ZAO CB Citibank Financial Statements for the year ended 31

Transcription

ZAO CB Citibank
Financial Statements
for the year ended 31 December 2013
ZAO CB Citibank
Contents
Auditors’ Report
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
1 Background
2 Basis of preparation
3 Significant accounting policies
4 Interest income and interest expense
5 Fee and commission income and fee and commission expense
6 Net gains on securities
7 Net foreign exchange income
8 General administrative expenses
9 Income tax expense
10 Cash and cash equivalents
11 Loans and deposits with banks and other financial institutions
12 Financial instruments held for trading
13 Loans to customers
14 Financial instruments available-for-sale
15 Property and equipment
16 Goodwill
17 Due to the Central Bank of the Russian Federation
18 Deposits and balances from banks and other financial institutions
19 Current accounts and deposits from customers
20 Transfer of financial assets
21 Other liabilities
22 Share capital
23 Corporate governance and internal control
24 Risk management
25 Credit related commitments
26 Operating leases
27 Contingencies
28 Related party transactions
29 Financial assets and liabilities: fair value and accounting classifications
30 Capital management
31 Average effective interest rates
32 Maturity analysis
33 Currency analysis
34 Events after the reporting period
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ZAO KPMG
10 Presnenskaya Naberezhnaya
Moscow, Russia 123317
Telephone
Fax
Internet
+7 (495) 937 4477
+7 (495) 937 4400/99
www.kpmg.ru
Auditors’ Report
To the Shareholder and the Board of Directors of ZAO CB Citibank
We have audited the accompanying financial statements of ZAO CB Citibank (the “Bank”),
which comprise the statement of financial position as at 31 December 2013, and the statements
of profit or loss and other comprehensive income, changes in equity and cash flows for 2013,
and notes, comprising a summary of significant accounting policies and other explanatory
information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards, and for such internal
control as management determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the fair presentation of these financial statements
based on our audit. We conducted our audit in accordance with Russian Federal Auditing
Standards and International Standards on Auditing. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to express an
opinion on the fair presentation of these financial statements.
Audited entity: ZAO Commercial bank “Citibank”
Registered by the Central Bank of the Russian Federation on 1
November 1993, Registration No. 2557. Re-registered as Closed
Joint Stock Company Commercial bank “Citibank” on 5 November
2001.
Entered in the Unified State Register of Legal Entities on 14
November 2002 by Moscow Inter-Regional Tax Inspectorate No. 39
of the Ministry of Taxes and Duties of the Russian Federation,
Registration
No. 1027700431296,
Certificate
series
77
No. 00480345.
Address of audited entity: 8/10, building 1, Gasheka street,
Moscow, 125047, Russian Federation.
Independent auditor: ZAO KPMG, a company incorporated under the
Laws of the Russian Federation, a part of the KPMG Europe LLP
group, and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Registered by the Moscow Registration Chamber on 25 May 1992,
Registration No. 011.585.
Included in the Unified State Register of Legal Entities on 13 August
2002 by the Moscow Inter-Regional Tax Inspectorate No.39 of the
Ministry for Taxes and Duties of the Russian Federation, Registration
No. 1027700125628, Certificate series 77 No. 005721432.
Member of the Non-commercial Partnership “Chamber of Auditors of
Russia”. The Principal Registration Number of the Entry in the State
Register of Auditors and Audit Organisations: No. 10301000804.
Auditors’ Report to the Shareholder and the Board of Directors of ZAO CB Citibank
Page 2
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Bank as at 31 December 2013, and its financial performance and its cash flows for 2013 in
accordance with International Financial Reporting Standards.
Lukashova N.V.
Director
(power of attorney dated 1 October 2013 No. 64/13)
ZAO KPMG
Moscow, Russian Federation
29 May 2014
ZAO Citibank
Notes to, and forming part of, the Financial Statements
1
Background
(a)
Organisation and operations
ZAO Citibank (the Bank) was established in the Russian Federation as a limited liability company and in 1993
was granted its general banking licence. The Bank converted to a closed joint-stock company in November
2001 and is a part of the international financial company, Citigroup, headquartered in the United States and
operating in over 100 countries. The principal activities of the Bank are deposit taking, lending, and foreign
exchange and securities transactions, which are conducted through its head office in Moscow and branch in
St.Petersburg. As at 31 December 2013, the Bank also has branches in Samara, Rostov-on-Don, Ekaterinburg,
Nizhny Novgorod, Volgograd and Ufa, which provide banking services to individuals. The activities of the
Bank are regulated by the Central Bank of the Russian Federation (the CB RF). The Bank became a member of
the state deposit insurance system in the Russian Federation on 3 February 2005.
The Bank’s registered office is 8-10, building 1, Gasheka str., Moscow.
(b)
Russian business environment
The Bank’s operations are primarily located in the Russian Federation. Consequently, the Bank is exposed to
the economic and financial markets of the Russian Federation, which display emerging-market characteristics.
Legal, tax and regulatory frameworks continue to be developed, but are subject to varying interpretations and
frequent changes that, together with other legal and fiscal impediments, contribute to the challenges faced by
entities operating in the Russian Federation. In addition, the contraction felt after the 2008 economic downturn
in the capital and credit markets and the impact of this on the Russian economy further increased the level of
economic uncertainty in the environment. The financial statements reflect management’s assessment of the
impact of the Russian business environment on the operations and financial position of the Bank. The future
business environment may differ from management’s assessment.
2
Basis of preparation
(a)
Statement of compliance
The accompanying financial statements are prepared in accordance with the requirements of International
Financial Reporting Standards (IFRS).
(b)
Basis of measurement
These financial statements are prepared on the historical cost basis except that financial instruments at fair
value through profit or loss and available-for-sale financial instruments are stated at fair value.
(c)
Functional and presentation currency
The functional currency of the Bank is the Russian Rouble (RUB) as, being the national currency of the
Russian Federation, it reflects the economic substance of the majority of underlying events and circumstances
relevant to them. In previous reporting periods before 1 January 2005 the Bank used US Dollar (USD) as a
functional currency. Beginning from 1 January 2005 because of the enforcement of new IAS 21 The Effect on
Changes in Foreign Exchange Rates (revised in 2003) the Bank revised its functional currency, and as a result
changed it from USD to RUB. The RUB is also the presentation currency for the purposes of these financial
statements.
As at 31 December 2013, the official exchange rate was 32.7292 RUB for 1 USD and as at 31 December 2012
the official exchange rate was 30.3727 RUB for 1 USD.
Financial information presented in RUB is rounded to the nearest thousand.
(d)
Goodwill
Goodwill arises from acquisitions of subsidiaries.
Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate
that it might be impaired and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity
sold.
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ZAO Citibank
(e)
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results could differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgments in applying accounting
policies is described in the following notes:
(f)

loan impairment estimates – Note 13

estimates of fair value of financial assets and liabilities – Note 29.
Changes in accounting policies and presentation
The Bank has adopted the following new standards and amendments to standards, including any consequential
amendments to other standards, with a date of initial application of 1 January 2013.

IFRS 13 Fair Value Measurements (see (i))

Presentation of Items of Other Comprehensive Income (Amendments to IAS 1 Presentation of Financial
Statements) (see (ii))

Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments
to IFRS 7) (see (iii)).
The nature and effect of the changes are explained below.
(i)
Fair value measurement
IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value
measurements, when such measurements are required or permitted by other IFRS requirements. In particular, it
unifies the definition of fair value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
It also replaces and expands the disclosure requirements about fair value measurements in other IFRS
requirements, including IFRS 7 Financial Instruments: Disclosures (see Note 29).
As a result, the Bank adopted a new definition of fair value, as set out in Note 3(c)(v). The change had no
significant impact on the measurements of assets and liabilities. However, the Bank included new disclosures
in the financial statements that are required under IFRS 13, comparatives not restated.
(ii)
Presentation of items of other comprehensive income
As a result of the amendments to IAS 1, the Bank modified the presentation of items of other comprehensive
income in its statement of profit or loss and other comprehensive income, to present separately items that
would be reclassified to profit or loss in the future from those that would never be. Comparative information
is also re-presented accordingly.
(iii)
Financial instruments: Disclosures – Offsetting financial assets and financial liabilities
Amendments to IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial
Liabilities introduced new disclosure requirements for financial assets and liabilities that are offset in the
statement of financial position or subject to master netting arrangements or similar agreements.
The Bank included new disclosures in the financial statements that are required under amendments to IFRS 7
and provided comparative information for new disclosures.
3
Significant accounting policies
The following significant accounting policies are applied in the preparation of the financial statements. The
accounting policies are consistently applied by the Bank to all periods presented in these financial statements.
Future changes in accounting policies are described at the end of this Note.
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(a)
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency of the Bank at exchange rates at the
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date
are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on
monetary items is the difference between amortised cost in the functional currency at the beginning of the
period, adjusted for effective interest and payments during the period, and the amortised cost in foreign
currency translated at the exchange rate at the end of the reporting period. Foreign currency differences arising
on retranslation are recognised in profit or loss, except for differences arising on the retranslation of availablefor-sale equity instruments or qualifying cash flow hedges to the extent that the hedge is effective, which are
recognised in other comprehensive income.
(b)
Cash and cash equivalents
The Bank includes cash and nostro accounts with the CB RF and nostro accounts with banks and other
financial institutions in cash and cash equivalents. The obligatory reserve deposit with the CB RF is not
considered to be a cash equivalent due to restrictions on its withdrawability. Cash and cash equivalents are
carried at amortised cost in the statement of financial position.
(c)
Financial instruments
(i)
Classification
Financial instruments at fair value through profit or loss are financial assets or liabilities that are:
- acquired or incurred principally for the purpose of selling or repurchasing in the near term
- part of a portfolio of identified financial instruments that are managed together and for which there is
evidence of a recent actual pattern of short-term profit-taking
- derivative financial instruments (except for derivative financial instruments that are designated and effective
hedging instruments) or,
- upon initial recognition, designated by the Bank as at fair value through profit or loss.
The Bank may designate financial assets and liabilities at fair value through profit or loss where either:
- the assets or liabilities are managed, evaluated and reported internally on a fair value basis
- the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise or,
- the asset or liability contains an embedded derivative that significantly modifies the cash flows that would
otherwise be required under the contract.
All trading derivatives in a net receivable position (positive fair value), as well as options purchased, are
reported as assets. All trading derivatives in a net payable position (negative fair value), as well as options
written, are reported in financial statements as liabilities.
Management determines the appropriate classification of financial instruments in this category at the time of
the initial recognition. Derivative financial instruments and financial instruments designated as at fair value
through profit or loss upon initial recognition are not reclassified out of the at fair value through profit or loss
category. Financial assets that would have met the definition of loans and receivables may be reclassified out
of the at fair value through profit or loss or available-for-sale category if the Bank has an intention and ability
to hold them for the foreseeble future or until maturity. Other financial instruments may be reclassified out of
the at fair value through profit or loss category only in rare circumstances. Rare circumstances arise from a
single event that is unusual and highly unlikely to recur in the near term.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market, other than those that the Bank:
- intends to sell immediately or in the near term
- upon initial recognition designates as at fair value through profit or loss
- upon initial recognition designates as available-for-sale, or
- may not recover substantially all of its initial investment, other than because of credit deterioration.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity that the Bank has the positive intention and ability to hold to maturity, other than those that:
- the Bank upon initial recognition designates as at fair value through profit or loss
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ZAO Citibank
- the Bank designates as available-for-sale, or
- meet the definition of loans and receivables.
Available-for-sale financial assets are those non-derivative financial assets that are designated as available for
sale or are not classified as loans and receivables, held-to-maturity investments or financial instruments at fair
value through profit or loss.
(ii)
Recognition
Financial assets and liabilities are recognised in the statement of financial position when the Bank becomes a
party to the contractual provisions of the instrument. All regular way purchases of financial assets are
accounted for at the settlement date.
(iii)
Measurement
A financial asset or liability is initially measured at its fair value plus, in the case of a financial asset or liability
not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue
of the financial asset or liability.
Subsequent to initial recognition, financial assets, including derivatives that are assets, are measured at their
fair values, without any deduction for transaction costs that may be incurred on sale or other disposal, except
for:
- loans and receivables which are measured at amortised cost using the effective interest method
- held-to-maturity investments that are measured at amortised cost using the effective interest method, and
- investments in equity instruments that do not have a quoted market price in an active market and whose fair
value cannot be reliably measured, which are measured at cost.
All financial liabilities, other than those designated at fair value through profit or loss and financial liabilities
that arise when a transfer of a financial asset carried at fair value does not qualify for derecognition, are
measured at amortised cost.
(iv)
Amortised cost
The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is
measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using
the effective interest method of any difference between the initial amount recognised and the maturity amount,
minus any reduction for impairment. Premiums and discounts, including initial transaction costs, are included
in the carrying amount of the related instrument and amortised based on the effective interest rate of the
instrument.
(v)
Fair value measurement principles
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal, or in its absence, the most
advantageous market to which the Bank has access at that date. The fair value of a liability reflects its nonperformance risk.
When available, the Bank measures the fair value of an instrument using quoted prices in an active market for
that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient
frequency and volume to provide pricing information on an ongoing basis. When there is no quoted price in an
active market, the Bank uses valuation techniques that maximise the use of relevant observable inputs and
minimise the use of unobservable inputs. The chosen valuation technique incorporates all the factors that
market participants would take into account in these circumstances.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction
price, i.e., the fair value of the consideration given or received. If the Bank determines that the fair value at
initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in
an active market for an identical asset or liability nor based on a valuation technique that uses only data from
observable markets, the financial instrument is initially measured at fair value, adjusted to defer the difference
between the fair value at initial recognition and the transaction price. Subsequently, that difference is
recognised in profit or loss on an appropriate basis over the life of the instrument, but no later than when the
valuation is supported wholly by observable market data or the transaction is closed out.
If an asset or a liability measured at fair value has a bid price and an ask price, the Bank measures assets and
long positions at the bid price and liabilities and short positions at the ask price.
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ZAO Citibank
Portfolios of financial assets and financial liabilities that are exposed to market risk and credit risk that are
managed by the Bank on the basis of the net exposure to either market or credit risk, are measured on the basis
of a price that would be received to sell the net-long position (or paid to transfer the net-short position) for a
particular risk exposure. Those portfolio-level adjustments are allocated to the individual assets and liabilities
on the basis of the relative risk adjustment of each of the individual instruments in the portfolio.
The Bank recognises transfers between levels of the fair value hierarchy as of the end of the reporting period
during which the change has occurred.
(vi)
Gains and losses on subsequent measurement
A gain or loss arising from a change in the fair value of a financial asset or liability is recognised as follows:
- a gain or loss on a financial instrument classified as at fair value through profit or loss is recognised in profit
or loss
- a gain or loss on an available-for-sale financial asset is recognised as other comprehensive income in equity
(except for impairment losses and foreign exchange gains and losses on debt financial instruments availablefor-sale) until the asset is derecognised, at which time the cumulative gain or loss previously recognised in
equity is recognised in profit or loss. Interest in relation to an available-for-sale financial asset is recognised in
profit or loss using the effective interest method.
For financial assets and liabilities carried at amortised cost, a gain or loss is recognised in profit or loss when
the financial asset or liability is derecognised or impaired, and through the amortisation process.
(vii)
Derecognition
The Bank derecognises a financial asset when the contractual rights to the cash flows from the financial asset
expire, or when it transfers the financial asset in a transaction in which substantially all the risks and rewards of
ownership of the financial asset are transferred or in which the Bank neither transfers nor retains substantially
all the risks and rewards of ownership and it does not retain control of the financial asset. Any interest in
transferred financial assets that qualify for derecognition that is created or retained by the Bank is recognised
as a separate asset or liability in the statement of financial position. The Bank derecognises a financial liability
when its contractual obligations are discharged or cancelled or expire.
The Bank enters into transactions whereby it transfers assets recognised on its statement of financial position,
but retains either all risks and rewards of the transferred assets or a portion of them. If all or substantially all
risks and rewards are retained, then the transferred assets are not derecognised.
In transactions where the Bank neither retains nor transfers substantially all the risks and rewards of ownership
of a financial asset, it derecognises the asset if control over the asset is lost.
In transfers where control over the asset is retained, the Bank continues to recognise the asset to the extent of
its continuing involvement, determined by the extent to which it is exposed to changes in the value of the
transferred assets.
The Bank writes off assets deemed to be uncollectible.
(viii)
Derivative instruments
Derivative financial instruments include swaps, forward contracts, futures, spot transactions and options in
interest rates, foreign exchanges, precious metals and stock markets, and any combinations of these
instruments.
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and
are subsequently remeasured at fair value. All derivatives are carried as assets when their fair value is positive
and as liabilities when their fair value is negative.
Changes in the fair value of derivatives are recognised immediately in profit or loss.
Derivatives may be embedded in another contractual arrangement (a host contract). An embedded derivative is
separated from the host contract and is accounted for as a derivative if, and only if the economic characteristics
and risks of the embedded derivative are not closely related to the economic characteristics and risks of the
host contract, a separate instrument with the same terms as the embedded derivative would meet the definition
of a derivative; and the combined instrument is not measured at fair value with changes in fair value recognised
in profit or loss. Derivatives embedded in financial assets or financial liabilities at fair value through profit or
loss are not separated.
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Although the Bank trades in derivative instruments for risk hedging purposes, these instruments do not qualify
for hedge accounting.
(d)
Repurchase and reverse repurchase agreements
Securities sold under sale and repurchase (repo) agreements are accounted for as secured financing
transactions, with the securities retained in the statement of financial position and the counterparty liability
included in amounts payable under repo agreements within deposits and balances from banks and other
financial institutions or current accounts and deposits from customers, as appropriate. The difference between
the sale and repurchase prices represents interest expense and is recognised in profit or loss over the term of the
repo agreement using the effective interest method.
Securities purchased under agreements to resell (reverse repo) are recorded as amounts receivable under
reverse repo agreements within loans and deposits with banks and other financial institutions or loans to
customers, as appropriate. The difference between the purchase and resale prices represents interest income
and is recognised in profit or loss over the term of the reverse repo agreement using the effective interest
method.
If assets purchased under agreement to resell are sold to third parties, the obligation to return securities is
recorded as a trading liability and measured at fair value.
(e)
Offsetting
Financial assets and liabilities are offset and the net amount reported in the statement of financial position
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on
a net basis, or realise the asset and settle the liability simultaneously.
(f)
Property and equipment
(i)
Owned assets
Items of property and equipment are stated at cost less accumulated depreciation and impairment losses. Where
an item of property and equipment comprises major components having different useful lives, they are
accounted for as separate items of property and equipment.
(ii)
Leased assets
Leases in terms of which the Bank assumes substantially all the risks and rewards of ownership are classified
as finance leases. Property and equipment acquired by way of a finance lease is stated at the amount equal to
the lower of its fair value and the present value of the minimum lease payments at inception of the lease, less
accumulated depreciation and impairment losses.
Leases in terms of which the Bank does not assume substantially all the risks and rewards of ownership are
classified as operating leases and lease payments are expensed as incurred.
(iii)
Depreciation
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of the individual
assets. Depreciation commences on the date of acquisition or, in respect of internally constructed assets, from
the time an asset is completed and ready for use. Land is not depreciated. The estimated useful lives are as
follows:
Buildings
(g)
50 years
Equipment
3 to 12 years
Leasehold improvements
5 to 10 years
Impairment
The Bank assesses at the end of each reporting period whether there is any objective evidence that a financial
asset or group of financial assets is impaired. If any such evidence exists, the Bank determines the amount of
any impairment loss.
A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if,
there is objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the financial asset (a loss event) and that event (or events) has had an impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated.
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ZAO Citibank
Objective evidence that financial assets are impaired can include default or delinquency by a borrower, breach
of loan covenants or conditions, restructuring of financial asset or group of financial assets that the Bank
would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the disappearance of
an active market for a security, deterioration in the value of collateral, or other observable data related to a
group of assets such as adverse changes in the payment status of borrowers in the group, or economic
conditions that correlate with defaults in the group.
In addition, for an investment in an equity security available-for-sale a significant or prolonged decline in its
fair value below its cost is objective evidence of impairment.
(i)
Financial assets carried at amortised cost
Financial assets carried at amortised cost consist principally of loans and other receivables (loans and
receivables). The Bank reviews its loans and receivables to assess impairment on a regular basis.
Management first assesses whether objective evidence of impairment exists individually for loans and
receivables that are individually significant, and individually or collectively for loans and receivables that are
not individually significant. If management determines that no objective evidence of impairment exists for an
individually assessed loan or receivable, whether significant or not, it includes the loan in a group of loans and
receivables with similar credit risk characteristics and collectively assesses them for impairment. Loans and
receivables that are individually assessed for impairment and for which an impairment loss is or continues to
be recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on a loan or receivable has been incurred, the amount of
the loss is measured as the difference between the carrying amount of the loan or receivable and the present
value of estimated future cash flows including amounts recoverable from guarantees and collateral discounted
at the loan or receivable’s original effective interest rate. Contractual cash flows and historical loss experience
adjusted on the basis of relevant observable data that reflect current economic conditions provide the basis for
estimating expected cash flows.
In some cases the observable data required to estimate the amount of an impairment loss on a loan or
receivable may be limited or no longer fully relevant to current circumstances. This may be the case when a
borrower is in financial difficulties and there is little available historical data relating to similar borrowers. In
such cases, the Bank uses its experience and judgment to estimate the amount of any impairment loss.
All impairment losses in respect of loans and receivables are recognised in profit or loss and are only reversed
if a subsequent increase in recoverable amount can be related objectively to an event occurring after the
impairment loss was recognised.
When a loan is uncollectable, it is written off against the related allowance for loan impairment. The Bank
writes off a loan balance (and any related allowances for loan impairment) when management determines that
the loans are uncollectible and when all necessary steps to collect the loan are completed.
(ii)
Financial assets carried at cost
Financial assets carried at cost include unquoted equity instruments included in available-for-sale financial
assets that are not carried at fair value because their fair value can not be reliably measured. If there is
objective evidence that such investments are impaired, the impairment loss is calculated as the difference
between the carrying amount of the investment and the present value of the estimated future cash flows
discounted at the current market rate of return for a similar financial asset.
All impairment losses respect of these investments are recognised in profit or loss and can not be reversed.
(iii)
Available-for-sale financial assets
Impairment losses on available-for-sale financial assets are recognised by transferring the cumulative loss that
is recognised in other comprehensive income to profit or loss as a reclassification adjustment. The cumulative
loss that is reclassified from other comprehensive income to profit or loss is the difference between the
acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any
impairment loss previously recognised in profit or loss. Changes in impairment allowance attributable to time
value are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired
available-for-sale debt security increases and the increase can be objectively related to an event occurring after
the impairment loss was recognised in profit or loss, the impairment loss is reversed, with the amount of the
reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired
available-for-sale equity security is recognised in other comprehensive income.
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ZAO Citibank
(iv)
Non financial assets
Other non financial assets, other than deferred taxes, are assessed at each reporting date for any indications of
impairment. The recoverable amount of goodwill is estimated at each reporting date. The recoverable amount
of non financial assets is the greater of their fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. For an asset
that does not generate cash inflows largely independent of those from other assets, the recoverable amount is
determined for the cash-generating unit to which the asset belongs. An impairment loss is recognised when the
carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
All impairment losses in respect of non financial assets are recognised in profit or loss and reversed only if
there has been a change in the estimates used to determine the recoverable amount. Any impairment loss
reversed is only reversed to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised. An impairment loss in respect of goodwill is not reversed.
(h)
Provisions
A provision is recognised in the statement of financial position when the Bank has a legal or constructive
obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to
settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
A provision for restructuring is recognised when the Bank has approved a detailed and formal restructuring
plan, and the restructuring either has commenced or has been announced publicly. Future operating costs are
not provided for.
(i)
Taxation
Income tax comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent
that it relates to items of other comprehensive income or transactions with shareholders recognised directly in
equity, in which case it is recognised within other comprehensive income or directly within equity.
Current tax expense is the expected tax payable on the taxable profit for the year, using tax rates enacted or
substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities are recognised in respect of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax assets and liabilities are not recognised for the following temporary differences: goodwill not
deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor
taxable profit and temporary differences related to investments in subsidiaries, where the parent is able to
control the timing of the reversal of the temporary difference and it is probable that the temporary difference
will not reverse in the foreseeable future.
The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow the
manner in which the Bank expects, at the end of the reporting period, to recover or settle the carrying amount
of its assets and liabilities.
Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by the
reporting date.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be
available against which the temporary differences, unused tax losses and credits can be utilised. Deferred tax
assets are reduced to the extent that taxable profit will be available against which the deductible temporary
differences can be utilized.
(j)
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
and share options are recognised as a deduction from equity, net of any tax effects.
Dividends
The ability of the Bank to declare and pay dividends is subject to the rules and regulations of the Russian
legislation.
Dividends in relation to ordinary shares are reflected as an appropriation of retained earnings in the period
when they are declared.
- 16 -
ZAO Citibank
(k)
Credit related commitments
In the normal course of business, the Bank enters into credit related commitments, comprising undrawn loan
commitments, letters of credit and guarantees, and provides other forms of credit insurance.
Financial guarantees are contracts that require the Bank to make specified payments to reimburse the holder for
a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a
debt instrument.
A financial guarantee liability is recognised initially at fair value net of associated transaction costs, and is
measured subsequently at the higher of the amount initially recognised less cumulative amortisation or the
amount of provision for losses under the guarantee. Provisions for losses under financial guarantees and other
credit related commitments are recognised when losses are considered probable and can be measured reliably.
Financial guarantee liabilities and provisions for other credit related commitment are included in other
liabilities.
Loan commitments are not recognised, except in the following cases:
- loan commitments that the Bank designates as financial liabilities at fair value through profit or loss
- if the Bank has a past practice of selling the assets resulting from its loan commitments shortly after
origination, then the loan commitments in the same class are treated as derivative instruments
- loan commitments that can be settled net in cash or by delivering or issuing another financial
instrument
- commitments to provide a loan at a below-market interest rate.
(l)
Income and expense recognition
Interest income and expense are recognised in profit or loss using the effective interest method.
Loan origination fees, loan servicing fees and other fees that are considered to be integral to the overall
profitability of a loan, together with the related transaction costs, are deferred and amortised to interest income
over the estimated life of the financial instrument using the effective interest method.
Other fees, commissions and other income and expense items are recognised in profit or loss when the
corresponding service is provided.
The Bank acts as an agent for insurance providers offering their insurance products to consumer loan
borrowers. Commission income from insurance represents commissions for such agency services received by
the Bank from such partners. It is not considered to be integral to the overall profitability of consumer loans
because it is determined and recognized based on the Bank’s contractual arrangements with the insurance
provider rather than with the borrower. The Bank does not participate in the insurance risk, which is entirely
borne by the partner; commission income from insurance is recognized in profit or loss when the Bank
provides the agency service to the insurance company. The borrowers have a choice whether to purchase the
insurance policy. A consumer loan customer’s decision whether or not to purchase an insurance policy does
not effect the stated interest rate offered to that customer.
Dividend income is recognised in profit or loss on the date that the dividend is declared.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of
the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term
of the lease.
(m)
New standards and interpretations not yet adopted
The following new standards, amendments to standards, and interpretations are not yet effective as at
31 December 2013, and are not applied in preparing these financial statements. The Bank plans to adopt these
pronouncements when they become effective. The Bank has not yet analysed the likely impact of the new
standards, amendments to standards, and interpretations on its financial position or performance.

IFRS 9 Financial Instruments is to be issued in phases and is intended ultimately to replace International
Financial Reporting Standard IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 will
be effective for annual periods beginning on or after 1 January 2018. The first phase of IFRS 9 was issued
in November 2009 and relates to the classification and measurement of financial assets. The second phase
regarding the classification and measurement of financial liabilities was published in October 2010. The
- 17 -
ZAO Citibank
third phase of IFRS 9 was issued in November 2013 and relates general hedge accounting. The Bank
recognises that the new standard introduces many changes to accounting for financial instruments and is
likely to have a significant impact on the financial statements. The impact of these changes will be
analysed during the course of the project, as further phases of the standard are issued. The Bank does not
intend to adopt this standard early.
4

Amendments to IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities do not introduce new rules for offsetting financial assets and liabilities; rather they clarify the
offsetting criteria to address inconsistencies in their application. The amendments specify that an entity
currently has a legally enforceable right to set-off if that right is not contingent on a future event; and
enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of
the entity and all counterparties. The amendments are effective for annual periods beginning on or after
1 January 2014, and are to be applied retrospectively.

Various Improvements to IFRS are dealt with on a standard-by-standard basis. All amendments, which
result in accounting changes for presentation, recognition or measurement purposes, will come into effect
not earlier than 1 January 2014. The Bank has not yet analysed the likely impact of the improvements on
its financial position or performance.
Interest income and interest expense
2013
RUB’000
Interest income
Loans to customers
Financial instruments held for trading and available-for-sale
Loans and deposits with banks and other financial institutions and amounts
receivable under reverse repo agreements
Interest expense
Current accounts and deposits from customers
Deposits and balances from banks and other financial institutions and amounts
payable under repo agreements
5
2012
RUB’000
12,956,550
5,524,631
10,607,716
8,964,951
2,874,710
21,355,891
2,755,719
22,328,386
3,990,250
4,278,784
644,798
4,635,048
1,003,229
5,282,013
Fee and commission income and fee and commission expense
2013
RUB’000
Fee and commission income
Settlement fees
Commissions from insurance companies
Annual credit card maintenance fees
Guarantees and letter of credit fees
Transaction processing fees
Cash withdrawal fees
Custody fees
Brokerage and underwriting fees
Credit card late payment fees
Cash transaction fees
Investment fund fees
Other
Fee and commission expense
Settlement fees
Franchise fee
Insurance fees
Guarantees received fees
Cash transportation fees
Customs card transaction fees
Other
- 18 -
2012
RUB’000
2,750,374
1,087,654
960,860
954,086
844,678
743,808
467,792
338,591
313,430
113,771
98,350
184,219
8,857,613
2,263,878
966,748
1,015,592
943,226
607,380
726,043
432,792
152,217
260,808
132,320
116,279
212,138
7,829,172
2,150,350
436,041
371,733
279,796
261,920
222,086
204,700
3,926,626
1,678,534
425,176
330,003
130,935
300,255
95,741
327,670
3,288,314
ZAO Citibank
6
Net gains on securities
Realised and unrealised net (loss) gain from financial instruments held for
trading
Realised net gain (loss) from financial instruments available-for-sale
7
2013
RUB’000
(265,104)
2012
RUB’000
808,198
705,564
440,460
(14,197)
794,001
2013
RUB’000
2,480,665
3,438,537
5,919,202
2012
RUB’000
2,772,992
1,954,344
4,727,336
Net foreign exchange income
Net gain from foreign exchange transactions
Net gain from revaluation of financial assets and liabilities in foreign currency
The presentation of certain captions related to net gain from foreign exchange transactions and net gain from
revaluation of financial assets and liabilities in foreign currency was changed in 2013 in comparison with 2012
to better present the nature of the underlying transactions.
8
General administrative expenses
Employee compensation and social insurance expenses
Intercompany charges for retail information technical support and other
services
Taxes other than income tax
Occupancy
Advertising and marketing
Outsourcing costs
Repairs and maintenance
Depreciation
Communications and information services
Insurance
Travel
Security
Other
9
2013
RUB’000
5,870,820
2012
RUB’000
5,976,545
2,509,058
1,383,183
1,174,929
667,316
601,721
556,540
453,769
391,855
200,632
96,429
63,705
1,164,322
15,134,279
2,873,406
1,375,119
1,155,327
300,555
838,921
559,969
485,864
326,261
297,725
102,292
65,237
1,182,337
15,539,558
Income tax expense
2013
RUB’000
Current tax expense
Current year
Deferred tax expense (benefit)
Origination and reversal of temporary differences
Total income tax expense
2012
RUB’000
2,363,608
2,592,222
65,922
2,429,530
(384,580)
2,207,642
In 2013 and 2012 the applicable tax rate for current and deferred tax is 20%.
Reconciliation of effective tax rate
The reconciliation between the expected tax expense to the actual income tax expense is as follows.
2013
RUB’000
11,558,358
2,311,672
341,224
(223,366)
2,429,530
Profit before tax
Income tax expense at the applicable statutory tax rate
Non-deductible costs
Income taxed at lower tax rates
Income tax expense
- 19 -
20%
3%
(2%)
21%
2012
RUB’000
11,126,645
2,225,329
386,790
(404,477)
2,207,642
20%
4%
(4%)
20%
ZAO Citibank
Deferred tax assets and liabilities
Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes give rise to net deferred tax assets as at 31 December 2013 and net
deferred tax liabilities as at 31 December 2012.
Movements in temporary differences during the years ended 31 December 2013 and 2012 are presented as
follows:
RUB’000
Financial instruments held
for trading
Loans to customers
available-for-sale
Other assets
Other liabilities
RUB’000
for trading
Loans to customers
available-for-sale
Other assets
Other liabilities
Balance
1 January 2013
Recognised in
profit or loss
Recognised in other
comprehensive
income
Balance
31 December
2013
(108,860)
(79,042)
137,844
(187,859)
-
28,984
(266,901)
(112,720)
18,185
24,825
198,185
(59,427)
(2,338)
(360)
(13,209)
(65,922)
303,104
303,104
190,384
15,847
24,465
184,976
177,755
Balance
1 January 2012
Recognised in
profit or loss
Recognised in other
comprehensive
income
Balance
31 December
2012
(264,725)
(96,921)
155,865
17,879
-
(108,860)
(79,042)
334,011
(215,645)
28,828
217,176
2,724
233,830
(4,003)
(18,991)
384,580
(446,731)
(446,731)
(112,720)
18,185
24,825
198,185
(59,427)
Income tax recognised in other comprehensive income
The tax effects relating to components of other comprehensive income comprise:
Amount
before tax
RUB’000
Net change in fair value of
financial instruments availablefor-sale
(809,955)
Net change in fair value of
financial instruments availablefor-sale transferred to profit or loss
(705,564)
Other comprehensive (loss)
income
(1,515,519)
2013
Tax
benefit
Amount
net-of-tax
Amount
before tax
2012
Tax
expense
Amount
net-of-tax
161,991
(647,964)
2,068,279
(443,892)
1,624,387
141,113
(564,451)
14,197
(2,839)
11,358
303,104
(1,212,415)
2,082,476
(446,731)
1 635,745
- 20 -
ZAO Citibank
10
Cash
Nostro account in the Central Bank of the Russian Federation
Nostro accounts in banks and other financial institutions
Citigroup entities
Other Russian banks and financial institutions
 MICEX Group
 Other banks and financial institutions
OECD banks
Large Russian banks
Total Nostro accounts in banks and other financial institutions
2013
RUB’000
5,948,291
11,021,936
2012
RUB’000
5,940,441
13,619,031
4,681,731
6,398,591
4,701,698
4,170,173
2,280,042
3,306,563
828,399
15,798,433
32,768,660
461,107
1,618,073
236,947
12,884,891
32,444,363
The Bank includes 30 largest Russian banks in terms of total assets in large Russian banks.
No cash and cash equivalents are impaired or past due.
11
Loans and deposits with banks and other financial institutions
2013
RUB’000
Loans and deposits
Citigroup entities
Large Russian banks
Central Bank of the Russian Federation
Other Russian banks and financial institutions
OECD banks
Amounts receivable under reverse repo agreements
Large Russian banks
Other financial institutions
Other Russian banks
2012
RUB’000
76,222,535
23,776,402
12,000,000
15,491,537
127,490,474
9,025,822
16,397,153
16,238,447
1,531,730
43,193,152
8,100,933
1,761,239
1,157,943
11,020,115
138,510,589
11,005,490
1,106,801
12,112,291
55,305,443
The Bank includes 30 largest Russian banks in terms of total assets in large Russian banks.
No loans and deposits with banks and other financial institutions are impaired or past due.
As at 31 December 2013, the fair value of financial assets collateralizing reverse repo agreements is RUB
11,896,351 thousand (31 December 2012: RUB 13,190,252 thousand).
Significant exposures for loans and deposits with banks and other financial institutions and
amounts receivable under reverse repo agreements
As at 31 December 2013 and 2012, exposures to banks and other financial institutions and amounts receivable
under reverse repo agreements, which individually comprised more than 10% of total loans and deposits with
banks and other financial institutions and amounts receivable under reverse repo agreements, are as follows:
2013
RUB’000
75,277,160
75,277,160
Citibank Jersey
Rosselkhozbank
- 21 -
2012
RUB’000
7,593,280
15,076,385
22,669,665
ZAO Citibank
12
Financial instruments held for trading
Financial assets held for trading
2013
RUB’000
Unpledged
Debt and other fixed income securities
Russian Government GKO/OFZ
Russian Government Eurobonds
Vnesheconombank
Agency on Mortgage Crediting (AIZhK)
European Bank for Reconstruction and Development
Renaissance Capital
Rosselkhozbank
OTP Bank
Vneshtorgbank
Rushydro
Credit Europe Bank
Gazprombank
FSK UES
Gazpromneft
Center-Invest Bank
Vimpelcom
Bank Uralsib
Derivative financial instruments
Foreign exchange contracts
Interest rate swaps
2012
RUB’000
23,638,702
1,204,984
48,249
35,319
26,703
10,714
10,405
6,983
3,250
2,470
114
12
24,987,905
9,770,203
6,946
200,442
97,157
3,537
10,716
353,301
9,703
13,476
4,766
370,599
127,852
35,721
31,032
2 740
11,038,191
1,506,156
75,597
1,581,753
26,569,658
7,501,346
146,372
7,647,718
18,685,909
No financial assets held for trading are impaired or past due.
Financial liabilities held for trading
2013
RUB’000
Derivative financial instruments
Interest rate swaps
1,591,359
75,676
1,667,035
2012
RUB’000
6,522,304
146,372
6,668,676
As at 31 December 2013 and 2012, the majority of forward exchange contracts and interest rate swaps are
entered into with other Citigroup entities.
Interest rate swaps
2013
Fair value
Interest rate swaps
Notional amount
RUB’000
29,261,543
Asset
RUB’000
75,597
Liability
RUB’000
(75,676)
2012
Fair value
Interest rate swaps
Notional amount
RUB’000
36,647,678
- 22 -
Asset
RUB’000
146,372
Liability
RUB’000
(146,372)
ZAO Citibank
The table below summarises, by major currencies, the contractual amounts of forward exchange contracts
outstanding at 31 December 2013 and 2012 with details of the contractual exchange rates. Foreign currency
amounts presented below are translated at rates ruling at the reporting date. The resultant unrealised gains and
losses on these unmatured contracts are recognised in profit or loss and in financial instruments held for
trading, as appropriate.
2013
Spot foreign exchange
contracts to buy British
Pounds and sell US Dollars
contracts to buy US Dollars
and sell Euro
contracts to buy Euro and sell
US Dollars
and sell Russian Roubles
contracts to buy Russian
Roubles and sell US Dollars
Russian Roubles
Roubles and sell Euro
contracts to buy Swiss Francs
and sell US Dollars
and sell Swiss Francs
contracts to buy Japanese Yen
and sell US Dollars
contracts to buy Swedish
Crowns and sell US Dollars
contracts to buy Czech
contracts to buy Canadian
Dollars and sell US Dollars
and sell Danish Crowns
contracts to buy Danish
Roubles and sell British
Pounds
and sell British Pounds
2012
Nominal buy
amount
RUB’000
Gain
(loss)
RUB’000
1,263
(1)
21,162,868
Weighted
average
contracted
exchange
rate
Weighted
average
contracted
exchange
rate
Nominal
buy amount
RUB’000
Gain
(loss)
RUB’000
0.61
264,883
-
0.62
13,382
1.37
1,304,010
609
1.32
6,437,479
(5,396)
0.73
2,457,401
(1,445)
0.75
16,562,440
11,428
0.03
17,690,335
(19,991)
0.03
53,122,031
(86,703)
32.68
6,824,773
10,951
30.42
12,618,681
(11,071)
0.02
1,646,608
2,765
0.02
12,142
35
45.10
1,206,858
1,272
40.27
1,215
(5)
0.89
-
-
-
1,174
2
1.12
-
-
-
2,024
(5)
105.11
900
(4)
86.03
425
(3)
6.47
41
-
6.48
243
(1)
19.89
-
-
-
188
(1)
1.06
-
-
-
104
-
0.18
-
-
-
-
-
-
994
4
5.65
-
-
-
27,377
45
49.09
-
-
-
237,506
188
1.61
- 23 -
ZAO Citibank
Option contracts to buy US
Dollars and sell Euro
Option contracts to buy Euro
and sell US Dollars
Option contracts to buy
Russian Roubles and sell Euro
Option contracts to buy Euro
Non-deliverable forward
Roubles and sell US Dollars
and sell Euro
US Dollars
Roubles and sell Euro
Deliverable forward contracts
to buy US Dollars and sell
Euro
to buy Euro and sell US
Dollars
Russian Roubles
to buy Russian Roubles and
sell US Dollars
sell Euro
to buy Euro and sell Russian
Roubles
sell British Pounds
to buy British Pounds and sell
Russian Roubles
Swiss Francs
to buy Swiss Francs and sell
US Dollars
to buy Swiss Francs and sell
Russian Roubles
sell Swiss Francs
to buy Kazakhstani Tenge and
sell Russian Roubles
Nominal buy
amount
RUB’000
Gain
(loss)
RUB’000
10,118,228
-
10,154,359
Weighted
average
contracted
exchange
rate
Weighted
average
contracted
exchange
rate
Nominal
buy amount
RUB’000
Gain
(loss)
RUB’000
1.38
-
-
-
-
0.73
-
-
-
161,891,640
-
47.37
-
-
-
170,526,000
-
0.02
-
-
-
911,181
3,116
32.98
6,894,603
193,986
31.74
755,440
(18,751)
0.03
2,615,150
(34,312)
0.03
-
-
-
57,929,184
1,326,076
1.35
-
-
-
59,361,182
(1,324,559)
0.74
-
-
-
736,949
9,826
41.32
1,343,839
(41,114)
1.34
10,165,706
(537,048)
1.25
4,175,612
109,973
0.75
11,093,870
280,936
0.77
42,297,666
116,812
0.03
76,720,284
(3,098,825)
0.03
70,295,563
(213,962)
33.30
77,241,713
3,596,151
32.79
12,658,599
(178,002)
45.23
22,633,741
347,953
41.52
15,150,946
212,811
0.02
19,073,297
210,135
0.02
318,683
(6,787)
53.30
303,117
4,412
49.96
269,471
6,928
0.02
69,415
(3,558)
0.02
13,590
(294)
1.10
115,778
(6,257)
1.04
227,298
9,588
0.93
219,651
4,799
0.93
106,948
116
0.03
127,979
(3,709)
0.03
236,737
(9,661)
35.68
241,499
9,225
34.90
671,446
553
4.70
690,204
(3,914)
4.92
- 24 -
ZAO Citibank
Nominal
buy amount
RUB’000
Weighted
average
contracted
exchange
rate
Nominal buy
amount
RUB’000
Gain
(loss)
RUB’000
45,244
(202)
0.60
237,669
(193)
0.62
670,677
(23,627)
101.61
485,001
(32,099)
80.60
671,866
(5,629)
0.01
686,355
(4,376)
0.01
646,640
31,268
0.33
452,456
49,999
0.40
to buy British Pounds and sell
US Dollars
to buy Japanese Yen and sell
US Dollars
Kazakhstani Tenge
sell Japanese Yen
13
Weighted
average
contracted
exchange
rate
Gain
(loss)
RUB’000
Loans to customers
2013
RUB’000
Loans to legal entities
Loans to global corporations
Loans to local corporate customers
Loans to individuals
Consumer loans
Credit cards
Mortgage loans
Staff loans
Overdrafts
Gross loans to customers
Impairment allowance
2012
RUB’000
60,331,114
12,672,870
73 003 984
55,184,200
17,335,257
72 519 457
25,615,714
20,859,012
484,603
90,363
12,485
47,062,177
120,066,161
(1,942,798)
118,123,363
21,601,639
17,629,656
570,092
22,420
11,131
39,834,938
112,354,395
(1,153,595)
111,200,800
Movements in the loan impairment allowance for the years ended 31 December 2013 and 2012 are as follows:
2013
RUB’000
1,153,595
1,935,422
(1,146,219)
1,942,798
Balance at the beginning of the year
Net charge
Write-offs
Balance at the end of the year
2012
RUB’000
3,856,902
992,616
(3,695,923)
1,153,595
Credit quality of loans to legal entities
The Bank reviewed its loan portfolio to legal entities and did not identify loans that have indicators of
impairment as at 31 December 2013.
Global corporations are international public companies, generally with investment grade ratings, for which no
defaults have occurred. Local corporate customers are generally large-scale entities established in Russia, for
which the Bank has not experienced late payments.
The following table provides information on the credit quality of loans to legal entities as at 31 December
2013:
Impairment
allowance
RUB’000
Gross loans
RUB’000
Standard loans non-impaired
Total loans to legal entities
Net loans
RUB’000
Impairment
to gross loans
%
60,331,114
555,047
59,776,067
0.9
12,672,870
73,003,984
116,590
671,637
12,556,280
72,332,347
0.9
0.9
- 25 -
ZAO Citibank
The following table provides information on the credit quality of loans to legal entities as at 31 December
2012:
Impairment
allowance
RUB’000
Gross loans
RUB’000
Total loans to legal entities
Net loans
RUB’000
Impairment
to gross loans
%
55,184,200
480,102
54,704,098
0.9
17,355,257
72,519,457
150,817
630,919
17,184,440
71,888,538
0.9
0.9
The Bank estimates loan impairment based on its past historical loss experience on these types of loans, and
assumes 0.9% collective rate (31 December 2012: 0.9%).
Changes in these estimates could affect the loan impairment allowance. For example, to the extent that the net
present value of the estimated cash flows differs by plus/minus one percent, the impairment allowance on loans
to legal entities as at 31 December 2013 would be RUB 723,323 thousand lower/higher (31 December 2012:
RUB 718,885 thousand).
Analysis of movements in the impairment allowance for loans to legal entities
Movements in the loan impairment allowance for loans to legal entities for the years ended
31 December 2013 and 2012 are as follows:
2013
RUB’000
630,919
51,438
(10,720)
671,637
Balance at the beginning of the year
Net charge
Write-offs
2012
RUB’000
599,358
31,561
630,919
Credit quality of loans to individuals
The following table provides information on the credit quality of loans to individuals collectively assessed for
impairment as at 31 December 2013:
Gross loans
RUB’000
Consumer loans
Not overdue
Overdue less than 30 days
Overdue 30-59 days
Overdue 60-89 days
Overdue 90-120 days
Overdue more than 120 days
Total consumer loans
Credit cards
Not overdue
Overdue 30-59 days
Overdue 60-89 days
Overdue 90-119 days
Overdue 120-149 days
Total credit cards
Mortgage loans
Not overdue
Overdue
Total mortgage loans
Staff loans
Not overdue
Total staff loans
Impairment
allowance
RUB’000
Net loans
RUB’000
Impairment
to gross loans
%
24,651,578
604,667
162,937
116,102
79,487
943
25,615,714
259,879
69,695
83,774
79,542
72,529
943
566,362
24,391,699
534,972
79,163
36,560
6,958
25,049,352
1.1
11.5
51.4
68.5
91.2
100.0
2.2
19,920,998
356,069
161,229
116,624
101,436
78,432
67,788
56,436
20,859,012
224,292
51,106
66,922
66,177
78,344
65,418
61,317
56,436
670,012
19,696,706
304,963
94,307
50,447
23,092
13,014
6,471
20,189,000
1.1
14.4
41.5
56.7
77.2
83.4
90.5
100.0
3.2
462,134
22,469
484,603
4,621
21,074
25,695
457,513
1,395
458,908
1.0
93.8
5.3
90,363
90,363
1,124
1,124
89,239
89,239
1.2
1.2
- 26 -
ZAO Citibank
Gross loans
RUB’000
Overdrafts
Not overdue
Overdue
Total overdrafts
Total loans to individuals
4,550
7,935
12,485
47,062,177
Impairment
allowance
RUB’000
33
7,935
7,968
1,271,161
Net loans
RUB’000
Impairment
to gross loans
%
4,517
4,517
45,791,016
0.7
100.0
63.8
2.7
The following table provides information on the credit quality of loans to individuals collectively assessed for
impairment as at 31 December 2012:
Gross loans
RUB’000
Consumer loans
Not overdue
Overdue 30-59 days
Overdue 60-89 days
Overdue 90-120 days
Total consumer loans
Credit cards
Not overdue
Overdue 30-59 days
Overdue 60-89 days
Overdue 90-119 days
Total credit cards
Mortgage loans
Not overdue
Overdue
Total mortgage loans
Staff loans
Not overdue
Total staff loans
Overdrafts
Not overdue
Overdue
Total overdrafts
Total loans to individuals
Impairment
allowance
RUB’000
Net loans
RUB’000
Impairment
to gross loans
%
20,903,940
458,300
90,247
80,015
68,909
228
21,601,639
81,901
32,846
23,294
27,574
45,288
228
211 131
20,822,039
425,454
66,953
52,441
23,621
21 390 508
0.4
7.2
25.8
34.5
65.7
100.0
1.0
16,968,754
306,228
105,573
72,626
58,334
45,739
39,345
33,057
17,629,656
35,876
34,569
38,784
38,394
42,339
36,693
36,209
33,057
295 921
16,932,878
271,659
66,789
34,232
15,995
9,046
3,136
17,333,735
0.2
11.3
36.7
52.9
72.6
80.2
92.0
100.0
1.7
550,709
19,383
570,092
138
10,311
10,449
550,571
9,072
559,643
0.0
53.2
1.8
22,420
22,420
225
225
22,195
22,195
1.0
1.0
5,002
6,129
11,131
39,834,938
310
4,640
4,950
522,676
4,692
1,489
6,181
39,312,262
6.1
75.7
44.5
1.3
The Bank estimates loan impairment based on its past historical loss experience on these types of loans.
The significant assumptions used in determining the impairment losses for loans to individuals include
management’s assumption that loss migration rates are constant and can be estimated based on a 12 month
historic loss migration pattern, considering the current economic environment.
Changes in these estimates could affect the loan impairment allowance. For example, to the extent that the net
present value of the estimated cash flows differs by plus/minus one percent, the impairment allowance on loans
to individuals as at 31 December 2013 would be RUB 457,910 thousand lower/higher (31 December 2012:
RUB 393,123 thousand).
- 27 -
ZAO Citibank
Analysis of movements in the impairment allowance for loans to individuals
Movements in the loan impairment allowance by classes of loans to individuals for the year ended
31 December 2013 are as follows:
Consumer loans Credit cards
RUB’000
RUB’000
Balance at the beginning of the
year
Net charge
Write-offs
211,131
948,242
(593,011)
566,362
295,921
916,579
(542,488)
670,012
Mortgage
loans
RUB’000
Staff loans
RUB’000
Overdrafts
RUB’000
10,449
15,246
25,695
225
899
1,124
4,950
3,018
7,968
Total
RUB’000
522,676
1,883,984
(1,135,499)
1,271,161
Movements in the loan impairment allowance by classes of loans to individuals for the year ended
31 December 2012 are as follows:
Consumer loans Credit cards
RUB’000
RUB’000
Balance at the beginning of the
year
Net charge (recovery)
Write-offs
3,001,175
518,759
(3,308,803)
211,131
233,408
449,633
(387,120)
295,921
Mortgage
loans
RUB’000
16,809
(6,360)
10,449
Staff loans
RUB’000
Overdrafts
RUB’000
1,601
(1,376)
225
4,551
399
4,950
Total
RUB’000
3,257,544
961,055
(3,695,923)
522,676
Industry and geographical analysis of the loan portfolio
Loans to customers were issued primarily to customers located within the Russian Federation who operate in
the following economic sectors:
2013
RUB’000
47,062,177
32,525,993
23,677,561
7,847,176
42,104
8,911,150
120,066,161
(1,942,798)
118,123,363
Individuals
Manufacturing
Trade
Telecommunication
Energy
Other
Gross loans to customers
Impairment allowance
2012
RUB’000
39,834,938
25,618,727
27,074,837
8,847,131
251,698
10,727,064
112,354,395
(1,153,595)
111,200,800
Analysis of collateral
Analysis of collateral for loans to legal entities
Loans issued to global corporations with a net carrying amount of RUB 48,987,442 thousand (31 December
2012: RUB 48,282,584 thousand) are secured by guarantees of parent companies or other Citigroup entities.
Loans to global corporations with a net carrying amount of RUB 10,788,625 thousand (31 December
2012: RUB 6,421,514 thousand) are not secured. Loans to local corporate customers are not secured.
Analysis of collateral for loans to individuals
Mortgage loans are secured by underlying residential property. Credit cards, overdrafts and consumer loans
are not secured.
For mortgage loans with a net carrying amount of RUB 458,908 thousand (31 December 2012: RUB 559,643
thousand) management believes that the fair value of collateral is at least equal to the carrying amount of
individual loans at the reporting date.
During the year ended 31 December 2013, the Bank did not obtain assets by taking possession of collateral
for loans to individuals (31 December 2012: nil).
- 28 -
ZAO Citibank
Loan maturities
The maturity of the loan portfolio is presented in Note 32, which shows the remaining periods from the
reporting date to the contractual maturities of the loans. Due to the short-term nature of the loans issued by the
Bank, it is likely that many of the loans will be prolonged at maturity. Accordingly, the effective maturity of
the loan portfolio may be significantly longer than the term based on contractual terms.
14
Financial instruments available-for-sale
2013
RUB’000
Unpledged
Gazprom Eurobonds
Vneshtorgbank
Vneshtorgbank Eurobonds
Rosselkhozbank
Agency on Mortgage Crediting (AIZhK) Eurobonds
Sberbank Eurobonds
Rossiyskie Zheleznye Dorogi (RZhD)
Russian Government Eurobonds
Moscow Region Government
Vnesheconombank
Equity securities
National Bureau of Credit Histories
Other
Pledged under repo agreements
Rosselkhozbank
Pledged under overnight loans
Vnesheconombank
Rosselkhozbank
No financial instruments available-for-sale are impaired or past due.
- 29 -
2012
RUB’000
7,655,690
1,086,560
539,466
527,693
436,997
353,048
123,445
80,281
60,727
14,748
4,632
-
74,438,210
699,010
844,988
3,910,323
108,657
413,319
1,079,862
16,162
1,620,713
3,370,495
1,323,331
4,410
5
4,410
-
25,400,819
-
18,571,250
76,424
4,067,550
2,945,621
1,453,758
1,015,510
720,974
46,491,934
106,477,154
ZAO Citibank
15
RUB’000
Cost
At 1 January 2013
Additions
Disposals
At 31 December 2013
Depreciation
At 1 January 2013
Depreciation charge
Disposals
At 31 December 2013
Carrying value at 31 December 2013
RUB’000
Cost
At 1 January 2012
Additions
Disposals
At 31 December 2012
Depreciation
At 1 January 2012
Depreciation charge
Disposals
At 31 December 2012
Carrying value at 31 December 2012
16
Land, buildings and
leasehold
improvements
Equipment
Total
2,597,288
78,005
2,675,293
3,151,172
99,113
(258,387)
2,991,898
5,748,460
177,118
(258,387)
5,667,191
(1,209,392)
(231,319)
(1,440,711)
1,234,582
(2,568,913)
(222,450)
254,675
(2,536,688)
455,210
(3,778,305)
(453,769)
254,675
(3,977,399)
1,689,792
Land, buildings and
leasehold
improvements
Equipment
Total
2 554 159
43 129
2 597 288
3 165 031
108 066
(121 925)
3 151 172
5 719 190
151 195
(121 925)
5 748 460
(984 262)
(225 130)
(1 209 392)
1 387 896
(2 424 800)
(260 734)
116 621
(2 568 913)
582 259
(3 409 062)
(485 864)
116 621
(3 778 305)
1 970 155
Goodwill
Goodwill arose on the acquisition of ABN-Amro’s custody business in January of 2005.
17
Due to the Central Bank of the Russian Federation
2013
RUB’000
24,627,807
24,627,807
Amounts payable under repo agreements
18
2012
RUB’000.
18,202,094
18,202,094
Deposits and balances from banks and other financial institutions
2013
RUB’000
15,575,806
24,668,055
388,636
40,632,497
Vostro accounts
Term deposits
Amounts payables under repo agreements
2012
RUB’000
15,217,882
13,454,261
28,672,143
Concentration of deposits and balances from banks and other financial institutions
As at 31 December 2013 and 2012 exposures that individually comprise more than 10% of total deposits and
balances from banks and other financial institutions are as follows:
2013
RUB’000
12,705,898
12,705,898
Citibank London
- 30 -
2012
RUB’000
-
ZAO Citibank
19
2013
RUB’000
181,149,355
59,460,323
240,609,678
Current accounts and demand deposits
Term deposits
2012
RUB’000
166,428,156
54,090,969
220,519,125
As at 31 December 2013 and 2012, there are no current accounts and demand or term deposits from customers
that individually exceed 10% of total current accounts and deposits from customers.
20
Transfer of financial assets
Financial instruments avaliable-for-sale
2013
RUB’000
25,400,819
25,016,443
Carrying amount of assets
Carrying amount of related liabilities
2012
RUB’000
18,647,674
18,202,094
The Bank has transactions to lend securities and to sell securities under repo agreements and to purchase
securities under reverse repo agreements.
The securities lent or sold under repo agreements are transferred to a third party and the Bank receives cash
in exchange. These financial assets may be repledged or resold by counterparties in the absence of any
default by the Bank, but the counterparty has an obligation to return the securities when the contract matures.
The Bank has determined that it retains substantially all the risks and rewards related to these securities and
therefore has not derecognised them. These securities are presented as “pledged under repo agreements” in
Note 14. In addition, the Bank recognises a financial liability for cash received as collateral included in
deposits and balances from banks and other financial institutions and due to the Central Bank of the Russian
Federation.
These transactions are conducted under terms that are usual and customary to standard lending, and securities
borrowing and lending activities, as well as the requirements determined by exchanges where the Bank acts
as intermediary.
21
Other liabilities
2013
RUB’000
3,592,591
1,122,992
365,866
86,711
5,168,160
Settlements
Accrued expenses
Taxes payable
Other payables
22
2012
RUB’000
2,895,564
1,358,986
43,525
54,836
4,352,911
Share capital
The Bank converted from a limited liability company to a closed joint-stock company in November 2001. In
conjunction with this change in the legal form, the Bank issued 1,000 ordinary shares at RUB 1 million per
share in exchange for the partner’s previous interest and RUB 763,950 thousand in retained earnings. In
accordance with the Charter the Bank has the right to issue additional 6,000 ordinary shares at RUB 1 million
per share and 2,000 preference shares at RUB 1 million per share. At 31 December 2013, 1,000 ordinary shares
remain issued and outstanding. The Bank received additional paid in capital of RUB 1,227,310 thousand from
Citigroup in 2007, however no additional shares were issued.
On 27 November 2013, according to the decision of the sole shareholder the Bank declared dividends in the
amount of RUB 4,770 thousand per share from retained earnings (31 December 2012: RUB 4,621 thousand),
which in total amounts to RUB 4,770,000 thousand (31 December 2012: RUB 4,621,650 thousand).This
dividends were paid to Citigroup Netherlands B.V. on 29 November 2013.
- 31 -
ZAO Citibank
23
Corporate governance and internal control
Corporate governance framework
The Bank operates as a closed joint stock company in accordance with the Russian law. The supreme
governing body of the Bank is the General Shareholders’ meeting that is called for annual or extraordinary
meetings. The General Shareholders’ meeting makes strategic decisions on the Bank’s operations.
The General Shareholders’ meeting elects the Board of Directors. The Board of Directors is responsible for
overall governance of the Bank’s activities.
Russian legislation and the Charter of the Bank establish lists of decisions that are exclusively approved by the
General Shareholders’ meeting and that are approved by the Board of Directors.
As at 31 December 2013, the Board of Directors includes:





Kurilin Andrey Igorevich – Chairman of the Board of Directors
Korshilov Denis Nikolaevich
Ivanova Maria Lvovna
Rozhkov Viktor Sergeevich
Richard Smith.
During the year ended 31 December 2013 the following changes occurred in composition of the Board of
Directors:
From 1 January 2013 to 15 April 2013 the Board of Directors consisted of: Kurilin Andrey
Igorevich (Chairman of the Board of Directors), Amit Sakh, Allan Levy, Berner Mikhail Borisovich and
Richard Smith. On 15 April 2013 new composition of the Board of Directors had been elected – Kurilin
Andrey Igorevich (Chairman of the Board of Directors), Korshilov Denis Nikolaevich, Ivanova Maria Lvovna,
Rozhkov Viktor Sergeevich, Richard Smith. On 27 June 2013 this composition had been approved till next
General Shareholders’ meeting.
Operating activities of the Bank are managed by the sole executive body of the Bank (the President) and
collective executive body of the Bank (the Management Board). Executive bodies of the Bank are accountable
to the Board of Directors and to the General Shareholders’ meeting.
The General Shareholders’ meeting elects the President. The executive bodies of the Bank are responsible for
implementation of decisions of the General Shareholders’ meeting and the Board of Directors of the Bank.
As at 31 December 2013, the Management Board includes:





Nikolaeva Natalia Yurievna – Acting Chairman of the Management Board
Belyaev Ruslan Valerievich
Korotkov Sergey Aleksandrovich
Belaya Natalia Viktorovna
Berner Mikhail Borisovich.
During the year ended 31 December 2013 the following changes occurred in composition of the Management
Board:
From 1 January 2013 till 15 April 2013 the Management Board consisted of: Zdenek Turek (Chairman of the
Management Board), Nikolaeva Natalia Yurievna, Belyaev Ruslan Valerievich, Korotkov Sergey
Aleksandrovich, Belaya Natalia Viktorovna.
On 15 April 2013 the Management Board had been elected in the following composition: Zdenek Turek
(Chairman of the Management Board), Kurilin Andrey Igorevich, Nikolaeva Natalia Yurievna, Belyaev Ruslan
Valerievich, Korotkov Sergey Aleksandrovich, Belaya Natalia Viktorovna, Berner Mikhail Borisovich.
On 27 June 2013 at the Annual Shareholders’ meeting the Management Board had been elected in the
following composition: Nikolaeva Natalia Yurievna (Acting Chairman of the Management Board), Kurilin
Andrey Igorevich, Belyaev Ruslan Valerievich, Korotkov Sergey Aleksandrovich, Belaya Natalia Viktorovna,
Berner Mikhail Borisovich.
On 26 December 2013 Kurilin Andrey Igorevich had resigned from the members of the Management Board
and the following composition had been approved: Nikolaeva Natalia Yurievna (Acting Chairman of the
Management Board), Belyaev Ruslan Valerievich, Korotkov Sergey Aleksandrovich, Belaya Natalia
Viktorovna, Berner Mikhail Borisovich.
- 32 -
ZAO Citibank
Internal control policies and procedures
The Board of Directors and the Management Board have responsibility for the development, implementation
and maintaining of internal controls in the Bank that are commensurate with the scale and nature of operations.
The purpose of internal controls is to ensure:

proper and comprehensive risk assessment and management

proper business and accounting and financial reporting functions, including proper authorization,
processing and recording of transactions

completeness, accuracy and timeliness of accounting records, managerial information, regulatory
reports, etc.

reliability of IT-systems, data and systems integrity and protection

prevention of fraudulent or illegal activities, including misappropriation of assets

compliance with laws and regulations.
Management is responsible for identifying and assessing risks, designing controls and monitoring their
effectiveness. Management monitors the effectiveness of the Bank’s internal controls and periodically
implements additional controls or modifies existing controls as considered necessary.
The Bank developed a system of standards, policies and procedures to ensure effective operations and
compliance with relevant legal and regulatory requirements, including the following areas:

requirements for appropriate segregation of duties, including the independent authorization of
transactions

requirements for the recording, reconciliation and monitoring of transactions

compliance with regulatory and other legal requirements

documenting of controls and procedures

requirements for the periodic assessment of operational risks faced, and the adequacy of controls
and procedures to address the risks identified

requirements for the reporting of operational losses and proposed remedial action

development of contingency plans

training and professional development

ethical and business standards and

risk mitigation, including insurance where this is effective.
There is a hierarchy of requirements for authorization of transactions depending on their size and complexity.
A significant portion of operations are automated and the Bank put in place a system of automated controls.
Compliance with the Bank’s standards is supported by a program of periodic reviews undertaken by the
Internal Control Service (Internal Audit). The Internal Control Service (Internal Audit) is independent from
management and reports directly to the Board of Directors. The results of the Internal Control Service (Internal
Audit) reviews are discussed with relevant business process managers, with summaries submitted to the Board
of Directors and senior management of the Bank.
The internal control system in the Bank comprises:

the governing bodies of the Bank

the revision commission (the controller)

Chief Accountant (and her deputies) of the Bank

Heads of branches (and their deputies) and chief accountants (and their deputies) of branches

the Internal Control Service (Internal Audit) is the Bank’s division acting on the basis of the Statute
approved by the Board of Directors for the internal control purposes and assistance to the governing
- 33 -
ZAO Citibank
bodies of the Bank in ensuring effective functioning of the Bank, and performing on a constant basis
review and assessment of internal control system efficiency based on the principles of independence
and impartiality in compliance with the Statute of the Internal Control Service (Internal Audit)
approved by the Board of Directors and in compliance with the internal audit plan. The Internal
Control Service (Internal Audit) is headed by the Head of the Internal Control Service (Internal
Audit) who is elected and dismissed by the Board of Directors. The Head of the Internal Control
Service (Internal Audit) is accountable to the Board of Directors.

other employees, divisions and functions that are responsible for compliance with the established
standards, policies and procedures, including;


the responsible employee of the Anti-Money Laundering and Financing of Terrorism and AntiCorruption Department performing responsibilities in accordance with the Internal Control
Rules of Anti-Money Laundering and Financing of Terrorism and Anti-Corruption introduced
by the Compliance Department and approved by the President of the Bank
other divisions and (or) responsible employees of the Bank, including:

the professional securities market participant controller – a regular employee of the Bank
satisfying the qualification requirements of the Federal Service for Financial Markets of the
Russian Federation, who is responsible for the arrangement and implementation of the internal
control over the Bank’s activity as a professional securities market participant, and acting on
the basis of Instructions on Internal Control

the Compliance and Control Department is the Bank’s division, acting on the basis of the
Statute of the Compliance and Control Department, and assisting the management of the Bank
in performing control over compliance with the Russian and international legislation
(compliance). The Head of the Compliance and Control Department informs the President on
the statement of the compliance-control in the Bank, disadvantages in the internal compliancecontrol system, actions on elimination of the detected disadvantages; communicates with the
corporate services and regulating authorities of the Russian Federation; consults and organizes
trainings of the employees on compliance-control issues

the executive officer – a regular employee of the Bank responsible for the internal control
implementation for the purposes of counteracting unlawful usage of insider information and
market manipulation, acting on the basis of Instructions on Internal Control.

the Division of Risk Management and Control over Currency Transactions of the Finance
Department is a division of the Bank acting on the basis of the Statute of the Division of Risk
Management and Control over Currency Transactions approved by the Chief Financial Officer,
specializing on performing control over the compliance of the Bank’s daily transactions with
the approved accounting policy and policy of control over expenses for the purposes of correct
accounting and recording, on control over the compliance with the market risk limits and
independent reconciliation of the financial results of the Bank’s transactions on financial
markets, coordinating of the internal control procedures on the faithfulness of the financial
statements performed by the divisions of the Bank on routine basis, including reconciliation of
the account balances and review of the terms of balances being on the off-balance accounts.

the Currency Control Division of the Operational Department – a division of the Bank acting
on the basis of the Statute of the Currency Control Division approved by the Head of the
Operational Department and in compliance with the legal acts imposed by the CB RF and
internal procedures, approved by the Heads of operational departments of the Bank.
Russian legislation, including Federal Law dated 2 December 1990 No. 395-1 On Banks and Banking Activity,
establishes the professional qualifications, business reputation and other requirements for members of the
Board of Directors, the Management Board, the Head of the Internal Control Service (Internal Audit) and other
key management personnel. All members of the Bank’s governing and management bodies meet these
requirements.
Management believes that the Bank complies with the CB RF requirements related to risk management and
internal control systems, including requirements related to the Internal Control Service (Internal Audit), and
that risk management and internal control systems are appropriate for the scale, nature and complexity of
operations.
- 34 -
ZAO Citibank
24
Risk management
Management of risk is fundamental to the business of banking and is an essential element of the Bank’s
operations. The major risks faced by the Bank are those related to market risk, credit risk and liquidity risk.
Risk management policies and procedures
The risk management policies aim to identify, analyse and manage the risks faced and to set appropriate risk
limits and controls, and to continuously monitor risk levels and adherence to limits. Risk management policies
and procedures are reviewed regularly to reflect changes in market conditions, products and services offered
and emerging best practice.
The Board of Directors has overall responsibility for the oversight of the risk management framework,
overseeing the management of key risks and reviewing its risk management policies and procedures as well as
approving significantly large exposures.
The Management Board is responsible for monitoring and implementation of risk mitigation measures and
making sure that the Bank operates within the established risk parameters. The Head of the Risk Department is
responsible for the overall risk management and compliance functions, ensuring the implementation of
common principles and methods for identifying, measuring, managing and reporting both financial and nonfinancial risks. He reports directly to the President and indirectly to the Board of Directors.
Credit, market and liquidity risks both at the portfolio and transactional levels are managed and controlled
through a system of Credit Committees and an Asset and Liability Management Committee (ALCO). In order
to facilitate efficient and effective decision-making, the Bank has established a hierarchy of Credit Committees
depending on the type and amount of the exposure.
Both external and internal risk factors are identified and managed throughout the organisation. Particular
attention is given to identifying the full range of risk factors and determination of the level of assurance over
the current risk mitigation procedures. Apart from the standard credit and market risk analysis, the Risk
Department monitors financial and non-financial risks by holding regular meetings with operational units in
order to obtain expert judgments in their areas of expertise.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices. Market risk comprises currency risk, interest rate risk and other price risks. Market
risk arises from open positions in interest rate, currency and equity financial instruments, which are exposed to
general and specific market movements and changes in the level of volatility of market prices.
The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, whilst optimizing the return on risk.
Overall authority for market risk is vested in the ALCO, which is chaired by the President. Market risk limits
are approved based on recommendations of the Risk Department’s Market Risk Management Division.
The Bank manages its market risk by setting open position limits in relation to financial instruments, interest
rate maturity and currency positions and stop-loss limits. They are monitored and reassessed on a regular basis.
The Bank monitors market risks by modelling the result of a fixed change in the monitored market factor while
keeping other factors constant. The potential change in the portfolio value is then defined depending on the
current sensitivity of the opened position to the changes in the market factors.
In addition, the Bank uses a wide range of stress tests to model the financial impact of a variety of exceptional
market scenarios on individual trading portfolios and the overall position. Stress tests provide an indication of
the potential size of losses that could arise in extreme conditions. The stress tests carried out by the Bank
include risk factor stress testing, where stress movements are applied to each risk category and ad hoc stress
testing, which includes applying possible stress events to specific positions.
The Bank also utilizes Value-at-Risk (VAR) methodology to monitor market risk of its trading positions. The
Bank does not solely rely on its VAR calculations in its market risk measurement due to inherent risk of usage
of VAR. The limitations of the VAR methodology are recognised by supplementing VAR limits with other
position and sensitivity limit structures, including limits to address potential concentration risks within each
trading portfolio, and gap analysis.
- 35 -
ZAO Citibank
Interest rate risk
The Bank is exposed to interest rate risk as its interest bearing assets and liabilities have different maturity
dates, periods of interest rate changes and volumes during these periods. For variable interest rates, the Bank is
exposed to a basis risk due to the different mechanisms of setting different interest rates, such as Libor or
MosPrime. The interest rate risk management activities are aimed at optimising net interest income in
accordance with the Bank’s strategy.
The Bank holds trading positions in various financial instruments. The majority of business activities are
conducted based on the requirements of customers. In accordance with the estimated demand from customers,
the Bank holds a supply of financial instruments and maintains access to the financial markets through the
quoting of bid and ask prices and by trading with other market makers. These positions are also held for the
purpose of speculation on the expected future developments of financial markets. The speculative expectation
and market making thus aims to maximize net income from trading.
An analysis of sensitivity of profit or loss and equity (net of taxes) as a result of changes in the fair value of
financial instruments as at 31 December 2013 and 2012 due to changes in the interest rates based on a
simplified scenario of a 100 basis point (bp) symmetrical fall or rise in all yield curves is as follows:
100 bp parallel increase
100 bp parallel decrease
2013
Profit
or loss
RUB’000
(892,765)
892,765
2012
Equity
RUB’000
(2,334,659)
2,334,659
Profit
or loss
RUB’000
(435,415)
435,415
Equity
RUB’000
(2,560,977)
2,560,977
An analysis of sensitivity of profit or loss and equity (net of taxes) to changes in interest rate repricing risk
based on a simplified scenario of a 100 basis point (bp) symmetrical fall or rise in all yield curves and positions
of all interest bearing assets and liabilities existing as at 31 December 2013 and 2012 is as follows:
2013
100 bp parallel increase
100 bp parallel decrease
Profit
or loss
RUB’000
(811,271)
811,271
2012
Equity
RUB’000
(811,271)
811,271
Profit
or loss
RUB’000
(1,722,313)
1,722,313
Equity
RUB’000
(1,722,313)
1,722,313
Currency risk
The Bank has assets and liabilities denominated in several foreign currencies. Foreign currency risk arises
when the actual or forecasted assets in a foreign currency are either greater or less than the liabilities in that
currency. For further information on the exposure to currency risk at year end refer to Note 33.
The measurement of the currency risk is based on the currency exposure in the individual currencies. The
currency exposure calculated for individual currencies is subject to the simulation of a standardised change in
the currency rate in comparison with the functional currency (appreciation of the currency monitored), and the
value of the currency exposure at the new level of the currency rate is calculated. The difference between the
calculated values represents the potential change in the value of the portfolio in a particular currency and is
compared with the limit. The limits are usually symmetrical, i.e. limiting the maximum long and short position
to the same extent.
A more comprehensive approach is provided by the calculation of VAR. The Bank also carries out stress
testing of the currency risk while adhering to the same methodology, but the fixed movement in exchange rates
is replaced with the movement in currency rates defined for stress testing purposes.
The Bank sets currency risk limits based on its net currency exposure in individual currencies and with respect
to the total currency exposure.
An analysis of sensitivity of profit or loss and equity (net of taxes) to changes in the foreign currency exchange
rates based on positions existing as at 31 December 2013 and 2012 and a simplified scenario of a 10% change
in USD and other currencies to RUB exchange rates is as follows:
10% appreciation of USD against RUB
10% depreciation of USD against RUB
10% appreciation of other currencies against RUB
10% depreciation of other currencies against RUB
2013
Profit
or loss
Equity
RUB’000
RUB’000
122,016
122,016
(122,016)
(122,016)
767,940
767,940
(767,940)
(767,940)
- 36 -
2012
Profit
or loss
Equity
RUB’000
RUB’000
600,170
600,170
(600,170)
(600,170)
167,796
167,796
(167,796)
(167,796)
ZAO Citibank
Credit risk
Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument fails
to meet its contractual obligations. The Bank has developed policies and procedures for the management of
credit exposures (both for recognised financial assets and unrecognised contractual commitments), including
guidelines to limit portfolio concentration and the establishment of Credit Committees, which actively monitor
credit risk. The credit policy is reviewed and approved by the Management Board.
The credit policy establishes:

procedures for review and approval of loan applications

methodology for the credit assessment of borrowers (legal entities and individuals)

methodology for the credit assessment of counterparties, issuers and insurance companies

methodology for the evaluation of collateral

credit documentation requirements

procedures for the ongoing monitoring of loans and other credit exposures.
Corporate loan applications are originated by the relevant client managers and are then passed on to the Loan
Department, which is responsible for the corporate loan portfolio. Analysts reports are based on a structured
analysis focusing on the customer’s business and financial performance. The loan application and the report are
then independently reviewed by the Risk Department’s Credit Risk Management Division and a second
opinion is given accompanied by a verification that credit policy requirements are met. The Credit Committee
reviews the loan application on the basis of submissions by the Loan Department and the Risk Department.
Individual transactions are also reviewed by the Legal, Accounting and Tax departments depending on the
specific risks and pending final approval of the Credit Committee.
The Bank continuously monitors the performance of individual credit exposures and regularly reassesses the
creditworthiness of its borrowers. The review is based on the customer’s most recent financial statements and
other information submitted by the borrower, or otherwise obtained by the Bank.
Retail loan applications are reviewed by the Retail Lending Division through the use of scoring models and
application data verification procedures developed together with the Risk Department.
Apart from individual customer analysis, the whole credit portfolio is assessed by the Risk Department with
regard to credit concentration and market risks.
The maximum exposure to credit risk is generally reflected in the carrying amounts of financial assets in the
statement of financial position and unrecognised contractual commitment amounts. The impact of possible
netting of assets and liabilities to reduce potential credit exposure is not significant.
The maximum exposure to credit risk from financial assets at the reporting date is as follows:
2013
RUB’000
ASSETS
Cash equivalents
Loans to customers
Other financial assets
Total maximum exposure
26,820,369
138,510,589
26,569,658
118,123,363
46,491,934
2,405,166
358,921,079
2012
RUB’000
26,503,922
55,305,443
18,685,909
111,200,800
106,477,154
2,646,030
320,819,258
The maximum exposure to credit risk from unrecognised contractual commitments at the reporting date is
presented in Note 25.
The Bank monitors concentrations of credit risk by industry/sector and by geographic location. For the analysis
of concentration of credit risk in respect of loans to customers refer to Note 13.
As at 31 December 2013, the Bank has debt securities issued by the Government of the Russian Federation
(31 December 2012: debt securities issued by the Government of the Russian Federation), credit risk exposure
to whom exceeds 10% of maximum credit risk exposure. The credit risk exposure for these financial
instruments as at 31 December 2013 is RUB 59,368,701 thousand (31 December 2012: RUB 102,802,771
thousand).
- 37 -
ZAO Citibank
Offsetting financial assets and financial liabilities
The disclosures set out in the tables below include financial assets and financial liabilities that:
are offset in the Bank’s statement of financial position or
are subject to an enforceable master netting arrangement or similar agreement that covers similar financial
instruments, irrespective of whether they are offset in the statement of financial position.
Similar agreements include derivative clearing agreements, global master repo agreements and global master
securities lending agreements. Similar financial instruments include derivatives, repo agreements, and reverse
repo agreements, and securities borrowing and lending agreements.
The Bank’s derivative transactions that are not transacted on an exchange are entered into under International
Derivative Swaps and Dealers Association (ISDA) Master Netting Agreements. In general, under such
agreements the amounts owed by each counterparty that are due on a single day in respect of transactions
outstanding in the same currency under the agreement are aggregated into a single net amount payable by one
party to the other. In certain circumstances, for example when a credit event such as a default occurs, all
outstanding transactions under the agreement are terminated, the termination value is assessed, and only a
single net amount is due or payable in settlement transactions.
Repo, reverse repo transactions, and securities borrowings and lendings are covered by master agreements with
netting terms similar to those of ISDA Master Netting Agreements.
The above ISDA and similar master netting arrangements do not meet the offsetting criteria in the statement of
financial position. This is because they create a right of set-off of recognised amounts that is enforceable only
following an event of default, insolvency or bankruptcy of the Bank or the counterparties. In addition, the Bank
and its counterparties do not intend to settle on a net basis or to realise the assets and settle the liabilities
simultaneously.
The Bank receives and accepts collateral in the form of marketable securities in respect of repo, and reverse
sale and repo agreements.
Such collateral is subject to the standard industry terms of the ISDA Credit Support Annex. This means that
securities received/given as collateral can be pledged or sold during the term of the transaction, but must be
returned on maturity of the transaction. The terms also give each counterparty the right to terminate the related
transactions upon the counterparty’s failure to post collateral.
- 38 -
ZAO Citibank
The tables below show financial assets and financial liabilities subject to offsetting, enforceable master netting arrangements and similar arrangements as at 31 December 2013
and 2012:
2013
Types of financial assets/liabilities
Reverse repo agreements
Derivative financial instruments - assets
Gross
amounts of
recognised
financial
asset/liability
RUB’000
Gross amount of
recognised
financial
liability/asset offset
in the statement of
financial position
RUB’000
Net amount of
financial
assets/liabilities
presented in the
statement of
financial position
RUB’000
11,020,115
-
11,020,115
Related amounts subject to offset under specific
conditions
Financial
instruments
RUB’000
Cash
collateral
received
RUB’000
Net
amount
RUB’000
11,020,115
-
-
1,581,753
-
1,581,753
1,581,753
-
-
Total financial assets
12,601,868
-
12,601,868
12,601,868
-
-
Repo agreements
25,016,443
-
25,016,443
25,016,443
-
-
1,667,035
-
1,667,035
1,581,753
-
85,282
26,683,478
-
26,683,478
26,598,196
-
85,282
Gross
amounts of
recognised
financial
asset/liability
RUB’000
Gross amount of
recognised
financial
liability/asset offset
in the statement of
financial position
RUB’000
Net amount of
financial
assets/liabilities
presented in the
statement of
financial position
RUB’000
12,112,291
-
12,112,291
12,112,291
-
-
7,647,718
-
7,647,718
6,668,676
-
979,042
Total financial assets
19,760,009
-
19,760,009
18,780,967
-
979,042
Repo agreements
18,202,094
-
18,202,094
18,202,094
-
-
6,668,676
-
6,668,676
6,668,676
-
-
24,870,770
-
24,870,770
24,870,770
-
-
Derivative financial instruments - liabilities
Total financial liabilities
2012
Types of financial assets/liabilities
Reverse repo agreements
Derivative financial instruments - assets
Derivative financial instruments - liabilities
Total financial liabilities
- 39 -
Related amounts subject to offset under specific
conditions
Financial
instruments
RUB’000
Cash
collateral
received
RUB’000
Net amount
RUB’000
ZAO Citibank
Liquidity risk
Liquidity risk is the risk that the Bank will encounter difficulty in meeting obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk exists when the
maturities of assets and liabilities do not match. The matching and/or controlled mismatching of the maturities
and interest rates of assets and liabilities is fundamental to liquidity management. It is unusual for financial
institutions ever to be completely matched since business transacted is often of an uncertain term and of
different types. An unmatched position potentially enhances profitability, but can also increase the risk of
losses.
The Bank maintains liquidity management with the objective of ensuring that funds will be available at all
times to honor all cash flow obligations as they become due. The liquidity policy is reviewed and approved by
the Management Board.
The Bank seeks to actively support a diversified and stable funding base comprising long-term and short-term
loans from other Citigroup entities, core corporate and retail customer deposits, accompanied by diversified
portfolios of highly liquid assets, in order to be able to respond quickly and smoothly to unforeseen liquidity
requirements.
The liquidity management policy requires:

projecting cash flows by major currencies and considering the level of liquid assets necessary in relation
thereto

maintaining a diverse range of funding sources

managing the concentration and profile of debts

maintaining debt financing plans

maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any
interruption to cash flow

maintaining liquidity and funding contingency plans

monitoring liquidity ratios against regulatory requirements.
The Bank monitors daily its liquidity position. Liquidity reports covering the liquidity position of the Bank
along with the stress testing simulations are regularly presented to the ALCO.
The Bank also calculates mandatory liquidity ratios on a daily basis in accordance with the requirements of the
CB RF. As at 31 December 2013 and 2012, the Bank is in compliance with these ratios.
The following table shows the mandatory liquidity ratios calculated as at 31 December 2013 and 2012.
Rapid liquidity ratio (Н2)
Current liquidity ratio (Н3)
Non-current liquidity ratio (Н4)
Requirement
Not less than 15%
2013, %
2012, %
47.4
74.1
Not less than 50%
80.1
78.0
Not greater than 120%
21.0
33.4
The following tables show the undiscounted cash flows from financial liabilities and credit related
commitments on the basis of their earliest possible contractual maturity. The total gross inflow and outflow
disclosed in the tables is the contractual, undiscounted cash flow on the financial liability or commitment. For
issued financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in
which the guarantee can be called. These expected cash flows can vary significantly from the actual future cash
flows.
- 40 -
ZAO Citibank
The liquidity position as at 31 December 2013 is as follows:
RUB’000
Non-derivative
liabilities
Due to the Central Bank
of the Russian
Federation
Deposits and balances
from banks and other
financial institutions
Current accounts and
deposits from customers
Other liabilities
Derivatives
- Inflow
- Outflow
Total liabilities
Credit related
commitments
Less than
1 month
1 to 3
months
3 to 6
months
6 months to More than
1 year
1 year
Total gross
outflow
(inflow)
Carrying
amount
24,627,807
-
-
-
-
24,627,807
24,627,807
40,265,350
130,968
84,339
229,655
-
40,710,312
40,632,497
242,350,264
4,386,599
2,609,964
560,667
808,202
220,894
758,282
-
222,500
-
246,749,212 240,609,678
5,168,160
5,168,160
(160,099,262) (32,431,496) (23,823,334) (23,533,700) (20,844,484) (260,732,276) (1,581,753)
160,141,242 32,467,234 23,761,203 23,441,355 21,086,902 260,897,936
1,667,035
311,672,000
3,337,337 1,051,304
895,592
464,918 317,421,151 311,123,424
91,084,557
-
-
-
-
91,084,557
91,084,557
The liquidity position as at 31 December 2012 is as follows:
RUB’000
Non-derivative
liabilities
Due to the Central
Bank of the Russian
Federation
Deposits and balances
from banks and other
Other liabilities
Derivatives
- Inflow
- Outflow
Total liabilities
Credit related
commitments
Less than
1 month
1 to 3
months
3 to 6
months
6 months to More than
1 year
1 year
Total gross
outflow
(inflow)
Carrying
amount
18,202,094
-
-
-
-
18,202,094
18,202,094
28,519,638
30,425
62,188
88,814
-
28,701,065
28,672,143
216,397,801
3,541,609
3,107,836
562,661
685,893
248,641
479,734
-
63,103
-
220,734,367 220,519,125
4,352,911
4,352,911
(80,260,818) (48,947,197) (61,319,350) (43,901,784) (20,604,691) (255,033,840) (7,647,718)
79,951,295 48,492,676 60,842,622 41,794,210 19,795,968 250,876,771
6,668,676
266,351,619
3,246,401
519,994 (1,539,026)
(745,620) 267,833,368 270,767,231
71,926,063
-
-
-
-
71,926,063
71,926,063
For further information on the exposure to liquidity risk at year end refer to Note 32.
25
Credit related commitments
Guarantees and letters of credit
The Bank issues guarantees and letters of credit on behalf of its customers. These instruments bear a credit risk
similar to that of loans granted. The amounts outstanding based on the contractual maturity of the instruments
are as follows:
2013
RUB’000
Guarantees issued maturing in:
2013
2014
2015
2016
2017
2018
2020
2021
11,508,853
1,682,954
772,861
52,267
90,460
38,424
2,291
14,148,110
- 41 -
2012
RUB’000
9,500,789
1,969,478
62,740
196,891
83,315
2,126
11,815,339
ZAO Citibank
2013
RUB’000
Letters of credit issued maturing in:
2013
2014
2015
2012
RUB’000
495,441
132,553
627,994
2,312,855
261,338
2,574,193
The contractual maturity of the above instruments is the latest date that the Bank may be called to honour its
obligation under the instrument.
Undrawn loan commitments
The Bank has outstanding credit related commitments to extend loans. These credit related commitments take
the form of approved loans and credit card limits and overdraft facilities.
At 31 December 2013, the Bank had the following undrawn loan commitments:
RUB’000
Overdrafts
Credit cards
Unused credit lines
68,051
52,465,251
220
52,533,522
9,938,954
1,632,215
12,203,762
23,774,931
Total
10,007,005
54,097,466
12,203,982
76,308,453
At 31 December 2012, the Bank had the following undrawn loan commitments:
RUB’000
Overdrafts
Credit cards
Unused credit lines
40,585
42,793,124
38,866
42,872,575
4,989,180
1,547,595
8,127,181
14,663,956
Total
5,029,765
44,340,719
8,166,047
57,536,531
The Bank applies the same credit risk management policies and procedures when granting credit commitments,
financial guarantees and letters of credit as it does for granting loans to customers.
The contractual amounts of credit related commitments are set out in the above table by category. The amounts
reflected in the table for credit related commitments assume that amounts are fully advanced. The amounts
reflected in the table for guarantees and letters of credit represent the maximum accounting loss that would be
recognised at the reporting date if the counterparties failed completely to perform as contracted.
The total outstanding contractual credit related commitments above do not necessarily represent future cash
requirements, as these credit related commitments may expire or terminate without being funded. The majority
of loan and credit line commitments do not represent an unconditional credit related commitment by the Bank.
Based on management’s estimate, no provisions are required against guarantees and letters of credit issued by
the Bank.
26
Operating leases
Leases as lessee
Future lease payments (net of VAT and operating costs) under operating leases in effect at 31 December 2013
and 2012 are detailed below:
2013
RUB’000
1,265,515
4,982,472
2,557,506
8,805,493
Less than 1 year
Between 1 and 5 years
More than 5 years
2012
RUB’000
1,190,495
4,780,717
2,879,893
8,851,105
During 2013 RUB 1,174,929 thousand is recognised as an expense in profit or loss in respect of operating
leases (31 December 2012: RUB 1,155,327 thousand).
- 42 -
ZAO Citibank
27
Contingencies
Taxation contingencies
The taxation system in the Russian Federation is relatively new and is characterised by frequent changes in
legislation, official pronouncements and court decisions, which are often unclear, contradictory and subject to
varying interpretation by different tax authorities. Taxes are subject to review and investigation by a number of
authorities who have the authority to impose severe fines, penalties and interest charges. A tax year remains
open for review by the tax authorities during the three subsequent calendar years; however, under certain
circumstances a tax year may remain open longer. Recent events within the Russian Federation suggest that the
tax authorities are taking a more assertive position in their interpretation and enforcement of tax legislation.
These circumstances may create tax risks in the Russian Federation that are substantially more significant than
in other countries. Management believes that it has provided adequately for tax liabilities based on its
interpretations of applicable Russian tax legislation, official pronouncements and court decisions. However, the
interpretations of the relevant authorities could differ and the effect on the financial position, if the authorities
were successful in enforcing their interpretations, could be significant.
Starting from 1 January 2012 new transfer pricing rules came into force in Russia. These provide the
possibility for tax authorities to make transfer pricing adjustments and impose additional tax liabilities in
respect of controllable transactions if their prices deviate from the market range or profitability range.
According to the provisions of transfer pricing rules, the taxpayer should sequentially apply five market price
determination methods prescribed by the Tax Code.
Tax liabilities arising from transactions between companies are determined using actual transaction prices. It is
possible, with the evolution of the interpretation of transfer pricing rules in the Russian Federation and changes
in the approach of the Russian tax authorities, that such transfer prices could be challenged. Since the current
Russian transfer pricing rules became effective relatively recently, the impact of any such challenge cannot be
reliably estimated; however, it may be significant to the financial position and/or the overall operations of the
Bank.
Insurance
The insurance industry in the Russian Federation is in a developing state and many forms of insurance
protection common in other parts of the world are not yet generally available. The Bank does not have full
coverage for its premises and equipment, business interruption, or third party liability in respect of property or
environmental damage arising from accidents on Bank’s property or relating to operations. Until the Bank
obtains adequate insurance coverage, there is a risk that the loss or destruction of certain assets could have a
material adverse effect on operations and financial position.
Litigation
In the ordinary course of business, the Bank is subject to legal actions and complaints. Management believes
that the ultimate liability, if any, arising from such actions or complaints, will not have a material adverse
effect on the financial condition or the results of future operations of the Bank.
28
Related party transactions
Control relationships
The Bank’s parent is Citigroup Netherlands B.V., headquartered in Netherlands.
The party with ultimate control over the Bank is Citigroup Inc., which produces publicly available financial
statements.
Transactions with directors and executive officers
All remuneration is in the form of short term employee benefits. The total remuneration of directors and
executive officers was RUB 185,578 thousand and RUB 182,363 thousand for the years ended 31 December
2013 and 2012, respectively.
Loans to directors and executive officers totalled RUB 46,619 thousand and RUB 30,078 thousand at
31 December 2013 and 2012, respectively. The average effective interest rates for these loans were 8.2% and
8.0% at 31 December 2013 and 2012, respectively.
- 43 -
ZAO Citibank
Transactions with other Citigroup entities
The following balances and average effective interest rates were outstanding with other Citigroup entities at
31 December 2013 and 2012:
2013
Carrying amount
RUB’000
Nostro accounts in banks and other financial
institutions
Loans and deposits with banks and other
Financial assets held for trading – derivatives
Other assets
Deposits and balances from banks and other
Financial liabilities held for trading – derivatives
Other liabilities
2012
Average
effective
interest rate
Carrying amount
RUB’000
Average
effective
interest rate
4,681,731
-
6,398,591
-
76,222,535
818,996
2,781
0.07%
-
9,025,822
4,000,891
-
0.53%
-
14,589,272
1,144,323
2,037
3.84%
-
4,287,319
4,983,474
636
0.01%
-
Amounts included in profit or loss for the years ended 31 December 2013 and 2012 in relation to transactions
with other Citigroup entities are as follows:
2013
RUB’000
152,412
(198,288)
(2,639,598)
164,073
(549,618)
230,655
(2,509,058)
Interest income
Interest expense
Net loss from foreign exchange contracts
Fee and commission income
Fee and commission expense
Other income
General administrative expenses
2012
RUB’000
622,576
(120,307)
(8,732)
57,433
(647,512)
50,121
(2,873,406)
Amounts of guarantees issued to other Citigroup entities as at 31 December 2013 and 2012 are as follows:
2013
RUB’000
3,839,445
Guarantees issued to other Citigroup entities
2012
RUB’000
3,808,162
Amounts of guarantees received from other Citigroup entities as at 31 December 2013 and 2012 are as follows:
2013
RUB’000
Guarantees received from other Citigroup entities for corporate loans issued
and undrawn facilities
29
90,247,561
2012
RUB’000
81,107,177
Financial assets and liabilities: fair value and accounting
classifications
Accounting classifications and fair value
The Bank performed the assessment of fair value of its financial instruments according to IFRS 7 Financial
Instruments: Disclosures.
The estimates of fair value are intended to approximate the price that would be received to sell an asset, or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. However,
given the uncertainties and the use of subjective judgment, the fair value should not be interpreted as being
realisable in an immediate sale of the assets or transfer of liabilities.
Fair values of financial instruments held for trading and financial instruments available-for-sale are based on
quoted market prices or dealer price quotations at the reporting date without any deduction for transaction
costs.
- 44 -
ZAO Citibank
If there are no available quoted market prices, fair value is determined by cash flow discounting and other
methods, used by market participants.
The objective of valuation techniques is to arrive at a fair value determination that reflects the price that
would be received to sell the asset, or paid to transfer the liability in an orderly transaction between market
participants at the measurement date.
As a result of performed assessment as at 31 December 2013 and 2012, management concluded that the fair
value of all short-term financial assets and liabilities approximates their carrying amount.
Fair value hierarchy
The Bank measures fair values using the following fair value hierarchy, which reflects the significance of the
inputs used in making the measurements:

Level 1: quoted market price (unadjusted) in an active market for an identical instrument.

Level 2: inputs other than quotes prices included within Level 1 that are observable either directly
(i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued
using: quoted market prices in active markets for similar instruments; quoted prices for similar
instruments in markets that are considered less than active; or other valuation techniques where all
significant inputs are directly or indirectly observable from market data.

Level 3: inputs that are unobservable. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the unobservable inputs have a significant
effect on the instrument’s valuation. This category includes instruments that are valued based on
quoted prices for similar instruments where significant unobservable adjustments or assumptions are
required to reflect differences between the instruments.
The tables below analyse financial instruments measured at fair value as at 31 December 2013 and 2012, by
the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are
based on the values recognised in the statement of financial position:
2013
Level 1
Financial instruments held for trading - assets
Financial instruments held for trading - liabilities
Market quotes
RUB’000
24,987,905
46,487,519
Level 2
Valuation techniques
based on market
observable inputs
RUB’000
1,581,753
1,667,035
-
Total
RUB’000
26,569,658
1,667,035
46,487,519
2012
Level 1
Financial instruments held for trading - assets
Financial instruments held for trading - liabilities
Market quotes
RUB’000
11,038,191
106,472,744
Level 2
Valuation techniques
based on market
observable inputs
RUB’000
7,647,718
6,668,676
-
Total
RUB’000
18,685,909
6,668,676
106,472,744
The fair value of unquoted equity securities available-for-sale with a carrying value of RUB 4 415 thousand as
at 31 December 2013 (31 December 2012: RUB 4 410 thousand) cannot be determined.
The tables below show analysis of the fair value of financial instruments not measured at fair value as at
31 December 2013 and 2012 by the level in the fair value hierarchy:
2013
-
Level 3
RUB’000
117,657,045
Total fair value
RUB’000
117,657,045
Total carrying
amount
RUB’000
118,123,363
240,620,071
-
240,620,071
240,609,678
Level 2
RUB’000
Loans to customers
- 45 -
ZAO Citibank
2012
-
Level 3
RUB’000
110,600,093
Total fair value
RUB’000
110,600,093
Total carrying
amount
RUB’000
111,200,800
220,529,682
-
220,529,682
220,519,125
Level 2
RUB’000
Loans to customers
30
Capital management
The CB RF sets and monitors capital requirements for the Bank.
The Bank defines as capital those items defined by statutory regulation as capital for credit institutions. Under
the current capital requirements set by the CB RF, banks have to maintain a ratio of capital to risk weighted
assets (statutory capital ratio) above the prescribed minimum level. As at 31 December 2013, this minimum
level is 10%. The Bank was in compliance with the statutory capital ratio as at 31 December 2013 and 2012.
The following table shows the capital position calculated in accordance with requirements set by the CB RF:
2013
53,047,859
17.1
Capital in RUB’000
Statutory capital ratio in %
31
2012
51,052,183
19.4
Average effective interest rates
The table below displays average effective interest rates for interest bearing assets and liabilities as at
31 December 2013 and 2012. These interest rates are an approximation of the yields to maturity of these assets
and liabilities.
2013
Average effective interest rate, %
Other
RUB
USD
currencies
Interest bearing assets
Loans and deposits with
banks and other financial
institutions and amounts
receivable under reverse
repo agreements
for trading
Loans to customers
available-for-sale
Interest bearing liabilities
Due to the Central Bank of
the Russian Federation
Deposits from banks and
other financial insitutions
and amounts payable under
repo agreements
- Current accounts and
demand deposits
- Term deposits
2012
Average effective interest rate, %
Other
RUB
USD
currencies
5.7%
0.2%
3.0%
6.2%
1.1%
-
6.8%
13.5%
7.7%
1.9%
1.7%
7.2%
13.6%
8.9%
2.2%
2.3%
7.3%
5.8%
4.5%
7.5%
5.8%
5.1%
5.4%
-
-
5.6%
-
-
4.3%
0.1%
-
5.1%
0.1%
-
0.8%
5.1%
0.3%
0.3%
0.3%
0.4%
0.8%
5.3%
0.3%
0.2%
0.3%
0.3%
- 46 -
ZAO Citibank
32
Maturity analysis
The following table shows all assets and liabilities as at 31 December 2013 by their remaining contractual maturities with the exception of securities included in financial
instruments held for trading and financial instruments available-for-sale except equity instruments. Such securities are shown in the category “Less than 1 month” as
management believes they are liquid assets which can be sold quickly in response to liquidity needs, if necessary.
RUB’000
ASSETS
Obligatory reserves with the Central Bank of the Russian
Federation
Loans to customers
Other assets
Goodwill
Deferred tax asset
Total assets
LIABILITIES
Due to the Central Bank of the Russian Federation
Deposits and balances from banks and other financial institutions
Other liabilities
Total liabilities
Net position as at 31 December 2013
Net position as at 31 December 2012
Cumulative net position as at 31 December 2013
Cumulative net position as at 31 December 2012
Less than 1
month
6 months to
1 year
More than
1 year
1 to 3 months
3 to 6 months
No maturity
Total
32,768,660
-
-
-
-
-
32,768,660
2,760,361
108,078,622
25,368,408
59,008,029
46,487,519
1,564,386
276,035,985
9,823,265
278,902
15,975,930
209,155
26,287,252
5,034,380
243,845
5,953,478
113,477
11,345,180
14,574,322
580,441
9,922,589
186,539
25,263,891
1,000,000
98,062
27,263,337
331,609
28,693,008
4,415
1,689,792
199,779
177,755
2,071,741
2,760,361
138,510,589
26,569,658
118,123,363
46,491,934
2,405,166
1,689,792
199,779
177,755
369,697,057
450,628
24,627,807
40,198,779
236,750,605
4,386,599
306,414,418
(30,378,433)
(29 503 025)
(30,378,433)
(29 503 025)
396,587
130,955
2,448,063
560,667
3,536,272
22,750,980
9 362 312
(7,627,453)
(20 140 713)
232,769
82,950
702,765
220,894
1,239,378
10,105,802
8 416 233
2,478,349
(11 724 480)
428,534
219,813
510,242
1,158,589
24,105,302
21 393 336
26,583,651
9 668 856
158,517
198,003
356,520
28,336,488
42 002 267
54,920,139
51 671 123
2,071,741
2 174 344
56,991,880
53 845 467
1,667,035
24,627,807
40,632,497
240,609,678
5,168,160
312,705,177
56,991,880
53 845 467
-
Management uses deposits and other sources of financing, provided by members of Citigroup for managing negative gap in short-term liquidity. Also, relying on previous
experience management believes that current accounts and demand deposits included in category “Less than 1 month” is a stable source of financing.
- 47 -

ZAO CB Citibank Financial Statements for the year ended 31

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