ANNUAL REPORT OF COMMERCIAL BANK “EXIMBANK

ANNUAL REPORT
OF COMMERCIAL BANK
“EXIMBANK - GRUPPO VENETO BANCA”
FOR THE YEAR 2013
TABLE OF CONTENTS
1. MESSAGE OF THE GENERAL DIRECTOR .................................................................................................... 3 2. KEY EVENTS IN 2013 ........................................................................................................................................... 5 3. SUMMARY RESULTS .......................................................................................................................................... 7 4. ITALIAN BANKING GROUP – VENETO BANCA.......................................................................................... 9 5. MANAGEMENT OF THE BANK ...................................................................................................................... 13 6.1. GLOBAL ECONOMIC TRENDS ................................................................................................................................... 14 6.2. ITALIAN ECONOMIC TRENDS .................................................................................................................................... 16 6.3. EASTERN EUROPE ................................................................................................................................................ 18 6.3.1. Romania ........................................................................................................................................................... 18 6.3.2. Republic of Moldova........................................................................................................................................ 19 6.3.3. Croatia .............................................................................................................................................................. 20 6.3.4. Albania ............................................................................................................................................................. 21 6.4. THE BANKING MARKET ........................................................................................................................................... 22 6.5. Republic of Moldova ........................................................................................................................................ 24 6.6. Banking System in the Republic of Moldova ................................................................................................... 25 6.7. Regulatory Framework ..................................................................................................................................... 27 7. CORPORATE GOVERNANCE .......................................................................................................................... 28 8. RISK MANAGEMENT ........................................................................................................................................ 30 8.1. Credit Risk ........................................................................................................................................................ 30 8.2. Market Risk ...................................................................................................................................................... 31 8.3. Liquidity Risk ................................................................................................................................................... 31 8.4. Operational Risk ............................................................................................................................................... 31 9. INTERNAL CONTROL SYSTEMS ................................................................................................................... 33 10. MAIN FINANCIAL RESULTS ........................................................................................................................... 35 10.1. Details on Asset Evolution ............................................................................................................................... 35 10.2. Data on liabilities and shareholders’ equity evolution ...................................................................................... 38 10.3. Details on revenues and expenses..................................................................................................................... 42 11. FACILITIES FOR LEGAL ENTITIES .............................................................................................................. 45 11.1. General framework ........................................................................................................................................... 45 11.2. Loan facilities ................................................................................................................................................... 46 12. FACILITIES FOR INDIVIDUALS ..................................................................................................................... 50 13. BANK CARDS....................................................................................................................................................... 53 14. OPERATIONS WITH SECURITIES ................................................................................................................. 56 15. INFORMATION TECHNOLOGY ..................................................................................................................... 59 16. HUMAN RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY ................................................. 60 17. LIST OF MAIN CORRESPONDENT BANKS.................................................................................................. 63 18. LIST OF BRANCHES AND AGENCIES ........................................................................................................... 64 2
1. MESSAGE OF THE GENERAL DIRECTOR
Dear Ladies!
Dear Gentlemen!
On behalf of the management team, I have the honor to present the financial statements for
“EXIMBANK – Gruppo Veneto Banca” S.A. for the financial year ended December 31, 2013.
The year 2013 is characterized by the strategic approaches of European banks in terms of
stabilization of previous year’s crisis effects and re-defining the future of core business activities.
Thus, as part of the European banking, “EXIMBANK – Gruppo Veneto Banca” S.A. has drawn
plans and budgets so that, in addition to compliance with internal and external regulatory
framework, to position itself as a bank for the future. In this regard, the Bank has sought permanent
dynamic changes in the regulatory environment and ensured full compliance with it. The bank has
also kept in the foreground customer needs and business interests, as the main driving force of the
market economy.
At the same time we understand the main balance sheet challenges that we are to face, or adequate
balance position of the Bank that we have to maintain in terms of liquidity and profitability:
development and implementation of innovative products, according to the bank's strategic plans.
All these challenges require prompt determination and bold action. I am proud to communicate to
you that many things have already occurred in 2013: the initiation of unprecedented capitalizations
of the Bank at the local level by issuing additional capital immediately, as well as in subsequent
financial years; analysis of immediate steps to implement the provisions of Basel II timely, as well
as follow the experience of implementing the Basel III in European banks, implicitly in Veneto
Banca SCPA; and the adjustment of bank management system in accordance with the development
strategy of the parent bank.
In terms of operational progress for 2013 would like to mention that the bank ended the financial
year with a total regulatory capital amounted to MDL 769.5 million, which is more than 3.8 times
the minimum level set by the National Bank of Moldova. However, according to the Basel
requirements, Total Regulatory Capital reached MDL 1 138.6 million.
According to the reported financial results, the bank increased its assets by 11.1%, while loans to
customers grew by approximately 4.4%. Thus, at the end of 2013, the Bank achieved a market share
of 6.0% in total assets, 7.2% of loans and 3.6% of drawn deposits of the banking system. Focusing
on retail initiated in 2012 led to its positive dynamics of about 27.8% on deposits and 5.5% on loans
in 2013.
Cooperation with international financial institutions is considered of a primary consideration already
in the near close perspective, especially in the energy efficiency, support for the agricultural sector
and small and medium enterprises.
3
Sincere thanks to all customers and business partners for their trust, to the Board Members for their
support and proactive spirit, to the employees of EXIMBANK - Gruppo Veneto Banca for the
intelligence, creativity and their contribution to the development of the bank.
With great satisfaction I express appreciation for the extraordinary and permanent support of the
sole shareholder Veneto Banca SCPA, especially for the decision to significantly increase the share
capital of the bank, showing confidence in the banking business development in Moldova, which, I
am convinced, will serve as a safe sustainable support for the development of the bank in the future.
Yours faithfully,
Lucio Luigi Gaita
General Director
4
2. KEY EVENTS IN 2013
January 31, 2013 – EXIMBANK
wins a gold medal and a diploma
"Financial institutions. Products
"Inter" in the jubilee edition of
2012".
– Gruppo Veneto Banca
of honor in the category
& Services", nomination
the "Brand of the Year
March 13, 2013 – EXIMBANK – Gruppo Veneto Banca
proposes its customers a new loan product - "AGRARIO",
thus providing financing solutions for the agricultural
sector.
March 25, 2013 – EXIMBANK – Gruppo Veneto Banca
implements the deposit "PROGRESIV", a unique product on
the domestic banking market, which gives the customer the
advantage of preserving resources long term with a gradual
increase of interest.
March 27, 2013 – EXIMBANK – Gruppo Veneto Banca
increases its capital by MDL 365 million to MDL 1.0 billion,
maintaining its first undisputed place in the banking system.
May 24, 2013 – EXIMBANK – Gruppo Veneto Banca, as a
precaution in avoiding fraud related to bank cards, registers
a new product in its array of banking products - "Eximbank
SMS Info", offered to all bank customers eager to be
informed on-line about bank card transactions.
5
July 1, 2013 – EXIMBANK – Gruppo Veneto Banca launches
a new term deposit - “RACCOLTO”, dedicated for saving
and investing population resources in foreign currency at
favourable rates.
September 1, 2013 – EXIMBANK – Gruppo Veneto Banca,
for the convenience of its customers, implements the
"Scheduled Payment" service, a way to execute repetitive
payment orders without the presence of the customer at the
bank.
December 2, 2013 – EXIMBANK – Gruppo Veneto Banca
obtains the license for issuing bank cards with
microprocessor in the MasterCard payment system.
6
3. SUMMARY RESULTS
ECONOMIC, FINANCIAL RESULTS AND MAJOR MANAGEMENT INDICATORS
ECONOMIC RESULTS (in thousand MDL)
2013
2012
var. abs.
var. %
155,076
184,739
-33,260
-16.1
215,078
242,323
-27,245
-11.2
Operating costs (expenses)
-148,473
-146,643
-1,830
1.2
Net profit before tax
-113,607
-94,778
-18,829
19.9
Net profit
-111,156
-133,843
22,687
-17.0
2013
2012
var. abs.
var. %
Gross banking product2
4,971,830
4,913,737
58,093
1.2
Due to clients
2,015,950
2,081,598
-65,648
-3.2
Due from clients
2,955,880
2,832,139
123,741
4.4
Interest-bearing assets
3,307,637
2,764,571
543,066
19.6
Total assets
4,569,270
4,112,538
456,732
11.1
Shareholders’ Equity
1,158,727
904,943
253,784
28.0
2013
2012
var. abs.
var. %
44.12
50.62
-6.50 p.p.
-12.8
64.69
68.87
-4.18 p.p.
-6.1
146.62
136.06
10.57 p.p.
7.8
2013
2012
var. abs.
var. %
35.74
35.63
0.11 p.p.
0.3
32.56
34.17
-1.61 p.p.
-4.7
91.46
114.47
-23.00 p.p.
-20.1
2013
2012
var. abs.
var. %
Return on equity (ROE)
-12.46
-13.77
1.31 p.p.
-9.5
Return on assets (ROA)
-3.19
-3.36
0.17 p.p.
-5.0
Interest margin / Interest-bearing assets
4.69
6.68
-1.99 p.p.
-29.8
Intermediation margin / Interest-bearing assets
6.50
8.77
-2.26 p.p.
-25.8
Net profit / Interest-bearing assets
-3.36
-4.84
1.48 p.p.
-30.6
Interest margin / Intermediation margin
72.10
76.24
-4.14 p.p.
-5.4
Operating costs / Intermediation margin (cost/profit ratio)
69.03
60.52
8.51 p.p.
14.1
Net interest income (Interest margin)
Intermediation margin
1
FINANCIAL AND OPERATING RESULTS (in
thousand MDL)
STRUCTURE INDICES (%)
Due to clients / Total assets
Due from clients / Total assets
Due from clients / Deposits of clients
CREDIT QUALITY INDICATORS (%)
Non-performing loans3 / Due from clients
Loans under supervision4 / Due from clients
Non-performing loans / Shareholders’ Equity
PROFITABILITY INDICATORS (%)
1
Sum of interest margin, net fees, income from financial operations and other operating income.
Sum of Due to clients and Due from clients.
3
Loans classified as substandard, doubtful and loss according to the Regulation of the National Bank of Moldova.
4
Loans classified as under supervision according to the Regulation of the National Bank of Moldova.
2
7
LIQUIDITY AND CAPITAL ADEQUACY
2013
2012
var. abs.
var. %
Current liquidity (%)
24.29
26.80
-2.51
-9.4
Long-term liquidity6
0.97
0.94
0.03
3.2
Capital adequacy (%)
38.52
35.04
3.48
9.9
STRUCTURE AND EFFICIENCY INDICATORS
2013
2012
var. abs.
var. %
388
413
-25
-6.1
20
20
0
0.0
Loans to clients per employee (in thousand MDL)
7,618
6,857
761
11.1
Due to clients per employee (in thousand MDL)
5,196
5,040
156
3.1
Gross banking product per employee (in thousand MDL)
12,814
11,898
916
7.7
Intermediation margin per employee (in thousand MDL)
554
587
-32
-5.5
5
7
Average number of employees (units)
Number of bank branches (units)
5
Liquid assets / Total assets (principle II of liquidity regulation, at least 20% according to the standards of the National Bank of
Moldova).
6
Assets with remaining maturity of more than 2 years / Financial resources with remaining maturity more than 2 years (principle I of
liquidity regulation, maximum 1.0 according to the standards of the National Bank of Moldova).
7
Total regulatory capital / Total risk weighted assets (at least 12% according to the standards of the National bank of Moldova).
8
4. ITALIAN BANKING GROUP – VENETO BANCA
Background of the Group
Veneto Banca Group is the result of an evolution started in 1877, when the popular cooperative bank
Banca Popolare di Montebelluna was founded.
In 1966 the cooperative institution merged with Banca Popolare del Mandamento di Asolo,
becoming the Banca Popolare di Asolo e Montebelluna. In 2000, it changed its name into Veneto
Banca, after acquiring Banca di Credito Cooperativo del Piave e del Livenza for the purpose of
servicing a greater territory of the Treviso province, where it started its activity, and became, in a
middle term, a bank of reference for families, enterprises, associations and public agencies in the
given region.
Veneto Banca has opened various branches in the regions Veneto and Friuli and has created
specialized companies, such as Claris Assicurazioni, Claris Broker, Claris Factor, Claris Leasing
and Claris Cinque (the last one is specialized in salary based crediting). Veneto Banca has also
implemented online services, Clarisbanca (for natural persons) and Impresa Web (for legal persons)
and has offered to its branches a network of financial promoters named Claris Net.
It obtained the control on other credit institutions of Italy (Banca di Bergamo, Banca Popolare di
Monza e Brianza, Banca Popolare di Intra, all of them being operational in the North-West of Italy)
and Eastern Europe (Banca Italo Romena in Romania, Eximbank in Moldova, Veneto Banka Croatia
and Veneto Banka Albania). Veneto Banca has also created a new bank in the south of Italy (Banca
Meridiana).
At the beginning of 2008 Veneto Banca Group has changed its structure: the parent bank Veneto
Banca has become Veneto Banca Holding, keeping its status of popular cooperative limited bank by
shares (società cooperativa per azioni) and government, strategic obligations and control in a reality
which is more pronounced as time passes in Italy and abroad.
The commercial sector is already divided into 4 geographic sectors, one company by shares being
responsible for each of them: Veneto Banca in the North-East, Banca Popolare di Intra (which has
acquired Banca Popolare di Monza and Banca di Bergamo) in the North-West, Banca Meridiana in
the South and the foreign banks in Eastern Europe.
Between the end of 2008 and beginning of 2009, Veneto Banca Holding has concluded an
agreement with Carifac (Cassa di Risparmio di Fabriano and Cupramontana, in the center of Italy)
and with BancApulia (in the southern part of the peninsula) to form – after obtaining the necessary
permits – a bank group along the Adriatic coast, from Friuli Venezia Giulia up to Puglia.
At the beginning of 2010, Banca Meridiana merged with BancApulia, forming a greater unique bank
for the purpose of better servicing the region of the South-East of Italy.
In April 2010 Veneto Banca Holding informed on the undertaking the offer of acquisition, till the
end of the year, of the major share in the subsidiary Co.fi.to. – holding of Gruppo Banca
Intermobiliare (BIM), specialized in the private bank sector.
November 2010 Merger by incorporation of Veneto Banca S.p.A. and of Banca Popolare di Intra
S.p.A. into Veneto Banca Holding s.c.p.a. This transaction of a structural reorganization nature has
9
incorporated the branches of Banca Popolare di Intra S.p.A. and Veneto Banca S.p.A. under the
same name Veneto Banca Holding s.c.p.a. (which, in January 2011, was renamed Veneto Bank
s.c.p.a.) The commercial network was reorganized into three main Territorial Regions: North
Region, with the Central Office in Montebelluna, North-Central region with the Central Office in
Verona and North-West region with the Central office in Verbania Intra.
January 2011: corporate name of the parent bank has been changed from „Veneto Banca Holding
s.c.p.a.” to „Veneto Banca s.c.p.a.”. A fusion between Co.fi.to and Veneto Banca is performed, and
subsequently it acquires control of Bank Intermobiliare
The mission of Veneto Banca Group is to be an innovational and autonomous group, a leader on its
territories, capable of rendering high quality services and generating value, in a responsible and
ethical way, for a long term, for the shareholders, clients and employees.
Important Data about the Group as of December 31, 2013:
587 branches, of which 64 branches outside Italy: Romania (22), Republic of Moldova (20),
Croatia (7), Albania (15), Hong Kong (1 representative office) and China (1 representative
office).
6,206 employees, decreasing by 4 employees compared to previous year.
Net loss: EUR 96.1 compared to the net loss of EUR 39.7 million during 2012.
Total assets: EUR 37,307 billion, decreasing by 7.1% compared to previous year.
Rating and the end of 2013:
STANDARD & POOR’S
Short-term liabilities
Medium and long-term liabilities
Perspectiva ratingului
B
BB+
Negative
10
GROUP STRUCTURE
11
GEOGRAPHIC STRUCTURE OF THE GROUP
Italian banks
Foreign banks
Veneto Banca S.c.p.a.
Piazza G.B. Dall'Armi, 1
31044 Montebelluna (Treviso)
P.Iva 00208740266
EXIMBANK – Gruppo Veneto Banca S.A.
Bd. Ştefan cel Mare şi Sfânt 171/1
MD 2004 - Chişinău, (Moldova)
Cassa di Risparmio di Fabriano e
Cupramontana S.p.a.
Via Don G. Riganelli, 36
60044 Fabriano (Ancona)
P.Iva 00077790426
Banca Italo Romena S.p.a.
Gara Herestrău, 2-4
020334 - Bucureşti (Romania)
Bancapulia S.p.a.
Via Tiberio Solis, 40
71016 San Severo (Foggia)
P.Iva 00148520711
Veneto Banka d.d.
Draskovićeva 58,
10000 Zagreb (Croaţia)
Banca IPIBI Financial Advisory S.p.A.
Via Meravigli n. 2
20123 Milano
P.Iva 01733820037
Veneto Banka Sh.a.
Bulevardi "Dëshmorët e Kombit"
Kullat Binjake, Tirana (Albania)
Banca Intermobiliare di Investimenti e
Gestioni S.p.A.
Via Gramsci, 7
10121 TORINO
P.Iva 02751170016
Bim Suisse S.A.
Contrada Sassello, 10 (angolo Via Motta)
CH-6900 Lugano (Elveţia)
Italian companies
Foreign companies
Claris Leasing S.p.a.
Immobiliare Italo Romena
Claris Factor S.p.a.
Italo Romena Leasing
Claris Cinque S.p.a.
Veneto Ireland Financial Service Ltd.
Apulia prontoprestito S.p.a.
Apulia previdenza S.p.a.
Bim Insurance Brokers S.p.a.
Bim Fiduciaria S.p.a.
Symphonia SGR S.p.a.
12
5. MANAGEMENT OF THE BANK
BOARD OF THE BANK
Chairman
Alessandro Gallina
Deputy Chairman
Vincenzo Consoli
Members
Renato Merlo
Gianpietro Zannoni
Daniele Scavaortz
EX ECUTIVE BODY OF THE BANK (GENERAL DIRECTION)
General Director
Lucio Luigi Gaita
First Deputy General Directors
Beniamino Contessotto
Deputy General Directors
Vitalie Bucătaru
AUDITING COMMITTEE
Chairman
Sergiu Suveica
Members
Adelina Grigoroi
Iuri Cicibaba
THE BANK’S AUDIT COMPANY IN 2013
KPMG MOLDOVA S.R.L.
13
6. THE MACROECONOMIC SCENARIO 8
During 2013 the world economy gradually improved, but with growth rates stationary at modest
levels and with significant differences among the various areas. Alongside the signals of
strengthening in the US economy and of the modest recovery in the Euro Area, facilitated by both a
relaxed orientation of monetary policy and lower fiscal drag, the emerging economies continued to
grow, but at a slightly lower rate and with greater risks related both to less favorable financial
conditions compared with the past and to macroeconomic imbalances accumulated in the previous
periods of rapid development.
Conditions on the European financial markets improved further, thanks to the recovery prospects,
relaxed monetary policy and progress in governance of the Euro Area. In particular, in the case of
Italy the stabilisation of the domestic situation enabled a gradual decrease in long-term interest rates
on government securities as well as a reduction of the spread on the German ten-year Bund, reviving
the interest of foreign investors in Italian financial assets.
After nine disappointing quarters, towards the end of the year the Italian economy began again to
show a few timid signs of recovery over the short term, with GDP growth over the previous quarter
of 0.1%, mainly as a result of a slight improvement seen in the agricultural and industrial segments.
Conditions on the employment market remain however critical, despite the manifestation of the first
signs of employment stabilising and hours worked increasing.
Despite the drop in available income, the financial position of indebted households, remains solid
overall, benefiting from the low level of interest rates and measures taken to support borrowers
which helped to limit the debt burden.
On the contrary, as regards businesses the ongoing recession caused a further decrease in
profitability and an increase in the proportion of financially fragile companies. For the latter the
ratio of borrowing costs to operating profit remains high, further aggravated by great uncertainty
about the timing and intensity of the economic recovery and by conditions of access to credit which
are not always easy above all for small and medium-sized enterprises. With the expected
improvement of the situation during 2014, the credit squeeze could gradually ease, overcoming both
the weak demand and the restrictive lending policies of the banking system, associated with the
growing riskiness of businesses which has characterized the last few years.
It is worth recalling, finally, that the ECB has begun performing a comprehensive assessment of the
major Euro Area banks, the first stage of the process that will lead to the launch of the single
banking supervision mechanism at the European level.
The assessment, performed on a group of 15 large and medium-sized Italian banks, which also
includes Veneto Banca, is expected to lead to significant benefits for the banking system, because it
will help to make banks' financial statements more transparent and comparable, to reduce the
fragmentation of the financial markets and to improve funding conditions.
6.1. GLOBAL ECONOMIC TRENDS
In the fourth quarter the GDP of the United States grew by 2.4% in annual terms, driven by the
rebuilding of inventories and expanding consumption. In the last few months further positive signs
also emerged. These could be seen both in terms of stronger employment market indicators –
including the unemployment rate which gradually declined down to 6.7% in December from 7.9% at
the beginning of the year - and in accelerating household consumption and exports. On the contrary
8
Source: Banca d’Italia – Bollettino Economico n. 1, Gennaio 2014; Banca Centrale Europea – Bollettino Mensile, Marzo 2014; ABI Monthly Outlook,
Gennaio/Febbraio/Marzo 2014; Prometeia – Rapporto di previsione, Gennaio 2014; International Labour Organization – Global employment trends, January
2014; EUROSTAT Newsrelease n. 34/2014, March 2014.
14
both investments in residential construction and public spending remain weak.
As regards the Euro Area in the fourth quarter GDP recorded a 0.5% increase compared with the
same period of 2012, a considerable recovery compared with the previous quarters of the year,
which were all characterised by negative changes. Growth was to a great extend due to more
vigorous domestic demand for final consumption and to an increase in gross fixed investments, up
respectively by 0.3% and 0.1% after several quarters of sometimes sharp decline. The largest
contribution came however from the foreign sector, in the context of which rapidly accelerating
trend in exports, up 2.6%, was only partially offset by the recovery of imports, which increased by
no more than 1.9%. On the contrary, the effect of changes in inventories was once again negative,
after the temporary recovery seen in the third quarter.
Among the major economies of the area, Germany – driven above all by investments in the building
industry - recorded the largest increase, of 1.4% year-on-year; in France GDP growth was weaker,
limited to 0.8% as a result of the negative contribution of net foreign demand and a drop in
investments.
The United Kingdom showed vigorous economic expansion in the last quarters. In the fourth
quarter of 2013 GDP increased in real terms by 0.7% from the previous period, driven mainly by the
services sector, and by 3.1% in annual terms, to which domestic demand contributed to a
considerable extent.
In the United Kingdom credit conditions improved for households and large companies; the
evolution of the employment market and the climate of confidence among businesses are consistent
with a stabilisation of growth at high levels.
After the rapid expansion of the previous periods, in the third quarter in Japan GDP growth slowed
to 1.1%, following a sharp deceleration of consumption and exports. The preliminary data relating to
the last quarter of the year indicated however a recovery, sustained by rising exports and a
temporary increase in consumption - above all of durable goods - caused by the increase in indirect
taxes planned for this coming April.
In the main emerging countries economic activity showed differing trends. In third quarter 2013
growth strengthened in China, coming out at 7.8% year-on-year, driven by measures to support
investments and exports introduced over the summer.
Less brilliant were the results of India, Brazil and Russia, where – with the exception of the
moderate increase in Indian GDP, amounting to 4.8% despite the sharp drop in the rupee and the
recovery of production in the agricultural sector – signs of a significant slowdown were seen. In
particular, in the same period Brazilian GDP growth slowed to 2.2%, down compared to the 3.3% in
the previous quarter, followed by Russia where GDP grew by 1.2%, that is at the same rate recorded
in the previous quarter.
The most recent indicators confirm the stability of growth in China, thanks to the recovery of
exports and the still robust trends on consumption and investments, reinforced by the announcement
by the Chinese authorities of a wide-ranging reform program aimed at strengthening the market
economy and at increasing competition in the financial and productive sectors. The prospective
situation, on the contrary, remains weak in Brazil, India and Russia, where according to analysts'
forecasts growth will remain limited also during 2014.
Global inflation remains low on the one hand owing to the weak trend in raw material prices and on
the other owing to the high unused capacity. The trend was the result both of the more volatile
components and of basis ones, related to non-food and non-energy goods and services, the growth of
which remained at the lowest levels. Pressures on the cost side continued to decline, with prices at
15
production down in November by 1.2% compared with the same month of 2012, as the prices of
intermediate goods and energy fell.
In the advanced economies the increase in the general price index remained at very low levels. In
particular, in November the consumer price index grew by 1.2% in annual terms in the United States
and by 2.1% in the United Kingdom, while in Japan the change, which became positive again last
summer, reached 1.6%. Among emerging countries, the consumer price trend remained instead
higher in India, Brazil and Russia.
Inflation increased slightly, but was still less than 1%, in the Euro Area, where in December it came
out at 0.8%, compared with 0.9% in the previous month, much lower than the 2.2% of a year before.
The “core” component, that is after eliminating the more volatile components, was stable compared
with the previous month, reaching 1.1% compared with 1.8% in 2012.
The difficulties in the economic recovery and the repeated downward revisions of economic growth
projections had a significant impact on the employment market situation, with an increase of
approximately 5 million people unemployed9 in 2013, when they reached a total of 202 million.
In reality over the last few years employment levels and the unemployment rate have not recorded a
sharp and sudden deterioration, but rather have seen a gradual weakening, the result of the combined
effect of persistently high unemployment rate and the progressively declining growth rate of the
working-age population at the global level.
The global employment gap, which opened up at the beginning of the 2008 financial crisis,
continued to widen. The employment rate in 2013 was 59.6%, unchanged from 2012, but well below
the 60.7% of the period before the crisis.
The employment rates of men and women still remain very different, although they were stationary
in the twelve months; they came out at 72.2% and 47.1% respectively.
Unemployment on the contrary remained steady at 6%, while young people were certainly more
affected by the weak and difficult recovery. The youth unemployment rate has now reached 13.1%,
a historically high figure, three times higher than the rate for the adult working population. The male
unemployment rate also rose slightly – from 5.7% to 5.8% - while the female rate was stationary at
6.4%.
The employment market developed differently in different regions and countries. In the advanced
economies and in the area of the European Union the unemployed account for a total of 8.6% of the
workforce, with an increase of approximately 3 points over 2007; however, while in the United
States and the United Kingdom unemployment rates are decreasing, in Japan and in Germany there
were only limited improvements compared with further deterioration in Italy and France.
6.2. ITALIAN ECONOMIC TRENDS10
Italy is now expected to come out of the recession more slowly than previously forecast. GDP, in
fact, after being stagnant in the third quarter and after growing on in last quarter by only 0.1%,
ended 2013 with a further decrease of 1.9%, which added to the drop in 2012 – of 2.5% - brought
the volume to just under the level recorded in 2000.
Once again the trend in net foreign demand contributed mainly to attenuating the negative change. It
grew by 0.8%, while the contribution of domestic demand was very negative and that of the change
in inventories almost none at all, as they fell by 2.6 and 0.1 percentage points respectively.
9
Source: Organizzazione Internazionale del Lavoro (ILO) - Rapporto sulle Tendenze globali dell’occupazione (Global employment Trends 2014), 21 gennaio
2014.
10
Source: ISTAT Statistiche – Report PIL e Indebitamento AP, pubblicato il 3 marzo 2014; ABI Monthly Outlook, gennaio e febbraio 2014
16
Also in 2013 the largest reduction involved spending for consumption of resident households, which
ended the year down 2.6%, a significant figure above all if considered alongside the sharp drop of
4% recorded the previous year. The drop in consumption was particularly marked for goods, 4%,
while the decrease in spending for services was only 1.2%. In terms of consumption functions, the
sharpest drops regarded healthcare spending and spending on clothes and footwear, down
respectively by 5.7% and 5.2%.
The trend in spending of Public Administrations and of Private Social Institutions (PSIs) was also
downwards, as they declined, respectively, by 0.8% and 1.5%.
Despite the slowdown compared with the 8% drop seen in 2012, the decline in gross fixed
investments was again considerable however, coming out at 4.7%. The drop concerned both
investments in construction and those in machinery and equipment, down by 6.7% and 6.3%;
investments in means of transport instead bucked the trend, recording an increase of 12.9%.
As regards the foreign component, 2013 saw a slight increase, of 0.1%, in exports of goods and
services, accompanied by a 2.8% decrease in imports.
On the production side, the volume of total added value recorded a reduction of 1.6% in annual
terms, a slowdown compared with the 2.2% drop seen in 2012. In particular, we can note that - with
the exception of the agriculture, forestry and fishing sector, which grew by 0.3% - almost all sectors
ended with lower figures than in the previous year, with particularly significant decreases in
construction and in industry in the strict sense, down respectively by 5.9% and 3.6%; the
performance of services was again negative, although the drop was more limited, a total of 0.9%.
In December 2013 the deseasonalised index of industrial production declined by 0.9% compared
with the previous month and by 3% with reference to the whole year. The only annual increase, of
5.6%, was observed in the intermediate goods sector; the instrumental goods and energy instead fell
considerably again, with changes of 5.6% and 3.2% respectively, while there was a more limited
reduction in the consumer goods sector, of only 1%. On the contrary the figure for new
manufacturing orders was positive, recording in November further growth on an annual basis of 3%,
after the 1.2% rise in October.
In December business confidence increased further, although only a little and with much
diversification in the trends according to size, sector and geographical area.
The situation on the employment market remains delicate. In December, in fact, although it fell
slightly compared with the previous month, the unemployment rate came out at 12.7%, very slightly
down from the peak of 12.8% in November when it reached the highest level since 1977. On
average in 2013, the unemployment rate reached 12.2%, compared with 10.7% a year earlier. The
increase involved both gender components, rising from 12.7% to 16.6% for men and from 15.7% to
18.2% for women, and the entire country, with a peak in the South where it reached 19.7%; it
increase also with regard to the foreign component, for which it rose from 14.1% in 2012 to 17.3%
in 2013.
The greatest worries, however, concern youth unemployment, which at the end of 2013 amounted to
41.6%; the annual average unemployment rate in the 15-24 age band grew to 40%, with a peak of
53.7% for young women in the South.
There was also an increase on the long-term unemployment rate (twelve months or more) which
rose from 52.5% in 2012 to 56.4% in 2013.
Overall in 2013 the employment rate came out at 55.6%, recording a reduction of more than one per
cent compared with 2012 and affecting to a very similar extent both the employed of Italian
nationality and foreigners. The average number of people employed decreased by 478,000,
17
corresponding to a reduction of 2.1%, which involved not only all geographical areas but also both
gender components, but with more accentuated deterioration rates in the southern regions and as
regards male employment, down by 2.6% compared with the -1.4% of the female component.
The downward trend characterized almost all segments, although with different intensity. The
largest drop, of 6.1%, regarded however temporary employees, while the changes were less marked
for permanent employees and the self-employed, down by 1.3% and 2.5%.
After the sharp drop of 2012, the inactive population between the ages of 15 and 64 began to grow
again, although with only a small increase of 0.3%.
In the last few months of 2013 consumer price inflation11 decreased further. The annual average
growth rate of the Harmonised Consumer Price Index (HCPI) ended 2013 at 1.3%, two percentage
points lower than the 3.3% of 2012, even though in December it showed an increase of 0.3% on a
monthly basis. While the most marked monthly increases involved the prices of Transport, Food
Products and Non-Alcoholic Drinks, up by 1.1% and 0.7% respectively, in the comparison over
twelve months the upward pressure came in particular from the prices of Recreation, Entertainment
and Culture, Food Products and Non-Alcoholic Drinks, Education and Health Services and
Healthcare Expenses, which recorded changes of between 1.5 and 1.3 percentage points; only the
prices of Communications fell sharply, going down by 9.7%.
The impact of the increase in the VAT rate, introduced last October, on the monthly rise in the index
was actually limited, and mostly offset by the effects caused by weak domestic demand. As regards
spending classes, during 2013 the deceleration of inflation in fact was much more marked for
households with less spending capacity, driven in particular by falling energy prices, which for this
group account for more than twice the proportion compared with households with higher spending
levels. In a situation of general easing of inflationary tensions, the annual average change in 2013 of
the harmonized consumer price indices by spending classes recorded a substantial narrowing of the
gap between households that maintain lower per capita spending and those with con higher per
capita spending: while for the former group average inflation went down from 4.2% in 2012 to 1.3%
in 2013, for the latter the overall change declined from 2.9% to 1.2%, reducing to one tenth of a
point the differential between the rates of changes of the two groups. The fall in inflation for the first
group of households however characterized both goods, down from 5% to 1.4%, and services, the
increase in which slowed from 2.4% to 1.2%.
6.3. EASTERN EUROPE
The trends of the main macroeconomic variables over the past year in the countries where the
Veneto Banca Group is now present are briefly illustrated below.
6.3.1. Romania12
In 2013 the Romanian economy grew by 3.5% compared with the previous year, achieving in the
last two thirds of the year a rapid acceleration of GDP, up by 4.2% and 5.1%.
The greatest contributions to development came from the industrial sector, the added value of which
grew by 2.3% in annual terms and which represent approximately 30% of GDP, and from the
agriculture, forestry and fishing sector, up by 1.1%. The contributions of the real estate; information
and communication; professional, scientific and technical; and administrative and support services
sectors were more limited. Instead the Construction sector and that of wholesale and retail trade,
transport and storage, hospitality and catering services ended negatively.
11
Source: Banca d’Italia – Bollettino Economico n. 1, gennaio 2014; ISTAT Statistiche: Prezzi al consumo, 14 gennaio 2014 e La misura dell’inflazione per
classi di spesa delle famiglie, 21 gennaio 2014.
Source: National Institute of Statistics, Monthly Statistical Bulletin n° 12/2013 e Press Release n°53/March 2014 e n°309/December 2013; National Bank of
Romania, Inflation Report, February 2014.
12
18
From the point of view of uses, a recovery was observed both in domestic final consumption and in
particular household spending, up respectively by 0.3% and 0.9%, and in net exports, the
contribution of which to growth reached 4.1% as a result of the rebound of volumes of goods and
services exported combined with a lower increase in imports. These trends were contrasted by a
slowdown in both gross fixed investments and the spending of public administrations, down 1.5%
and 0.6% respectively.
As regards the employment market, at the end of December the number of people employed reached
61%, improving slightly on both the figure for the previous quarter and that for the same period of
2012 with increases of 0.2% and 0.8% respectively. There remain, however, notable differences
both between men and women - the proportions came out at 68.3% and 53.7% - and as regards
young people, stationary at 25.3%.
At the same time we can note a worsening in the unemployment rate, which reached 7% compared
with 6.8% in 2012. In this case too, the gap between the percentages of male and female
unemployment was confirmed – 7.4% and 6.5% – as was youth unemployment, which in the 15-24
age band reached 23.2%.
In December the average inflation rate calculated for the whole of 2013 was 4%, slowing down
slightly compared with the 4.3% calculated in November. A similar change can be seen also in
terms of the annual average harmonized consumer price index – calculated to ensure its
comparability in the context of the European Union – which in the last two months went down from
3.5% to 3.2%.
As far as the components are concerned the most significant increase involved the non-food goods
sector, 5.2%, followed by prices of services and food goods, both up by about 3%.
The improving trend embarked on in terms of inflation and the related expectations led the Central
Bank to adjust gradually the monetary policy settings in the last few months of 2013 and the
subsequent monetary policy interest rate cuts were passed on favorably, although with a certain
delay, to interest rates on lending to the real economy.
In this direction the Central Bank therefore maintained an accommodating tone revising downwards
- several times during the year - its reference rate, which went from 5.25% at the end of 2012 to 4%
in November 2013.
6.3.2. Republic of Moldova13
After the healthy growth recorded in GDP in the early part of the year, the preliminary data for the
third quarter show a further significant leap forward of 12.9%, which brings annual average growth calculated on the basis of the first nine months – to 8%. This extraordinary development derived to a
great extent from the performance of the agricultural sector which, after a 2012 heavily affected by
drought, benefited from rapid expansion of production volumes which on one hand pushed up the
quantities of goods exported and on the other limited imports. From the point of view of uses, the
increase in exports, of 15%, was followed by a strong recovery of household consumption, up by
8.9%; while the change in gross fixed investments was again positive, but on a reduced scale, as
compared with the same quarter of 2012 they increased by 1.2%. On the contrary, spending by the
public administration was slightly down, by 0.9%.
The third quarter of 2013 also brought improvements in the employment markets. The number of
people employed increased in fact by 4.3%, enabling the unemployment rate to decline to 3.9%,
down by approximately 0.9 percentage points compared with the same quarter of 2012.
13
Source: National Bank of Moldova, Press release on monetary policy decisions, 28 February 2013; National Bank of Moldova, Press release on inflation, 14
January 2013; National Bank of Moldova, Inflation Report, n°1, February 2013; National Bureau of Statistics of Republic of Moldova, Buletin Statistic ianuariedecembrie 2013.
19
In October November 2013, the growth rate of real wages slowed compared with the third quarter
by approximately 2.2 percentage points, coming out at 3.2%.
In fourth quarter 2013 the annual inflation rate came back near to the target envisaged in the
monetary policy strategy, settling at around the average for the period at 4.9%, 0.9 percentage point
higher than in the previous quarter. The increase was driven mainly by the trend in prices of food
products, but was also a result of the devaluation of the Leu against the currencies of the main
commercial partners; “core” inflation on the contrary slowed down, owing above all to stationary
domestic demand.
As regards industrial production prices, in third quarter 2013 the figure for the index increased by
3.7%, with a slight acceleration of 0.3 percentage points compared with the second.
During 2013 monetary policy was affected by the need to rebalance the inflationary and deflationary
trends. The risk of disinflation, deriving mainly from stagnant aggregate demand and the fall in the
national currency, was in fact to a great extent offset by the economic recovery of the EU and by the
sharp increase in food product prices on international markets. In these circumstances the Moldavian
National Bank maintained an accommodating attitude in monetary policy lines, leaving unchanged
both the base rate, at 3.5% after the 1 per cent reduction approved in April 2013, and the proportion
of obligatory reserve in national and foreign currency, stable at 14%.
6.3.3. Croatia14
In the fourth quarter GDP fell by 1.2% from the same period of 2012 manly as a result of a decrease
in the volume of exports of goods, only partially offset by lower imports. Also in terms of average
annual rate, the GDP trend was negative, ending with a reduction of 1%, but in this case the positive
contribution of exports of goods and services, boosted in particular by the exceptionally good
performance of the services to tourism sector, in practice counterbalanced the negative trend of both
the other components of domestic demand, and of consumption by public administrations and
investments.
As regards production the most significant positive contribution was made by the hospitality and
catering sector, while manufacturing was the sector which recorded the largest drop.
The stronger negative trends in the employment market observed in the third quarter continued in
the fourth. Between July and November the number of people employed fell by 2.9% affecting
almost all business sectors, but hitting particularly hard the Trade sector and that of Hospitality and
Catering.
At the same time the unemployment rate reached 20.9%, up further compared with the 19.8%
calculated in the third quarter. Nominal wages, on the contrary, rose slightly and, thanks to the
simultaneous cooling of inflation, this translated into an increase in purchasing power.
In 2013 average annual consumer price index fell by 2.2% compared with the previous year. In
December the prices of goods and services declined by 0.3% compared with the previous twelve
months and the most significant decreases were recorded in the Clothing and Footwear sector and in
that of Furniture and Articles/Services for the Home, only partially offset by an acceleration noted in
the sectors of Food and Non-Alcoholic Drinks, and Transport.
The liquidity available to the banking system was ample and the Croatian National Bank
strengthened the previous loose policy line by adopting new measures aimed at stimulating the
growth of lending and this improving its effectiveness. In this sense, in December the proportion of
obligatory reserve was reduced from 13.5% to 12%, obliging the banks to use the resources freed up
14
Source: Croatian National Bank, Bulletin n.199, Year XX - January 2014.
20
in this way to purchase Treasury bonds which the National Bank will release in a proportion of half
the amount of loans granted to Croatian non-financial companies.
6.3.4. Albania15
2013 was a difficult year for the Albanian economy. Aggregate demand and economic growth
remained on modest levels; inflation remained low around the lower limit of the target oscillation
band, while the budget deficit and public debt increased brusquely owing to the unfavourable
domestic and international economic scenario. The June elections finally added further uncertainty
to the economy and to financial markets.
In the first half of the year the Albanian economy grew weekly driven mainly by foreign demand
and by stimulation of a fiscal nature, while domestic demand and investments remained
substantially stagnant, both affected not only by the uncertain recovery but also by restrictive
lending conditions. The preliminary data relating to the third quarter show however a further
worsening of the economic situation; compared with the third quarter of 2012, in fact, the gross
added value decreased by 2.26%.
With the exception of the agricultural sector, up by 2.9%, all the main business sectors contributed
to the drop indicated above. Among these the declines in manufacturing and in construction stood
out, at 7% and 10% respectively.
In the last few years the Albanian economy has grown at rates lower than its potential and aggregate
demand has been insufficient to ensure full use of production capacity. In this context the
employment indicators also grew slowly, determining a low trend in salaries, in production costs
and of final prices of goods and services.
During the fourth quarter the employment rate came out at 58.4%, down by 0.3 percentage points in
the annual comparison. The gap between female and male employment levels also remains very
wide, coming out in the order of 47.6% and 70.3%, both down compared with the previous quarter.
In the last quarter, while the total rate declined slightly, youth employment increased by 0.6%.
The most negative contribution came from the construction industry, in constant decline in 2013,
while a 1% recovery was seen in the number of people employed in manufacturing in the last
quarter of the year.
In the fourth quarter the unemployment rate remained stable at 17%; the gender components, on the
contrary, present diverging trends, with female unemployment worsening by 0.8% against a
reduction of 0.4% in male unemployment.
Finally, youth unemployment was still high and increased further in the last quarter. It came out at
28.1%. The high proportion of both the young unemployed for more than a year and graduates
contributed however to aggravating this figure. These two segments came out at 61.7% and 29%
respectively.
In December 2013 the consumer price index recorded an annual increase of 1.9%, compared with
the 2.4% reached at the end of 2012. The largest annual increases were seen in the “Food and NonAlcoholic Drinks” and “Alcohol and Tobacco” sectors, while the smallest characterised prices in the
sectors of Communications, Healthcare and Transport; the contribution of the “Clothing and
Footwear” sector was instead negative.
The weak demand for consumption and investments, together with the prudent lending policies
adopted by the banks reduced the level of the monetary indicators. On the basis of the economic
15
Source: National Bank of Albania, Monetary policy report 2013 Q3, December 2013; INSTAT, Quarterly Economic Growth – Q3 2013, January 2014; INSTAT,
aggiornamenti 2013 in www/instat.gov.al. e in www.bankofalbania
21
prospects and aiming to consolidate aggregate demand, at the end of the year the Central Bank
therefore maintained the loose monetary policy in place, both reducing the reference rate by half a
per cent – at 3% in the fourth quarter – and issuing further liquidity into the system; these
instruments made it possible to keep under control the cost relating to inflation, and the interest rate
on interbank deposits, government securities and loans in the national currency (the Lek).
6.4. THE BANKING MARKET16
In December bank loans declined more slowly, recording an annual change of -4.3% compared
with - 4.5% in the previous month. Overall at the end of 2013 bank loans to residents, excluding
interbank loans amounted to 1,853 billion euro.
In terms of duration, the largest negative change was noted on the short-term component (up to 1
year), which fell by a further 6.8%, after the sharp drop of 8.9% recorded in November 2013. Again
negative, but to a lesser extent, was the trend in the medium- and long-term segment (more than 1
year), down by 3% from the previous year.
Considering households and non-financial companies loans in existence reached 1,416 billion euro
with a 4% reduction over the twelve months, which still seems notable compared with the -2.8% in
the Area Euro average but slowing compared with the -4.5% of the previous month.
Entering into detail, the drop in loans to households was confirmed, as they fell in December by a
further 1.2% after the -1.5% of the previous month, and in particular the downward trend in loans
for property purchase was reconfirmed, with -1.1% as already seen in the last few months.
The decline in loans to non-financial companies remained, on the contrary, much more intense, as
they recorded a drop of 5.3%, slightly more limited after the negative peak of 6% in the previous
month. Although the demand for loans for inventories and working capital and for restructuring debt
has gradually strengthened, this trend was affected preponderantly by the sharp reduction of gross
fixed investments, penalized above all by investments in machinery; in addition, the significant
downsizing that affected the real value of gross fixed investments, the index of which went from 100
in the first quarter of 2008 (beginning of the crisis) to 72.9 in the third quarter of 2013, was
accompanied by a growing increase in the number of bankruptcies, receiverships and voluntary
liquidations.
On the basis of the findings of the Bank of Italy's investigation into bank lending relating to the third
quarter of 2013 (Bank Lending Survey), the trend in loans to businesses continued to be affected
both by weak demand and by the still restrictive offer criteria, in particular to the most risky
customers segments, following the pressures of the recession on bank's balance sheets; while with
reference to loans to households, in the third quarter demand remained weak, despite the gradual
affirmation of less rigid offer policies on the part of banks.
In December gross non-performing loans showed a new increase, of 6.3 billion euro, reaching 156
billion euro. Compared with 2012, the stock increased to 31 billion, representing an increase of
approximately 25% in annual terms.
The ratio to loans also worsened, reaching 8.1%, a much higher figure than the 6.3% of the previous
year and very far from the 2.8% at the end of 2007 before the beginning of the crisis. The ratio is
however particularly bad for small traders and businesses, reaching 14% and 13.3% respectively,
compared with 11.8% and 9.7% at the end of 2012. The difference in the ratio calculated for
consumer households, instead, was almost half, at 6.5% compared with 5.6% of a year before.
16
Source: Banca d’Italia – Bollettino Economico n. 1, gennaio 2014; ABI Monthly Outlook, gennaio e febbraio 2014.
22
Considered net of impairment, the increase in non-performing loans in the year was 24%, an
increase of 15.6 billion, of which a good 4.7 classified as such in December alone, thus exceeding
80 billion euro. Also in this case the ratio to total loans deteriorated sharply rising to more than
4.3%, at approximately 1 percentage point above the figure for the end of 2012.
At the end of 2013 banks' funding from resident customers decreased by almost 5 billion in the last
month, coming down to 1,729 billion euro, an annual drop of 1.9%. This trend overturned the
expansive one which had characterized the previous months and the main reason, alongside the
ongoing drop in bonds, in December at 9.8%, was the sharp deceleration in deposits, up 1.9%
compared with the 6.2% seen at the end of 2012.
Deposits from abroad, finally, recorded a negative annual change, of 5.9%; in terms of content, there
was a fall in the proportion of deposits from abroad to total funding, down to 12.1% from the 12.5%
of a year before.
In December 2013 the weighted average interest rate11 on loans to households and non-financial
companies was 3.83%, slightly up compared both with the previous month and the previous year.
On new loans to non-financial companies, for which the increase compared with November was a
little larger, the average interest rate applied came out at 3.47%. On new loans to households for
property purchases - which summarizes the trend in fixed and floating interest rates and is affected
also by the change in the composition between disbursements based on the type of mortgage loan –
it amounted to 3.42%, the lowest figure since July 2011.
As regards bank funding from customers the average remuneration remained substantially stable and
the average interest rate, including the return on deposits, bonds and repurchase agreements to
households and non-financial companies, came out in December 2013 at 1.89%, stationary at the
level of the previous month.
The trends just described kept the spread between interest rates on loans and rates on funding at
relatively low levels. On average, in 2013 this spread was 183 basis points, less than the 187 basis
points of 2012. With reference to the interest rate on interest-bearing assets in relation to households
and non-financial companies and to the average interest rate on funding from households and nonfinancial companies, 3.70% and 1.89% respectively, the spread in December 2013 amounted to
1.81%, up by approximately one basis point on the figure for November; on average over the year
the gap was 178 basis points, down compared with the 190 basis points of 2012.
The quantity of securities in custody, under management and/or held directly by customers, with
Italian banks at the end of 2013 amounted to around 1,455 billion euro, an annual decrease of 3.3%.
The proportion of these securities held by consumer households, which with its 43% represents the
largest part of it, decreased in the year by 8.6%, recording the greatest drop; securities held by nonresidents, approximately 2.7% of the total, showed on the contrary an increase of approximately
10%.
Bank asset management achieved significant growth, recording an increase in amounts of nearly
16% year-on-year. At the end of third quarter 2013, the total assets of individual asset management
of banks, investment firms and U.C.I.T.S in Italy amounted to approximately 599.6 billion euro, an
increase of approximately 46% compared with the same period of 2012.
The assets and flow of net deposits of open-ended funds operating under Italian and foreign law also
recorded a net improvement, in both cases recording positive annual changes. The assets – the main
components of which were bond (49%), equity (21%) and flexible (18%) funds – reached 559
billion euro, compared with 446 in 2012.
23
In 2013 there was another increase in the flow of net deposits into open-ended funds, of 46 billion
euro from the start of the year.
6.5.
Republic of Moldova
During 2013 almost all economic activities have recorded progress. Improvement is also registered
in the monetary and budgetary situation. Inflation and currency depreciation are moderate. An
increase in real wages and pensions has been noted, while the number of registered unemployed has
been reduced.
Gross Domestic Product (GDP) rose essentially. After last year's recession, Moldovan economy
entered a period of recovery. During the first nine months of 2013 Gross Domestic Product totaled
MDL 73.3 billion, increasing by 8.0% (in comparable prices) compared to the corresponding period
of 2012. The most significant impact on GDP growth was registered in the gross added value in
goods - by 4.7 percentage points (pp), including agriculture - 3.7 pp, industry - 1.0 pp, followed by
services - by 2.3 pp, including internal trade - 0.9 pp, transport and communications - 0.5 pp,
construction - 0.1 pp.
Consumer prices rose moderately. In November 2013, consumer prices rose by 4.4% compared to
December 2012, and 3.5% compared with the same period of 2012. Increase in prices was due, in
general, to the increase in food prices (especially milk and milk products, meat and canned meat,
milling and bakery etc..) and non-food products (clothing, footwear, energy products and
healthcare).
Moldovan Leu depreciated. From the beginning of 2013 the exchange rate of the national currency
depreciated by 8.8% against the U.S. dollar (from 12.06 Moldovan Lei (MDL) for 1 US Dollar on
01.01.2013 to 13.06 Moldovan Lei (MDL) for 1 US Dollar on 31.12.2013) in nominal terms, and
13.0% - compared to the Euro. The main factors for exchange rate change were remittances from
abroad, foreign trade development and fluctuations in the U.S. dollar on international currency
markets, as well as the National Bank's intervention in the forex market in order to maintain
inflation at the planned level. Foreign Exchange reserve assets of the National Bank of Moldova
reached a maximum of 2,820.6 million by 31.12.2013, increasing by 13% compared to the end of
2012.
Monetary indicators rose essentially. M3 money supply amounted to about MDL 62.6 billion at the
end of December 2013, increasing by 26.5% compared to the end of December of 2012. The
situation on the money market is characterized by a strong growth of currency in circulation
(+33.7%), deposits (+24.2%) and loans (+16.1%).
Public revenues have been increasing. In 2013 the national public budget revenues have accrued
inflows in the amount of MDL 36,908.5 million, MDL 144.4 million less or at least 99.6 percent of
the annual plan. Compared to 2012, revenues have increased by MDL 3,378.2 million or 10.1
percent.
Out of total general government revenues, tax revenues were MDL 32,192.8 million, while non-tax
receipts – MDL 1,351.1 million. The budget for the corresponding period was met at 100.3 percent
and 96.2 percent, respectively. Compared with 2012, tax revenues have increased by MDL 3,329.6
million, while non-tax revenue – MDL 10.5 million. Revenues from special funds of public
institutions were collected in the amount of MDL 893.8 million, or 98.4 percent level of the annual
budget. Special fund revenues were MDL 397.2 million, or 101.5 percent of the budget. Grants for
budget support and projects financed by external sources, foreign and local investors were disbursed
amounting to MDL 2,073.6 million, including: internal grants – MDL 36.0 million and external
grants – MDL 2,037.6 million.
24
Government debt has been growing. The total amount of debt (internal and external), administered
by the Government amounted to MDL 23.5 billion at the end of December 2013, increasing by
MDL 2.3 billion compared to the similar date of the previous year. The domestic government debt
increased by 8.4%, while foreign - by 12.1%.
Growth rate of exports exceeded that of imports. In 2013 exports increased by 11%, while imports by 5.4%. The negative balance of trade reached USD 3,093.7 million, compared to USD 3,051
million in January-October 2012. Coverage rate of imports with exports reached 43.7% compared to
41.5% in the corresponding period in 2012.
The industrial sector developed positively. Production volume processed by industrial enterprises
during 2013 amounted to MDL 38.1 billion and increased by 6.8% (in comparable prices) compared
to 2012, including manufacturing output - by 7.9% and quarrying output - by 2,228%. However, the
production and distribution of electricity and heat decreased by 4.3%.
Agricultural output increased significantly. Agricultural production in all categories of households,
recorded MDL 24.5 billion in current prices, increasing by 38.3% (in comparable prices) compared
to the corresponding period of 2012. The increase in agricultural production was due to a
considerable increase of 61.8% in crop production, while livestock production increased only by
0.7%.
Investing activities reflect a positive image. In January-December 2013 volume of investments in
tangible assets amounted to MDL 18.5 billion, an increase of 2.3% (in comparable prices) compared
to the similar period of 2012. Out of the mentioned, construction-assembly constituted about MDL
9.7 billion and increased by 1.6% from 2012.
Transport services revives. Railway, trucking, maritime and air companies transported about 13.8
million tonnes of freight in 2013, or 26.5% more than the volume carried in the same period of
2012.
Volume of retail trade and services provided to the population increased moderately. The turnover
in retail trade increased by 3.1% (in comparable prices) in 2013 from 2012, and the turnover of the
services provided to the population - 10.7%, respectively.
The situation in the social sphere improves. Gross monthly average wage of a worker in the
national economy in January-December 2013 amounted to MDL 3,765.1, increasing by 8.3% over
the same period of 2012 in nominal terms, while increasing 3.5% in real terms. Size of subsistence
in the first half of 2013 averaged MDL 1,608.3 per month for one person. Monthly household
disposable income amounted to MDL 1,755.5 average per person in the third quarter 2013, an
increase over the third quarter of 2012 by 16.6% in nominal terms and by 12.1% in real terms. The
average monthly expenses of the households amounted to MDL 1,888.0 average per person in the
third quarter 2013, an increase over the third quarter of 2012 by 12.6% in nominal terms and by
8.3% in real terms. Monthly average pension was MDL 1,020.7 in December and increased by 6.6%
in nominal terms and 1.3% in real terms over the same month of 2012. Unemployment, estimated
according to the methodology of the International Labour was 51.4 thousand in third quarter 2013,
10.8 thousand lower than the third quarter of 2012. Unemployment rate (the proportion of
unemployed persons in the labor force) at the country level has been 3.9 % in the third quarter 2013,
being lower by 0.9 pp compared to the third quarter of 2012. There were about 4100 registered
unemployed at the employment offices, 15.9% less than the number registered in the same period of
2012.
6.6.
Banking System in the Republic of Moldova
During 2013, the banking sector in Moldova has recorded the following trends:
25
As of 31.12.2013, Tier 1 Capital marked an increase of 14.6 percent to MDL 7,919.3 million. This
development was largely driven by the profit obtained in the system during the year and the issuance
of shares of four banks. Recorded Tier 1 Capital reflects a level of consolidation that allows licensed
banks to cover potential losses, without any threat to financial security. By 31.12.2013 all banks
except one had a Tier 1 Capital above the minimum required (≥ MDL 200 million).
Foreign investments in the share capital of licensed banks at 31.12.2013 was 72.2 percent, being 0.5
pp greater compared with the end of 2012. Dynamics was due to the increase by 16.9 percent of
non-resident shareholders in capital investments and the increase by 13.6 percent of local
shareholders' investments.
Average risk-weighted capital adequacy of the banking system still remains at a high level - 23.4
percent (normative ≥ 16 percent), although decreasing by 0.9 pp. For many years this proves the
existence of a lending potential in banks.
As of 31.12.2013, assets amounted to MDL 76,184.0 million or 31.0 percent more than the end of
2012 and indicate a continuing trend of expansion of banking activity. A significant impact on the
assets increase had positive dynamics of "cash and cash equivalents" and "loans and receivables".
They grew by 69.5 percent to MDL 24,346.1 million and by 20.7 percent to MDL 43,728.6 million
respectively.
As of 31.12.2013, the balance of loans amounted to MDL 42,177.3 million or 20.6 percent more
according to prudential reports, which relates to a more dynamic lending process. At the same time
portfolio quality improved, bad loans accounted for an absolute value of MDL 4,883.0 million on
the reporting date or 3.7 percent less than the end of last year. Share of net non-performing loans in
total regulatory capital decreased by 9.3 pp to 16.6 percent from 31.12.2013 and expresses reduction
of capital loss risk.
The total volume of new loans in 2013 has been on a growing trend; 14.3 percent increase from the
previous year and amounted to MDL 30,504.5 million. Accordingly, total new term deposits
amounted to MDL 34,125.2 million or by 12.3 percent less.
As of 31.12.2013, profit of the licensed banks totaled MDL 1,020.2 million. It increased by MDL
585.6 million lei compared to the previous year. This evolution has occurred due to the reduction of
non-interest expenses by MDL 549.9 million (15.9 percent) and in particular, the reduction in
financial asset impairment by MDL 422.2 million (57.3 percent). Simultaneously, interest income
increased by MDL 348.5 million (7.9 percent).
Return on assets and return on equity at 31.12.2013 were respectively 1.6 percent and 9.4 percent,
increasing by 0.8 pp compared to 31.12.2012 and 5.1 pp respectively.
The value of the long-term liquidity coefficient of the banking system (liquidity principle I) (assets
with the repayment term longer than two years / financial resources with potential withdrawal
greater than two years ≤ 1) registered 0.7. Current liquidity sector (liquidity principle II) (liquid
assets, denominated in cash, deposits at the NBM, liquid securities, net interbank loans with the
reimbursement term of up to one month / total assets * 100% ≥ 20 percent) registered 33.8 percent.
The respective values of the liquidity coefficients reveal the presence of adequate liquidity to
support payments on liabilities and determine the soundness of banks for possible external shocks.
According to prudential reports dated 31.12.2013 the balance of deposits increased by 30.5 percent
to MDL 51,889.9 million in 2013. In particular, retail deposits from individuals increased by 23.0
percent to MDL 31,349.3 million and reflect the credibility of the banking sector.
26
6.7.
Regulatory Framework
In 2013 the National Bank of Moldova continued insuring a single reporting framework applying of
International Financial Reporting Standards by approving the “Instruction on the consolidated
financial statements FINREP applicable to banks”.
While performing the functions of developing and implementing the monetary and foreign exchange
policy to ensure a secure and sustainable financial system, the National Bank intervened with
numerous changes to the basic regulations related to banking and monetary policy instruments.
Thus, during 2013 has made a number of updates to the main regulations of banking supervision, as
well as instructions with reference to the means and deadline for submitting reports to the NBM.
Although the conduct of monetary policy continues to be affected by the complexity of inflationary
risks, the National Bank has found the need to preserve adaptive monetary policy and decided to
decrease the base rate applied to major monetary policy short-term operations and base rate applied
to long-term loans by 1 pp to 3.5% and 3%.
In order to cover its current expenditures and similar to previous years, the Board of Directors of the
Deposit Guarantee Fund in the Banking System established the percentage rate for calculating the
amount of the payment required for 2013 in the amount of 0.0628% of the total amount of
guaranteed deposits recorded the balance sheet.
27
7. CORPORATE GOVERNANCE
The Commercial Bank „EXIMBANK – Gruppo Veneto Banca”, by acknowledging that the use of
the best practices and standards is a basic conditions for ensuring the Bank stability, competitiveness
on the financial market, as well as success in business, being aware of the level of responsibility
before its shareholder, with a view to securing and protecting its interests, conducts its banking
activity with the purpose to attain the established objectives.
In such a way, following the decission of the General Assembly of the Shareholders dated March
30, 2010, with subsequent changes and completions dated Aprl 26, 2012, the Code of Corporate
Governance has been approved. It reveals development and implementation trends of the best
practices and highest standards of corporate governance and ethical conduct. Public acces to the
principles of corporate conduct is provided by publishing this Code on the Bank’s website at the
following
address:
http://www.eximbank.com/files/statements/Corporate_Governance_Code_2012.pdf
The system of identification, evaluation, monitoring and control of the risks has been developed and
applied by the Bank also with regard to internal control and management of the risks related to the
processes of financial reporting, with a view to delivering information that is trustworthy, relevant
and complete to the structures involved in decision-making within the Bank and to external users, as
well as in order to ensure compliance of the banking activities with the legal framework on financial
reporting and the internal policies and procedures.
General Assembly of the Shareholders
General Assembly of the Shareholders is the supreme governing body of the Bank. Corporate
conduct practices of the Bank are aimed at ensuring real opportunities of the shareholders to enforce
its rights when participating in the Bank’s activity. The competence of the General Assembly of the
Shareholders, the periodicity of its convening, conduct and decisions are governed by the law on
joint stock companies and the Bank’s Bylaws. Decisions of the General Assembly of the
Shareholders on matters within its competence are mandatory for officers of the Bank and
shareholders.
General Assembly of the Shareholders approves the Statute of the Bank, decides on capital changes,
approves members of the Board of the Bank and its Regulation, appoints the members of the Audit
Committee and approves its rugulation, confirms the audit company and determines the amount of
its retribution, decides on concluding transactions on a large scale etc..
Board of Administration
The Board is a governing body of the Bank, which exercises the function of monitoring the Bank’s
activity, approves the Bank’s policies and strategy and ensures the implementation thereof. The
Board of the Bank represents the interest of the shareholders passed from the General Assembly and
carries out the general management and control over the Bank’s activity within the limits of its
authority. The Board of the Bank is subordinated to the General Assembly of the Shareholders. The
Board is responsible for the adoption of the corporate strategy, risk control policies and business
plans, for the financial operations and stability of the Bank and exercises oversight over their
achievement by the General Direction.
Audit Committee
The Audit Committee of the Bank exercises control over the Bank’s economic and financial activity
28
and is subordinated to the General Assembly of the Shareholders. The Audit Committee of the
Bank exercises compulsory control over the Bank’s economic and financial activity as well as
performs extraordinary check-ups on its own initiative, at the request of the shareholders, under a
resolution of the General Assembly of the Shareholders or under a resolution of the Board of the
Bank.
General Direction
The General Direction is the executive body of the Bank that ensures the implementation of the
General Assembly of the Shareholders resolutions and of the Board of Administration, and acts on
behalf of the Bank in compliance with the laws, the Bank’s By-Laws, the Regulations on the
General Direction, approved by the Board of Administration.
The General Direction exercises the functions of managing the Bank’s current affairs, including the
management of all structural subdivisions, the kinds and lines of activity of the Bank, acknowledges
its responsibility before the shareholder, the Bank’s clients and community and considers that its
main goal is to faithfully and skillfully perform its position-related duties concerning the current
activity management, ensuring a profitable, stable and sustainable development.
Credit Committee
The Credit Committee implements the Bank’s policy and strategy in the field of granting loans by
applying measures set by management in practice. The main objective of the Credit Committee is a
fair and impartial examination of credit applications, analyzing risks that may arise as a result of
entering into a credit transaction, and advancing proposals to the Executive Body or the Board of
Administration for a final resolution.
Functions of the Credit Committee are the following:
-
examination of applications for loans and issuance of guarantees within its jurisdiction;
submitting proposals regarding the implementation of procedures and other rules for granting
and managing loans, new lending products;
establishing or revising credit limits for a client or group of clients assigned to the category
"large customers";
exposing its opinion on the strategy for recovering bad loans, improving the quality of the loan
portfolio, the transition to loss non-recoverable loans;
reviewing requests for modification of terms and conditions of loan reimbursement schedule
and previously issued guarantees within the limits of its authority;
examining the compliance of loans and engagements classification according to the internal
provisions of NBM regulations, etc.
Committee on Assets and Liabilities Management
The Committee on Assets and Liabilities Management has as a main objective management of
Bank’s assets and liabilities, and namely the strategic management of the balance sheet, including
liquidity management, profitability, risk management, pricing, efficiency of drawing deposits and
investment of funds in conformity with the Regulations on the Assets and Liabilities Management
Committee.
Compliance with the Code of Corporate Governance is aimed not only at building a positive image
of the Bank to the shareholders, partners, clients, employees, and society, but also to control and
mitigate risks, successful implementation of statutory activities.
29
8. RISK MANAGEMENT
At present, risk management has become a priority subject for financial institutions.
Resulting from the above, the identification, measuring, monitoring and control of risks are truly
significant for the Bank. Risk positions are reviewed and assessed by top management, internal and
foreign auditors, as well as NBM representatives.
The policies and activities of risk management are in line with those of Veneto Banca Group and are
concentrated on the identification and valuation of the risks from their appearance. The Bank
cautiously approaches risk in accordance with its long-term strategy. Risk management policies and
activities comply with Gruppo Veneto Banca practices, and are focused upon risk identification and
assessment in its initial stage. The Bank implements this approach through risk management and
credit monitoring functions.
Main assets and financial debts of the Bank are made up of credits/loans and advance payments to
its customers, leasing-related receivables, securities placed at NBM, loans as well as demand
deposits and term deposits. Such instruments are subject to a series of risks, such as credit risk,
currency risk, interest rate risk and liquidity risk.
8.1.
Credit Risk
Credit risk stands for the loss likely to be incurred by the bank provided a customer or other
counterparty fails to honor his/her/its contractual obligations. The credit risk is implicitly contained
in traditional banking products – credits/loans, crediting commitments and other contingent
engagements such as letters of credit.
The Bank manages its exposure both towards individual counterparties and customer groups through
crediting threshold-limits established at the moment of analysis. The value of the threshold-limit
depends on quantitative factors such as client’s position and financial performance, condition of the
industry, as well as qualitative factors, such as management quality, shareholders’ composition, as
well as soundness of guarantees (collateral / security) submitted by the client. Guarantees are
industrial facilities or held real estate, equipment, or stocks. The exposure in relation to authorized
threshold-limits is continuously monitored.
Credit risk management is based on several significant principles, such as:
-
analysis and approval of launching of new risk-generating products and activities by the
bank management;
-
use of well-defined credit-granting criteria, depending on the type of customer, which
involve detailed knowledge about the debtor, credit structure and destination, reimbursement
source, as well as request for real or personal guarantees for credit risk reduction to
acceptable levels;
-
establishment of well-documented processes for credit approval, by using a clear system of
competences for approval;
-
continuous monitoring of exposure both at individual and collective levels, if needed;
-
monitoring of credit portfolio quality and periodical reporting to bank management;
-
periodic check-ups of crediting activity by internal audit departments;
-
use of a system meant to identify and handle inefficient credits as well as various aspects
resulting from such activity by applying objective indicators.
30
At the same time the objective of credit risk is to maintain a well-balanced portfolio divided by
economic sectors, customer categories and geographical areas.
8.2.
Market Risk
Market risk represents the risk of losses associated to the modification of market variables, such as
interest rates and exchange rates.
Given the aim of the Bank to identify exposures to this risk, simulations are constantly performed in
the view of preventing market movements and managing this type of risk efficiently. The role of
stress-tests, as an integral part of market risk management process, is to reduce the subject-to-risk
value to minimum through pro-active management, modernize methods and monitor the instruments
employed.
The currency risk is tightly connected to the shifts in exchange rates. The Bank manages the
currency risk by using threshold-limits for open currency positions at the level of each currency and
at the level of total currency position.
The currency risk within Commercial Bank „EXIMBANK - Gruppo Veneto Banca” is thought as
minimal, due to its prudent policy regarding the open position threshold-limits. The currencies
operated by the Bank correspond to Bank development and market evolution.
Interest rate risk depends on the shifts in interest rates existent in the market. This type of risk is
handled by the Bank by means of monitoring gaps between assets and liabilities throughout settling
intervals and/or throughout repricing intervals. Generally, the Bank tries to maintain a net positive
position of financial interest-based instruments.
8.3.
Liquidity Risk
Liquidity risk is associated whether to the difficulties encountered while trying to obtain the
necessary funds for meeting its commitments, or to the impossibility of commercializing a financial
asset in due time and against a payment close to its real cost.
The bank is systematically monitoring current liquidity discrepancies between Bank’s assets and
liabilities, and performing, on a permanent basis, forecasts regarding the future liquidities’ position.
At the same time the Bank makes use of stress scenarios as part of liquidity risk management.
Liquidity risk management is grounded on a structure with principles establishing measures for
balance structure correction, in order to eliminate unacceptable deviations.
In order to counteract the market crisis, the Bank holds highly liquid assets, such as deposits with
other banks, accounts at NBM, and other loan facilities allowing the bank to be placed among the
most viable actors on the market.
8.4.
Operational Risk
Operational risk stands for the risk of losses resulted from inadequate or unobserved internal
procedures, human mistakes, system errors, as well as external events.
The management of this risk category is of a major importance in risk management practices
existent in modern financial markets in conformity with Basel II requirements. Operational risk
management implies structuring domestic controls and corporative governing, able to identify losses
resulting from mistakes, frauds, failings to perform transactions within the fixed deadline. At the
same time it can affect the bank’s interests by means of dealers, credit officers or other employees
31
who trespass job duties in a risky or non-ethical way. Other aspects of the operational risk include
major collapses of the information system, events such as fires or other calamities.
The crucial elements in operational risk management are the clear strategies and supervision on
behalf of the Board and General Direction, the culture of internal and operational controls (including
segregation of functions and responsibility distribution), effective reporting instruments and
continuity plans.
In order to reduce operational risks, the Bank elaborated plans and implemented work continuity
devices, which are systematically subject to tests. Back-up solutions were developed in cooperation
with IT-specialized and telecommunication partners.
Similar to other aspects of risk management, Eximbank – GVB is continuously modeling an
adequate environment for operational risk management:
-
Maintaining and developing the necessary governing for ensuring risk management activity
performance;
-
Ensuring compliance with the norms and regulations imposed by national and international
authorities;
-
Encoding policies and procedures pertaining to operational risk management and checking at
the bank level;
-
Drafting strategies for identifying, assessing, monitoring and controlling the operational risk;
such aspects include direct and distance controls of branches and their software-based
monitoring;
-
Developing and implementing an operational risk assessment methodology;
-
Modeling and maintaining a work continuity plan;
-
Developing and implementing an operational risk reporting system;
-
Further developing of operational risk management in order to achieve a much more efficient
capital granting.
32
9. INTERNAL CONTROL SYSTEMS
The Internal Control System consists of a set of rules, procedures and organizational structures
aimed at ensuring compliance with institutional strategies and achieving the following objectives of
the Bank:
• Effectiveness and efficiency of operations;
•
Accuracy of financial reporting - credibility, integrity and timely provision of reliable
financial information to the management of the Bank;
•
Obeying laws and applicable regulations – complying with laws and regulations, with
approved policies and procedures.
The Bank implemented organizational solutions:
•
to provide the necessary separation between operational and control subdivisions, to avoid
conflicts of interest in the allocation of tasks;
•
to be able to identify, measure and monitor appropriately all risks assumed or incurred on the
various operating segments;
•
to set control activities at each operational level and to allow establishing unequivocal and
formalized tasks and responsibilities, particularly in the verification tasks and removing
detected deviations;
•
to provide reliable information systems and adequate procedures for reporting to various
directional levels, which are assigned control functions;
•
to provide timely information to relevant structures of the bank and immediate management
of violations detected by the operational divisions, the Internal Audit Section or other
persons responsible for carrying out checks;
•
to record each transaction properly, ensuring proper allocation under a temporal profile.
The internal controls system is regularly validated against the bank's business development and
reference context.
In order to ensure effectiveness of internal control within EXIMBANK - Gruppo Veneto Banca, the
following structure was established:
1. Line controls – first level of activity management within the control structure, which is
meant to ensure the correct performance of operations and compliance of which is ensured at
the level of each operational subdivision of the Bank;
2. 2nd level controls – are ensured by the set of supervision and control measures performed by
the responsible departments / sections of the Headquarters of the Bank;
3. 3rd level controls – organization and ensuring permanent control by the Internal Audit
department of the Bank. The Internal Audit has the responsibility to revise policies,
processes and mechanisms of control in such a way that it remains sufficient and adequate to
the performed activity. The Internal Audit function evaluates the effectiveness and adequacy
of internal controls in order to provide reasonable insurance to the Board of Administration.
In addition, the Internal Audit has a direct line of reporting to the Central Internal Audit
Department of the parent bank, thus having the necessary degree of independence, which
allows the achievement of its objectives.
33
4. 4th level controls – periodical supervision and control of the Bank performed by the auditors
of Veneto Banca.
To ensure the above-mentioned objectives, EXIMBANK - Gruppo Veneto Banca designed and
organized an internal control system applicable at each hierarchical level. At the elaboration of the
internal control system, the volume, number, and type of transactions, the variety of operations, the
degree of risk associated to each sphere of activity, the amount of control on the daily activity, the
degree of centralization and decentralization.
34
10. MAIN FINANCIAL RESULTS
10.1. Details on Asset Evolution
During the reporting year total assets of the Bank registered an increase of 11.1%, reaching MDL
4.6 billion (equivalent of EUR 254.3 million) at year end.
Since 2010, total assets of the domestic banking system have been growing. 2013 has been
characterized by a close attention paid by the banks and the regulator with reference to the correct
evaluation of financial assets by applying the concept of “fair value”. Besides this aspect, the Bank's
assets were positively influenced by the capital increase in March 2013.
35
Compared to the previous year, total assets of the banking system increased by 30.7% and accounted
for MDL 76.2 billion, increasing generally due to major investments in the banking system,
conducted during 2013.
Although the Bank was able to increase the value of its assets by about MDL 457 million
(equivalent of EUR 25.4 million) in 2013 compared to 2012, it stepped down one position in the
domestic banking system by the size of total assets, ranking sixth.
ASSET STRUCTURE (thousand MDL)
Cash and cash equivalents
Securities
Net loans to clients
Other assets
TOTAL ASSETS
2013
2012
var %
comp.
'12(%)
comp.
'11(%)
1,035,471
679,593
52.4
22.66
16.5
76,515
427,778
-82.1
1.7
10.4
2,955,880
2,832,139
4.4
64.7
68.9
501,404
173,028
189.8
11.0
4.2
4,569,270
4,112,538
11.1
100.0
100.0
36
In 2013 the Bank increased interbank placements from investment in securities, which ensured the
increase of cash and liquid assets.
Lending activity, although characterized by a modest growth trend compared to the previous year,
increased the amount of loans to customers by MDL 123.7 million (equivalent of EUR 6.9 million).
However, the share of the Bank in the total loans of the banking system fell by one percentage point,
representing 7.2% as of December 31, 2013, placing fifth in this chapter among the fourteen banks
in the banking system of Moldova.
The loan portfolio increased slightly, but not on account of the corporate segment, which remained
slightly below last year. The increase is due to loans to individuals and particularly due to the
mortgage product "Famiglia". Its volume has increased by 22.11% or MDL 60.8 million (equivalent
of EUR 3.4 million) compared to 2012.
CASH AND CASH EQUIVALENTS,
(thousand MDL)
Cash
2013
2012
var. %
comp.%
'13
comp.%
'12
164,782
147,596
11.6
15.9
21.7
Due from Banks
544,963
173,913
213.4
52.6
25.6
Due from NBM
325,726
358,084
-9.0
31.5
52.7
1,035,471
679,593
52.4
100.0
100.0
TOTAL
37
As mentioned above, the Bank has significantly reduced investments in financial assets for sale,
such as securities and investment in the capital of other companies to reach a value of MDL 76.5
million (equivalent of EUR 4.3 million) at the end of 2013.
Public debt
Government bonds, nominal value
Treasury bonds issued by the Ministry of Finance,
nominal value
National Bank Certificates, nominal value
Discount on securities
Accrued Interest on Securities
Revaluation of Securities
Transaction securities
74,490
1,195
425,753
1,195
-5.0
-73.4
comp.
% '13
99.5
0.3
38,580
31,933
0.8
8.2
8.2
35,000
- 281
18
- 22
2,025
390,000
- 432
19
38
2,025
-4.9
-64.6
-88.5
-117.9
-0.5
91.2
-0.1
0.0
0.0
0.5
91.2
-0.1
0.0
0.0
0.5
TOTAL
76,515
427,778
-4.92
100.0
100.0
SECURITIES, (in thousand MDL)
2013
2012
var. %
comp.
% '12
99.5
0.3
During 2013 the Bank insured sufficient liquidity in order to maintain short-term liquidity ratio
above the minimum set by the National Bank of Moldova, reaching 24.29% at the end of the year.
Long-term liquidity ratio was 0.97, which is below the maximum set by the National Bank of
Moldova of 1.
LIQUIDITY
2013
Current liquidity (*)
Long term liquidity
2012
Var. %
24.29%
26.80%
-2.51%
0.97
0.94
0.03
(**)
(*) Liquid assets / Total assets (principle II of liquidity regulation, at least 20% according to the prudential
limit set by the National Bank of Moldova).
(**)Assets with remaining maturity of more than 2 years / Financial resources with remaining maturity more
than 2 years (principle I of liquidity regulation, maximum 1.0 according to the prudential limit set by the
National Bank of Moldova).
10.2. Data on liabilities and shareholders’ equity evolution
During 2013 EXIMBANK - Gruppo Veneto Banca liabilities were constantly evolving, and at the
end of the year showed significant growth, increasing by 6.33% or MDL 202.9 million (equivalent
of EUR 11.3 million), compared to the end 2012, reaching a total of MDL 3,410.5 million
(equivalent of EUR 189.8 million) at December 31, 2013.
38
39
Since the Bank is part of the Italian financial-banking group Veneto Banca, access to cheap
resources of the parent bank meets its liquidity demands if needed. In this context, the Bank has
revised its policy to attract funds from clients in such a way that by the end of 2013 these reached
MDL 2,015.9 million (equivalent of EUR 112.1 million).
Although during the year the Bank reimbursed the installments due (IFC, EBRD), balance due
showed a net increase in the amount of MDL 273.8 million (equivalent of EUR 15.2 million) or
25.29% over the previous year. Borrowed resources increased exclusively due to credit lines
contracted from the parent bank.
LIABILITIES STRUCTURE
(thousand MDL)
Due to clients
Shareholders’ equity
Other liabilities:
Veneto Banca
IFC
BERD
Ministry of Finance
Other liabilities
TOTAL
2013
2012
2,015,950
1,158,727
1,356,524
1,180,530
169,207
0
6,787
38,068
2,081,598
904,943
1,082,723
744,715
259,970
69,196
8,842
43,274
4,569,270
4,112,538
13.3
-12.9
25.0
78.0
-13.9
-48.4
-23.3
151.2
comp. %
'13
50.6
22.0
26.3
18.1
6.3
1.7
0.2
1.1
comp. %
'12
47.7
27.0
22.5
10.9
7.8
3.5
0.3
0.4
6.8
100.0
100.0
var. %
In general the structure of deposits has not undergone significant changes in 2013; this continuity
confirmed both, public confidence in the banking system and EXIMBANK – Gruppo Vento Bank in
particular.
DUE TO CLIENTS
(thousand MDL)
2013
2012
var. %
comp. %
'13
comp. %
'12
Demand deposits
861,026
740,871
16.2
42.7
35.6
Individuals
216,770
178,868
21.2
10.8
8.6
Legal entities
644,256
562,003
14.6
32.0
27.0
1,154,924
1,340,726
-13.9
57.3
64.4
898,550
878,223
2.3
44.6
42.2
256,374
2,015,950
462,503
2,081,598
-44.6
-3.2
12.7
100.0
22.2
100.0
Time deposits
Individuals
Legal entities
TOTAL DEPOSITS
Demand deposits of individuals increased by MDL 37.9 million (equivalent of EUR 2.1 million), or
21.2% over the previous year, while legal entity deposits rose by MDL 82.2 million (equivalent of
EUR 4.6 million), or 14.6% over 2012. Term deposits of individuals have also increased,
representing MDL 899 million (equivalent of EUR 50 million) at the end of the year.
40
Reviewing the strategy of drawing deposits from customers in 2013, as well as increasing loan
portfolio generated an increase in the ratio of loans granted over deposits accepted by the Bank by
10.5 pp, from 136.1% in 2012 to 146.6% at the end of the reporting year.
Shareholders’ equity
The investments of the sole shareholder Veneto Banca s.c.p.a. in the share capital made during the
previous years has allowed the Bank to maintain its leadership in this area even in the most recent
years, when domestic banks increased their capital. Despite the mentioned on March 27, 2013,
following the decision of Extraordinary General Assembly of the Shareholders, the Bank registered
capital increase of MDL 365.0 million (equivalent of approximately EUR 22.9 million). As a result,
the Bank's capital reached MDL 1.0 billion, the Bank maintaining its leading position in this area.
Parent bank's decision to raise the capital reiterates Veneto Banca Group view with reference to a
long-term presence in the Republic of Moldova and to strengthen the local banking market
positions. The financial resources will be directed to the structural development of the Bank, while
the increase in capital would also strengthen the bank's ability to carry out new investment projects
and implement advanced banking technologies.
Total regulatory capital amounted to MDL 769.5 million (equivalent of EUR 42.8 million) and was
ranked fourth per banking system, advancing one position from the previous year.
41
10.3. Details on revenues and expenses
In 2013, EXIMBANK - Gruppo Veneto Banca obtained revenues totaling MDL 367.8 million
(equivalent of EUR 20.5 million).
REVENUES
(thousand MDL)
Interest income
On placements with banks
On securities
On loans (including commission fees)
Non-interest income
On foreign currency exchange operations
Commission related
Other non-interest income
TOTAL REVENUES
2013
2012
307,795
4,752
8,796
294,248
60,002
23,994
32,947
3,061
367,797
342,744
4,146
27,568
311,031
59,113
24,747
29,592
4,774
401,857
var.%
-10.2
14.6
-68.1
-5.4
1.5
-3.0
11.3
-35.9
-8.5
comp. %
'13
83.7
1.3
2.4
80.0
16.3
6.5
9.0
0.8
100.0
comp. %
'12
85.3
1.0
6.9
77.4
14.7
6.2
7.4
1.2
100.0
Bank expenses amounted to MDL 479.0 million (equivalent of EUR 26.7 million), decreasing by
MDL 56.7 million (equivalent of EUR 3.2 million) compared to 2012.
42
EXPENSES
(in thousand MDL)
Interest expenses
On bank deposits
On deposits of individuals
On deposits of legal entities
On borrowings
2013
2012
-152,720
-43,232
-63,662
-158,006
-37,129
-67,039
-3.3
16.4
-5.0
31.9
9.0
13.3
29.5
6.9
12.5
-37,160
-8,666
-39,381
-14,457
-5.6
-40.1
7.8
1.8
7.4
2.7
Non-interest expenses
-148,474
-148,172
0.2
31.0
27.7
Wages and salaries
-59,718
-38,854
-62,263
-38,375
-4.1
1.2
12.5
8.1
11.6
7.2
-49,902
-47,534
5.0
10.4
8.9
-180,211
2,451
-478,954
-190,458
-39,065
-535,701
-5.4
-106.3
-10.6
37.6
-0.5
100.0
35.6
7.3
100.0
Other administrative expenses
Operational expenses
Impairment Charges
Tax Expenses
TOTAL EXPENSES
var.%
comp.
% '13
comp. % '12
During the reporting period, EXIMBANK - Gruppo Veneto Banca incurred interest expenses in the
amount of MDL 152.7 million (equivalent of EUR 8.5 million), MDL 5.3 million less than in 2012.
This decrease in expenses is largely due to contracting cheaper resources from the parent bank.
Non-interest expenses in the amount of MDL 148.5 million (equivalent of EUR 8.3 million)
increased only by MDL 0.2 million due to applying cost-effective policies, particularly those of rent,
advertising, representation expenses and other operational costs.
In 2013 the Bank continued to implement a prudent policy on the evaluation of financial assets in
order to reduce credit risk. This approach comes into equilibrium with the effort of the supervising
authority to maintain the quality of the loan portfolio in the system. Thus the impairment charges
amounted to MDL 180.2 million (equivalent of EUR 10.0 million) during 2013, decreasing compared
to the previous year.
Profit or Loss
In 2013 EXIMBANK - Gruppo Veneto Banca benefited from the investments in the form of credit
lines of its main shareholder Veneto Banca SCPA to further increase its operational capacity and to
create added value by offering customers banking services and lending sources, oriented for their
own consumption, as well as for the development of various branches of the national economy.
Implementing evaluation of financial instruments at fair value principle resulted in a net loss of MDL
111.2 million (equivalent of EUR 6.2 million) at the end of 2013.
43
FINANCIAL STATEMENT
(in thousand MDL)
Interest income
Interest expenses
Net interest income (Interest margin)
Net commissions
Income from financial operations
Other operational income
Intermediation margin (*)
Wages and salaries
Other operating expenses
Operating costs (expenses)
Gross activity income
Impairment Charges
Net profit / net loss before taxation
Income tax
Net profit / net loss
2013
2012
307,795
-152,720
155,076
32,947
23,994
3,061
215,078
-59,718
-88,756
-148,474
66,604
-180,211
-113,607
2,451
-111,156
342,744
-158,006
184,738
29,592
24,747
4,774
243,851
-62,263
-85,909
-148,172
95,679
-190,458
-94,779
-39,065
-133,844
var. abs.
-34,949
5,286
-29,663
3,356
-753
-1,714
-28,773
2,545
-2,846
-301
-29,075
10,247
-18,828
41,516
22,688
var.%
-10.2
-3.3
-16.1
11.3
-3.0
-35.9
-11.8
-4.1
3.3
0.2
-30.4
-5.4
19.9
-106.3
-17.0
(*) The sum of interest margin, net commissions, income from financial operations and other operating
income.
Simultaneous decrease of interest income and expenses from the previous year is primarily due to
the reduction of average interest rates on loans and the reduction of the amount invested in
securities.
Consequently, net interest income, the main component of intermediation margin, decreased MDL
28.8 million compared to 2012.
Financial crisis that has seriously affected the development of the countries world wide is felt
throughout the real economy. The banking sector has to remain flexible, financing needs of
customers, while simultaneously keeping a dose of realism on the recoverability of facilities
provided, especially in this challenging period.
44
11. FACILITIES FOR LEGAL ENTITIES
11.1. General framework
Following the strategy adopted during the previous years, in 2013 Eximbank - Gruppo Veneto
Banca continued to assist customers in finding appropriate solutions to them, both dedicated to
continuous product updating and simplifying the procedures for working with potential or current
customers.
Providing the access to long-term financial resources from international financial institutions allows
the Bank to comply with generally accepted standards of corporate banking segment, while for Bank
clients - access to a wide range of products and services offered at the European quality and
favourable prices.
Continuing to promote intensively the image of the Bank as a member of the banking group Veneto
Banca, together with a continuous expansion of product range and customer service, both
qualitatively and quantitatively, contributes to a continuous rise in the number of clients that are
served in EXIMBANK - Gruppo Veneto Banca, and thus to a sustainable growth of the Bank.
Maintaining and increasing the client base is due including to individual approach of the Bank to its
clients and structuring offers based on their necessities and needs.
Bank efforts to create customer loyalty and commercial offers perfectly adapted to their needs had
reached the expected goal. Thus, at the end of 2013 the number of active corporate customers
increased by 15.03% over the previous year, representing the figure of 10,748.
45
Effects of economic recovery have helped increase movements in current accounts of corporate
clients cumulative turnover increasing by 4.4% over the previous year, constituting MDL 45.0
billion (equivalent to EUR 2.5 billion). However, current account balances in the amount of MDL
643.6 million (equivalent of EUR 35.8 million) recorded a significant increase of 14.6% over 2012.
Bank customer structure is quite extensive, including representatives of international institutions,
foreign embassies, large state and private enterprises, as well as micro, small and medium-sized
enterprises, being active practically throughout the country in all branches of the national economy.
Expanding the base of corporate clients prompted the Bank to continue diversifying the array of
services to customers in 2013 through optimum opportunities for the successful conduct of
international business. In such a way, EXIMBANK - Gruppo Veneto Banca continued to provide
customers the main forms of payment accepted in international practice:
-
Money transfers
-
Document operations
-
Exchange operations
-
Encashment, etc.
To ensure operational and qualitative performance of the international settlements, the Bank has a
wide network of correspondent accounts in top banks located in leading financial centers worldwide.
List of main correspondents is presented in Chapter 17 of the report.
11.2. Loan facilities
With tough competition in the local banking market, one of the most important methods of
differentiation is of course the variety of products and services for customers. In 2013 EXIMBANK
- Gruppo Veneto Banca continued to implement the credit policy aimed at developing the real sector
of the national economy.
The Bank has continued to provide a large spectrum of competitive and high quality credit services
and products designed to satisfy any requirements in order to finance investment projects of existent
and potential clients.
To give an personalized offer to SMEs, given the profile, size and hence their needs, the Bank has
successfully launched diverse loan products, while the customer associates have always contributed
to finding the most appropriate financing solutions, by being open-minded and showing their
professionalism. Thus, in 2013 lending opportunities through special packages for this segment of
customers were exercised, while terms and conditions for granting financial resources are being
reshaped according to qualifications and goals pursued by entrepreneurs.
Thus, during 2013 the Bank granted loans to corporate clients in a total amount of MDL 1,007.6
million (equivalent of EUR 56.1 million), while economic agents reimbursed loans in a total amount
of MDL 966.4 million (equivalent of EUR 53.8 million). As a consequence, the gross loan portfolio
granted to corporate clients at the end of reporting year reached MDL 3.03 billion (equivalent of
EUR 168.2 million).
46
On December 31, 2013 gross loan portfolio registered a positive growth of 1.37%, an increase
which is a positive factor in the development of lending activity.
The structure of the loan portfolio classified by currency suffered some significant changes during
the reporting year, maintaining relatively the same weight in Euro compared to 2011. Thus, loans in
national currency in absolute values increased by MDL 113.1 million or by 9.8%, loans in US
Dollars decreased by an equivalent of MDL 87.6 million or by 8.4%, while loans in Euro increased
compared to the previous year level with a variation of 2.0% and a total of MDL 15.6 million.
STRUCTURE BY CURRENCY
(Thousands of MDL)
Moldovan Lei
2013
2012
comp. %،13
var. %
comp. %،12
1,270,415
1,157,294
9.8
41.9
38.7
US Dollars
957,588
1,045,169
-8.4
31.6
35.0
Euro
803,025
787,376
2.0
26.5
26.3
3,031,028
2,989,838
1.4
100.0
100.0
TOTAL LOANS
47
EXIMBANK – Gruppo Veneto Banca has always tended to credit all sectors of national economy,
loan portfolio distribution among branches of the economy reflecting their development trends.
Diversification of the loan portfolio as one of the main objectives of the bank credit policy, allowed
granting credit resources to a number of economic sectors through implementation of various
projects. Thus, it is worth mentioning the diversity of economic branches financed by the bank, here
being found representatives of all sectors of the national economy.
The Bank's ability to finance real sector of the national economy for a medium and long term from
investment of the shareholder - Veneto Banca through credit lines and funds raised in the local
market was manifested by maintaining steady the maturity weights of the loan portfolio.
The share of loans with a 5 years maturity decreased by about 5.1 percentage points over the
previous year and amounted to 54.7% of total loans to corporate clients.
Loans with a 2 - 5 year maturity with a share of 34.5% increased by about 5.9 percentage points,
while the share of loans with a maturity of less than 1 year remained unchanged (10.1%).
48
In terms of financial resources of the Bank's loan portfolio, it is dispersed and includes loans
financed from resources:
-
Own;
-
Parent Bank;
-
International Finance Corporation (IFC);
-
European Bank for Reconstruction and Development;
-
International Fund for Agricultural Development in the Project for rural financing and
development of small enterprises;
In order to ensure reimbursement of loans, the Bank has adopted tougher requirements on quality
and liquidity of pledges, which along with continuous improvement of methods and procedures for
evaluating financed projects and loan portfolio diversification helps minimize risks and maintain
Bank lending at a high profitability.
49
12. FACILITIES FOR INDIVIDUALS
During 2013, EXIMBANK – Gruppo Veneto Banca has continued its development policy in retail
sector by providing high quality services adjusted to market requirements and offering to clients the
team expertise and a wide network of branches and representative offices located in the capital, as
well as in the regions.
Private individuals continued to enjoy a large range of various financial-banking products and
services:
•
deposit accounts and current accounts in national and foreign currency;
•
mortgage loans (Famiglia);
•
loan „Green Energy”;
•
international transfers (including via fast money transfers);
•
debit and credit cards;
•
cash services and currency exchange operations;
•
operations with securities;
•
safe deposit boxes;
•
online banking services (current accounts, bank cards, foreign exchange, etc).
Consequently, the dynamics of retail clients showed a positive trend in 2013 with over 98.0
thousand clients by the end of the year, meaning an increase by 21.5% compared to end of 2012,
strengthening its position on the retail banking services market of the Republic of Moldova.
50
Like in the previous years, in 2013 EXIMBANK – Gruppo Veneto Banca provided a large range of
instruments to create savings and accumulate funds for its clients, such as term deposits accepted for
a period of up to seven years in MDL and foreign currency, as well as other specific deposits
oriented for certain types of customers or social class (students, retired, etc.), characterized by the
possibility of combining account efficiency and its profitability.
One of the important factors that influenced the increase in the number of customers during the year
was the launch of new savings products, specifically:
-
PROGRESIV, a unique product on the domestic banking market, which gives the customer
the advantage of saving financial resources for a long term period with the interest rate
capitalization;
-
RACCOLTO, aimed for diversification of investments in foreign exchange placements at
comptetitive rates.
During 2013, the activity of EXIMBANK - Gruppo Veneto Banca in attracting funds was focused
on managing the portfolio of deposits from individuals, which would provide the necessary
resources for the effective and competitive operations of the Bank in conjunction with interest
expenditures in order to maintain their optimum level. At the end of the year, the deposit portfolio
was MDL 898.5 million (equivalent of EUR 50 million), representing an annual increase of 2.3%.
The share of the Bank deposits of the total banking system deposits of individuals at the end of the
year accounted for 3.5%.
In 2013 operating in the retail segment followed the policy determined by the bank's strategy,
designed to ensure high deposit security, offering a wide range of lending services to individuals,
51
able to satisfy potential and existing customers, maintaining the position of the bank as a solid, safe,
and prudent institution by granting mortgage and consumer loans to individuals, and by
implementing new lending opportunities through card accounts.
Consequently, in 2013 the Bank disbursed loans to private individuals in a total amount of MDL
344.2 million (equivalent of EUR 19.2 million). During the year, the Bank offered its customers the
opportunity to benefit from loans at attractive interest rates and therefore were granted loans
amounting to MDL 130.0 million (equivalent of EUR 7.2 million). This increase was mainly due to
the launch of the mortgage product "Famiglia" for individuals designed for purchase, renovation,
upgrading, repair and construction of buildings for housing.
In the reporting year the volume of remittances of Moldovan citizens registered an upward trend,
which involves the development of a vast system of bank transfers. By means of its policy on this
segment, EXIMBANK - Gruppo Veneto Banca promotes a large spectrum of international transfers.
During 2013 the Bank has continued rendering fast money transfer services by means of nine
international systems: Western Union, Privat Money, Unistream, Anelik, Bystraya Pochta, Leader,
Migom, Contact, Zolotaia Korona.
Taking into account the big number of citizens of the Republic of Moldova working in Italy, the
banking group Veneto Banca continued with customer service by means of:
-
„Account without Frontiers”, designed for transfers of cash under advantageous conditions,
between the accounts opened within the group in the countries like Moldova, Italy, Romania
and Albania.
52
13. BANK CARDS
Being in line with technological development, EXIMBANK - Gruppo Veneto Banca maintained the
vision of business growth and prosperity, offering the most attractive and convenient products to its
customers. In particular, new projects were initiated and undertaken in order to streamline and
develop banking products at the highest level in the bank card business in 2013, namely:
-
-
-
Issuing MasterCards with microprocessor: presently using EMV technology in issuing
bank cards is of the top, ensuring cardholders with maximum protection and security
against fraud. Holders of MasterCard with microprocessor issued by EXIMBANK Gruppo Veneto Banca have the safety of their own money and the convenience of using
cards with hi-tech design.
EXIMBANK SMS Info Project: convenient and efficient service for cardholders of
EXIMBANK - Gruppo Veneto Banca which provides the convenience of being
constantly informed of the movements in the card accounts. This solution provides
monitoring of cards with high level of risk and risk management of losses of both
customers and the bank.
Decentralization of card accounts and partial distribution of functions and activities of
the headquarters to the branches and agencies for an effective management of business
card issuing, serving corporate clients and retailers
Purchase of new equipment to develop and extend the network of servicing bank cards,
as well as ATMs, Cash and Retail POS terminals.
Despite the poor macroeconomic situation EXIMBANK - Gruppo Veneto Banca has managed to be
balanced and even to record growth in retail activity. Thus, in 2013, the volume of transactions in
the network of retail POS terminals increased by about 21%, reaching a total of about MDL 150
million, compared to about MDL 118 million recorded in 2012. Directly related to this is the
increasing number of transactions in the retail bank network up to 462 592, an increase of
approximately 25% over the previous year, when there were approximately 348 739 transactions. In
order to facilitate the process of maintenance, an update of the POS terminal software was held. In
such a way, the time for servicing customers and endless lines were reduced to the minimum.
53
At the same time new types of POS terminals with a Wi-Fi solution have been purchased. Because
of its investments, EXIMBANK - Gruppo Veneto Banca manages to keep a growing number of
retailers and the intake of satisfaction - corresponding. With professional service and quality
oriented towards customer, EXIMBANK - Gruppo Veneto Banca remains among the banks with the
largest network of traders.
Bank cards network service numbers 81 ATMs spread geographically convenient, 810 retail POS
terminals installed at Bank retailers, 41 Cash POS terminals installed inside Bank branches and
agencies.
54
With the acquisition of new technologies in the bank card issuing in 2013, the Bank was able to
optimize its card portfolio management. Thus, all inactive cards (expired, unused, etc.) have been
closed, updating the database of active and dynamic customers to which the Bank provides quality,
efficient and convenient to use products. Meanwhile, during 2013 the Bank has intensified attracting
new customers, such as the number of cards opened reaching about 18 thousand pieces, totaling
43,000 active cards.
Also, the Bank created favorable conditions to attract new corporate clients with salary
domiciliation in EXIMBANK - Gruppo Veneto Banca, being approximately 11% higher than in
2012, reaching the number of 863 companies.
55
Customer loyalty and streamline their service process remains among the most important objectives
of the Bank Cards Department.
14. OPERATIONS WITH SECURITIES
In 2013 the activity of investment in State Securities on the market was marked by the increased
demand towards these financial instruments, constantly higher than the offer of the issuer, a fact
caused by an excess of liquidity in the banking system. The evolution of interest rate of State
Securities was marked by the National Bank decisions to modify the interest rate of monetary policy
instruments.
During 2013, NBM operated one downward adjustment of the short-term base rate by 1.0
percentage point and namely on April 29, 2013 (the decrease constituted from 4.5% to 3.5%). The
NBM decisions were dictated by the need for monetary stimulus in order to prevent the evolution of
overall domestic macroeconomic and international environment, to maintain price stability over the
medium term.
The weighted average rate for all types of State Securities with a maturity of up to 1 year had a
downward trend for 2013, falling within the boundaries of 3.52% - 7.99%.
The excess of liquidity was removed by the Central Bank exclusively by the sale of NBM
Certificates. The Certificates had a maturity of 14 days, interest rate being equal to the base rate
effective as of the date of auction.
56
Thus EXIMBANK – Gruppo Veneto Bank purchased NBM Certificates in the amount of MDL
4.025 million (equivalent of EUR 223.99 thousand) during the reporting year, or by 68.20% less
than the amount purchased during the previous year, when investments in NBM Certificates totaled
MDL 12.658 million.
In 2013, purchases of State Securities amounted to MDL 148 million (equivalent of EUR 8.26
million), an increase of 6.47% since 2012, when investments in State Securities totaled MDL 139
million.
As a result of investments in State Securities, the Bank registered an income amounting to MDL
8.77 million (equivalent of EUR 0.48 million). A the same time, revenue from investment in
treasuries decreased by 68.18% due to a significant decrease in interest rates for these financial
instruments compared to 2012.
During 2013 the bank has fully met the criteria for a primary dealer in the market of State Securities,
participating at all auctions conducted by the National Bank of Moldova.
EXIMBANK - Gruppo Veneto Banca is a professional participant to the corporate securities market,
being a shareholder and a member of the Moldova Stock Exchange and the National Depository.
There were concluded 27 contracts for brokerage services and received 53 orders under which the
Stock Exchange executed 54 transactions with a volume of MDL 254.3 thousand (equivalent of
EUR 14 200) during the reporting year.
57
During the year, the Bank has successfully serviced and brokered the public offer on the secondary
market announced by the majority shareholder of the insurance company "Grawe Carat Insurance"
JSC. Moreover, during the years 2010-2013, as a result of the tender won and in accordance with the
concluded brokerage contract most of the holdings in the portfolio of the liquidating Commercial
Bank "InvestPrivatBank" were sold. Due to the mentioned, collaboration with this institution was
extended by concluding a new contract of brokerage services.
The amount of bank investments in corporate securities and equity remained relatively constant
compared to 2012. Thus, at the end of 2013, investments in shares amounted to MDL 626.5
thousand (equivalent of EUR 34 900) and equity investments for trading constituted MDL 1.4
million (equivalent of EUR 77 900).
58
INFORMATION TECHNOLOGY
Information technologies are widely used in the Bank's operating activity. In 2013, with the process
of optimization, parameterization and testing of new features of the "ab-Solution" Core-Banking for
extending grid services for the Bank's customers, new applications have been implemented. For
example, the need to standardize the activity of analysis and lending at the Group Level led to the
implementation of a new banking application. The Bank, in cooperation with partner companies
specializing in IT has completed the implementation of a new electronic banking solution for
managing credit applications called "Credit on the Web" (CoW). Starting with 2014 the application
will replace the paper-based loan application. Lending activity will improve once such a procedure
is introduced:
-
-
Reducing the risk of operational errors in granting and management of loans due to the
introduction of automated verifications of decisional competence and authorized users,
ensuring also a higher level of integration between loan application and "ab-Solut" information
system;
Automated interaction with other applications (registers, loans and collateral, etc.), facilitating
the management and monitoring of loans after granting.
This new application represents an evolution even in terms of graphics and brings improvements at
the informational level, at the same time limiting operational risks and manual involvement.
Technical solution for data transmission network (topology, equipment used, network support data
transmission) is built on GigabitEthernet technology 1Gbps UTP cat. 6 (the Headquarters). Bank
communications global network is built using Cisco equipment. Reliability of the banking network
data transmission is ensured due to the following features:
-
Used transmission medium is optic fiber;
Doubling the communication channels by connecting branches / agencies at two different
operators;
Using (EIGRP), Cisco IOS IP Service Level Agreements, PBR (Policy Based Routing)
routing protocols;
-
Using IPSec data encryption protocols.
Switching to backup data transport channels / Internet is performed automatically. Network
monitoring is carried out by means of SNMP, Netflow, Syslog, etc. protocols, which provide traffic
analysis and operative detection of shortcomings. Channel security is ensured by using IPSec, SSL
protocols.
Given the need to ensure the operational continuity of the information systems and ongoing
servicing of customers, network and backup equipment have been updated, the strategy for restoring
the Bank’s activity has been revised and a new Bank business continuity plan has been approved in
2013.
Taking into account the importance of a backup center existence equipped enough to ensure the
resumption of all critical systems for the Bank, equipping the center with all the necessary technical
means sufficient to ensure business continuity in the event of major incidents (Disaster Recovery
Plan / Business Continuity Plan) will end up in 2014. In the period to come, the Bank will focus on
59
the maximum use of information technology to ensure the achievement of strategic tasks, such as
quality service for customers, minimizing risks and optimizing the technological process of
providing banking services, also including by implementing a new internet banking service
15. HUMAN RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY
In 2013, personnel management continued to be one of the most important concerns of the Bank
management.
By the end of 2013 EXIMBANK – Gruppo Veneto Banca had 387 employees (the total number of
employees decreased by 29 people compared to 2012).
Structure
In order to select the best candidates for professional team building - the most valuable asset,
Eximbank - Gruppo Veneto Banca offered many opportunities to its employees to disclose their
potential and career development. The Bank's policy is to promote the staff of the Bank primarily.
Bank's internal recruitment policy also aims at facilitating internal staff mobility, focusing on skills
with wide applicability. Bank internal mobility policy allows expansion of capable workers to
various fields and increases the synergies between them.
Training
60
Recruitment and selection was made based on the strategic objectives and programs proposed by the
Bank, retaining the employees with undergraduate and graduate education segment at the highest
level, which is visible in the chart below.
Similar to previous years, throughout 2013, EXIMBANK - Gruppo Veneto Banca provided the
opportunity to conduct trainings for professional development of its employees. In such a way, 169
employees benefitted from training opportunities organized as part of training courses and programs,
both internal and external. Internal seminars organized by high responsibility parties and their
colleagues constituted 33.81% of the seminars attended by employees of the Bank.
As a responsible institution, EXIMBANK - Gruppo Veneto Banca contributes to a sustainable
economic growth in the country, working with customers and business partners, with employees, in
order to improve general living conditions. For the integration of commercial activity with the
concept of social responsibility, the Bank constantly turned its attention to social and environmental
impact assessment of its business.
The diversity of the Bank's activity and achieving new strategic objectives implies providing the
Bank with human capital that is appropriate to the pace of its development, therefore, in 2014,
human resources policy is still oriented towards: improvement of training and professional
development, setting targets for each employee, assessment of the individual contribution, etc..
Human resources activity will contribute to the Bank's objectives as a whole.
In August 2013, the Extraordinary General Assembly of Shareholders of the Commercial Bank
"EXIMBANK – Gruppo Veneto Banca" approved amendments to the Bank's organizational
structure and the Statute of the Bank. Approved amendments are very much appropriate for the
ongoing improvement strategy of the Bank, the sole shareholder - Veneto Banca SCPA (Italy) 61
focusing particularly on commercial and promotional activities, as well as directing the bank's
business risks.
Organizational structure
It is important to mention that the bank pays particular attention to local business and social
development, by realizing the general standards implemented by Veneto Banca Group, acting
responsibly towards all the stakeholders both within the bank and society.
62
16.
LIST OF MAIN CORRESPONDENT BANKS
NAME OF THE BANK
COUNTRY
CITY
VENETO BANCA S.C.P.A.
ITALY
MONTEBELLUNA
INTESA SANPAOLO S.P.A.
THE BANK OF NEW YORK
MELLON
ITALY
MILANO
EUR, USD, GBP, CHF,
JPY
EUR
USA
NEW YORK
USD
USA
NEW YORK
USD
THE BANK OF NEW YORK
MELLON
CURRENCY
FRANKFURT AM
MAIN
FRANKFURT AM
MAIN
FRANKFURT AM
MAIN
EUR, GBP, CHF, CAD,
JPY
AUSTRIA
VIENA
EUR, USD
ROMANIA
BUCHAREST
RON, USD, EUR
BANCA TRANSILVANIA
ROMANIA
CLUJ-NAPOCA
SBERBANK ROSSII
ZAO UNICREDIT BANK
PROMSVYAZBANK
RAIFFEISEN BANK AVAL
PRIVATBANK
BELGAZPROMBANK
RUSSIA
RUSSIA
RUSSIA
UKRAINE
UKRAINE
BELARUS
MOSCOW
MOSCOW
MOSCOW
KIEV
DNEPROPETROVSK
MINSK
COMMERZBANK A.G.
GERMANY
VTB BANK (DEUTSCHLAND) AG
GERMANY
BHF BANK
GERMANY
RAIFFEISEN ZENTRALBANK
OSTERREICH A.G.
BANCA ITALO-ROMENA SPA,
SUCURSALA BUCUREŞTI
EUR, USD, JPY
EUR
RON, USD, EUR, GBP,
CHF
RUB, USD, EUR
RUB
EUR, USD
UAH
UAH, USD, EUR
BYR
63
17. LIST OF BRANCHES AND AGENCIES
NAME OF THE
BRANCH
LOCATION
CONTACT
TELEPHONE NO.
BRANCHES
Branch nr. 1
Comrat, str. Pobedî 53
(+ 373 298) 2 47 47
Branch nr. 2
Ungheni, str. Decebal 16
(+ 373 236) 2 20 98, 2 23 38
Branch nr. 3
Chişinău, str. Alecu Russo 1
(+ 373 22) 49 55 68, 43 85 29
Branch nr. 4
Căuşeni, str. Ştefan cel Mare 4
(+ 373 243) 2 18 15, 2 17 49
Branch nr. 5
Orhei, str. Vasile Lupu 44
(+ 373 235) 3 21 50, 3 21 47
Branch nr. 6
Chişinău, str. Mihail Kogălniceanu 76
(+ 373 22) 23 20 62, 23 20 66
Branch nr. 7
Chişinău, bd. Dacia 27
(+ 373 22) 55 15 80, 55 15 89
Branch nr. 8
Soroca, str. Kogălniceanu Mihail 20
(+ 373 230) 2 30 38, 3 06 21
Branch nr. 9
Chişinău, bd. Grigore Vieru 16
(+ 373 22) 21 04 12, 21 03 92
Branch nr. 11
Chişinău, str. Eminescu Mihai 48, ap.1
(+ 373 22) 22 48 19
Branch nr. 13
Chişinău, bd. Mircea cel Bătrîn 11
(+ 373 22) 41 14 43, 41 14 34
Branch nr. 15
Cahul, str. 31 August 13
(+ 373 299) 9 38 08
Branch nr. 16
Hânceşti, str. Hâncu Mihalcea 149
(+ 373 269) 2 14 74
Branch nr. 17
Chişinău, str. Bulgară 35
(+ 373 22) 27 71 72
Branch nr. 18
Bălţi, str. Ştefan cel Mare 48
(+ 373 231) 6 10 70
Branch nr. 19
Chişinău, bd. Ştefan cel Mare şi Sfânt 6
(+ 373 22) 54 33 67
Branch nr. 20
Chişinău, bd. Ştefan cel Mare şi Sfânt 171/1
(+ 373 22) 30 11 88
Branch nr. 21
Taraclia, str. Lenin 111/a
(+ 373 294) 2 11 21
Branch nr. 22
Chişinău, str. Alba Iulia 190/1
(+ 373 22) 59 90 70
Branch nr. 23
Chişinău, str. Socoleni 1
(+ 373 22) 85 50 15
64
NAME OF THE
AGENCY
LOCATION
CONTACT
TELEPHONE NO.
AGENCIES
Agency nr.1
of Branch nr.1
Comrat, str. Lenin 191, ap.3
(+373 298) 2 94 92
Agency nr.5
of Branch nr. 9
Chişinău, str. Varlaam Mitropolit 69
(+373 22) 21 11 56
Agency nr. 11
of Branch nr.19
Chişinău, bd. Negruzzi C. 5
(+373 22) 27 50 46
Agency nr. 12
of Branch nr.19
Chişinău, str. Calea Moşilor 7/1
(+373 22) 92 43 70
Agency nr.13
of Branch nr.20
Chişinău, str. Cibotari Maria 37
(+373 22) 88 16 18
65