annual report - Banca Intesa

Transcription

ANNUAL
REPORT
BELGRADE GATE,
Petrovaradin
ANNUAL REPORT 2011
PROJECT
THE PLACE I LOVE
As the leading bank in the domestic market measured by all performance indicators, Banca
Intesa is striving for the best possible results not only in business but also in its commitment
to invest in the development of the community in general. In an attempt to help preserve
the Serbian cultural and historical heritage, Banca Intesa launched a unique corporate social
responsibility project, The Place I Love. Owing to this worthy initiative, a list of more than 1,300
localities was compiled, while nearly 200,230 citizens gave their vote to help select three facilities that will be renovated and saved from oblivion.
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BANCA INTESA A.D. BEOGRAD
ANNUAL REPORT 2011
Project finalists
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ANNUAL REPORT 2011
BELGRADE GATE,
Petrovaradin
Built from 1692 to 1780 on a hill above the Danube as a fortification, Petrovaradin consists of
the Upper and the Lower Town. The Upper Town is a fortress, surrounded by high ramparts
with steep, serpentine slopes, while the Lower Town consists of a small settlement with narrow streets. Belgrade Gate is one of the most monumental structures preserved in the Lower
Town. The vaulted gate is of classicist style with two façades of different shape and proportions - the outer, 20 m long, and the inner, 40 m long, both 10 m high. The entrance façade
has six profiled columns, two iron-decorated windows and Novi Sad coat of arms. The second
façade has three oval and two rectangular passages, with eight columns. The 20 m deep Gate
has four in-built guardhouses and two entrances into side rooms. On both sides there are two
car and two pedestrian passages.
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ANNUAL REPORT 2011
ANNUAL REPORT
CONTENTS
KEY FINANCIAL INDICATORS
2011.
09
LETTER FROM THE CHAIRMAN OF THE MANAGING BOARD
10
INTRODUCTORY REMARKS OF THE PRESIDENT OF THE EXECUTIVE BOARD
12
MACROECONOMIC ENVIRONMENT AND BANKING SECTOR
16
RETAIL BANKING
24
CORPORATE BANKING
30
TREASURY AND INVESTMENT BANKING
36
CORPORATE SOCIAL RESPONSIBILITY
40
FINANCIAL STATEMENTS 46
ORGANIZATIONAL STRUCTURE
144
BUSINESS NETWORK
145
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ANNUAL REPORT 2011
REMAINS OF THE
NATIONAL LIBRARY,
Kosančićev venac
The National Library, founded in 1832, had around 300,000 books, 1,390 hand written books,
charters and other writings, over 100 of which on parchment, which dated back from the 12th,
13th and 14th century. It also had collections of Turkish manuscripts, books printed from the 15th
to the 17th century, old maps, pictures, newspapers, a collection of all books printed in Serbia
from 1832, as well as those printed in the neighbouring countries, but also complete libraries of
Vuk Stefanović Karadžić, Đura Daničić and others. On the eve of bombing at the start of World
War II, on April 1, 1941, everything was ready for library evacuation, but the Ministry of Education prohibited the evacuation of educational and cultural institutions of Belgrade on April 3 and
ordered that all valuable objects be put in the basement. The library was hit by bombs on April 6.
Everything in it is believed to have burnt down.
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ANNUAL REPORT 2011
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ANNUAL REPORT 2011
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ANNUAL REPORT 2011
KEY FINANCIAL INDICATORS
in thousands of dinars
Banca Intesa Beograd
Income Statement
Net interest
Net fees and commissions
Pretax income
Taxes
2011
2010
2009
19,437,755
17,345,394
15,189,583
5,435,066
5,164,483
4,750,314
10,689,733
8,456,120
6,677,923
466,084
1,113,156
871,597
Income from deferred tax assets and liabilities
23,673
35,407
5,792
Losses from deferred tax assets and liabilities
9,410
0
-205,324
9,590,840
7,619,930
6,012,307
Profits
Balance Sheet
83,162,819
51,409,640
75,035,256
Deposits and loans
Callable deposits and loans
249,337,725
245,087,290
181,075,737
Other investments
11,521,581
10,270,578
4,260,122
Transaction deposits
Other types of deposits
84,678,429
65,078,801
63,897,605
150,686,366
171,432,085
144,440,627
Borrowings
57,106,462
45,255,242
30,700,608
Capital
80,414,325
57,289,122
49,786,038
392,322,689
359,122,995
307,938,537
2.72%
2.35%
2.17%
13.29%
14.76%
13.41%
7.92%
7.42%
8.08%
Net Balance
Indicators
Profits / Assets
Profit / Total Capital
Income from interest / Assets
Interest expense / Liability
2.97%
2.59%
3.15%
Capital adequacy
16.86%
18.62%
17.67%
Net asset / Employee
122,601
116,221
103,370
3200
3090
2979
Number of Employees
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ANNUAL REPORT 2011
LETTER FROM THE CHAIRMAN
OF THE MANAGING BOARD
Ladies and gentlemen,
It is a great honour for me to share with you the achievements that Banca Intesa made in 2011,
key business indicators. Against the adverse impact of the global economic slowdown and, in
as well, Banca Intesa recorded continued growth in all segments of operation while making
banking model that we operate and our unrelenting focus on clients.
the euro zone, with trade and foreign investment particularly affected by its damaging effects.
Given that the EU accounts for around 55% of the country’s foreign trade, Serbia was no
exception to the negative impact of the euro zone crisis, which put additional pressure on the
existing problems in the domestic economy. Even though Serbia’s GDP expanded 1.6 percent
unemployment was on the rise, local demand weakened, and liquidity in the real economy fell
considerably. In such circumstances, the capacity of the business sector to borrow and repay
was limited to a great extent. With the NPL ratio reaching 19 percent at the end of the year,
banks have become increasingly cautious in risk management and risk taking, and resorted to
a conservative lending policy.
proving to 2.17, as well as a strong capital position. The capital adequacy ratio rose to 19.1
percent, well above the required minimum of 12 percent, which provide more than adequate
protection from potential turbulences. In addition, banks are relying on a strong domestic
the year at 1.2 percent and ROE at 6 percent, while coverage of credit portfolio by loan loss
reserves and loan loss provisions remained high.
Operating in such a demanding business environment, we demonstrated resilience and
strength, and continued to actively meet the growing needs of our clients. With our universal
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ANNUAL REPORT 2011
both capital and total assets, thus further strengthening our leadership position. Also, stable
able market lead on all fronts. Despite lending growth, we preserved the quality of our assets,
keeping NPLs below industry average. On top of all this, our strong capital position was further
bolstered by a capital increase of 130 million euros coming from our parent group, Intesa Sanpaolo, which provided us with even bigger capacity for further lending growth and for support
-
we will succeed in our goals once again.
Sincerely,
Dr. György Surányi,
Chairman of the Managing Board
We ended the year with a stronger client base and a wider branch network, also boosting our
our clients. At the same time, we continued providing dynamic support for the Serbian government’s program of state-subsidized lending for the economy, emerging once again as the
most active bank in the domestic market in this regard. Our success and achievements were
Business New Europe, which once again named us the best bank in Serbia.
All macroeconomic indicators show that market challenges and business uncertainties are sla
ted to continue into 2012. Against the backdrop, we will keep operating in a highly disciplined
and prudent manner, putting more efforts into advancing all business processes, increasing
operating platform, which will enable us to back our customers, while providing stable support
to the government in a bid to help revive economic recovery and encourage growth.
Finally, on behalf of the Managing Board, I would like to extend my appreciation to Banca
Intesa’s staff and management for their strong dedication to meeting the strategic goals of
the Bank, and for their hard work and commitment to delivering the highest quality service
that has always been the keystone of our leadership position in the Serbian banking market.
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ANNUAL REPORT 2011
INTRODUCTORY REMARKS
OF THE PRESIDENT OF THE
EXECUTIVE BOARD
Dear shareholders,
It is my pleasure to present, on behalf of the Executive Board, the results that Banca Intesa
achieved in 2011. Despite a challenging macroeconomic environment, Banca Intesa recorded
dynamic growth in all key business segments last year. The continuity of the Bank’s successful
results is based on full adherence to the fundamental principles of prudent risk management
that provide foundation for our business philosophy.
The past year was marked by a slowing global economy and an escalation of the euro zone
debt crisis, whose negative effects have brought additional burden upon the local market. The
tion for a more rapid economic recovery and emergence from crisis. Domestic consumption
posted a decline, while unemployment increased to nearly 24 percent. At the same time, the
central bank responded to recessionary effects with a slight relaxation of monetary policy,
planned range, and the domestic currency was relatively stable during the period under observation. On the other hand, foreign direct investments, which doubled compared to 2010, were
a bright spot. Despite a number of problems that the banking sector faced in the past year,
it managed to maintain lending activity and end the year liquid and adequately capitalized.
In such circumstances, Banca Intesa fully preserved its solid capital position and high level of
liquidity, further strengthening its leadership in the domestic banking market.
Owing to the stability and strong support of our parent group, Intesa Sanpaolo, the Bank’s
capital was increased by additional 130 million euros, considerably strengthening our capacitizens. Our total assets rose by more than nine percent relative to the end of 2010, to 392.3
billion dinars, which represents more than 15 percent of total assets in the banking sector.
Despite a trend of slowing lending activity in the market, we reported growth in total loans of
almost nine percent. Corporate loans reached 198.5 billion dinars, a more than nine percent
increase over 2010, while loans to citizens rose by eight percent to 78.9 billion dinars.
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ANNUAL REPORT 2011
Stability and reliability, as well as a solid capital position, played a dominant role in enabling
Banca Intesa to reinforce its market leadership in total deposits as well. A strong focus on
preserve Serbian cultural and historical heritage, while raising awareness of the importance of
these sites and national treasures.
236.8 billion dinars, representing a growth of more than 18 percent over the previous year.
Retail savings went up by more than 12 percent, while corporate deposits rose by as much as
26 percent. Our efforts to achieve business excellence and to improve continuously the quality
of services provided to customers were rewarded by the constant growth of our client base.
Our constant drive to improve the quality of our operations and the consistency with which
we implement our responsible and prudent business strategies, but also our efforts to improve
exceeded 1.54 million. Dynamic expansion in key balance sheet items, together with the full
complex market conditions. The best evidence of these achievements can be found in the
numerous acknowledgements and awards we have received from reputable international and
local media.
Even though all macroeconomic forecasts clearly indicate that economic uncertainty and nega-
Determined to provide, as in all the previous years, stable support to the Serbian government in
its endeavors to stimulate economic activity and jumpstart recovery, we remained the most active bank in the market in 2011 in terms of participation in the program of subsidized lending to
businesses and individuals. We also continued successful cooperation with leading international
sized
enterprises as well as public companies highly favorable loans for infrastructure projects, entrepreneurship development, working capital and investments. Meanwhile, the unique blend of creati
vity, knowledge and experience of our development team ensured the effective continuation of
work on the further improvement of our portfolio of products and services which certainly makes
us stand out from competition. In light of the dynamic market changes we developed new service
cept that provides the highest quality service for our most prestigious clients, and we also devised
our market position in payment cards operations, where Banca Intesa is the absolute leader in
terms of the number of payment cards issued, as well as the number and volume of transactions.
As a bank that truly understands the needs of the community and invests generously in social
values, we participated in numerous humanitarian efforts in 2011 as well. We are proud of our
longstanding relations with major humanitarian organizations in Serbia and of our joint results.
continuing our cautious risk management policy. We will seek to maintain our leading market
position, while at the same time providing value added for our shareholders and for the community at large.
In closing, I would like to thank, both personally and on behalf of the Executive Board, all Banca Intesa employees who, with their professionalism and dedication, provided key contribution
to our excellent results in 2011. I would also like to thank our clients and business partners, as
well as members of the Managing and Supervisory Board, whose support played a major role
in our business success this past year.
Sincerely,
Draginja Ðuriæ
President of the Executive Board
particular mention as a unique project of this kind in Serbia which we initiated in order to help
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ANNUAL REPORT 2011
RAMPARTS,
Novi Pazar
The Novi Pazar fortress is located in the very centre of town, on the right hand bank of the
Raška River. It was built by one of the most renowned Ottoman commanders, Isa-Bey-Isahović,
in the 15th century when founding the town of Novi Pazar on the crossroads of caravan trails
connecting Bosnia, Dubrovnik and south Adriatic with Constantinople and Thessaloniki. On
the basis of the remains of ramparts, bastions and moats, a triangular base of the fortress was
identified, consisting of three angular bastions, fortresses of polygonal bases and different
dimensions. After the Turkish defeat under the walls of Vienna in 1683 and the Austrian penetration to Skopje, Turkish authorities commenced the extension and fortification of the former
construction. During the reign of sultan Abdulaziz (1861-1876) two new towers were built, an
arsenal, a smaller mosque and new barracks.
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ANNUAL REPORT 2011
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ANNUAL REPORT 2011
MACROECONOMIC ENVIRONMENT
AND BANKING SECTOR
During the slow economic recovery of 2010, Serbia’s gross domestic product (GDP) showed
weak growth of 1.0%; yet, in 2011, GDP grew by 1.6% year-on-year. This change was stimulated by growth in foreign investment and in net exports.
Consumer prices were above the target tolerance band (4.5% ± 1.5%) throughout the year,
reaching their peak in April (+14.7 year-on-year). By the end of the year, consumer price index
(CPI) almost entered the target tolerance band (7.0% year-on-year). In addition, the National
Bank of Serbia (NBS) began easing monetary policy in June, bringing down the policy rate to a
level of 9.75% by the end of December 2011.
Foreign investors’ interest increased in 2011, and foreign direct investment (FDI) doubled over
the previous year, reaching the pre-crisis level of EUR 1.8 billion. Credit agencies confirmed Serbia’s long- and short-term foreign and local currency sovereign credit ratings at ‘BB/B’ (stable).
In 2011, Serbia’s ranking as measured by the Global Competitiveness Index (GCI) rose from
96th to 95th place, out of 142 countries; while, according to the World Bank’s Doing Business
index, Serbia’s ranking was lowered from 89th to 92nd place.
In September 2011, the International Monetary Fond (IMF) approved an 18-months preca
utionary stand-by arrangement for Serbia of EUR 1.1 billion, with the objective of maintaining macroeconomic and fiscal stability while improving the investment climate. The main
advantages of the IMF arrangement are: (1) preventative measures against unpredictable
crises (specifically for capital inflow); (2) the impact on the pre-election political cycle, as
political parties will not be able to misuse money from the budget for their pre-election
campaigns; and (3) the possibility (if necessary) of using some EUR 1.1 billion defined by
the arrangement.
In the first quarter of 2012, the European Council decided to grant Serbia the status of candidate for membership to the European Union block, which will help improve the country’s
image in the investor’s community.
Macroeconomic environment in 2011
GDP grew by 1.6% year-on-year in 2011. Contribution to GDP growth came from foreign
investment and net exports, while final domestic consumption was negative.
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ANNUAL REPORT 2011
Serbia’s economic growth with major foreign trade partners declined during the course of the
year. This is bound to weigh down on export demand and investment in Serbia, and there is
no reason to expect GDP to grow by more than 0.5% in 2012. However, it is estimated that
net exports will boost GDP in 2012, due to new investments agreed upon earlier, notably in
the automotive industry (FIAT Kragujevac). Fixed investment and final consumption will provide
negative contributions in the upcoming year.
Domestic demand
Total final consumption
Net exports
The NBS has been setting inflation targets since early 2009, and the choice of an inflationtargeting regime was strengthened by the awareness that permanently high rates of inflation adversely affect economic growth and employment. The focus of monetary policy should
therefore be shifted from short-term demand management to medium-term price stability,
which lies at the core of inflation targeting.
Investment
GDP (%)
5.4
1.0
3.8
One of Serbia’s structural economic problems is that industrial productivity has yet to rebound
from the 1990s. Currently, Serbia’s main industrial sectors are food processing, chemicals, and
the metal industry of which the last two in the past four years experienced particularly sharp
growth. In 2011, industrial production increased by 2.1% while the manufacturing industry’s
output decreased by 0.4%. Industrial production recorded positive growth in 2011 mainly due
to increase in electricity and the mining industry.
Even though 2011 targets were 4.5% ± 1.5%, CPI was above the target tolerance band
through the year. Inflation picked up in the second half of 2010, and continued through early
2011, from 4.2% in June 2010 to 14.7% in April 2011 as a consequence of rising food and
administered prices. However, since April inflation has declined as a result of past monetary policy
measures, the weakening of cost-push pressures on food prices, and low aggregate demand.
1.6
By the end of 2011, CPI decreased to 7% year-on-year, which was just above the tolerance
band (4.5 ±1.5). In January 2012, CPI fell to 5.6% year-on-year and entered the target tole
rance band for the first time in seventeen months.
-3.5
Inflation is expected to remain within the target tolerance band during 2012. It is possible that
in the second half of 2012 and at the beginning of 2013, inflation might move toward the
2007
2008
2009
2010
2011
14.1
Contribution to y-o-y GDP growth (in %)
Real GDP (percent change, unless otherwise indicated)
Real domestic demand
Consumer prices (average)
Consumer prices (end of period)
Unemployment rate (in percentage)
General government finances (in % of GDP)
Revenue
Expenditure
Fiscal balance (cash basis)
Gross debt
External debt
Balance of payments (percent change, unless otherwise indicated
Current account balance
Export of goods
Import of goods
Trade of goods balance
Gross official reserves (in EUR billion)
IMF projections for 2012
14.7
13.4
12.6
0.5
-1.4
4.1
4.5
24.2
40.0
45.3
-4.4
53.7
85.0
-8.6
27.2
42.3
15.2
11.2
12.7
11.2
12.1
10.5
9.3
8.7
8.1
5.6
7.0
2.5
2.7
Jan
Feb
Mar
Apr
Tolerance band
May
Jun
Jul
Aug
0.6
-0.7
Sep
Oct
Nov
Dec
Tolerance band
Food inflation
Regulated prices
Non-food core inflation
Targeted inflation
Tolerance band
CPI
Contribution to y-o-y CPI
17
ANNUAL REPORT 2011
16
14
12
10
8
6
The NBS attempts to achieve the targeted rate of inflation through changes in its key policy
rate, which is the interest rate charged on two-week reverse-repo operations. This interest rate
represents the key monetary policy instrument (other instruments are reserve requirements
and operations in the foreign exchange market). The easing in monetary policy began in June,
bringing down the policy rate to the level of 9.75% at the end of the year. In 2011, the repo
rate yielded 11.54% on average.
The central bank maintains a floating exchange rate regime which gives it the right to intervene in case of excessive daily fluctuations in the foreign exchange market, threats to financial
and price stability, and risks to the adequate level of foreign exchange reserves. In 2011, the
dinar gained 0.8% against the euro and lost -2% against the dollar, in nominal terms.
Despite exhibiting high short-term volatility in 2011, the dinar exchange rate was relatively
stable and required little intervention by the NBS, which sold a total of EUR 90 million and
bought EUR 45 million on the foreign exchange market.
104.6
4
103.2
103.6
102.5
99.6
102.1
101.6
101.2
104.0
104.6
100.5
97.0
2
USD
3
6
9
12
3
6
9
12
2011
3
6
9
2012
76.8
2013
75.0
78.0
upper bound of the target tolerance band. As the decree restricting trade margins ceases to be
valid in July 2012, the prices of processed food could cause minor inflationary pressures. The
second half of 2012 could also present a reversal in fruit and vegetable prices, which produced
disinflationary effects in the previous period.
13.40
12.00
12.10
12.50
12.50
Mar
67.4
Apr
May
12.00
11.75
10.855
11.25
11.686
10.00
9.75
9.30
Inflation (y-o-y)
8.70
Key policy rate NBS (p.a.)
8.10
7.00
Mar
Apr
May
Jun
Jul
Aug
CPI and key policy rate NBS (in %)
18
Jun
Jul
Aug
Sep
71.8
Oct
Nov
Dec
NBS overall foreign reserves reached EUR 12.058
million at the end of December 2011. Net foreign
exchange reserves, defined as foreign exchange reserves less the banks’required reserves and drawings
from the IMF, came to EUR 6.660 million. This level
of overall foreign reserves is satisfactory by all criteria, as it covers M1 by 430%, short-term debt by
1,771%m and more than eight months of imports.
10.50
Feb
70.4
12.058
9.082
10.75
11.75
11.20
Jan
71.3
EUR/ RSD and USD/ RSD exchange rates, end of month
12.027
12.70
12.25
Feb
67.1
70.6
80.9
At the beginning of 2012, the dinar started to depreciate as the ongoing crisis in the euro area
spilled over to the Serbian economy through two transmission channels: foreign trade (around 55%
of Serbian export is to the EU), and financial channels.
14.70
14.10
12.00
Jan
74.7
73.2
Projection of CPI y-o-y
12.60
EUR
0
Sep
Oct
Nov
Dec
2007
2008
2009
2010
FX reserves, in EUR million
2011
Economists expect that around EUR 2 billion in fo
reign exchange reserves will be spent by the end of
2012. This money will be used by commercial banks,
by NBS interventions on foreign exchange markets
to strengthen the dinar, and for covering Serbia’s
trade deficit.
ANNUAL REPORT 2011
In 2011, FDI reached EUR 1.8 billion, which was above the pre-crisis level of EUR 1.59
billion and double compared to 2010, when it recorded only EUR 0.83 billion. The top three
investors were: Luxemburg (EUR 812 million), the Netherlands (EUR 241 million) and Austria
(EUR 155 million).
Wholesale and retail trade; repair
of motor vehicles and motorcycles
Manufacturing
Financial and insurance activities
The IMF mission emphasized the importance of reform in the legal framework of the labor
market. The IMF believes that current labor market regulations have resulted in weak productivity as a result of protecting the jobs of older workers in shrinking industries while forcing
younger workers into temporary positions. According to the IMF, the new government should
implement the agreed changes in the labor law so that the calculation of severance pay is
based only on the duration of employment with the last employer, and the duration of fixedterm contracts is extended from one to three years.
In 2011, the Serbian government revised the budget deficit to 4.5% of GDP (from 4.1% of
GDP) or from RSD 120 billion to RSD 142.7 billion. Consolidated fiscal deficit amounted to
RSD 158.3 billion, which is RSD 5 billion more than that planned by fiscal policy. The higher
fiscal deficit was a consequence of lower inflow of public revenues, while public expenses
were even lower than planned.
3.24
Real estate activities
Construction
883
Export
Import
Deficit
14.450
1.80
1.45
441
406
11.505
1.59
1.30
1.16
FDI by branch of activity,
in EUR million
8.439
7.393
5.961
0.83
144
12.622
93
2005
2006
2007
2008
2009
2010
2011
FDI in Serbia since 2005, in EUR billion
Following the balance of payments adjustments in 2009 and 2010 through the dinar depreciation and reduction in the current account deficit, real appreciation of the dinar in the previous
year once again contributed to a widening of the external imbalance. Serbia ended 2011 with
a current account deficit of EUR 2.968 million, which was 42.5% higher compared to 2010,
but still lower by half than in 2008.
However, Serbia’s total trade recovered in 2011 as exports amounted to EUR 8.439.4 million
(+14.1% year-on-year), while imports reached EUR 14.449.7 million (+14.5% year-on-year),
causing a EUR 6.010.3 million deficit (-14.95% year-on-year). Export-import ratios maintained the previous year’s level of 58.4%. Germany was ranked as the first major foreign
trade partner in exports, with EUR 952.4 million, followed by Italy (EUR 936.6 million) and
Bosnia and Herzegovina (EUR 852.6 million), while the Russian Federation (EUR 1.908.1
million), Germany (EUR 1.557.6 million), and Italy (EUR 1.293.7 million) were the major
foreign trade partners in imports.
-5.229
-5.543
2009
2010
-6.010
2011
External trade, in EUR million
According to the new budget system law, the government was supposed to continue keeping
public debt-to-GDP ratio below 45% in 2011. However, at the end of the year, public debtGDP breached the limit (45.1%), totaling EUR 14.47 billion. The IMF expressed its concern
saying that public debt might be above Serbia’s legal debt ceiling (45% of GDP) in 2012, and
also above the level considered appropriate for emerging market economies.
BANKING SECTOR
The banking sector in Serbia consists of 33 banks, which employ 29,228 people in total.
The average net salaries and wages paid in 2011 amounted to RSD 37,853, and increased by
+10.8% year-on-year in nominal terms while in real terms they declined by -0.4% year-onyear. The unemployment rate, based on the Labor Force Survey, increased to 23.7%, while the
employment rate (35.3%) continued to decline.
Of these 33 banks, 21 are foreign owned. They account for 74% of total assets and 75% of
total capital. The most significant foreign banks, in terms of their share of total banking sector
assets, originate from Italy and Austria (22% and 19%, respectively), followed by those from
Greece (15%) and France (10%).
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ANNUAL REPORT 2011
Despite a high level of non-performing loans (NPLs), banks are highly capitalized, providing
more than adequate protection. Indeed, capital adequacy ratio is among the highest in the
region. The capital adequacy of the banking sector is 19.1%, far above the prescribed 12%.
The banking sector is very liquid, with an average liquidity ratio 117% above the required
minimum of 1. There is also a strong domestic deposit base, and there are virtually no direct
investments in any high-risk financial instruments.
The IMF has recommended the adoption of a factoring law to allow non-lending institutions
to take over recovery of non-performing assets, as well as the expediting of bankruptcy court
procedures. Recent changes to the law on corporate income tax may ease the financial burden
of NPL write-offs.
In December 2011, a program to provide financial support to banks was adopted. Banks may
voluntarily apply to sell their NPLs to the Deposit Insurance Agency, or they may request a
capital injection from the government.
In addition, all profitability indicators are showing progress (ROA 1.2% and ROE 6%).
The only concern is the deteriorating NPL situation. Serbia has one of the highest NPL levels in
the region, with many more NPLs in the corporate segment than in retail. However, coverage
of credit portfolios by loan-loss reserves and loan-loss provisions remains high.
20
The NBS recently introduced a new Capital Adequacy Decision, which initiated significant
recapitalizations of banks in 2011.
ANNUAL REPORT 2011
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ANNUAL REPORT 2011
LOG CHURCH,
Aranđelovac
The Log Church in Darosava - St. Peter and Paul’s Cathedral, was constructed at the time of
liberated Serbia under the rule of Prince Miloš, during a great restoration of Orthodox churches
and their liberation from secrecy to which they had been forced. The church is first mentioned
in the 1833 census, and it is believed that it was built in 1832. It boasts an abundance of ornamented details - porch fence, massive doors with rosettes, small window openings with interior shutters, latch closing the door, an iconostasis from 1832, as well as the octagonal rosette
on the ceiling. All elements have been carved in wood with stylized geometrical ornaments,
painted red, green and white. In 1951 the church was put under the protection of the state as
a cultural monument. Regular service in the church was performed until 2002, and now it is
performed only on certain holidays.
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ANNUAL REPORT 2011
23
ANNUAL REPORT 2011
RETAIL BANKING
Banca Intesa achieved positive retail results in 2011, despite challenging market conditions
in the wake of the global financial crisis and drop in confidence in the banking sector and
the euro towards the end of the year. However, continuous innovation of products and
services, combined with a quick response to market signals and the dedicated, profe
ssional work of the Bank’s staff, helped the bank confirm its leadership in the market. As
in previous years, Banca Intesa strengthened its business and experienced strong growth
in all retail areas – individuals, small business, and agriculture – while maintaining a focus
on asset quality.
Individuals
2011 was a dynamic year for new business relationships, as Banca Intesa underscored its role
as a pioneer in the Serbian market. In the second half of the year, the Bank entered the affluent market segment through a personalized service model, Magnifica, providing a range of
dedicated products and services to its valuable customers. Magnifica offices and relationship
managers spanned the most important cities across Serbia.
The Bank also broadened its offerings in the mass market by improving existing products and
services, and delivering the best customer experience possible. Banca Intesa worked hard
to simplify its processes, which reduced approval
1.42
lead-times. A tailored offer was made for the pre1.37
1.35
viously loan-wise, non-banked retired population,
1.25
successfully providing Senior Cash loans for reti
rees up to 74 years old.
Significant efforts were made to increase the crosssell ratio (the number of products per customer),
as well as to reactivate dormant customers. Besides
dedicated campaigns for these customers, a special dormancy-prediction model was developed.
This allowed Banca Intesa to increase its overall
profitability per customer, as well as to increase
customer activity rates.
2008
2009
2010
2011
Number of customers (in millions)
24
The past year was also marked by the implementation of the consumer protection law. The new
ANNUAL REPORT 2011
618.5
667.4
528.8
499.7
regulations did not bring significant adjustments to
the Bank’s day-to-day business, since its operations
were already based on its parent Group’s best practices. This preparedness further strengthened the
Bank’s good relationship with its customers.
Banca Intesa’s loan portfolio grew above Serbian
market average rates, while the Bank’s focus on
asset quality kept the NPL ratio well below market
average. In terms of structure, the lending portfolio
is dominated by mortgage loans, which at the end of
the year accounted for about a half of the portfolio.
Despite the euro zone crisis, Banca Intesa managed
to continuously grow its stable deposit base. FurLoans outstanding – individuals
thermore, at the initiative of the NBS, banks were
(EUR million)
called to moderate the interest rates paid on depo
sits during November, the traditional savings month. Banca Intesa renewed deposits at maturity at lower rates than in previous years, thus reducing its cost of funding. Growth in deposits,
which outperformed market average, showed that customers put a premium on the trustworthiness and reliability of the leading bank in Serbia. At the end of 2011, retail deposits were at
the level of EUR 1,181,357,283, having grown 13% year-on-year.
2008
2009
2010
Besides growing its portfolio, in the past year the Bank introduced the Visa Magnifica card
allowing zero-fee cash withdrawal on Intesa Sanpaolo group ATMs. Contactless chips on the
Bank’s payment cards made for fast and convenient payments.
Once again, Banca Intesa was the market leader with regard to the number of issued payment
cards. At the end of the year, 1,169,540 payment cards were in circulation, which represents
a year-on-year increase of 7.1%. A total of 819,476 debit cards were issued to individuals and
36,683 to legal entities. Credit cards were received by a total of 303,725 individuals and 9,656
legal entities.
Debit cards
2011
284,058
856,159
793,417
744,349
279,493
1,169,540
1,092,018
1,023,842
1,012,842
728,784
Total payment cards
Credit cards
298,601
313,381
2010
2011
1,181.35
982.78
1,085.00
1,043.67
2008
2009
Number of issued payment cards
215.42
224.31
219.82
229.57
Dinar deposits
Significant efforts were put into strengthening
the customer on-boarding process, as well as the
activation of cards. In 2011, the Bank ran several
campaigns, including ”spend and get” programs,
for promoting customer card use. As a result, more
than 20,000 dormant cardholders began using
their payment cards. The Bank’s main goal of esta
blishing credit-card holder usage behavior in the
earliest phase was successfully achieved.
Foreign currency deposits
96.35
60.89
Total deposits
2010
2011
Deposits – indiduals (EUR million)
Payment cards
In the area of payment-card operations, Banca Intesa underscored its leading position in the
Serbian market in 2011, in the number and volume of transactions and, indeed, in its overall
portfolio. As in other areas of its operations, the Bank improved its procedures and processes
to follow all innovations in the card business. Banca Intesa has an exclusive agreement with
American Express for Serbia, and its portfolio is comprised of debit and credit cards of the
American Express, Visa, MasterCard and DinaCard brands. The Bank is both the issuer and
acquirer for all of these brands.
The total value of approved limits for credit cards
was EUR 229.57 million, an increase of 4% compared to 2010.
2008
2009
2010
2011
In its constant quest for solutions that reduce cash
circulation and increase the use of electronic payment solutions by customers, Banca Intesa conti
nued developing its Point of Sale (POS) network.
The Bank boasts the largest network of POS terminals in Serbia, which was further expanded
in 2011 (to 23,177). Additionally, a continued desire to innovate led to the introduction of
terminals for contactless payments.
Credit cards
approved limits (EUR million)
25
ANNUAL REPORT 2011
Almost a half of all POS transactions in Serbia (45%) are made through Banca Intesa terminals. In 2011, Banca Intesa remained the leader in POS-acquiring business and managed to
increase total turnover, year-on-year. The total volume increased by 7.75%, while the number
of transactions grew by 8.37%.
119.98
184.19
167.55
104.64
104.01
102.27
2008
2009
2010
153.14
133.26
Turnover (all cards* RSD million)
Number of transactions (millions)
80,706
74,899
72,038
67,802
31.57
29.82
30.94
33.53
2008
2009
2010
2011
Loan outstanding small business and agriculture (EUR million)
2011
Deposits - small business and agriculture
(EUR million)
At the end of 2011, the total amount of small business deposits stood at EUR 119.98 million.
2008
2009
2010
2011
POS network
* Banca Intesa and other banks’ cards
Small business
No area of today’s economy receives more attention than small businesses, which are widely
viewed as the engine of job growth. To expand its offerings for its small-business clientele, Banca Intesa made several agreements with the Development Fund of the Republic of Serbia, the
European Fund for Southeast Europe (EFSE), the Council of Europe Development Bank (CEB),
as well as the Guarantee Fund of the Autonomous
Province of Vojvodina, to provide the market with
112,253
110,867
subsidized loans, lower-than-market rates, and
103,904
100,455
loans for previously un-banked segments.
In 2011, cooperation was established with a
number of business entities, and as of December
31, 2011, the customer base reached 112,253.
2008
2009
2010
Number of customers
26
2011
Small business is the focus of Banca Intesa’s retail
activities. The Bank has been increasing lending
to this segment, providing the highest quality of
products and services to creditworthy borrowers.
Through loans to micro enterprises and entrepreneurs, Banca Intesa retained a leading position in
this market segment. The Bank’s loan portfolio
saw strong growth, reaching EUR 184.19 million
at the end of the year.
In early 2011, Banca Intesa concluded an agreement that regulates relations with the Develop
ment Fund of Serbia, regarding the package of economic measures the Serbian government has proposed to overcome the economic crisis. The agreement includes subsidized
interest rates and provides better terms for loans to maintain solvency for working capital
financing and for the export and investment projects of entrepreneurs and legal entities.
The Bank continued providing investment and working-capital loans to entrepreneurs and legal
entities via an EFSE credit line under the Framework agreement for the granting of individual loans
signed in March 2010. The main feature of those loan models was that interest rates for the loan
user are more attractive, based on the cost of funding, than those for comparable, same-purpose commercial loans from both the Bank and others. This led to the enlargement of the Bank’s
small-business credit portfolio. The last tranche of the credit line was drawn in the last quarter
of 2011.
A new tranche, worth EUR 1 million, was drawn in 2011 under the CEB credit line for micro
loans for entrepreneur development. These loans sought to support entrepreneurs with new
ideas aimed at increasing the number of employees and spreading new business activities.
On the other hand, this contract further contributed to the strengthening of the comparative
advantages of Banca Intesa in the Serbian market as a responsible corporate citizen.
Furthermore, the Bank extended its successful cooperation with the Guarantee Fund of
Vojvodina, further confirming its efforts in the field of corporate social responsibility. This cooperation program included start-up loans for unemployed women and loans for women who
have been running businesses for up to three years. The interest rates were set significantly
lower than current market rates, as part of efforts to create opportunities for underprivileged
customers.
ANNUAL REPORT 2011
Agriculture
Customer Relationship Management (CRM)
In a bid to support the key strategic sector of the Serbian economy, Banca Intesa put in place a
tailored offer for agriculture producers. In addition to loans for the purchase of mechanization
and the launch of the Farmer Hit account bundle, the Bank concluded several agreements that
supported producers in their need for agricultural machinery, land and insurance policies. Special arrangements were concluded with the Ministry of Agriculture, Trade, Forestry and Water
Management, as well as local governments, the Guarantee Fund of Vojvodina and the EFSE.
All Banca Intesa initiatives have been complemented by CRM solutions, which have provided
the Bank with the necessary information and market intelligence to better understand its customers’ financial needs and to improve insights into their behavioral profile.
Banca Intesa’s dedication to this segment allowed it to increase market share by 2.2%, yearon-year, to 16.4% at the end of 2011.
Retail network
During 2011, Banca Intesa further strengthened its retail network after investing significant
resources to enhance local coverage and client service and satisfaction, as well as the quality of
work conditions. One in five branches saw either full or small refurbishment in the past year,
while four new branches were opened including a self-service one. The Bank’s retail network at
the end of 2011 consisted of 208 branches, including eight with offices specialized for mortgage loans, in 115 cities across Serbia.
As part of the refurbishment process, a new branch format was adopted, which added sales
positions through better space organization while widening waiting areas for better service and
comfort.
During 2011, CRM continued to support Retail Division activities regarding insight and interaction with customers. About 200 CRM campaigns ran using different channels including direct
mail, branches, call center, SMS and e-mail, for all retail segments. An increased number of
branch campaign initiatives from Banca Intesa’s regional centers contributed to increased usage of the CRM application, compared to 2010.
Moreover, CRM was crucial for a number of activities, including support for the Magnifica
service model launch as well the customer-reactivation campaign and the development of the
dormancy-prediction model. CRM also provided application support for strategic processes
including complaint management and external sales management.
Strength, flexibility, and innovation are just some of the reasons for why 1.5 million clients, on
both the individual and small-business fronts, choose Banca Intesa to be their reliable business
partner.
In 2012, it is Banca Intesa’s intention to continue providing the best solutions to its customers,
with a standard of excellence in service which fully satisfies their needs.
Direct channels
Banca Intesa’s use of direct channels strengthened over the course of 2011. The growth of
on-line banking demonstrated the Bank’s continued commitment to introducing new and
innovative tools to manage customers’ finances. A significant increase in the number of active
on-line banking users was achieved. Almost 100,000 customers were active users of Intesa
Online, a year-on-year increase of 27.7%. At the same time, the Bank introduced business
payment-card statements by e-mail.
In 2011, Banca Intesa was the only bank in Serbia to provide payment card processing for
Internet transactions. In the course of the year, more than 100 domestic on-line merchants
relied on the Bank for e-commerce services.
Customers want the same kind of service when they bank by telephone. Banca Intesa’s welltrained call center team and its state-of-the art call center technology helped the Bank meet
those expectations. Besides serving callers, the call center also helped follow up on many Retail
Division campaigns.
The Bank’s reach does not end there. Banca Intesa is proud to distinguish itself in the field of
innovation by becoming the first bank in Serbia to offer access to accounts from mobile
phones. The Intesa Mobi service was launched in 2010, but was further upgraded in 2011 by
the launch of special versions for both iOS and Android platforms. Banca Intesa’s multifunctional ATMs, round-the-clock self-service areas and e-banking solutions allow customers to
contact the Bank 24 hours a day.
27
ANNUAL REPORT 2011
PUBLIC SWIMMING
AREA,
Sombor
With the construction of the Great Bačka Canal in the 18th century, the residents of Sombor got
their first public swimming area. In the 1930s, the Strand (beach) was built on the left hand side
of the Apatin bridge, where it is still located today. Today, the public swimming area in Sombor
comprises an outdoor Olympic-size pool of 50 m x 25 m, a large outdoor pool of 25 m x 8 m,
beach volleyball courts, 5-a-side soccer pitches, as well as a children’s playground. Apart from
these facilities, in the area there is also a derelict building that was once used as a cafe and restaurant. The beginnings of water polo in the former Yugoslavia are tied to this swimming area.
28
ANNUAL REPORT 2011
29
ANNUAL REPORT 2011
CORPORATE BANKING
Owing to the strong support of its parent Group and to the business policy and strategy upon
which the Bank’s leadership position on the domestic market is based, Banca Intesa ended
2011 with solid results, achieving its business goals and fulfilling the expectations of its shareholders in all business segments.
Throughout the year, Banca Intesa was fully committed to meeting the needs and expectations
of its clients. For a third year in a row, the Bank actively supported the Government of the
Republic of Serbia’s package of measures, leading the banking sector in terms of the number
and amount of subsidized loans provided to businesses. At the same time, it secured funds
from international credit lines in order to provide most affordable funding and expert consul
tant support for its clients.
Although the negative impact of the economic crisis was less visible in the banking sector than
in the real economy, banks are operating in interaction with the rest of the economy and the
difficulties facing the businesses are reflected on banks as well.
Corporate loans
2009
16.96%
2010
17.70%
Q1 2011
18.00%
Q2 2011
Share in loans and deposits
30
22.00%
20.00%
19.03%
16.88% 17.14%
23.60%
23.10%
Corporate deposits
18.20%
Q3 2011
17.80%
Q4 2011
ANNUAL REPORT 2011
The Corporate Division met its budgeted targets, and the Bank not only managed to retain its
last year’s market share in corporate banking, but succeeded in increasing it, posting a rise in
both loans and deposits and strengthening its leadership position.
The number of corporate clients remained unchanged relative to the previous year, mainly because Banca Intesa has a significant market share and the market left little room for any major
acquisition of liquid and creditworthy clients in a difficult year such as 2011. At the same time,
Banca Intesa’s operations with Italian and other international clients intensified, leading to an
even larger market share in this segment.
540
443
Corporate dinar deposits
25.60%
Corporate foreign currency deposits
24.30%
23.00%
22.80%
20.82%
21.80% 22.30%
19.90%
19.10%
16.87%
16.50%
14.35%
567
LC
SME
424
405
331
7,679
8,387
7,028
7,759
7,897
8,040
2009
2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Market share in deposits (by deposit currency)
2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
Dinar loans
2010
Q1 2011
Q2 2011
1,431,575
594,184
Q3 2011
Deposits (in EUR thousand)
Q4 2011
2009
2010
106,077
82,804
1,514,378
1,898,488
1,792,411
487,419
512,893
637,185
630,451
313,162
521,357
511,431
562,203
2009
834,518
375,569
854,422
342,992
296,458
858,661
1,805,172
1,764,314
Q1 2011
1,953,768
Q2 2011
1,943,934
103,841
1,081,604
1,006,021
1,840,093
1,150,077
Foreign currency loans
105,581
Foreign currency deposits
113,760
Dinar deposits
As in previous years, Banca Intesa remained the most active bank in the market with regard to
supporting the Serbian government’s package of economic measures and supplying subsidized
lending to businesses, with the Corporate Division providing more than 1,000 subsidized loans
in 2011, totaling over EUR 200 million.
1,848,187
Owing to its offer of products and services, as well as professional attitude and partnership
with clients, Banca Intesa reaffirmed their confidence in a period of economic difficulty, offe
ring them financial support and security, which resulted in increased total deposits and market
share in deposit operations.
Banca Intesa confirmed its leadership position both in deposits and in loans, increasing its loan
portfolio in 2011.
1,691,412
2009
Number of clients*
*excl. entrepreneurs and small business clients of the Retail Division
117,879
2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
1,646,436
2009
Q3 2011
Q4 2011
Loans (in EUR thousand)
31
ANNUAL REPORT 2011
Corporate dinar loans
17.36%
14.7%
18.5%
18.4%
18.0%
17.2%
The funds from the credit line, which has a repayment period of up to 10 years, will be primarily used for financing small and medium-sized business investment projects, procurement,
reconstruction, or extension of fixed assets, as well as financing working capital required for
the implementation of investment projects that also seek to preserve or increase the number
of employees.
Corporate foreign currency loans
14.5%
18.1%
13.9%
13.90%
13.5%
KfW Credit Line
In 2011, Banca Intesa continued to provide active support and lending for public companies
and local governments using German KfW development bank funds with the aim of supporting
the implementation of infrastructure and other investment projects. An additional EUR 30 million
has been secured for this purpose.
11.39%
Since the beginning of its cooperation with this financial institution, the Bank has approved
more than EUR 70 million worth of loans for over 300 projects for financing local government
capital investments aimed at improving the lives of citizens.
Italian Credit Line
2009
2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Market share in loans (by loan currency)
Owing to its prudent lending and risk management policy, in 2011 Banca Intesa maintained
the NPL level well below the banking sector average.
EBRD CREDIT LINE
In mid-2011 Banca Intesa and the European Bank for Reconstruction and Development (EBRD)
signed an agreement on the use of the “Western Balkans Private Sector Support Facility” credit
line, owing to which the Bank continued to offer attractive products to its corporate clients.
Funding amounting to EUR 10 million has been earmarked for financing small and mediumsized business investments in facilities, equipment, software, management system improvement and general construction and modernization, in order to improve compliance with one
or more EU directives in environmental protection, employee safety, and product safety and
quality.
In order to help the successful implementation of individual projects, the EBRD has provided
potential beneficiaries of this credit line with free consulting assistance of experts and the right
to incentives amounting to between 10% and 20% of the loan, depending on the type of
project, contingent upon successful project completion, which significantly reduces the loan
cost and makes the credit line more attractive.
CEB Credit Line
In August 2011, Banca Intesa and the Council of Europe Development Bank (CEB) signed an
agreement on the use of a new credit line worth EUR 20 million.
32
As of 2005, Banca Intesa has been offering loans from the Italian credit line to its clients as
part of its standard offering.
In December 2011, the Bank signed with the NBS an agreement for a new, second Italian line
of credit, worth EUR 30 million. The funding will be available during 2012 to public enterprises
and utility companies.
Documentary Letters of Credit, Guarantees
and Documentary Collections
The total number of banking instruments related to goods imports and exports is still rising,
with a shift in the structure of the instruments towards documentary collection and away from
guarantees and letters of credit. The number of processed documentary collections soared by
nearly 50% in 2011 relative to the previous year, with the number of vostro letters of credit
and guarantees where the Bank acted as an advising bank also posting growth, suggesting
that businesses are increasingly aware of the importance of these instruments.
Expertise and knowledge in the areas of guarantees and documentary collection is the reason
why clients choose Banca Intesa as a partner to help them conduct international transactions.
A team of Banca Intesa experts has begun holding training sessions, seminars and workshops
intended for the clients in order to promote these banking products. This practice is set to
continue in the coming years.
Despite the current slow-down in economic activity, the number and volume of issued guarantees in domestic trade remains high.
ANNUAL REPORT 2011
Amount in EUR thousand
Apart from its electronic payment system, the Bank is constantly investing efforts in broadening its product range and creating more benefits for its clients.
Number
385,709
5,647
335,242 345,409
5,582
Factoring
4,935
131,884
1,216
69,527 64,644 79,354
2009
2010
2011 Q1 2011 Q2 2011 Q3 2011 Q4 2011
2009
2010
1,420 1,444 1,502
2011 Q1 2011 Q2 2011 Q3 2011 Q4 2011
Guarantees and bill guarantees
Project and Special Financing
Bearing in mind the continuing negative impact of the global economic crisis, Banca Intesa
did not change its strategy for project financing in 2011. Despite the modest growth of the
overall portfolio, restrictive policy guidelines were followed in the financing of residential and
business real estate, while the Bank focused on financing medium-sized residential construction projects with an average loan amount of EUR 1.3 million, an average apartment size of 55
square meters, and mid-range quality of construction.
In order to spread risk and in circumstances when the banks were reluctant to compete, special finance projects in the form of syndicated loans and club deals were intensified to finance
both projects and regular operations of large clients whose credit standing was not seriously
affected by the global economic crisis, such as Telekom, which received a syndicated loan
of EUR 470 million, or Farmakom, which received parallel financing with the International
Finance Corporation (IFC).
Year 2011 saw a rise in the number of investors interested in renewable-energy projects. As a
result of this increased interest, several projects involving wind farms, solar power plants and
biogas were identified as having potential for project financing, so it is expected that some of
these projects might be implemented in 2012.
Payment Operations
As the leading bank in the domestic market, Banca Intesa is continually engaged in the innovative development of software and access systems for its clients, in keeping with global
trends and IT development, in order to provide them with the most up-to-date products and
services. Banca Intesa places particular priority on e-banking services, ensuring maximum ease
and convenience for its clients, as well as significant savings.
The Factoring Department experienced a growth trend in 2011 in factoring product sales.
Factoring allows companies to solve their need for optimum liquidity quickly and efficiently. In
addition to clients gaining simpler access to liquid funds, when the Bank purchases receivables,
prompt maintenance of receivables accounts, reconciliation of open items, their collection
and all operational collection activities are turned over to the Bank, which improves clients’
operating efficiency.
As in previous years, domestic factoring had the highest share in 2011. Domestic factoring
accounted for 66.5% of overall turnover and international factoring for the remaining 33.5%.
Keeping in mind the business environment, Banca Intesa believes that there is real potential for
further development of factoring in the domestic economy. In the following period the Bank
plans to maintain its current market share in this business segment, which will require putting
additional efforts into promotion and sales of this product considering the fact that clients
generally prefer classic short-term financing over factoring.
Amount of purchased
receivables (in EUR thousand)
Number of clients
242,800
603
131,600
88,600
76,570 82,320
36,590
2009
2010
262
47,320
2011 Q1 2011 Q2 2011 Q3 2011 Q4 2011
156
146
2009
2010
87
124
130
2011 Q1 2011 Q2 2011 Q3 2011 Q4 2011
Factoring (amount of purchased receivables and number of clients)
Despite forecasts that the economic crisis would give way to economic recovery and prospe
rity in 2011, the optimistic scenario did not become reality. During the past year, the economy
remained heavily influenced by the crisis, as evidenced by prominent illiquidity of businesses,
a large number of frozen corporate bank accounts, substantial difficulties with the collection
of receivables, increasing defaults and NPL amounts, as well as minimal international and
domestic investment activities.
This is best demonstrated by the fact that the Corporate Division’s clients effected 78.5% of
all payments electronically, with this percentage standing at 75.5% among SMEs and 92.9%
among large companies.
33
ANNUAL REPORT 2011
OLD BATH,
Jošanička Banja
Jošanička Banja is located on the slopes of Mt Kopaonik, in the valley of the Jošanica River and
its tributary Samokovka. It is 550 m above sea level, has the characteristics of a climatic spa and is
among balneological settlements with the warmest water in Europe. It has five mineral water
springs used for healing purposes. Jošanička Banja has a long tradition in treating rheumatic
ailments, and the first data on the organized use of the spa date back to 1922. The healing water of Jošanička Banja was first used by the Turks in the 14th century. The Turks constructed a
primitive, the so-called Old Bath, which was redecorated and extended in the 18th century. The
new bath was constructed in 1935, when the spa was to a certain extent equipped.
34
ANNUAL REPORT 2011
35
ANNUAL REPORT 2011
TREASURY AND INVESTMENT BANKING
In 2011, during a period of mild economic recovery, all aspects of the Treasury Department’s
performance showed improvement. The escalation of the euro zone’s public debt in the final
quarter of the year stressed the importance of adequate liquidity management as a primary
goal for all financial institutions. Thus the Bank’s cautious long-term policy proved to be the
right choice, as well as its primary guide in the task of securing liquidity.
7,000
6,000
5,000
Corporate clients
4,000
Other banks
3,000
Retail clients
2,000
1,000
NBS
2009
2010
2011
Foreign exchange trading in 2009-2011 (EUR million)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
2004
2005
2006
2007
2008
2009
2010
2011
Foreign exchange trading for corporate clients (EUR million)
Following a decline in the volume of foreign exchange trading due to the the global economic
crisis, the Bank in 2011 set a record foreign exchange trading volume of EUR 7.2 billion in total.
Foreign exchange trading for corporate clients continued to grow, reaching an absolute maximum turnover of EUR 4.2 billion, following a sharp decline in the midst of the 2009 crisis.
36
ANNUAL REPORT 2011
With a market share of more than 20%, Banca Intesa kept its lead in foreign exchange trading Banca Intesa in 2011 maintained its lead in the purchasing of NBS securities and Serbian
for corporate clients in Serbia.
government bonds, with a market share of 12.37%.
20.02%
12.37%
Banca Intesa
Banca Intesa
Other banks
Other banks
79.98%
Share in foreign exchange trading for legal entities in 2011
87.63%
Banca Intesa’s share in purchase of NBS
securities and Serbian government bonds
37
ANNUAL REPORT 2011
ELEMENTARY SCHOOL,
Čumić, Kragujevac
Elementary school Prota Stevan Popović at the village of Čumić was opened in 1793, after it was
constructed some time before that. Prota Stevan Popović, well-known for his literacy, founded
the school by opening his home to all pupils from the village of Čumić and neighbouring villa
ges, teaching them in the patron saint celebration room. He dedicated his large guest room to
work with pupils, and he with his family lived in the kitchen and a small room. The school could
accommodate 20 students, of 7 to 17 years of age, who attended it from the first to the fourth
grade. The fall of Serbia to the Turks in 1813 did away with all educational achievements from
the period of the First Serbian Uprising, so the Čumić school was then closed. It reopened its
doors in 1815.
38
ANNUAL REPORT 2011
39
ANNUAL REPORT 2011
CORPORATE SOCIAL RESPONSIBILITY
During 2011, Banca Intesa made significant progress in positioning itself as a financial institution completely devoted to achieving business success in a socially responsible manner, caring
for the community and the satisfaction of its clients and employees while striving for minimal
negative environmental impact.
In accordance with its clear commitment to optimal results in not only economic terms, but
also in terms of social and environmental impact, in 2011 Banca Intesa adopted a corporate
social responsibility (CSR) strategy, institutionalizing this business model within the organization.
This three-year strategy calls for the incorporation of CSR within the decision-making process
at all Bank levels. It introduces CSR into everyday business activities and defines goals in five
areas in which Banca Intesa measures its commitment to CSR - market, community, environment, workplace, and corporate governance.
CLIENT SATISFACTION MANAGEMENT
From a customer satisfaction perspective, 2011 can be assessed as a year of stability for
Banca Intesa. The main task of the Customer Satisfaction Management Unit was to retain a
87.3
85.6
87.1
86.9
85.9
85.4
85
84.5
2008
2009
2010
ECSI
40
2011
2008
2009
2010
Loyalty
2011
ANNUAL REPORT 2011
86.7
92.1
81.9
91.3
85.9
92.3
92.2
91.9
84.2
2008
2009
2010
91.1
90.7
80.9
85
86.1
91.6
81.8
85.2
85.2
85.6
79.5
2011
2008
2009
2010
2011
2008
Relationship with personnel
Image
2009
2010
2011
Service value
2008
2009
2010
2011
2008
Aftersales support
2009
2010
2011
Branch organization
ESCI
high level of customer satisfaction, continue with efforts aimed at eliminating causes of dissatisfaction, further promote customer confidence and improve service quality.
In order to better incorporate the opinions, suggestions, and complaints of its clients in the
process of planning activities aimed at improving the level of their satisfaction, the Bank added
to its existing communication channels official profiles on the most popular social networks,
Facebook and Twitter. Owing to continual monitoring and analysis of customer opinions, a
positive trend recorded in almost all indicators and key factors for determining customer satisfaction and loyalty in 2010 continued to be positive in 2011.
In 2011, Banca Intesa successfully interviewed more than 20,000 clients – individuals and companies – in cooperation with the GfK market research company, in order to define customer
satisfaction indices both for the Bank as a whole and for individual branches.
90.4
89.8
85.4
85.2
Although broadly at the level of statistical average from the previous years, client satisfaction
and loyalty indices for individuals and small business showed growth in relative to the previous year - 0.9% for ECSI and 1.2% for the Loyalty Index. In the SME segment, a high level
of customer satisfaction and loyalty was also retained. The Bank is especially pleased that a
high percentage of clients rate themselves as fully satisfied with their cooperation with Banca
Intesa, and that a similarly high percentage of them are prepared to recommend and extend
cooperation with the Bank.
91
86.6
86.1
85.3
Respondents rated very highly their relationships with Banca Intesa employees, as well as the
advisory and operational support they receive from the Bank. Research shows that the clients
have recognized and rated positively the Bank’s efforts in the area of CSR and support to local
economic development and cultural activities.
89.7
83.1
84.8
84.4
82.7
82.0
81.9
81.4
81.6
80.6
80.8
83.1
2008
2009
2010
Repurchase intention
2011
2008
2009
2010
2011
Competitive advantage
LOYALTY
2008
2009
2010
Would recommend
2011
2008
2009
2010
2011
2008
ECSI
2009
2010
2011
Loyalty
SME
41
ANNUAL REPORT 2011
At the initiative of its parent group, in 2011, Banca Intesa organized the first student competition dedicated to customer satisfaction under the name of Prove Yourself 100% (Customer
Satisfaction University Award). The competition aims to provide an opportunity to the most
successful students at local universities to apply their theoretical knowledge in the preparation
of customer satisfaction management projects, putting them in real business situations, as well
as to encourage logical thinking, creativity and competitiveness. The high quality of the student project solutions and their great interest in the competition led to a decision to continue
with the Prove Yourself 100% competition on an annual basis.
1% Dr 0% 1%
PhD
22%
MA
32%
No degree
High school
diploma
BA
EMPLOYEE RELATIONS
College
degree
In accordance with the growth and increase in the volume and diversity of its business and staffing, Banca Intesa as the leading bank in the market continues to cultivate a collegial working
environment. Employees are guided towards an understanding of the roles assigned to them
for the purpose of implementing key strategies. The Bank enables its employees to grow on
a personal and professional level and, above all, foster continued commitment to employee
engagement.
The employees of Banca Intesa strive to offer the Bank’s clients outstanding service on a daily
basis, taking the time to understand fully their needs and priorities. The long-term client relationships that the Bank fosters enable its staff to help each client put their money to work for them
in the most effective way possible. To this end, Banca Intesa continues to attract, retain, and
develop the best talent in the banking industry, and, above all, to cultivate diversity.
Employee performance management plays a key role in steering employees toward the creation of long-term relationships with clients and toward strong ties with their peers. As a leader
in financial services, Banca Intesa is devoted to professional development of its employees by
creating exceptional learning opportunities that enable the employees to fulfill their potential. By
matching staff capabilities and appropriate education and training initiatives, the Bank continues
to invest in its employees.
Average number of training hours per employee
Percentage of employees who attended some type of training
Total training hours
17
57%
54,877
Training data
In the past year, Banca Intesa began the process of designing more efficient performance assessment approaches, as well as harmonizing the performance assessment process with employee
reward system. Communication during the employee performance assessment process is even
more effective and frequent, while the performance goal definition system is more transparent.
Its assessment is based not only on results but, equally, on the way in which goals were reached.
Together with their superiors, employees regularly analyze their performance and priority needs
for further development.
In its approach to management and leadership development in 2011, Banca Intesa employed
a strategy of creating a high performance culture, within its parent Group as well as the Bank
itself. An integral component of the strategy was the need to develop a clear internal and
external direction of leadership conduct and skills necessary to maintain a stable business in
unpredictable times.
42
44%
Educational level
Banca Intesa is devoted to providing a clear career development plan in order to retain its key
employees. Above all, the Bank strives to provide equality and eliminate all forms of discrimination, including gender-based discrimination, in order to create an environment in which each
individual has the same opportunity to express and exercise his or her rights, and to participate in
the decision-making process through delegation of work and tasks. Through careful planning and
promotion of employees in the previous years, the Bank provided growth to its employees within
the organization and successfully filled most of its higher positions via promotions.
1%
14%
16%
20-30
30-40
40-50
49%
50-60
Over 60
20%
Age structure
Through continuous two-way communication with its employees via regular surveys, Banca Intesa
regularly monitors the results at all levels of the organization. This ensures that the opinions of
the Bank’s employees are taken into account when adopting corporate decisions that affect their
interests.
ANNUAL REPORT 2011
SUPPORT TO ENTREPRENEURSHIP
47%
71%
53%
29%
In its desire to identify, affirm and reward the best examples of entrepreneurship, but also to
encourage the establishment and development of own business, for the fourth consecutive year
Banca Intesa, in cooperation with the Blic daily, held the Blic Entrepreneur competition for the best
entrepreneur in Serbia in the SME category and awarded the winner EUR 30,000 to support its
continued development.
Female
Banca Intesa is strategically directed towards supporting SMEs, based on an inherent understanding that this segment of the economy is the driver of economic growth and recovery. At the end
of 2011, the fifth Blic Entrepreneur competition was announced. The winner will be selected
in 2012.
Male
% of employees
% of managers
Gender structure
ENVIRONMENTAL IMPACT
In 2011, Banca Intesa confirmed its strategic commitment to continuous reduction of its negative
environmental impact. Understanding the importance of responsible recyclables management,
the Bank successfully recycled 37,770 kilograms of paper and handed over 18,950 kilograms of
electronic and electrical waste, as well as 120 kilograms of toner cartridges to a legal person registered for waste management. Additionally, as of 2011 all copies of internal magazine “Es:presso,”
whose circulation numbers more than 3,000 copies, have been printed on recycled paper.
Last year, the Bank began developing a new procedure for the procurement of goods and services, which stipulates that active engagement in protecting the environment must be included
in supplier selection criteria.
RESTORATION OF HISTORICAL HERITAGE
In the middle of the year, Banca Intesa embarked upon a unique CSR project named The Place I
Love in order to create a list of sites that hold special sentimental value for the citizens of Serbia,
to restore at least three sites selected by popular vote, and to remind the public of Serbia’s rich
cultural and historical heritage and of the need to preserve it.
In the first phase of the project, citizens nominated sites for reconstruction. The Bank received
a total of 1,290 nominations through the project’s official website, via specially designed cards
handed out in branches, and via the call center. An expert committee comprised of distinguished
cultural workers created a list of 10 final nominees, from among which the winners were chosen.
Nearly 200,230 votes decided that the planned RSD 30 million will be donated for the reconstruction of Belgrade Gate at Petrovaradin, Town Ramparts in Novi Pazar and the Remains of the
National Library at Kosančićev Venac, which was destroyed in the 1941 bombing of Belgrade.
VOLUNTEERING
CORPORATE PHILANTHROPY
In an effort to make the New Year’s holiday more cheerful for children with special needs, in 2011
Banca Intesa again donated to educational institutions throughout the country several hundred
care-packages prepared and distributed by Bank employees to children during school assemblies.
In 2011, Banca Intesa donated RSD 111.6 million toward numerous projects to support nonprofit
and humanitarian organizations, educational, social, and health institutions, as well as cultural
and sports manifestations.
Spreading the spirit of corporate activism and environmental responsibility, in 2011 Banca Intesa
participated in the Our Belgrade and Let’s Clean Up Serbia volunteer programs. Bank employees,
their families and friends participated in these activities.
In order to contribute to the improvement of conditions for the medical treatment of children in
one of the oldest health institutions in the country, Banca Intesa donated funds towards the reconstruction of the cardiology and cardiac surgery departments at the Children’s University Clinic
in Tiršova Street and designed the related project. Bearing in mind that 1,500 children are hospitalized annually in these facilities, whose resources are limited, the Bank donated RSD 25 million
to prepare and implement a complete plan for repair works to the 480 square meter building, its
outfitting, and equipment.
Continuing its partnership spanning several years with non-profit organization Our Serbia, Banca Intesa sponsored the eleventh consecutive School of Friendship, visited by 600
children from across Serbia and the region. Also, it was the sixth consecutive year that the
Bank participated in the organization’s Send a Friendship Card charity campaign, which
raises funds to improve the living conditions of Serbia’s youngest citizens in underdeveloped
municipalities.
COOPERATION OF FINANCIAL AND CIVIL SECTOR
Banca Intesa and the European network of nongovernmental organizations, Euclid Network,
signed a memorandum of understanding in 2011. Inspired by the experiences of many Western
European countries, this document officially marked the cooperation between the financial and
non-profit sectors on the Empowernet platform for the first time in Serbia.
With the aim of understanding the needs and challenges of Serbia’s non-profit sector, particularly
in the area of finding sources of financing, Banca Intesa established cooperation with Euclid Network on EU projects in Serbia that will seek to strengthen ties between the domestic civil sector
and those of EU countries, to educate the civil sector in Serbia regarding the ways and possibilities
of civil sector participation in the process of EU integration, as well as to promote financial sustainability based on cooperation.
43
ANNUAL REPORT 2011
NATIONAL MUSEUM,
Vranje
The National Museum in Vranje was founded in 1960, and has comprised the Museum-Home
of Bora Stanković since 1967 and a Gallery since 1992. The seat of the Museum is in the Pasha’s
Residence built in 1765 and has a surface of 400 square meters of exhibition space with around
30,000 exhibits from the field of oenology, archaeology and cultural history. Clothing and
objects in daily use from the ethnological collection are displayed in the rooms. On the upper
floor there is a Bedroom from the early 20th century, a Maid’s Room and a Salon. Objects from
the archaeological collection are in the halls, whereas the Museum-House of Bora Stanković
contains objects that belonged to the writer and members of his family, as well as posters,
photographs of theatre plays and editions of his works.
44
ANNUAL REPORT 2011
45
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
RAJAC WINERIES,
Negotin
Rajac wineries are a unique architectural complex of wine cellars created from the mid-18th
to the 1930s. Formed as a group of 270 wineries around the central square with a well and a
congregation area, they were built from trimmed stone and wood logs. The cellars are partly
dug in the ground to ensure minimum temperature variations during the year, and rooms for
accommodation during wine picking or nurturing are on the upper floor. They have two oppo
site entrances on two levels or a window where there are no other doors, through which a
wooden guttering for pouring grapes into the tub is placed. Rajac used to have 316 wineries,
down to only around 60 now. Wine from the barrels from these stone cellars has unique taste,
smell and colour, and is attributed miraculous power and medicinal properties due to its exquisite quality.
48
CONTENTS
INDEPENDENT AUDITOR’S REPORT
2011.
51
INCOME STATEMENT 52
BALANCE SHEET 53
STATEMENT OF CHANGES IN EQUITY 54
CASH FLOW STATEMENT 55
NOTES TO THE FINANCIAL STATEMENTS
57
49
FINANCIAL STATEMENT FOR 2011
50
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS OF BANCA INTESA A.D. BEOGRAD
We have audited the accompanying financial statements of Banca Intesa a.d. Beograd (hereinafter: the Bank), which comprise the balance sheet as at 31 December 2011, and the income statement,
statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Law on Accounting and Auditing and regulations of the National Bank of
Serbia governing financial reports of the banks and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Bank as at 31 December 2011, and of its financial performance and its cash flows for the year then
ended in accordance with the Law on Accounting and Auditing and regulations of the National Bank of Serbia governing financial reports of banks.
Belgrade, 19 March 2012
Mirjana Kovačević
Authorized Auditor
Ernst & Young Beograd d.o.o.
51
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2011
(RSD thousand)
Interest income
Interest expense
Note
2011
2010
3
3
31,090,463
(11,652,708)
26,631,103
(9,285,709)
19,437,755
17,345,394
7,378,106
(1,943,040)
6,950,505
(1,786,022)
5,435,066
5,164,483
169
44
1,937,273
414,248
(4,259,378)
(4,434,178)
(864,976)
(6,397,975)
23,452,765
(24,031,080)
1,219
(13,798,805)
397,426
(4,364,160)
(3,996,296)
(890,691)
(6,176,280)
24,281,001
(9,507,171)
10,689,733
8,456,120
(1,113,156)
23,673
9,410
(871,597)
35,407
-
9,590,840
7,619,930
Net interest income
Fee and commission income
Fee and commission expense
4
4
Net fee and commission income
Net gain on sell of securities at fair value through profit and loss
Net gain on sell of securities available for sale
Net foreign exchange gains / (losses)
Gains from dividends and shares
Other operating income
Impairment losses of financial assets and provisions, net
Salaries, wages and other personal expenses
Depreciation and amortization
Other operating expenses
Gains on changes in value of assets and liabilities
Losses on changes in value of assets and liabilities
5
6
7
8
9
10
11
12
Profit before tax
Income tax
Profit from created deferred tax assets and reduction of deferred tax liabilities
Loss from reduction deferred tax assets and creation of deferred tax liabilities
PROFIT
Notes on the following pages form part of these Financial statements.
Approved by the management of Banca Intesa a.d. Beograd
52
13
13
13
(RSD thousand)
ASSETS
Cash and cash equivalents
Revocable deposits and loans
Interest and fee receivables, receivables from sales, changes in fair value of derivatives and
other receivables
Loans and advances (excluding treasury shares)
Securities
Equity investments
Other placements
Intangible assets
Property, equipment and investment property
Non-current assets held for sale and discontinued operations
Deferred tax assets
Other assets
BALANCE SHEET AS AT 31 DECEMBER 2011
Note
2011
2010
15
16
16,222,561
83,162,819
20,053,248
51,409,640
17
18
19
20
21
22
23
2,985,589
249,337,725
17,784,587
962,568
11,521,581
595,399
6,583,749
60,192
47,317
3,058,602
2,390,298
245,087,290
19,380,689
948,033
10,270,578
561,462
6,388,002
50,685
33,054
2,550,016
392,322,689
359,122,995
84,678,429
150,686,366
57,106,462
2,385,649
165,937
2,229,010
43,334
269,029
14,344,148
65,078,801
171,432,085
45,255,242
132,790
94,607
2,419,833
56,962
220,031
17,143,522
311,908,364
301,833,873
41,759,627
28,400,323
665,615
2,080
9,590,840
28,446,332
20,780,393
560,107
117,640
7,619,930
80,414,325
57,289,122
392,322,689
359,122,995
245,058,656
157,073,304
13
24
Total assets
LIABILITIES
Other deposits
Borrowings
Liabilities arising from securities
Interest, fee and changes in fair value of derivatives
Provisions
Tax liabilities
Liabilities from profit
Deferred tax liabilities
Other liabilities
25
26
27
28
28
29
30
Total liabilities
Equity
Equity
Reserves from profit
Revaluation reserves
Unrealized losses arising on securities available for sale
Profit
31
31
31
31
31
Total equity
Total liabilities and equity
Off – balance sheet items
32
53
STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD 1 JANUARY 2011 - 31 DECEMBER 2011
Share capital Other capital
Share
premium
Reserves
from profit
Revaluation
reserves and
Unrealized losses
arising on securities
available for sale
(RSD thousand)
Profit
Total
Balance as of 1 January 2010
Profit for the year
Effects of changes in fair values of securities available-for-sale
Profit distribution
18,477,400
-
11,158
-
9,957,774
-
14,768,086
6,012,307
559,313
(116,846)
-
6,012,307
7,619,930
(6,012,307)
49,786,038
7,619,930
(116,846)
-
Balance as of 31 December 2010
Profit distribution
Share issue
Profit for the year
Effects of changes in fair values of securities available-for-sale
18,477,400
2,838,500
-
11,158
-
9,957,774
10,474,795
-
20,780,393
7,619,930
-
442,467
221,068
7,619,930
(7,619,930)
9,590,840
-
57,289,122
13,313,295
9,590,840
221,068
21,315,900
11,158
20,432,569
28,400,323
663,535
9,590,840
80,414,325
54
STATEMENT OF CASH FLOWS FOR THE PERIOD 1 JANUARY 2011 - 31 DECEMBER 2011
2011
2010
Cash inflows from operating activities
39,360,945
33,445,034
Interest
Fees
Other operating income
Dividend and other share income
28,811,049
7,470,150
3,079,746
-
24,244,341
7,152,214
2,048,479
-
(25,076,241)
(6,878,133)
(2,041,222)
(5,260,446)
(626,113)
(10,270,327)
(20,259,105)
(4,731,441)
(1,922,121)
(4,574,219)
(550,749)
(8,480,575)
Net cash inflow from operating activities before increase or decrease in placements and deposits
14,284,704
13,185,929
Decrease in placements and increase in taken deposits
Decrease in securities at fair value through profit and loss,
Investments held for trading and short-term securities held to maturity
Increase in deposits with banks and other clients
22,645,049
11,267,655
(16,490,984)
(6,154,065)
(11,267,655)
(43,181,291)
(43,181,291)
(33,867,457)
(29,969,357)
-
(3,898,100)
Net cash outflow from operating activities before tax
(6,251,538)
(9,413,873)
Income tax paid
(1,064,158)
(755,169)
Net cash outflow from operating activities
(7,315,696)
(10,169,042)
1,398,836
1,309,360
89,476
439,697
3,209
436,488
Cash outflow from investing activities
Outflow from long-term investment in securities
Outflow from purchase of equity investments
Outflow from purchase of intangible and tangible fixed assets
(13,480,293)
(12,230,528)
(14,555)
(1,235,210)
(1,861,231)
(815,546)
(1,045,685)
Net cash outflow from investing activities
(12,081,457)
(1,421,534)
(RSD thousand)
CASH FLOW FROM OPERATING ACTIVITIES
Cash outflows of cash from operating activities
Interest
Fees
Salaries and other personal expenses
Taxes and contributions paid
Other operating expenses
Increase in placements and decrease in taken deposits
Increase in loans and placements to banks and other clients
Increase in securities at fair value through profit and loss,
Investments held for tradng and short-term securities held to maturity
CASH FLOW FROM INVESTING ACTIVITIES
Cash inflow from investing activities
Inflow from long-term investment in securities
Inflow from sales of equity investments
Inflow from sales of intangible and tangible fixed assets
55
STATEMENT OF CASH FLOWS FOR THE PERIOD 1 JANUARY 2011 - 31 DECEMBER 2011
2011
2010
Cash inflows from financing activities
Inflow from capital increase
Inflow from borrowings received, net
Inflow from securities
18,588,338
13,313,295
5,275,043
-
8,191,615
8,191,615
-
Cash outflows from financing activities
Outflows from subordinated borrowings
Outflows from securities
(3,043,037)
(3,025,761)
(17,276)
(155)
(155)
Net cash inflow from financing activities
15,545,301
8,191,460
81,993,168
(85,845,020)
53,344,001
(56,743,117)
Net decrease in cash
(3,851,852)
(3,399,116)
Cash at the beginning of year
20,053,248
23,163,886
355,324
(334,159)
415,470
(126,992)
16,222,561
20,053,248
(RSD thousand)
CASH FLOWS FROM FINANCING ACTIVITIES
Total net inflow of cash
Total net outflow of cash
Exchange rate gains
Exchange rate losses
Cash at the end of year (Note 15)
56
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011
1. CORPORATE INFORMATION
Banca Intesa Beograd a.d. Beograd (hereinafter referred to as the “Bank“) was established as a joint stock company, pursuant to the Memorandum on Association and Operations of Delta banka
DD, Beograd dated 16 September 1991. On 19 September 1991, the National Bank of Yugoslavia issued a certificate and permition for the foundation of Delta banka DD, Beograd.
On 16 October 1991, the Bank was duly registered with the Commercial Court in Belgrade and subsequently commenced its operations. On 7 June 1995, a new Memorandum on Association was
concluded, with a new Article of Association adopted at the General Assembly meeting held on 10 July 1995, whereby reconciliation of the Bank’s acts with the provisions of the Law on Banks
and other financial organizations was made.
In 2005, based on Decision of General Assembly of Shareholders, a change of shareholders of the Bank occurred. Existing shareholders sold their shares, two shareholders in a whole and the majority part was sold to Intesa Holding International SA. After this ownership change, the Bank has two shareholders, out of which Intesa Holding International S.A., Luxemburg owns more than 90%
of the Bank’s share capital.
Pursuant to the General Manager’s Decision no. 18600 dated 7 November 2005, the Approval of National Bank of Serbia and the Decision of the Agency for Commercial Registries no. BD
98737/2005 dated 29 November 2005, the Bank changed its previous name into Banca Intesa a.d. Beograd.
In accordance with the Decision of the Agency for Commercial Registries no. BD. 159633/2006 dated 5 October 2006, the abovementioned alteration and the change of legal form of the Bank into
a closed joint-stock company were registered.
The Bank is authorized and registered with the National Bank of Serbia for performing payment transactions, loan and deposit activities in the country and clearing and settlement transaction
services abroad. In accordance with the provisions of the Law on Banks, the Bank operates on the principles of liquidity, safety and profitability.
During the year ended 31 December 2007, the legal status change was carried out through merger by absorption, whereby the acquirer was Banca Intesa a.d. Beograd, and the acquired bank
was Panonska banka a.d. Novi Sad. On 26 July 2007, the Decisions on signing of the letter of intent to perform the legal status change of merger by absorption and launch relating activities were
passed at the meetings of the Board of Directors of both Banca Intesa a.d. Beograd and Panonska banka a.d. Novi Sad. Draft of the Agreement on merger was prepared and adopted by the Boards
of Directors of both banks at the meetings held on 29 October 2007.
Upon registration of the procedure of merger by absorption with the Agency for Commercial Registers, the Bank as the acquirer and the legal successor has continued to operate under its existing
business name, while the acquired bank – Panonska banka a.d. Novi Sad ceased its operations without liquidation process, and its shares were withdrawn and cancelled.
57
1. CORPORATE INFORMATION (continued)
In accordance with article 384 of the Law on business companies of the Republic of Serbia, 30 September 2007 was determined as the date of merger that is the date when all operations of Panonska
banka a.d. Novi Sad were considered as taken over by the Bank. The legal status change of merger by absorption was carried out in such a way that the acquired bank – Panonska banka a.d. Novi
Sad transferred all assets and liabilities as of 30 September 2007 to the Bank as the acquirer in exchange for share issue to the shareholders of the acquired bank by the Bank acquirer.
In accordance with the valuation performed, the shares were exchanged in such way that shareholders of the acquired bank received 1 ordinary share of the Bank acquirer in exchange for 38 ordinary
shares of the acquired bank. In order to exchange the total number of shares of Panonska banka a.d. Novi Sad, the Bank issued additional 26.166 ordinary shares, with nominal value of RSD
100,000.00 and consequently after the merger, the Bank’s share capital amounted to RSD 15,752,700,000.00, divided into 157,527 ordinary shares with nominal value of RSD 100,000.00 per share.
Shareholders of the acquired bank in the merger have become the shareholders of Banca Intesa a.d. Beograd, with the appropriate number of ordinary shares, and they have the same status, rights
and obligations as the shareholders of the Bank, with the right to participate in profit distribution of the Bank acquirer starting from 1 January 2008.
Since there were no significant differences in the accounting policies applied in the preparation of the financial statements of both banks, neither adjustments to net assets nor adjustments to net
results for 2007 of the Bank were made as a consequence of the accounting for the merger by absorption.
The Agreement on merger by absorption was adopted at the Bank’s Assembly meeting held on 17 December 2007.
As at 31 December 2011, the Bank operated through its Head Office located in Belgrade, Milentija Popovica 7b, with its associated organizational divisions in Belgrade, 7 regional centers and 208
branches.
The Bank had 3,200 employees as at 31 December 2011 (31 December 2010: 3,090 employees).
The Bank’s registration number is 07759231. The Bank’s tax identification number is 100001159.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1. Basis of preparation and presentation of financial statements
The accompanying financial statements have been prepared in accordance with the accounting regulations prevailing in the Republic of Serbia, which are based on the Law on Accounting and
Auditing (Official Gazette of the Republic of Serbia, no. 46/2006, 111/2009), the Law on Banks (Official Gazette of the Republic of Serbia, no. 107/2005, 91/2010) and the respective regulations
issued by the National Bank of Serbia based on the aforementioned legislation. Pursuant to the Law on Accounting and Auditing, banks are obliged to maintain, prepare and present their financial
statements in accordance with the International Accounting Standards (IAS), i.e. International Financial Reporting Standards (IFRS“), and Interpretations of Standards.
IAS, IFRS and interpretations issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee up to 1 January 2009 have been officially
translated by the Decision of Ministry of Finance of Republic of Serbia number 401-00-1380/2010-16 and are published in Official Gazette of the Republic of Serbia no. 77 dated October 25, 2010.
Any new or amended IFRS and IFRIC interpretations issued subsequent to 1 January 2009 have not been applied in the preparation of the accompanying financial statements.
The accompanying financial statements have been prepared in the form prescribed by the Rulebook on format and contents of financial statements for banks (Official Gazette of the Republic of
Serbia No: 74/2008, 3/2009, /correction 12/2009/ and 5/2010). These Rulebooks determine the legal definition of a complete set of financial statements, and minimal content of Notes to the financial
statements, which contain departures from IAS 1 Presentation of Financial Statements regarding the presentation of certain financial statement items.
As a result of the abovementioned, the Bank’s management has not included an explicit and unreserved statement of compliance of the accompanying financial statements with the requirements
of all standards and interpretations issued by International Accounting Standards Board, which comprise International Financial Reporting Standards.
The accompanying financial statements have been prepared under the historical cost convention, except for the measurement at fair value of securities held for trading as well as securities available
for sale.
The accompanying financial statements include receivables, liabilities, operating results, changes in equity and the Bank’s cash flow, excluding its subsidiary – Intesa Leasing d.o.o., Beograd. The
Bank also prepares consolidated financial statements separately, in accordance with the respective accounting regulations of the Republic of Serbia.
The Bank’s financial statements are stated in thousand of Dinars, unless otherwise stated. The Dinar (RSD) is the functional and official reporting currency of the Bank. All transactions in currencies
that are not functional currency are considered to be transactions in foreign currency.
The accompanying financial statements have been prepared under the going concern principle, which implies that the Bank will continue its operations in the foreseeable future.
In the preparation of these financial statements, the Bank has adhered to the principal accounting policies further described in Note 2.
The accounting policies and accounting estimates applied in the preparation of these financial statements are consistent with those followed in the preparation of the Bank’s annual financial
statements for the year ended 31 December 2010.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.2. Comparative Figures
The comparative figures represent financial statements of the Bank as of and for the year ended 31 December 2010, which were audited.
2.3. Significant Accounting Estimates and Judgments
Use of Estimates
The preparation and presentation of the financial statements requires the Bank’s management to make estimates and reasonable assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements, as well as income and expenses for the reporting period.
These estimations and related assumptions are based on information available as of the date of the preparation of the financial statements. Actual results could differ from those estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis, and changes in estimates are recognized in the income statement in the periods in which they become known.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
Impairment of Financial Assets
The Bank assesses, at the end of each reporting period, whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial
assets is impaired, and impairment losses are incurred, if and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset
(a “loss event“) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.
The Bank reviews its loan portfolio at least on a quarterly basis, in order to assess impairment.
In determining whether an impairment loss should be recorded in the income statement, the Bank makes judgments as to whether there is any reliable evidence indicating that there is a measurable
decrease in the estimated future cash flows from a loan portfolio before the decrease can be identified with an individual loan in that portfolio. The evidence may include observable data indicating
that there has been an adverse change in the payment status of borrowers toward the Bank, or national or local economic conditions that correlate with defaults on assets of the Bank.
The Bank’s management performs estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when
scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly, in order to reduce any differences
between estimated and actual losses.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.3. Significant Accounting Estimates and Judgments (continued)
Useful Lives of Intangible Assets, Property and Equipment
The determination of the useful lives of intangible assets, property and equipment is based on historical experience with similar assets as well as on any anticipated technological development and
changes influenced by wide range of economic or industry factors. The appropriateness of the estimated useful lives is reviewed annually, or whenever there is an indication of significant changes
in the underlying assumptions.
Due to the significant share of tangible and intangible assets in total assets of the Bank, the impact of each change in these assumptions could materially affect the Bank’s financial position as well
as the results of its operations.
Impairment of Non-Financial Assets
At the end of each reporting period, the Bank’s management reviews the carrying amounts of the Bank’s intangible assets and property and equipment presented in the financial statements. If there
is any indication that such assets have been impaired, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. If the recoverable amount of an asset
is estimated to be less than its carrying value, the carrying amount of the asset is reduced to its recoverable amount.
An impairment review requires from management to make subjective judgment concerning the cash flows, growth rates and discount rates of the cash generating units under review.
Provisions for legal proceedings
The Bank is subject to a number of legal proceedings arising from daily operations that relate to commercial, contractual and employment matters, which are resolved and considered during regular
business activity. The Bank regularly estimates probability of negative outcomes to these matters as well as the amounts of probable or reasonable estimated losses.
Reasonable estimates include judgment made by management after considering information including notifications, settlements, estimates performed by legal department, available facts, identification
of other potentially responsible parties and their ability to contribute as well as prior experience.
Provision for legal proceedings is recognized when it is probable that an obligation exists for which a reliable estimation can be made of the obligation after careful analysis of the individual matter
(Note 29). The required provision may change in the future due to occurrence of new events or obtaining additional information. Matters that are either contingent liabilities or do not meet the
recognition criteria for provision are disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote.
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2.3. Significant Accounting Estimates and Judgments (continued)
Retirement and Other Post-Employment Benefits
The costs of defined employee benefits payable upon the termination of employment, i.e. retirement in accordance with the fulfilled legal requirements are determined based on the actuarial
valuation. The actuarial valuation includes an assessment of the discount rate, future movements in salaries, mortality rates and fluctuation of employees. As these plans are long-term, significant
uncertainties influence the outcome of the estimation. Additional information is disclosed in Note 29 to financial statements.
2.4. Interest Income and Expenses
Interest income and expense, including penalty interest and other income and other expenses from interest bearing assets as well interest bearing liabilities are recognized on an accrual basis based
on obligatory terms defined by a contract between the Bank and customers.
For all interest-bearing financial instruments measured at amortised cost and interest bearing financial instruments available for sale, interest income and expense are recognized within “Interest
income“ and “Interest expense“ in the income statement using the effective interest method, which is the rate that exactly discounts estimated future cash payments or receipts through the
expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability.
Loan origination fee, which is a part of effective interest rate, is recorded within “Interest income“. Loan origination fees, which are charged, collected or paid on a one-time basis in advance, are
deferred and amortized to interest earned on loans and advances over the life of the loan using the straight-line method, which approximates the effective yield.
From the moment of charges being filed, and for receivables from retail clients past due over 180 days, the Bank calculates suspended interest on total receivables (including principal, interest and
costs) instead of regular interest. Transfer of total interest overdue to the suspended interest in off-balance before the moment of charges being filed could be prescribed by special decisions of the
Bank’s authorities.
Suspended interest is calculated and recorded as off-balance sheet item until final settlement of dispute.
2.5. Fee and Commission Income and Expenses
Fees and commissions originating from banking services are generally recognized on an accrual basis when the service has been provided.
Fees and commissions mostly comprise of fees for payment operations services, issued guarantees and other banking services.
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2.6. Foreign Currency Translation
Items stated in the financial statements are valued by using currency of the Bank’s primary economic environment (functional currency). As disclosed in Note 2.1., the accompanying financial statements
are stated in thousand of Dinars (RSD), which represents the functional and official reporting currency of the Bank.
Transactions denominated in foreign currency are translated into dinars at the official exchange rate determined on the Interbank Foreign Currency Market, prevailing at the transaction date.
Assets and liabilities denominated in foreign currency at the balance sheet date are translated into dinars at the official median exchange rate determined on the Interbank Foreign Currency Market,
prevailing at the balance sheet date (Note 37).
Gains or losses on foreign exchange arising upon the translation of balance sheet items are credited or debited as appropriate, to the income statement, as Gains or losses on foreign exchange
transactions and translations (Note 5).
Gains or losses arising upon the translation of financial assets and liabilities with contracted foreign currency clause are credited or debited as appropriate, to the income statement, as gains/losses
from changes in value of assets and liabilities (Notes 11 and 12).
Commitments and contingencies denominated in foreign currency are translated into dinars at the official median exchange rate prevailing at the balance sheet date.
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2.7. Financial Instruments
All financial instruments are initially recognized at fair value including any directly attributable incremental costs of acquisition or issue that are directly attributable to the acquisition or issuing of
financial asset or liability, except for financial assets and financial liabilities at fair value through profit and loss.
Financial assets and financial liabilities are recorded in the balance sheet of the Bank on the date upon which the Bank becomes counterparty to the contractual provisions of a specific financial
instrument. All regular way purchases and sales of financial assets are recognized on the settlement date, which is the date the asset is delivered to the counterparty.
Derecognition of financial assets and financial liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:
• the rights to receive cash flows from the asset have expired; or
• the Bank has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either the Bank has transferred substantially all the risks and rewards of the asset, or the Bank has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset.
When the Bank has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and
rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Bank’s continuing involvement in the asset. Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Bank could be required to repay.
Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition
of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.
The Bank classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, securities held-to-maturity and securities available-for-sale.
Management of the Bank determines the classification of its investments at the time of initial recognition.
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2.7. Financial Instruments (continued)
2.7.1. Financial Assets at Fair Value through Profit or Loss
This category includes two sub-categories: financial assets held for trading and those designated at fair value through profit or loss.
Financial assets are classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term and generating profit from short-term price
fluctuations. These assets are stated at fair value in the balance sheet.
Financial instruments held for trading comprise financial derivatives and Government’s savings bonds.
All realized or unrealized gains and losses from changes in fair value of trading securities are recognised in the income statement.
During 2007, the Bank introduced several types of financial instruments which met definition of financial derivatives according to IAS 39 “Financial Instruments: Recognition and Measurement”
and for which basic underlying variable is foreign exchange rate. Derivatives used by the Bank are FX swap and FX forward contracts. For the accounting purposes, and in accordance with the
requirements of IAS 39, the derivatives are classified as financial instruments held for trading and are recorded in the balance sheet at fair value, while all fair value changes are recorded in the
income statement under unrealized foreign exchange gains and losses.
Derivatives are initially recognised when the Bank becomes a party to agreement with the other contractual party (the agreement date). The notional amount of the derivative contract is recorded
in off-balance sheet, and initial positive or negative fair value of the derivative is recorded in the balance sheet as asset or liability. The initial recognition of fair value applies to the cases when
there is available market price for the same or a similar derivative on an organised market, and when the price differentiates from the price at which the Bank contracted the derivative. Hence, the
derivatives contracted by the Bank with the customers operating in Serbia do not have initially recognised fair value, since there is no active market for similar derivatives in the country. When an
active market for such derivatives develops, i.e. when the relevant market information becomes available, the Bank will recognise in the balance sheet (as assets or liabilities) and the income
statement (initially positive or negative fair value) the difference between the market value of transactions and initial fair value of derivatives determined using valuation techniques. In accordance
with the existing accounting policy of the Bank, adjustments to fair value of financial instruments held for trading are recognised at the end of each month, and the effect of changes in fair value
are recognised in the income statement as unrealised foreign exchange gains or losses. Derivatives are recognised as assets or liabilities depending whether their fair value is positive or negative.
Derivatives are derecognised at the moment of expiry of contracted rights and obligations arising from derivatives (exchange of cash flows), i.e. at termination date. At that moment, ultimate effect
of foreign exchange differences is recorded against realised foreign exchange differences, and all previously recognised changes in fair value (through unrealised foreign exchange differences) are
reversed.
Since there is neither an active market for derivatives in Serbia nor a possibility to determine fair value of derivatives by reference to a quoted market price, the Bank uses the methodology of
discounting future cash flows arising from derivatives in order to determine fair value. This methodology of calculation is generally accepted by market participants in countries having developed
markets with active trading in derivatives and the calculated fair value represents a reliable estimate of the fair value which would be achieved on an active market.
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2.7.1. Financial Assets at Fair Value through Profit or Loss (continued)
The methodology incorporates market factors (median exchange rate, interest rates and similar) and it is consistent with generally accepted methodologies for valuation of derivatives.
2.7.2. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
All loans and receivables to banks and customers are recognized in balance sheet when cash is advanced to debtors. Loans and receivables are initially recognized at fair value. After the initial
recognition, loans are measured at amortized cost using interest rate method, less allowance for loan impairment and any amounts written off.
Interest income and receivables in respect of these instruments are recorded and presented under interest income and interest, fees and commissions receivable, respectively. Fees which are part of
effective yield on these instruments are recognised as deferred income and credited to the income statement as interest income over the life of a financial instrument using the straight-line method,
which approximates the effective yield.
The Bank negotiates foreign currency clause with the beneficiaries of the loans. Loans and receivables in dinars, with contracted foreign currency clause, i.e. dinar-eur, dinar-usd and dinar-chf foreign
exchange rate, are revalued in accordance with the contract signed for each loan. The difference between the carrying amount of loan and the amount calculated from foreign currency clause
applied is disclosed within loans and receivables. Gains and losses resulting from the application of foreign currency clause are recorded in the income statement, as gains/losses from changes in
value of assets and liabilities.
Impairment of financial assets and provisions for risks
The Bank, in accordance with internal policy, assesses at each balance sheet date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial
asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition
of the asset (an incurred “loss event“) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably
estimated.
Evidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, default or delinquency in interest or principal payments,
the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as
changes in arrears or economic conditions that correlate with defaults.
For loans and placements with banks and customers, the Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or
collectively for financial assets that are not individually significant.
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2.7.2. Loans and Receivables (continued)
Impairment of financial assets and provisions for risks (continued)
If the Bank identifies that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it is included in a group of financial assets with similar
credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognized, are
not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets’ carrying amount and the present value of estimated
future cash flows (excluding future expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use of an allowance account, while impairment
losses on loans and advances and other financial assets carried at amortized cost are charged to the income statement (Note 7). Loans together with the associated allowance are written off when
there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Bank. If, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed by adjusting the allowance account. The
amount of the reversal is recognized in the income statement (Note 7).
The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate. The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the cash flows that may result
from foreclosure less costs for obtaining and selling that collateral.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of the Bank’s internal credit grading system that considers credit risk characteristics. Future cash
flows on a group of financial assets that are collectively evaluated for impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those in
the group. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the years on which the historical loss experience
is based and to remove the effects of conditions in the historical period that do not exist at the balance sheet date. The methodology and assumptions used for estimating future cash flows are
reviewed regularly to reduce any differences between loss estimates and actual loss experience.
Direct write-offs for past due loans and receivables, partial or in full, may be performed during the year if inability of their collection is certain, i.e. impairment is recognized and documented. Write
off is made based on the court decisions, or based on decisions made by the Bank’s authorities.
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2.7.2. Loans and receivables (continued)
Uncollectable receivables write-off
On 24 November 2010, the Bank has adopted the Procedure on uncollectable receivables write-off. The procedure relates to the write-off of receivables that meet the following requirements: delay
in payment of receivable is more than 360 days; the Bank has failed to collect receivables despite the implementation of all activities of collection specified by its policies and procedures; judicial or
extrajudicial procedures of settlement of receivables have been initiated; receivables are fully impaired.
Exceptionally, receivables that do not fulfil above mentioned requirements may be written-off if such decision is made by the appropriate authority, Asset Quality Committee, in accordance with the
authorities delegated by the Board of Directors.
Written-off receivables are transferred to off balance sheet items and are held for 2 years, after which the Asset Quality Committee issues the decision on their permanent write-off or continuing
keeping such receivables in off-balance.
2.7.3. Renegotiated Loans
If the Bank estimates that the clients delay in payment are temporary and that, under adjusted agreed conditions, the client could fulfil obligations toward Bank regularly, the Bank seeks to restructure
loans rather than to activate collaterals. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, the loan is no
longer considered past due. Management continuously reviews renegotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loans continue to be subject
to an individual or collective impairment assessment, calculated using the loan’s original effective interest rate, before renegotiation.
2.7.4. Securities Held-to-Maturity
Securities held-to-maturity are financial assets with fixed or determinable payments and fixed maturities that the Bank’s management has the positive intention and ability to hold to maturity.
Securities held-to-maturity are subsequently measured at amortized cost using the effective interest rate method, less any allowance for impairment. Amortized cost is calculated by taking into
account any discount or premium on acquisition, over the period to maturity. The amount of impairment loss for investments held to maturity is calculated as the difference between the investments’
carrying amount and the present value of expected future cash flows discounted at the investment’s original effective interest rate.
2.7.5. Securities available for sale
Securities intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices are classified as
“available for sale”.
They comprise shares and investments in shares of other banks and companies, as well as treasury bills of the Republic of Serbia with maturity over 3 months.
Upon initial recognition, these instruments are measured at fair value. Investments in shares that are not quoted, and whose value cannot be determined with certainty, are measured at cost. The
fair values of quoted investments in active markets are based on current bid prices.
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2.7.5. Securities available for sale (continued)
Unrealised gains and losses are recognised directly in revaluation reserves, in equity, until the security is not sold, collected or otherwise realized, or until the security is not impaired. In the case of
disposal or impairment of security, accumulated gains or losses, previously recognised in equity, are recognised in gains or losses from sales of securities in the income statement. For all estimated
risks that investments in shares and other securities available for sale will not be collected, the Bank recognizes allowances for impairment.
Interest income on treasury bills of the Republic of Serbia is calculated and recognized monthly.
Dividend income in respect of investments in shares of other legal entities, and income from investments in equity instruments of other legal entities are recognised as income at the moment of
their collection.
In case of securities available for sale, the Bank assesses on an individual basis whether there is an objective evidence of impairment, based on the same criteria applied to financial assets carried at
amortized cost. Also, impairment already recognized represents cumulative loss valued as difference between amortized cost and current fair value, less any impairment loss previously recognized in
the income statement. The Bank records impairment changes on available-for-sale equity investments when there has been a significant of prolonged decline in the fair value below their cost. When
there is an evidence of impairment, the cumulative loss, measured as the difference between cost and fair value, decreased for any impairment of investment previously recognized in the income
statement, is transferred from equity and recognized in the income statement, while the increase in fair value, after recognition of impairment, is recognized in equity.
2.7.6. Deposits from Banks and customers
All deposits from banks and customers as well as other interest-bearing financial liabilities are initially recognized at the fair value decreased by transaction costs, except for financial liabilities through
profit and loss. After initial recognition, interest-bearing deposits and borrowings are subsequently measured at amortized cost using the effective interest method.
2.7.7. Borrowings
Borrowings are recognized initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortized cost.
Borrowings are classified as current liabilities, unless the Bank has unconditional right to postpone the settlement of obligations for at least 12 months after the balance sheet date.
2.7.8. Operating liabilities
Trade payables and other short-term operating liabilities are stated at nominal value.
2.8. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an
intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
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2.9. Special reserves for estimated losses on bank balance sheet assets and off-balance sheet items
Special reserves for estimated losses on balance sheet assets and off-balance sheet items are calculated in accordance with the National Bank of Serbia’s “Decision on the Classification of the
Bank Balance Sheet Assets and Off-balance Sheet Items” (“Official Gazette of the Republic of Serbia“, no. 94/2011). The new Decision on the Classification of the Bank Balance Sheet Assets and
Off-balance Sheet Items is applied from 31. December 2011 and, as the most significant changes comparing to the previous Decision, relates to the following: change of threshold for calculating
days of delay for corporate clients (decreased from 2,5% to 1%), introduce the historical default when determining the class of corporate clients, change in the way of treatment of historical delay
for individuals, changes in calculation of creditworthiness for corporate clients and individuals, abolition of percentege range for the calculation of reserves for estimated losses and introducing fixed
percentages.
All receivables from a single borrower (balance sheet and off-balance sheet exposure) are classified in categories from A to D, in accordance with the assessment of their recoverability. Collectibility
of receivables from the single borrower is assessed based on the borrower’s payment record and his financial position, number of days past due, overdue principal and interest as well as based on
the quality of collaterals pledged.
In accordance with the classification of receivables and pursuant to the aforementioned Decision, the amount of the special reserves against potential losses is calculated by applying the following
percentages: A (0%), B (2%), V (15%), G (30%) i D (100%) (applied percentages for 2010: A (0%), B (5%-10%), V (20%-35%), G (40%-75%) i D (100%)).
Through its internal act, the Bank has defined the criteria and methodology for determining classification of receivables and calculation of special reserves in accordance with the criteria defined
in the “Decision on the Classification of the Bank Balance Sheet Assets and Off-balance Sheet Items”. Basic criteria for classification of receivable include the borrower’s timeliness in settlement of
obligations, financial position and business performance, adequacy of cash flows as well as adequate collateral.
Calculated special reserves for estimated losses are reduced by allowances for impairment of balance sheet assets and provisions against losses on off-balance sheet items, which are calculated in
accordance with the Bank’s accounting policy disclosed in Note 2.7.2. and charged to the income statement.
The amount of special reserves for estimated losses, after reducing by allowances for impairment of balance sheet assets and provisions against losses on off-balance sheet items, is deducted from
capital when calculating banks regulatory capital.
2.10. Cash and cash equivalents
Cash and cash equivalents comprise of cash at current account and cash on hand (in Dinars and in foreign currency), gold and other precious metals, cheques and current accounts in foreign
currency held with other domestic banks and foreign banks as well as treasury bills of the Republic of Serbia with maturity up to 3 months.
2.11. Reverse repurchase agreements
Securities acquired under agreements to resell at a specified future date are recognized in the balance sheet.
The corresponding cash paid, including due interest, is recognized in the balance sheet. The difference between the purchase price and the price at resale date is treated as interest income and is
accrued over the life of the agreement.
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2.12. Equity Investments
2.12.1. Investments in subsidiaries
Subsidiaries are legal entities in which the Bank has ownership of more than 50 percent, or otherwise holds more than half of voting rights, or the right to manage the financial (business) policy of
the subsidiary.
As of 31 December 2011, the Bank owns 100% of capital of Intesa Leasing d.o.o., Beograd. Equity investment in the aforementioned subsidiary is stated at cost, less allowance for impairment
(Note 20).
In accordance with IAS 27 “Consolidated and Separate Financial Statements“, the Bank prepares consolidated financial statements. In preparing consolidated financial statements, the Bank
combines its financial statements and the financial statements of its subsidiary line by line by adding together same items of assets, liabilities, equity, income and expenses. All intra-group balances
and transactions, including income, expenses and unrealized gains, are eliminated in full.
2.12.2. Investments in associates
In accordance with IAS 28 “Investments in Associates“, investments in associates are investments in entity over which the investor has significant influence and that is neither a subsidiary nor an
interest in a joint venture.
Investments in associates are classified as financial asset available for sale and are recognized at cost less allowance for impairment. As at 31 December 2011, the Bank has investment in Investment
funds Management Company “Intesa Eurizon Asset Management” a.d. Beograd, and is entitled to 40% of total shares of the company.
2.13. Intangible Assets
Intangible assets consist of software, licenses and intangible assets under construction. Intangible assets are carried at cost less any accumulated amortization.
Licenses are initially recognized at cost. They have limited useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method in order to fully
write off the cost of these assets over their estimated useful lives (from 5 to 10 years).
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives
(from 2 to 5 years).
Costs associated with maintaining computer software programmes are recognized as an expense as incurred.
Amortization of intangible assets is calculated using the straight-line method to write down the cost of intangible assets to their residual values over their estimated useful lives, as follows:
- Licenses and similar rights
- Software
10%-20%
20%-50%
Intangible assets include unamortized software in progress, since it is still not in use.
71
2.14. Property and equipment and investment property
As of 31 December 2011, property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Bank and the cost of the item can be measured reliably. All other repairs and maintenance are recognized in the income statement of the financial period in which they are incurred.
The Bank owns property as investments to generate profits from rents and/or increases in property value on the market. Investment property is stated at cost less accumulated depreciation.
Depreciation is calculated using straight-line method applied to cost of fixed assets, using the following prescribed annual rates in order to write them off over their useful lives:
Buildings
Computer equipment
Furniture and other equipment
Investment property
2.5%
20%
7% - 25%
2.5%
In determining the basis for depreciation, the depreciable values of assets equal their cost or revalued amount, since the Bank assesses the residual values of assets as nil.
Calculation of depreciation of property and equipment commences at the beginning of month following the month when an asset is put into use. Assets under construction are not depreciated.
Depreciation charge is recognised as expense for the period when incurred.
The useful lives of the assets are reviewed periodically, and adjusted if necessary at each balance sheet date. Change in the expected useful life of an asset is considered as a change in an
accounting estimate.
Gains or losses from the disposal of property and equipment are credited or debited in the income statement, included in Other operating income or Other operating expenses, respectively.
The calculation of the depreciation for tax purposes is determined by the Law on Corporate Income Tax of the Republic of Serbia and the Rules on the Manner of Fixed Assets Classification in Groups
and Depreciation for Tax Purposes. Different depreciation methods used for the financial reporting purposes and the tax purposes give raise to deferred taxes (Note 13(c)).
2.15. Impairment of non-financial assets
In accordance with adopted accounting policy, at each balance sheet date, the Bank’s management reviews the carrying amounts of the Bank’s intangible assets, property and equipment. If there
is any indication that such assets have been impaired, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. If the recoverable amount of an
asset is estimated to be less than its carrying value, the carrying amount of the asset is reduced to its recoverable amount, being the higher of an asset’s fair value less costs to sell and value in use.
Impairment losses, representing a difference between the carrying amount and the recoverable amount of tangible and intangible assets, are recognized in the income statement as required by IAS
36 “Impairment of Assets”.
Non-financial assets (other than goodwill) that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
72
2.16. Finance Leases
Bank as a Lessee
Finance leases, which transfer to the Bank substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased
property or, if lower, at the present value of the minimum lease payments and included in property and equipment with the corresponding liability to the lessor included in other liabilities.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
are charged directly against income in interest expense.
It is regulated by the Agreement on leasing that the Bank can, but it does not have to, obtain ownership of the leased facility after the expiration of the Agreement on leasing.
2.17. Operating Leases
A lease is classified as an operating lease if it does not transfer to the Bank substantially all the risks and rewards incidental to ownership.
The total payments made under operating leases are included in Other operating expenses, when incurred, in the income statement using a straight-line basis over the period of the lease.
2.18. Provisions and Contingencies
Provisions are recognized when the Bank has a present obligation, legal or constructive, as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. In order to be maintained, the best possible estimates are considered, determined and, if
necessary, adjusted at each balance sheet date. When the outflow of the economic benefits is no longer probable in order to settle legal or constructive liabilities, provisions are derecognised
in income. Provisions are taken into account in accordance with their type and they can be used only for the expenses they were recognised initially for. Provisions are not recognised for future
operating losses.
Contingent liabilities are not recognized in the financial statements. Contingent liabilities are disclosed in the notes to the financial statements (Note 35), unless the possibility of an outflow of
resources embodying economic benefits is remote.
Contingent assets are not recognized in the financial statements. Contingent assets are disclosed in the notes to the financial statements when an inflow of economic benefits is probable.
2.19. Equity
Equity consists of share capital (ordinary shares), other capital, share premium, reserves from profit and retained earnings.
Dividends on ordinary shares are recognized as a liability and deducted from equity in the period in which they are approved by the Bank’s shareholders. Dividends for the year that are declared after
the balance sheet date are disclosed as an event after the balance sheet date.
73
2.20. Employee benefits
(a) Employee taxes and Contributions for Social Security
In accordance with the regulations prevailing in the Republic of Serbia, the Bank is obliged to pay contributions to various state social security funds. These obligations involve the payment of
contributions on behalf of the employee, by the employer in an amount calculated by applying the specific, legally-prescribed rates. The Bank is also legally obligated to withhold contributions from
gross salaries to employees, and on their behalf to transfer the withheld portions directly to the appropriate government funds. The Bank has no legal obligation to pay further benefits due to its
employees by the Pension Fund of the Republic of Serbia upon their retirement.
(b) Termination Benefits arising from Restructuring
Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The
Bank recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of
withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy.
(c) Other Employee Benefits - Retirement Benefits
In accordance with the Labour Law and article 33 of the General collective agreement, the Bank is obligated to pay retirement benefits in the amount equal to 3 average salaries in the moment of
payment, while this amount cannot be lower than 3 salaries of employee, 3 average salaries in the Bank in the moment of payment or 3 average salaries realized in the Republic of Serbia, according
to the latest data published by statistical office of the Republic, if that is favourable for the employee. The entitlement to these benefits usually depends on the employee remaining in service up to
retirement age and/or the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment.
Provision for retirement benefits and unused days of vacation are calculated by independent actuary and are recognized in the balance sheet at present value of discounted estimated future outflows
(Note 29 (c)).
2.21. Taxes and contributions
(a) Income Taxes
Current Income Tax
Current income tax represents an amount that is calculated and paid in accordance with the effective Law on Corporate Income Tax of the Republic of Serbia. During the year, the Bank pays income
tax in monthly instalments, based on the prior year Tax return. Final tax base used for calculating income tax at the prescribed rate of 10% is disclosed in the Tax return.
In order to determine the amount of the taxable profit, the accounting profit is adjusted for certain permanent differences and reduced for certain investments made during the year, as disclosed in
the current year Tax return. Tax return is submitted to Tax authorities 10 days after the submission of the financial statements, i.e. until the 10 March of the following year.
In accordance with the Law on Corporate Income Tax of the Republic of Serbia, when investing in fixed assets tax credit is recognized in the amount equal to 20% of the investment, and this tax
credit may not exceed 50% of computed tax for the year in which this investment was made. Unused portion of tax credit may be transferred to the future income tax account, but not more than
10 years.
74
2.21. Taxes and contributions
(a) Income Taxes (continued)
Deferred income tax
Deferred tax is provided for using the balance sheet liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. Tax rate enacted at the balance sheet date is used to determine the deferred income tax amount.
Deferred tax liabilities are recognised for all taxable temporary differences, except where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with
investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized except where the deferred tax asset relating to the
deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries and associates when deferred tax assets are recognised
only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all
or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be recovered.
75
2.21. Taxes and contributions (continues)
(a) Income Taxes (continued)
Deferred income tax (continued)
Deferred tax assets and liabilities are calculated at tax rates that are expected to be effective in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the balance sheet date.
Current and deferred taxes are recognized as income or expense and are included in the profit for the period.
Deferred income taxes related to items that are recorded directly in equity are also recorded in equity.
(b) Taxes and contributions not related to operating result
Taxes and contributions that are not related to the Bank’s operating result include property taxes, VAT, employer contributions on salaries, and various other taxes and contributions paid pursuant
to republic and local tax regulations. These taxes and contributions are included within other operating expenses (Note 10).
2.22. Funds Managed on Behalf of Third Parties
The funds that the Bank manages on behalf of, and for the account of third parties, are disclosed within off-balance sheet items (Note 32(a)). The Bank is not exposed to any risk in respect of repayment
of these placements.
76
3. INTEREST INCOME AND INTEREST EXPENSE
a) Interest income and expense by sector structure are presented as follows:
2011
3,032,179
15,564,957
2,911,577
436,790
72,194
9,072,766
RSD thousand
2010
2,460,158
13,663,832
2,456,332
176,055
92,697
7,782,029
Total
Interest expense
– National Bank of Serbia and other banks
– Corporate customers
– Public sector
– Other customers
– Foreign entities
– Retail customers
31,090,463
26,631,103
744,530
3,175,903
520,975
1,021,329
2,082,776
4,107,195
500,874
2,179,000
503,128
1,860,601
1,666,560
2,575,546
Total
Net interest income
11,652,708
9,285,709
19,437,755
17,345,394
Interest income
– National Bank of Serbia and other banks
– Public sector
– Other customers
b) Interest income and expense by type of financial instruments are presented as follows:
Interest income
Loans
Reverse REPO transactions
Obligatory reserve
Deposits
Securities
Other placements
2011
RSD thousand
2010
25,656,928
2,045,821
253,197
19,152
2,094,090
1,021,275
21,843,034
1,842,245
284,532
4,410
2,042,429
614,453
Total
31,090,463
26,631,103
1,955,356
9,682,711
14,641
1,544,708
7,734,632
6,369
Total
11,652,708
9,285,709
Net interest income
19,437,755
17,345,394
Interest expenses
Loans
Deposits
Other interest expenses
77
4. FEE AND COMMISSION INCOME AND EXPENSE
2011
2,185,359
417,888
71,591
2,250,461
RSD thousand
2010
2,053,584
298,340
76,609
2,246,638
4,925,299
833,885
1,618,922
4,675,171
864,636
1,410,698
Fee and commission expense
Fee for payment transaction services:
– Domestic
– International
National Bank of Serbia’s fee and commission
Credit Bureau’s fees
Fee for cards operations
Other fees and commissions
7,378,106
186,411
108,914
51,559
29,846
1,538,652
27,658
6,950,505
166,094
48,331
43,571
37,890
1,427,901
62,235
Total
1,943,040
1,786,022
Net fee and commission income
5,435,066
5,164,483
Fee and commission income
Fee for banking services:
- Domestic payment transaction services
- International payment transaction services
- Loan operations
- Cards operations
Commissions in respect of issued guaranties and letter of credits
Other fee and commission
Total
Other fees and commission income during 2011 mostly relate to fees for the maintenance of current accounts in the amount of RSD 1,031,474 thousand (2010: RSD 967,203 thousand) as well as
fees for payment slips, EDB and Telekom Srbija in the amount of RSD 189,826 thousand (2010: RSD 156,547 thousand).
5. NET FOREIGN EXCHANGE GAINS/(LOSSES)
Foreign exchange gains
Foreign exchange losses
Net foreign exchange gains/(losses)
78
2011
121,225,609
(119,288,336)
RSD thousand
2010
84,576,542
(98,375,347)
1,937,273
(13,798,805)
6. OTHER OPERATING INCOME
Recovery of receivables previously written-off
Rental income
Gains on sales of property and equipment and surpluses
Reimbursed expenses
Other income
2011
54,666
18,442
43,551
5,781
291,808
RSD thousand
2010
157,132
18,928
131,549
5,270
84,547
Total
414,248
397,426
7. IMPAIRMENT LOSSES ON FINANCIAL ASSETS AND PROVISIONS, NET
(a) Impairment losses and provisions, net
Provisions for off-balance sheet items
Provisions for:
– long-term employee benefits
– litigations
– other liabilities – arising from VAT
2011
11,482,696
591,938
83,018
138,490
45,288
266,796
RSD thousand
2010
9,267,879
1,978,460
145,882
82,106
41,844
269,832
Total
Reversal of impairment losses
12,341,430
11,516,171
Reversal of impairment losses on balance sheet assets
Suspended interest
Release of provision for losses on off-balance sheet
Assets
Release of provisions for:
– Long-term employee benefits
– Litigations
6,835,834
213,400
7,049,234
4,697,193
102,085
4,799,278
969,934
32,698
30,186
62,884
2,119,114
140,992
92,627
233,619
Total
8,082,052
7,152,011
Impairment losses and provisions, net
4,259,378
4,364,160
Additions to allowances for impairment of financial assets and provisions:
Impairment losses for balance-sheet assets
79
7. IMPAIRMENT LOSSES ON FINANCIAL ASSETS AND PROVISIONS, NET (continued)
b) Movements in the Allowance for Impairment of Financial Assets and Provisions
Movements in the allowance for impairment of loans and other financial assets and provisions during the 2011 are presented as follows:
RSD thousand
Balance as at
31 December 2010
Additions
Reversals
FX losses on impairment for
financial assets
FX gains on impairment of
financial assets
Transfer to off-balance
(Note 32 (d))
Other
Balance as at
31 December 2011
80
Cash and cash
Interest and Loans, advances
equivalents fee receivable
and deposits
(Note 15)
(Note 17)
(Note 18)
Securities
available for
sale
(Note 19)
Equity
investments
(Note 20)
Other
placements
(Note 21)
Other assets
(Note 24)
Provisions
(Note 29)
Total
1,690
3,811
(1,049)
1,559,748
1,427,912
(470,695)
15,264,727
8,888,345
(6,107,542)
16,148
20,755
-
894
20
-
943,760
1,129,076
(457,475)
10,876
12,777
(12,473)
2,419,833
858,734
(1,032,818)
20,217,676
12,341,430
(8,082,052)
355
17,408
966,827
-
-
49,614
333
105,014
1,139,551
(303)
(20,309)
(1,046,398)
-
-
(48,911)
(363)
(121,741)
(1,238,025)
-
(699,416)
-
(2,632,533)
-
(1,199)
(194)
(377,779)
-
(3,101)
(12)
-
(3,709,740)
(4,494)
4,504
1,814,648
15,333,426
35,704
720
1,238,285
8,049
2,229,010
20,664,346
8.SALARIES, WAGES AND OTHER PERSONAL EXPENSES
Net salaries
Tax on employee benefits
Contributions on employee benefits
Other personal expenses
Total
2011
3,167,371
486,848
680,657
99,302
RSD thousand
2010
2,859,218
442,722
619,000
75,356
4,434,178
3,996,296
2011
223,716
641,260
RSD thousand
2010
201,861
688,830
864,976
890,691
2011
383,867
807,932
735,776
366,643
812,756
402,756
889,516
197,873
888,975
196,093
208,722
267,401
10,803
228,862
RSD thousand
2010
416,713
825,078
704,232
323,374
681,952
390,045
828,144
181,921
774,451
161,662
170,510
508,680
20,941
188,577
6,397,975
6,176,280
9. DEPRECIATION AND AMORTIZATION
Amortization of intangible assets (Note 22)
Depreciation of property, equipment and investment property (Note 23)
Total
10. OTHER OPERATING EXPENSES
Material, energy and spare parts
Professional services
Advertising, marketing and representation
Mail and telecommunication expenses
Insurance premiums
Maintenance of property and equipment
Rental cost
Fees and commission
Taxes and contributions
Physical-technical security
General and administrative expenses
Direct write-off of receivables
Losses on write-offs, disposals and shortages of property, equipment and intangible assets
Other expenses
Total
81
11. GAINS FROM CHANGES IN VALUE OF ASSETS AND LIABILITIES
2011
RSD thousand
2010
Gains from changes in value of loans and receivables
Gains from changes in value of securities
Gains from changes in value of derivatives
Gains from changes in value of other financial assets
Gains from changes in value of liabilities
21,876,125
298,009
142,477
1,136,154
23,974,236
2,879
3,363
265
300,258
Total
23,452,765
24,281,001
2011
RSD thousand
2010
Losses from changes in value of loans and receivables
Losses from changes in value of securities
Losses from changes in value of derivatives
Losses from changes in value of liabilities
22,203,016
534,763
164,916
1,128,385
8,708,599
94,101
704,471
Total
24,031,080
9,507,171
2011
1,113,156
(23,673)
9,410
RSD thousand
2010
871,597
(35,407)
-
1,098,893
836,190
12. LOSSES FROM CHANGES IN VALUE OF ASSETS AND LIABILITIES
13. INCOME TAX
a) Components of Income Tax
The components of income tax expense are:
Current income tax
Profit from created deferred tax assets and reduction of deferred tax liabilities
Loss from reduction deferred tax assets and creation of deferred tax liabilities
Total income tax
82
13. INCOME TAX (continued)
(b) Reconciliation of total amount of income tax stated in the income statement with the amount of profit before tax multiplied by prescribed tax rate
is as follows:
2011
RSD thousand
2010
10,689,733
8,456,120
Income tax at the rate of 10%
Tax effect of non-deductable expenses
Tax credits on investment in property and equipment
Effects of interest on arm’s length basis
Other
1,068,973
60,278
(66,114)
6,049
29,707
845,612
33,323
(49,208)
6,463
Income taxes stated in the income statement
1,098,983
836,190
10.28%
9.89%
Profit before tax
Effective tax rate
For the purpose of determining income taxes for the year ended 31 December 2011, the Bank increased the tax base by the amounts of provisions charged to the income in the total amount of
RSD 266,796 thousand, which includes the following:
-
-
-
-
Provision for litigations in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” in the amount of RSD 138,490 thousand;
Provision for restructuring in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” in the amount of RSD 70,237 thousand;
Provisions for retirement benefits in accordance with IAS 19 “Employee Benefits“ in the amount of RSD 12,781 thousand; and
Provisions for tax liabilities RSD 45,288 thousand.
(c) Deferred Tax Assets
Deferred tax assets relate to taxable temporary differences between carrying amount of tangible and intangible assets and their taxable base, as well as to differences arised from fair value of derivatives and their carrying amount.
Movements in deferred tax assets during the year were as follows:
Balance as at 1 January
Effects of temporary differences credited to the income statement
Balance as at 31 December
2011
RSD thousand
2010
33,054
14,263
33,054
47,317
33,054
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14. EARNINGS PER SHARE
Pursuant to the Serbian Business Registers Agency Decision no. BD 159633/2006 dated 5 October 2006, the Bank became a closed joint-stock company, and therefore it is not obliged to calculate
and disclose the earning per share as required by IAS 33 “Earning per Share”.
15. CASH AND CASH EQUIVALENTS
In Dinars
Gyro account
Cash on hand
Bonds of Ministry of Finance of Republic of Serbia, with maturity up to 90 days
In foreign currency
Current accounts held with foreign banks
Foreign currency cash on hand
Other monetary assets
Gold and precious metals
Gross balance as at 31 December
Minus: Allowance for impairment (Note 7 (b))
- In foreign currency
2011
RSD thousand
2010
10,146,499
2,743,000
315,667
7,847,530
2,261,201
7,890,224
13,205,166
17,998,955
541,445
2,383,905
40,365
487,608
1,484,068
34,096
2,965,715
2,005,772
56,184
50,211
16,227,065
20,054,938
(4,504)
(1,690)
(4,504)
(1,690)
16,222,561
20,053,248
Obligatory reserve in dinars is minimal reserve in dinars allocated in accordance with the National Bank of Serbia’s Decision on banks’ obligatory reserve held with the National Bank of Serbia (Official
Gazette of Republic of Serbia no. 3/2011).
Bank is required to calculate and allocate the obligatory reserve in dinars by applying 5% on the average daily balance of liabilities in dinars with contractual maturity up to 730 days, while 0%
is applied on the average daily balance of liabilities in dinars with contractual maturity over 730 days. These percentages are calculated on the average daily balance of liabilities in local currency
during the preceding calendar month and a bank allocates calculated amount to its gyro account with National bank of Serbia. The Bank calculates obligatory reserve in dinars on the deposits in
dinars, loans and securities, and other obligations in dinars, excluding dinar deposits received under transactions performed on behalf and for the account of third parties that are not in excess of
the amount of the investment made from such deposits as defined by the Decision.
During the maintenance period, the Bank is obliged to maintain average daily balance of obligatory reserve in dinars at the level of calculated obligatory reserve in dinars.
As at 31 December 2011, obligatory reserve in dinars amounted to RSD 11,447,878 thousand and it was in accordance with the aforementioned Decision of the National Bank of Serbia.
The average interest rate on the balance of the obligatory reserve in dinars set aside equalled 2.50% annually during 2011.
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16. REVOCABLE DEPOSITS AND LOANS
In Dinars
Reverse repurchase agreements
In foreign currency
Obligatory reserve with the National Bank of Serbia
2011
33,000,000
RSD thousand
2010
7,000,000
33,000,000
50,162,819
7,000,000
44,409,640
50,162,819
83,162,819
44,409,640
51,409,640
Obligatory reserve with the National Bank of Serbia in foreign currency
In accordance with the National Bank of Serbia’s Decision on banks’ obligatory reserve held with the National Bank of Serbia (Official Gazette of Republic of Serbia no. 3/2011), the Bank calculates
and allocates the obligatory reserves by applying 30% on the average daily balance of foreign currency deposits as well as on the average daily balance of foreign currency clause-indexed dinar
liabilities in the preceding calendar month, except for liabilities defined by the Decision, with contractual maturity up to 730 days. The Bank applies 25% on the aforementioned liabilities with
contractual maturity over 730 days.
The Bank is obliged to maintain average daily balance of obligatory foreign currency reserve at the level of calculated foreign currency reserve, in the calculation period.
The National Bank of Serbia does not pay interest on obligatory reserve in foreign currency.
As at 31 December 2011, the Bank’s obligatory reserve in foreign currency was in compliance with the aforementioned Decision of the National Bank of Serbia.
In accordance with the Decision on obligatory reserves held at the National Bank of Serbia that leasing companies are obliged to keep on separate account with the bank (Official Gazette of Republic
of Serbia no. 12/2010), the Bank is obliged to calculate and allocate obligatory reserve on foreign currency financial assets that leasing companies keep on separate account with the Bank (obligatory
leasing reserve) at a rate of 100% on average daily balance of those liabilities during the previous calendar month.
Calculated obligatory leasing reserve the Bank allocates in EUR, on foreign currency accounts with National Bank of Serbia, and exceptionally, when due to allocation of obligatory leasing reserve in
EUR the Bank’s foreign exchange risk ratio would not comply with the Decision on Risk Management of National Bank of Serbia, the Bank may allocate obligatory leasing reserve in USD.
Reverse repurchase agreements
Reverse repurchase agreements are recognized as placements or borrowings. They represent purchase and sale of securities where the contractual parties agreed that securities are sold by a seller
to a buyer at purchase cost as of the date of transaction, while at the same time the buyer is obligated to resell the same securities to the seller, who is obligated to pay the agreed repurchase price.
Reverse repurchase agreements in the amount of RSD 33,000,000 thousand as at 31 December 2011 relate to purchase of treasury bills from the National Bank of Serbia with maturity period to
14 days, and bearing an interest rate 9.75% per annum (31 December 2010: RSD 7,000,000 thousand).
85
17. INTEREST AND FEE RECEIVABLES, RECEIVABLES FROM SALES, CHANGES IN FAIR VALUE OF DERIVATIVES AND OTHER RECEIVABLES
In Dinars
Interest and fee receivables:
– Other banks
– National Bank of Serbia
– Public sector
– Other customers
Receivables from sales
Receivables from changes in fair value of derivatives
(Note 35 (e))
In foreign currency
Interest and fee receivables:
– Other banks
– Public sector
– Other customers
Gross receivables
Minus: Allowance for impairment (Note 7(b))
– in dinars
– in foreign currency
86
2011
RSD thousand
2010
152,284
11,158
3,003,268
44,484
736,634
605
608,063
1,063
70,321
8,408
3,014,935
34,705
537,141
234
148,603
998
142,477
3,363
4,700,036
3,818,708
63
59,095
14,110
8,679
18,254
73
103,664
27
12,640
11,530
3,404
100,201
131,338
4,800,237
3,950,046
(1,775,715)
(38,933)
(1,495,317)
(64,431)
(1,814,648)
(1,559,748)
2,985,589
2,390,298
18. LOANS AND ADVANCES
Loans and advances by type of customer
RSD thousand
Short-term
2011
Long-term
Total
Short-term
2010
Long-term
In dinars
Loans and placements to:
– Other banks
-Corporate customers
– Public sector
– Other customers
1,043,050
54,571,364
6,188,390
83,675
660
4,418,055
6,665,241
94,735,729
71,762,452
11,877,220
347,633
1,572,045
7,708,291
149,307,093
77,950,842
11,960,895
348,293
5,990,100
1,304,119
64,661,551
5,613,118
58,005
519
1,686,420
2,803,533
80,743,681
66,693,854
8,619,119
223,058
1,540,603
4,107,652
145,405,232
72,306,972
8,677,124
223,577
3,227,023
Total in RSD
66,305,194
186,960,320
253,265,514
73,323,732
160,623,848
233,947,580
In foreign currency
Loans and placements to:
– Other banks
– Public sector
– Other customers
673
1,403,435
59,287
82
209,579
197,789
1,260
4,969,120
486,359
4,070,918
556
6,579
1,933
6,372,555
545,646
4,071,000
210,135
204,368
1,965
1,163,433
9,184
1,467
13,451,960
8,433
6,076,972
511,756
4,103,036
1,073,392
2,839
1,965
7,240,405
520,940
4,104,503
14,525,352
11,272
Total in foreign currency
1,870,845
9,534,792
11,405,637
14,636,442
11,767,995
26,404,437
68,176,039
196,495,112
264,671,151
87,960,174
172,391,843
260,352,017
(10,501,265)
(4,832,161)
(15,333,426)
(10,460,709)
(4,804,018)
(15,264,727)
57,674,774
191,662,951
249,337,725
77,499,465
167,587,825
245,087,290
Gross loans and advances
Minus: Allowance for impairment
(Note 7(b))
Total
Short-term loans have been granted to corporate customers for financing business activities in trading, manufacturing, construction, agriculture and food processing industry as well as for other
purposes, at the rates ranging from 8.25% to 24% per annum for loans in Dinars, and from 4.4% to 14.18% per annum for loans indexed by a foreign currency clause or indexed in foreign currency.
Long-term loans to corporate customers in dinars bear interest rate ranging from 11.12% to 21.18% per annum, and from 2.78% to 14.98% per annum for long-term loans in dinars indexed by
a foreign currency as well as loans in foreign currency.
Short-term retail loans and loans to small Corporate customers bear interest rates ranging from 5% to 20% annually in case of loans indexed by a foreign currency, and from 3.50% to 27.00% for
loans that are not indexed by a foreign currency.
Interest rate on retail overdrafts is 2.8% monthly, and on overdrafts for small Corporate customers 2.9% monthly.
Long-term retail loans and loans to small Corporate customers have been granted for purchase of consumer goods, renovating, adaptation and purchase of business and residential space for a
period from 18 months u to 30 years, bearing interest at the rates ranging from 4.50% to 20% annually in case of loans indexed by a foreign currency and from 2.71% to 25% annually for loans
that are not indexed by a foreign currency.
87
19. SECURITIES
Securities and other placements:
– Equity investments
– Debt securities issued by the Government of the
Republic of Serbia
2011
Securities at fair
value through Securities available
profit or loss
for sale
RSD thousand
2010
Total
Securities at fair
value through
profit or loss
Securities available
for sale
Total
-
49,223
49,223
-
52,308
52,308
38,869
17,639,819
17,678,688
49,580
19,422,931
19,472,511
38,869
(11,631)
17,689,042
104,011
17,727,911
92,380
49,580
(15,677)
19,475,240
(112,306)
19,524,820
(127,982)
Gross securities
Less: Allowance for impairment (Note 7(b))
27,238
-
17,793,053
(35,704)
17,820,291
(35,704)
33,903
-
19,362,934
(16,148)
19,396,837
(16,148)
Balance as at
31 December
27,238
17,757,349
17,784,587
33,903
19,346,786
19,380,689
Fair value adjustments
20. EQUITY INVESTMENTS
Investments in subsidiaries:
– Intesa Leasing d.o.o., Beograd – 100.00% of capital
Equity investments in other legal entities:
Alma Mons d.o.o.,Novi Sad
Bancor Consulting Group d.o.o., Novi Sad
Pan trgovina d.o.o., Novi Sad
Nikola Tesla d.o.o., Subotica
Veeda d.o.o., Vranje
Poslovni Inkubator d.o.o., Beočin
88
2011
962,496
RSD thousand
2010
947,941
- - 962,496
30
267
466
29
(720)
947,941
30
267
466
161
29
33
(894)
72
92
962,568
948,033
21. OTHER PLACEMENTS
In Dinars
Purchased placements - Factoring
Receivables for guarantees paid
Placements in respect of assigned receivables
Other placements
In foreign currency
Other placements
2011
RSD thousand
2010
4,184,914
1,422,151
6,862,647
242,017
2,511,193
937,724
4,028,103
2,409,687
12,711,729
9,886,707
48,137
1,327,631
48,137
1,327,631
Gross placements
– in dinars
12,759,866
11,214,338
(1,238,285)
(1,238,285)
(943,751)
(9)
(943,760)
11,521,581
10,270,578
89
22. INTANGIBLE ASSETS
Licences
Software Intangible assets in progress
RSD thousand
Total
COST
Balance as at 1 January 2010
Additions during the year
Transfers from assets in progress
Disposals and write offs
220,961
55,539
-
605,582
163,806
(24,978)
51,154
191,938
(219,345)
-
877,697
191,938
(24,978)
Balance as at 31 December 2010
276,500
744,410
23,747
1,044,657
64
220,337
257,653
(220,401)
257,653
-
276,564
964,747
60,999
1,302,310
ACCUMULATED AMORTIZATION
Balance as at 1 January 2010
Amortization (Note 9)
99,016
28,551
207,296
173,310
-
306,312
201,861
-
(24,978)
-
(24,978)
127,567
355,628
-
483,195
33,797
189,919
-
223,716
161,364
545,547
-
706,911
– 31 December 2011
115,200
419,200
60,999
595,399
148,933
388,782
23,747
561,462
Transfers from assets in progress
Amortization (Note 9)
Net book value as at:
90
23. PROPERTY, EQUIPMENT AND INVESTMENT PROPERTY
RSD thousand
Land and buildings
Equipment and
equipment under
finance lease
Leasehold
improvements
Construction in
progress
Total property and
equipment
Investment
property
5,606,964
157,087
(338,674)
3,573,799
444,838
(179,748)
492,572
54,146
(21,206)
48,305
675,591
(656,071)
-
9,721,640
675,591
(539,628)
20,713
-
5,425,377
3,838,889
525,512
67,825
9,857,603
20,713
3,076
150,999
(14,636)
481,843
(381,055)
130,803
(27,440)
853,620
(763,645)
-
856,696
(423,131)
1,116
-
5,564,816
3,939,677
628,875
157,800
10,291,168
21,829
661,538
2,197,728
228,624
-
3,087,890
2,902
106,763
(109,524)
482,852
(166,219)
98,698
(13,565)
-
688,313
(289,308)
517
- 658,777
2,514,361
313,757
-
3,486,895
3,419
103,822
(5,199)
446,571
(374,486)
90,198
(22,641)
-
640,591
(402,326)
669
- 757,400
2,586,446
381,314
-
3,725,160
4,088
4,807,416
1,353,231
247,561
157,800
6,566,008
17,741
4,766,600
1,324,528
211,755
67,825
6,370,708
17,294
COST
Balance as at
1 January 2010
Transfers from construction in progress
Balance as at
31 December 2010
Transfers from construction in progress
Balance as at
31 December 2011
ACCUMULATED DEPRECIATION
Balance as at
1 January 2010
Depreciation
(Note 9)
Balance as at
31 December 2010
Depreciation
(Note 9)
Balance as at
31 December 2011
Net book value as at:
As at 31 December 2011, the Bank has title deeds for property it owns and has no buildings pledged as collateral.
As at 31 December 2011, the carrying value of equipment under finance lease amounts to RSD 142,837 thousand (31 December 2011: RSD 158,772 thousand).
Using the external and internal sources of information in accordance with IAS 36 “Impairment of Assets”, The Bank’s management concluded that there were no indications of impairment of the
property and equipment in use at the balance sheet date.
91
24. OTHER ASSETS
2011
8,416
RSD thousand
2010
8,367
2,415
55,488
876,423
1,986
808,377
741,493
52,509
10,001
20,719
38,899
260,537
168,213
21,175
866
123,558
954,211
18,838
386,657
271,647
58,938
12,753
27,555
407,838
159,096
130,568
-
Total other assets
3,066,651
(8,049)
2,560,892
(10,876)
Balance at 31 December
3,058,602
2,550,016
Receivables from employees
Receivables for taxes paid in advance,
except income taxes
Advances paid
Other receivables from operations
Assets received on foreclosed loans
Other assets
Accrued interest income:
– in dinars
Other accrued income
Deferred interest expenses:
– in dinars
Other deferred expenses:
– in dinars
Other accruals:
– in dinars
Other receivables from operations as at 31 December 2011 amounting to RSD 876,423 thousand mostly relate to receivables in dinars with respect to payment cards of other card issuers Master
Card in the amount of RSD 108,885 thousand and VISA in the amount of RSD 492,820 thousand.
92
25. TRANSACTION DEPOSITS
Other banks
Financial institutions
Investment and voluntary pension funds
Insurance companies
Holding companies
Corporate
Public sector
Retail
Foreign banks
Other foreign entities
Other customers
Balance as of 31 December
RSD
146,345
53,861
395,094
314,200
256,131
19,687,227
12,862
9,866,368
18,638
116,718
2,081,121
32,948,565
2011
Foreign currency
65,888
9,275
17,129
102,981
27,955
23,020,195
29,361
27,137,986
25,824
924,802
368,468
51,729,864
Total
212,233
63,136
412,223
417,181
284,086
42,707,422
42,223
37,004,354
44,462
1,041,520
2,449,589
84,678,429
RSD
92,647
32,872
399,413
318,356
145,838
17,468,120
16,058
7,395,614
2,637
99,762
1,900,672
27,871,989
2010
Foreign currency
62,706
36,918
21,082
237,987
332,587
10,749,674
56,020
24,084,114
12,800
1,262,676
350,248
37,206,812
RSD thousand
Total
155,353
69,790
420,495
556,343
478,425
28,217,794
72,078
31,479,728
15,437
1,362,438
2,250,920
65,078,801
Transaction deposits of corporate clients are placed with the interest ranging from 0.5% to 9.75% per annum, depending on the currency and the amount of deposit.
Transaction deposits of retail clients in dinars are not interest bearing, while a vista deposits bear interest at rate from 4% per annum, and from 0.3% per annum for transaction deposits in EUR
and other currencies.
26. OTHER DEPOSITS
Short term
2011
Long term
Total
Short term
In RSD
Saving deposits:
– Retail
Special purpose deposits
Other deposits
Total in RSD
In foreign currency
Savings deposits:
– Retail
Special purpose deposits
Other deposits
1,457,539
10,561
2,845,485
31,799,614
36,113,199
72,290,151
1,441,333
3,831,802
21,963,603
3,076
640,631
112,545
756,252
7,729,468
188,688
3,113,224
3,258,646
1,460,615
10,561
3,486,116
31,912,159
36,869,451
80,019,619
1,630,021
6,945,026
25,222,249
99,526,889
14,290,026
135,640,088
15,046,278
2010
RSD thousand
Long term
Total
626,463
6,339
2,490,331
28,583,491
31,706,624
66,310,611
1,401,460
4,282,550
56,171,368
1,604
926,324
120,198
1,048,126
6,800,459
58,742
3,372,642
279,503
628,067
6,339
3,416,655
28,703,689
32,754,750
73,111,070
1,460,202
7,655,192
56,450,871
113,816,915
128,165,989
10,511,346
138,677,335
150,686,366
159,872,613
11,559,472
171,432,085
Term deposits in dinars and foreign currency bear interest rates ranging from 1.8% to 11.75% per annum, depending on the currency and the period that funds have been deposited for.
Retail short-term deposits in dinars bear interest at rates ranging from 8% to 12% per annum, depending on the period that the funds have been deposited for. The interest rates on the retail
short-term deposits in foreign currency range from 1.0% do 6.5% per annum, depending on the period the funds have been deposited for as well as the currency.
93
26. OTHER DEPOSITS (continued)
Retail long-term deposits in foreign currency bear interest at rates ranging from 4.0% to 7.0% per annum for deposits in EUR, i.e. at rates rangning from 2.3% to 4.0% per annum for other currencies, depending on the period that the funds have been deposited for.
The structure of other deposits by type of customers is as follows:
Banks
Corporate customers
Retail customers
Foreign entities
Public sector
Other customers
2011
9,253,640
31,123,536
363,410
4,182,103
3,230,641
8,981,078
RSD thousand
2010
6,433,366
30,483,986
333,774
36,414,691
2,169,712
9,319,030
57,134,408
85,154,559
2011
RSD thousand
2010
692,726
4,472,984
4,844,789
178,558
179,312
62,773
1,301,741
4,819,885
4,355,356
175,561
401,738
17,567
10,431,142
11,071,848
The structure of special purpose deposits by type of customers is as follows:
Banks
Corporate customers
Retail customers
Foreign entities
Public sector
Other customers
94
27. BORROWINGS
Short term
2011
Long term
Total
In RSD
Borrowings:
- Other banks
- Corporate customers
Other financial liabilities
800,000
110,671
-
1,483
-
801,483
110,671
-
Total in RSD
910,671
1,483
In foreign currency
Borrowings:
- Other banks
- Public sector
- Foreign entities
Other financial liabilities
1,205,796
6,278,454
2,747,288
10,231,538
Balance as of
31 December
11,142,209
Short term
2010
Long term
RSD thousand
Total
189,620
1,160,720
2,966
-
2,966
189,620
1,160,720
912,154
1,350,340
2,966
1,353,306
2,258,207
43,704,563
45,962,770
1,205,796
2,258,207
49,983,017
2,747,288
56,194,308
2,182,221
2,182,221
2,357,698
39,362,017
41,719,715
2,357,698
39,362,017
2,182,221
43,901,936
45,964,253
57,106,462
3,532,561
41,722,681
45,255,242
Interest rates on long-term borrowings in dinars range from 0.5% to 5.5% per annum.
Interest rates on long-term borrowings in foreign currency range from EURIBOR 3M – 0.01% to EURIBOR 6M + 6.45%, depending on the date of the loan approval and the currency.
95
27. BORROWINGS (continued)
As of 31 December 2011, borrowings from foreign banks, which are presented within borrowings from foreign entities, include loans granted to the Bank by the members of Intesa Sanpaolo Group,
as follows:
Creditor
Intesa Sanpaolo S.p.A., Italy
Intesa London
Vseobecna Uverova banka
A.S., Slovačka
96
Currency
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
Amount
2,500,000
10,000,000
10,000,000
10,000,000
10.000.000
5.000.000
10,000,000
500,000
2,000,000
19,500,000
Maturity Date
13.01.2016.
13.01.2014.
22.12.2014.
21.12.2016.
03.12.2015.
25.07.2018.
07.11.2016.
19.12.2014.
13.01.2016.
31.12.2015.
Interest rate
3M Euribor – 1 b.p.
3M Euribor –1 b.p.
3M Euribor –1 b.p.
3M Euribor
3M Euribor + 1 b.p.
3M Euribor
3M Euribor
6M Euribor +1.00% p.a.
2011
145,335
392,403
392,403
523,205
523,205
366,243
654,006
26,160
116,268
2,040,498
RSD thousand
2010
175,830
527,491
527,491
632,989
659,364
421,993
791,236
35,166
140,664
2,057,215
EUR
EUR
EUR
EUR
EUR
EUR
40,000,000
15,000,000
60,000,000
40,000,000
500,000
15,000,000
03.05.2016.
20.08.2029.
09.06.2014.
28.05.2014.
31.05.2017.
10.04.2031.
3M Euribor +358 b.p.
3M Euribor +3.64%
4,185,636
1,412,652
6,278,454
4,185,636
52,320
1,569,614
4,219,928
1,503,349
6,329,893
4,219,928
-
22,864,038
22,242,537
27. BORROWINGS (continued)
Other borrowings from international financial organizations and foreign corporate entities are shown in the following table:
Creditor
EIB
EIB
EIB
EIB
EIB
EIB
EIB
KfW
KfW
KfW
KfW
KfW
KfW
EBRD
EBRD
EBRD
EBRD
EFSE
EFSE
EFSE
APEX
CEB
NBS
Currency
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR Amount
1,508,397
2,633,096
1,631,253
13,818,410
6,411,464
6,215,949
7,781,430
14,000,000
16,000,000
13,000,000
17,000,000
15,000,000
15,000,000
10,000,000
30,000,000
4,000,000
10,000,000
25,000,000
20,000,000
5,000,000
9,487,000
20,000,000
Maturity Date
20.06.2015
20.06.2017
20.05.2016
15.06.2018
10.07.2019
20.11.2017
24.08.2018
30.12.2015
30.12.2015
31.12.2016
30.12.2016
30.06.2018
30.06.2018
14.07.2014
08.09.2015
18.06.2016
18.09.2016
22.09.2016
15.12.2018
15.12.2021
16.07.2022
16.12.2019
8 years from the date of
19,731,805 withdrawal of tranche Balance as of 31 December
Interest rate
3M Euribor +7.6 b.p.
3M Euribor + 10.6 b.p.
6M Euribor + 6.45% p.a.
1.2%p.a.
1.5% p.a.
2.94% p.a.
6M Euribor + 2.7 % p.a.
2011
157,840
275,530
170,696
1,445,971
670,901
650,442
814,256
1,065,435
1,217,640
1,236,665
1,617,178
784,807
784,807
896,922
3,139,227
418,564
523,205
2,616,023
1,046,409
261,602
992,728
1,046,409
RSD thousand
2010
159,133
277,787
172,094
1,457,817
676,398
655,771
820,927
1,342,704
1,534,519
1,371,477
1,793,469
1,054,982
3,164,946
2,637,455
1,000,861
-
1% p.a. 1,265,475
1,356,838
23,098,732
19,477,178
Short-term loans from banks and foreign entities relates to:
Creditor
VOLKSBANK AD BEOGRAD
CREDY BANKA AD KRAGUJEVAC
PIRAEUS BANK AD BEOGRAD
Intesa Sanpaolo S.P.A
Currency
USD
EUR
EUR
EUR
Amount
6,500,000
2,500,000
4,000,000
60,000,000
Maturity Date
04.01.2012
04.01.2012
04.01.2012
04.01.2012
Interest rate
0.20%
0.80%
0.80%
1.08%
2011
525,630
261,602
418,564
6,278,454
RSD thousand
2010
-
7,484,250
-
97
28. LIABILITIES ARISING FROM SECURITIES, INTEREST, FEE AND CHANGES IN FAIR VALUE OF DERIVATIVES
a)
Short term deposits of other entities in dinars –
forward covered within 3 months
Short term deposits of other entities in dinars –
forward covered within 6 months
Liabilities for short term securities in foreign currency (draft cheques)
2011
RSD thousand
2010
2,364,460
108,162
15,450
5,739
24,628
2,385,649
132,790
2011
RSD thousand
2010
275
700
3
164,917
225
245
19
17
94,101
165,895
94,607
42
42
165,937
94,607
b)Interest and fee payables and derivatives fair value
In RSD
Interest and fee payables:
– Banks
– Corporate
– Public sector
– Other
Negative fair value of derivatives (Note 32 (e))
In foreign currency
Interest and fee payables:
- Foreign entities
98
29. PROVISIONS
2011
RSD thousand
2010
Provision for off-balance sheet exposures (a)
Provision for employee benefits:
– restructuring (b)
– long-term retirement benefits and unused days of vacation (c)
Provision for litigations (Note 35 (a))
Provision for VAT liabilities
1,287,823
1,682,556
70,237
223,437
383,190
264,323
32,698
210,656
274,887
219,036
2,229,010
2,419,833
a)According to the Bank’s internal policy, provisioning for commitments and other off-balance sheet items exposed to risk is performed in the same manner as for balance sheet assets, i.e.
off-balance sheet items are classified into recoverability categories based on the estimation of the recoverable amount of receivables, when it is probable that an outflow of resources will be required
to settle the obligation arising from the Bank’s commitment, and when the objective evidence of such probability exists.
b)Project of considering and analyzing efficiency of business processes, which may lead to restructuring and decrease in number of employees (redundancies), which started near 2009 year end is
still not finalized completely. Therefore, the Bank made provisions in the same manner as in previous years, based on estimated number of employees that fulfil conditions for retirement or number
of employees that potentially could be redundant. For the purpose of estimation, available laws and regulations as well as internal acts have been used (Labour Law and Collective agreement).
c)Long-term provision for retirement benefits has been recognized at year ended on the basis of an independent actuary’s calculation, in the amount of present value of estimated future cash
outflows. Present value of defined benefit obligations is calculated at discounted rate of 10% p.a. In the absence of a developed financial market in Serbia, in order to determine discount rate at
the balance sheet date, annual yield on Government saving bonds (foreign currency saving bonds) guaranteed by the Republic of Serbia is applied. Considering nominal annual yield from saving
bonds, projected inflation in Euro zone countries and assumption that exchange rate is formed based on purchasing power parity, real annual yield of benchmark securities is around 4.5%, i.e. with
projected nominal inflation rate in Serbia of 5.5%, nominal annual yield is around 10%.
The provision was determined in accordance with the Bank’s Collective agreement as well as in accordance with the assumption on average salary increase rate of 3.2% per annum over the period
the provision has been established for.
Provision for unused days of vacation is calculated on the basis of an independent actuary’s report at the balance sheet date. In accordance with article 114 of the Labour Law in Republic of Serbia,
during the vacation employee is entitled to compensation in the amount of last three months average salary. In calculating provision for unused vacation days, following is important:
• Average gross salary in Bank paid in October, November and December 2011
• Number of unused days of vacation.
99
30. OTHER LIABILITIES
2011
RSD thousand
2010
160,075
217,735
110,750
882,339
364,609
838,167
150,596
688,294
58,708
923,460
2,355,940
2,038,793
439,274
1,496,341
355,768
1,123,834
3,647
3,189
337,989
1,073,358
112,168
4,353
2,827
739,643
1,039,380
70,009
3,465,966
3,335,814
Subordinated liabilities (a)
8,371,272
11,604,802
Finance lease liabilities (b)
150,970
164,113
14,344,148
17,143,522
Net salaries and compensations
Taxes, contributions and other duties payable,
excluding income tax liability
Trade payables
Advances received
Other liabilities
Accruals and deferred income
Accrued interest expenses:
– in RSD
Accrued interest – other expenses:
– in RSD
Deferred interest income in RSD
Other deferred income in RSD
Other deferrals in RSD
100
30. OTHER LIABILITIES (continued)
(a) Outstanding balance and structure of subordinated liabilities as of 31 December 2011 and 31 December 2010 are as follows:
Creditor
International Finance Corporation
(IFC),Washington, USA
Intesa Sanpaolo S.p.A., Torino,
Italy
31 December 2011
RSD thousand
31 December 2010
3,139,227
6,329,892
12.03.2012
Interest Rate
6M Euribor +
2.25% p.a.
3M Euribor +
1.8% p.a.
5,232,045
5,274,910
8,371,272
11,604,802
Currency
Amount
Maturity Date
EUR
60,000,000
15.12.2012
EUR
50,000,000
110,000,000
(b) Finance liabilities for leased equipment as of 31 December 2011 and 2010 are as follows:
Minimal lease payments
2011
Present value
Future value
2010
Present value
RSD thousand
Future value
Within 1 year
Between 1 and 5 years
49,315
101,655
60,897
110,793
43,539
120,574
56,142
135,526
150,970
171,690
164,113
191,668
101
31. EQUITY
(a) Equity structure
Structure of capital is presented in table below:
Share capital – ordinary shares
Other capital
Share premium
Reserves from profit
Revaluation reserves and unrealized losses on financial assets available for sale
Profit for the year
2011
21,315,900
11,158
20,432,569
28,400,323
663,535
9,590,840
RSD thousand
2010
18,477,400
11,158
9,957,774
20,780,393
442,467
7,619,930
80,414,325
57,289,122
/i/
Share capital
As of 31 December 2010 the total number of the Bank’s registered shares is 184,774 ordinary shares with nominal value of RSD 100 thousand per share.
Shareholder’s Assembly meeting held on 8 December 2011 passed the Decision on issuing 6th emission of ordinary shares without public offer for the purpose of increase in share capital. Total
amount of issued shares is RSD 13,313,295 thousand and comprise 28,385 shares with nominal value RSD 100 thousand per share.
Shares were sold at the issue price of RSD 469,025.71, consisting of nominal value of the RSD 100,000 and share premium of RSD 369,025.71.
Following existing shareholders purchased 6th issue of ordinary shares:
Shareholder
Intesa Sanpaolo Holding international S.A., Luxemburg
International Finance Corporation ( IFC) Washington, USA
22,080
1,987
4,318
Total
28,385
The shares were purchased by existing shareholders while shareholder structure remained the same.
102
Number of shares
31. EQUITY (continued)
(a) Equity structure (continued)
/i/
Share capital (continued)
As of 31 December 2011 the total number of the Bank’s registered shares is 213,159 ordinary shares with nominal value of RSD 100,000 per share.
The shareholders structure of the Bank as of 31 December 2011 is presented as follows:
Shareholder
Number of shares
In %
Intesa Sanpaolo Holding International S.A., Luxemburg
International Finance Corporation (IFC) Washington, USA
165,810
14,921
32,428
77.787
7.00
15.213
Total
213,159
100.00
/ii/ Share premium
Share premium in the amount of RSD 20,432,569 thousand as of 31 December 2011 is the result of the Bank’s status change, i.e. the merger of Panonska banka a.d. Novi Sad in the amount of
RSD 2,989,941 thousand, as well as the result of the 4th, the 5th and the 6th issues of ordinary shares without public offer for the purpose of increase in share capital.
/iii/ Reserves from profit
Reserves from profit are presented as follows:
2011
RSD thousand
2010
Special reserves for estimated losses
Shortfall amount of special reserves for estimated losses
38,097,054
(9,696,731)
32,209,707
(11,429,314)
28,400,323
20,780,393
Special reserve for estimated loan losses is calculated as required by the Decision on Classification of Bank Balance Sheet Assets and Off-Balance Sheet Items (“Official Gazette of the Republic of
Serbia“, no. 94/2011). As of 31 December 2011 special reserves for estimated losses for balance sheet assets and off-balance sheet items after deductions of allowance for impairment of balance
sheet assets and off-balance sheet items calculated in accordance with above mentioned Decision (Note 2.9.) amounts to RSD 38,097,054 thousand.
Pursuant to the proposal of the Board of Directors, the retained earnings for 2011 in the amount of RSD 9,590,840 thousand is entirely used for coverage of the shortfall amount of the special
reserves for estimated losses.
The final Decision on profit distribution, upon the proposal by the Board of Directors, is to be passed by the Shareholders’ Assembly on its ordinary annual session, subsequent to the adoption of
the financial statements for the year ended 31 December 2011.
The shortfall amount of the special reserves for estimated losses, subsequent to the transfer of profit for the year 2011, amounts to RSD 105,891 thousand (31 December 2010: RSD 3,809,384
thousand).
103
31. EQUITY (continued)
(a) Equity structure (continued)
/iv/ Revaluation Reserves
Revaluation reserves in the amount of RSD 663,535 thousand as of 31 December 2011 (31 December 2010: RSD 442,467 thousand), comprises positive effects of the performed independent
appraisal of buildings at 1 January 2004 as well as fair value adjustments of available-for-sale securities.
2011
RSD thousand
2010
Effects of buildings’ appraisal
Revaluation reserve from equity shares
Unrealized gains from available-for-sale securities
559,125
106,490
(2,080)
559,125
982
(117,640)
663,535
442,467
(b) Performance Indicators – Compliance with Legal Requirements
The Bank is obliged to reconcile the scope and the structure of its operations and risky placements with the performance indicators prescribed by the Law on Banks and relevant decisions of National
Bank of Serbia passed on the basis of the aforementioned Law.
As of 31 December 2011, the Bank was in compliance with all prescribed performance indicators.
Performance indicators
1
2
3
4
5
6
7
8
9
10
104
Capital
Capital adequacy ratio
Permanent investments indicator
Related parties exposure
Indicator of large and the largest permissible loans
Liquidity ratio:
Foreign currency risk indicator
Exposure to a group of related parties
Exposure to an entity related to the Bank
Bank's investment in legal entity which is not in the financial sector
Prescribed
Minimum EUR 10 million
Minimum 12%
Maximum 60%
Maximum 20%
Maximum 400%
Minimum 1
Maximum 30%
Maximum 25%
Maximum 5%
Maximum 10%
31 December 2011
Realized
31 December 2010
40,673,797
16.86%
16.33%
5.31%
32.86%
1.68
0.60%
12.47%
2.97%
0.0001%
55,943,806
18.62%
11.52%
10.40%
17.50%
1.23
1.67%
17.50%
1.87%
0.0104%
32. OFF-BALANCE SHEET ITEMS
2011
RSD thousand
2010
Funds managed on behalf of third parties (a)
Guarantees and other irrevocable commitments (b)
Other off-balance sheet items-derivatives (c)
Other off-balance sheet items (d)
3,102,844
116,239,684
47,719,376
77,996,752
2,592,166
97,246,421
13,577,254
43,657,463
245,058,656
157,073,304
(a) Funds managed on behalf of third parties
2011
RSD thousand
2010
Funds managed on behalf of third parties:
– short-term
– long-term
52,507
3,050,337
84,957
2,507,209
3,102,844
2,592,166
Payment guarantees:
– in dinars
2011
14,773,531
10,579,575
RSD thousand
2010
17,912,073
10,679,338
Total
Performance guarantees:
– in RSD
25,353,106
11,721,200
1,917,325
28,591,411
12,444,212
2,518,971
Total
13,638,525
927,633
125,994
100,985
60,597,817
15,495,624
14,963,183
5,455,265
132,012
90,887
47,836,388
177,275
77,248,053
116,239,684
53,691,827
97,246,421
(b) Guarantees and other irrevocable commitments
Uncovered letters of credit in foreign currency
Avals and Acceptances
Sureties
Irrevocable commitments for undisbursed loans
Other irrevocable commitments
105
32. OFF-BALANCE SHEET ITEMS (continued)
Irrevocable commitments for undisbursed credit facilities represent unused portions of approved loans that cannot be cancelled unilaterally, such as: overdrafts and unused credit card limits for retail
clients.
(c) Other off-balance sheet items - Derivatives
106
SWAP contract payables (nominal amount) – purchase of EUR
SWAP contract payables (nominal amount) – sale of EUR
SWAP contract receivables (nominal amount) – purchase of USD
SWAP contract receivables (nominal amount) – purchase of AUD
SWAP contract receivables (nominal amount) – purchase of CAD
SWAP contract receivables (nominal amount) – purchase of GBP
SWAP contract receivables (nominal amount) – purchase of SEK
SWAP contract receivables (nominal amount) – purchase of NOK
SWAP contract receivables (nominal amount) – purchase of JPY
SWAP contract receivables (nominal amount) – purchase of RSD
SWAP contract receivables (nominal amount) – purchase of CHF
SWAP contract receivables (nominal amount) – sale of RSD
Covered currency forward contract payables (nominal amount) – sale of EUR
Covered currency forward contract receivables nominal amount) – purchase of RSD
Covered currency forward contract payables (nominal amount) – sale of USD
Covered currency forward contract payables (nominal amount) – sale of EUR
Covered currency forward contract receivables (nominal amount) – purchase of RSD
2011
627,872
20,346,543
11,604,300
254,521
166,260
498,409
93,612
123,786
7,758,850
627,159
20,929
2,379,910
2,459,974
370,177
387,074
RSD thousand
2010
1,054,982
5,652,994
4,756,812
209,466
110,909
306,040
35,320
111,870
42,600
1,080,232
97,857
108,162
10,010
-
47,719,376
13,577,254
32. OFF-BALANCE SHEET ITEMS (continued)
d)
Other off-balance sheet items
2011
RSD thousand
2010
Loro guarantees
Treasury bills
Foreign currency savings’ bonds
Suspended interest
Transfer from balance sheet
Other
24,352,253
33,000,000
674,252
3,519,989
8,237,688
8,212,570
20,637,822
7,000,000
775,865
2,007,136
3,897,581
9,339,059
77,996,752
43,657,463
2011
RSD thousand
2010
Beginning balance
Transfer from balance sheet (Note 7 (b))
Other changes
3,897,581
3,709,740
630,367
1,805,354
3,311,700
(1,219,473)
8,237,688
3,897,581
Financial assets
Net positive fair value of covered currency forward contract
Net positive fair value of currency forward contract
Net positive fair value of currency SWAP contract (far leg)
2011
RSD thousand
2010
2,834
7,282
132,361
647
2,716
Total (Note 17)
142,477
3,363
66,464
98,453
94,079
22
164,917
94,101
Movements in transfer from balance sheet:
(e) Fair Value of Financial Derivates
Financial liabilities
Net negative fair value of currency SWAP contract (far leg)
Net negative fair value of covered currency forward contract
Total (Note 28)
107
33. RELATED PARTY DISCLOSURES
A number of banking transactions with shareholders and other related parties take place in the ordinary course of business.
a)The Bank enters into business relationship with its Parent company – major shareholder Intesa Holding International S.A., Luxembourg and other members of Intesa Sanpaolo Group.
Outstanding balance of receivables and liabilities as of 31 December 2011 and 2010, as well as income and expenses for the years then ended, resulting from transactions with the shareholders
and other Bank’s related parties within Intesa Sanpaolo Group are presented as follows:
Intesa
Sanpaolo
S.p.A., Italy,
England,
USA
130,767
130,141
Privredna
bank d.d.,
Zagreb,
Croatia
11,445
Intesa
Leasing
d.o.o.,
Belgrade
1,226,248
Vseobecna
Uverova
banka A.S.,
Slovakia
-
Banka
Koper d.d.,
Slovenia
-
Pravex Bank
Comm. bank
-
2,771
3,394
11
-
5,408
27,228
362
-
118
-
-
3,130
-
634
Total receivables
Fair value - derivatives
Loans payables
Deposits payables
Other payables
267,073
6,715
23,910,446
6,295,940
258,440
11,456
1,152
15,753
1,258,884
1,531,419
232,422
362
4,185,636
34,030
-
118
-
2,415
-
42,108
3,195
377
2,005
14,672
-
634
-
Total payables
30,471,541
16,905
1,763,841
4,219,666
-
-
2,415
42,108
2,382
14,672
-
7,562
27
44,922
-
-
-
-
-
-
-
-
20,544
230,283
12,732
426
531
12,926
-
766
-
-
-
-
11
99
101
-
258,389
829,279
13,185
332
58,379
102,080
126,377
766
-
-
10,288
-
110
-
101
-
-
26,805
453,883
1,181
9,665
2,589
-
-
-
-
404,599
3,077
5,747
21,467
-
-
1,309,967
11,178
104,669
126,377
-
-
10,288
407,676
27,214
-
-
2011
Total placements
Interest and fees receivable
Other receivables
Interest income
Fees and commission
income
Other income
Total income
Interest expenses
Fees and commission
expense
Other expenses
Total expenses
108
Intesa
Banca
Sanpaolo
Intesa
Intesa
Infrastrutture
Banka D.D.
Sanpaolo
Sanpaolo Cib leasing Innovazione e
Bosnia and Card d.o.o., Card d.o.o.,
LTD, Sviluppo S.p.A.,
Hercegovina
Ljubljana
Zagreb
Hungary
Italy
65
-
33. RELATED PARTY DISCLOSURES (continued)
The aforementioned receivables and payables at the balance sheet date as well as income and expenses are arising from business transactions during the year with related parties of the Intesa
Sanpaolo Group as a result of normal business activities.
Bank on its receivables and payables is charged and paid interest calculated by applying the usual rates. Receivables from related parties are not covered by the collateral.
2010
Total placements
Other receivables
Intesa Holding
International, Intesa Sanpaolo
Luxemburg
S.p.A., Italy
2,263
13,572,260
12,700
Privredna
bank d.d., Intesa Leasing
Zagreb,
d.o.o.,
Croatia
Belgrade
453
4,271
1,044,346
29,987
Vseobecna Intesa Sanpaolo
Uverova
Banka D.D.
banka A.S.,
Bosnia and
Slovakia
Hercegovina
806
-
Intesa
Sanpaolo
Card d.o.o.,
Ljubljana
-
Banca
Intesa Infrastrutture
Sanpaolo Innovazione
Card d.o.o.,
e Sviluppo
Zagreb
S.p.A., Italy
2,442
Total receivables
-
13,587,223
4,724
1,074,333
806
-
-
-
2,442
Loans and deposits payables
Other payables
-
59,111,430
94,079
110,850
2
6,594
1,749,477
746
4,239,522
-
-
36,426
1,421
-
Total payables
-
59,316,359
6,596
1,750,223
4,239,522
-
36,426
1,421
-
Interest income
Fees and commission income
Other income
-
89
17,082
2,263
418
453
53,657
439
6,844
-
-
-
-
-
Total income
-
19,434
871
60,940
-
-
-
-
-
Interest expenses
Fees and commission expense
Other expenses
96,709
-
769,327
32,559
596,104
582
-
81,834
-
78,486
-
10,227
-
307,856
2,638
4,544
3,253
-
Total expenses
96,709
1,397,990
582
81,834
78,486
10,227
310,494
7,797
-
109
33. RELATED PARTY DISCLOSURES (continued)
(b) Gross salaries and other benefits of the Executive Board’s members and other key personnel of the Bank, including the Board of Directors’ members, during 2011 and 2010, are presented as
follows:
Remunerations to the members of the Executive
Board, Board of Directors and other key management of the Bank
Total
2011
RSD thousand
2010
157,315
157,315
149,618
149,618
34. RISK MANAGEMENT
Risk is an inherent in the Bank’s activities and cannot be eliminated completely. It is important to manage the risks in such a way that they can be reduced to limits acceptable for all interested parties:
shareholders, creditors, depositors, legislators. Risk management is the process of permanent identifying, assessment, measurement, monitoring and controlling of the Bank’s exposure to risks. An
important part of risk management is reporting and mitigating the risk. The adequate system of risk management is critical element in ensuring the Bank’s stability and profitability of its operations.
The Bank is exposed to the following major risks: credit risk, liquidity risk, interest rate risk, foreign currency risk, operational risk, risk of exposure toward single entity or a group of related entities
(concentration risk), risk of investments and risk related to the county of origin of the entity to which the Bank is exposed.
The Board of Directors and the Executive Board are responsible for implementation of the adequate risk management system and its consistent application.
The Bank’s Board of Directors determines the procedures for identification, measurement and assessment of risks, and is responsible for implementing a unique risk management system and
supervision over that system.
The Bank’s Executive Board is responsible for identifying, assessing and measuring the risks the Bank is exposed to in its operations, and applies the principles of risk management approved by the
Bank’s Board of Directors. The Executive Board approves internal acts which define risk management and proposes strategies and policies for risk management to Audit Committee and Board of
Directors.
The Committee for monitoring business activities (Audit Committee) analyses and adopts the proposals of policies and procedures with respect to risk management and internal controls, which are
submitted to the Board of Directors for consideration and adoption. Furthermore, the Committee analyses and monitors the application and adequate implementation of the adopted policies and
procedures for risk management, and recommends new ways for their improvement, if necessary.
Risk Management Department has been established in the Bank in order to implement a special and unique system for risk management as well as to enable a functional and organizational
segregation of risk management activities from regular business activities.
The Bank has developed the comprehensive risk management system by introducing the policies and procedures, as well as the limits for the risk levels acceptable for the Bank.
110
34. RISK MANAGEMENT (continued)
The Bank’s organization parts authorized for risk management constantly monitor changes in the legislative provisions, while analyzing its influence on the risks at the entity level of the Bank. They
take necessary measures to bring the Bank’s business activities and procedures in accordance with new procedures within the scope of controlled risk. In addition, introduction of new services is
followed by necessary market and economic analysis in order to optimize the relation between income and the provision for estimated risks.
34.1. Credit risk
Credit risk is the risk that credit beneficiaries will not be able to fulfil contractual obligations to the Bank, whether fully or partially. By its internal acts, policies and procedures, the Bank has
implemented the adequate system of credit risk management, as well as reducing the credit risk to an acceptable level. The Bank manages the credit risk through setting the credit risk limits,
establishing acceptable credit limits for individual customers or for the group of customers.
The credit risk is managed by the Bank at a counter-party specific level, group of related parties, and on the total credit portfolio level. For the purpose of implementing the policy of optimal credit
risk exposure, the Bank evaluates the credit worthiness of each client both at the moment of application of the loan as well as through a subsequent regular and continuous performance analysis.
The analysis of the client’s credit worthiness, timely settlement of liabilities in the past, the value of collateral on the individual level and for each transaction, is performed in the Credit Management
Department.
Permanent monitoring of a client’s internal rating, the level of risk with respect to each client, the necessary amount of reserve for covering the risk, concentration risk (large exposures), portfolio
credit risk, the level of capital necessary for coverage all credit risks is performed by the Risk Management Department. Credit Management Department and the Risk Management Department are
independent in the Bank.
Principles prescribed by the National Bank of Serbia legislation as well as the Bank’s internal procedures are applied in these analysis in order to anticipate potential risks that can arise in terms of a
client’s inability to settle its liabilities when they fall due and according to contracted terms.
In that sense, an assessment of the required reserve level for potential losses, both at the moment of approval of certain loan, as well as through a continuous, monthly portfolio analysis, are carried
out. The analysis entails measuring the adequacy of provision/reserves according to clients’ types, risk types, sub-portfolios and total portfolio of the Bank.
Decision making on exposure to credit risk is performed based on the proposals provided by the Credit Management Department. The terms for approval of each corporate loan are determined
individually depending on the client type, loan’s purpose, estimated creditworthiness and current market position. Type of collateral that accompany each loan are also determined according to a
client credit worthiness analysis, type of credit risk exposure, term of the placement as well as the amount of a particular loan. Conditions of loan approvals to retail clients and entrepreneurs are
determined through defining standard conditions for different type of products. Risk price for standard types of products is calculated according to the analysis of credit costs of the Bank per each
type of product.
Considering the importance of credit risk, dispersion in authorities in respect of decision making process on granting activities has been made. This dispersion is provided with the prescribed limits
up to which authorized person or management bodies may decide. Organizational parts passing the decisions with respect to loan approvals, with different levels of authorizations, are: branch
managers, regional managers, Credit Management Department, Credit Board, Credit Committee, Executive Board and Board of Directors. For credit exposures exceeding the determined limit, the
approval of the parent bank is necessary.
111
34.1. Credit risk (continued)
The Bank manages the credit risk by setting up limits with respect to period, amount and results of the individual customer’s credit worthiness, by diversification of loans to a larger number of
customers and contracting foreign exchange clause and index-linking to a consumer price index in order to maintain the real value of loans.
Furthermore, the Bank manages the credit risk through assesment and analysis of received collaterals, by providing allowance for impairment of financial assets, provision for off-balance sheet items,
as well as by determining the adequate price of a loan which covers the risk of a particular placement.
In addition to clients’ credit worthiness, the risk limits are also determined based on different types of collateral. Risk exposure toward a single debtor, including banks, is limited and includes
balance sheet and off-balance sheet items exposures. Total risk exposure to a single customer (or a group of related parties) regarding exposure limits, is considered thoroughly and analyzed before
the transaction.
Loan Concentration Risk
The concentration risk is the risk of incurring losses due to an excessive volume of placements into a certain group of debtors. Groups of debtors can be defined by different categories: geographical
sectors, industries, countries, related parties or economic groups, etc. The Bank manages and controls the concentration risk by limiting and monitoring the exposure toward certain groups,
predominantly by countries and economic groups.
Derivative Financial Instruments
Derivative financial instruments lead to the Bank’s exposure to credit risk in case their fair value is positive for the Bank. Credit exposure arising from derivatives is calculated using current exposure
method, i.e. the sum of positive fair value of the contract and nominal value of derivative multiplied by coefficient which depends on the type and maturity of financial derivative, as prescribed by
National Bank of Serbia. Credit risk of derivatives is limited by determining the maximum credit exposure arising from derivative for each individual customer.
Risks similar to credit risk
The Banks issues guarantees and letters of credit to its clients, based on which the Bank commits to make payments on behalf of the third parties. In this way the Bank is exposed to risks similar to
credit risks, which can be mitigated by the same control processes and policies used for credit risk.
112
Collaterals and other instruments of credit risk protection
The amount and type of the collateral required depends on an assessment of the credit risk of each customer. Terms of collateral with respect to each placement are determined by the analysis of
customer’s credit worthiness, type of exposure to the credit risk, placement’s maturity as well as the amount itself.
Contractual authorization as well as bills of exchange are provided by customers as standard collaterals while, depending on the assessment, additional collaterals may be required, such as real estate
mortgages, movable property pledges, partial or entire coverage of placements with deposits, guarantees issued by other bank or legal entity, adequate securities, or joint contracting and several
debtorship of another legal entity which then becomes the joint and several debtor.
In cases of real estate mortgages or movable property pledges, the Bank always obtains valuations of the assets carried out by the approved appraiser, in order to reduce the potential risk to the
lowest rate. Decisions on placements to retail clients and small business (entrepreneurs) are mostly based on appraisal of standardised, previously defined conditions, using the scoring model with
the additional analysis of the credit analysts.
Assessment of impairment of financial assets
The main factors considered for financial assets impairment assessment include: overdue of payments of principal or interest, identified weakness in the cash flows of customers, internal credit rating
downgrades, or breach of original terms of the contract. The Bank performs assessment of impairment at two levels, individual and collective.
Individual assessment of impairment
The Bank performs individual assessment of impairment for each individually significant loan or advance (exceeding EUR 150,000 for corporate clients and EUR 50,000 for retail clients) if it is in the
status of default (overdue more than 90 days), i.e. if there is objective evidence that the loan has been impaired.
The level of impairment of loans is determined based on the projection of expected cash flows which shall be collected pursuant to the contract with clients, taking into consideration the assessment
of financial position and credit worthiness of the client, the realizable value of collateral, as well as the timing of the expected cash flows from realisation of collaterals, etc. Projected cash flows are
discounted using the effective interest rate to their present value. Impairment loss is measured as the difference between the carrying amount of loan and its estimated recoverable amount, being
the present value of the expected future cash flows. Individual assessment of the impairment of placements is performed at least semi-annually.
If new information becomes available that, as estimated by credit analysts, have an effect on the client’s credit worthiness and the value of collateral, as well as the certainty of settling the liabilities
toward the Bank, an extraordinary assessment of the impairment of a loan is performed.
113
Assessment of impairment of financial assets (continued)
Collective assessment of impairment
Collective Assessment of impairment is performed for loans and advances that are not individually significant (including credit cards, residential mortgages and unsecured consumer lending) and
for individually significant loans and advances where there is no objective evidence of individual impairment. Allowances are evaluated monthly with separate review of each sub-portfolio, which
represents a specific group of loans and advances with similar characteristics.
The collective assessment of impairment takes into account impairment that is likely to be present in the Bank’s portfolio even though there is not yet objective evidence of the impairment in an
individual assessment. Impairment losses are estimated based on migration matrices and the probability of collection of receivables overdue more than 90 days. Migration matrices and probabilities
are determined based on monitoring the multiannual migrations of internal rating of the clients in the Bank’s portfolio.
Special reserves for estimated losses
Both for corporate and retail loans, as per the regulatory requirements of the National Bank of Serbia, the Bank also calculates special reserves for estimated losses as defined by the Decision on the
Classification of Banks Balance Sheet Assets and Off Balance Sheet Items. Financial guarantees and letters of credit are assessed and provision is made in the same manner as for loans and advances.
114
(a) Maximum Exposure to Credit Risk (continued)
Analysis of the Bank’s exposure to credit risk (other than credit risk exposure to the National Bank of Serbia, as well as securities of the Republic of Serbia), by geographical locations, before taking
into account collaterals and other hedging funds, as of 31 December 2011 and 2010 is presented in the table below:
Serbia
Belgrade
Vojvodina
Rest of Serbia
Other countries
European Union
Other European Countries
Rest of the world
Total
Serbia
Belgrade
Vojvodina
Rest of Serbia
Other countries
European Union
Other European Countries
Rest of the world
Total
RSD thousand
Accounts with
other banks and placements
with banks
Loans and advances to
customers
Equity investments
and securities
541,445
527,015
11,929
2,501
541,445
276,883,512
126,410,664
89,031,171
61,441,677
547,505
396,346
115,968
35,191
277,431,017
963,289
963,230
30
29
963,289
Interests, fees and Guarantees and other
other assets
commit-ments
4,795,765
2,672,863
1,075,272
1,047,630
4,471
3,044
1,143
284
4,800,236
102,428,270
41,090,463
31,340,326
29,997,481
264,419
21,541
235,253
7,625
102,692,689
Total
2011
385,070,836
171,137,220
121,446,799
92,486,817
1,357,840
947,946
364,293
45,601
386,428,676
RSD thousand
Accounts with
other banks and placements
with banks
Loans and advances to
customers
Equity investments
and securities
447,774
297,095
147,011
3,668
270,130,136
158,331,890
57,709,986
54,088,260
948,927
948,835
63
29
3,937,007
2,204,044
790,163
942,800
97,045,674
54,004,307
22,051,891
20,989,476
372,509,518
215,786,171
80,699,114
76,024,233
44,601
39,589
15
4,997
1,436,220
1,297,089
104,024
35,107
- -
13,039
12,376
514
149
200,747
17,163
179,543
4,041
1,694,607
1,366,217
284,096
44,294
492,375
271,566,356
948,927
3,950,046
97,246,421
374,204,125
Interests, fees and Guarantees and other
other assets
commit-ments
Total
2010
115
(a) Maximum exposure to credit risk (continued)
Analysis of Bank’s exposure to credit risk, by industry sectors, before taking into account collaterals and other hedging funds, as of 31 December 2011 and 2010 is presented in the table below:
Central Bank, foreign and domestic banks and other monetary intermediation
Holding companies and other credit and financing services, excluding insurance
and pension funds
Other legal entities (excluding banks) in bankruptcy
Financial leasing
Retail customers
Construction
Local government
Non-profit legal entities and social services clients that are not financed from
the budget
Insurance
Other
Agriculture, forestry and fishing
Activities supporting financial services, insurance and pension funds
Real estate, professional, scientific, innovation and technical activities,
administrative and supporting service activities, art, entertainment and
recreation and other service activities
Trust, investment and similar funds
Related financial institutions that are not included in consolidation
Related financial institutions that are included in consolidation
Corporate clients of social activities that are not financed from budget
Corporate clients of social activities that are financed from budget
Republic bodies and organizations
Mining, manufacturing, water supply, wastewater management, waste
management control and similar activities
Transportation and warehousing, accommodation and food services,
information and communication
Entrepreneurs
Energy, gas and steam supply, air conditioning
Foreign legal entities
Wholesale and retail sale, repair of motor vehicles and motorcycles
Total
116
Gross maximum
exposure 2011
1,234,675
Net maximum
exposure 2011
1,203,691
Gross maximum
exposure 2010
15,500,936
RSD thousand
Net maximum
exposure 2010
15,454,458
7,554,548
5,968,010
209
91,556,624
41,810,378
13,558,910
5,486,952
2,138,398
36
48,770,810
23,100,089
11,161,554
211
85,034,784
38,302,438
9,538,607
53,467,063
22,627,237
8,076,417
429,547
229,838
230,977
9,893,609
212,918
265,529
216,126
227,156
4,738,424
56,790
165,451
5,649,378
9,949,561
5,029,588
151,907
5,649,378
5,990,414
4,287,168
17,716,005
3,781
2,241,508
2,153,111
154,194
4,076,182
9,228,197
141
2,194,152
925,195
109,025
1,206
20,369,042
2,043,387
69,999
46,630
13,256,830
1,992,287
40,555
1,445
73,493,134
35,593,078
72,005,395
52,565,664
40,461,212
6,678,854
2,361,181
448,727
63,960,544
12,574,066
4,296,657
1,853,071
445,483
38,402,225
38,136,978
5,879,629
3,054,030
1,320,449
62,107,632
14,304,123
3,920,050
2,792,431
1,316,124
45,383,476
386,428,676
202,988,051
374,204,125
251,277,027
(b) Portfolio Quality
The Bank manages the quality of its financial assets using the internal classification of placements.
The following table presents the quality of gross portfolio (gross balance exposure and off-balance sheet exposure) as of 31 December 2011, by types of placements and based on the Bank’s rating
system:
Neither past due nor impaired
High quality level Standard quality level
Banks
Customers:
Corporate customers
Small size and medium size companies
Mortgage loans to retail customers
Other placements to retail customers
Total
RSD thousand
Due but not impaired
Individually impaired
Total 2011 1,225,072
-
7,932
1,671
1,234,675
79,563,321
127,935,157
31,063,078
49,678,251
289,464,879
19,618,636
24,062,462
43,681,098
4,410,800
8,341,426
4,213,881
3,355,571
7,297,636
22,370,963
962,889
2,319,930
32,953,089
110,890,393
182,710,008
36,239,848
55,353,752
386,428,676
20,329,610
According to the Bank’s Internal classification all receivables, in terms of risk, are divided into performing and nonperforming. Performing includes classes A1, A2 and B1 while the nonperforming
receivables includes classes B2 (past due), C1 (substandard) and C2 (doubtful).
The following table presents the quality of gross portfolio (gross balance exposure and off-balance sheet exposure) as of 31 December 2010, by types of placements and based on the Bank’s grading system:
Neither past due nor impaired
High quality level Standard quality level
Banks
Customers:
Corporate customers
Small size and medium size companies
Total
RSD thousand
Due but not impaired
Individually impaired
Total 2010 15,484,919
-
14,332
1,685
15,500,936
71,069,422
118,482,725
28,909,181
46,347,728
280,293,975
11,860,923
33,234,489
771,415
1,301,861
47,168,688
3,706,117
15,000,338
790,248
3,064,797
4,130,186
16,184,203
746,902
3,102,654
24,165,630
90,766,648
182,901,755
31,217,746
53,817,040
374,204,125
22,575,832
117
(b) Portfolio Quality (continued)
Ageing analysis of loans and advances to customers past due but not impaired
The ageing analysis of loans and advances to customers past due but not impaired as of 31 December 2011 and 2010 is presented as follows:
2011
Loans to customers:
Corporate customers
Small business and SME
Up to 30 days
From 31 to 60 days
From 61 to 90 days
Over 91 days
RSD thousand
Total
1,664,353
5,613,497
1,518,764
2,206,540
605,229
2,250,546
2,449,394
869,392
2,149,150
477,383
245,723
279,639
-
4,418,732
8,341,426
4,213,881
3,355,571
11,003,154
6,174,561
3,151,895
-
20,329,610
RSD thousand
2010
Loans to customers:
Corporate customers
Small business and SME
Up to 30 days
From 31 to 60 days
From 61 to 90 days
Over 91 days
Total
1,692,117
9,428,570
562,557
2,318,611
2,284,448
126,535
530,692
539,758
46,156
187,875
2,028,332
2,747,562
55,000
27,619
3,720,449
15,000,338
790,248
3,064,797
14,001,855
2,941,675
773,789
4,858,513
22,575,832
During 2011, the Bank applied a new methodology for classification, which is harmonized with the members of the group.
In the above tables, the category neither past due nor impaired receivable are performing receivables that are not past due1 and classified in high level of quality (A1 and A2) and a standard level
of quality (B1). Due but not impaired receivables are performing receivables with delay in payments between 1 and 90 days (classes A1, A2, and B1). Impaired loans are nonperforming receivables
(class B2, C1, and C2).
1 Delay in payment is longer than 1 day
118
(b) Portfolio Quality (continued)
Assessment of impairment of financial assets
The structure of balance sheet assets and off-balance sheet items as of 31 December 2011 and the related allowance for impairment, i.e. provision, which are determined in accordance with the
Bank’s internal methodology disclosed in Note 2.7.2., is presented as follows:
Banks
Retail
Corporate
Entrepreneurs
Total (A)
Banks
Retail
Corporate
Entrepreneurs
Total (B)
Total (A+B)
Individual assessment
Classified
Allowance for
balance sheet assets
impairment
1,159,634
270,476
25,443,586
10,541,930
102,323
42,691
26,705,543
Classified
off-balance sheet assets
2,483,177
380
2,483,557
29,189,100
10,855,097
Collective assessment
Classified
Allowance for
impairment
571,866
4,570
73,585,968
2,179,228
175,732,588
4,864,708
4,949,481
491,933
254,839,903
Classified
Provision off-balance sheet assets
662,809
16,847,997
375,992
81,071,016
1,627,310
375,992
100,209,132
11,231,089
355,049,035
7,540,439
Total
Classified
571,866
74,745,602
201,176,174
5,051,804
281,545,446
Classified
Provision off-balance sheet assets
4
662,809
104,803
16,847,997
794,627
83,554,193
12,396
1,627,690
911,830
102,692,689
8,452,269
384,238,135
RSD thousand
Allowance for
impairment
4,570
2,449,704
15,406,638
534,624
18,395,536
Provision
4
104,803
1,170,619
12,396
1,287,822
19,683,358
As at 31 December 2011 the aforementioned amounts do not include assets that are not classified in accordance with the Decision on the Classification of Bank Balance Sheet Assets and Off-balance
Sheet Items in the amount of RSD 276,014,704 thousand (31 December 2010: RSD 180,502,206 thousand).
119
(c) Default receivables
The Bank gives special attention to default receivables (receivables past due more than 90 days) by monitoring their total outstanding balance and the trend of these receivables.
Breakdown of default receivables as of 31 December 2011 is presented as follows:
Segment
Banks
Corporate
Entrepreneurs
Retail
Total
Total receivables
RSD thousand
Default receivables
571,866
74,745,602
201,176,173
5,051,805
281,545,446
22,362,517
484,070
2,853,831
25,700,418
(d) Restructured loans
Outstanding gross exposure of restructured loans, as defined in accordance with the Decision on classification of balance sheet assets and off balance sheet items of the National Bank of Serbia, as
of 31 December 2011 amounted to RSD 6,324,630 thousand (31 December 2010: RSD 5,103,164 thousand).
120
34.2. Liquidity Risk and Financial Assets Management
Liquidity risk relates to the risk that the Bank does not have enough liquidity reserves for settling liabilities when they fall due and for covering the unexpected deposit outflows and non-deposit
liabilities. The liquidity issue is presented as the deficit in reserves as well as difficult or impossible acquisition of highly liquid assets at a reasonable market price.
Liquidity risk is measured by permanent monitoring and analysis of the maturity structure of assets and liabilities through appropriate reports and indicators: report on structural maturity mismatch
that is analyzed through three scenarios: base scenario, scenario of specific liquidity crises and scenario of systematic crises (maturity mismatch), indicator of structural maturity mismatch and the so
called Rules - Rule 1 and Rule 2, short-term liquidity gaps and liquidity indicators prescribed by the National Bank of Serbia.
The Risk Management Department is responsible for measuring and monitoring of the liquidity and for the regular preparation of reports which present the effects of the migration of various
Bank’s categories of assets and liabilities to the Bank’s liquid asset position. The Risk Management Department reports on liquidity to the parent bank and ALCO Committee. Furthermore, the Risk
Management Department provides support to the Treasury Department within the field of statistical analysis and testing the assumptions on the behaviour of certain assets and liabilities items
affecting cash inflows and outflows. Applied assumptions on the behavior are approved and periodically revised by the ALCO Committee.
Objectives of liquidity management comprise:
- Planning of cash inflows and outflows;
- Implementation and monitoring of liquidity indicators;
- Measurement and monitoring of the Bank’s liquidity;
- Measurement of liquidity gaps and the estimation of deposit stability; and
- Preparation of the Reports for the management.
Short-term liquidity management is done through monitoring following limits/indicators:
- Limits on cumulative net position in the interbank market in the period up to 7 days;
- Limits on short-term liquidity gaps up to a month;
- The minimal amount of liquid assets and liquid reserves;
- Monitoring of indicators of the concentration of interbank lending and customer deposits.
Structural liquidity management is done through monitoring:
- Reports on structural maturity;
- Indicators of structural compliance, so called Rules - Rule 1 and Rule 2
- Monitoring of early warning indicators that point to the existence of specific or systematic liquidity crisis.
- Preparation of the reports for the management
Liquidity ratio prescribed by the National Bank of Serbia represents the relation between the liquid assets and current liabilities. Liquid assets include all receivables and assets items due within one
month. Current liabilities represent all the Bank’s liabilities due within one month.
This liquidity indicator cannot be less than 1 (the average liquidity indicator for all work days in a month), or less than 0.9 for more than three consecutive work days or 0.8 – when calculated for
a single work day.
121
34.2. Liquidity Risk and Financial Assets Management (continued)
As at 31 December
Average for the period
Highest
Lowest
2011
2010
1.93
1.51
1.93
1.13
1.15
1.34
1.53
1.09
All balance sheet and off-balance sheet items are classified in certain maturity intervals according to the remaining maturity in report on structural maturity mismatch, or if maturity is not defined,
according to statistically or expert-defined maturity determined based on analysis of historical inflows and outflows of these balance sheet items, taking into account current market condition.
122
The following table presents remaining maturity mismatch report as of 31 December 2011:
Up to 1
month
ASSETS
Interest and fees receivable, receivables from sales,
changes in fair value of derivatives
and other receivables
Loans and advances to customers
Securities (excluding treasury shares)
Equity investments
Other placements
Intangible assets
Fixed assets held for sale and assets from discontinued
operations
Deferred tax assets
Other assets
TOTAL ASSETS
LIABILITIES
Other deposits
Borrowings
Interest and fees payable and changes in fair value
of derivatives
Provisions
Tax liabilities
Other liabilities
TOTAL LIABILITIES
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
MATURITY MISMATCH
From
1 to 3
From
months 3 to 6 months
From
6 to 12
months
From 1 to 5
years
Over 5 years
With
non-defined
maturity
RSD thousand
Total
16,222,561
83,162,819
-
-
-
-
-
-
16,222,561
83,162,819
40,425,766
4,066,079
554,635
-
15,998,214
1,720,758
1,777,807
-
23,191,127
3,258,695
1,255,668
-
38,558,159
7,851,242
1,705,204
-
98,817,489
887,813
3,353,181
-
47,680,396
371,522
-
2,985,589
(15,333,426)
962,568
2,503,564
595,399
6,583,749
2,985,589
249,337,725
17,784,587
962,568
11,521,581
595,399
6,583,749
144,431,860
19,496,779
27,705,490
48,114,605
103,058,483
48,051,918
60,192
47,317
3,058,602
1,463,554
60,192
47,317
3,058,602
392,322,689
84,678,429
31,203,023
11,474,817
5,739
33,206,551
261,603
2,364,460
25,850,684
658,711
15,450
52,208,819
3,350,544
-
7,969,448
32,545,540
-
247,841
8,815,247
-
-
84,678,429
150,686,366
57,106,462
2,385,649
0
5,939,365
133,301,373
0
5,233,972
41,066,586
0
1,579,445
28,104,290
0
1,585,871
57,145,234
0
5,495
40,520,483
-0
0
-0
-0
-0
9,063,088
165,937
2,229,010
43,334
269,029
2,707,310
165,937
2,229,010
43,334
269,029
14,344,148
311,908,364
-
-
-
-
-
-
80,414,325
80,414,325
133,301,373
41,066,586
28,104,290
57,145,234
40,520,483
9,063,088
83,121,635
392,322,689
11,130,487
(21,569,807)
(398,800)
(9,030,629)
62,538,000
38,988,830
(81,658,081)
-
123
The following table presents remaining maturity mismatch report as of 31 December 2010:
From
Up to 1 month 1 to 3 months
ASSETS
Interest and fees receivable, receivables
from sales, changes in fair value of derivatives and other receivables
Loans and advances to customers
Equity investments
Other placements
Intangible assets
Property, equipment and investment
property
Deferred tax assets
Other assets
From
6 to 12 months
From 1 to 5
years
Over 5 years
RSD thousand
Total
15,150,177
51,409,640
4,903,071
-
-
-
-
-
-
20,053,248
51,409,640
35,956,280
1,256,318
3,366,271
-
17,575,487
4,606,566
488,062
-
28,184,860
7,400,743
4,812,717
-
34,784,297
6,117,062
357,220
-
84,618,346
1,044,502
-
42,361,910
-
2,390,298
1,606,110
948,033
201,806
561,462
2,390,298
245,087,290
19,380,689
948,033
10,270,578
561,462
107,138,686
27,573,186
40,398,320
41,258,579
85,662,848
42,361,910
6,388,002
50,685
33,054
2,550,016
14,729,466
6,388,002
50,685
33,054
2,550,016
359,122,995
65,078,801
66,173,075
374,241
-
28,917,328
108,162
18,599,043
4,772,137
-
51,439,068
5,608,902
-
6,006,769
24,485,145
-
296,802
6,671,875
-
3,342,942
24,628
65,078,801
171,432,085
45,255,242
132,790
2,933
131,629,050
5,580
29,031,070
1,590,387
24,961,567
1,603,789
58,651,759
8,442,538
38,934,452
6,968,677
94,607
2,419,833
56,962
220,031
5,498,295
11,657,298
94,607
2,419,833
56,962
220,031
17,143,522
301,833,873
-
-
-
-
-
-
57,289,122
57,289,122
131,629,050
29,031,070 24,961,567
58,651,759
38,934,452
6,968,677
68,946,420
359,122,995
MATURITY MISMATCH
(24,490,364)
(1,457,884)
15,436,753
(17,393,180)
46,728,396
35,393,233
(54,216,954)
-
TOTAL ASSETS
LIABILITIES
Other deposits
Borrowings
Interest and fees payable and changes in
fair value of derivatives
Provisions
Tax liabilities
Other liabilities
TOTAL LIABILITIES
TOTAL EQUITY
124
From
3 to 6 months
With
non-defined
maturity
Ratios of maturity mismatch are calculated based on the data from Maturity mismatch report, so called Rule 1 and Rule 2 indicators. Rule 1 indicates coverage of fixed investments with Bank’s capital;
Rule 2 indicates coverage of long-term investments with long-term funds.
For the purpose of the calculation of structural maturity mismatch indicators, the short-term is defined as a period up to 18 months, middle-term as a period between 18 months to 5 years while
long-term is defined as a period over 5 years.
Rule 1:
Investments in property and equipment + equity investments ≤ Bank’s regulatory equity + Deductable items
Rule 2:
Long-term receivables + 0.5*(middle-term receivables) <= Suficit/Deficit from Rule 1 + Non current monetary assets + Long-term liabilities + 0.5*(Middle-term liabilities) + Avista behavior coefficient
(current accounts and savings deposits) + 0.25*(liabilities to clients with maturity up to 18 months) + 0.25*(interbank liabilities with maturity from 3 to 18 months)
31 December 2011
RSD thousand
31 December 2010
Rule 1
34,097,836
49,527,705
Tangible assets
Investments in equity securities
Equity
Deductable items
6,583,749
962,568
40,673,797
970,356
6,438,687
948,033
55,943,806
970,619
Rule 2
32,546,610
47,000,820
Long-term assets
0.5 * Middle-term assets
Surplus of equity from Rule 1
48,051,918
40,958,541
34,097,836
42,361,910
35,351,294
49,527,705
Long-term liabilities
0.5 * Middle-term liabilities
0.25* transaction and a vista deposits
0.25* liabilities to clients with maturity up to 18 months
0.25* interbank liabilities with maturity from 3 to 18 months
9,063,087
18,635,498
21,169,607
34,087,296
4,503,744
6,968,677
14,653,851
16,269,700
33,376,515
3,917,576
The ratio of aggregate maturity mismatch amounts to minus 25.68%. This ratio indicates the mismatch between receivables and payables due within 3 months in relation to the regulatory capital
of the Bank. Furthermore, this ration also implies a cautious assumption that all demand and short-term deposits will flow out within the period of 3 months, which never happens in practice.
125
The Bank has good maturity match of assets and liabilities which is presented in above mentioned ratios.
All the Bank’s long-term investments are financed through the equity (Rule 1), while all long-term placements are financed through long-term funds (Rule 2).
34.3. Market risk
In its ordinary course of business, the Bank is exposed to the fluctuations in market variables which might affect the Bank’s income in a positive or a negative way. There are following types of
market risks:
- Interest rate risk,
- Foreign currency risk
34.3.1. Interest rate risk
Interest risk is the risk of the decreasing of profit or net assets value of the Bank due to changes in market interest rates. The Bank’s exposure to the interest rate risk depends on the ratio of the
interest-sensible assets and interest-sensible liabilities.
Interest rate risk is calculated separately in the banking book and in the trading book. In the trading book only Value at risk (VaR), duration and convexity are calculated, as the measures of interest
rate risk exposure.
In the banking book, interest rate risk is measured and monitored by calculating the gap between interest-sensible assets and interest-sensible liabilities (Repricing Gap). Based on the determined
gaps, the profit and equity sensitivity analysis is performed for certain changes in market interest rates.
Acceptable level of interest rate risk is defined through limits for highest possible sensitivity of net assets to changes in yield market rates of 100bps and highest possible value at interest rate risk
(IRR VaR) for positions in trading book and securities available for sale.
Value at interest rate risk represents highest possible one day loss on positions of trading book and securities available for sale that the Bank could undertake under usual market movements in
interest rates. Considering that the value at interest rate risk is calculated with confidence interval from 99%, realized one day loss may be higher than value at interest rate risk once in 100 days.
Value at risk is calculated using the method of hybrid historical simulation.
The sensitivity of net asset value to changes in market interest rates of 100 bps is calculated and monitored monthly, and value at interest rate risk daily. Information on level of interest rate risk is
regularly submitted to Alco Committee and to the Parent Bank.
126
34.3. Market Risk (continued)
34.3.1. Interest Rate Risk (continued)
The following table represents Reprising Gap report, i.e. the Bank’s exposure to the interest rate risk as of 31 December 2011:
From
From
Up to 1 month 1 to 3 months 3 to 6 months
ASSETS
Interest and fees receivable, receivables from
sales, changes in fair value of derivatives and
other receivables
Loans and advances
Equity investments
Other placements
Intangible assets
Fixed assets held for sale and assets from discontinued operations
Deferred tax assets
Other assets
TOTAL ASSETS
RSD thousand
From
6 to 12
months
From 1 to 5
years
Over 5 years
Non-interest
sensitive
Total
16,222,561
33,000,000
-
-
-
-
-
50,162,819
16,222,561
83,162,819
126,169,474
4,066,079
4,296,484
-
71,702,812
1,720,758
1,777,807
-
11,665,373
3,258,695
1,255,668
-
26,765,528
7,851,242
1,705,203
-
24,969,596
887,813
3,353,182
-
3,398,368
371,522
-
2,985,589
(15,333,426)
962,568
(1,238,285)
595,399
6,583,749
2,985,589
249,337,725
17,784,587
962,568
11,521,581
595,399
6,583,749
-
-
-
-
-
-
60,192
47,317
3,058,602
60,192
47,317
3,058,602
183,754,598
75,201,377
16,179,736
36,321,973
29,210,591
3,769,890
47,884,524
392,322,689
127
From
Up to 1 month 1 to 3 months
LIABILITIES
Other deposits
Borrowings
Liabilities on securities
Interest and fees payable and changes in
fair value of derivatives
Provisions
Tax liabilities
Other liabilities
From
6 to 12 months From 1 to 5 years
Over 5 years
Non-interest
sensitive
RSD thousand
Total
84,678,429
39,672,109
11,474,817
5,739
27,819,587
27,825,984
2,364,460
22,899,104
13,233,738
15,450
52,078,277
1,580,143
-
7,969,448
2,756,337
247,841
235,443
-
-
84,678,429
150,686,366
57,106,462
2,385,649
5,939,365
5,233,971
3,149,059
16,258
5,495
-
165,937
2,229,010
43,334
269,029
-
165,937
2,229,010
43,334
269,029
14,344,148
141,770,459
63,244,002
39,297,351
53,674,678
10,731,280
483,284
2,707,310
311,908,364
-
-
-
-
-
-
80,414,325
80,414,325
141,770,459
63,244,002
39,297,351
53,674,678
10,731,280
483,284
83,121,635
392,322,689
PERIODICAL GAP
41,984,139
11,957,375
(23,117,615)
(17,352,705)
18,479,311
3,286,606
(35,237,111)
-
CUMULATIVE GAP
41,984,139
53,941,514
30,823,899
13,471,194
31,950,505
35,237,111
TOTAL LIABILITIES
TOTAL EQUITY
128
From
3 to 6 months
The following table represents Reprising Gap report, i.e. the Bank’s exposure to the interest rate risk as of 31 December 2010:
Up to 1 month
ASSETS
Interest and fees receivable, receivables from
sales, changes in fair value of derivatives and
other receivables
Loans and advances
Equity investments
Other placements
Intangible assets
Fixed assets held for sale and assets from
discontinued operations
Deferred tax assets
Other assets
TOTAL ASSETS
From
From
From
1 to 3 months 3 to 6 months 6 to 12 months From 1 to 5 years
15,150,177
-
4,903,071
-
159,856,066
1,256,317
3,432,018
-
42,536,676
4,606,566
488,062
-
-
-
179,694,578
52,534,375
-
10,432,347
7,400,744
4,812,717
22,645,808
Over 5 years
Non-interest
sensitive
RSD thousand
Total
-
-
-
51,409,640
20,053,248
51,409,640
9,723,418
6,117,062
357,220
-
14,384,244
978,755
-
6,548,430
-
2,390,298
1,606,109
948,033
201,806
561,462
6,388,002
2,390,298
245,087,290
19,380,689
948,033
10,270,578
561,462
6,388,002
-
-
-
50,685
33,054
2,550,016
50,685
33,054
2,550,016
16,197,700
15,362,999
6,548,430
66,139,105
359,122,995
129
Up to 1 month
From
3 to 6 months
From
6 to 12 months
From 1 to 5
years
Over 5
years
Non-interest
sensitive
65,078,801
35,853,616
189,620
-
59,762,780
25,589,707
108,163
18,421,550
10,747,971
-
51,140,568
2,661,346
-
5,956,769
2,424,744
296,802
298,912
-
3,342,942
24,627
65,078,801
171,432,085
45,255,242
132,790
2,933
5,280,490
6,337,806
21,316
2,682
-
94,607
2,419,833
56,962
220,031
5,498,295
94,607
2,419,833
56,962
220,031
17,143,522
101,124,970
90,741,140
35,507,327
53,823,230
8,384,195
595,714
11,657,297
301,833,873
-
-
-
-
-
-
57,289,122
57,289,122
101,124,970
90,741,140
35,507,327
53,823,230
8,384,195
595,714
68,946,419
359,122,995
PERIODICAL GAP
78,569,608
(38,206,765)
(12,861,519)
(37,625,530)
6,978,804
5,952,716
(2,807,314)
-
CUMULATIVE GAP
78,569,608
40,362,843
27,501,324
(10,124,206)
(3,145,402)
2,807,314
LIABILITIES
Other deposits
Borrowings
Liabilities on securities
Interest and fees payable and changes in fair
value of derivatives
Provisions
Tax liabilities
Other liabilities
TOTAL LIABILITIES
TOTAL EQUITY
130
RSD thousand
From
1 to 3 months
Total
34.3.
Market Risk (continued)
The table below shows the effect of change in interest rates on the Bank’s net income and net assets value:
Scenario
1
2
3
4
Interest rate fluctuation
Net income effect RSD thousand
Net assets effect
RSD thousand
1%
2%
-1%
-2%
134,712
269,424
(134,712)
(269,424)
(478,329)
(921,817)
515,872
1,072,225
The following table represents value at risk for trading book and securities available for sale:
Value at risk:
In EUR
IRR VaR
Average
Maximum
Minimum
231,386
377,695
129,946
34.3.2. Foreign Currency Risk
Foreign currency risk is the risk of the occurrence of negative effect to the financial result and equity of the Bank due to changes in foreign exchange rates. The banking operations in different foreign
currencies cause the exposure to fluctuation in foreign currencies exchange rates.
In accordance with the internal policy of the Bank, considering potential fluctuations in foreign currency exchange rate, the Board of Directors decides on the limit on the open foreign currency
position of the Bank based on the proposal of the Risk Management Department.
The Bank’s Board of Directors has established the limit on the open foreign currency position which is more conservative than the regulatory limit of the foreign currency position and which is monitored
on a daily basis, in order to ensure that the Bank’s currency risk exposure is maintained within established limits.
The Bank measures the foreign currency risk daily, in accordance with the methodology of the National Bank of Serbia, through the Report on the foreign currency risk indicator.
The foreign currency risk indicator is the ratio between the total open net foreign currency position and the Bank’s regulatory capital (calculated in accordance with the Decision on Capital Adequacy
of Banks), whereby the Bank is obliged to ensure that its total net open position does not exceed the amount of 20% of its capital.
During 2011, the Bank strictly paid attention to reconcile the foreign currency risk indicator with the prescribed limit, where this indicator was always at the level far below the limit.
131
34.3.2. Foreign Currency Risk (continued)
The following table shows the Bank’s foreign currency risk exposure, i.e. open net foreign currency position as of 31 December 2011:
RSD thousand
EUR
USD
CHF Other currencies
Total in foreign
currency
Total in RSD
Total
ASSETS
Interest and fees receivable, receivables from sales, changes in
fair value of derivatives and other receivables
Loans and advances
Equity investments
Other placements
Intangible assets
Deferred tax assets
Other assets
2,344,952
50,162,819
198,951
-
212,158
-
265,838
-
3,021,899
50,162,819
13,200,662
33,000,000
16,222,561
83,162,819
490,003
179,616,225
27,238
6,949,513
-
3,727
660,893
-
2,237
3,872,145
-
33
996
-
496,000
184,149,264
27,238
6,950,509
-
2,489,589
65,188,461
17,757,349
962,568
4,571,072
595,399
6,583,749
2,985,589
249,337,725
17,784,587
962,568
11,521,581
595,399
6,583,749
492,637
8,187
548
122
501,495
60,192
47,317
2,557,108
60,192
47,317
3,058,602
TOTAL ASSETS ( I )
240,083,387
871,758
4,087,088
266,989
245,309,223
147,013,466
392,322,689
Other deposits
Borrowings
Interest and fees payable and changes in fair value of derivatives
Provisions
Tax liabilities
Other liabilities
46,324,742
110,271,642
55,616,132
-
3,142,759
6,227,651
569,683
-
1,495,730
1,976,317
2,298
42
766,633
574,005
6,194
5,739
51,729,864
119,049,615
56,194,307
5,781
32,948,565
31,636,751
912,155
2,379,868
84,678,429
150,686,366
57,106,462
2,385,649
10,531,206
90,697
12,804
3,513
10,638,220
165,937
2,229,010
43,334
269,029
3,705,928
165,937
2,229,010
43,334
269,029
14,344,148
TOTAL LIABILITIES
222,743,722
10,030,790
3,487,191
1,356,084
237,617,787
74,290,577
311,908,364
-
-
-
-
-
80,414,325
80,414,325
222,743,722
10,030,790
3,487,191
1,356,084
237,617,787
154,704,902
392,322,689
(17,200,397)
9,144,326
(627,158)
1,136,588
(7,546,641)
-
-
139,268
(14,706)
(27,260)
47,493
144,795
(7,691,436)
-
LIABILITIES
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY (II)
Financial derivatives affecting the foreign currency
position, recorded in the off balance sheet (III)
Open net foreign currency position
(I – II+ III)
132
The following table shows the Bank’s foreign currency risk exposure, i.e. open net foreign currency position as of 31 December 2010:
EUR
USD
CHF
Other currencies
RSD thousand
Total in foreign
currency
Total in RSD
Total
ASSETS
Interest and fees receivable, receivables from sales, changes in fair
value of derivatives and other receivables
Loans and advances
Equity investments
Other placements
Intangible assets
Deferred tax assets
Other assets
1,467,061
44,409,640
136,695
-
158,662
-
243,354
-
2,005,772
44,409,640
18,047,476
7,000,000
20,053,248
51,409,640
123,692
175,676,308
5,270,692
4,857,000
660,092
49
4,219,895
13,342
142
7,572
1,487,751
8,229
25
73,396
121
131,338
181,383,954
5,270,692
4,943,738
668,584
2,258,960
63,703,336
14,109,997
948,033
5,326,840
561,462
6,388,002
50,685
33,054
1,881,432
2,390,298
245,087,290
19,380,689
948,033
10,270,578
561,462
6,388,002
50,685
33,054
2,550,016
TOTAL ASSETS ( I )
232,464,485
4,370,123
1,662,214
316,896
238,813,718
120,309,277
359,122,995
LIABILITIES
Other deposits
Borrowings
Interest and fees payable and changes in fair value of derivatives
Provisions
Tax liabilities
Other liabilities
33,078,541
137,642,615
43,863,387
13,011,819
1,080,866
3,269,492
4,609
3,778
2,481,171
3,640,672
30,560
19,338
566,234
388,489
3,380
24,628
3,978
37,206,812
144,941,267
43,901,936
24,628
13,038,913
27,871,989
26,490,818
1,353,306
108,162
94,607
2,419,833
56,962
220,031
4,104,609
65,078,801
171,432,085
45,255,242
132,790
94,607
2,419,833
56,962
220,031
17,143,522
TOTAL LIABILITIES
227,596,361
4,358,745
6,171,741
986,709
239,113,556
62,720,316
301,833,873
-
-
-
-
-
57,289,122
57,289,122
227,596,361
4,358,745
6,171,741
986,709
239,113,556
120,009,438
359,122,995
(4,695,869)
-
4,746,801
773,605
824,537
-
-
172,255
11,378
237,274
103,792
524,699
299,839
-
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY (II)
Financial derivatives affecting the foreign currency position,
recorded in the off balance sheet (III)
Open net foreign currency position
(I – II+ III)
Balances with F/X clause have been reported under corresponding currencies.
133
Furthermore, the Bank has developed internal methodology for measuring the foreign currency risk, which implies that VaR is calculated and monitored on a daily basis with 99% confidence interval.
VaR is the highest possible loss the Bank could suffer in normal market conditions with the probability of 99%. Foreign currency VaR is calculated and monitored daily and is reported to Director of
Treasury, Executive Board member responsible for risks and the Parent bank.
The table below presents the benchmark amounts of the foreign currency VaR in 2011 and 2010:
Foreign currency VaR
Average
Maximum
Minimum
2011
VaR (in EUR)
2010
59,394
643,650
1,542
34,182
293,717
371
The following table presents the impact of changes in foreign exchange rate on Bank’s profit:
Scenario
10% depreciation of RSD
20% depreciation of RSD
RSD thousand
Impact on the profit
14,480
28,959
34.4. Operational Risk
Operational risk is the risk of negative effects on the Bank’s financial result and equity due to failures in performance of operating activities, human mistakes, system errors and external factors
influence. This definition includes legal risk, but excludes strategic and reputational risk.
The function of operational risk management process is to identify, assess, control and minimize the possibility of occurrence and effect of net losses. The Bank cannot eliminate all operational
risks, but it can, trough the processes of recording and analyzing the operational risks identify the failures in its processes, products and procedures. Hence, the Bank’s improvement of its processes,
products and procedures can decrease frequency and negative influence of operational losses on its operations and profitability. An important aspect of the operative risk management is updating
the management on significant operative risks in timely manner, as well as permanent education of all employees included in the process of collecting data on operational risks and comprehensive
development of the awareness on the importance of identification, measurement, control and mitigation of operational risks.
Data on operational risks are gathered from all organizational parts of the Bank. Data is classified and analyzed, while the methods of risk mitigation and its impact reduction are recommended.
Once per year the Bank performs its own risks assessment. First part of this process is based on a certain number of scenarios, where the members of the Executive Board assess the frequency and
possibility of the operative occurrences, and their influence on profits, from the field they are responsible for. In second part members of the Executive Board evaluate risk factors in the business
environment, where the importance and impact of some risk factors are estimated, as well as the level of control and management of risk, and suggestions of measures to mitigate the possible
impact of certain risk factors are made. By combining the results of the Bank’s risk assessment and statistics of historical cases of operational risks, a clear picture of the Bank’s exposure to operational
risks is obtained.
134
34.4. Operational Risk (continued)
The Bank has established and maintains complete and transparent reporting system. The purpose is to analyse and monitor development of the Bank’s exposure to operational risk and to prevent
the occurrence of events with high intensity (worst case). Reports developed by the Bank include: monthly and semi-annual report (for Members of the Executive Board, Internal Audit and Director
of Risk Management Department), quarterly report on capital requirement for operational risk (for National Bank of Serbia).
For the calculation of capital requirement for operational risk, the Bank applies Basic Indicator Approach. Capital requirement for operational risk calculated using basic indicator approach is equal
to three year average exposure indicator multiplied by capital requirement rate of 15%. As of 31 December 2011 capital requirement for operational risk, calculated on basic indicator approach
amounts to RSD 3,621,530,552.
34.5. Exposure Risk
The Risk Management Department monitors, measures and reports to the Bank’s boards on the Bank’s exposure to a single client or a group of clients, risk of investment in other legal entities as well
as in fixed assets, country risk to which the Bank is exposed as well as operational risk. In 2011, the Bank maintained compliance of the exposure risk and investment risk indicators and performed
appropriate activities defined by the relevant procedures and decisions on credit approval and investments in financial and non-financial assets, that ensured compliance of the Bank’s placements
and investments with indicators prescribed by the National bank of Serbia.
The exposure risks include the risk of the Bank’s exposure to a single client or a group of related clients, as well as exposure risk toward related parties of the Bank.
In accordance with the Risk management policy, the Bank’s management defines exposure limits, i.e. the concentration of placements to single client or a group of related clients, and related
parties of the Bank.
The Bank’s management and relevant Bank’s authorities strive to ensure the compliance of the Bank’s exposure to the prescribed limits, i.e., exposure to a single client or a group of related clients
does not exceed 25% of the Bank’s equity, total amount of all large exposures do not exceed 400% of the Bank’s equity, total exposure to a related party does not exceed 5% of the Bank’s equity
and total exposure to all related parties of the Bank does not exceed 20% of the Bank’s equity.
34.6. Investment Risks
Investment risks include the risk of investment in other legal entities and investment in fixed assets. In accordance with the National bank of Serbia legislation, the Risk Management Department
monitors the Bank’s investments and reports to the Board of Directors. The Department also ensures that the Bank’s investment in a single non-financial sector entity does not exceed 10% of the
Bank’s equity and that total Bank’s investments in non-financial entities and fixed assets do not exceed 60% of the Bank’s equity.
135
34.7. Country Risk
Country risk relating to the country of origin of the Bank’s client includes negative effects which may influence financial result and equity of the Bank, as the Bank might not be able to collect receivables from such a client, as a result of political, economical or social conditions in the client’s origin country.
The Bank’s exposure to the country risk is low, due to insignificant share of non-residents in the total loan portfolio of the Bank.
34.8. Capital Management
The objective of the Bank’s capital management is to maintain the ability of conducting the business in the indefinite period in the foreseeable future, in order to maintain the optimal structure of
the capital in order to decrease the costs of capital as well as to ensure dividends for the shareholders.
The Bank permanently manages its capital in order to:
- Ensure compliance with the capital requirements set by the National bank of Serbia;
- Ensure adequate level of capital in order to enable conducting the business as a going concern; and
- Maintain capital at the level that will ensure future development of the business.
The capital adequacy, as well as the exercise of the Bank’s capital, is monitored on a monthly basis by the Bank’s management. The National bank of Serbia has defined the following capital limits:
- The minimal amount of the capital of EUR 10 million;
- Capital adequacy ratio of 12%
The Bank’s total capital comprises Tier 1 and Tier 2, and deductible items:
- Tier 1 capital include: share capital from ordinary shares, share premium, reserves from profit, retained earnings/accumulated losses, capital gains/losses on repurchase of treasury shares as well
as intangible assets and repurchased treasury shares (excluding cumulative preference shares) as Tier 1 capital deductible items..
- Tier 2 capital include: share capital from preference shares, share premium on preference shares, revaluation reserves related to fixed assets and equity investments, subordinated liabilities up to
50% of capital and repurchased treasury preference shares as Tier 2 capital deductible item.
- Deductible items are: amount of the required special reserves for potential losses, equity investments in banks or other financial organization exceeding 10% of its capital, and 10% of the investing
bank capital, and the amount of the Tier 2 capital of the Bank which exceeds its Tier 1 capital.
Based on the Bank’s strategic plan and assessments of the new regulatory framework effects on the capital adequacy (Basel II), which is in force from 31 December 2011, the Bank issued new shares
in the amount of RSD 13,313,295 thousand in 2011.
136
34.8. Capital Management (continued)
The table below summarizes the structure of the Bank’s capital as of 31 December 2011 and 2010:
Regulatory capital
Tier 1 capital
Tier 2 capital
2011
79,142,153
599,054
2010
56,272,409
4,451,399
79,741,207
60,723,808
-
(3,809,384)
Shortfall amount of the special reserves
for potential losses
Required reserves for estimated losses on balance sheet assets and off-balance sheet items of banks (Decision on the capital
adequacy of the bank 46/2011)
Equity investment in Intesa Leasing d.o.o. Beograd and
Intesa Eurizon Assets Management Beograd
38,097,054
-
(970,356)
(970,619)
Total (1)
40,673,797
55,943,805
Risk – weighted assets
2011
2010
Credit risk exposure
Market risk exposure
Operational risk exposure
211,007,746
30,179,425
299,424,866
944,825
-
Total (2)
241,187,171
300,369,691
Capital adequacy ratio (1/2 x 100)
16.86%
18.62%
RSD thousand
As of 31 December 2011 the total capital for covering risks amounted to RSD 28,942,460 thousand, of which the credit risk, counterparty risk and risk of settlement / delivery on the basis of free
delivery amounted to RSD 25,320,929 thousand, while the remaining amount of capital covers operational risks.
137
34.9. Fair Value of Financial Assets and Liabilities
The Bank’s policy is to disclose information on the fair value of assets and liabilities for which official market records are available and when the fair value significantly differs from the carrying
amount.
Sufficient market experience, or stability and liquidity for the purchase and sale of receivables and other financial assets and liabilities do not exist in the Republic of Serbia, due to the fact that official
market information is not always available. Consequently, fair value cannot be reliably determined in the absence of an active market. The Bank’s management estimates its overall risk exposure and
provides allowances for losses in case it assess that the carrying amount of asset is not collectable.
The Bank’s financial instruments carried at amortized cost mostly have short maturity terms and/or bear variable interest rates that reflect current market conditions. Consequently, the Bank considers
that carrying amount of financial instruments approximates their fair value. The fair value of loans and placements to customers is equal to their carrying value, decreased by related allowance for
impairment. Available for sale investments include treasury bills of the Republic of Serbia and equity instruments. Available for sale investments are carried at fair value, except equity instruments
that do not have a quoted market price in an active market and whose value cannot be reliable determined that are carried at cost less estimated allowances for impairment. Fair value of quoted
securities is based on current offer prices. Fair value of treasury bills is based on discount value that gradually, until maturity, increases by the amount of accrued interest.
The Bank’s management believes that the carrying amounts in the accompanying financial statements reflect the value that is the most valid and the most useful for the reporting purpose.
138
34.9. Fair Value of Financial Assets and Liabilities (continued)
Financial instruments at fair value
Financial instruments, such as financial instruments available for sale, are valued at fair value based on available market information, i.e. using quoted market price at the reporting date. In the
absence of this information, other valuation techniques are being used.
The Bank uses the following hierarchy in order to determine and disclose fair values of financial instruments:
Level 1: Quoted prices in active market for identical financial instruments;
Level 2: Comparative approach, which uses information on similar financial instruments or other market information, based on which value of financial instruments may be determined;
Level 3: Mark to model approach, which uses information which is not based on the market data, but is derived from theoretical model which is appropriate for identification of the value of financial
instrument.
The following table presents values of financial instruments obtained by using of abovementioned techniques:
Financial assets/(liabilities) held for trading
Financial assets available for sale
Level 1
Level 2
Level 3
RSD thousand
Total
37,240
(22,440)
-
14,800
-
18,060,369
-
18,060,369
35. CONTINGENT LIABILITIES
(a) Legal proceedings
As of 31 December 2011, the Bank represents the defendant in a certain number of legal proceedings. Total estimated amount of claims is RSD 422,141 thousand (31 December 2010: RSD 320,326
thousand), including penalty interests and fees.
The final outcome of the ongoing legal proceedings is uncertain. As disclosed in Note 29 to the financial statements as of 31 December 2011, the Bank recognized provisions for potential losses
that could arise from the aforementioned litigations in total amount of RSD 383,190 thousand (31 December 2010: RSD 274,887 thousand). The Bank’s management considers that no significant
losses will arise from the ongoing litigations, other than those provided for.
The Bank is subject to a number of lawsuits as a plaintiff for collection of receivables.
(b) Tax Risks
Tax system of the Republic of Serbia is in process of continuous review and amendments. Tax period in the Republic of Serbia is considered to be open in five years. In different circumstances, tax
authorities could have different approach to some matters, and could determine additional tax liabilities together with related penalty interest and fees. The Bank’s management believes that tax
liabilities recognized in the accompanying financial statements are fairly presented.
139
36. RECONCILIATION OF OUTSTANDING BALANCES WITH COUNTERPARTIES
In accordance with Article 20 of the Law on Accounting and Auditing, the Bank performed reconciliation of liabilities and receivables with its debtors and creditors as at 31 December 2011, and
maintained reliable documentation.
From a total of 2,748 submitted open item statements, 46 were disputed.
Most of the unreconciled outstanding balances of receivables are as follows:
- RSD 612,632 thousand refer to receivables from companies in bankruptcy.
- RSD 289,000 thousand relates to receivables based on guarantees paid for two clients Termoelektro doo Beograd and Petšped doo Beograd. These clients dispute amounts on open item statements
without grounds. According to the Article no. 8 of Agreement of issue of guarantee , signed by the companies, it is specified that if the Bank pays for guarantee, the paid amount becomes a
short-term loan on the date of issuing a payment order, without obligation of contracted parties to conclude a separate Annex to this Agreement. This short-term loan has maturity within 7 days
from the date of payment under the guarantee.
- RSD 103,920 thousand refer to receivables from corporate client Irva doo, Beograd. Open item statement is disputed on the grounds that Reorganization plan prepared in advanced has been
adopted.
- RSD 81,737 thousand, refers to purchase of short-term receivables - factoring. Legal entities generally do not change in the accounting records the client toward which they have an obligation,
regardless of the fact that the client has ceded the receivables to the Banks pursuant to the Sale of Receivables Agreement.
- RSD 70,578 thousand mostly relates to accrued interest.
- RSD 2,655 thousand refers to non-compliance arising from receivables under transactions with credit cards.
- RSD 926 thousand relates to other receivables.
37. EXCHANGE RATES
The official foreign exchange rates of the National Bank of Serbia determined on the Interbank Foreign Currency Market, used for translation of balance sheet items denominated in foreign currencies
as at 31 December 2011 and 2010 into Serbian Dinars (RSD) were as follows:
EUR
USD
CHF
140
2011
104.6409
80.8662
85.9121
In RSD
2010
105.4982
79.2802
84.4458
38. SUBSEQUENT EVENTS
There have been no significant events subsequent to the balance sheet date, which would require disclosures in the notes to the accompanying financial statements of the Bank as of and for the
year ended 31 December 2011.
141
ANNUAL REPORT 2011
SYNAGOGUE,
Apatin
The Jewish house of prayer built in Apatin in 1885 is one of its kind in the world. This is the
only completely preserved old synagogue in Vojvodina . Its uniqueness is related to a ceiling mural with Old Testament scenes, which is completely contrary to the manner of interior
decoration of synagogues. According to its content, the mural is non-typical of Judaism and
contains Hebrew writing written in reverse, so the text can only be read with a mirror. In 1995,
the synagogue was sold to the Baptist church when a cross was placed on the slate with Moses’
messages. In the yard of the synagogue there used to be a school that was attended by the
children of more affluent Apatin residents of different religions who wanted them to get high
quality education. The school was closed in 1920.
142
ANNUAL REPORT 2011
143
ANNUAL REPORT 2011
INTESA LEASING
BELGRADE
LEGAL DEPARTMENT
EURIZON CAPITAL
BELGRADE
HUMAN RESOURCES
DEPARTMENT
BOARD OF DIRECTORS
INTERNAL AUDIT
EXECUTIVE BOARD
COMPLIANCE OFFICE
SECURITY DEPARTMENT
MARKETING AND
COMMUNICATIONS
DEPARTMENT
PRESIDENT OF THE
EB / CEO
COSTUMER SATISFACTION
MENAGEMENT UNIT
ORGANIZATION AND PROJECT
MANAGEMENT DEPARTMENT
RISK MANAGEMENT
DEPARTMENT
DEPUTY PRESIDENT
OF THE EB / COO
ECONOMIC RESEARCH
ORGANIZATION
AND PROJECT
UNIT
MANAGEMENT
DEPARTMENT
CREDIT MANAGEMENT
DEPARTMEN
DELINQUENCY MANAGEMENT
DEPARTMEN
CORPORATE DIVISION
RETAIL DIVISION
CHIEF COMMERCIAL
OFFICER
PLANNING
AND CONTROL
DEPARTMENT
FINANCE
AND ACCOUNTING
DEPARTMENT
REAL ESTATE AND
PROCUREMENT MANAGEMENT
DEPARTMENT
TREASURY
DEPARTMENT
COMMERCIAL PLANNING
AND NETWORK MANAGEMENT
DEPARTMENT
CORPORATE PRODUCTS
AND SALES MANAGEMENT
DEPARTMENT
LARGE CORPORATE
DEPARTMENT
Collection Office
SMALL BUSINESS SALES
MANAGEMENT
DEPARTMENT
GUARANTEES AND
DOCUMENTARY OPERATIONS
DEPARTMENT
FACTORING DEPARTMENT
BACK OFFICE
DEPARTMENT
ICT DEPARTMENT
PAYMENTS AND CASH
MONITORING
DEPARTMENT
REGIONAL
BACK
OFFICE
REGIONS
REGIONS
Branches and
Mortgage Centers
CHIEF INFORMATION
OFFICER
INDIVIDUALS SALES
MANAGEMENT
DEPARTMENT
RETAIL PRODUCT AND
SERVICE MANAGEMENT
DEPARTMENT
144
DEPUTY HEAD OF
CORPORATE DIVISION
CRM Office
PAYMENT CARDS
AND DIRECT CHANNELS
DEPARTMENT
FINANCE MANAGEMENT
AND TREASURY DIVISION
REGIONAL
OPERATIONS
ANNUAL REPORT 2011
BUSINESS NETWORK
BUSINESS NETWORK
Location
Branch name
Regional center
Address
Ada
Ada, Vuka Karadžića 18
Pančevo
Vuka Karadžića 18
Aleksandrovac
Aleksandrovac, Trg oslobođenja bb
Kragujevac
Trg oslobođenja bb
Aleksinac
Aleksinac, Knjaza Miloša 115
Niš
Knjaza Miloša 115
Apatin
Apatin, Petefi Šandora 2
Novi Sad
Petefi Šandora 2
Arandjelovac
Aranđelovac, Knjaza Miloša 192
Kragujevac
Knjaza Miloša 192
Arilje
Arilje, Stevana Čolovića 2
Užice
Stevana Čolovića 2
Bačka Palanka
Bačka Palanka, Žarka Zrenjanina 43
Novi Sad
Žarka Zrenjanina 43
Bačka Topola
Bačka Topola, Glavna 29
Novi Sad
Glavna 29
Bačka Topola
Bačka Topola, Glavna 22
Novi Sad
Glavna 22
Bački Petrovac
Bački Petrovac, Maršala Tita 4
Novi Sad
Maršala Tita 4
Batajnica
Zemun, Batajnica, Majke Jugovića 1
Beograd
Majke Jugovića 1
Bajina Bašta
Bajina Bašta, Kneza Milana Obrenovića 22
Užice
Kneza Milana Obrenovića 22
Bečej
Bečej, Novosadska 2
Pančevo
Novosadska 2
Beočin
Beočin, Trg Cara Lazara 8
Novi Sad
Trg Cara Lazara 8
Belgrade
New Belgrade, Otona Župančića 1
Beograd 2
Otona Župančića 1
Belgrade
Čukarica, Požeška 128
Beograd 2
Požeška 128
Belgrade
Čukarica, Požeška 45
Beograd 2
Požeška 45
Belgrade
New Belgrade, Tošin bunar 159
Beograd 2
Tošin bunar 159
Belgrade
New Belgrade, Bulevar Zorana Đinđića 2a
Beograd 2
Bul. Zorana Đinđića 2a
Belgrade
New Belgrade, Nedeljka Gvozdenovića 24a
Beograd 2
Nedeljka Gvozdenovića 24a
Belgrade
New Belgrade, Jurija Gagarina 149
Beograd 2
Jurija Gagarina 149
Belgrade
New Belgrade, Bulevar Arsenija Čarnojevića 54
Beograd 2
Bul. Arsenija Čarnojevića 54
Belgrade
Zvezdara, Bulevar Kralja Aleksandra 288
Beograd 1
Bulevar Kralja Aleksandra 288
Belgrade
Palilula, Marjane Gregoran 60
Beograd 1
Marjane Gregoran 60
Belgrade
Voždovac, Ustanička 69
Beograd 1
Ustanička 69
Belgrade
Zvezdara, Mirijevski venac 23
Beograd 1
Mirijevski venac 23
Belgrade
Voždovac, Kumodraška 174
Beograd 2
Kumodraška 174
Belgrade
Beograd 1
Belgrade
Vračar, Resavska 1-3
Beograd 1
Resavska 1-3
145
BUSINESS NETWORK
146
ANNUAL REPORT 2011
Location
Branch name
Regional center
Address
Belgrade
Stari Grad, Knez Mihailova 30
Beograd 1
Knez Mihailova 30
Belgrade
Stari Grad, Kolarčeva 5
Beograd 1
Kolarčeva 5
Belgrade
Stari Grad, Studentski trg 7
Beograd 1
Studentski trg 7
Belgrade
Stari Grad, Makedonska 42
Beograd 1
Makedonska 42
Belgrade
Stari Grad, Karađorđeva 67
Beograd 1
Karađorđeva 67
Belgrade
Vračar, Bulevar oslobođenja 3
Beograd 1
Bulevar oslobođenja 3
Belgrade
Voždovac, Vojvode Stepe 77
Beograd 2
Vojvode Stepe 77
Belgrade
Vračar, Cara Nikolaja 82-84
Beograd 1
Cara Nikolaja 82-84
Belgrade
Palilula, Ruzveltova 8
Beograd 1
Ruzveltova 8
Belgrade
Rakovica, Vukasovićeva 50a
Beograd 2
Vukasovićeva 50a
Belgrade
Čukarica, Radnička 55
Beograd 2
Radnička 55
Belgrade
Savski Venac, Sarajevska 31
Beograd 1
Sarajevska 31
Belgrade
Stari Grad, Svetogorska 47
Beograd 1
Svetogorska 47
Belgrade
Savski Venac, Vase Pelagića 48b
Beograd 2
Vase Pelagića 48b
Belgrade
Rakovica, Vidikovački venac 80b
Beograd 2
Vidikovački venac 80b
Belgrade
New Belgrade, Goce Delčeva 34
Beograd 2
Goce Delčeva 34
Belgrade
New Belgrade, Partizanske avijacije 14
Beograd 2
Partizanske avijacije 14
Belgrade
Beograd 2
Jurija Gagarina 16
Belgrade
New Belgrade, Milentija Popovića 7v
Beograd 2
Milentija Popovića 7v
Belgrade
New Belgrade, Omladinskih brigada 90
Beograd 2
Omladinskih brigada 90
Belgrade
Stari Grad, Višnjićeva 9
Beograd 1
Višnjićeva 9
Belgrade
Palilula, 27. marta 23
Beograd 1
27. marta 23
Belgrade
Stari Grad, Cara Uroša 54
Beograd 1
Cara Uroša 54
Belgrade
Stari Grad, Takovska 58
Beograd 1
Takovska 58
Belgrade
Stari Grad, Džordža Vašingtona 8
Beograd 1
Džordža Vašingtona 8
Belgrade
Voždovac, Braće Jerković 137b
Beograd 2
Braće Jerković 137b
Belgrade
Čukarica, Trgovačka 30
Beograd 2
Trgovačka 30
Belgrade
Savski Venac, Nemanjina 4
Beograd 1
Nemanjina 4
Belgrade
Sopot, Kosmajski trg 6
Beograd 2
Kosmajski trg 6
Belgrade
Surčin, Vojvođanska 85
Beograd 2
Vojvođanska 85
Belgrade
Beograd 2
Jurija Gagarina 32
Belgrade
Palilula, Borča, Ivana Milutinovića 73
Beograd 1
Ivana Milutinovića 73
Belgrade
Stari Grad, Cara Dušana 50
Beograd 1
Cara Dušana 50
Belgrade
Čukarica, Sremčica, Beogradska 161
Beograd 2
Beogradska 161
ANNUAL REPORT 2011
BUSINESS NETWORK
Location
Branch name
Regional center
Address
Belgrade
Stari Grad, Topličin venac 19-21
Beograd 1
Topličin venac 19-21
Belgrade
Beograd 1
Belgrade
Vračar, Kralja Milana 18
Beograd 1
Kralja Milana 18
Belgrade
Voždovac, Banjica, Crnotravska 7-9
Beograd 2
Crnotravska 7-9
Belgrade
Rakovica, Miška Kranjca br. 12
Beograd 2
Miška Kranjca br. 12
Belgrade
Beograd 2
Jurija Gagarina 14
Belgrade
Savski Venac, Neznanog Junaka 7
Beograd 2
Neznanog Junaka 7
Belgrade
Voždovac, Danijelova 32
Beograd 2
Danijelova 32
Belgrade
Vračar, Južni Bulevar 84
Beograd 1
Južni Bulevar 84
Belgrade
Centar za stambene kredite, New Belgrade, Goce Delčeva 34
Beograd 2
Goce Delčeva 34
Belgrade
Centar za stambene kredite, Resavska 1-3
Beograd 1
Resavska 1-3
Belgrade
Kancelarija za stambene kredite, Čukarica, Požeška 128
Beograd 2
Požeška 128
Belgrade
Kancelarija za stambene kredite, Knez Mihajlova 30
Beograd 1
Knez Mihailova 30
Belgrade
Kancelarija za stambene kredite, Studentski Trg 7
Beograd 1
Studentski trg 7
Bezdan
Bezdan, Žrtava fašizma 19
Bezdan
Žrtava fašizma 19
Bor
Bor, Đorđa Vajferta 3
Niš
Đorđa Vajferta 3
Bogatić
Bogatić, Vojvode Stepe 35
Užice
Vojvode Stepe 35
Brus
Brus, Kralja Petra I bb
Kragujevac
Kralja Petra I bb
Bujanovac
Bujanovac, Karađorđa Petrovića 111
Niš
Karađorđa Petrovića 111
Crvenka
Crvenka, Moše Pijade 49
Novi Sad
Moše Pijade 49
Čačak
Čačak, Kuželjeva 1
Užice
Kuželjeva 1
Čajetina
Čajetina, Zlatiborska 13
Užice
Zlatiborska 13
Čoka
Čoka, Potiska 10
Pančevo
Potiska 10
Ćićevac
Ćićevac, Karađorđeva bb
Kragujevac
Karađorđeva bb
Ćuprija
Ćuprija, Karađorđeva 57
Kragujevac
Karadjordjeva 57
Despotovac
Despotovac, Despota Stefana Lazarevića 36
Kragujevac
Despota Stevana Lazarevića 36
Gornji Milanovac
Gornji Milanovac, Karađorđeva 1
Užice
Karađorđeva 1
Inđija
Inđija, Novosadska 21
Novi Sad
Novosadska 21
Ivanjica
Ivanjica, Majora Ilića 1
Užice
Majora Ilića 1
Jagodina
Jagodina, Maksima Gorkog 2
Kragujevac
Maksima Gorkog 2
Kanjiža
Kanjiža, Glavna 3
Pančevo
Glavna 3
Kikinda
Kikinda, Braće Tatića 16
Pančevo
Braće Tatića 16
Kladovo
Kladovo, 22. septembra 9
Niš
22.septembra 9
Knjaževac
Knjaževac, Trg Oslobođenja 4
Niš
Trg Oslobođenja 4
147
BUSINESS NETWORK
148
ANNUAL REPORT 2011
Location
Branch name
Regional center
Address
Kosjerić
Kosjerić, Karađorđeva 58
Užice
Karađorđeva 58
Kostolac
Kostolac, Nikole Tesle 5-7
Pančevo
Nikole Tesle 5-7
Kovačica
Kovačica, Maršala Tita 31a
Pančevo
Maršala Tita 31a
Kovin
Kovin, Cara Lazara 73
Pančevo
Cara Lazara 73
Kragujevac
Kragujevac, Save Kovačevića 12 b
Kragujevac
Save Kovačevića 12 b
Kragujevac
Kragujevac, Kralja Petra I 19
Kragujevac
Kralja Petra I 19
Kragujevac
Kragujevac, Kralja Aleksandra I Karađorđevića 120
Kragujevac
Kralja Aleksandra I Karađorđevića 120
Kraljevo
Kraljevo, Trg Jovana Sarića 8
Kragujevac
Trg Jovana Sarića 8
Kruševac
Kruševac, Mirka Tomića 4
Kragujevac
Mirka Tomića 4
Kruševac
Kruševac, Vece Korčagina 18
Kragujevac
Vece Korčagina 18
Kruševac
Kruševac, Radomira Jakovljevića bb
Kragujevac
Radomira Jakovljevića bb
Kučevo
Kučevo, Trg Veljka Dugoševića 2
Pančevo
Trg Veljka Dugoševića 2
Kula
Kula, Maršala Tita 242
Novi Sad
Maršala Tita 242
Lajkovac
Lajkovac, Kralja Petra I 2
Užice
Kralja Petra I 2
Lazarevac
Lazarevac, Karađorđeva 41
Užice
Karađorđeva 41
Leskovac
Leskovac, Trg Revolucije 7
Niš
Trg Revolucije 7
Leskovac
Leskovac, Bulevar oslobođenja 170
Niš
Bulevar Oslobodjenja 170
Loznica
Loznica, Trg Vuka Karadžića bb
Užice
Trg Vuka Karadžića bb
Lučani
Lučani, Jugoslovenske armije 1
Užice
Jugoslovenske Armije 1
Ljig
Ljig, Vojvode Mišića 12
Užice
Vojvode Mišića 12
Ljubovija
Ljubovija, Vojvode Mišića 44
Užice
Vojvode Mišića 44
Mionica
Mionica, Dr. Jove Aleksića 21
Užice
Dr. Jove Aleksića 21
Mladenovac
Mladenovac, Kralja Petra I 217
Kragujevac
Kralja Petra I 217
Mokra gora
Mokra Gora, Železnička stanica Mokra gora
Užice
Železnička stanica Mokra gora
Mol
Mol, JNA 63
Pančevo
JNA 63
Negotin
Negotin, Trg Đorđa Stanojevića 70/II
Niš
Trg Đorđa Stanojevića 70/II
Niš
Centar za stambene kredite, Niš, Obrenovićeva 13
Niš
Obrenovićeva br.13
Niš
Niš, Nade Tomić 8a
Niš
Nade Tomić 8a
Niš
Niš, Sinđelićev trg 18
Niš
Sinđelićev trg 18
Niš
Niš, Vizantijski bulevar 78
Niš
Vizantijski bulevar 78
Niš
Niš, Obrenovićeva 82 (Fontana)
Niš
Obrenovićeva 82 (Fontana)
Niš
Niš, Obrenovićeva 13 (Obrenovićeva)
Niš
Obrenovićeva 13 (Obrenovićeva)
Niš
Niš, Bulevar Nemanjića 28-32
Niš
Bulevar Nemanjića 28-32
Nova Pazova
Nova Pazova, Cara Dušana 4
Novi Sad
Cara Dušana 4
ANNUAL REPORT 2011
BUSINESS NETWORK
Location
Branch name
Regional center
Address
Nova Varoš
Nova Varoš, Svetog Save 31
Užice
Svetog Save 31
Novi Kneževac
Novi Kneževac, Kralja Petra I Karađorđevića 29
Pančevo
Kralja Petra I Karađorđevića 29
Novi Bečej
Novi Bečej, Trg Oslobođenja 5
Pančevo
Trg Oslobođenja 5
Novi Pazar
Novi Pazar, AVNOJ-a 6
Kragujevac
AVNOJ-a 6
Novi Sad
Novi Sad, Bulevar Mihajla Pupina 4
Novi Sad
Bulevar Mihaila Pupina 4
Novi Sad
Novi Sad, Bulevar Oslobođenja 32
Novi Sad
Bulevar Oslobođenja 32
Novi Sad
Novi Sad, Bulevar Jovana Dučića 1
Novi Sad
Bulevar Jovana Dučića 1
Novi Sad
Novi Sad, Bulevar Cara Lazara 79a
Novi Sad
Bulevar cara Lazara 79a
Novi Sad
Novi Sad, Bulevar Oslobođenja 76a
Novi Sad
Bulevar Oslobođenja 76a
Novi Sad
Novi Sad, Fruškogorska 10
Novi Sad
Fruškogorska 10
Novi Sad
Novi Sad, Braće Ribnikar 25a
Novi Sad
Braće Ribnikar 25a
Novi Sad
Novi Sad, Rumenačka 33
Novi Sad
Rumenačka 33
Novi Sad
Novi Sad, Kisačka 27
Novi Sad
Kisačka 27
Novi Sad
Novi Sad, Kosovska 1
Novi Sad
Kosovska 1
Novi Sad
Novi Sad, Zmaj Jovina 12
Novi Sad
Zmaj Jovina 12
Novi Sad
Novi Sad, Narodnog fronta 34
Novi Sad
Narodnog fronta 34
Novi Sad
Novi Sad, Radnička 16
Novi Sad
Radnička 16
Novi Sad
Novi Sad, Franje Štefanovića 1
Novi Sad
Franje Štefanovića 1
Novi Sad
Novi Sad, Bulevar Oslobođenja 8
Novi Sad
Buleva Oslobođenja 8
Novi Sad
Centar za stambene kredite,Novi Sad, Bulevar Mihajla Pupina 4 Novi Sad
Bulevar Mihajla Pupina 4
Obrenovac
Obrenovac, Miloša Obrenovića 133-135
Užice
Miloša Obrenovića 133-135
Pančevo
Pančevo, Štrosmajerova 1
Pančevo
Štrosmajerova 1
Pančevo
Pančevo, Karađorđeva 2-4
Pančevo
Karađorđeva 2-4
Pančevo
Pančevo, Cara Lazara 2
Pančevo
Cara Lazara 2
Pančevo
Centar za stambene kredite, Pančevo, Cara Lazara 2
Pančevo
Cara Lazara 2
Paraćin
Paraćin, Kralja Petra I 4
Kragujevac
Kralja Petra I 4
Petrovac na Mlavi
Petrovac na Mlavi, Bate Bulića 37
Pančevo
Bate Bulića 37
Plandište
Plandište, Hajduk Veljka 16a
Pančevo
Hajduk Veljka 16a
Pirot
Pirot, Branka Radičevića 18
Niš
Branka Radičevića 18
Požarevac
Požarevac, Trg Radomira Vujovića 8
Pančevo
Trg Radomira Vujovića 8
Požega
Požega, Knjaza Miloša 6
Užice
Knjaza Miloša 6
Priboj
Priboj, Nemanjina 48-50
Užice
Nemanjina 48-50
Prijepolje
Prijepolje, Sandžačkih brigada 39
Užice
Sandžačkih brigada 39
Prokuplje
Prokuplje, 9. oktobra 6
Niš
9. oktobra 6
149
BUSINESS NETWORK
150
ANNUAL REPORT 2011
Location
Branch name
Regional center
Address
Raška
Raška, Miluna Ivanovića 8
Kragujevac
Miluna Ivanovića 8
Ruma
Ruma, Glavna 170
Novi Sad
Glavna 170
Ruma
Ruma, 15. maja 143
Novi Sad
15. maja 143
Sjenica
Sjenica, Milorada Jovanovića bb
Kragujevac
Milorada Jovanovića bb
Smederevo
Smederevo, Cvijićeva 3
Pančevo
Cvijićeva 3
Smederevska Palanka
Smederevska Palanka, Svetog Save 19
Kragujevac
Svetog Save 19
Sombor
Sombor, Venac Stepe Stepanovića 32
Novi Sad
Venac Stepe Stepanovića 32
Sremska Mitrovica
Sremska Mitrovica, Kralja Petra I 6
Novi Sad
Kralja Petra I 6
Sremska Mitrovica
Sremska Mitrovica, Svetog Dimitrija 2
Novi Sad
Svetog Dimitrija 2
Srbobran
Srbobran, Zmaj Jovina 18
Pančevo
Zmaj Jovina 18
Sremski Karlovci
Sremski Karlovci, Trg karlovačke mitropolije 1
Novi Sad
Trg Karlovačke Mitropolije 1
Sremska Kamenica
Sremska Kamenica, Trg Jove Jovanovića Zmaja 5
Novi Sad
Trg Jove Jovanovića Zmaja 5
Senta
Senta, Zlatne grede 6
Pančevo
Zladne grede 6
Stara Pazova
Stara Pazova, Ćirila i Metodija 2
Novi Sad
Ćirila i Metodija 2
Subotica
Subotica, Dimitrija Tucovića 2
Novi Sad
Dimitrija Tucovića 2
Subotica
Subotica, Štrosmajerova 6
Novi Sad
Štrosmajerova 6
Subotica
Kancelarija za stambene kredite, Subotica, Dimitrija Tucovića 2
Subotica
Surdulica
Surdulica, Ulica Kralja Petra I bb
Niš
Kralja Petra I bb
Svilajnac
Svilajnac, Svetog Save 52
Kragujevac
Svetog Save 52
Šabac
Šabac, Gospodar Jevremova 44
Užice
Gospodar Jevremova 44
Šabac
Šabac, Karađorđeva 14
Užice
Karađorđeva 14
Šid
Šid, Karađorđeva 11-13
Novi Sad
Karađorđeva 11-13
Tavankut
Tavankut, Jovana Mikića 2
Novi Sad
Jovana Mikića 2
Temerin
Temerin, Novosadska 403
Pančevo
Novosadska 403
Titel
Titel, Mihajla Krestića 8a
Pančevo
Mihaila Krestića 8a
Topola
Topola, Tomislava Karađorđevića 3
Kragujevac
Tomislava Karađorđevića 3
Trstenik
Trstenik, Cara Dušana bb
Kragujevac
Cara Dušana bb
Tutin
Tutin, Pešterska bb
Kragujevac
Pešterska bb
Ub
Ub, Kralja Petra I 60
Užice
Kralja Petra I 60
Užice
Užice, Dimitrija Tucovića 129
Užice
Užice
Užice
Užice
Užice
Valjevo
Valjevo, Karađorđeva 71
Užice
Karađorđeva 71
Valjevo
Valjevo, Železnička 7
Užice
Železnička 7
ANNUAL REPORT 2011
BUSINESS NETWORK
Location
Branch name
Regional center
Address
Velika Plana
Velika Plana, Momira Gajića br 2
Kragujevac
Momira Gajića br 2
Veliko Gradište
Veliko Gradište, Kneza Lazara 35
Pančevo
Kneza Lazara 35
Veternik
Veternik, Kralja Petra I 7a
Novi Sad
Kralja Petra I 7a
Vladičin Han
Vladičin Han, Svetosavska 16a
Niš
Svetosavska 16a
Vladimirci
Vladimirci, Svetog Save 12
Užice
Svetog Save 12
Vlasotince
Vlasotince, Nemanjina 2
Niš
Nemanjina 2
Vranje
Vranje, Lenjinova bb
Niš
Lenjinova bb
Vrbas
Vrbas, Maršala Tita 66
Novi Sad
Maršala Tita 66
Vrnjačka Banja
Vrnjačka Banja, Kruševačka 1
Kragujevac
Kruševačka 1
Vršac
Vršac, Sterijina 19a
Pančevo
Sterijina 19a
Vršac
Vršac, Dositejeva 1
Pančevo
Dositejeva 1
Zaječar
Zaječar, Nikole Pašića 70
Niš
Nikole Pašića 70
Zemun
Zemun, Glavna 30
Beograd 2
Glavna 30
Zemun
Zemun, Gornjogradska 38
Beograd 2
Gornjogradska 38
Zlatibor
Zlatibor, Jezero bb
Užice
Jezero bb
Zrenjanin
Zrenjanin, Kralja Aleksandra I Karađorđevića bb
Pančevo
Kralja Aleksandra I Karađorđevića bb
Zrenjanin
Zrenjanin, Bulevar Veljka Vlahovića bb
Pančevo
Bul. Veljka Vlahovića bb, TC »Bagljaš« lok.12
Žabalj
Žabalj, Trg Svetog Save 3
Pančevo
Trg Svetog Save 3
151
Published by: Banca Intesa a.d. Beograd
Design and prepress: LPT
Photos: Banca Intesa
Printed by: Štamparija Stojkov
Circulation: 50

annual report - Banca Intesa

Transcription

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