to open Document - Banco de Costa Rica

ANNUAL REPORT
COSTA RICA
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INDEX
CONTENTS
03 Profile of Banco de Costa Rica
06 Message from the President of the Board of Directors
08 Message from the General Manager
11 Board of Directors and Executive Committee
25 Organization Chart
28 Corporate Governance
35 Social Responsibility
39 Recognition
46 Economic and Financial Environment
71 Risk Management
77 Financial Statements
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PROFILE
OF BANCO
DE COSTA RICA
HISTORY
The Banco de Costa Rica was founded on April 20, 1877
to take part in private and public activities in the country.
Thanks to a clear competitive advantage, just seven months
after it was founded it obtained its first dividend of around
13% of its capital.
It issued the first loan to the Government in 1878, and
in 1879 it financed the first railroad, which began a
monumental relationship between the public and private
sectors.
Being as it was on the leading edge of social and economic
developments in the country, in 1883 the bank had its
first female employee and by 1886 it reached a historical
banking milestone when it had five women employees, a
rarity in those days. In 1884 it led the baking modernization
that generated the Soto-Ortuño contract, which made the
bank the first and only money issuer for many years.
During its first 100 years this institution boosted Costa Rica’s
economic and social development by financing power
plants, pipelines, highways, schools, and hospitals. At the
same time it provided loans to small and mid-sized businesses
and showed its solidarity by supporting cultural, educational,
sporting, and health projects that were all aimed at improving
the quality of life for the citizens of this country.
In 1948 the Founding Council of the Second Republic
decreed the nationalization of banking, and since then
the bank has been integrated with the national banking
system and defined as an autonomous financial institution,
in accordance with Article 189 of the 1949 Political
Constitution of the Republic of Costa Rica.
In 1956 different offices (previously known as “branches”)
were opened in strategic points throughout the country
to begin a process of decentralization. In 1965 the BCR
created the Industrial Credit Division and financed the
country’s sugar production and agro-industrial expansion by
issuing important loans to entities in agriculture, livestock,
and industry.
In the final decades of the 20th century it promoted loans
to import automobiles. It also stood out for its technological
innovation in the financial sector when it installed its first ATM,
issued its first debit card, and created its first drive-through
bank. It is actively involved with the National Basic Crops
Program, has founded the BICSA bank, has created the
first Corporate Banking Division, and has initiated a series
of strategic alliances with the Government. One alliance
in 2012 is with the National Registry; using the Banco
de Costa Rica’s technological platform and its network of
offices throughout the country, it has helped improve the
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processes to obtain and renew passports, driver’s licenses,
and residency permits, as well as other different registry
services. With this Registry, the bank has helped its clients
and the general public integrate themselves into modern
technological society.
In this century, the Banco de Costa Rica is a conglomerate
made up of different companies that efficiently manage
investment funds, stocks, and pension and insurance plans,
all while continuing its work to push sustainable development
in Costa Rica.
In its 136 years of history, the Banco de Costa Rica continues
to innovate with new projects and programs, and promotes
and motivates growth and progress in different economic
and social areas throughout the country. Its commitment to
Costa Rica has been renewed year after year, reflecting the
bank’s genuine desire to evolve.
Throughout the year 2013, the Banco de Costa Rica has
reaffirmed its mission of promoting the development of
Costa Rican society. By offering a variety of products and
services of the highest quality, it reaches its goal of providing
sustainable development and a positive impact on the
national economy, thereby making itself into a complete
financial conglomerate.
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MESSAGE
FROM THE PRESIDENT
OF THE BOARD OF DIRECTORS
RENEWING OUR
COMMITMENT TO CUSTOMER
SERVICE EXCELLENCE
BY ALBERTO RAVEN ODIO
PRESIDENT OF THE BOARD OF DIRECTORS
The General Board of Directors of the Banco de Costa Rica
is pleased to share the financial results of the year 2013.
Within the local and international economic context that
accompanied the decision-making throughout this year, the
Banco de Costa Rica was able to continue promoting social
development and sustainability in the country through its
responsible management of diverse sectors in the national
economy, always maintaining balance and financial
responsibility between businesses, as well as keeping risk
management and effective cost controls in mind.
The year 2013 was only moderately dynamic economically,
and the economic activity was more regulated. Nevertheless,
we met the budgetary goal that we had set, thereby
achieving satisfactory indicators and profits in accordance
with our institutional goals.
Inspired by the values of service, integrity, commitment,
solidarity, and innovation, the employees of the Banco
de Costa Rica, through their dedication and hard work,
renewed their commitment to the strategic objective of
reaching a high level of excellence in the different realms of
customer service. For that reason, the Banco de Costa Rica
continued to be the highest-rated bank in terms of customer
service, an achievement which has been recognized both
within the country and internationally.
One year later, this banking institution with 136 years of history
continues to promote important social and environmental
areas; in the social realm, by responsibly strengthening
its assets and reinvesting its profits in competitive financial
products and services to democratize access and financial
inclusion for more parts of society. In the environmental realm,
we continued to manage and incorporate criteria related to
sustainability in our improvement processes to our network
of offices, along with other actions that are within the bank’s
strategic plan of social responsibility.
Maintaining the business’ sustainability is and will continue
to be a constant challenge for the Banco. 2013 has
been another step on the path to establishing the strategic
foundation of what will be a new business model for the
BCR Financial Conglomerate, in order to be effective in our
mission and to promote the country’s social development,
competitiveness, and sustainability.
We thank our clients and employees for helping us to finish
a very satisfactory year for the institution.
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MESSAGE
FROM THE
GENERAL MANAGER
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MESSAGE FROM GENERAL MANAGER
MARIO RIVERA TURCIOS
The Banco de Costa Rica continued to grow throughout the
year in order to offer our clients excellent service and to offer
more and better products. One year later, our commitment
to our clients has inspired us, made us innovate more, and
motivated us to overcome the challenges of a competitive
market with new participants in Latin America, which has
diversified the banking services offered.
Our extensive participation in the Costa Rican financial
market continues to be one of our strengths, not only due
to the quantity of customers satisfied with our service, but
also because of the wide geographic range of our coverage
and the variety of alternative payment channels, such as
electronic methods and self-service banking. This joins our
product portfolio, which provides many financial services at
competitive prices.
We have also continued to meet our objective of automating
transactions. There was greater growth in the use of electronic
methods, and the number of manual transactions made by
our clients decreased. We went from 127 million electronic
transactions in 2012 to 137 million in 2013, meaning an
annual growth of 7.4%. Additionally, we also have opened
three new offices within the country, bringing our total number
of offices to 247.
In financial terms, we were able to maintain an adequate
level of profits, which reached 29.216 billion colones, taking
into consideration that during the first semester of 2013,
credit lending was decreased due to credit restrictions. On
the other hand, our assets grew by 13%, the portfolio grew
by 8.2%, and sight savings deposits increased by 39.7%.
In terms of credit, we continued to promote important
actors in the national economy, such as the institutional,
corporate, and business sectors. The one that showed the
most development was the institutional sector, ad 41.3%.
Meanwhile, corporate and business sectors grew by 25%.
Funds from deposits in savings and checking accounts also
grew from 51% to 55% as compared to the previous year,
and increased their service revenues. Additionally, our
capital adequacy stayed above the normal ranges, and
reached 12.15% in 2013.
In an organized and prudent way, the Banco de Costa
Rica satisfactorily controlled its cost control indicators, which
allowed it to reach a more controlled management of market
spending, with a percentage of 0.6%, while the average
was at 8.4%.
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Additionally, the mission of the BCR to promote
sustainable development as a pillar of the construction
and progress of Costa Rican society was given further
emphasis through the development of strategic efforts
directed to small and medium-sized businesses; this
responded to the need to invigorate the economy
through a strategic strengthening of micro, small, and
medium-sized businesses.
We are a bank that believes in Costa Rica and its
people. For 2014, the BCR expects moderate
development at an estimated growth rate of 13% of
Total Assets, 15% for the credit portfolio, and expects
an increase of 15% in terms of intakes. Because of this,
we project an 8% increase in profits.
Our main investments are focused on a series of
significant improvements that are linked to electronic
channels and infrastructure. These investments aim to
continue providing better facilities for customer service.
Inspired by the values of service, excellence, integrity,
commitment, solidarity, and innovation, our pact to
promote sustainable development in society will continue
intact. The consolidation of our social responsibility will
continue to be an integral part of our business’ mission,
which will focus important efforts on
the process of promoting an internal culture that integrally
promotes the management of social responsibility
topics, by developing significant actions with an aim
towards social, economic, and environmental impact.
The achievement of this strategic objective, which will
make us a leading institution in social an environmental
responsibility, is a fundamental goal.
With the strategic rigorousness with which we take on
these goals, the search for customer service excellence
will continue to inspire us to increase our competitiveness
and the sustainability of our country, fulfilling thereby the
social development role that a public bank of the Costa
Rican State should take on daily, with those who give
us their confidence and patronage. With 136 years of
banking history, we can reaffirm our commitment to the
country and prove, through each and every one of the
actions of the employees of our institution, that we are
indeed the Bank of Costa Rica.
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BOARD OF DIRECTORS
FROM LEFT TO RIGHT: Alexander Mora Delgado, Vice President; Percival Kelso Baldioceda,
Director; Alberto Raven Odio, President; Pablo Ureña Jiménez, Alcides Calvo Jiménez, Marta
E. Arrea Brenes, and Evita Arguedas Maklouf, Directors
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EXECUTIVE COMMITTEE
Mario Rivera Turcios
General Manager
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EXECUTIVE COMMITTEE
Zacarías Esquivel Cruz
Assistant Manager for Risks
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EXECUTIVE COMMITTEE
Guillermo Quesada Oviedo
Commercial Assistant Manager
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EXECUTIVE COMMITTEE
Leonardo Acuña Alvarado
Assistant Manager for Finances and Administration
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EXECUTIVE COMMITTEE
Rodrigo Ramírez Rodríguez
Credit Director
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EXECUTIVE COMMITTEE
Lissander Chacón Vargas
Director of Human Capital and Optimization of Processes
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EXECUTIVE COMMITTEE
Ricardo Brenes Jiménez
Director of Technology
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EXECUTIVE COMMITTEE
Eduardo Ramírez Castro
General Counsel
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EXECUTIVE COMMITTEE
Álvaro Camacho de la O
Director of BCR Sociedad de Fondos de Inversión S.A.
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EXECUTIVE COMMITTEE
Mauricio Rojas Díaz
Director of BCR Operadora de Pensiones Complementarias S.A.
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EXECUTIVE COMMITTEE
Vanessa Olivares Bonilla
Director of BCR Valores Puesto de Bolsa S.A.
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EXECUTIVE COMMITTEE
Gilberth Barrantes Campos
General Auditor
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EXECUTIVE COMMITTEE
José Manuel Rodríguez Guzmán
Assistant General Auditor
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ORGANIZATION
BANCO DE COSTA RICA
BOARD OF
DIRECTORS
Executive
Committee
Board of Directors
Secretariat
General Corporate
Audit
Compliance
Corporate
Relations
General
Management
Corporate Social
Responsibility
Comptroller of
Services
Strategy and
Projects
Companies
Administrative
Procedures Unit
BCR Digital
Commercial
Risk
Finances and
Administration
Credit
Human Capital and
Optimization of
Processes
Technology
Legal
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BANCO DE
COSTA RICA
OPERADORA DE
PENSIONES S.A.
BCR VALORES
PUESTO DE BOLSA S.A.
SOCIEDAD DE FONDOS
DE INVERSIÓN S.A.
BCR CORREDORA
DE SEGUROS S.A.
BICSA
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CORPORATE
GOVERNANCE
CORPORATE
GOVERNANCE
The Banco de Costa Rica (BCR) is an autonomous, public
institution with its own independent legal status in terms of
administration, which belongs in totality to the State of Costa
Rica.
Our activities are regulated by the Political Constitution of
Costa Rica, the National Organic Banking System Law
(LOSBN), the Costa Rican Organic Central Bank Law
(LOBCCR), the General Public Administration Law, as well
as by the regulations and norms issued by the Costa Rican
National Financial System Supervisory Council (CONASSIF)
and by other regulation and control authorities such as the
Comptroller General of the Republic.
The Banco de Costa Rica is organized under the Financial
Conglomerate model, due to the distinct activities and types of
businesses it takes part in. The BCR Financial Conglomerate
is subject to supervision and inspection by the CONASSIF,
which is in turn comprised of distinct Superintendence bodies:
the General Financial Entity Superintendence (SUGEF),
which is in charge of supervising the banking and financial
systems; the Superintendence of Securities (SUGEVAL), which
is in charge of supervising activities related to the securities
market; the General Superintendence of Pensions (SUPEN),
which is responsible for supervising the pensions market;
and the General Insurance Superintendence (SUGESE), in
charge of supervising the insurance market.
Additionally, our subsidiary, the International Bank of Costa
Rica, is supervised by the Panama Banks Superintendence
and its branch in the State of Florida in the United States of
America, and by the respective state and federal regulatory
authorities.
The BCR promotes the ongoing improvement of its internal
self-regulation and control mechanisms, with the aim of
guaranteeing strict compliance with the applicable laws,
regulations, and norms in all of its activities and business
dealings. It strives for permanent application of the
Conglomerate’s values and is governed by a series of ethical
principles that act as a guide in its financial, commercial, and
service decisions in all the companies in the Conglomerate.
The BCR Financial Conglomerate is comprised of the
following companies:
• Banco de Costa Rica (BCR), an institution dedicated to
commercial banking activities; it is the Conglomerate’s
controlling company.
• BCR Valores Puesto de Bolsa S.A., a company dedicated
to securities brokering, 100% subsidized by the BCR.
• BCR Sociedad Administradora de Fondos de Inversión
S.A., a company dedicated to the administration of
Investment Funds, 100% subsidized by the BCR.
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• BCR Operadora de Planes de Pensiones
Complementarias S.A., a company dedicated to the
administration of pension plans, 100% subsidized by
the BCR.
• BCR Corredora de Seguros S.A., a company
dedicated to insurance brokerage, 100% subsidized
by the BCR.
• Banco Internacional de Costa Rica S.A. (BICSA), a
company dedicated to commercial banking activity,
located in Panama City, subsidized 51% by the BCR.
• BanProcesa TI S.A. This company is not currently
functioning at the time of this report.
Board of Directors
The top-level management of the Banco de Costa Rica
corresponds to the General Board of Directors, made up
of seven members who are designated by the Governance
Council, for a period of eight years or less in the case of
substitutions. Once the nominations have taken place and
the Governance Council begins working, it cannot remove
any member of the Board of Directors, except as indicated
by Law. Every year the Board elects a President and a Vice
President through a majority vote; these positions may be
reelected.
In its function as the BCR’s Supreme Governance Body, the
Board of Directors must name a general manager, assistant
managers, and general and assistant auditors for the BCR. In
its function as an assembly of stockholders, it must designate
the members of the Boards of Directors for each of its
subsidiary companies.
The boards of directors must meet the conditions that are
established in the valid legal regulations and the statutes for
the companies, as well as any conditions that are determined
by the policies, regulations, or agreements issued by each
of these subsidiary bodies. In the case of the BICSA, it is
governed by Panamanian laws, as well as by the company’s
social pact and its Board of Directors’ Regulations.
Among other things, the boards of directors must define the
Bank’s and the companies’ general policies; approve the
institution’s strategic and business plan, annual budgets, and
the institution’s financial statements; make decisions related
to its competition; exercise top-level investigations of all the
deals and activities that the BCR Conglomerate takes part
in; and make any nominations that they are required to do
by Law or statutes. The BCR’s General Board of Directors
normally meets once per week, and meets for extraordinary
sessions as needed.
The General Board of Directors for the BCR is as follows:
Name and Surnames
Position
Date of
Appointment
Alberto Raven Odio
President
June 1, 2010
Alexander Mora Delgado
Vice President
June 1, 2010
Alcides Calvo Jiménez
Director
June 1, 2006
Percival Kelso Baldioceda
Director
June 1, 2006
Evita Arguedas Maklouf
Director
June 1, 2010
Luis Paulino Arias Fonseca,
c.c. Pablo Ureña Jiménez
Director
June 1, 2010
Marta E. Arrea Brenes
Director
Sept. 1, 2010
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In addition to the BCR’s General Board of the Directors,
the subsidiary companies also have their own Boards of
Directors, which are mostly comprised of representatives
from the BCR’s General Board of Directors, but also by
independent members, in accordance with each of the
companies’ applicable guidelines. The following chart
shows how the boards are comprised.
Board of Directors
Members
Banco de Costa Rica
7 members
BCR Valores Puesto de
Bolsa S.A.
5 + General Counsel
BCR Sociedad
Administradora de Fondos
de Inversión S.A.
5 + General Counsel
BCR Operadora de
Planes de Pensiones
Complementarias S.A.
5 + General Counsel
BCR Corredora de
Seguros S.A.
5 + General Counsel
BICSA Board of Directors
9 members
Administration and Management
The General Manager is in charge of the Banco de Costa
Rica’s top-level management. The Manager is appointed by
the General Board of Directors for a period of six years.
Additionally, three assistant managers have been designated
to support the Manager in managing the institution. The
general assistant managers are also appointed by the Board
of Directors for a period of six years.
Support Committees
As part of the Corporate Governance structure, the Board of
Directors and the administration are supported by committees
that perform specific functions. Each committee meets
regularly to work on matters related to their competence.
Some are comprised of members of the General Board
of Directors and the Administration and others are only
comprised of representatives from the BCR’s Administration.
The following committees are comprised of representatives
from the Board of Directors and the Administration:
Corporate Audit Committee: This committee is in
charge of matters related to the auditor general’s work, the
companies’ internal auditors, the hiring and development of
the external auditors, audit reports, and the internal control of
all the businesses in the BCR Conglomerate.
Corporate Risk Committee: This committee
analyzes all matters related to risk management in the
BCR Conglomerate’s companies such as credit, market,
operational, technological, legal, and reputational risks,
among others.
Corporate Compliance Committee: This committee is
in charge of matters related to laws and regulations regarding
capital legitimization, money laundering, suspicious activities,
and everything that is related to protecting the companies in
the BCR Conglomerate from such situations.
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Corporate Transformation and Technology
Committee: This committee is in charge of strategic
matters related to technology, information systems, and
aspects related to challenges and difficulties in technology.
The following committees are only comprised of
representatives from the BCR Conglomerate’s Top-Level
Administration:
Corporate Executive Committee: This is the highestlevel governing body in the BCR. It evaluates matters related
to the Conglomerate’s strategic plan, business progress,
and monthly financial results, among other things. It is also
the coordinating and communicating body between the
General Board of Directors and the Conglomerate’s other
Committees.
Credit Committee: This committee is in charge of
monitoring and following-up any policies, procedures, and
controls established to issue credit, as well as the valid credit
laws. Additionally, as a governing body its responsibilities
include approving credit operations that correspond to the
limits established by the General Board of Directors.
Corporate Assets and Liabilities Committee:
Assets and Liabilities Committee is a supporting body for
managing the BCR’s financial risks. It is also responsible for
establishing interest rates for assets and liabilities, as well
as the fees and conditions for the Conglomerate’s banking
services.
Additionally, it is in charge of monitoring market developments
and the national and international economic situation,
and of taking measures that lead to the best practices in
terms of liquidity, solvency, leverage, termmatching, and
matters related to market risk for the companies in the BCR
Conglomerate
Corporate Commercial Committee: This committee’s
purpose is to resolve and follow-up on various policies, plans,
procedures, and commercial strategies for the companies in
the BCR Conglomerate.
Additionally, there are other committees in the subsidiary
companies that take care of other specific aspects of
regulation, such as the investment committees in BCR Valores
Puesto de Bolsa, BCR S.A.F.I. and BCR OPC, the risk
committee specific BCR Pensiones OPC.
In the case of the subsidiary Banco Internacional de Costa
Rica (BICSA), it has 6 committees that support the Board of
Directors and Management, which are: Audit Committee,
Compliance Supervisory Committee, Risk Committee,
BICSA local new Project Committee, and the Corporate
Governance Committee.
Policies for selection, appointment, and removal
of Committee members
The designation of each committee’s members is a natural part
of their functioning, so all appointments are made with the
participation of appropriate managers. Additionally, some
committees include the participation of people from outside
of the organization who have been selected according to
defined profiles according to the committees they participate
with. The General Board of Directors—or the subsidiaries’
board--is the one that approves the appointment or removal
of committee members.
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Internal policies regarding the rotation of Board
of Directors and Committee members
Related to the rotation policies for the members of the
General Board of Directors, the BCR Conglomerate’s
General Board of Directors is governed by a policy of
member rotation that has been established by the National
Organic Banking System Law and by the subsidiaries’
statutes regarding Boards of Directors. Regarding the
rotation of different committee members, the Corporate
Governance Code says in article 30 that: “…The rotation of
internal and external Support Committee members is linked,
in general, to the succession and occupation plans for their
respective positions, since the integration of the positions is
a part of the tasks the position performs.” For cases involving
external members, their appointments will be annual and will
be renewed automatically unless they are removed by the
respective Board of Directors by a previous agreement, or
unless the interested party resigns. The Banco Internacional
de Costa Rica maintains the directives that regulate the terms
of nomination for the Directors (Article 4) within its regulations
for the Board of Directors.
Policies regarding conflicts of interest
As part of its Corporate Governance structure, the BCR
Financial Conglomerate has established a series of policies
about conflicts of interest that may arise between members
of its Boards of Directors, members of managing bodies,
and companies in the Conglomerate, as well as between
members of the managing bodies, clients, and suppliers.
These policies are aimed to manage conflicts of interest
that the Conglomerate may have, or which may arise in
the future between managers, employees, clients, regulatory
entities, or other related entities that are involved in normal
commercial business operations.
Policies regarding the obligation to abstain from
voting or participating in committee meetings
Situations in which a committee member abstains from voting
or attending one or multiple meetings may be related to
conflicts of interest, including conflicts that may arise from
compliance with the General Public Administration Law, if
the law indicates a need to abstain.
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Internal Audits
One of the characteristics of the internal audit is that it is
done by highly-qualified people who are professionals with
important training and noteworthy experience in other units
at the BCR. In addition to the responsibilities it has in the
management, it is in permanent contact with the different
areas of the Banco de Costa Rica.
External Audits
Starting in 2012, the external audits of the companies in the
BCR Conglomerate, except BICSA, have been realized by
the Lara Eduarte Offices S.C., a company that is a member
of Crowe Horwath International, which issues opinions
about individual and consolidated financial statements for
the Banco de Costa Rica and its subsidiaries. The subsidiary
BICSA is audited by the external auditing firm KPMG.
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SOCIAL
RESPONSIBILITY
A RESPONSIBLE
BANK
Since its founding in 1877, the Banco de Costa Rica
has responsibly assumed its role in promoting actions that
are linked to our mission of promoting the country’s social
development, competitiveness, and sustainability.
To positively influence the three areas of sustainability –
social, economic, and environmental—our business model
establishes, among its other strategic objectives, goals
related to social responsibility.
Within the Corporate Governance framework, we have
institutional guidelines that are clearly oriented towards
strengthening an internal culture inspired by the principles
and values that the employees of the BCR Financial
Conglomerate promote in their daily actions.
Upon concluding this period of time, we are pleased to share
the most relevant results of our sustainability program; these
results are testimony to the fact that by doing these actions,
we are headed in the right direction to reach important social
and environmental results in our groups of interest.
A MODEL OF A SUSTAINABLE
BUSINESS
In the social area, the impacts of the Banco de Costa
Rica are managed through the institutional commitment taken
on by the employees with regards to promoting labor rights
and the rights of free association, non-discrimination, and
equality and equity of opportunities.
Externally, in addition to promoting a responsible market
offering products and services designed especially to take
care of the distinct banking and financial needs of our clients,
we have also understood the importance of taking charge
of providing a united response to social problems that afflict
the most vulnerable populations in our country, such as the
country’s children.
In 2013, a notable action was the consolidation of an alliance
with the National Children’s Hospital (HNN), in order to call
attention to negligence as an expression of violence towards
infants. We also worked together on articulated efforts that
worked towards to gradual reduction in the number of victims
of this kind of abuse. Through the “Don’t neglect them, not
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even for a second” awareness campaign, we began this
social crusade, an institutional effort that also involved
educational actions directed at caretakers responsible for
boys and girls. Workshops, educational talks, pamphlets,
and the placement of advice on social networks and other
media completed the communication platform that supported
this campaign.
In dealing with our suppliers, we also developed a
communication program to make them aware of our ethical,
social, and environmental commitments, with the goal of
promoting the implementation of values, conducts, and
responsible practices that allow them to continue to be
considerate in the purchasing processes of the BCR Financial
Conglomerate, as long as their products and services
incorporate the criteria of sustainability that are contemplated
in the posters. To ease communication and transparency in
our administrative contracting processes, we developed an
informative section on the Bank’s website, which is especially
designed for this interest group.
In the economic area, we should mention that the
responsible management of personal finances takes
preference among the actions contemplated in the Financial
Education Plan for the year 2013. This plan included talks
with clients and financial advice that was transmitted through
various channels considered in the communication strategies.
Another institutional effort that gave impulse to more
sustainable development during the year 2013 was the
incorporation of the program “I love my card.” This included
special discounts for the Bank’s cardholders in order to
stimulate purchases of environmentally-friendly products and
services.
In combination with the previously-mentioned points, we
also manage alliances with international banks in order
to promote the use of renewable energies. One of these
alliances was signed with the Japanese bank Japan Bank
for International Commerce (JBIC), through the “General
Agreement for the Financing of Japanese Goods and/
or Services and Japanese Renewable Energy Plants,” with
which we were provided a line of credit with an initial value
of $50 million.
The signing of this agreement, along with those signed with
banks in China and Korea, demonstrates our commitment to
offering financial solutions to projects that are environmentally
friendly and, additionally our commitment to actively working
towards meeting the goals that we face as a country, such as
reaching carbon neutrality by 2021, which implies projects
related to renewable energies, such as the project led by the
Banco de Costa Rica to promote the renovation of public
transportation fleets through this type of financing.
Another initiative that allows us to stand out has been the
launching of EcoCrédito, a product directed at micro, small,
and medium-sized businesses, which promotes development
of an economic sector that represents 97% of the Costa
Rican business parks and which handles 33% of the Gross
Domestic Product (GDP), through the financing of projects
that contribute to reducing carbon footprints in the operations
of these businesses.
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In the environmental area, we have continued to
strengthen our actions oriented towards reducing, mitigating,
and compensating for the impact generated by the BCR
Financial Conglomerate.
An institutional environmental management plan acts as
a guide to our commitment to business decisions that
incorporate sustainability criteria into the different office
remodeling and construction processes.
In addition to continually promote the waste management
program in offices, our environmental commitment as an
institution is strengthened through our active participation in
the banking offices program of the Blue Flag (Bandera Azul)
Program to help fight climate change.
From 2008 to 2013, we were able to recover 180.9 tons
of valorizable waste, which reflects our conviction to be
responsible in the management of these wastes. We should
reiterate that the emphasis of the organization is to promote
a cultural change towards reducing waste and the adoption
of the habit of classifying those wastes which, due to the
nature of our business, we are unable to reduce.
We are a Bank that believes in sustainability as a development
model. We invite you to learn more about our actions by
going to our webpage at www.bancobcr.com, where you
can also view our annual report as voluntary members of the
Global Pact.
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REGOGNITION
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ECONOMIC AND
FINANCIAL
ENVIRONMENT
2013 ECONOMIC
ENVIRONMENT
INTERNATIONAL ECONOMY
The worldwide economic outlook improved in 2013.
Economic activity showed signs of stabilizing in the advanced
economies, and even accelerated to some degree in
economies in emerging markets. Nevertheless, it is clear that
some turbulence still remains, at least within the short term.
Throughout 2013 many grave threats to the worldwide
financial recovery were countered, such as the weakening
confidence in the European market and the imminent
possibility of a financial abyss in the United States, and
financial stability was strengthened. The policy means
adopted during the year countered the most grave shortterms risks. Nevertheless, by the end of April 2013, the
growth outlook had changed very little, and the worldwide
economy was moving at different speeds: in some parts of
the world, the financial conditions were improving, but that
did not uniformly translate to increased growth, or there were
also other factors slowing down growth.
Worldwide growth rebounded in the second half of 2013,
averaging 3.6%, which represents a marked increase with
respect to the 2.6% increase measured in the six previous
months. A large part of this rebound took place in advanced
economies, meaning that the growth in emerging markets
was modest. The intensification of activity was reflected in
international commerce and industrial production.
The acceleration of worldwide activity towards the end of
2013, which turned out to be stronger than predicted, was
partly due to the upswing in the growth of stocks, which will
once again go down. It is predicted that worldwide growth
will advance by 3.6% in 2014 and then by 3.9% in 2015.
In 2013, production in the United States increased by 1.9%
(2.8% in 2012) in response to more restrictive financial
conditions, cuts to public spending, and difficulties reaching
a financial agreement, which detracted from dynamic
growth in private internal spending. On the other hand, there
was a continued downward tendency in the unemployment
rate (6.7% in December). By the end of the year, inflation
was 1.2% lower than that country’s goal (2%). These results,
along with robust production growth in the third trimester
(4%) influenced the Federal Reserve’s decision, in December
of 2013, to begin to reduce the monthly program to buy
assets, from $85 billion to $75 billion, beginning in January
of 2014. On that occasion, it agreed to maintain the interest
rate between 0% and 0.25%, and left open the possibility
of not changing that range if the projected inflation rate
remained below 2%, even if unemployment dropped below
6.5%.
Growth is now positive in the Euro Zone. There was improved
economic activity with growth in the second half of 2013.
The recovery, pushed mainly by Germany and France,
allowed the unemployment rate to stabilize at 12.1% in April.
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With respect to the regional growth of Latin America, a
slight acceleration in activity has been predicted: growth
will increase from 2.7% in 2013 to 3% in 2015. Some
economies recently experienced strong market pressures,
and the worsening of those financial conditions will be
ballast for growth.
Nonetheless, throughout 2013 there were risks to growth in
this zone, which were associated with the fragility of bank
balances and the fragmentation of the financial markets.
In the economies of emerging and developing markets
there was a slight growth in the second half of 2013.
There was more dynamism in production, which was due
to the weakness of external demand, along with the drop
in prices of prime material and less internal demand. This
last point was a result of the increase in interest rates in
these economies, which were faction inflationary pressures.
Globally, the economies of emerging and developing
markets will continue to contribute to more than two thirds
of the worldwide growth, and its growth will increase from
4.7% in 2013 to 4.9% in 2014, and to 5.3% in 2015.
In general terms, in 2013 inflation remained at low levels in
the majority of countries. In particular, in Costa Rica’s main
commercial partners, inflation was at 2.2% (2.7% in 2012),
and as such the difference between this indicator and the
local average inflation rate was 3 p.p. (2.2 p.p, is long-term
inflation rates for these commercial partners are compared
[3%]).
Growth of Real GDP
Worldwide Economic Growth
Projections
2012
2013
2014
2015
Global Product
3,2
3,0
3,6
3,9
Advanced Economies
1,4
1,3
2,2
2,3
United States
2,8
1,9
2,8
3,0
Euro Zone
-0,7
-0,5
1,2
1,5
Japan
1,4
1,5
1,4
1,0
United Kingdom
0,3
1,8
2,9
2,5
"Economies of Emerging
and Developing Markets
5,0
4,7
4,9
5,3
Latin America & Caribbean 3,1
2,7
2,5
3,0
China
7,7
7,5
7,3
7,7
7,4
8
6,3
7
6
5
4
5,1
5,0
3,9
3,2
4,7
3
3,0
3
1,6
2
1,4
1,3
1
0
Worldwide
Advanced Economies
2010
2011
2012
Emerging Economies
2013
Source: International Monetary Fund
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DOMESTIC ECONOMY
Macroeconomic results in 2013 were favorable. Despite
a global economy with slow growth and increased
uncertainty, the Costa Rica economy –as measured by the
Gross Domestic Product—stayed for most of the year within
the range goal established by the Banco Central de Costa
Rica in its Microeconomic Program (5%, +/- 1 percentage
point). This was thanks to the relative exchange stability and
the reduction in inflationary pressures from abroad.
Once these adjustments dissipated, inflation tended to
once again remain within the goal range. Nonetheless, in
November and December the interannual CPI (3.4% and
3.7%, respectively) was below said range, which was also
a result of the adjustments in prices of some regulated goods
and services (electricity and fuels).
Biannual Real GDP - Cycle Tendency
Interannual variation, in percentage
6
IInflation: general, underlying y expected
5,9
5
3,9
-Interannual percentage variation3
Consumer Pricing Index
Underlying Inflation Index
8
Expected 12 Month Inflation
7
0
I
II
I
II
2013 (3,5%)
Source: Banco Central de Costa Rica.
5
4
3
2
2
2012 ( 5,1%)
6
3,9
3,0
Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Dec-13
Source: Banco Central de Costa Rica.
Costa Rican inflation–measured by the interannual variation
in the Consumer Pricing Index—between February and April
showed interannual variation in the CPI (6.3%) which was
above the goal, due to adjustments in the prices of some
regulated goods and services, and to agricultural supply
shocks, two elements which do not directly depend on
monetary policy.
In terms of spending components, the main push during
the first part of 2013 came from internal demand, which
grew by 3.6% (4.5% in 2012), and added 3.7 percentage
points to the GDB increase. In the second half of the year,
the majority of the growth came from both a greater ernal
demand (from 3.7 to 3.9 p.p.) and external demand (from
1.3 to 2.2 p.p.)
External demand, facing a more favorable international
environment that increased sales through special programs,
mainly in the manufacturing industry and in pineapple, sugar,
and milk exports, showed a median variation of 3.6%,
concentrated in the second semester.
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Contribution to GDP growth based on spending components
- Percentage contribution to the variation rate of the cycle trend -
10
5
5
Internal demand
Imports
External demand
GDP
4
6.1
4
3,5
0
-5
-5
5,9%
I - 12
-3
3,9%
II
1.3
-2.1
2,9%
I - 13
4
2.2
operations (a decrease of USD$1.477 billion, concentrated
in short-term resources). The net flow for the public sector
decreased by USD$24 million.
Foreign direct investment increased by USD$2.682 billion
and mainly was directed to the real estate (43.3%) and
services (29.6%) sectors. On average, between 2007 and
2013, FDI represents around 5.4% of the GPD.
Balance of payments
- Millions of dollars -
-2.2
3,9%
II
Source: Banco Central de Costa Rica.
For their part, imports of capital goods (especially for the
electronics, telecommunications, and mobile transportation
equipment industries) and perishable consumer goods
(pharmaceutical products, toiletries, and food) all grew by
4.1% during the year (8.4% in 2012), and for the third
consecutive year maintained the deceleration trend.
In the context of global growth and the evolution of
commercial goods, in 2013 the operations with an external
sector presented an account deficit of 5.1% of the GDP,
financed with long-term foreign capital. This balance shows
that the access to foreign savings in 2013 led to an increase
of 72.1% in liabilities in the country in terms of GDP (67.8%
in 2012), a result which is seen in the debt of the public
sector and the national banking system.
The net flows of the capital and financial accounts
represented 6% of the GDP (3.9 p.p. less than in 2012). The
smallest cash flows were mainly explained by private sector
I. Current accounts
A. Goods
FOB Exports
CIF Imports
B. Services
Transportation
Travel
Other services
C. Incomes
Interests on external public debt
Other incomes
D. Checking transfers
General Government
Other sectors
II. Financial and capital account
A. Capital account
B. Financial account
Public sector
Expenditures
Amortizations
Others
Private sector
Direct investment
Remaining private capital
III. Assets in reserve
(-increase, +decrease))
Figures in relation to GDP
Current accounts / GDP
Commercial account / GDP
Balance of services / GDP
Balance of incomes / GDP
Transfers / GDP
Private capital / GDP Direct
Investment / GDP
2012
2013
-2.383
-6.131
11.460
-17.591
4.244
242
1.870
2.132
-829
-248
-581
333
20
313
4.492
46
4.446
1.239
1.955
-664
-52
3.207
2.332
875
-2.110
-2.529
-6.449
11.526
-17.975
4.706
265
2.032
2.409
-1.095
-273
-822
309
15
294
2.989
9
2.980
1.214
1.903
-715
26
1.766
2.682
-915
-461
-5,2%
-13,5%
9,4%
-1,8%
0,7%
7,1%
5,1%
-5,1%
-13,0%
9,5%
-2,2%
0,6%
3,6%
5,4%
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Evolution of foreign direct investment
8%
2.800
6%
2.100
4%
1.400
700
2%
0
0%
2007
2008
2009
2010
2011
FDI Amount (right axis)
2012
2013
Financial Results of the
Reduced Global Public Sector
Accumulated results as of December, as percentage of GDP
2012
2013
Change
Global Public Sector
-5,0
-6,2
1,2
Banco Central de Costa Rica
-0,6
-0,8
0,2
Non-financial public sector
-4,4
-5,4
1,0
Central Government
-4,4
-5,4
1,0
Primary Outcome
-2,3
-2,9
0,6
Non-financial public sector outcome
0,0
0,0
0,0
GDP
Source: Banco Central de Costa Rica.
Despite the increase observed in the country’s external debt
in recent years, according to criteria from the World Bank
and the International Monetary Fund which measure the
sustainability of foreign debt, the foreign debt ratios in Costa
Rica (with respect to GDP and exports) are still acceptable.
Global Public Sector (RGPS) as of December of 2013 was
a deficit for the equivalent of 6.2% of the GDP (1.2% above
what was observed in 2012). These results were influenced
by the deterioration in finances of the components of the
public sector, mainly within the Central Government.
In terms of public finance, in 2013 was characterized by
an evident deterioration in public finances, notable in the
Central Government’s deficit of 5.4 of GDP, the highest level
in the last 19 years; this was due to the greater expansion
of the main spending areas and the deceleration of income
areas.
Despite the efforts made by the Government—which were
concentrated on incomes—with the aim of decreasing tax
evasion and increasing tax collection, the financial deficit
increased 1 percentage point of the GDP with respect to the
previous year, a result of spending growth as well as of the
decrease in collection.
The Reduced Global Public Sector (RGPS) at the end of
2013 showed an accumulated financial deficit of 6.2% of
the GDP (1.2 p.p. above what was observed in 2012). This
area was influenced by the deterioration of finances in all
the components of the public sector, especially in the Central
Government. The accumulated financial result of the Reduced
On the other hand, in 2013 the annual growth of monetary
and credit aggregates was congruent with the real increase
in production and the inflationary goal. Additionally, the
monetary aggregates also showed a trend toward savings
instruments in the national currency, although there was a
preferential tendency towards credit operations in dollars.
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In terms of interest rates, in 2013 the interest rates in colones
of the National Financial System showed a downward
tendency, influenced by the slowing trend observed in credit
demand within the private sector, especially in the first half of
the year, and the access by the Government, as well as by
banks, to foreign financing. In a manner congruent with the
lowering of interest rates, the premium for savings in colones
decreased, but continued to remain positive.
The economy is expected to maintain the stability and solidity
that characterizes it. The monetary policy implemented
by the Banco Central de Costa Rica is important for the
country’s correct orientation. It is believed that the behavior
of macroeconomic variables will favor economic growth and
dynamism in the financial activity of the country.
If the Basic Passive Interest Rate (BPR) is used as a reference
for the development of interest rates in the Costa Rican
financial market, it decreased from 9.2% in December of
2012 to 6.5% in December of 2013.
Basic Passive Rate
Nominal
Dec 13
Jul 13
Oct 13
Jan 13
Apr 13
Jul 12
Oct 12
Jan 12
0,00
Apr 12
0,00
Jul 11
1,75
Oct 11
2,75
Jan 11
3,50
Apr 11
5,50
Jul 10
5,25
Oct 10
8,25
Jun 10
7,00
Apr 10
11,00
Real (right axis)
Source: Banco de Costa Rica with information
of Banco Central de Costa Rica
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2013 FINANCIAL
ENVIRONMENT
BCR 2013 FINANCIAL
MANAGEMENT
The BCR continues to consolidate its strategy oriented towards
achieving excellence in all dimension of customer service,
with excellent financial results. It strengthened its solvency
and capital solidity, increased its market participation, and
promoted, though its actions and solutions for its clients, the
social and economic development of the country.
General Balance
Main Indicators
2012
2013
Financial Income / Total Income
71,9%
73,6%
Incomes for Services / Total Income
16,6%
18,1%
Financial Expenses / Total Expenses
35,6%
36,9%
Financial Expenses / Financial Income
43,3%
44,8%
Administrative Expenses / Total Expenses
47,1%
46,0%
Financial Margin / Admin. Expenses
91,2%
94,3%
Operational Profit / Total Income
14,0%
12,9%
Net Profit / Total Income
8,3%
7,6%
Indicators of Results
Indicators of Balance
In 2013 we had solid growth both in terms of our total assets
and in our main portfolios. The assets grew 12%, pushed by
a 7% increase in the credit portfolio and a 6% increase in
our intakes.
Productive Assets / Total Assets
82,6%
82,1%
Credit Portfolio / Total Assets
68,2%
65,2%
Credit Portfolio / Productive Assets
82,6%
79,4%
Credit Portfolio / Public Deposits
99,5%
99,9%
The Banco de Costa Rica has pushed the expansion not only
of its assets, but also of its sources of financing. It is because
of this that it maintains a continued policy of diversification of
instruments and financing markets. During 2013 it reaffirmed
its strategic decision to combine domestic capital sources
with those of foreign markets, giving a deeper level of
financial structure and sustaining the growth of the volume
of business during the coming years, consolidating and
opening new markets.
Portfolio + 90 days / Credit Portfolio
2,0%
1,8%
Total Liabilities / Total Assets
90,3%
90,5%
Liability / Capital (Number of times)
9,3
9,5
Performance of Average Assets (ROA)
0,90%
0,72%
Profitability of Average Asset (ROE)
8,92%
7,43%
Operational Efficiency (1)
62,73%
63,13%
Management Indicators
(1) The indicator Operational Efficiency is the relationship between General
and Administrative Expenses and the total income in the period.
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In 2013 the BCR was a pioneer in the placement of long-term
bonds in markets such as the United States, Latin America,
the United Kingdom, and Europe, for a total amount of
US$500 million, always searching for better opportunities
in the market. The success of these placements clearly
demonstrated confidence for the Bank.
Additionally, its capital grew in real terms, adding value for
its shareholder, the Costa Rican State.
The solid growth experienced in 2013 allowed us to
continue conserving our market participation, with 20%
of participation in the total credit portfolio of the National
Banking System, as of December of 2013. In this way, we
are in second place in the Costa Rican financial industry.
Additionally, we continue to be the third-largest among all
financial entities in the region including Central American
and the Dominican Republic, excluding Panama; we are
seventh in the region if Panama is included.
General Consolidated Balance
GROWTH AND MARKET PARTICIPATION
Millions of colones
Thousands of dollars
2012
2013
%Change
Total Assets
3.822.311
4.265.516
12%
Assets
Availability
518.024
603.278
16%
Investments in securities
549.629
720.714
31%
Net credit portfolio
2.608.592
2.779.248
7%
Net real estate, furnishing, equipment
77.039
83.941
9%
Other assets
69.027
78.335
13%
Total liabilities plus assets
3.822.311
4.265.516
12%
Total liabilities
3.450.298
3.859.875
12%
Public debts
2.620.804
2.780.838
6%
Debts with entities
680.216
937.478
38%
Other liabilities
149.278
141.559
-5%
Assets
372.013
405.641
9%
Primary capital
257.472
274.906
7%
Secondary capital
76.205
89.429
17%
Minority interests
38.336
41.306
8%
Market Participation
BCR
Industry
2012
2013
13%
14%
24%
21%
Credit Portfolio
8%
12%
20%
20%
Public Deposits
11%
11%
22%
22%
8%
10%
19%
18%
Equity
Credit Portfolio
These positive results were accompanied by an 8% increase
in the credit portfolio which, as of December of 2013, made
the Banco de Costa Rica the second-largest bank in the
country in terms of placements, with a market participation
of 20%. 2013 was characterized by a renewed preference
for credits in foreign currencies, a trend which was observed
throughout the industry. In line with our commercial strategy,
we continue promoting various types of credit to people, a
greater penetration in the small business sector, and a higher
diversification through economic activity.
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Distribution of the portfolio by
economic activity, 2013
Industry
12%
Credit Portfolio, by currency
Colones
Commercial
Agricultural
5%
Consumer
12%
Dollars
7%
3%
2%
3%
Tourism
Electricity
48%
46%
52%
54%
2012
2013
Transportation
Housing and
Construction
24%
Services
32%
We continue to consolidate our participation in the housing
and construction sector and we made an important push
towards growth in the service sector (up 32% in 2013),
which has been one of the most dynamic sectors in our
economy. We maintained an active strategy in the consumer
banking and commerce sectors, which showed very positive
numbers through the year.
In the corporate sector we continue to be the leading credit
entity, with a portfolio growth of 8% in 2013, supporting
a higher level of economic dynamism, higher expectations
among the economic agents, and a growth in both internal
and external demand, which helped to boost the volume of
international commerce in the country.
Credit Portfolio Composition
Millions of colones
2012
2013
%Change
Business and Institutional
1.737.727
1.870.675
8%
Consumer
284.561
293.062
3%
Housing
553.580
586.436
6%
Credit Cards
53.082
50.960
-4%
Total
2.628.950
2.801.133
7%
Sources of Funds
Strengthened by the backing that the Costa Rican State
offers people who save money with the Banco de Costa
Rica, our Bank has shown great stability in terms of funds.
Here you can notice its ability to increase public deposit
intakes, which increased 6% in the year 2013, similar to the
growth of the market, which allowed us to maintain a market
participation rate above 21%.
The significant participation of deposits in checking and
savings accounts, included in the total incomes (47% in
2013), guarantees the bank a low-cost financing base and
at the same time positions it as one of the most reliable and
safe banks in the country. We should mention that the Banco
de Costa Rica has a market participation of 25% in shortterm deposits, which means that 1 in every 4 colones (or
dollars) that individuals and legal entities maintain in current
deposits in the country are trusted to the Banco de Costa
Rica. The intake of resources through certificates of deposit
has been consolidated as another solid source of funds, with
a growth of 10% in 2013 and a market participation rate
of 20%, making us the Bank with the highest intakes through
certificates of deposit in the country. Additionally, higher
passive interest rates in the domestic currency than rates for
dollars, accompanied by the relative stability of the exchange
rate for the domestic currency, have led customers to partially
revert savings from dollars to the domestic currency, causing
a change in the country’s financial wealth, thereby settling
national savings even more.
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Structure of Public Deposits
16%
16%
31%
31%
53%
53%
2012
2013
Equity
Savings Accounts
Current Accounts
Term Deposits
Public Deposits by Currency
Foreign currency
37%
37%
63%
63%
2012
2013
Domestic currency
In 2013, resources from loans with other foreign financial
entities played a relevant role as a source of funding at
a reasonable cost, allowing the Banco de Costa Rica to
strengthen its liquidity and respond to the demand for credit
in foreign currencies. There was a 41% growth of external
funding in the Bank during 2013. The portfolio ratio between
credits and public deposits was 100%, reflecting an efficient
use of the resources taken in.
The Bank’s equity reached ¢405.641 billion colones
(US$820 million), which was a 9% increase over the year
2012 and was the second highest level in the national
banking and finance system. This change is a product of the
increase of net profits associated with the Bank’s good results
in the year 2013, adjusting additionally for the appraisal
results of the investment market prices for financial instruments,
and adjusted for the conversion of financial statements of its
subsidiary company, BICSA, whose official currency is the
United States Dollar.
In terms of the level of solvency as measured by the equity
sufficiency indicator (capital adequacy) up to December
2013, the Banco de Costa Rica reached a solvency index
of 12.15%, which is 22% higher than the minimum level
(10%) established by the banking supervisory authority.
In 2013 the Banco de Costa Rica continued diversifying
its sources of financing, this time in highly demanding and
competitive markets, becoming the number one bank in
the country in terms of placing debt bonds in international
markets, taking advantage of favorable market conditions
and the elevated international risk grade given to the
institution. In this way, there were debts issued in the United
Kingdom, Europe, The United States, and Latin America, for
a total amount of US$500 million.
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State of Results
Results of Financial Intermediation
During 2013 the Banco de Costa Rica (BCR) reached a
consolidated net utility of 29.215 billion colones which,
although lower than the year before, continued to reflect
its good performance and was supported by the business
strategies of the BCR Conglomerate and by an economy
that showed positive results this year, despite the fact that
a certain level of uncertainty still exists in the international
economy.
The Bank’s net financial income increased by 4% (6.040
billion colones) during 2013, reaching a sum of 150.006
billion colones. The engine for this growth was an increase in
our productive assets, which grew by 11% during the year,
especially the business and institutional credit portfolios,
which grew by 8% in comparison to the detailed portfolio,
which grew 6%.
From the market’s perspective, the BCR’s financial results were
also very positive. The BCR Conglomerate’s 2012 profits
represent 18% of the total profits of the Financial Groups and
Conglomerates in the country.
Consolidated State of Results
Millions of colones
2012
2013
Incomes through financial intermediation
275.456
284.900
Costs through financial intermediation
119.255
127.525
7%
Results of financial intermediation
143.966
150.006
4%
Incomes through services and other incomes
107.666
102.000
-5%
Other operational costs
40.232
43.129
7%
Gross Operational Results
211.400
208.877
-1%
Administrative costs
157.839
159.082
1%
Net Operational Results
53.560
49.795
-7%
Taxes and participation in profits
17.729
16.282
-8%
Period results attributed to minority interests
3.920
4.298
10%
FINAL RESULT
31.911
29.215
-8%
On the other hand, due to the strong resource demand on
the part of the Costa Rican State in the local financial market,
during 2013 the cost of local funds increased substantially
and sustainably. Additionally, due to this situation, the
available resources were more restricted, the competition
was stronger and, as a result, there was an increase in
financing costs and a reduction in the margin of financial
intermediation.
%Change
3%
Incomes from Services
Incomes from services and other operational incomes totaled
101.998 billion colones, which contributed to 28% of the
BCR Conglomerate’s total incomes. It should be noted that
compared to the industry, the Banco de Costa Rica is in
second place in income generation through services, with a
market participation rate of 19% in 2013.
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Income Distribution from
Banking Services, 2013
Incomes from services, by business line
Millions of colones
2012
2013
Banking services
67.727
72.345
Stock trading services
1.940
2.124
10%
Investment funds
4.410
5.170
17%
Pension funds
4.354
5.969
37%
Insurance placement
1.914
2.487
30%
Investment and Trust Banking
1.794
1.862
4%
Other incomes
25.527
12.042
-53%
Total
107.666
101.998
-5%
%Change
7%
Other services
11%
Public services
Fees and taxes
Foreign commerce
Current accounts
4%
Cards
4%
43%
5%
6%
27%
Currencies
The incomes that originate from traditional banking services
continue to grow at a good rate. In 2013 the BCR obtained
incomes of ¢77.588 billion colones, a 15% increase over
the year before. This increase continues to be supported
through the continual growth of our debit and credit card
business, which represented 42% of the incomes through
banking services in this year. This was complemented by the
business of buying and selling currency, which increased by
12% and represented 27% of these incomes.
Income from foreign commercial activities showed recovery,
and grew by 15% as compared to 2012. The collection of
fees and taxes grew solidly by 15%, in conjunction with a
higher level of economic activity in the country.
Services associated with checking and savings accounts
grew by 8%. Nevertheless, the clients have continued to
ration their use of services associated with their accounts,
including a positive move from in-person transactions
towards electronic services, which are more appealing and
economical for many. The volume of electronic transactions
grew by 7% in 2013. Additionally, the Bank processed
80% (more than 137 million) of its transactions by electronic
means this year, with 20% in-person transactions (32 million).
In terms of non-banking commissions, our subsidiary in
charge administering pension funds, BCR OPC, showed a
37% increase in its incomes. Additionally, our subsidiary in
charge of administering investment funds, BCR SAFI, showed
a 17% increase in its incomes in 2012, providing 31% of
our incomes not related to banking services.
Lastly, incomes from collecting public services showed a
satisfactory growth rate of 20%, which begins to reflect the
first results of our expansion to massive service points with the
“Pague Fácil BCR” (“BCR Easy Pay”) program.
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Income Distribution From
Non-Banking Services, 2013
11%
12%
14%
29%
Administrative Expenses
In terms of administrative costs, the Banco de Costa Rica
closed 2013 with expenses of ¢159.082 billion colones,
a 1% increase over the previous year. This modest growth
in expenses reflects, among other things, the strict control
exercised in all areas of the Conglomerate’s administration.
At the same time, this has not limited the necessary investments
in important infrastructure and technological projects, nor
expenditures destined to strengthen the intake, marketing,
and sales activities.
34%
Administrative Expenses
Millions of colones
Trading Services
Investment Funds
Pension Funds
Insurance Placement
Investment and Trust Fund Banking
In 2013, the BCR Corredora de Seguros continued its
consolidation process, reaching the second place in the
Costa Rican market in terms of income generation from
insurance brokerage.
2012
2013
%Change
Personnel Services Costs
110.021
107.819
-2%
Contracted Services
14.741
16.828
14%
Depreciation and Amortization
7.148
6.740
-6%
Other General Costs
25.929
27.695
7%
Total
157.839
159.082
1%
At the same time, the businesses related to stock brokerage
and investment banking showed moderate growth, in
accordance with a less dynamic stock market and a lower
volume of transactions.
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Contributions and Taxes
The Banco de Costa Rica, like any other bank belonging
to the Costa Rican State, is subject to a quasi-fiscal tax
regimen created by law in order to support certain institutions
dedicated to special purposes. Additionally, despite the
status of Institution Autonomous from the State, the Bank must
contribute income tax, just like any other legal person in the
country.
In 2013 the BCR paid ¢16.282 billion colones in taxes and
contributions, equivalent to 33% of its profits before taxes.
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2013 MANAGEMENT
BY BUSINESS AREA
RETAIL BANKING
The Retail Banking Division is in charge of attending to the
needs of our personal customers, as well as of small and midsized businesses (PYMES). Our strategy’s central objective
is the client, and it focuses on providing excellent service
with quick processes and fast response times, advanced
technologies, and a variety of renewed highly competitive
products and services, which allows us to strengthen the
connection with our customers and intensify their use of all
our network of channels and services (bank offices, ATMs,
banking by telephone, mobile and internet banking, and
other services).
Among other services, our products include checking
accounts; credit cards; housing and consumer credit;
life and general insurance policies; savings instruments;
investment funds; pension funds, intermediation of securities;
buying and selling of currencies and international services;
transfers; public, private, and municipal service payments;
tax collection; as well as fiduciary services and automatic
charges. Additionally, this includes 24/7 access to our
services through electronic channels.
Detailed Banking Portfolio
Millions of colones
2012
2013
Businesses (PYMES)
155.233
181.659
%Change
17%
Consumer
284.561
293.062
3%
Housing
553.580
586.436
6%
Credit Cards
48.982
47.049
-4%
Total Retail Banking
1.042.356
1.108.206
6%
Incomes from Services by
Commercial Segment
15%
Retail Banking
48%
37%
Business Banking
Subsidiaries
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Within the retail banking segment, financing for small and
mid-sized Costa Rican business has continued to grow
positively. The Banco de Costa Rica is continuing to focus
its attention on this sector to deepen banking penetration
and offer more development possibilities to small business
owners, entrepreneurs, and business innovators by
promoting their activities and offering adequate financing for
their needs. The services we offer include distinct financing
alternatives; operational support for importation and
exportation; collection, payment, and fundraising services;
factoring; checking accounts; transfers and payments to and
from abroad; investment administration; assessment and
sales of insurance; buying and selling of currency; fiduciary
services; a securities market; investment and credit funds with
the resources from the Development Financing Fund; as well
as credits with the endorsement of the National Development
Trust Fund (FINADE).
The small and mid-sized business sector in our portfolio grew
by 17% in 2013 (15% in 2012), with a deeper connection,
supported by favorable business conditions in some of the
areas that the small businesses work in, such as agriculture,
livestock, tourism, and construction.
The results in relation to the collection of public deposits from
retail banking were also satisfactory. The deposit portfolio
grew by 13% in 2013 and maintained a product structure
relatively similar to the structure from 2012.
Retail Banking Portfolio
Millions of colones
2012
2013
%Change
Current Accounts
282.770
331.456
17%
Savings Accounts
409.742
443.479
8%
Certificates of Deposit
419.022
478.739
14%
Total Retail Banking
1.111.534
1.253.674
13%
Structure of Public Deposits
Retail Banking
25%
26%
Current Accounts
Term Deposits
Savings Accounts
38%
38%
37%
35%
2012
2013
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CORPORATE AND
INSTITUTIONAL BANKING
The Banco de Costa Rica has consolidated its leadership
in the corporate and institutional banking sectors. Large
and medium-sized companies in the country continue to
come to the BCR because they find in us a strategic ally
that understands and accompanies them in their businesses’
development and growth. We give them a variety of
integrated and personalized banking solutions and provide
them with a series of high quality products and services at very
competitive prices. The leading companies in the country, as
well as the most-recognized multinational companies and the
majority of the governmental institutions and companies, are
all active clients of our Bank through a variety of products
and services.
The Corporate and Institutional Banking Division meets the
needs of this segment of customers by making use of a
strategy in which the customer is priority number one. Through
highly personalized attention, customers are provided with
excellent and tailor-made services, supported by agile
processes and quick response times. The services offered
require the active and continuous participation of various
areas of the Bank, which are integrated as a single team to
provide the excellent service the customer expects. Key areas
for successful customer service for these very important clients
include Operation Management, Credit Management,
Treasury Management, Foreign Commerce Management,
Legal Management, and Investment Banking Management,
along with the Zone, Corporate, and Institutional Executives.
The added value that this segment brings to the Bank’s
business and incomes is quite relevant, and is obtained
not only through financial intermediation, but also through
the services they use, as well as the cross-sales that they
provide towards other divisions and subsidiaries of the BCR
Conglomerate.
Corporate and Institutional Banking Credit Portfolio
Millions of Colones
2012
2013
Services Sector
863.371
901.696
%Change
Industry and Manufacturing
319.752
337.479
6%
Agriculture
159.129
180.356
13%
Commerce
159.630
148.432
-7%
Electricity and Telecommunications
46.169
45.030
-2%
Other economic sectors
189.675
257.684
36%
Total Corporate and
Institutional Banking
1.737.727
1.870.675
8%
4%
Corporate and Institutional Banking
Credit Portfolio, By Currency
Colones
43%
40%
57%
60%
2012
2013
Dollars
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Leading the market in the corporate and institutional segment
demands continuous updating of financial products and
permanent communication with our clients, who are also
highly coveted by our competition. The business credit
portfolio grew by 8% in 2013, in comparison to the previous
year. The economic sectors displayed different behaviors
according to each one’s perspectives regarding the behavior
of the economy.
In terms of public deposit intakes in the corporate and
institutional segments, our clients preferred term deposits,
especially for terms less than 30 days, which help them
handle liquidity and their treasuries. This is because of the
tax benefits that these deposits provide, since the interest
rates on these types of deposits are charged 8% as a single
and definitive tax, while the incomes that they receive in
checking accounts are considered to be normal income for
tax purposes, and are subject to a 30% income tax.
Due to the greater growth of the business credit portfolio in
2013 in relation to the growth of its public deposit intakes,
the Bank turned to foreign funding as a way to maintain
available funds for the country’s productive sector. This
situation made payable loans to foreign entities grow by
40% in 2013, which was 8% of the Bank’s total consolidated
liabilities.
Corporate and Institutional Public Banking Deposits
Millions of colones
2012
2013
%Change
Colones
959.430
919.431
-4%
Dollars (valued in Colones)
503.279
564.329
12%
Total Corporate and
Institutional Banking
1.462.709
1.483.761
1%
Structure of Public Deposits
Corporate and Institutional Banking
Current Accounts
34%
35%
65%
65%
2012
2013
Term Deposits
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SUBSIDIARY COMPANIES
BCR VALORES PUESTO DE BOLSA S.A.
This is the subsidiary of the Banco de Costa Rica dedicated
to attending to clients’ needs in the securities markets. Its
range of services include assessment in subjects related to
stocks, the buying and selling of securities (commercial paper,
term certificates of deposit, bonds, repurchases, reports, and
actions, among other services), not only domestically, but also
in international markets and in the currencies that the customers
need. Additionally, it is dedicated to the administration of
individual portfolios, custodial services, fiduciary services,
and other support activities for our customers. We also
offer our customers assessment services for structuring,
titling, and/or stock market dividend placement under our
two subscription services, “firm subscription” or “best effort
subscription.”
BCR Securities Market
Millions of colones
2012
2013
Profitability over Equity
15%
23%
Operational Efficiency Index
47%
40%
Net Profit
1.171
2.550
Portfolios Administered
432.525
334.311
In 2013, the market, as well as BCR Securities, faced a much
more benign macroeconomic market than in 2012. This was
mainly observable in the first trimester, due to several events
happening. One of these was the issuance of $1 billion
by the Costa Rican government in international markets in
November of 2012, after a number of years of not taking
part in this type of financing. This lowered the pressure on
this issuer on its loanable funds in the local market during
the following months, with the consequent effect of reducing
interest rates. On the other hand, by the end of January there
was a strong influx of financial capital from abroad, which
ended up causing a rise in prices of fixed income instruments
in the local market. This influx aimed to take advantage of
the relatively high interest rates in colones. The Basic Liability
Rate, which had started the year at 9.20%, finished the year
at 6.50%. These events in turn facilitated the acquisition
of capital gains on the part of the stock brokerages and
investors, strengthening the level of business throughout the
year.
Within this generally positive context, it should be mentioned
that BCR Valores performed at a higher level than that of
some of the main financial variables, as compared to other
stock brokerages. Total assets grew up 9.55% with respect
to the previous year, closing at 42.244 billion colones as
of December 31. This behavior is more noticeable if one
takes into account that the total assets of the stock industry
decreased by 8.38% during the same period. In terms
of capital, one could also note a clear advantage in the
performance of BCR Valores, seeing as it increased by 34%,
reaching 11.620 billion colones as of December, improving
upon the 16.65% general growth rate.
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BCR Sociedad Administradora
de Fondos de Inversión S.A.
In terms of these results, one may notice an increase of
slightly more than 40% in the total incomes of BCR Valores
in 2013, as compared to the year before, passing the
growth rate of 20% observed in the industry as a whole.
The incomes from BCR Valores went from ¢5.451 billion
colones in 2012 to ¢7.797 billion colones in 2013. Net
profits more than tripled in 2013, as compared to 2012,
increasing by 118% from ¢1.171 billion colones in 2011
to ¢2.550 billion. The growth of this indicator for the stock
industry in 2013 reached around 128%. With these results,
the return on capital for BCR Valores was at around 22.96%
in 2013, much higher than the average brokerage rates
of 15.40%, and they placed the BCR in second place in
the market (out of a total of 16 stock brokerages currently
operating). By volume negotiated, in 2013 BCR Valores
reached an amount of 6.778 billion colones, allowing it
to increase its market participation from 9.93% in 2012 to
11.58% in 2013.
This is the Banco de Costa Rica subsidiary that has
been dedicated to the administration of Investment
Funds (mutual funds) for the past 13 years. With a wide
selection of Investment Funds for liquidity, income, growth,
development, and real estate, combined with a complete
assets administration assessment service, BCR S.A.F.I. is the
undisputed leader in the Cost Rican Investment Fund industry,
and has continually maintained that position of privilege over
the last eight consecutive years.
BCR Sociedad Administradora
de Fondos de Inversión
Millions of colones
2012
2013
Profitability over Equity
16%
16%
Operational Efficiency Index
43%
49%
Net Profits
1.076
1.282
Investment Funds Administered
267.062
351.133
The investment funds industry continued to grow throughout
2013, with financial investment funds having to compete
strongly with alternative products, bank deposits, due to
client preference; real estate funds maintained a stalled level
of growth in comparison to previous years.
By the end of 2013, BCR SAFI had reached a market
participation of 23% and maintained its leading position
in the market. Additionally, real estate investment funds
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BCR Operadora de Planes
de Pensiones Complementarias S.A.
managed to stay on top, with 34% market participation in
the industry.
Total assets grew by 22% compared to the previous period,
closing at ¢9.238 billion colones, while equity increased
by 19% to ¢8.392 billion colones; and with a profitability
of 16.39% in 2013, it is one of the market’s most profitable
funds companies on the market.
Total incomes in 2013 grew by 16% as compared the
year before, which was a result of an important increase
in administration commission incomes, and of the profits
earned on the negotiation of securities titles. Net profit was
¢1.282 billion colones, which made it possible to maintain
a profitability over equity that was above the general
profitability of the BCR Conglomerate.
BCR SAFI has 16 registered and 9 active investment funds
in the market, of which 5 are financial, 4 are for real estate,
and 1 is for real estate development investment.
BCR Pensiones is the subsidiary of the Banco de Costa Rica
dedicated to the administration of pension plans and labor
capitalization, whether obligatory or voluntary, which is
created and allowed by the Worker Protection Law.
BCR Operadora de Planes de
Pensión Complementarios
Millions of colones
2012
2013
Profitability over Equity
29%
38%
Operational Efficiency Index
56%
40%
Net Profit
1.257
2.459
Pension Funds Administered
494.320
586.508
Pension plan activity in Costa Rica continued its consolidation
process. 14 years after the Worker Protection Law was
enacted, it is now comprised of six actors. The number
of participants has decreased, while the concentration of
administered funds has increased. At the end of 2013,
through three Pension Fund Operators, we administered
around 75% of the industry’s funds.
BCR Pensiones is in third place in the industry, maintaining
approximately $1.185 million dollars in administered funds,
through 6 pension funds; two funds are obligatory and 4
are voluntary.
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BCR Corredora de Seguros S.A.
In terms of financial results, BCR Pensiones ended 2013
with ¢8.591 billion colones in assets and equity of ¢6.913
billion colones. Additionally, its incomes grew by 35% over
the previous year, while expenses were lowered by 6%. This
was a result of an increase in profits of around 96% and
the highest profitability over equity among all Operators
in the industry. Additionally, it is the number one Operator
in annual net affiliation, and has the highest growth in
administrated assets, which has let BCR Pensiones reach a
market participation of around 20% in terms of number of
affiliates.
This is the subsidiary of the Banco Costa Rica that has
been dedicated to insurance brokerage since 2009. It was
created after the insurance monopoly in Costa Rica was
eliminated at the end of 2008. BCR Seguros was the first
registered and authorized Insurance Broker, and it started
operations in June of 2009.
BCR Corredora de Seguros
Millions of colones
2012
2013
Profitability over Equity
35%
34%
Operational Efficiency Index
58%
60%
Net Profit
535
773
Commissions Earned
2.181
2.774
In its fifth year after the insurance market opened up, the
Costa Rican insurance market has continued a process of
consolidation and development to promote a culture of
insurance in the Costa Rican market. The sales forces were
regionalized, meaning that the main areas of the country
now have assigned Insurance Brokers, and new products
were also added to the portfolio, providing opportunities for
growth and closer relationships with customers of the BCR.
The Bank’s objective is to reach a leadership position in the
near future.
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Banco Internacional de Costa Rica (BICSA)
In 2013, for the second year in a row, BCR Corredora de
Seguros was in first place among all insurance intermediaries
in generating profits, at ¢773 million colones. Additionally,
it has assets of ¢3.411 billion colones, and reached
second place among intermediaries in income generation,
reaching ¢2.966 billion colones, which allowed it to reach
a profitability over equity of 34%.
Additionally, it stood out because of its 14% growth rate
in insurance premium placements over the previous year,
equivalent to over 28 million dollars, with 51% corresponding
to personal insurance policies, 43% general insurance
policies, and 6% joint and other insurance policies. Equity
reached ¢2.649 billion colones, with an inter-annual growth
of 41%, and commissions grew by 27% over the previous
year.
This is a subsidiary of the Banco de Costa Rica that has been
operating since 1976. BICSA is a banking entity located
in the Republic of Panama that operates with a general
license issued by the Panama Bank Superintendence, and
which may conduct business in Panama and abroad. It
also maintains banking branches in the city of Miami, USA,
which has been working since 1983 under an international
banking license and which has representation offices in
several Central American countries. The property equity of
the BICSA belongs 51% to the Banco de Costa Rica and
49% to another Costa Rican state bank.
Banco Internacional de Costa Rica (BICSA)
Thousands of dollars
2012
2013
Total Assets
1.488.201
1.650.431
Credit Portfolio
1.198.191
1.233.366
Public Deposits
694.390
893.904
Equity
155.829
170.296
Net Profit
16.177
17.721
Profitability over Equity
12%
11%
Operational Efficiency Index
41%
36%
Change %
11%
3%
29%
9%
10%
At the end of 2013 the balances of BICSA showed positive
financial growth, both in its credit portfolio and in its intakes
of resources and equity. The profitability over equity remained
at a level similar to the previous year. Capital returns continue
to be higher than the returns from associated banks, adding
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real positive value to this investment. It remains anchored by
its strategic strengths and the three most important financial
objectives: strong liquidity, strong reserves, and strong
capital sufficiency.
BICSA’s asset volume increased to ¢1.650 billion colones
which, compared to ¢1.488 billion colones in assets from
the previous year, represents a growth of 11%. The loan
portfolio in December of 2013 was at $1.233 million,
reflecting an increase of 3% over 2012, making it the most
important asset, and comprising 81% of the total assets.
Additionally, BICSA’s profit in 2013 was at $17 million,
which was higher than the previous year.
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INTEGRAL RISK
MANAGEMENT
INTEGRAL RISK
MANAGEMENT
The sophistication and uncertainty of financial markets
necessitates the management of risks that may decrease
the value of the entities and the third-party resources they
administer.
Integral Risk Management System (SIGIR)
Facing this reality, the BCR has implemented an Integral Risk
Management System that allows it to achieve a balance
between the expected benefits of a commercial strategy and
the acceptance of a determined level of risk. This system
uses an effective administration based on risk. In addition to
being innovative, dynamic, and independent of the business,
it is characterized in that it preserves the basic objectives of
solvency, profitability, efficiency, and liquidity in the various
components on the balance sheet.
The SIGIR has been consolidating its objective of generating
information that helps improve decision-making, and is
oriented to placing the BCR within a level of risk that is
congruent with its profile and its risk appetite, as well as
being consistent with its nature, complexity, and volume
of operations. With this information it helps achieve short,
medium, and long-term institutional objectives and goals.
It is a formal, integral, and continual system. Additionally,
it is involved in activities related to identification, analysis,
evaluation, administration, revision, documentation, and
communication of risks. These activities may come up in the
evaluations of established risks.
Integral risk management considers all relevant risks that the
BCR may be exposed to.
The use and perfection of SIGIR is led by the General
Superintendence of Risk Management of the BCR, which is
in charge of the departments of Integral Risk Management,
Credit Risk, Market Risks, Technological and Operational
Risks, and others, and is backed up by a specialized human
resources team with ample knowledge of the business, the
market, and the needs of its clients.
The SIGIR has been made more robust through the use of
an Guiding Framework that contains policies, regulations,
dispositions, procedures, and other internal norms that
regulate its functioning and perfection and define—among
other aspects—the roles and responsibilities of the actors
that intervene in this process. Additionally, it has models,
methodologies, tools and systems that are all aligned with
prudent international practices and which are strictly linked
to the guidelines by these regulators, supervisors, and
fiscalizers, according to the terms in which the Banco and its
subsidiaries are located.
A risk culture has been developed, and it is rooted at all
levels in the organization. This has been achieved thanks to
the implementation of strategies, programs, and plans that
aim to continually improve processes, which high standards
of quality and strict systems of control and follow-up for
relevant risks.
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Within the context of corporate governance and integral
risk management, the Board of Directors, the Executive
Committee, the Corporate Committee for Risk, and other
related committees all play a fundamental role in making
decisions based on risk, as organizations in charge of
evaluating strategic aspects and tactics that are inherent
in this management. At the same time, through the
intermediation of the committees for Assets and Liabilities,
Credit, Commercial, Investments and Transformation and
Technology, among others, the management of these distinct
risks may be managed within the corporate framework.
Adopted Risk Profile
The risk profile reflects an entity’s capacity and attitude
towards economic loss tolerance and other consequences
that affect the fulfillment of the institutional objectives that the
Bank’s businesses and other processes generate.
We use the following criteria to determine risk levels:
Level
Adverse
Details
Not willing to assume risks that
generate losses or other relevant
consequences for the business
Conservative
Seeks profitability in accordance with
a low risk level.
Moderate
Willing to assume risks of losses or
other consequences, but in a limited
manner.
Aggressive
Assumes the risk of large losses
or other consequences, with the
expectation of receiving significant
gains in return.
The BCR has taken on the “Moderate” risk profile and in
light of this it has established its appetite for risks by using
limits and indicators that are monitored and controlled
permanently, taking into account credit, financial, market,
and operational aspects, among the most important aspects.
Value added for the business
BCR currently manages its risks in an integrated way, not only
for prudence’s sake, but also as a way to generate business
opportunities which can benefit in two ways: by minimizing
losses or maximizing gains, and by largely guaranteeing
long-term permanence through safeguarding equity.
In accordance with modern risk management, the Risks
Department acts as a strategic partner for the different areas
of the business, so that they feel supported in the generation
of business, thereby allowing the sale of financial products
and services that take the importance of institutional equity
into account in terms of solidity. This becomes especially
relevant and is an added value for the business, especially
in periods of economic instability and financial crises, and
is operationalized through the issuance of early warnings.
These alerts present and analyze events and perspectives,
both negative and positive, at a macroeconomic level, by
economic activity and by sector, as well as geographic
area, in order to make decisions.
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Advances in Management
Integral risk management forms part of the institutional strategy
and is at the core of decision-making. The acquisition and
implementation of automated systems of the highest order
for the management of risks related to credit, markets,
investment portfolios, operational, and technological risks,
among others, have all strengthened this process.
We are developing a Plan for Risk Culture that has been
approved by the General Board of Directors; it is for the
employees of the BCR. An important aspect of this is Risk Day,
which has taken place for the last few years, involving the
participation of national and international speakers, virtual
and in-person courses, and the launching of a webpage on
the BCR’s intranet, which is dedicated exclusively to topics
related to risks.
On the other hand, we have also promoted a culture of
recognizing banking risks for current and potential clients,
through the use of technical publications in prestigious media
outlets and within the national-level financial world.
The General Superintendence for Risk Management issues
warnings not only when there are events that may crop up
in the future and negatively affect the BCR, but also issues
positive alerts that are related to business opportunities that
may be in planning; all of this is based on macroeconomic
studies and econometrics that are complimented by the
contributions of the commercial and support areas.
There is also a Maturity Model that defines the critical steps
to follow in order to reach greater relevancy for integral
management, which allows us to place the SIGIR that the
BCR uses at a determined level of maturity. Once derived
from the obtained result, we establish short and mid-term
strategies to deal with the gaps that were identified with
respect to the next level of maturity, thereby working in a way
that is focused on continual improvement.
Risk evaluations are made in an integral way and using a
methodology aligned with the applicable norms and best
practices; the risk evaluations may be for strategic objectives,
processes, intra-group relations, trusts, securitizations,
outsourcing, and new products and services, among others.
These are aimed at achieving the proposed objectives and
goals, generating the mitigators necessary to locate the BCR
within the range of acceptable risk.
We also implemented a “Risk Report” to launch new products
and services or make substantial modifications to existing
ones; this report is an instrument to aid in decision-making
based on risk on the part of the corresponding solutionary
body.
In terms of technological risk, we have been implementing the
Cobit methodology, which allows continuous improvement in
all aspects related to the processing and organization of
processes that the Technological division intervenes in.
The Model for the Management of Risks Related to Money
Laundering and Financing for Terrorism was strengthened
for clients, products, channels, and geographical areas,
increasing the coverage not only of the Bank, but also of its
subsidiaries.
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Review of Risk Management
For the management of market risks, the BCR has
econometric models that allow it to predict the future
behavior of macroeconomic and financial variables, not
only at the market level, but also internally. Additionally, the
management of market risks was aided by novel tools and
systems, such as SAP and Matlab, among others. For credit
risks, we are developing a project to aid in the management
through a robust automated system for effective management
which includes, among other things, risk grading models for
businesses and financial entities, and a “Credit Scoring” for
Retail Banking.
For operational risks, the OpRisk system was implemented,
which uses methodologies to estimate events by risk and
present periodic reports of operational losses.
At the same time other risks were managed, such as
reputational risk, environmental risk, and social risk; for these
a Management System that meets international standards
was implemented.
Finally, the Internal Risk Grading Model has been
consolidated, becoming an integral instrument to monitor and
control the limits of the most relevant and impactful indicators
for the BCR. The results of this model are periodically made
known to the Corporate Risk Committee and the General
Board of Directors.
In addition to the internal self-evaluations performed in the
risk management areas with the objective of perfecting the
processes, the General Corporative Audit continues its role
as fiscalizer which, complimentary to its role as external
auditor, has substantially contributed to the strengthening,
evaluation, and perfection of the Integral Risk Management
System.
In terms of external evaluations on the part of international
organizations, the Banco de Costa Rica has an investment
grade of Baa3 from Moody’s and of BB+ from Fitch Ratings,
both of which are similar to the ratings of the Costa Rican
Government. At the local level, the long-term grade is
AA+(cri), with a stable outlook, and the short-term grade is
F1+(cri).
The following aspects fundamentally affect these grades:
Government Support: The national scores for the Banco
de Costa Rica (BCR) reflect the explicit guarantee of the
Costa Rican state for all of its liabilities. As stated in the
National Organic Banking System Law, state banks have
the guarantee and complete cooperation of the State, which
allows their scores to be aligned with the scores of Costa
Rica.
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Strong Capitalization: The internal generation of capital
remains sufficient to sustain the growth of assets and maintain
capital indicators at adequate levels. With the exception of
obligatory contributions, all profits are capitalized.
Diversified Funding: The BCR benefits from a diversified and
stable base of deposits. It has recently been complimented
by subordinated debt and an international long-term credit
issuance.
Quality of Adequate Assets: The growth of the BCR towards
a more balanced portfolio has improved its diversification,
keeping default under control and maintaining a moderate
level of exposure to exchange risk, generated by the loans
issued in dollars to non-charging debtors.
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CONSOLIDATED AND AUDITED
FINANCIAL STATEMENTS
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See the notes regarding the
Consolidated Financial Statements on
our website at www.bancobcr.com
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ANNUAL REPORT