NS Bank Financial Statements for the Year Ended 31 December

Transcription

NS Bank
Financial Statements
for the Year Ended 31 December 2013
and Independent Auditor’s Report
NS Bank
Notes to the Financial Statements for the Year Ended 31 December 2013
Contents
Independent Auditor’s Report
Statement of Management’s Responsibilities for the Preparation and Approval of the Financial
Statements
Statement of Financial Position .........................................................................................5
Statement of Comprehensive Income ..................................................................................6
Statement of Cash Flows ................................................................................................. 8
Statement of Changes in Equity ....................................................................................... 10
Notes to the Financial Statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
Principal Activities of the Bank.................................................................................. 11
Operating Environment of the Bank ............................................................................ 12
Basis of Presentation .............................................................................................. 13
Summary of Significant Accounting Policies .................................................................. 17
Cash and Cash Equivalents ....................................................................................... 29
Due from Other Banks............................................................................................. 29
Loans to Customers ................................................................................................ 30
Financial Assets Available for Sale .............................................................................. 36
Non-current Assets Held for Sale................................................................................ 40
Premises and Equipment ......................................................................................... 41
Other Assets ........................................................................................................ 43
Due to Other Banks ................................................................................................ 48
Customer Accounts ................................................................................................ 48
Debt Securities Issued ............................................................................................. 49
Other Borrowed Funds ............................................................................................ 50
Other Liabilities .................................................................................................... 51
Share Capital and Share Premium .............................................................................. 51
Retained Earnings according to Russian Legislation ......................................................... 51
Interest Income and Expense .................................................................................... 52
Fee and Commission Income ..................................................................................... 52
Operating Expenses................................................................................................ 53
Proceeds from Sale of Real Estate and Property Rights under Investment Contracts ................. 53
Income Tax .......................................................................................................... 53
Dividends ............................................................................................................ 55
Components of Comprehensive Income ........................................................................ 56
Risk Management .................................................................................................. 56
Capital Management............................................................................................... 69
Contingent Liabilities ............................................................................................. 69
Fair Value of Financial Instruments............................................................................. 71
Reconciliation of Classes of Financial Instruments with Measurement Categories ..................... 72
Related Party Transactions....................................................................................... 74
2
NS Bank
(in thousands of Russian Roubles)
1.
Principal Activities of the Bank
NS Bank (the Bank) was founded in 1994 as a limited liability company in accordance with the legislation
of the Russian Federation. The Bank was reorganised by restructuring into a closed joint stock company on
the basis of the decision of the General Participants’ Meeting (Minutes No. 46 of 20 April 2001) and
registered by the Central Bank of the Russian Federation (the Bank of Russia, CBR) on 8 August 2001,
registration No. 3124.
In 2013 the Bank operated on the basis of the following licenses:

General License No. 3124 of 20 August 2003 issued by the Bank of Russia for banking operations with
funds of individuals and legal entities in Russian Roubles and foreign currency;

License No. 3124 of 20 August 2003 issued by the Bank of Russia for banking operations to borrow and
sell precious metals;

FFMS licenses of the professional securities market participant:
–
No. 177-07407-100000 of 27.01.2004 for broker activities with unlimited validity period;
–
No. 177-07409-010000 of 27.01.2004 for dealer activities with unlimited validity period;
–
No. 177-07421-000100 of 30.01.2004 for depository activities with unlimited validity period;
–
No. 177-07413-001000 of 27.01.2004 for securities management with unlimited validity period.
The priority lines of the Bank’s business are commercial banking operations on the territory of the Russian
Federation.
The Bank has 5 branches in the Russian Federation.
Legal and mailing address of the Bank is at: 20/2 Dobrovolcheskaya Str., Moscow, 109004.
Since 10 February 2005 the Bank has been a member of the Obligatory Deposit Insurance System regulated
by the State Corporation “Deposit Insurance Agency”.
The average annual number of the Bank’s employees in 2013 was 543 (2012: 521).
The Bank is a member of the Association of Russian Banks, Association of Regional Banks of Russia, Moscow
Interbank Currency Exchange (MICEX), Moscow International Currency Association, National Securities
Market Association, Russian National SWIFT Association, international payment systems VISA International
and MasterCard Worldwide, international funds transfer systems Western Union, LEADER, Golden Crown
and Unistream payment systems, Guild of Financial Managers, Guild of Kremlin Suppliers.
On 24 February 2014 the rating agency “Expert RA” affirmed the Bank's creditworthiness rating at “A+”
“Very high level of creditworthiness” with a “stable” outlook.
On 2 September 2013 the National Rating Agency upgraded the Bank's creditworthiness rating to “AA-”
“Very high creditworthiness (Level 3)”.
On 4 April 2013 the international rating agency Moody’s Investors Service affirmed the following NS Bank's
ratings: the financial stability rating “E+”, the long-term foreign currency and local currency deposits
rating “B3” and “Not-Prime” short-term foreign and local currency deposits rating. At the same time,
Moody’s Interfax Rating Agency affirmed the Bank’s long-term national scale credit rating “Baa3.ru”. The
outlook for the financial stability rating and the long-term foreign currency and local currency deposits
rating was changed to “stable”.
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NS Bank
Below is the information on the Bank’s main shareholders:
Shareholder
Yu.G. Petrov
GRANDISS LLC
OLK Company LLC
FinStandart LLC
G.M. Ulanovskiy
Stroyproektinvest-3 LLC
L. N. Podgornaya
M.D. Balakin
N.I. Andrianova
Shareholders owning less than 5% of the share capital
Total
2013
Ownership
(%)
2012
Ownership
(%)
25.92
18.16
17.99
16.99
6.53
5.22
5.09
4.10
100.00
25.92
12.16
0.01
1.53
5.22
0.09
34.04
16.83
4.20
100.00
The Bank is actually controlled by Yu.G. Petrov (holding 34.35% as at 31 December 2013), I.N. Belogurova
(holding 18.16% as at 31 December 2013), S.F. Deriabin (holding 17.99% as at 31 December 2013),
L.M. Danilova (holding 16.99% as at 31 December 2013) (2012: the Bank was actually controlled by
M.D. Balakin - 34.04% and Yu.G. Petrov - 34.43%).
As at 31 December 2013, members of the Bank’s Board of Directors controlled 563 029 shares of the Bank
or 37.54% (2012: 1 050 000 shares of the Bank or 70%).
2.
Operating Environment of the Bank
General
The economy of the Russian Federation continues to display certain characteristics of an emerging
market. These characteristics include, in particular, inconvertibility of the national currency in most
countries outside of Russia and relatively high inflation rates. The Russian tax, currency and customs
legislation is subject to varying interpretations and frequent changes. Russia continues development of the
legal, tax and administrative framework to comply with the market economy requirements. The economic
reforms conducted by the Government are aimed at retooling the Russian economy, development of hightech productions, enhancement of labour productivity and competitiveness of the Russian products on the
world market.
The ongoing uncertainty and volatility of the financial markets, including the European region, as well as
other risks could have significant negative effects on the Russian financial and corporate sectors. It is
impossible to estimate reliably what impact the above financial market uncertainty and volatility will have
on the Bank’s operations. Management determined loan impairment provisions using the “incurred loss”
model required by the applicable accounting standards. These standards require recognition of
impairment losses arising from past events and prohibit recognition of impairment losses that could arise
from future events, including future changes in the economic environment, no matter how likely those
future events are (Note 4).
In 2013 the Russian economy continued its recovery started in 2010 and accompanied by GDP growth,
declining unemployment and stabilisation in inflation rates. Despite certain signs of recovery, future
economic growth remains uncertain. During 2013 key exchange indices slid down several times, recovering
slightly at the year-end, and most transactions on the stock exchanges were of speculative nature.
On 28 June 2013 Standard & Poor's confirmed Russia’s short-term foreign currency sovereign credit rating
at ВВВ/А-2. The long-term foreign currency sovereign credit rating was reaffirmed at ВВВ/А-3, and the
long- and short-term local currency sovereign credit ratings were reaffirmed at BBB+/A-2, stable outlook.
On 27 March 2013 Moody's Investors Service confirmed Russia’s rating at “Baa1” with a sustainable
forecast.
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NS Bank
There is an obligatory Deposit Insurance System established in the Russian Federation. According to the
deposit insurance legislation, 100% is compensated to the depositor if the deposit amount does not exceed
RUB 700 thousand. To calculate the compensation, foreign currency denominated deposits are restated at
the exchange rate set by the Central Bank of the Russian Federation at the date of the insured event, and
the amounts due to banks from depositors are deducted from the deposit amount.
In 2013 the situation in the banking sector was characterised by growth in assets, loans issued and profits,
but the quality of assets continues to remain a critical issue. The banking liquidity is mainly influenced by
measures undertaken by the CBR and the Government in the framework of the monetary policy. In 2013
the refinancing rate did not change and remained at 8.25% per annum, required reserve ratios for credit
institutions' obligations amounted to 4.25%.
The future economic direction of the Russian Federation is largely dependent upon the effectiveness of
economic, financial and monetary measures undertaken by the Government, together with tax, legal,
regulatory, and political developments.
Inflation
Russia continues to experience relatively high levels of inflation. The inflation indices for the last five
years are given in the table below:
Year ended
31
31
31
31
31
December
December
December
December
December
Inflation for the period
2013
2012
2011
2010
2009
6.5%
6.6%
6.1%
8.8%
8.8%
Currency transactions
Foreign currencies, in particular the US Dollar and EUR, play a significant role in the underlying economics
of many business transactions in the Russian Federation. The table below shows exchange rates of RUB
relative to USD and EUR as set by the CBR:
Date
31
31
31
31
31
3.
December
December
December
December
December
2013
2012
2011
2010
2009
USD
EUR
32.7292
30.3727
32.1961
30.4769
30.2442
44.9699
40.2286
41.6714
40.3331
43.3883
Basis of Presentation
General principles
These financial statements of the Bank are prepared in accordance with International Financial Reporting
Standards (IFRS). The Bank maintains its accounting records in accordance with the applicable legislation
of the Russian Federation. These financial statements have been prepared on the basis of those
accounting records and adjusted as necessary in order to comply, in all material respects, with IFRS.
Functional and presentation currency
These financial statements are presented in Russian Roubles being the Bank’s functional and presentation
currency. All amounts in these financial statements are rounded to the nearest thousand roubles, unless
otherwise stated.
Estimates and assumptions
The preparation of the financial statements requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as at the date of
the financial statements preparation, and the reported amounts of revenues and expenses during the
reporting period. Issues that require management’s estimate and are most significant for the financial
statements are disclosed in Notes 4, 6, 7, 8, 10, 11 and 28.
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NS Bank
Going concern
These financial statements reflect the Bank management’s current assessment of the impact of the
Russian business environment on the operations and the financial position of the Bank. The future
economic direction of the Russian Federation is largely dependent upon the effectiveness of measures
undertaken by the RF Government and other factors, including regulatory and political developments
which are beyond the Bank’s control. The Bank’s management cannot predict what impact these factors
can have on the Bank’s financial position in future.
These financial statements were prepared on a going concern assumption. The Bank’s liquidity position
disclosed in Note 26 indicates that the Bank has no sufficient funds to meet its obligations. However, the
deficit does not prevent the Bank from conducting its day-to-day operations. The Bank complies with
mandatory liquidity ratios set by the Central Bank of the Russian Federation.
For prompt management of the liquidity risk the Bank regularly monitors external factors, which could
influence the Bank’s liquidity level, and forecasts cash flows. For the medium- and long-term liquidity risk
management the Bank analyses maturity mismatches of assets and liabilities. To reduce its risk exposure
the Bank sets liquidity gap limits. The set limits are periodically reviewed to reflect the changes in
external and internal environment.
To maintain the required liquidity level the Bank can attract additional funds from the Central Bank of
Russia and in the interbank market. Diversification of liquidity sources allows to minimise the Bank’s
dependence on any source and ensure full satisfaction of its liabilities. A sufficient current liquidity
cushion accumulated by the Bank and the available sources of additional fund-raising allow the Bank to
continue its operations as a going concern on a long term basis.
Changes in Accounting Policies
The accounting policies adopted are generally consistent with those of the previous financial year. Listed
below are those new and amended standards and interpretations which are or in the future could be
relevant to the Bank’s operations:

IAS 27 “Separate Financial Statements” (effective for annual reporting periods beginning on or after
1 January 2013). This standard and IFRS 10 “Consolidated Financial Statements” supersede IAS 27
“Consolidated and Separate Financial Statements” (as amended in 2003). IAS 27 clarifies transition
requirements regarding changes in IAS 21, 28 and 31 caused by revision of IAS 27 (as amended in
January 2008). IAS 27 sets out requirements for accounting for and disclosure of information about an
entity’s investments in subsidiaries, joint ventures and associates when preparing separate financial
statements.

IAS 28 “Investments in Associates and Joint Ventures” (effective for annual reporting periods
beginning on or after 1 January 2013). This standard is a revised version of IAS 28 "Investments in
Associates" (as amended in 2003) and sets out requirements for the application of the equity method
when accounting for investments in associates and joint ventures.

IFRS 10 “Consolidated Financial Statements” (effective for annual reporting periods beginning on or
after 1 January 2013). The new standard supersedes IAS 27 "Consolidated and Separate Financial
Statements" and SIC 12 “Consolidation – Special Purpose Entities”. IFRS 10 introduces a unified threelevel control model: the investor can have control provided that the three criteria are met:

-
(a) the investor has power over the investee;
-
(b) the investor is exposed or has rights to variable returns from its involvement with that
investee;
-
(c) the investor has the ability to use its power over the investee to affect the amount of the
investor's returns.
IFRS 11 “Joint Arrangements” (applied retrospectively to annual reporting periods beginning on or
after 1 January 2013). The new standard supersedes IAS 31 “Interests in Joint Ventures”. The main
change introduced by IFRS 11 relates to the classification of all types of joint arrangements into joint
operations, which are accounted for on a proportionate consolidation basis, or joint ventures, for
which the equity method is used. The type of joint arrangement is determined based on rights and
obligations of the parties to the arrangement arising from joint arrangement’s structure, legal form,
contractual arrangement and other facts and circumstances. Early adoption of IFRS 11 is permitted
provided an entity also early adopts IFRS 10, IFRS 12, IAS 27 and IAS 28 (as amended in 2011).
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NS Bank

IFRS 12 “Disclosure of Interests in Other Entities” (effective for annual reporting periods beginning on
or after 1 January 2013). The new standard contains disclosure requirements for entities that have
interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities.
Interests in another entity are widely defined as contractual and non-contractual involvement that
exposes an entity to variability of returns from the performance of the other entity. Amended and
new requirements for disclosing information aim to provide the users of financial statements with
information that would enable them to assess the nature of the risks related to the entity’s interests
in other entities and the effect of those interests on the entity’s financial position, financial
performance and cash flows. To comply with the new requirements the entity should disclose
significant judgments and assumptions made in determining the nature of its interest in another entity
or arrangement and in determining the type of joint arrangement in which it has an interest, as well
as information on its involvement in subsidiaries, joint arrangements, associates and unconsolidated
structured entities. In case of full early adoption of IFRS 12 it is also necessary to adopt IFRS 10,
IFRS 11, IAS 27, and IAS 28 (as amended in 2011).

IFRS 13 “Fair Value Measurement” (applied prospectively for annual periods beginning on or after
1 January 2013; early adoption is permitted). The new standard replaces fair value measurement
guidance contained in individual IFRSs with a single source of fair value measurement guidance. It
provides a revised definition of fair value, establishes a framework for measuring fair value, and sets
out disclosure requirements for fair value measurement. IFRS 13 does not introduce new requirements
for measurement of assets and liabilities at fair value nor does it eliminate the exceptions to fair
value measurement currently applicable to certain standards.

Amendment to IAS 1 “Presentation of Financial Statements: Presentation of Items of Other
Comprehensive Income” (applied retrospectively for annual periods beginning from 1 July 2012; early
adoption is permitted). The amendment requires that an entity present separately items of other
comprehensive income that may be reclassified to profit or loss in the future from those that will
never be reclassified to profit or loss. Additionally, the amendment changes the title of the statement
of comprehensive income to ‘statement of profit or loss and other comprehensive income’ (the use of
other wording in the title is permitted).

Amendment to IAS 19 “Employee Benefits” (applied retrospectively for annual periods beginning on or
after 1 January 2013; early adoption is permitted). The amendment makes significant changes to the
recognition and measurement of defined benefit pension expense and termination benefits. The
amendment also makes significant changes to disclosures for all employee benefits.

Amendment to IFRS 7 “Financial Instruments — Disclosures” (amendments are applied retrospectively
to annual reporting periods effective since 1 January 2013). This amendment requires a disclosure
which will enable the financial statement users to assess the effect or potential effect of netting
arrangements, including the rights to offset.
The changes described above did not have a material impact on the Bank’s financial statements.
IFRSs and IFRIC Interpretations not yet effective
The Bank has not applied the following IFRSs and Interpretations of the International Financial Reporting
Interpretations Committee (IFRIC) that have been issued but are not yet effective:

IFRS 9 “Financial Instruments” (effective for annual periods beginning on or after 1 January 2013;
however, the date can be postponed to 1 January 2015; early adoption is permitted). This standard
was issued in November 2009 as the first phase of replacing IAS 39 and replaces those parts of IAS 39
that relate to classification and measurement of financial assets. The second phase of replacing this
standard regarding the classification and measurement of financial liabilities took place in October
2010. The main differences of the new standard are as follows:
-
financial assets are required to be classified into two measurement categories: those to be
measured subsequently at fair value, and those to be measured subsequently at amortised cost.
The decision is to be made at initial recognition. The classification depends on the entity’s
business model for managing its financial instruments and the contractual cash flow
characteristics of the instrument;
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NS Bank
-
a financial instrument is subsequently measured at amortised cost only if it is a debt instrument
and both (i) the objective of the entity’s business model is to hold the asset to collect the
contractual cash flows, and (ii) the asset’s contractual cash flows represent only payments of
principal and interest (that is, it has only “basic loan features”). All other debt instruments are to
be measured at fair value through profit or loss;
-
all equity instruments are to be measured subsequently at fair value. Equity instruments that are
held for trading will be measured at fair value through profit or loss. For all other equity
investments, an irrevocable election can be made at initial recognition, to recognise unrealised
and realised fair value gains and losses through other comprehensive income rather than profit or
loss. There is to be no recycling of fair value gains and losses to profit or loss. This election may
be made on an instrument-by-instrument basis. Dividends are to be presented in profit or loss, as
long as they represent a return on investment.

Amendments to IAS 32 “Financial Instruments — Disclosures” (amendments are applied retrospectively
to annual reporting periods effective since 1 January 2013). These amendments introduce guidance for
application of IAS 32 in order to remove inconsistencies in the application of some of the offsetting
criteria. The amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’
and that some gross settlement systems may be considered equivalent to net settlement.

Amendments to IAS 36 “Impairment of Assets” (effective for annual reporting periods beginning on or
after 1 January 2014, early adoption is permitted). The amendments remove the requirement to
disclose the recoverable amount when a CGU contains goodwill or indefinite lived intangible assets but
there has been no impairment.

Amendments to IAS 39 “Financial Instruments: Recognition and Measurement” (effective for annual
reporting periods beginning on or after 1 January 2014, early adoption is permitted). The amendments
provide relief from the requirement for the discontinuance of hedge accounting in IAS 39 and IFRS 9 in
circumstances when a hedging instrument is required to be novated to a central counterparty as a
result of laws or regulations.

IFRIC 21 “Levies” (effective for annual reporting periods beginning on or after 1 January 2014, early
adoption is permitted). IFRIC 21 is an interpretation of IAS 37 “Provisions, Contingent Liabilities and
Contingent Assets”. The Interpretation sets out the accounting for an obligation to pay a levy that is
not income tax. It clarifies, that the obligating event that gives rise to a liability to pay a levy, is the
activity described in the relevant legislation that triggers the payment of the levy. The liability for the
levies is recognised in the financial statements when the event set by the relevant legislation occurs.
The Bank is currently assessing the adoption of these IFRS and amendments, the impact of their
application on the Bank and the timing of their adoption.
Subsidiaries
Subsidiaries are those entities in which the Bank, directly or indirectly, has an interest of more than one
half of the voting rights or otherwise has the power to exercise control over financial and operating
policies.
In April 2001 the Bank set up a subsidiary NPF “Centre of Information Technologies in Building
Industry” LLC.
In June 2013 the Bank withdrew from NPF “Centre of Information Technologies in Building
Industry” LLC.
Subsidiary
NPF “Centre of
Information
Technologies in
Building Industry”
LLC
Country of
registration
Nature of
business
Russia
Consulting
services
31 December 2013
31 December 2012
Total Ownership,
Total Ownership,
investments
% investments
%
-
16
-
10
100.0
NS Bank
In accordance with requirements of Federal Law No. 208-FZ of 27 July 2010 “On Consolidated Financial
Statements”, the Bank prepared the annual consolidated financial statements as at 31 December 2013,
which are available at the Bank’s address indicated in Note 1.
Investments in closed-end unit investment funds (CEUIF)
The Bank makes investments in closed-end unit investment funds (CEUIF). Investments in CEUIF are
classified as other assets and other liabilities depending on the structure of the CEUIF balance sheet and
are subsequently recognised in accordance with the accounting policies for the respective category of
asset/liability.
As at 31 December 2013 and 31 December 2012, the Bank has investments in the following CEUIFs:
Description
31 December 2013
31 December 2012
Total Ownership,
Total Ownership,
investments
% investments
%
United Management Company LLC:
Real estate CEUIF “United Urban”
CEUIF of direct investments “Stable”
Real estate CEUIF “BEST Development”
Real estate CEUIF “United Real Estate”
4.
2 556 966
-
96.1
-
201
438
339
253
000
897
197
105
100.0
100.0
99.2
100.0
Summary of Significant Accounting Policies
Cash and cash equivalents
Cash and cash equivalents are assets, which can be converted into cash within a day and consist of cash on
hand, balances on correspondent and current accounts of the Bank, overnight deposits, cash deposits with
MICEX, cash on broker accounts and cash balances with clearing nonbank institutions. All short-term
interbank placements (other than overnight deposits) are included in due from other banks. Amounts,
which relate to funds that are of a restricted nature, are excluded from cash and cash equivalents.
Cash and cash equivalents exclude mandatory cash balances with the Central Bank of the Russian
Federation.
Mandatory cash balances with the Central Bank of the Russian Federation
Mandatory cash balances with the Central Bank of the Russian Federation represent mandatory reserve
deposits with CBR, which are not available to finance the Bank’s day-to-day operations. The mandatory
reserve balance is excluded from cash and cash equivalents for the purposes of the statement of cash
flows.
Financial assets
The Bank classifies its financial assets in the following categories:

financial assets at fair value through profit or loss;

loans and receivables (this category includes due from other banks and loans to customers);

financial assets available for sale.
The Bank determines the classification of its financial assets at initial recognition. Classification of
financial assets at initial recognition depends on the purpose for which they were acquired and their
characteristics.
Initial recognition of financial assets
The Bank recognises financial assets and financial liabilities in its statement of financial position when it
becomes a party to the contractual obligation of the financial instrument. Regular way purchases and
sales of the financial assets and liabilities are recognised using settlement date accounting.
All financial assets are initially recognised at fair value plus transaction costs that are directly attributable
to acquisition or issue of the financial asset in the case of a financial asset not at fair value through profit
or loss.
17
NS Bank
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction in the principal (or most advantageous) market at the measurement date under current
market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated
using another valuation technique.
The Bank must have access to the principal or most advantageous market.
An entity shall measure the fair value of an asset or a liability using the assumptions that market
participants would use when pricing the asset or liability, assuming that market participants act in their
economic best interest.
Fair value measurement of a non-financial asset takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use.
All assets and liabilities for which fair value is recognised or disclosed are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:

Level 1 — quoted market prices in an active market (that are unadjusted) for identical assets or
liabilities);

Level 2 — valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable;

Level 3 — valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are remeasured in the financial statements at fair value on a recurring basis,
the Bank determines whether transfers have occurred between Levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
The Bank’s securities portfolio comprises securities traded on the organised market – MICEX SE CJSC.
Transactions on MICEX SE CJSC are conducted on a regular basis and information on the current quotations
of the active market is publicly available. Active market quotations are the best evidence for determining
the current fair value of financial instruments.
The Bank engages external valuers to measure material assets, such as investment property. A decision to
engage external valuers is taken annually by the Bank’s Executive Board, which is governed by such
selection criteria as market knowledge, reputation, independence and professional compliance.
At each reporting date the Bank analyses movements in the values of financial assets and liabilities which
are required to be re-measured or re-assessed in accordance with the Bank’s accounting policies. For this
analysis, the Bank verifies the major inputs applied in the latest valuation by agreeing the information in
the valuation computation.
For the purpose of fair value disclosures, the Bank has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value
hierarchy as explained above (Note 29).
The fair value of financial instruments traded on the active market as at the reporting date is determined
based on the market or dealers’ quotations including transaction costs.
If a quoted market price is not available, the fair value of financial assets and financial liabilities recorded
in the statement of financial position is estimated on the basis of market prices for similar financial
instruments or using various valuation techniques, including mathematical models. Inputs for such models
are based on observable market data or judgement.
Judgement is based on the time value of money, credit risk level, volatility of the instrument, market risk
level and other applicable factors, if such information is available.
18
NS Bank
Amortised cost of financial instruments
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or
financial liability is measured at initial recognition minus principal repayments, plus or minus the
cumulative amortisation using the effective interest method of any difference between that initial amount
and the maturity amount, and minus any reduction (directly or through the use of an allowance account)
for impairment or uncollectibility.
The effective interest method is a method of calculating the amortised cost of a financial asset or a
financial liability (or group of financial assets or financial liabilities) and of allocating the interest income
or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected life of the financial instrument or, when
appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When
calculating the effective interest rate, the Bank shall estimate cash flows considering all contractual
terms of the financial instrument (for example, prepayment, call and similar options) but shall not
consider future credit losses. The calculation includes all fees and points paid or received between parties
to the contract that are an integral part of the effective interest rate, transaction costs, and all other
premiums or discounts. There is a presumption that the cash flows and the expected life of a group of
similar financial instruments can be estimated reliably. However, in those rare cases when it is not
possible to estimate reliably the cash flows or the expected life of a financial instrument (or group of
financial instruments), the Bank shall use the contractual cash flows over the full contractual term of the
financial instrument (or group of financial instruments.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or a group of similar financial assets) is
derecognised where:

the rights to receive cash flows from the asset have expired;

the Bank has transferred its rights to receive cash flows from the asset, or retained the right to
receive cash flows from the asset, but has assumed an obligation to pay them in full without material
delay to a third party; and

the Bank either has transferred substantially all the risks and rewards of the asset, or has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset. If the transferee has no practical ability to sell the asset in its entirety to an
unrelated third party without needing to impose additional restrictions on the transfer, the entity has
retained control.
Where the Bank has transferred its rights to receive cash flows from an asset 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.
Reclassification of financial assets
The Bank shall not reclassify out of the fair value through profit or loss category a derivative financial
instrument while it is held or issued or any financial instrument classified at initial recognition as at fair
value through profit or loss.
Financial assets available for sale may be reclassified into loans and receivables if the Bank has a positive
intention and the ability to hold these financial assets for the foreseeable future or until maturity.
If financial assets are reclassified into loans and receivables or investments held to maturity, the fair
value on the date of reclassification will become the new cost of these financial assets. Subsequently
these assets are measured at amortised cost using the effective interest rate method.
If, as a result of a change in intention or ability, it is no longer appropriate to classify an investment as
held to maturity, it shall be reclassified as financial assets available for sale and remeasured at fair value.
Unrealised gains and losses arising from changes in the fair value of financial assets available for sale are
recorded in the statement of comprehensive income as other comprehensive income.
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NS Bank
The Bank shall not classify any financial assets as investments held to maturity if the Bank has, during the
current financial year or during the two preceding financial years, sold or reclassified more than an
insignificant amount of held-to-maturity investments before maturity (more than insignificant in relation
to the total amount of held-to-maturity investments) other than sales or reclassifications that:

are so close to maturity or the financial asset's call date (for example, less than three months before
maturity) that changes in the market rate of interest would not have a significant effect on the
financial asset's fair value;

occur after the Bank has collected substantially all of the financial asset's original principal through
scheduled payments or prepayments; or

are attributable to an isolated event that is beyond the Bank's control, is non-recurring and could not
have been reasonably anticipated by the Bank.
Whenever sales or reclassifications of more than an insignificant amount of held-to-maturity investments
do not meet any of the conditions of the classification, any remaining held-to-maturity investments shall
be reclassified as available for sale.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include derivative financial instruments.
Derivative financial instruments including futures, currency exchange contracts and interest rate swaps
with positive fair value other than derivative instruments designated and effective as hedges are initially
recorded in the statement of financial position as other assets at cost (including transaction costs) and
subsequently remeasured at their fair value. Fair values are obtained from quoted market prices or using
the spot rate at the year-end as the basis depending on the type of transaction.
Changes in the fair value of derivative financial instruments are included in gains less losses arising from
financial assets at fair value through profit or loss or in gains less losses from dealing in foreign currency
or precious metals depending on the type of transaction.
Financial assets at fair value through profit or loss are included in other assets in the statement of
financial position.
Due from other banks
In the normal course of business, the Bank places funds for various periods of time with other banks.
Amounts due from other banks with a fixed maturity term are not intended for immediate or short-term
trading and are measured at amortised cost using the effective interest method. Those that do not have
fixed maturities are carried at amortised cost calculated based on expected maturity. Due from other
banks are carried net of any allowance for impairment.
Loans to customers
This category includes non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market, other than:

those that the entity intends to sell immediately or in the near term, which shall be classified as held
for trading, and those that the entity upon initial recognition designates as at fair value through profit
or loss;

those that the entity upon initial recognition designates as available for sale;

those for which the holder may not recover substantially all of its initial investment, other than
because of credit deterioration, which shall be classified as available for sale.
Loans to customers are initially recorded at cost, which is the fair value of the consideration given.
Subsequently, they are carried at amortised cost using the effective interest method less provision for
loan impairment.
Loans to customers are recorded when cash is advanced to borrowers.
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NS Bank
Loans to customers originated at interest rates different from market rates are remeasured at origination
to their fair values, being future interest payments and principal repayment(s) discounted at market
interest rates for similar loans. The difference between the fair value and the nominal value at origination
is credited or charged to the statement of comprehensive income as gains /losses on origination of assets
at rates above/below market. Subsequently, the carrying amount of such loans is adjusted for
amortisation of gain or loss on the loan issued and the related gains/losses are recorded within the
statement of comprehensive income using the effective interest method.
The Bank does not acquire loans from third parties.
Financial assets available for sale
Financial assets available for sale are non-derivative financial assets not included into any of the above
categories and not classified as investments held to maturity.
Financial assets available for sale are initially recognised at fair value plus transaction costs that are
directly attributable to acquisition or issue of the financial asset. Financial assets available for sale are
subsequently remeasured to fair value based on quoted bid prices. Certain financial assets available for
sale for which there is no available independent quotation have been fair valued by the Bank’s
management on the basis of results of recent sales of similar financial assets to unrelated third parties or
determined on the basis of indicative quotations for purchase/sale of each type of securities published by
information agencies or provided by professional securities market participants. If there is no active
market and it is impossible to determine the fair value of equity securities using reliable methods,
investments are recognised at acquisition cost.
Unrealised gains and losses arising from changes in the fair value of financial assets available for sale are
recognised in the statement of comprehensive income as other comprehensive income. When financial
assets available for sale are disposed of, the related accumulated unrealised gains and losses previously
recognised as other comprehensive income are reclassified to the statement of comprehensive income as
gains less losses arising from financial assets available for sale. Disposals of financial assets available for
sale are recorded using the FIFO method.
Interest earned on debt securities available for sale is determined using the effective interest method and
reflected in the statement of comprehensive income as interest income. Dividends received on equity
investments available for sale are recorded in the statement of comprehensive income when the Bank’s
right to receive dividends is established and dividends are likely to be received.
Promissory notes purchased
Promissory notes purchased are included in financial assets available for sale, investments held to
maturity, due from other banks or loans to customers, depending on their economic substance and are
subsequently accounted for in accordance with the accounting policies for these categories of assets.
Impairment of financial assets
The Bank assesses on the closing date whether there is any objective evidence that the value of a
financial asset item or group of items has been impaired. Impairment losses are recognised in the
statement of comprehensive income as they are incurred as a result of one or more events that occurred
after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on
the amount or timing of the estimated future cash flows of the financial asset or group of financial assets
that can be reliably estimated. If the Bank determines that no objective evidence of impairment exists for
an individually assessed financial asset, it includes the asset in a group of financial assets with similar
credit risk characteristics and collectively assesses them for impairment.
(1) Impairment of due from other banks and loans to customers
For amounts due from other banks and loans to customers carried at amortised cost, 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.
Objective evidence that due from other banks and loans to customers are impaired includes observable
data about the following events in respect of individually significant financial assets:

default in any payments due;

significant financial difficulty of the borrower supported by financial information at the Bank’s
disposal;
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NS Bank




it becoming probable that the borrower will enter bankruptcy or other financial reorganisation;
worsening national or local economic environment affecting the borrower;
breach of contract, such as a default or delinquency in interest or principal payments;
the lender, for economic or legal reasons relating to the borrower's financial difficulty, granting to the
borrower a concession that the lender would not otherwise consider.
Assets that are individually assessed for impairment and for which an impairment loss is recognised are
not included in a collective assessment of impairment.
If the Bank determines that no objective evidence of impairment exists for an individually assessed
financial asset, it includes the asset in a group of financial assets with similar credit risk characteristics
and collectively assesses them for impairment.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of
similar credit risk characteristics such as asset type, industry, geographical location, collateral type,
payment status and other relevant factors. The characteristics chosen are relevant to the estimation of
future cash flows for groups of such assets by being indicative of the borrowers' ability to pay all amounts
due according to the contractual terms of the assets being evaluated.
The main criterion used for determining objective evidence of loss from impairment of due from other
banks and loans to customers representing collectively measured financial assets is availability of
observable data indicating that there is a measurable decrease in the estimated future cash flows from a
group of financial assets since the initial recognition of those assets, although the decrease cannot yet be
identified with the individual financial assets in the group.
Such information may include adverse changes in the payment status of borrowers in the group (for
example, an increased number of delayed payments or an increased number of credit card borrowers who
have reached their credit limit and are paying the minimum monthly amount), national or local economic
conditions that correlate with defaults on the assets in the group (for example, an increase in the
unemployment rate in the geographical area of the borrowers, a decrease in property prices for mortgages
in the relevant area, a decrease in oil prices for loan assets to oil producers, or adverse changes in
industry conditions that affect the borrowers in the group).
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of expected future
cash flows. The carrying amount of the asset is reduced through the use of the impairment provision
account and the amount of the loss is recognised in the statement of comprehensive income.
For determination of the present value, the estimated future cash flows are discounted at the financial
asset’s original effective interest rate. If a loan has 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 collateralised financial asset reflects the cash flows that may result from
foreclosure less costs for obtaining and selling the collateral.
Future cash flows in a group of loans that are collectively evaluated for impairment are estimated on the
basis of historical loss experience for loans with credit risk characteristics similar to those in the group or
on the basis of historical information on collections of past due debts. Historical loss experience is
adjusted on the basis of current observable data to reflect the effects of current conditions that did not
affect the period on which the historical loss experience is based and to remove the effects of conditions
in the historical period that do not exist currently. Estimates of changes in future cash flows reflect and
are directionally consistent with changes in related observable data from period to period (such as
changes in unemployment rates, property prices, commodity prices, payment status or other factors that
are indicative of incurred losses in the group and their magnitude). The methodology and assumptions
used for estimating future cash flows are reviewed regularly to reduce any differences between loss
estimates and actual loss experience.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as improvement in the
debtor’s credit rating), the previously recognised impairment loss is reversed by adjusting the allowance
account in the statement of comprehensive income.
Uncollectible assets are written off against the related allowance for impairment after all the necessary
procedures to recover the asset in full or in part have been completed and the final amount of the loss has
been determined. The carrying amount of impaired financial assets is not reduced directly.
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NS Bank
In accordance with the Russian legislation, in case of a write-off of the uncollectible loan and relating
interest, the Bank shall take necessary and adequate steps, envisaged by law, standard business practice
or agreement, to collect this outstanding loan.
(2) Impairment of financial assets available for sale
The Bank assesses at the end of each reporting period whether there is objective evidence that a financial
investment or a group of investments available for sale is impaired.
In case of equity investments classified as available for sale, objective evidence of impairment would
include significant financial difficulty of the issuer supported by available information. To assess whether
there is any indication of impairment the Bank shall analyse the issuer’s activities taking into account the
influence of economic factors, including consequences of changes in the technical, market, economic or
legal environment in which the issuer operates. The Bank also assesses other factors such as volatility of
price per share.
Cumulative loss measured as a difference between the acquisition cost and the current fair value, less any
impairment loss on that asset previously recognised through the profit and loss accounts, is transferred
from other comprehensive income to the profit and loss accounts.
Impairment losses on equity instruments are not reversed through the profit and loss account: increases in
the fair value after impairment are recognised directly in other comprehensive income.
In case of unquoted debt instruments not carried at fair value, classified as available for sale, impairment
is assessed based on the same criteria as those for financial assets carried at amortised cost. Interest
income is based on the reduced carrying amount and is accrued using the rate of interest used to discount
future cash flows for the purpose of measuring the impairment loss. The interest income is recorded
within interest income in the statement of comprehensive income.
If in the subsequent year the fair value of a debt instrument increases, and such increase can be
objectively related to the event occurring after the impairment loss was recognised in the statement of
comprehensive income, the impairment loss is reversed and the related recovery is recorded in the
statement of comprehensive income.
Impairment of non-financial assets
Non-financial assets, other than deferred taxes, are assessed at each reporting date for any indications of
impairment. The recoverable amount of non-financial assets is the greater of their fair value less costs to
sell and value in use. Costs to sell are the costs associated with disposal of an asset tested for impairment,
less finance costs. Value in use of an asset reviewed for impairment is the present value of the future cash
flows expected to be derived from the use of an asset and its subsequent disposal. If there is not any
evidence of impairment of an asset reviewed for impairment, its recoverable amount is not determined.
The Bank assesses indications of possible impairment using internal and external data sources.
All impairment losses in respect of non-financial assets are recognised in comprehensive income and
reversed only if there has been a change in the estimates used to determine the recoverable amount. Any
impairment loss is only reversed to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss, or
financial liabilities carried at amortised cost.
Initially, a financial liability shall be measured by the Bank at its fair value plus, in the case of a financial
liability not at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition or issue of the financial liability.
A financial liability is derecognised 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 recognised in the statement of comprehensive income.
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NS Bank
Financial liabilities carried at amortised cost
Financial liabilities carried at amortised cost include due to other banks, customer accounts, debt
securities issued and other borrowed funds.
Due to other banks. Due to other banks are recorded when money or other assets are advanced to the
Bank by counterparty banks.
Customer accounts. Customer accounts are non-derivative financial liabilities to individuals, state or
corporate customers in respect of settlement accounts and deposits.
Debt securities issued. Debt securities issued include promissory notes issued by the Bank. If the Bank
purchases its own debt securities issued, they are removed from the statement of financial position and
the difference between the carrying amount of the liability and the consideration paid is included in other
operating income as gain from retirement of debt.
Other borrowed funds. Other borrowed funds include subordinated loans received by the Bank and are
recorded as cash is advanced to the Bank.
Repurchase and reverse repurchase agreements
Sale and repurchase agreements (“repo” agreements) are treated as secured financing transactions.
Securities sold under sale and repurchase agreements are not derecognised, and the securities are not
reclassified. The corresponding liability is presented within due to other banks or customer accounts.
Securities purchased under agreements to resell (“reverse repo” agreements) are recorded as due from
other banks or loans to customers, as appropriate. The difference between the sale and repurchase price
is treated as interest income in the statement of comprehensive income and accrued over the life of repo
agreements using the effective interest rate method.
Securities lent by the Bank to counterparties continue as a loan for fixed compensation to be recognised in
the Bank’s financial statements as securities. Securities borrowed for fixed compensation are not recorded
in the Bank’s financial statements except when they are sold to third parties. In such cases, the financial
result from sale and purchase of such securities is recognised in the statement of comprehensive income
within gains less losses arising from financial assets at fair value through profit or loss. The obligation to
return the securities is recorded as financial liabilities at fair value through profit or loss.
Offsetting
Financial assets and liabilities are offset and the net amount is reported in the statement of financial
position only when there is a legally enforceable right to offset the recognised amounts, and there is an
intention to either settle on a net basis, or to realise the asset and settle the liability simultaneously.
Non-current assets classified as held for sale
Non-current assets (which may include both non-current and current assets) are classified in the
statement of financial position as non-current assets held for sale if their carrying amount will be
recovered principally through a sale transaction within twelve months after the reporting date.
Both financial and non-financial assets are reclassified when all of the following conditions are met:
(a) the assets are available for immediate sale in their present condition;
(b) the Bank’s management approved and initiated an active programme to locate a buyer;
(c) the assets are actively marketed for a sale at a reasonable price;
(d) the sale is expected within one year; and
(e) it is unlikely that significant changes to the plan to sell will be made or that the plan will be
withdrawn by the Bank’s management.
Non-current assets classified as held for sale in the current period’s statement of financial position shall
not be reclassified in the comparative statement of financial position.
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NS Bank
Held for sale premises and equipment, investment property, intangible assets as a whole are measured at
the lower of their carrying amount and fair value less costs to sell. Held for sale premises and equipment
and intangible assets are not depreciated or amortised. The Bank recognises an impairment loss for any
initial or subsequent write-down of the asset to fair value less costs to sell. Reclassified non-current
financial instruments, deferred taxes and investment properties held at fair value are not subject to the
write down to the lower of their carrying amount and fair value less costs to sell.
Premises and equipment
Premises and equipment are stated at cost or at revalued amount, as described below, less accumulated
depreciation and impairment provision. Premises and equipment acquired prior to 1 January 2003 are
restated to the equivalent purchasing power of the Russian Rouble as at that date.
At the end of each reporting period the Bank assesses whether there is any indication of impairment of
premises and equipment. If such indication exists, the Bank estimates the recoverable amount, which is
determined as the higher of an asset’s fair value less costs to sell and its value in use. Where the carrying
amount of premises and equipment is greater than their estimated recoverable amount, it is written down
to their recoverable amount and the difference is charged as impairment loss to the statement of
comprehensive income.
The Bank’s buildings are revalued on a regular basis. The frequency of revaluations depends on changes in
the fair value of the assets subjected to revaluation. After initial recognition at cost, buildings are carried
at a revalued amount, which is the fair value of the items at the date of the revaluation less any
subsequent accumulated depreciation and accumulated impairment losses. Revaluations are performed
regularly to avoid significant differences between the fair value of the revalued asset and its carrying
amount.
When buildings are revalued, any accumulated depreciation at the date of the revaluation is eliminated
against gross carrying amount of the asset and the net amount is restated to the revalued amount of the
asset
Any revaluation surplus is recorded in the statement of comprehensive income as other comprehensive
income, except to the extent that it reverses a revaluation decrease of the same asset previously
recognised through profit or loss. A decrease arising as a result of a revaluation is recognised as profit or
loss in the statement of comprehensive income, except that revaluation deficit is directly offset against
the previous surplus from revaluation of the same asset recorded within other comprehensive income as
effect of revaluation of premises and equipment.
The revaluation reserve for premises and equipment is transferred directly to retained earnings when the
surplus is realised, i.e. either on the retirement or disposal of the asset.
Gains and losses on disposal of premises and equipment are determined by reference to their carrying
amount and recorded as operating expenses in the statement of comprehensive income.
Repairs and maintenance are charged to the statement of comprehensive income when the expense is
incurred.
Construction in progress is carried at cost less impairment provision. As soon as construction is completed,
assets are reclassified as premises and equipment at their carrying value at the date of reclassification.
Construction in progress is not depreciated until the asset is available for use.
Depreciation
Depreciation of premises and equipment commences from the date the assets are ready for use.
Depreciation is charged on a straight line basis over the estimated useful lives of the assets:

Buildings – from 26 years to 30 years;

Motor vehicles – from 2 years to 7 years;

Equipment and computers – from 2 years to 20 years;

Furniture – from 2 years to 7 years.
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NS Bank
At the end of the service life, the residual value of an asset is the estimated amount that the Bank would
currently obtain from disposal of the asset less the estimated costs of disposal, if the asset were already
of the age and in the condition expected at the end of its useful life. The assets' residual values and useful
lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Investments in construction
Investments in construction represent the Bank’s share in the investment contracts of developers of
residential real estate and business centres acquired for the purpose of further resale. Investments in
construction are recorded at cost within other assets in the statement of financial position.
Finance lease – the Bank as lessee
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of
an asset.
The Bank recognises finance leases as assets and liabilities in the statement of financial position at the
date of commencement of the lease term at amounts equal to the fair value of the leased property, or at
the present value of the minimum lease payments, if this amount is less than the fair value of the asset.
The discount rate to be used in calculating the present value of the minimum lease payments is the
interest rate implicit in the lease, if this is practicable to determine; if not, the Bank’s borrowing rate
shall be used. Initial direct costs incurred are included as part of the asset. Lease payments are
apportioned between the finance charge and the reduction of the outstanding liability. The finance charge
is allocated to periods during the lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each reporting period.
The costs identified as directly attributable to activities performed by the lessee under the finance lease
contract, are included as part of the amount recognised as an asset under the lease.
Operating lease – the Bank as lessee
Leases of property under which the risks and rewards of ownership are effectively retained with the lessor
are classified as operating leases. Lease payments under operating lease are recognised as expenses on a
straight-line basis over the lease term and included into operating expenses in the statement of
comprehensive income.
Operating lease – the Bank as lessor
The Bank presents assets subject to operating leases in the statement of financial position according to
the nature of the asset. Lease income from operating leases is recognised in the statement of
comprehensive income on a straight-line basis over the lease term as other operating income. The
aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the
lease term on a straight-line basis. Initial direct costs incurred specifically to earn revenues from an
operating lease are added to the carrying amount of the leased asset and recognised as an expense over
the lease term on the same basis as the lease income.
Share capital
Ordinary shares and non-cumulative, non-redeemable preference shares are classified as share capital.
The share capital contributed before 1 January 2003 was restated for the effects of inflation. The share
capital contributed after the above date is stated at original cost. Non-monetary contributions to the
share capital are recorded at fair value of contributed assets at the date the contributions are made.
Share premium
Share premium represents the excess of contributions over the nominal value of the shares issued.
Dividends
Dividends are recognised as a liability and deducted from shareholders’ equity at the end of the reporting
period only if they are declared before or on the reporting date. Information on dividends which are
declared after the reporting date is disclosed in the subsequent events note. Net profit of the reporting
year reflected in the statutory financial statements is the basis for payment of dividends and other
appropriations.
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NS Bank
After approval of dividends by the General Shareholders’ Meeting they are recognised in the financial
statements as distributed profits.
Contingent assets and liabilities
Contingent assets are not recognised in the statement of financial position but disclosed in the financial
statements when an inflow of economic benefits is probable.
Contingent liabilities are not recognised in the statement of financial position but disclosed in the
financial statements unless the possibility of any outflow in settlement is remote.
Credit related commitments
The Bank enters into credit related commitments, including guarantees and commitments to extend
credits. Guarantees represent irrevocable assurances of the Bank to make payments in the event that a
customer cannot meet its obligations to third parties and carry the same credit risk as loans.
Commitments to extend credit represent unused portions of authorisations to extend credit in the form of
loans or guarantees. With respect to credit risk on commitments to extend credit, the Bank is potentially
exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss
is less than the total unused commitments since most commitments to extend credit are contingent upon
customers maintaining specific credit standards.
Credit related commitments are initially recognised at their fair value. Subsequently, they are analysed at
the end of each reporting period and adjusted to reflect the current best estimate. The best estimate of
the expenditure required to settle the present obligation is the amount that the Bank would rationally pay
to settle the obligation at the end of the reporting period or to transfer it to a third party at that time.
Provisions
Provisions are recognised when the Bank has a present legal or constructive obligation as a result of past
events, and it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation, and a reliable estimate of the amount of the obligation can be made.
Taxation
The income tax charge/recovery comprises current tax and deferred tax and is recorded in the statement
of comprehensive income except if it is recorded directly in other comprehensive income because it
relates to transactions that are also recorded directly in other comprehensive income. Income tax expense
is recorded in the financial statements in accordance with the applicable legislation of the Russian
Federation. Current tax is calculated on the basis of the taxable profit for the year, using the tax rates
enacted during the reporting period.
Current tax is the amount expected to be paid to or recovered from the taxation authorities in respect of
taxable profits or losses for the current or prior periods. Tax amounts are based on estimates if financial
statements are authorised prior to filing relevant tax returns.
Deferred income tax is provided using the balance sheet liability method for tax loss carryforwards and
temporary differences arising between the tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes.
Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of the
reporting period which are expected to apply to the period when the temporary differences will reverse or
the tax loss carryforwards will be utilised. Deferred tax assets and liabilities are offset if there is a legally
enforceable right to set off current tax assets against current tax liabilities and deferred taxes refer to the
same tax authority. Deferred tax assets for deductible temporary differences and tax loss carryforwards
are recorded to the extent that it is probable that future taxable profit will be available against which the
deductions can be utilised. Judgement is required to determine the amount of deferred tax assets that
may be recognised in financial statements based on probable periods and amounts of future taxable
profits and future tax planning strategies.
Russia also has various other taxes, which are assessed on the Bank’s activities. These taxes are recorded
within operating expenses in the statement of comprehensive income.
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NS Bank
Income and expense recognition
Interest income and expense are recorded in the statement of comprehensive income for all debt
instruments on an accrual basis using the effective interest method. The effective interest method is a
method of calculating the amortised cost of a financial asset or a financial liability and of allocating the
interest income or interest expense over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash payments or receipts through the expected life of the financial
instrument to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest rate, the Bank estimates cash flows considering all contractual terms of the financial
instrument, but does not consider future credit losses. The calculation includes all commissions and fees
paid or received by the parties to the contract that are an integral part of the effective interest rate,
transaction costs, and all other premiums or discounts.
Interest income includes coupons earned on fixed-income financial assets and accrued discount and
premium on promissory notes and other discounted instruments. When loans become doubtful of
collection, they are written down to their recoverable amounts and interest income is thereafter
recognised based on the rate of interest that was used to discount the future cash flows for the purpose of
measuring the recoverable amount.
Fees, commissions and other income and expense items are recorded on an accrual basis after the service
is provided. Loan origination fees for loans that are not yet provided, but are probable of being drawn
down, are recognised within other assets and are subsequently taken into account in calculation of
effective yield on the loan. Fees and commissions arising from negotiating a transaction for a third party,
such as the acquisition of loans, shares and other securities or the purchase or sale of businesses, are
recorded on completion of the transaction in the statement of comprehensive income. Investment
portfolio and other advisory service fees are recognised based on the applicable service contracts.
Employee benefits and social insurance contributions
The Bank pays social insurance contributions on the territory of the Russian Federation. Insurance
contributions are recorded on an accrual basis and comprise contributions to the Russian Federation state
pension, social insurance, and obligatory medical insurance funds in respect of the Bank’s employees. The
Bank does not have pension arrangements separate from the state pension system of the Russian
Federation. Wages, salaries, contributions to the Russian Federation state pension and social insurance
funds, paid annual leaves and paid sick leaves, bonuses and non-monetary benefits are accrued as the
Bank’s employees render the related service.
Foreign currency and precious metals
Foreign currency transactions are initially translated into the functional currency at the CBR exchange
rate in effect at the transaction date. Monetary assets and liabilities denominated in foreign currencies
are translated into the functional currency at the CBR exchange rate ruling at the end of the reporting
period. Foreign exchange gains and losses resulting from revaluation of transactions in foreign currency
and precious metals are recorded in the statement of comprehensive income within gains less losses from
revaluation of foreign currency and precious metals. Non-monetary items denominated in foreign currency
and carried at cost are restated at the CBR exchange rate in effect at the transaction date. Non-monetary
items denominated in foreign currency and carried at fair value are restated at the exchange rate in
effect at the date the fair value is determined.
Gold, silver and other precious metals are recorded at current bid prices set by the CBR. Changes in CBR
bid prices are recorded as translation differences within gains less losses from revaluation of foreign
currency and precious metals in the statement of comprehensive income. Precious metals are recorded
within other assets.
Gains and losses on purchase and sale of foreign currency and precious metals are determined as the
difference between the selling price and the carrying amount at the date of the transaction.
28
NS Bank
5.
Cash and Cash Equivalents
Cash on hand
Cash balances with CBR (other than mandatory reserve deposits)
Correspondent accounts and overnight deposits with other banks of:
- the Russian Federation
- other countries
Cash deposits with MICEX
Cash on broker accounts
Balances with clearing nonbank credit institutions
Total cash and cash equivalents
2013
2012
935 918
1 957 802
1 035 521
9 676 017
1 586 170
1 169 822
2 145 495
2 831
2 711
7 800 749
1 273 771
1 678 425
253 691
6 333
13 923 758
As at 31 December 2013, the Bank had cash balances above 10% of the Bank’s capital with three
commercial banks, other than cash balances with CBR (2012: cash balances with two counterparty banks
other than cash balances with CBR). The aggregate amount of these funds equalled
RUB 4 528 899 thousand or 58.1% of total cash and cash equivalents (2012: RUB 2 638 830 thousand or
19.0% of total cash and cash equivalents).
Cash deposits with MICEX are funds deposited with JSCB National Clearing Centre and required for trading
in securities and foreign currency.
Cash on broker accounts represents funds deposited for dealing in securities on exchanges.
As at 31 December 2013 and 31 December 2012, the credit quality analysis of correspondent accounts and
overnight deposits with other banks has shown that these funds in the total amount of
RUB 2 755 992 thousand (2012: RUB 2 952 196 thousand) are current.
6.
Due from Other Banks
Deposits with CBR
Loans to other banks
Current/demand accounts with banks
Guarantee fund with payment systems
Reverse repo agreements
Promissory notes of other banks
Provision for impairment of due from other banks
Total due from other banks
2013
2012
1 000 123
500 003
149 977
2 371
(128 046)
1 524 428
2 500 922
875 195
190 286
1 097 749
33 877
(411)
4 697 618
As at 31 December 2013, the Bank had cash balances with one commercial banks, other than CBR
balances, above 10% of the Bank’s capital (2012: with four counterparty commercial banks, other than
CBR balances). The aggregate amount of these funds is RUB 500 003 thousand or 32.80% of total funds
placed with other banks (2012: RUB 1 980 142 thousand or 42.15% of total funds placed with other banks).
As at 31 December 2013, loans were issued to Sberbank of Russia OJSC with maturity on 9 January 2014
(2012: to Sberbank of Russia OJSC, JSCB Avangard (OJSC), JSCB Investtorgbank (OJSC) and
Mezhtopenergobank OJSC with maturity on 9 January 2013).
As at 31 December 2012, due from other banks in the amount of RUB 1 097 749 thousand were actually
collateralised by securities acquired under reverse repo agreements at the fair value of
RUB 1 241 668 thousand.
Promissory notes of other banks as at 31 December 2012 were represented by Rouble-denominated debt
securities of Deal-Bank, Ltd. with maturity on 14 September 2013 and yield to maturity of 9.0% per
annum.
The credit quality analysis of due from other banks as at 31 December 2013 and 31 December 2012 has
shown that all the above classes of due from other banks in the total amount of RUB 1 524 428 thousand
(2012: RUB 4 697 618 thousand) are current.
29
NS Bank
As at 31 December 2013, current/demand accounts with banks include correspondent account balances
with Master-Bank OJSC and JSCB SLAVYANSKY BANK (CJSC) in the total amount of RUB 128 046 thousand
(2012: correspondent account balances with JSCB SLAVYANSKY BANK (CJSC) in the amount of
RUB 411 thousand). The Bank considered these funds to be uncollectible and made a 100% provision in the
amount of RUB 128 046 thousand (2012: a 100% provision in the amount of RUB 411 thousand).
Movements in the provision for impairment of due from other banks during 2013 and 2012 are as follows:
Current accounts
with banks
Provision for impairment of due from other banks as at 1 January 2012
Provision for impairment during 2012
Provision for impairment of due from other banks as at 31 December 2012
411
411
Provision for impairment of due from other banks as at 31 December 2013
127 635
128 046
7.
Loans to Customers
Corporate loans
Loans to small and medium business
Consumer loans to individuals
Housing loans to individuals
Mortgage loans to individuals
Car loans to individuals
Loans to state unitary enterprises
Less: provision for impairment of loans to customers
Total loans to customers
2013
2012
10 835 319
6 957 304
580 071
294 785
244 159
167 545
398
(1 187 754)
17 891 827
7 535 126
4 271 420
217 729
1 309 081
321 492
113 382
786 835
(673 289)
13 881 776
As at 31 December 2013, accrued interest income on impaired loans amounted to RUB 25 049 thousand
(2012: RUB 9 255 thousand).
As at 31 December 2013, loans to customers in the amount of RUB 294 785 thousand
(2012: RUB 1 309 081 thousand) were actually collateralised by securities acquired under reverse repo
agreements at the fair value of RUB 747 153 thousand (2012: RUB 2 649 165 thousand).
As at 31 December 2012, corporate loans in the amount of RUB 90 000 thousand are provided as collateral
against the loan received from the CBR (Note 12).
Economic sector concentrations within the Bank’s loan portfolio are as follows:
Construction
Trade
Real estate transactions
Finance lease
Individuals
Industry
Architecture
Financial services
Other
Total loans to customers (gross)
Amount
2013
%
Amount
2012
%
059 516
636 344
821 108
021 187
992 173
920 357
500 000
327 514
801 382
19 079 581
47.5
19.1
9.5
5.4
5.2
4.8
2.6
1.7
4.2
100.0
5 283 701
3 241 112
1 169 085
663 042
652 603
1 314 875
1 691 022
539 625
14 555 065
36.3
22.3
8.0
4.6
4.5
9.0
11.6
3.7
100.0
9
3
1
1
As at 31 December 2013, the Bank had fourteen borrowers (2012: fifteen borrowers) with the aggregate
loan amount above 10% of the Bank’s capital. The aggregate amount of these loans was
RUB 11 998 195 thousand or 62.9% of total loans to customers (2012: RUB 9 168 308 thousand or 63.0% of
total loans to customers).
30
NS Bank
Movements in the provision for impairment of loans to customers during 2013 and 2012 are as follows:
Provision for impairment of loans to
customers as at 1 January 2012
Provision/(recovery of provision) for
impairment during 2012
customers as at 31 December 2012
customers as at 31 December 2013
Corporate
loans
Loans to
small and
medium
business
275 375
114 017
3 296
2 426
759
-
51 953
447 826
15 236
202 163
(135)
789
375
-
7 035
225 463
290 611
316 180
3 161
3 215
1 134
-
58 988
673 289
274 797
290 673
4 518
(773)
4 234
4
(58 988)
514 465
565 408
606 853
7 679
2 442
5 368
4
-
1 187 754
Consumer
loans to
individuals
31
Housing Mortgage
loans to
loans to Car loans to
individuals individuals individuals
Loans to
state
unitary
enterprises
Total
NS Bank
Below is the credit quality analysis of loans as at 31 December 2013:
Loans net of
Impairment
impairment provision to
provision gross loans, %
Gross loans
Impairment
provision
Individually assessed loans
Current loans (not past due)
10 055 332
417 284
9 638 048
4.1
Collectively assessed loans
1 to 6 months overdue
675 892
104 095
45 070
103 054
630 822
1 041
6.7
99.0
10 835 319
565 408
10 269 911
5.2
4 052 251
78 793
3 973 458
1.9
Less than 1 month overdue
More than 1 year overdue
2 596 214
39 585
111 758
90 780
66 716
003
170
756
415
716
2 312 211
24 415
37 002
3 365
-
10.9
38.3
66.9
96.3
100.0
6 957 304
606 853
6 350 451
8.7
578 156
947
179
789
5 837
928
125
789
572 319
19
54
-
1.0
98.0
69.8
100.0
580 071
7 679
572 392
1.3
294 785
-
294 785
-
294 785
-
294 785
-
239 475
4 684
2 395
47
237 080
4 637
1.0
1.0
244 159
2 442
241 717
1.0
Corporate loans
Total corporate loans
Total loans to small and medium business
284
15
74
87
66
Total consumer loans to individuals
Total reverse repo agreements
Total housing loans to individuals
32
NS Bank
Loans net of
Impairment
Gross loans
Impairment
provision
163 815
3 730
1 638
3 730
162 177
-
1.0
100.0
167 545
5 368
162 177
3.2
398
4
394
1.0
Total car loans to individuals
398
4
394
1.0
19 079 581
1 187 754
17 891 827
6.2
Total mortgage loans to individuals
Car loans to individuals
Below is the credit quality analysis of loans as at 31 December 2012:
Loans net of
Impairment
Gross loans
Impairment
provision
7 220 038
270 020
6 950 018
3.7
315 088
20 591
294 497
6.5
7 535 126
290 611
7 244 515
3.9
2 027 250
61 821
1 965 429
3.0
2 174 400
68 296
1 474
210 002
42 883
1 474
1 964 398
25 413
-
9.7
62.8
100.0
4 271 420
316 180
3 955 240
7.4
216 777
74
20
523
335
2 282
1
20
523
335
214 495
73
-
1.1
1.4
100.0
100.0
100.0
217 729
3 161
214 568
1.5
Corporate loans
Total corporate loans
Total loans to small and medium business
Total consumer loans to individuals
33
NS Bank
Loans net of
Impairment
Gross loans
Impairment
provision
1 309 081
-
1 309 081
-
1 309 081
-
1 309 081
-
321 492
3 215
318 277
1.0
321 492
3 215
318 277
1.0
113 382
1 134
112 248
1.0
113 382
1 134
112 248
1.0
786 835
58 988
727 847
7.5
786 835
58 988
727 847
7.5
14 555 065
673 289
13 881 776
4.6
Total reverse repo agreements
Total housing loans to individuals
Total mortgage loans to individuals
Loans to state unitary enterprises
Total loans to state unitary enterprises
Individually assessed loans include loans which show certain signs of impairment, are material in value and
individually assessed by the Bank for impairment.
Unimpaired loans represent loans issued to borrowers with high level of liquidity and profitability, with no
individual signs of impairment.
Collectively assessed loans include loans grouped in homogeneous portfolios sharing common
characteristics in respect of risk exposure, and/or signs of impairment.
The credit quality of loans for which no signs of impairment have been identified differs due to a variety
of industry risks and the borrowers’ financial position.
As at 31 December 2013, current loans to customers include balances in the amount of
RUB 1 437 541 thousand (2012: RUB 1 092 546 thousand) that would otherwise be past due whose terms
have been renegotiated.
The amounts of loans recognised as “past due” represent the entire balance of such loans rather than the
overdue amounts of individual payments.
34
NS Bank
Below is the information on the collateral structure as at 31 December 2013:
Investment contracts
Immovable property
Legal rights of claim
Goods for sale
Motor vehicles
Non-marketable securities
Equipment
Surety
Other
Interests in share capitals
Deposits with the Bank
Unsecured
Total collateral
Corporate
loans
Loans to small
and medium
business
Consumer
loans to
individuals
Reverse repo
agreements
Housing
loans to
individuals
Mortgage
loans to
individuals
Car loans to
individuals
Total
4 780 016
2 647 200
586 503
1 555 330
520 022
391 889
36 659
317 700
10 835 319
2 651 055
1 133 595
1 362 555
76 421
91 426
206 489
30 794
340 540
53 333
5 500
1 005 596
6 957 304
266 422
10 000
12 557
48 941
16 393
111 059
114 699
580 071
290 000
4 785
294 785
3 859
117 530
7 697
64 183
50 890
244 159
167 545
167 545
398
398
7 431 071
4 218 621
2 076 588
1 631 751
624 403
545 430
422 683
401 289
117 516
111 059
5 500
1 493 670
19 079 581
Loans to small
and medium
business
Consumer
loans to
individuals
Reverse repo
agreements
Housing
loans to
individuals
Mortgage
loans to
individuals
Loans to state
unitary
enterprises
Total
1 495 756
1 079 866
903 782
164 424
52 980
21 386
553 226
4 271 420
105 850
1 782
13 331
96 766
217 729
1 309 081
1 309 081
13 060
123 147
51 921
133 364
321 492
113 382
113 382
786 835
786 835
6 191 916
3 522 018
1 813 764
1 310 863
674 495
66 311
51 765
51 921
872 012
14 555 065
Below is the information on the collateral structure as at 31 December 2012:
Corporate
loans
Investment contracts
Immovable property
Legal rights of claim
Non-marketable securities
Goods for sale
Motor vehicles
Equipment
Other
Unsecured
Total collateral
4 696 160
2 209 860
510 071
30 379
88 656
7 535 126
The collateral value of the security may differ from its fair value.
35
NS Bank
8.
Financial Assets Available for Sale
2013
2012
Government debt securities
- Russian Federation bonds (OFZ)
- Eurobonds of the Republic of Belarus
- Federal currency bonds (OVGVZ)
- Municipal bonds
2 185 542
66 723
55 514
20 651
3 520 134
64 747
157 826
Corporate debt securities
- Corporate bonds
- Corporate eurobonds
- Promissory notes
6 333 010
1 155 460
-
5 173 558
194 750
236 260
115 509
25 902
9 958 311
109 460
65 097
9 521 832
Corporate equity securities
- Participating interest in the share capitals of companies
- Corporate shares
Total financial assets available for sale
Russian Federation bonds (OFZ) are Rouble-denominated government securities issued by the Ministry of
Finance of the Russian Federation. As at 31 December 2013, OFZ in the Bank’s portfolio have maturity
dates from March 2014 to August 2034 (2012: from January 2013 to February 2036), coupon rates ranging
from 6.7% to 12.0% per annum (2012: ranging from 6.7% to 12.0% per annum), and yield to maturity from
6.9% to 12.0% per annum (2012: from 5.6% to 7.4% per annum), depending on the issue.
Eurobonds of the Republic of Belarus are USD-denominated government securities issued by the Ministry of
Finance of the Republic of Belarus. As at 31 December 2013 and 31 December 2012, these bonds in the
Bank’s portfolio have maturity date on 3 August 2015, coupon rate of 8.75% per annum, and yield to
maturity of 8.5% per annum (2012: 11.3% per annum).
Federal currency bonds (OVGVZ) are USD-denominated government securities with the coupon rate of 7.5%
per annum. As at 31 December 2013, these bonds in the Bank’s portfolio have maturity date on 31 March
2030 and yield to maturity of 4.2% per annum (2012: 4.1% per annum).
Municipal bonds are represented by interest-bearing Rouble-denominated securities issued by the City of
Moscow and freely traded on the MICEX. As at 31 December 2013, these bonds in the Bank’s portfolio have
maturity date in June 2014, coupon rate of 12.0% per annum, and yield to maturity of 12.5% per annum
(2012: maturity dates from June 2013 to June 2014, coupon rates ranging from 7.0% to 15.0% per annum,
depending on the issue).
As at 31 December 2013 and 31 December 2012, corporate bonds are represented by Rouble-denominated
interest-bearing securities issued by major Russian companies and banks. As at 31 December 2013,
corporate bonds in the Bank’s portfolio have maturities from February 2014 to February 2032, coupon
rates from 5.0% to 15.0% per annum (2012: from February 2013 to February 2032, coupon rates from 6.8%
to 15% per annum), depending on the issue.
As at 31 December 2013, corporate eurobonds are represented by USD-denominated interest-bearing
securities freely tradable in global markets. As at 31 December 2013, corporate eurobonds in the Bank’s
portfolio have maturities from March 2014 to July 2016, coupon rate ranging from 1.99% to 10.7% per
annum (2012: maturities from October 2013 to November 2015, coupon rate ranging from 3.3% to 8.2% per
annum), depending on the issue.
As at 31 December 2012, Rouble-denominated promissory notes were issued by Defence Systems JSC. As at
31 December 2012, the promissory notes in the Bank’s portfolio have maturity on and after 16 April 2013
and yield to maturity of 9.3% per annum.
36
NS Bank
As at 31 December 2013, participating interest in the share capitals of companies in the amount of
RUB 115 509 thousand (2012: RUB 109 460 thousand) represents the Bank’s 19.9% contributions into the
share capital of Construction Insurance Group LLC (2012: represents the Bank’s contributions into the
share capital of NPF “Centre of Information Technologies in Building Industry” LLC (100%) and
Construction Insurance Group LLC (19.9%).
In June 2013 the Bank withdrew from NPF “Centre of Information Technologies in Building Industry” LLC.
The Bank transferred its participation interests to NPF “Centre of Information Technologies in Building
Industry” LLC itself.
Corporate shares are represented by ordinary shares of Russian entities:
Issuer
Rosneft Oil Company (OJSC)
Surgutneftegaz OJSC
Lukoil OJSC
MGTS PJSC
Sberbank of Russia OJSC
NOVATEK OJSC
OJSC MMC Norilsk Nickel
MTS OJSC
Tatneft OJSC
NLMK OJSC
Gazprom OJSC
Total corporate shares
Sector
oil & gas
oil & gas
oil & gas
telecommunications
banking
natural gas production
metallurgical
telecommunications
oil & gas
metallurgical
oil & gas
2013
8
7
7
2
182
674
242
123
613
36
32
25 902
Fair value
2012
4 851
14 129
14 339
10 342
5 374
8 600
4 033
2 016
1 413
65 097
Financial assets available for sale include securities provided as collateral under repo agreements, whose
fair value as at 31 December 2013 was RUB 5 375 621 thousand (2012: RUB 2 821 291 thousand) (Note 12).
The credit quality analysis of debt securities as at 31 December 2013 and 31 December 2012 has shown
that all debt securities in the total amount of RUB 9 816 900 thousand (2012: RUB 9 347 275 thousand) are
current.
37
NS Bank
Below is the credit quality analysis of issuers of debt securities included in financial assets available for
sale as at 31 December 2013 in accordance with the ratings of international agencies:
Fitch Moody’s S&P
- Federal currency bonds (OVGVZ)
- Municipal bonds
- Moscow
- Corporate bonds
- Russian Agricultural Bank, OJSC
- Russian Railways OJSC
- VTB Bank OJSC
- JSC Federal Grid Company of Unified
Energy System
- Vnesheconombank
- Gazprom OJSC
- Eurasian Development Bank (EDB)
- Alfa-Bank OJSC
- JSCB Promsvyazbank CJSC
- SU-155 Capital LLC
- Rusfinance Bank, LLC
- Rosneft Oil Company (OJSC)
- VimpelCom-Invest LLC
- NOMOS-BANK (OJSC)
- AFK System OJSC
- NOVATEK OJSC
- OTJSC Transneft OJSC
- MTS OJSC
- Gazprombank OJSC
- MegaFon Finance LLC
- Agency For Housing Mortgage Lending OJSC
- OJSC JSCB Rosbank
- X5 FINANCE LLC
- OJSC Bank ZENIT
- Transaero OJSC
- Euraz Holding Finance LLC
- Rostelecom OJSC
- Transcontainer OJSC
- Magnit OJSC
- OJSC Russian Bank for Small and Medium
Enterprises Support (SME Bank)
- Russian Post OJSC
- OJSC Bank Saint Petersburg
- Bank VTB 24 CJSC
- Rosnano OJSC
- Credit Europe Bank CJSC
- CJSC Commercial Bank DeltaCredit
- MMK OJSC (Magnitogorsk Iron and Steel
Works)
Amount
No rating
assigned
Total
BBB
ВВВ
Baa1
B3
Baa1
A2 2 185 542
66 723
A2
55 514
- 2 185 542
66 723
55 514
ВВВ
Baa1
A2
20 651
-
20 651
BBBBBB
-
Baa3
Baa1
Baa2
BBB
-
596 436
583 648
574 955
-
596 436
583 648
574 955
F3
BBB
BBB
AA+
BBBBB+
BBBBBBBBBBBB+
BBBBBB+
BBBBBBB+
-
Aaa
Baa1
A2
Baa1 BBB
A3
A2
Ba1 BB+
Ba3
BB
Ba1
Baa
Ba3 BBBa3
BB
Baa3 BBBBaa1
Ba2 BB+
Baa3 BBB- BBBBaa1
Baa3
B+
Ba3
B+
- BB+
Ba3
BB
BBB
BBBB-
Baa2
A+
Baa2
Ba3
Baa2
B
-
B
Ba3
-
38
452
412
362
341
269
216
61
40
40
34
452
228
729
025
584
808
116
214
252
164
109
041
149
710
430
460
424
381
331
077
356
334
026
209 229
176 392
64 544
-
452
412
362
341
269
216
209
193
187
176
160
155
145
132
125
124
120
109
102
88
79
64
61
40
40
34
452
228
729
025
584
808
229
116
214
392
252
164
109
041
149
710
430
460
424
381
331
544
077
356
334
026
31
30
30
30
25
20
5
246
971
768
494
099
705
088
-
31
30
30
30
25
20
5
246
971
768
494
099
705
088
35
-
193
187
160
155
145
132
125
124
120
109
102
88
79
35
NS Bank
Fitch Moody’s S&P
- Alfa-Bank OJSC
- Gazprom OJSC
- RN Holding OJSC (former TNK BP Holding)
- OTJSC Transneft OJSC
- JSCB Promsvyazbank CJSC
- Gazprombank OJSC
- Euraz Group
- Alrosa diamond mining company (OJSC)
- Vimpel-Communications OJSC
- Severstal OJSC
- Vnesheconombank
Total debt securities available for sale
AA+
BBBBBB
BBBBBBBBB
BBB
Ba1 BB+
Baa3
Baa1 BBB
Baa1
Baa1
Ba3
BB
Baa3 BBBB1
B+
Ba3
Ba3
Ba1
Baa1
-
Amount
139 923
135 699
113 830
112 574
99 566
90 568
147 894
69 622
69 558
66 169
60 731
49 326
9 366 735
No rating
assigned
Total
- 139 923
- 135 699
- 113 830
- 112 574
99 566
90 568
- 147 894
69 622
69 558
66 169
60 731
49 326
450 165 9 816 900
Below is the credit quality analysis of issuers of debt securities included in financial assets available for
sale as at 31 December 2012 in accordance with the ratings of international agencies:
No
rating
Fitch Moody’s S&P Amount assigned
- Municipal bonds
- Corporate bonds
- VTB Bank OJSC
- Gazpromneft OJSC
- Russian Railways OJSC
- Vnesheconombank
- JSC Federal Grid Company of Unified
Energy System
- Transaero OJSC
- NOVATEK OJSC
- Rosneft Oil Company (OJSC)
- Agency for Housing Mortgage Lending OJSC
- Lukoil OJSC
- Eurasian Development Bank (EDB)
- MegaFon Finance LLC
- AK Transneft OJSC
- Gazprom OJSC
- Aeroflot OJSC
- TransCreditBank OJSC
- VimpelCom-Invest LLC
- MTS OJSC
- Alrosa diamond mining company (OJSC)
- AFK System OJSC
- Severstal OJSC
- Euraz Holding Finance LLC
- NLMK OJSC
- MMK OJSC
- Transcontainer OJSC
Total
BBB
ВВВ
-
Baa1 BBB+ 3 520 134
Baa1 ВВВ 157 826
B3
B64 747
-
BBB
BBB
ВВВ
BBB
Baa1 BBB
Baa1
Baa3 BBBBaa1 ВВВ
Baa1 BBB+
673
668
548
498
294
269
871
710
032
030
-
673
668
548
498
294
269
871
710
032
030
BBBBBB
BBBВВВ
ВВВ
BB+
BB+
BBBBBB
BBBB
BB+
Baa3 BBB
Baa3 BBBBaa1 BBB
Baa1 BBB
Baa2 BBB
ВВВ ВВВ
- BBBBaa1 BBB
Baa1 BBB
Baa3 BBB
Ba2 BB
Ba3 BBBa3 BB
Ba1 BB+
- B+
Baa3 BBBBa3
Ba3
-
289 673
190 757
165 174
161 999
154 126
132 240
120 225
103 214
97 454
93 940
92 428
77 828
77 315
69 212
63 120
61 715
58 242
53 746
40 363
241 442
81 526
-
289
241
190
165
161
154
132
120
103
97
93
92
81
77
77
69
63
61
58
53
40
673
442
757
174
999
126
240
225
214
454
940
428
526
828
315
212
120
715
242
746
363
39
3 520 134
157 826
64 747
NS Bank
No
rating
Fitch Moody’s S&P Amount assigned
- Rosnano OJSC
- X5 FINANCE LLC
- Tatneft OJSC
- Promissory notes
- Defence Systems JSC
- Alfa-Bank OJSC
- Euraz Group
- NOMOS-BANK (OJSC)
- LLC PSB-Finance
- Vnesheconombank
Total debt securities available for sale
9.
BB+
ВВВВВBBB
- BB+
- В+
Ba1
-
-
Total
24 931
24 734
15 242
-
24 931
24 734
15 242
-
236 260
236 260
Ва1 ВВ+
67 387
Ba3 В+
33 868
Ba3 ВВ
31 478
Baa1 BBB
30 823
8 756 853
67 387
33 868
31 478
31 194
31 194
30 823
590 422 9 347 275
Non-current Assets Held for Sale
Asset
2013
Apartment in Vologda
Apartment in Ukhta, Republic of Komi
Apartment in Vuktyl, Republic of Komi
Total non-current assets held for sale
2 900
2 900
600
6 400
Non-current assets held for sale in the amount of RUB 6 400 thousand are represented by apartments
which were received during 2013 in the course of work for collection of overdue receivables under the
agreement on compensation for release from obligations in favour of the Bank.
To find buyers for these apartments the Bank signed realtor services contracts. The Bank constantly
monitors real estate market and appraises apartments taking into account the prices established in the
market in order to determine the best time for apartment sale.
40
NS Bank
10. Premises and Equipment
Net book value as at
31 December 2012
Cost
Balance as at
1 January 2013
Acquisition
Transfers
Disposals
Revaluation
Accumulated
depreciation
eliminated on
revaluation
Balance as at
31 December 2013
Accumulated
depreciation
Balance as at
1 January 2013
Depreciation charge
Disposals
Accumulated
depreciation
eliminated on
revaluation
Balance as at
31 December 2013
31 December 2013
Office
equipment
and
Construction
computers Furniture in progress
Buildings
Motor
vehicles
903 557
7 014
67 230
3 549
3 610
984 960
905 611
288 974
3 610
(373)
53 706
27 255
3 800
(699)
-
175 062
15 640
(18 817)
-
21 248
865
(79)
-
3 610
(3 610)
-
1 132 786
309 279
(19 968)
53 706
(39 805)
-
-
-
-
(39 805)
1 211 723
30 356
171 885
22 034
-
1 435 998
2 054
40 204
(42)
20 241
2 138
(699)
107 832
11 779
(8 678)
17 699
1 645
(58)
-
147 826
55 766
(9 477)
(39 805)
-
-
-
-
(39 805)
2 411
21 680
110 933
19 286
-
154 310
1 209 312
8 676
60 952
2 748
-
1 281 688
41
Total
NS Bank
31 December 2011
Cost
Balance as at
1 January 2012
Acquisition
Disposals
Revaluation
Accumulated depreciation
eliminated on
revaluation
Balance as at
31 December 2012
Balance as at
1 January 2012
Depreciation charge
Disposals
eliminated on
revaluation
Balance as at
31 December 2012
31 December 2012
Office
equipment
and
Construction
computers Furniture in progress
Buildings
Motor
vehicles
852 329
12 892
83 219
6 602
853 348
709
80 276
23 710
10 993
(7 448)
-
159 665
17 033
(1 636)
-
21 284
17
(53)
-
(28 722)
-
-
-
905 611
27 255
175 062
21 248
1 019
29 757
-
10 818
16 650
(7 227)
76 446
32 662
(1 276)
14 682
3 070
(53)
-
102 965
82 139
(8 556)
(28 722)
-
-
-
-
(28 722)
2 054
20 241
107 832
17 699
-
147 826
903 557
7 014
67 230
3 549
3 610
984 960
-
Total
955 042
- 1 058 007
3 610
32 362
(9 137)
80 276
-
(28 722)
3 610 1 132 786
As at 31 December 2013 and 31 December 2012, the Bank’s buildings were appraised by the independent
appraiser LLC Appraisal and Consultations Agency based on the market value. As at 31 December 2013, the
net book value of buildings includes the amount of RUB 282 401 thousand (2012: RUB 228 695 thousand)
that represents accumulated positive revaluation of the Bank’s buildings.
As at 31 December 2013, the total deferred tax liability of RUB 56 480 thousand
(2012: RUB 45 739 thousand) was computed in respect of revaluation of these buildings to fair value and
recorded in equity in accordance with IAS 16 (Note 23).
If the buildings were measured using the cost model, the items in the statement of financial position
would be as follows:
Cost
Net book value
2013
2012
1 126 168
(183 043)
943 125
833 957
(122 212)
711 745
Premises and equipment of the Bank include premises and equipment under long-term lease, which are
received by the Bank under finance lease contracts.
42
NS Bank
The carrying value of premises and equipment received by the Bank under finance lease contracts is as
follows:
Motor vehicles
2013
2012
Net book value as at 1 January
Depreciation charge
Lease-to-own purchase
Net book value as at 31 December
361
(114)
247
802
(223)
(218)
361
As at 31 December 2013, the Bank’s finance lease obligations amounted to RUB 5 thousand, including the
current portion of RUB 5 thousand (2012: RUB 74 thousand, including the current portion of
RUB 69 thousand and the non-current portion of RUB 5 thousand). Lease payments are made on a monthly
basis, and for the year 2013 they amounted to RUB 79 thousand (2012: RUB 255 thousand), the interest
rate is 38.5% per annum (2012: 47.9% per annum) (Note 16).
In future periods the Bank will make lease payments to lessors in the amount of RUB 5 thousand (2012:
RUB 84 thousand), there is no interest expense (2012: including interest expense of RUB 2 thousand).
Information on minimum lease payments under finance lease of motor vehicles as at 31 December 2013 is
presented below:
Less than 1 year
Minimum lease payments as at 31 December 2013
- including interest
- including liability
Present value of minimum lease payments as at
31 December 2013
5
5
5
Information on minimum lease payments under finance lease of motor vehicles as at 31 December 2012 is
presented below:
Minimum lease payments as at 31 December 2012
- including interest
- including liability
Present value of minimum lease payments as at
31 December 2012
Less than
1 year
From 1 to
5 years
Total
79
2
77
5
5
84
2
82
69
5
74
11. Other Assets
Investments in construction
Investments in real estate
Restricted cash
Settlements for commemorative coins
Precious metals
Accounts receivable related to business transactions
Advance payments related to business transactions
Other
Less: provision for impairment of other assets
Total other assets
2013
2012
2 622 356
1 278 137
34 384
29 525
29 238
28 708
22 693
3 071
29 115
(92 104)
3 985 123
126 291
366 221
1 065 023
11 455
25 147
13 029
25 569
29 548
27 387
(21 911)
1 667 759
Investments in construction represent the Bank’s shares in the developer investment contracts, which
were acquired by the Bank for subsequent resale purposes.
43
NS Bank
Investments in real estate represent the Bank’s real estate acquired for subsequent resale purposes.
Restricted cash represents cash included in assets of closed-end unit investment funds (CEUIF):
Real estate CEUIF “United Urban”
CEUIF of direct investments “Stable”
Real estate CEUIF “United Real Estate”
Real estate CEUIF “BEST Development”
Total restricted cash
2013
2012
34 384
34 384
272 307
452 202
339 725
789
1 065 023
Real estate CEUIF “United Urban”, CEUIF of direct investments “Stable”, Real estate CEUIF “United Real
Estate”, and Real estate CEUIF “BEST Development” are managed by United Management Company LLC.
Financial assets at fair value through profit or loss represent the fair value of foreign currency futures and
precious metals and oil futures.
Derivative financial instruments are normally traded on the OTC market by professional market
participants on standard contractual terms and conditions.
Contractual amounts of derivative financial instruments are not necessarily indicative of the amounts of
future cash flows involved or the current fair value of the instruments and, therefore, do not reflect the
Bank’s exposure to credit or price risks. The derivative financial instruments become favourable (assets)
or unfavourable (liabilities) as a result of fluctuations in foreign exchange rates relative to these
instruments. The aggregate contractual or notional amount of derivative financial instruments, the extent
to which instruments are favourable or unfavourable and, thus, their aggregate fair values can fluctuate
significantly from time to time.
The table below contains information on outstanding transactions involving derivative financial
instruments as at 31 December 2013 and 31 December 2012:
2013
Currency spots
Precious metals futures
Oil futures
Total derivative financial instruments
Notional
principal
amount
4 899 155
7 870
4 907 025
44
2012
Fair value of
assets
Notional
principal
amount
Fair value of
assets
3 066
5
3 071
4 109 474
5 072
98
4 114 644
29 378
72
98
29 548
NS Bank
Below is the structure of the Bank’s investments in construction as at 31 December 2013 and 31 December
2012:
Investment
project
Developer
Apartments
Residential
buildings
Residential
buildings
LLC KOVCHEG
LLC Granelle
Development
LLC Granelle
Development
Apartments
Residential
buildings
LLC Lotan
Apartments
Residential
buildings
LLC RIVAS MO
LLC Granelle
Development
LLC StroyTekhInvest
25 (LLC STI 25)
Apartments
LLC Transfort
Apartments
Administrative
building,
residential
building
LLC Amatol
Apartments
Residential
buildings
LLC STK Euro-Start
LLC Granelle
Development
LLC Granelle
Development
Apartments
Apartments
LLC Volgo-Okskiy
Project
LLC Anker
Development Centre
Car parking space
CJSC
LLC Granelle
Residential building
Development
Development Centre
CJSC
Centre MARCA
(GVSU)
Total investments in construction
Location
2013
2012
505 316
-
31 Gaidar str., Korolev, Moscow region
Gorky str., Dobrolyubov str., Polevaya str.,
Korolev, Moscow region
8, 8.1, 6 Bulatnikovski rural district near village
of Drozhzhino, Leninski district
Malye Vyazemy village Odintsovo district,
Moscow region
Northward of Putilkovo village, Krasnogorsk
district, Moscow region
386 812
-
300 000
-
256 987
-
250 000
-
231 681
-
Northward of Lukino, Balashikha, Moscow region
Estate 35, Agricultural CJSC Ruchyi, Vsevolozhsk
district, Leningrad region
Eastward of Ermolino village, Leninski district,
Moscow region
219 907
-
134 417
-
76 482
-
69 585
-
64 163
-
50 094
-
44 463
-
27 649
-
4 800
-
-
81 773
-
41 224
Bld. 2 Rozhdestvenskaya str., Moscow region,
Mytishchi
Academician I.N. Blokhina street, Nizhny
Novgorod
Voskresenskoe farm household, Voskresenskoe
settlement, Moscow
Dobrolyubov str., Glavnaya street, Gaidar
street, Korolev, Moscow region
Blds 6, 4, northward of Lukino, Balashikha,
Moscow region
Bld. 1 Oktyabrskaya street, Zarechenski district,
Tula
Bld. 2 ABC, Quarter 1, Davydkovo, Moscow
12/10 Balashikhinskoe shosse, Balashikha,
Moscow region
Quarter 1, 2 Davydkovo, Fili-Davydkovo district,
Moscow
4/763 Proyektiruemy proezd, Kotelniki, NorthWestern District, Moscow region
45
2 622 356
3 294
126 291
NS Bank
As at 31 December 2013, investments in construction in the amount of RUB 1 341 157 thousand
(2012: RUB 85 067 thousand) represent investments in construction included into assets of Real estate
CEUIF “United Urban” (2012: Real estate CEUIF “United Urban”):
Investment project
Developer
Apartments
LLC KOVCHEG
Apartments
LLC Lotan
Apartments
Apartments
LLC RIVAS MO
LLC StroyTekhInvest
25 (LLC STI 25)
Apartments
LLC Amatol
Apartments
Apartments
LLC CTC Euro-Start
LLC Granelle
Development
Apartments
LLC Amatol
LLC Granelle
Development
Location
Bld. 2 Rozhdestvenskaya str., Moscow region,
Mytishchi
8, 8.1, 6 Bulatnikovski rural district near
village of Drozhzhino, Leninski district
Northward of Putilkovo village, Krasnogorsk
Estate 35, Agricultural CJSC Ruchyi,
Vsevolozhsk district, Leningrad region
Eastward of Ermolino village, Leninski
Voskresenskoe farm household,
Voskresenskoe settlement, Moscow
Blds 6, 4, northward of Lukino, Balashikha,
Moscow region
Bld. 1 Oktyabrskaya street, Zarechenski
district, Tula
2013
2012
505 316
-
256 987
-
231 681
-
134 417
-
76 481
-
64 163
-
44 463
-
27 649
-
-
81 773
-
3 294
1 341 157
85 067
12/10 Balashikhinskoe shosse, Balashikha,
Moscow region
Centre MARCA
4/763 Proyektiruemy proezd, Kotelniki,
(GVSU)
North-western district, Moscow region
Total investments in construction included assets of closed-end unit investment funds
(CEUIF)
Below is the structure of the Bank’s investments in real estate (representing non-residential premises) as
at 31 December 2013 and 31 December 2012:
Real estate location
Bezvodnoe village, Kstovsky district, Nizhny Novgorod region
Chechenino village, Kstovsky district, Nizhny Novgorod region
18 Davydkovskaya street, Moscow
1, 3rd Pokrovsky proezd, Kotelniki, Moscow region
1/31A Leningradsky avenue, Moscow
1/1 Sculptor Mukhina str., Moscow
Total investments in real estate
2013
2012
1 124 085
112 464
36 424
5 164
1 278 137
353 654
12 567
366 221
As at 31 December 2013, investments in real estate in the amount of RUB 1 241 713 thousand
(2012: RUB 366 221 thousand) represent investments in real estate included into assets of Real estate
CEUIF “United Urban” (2012: Real estate CEUIF “BEST Development”):
Real estate location
Bezvodnoe village, Kstovsky district, Nizhny Novgorod region
Chechenino village, Kstovsky district, Nizhny Novgorod region
18 Davydkovskaya street, Moscow
1/31A Leningradsky avenue, Moscow
1/1 Sculptor Mukhina str., Moscow
Total investments in real estate
46
2013
2012
1 124 085
112 464
5 164
1 241 713
353 654
12 567
366 221
NS Bank
Below is the structure of the Bank’s investments in construction in 2013 and 2012:
Carrying value as at 1 January
Acquisition of investments in construction
Sale of investments in construction
Termination of investment agreement
Reclassification of investments in construction to investments in real
estate
Carrying value as at 31 December
2013
2012
126 291
3 378 645
(365 080)
(517 500)
1 056 893
734 345
(454 327)
(856 966)
2 622 356
(353 654)
126 291
2013
2012
366 221
1 278 137
(366 221)
1 272 309
12 567
(1 272 309)
1 278 137
353 654
366 221
Movements in investments in real estate during 2013 and 2012 are as follows:
Investments in real estate
Sale of investments in real estate
Reclassification of investments in construction to investments in real
estate
Movements in the provision for impairment of other assets during 2013 and 2012 are as follows:
Accounts receivable
Investments in related to business
construction
transactions
Provision for impairment of other assets
as at 1 January 2012
Amounts written off during 2012 as
uncollectible
as at 31 December 2012
Amounts written off during 2013 as
uncollectible
as at 31 December 2013
Other
Total
26 621
-
-
26 621
(26 621)
41
21 911
(4 669)
-
(41)
-
(41)
-
-
21 911
21 911
69 585
157
589
70 331
-
(138)
-
(138)
69 585
19
22 500
92 104
The credit quality analysis of financial asset classified as other assets as at 31 December 2013 and
31 December 2012 has shown that all financial assets classified as other assets in the total amount of
RUB 3 926 290 thousand (2012: RUB 1 625 259 thousand) are current and unimpaired.
The Bank considered financial assets included in other assets as at 31 December 2013 in the total amount
of RUB 69 604 thousand to be uncollectible and made a 100% provision in the amount of
RUB 69 604 thousand (2012: none).
The Bank has no collateral for impaired assets classified as other assets.
47
NS Bank
12. Due to Other Banks
Repo agreements
Term loans of other banks
Correspondent accounts of other banks
Loan from CBR
Total due to other banks
2013
2012
4 615 429
249 447
65
4 864 941
2 510 631
350 000
18 094
43 902
2 922 627
As at 31 December 2013, securities sold under repo agreements include bonds and eurobonds of major
Russian companies and banks with the fair value of RUB 5 375 621 thousand (2012: municipal bonds, bonds
of major Russian companies and banks with the fair value of RUB 2 821 291 thousand). Repo agreements
are concluded with the CBR (Note 8).
Below are the CBR loan conditions as at 31 December 2012:
Issue date
Maturity date
Interest rate, %
2012
18.10.2012
20.02.2013
7.75
43 800
As at 31 December 2012, loans to customers in the amount of RUB 90 000 thousand were provided as
collateral against the loan received from the CBR (Note 7).
As at 31 December 2013, the Bank had no cash balances (other than the repo) above 10% of the Bank’s
capital (2012: the Bank had cash balances of 1 commercial bank (other than the repo) above 10% of the
Bank capital). The aggregate amount of these funds was RUB 350 000 thousand or 12.0% of total due to
other banks).
13. Customer Accounts
Government agencies
— Current/settlement accounts
— Term deposits
Legal entities
— Current/settlement accounts
— Term deposits
Individuals
— Current accounts/demand deposits
— Term deposits
Total customer accounts
2013
2012
650 091
51 848
695 095
51 848
11 648 387
2 863 336
17 233 934
1 980 063
1 385 813
1 756 713
14 980 852 14 203 050
31 580 327 35 920 703
According to the Russian Civil Code, the Bank is obliged to repay deposits to individual depositors at short
notice. If a fixed-term deposit is withdrawn by the depositor ahead of term, interest is payable at the rate
paid by the Bank on demand deposits unless otherwise specified by the contract.
48
NS Bank
Economic sector concentrations within customer accounts are as follows:
Individuals
Construction
Services
Financial services
Industry
Trade
Government agencies
Transport and communications
Other
Total customer accounts
Amount
2013
%
366 665
240 081
030 739
451 206
060 032
007 586
701 939
109 279
1 612 800
31 580 327
51.8
22.9
6.4
4.6
3.4
3.2
2.2
0.3
5.1
100.0
16
7
2
1
1
1
Amount
2012
%
959 763
181 326
695 104
907 866
809 402
1 209 639
746 944
135 324
1 275 335
35 920 703
44.4
31.1
4.7
8.1
2.3
3.4
2.1
0.4
3.5
100.0
15
11
1
2
As at 31 December 2013, the Bank had ten customers (2012: twelve customers) with total balances over
10% of the Bank’s capital. The aggregate amount of these customer accounts was
RUB 10 625 761 thousand or 33.65% of total customer accounts (2012: RUB 14 953 277 thousand or 41.63%
of total customer accounts).
As at 31 December 2013, the Bank had one large depositor with the balance of RUB 4 902 816 thousand or
15.5% of total customer accounts (2012: RUB 5 987 462 thousand or 16.7% of total customer accounts).
As at 31 December 2013, a term deposit of a legal entity in the amount of RUB 5 500 thousand was
provided as collateral against loans to customers (Note 7).
14. Debt Securities Issued
As at 31 December 2013, debt securities issued by the Bank include non-interest bearing notes of
RUB 98 474 thousand (2012: promissory notes of RUB 24 thousand) denominated in RUB (2012: in RUB).
The maturity dates of the notes are from April to December 2016 (2012: at sight).
49
NS Bank
15. Other Borrowed Funds
Other borrowed funds include subordinated loans:
Construction Department
No. 155 CJSC
- loan 1
- loan 2
- loan 3
- loan 4
- loan 5
Betiar-22 OJSC
- loan 1
- loan 2
- loan 3
ROSSTROY Building Corporation
CJSC
- loan 1
- loan 2
Monblan Company CJSC
- loan 1
- loan 2
Assembly Department No. 3 LLC
Domodedovsky Reinforced
Concrete Products Plant CJSC
Strommashleasing LLC
Total other borrowed funds
Drawdown
date
Maturity
Maturity date
date under
under
original
renegotiated
contractual contractual
terms
terms
29.06.2005
07.02.2007
16.07.2007
03.09.2010
11.04.2013
28.06.2015
06.02.2017
15.07.2017
30.09.2040
31.05.2041
28.06.2036
06.02.2038
15.07.2038
-
200
50
35
300
370
26.12.2008
01.12.2009
02.12.2009
25.12.2019
15.12.2039
20.12.2039
25.12.2039
-
150 000
150 000
120 000
150 000
150 000
120 000
03.09.2010
05.05.2011
30.09.2040
31.05.2041
-
300 000
180 000
300 000
180 000
27.10.2008
10.09.2008
10.04.2012
26.10.2019
11.09.2018
15.05.2042
26.04.2039
10.09.2039
-
100 000
90 000
230 000
100 000
90 000
230 000
21.12.2010
05.05.2011
26.04.2019
31.05.2041
-
2013
000
000
000
000
000
2012
200
50
35
300
000
000
000
000
-
100 000
100 000
370 000
2 375 000 2 375 000
On 11 April 2013, the Bank and Strommashleasing LLC entered into a supplementary agreement to
subordinated loan contract No. 10/12 to change the lender. Construction Department No. 155 CJSC
became a new lender. On 3 April 2013, Moscow Main Territorial Department of the Central Bank of the
Russian Federation issued a positive opinion on the results of the legal due diligence of the supplementary
agreement.
Subordinated loans were raised by the Bank in Russian Roubles.
Subordinated loans were raised at floating interest rates tied to the refinancing rate. As at 31 December
2013, the refinancing rate was set by the CBR at 8.25% per annum (2012: 8.25 % per annum).
Borrowed funds are scheduled for repayment upon expiration of the contract.
Movements in other borrowed funds are shown below:
2013
2012
2 375 000 2 145 000
230 000
259 953
242 952
(259 953) (242 952)
2 375 000 2 375 000
Borrowings
Accrued interest expense
Interest expense paid
50
NS Bank
16. Other Liabilities
Note
Provision for credit related commitments
Remuneration payable to employees
Settlements with Deposit Insurance Agency
Accounts payable
Advances received in real estate transactions
Taxes other than income tax
Advances received for provision of bank guarantees
Advances received for rent of individual safe deposit boxes
Plastic card settlements
Finance lease obligations
Accounts payable relating to real estate transactions
Other
Total other liabilities
2013
28
320
52
32
21
12
9
8
3
1
268
073
462
409
455
382
138
159
330
5
1 155
461 836
10
2012
291
64
30
10
12
12
276
108
405
490
455
552
2 653
8 368
74
105 722
1 625
539 728
Advances received in real estate transactions represent the Bank’s obligations in connection with the
transfer of real estate and real estate investment rights.
Accounts payable relating to real estate transactions as at 31 December 2012
liability for payment of investment rights to the real estate.
represent the Bank’s
17. Share Capital and Share Premium
Authorised, issued and fully paid share capital comprises:
Ordinary shares
Preference shares
Total share capital
Number
of shares
Nominal
value
2013
Inflation
adjusted
value
1 400 000
100 000
1 500 000
1 400 000
100 000
1 500 000
1 589 033
104 125
1 693 158
Number
of shares
Nominal
value
2012
Inflation
adjusted
value
1 400 000
100 000
1 500 000
1 400 000
100 000
1 500 000
1 589 033
104 125
1 693 158
All ordinary shares have a nominal value of RUB 1 thousand per share and carry one vote.
The preference shares have a nominal value of RUB 1 thousand per share and rank ahead of the ordinary
shares in the event of liquidation of the Bank. These shares are not redeemable.
Share premium represents the excess of equity contributions over the nominal value of the shares issued.
As at 31 December 2013, the share premium amounted to RUB 26 thousand (2012: RUB 26 thousand)
(inflation-adjusted).
18. Retained Earnings according to Russian Legislation
According to the Russian legislation only accumulated retained earnings reflected in the Bank’s statutory
financial statements may be distributed as dividends among the shareholders. As at 31 December 2013,
the Bank’s retained earnings amounted to RUB 1 776 949 thousand (2012: RUB 1 516 761 thousand)
(unaudited data).
The retained earnings reflected in the Bank’s statutory records include a reserve fund in the amount of
RUB 75 000 thousand (2012: RUB 56 500 thousand) (unaudited data) that represents funds provided, as
required by the regulations of the Russian Federation, in respect of the Bank’s general banking risks,
including future losses and other unforeseen risks or contingent liabilities.
51
NS Bank
19. Interest Income and Expense
2013
2012
Interest income
Loans to customers
Correspondent accounts with other banks
Total interest income
2 068 945
728 104
81 626
18 583
2 897 258
2 087 218
458 323
56 442
14 363
2 616 346
Interest expense
Customer accounts
Other borrowed funds
Loans from CBR
Due to other banks
Debt securities issued
Finance lease
Total interest expense
Net interest income
1 798 353
254 738
181 907
32 451
13 277
2
2 280 728
616 530
1 430 572
242 952
1 514
44 892
43
56
1 720 029
896 317
20. Fee and Commission Income and Expenses
2013
2012
Fee and commission income
Commission on guarantees issued
Commission on settlement transactions
Commission on plastic card operations
Commission for provision to clients of information on movement of funds
Commission for opening and maintenance of account
Commission on cash transactions
Commission for servicing of the Bank-Client system
Commission on cash collection
Agency commission
Other
Total fee and commission income
237 595
186 074
161 638
151 284
80 658
44 301
17 830
2 416
1 009
18 608
901 413
593
305
463
251
409
412
657
692
585
22 873
736 240
Fee and commission expenses
Commission on plastic card operations
Commission on document processing and accounting
Commission on cash transactions
Commission on settlement transactions
Commission for acquisition of securities
Commission on cash collection
Other
Total fee and commission expenses
Net fee and commission income
70 089
8 421
4 757
3 610
3 459
1 619
4 133
96 088
805 325
54 639
7 637
5 868
3 065
1 305
1 626
5 492
79 632
656 608
52
174
186
121
41
121
49
15
2
NS Bank
21. Operating Expenses
Note
Staff costs
Professional services (security, communications, etc.)
Rent expenses
Mandatory deposit insurance
Depreciation of premises and equipment
Administrative expenses
Expenses relating to maintenance of premises and equipment
Taxes (other than income tax)
Voluntary and mandatory insurance
Advertising and marketing
Other
Total operating expenses
10
2013
2012
699 605
82 486
76 469
65 815
55 766
47 342
46 380
23 856
20 703
18 131
24 368
1 160 921
655 300
82 787
63 913
43 044
82 139
68 074
44 002
22 522
51 152
26 736
16 715
1 156 384
22. Proceeds from Sale of Real Estate and Property Rights under Investment Contracts
Counterparty
Individuals
LLC Regency
Construction Department No. 155 CJSC
Salpa LLC
Management Company of Real estate CEUIF “United Investments”, LLC
NFQ/2 Print LLC
Management Company of Real estate CEUIF “United Urban”, LLC
Management Company of CEUIF “Odintsovsky Industrial”, LLC
United Management Company LLC
Best Consulting LLC
Domodedovsky Reinforced Concrete Products Plant CJSC
Total proceeds from sale of real estate and property rights under investment
contracts
2013
2012
57 985
1 824
-
167 588
88 071
60 872
17 058
5 367
4 038
3 158
2 704
707
182
59 809
349 745
In 2013, the proceeds from sale of real estate and property rights under investment contracts in the
amount of RUB 57 985 thousand represent income from sale of real estate and property rights under
investment contracts obtained by Real estate CEUIF “United Real Estate” and Real estate CEUIF “United
Urban” (2012: in the amount of RUB 154 444 thousand represent income from sale of real estate and
property rights under investment contracts obtained by Real estate CEUIF “United Real Estate” and Real
estate CEUIF “United Urban”).
23. Income Tax
Income tax expense comprises the following:
Current income tax expense
Deferred taxation movement due to origination and reversal of
temporary differences
Less: deferred taxation charged directly to other comprehensive
income
Total income tax expense for the year
The current tax rate applicable to the majority of the Bank’s profit is 20% (2012:20%).
53
2013
2012
105 451
178 676
(52 238)
20 698
(8 369)
44 844
(29 775)
169 599
NS Bank
Reconciliation between the theoretical and the actual taxation charge is provided below.
2013
IFRS profit before taxation
Theoretical tax charge at the applicable statutory rate
(2013: 20%; 2012: 20%)
Income on state securities taxed at the rate of 15%
Dividend income subject to withholding tax of 9%
Non-deductible expenses less non-taxable income
Income tax expense for the year
2012
173 736 741 977
34 747 148 395
(6 544)
(6 397)
(137)
(125)
16 778
27 726
44 844 169 599
Differences between IFRS and statutory taxation regulations of the Russian Federation give rise to certain
temporary differences between the carrying amount of certain assets and liabilities for financial
statement purposes and for the Bank’s profits tax purposes.
2013
Movement
2012
Tax effect of deductible temporary differences
Provision for impairment of loans to customers and contingent
credit related commitments
Income from issuance of guarantees and sureties
Gross deferred tax assets
129 548
11 067
1 697
142 312
28 549
11 067
1 697
41 313
100 999
100 999
Tax effect of taxable temporary differences
Revaluation of premises and equipment
Interest on loans to customers
Revaluation of financial assets available for sale
Real estate payables included in CEUIF liabilities
Other
Gross deferred tax liabilities
Total net deferred tax asset/(liability)
57 434
56 480
3 101
597
1 902
119 514
22 798
36 903
10 741
(10 404)
2 687
(20 253)
(2 372)
(21 146)
(7 081)
(10 925)
52 238
20 531
45 739
10 404
414
20 253
2 969
21 146
8 983
130 439
(29 440)
2012
Movement
2011
Tax effect of deductible temporary differences
Provision for impairment of loans to customers and contingent
credit related commitments
Deficit on revaluation of premises and equipment
Gross deferred tax assets
100 999
100 999
56 338
(5 883)
50 455
44 661
5 883
50 544
Tax effect of taxable temporary differences
Interest on loans to customers
Revaluation of financial assets available for sale
Real estate payables included in CEUIF liabilities
Other
Gross deferred tax liabilities
Total net deferred tax liability
45 739
10 404
414
20 253
2 969
20 531
21 146
8 983
130 439
(29 440)
16 055
(7 064)
(11 313)
7 478
13 720
12 278
21 146
18 853
71 153
(20 698)
29 684
17 468
11 727
12 775
(10 751)
8 253
(9 870)
59 286
(8 742)
54
NS Bank
Net deferred tax assets represent the amounts of income tax that may be offset against future income
taxes and are reported as deferred tax assets in the statement of financial position. Deferred tax asset
arising from tax loss carryfowards is recognised to the extent that it is probable that the respective tax
benefit can be utilised.
Net deferred tax liability is the amount of income taxes payable in future periods in respect of taxable
temporary differences.
As at 31 December 2013, the total deferred tax liability of RUB 597 thousand (2012: RUB 2 969 thousand)
arose from fair valuation of financial assets available for sale (Note 8). The deferred tax liability
associated with fair valuation of the above financial assets reflected within comprehensive income is also
recorded as movements in the Bank’s equity and is subsequently included in the statement of
comprehensive income at the time of disposal of financial assets available for sale.
As at 31 December 2013, the total deferred tax liability in the amount of RUB 56 480 thousand (2012:
RUB 45 739 thousand) was calculated in respect of positive revaluation of buildings to fair value and
recorded in revaluation reserve for premises and equipment in accordance with IAS 16 (Note 10).
24. Dividends
Dividends payable as at 1 January
Dividends declared during the year
Dividends paid during the year
Dividends payable as at 31 December
Dividends per share declared during the year, RUB
2013
2012
6 000
(6 000)
60.0
6 000
(6 000)
60.0
During 2013 and 2012 all dividends on preference shares were declared and paid in Russian Roubles.
In 2013 and 2012, dividends on ordinary shares were not paid.
55
NS Bank
25. Components of Comprehensive Income
Revaluation to fair value of financial assets available for sale (Note 8)
Gains less losses on revaluation of financial assets available for sale
Revaluation of premises and equipment (Note 10)
Effect of revaluation of premises and equipment
Income tax relating to components of comprehensive income
Financial assets available for sale (Note 23)
Revaluation of premises and equipment (Note 23)
Other comprehensive income after taxation
2013
2012
(11 863)
(11 863)
68 600
68 600
53 706
53 706
80 276
80 276
2 372
(10 741)
33 474
(13 720)
(16 055)
119 101
26. Risk Management
The risk management function within the Bank is carried out in respect of financial risks (credit, market,
currency, liquidity and interest rate), operational and legal risks. The primary objectives of the financial
risk management function are to establish risk limits, and then ensure that exposure to risks stays within
these limits. The assessment of exposure to risks also serves as a basis for optimal distribution of riskadjusted capital, transaction pricing and business performance assessment. The operational and legal risk
management functions are intended to ensure proper functioning of internal policies and procedures to
minimise operational and legal risks.
Credit risk. The Bank takes on exposure to credit risk which is the risk that a counterparty will be unable
to pay amounts in full when due. The Bank controls the credit risk it undertakes by placing limits on the
amount of risk accepted in relation to one borrower, or group of related borrowers. Such risks are
monitored by the Bank on a regular basis, the limits being subject to a monthly (in case the borrower is a
credit institution) or quarterly (in case the borrower is a non-credit institution) review. Limits on the level
of credit risk by product, borrowers and industry segments are approved by the Bank’s Credit Committee.
The exposure to any one borrower including banks and broker companies is further restricted by sub-limits
covering on- and off-balance sheet exposures. Actual exposures are monitored against limits daily.
Exposure to credit risk is managed through regular analysis of the ability of borrowers and potential
borrowers to meet interest and principal repayment obligations and by changing these lending limits
where appropriate. Exposure to credit risk is also managed by obtaining property and securities collateral
and corporate and personal guarantees.
The Bank’s maximum exposure to credit risk is primarily reflected in the carrying amount of financial
assets in the statement of financial position. The impact of possible netting of assets and liabilities to
reduce potential credit exposure is not significant. For guarantees and commitments to extend credits,
the maximum exposure to credit risk is equal to total liabilities, as described in Note 28.
Credit risk for off-balance sheet financial instruments is defined as the possibility of sustaining a loss as a
result of another party to a financial instrument failing to perform in accordance with the terms of the
contract. The Bank uses the same credit policies for contingent liabilities as it does for on-balance sheet
financial instruments through established transaction approvals, risk control limits and monitoring
procedures.
The Bank performs the loan maturity analysis and subsequent monitoring of overdue balances. Therefore,
the management provides information on overdue maturities and other information on credit risk, as
described in Notes 6, 7, 8 and 11.
The Bank is exposed to early redemption risk as a result of lending at fixed or variable interest rates,
including mortgage loans that give the borrower the right of early redemption. The financial result and
the Bank’s equity for the current year and at the end of the reporting period would not greatly depend on
the rate fluctuations in case of early redemption because such loans are carried at amortised cost whereas
the amount to be early redeemed corresponds or nearly corresponds to the amortised cost of loans to
customers.
56
NS Bank
Market risk. The Bank takes on exposure to market risk arising from open positions in interest rate,
currency and equity instruments, all of which are exposed to general and specific market movements. The
Credit Committee sets acceptable risk limits and monitors them on a daily basis. However, the use of this
approach does not prevent losses beyond these limits in the event of more significant market movements.
The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return on the risk accepted.
The Bank assesses its market risk exposure in compliance with the requirements of CBR Regulation
No. 313-P of 14 November 2007 “On the Procedure of Market Risk Calculation by Credit Institutions” (as
amended by CBR Instructions No. 2321-U of 3 November 2009 and No. 2524-U of 17 November 2010).
The main instrument used by the Bank to control and manage market risk is the Value-at-Risk (VaR)
methodology. VaR is an estimate of potential loss, with a given probability and time horizon, resulting
from movements in market parameters.
The VaR model is based on the following assumptions:

Modelling using a 99% confidence level;

Historic modelling based on the analysis of intraday changes in the parameter for the period not less
than 250 trading days (1 calendar year);

Modelling horizon - 1 day.
Potential changes (fluctuations) in market prices are determined on the basis of market data for 2013.
Although VaR is a valuable tool in measuring market risk exposures, it has a number of limitations,
especially in less liquid markets:

The use of historical data as a basis for determining future events may not encompass all possible
scenarios (especially, exclusively non-standard scenarios which have a critical, extraordinary
structure);

The use of a 99% confidence level does not take into account losses that may occur beyond this level.
There is a 1% probability that the loss could exceed the estimated VaR;

The use of a holding period for a certain security related to financial assets available for sale does not
take into account the sale of certain securities before the end of a holding period;

As VaR is usually calculated on an end-of-day basis, it does not necessarily reflect exposures that may
arise on positions opened during the trading day.
The Bank does not solely rely on its VaR calculations in its market risk measurement as this methodology
has certain limitations described above. The risk of limitations of the VaR methodology is mitigated by
supplementing VaR limits with a limit on the structure of the securities portfolio by type of securities.
57
NS Bank
Geographical risk. The geographical concentration of the Bank’s assets and liabilities as at 31 December
2013 is set out below:
Russia
Other
OECD countries
Total
Assets
Mandatory cash balances with CBR
Loans to customers
Non-current assets held for sale
Other assets
Deferred tax assets
Total assets
6 630 927
272 431
1 524 428
17 891 827
9 891 588
6 400
1 281 688
3 985 123
22 798
41 507 210
1 169 822
1 169 822
66 723
66 723
7 800 749
272 431
1 524 428
17 891 827
9 958 311
6 400
1 281 688
3 985 123
22 798
42 743 755
Liabilities
Due to other banks
Customer accounts
Other liabilities
Current tax liabilities
Total liabilities
Net balance sheet position
4 864 941
31 480 720
98 474
2 375 000
461 836
6 594
39 287 565
2 219 645
11 151 148
4 973
4 973
1 164 849
-
94 634
94 634
(27 911)
-
4 864 941
31 580 327
98 474
2 375 000
461 836
6 594
39 387 172
3 356 583
11 151 148
58
NS Bank
The geographical concentration of the Bank’s assets and liabilities as at 31 December 2012 is set out
below:
Russia
Other
OECD countries
Total
Assets
Loans to customers
Other assets
Current tax assets
Total assets
12 245 333
296 155
4 697 618
13 881 776
9 457 085
984 960
1 667 759
25 701
43 256 387
1 678 425
1 678 425
64 747
64 747
13 923 758
296 155
4 697 618
13 881 776
9 521 832
984 960
1 667 759
25 701
44 999 559
Liabilities
Due to other banks
Customer accounts
Other liabilities
Deferred tax liabilities
Total liabilities
2 922 627
35 784 510
24
2 375 000
539 728
29 440
41 651 329
1 605 058
8 353 773
43 531
43 531
1 634 894
-
92 662
92 662
(27 915)
-
2 922 627
35 920 703
24
2 375 000
539 728
29 440
41 787 522
3 212 037
8 353 773
59
NS Bank
Currency risk. The Bank takes on exposure to effects of fluctuations in the prevailing foreign currency
exchange rates on its financial position and cash flows. The Bank’s Credit Committee sets limits on the
level of exposure by currency and in total for both overnight and intra-day positions and monitors the
compliance on a daily basis. The table below summarises the Bank’s exposure to foreign currency
exchange rate risk as at 31 December 2013.
Assets
Loans to customers
Non-current assets held for sale
Other assets
Deferred tax assets
Total assets
Liabilities
Due to other banks
Customer accounts
Other liabilities
Total liabilities
Off-balance sheet position
Net on-and off-balance sheet
position
Other
currencies
RUB
USD
EUR
3 437 770
272 431
1 501 723
15 505 457
8 680 614
6 400
1 281 688
3 955 824
22 798
34 664 705
2 664 404
22 030
1 591 243
1 277 697
5 555 374
1 594 440
675
795 127
61
2 390 303
104 135
7 800 749
272 431
1 524 428
- 17 891 827
9 958 311
6 400
1 281 688
29 238
3 985 123
22 798
133 373 42 743 755
4 864 941
26 578 040
3 291 650
1 663 366
98 474
2 375 000
461 182
654
6 594
34 384 231
3 292 304 1 663 366
280 474
2 263 070
726 937
3 097 081 (1 009 076) (2 077 069)
4 864 941
47 271 31 580 327
98 474
2 375 000
461 836
6 594
47 271 39 387 172
86 102 3 356 583
(7 865)
3 071
3 377 555
11 101 058
78 237 3 359 654
- 11 151 148
60
1 253 994 (1 350 132)
46 631
3 459
Total
NS Bank
As at 31 December 2012, the Bank had the following positions in currencies:
Assets
Loans to customers
Other assets
Current tax assets
Total assets
Liabilities
Due to other banks
Customer accounts
Other liabilities
Total liabilities
Off-balance sheet position
Net on-and off-balance sheet
position
Other
currencies
RUB
USD
EUR
11 166 735
296 155
4 512 949
11 092 942
9 262 335
984 960
1 627 415
25 701
38 969 192
786 486
184 669
2 040 677
259 497
15 197
3 286 526
1 831 381
748 157
2 579 538
139 156 13 923 758
296 155
4 697 618
- 13 881 776
9 521 832
984 960
25 147
1 667 759
25 701
164 303 44 999 559
2 922 627
31 137 352
24
2 375 000
533 630
29 440
36 998 073
1 971 119
1 489 333
2 942 575
5 932
2 948 507
338 019
(552 613)
1 775 746
166
1 775 912
803 626
(921 235)
2 922 627
65 030 35 920 703
24
2 375 000
539 728
29 440
65 030 41 787 522
99 273 3 212 037
14 063
29 548
3 460 452
8 336 934
(214 594)
12 960
(117 609)
3 879
113 336
-
Total
3 241 585
8 353 773
The Bank issued loans denominated in foreign currencies. Depending on the revenue stream of the
borrower, the appreciation of foreign currencies against the Russian Rouble may adversely affect the
borrowers’ repayment ability and therefore increases the likelihood of future loan losses.
The table below shows the change in the financial result and equity due to possible fluctuations of
exchange rates used at the end of the reporting period, if all other conditions remain unchanged.
A reasonably possible change by each currency is determined based on the analysis of historical data on
maximal movements in foreign exchange rates for December 2013. The variance analysis of foreign
exchange rates for 2013 has shown that as at 31 December 2013 a reasonably possible variance in the USD
and EUR exchange rates may reach 2%.
Effect on profit before taxation
31 December 2013
Effect on equity
25 080
(25 080)
(27 003)
27 003
20 064
(20 064)
(21 602)
21 602
USD appreciation by 2%
USD depreciation by 2%
EUR appreciation by 2%
EUR depreciation by 2%
61
NS Bank
The table below shows the change in the financial result and equity due to possible fluctuations of
exchange rates used at the end of the reporting period if all other conditions remain unchanged.
A reasonably possible change in foreign exchange rate by currency is determined based on the analysis of
maximal fluctuations in foreign exchange rates for December 2012. The analysis of foreign exchange rate
fluctuations for the year 2012 showed that a reasonably possible fluctuation in the USD exchange rate as
at 31 December 2012 could be 4%, and a reasonably possible fluctuation in exchange rate of EUR as at 31
December 2012 could be 3%.
Effect on profit before taxation
31 December 2012
Effect on equity
(8 584)
8 584
(3 528)
3 528
(6 867)
6 867
(2 822)
2 822
USD appreciation by 4%
USD depreciation by 4%
EUR appreciation by 3%
EUR depreciation by 3%
Liquidity risk. Liquidity risk is defined as the risk when the maturity of assets and liabilities does not
match. The Bank is exposed to risk via daily calls from customers on its available cash resources from
customer accounts, maturing deposits, loan draw downs and guarantees. The Bank does not accumulate
cash resources to meet calls on all liabilities mentioned above, as based on the existing practice, it is
possible to forecast with a sufficient degree of certainty the required level of cash funds necessary to
meet the above obligations. Liquidity risk is managed by the Deputy Chairman of the Bank’s Board.
Quick liquidity is managed by First Deputy Chairman of the Board overseeing the Treasury. Current and
long-term liquidity is managed by the working group including Acting Chairman of the Board, First Deputy
Chairman of the Executive Board overseeing the Treasury, Deputy Chairman of the Executive Board
overseeing the Finance and Economics Department and Chief Accountant.
The Bank is keen on maintaining stable financing predominantly consisting of due to other banks, deposits
of legal entities/deposits of individuals, debt securities, and also on investing funds in diversified liquid
asset portfolios to be able to meet unexpected liquidity needs quickly and unhampered.
To manage its liquidity, the Bank is required to analyse the level of liquid assets needed to settle the
liabilities on their maturity by providing access to various sources of financing, drawing up plans to solve
the problems with financing and exercising control over compliance of the liquidity ratios with the laws
and regulations. The Bank calculates liquidity ratios on a daily basis in accordance with the requirements
of the Bank of Russia. These ratios include:
-
Quick ratio (H2) calculated as a ratio of highly liquid assets and liabilities on demand.
The minimum admissible value of Н2 is set at 15%. As at 31 December 2013, this ratio was 60.6%
(2012: 82.5%) (unaudited data).
-
Current liquidity ratio (Н3) calculated as a ratio of liquid assets and liabilities maturing within
30 calendar days. The minimum admissible value of Н3 is set at 50%. As at 31 December 2013, this
ratio was 81.3% (2012: 101.0%) (unaudited data).
-
Long-term liquidity ratio (Н4) calculated as a ratio of assets maturing in more than 1 year to equity
and liabilities maturing in more than 1 year. The maximum admissible value of Н4 is set at 120%. As at
31 December 2013, this ratio was 43.5% (2012: 31.0%) (unaudited data).
The Treasury of the Bank receives information about financial assets and liabilities. The Bank’s Treasury
controls liquidity ratios on a daily basis and, if necessary, raises funds from financial markets, mainly
interbank loans, thereby managing quick and current liquidity.
The Bank’s management monitors the daily liquidity position and also performs stress testing under a
variety of scenarios covering both normal and more severe market conditions.
The table below shows the liabilities as at 31 December 2013 by their remaining contractual maturity.
The amounts in the table represent contractual undiscounted cash flows. These undiscounted cash flows
differ from the amounts recorded in the statement of financial position, which are based on discounted
cash flows.
62
NS Bank
In those cases when the amount to be paid is not fixed, the amount in the table is determined on the basis
of conditions prevailing at the end of the reporting period. Foreign currency payments are translated using
the CBR exchange rates effective at the end of the reporting period.
The table below shows the maturity analysis of financial liabilities as at 31 December 2013:
Liabilities
Due to other banks
Customer accounts
Total potential future
payments under
financial liabilities
On demand
and less
than 1
month
From 1 to
6 months
From 6
to 12
months
From 1 to
5 years
More than
5 years
Total
4 617 397
21 460 186
21 576
9 215
5 650 494
105 097
11 304
3 758 130
128 065
312 423
1 675 488
139 500
1 016 166
7 664 450
4 950 339
32 544 298
139 500
8 935 354
26 099 159
5 764 806 3 897 499 3 143 577
7 664 450 46 569 491
The table below shows the maturity analysis of financial liabilities as at 31 December 2012:
Liabilities
Due to other banks
Customer accounts
Total potential future
payments under
financial liabilities
On demand
and less
than 1
month
From 1 to
6 months
From 6
to 12
months
From 1 to
5 years
More than
5 years
Total
2 533 392
23 104 805
24
21 576
57 322
5 884 344
105 097
16 358
3 543 867
128 065
473 636
5 936 210
1 016 862
40 061
7 918 492
3 080 708
38 509 287
24
9 190 092
25 659 797
6 046 763 3 688 290 7 426 708
7 958 553 50 780 111
The customer accounts are reflected in the above analysis by their remaining maturity. However, in
accordance with the Civil Code of the Russian Federation, the individuals have the right to withdraw funds
from accounts before maturity in which case they lose the accrued interest.
63
NS Bank
The Bank does not use the above undiscounted amounts in the maturity analysis to monitor the liquidity
profile. Instead, the Bank monitors the expected maturity limits that are shown in the table below as at
31 December 2013:
On
demand
and less
than
1 month
Assets
Cash and cash
equivalents
7 800 749
Mandatory cash
balances with CBR
1 524 428
Loans to customers
616 158
Financial assets
available for sale
9 958 311
Non-current assets held
for sale
Premises and
equipment
Other assets
33 027
Deferred tax assets
Total assets
19 932 673
From 1 to
6 months
From 6 to
12 months
From 1 to
5 years
More than
5 years
No stated
maturity
Total
-
-
-
-
-
7 800 749
5 586 580
5 594 100
5 379 492
715 497
272 431
-
272 431
1 524 428
17 891 827
-
-
-
-
-
9 958 311
-
6 400
-
-
-
6 400
10 223
5 596 803
4 849
5 605 349
4 935
5 384 427
7 159
722 656
1 281 688
1 281 688
3 924 930
3 985 123
22 798
22 798
5 501 847 42 743 755
249 447
1 426 509
98 474
1 774 430
2 375 000
2 375 000
4 864 941
- 31 580 327
98 474
2 375 000
320 268
461 836
6 594
320 268 39 387 172
Liabilities
Due to other banks
4 615 494
Customer accounts
21 351 643
5 265 708
3 536 467
Other liabilities
108 592
18 237
14 739
6 594
Total liabilities
26 075 729 5 290 539 3 551 206
Net liquidity gap as at
31 December 2013 (6 143 056)
306 264 2 054 143
Cumulative liquidity
gap as at
31 December 2013 (6 143 056) (5 836 792) (3 782 649)
Credit related
commitments
98 299 2 047 556 4 383 709
64
3 609 997 (1 652 344)
5 181 579
(172 652) (1 824 996)
3 356 583
4 512 904
108 680
3 356 583
- 11 151 148
NS Bank
The table below shows the expected maturity analysis as at 31 December 2012:
Assets
Cash and cash
equivalents
Mandatory cash
balances with CBR
Loans to customers
Financial assets
available for sale
Premises and
equipment
Other assets
Current tax assets
Total assets
On
demand
and less
than
1 month
From 1 to
6 months
From 6 to
12 months
From 1 to
5 years
More than
5 years
No stated
maturity
Total
13 923 758
-
-
-
-
-
13 923 758
4 663 742
567 709
5 237 172
33 876
4 140 288
3 449 963
486 644
296 155
-
296 155
4 697 618
13 881 776
9 521 832
-
-
-
-
-
9 521 832
48 326
28 725 367
6 443
25 701
5 269 316
4 866
4 179 030
3 950
3 453 913
8 501
495 145
984 960
984 960
1 595 673
1 667 759
25 701
2 876 788 44 999 559
43 800
5 435 520
19 797
5 499 117
3 144 190
13 370
3 157 560
350 000
4 321 487
48
4 671 535
40 000
2 375 000
2 415 000
2 922 627
- 35 920 703
24
2 375 000
291 277
539 728
29 440
29 440
320 717 41 787 522
(229 801)
1 021 470 (1 217 622) (1 919 855)
2 556 071
2 771 973
3 793 443
2 575 821
655 966
3 212 037
903 443
2 807 643
4 317 448
-
-
Liabilities
Due to other banks
2 528 827
Customer accounts
22 979 506
24
Other liabilities
215 236
Total liabilities
25 723 593
Net liquidity gap as at
31 December 2012
3 001 774
Cumulative liquidity
gap as at
31 December 2012
3 001 774
Credit related
commitments
325 239
3 212 037
8 353 773
As the above analysis is based on expected maturity, the entire portfolio of financial assets available for
sale is categorised as “On demand and less than 1 month” in accordance with the portfolio liquidity
assessment by the management.
In the opinion of the Bank’s management, the matching and/or controlled mismatching of the maturities
and interest rates of assets and liabilities is fundamental for successful management of the Bank. It is
unusual for the banks ever to be completely matched since business transacted is often of an uncertain
term and of different types. An unmatched position potentially enhances profitability, but can also
increase the risk of losses. The maturities of assets and liabilities and the ability to replace, at an
acceptable cost, interest-bearing liabilities as they mature, are important factors in assessing the liquidity
of the Bank and its exposure to changes in interest and exchange rates.
The management believes that in spite of a substantial portion of customer accounts being on demand,
diversification of these deposits by number and type of depositors, and the past experience of the Bank
would indicate that these customer accounts provide a long-term and stable source of funding for the
Bank.
Liquidity requirements in respect of guarantees are considerably lower than the amount of the related
commitment because the Bank does not generally expect a third party to draw funds under the
agreement. The total outstanding contractual amount of commitments to extend credits does not
necessarily represent future cash requirements, since many of these commitments will expire or
terminate without being funded.
65
NS Bank
Interest rate risk. The Bank takes on exposure to the effects of fluctuations in the prevailing levels of
market interest rates on its financial position and cash flows. Interest margins may increase as a result of
such changes but may decrease or create losses in the event that unexpected movements arise.
The Bank is exposed to interest rate risk, principally as a result of lending at fixed interest rates, in
amounts and for periods, which differ from those of term borrowings at fixed interest rates. In practice,
interest rates are generally fixed on a short-term basis. Also, interest rates fixed contractually on both
assets and liabilities, are usually renegotiated to reflect current market conditions.
The Credit Committee sets limits on the level of mismatch of interest rate re-pricing that may be
undertaken, which is monitored regularly. In the absence of any available hedging instruments, the Bank
normally seeks to match its interest rate positions.
The table below summarises the Bank’s exposure to interest rate risks as at 31 December 2013.
On demand
and less
than
1 month
Assets
Cash and cash
equivalents
Mandatory cash
balances with CBR
Loans to customers
Financial assets
available for sale
Non-current assets held
for sale
Premises and
equipment
Other assets
Deferred tax assets
Total assets
Liabilities
Due to other banks
Customer accounts
Other liabilities
Total liabilities
Net interest rate gap
as at
31 December 2013
Cumulative interest
rate gap as at
31 December 2013
From 1 to From 6 to
6 months 12 months
From 1 to More than
5 years
5 years
Noninterest
bearing
Total
3 465
-
-
-
-
7 797 284
7 800 749
1 519 011
616 158
5 586 580
5 594 100
5 379 492
715 497
272 431
5 417
272 431
1 524 428
17 891 827
9 816 900
-
-
-
-
141 411
9 958 311
-
-
-
-
-
6 400
6 400
11 955 534
5 586 580
5 594 100
5 379 492
4 615 429
7 667 352
12 282 781
5 265 708
5 265 708
3 536 467
3 536 467
249 447
65
4 864 941
1 426 509
- 13 684 291 31 580 327
98 474
98 474
- 2 375 000
2 375 000
461 836
461 836
6 594
6 594
1 774 430 2 375 000 14 152 786 39 387 172
(327 247)
320 872
2 057 633
3 605 062 (1 659 503)
(640 234)
(327 247)
(6 375)
2 051 258
5 656 320 3 996 817
3 356 583
66
1 281 688
1 281 688
3 985 123
3 985 123
22 798
22 798
715 497 13 512 552 42 743 755
3 356 583
NS Bank
The table below summarises the Bank’s exposure to interest rate risks as at 31 December 2012.
On demand
and less
than
1 month
Assets
Cash and cash
equivalents
Mandatory cash
balances with CBR
Loans to customers
Financial assets
available for sale
Premises and
equipment
Other assets
Current tax assets
Total assets
Liabilities
Due to other banks
Customer accounts
Other liabilities
Total liabilities
Net interest rate gap
as at
31 December 2012
Cumulative interest
rate gap as at
31 December 2012
From 1 to From 6 to
6 months 12 months
From 1 to More than
5 years
5 years
Noninterest
bearing
Total
2 600 162
-
-
-
-
11 323 596
13 923 758
4 663 742
567 709
5 237 172
33 876
4 140 288
3 449 963
486 644
296 155
-
296 155
4 697 618
13 881 776
9 347 275
-
-
-
-
174 557
9 521 832
17 178 888
5 237 172
4 174 164
3 449 963
2 510 733
3 293 760
5 804 493
5 435 520
5 435 520
393 800
3 144 190
3 537 990
18 094
2 922 627
4 321 487
40 000 19 685 746 35 920 703
24
24
- 2 375 000
2 375 000
539 728
539 728
29 440
29 440
4 321 487 2 415 000 20 273 032 41 787 522
11 374 395
(198 348)
636 174
11 374 395 11 176 047 11 812 221
984 960
984 960
1 667 759
1 667 759
25 701
25 701
486 644 14 472 728 44 999 559
(871 524) (1 928 356) (5 800 304)
10 940 697 9 012 341
3 212 037
3 212 037
If as at 31 December 2013 the interest rates had been by 50 basis points lower, provided all other
conditions remained unchanged, profit before taxation would have been by RUB 11 875 thousand
(2012: by RUB 13 691 thousand) higher as a result of the decreased interest expenses on financial
liabilities with a variable interest rate.
67
NS Bank
If as at 31 December 2013 the interest rates had been by 50 basis points higher, provided all other
conditions remained unchanged, profit before taxation would have been by RUB 11 875 thousand
(2012: by RUB 13 691 thousand) lower as a result of the increased interest expenses on financial liabilities
with a variable interest rate.
The Bank monitors financial instrument interest rates. The table below shows the interest rates on the
basis of reports that were analysed by the Bank’s key managers as at 31 December 2013 and
31 December 2012:
2013
Other
EUR currencies
RUB
USD
Assets
Cash and cash
equivalents
0.50%
1.43%
12.68%
Loans to customers
Financial assets available
8.30%
for sale
0.50%
0.10%
10.31%
0.30%
11.76%
7.83%
Liabilities
Due to other banks
9.00%
Customer accounts
- term deposits of legal
entities
5.95%
- term deposits of
individuals
9.91%
10.24%
10.60%
2012
Other
EUR currencies
RUB
USD
-
4.25%
4.86%
13.13%
3.00%
0.17%
10.09%
3.00%
12.32%
-
-
-
7.97%
7.22%
-
-
-
-
-
6.00%
-
-
-
-
2.50%
-
5.21%
3.33%
4.50%
-
3.64%
-
3.65%
-
1.55%
-
10.05%
10.60%
4.52%
-
4.19%
-
2.16%
-
The “-” sign in the table above means that the Bank does not have interest-bearing assets or liabilities in
the corresponding currency.
Other price risks. The Bank takes on exposure to the risk of changes in share prices. The Credit
Committee authorises and the Financial Market Operation’s Department monitors operations with equity
instruments.
The table below shows the change in the financial result and other comprehensive income as a result of
possible fluctuations in prices for equity securities as at 31 December 2013 provided other variables
remain unchanged.
Effect on profit before
taxation
Effect on other
comprehensive income
-
(2 590)
2 590
Price decrease by 10%
Price increase by 10%
68
NS Bank
The table below shows the change in the financial result and other comprehensive income as a result of
possible fluctuations in prices for equity securities as at 31 December 2012 provided other variables
remain unchanged.
Effect on profit before
taxation
Effect on other
comprehensive income
-
(6 510)
6 510
Price decrease by 10%
Price increase by 10%
27. Capital Management
The Bank’s capital management has the following objectives: to observe the capital requirements
established by the CBR, namely the requirements of the deposit insurance system; to maintain the Bank’s
operations as a going concern and to maintain its capital base at the level necessary to ensure a 10%
capital adequacy ratio in accordance with the requirements set by the Central Bank of the Russian
Federation. The control over compliance with the capital adequacy ratio set by the Central Bank of the
Russian Federation is exercised daily on the basis of the estimated and actual data as well as on the basis
of monthly reports that contain corresponding calculations controlled by the Chairman of the Board and
Chief Accountant of the Bank.
The Bank is keen on maintaining the necessary capital level in order to preserve the confidence of
creditors, investors and the market as a whole as well as to develop the future activity of the Bank. In
accordance with the current capital requirements set by the CBR, the banks should maintain the ratio of
capital to risk weighted assets (capital adequacy ratio) above the prescribed minimum level.
The table below shows the regulatory capital structure based on the Bank’s reports prepared in
accordance with the requirements of the Russian legislation:
Core capital
Secondary capital
Total regulatory capital
2013
(unaudited
data)
2012
(unaudited
data)
3 268 565
2 511 396
5 779 961
2 998 368
2 511 285
5 509 653
During 2013 and 2012 the Bank complied with all capital requirements set by the CBR.
As at 31 December 2013, the Bank’s capital adequacy ratio calculated based on capital requirements
established by the CBR was 13.1% (2012:16.1%) (unaudited data). The minimum admissible value is set by
the CBR at 10.0%
28. Contingent Liabilities
Legal issues. In the ordinary course of business, the Bank is subject to legal actions and complaints.
Management believes that the ultimate liability, if any, arising from such actions or complaints will not
have a material adverse effect on the financial condition or the results of future operations of the Bank.
Tax legislation. Russian tax legislation is subject to varying interpretations and changes which can occur
frequently. Management’s interpretation of such legislation as applied to the transactions and activity of
the Bank may be challenged by the relevant regional or federal authorities. Practice shows that the tax
authorities may be taking a more assertive position in their interpretation of the legislation and
assessments and it is possible that transactions and accounting methods that have not been challenged in
the past may be challenged. As a result, significant additional taxes, penalties and interest may be
assessed. Fiscal periods remain open to review by the tax authorities in respect of taxes for three calendar
years preceding the year of the review. Under certain circumstances reviews may cover longer periods.
69
NS Bank
As at 31 December 2013, the Bank’s management believes that its interpretation of the relevant
legislation is appropriate and the Bank’s tax, currency and customs positions will be sustained by
controlling bodies.
Operating lease commitments. Where the Bank is the lessee, the future minimum lease payments under
non-cancellable operating leases are as follows:
Less than 1 year
From 1 to 5 years
Total operating lease commitments
2013
2012
30 033
61 031
91 064
28 040
35 080
63 120
Lease expenses recognised by the Bank amounted to RUB 76 469 thousand (2012: RUB 63 913 thousand).
Credit related commitments. The main objective of these instruments is to provide funds to customers
when necessary. The total outstanding contractual amount of guarantees and undrawn credit lines does
not necessarily represent future cash requirements, as these financial instruments may expire or
terminate without being funded. However, as there is a potential risk, a provision for credit related
commitments in respect of issued guarantees is made in the statement of financial position within other
liabilities depending on customer financial position. With respect to credit risk on undrawn credit lines,
the Bank is less exposed to the risk of loss since in the case of impairment of loans issued the Bank will not
pay the remaining amounts. Therefore, a provision for these credit related commitments is equal to zero.
Outstanding credit related commitments of the Bank are as follows:
Guarantees issued
Undrawn credit lines
Less: provision for impairment of credit related commitments
Total credit related commitments
2013
2012
9 391 406
2 080 010
(320 268)
11 151 148
7 939 754
705 295
(291 276)
8 353 773
2013
2012
291 276
28 992
97 092
194 184
320 268
291 276
Movements in the provision for credit related commitments are as follows:
Note
Provision for credit related commitments as at 1 January
Provision for credit related commitments during the period
Provision for credit related commitments as at
31 December
70
16
NS Bank
29. Fair Value of Financial Instruments
The fair value is defined as the amount at which the instrument could be exchanged in a current
transaction between knowledgeable willing parties on arm’s length conditions, other than in a forced sale
or liquidation. Quoted financial instruments in active markets provide the best evidence of fair value. As
no readily available market exists for major part of the Bank’s financial instruments, their fair value is
based on current economic conditions and the specific risks attributable to the instrument. The estimates
presented below are not necessarily indicative of the amounts the Bank could realise in a market
exchange from the sale of its full holdings of a particular instrument.
Below is the estimated fair value of the Bank’s financial instruments as at 31 December 2013 and
31 December 2012:
2013
Carrying
value
Financial assets
Loans to customers
Financial assets at fair value through
profit or loss
Financial liabilities
Due to other banks
Customer accounts
7
1
17
9
800 749
524 428
891 827
958 311
Fair value
7
1
17
9
800 749
524 428
891 827
958 311
2012
Carrying
value
13
4
13
9
923 758
697 618
881 776
521 832
Fair value
13
4
13
9
923 758
697 618
875 250
521 832
3 071
3 071
29 548
29 548
4 864 941
31 580 327
98 474
2 375 000
4 864 941
31 580 327
98 474
2 375 000
2 922 627
35 920 703
24
2 375 000
2 922 627
35 920 703
24
2 375 000
The Bank uses the following methods and assumptions to estimate the fair value of the following financial
instruments:
Financial instruments carried at fair value. Cash and cash equivalents, financial assets available for
sale and financial assets at fair value through profit or loss are carried in the statement of financial
position at their fair value.
Due from other banks. The fair value of floating rate instruments is their carrying amount. The estimated
fair value of fixed interest-bearing placements is based on discounted cash flows using prevailing money
market interest rates for instruments with similar credit risk and maturity. The Bank’s management
believes that the fair values of due from other banks as at 31 December 2013 and 31 December 2012 do
not materially differ from respective carrying amounts. This is primarily due to the short-term nature of
the investments.
Loans to customers. Loans to customers are reported net of impairment provisions. The estimated fair
value of loans to customers represents the discounted amount of estimated future cash flows expected to
be received. To determine fair value, expected cash flows are discounted at current market rates.
Due to other banks. The fair value of due to other banks maturing in less than 1 month approximates the
carrying amount because of their relatively short-term maturity. The fair value of due to other banks
maturing in more than 1 month is the present value of the estimated future cash flows discounted at the
respective year-end market rates. The Bank believes that fair values of due to other banks as at 31
December 2013 and 31 December 2012 do not materially differ from respective carrying amounts. This is
due to the relatively short-term maturity of these liabilities.
Customer accounts. The estimated fair value of liabilities with no stated maturity is based on the amount
payable at the creditor’s request. The estimated fair value of fixed interest bearing placements and other
borrowings without a quoted market price is based on discounted cash flows using interest rates for debt
instruments with similar maturity.
71
NS Bank
Debt securities issued. The fair value of fixed interest bearing financial liabilities carried at amortised
cost is determined by comparing the market interest rates at initial recognition of these instruments with
current market rates on similar financial instruments. The estimated fair value of fixed interest bearing
debt securities issued is based on discounted cash flows using money market interest rates for debt
instruments with similar credit risk and maturity.
Other borrowed funds. The fair value of other fixed interest bearing borrowed funds without market
quotations is based on discounted cash flows using interest rates for debt instruments with similar
maturity. The fair value of floating rate borrowed funds is their carrying amount.
Below is the fair value hierarchy of financial assets as at 31 December 2013. Level 1 includes financial
assets which are traded in an active market, whose fair values are measured based on market quotations.
Level 3 includes financial assets whose fair value is determined based on judgment or fair value
techniques for which any significant input is not based on observable market data.
Level 1
9 842 802
3 071
Below is the fair value hierarchy of financial assets as at 31 December 2012.
Level 1
Level 3
Total
9 176 112
29 548
236 260
-
9 412 372
29 548
30. Reconciliation of Classes of Financial Instruments with Measurement Categories
In accordance with IAS 39 “Financial Instruments: Recognition and Measurement” the Bank classifies
its financial assets in the following categories: 1) financial assets at fair value through profit or loss; 2)
loans and receivables; 3) financial assets available for sale.
At the same time, in accordance with IFRS 7 “Financial Instruments: Disclosures” the Bank discloses
different categories of its financial instruments.
72
NS Bank
The table below shows reconciliation of classes of financial assets with the above categories as at
31 December 2013:
Assets
- Deposits with CBR
- Loans to other banks
- Current/demand accounts with banks
- Guarantee fund with payment systems
Loans to customers
- Corporate loans
- Loans to small and medium business
- Consumer loans to individuals
- Reverse repo agreements
- Housing loans to individuals
- Mortgage loans to individuals
- Car loans to individuals
- Government debt securities
- Corporate debt securities
- Corporate equity securities
Financial assets classified as other
assets
Total financial assets
Non-financial assets
Total assets
Financial
assets at fair
value through
profit or loss
Loans and
receivables
Financial
assets
available for
sale
Total
Total
7 800 749
-
-
7 800 749
-
1 000 123
500 003
21 931
2 371
-
1 000 123
500 003
21 931
2 371
-
10 269 911
6 350 451
572 392
294 785
241 717
162 177
394
-
10 269 911
6 350 451
572 392
294 785
241 717
162 177
394
-
-
2 328 430
7 488 470
141 411
2 328 430
7 488 470
141 411
3 071
7 803 820
3 923 219
23 339 474
9 958 311
3 926 290
41 101 605
1 642 150
42 743 755
-
73
NS Bank
The table below shows reconciliation of classes of financial assets with the above categories as at
31 December 2012:
Assets
- Deposits with CBR
- Loans to other banks
- Current/demand accounts with banks
- Promissory notes of other banks
Loans to customers
- Corporate loans
- Loans to small and medium business
- Consumer loans to individuals
- Housing loans to individuals
- Mortgage loans to individuals
- Loans to state unitary enterprises
- Government debt securities
- Corporate debt securities
- Corporate equity securities
Financial assets classified as other
assets
Total financial assets
Non-financial assets
Total assets
Financial
assets at fair
value through
profit or loss
Loans and
receivables
Financial
assets
available for
sale
Total
13 923 758
-
-
13 923 758
-
2 500 922
875 195
189 875
1 097 749
33 877
-
2 500 922
875 195
189 875
1 097 749
33 877
-
7 244 515
3 955 240
214 568
1 309 081
318 277
112 248
727 847
-
7 244 515
3 955 240
214 568
1 309 081
318 277
112 248
727 847
-
-
3 742 707
5 604 568
174 557
3 742 707
5 604 568
174 557
29 548
13 953 306
18 579 394
9 521 832
29 548
42 054 532
2 945 027
44 999 559
All financial liabilities of the Bank are carried at amortised cost.
31. Related Party Transactions
For the purposes of these financial statements, parties are considered to be related if one party has the
ability to control or exercise significant influence over the other party in making financial or operational
decisions as defined by IAS 24 “Related Party Disclosures”. In considering each possible related party
relationship, attention is directed to the economic substance of the relationship, not merely the legal
form.
In the normal course of business the Bank enters into transactions with its major shareholders, directors
and other related parties. These transactions include settlements, issuance of loans, deposit taking,
guarantees, trade finance and foreign currency transactions. According to the Bank’s policy the terms of
related party transactions are equivalent to those that prevail in arm’s length transactions.
74
NS Bank
The outstanding balances at the year end and asset transactions with related parties for 2013 and 2012
are as follows:
Shareholders
2013
Loans to customers
Loans to customers as at 1 January
(gross)
Loans to customers issued during the
year
Loans to customers repaid during the
year
Loans to customers as at
31 December (gross)
customers
customers as at 1 January
(Recovery of provision)/provision for
impairment of loans to customers
during the year
customers as at 31 December
Loans to customers as at 1 January
(less provision for impairment)
Loans to customers as at
31 December (less provision for
impairment)
Directors and key
management
personnel
2013
2012
Other related parties
2013
2012
-
32 500
10 287
1 446 830
1 471 936
450
1 425
47 800
989 830
2 568 978
- (10 467)
(25 587)
(1 453 081)
(2 594 084)
450 23 458
32 500
983 579
1 446 830
-
325
103
48 332
62 225
5
(92)
222
2 783
(13 893)
5
233
325
51 115
48 332
- 32 175
10 184
1 398 498
1 409 711
445 23 225
32 175
932 464
1 398 498
75
NS Bank
The outstanding balances at the year end and liability transactions with related parties for 2013 and 2012 are as follows:
Customer accounts
Customer accounts as at
1 January
Customer accounts received
during the year
Customer accounts repaid
during the year
Customer accounts as at
31 December
Directors and key
management
personnel
2013
2012
2013
Shareholders
2012
573 667
426 870
1 206 803
3 497 108
3 964 193
4 615 785
(3 562 019)
508 756
2013
Subsidiary
2012
2013
Associate
2012
858 802
5 142
8 300
337 627
392 212
3 264 548
-
72 152
2 156 764
2 392 327
(3 817 396) (4 563 994) (2 916 547) (5 142)
(75 310)
(2 110 322)
5 142
384 069
573 667 1 258 594 1 206 803
76
-
2013
2012
2 177 758
429 080
117 578 591 209 163 901
(2 446 912) (119 527 194) (207 415 223)
337 627
229 155
2 177 758
NS Bank
2013
2012
Other borrowed funds as at 1 January
Exclusion of a counterparty from the list of related parties
Interest accrued during the year
Interest paid during the year
Other borrowed funds as at 31 December
585 000
(585 000)
95 261
(95 261)
-
1 065 000
(480 000)
56 236
(56 236)
585 000
Below are guarantees and sureties issued by the Bank to related parties as at 31 December 2012:
Shareholders
Other
related
parties
Total
56 310
67 980
124 290
Guarantees and sureties issued by the Bank
As at 31 December 2013, the Bank has no guarantees and sureties issued to related parties.
Below are income and expense items arising from related party transactions for the years 2013 and 2012:
Shareholders
2013 2012
Interest income
Interest expense
Fee and commission
income
4
53 404 61 016
89
139
Directors
and key
management
personnel
2013
2012
Subsidiary
2013
2012
3 261
112 263
1 172
113 318
-
10 519
709
-
Associate
2013
2012
- 21 560 25 209
214
96
Other related
parties
2013
2012
141 933
33 090
275 438
13 935
10 560
33 099
Directors and key management personnel mainly represent members of the Bank’s Board of Directors and
Executive Board.
Other related parties are mostly represented by companies controlled by the Bank’s major shareholders.
Payments and remuneration to key management personnel in 2013 amounted to RUB 210 230 thousand
(2012: RUB 154 671 thousand).
77

NS Bank Financial Statements for the Year Ended 31 December

Transcription

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