Stopanska Banka AD Bitola

Transcription

Financial statements and Independent Auditors’ Report
Eurostandard Banka AD, Skopje
31 December 2012
This is an English translation of the original Report issued in Macedonian, in case of any discrepancies
between the English and the Macedonian version the Macedonian text shall prevail
Contents
Page
Independent Auditors’ Report
1
Income Statement
4
Statement of Comprehensive Income
5
Balance Sheet
6
Statement of Changes in Equity and Reserves
8
Statement of Cash Flows
12
Notes to the financial statements
14
Independent Auditors’ Report
To the Management and Shareholders of
Grant Thornton DOO
M.H.Jasmin 52 v-1/7
1000 Skopje
Macedonia
T +389 (2) 3214 700
F +389 (2) 3214 710
www.grant-thornton.com.mk
We have audited the accompanying financial statements of Eurostandard Banka AD (“the Bank”)
which comprise of the Balance sheet as of 31 December 2012, and the Income statement,
Statement of Comprehensive income, Statement of changes in equity and reserves and Statement
of cash flows for the year then ended, and a summary of significant accounting policies and other
explanatory notes, included on pages 4 to 127.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with the Decision on the Methodology of recording and evaluating accounting items
and the preparation of financial statements issued by the National Bank of the Republic of
Macedonia, 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.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance 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.
Chartered Accountants
Member firm of Grant Thornton International Ltd
2
In making those risk assessments, the auditor considers internal control relevant to the Bank’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 Bank’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the
Management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our qualified audit opinion.
Basis for qualified opinion
As it is disclosed in notes 12 and 16 to the accompanying financial statements, the allowance for
impairment of financial assets, on a net basis, for the year then ended 31 December 2012 amounts
to Denar 45,876 thousand, and the special reserves for off-balance sheet exposures, on a net basis
amounts to Denar 241 thousand. Based on the applied auditing procedures, we identified that the
allowance for impairment of the financial assets on a net basis, the carrying amount of the special
reserves for off-balance exposures, as well as the carrying amount of the commitments and
contingencies as at and for the year then ended 31 December 2012 have been understated, and the
financial result and the carrying amount of the loans and advances to customers as at and for the
year then ended 31 December 2012 have been overstated by the amount of Denar 46,807
thousand. The Bank has recorded this amount in their financial statements after the reporting date,
which is not in accordance with the applied accounting framework which requires expenses and
associated provisions to be recognized in the period when they have occurred.
Qualified opinion
In our opinion, except from the effect on the financial statements from the issue discussed in the
“Basis for qualified opinion” paragraph, the financial statements present fairly, in all material
respects, the financial position of the Bank as at 31 December 2012, and its financial performance
and its cash flows for the year then ended in accordance with the Decision on the Methodology for
recording and evaluating accounting items and the preparation of financial statements as of issued
by the National Bank of the Republic of Macedonia.
Emphasis of matters

As disclosed in note 1.5 to the accompanying financial statements, during the year ended 31
December 2012, the Bank was handed measures by the Governor of the National Bank of the
Republic of Macedonia: written warning and recommendations. The measures were handed on
the basis of findings from the Minutes of partial immediate field control performed by the
Bank during 2012.
On 28 May 2012, the Bank’s Managing Board and the Mediation commission of NBRM have
made a Protocol for coming to an agreement to remove consequences from violations.
Member firm of Grant Thornton International Ltd
3
Grant Thornton
•
Furthermore, as it is disclosed in note 48 to the accompanying financial statements, after 31
December 2012, the reporting date for the fmancial reports, the Bank has been handed
measures by the Governor of NBRM: Decision, written warning and recommendations.
Our opinion is not qualified in regards to the matters above.
Skopje,
30 April 2013
Grant Thornton DOO
'
t:2cj
~rtified
l
audita.
/Marjan Andonov
Member finn of Grant Thornton International ltd
4
Financial statements
31 December 2012
Income Statement
2012
In Denar thousand
2011
6
338,473
(253,067)
85,406
252,222
(137,564)
114,658
7
62,011
(16,575)
45,436
48,709
(13,435)
35,274
8
778
-
9
10
11
24
8,953
5,784
-
9,055
4,714
-
Impairment losses of financial assets, net
Impairment losses of non – financial assets, net
Personnel expenses
Depreciation and amortization
Other operating expenses
Participation in losses of associates
Profit/(Loss) before taxation
12
13
14
15
16
24
(45,876)
(1,246)
(64,637)
(14,082)
(117,052)
(96,536)
25,999
(706)
(60,651)
(16,977)
(107,251)
4,115
Income tax
17
Profit/ (loss) for the year from continuing operations
(864)
(97,400)
(1,221)
2,894
Profit / (loss) from group of assets and liabilities held for
sale
Profit / (loss) for the year
(97,400)
2,894
-
-
(5,411)
-
161
-
Notes
Interest income
Interest expenses
Net interest income / (expenses)
Fee and commission income
Fee and commission expenses
Net fee and commission income/(expenses)
Net trading income
Net income from other financial instruments recorded at fair
value
Foreign exchange gains / (losses), net
Other operating income
Participation in income of associates
Profit / (loss) for the year, attributable to:*
Shareholders of the Bank
non-controlling interest
Earnings per share
basic (losses) / earnings per share (in Denar)
diluted earnings / (losses) per share (in Denar)
* Only for consolidated financial statements
See accompanying Notes to the financial statements
41
5
31 December 2012
Statement of Comprehensive Income
In Denar thousand
Note
Profit/ (loss) for the year
Other gains/ (losses) in the period not presented in the
Income Statement (before taxation)
Revaluation reserve for assets available-for-sale
- unrealized net-changes in fair value of assets availablefor-sale
- realized net-gains/ (losses) from assets available-forsale, reclassified in the Income Statement
Reserve for instruments for risk protection of cash flows
- unrealized net-changes in fair value of instruments for
risk protection of cash flows
- realized net-gains/(losses) from instruments for risk
protection of cash flows, reclassified in the Income
Statement
Reserve for instruments for risk protection from netinvestments in foreign operations
Reserve of foreign exchange differences from investment
in foreign operations
Participation in other gains/ (losses) in associates not
presented in the Income Statement
Other gains/(losses) not presented in the Income
Statement
Income tax from other gains/(losses) not presented in the
Income Statement
Total other gains/ (losses) in the period not presented
in the Income Statement
Comprehensive income/ (loss) for the year
Comprehensive income/ (loss) for the year, attributable
to:*
Shareholders of the Bank
Non-controlling interest
24
17
2012
2011
(97,400)
2,894
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(97,400)
2,894
-
-
6
31 December 2012
Balance Sheet
2012
In Denar thousand
2011
18
19
1,195,593
3,885
1,283,729
-
20
21
22.1
22.2
23
3,201,167
311,799
209,662
2,292,718
19,990
24
30.1
25
26
27
28
29
30.2
31
894
28,992
346,145
9,497
14,333
251,606
5,363,911
1,758
7,006
242,448
8,427
21,971
251,606
4,339,315
-
-
6,389
4,310,018
274,241
116,252
1,247
36,035
4,744,182
20,135
3,392,983
82,862
116,259
1,006
8,941
3,622,186
Notes
Assets
Cash and cash equivalents
Assets for trading
Financial assets at fair value through the Income Statement
upon initial recognition
Derivative assets held for risk management
Loans and advances to banks
Loans and advances to customers
Investments in securities
Investments in associates (recorded according to “equity
method”)
Income tax receivables (Current)
Other receivables
Pledged assets
Foreclosed assets
Intangible assets
Property and equipment
Deferred tax assets
Non-current assets held for sale and disposal group
Total assets
Liabilities
Trading liabilities
Financial liabilities at fair value through profit and loss upon
initial recognition
Derivative liabilities held for risk management
Due to banks
Due to customers
Debt instruments issued
Borrowings
Subordinated liabilities
Special reserve and provisions
Income tax liabilities (Current)
Deferred tax liabilities
Other liabilities
Liabilities directly associated with disposal group
Total liabilities
32
33
21
34.1
34.2
35
36
37
38
30.1
30.2
39
31
7
31 December 2012
Balance Sheet (continued)
Notes
Equity and reserves
Subscribed capital
Share premium
Treasury shares
Other equity instruments
Revaluation reserves
Other reserves
Retained earnings/ (Accumulated losses)
Total equity and reserves attributable to the shareholders
of the Bank
Non-controlling interest •
Total equity and reserves
Total liabilities and equity and reserves
Commitments and contingencies
Contingent assets
40
42.1
42.2
2012
In Denar thousand
2011
1,100,668
1,100,668
25,507
(506,446)
25,073
(408,612)
619,729
717,129
619,729
5,363,911
717,129
4,339,315
628,494
402 ,632
The financial statements have been approved for issuing by the Bank's Supervisory Board on 29
April2013.
Signed on behalf of the Bank by:
~
Nikolce Petkoski
President of the Board of Directors
' iEUR0.£Tt!.NDARD
Car;f.c
m
8
31 December 2012
Statement of Changes in Equity and Reserves
Equity
In Denar thousand
At 1 January 2011
Opening balance adjustments
At 1 January 2011, adjusted
Comprehensive income/(loss) for
the year
Other gains/ (losses) for the period
not presented in the Income
Statement
Changes in fair value of assets
available – for – sale
Changes in fair value of risk
protection of cash flows
protection of net investments in
foreign operations
Subscribed
capital
Other
Share
equity
prem- (Treas. instrum
ium shares)
ents
Reval.
Reserve
for
assetsRisk
available Reserv
Forex
- for sale
e reserve
Other reserves
Statut
ory
Other reserv
reser.
e
Retained earnings
Capital
Attribut.
com. of Other
to Limited for
hyb. fin. reserve shareho distrib. to
Instrum.
s
l sharehol.
Total
equity and
reserves
attributabl
Total
e to the
Non- equity
and
(Accum.shareho. of controlling
losses the Bank interest * reserves
1,100,668
1,100,668
-
-
-
-
-
-
-
24,837
24,837
-
-
1,571
1,571
- (412,841)
- (412,841)
-
-
-
-
-
-
-
-
-
-
-
2,894
-
-
2,894
-
2,894
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
714,235
714,235
- 714,235
- 714,235
9
31 December 2012
Statement of Changes in Equity and Reserves (continued)
Equity
In Denar thousand
Foreign exchange differences from
investments in foreign operations
Deferred tax (assets) / liabilities
recognized in equity
Other gains/(losses) for the period
Statement
Total unrealized profit / (loss)
recognized in equity and
reserves
Total comprehensive income/
(loss) for the year
Transactions with shareholders,
reserves:
Shares issued during the period
Distribution to statutory reserve
Distribution to other reserves
Dividends
Purchase of treasury shares
Sale of treasury shares
Other
Subs- Share
equity
cribed prem- (Treas. instrum
capital
ium shares)
ents
Reval.
Reserve
for
assetsRisk
available- Reserv
for sale
e
Forex
reserve
Other reserves
Retained earnings
Capita
l com.
of hyb.
Attribut.
Limited
fin. Other
to for distrib.
Other Statutory Instru reserv shareho
to
reser.
reserve
m.
es
l sharehol.
Total
equity and
reserves
attributabl
Total
e to the
Non- equity
shareho. controllin
and
of the g interest reserve
(Accum.
Bank
s
losses
*
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,894
-
-
2,894
-
2,894
-
-
-
-
-
-
-
-
236
-
-
-
(236)
-
-
-
-
-
-
Covering loses from previous years
reserves:
At 31 December 2011 / 1 January
2012
1,100,668
-
-
-
-
-
-
-
-
-
-
(1,335)
-
1,335
-
-
-
-
-
-
-
-
-
-
236
-
-
(1,571)
-
1,335
-
-
-
-
-
-
-
-
-
-
25,073
-
-
2,894
- (411,506)
717,129
- 717,129
10
31 December 2012
Equity
In Denar thousand
Comprehensive income/(loss) for
the year
Other gains/(losses) for the period
Statement
Changes in fair value of assets
protection of cash flows
protection of net investments in
foreign operations
Foreign exchange differences from
investments in foreign operations
Deferred tax (assets) / liabilities
Other profit/ (loss) not recognized in
the income statement
Total unrealized profit / (loss)
reserves
Total comprehensive income/
(loss) for the year
Subscribed
capital
Other
Share
equity
prem- (Treas. instrum
ium shares)
ents
Reval.
Reserve
for
assetsRisk
available- Reserv
for sale
e
Forex
reserve
Other reserves Retained earnings
Capital
com.
of hyb.
Attribut.
Limited
fin. Other
to for distrib.
to
reser. reserve
m.
es
l sharehol.
Total
equity and
reserves
attributabl
Total
e to the
Non- equity
shareho. controllin
and
(Accum.
Bank
s
losses
*
-
-
-
-
-
-
-
-
-
-
-
-
-
(97,400)
(97,400)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(97,400)
(97,400)
- (97,400)
- (97,400)
11
31 December 2012
Equity
In Denar thousand
reserves:
Shares issued during the period
Distribution to statutory reserve
Distribution to other reserves
Dividends
Purchase of treasury shares
Sale of treasury shares
Covering losses from previous
years
reserves
At 31 December 2012
Subs- Share
cribed premcapital
ium
Other
equity
(Treas. instru
shares) ments
Reval.
Reserve
for
assetsRisk
available- Reserv
for sale
e
Forex
reserve
Other reserves
Retained earnings
Capital
com.
of hyb.
Attribut.
Limited
fin. Other
to for distrib.
to
reser. reserve
m.
es
l sharehol.
Total
equity and
reserves
attributabl
Total
e to the
Non- equity
shareho. controllin
and
(Accum.
Bank
s
losses
*
-
-
-
-
-
-
-
-
434
-
-
-
(434)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,460)
-
2,460
-
-
-
1,100,668
-
-
-
-
-
-
-
434
25,507
-
-
(2,894)
-
2,460
- (506,446)
619,729
- 619,729
12
31 December 2012
Statement of Cash Flows
In Denar thousand
Notes
Cash flow from operating activities
Profit / (Loss) before taxation
Adjustment for:
Non-controlling interest, included in the consolidated
income statement *
Amortization and depreciation of:
Intangible assets
Capital gain from:
Sale of intangible assets
Sale of property and equipment
Sale of foreclosed assets
Capital loss from:
Sale of intangible assets
Sale of property, plant and equipment
Sale of foreclosed assets
Interest income
Interest expense
Net trading (income)/ expenses
Impairment losses of financial assets, net
additional impairment losses
release of impairment losses
Impairment losses of non – financial assets, net
additional impairment losses
release of impairment losses
Special reserve
additional provisions
release of provisions
Dividend income
Participation of profit / (loss) of associates
Other adjustments
Received interest
Paid interest
Profit from operations before changes in operating
assets
(Increase) / decrease of operating assets:
Trading assets
Derivatives held for risk management
Assets pledged as collateral
Foreclosed assets
Obligatory deposit in foreign currency
2012
2011
(96,536)
4,115
-
-
4,544
9,538
5,041
11,936
-
-
(338,473)
253,067
(349)
(252,222)
137,564
-
264,987
(219,111)
195,566
(221,565)
1,246
-
706
-
4,149
(3,908)
(2,697)
(8)
321,141
(245,814)
3,122
(2,963)
(717)
245,145
(126,182)
(48,224)
(454)
(3,536)
122,702
(1,038,352)
5,020
(185,453)
(951,327)
3,375
(22,932)
13
31 December 2012
In Denar thousand
Statement of Cash Flows (continued)
Obligatory deposit held with NBRM according to special
regulations
Other receivables
Deferred tax assets
Non – current assets held for sale and disposal group
Increase / (decrease) in operating liabilities:
Trading liabilities
Due from banks
Due form customers
Other liabilities
Liabilities related to group or assets for disposal
Net cash flow from operating activities before taxation
(Paid) / received income tax
Net cash flow from operating activities
Cash flow from investment activity
(Investments in securities)
Inflows from sale of investment in securities
(Outflows from investment in subsidiaries and associates)
Inflows from disposal of investment in subsidiaries and
associates
(Purchase of intangible assets)
Inflows from sale of intangible assets
(Purchase of property and equipment)
Inflows from sale of property and equipment
(Outflows from non - current assets held for sale)
Inflows from non - current assets held for sale
(Other outflows from investing activity)
Other inflows from investing activity
Net cash flow from investing activity
Cash flow from financing activity
(Repayment of debt securities issued)
Issued debt securities
(Repayment of borrowings)
Increase of borrowings
(Repayment of issued subordinary debts)
Issued subordinated debts
Inflows from issued shares / equity instruments during the
period
(Purchase of treasury shares)
Selling of treasury shares
(Dividends paid)
(Other outflows from financing)
Other inflows from financing
Net cash flow from financing activity
Effect from allowance for impairment of cash and cash
equivalents
Effect from foreign exchange differences of cash and cash
equivalents
Net increase / (decrease) of cash and cash equivalents
Cash and cash equivalents as of 1 January
Cash and cash equivalents as of 31 December
18
2012
2011
(26,551)
(13,734)
911,349
25,650
(65,676)
(65,676)
(3,429)
8,256
1,640,356
(844)
487,548
487,548
(290,005)
-
(15,052)
-
(5,614)
(456)
2,497
(293,578)
(260)
(4,142)
117
(19,337)
(19,090)
208,891
-
(568)
82,899
189,801
82,331
-
-
(169,453)
1,148,916
979,463
550,542
598,374
1,148,916
-
14
Notes to the financial statements
1
General
Eurostandard Banka AD, Skopje (“the Bank”) is a Shareholding Company incorporated in the
Republic of Macedonia. The Bank’s registered head office is located at: 27 Mart no. 2- Mal ring,
Skopje, Republic of Macedonia.
The Bank is licensed by the National Bank of the Republic of Macedonia for conducting payment
transfers on the territory of the Republic of Macedonia and abroad, and deposit services on the
territory of the Republic of Macedonia and abroad and credit services on the territory of the
Republic of Macedonia.
The Bank owns 66.66% of the shares of Postenska Banka AD, Skopje, with voting right acquired
by realization of pledge recorded in these financial statements as non-current assets held for sale.
These financial statements have been approved by the Bank’s Supervisory Board on 29 April 2013.
The Bank’s shares are not listed on any Stock Exchange.
As of 31 December 2012 and 2011, the Bank’s total number of employees is 103 and 99,
respectively.
1.1
Basis of preparation of financial statements
These financial statements are prepared in accordance with the Accounting standards adopted with
the Decision on the Methodology of recording and evaluating accounting items and the
preparation of financial statements (Official Gazette of RM No. 169/2010) and the Decision on
the types and content of financial statements of banks (Official Gazette of RM No. 169/2010,
152/2011 and 54/2012).
The financial statements have been prepared on the historical cost basis except for the following:


financial instruments at fair value through the income statement measured at fair value;
available-for-sale financial assets measured at fair value;
The preparation of financial statements in accordance with accounting standards applicable in the
Republic of Macedonia and requires use of estimates and judgements that affect the presented
assets and liabilities, contingent assets and liabilities at the date of financial statements and the
presented amounts of revenues and expenses during the reporting period. These estimates are
based on Management's best knowledge of the current events and activities and are disclosed in
Note 1.3.
15
Notes to the financial statements (continued)
Basis of preparation of financial statements (continued)
Additional information is presented in accounting policies and appropriate notes to the financial
statements.
The financial statements have been prepared as of and for the years ended 31 December 2012 and
2011 and present separate, not consolidated financial statements. Current and comparative data
stated in these financial statements are expressed in Denar thousand. The Group’s reporting and
functional currency is the Macedonian Denar (“MKD” or “Denar”). Where necessary, the
presentation of comparative data is adjusted according to changes in presentation in the current
year.
1.2
Significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set
out below. The determination of the Bank’s accounting policies is based on acknowledged, familiar
and practical experiences of the provisions of the Decision on the Methodology for recording and
valuating of accounting items and for the preparation of financial statements, Rulebook on
accounting plan of banks, the Decision on the types and content of financial statements of banks
and other legal regulations. These policies have been consistently applied to all the years presented,
unless otherwise stated.
1.2.1
Foreign currency transactions
Transactions denominated in foreign currencies have been translated into Denar at rates set by the
National Bank of the Republic of Macedonia at the dates of the transactions.
Foreign currency translation is transaction which follows a foreign currency or may be converted
into foreign currency.
Assets and liabilities denominated in foreign currencies are translated into Denars at the balance
sheet date using official rates of exchange prevailing on that date, and any foreign exchange gains
or losses, resulting from foreign currency translation, are included in the income statement in the
period in which they arose. The middle exchange rates used for conversion of the balance sheet
items denominated in foreign currencies are as follows:
31 December 2012
61.5000 Denars
46.6510 Denars
50.9106 Denars
1 EUR
1 USD
1 CHF
1.2.2
31 December 2011
61.5050 Denars
47.5346 Denars
50.5964 Denars
Offsetting
Financial assets and liabilities are offset and reported in the balance sheet on a net basis when there
is a legally enforceable right to offset the recognized amounts and when there is intent to either
settle on a net basis or to realize the asset and settle the liability simultaneously.
1.2.3
Interest income and expenses
Interest income and expense are recognized in the income statement for all interest bearing
financial assets and liabilities using the effective interest method.
16
Significant accounting policies (continued)
Interest income and expenses (continued)
The effective interest method is a method of calculating the amortised cost of a financial asset or a
financial liability and of allocating the interest income or interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments or
receipts through the expected life of the financial instrument or, when appropriate, a shorter
period to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest rate, the Bank estimates cash flows considering all contractual terms of the
financial instrument but does not consider future credit losses. The calculation includes all fees and
points paid or received between parties to the contract that are an integral part of the effective
interest rate, transaction costs and all other premiums or discounts.
1.2.4
1.2.5
Foreign exchange income and expenses
1.2.6
Dividend income
1.2.7
Financial assets
Fee and commission income, excluding the commission for loans approval, is recognized on an
accrual basis when the service has been provided. The commission for loan approval is limited and
amortised during the period of the loan, by applying the effective interest rate method.
Net foreign exchange income and expenses include realized and unrealized foreign exchange
differences that are derived from the reconciliation of transactions made in foreign currency, as
well as from asset and liability valuation, which are included in the income statement in the period
when they occur. Commitments and contingencies denominated in foreign currency are translated
in Denar, by applying the official exchange rates that are valid on the balance sheet date.
Dividends are recognized in the income statement when the entity’s right to receive payment is
established. Dividends are presented as a part of net-revenues from trading or other revenues from
operating activities, depending on the appropriate classification of the instrument.
Financial assets are classified in the following categories: loans and receivables, financial assets at
fair value through profit and loss, financial assets available-for-sale and financial assets held to
maturity. Financial assets classification is done at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They arise when the Bank provides money or services directly
to a debtor with no intention of trading the receivable. They are recognized when the cash is
advanced.
Financial assets at fair value through profit and losse
This category of financial assets consists of securities held for trading and securities at fair value
through profit and losse classified as it at initial recognition. A financial asset is classified as asset
held for trading if it is acquired or incurred principally for the purpose of generating profit through
short-term fluctuations in the price or if it is included in the portfolio for which a short-term actual
form of profit gain exists. As of 31 December 2012 and 2011 the Bank has no assets classified
under this category.
17
Financial assets (continued)
Financial assets available-for-sale
Financial assets available-for-sale are non-derivative financial assets that are either designated to
this category or do not qualify for inclusion in any of the other categories of financial assets.
Financial assets available-for-sale are those intended to be held for an indefinite period of time,
which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or
share prices.
Financial assets held to maturity
Financial assets held to maturity are non-derivative financial assets with fixed or determinable
payments and fixed maturities that the Bank’s Management has the positive intention and ability to
hold to maturity. If the Bank sells a significant amount of the financial assets held to maturity
before they reach the maturity date, then the entire category of these assets will be reclassified in
financial assets available-for-sale.
Initial recognition and derecognition
Purchases and sales of financial assets available – for – sale and held to maturity financial assets are
recognized on trade – date – the date on which the Bank commits to purchase or sell the asset.
Loans are recognized when cash is advanced to the borrowers. Financial assets, apart from
financial assets at fair value through profit or loss, are initially recognized at fair value plus
transaction costs.
Financial assets cease to be recognized after the rights to receive cash flows from the funds ends or
after their transfer, and the Bank transferred substantially all risks and benefits of ownership.
Subsequent measurement
After initial recognition, the Bank measures financial assets carried at fair value through profit or
loss, or as available-for-sale, at fair values without any deduction for transaction costs it may incur
on their sale.
The fair value of quoted financial assets is their bid prices at the balance sheet date.
If the market on which the financial asset is quoted is not active, the Bank establishes fair values by
using a valuation technique. Valuation techniques include the use of recent arm’s length market
transactions, references to the current fair value of another instrument that is substantially the
same, discounted cash flow analysis and option pricing models. If the value of equity instruments
cannot be reliably measured, they are measured at cost.
Investments held to maturity and loans and receivables are measured at amortised cost using the
effective interest method, less impairment losses.
Realised gains and losses, and unrealised gains and losses arising from changes in the fair value of
financial assets at fair value through profit or loss, are included in the profit or loss in the period in
which they arise.
Net changes in the fair value of financial assets classified as of fair value through profit and loss
includes interest income.
18
Financial assets (continued)
Unrealised gains and losses arising from changes in the fair value of financial assets available-forsale are recognised directly in equity, except for impairment losses and foreign exchange gains and
losses on monetary items such as debt securities, which are recognised in profit or loss.
When financial assets available-for-sale are sold or impaired, the cumulative gains or losses
previously recognised in comprehensive income are recognised in profit or loss. When financial
assets available-for-sale are interest bearing, the interest calculated by using the effective interest
method is recognised in profit or loss.
1.2.8
Impairment of financial assets
Assets carried at amortized cost
The Bank assesses at each balance sheet date whether there is objective evidence that a financial
asset is impaired. A financial asset or a group of financial assets is impaired and impairment losses
are incurred only if there is objective evidence of impairment as a result of one or more events that
occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has
an impact on the estimated future cash flows of the financial asset or group of financial assets that
can be reliably estimated.
The criteria that the Bank uses to determine that there is objective evidence of an impairment loss
include:








Delinquency in contractual payments of principal or interest;
Days in arrears for payment of principal or interest;
Cash flow difficulties experienced by the borrower;
Breach of loan covenants or conditions;
Deterioration of the borrower’s competitive position;
Deterioration in the value of collateral;
Initiation of bankruptcy proceedings;
Activating the collateral.
The Bank assesses the existence of objective evidence for impairment on individual basis.
The amount of impairment loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows (excluding future credit losses based on the
loan) discounted at the financial asset’s original effective interest rate. The carrying amount of the
asset is reduced through the use of an allowance for impairment and the amount of the impairment
loss is recognized in the current income statement.
When a loan is uncollectible, it is written off against the related provision for loan impairment.
Such loans are written off after all the necessary procedures have been completed and the amount
of the loss has been determined. Subsequent recoveries of amounts previously written off decrease
the amount of the provision for loan impairment and are recognized as income in the current
period. If, in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognized (such as an
improvement in the debtor’s credit rating), the previously recognized impairment loss is reversed
by adjusting the allowance account. The amount of the reversal is recognized in the profit or loss
as release from impairment (impairment loss).
19
Impairment of financial assets (continued)
Assets recognized at fair value
The Bank assesses at each balance sheet date whether there is objective evidence that a financial
asset is impaired. Significant or prolonged decline in the fair value of the financial asset below its
cost is considered as objective evidence in determining whether the assets are impaired. If any such
evidence exists for financial assets available-for-sale, the cumulative loss – measured as the
difference between the acquisition cost and the current fair value is recognized in the income
statement. If, in a subsequent period, the fair value of a debt instrument classified as available-forsale increases and the increase can be objectively related to an event occurring after the impairment
loss was recognized in profit or loss, the impairment loss is reversed through the income statement
.
1.2.9
Foreclosed assets
Foreclosed assets consist of buildings and equipment acquired in exchange for bad and doubtful
receivables with an intention for their further sale. They are not used by the Bank for its core
operations. These assets are measured at the lower of carrying amount and fair value less costs to
sell. The Bank plans to dispose the collected collateral within five years of forced acquisition.
For the purposes of subsequent measurement of foreclosed assets in cases where the estimated
value of foreclosed asset is less than cost or carrying value, the Bank in the amount of their
difference recognizes an impairment loss in the income statement.
During June 2012, The National Bank of the Republic of Macedonia issued „Decision on
amending the Decision on accounting and regulatory treatment of the foreclosed assets”,
according to which the Bank shall be required to recognize the impairment loss for the already
foreclosed asset in the income statement equal at least to the higher amount of:

the difference between the appraised value, reduced by the selling costs and the initial
accounting value, reduced by the total amount of impairment loss

20% of the initial accounting value reduced by the total amount of impairment loss
The Bank is obliged to make the first recognition of impairment loss for these assets no later than
1 January 2013.
By exception to items above, for the assets foreclosed after 01 January 2010, the deadline and the
requirement for impairment loss recognition shall start from 01 July 2014, while the Bank shall be
required to make the first recognition of the impairment loss for these assets until 01 January 2015
at the latest.
Until 01 July 2014, for these assets the Bank shall be required to recognize impairment loss in the
income statement equal to the difference between the appraised value, reduced by the selling costs
and the initial accounting value, reduced by the total amount of impairment loss.
Provided that the Bank fails to sell the foreclosed assets within five years it shall be required at the
end of the fifth year to reduce the value of the already foreclosed asset to zero.
20
1.2.10 Intangible assets
Computer software
Costs associated with development or maintaining computer software programs are recognized as
an expense as incurred. Costs directly associated with identifiable and unique software products
controlled by the Bank that will probably generate economic benefits exceeding costs beyond one
year, are recognized as intangible assets. Computer software development costs recognized as
assets are amortized using the straight-line method over a period of four years.
Other intangible assets
Costs to acquire rights and licenses are capitalized and amortized using the straight-line method
over a period of four years.
1.2.11
Property, plant and equipment are carried at cost less accumulated depreciation and impairment
losses, if any. Cost includes all expenses directly attributable to purchase of assets.
Depreciation is charged on a straight - line basis at prescribed rates in order to allocate the
acquisition cost of property, building, plant and equipment over their useful lives. The following
are approximations of estimated useful life applied to significant items of property, plant and
equipment:
Transportation assets
Furniture and office
Other equipment
4 years
5 years
4, 5 and 10 years
Subsequent purchases are included in the asset’s carrying value or are recognized as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the Bank and the cost of the item can be measured reliably.
All other repairs and maintenance are charged to the income statement during the financial period
in which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These
are included in the income statement for the period in which they are incurred.
1.2.12
Non – current assets that are expected to be recovered through sale rather than through
continuous use are classified as held for sale. Before this classification as held for sale, they are
evaluated by the lower of their book value and fair value, less sales expenses. Loss for impairment
at their initial recognition as held for sale and losses and profit from subsequent assessment are
recognized in the income statement. Gains are not recognized in excess of any cumulative
impairment loss.
1.2.13
Impairment of non-financial assets
Assets that are subject to amortization and depreciation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount. The recoverable amount is the
higher of an asset’s net selling price and value in use.
21
1.2.14
Cash and cash equivalents comprise cash, accounts that represent deposits on demand in banks,
accounts in NBRM and term deposits in banks less than three months’ maturity from the date of
acquisition.
1.2.15
Provision
A provision is recognized when the Bank has a present obligation as a result of a past event and it
is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are
reviewed at each balance sheet date and adjusted to reflect the current best estimate. When the
effect of the time value of money is material, the amount of provision represents the present value
of the expenditures expected to be required to settle the obligation.
1.2.16
Employees benefits
The Bank contributes to its employees as prescribed by the local social security legislation.
Contributions, based on salaries, are made to the national Pension Fund and the obligatory private
pension funds. There is no additional liability regarding these pension schemes. In addition, all
employers in the Republic of Macedonia are obligated to pay to the employees a separate minimum
amount regulated by law. The Bank has not made provisions for the employees’ minimum amount
on retirement, as this amount would not have a material effect on the financial statements.
The Bank does not operate any pension scheme or retirement benefit plans and consequentially,
has no liability for pensions. The Bank is not obliged to provide additional benefits for its current
or previous employees.
1.2.17
Current and deferred income tax
Income tax at 10% rate is paid to non – deductible items for tax purposes adjusted for tax credit,
on less recognized revenues from related parties, as well as on the distributed profit for dividends
to legal entities – non-residents and to individuals. Undistributed profit (retained earnings) is
exempt of taxation.
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying values for financial reporting
purposes. The tax rates that are currently valid are used in determination of deferred income tax.
Deferred income tax is charged or credited in the profits and losses except when it relates to items
charged or credited directly to the equity, in which case the deferred tax is also dealt within the
equity. Deferred tax assets are recognized to the extent that it is probable that future taxable profit
will be available against which the temporary differences can be utilized.
The Bank has not recognized any deferred tax liability or asset as of 31 December 2012 and 31
December 2011, as there are no temporary differences existing at those dates.
22
1.2.18
Financial liabilities
Financial liabilities are classified in accordance with the substance of the contractual arrangement.
Financial liabilities at the reporting dates are classified as other financial liabilities at amortised
initial cost and consist of borrowings, subordinated liabilities, deposits and other liabilities.
Borrowings and subordinated liabilities
Borrowings and subordinated liabilities are initially recognized at fair value, being their issue
proceeds (fair value of consideration received) less transaction costs incurred. Borrowings are
subsequently carried at amortized cost. Borrowings are derecognized at the moment of their
settlement, cancellation or expiration.
Deposits
Deposits mainly present: current accounts, demand deposits and time deposits to banks, legal
entities and individuals.
The Bank recognizes deposits in the balance sheet when the Bank becomes a party of contractual
provisions of the instrument. The deposits are measured at their objective value, plus transaction
costs, which are directly related to the undertaking or issuing of the financial liability. Deposits
consequently are measured according to their amortized cost, by using the method of effective
interest rate. Deposits are derecognized at the moment of their settlement, cancellation or
expiration.
Other liabilities
Other liabilities are recognized initially at fair value, being their issue proceeds (fair value of
consideration received) net of transaction costs incurred. They are subsequently stated at amortized
cost. Other liabilities are derecognized at the moment of their settlement, cancellation or
expiration.
1.2.19 Equity, reserves and dividend payments
(a) Shareholders’ capital
Share capital represents the nominal value of shares that have been issued.
(b) Share issue costs
Incremental costs directly attributable to the issue of new shares or options or to the acquisition of
a business are shown in equity as a deduction, net of tax, from the proceeds.
(c) Treasury shares
Where the Bank purchases equity share capital, the consideration paid is deducted from total
shareholders’ equity as treasury shares until they are cancelled. Where such shares are subsequently
sold, any consideration received is included in shareholders’ equity.
(d) Reserves
Reserves, which comprise of statutory reserves, are generated throughout the period, based on
distribution of profit in accordance with legal regulation and the Decisions made by the Bank’s
Assembly.
(e) Retained earnings/ accumulated (losses)
Retained earnings/ accumulated (losses) comprise the retained earnings and accumulated losses
from current and previous periods.
(f) Dividends on ordinary shares
Dividends on ordinary shares are recognized as liabilities in the period in which they are approved
by the Bank’s shareholders.
23
1.2.20
Lease
The determination of whether an arrangement is, or contains a lease is based on the substance of
the arrangement of whether the fulfilment of the arrangement is dependent on the use of a specific
asset or assets or the arrangement conveys a right to use the asset.
Bank as a lessee
Finance leases, which transfers to the Bank substantially all the risks and benefits incidental to
ownership of the leased item, are capitalised at the inception of the lease at the fair value of the
leased vehicles and equipment or, if lower, at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so
as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
are charged directly against income.
Leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease
term, if there is no reasonable certainty that the Bank will obtain ownership by the end of the lease
term.
Payments of the operating leasing are recognized as an expense on a straight-line basis over the
lease term. Prepaid rents are recognized as deferred expenses.
Bank as a lessor
Leases where the Bank retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Initial direct costs incurred in negotiating an operating lease are
presented as deferred expenses in the balance sheet and recognised in profit or loss over the lease
term on the same basis as rental income. Contingent rents are recognized as revenue in the period
in which they are earned. Prepaid rents are recognized as deferred income.
1.2.21
Segment reporting
Segment reporting is presented by business activities according operating segments. Operating
segments of the Bank are: operations with individuals- loans and deposits, operations with financial
institutions- loans and term deposits and other operating segments. Concentration of business
activities to significant customers is reported if the Bank earns 10% or more from the total income
and expenses of the Bank from certain customer.
1.2.22
The Bank undertakes liabilities in its operating activities arising from loan placements accounted
for in the off balance accounts, which primarily include guarantees and letter of credits. These
financial liabilities are accounted for in the balance sheet when they become recoverable. Provision
for impairment related to off balance commitments and contingencies are recognized as a liability
within the balance sheet.
1.2.23
Fiduciary activities
The Bank usually acts as trustee and in other fiduciary capacities that result in the holding or
placing of assets on behalf of individuals and other institutions. These assets and income arising
there on are excluded from these financial statements, as they are not assets of the Bank.
24
1.2.24
Events after the reporting date
Events after the reporting date that provide additional information about the Bank’s position at the
balance sheet date (adjusting events) are reflected in the financial statements. Events after the
reporting date that are not adjusting events are disclosed in the notes when material.
25
1.3
Critical estimates and judgments
The Bank makes estimates and assumptions which affect the reported amounts of assets and
liabilities within the next financial year. Estimates and judgments are continually evaluated and
based on historical experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Impairment of loans and advances to customers
The Bank on a monthly basis reviews its loan portfolio to assess impairment. In determining
whether an impairment loss should be recorded in the income statement, the Bank makes
judgments as to whether there is any observable data indicating that there is a measurable decrease
in the estimated future cash flows from a portfolio of loans before the decrease can be identified
with an individual loan in that portfolio. This evidence may include observable data indicating that
there has been an adverse change in the payment status of borrowers in a Bank, or national or local
economic conditions that correlate with defaults on assets in the Bank. This evidence may include
observable data indicating that there has been an adverse change in the payment status of
borrowers in a Bank, or national or local economic conditions that correlate with defaults on assets
in the Bank. Management uses estimates based on historical loss experience for assets with credit
risk characteristics and objective evidence of impairment similar to those in the portfolio when
scheduling its future cash flows. The methodology and assumptions used for estimating both the
amount and timing of future cash flows are reviewed regularly to reduce any differences between
loss estimates and actual loss experience.
Impairment of investments in available-for-sale securities
The Bank determines that available – for – sale equity investments are impaired when there has
been a significant decline in the fair value below its carrying value. This determination of what is
significant or prolonged requires judgment. In making this judgment, the Bank evaluates among
other factors, the normal volatility in share price. In addition, impairment may be appropriate when
there is evidence of deterioration in the financial health of the entity where the assets are invested,
industry and sector performance, changes in technology, and operational and financing cash flows.
Impairment of non-financial assets
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount. In determining the recoverable amount, Management estimates
the expected prices and cash flows of each cash generating unit and determines the appropriate
interest rate in calculating the carrying value of cash flows.
1.4
Change in accounting policies, accounting estimates and correction of errors
During 2012 and 2011, the Bank has made no changes in accounting policies, accounting estimates
and correction of errors in the accompanying financial statements.
26
1.5

Compliance with the regulations
During 2012, the Bank was handed measures by the Governor of the National Bank of the
Republic of Macedonia: written warning and recommendations. The measures were handed on
the basis of findings stated in the Minutes of partial field control performed by NBRM during
2012.
On 28 May 2012, the Bank’s Managing Board and the Mediation commission of NBRM have
made a Protocol for coming to an agreement to remove consequences from violations.
After 31 December 2012, the reporting date for the financial reports, the Bank has been
handed measures by the Governor of NBRM: Decision, written warning and
recommendations (Note 48).

As at 30 June 2012 and 30 September 2012, the Bank has exceeded the legally required limits
for large exposures, for which the National Bank of the Republic of Macedonia was notified.
Shortly after the cut-off dates, the Bank complied with the required limits.
27
2
Risk management
The Bank establishes an integrated system for management of all tangible and intangible risks, on
which it is exposed to by the nature, size and complexity of the financial activities that are carried
out.
Bank in its operations is exposed to the following types of risks:

Credit risk, including country risk.

Liquidity risk.

Currency risk.

Risk of change in interest rates in the portfolio of banking activities.

Risk of concentration of the Bank exposure.

Operational risk.

Strategic risk.

Legal risk.

Reputation risk.
Based on the Strategy of managing risks the Bank establishes special policies and procedures for
managing all risks to which is exposed in its operation.
Policies to manage risks include:

Evaluation of the Bank capacity to take certain risks, and to evaluate its risk profile.

Organizational structure in managing risks.

Basic elements of risk management.

Acceptable instruments to prevent or reduce risks.

Internal control and main elements of the process of internal assessment and evaluation of the
required adequacy of the Bank capital.
In addition, according to the risk management policies, the Bank establishes procedures for
measurement or assessment, monitoring, controlling or reducing risks that should:

Provide timely and comprehensive identification of risks (risk mapping) facing the Bank.

Be based on quantitative and / or qualitative estimates for measurable and non-measurable
risks.

Include rules, procedures and ways to reduce diversification, transfer and avoiding risks that
are identified, measured and assessed by the Bank.

Define the frequency and the methods for risk monitoring.
The Bank establishes an organizational structure with clearly defined powers and responsibilities in
managing risks, which corresponds to the size, type and complexity of the Bank and the financial
activities carried out.
28
Risk management (continued)
The organization of the system of managing risks is established by the following hierarchy levels:

Strategic level – risk management function is accomplished by members of the Supervisory
Board and Managing Board.

Macro level – risk management function at the level of business unit or business line is
executed by persons with special rights and responsibilities that perform governmental
functions and/ or special organizational part responsible for monitoring the management of all
or certain risks and takes place at level of the Risk Management Directorate.

Micro level – risk management activities are carried out by people who take risks in everyday
work, in accordance with the work procedures and the internal control systems and takes place
at the level of Risk Management Directorate and at the level of business units – sectors.
2.1
Credit risk
Credit risk is a risk of financial loss for the Bank if the client or the contracting party of the
financial instrument fails to meet their obligation and it is generally derived from loans and
advances to clients and other banks, issued guarantees and securities investment. In order to
manage the risk, the Bank collectively takes into consideration all the elements of credit risk
exposure (as individual risk of the failure to meet the liabilities of the debtor, country risk and
industrial sector risk).
The Bank defines the acceptable credit exposure, with which it is expected:




Credit risk dispersion;
Increasing the scope of the credit portfolio;
Improvement of the portfolio quality;
Increasing the Bank’s profitability.
The management and control of credit risk is centralised in the Centre for risk management, which
in turn regularly informs the Risk Management Board and the Board of Directors, and through
them, the Supervisory Board and the Audit Committee.
The Bank manages limits and controls the concentration of credit risk at the time when they are
identified - particularly in terms of individual contractual parties or Banks, as well as in term of
industrial sectors and countries.
The Bank structures the levels of undertaken credit risk by means of setting limits of acceptable
risk related to one lender or a Bank of lenders, to geographical and industrial segments.
Moreover, the exposure to credit risk is managed by regular analysis of the lenders’ capability to
meet their obligations of interest and principal, as well as through the change of these credit limits,
if at all possible.
29
Credit risk (continued)
Collateral represents one of the most traditional and frequent ways to mitigate the credit risk. The
Bank applies instructions related to the acceptability of certain classes of collaterals. The basic
types of collateral for credit and advances are the following:





Housing and business property mortgages;
Pledge on business assets, such as equipment, inventory and receivables;
Pledge on financial instruments, such as shares;
Cash deposit;
Bills of exchange.
In order to mitigate the credit risk and if the Bank considers necessary, it can ask for additional
collateral from its customers.
Policies and procedures
After the individual classification of exposure to credit risk has been made, the Bank makes an
allowance for impairment of the active balance and off – balance sheet receivables, by determining
the net present value of future cash flows that would arise based on those receivables.
The amount of the allowance for impairment for active balance sheet receivables, individually, is
determined as the difference between the carrying value of balance sheet receivables and the
current value of the assessed recoverable amounts (excluding future losses based on the credit).
The net present value of the active balances receivables is calculated by discounting expected
future cash flows for those receivables with the use of the effective interest rate based on the
contract.
The effective interest rate is the interest rate which equals, the net present value of all future cash
flows to the net present value of all future cash outflows. When calculating the effective interest
rate, the Bank:




Takes into consideration all future cash flows (inflows and outflows) which are expected to
arise in accordance with the agreed conditions;
Takes into consideration all paid and/or collected commissions and fees which represent an
integral part of the effective interest rate of the receivable;
Does not take into consideration the fees and commissions for investment of deposit, as a
collateral for the receivable;
Does not take into consideration future losses due to credit risk of the receivable.
For the purposes of discounting the expected future cash flows, the effective interest rate on
annual basis is used.
If due to the financial difficulties of the client, the Bank approves a change of crediting conditions
in terms of the interest rate and the period of repayment of the client’s receivables, the effective
interest rate used for discounting the expected future cash flows, is the one that was valid before
the changes of the crediting conditions.
30
For discounting the expected future cash flows of the receivables with a variable interest rate, the
Bank applies the effective interest rate, in accordance with the contract, valid on the day on which
the net present value of expected cash is determined.
In situations such as these, the effective interest rate is calculated for the entire period of the
contract’s validity (not just the remaining maturity period), by applying the interest rate, valid on
the day on which the net present value of expected cash flows is determined. If the interest rate on
the date on which the net present value is determined, is changed by less than 10% in terms of the
last interest rate used to execute the discounting of future cash flows, the Bank can apply the
previous interest rate that was used to determine the net present value of expected future cash
flows.
The Bank allows impairment, and makes a special reserve within the following limits:





From 0% to 10% of the credit risk exposure classified in risk category “A”.
Over 10% to 25% of the credit risk exposure classified in risk category “B“.
Over 25% to 50% of the exposure of credit risk classified in risk category “C“.
Over 50% to 75% of the exposure of credit risk classified in risk category “D“.
Over 75% to 100% of the exposure of credit risk classified in risk category “E“.
Maximum credit risk exposure before received collateral
The maximum exposure of credit risk is displayed through carrying values of the financial assets in
the balance sheet, shown in the table below:
31
A. Analysis of total credit risk exposure
In Denar thousand
Loans and
advances to banks
Loans and advances to
customers
Investment in
financial assets
Investment in
available – for –
financial assets
sale held – to – maturity
2012
2011
2012
2011
2012
risk category A
-
-
2,916,292
2,140,136
-
risk category B
-
-
294,204
92,305
-
risk category C
-
-
17,881
54,799
-
risk category D
-
-
94,614
82,349
risk category E
-
-
177,737
-
-
-
-
2011
Cash and cash
equivalent
Fee and
commission
Off-balance sheet
receivables Other receivables
exposure
Total
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
-
-
-
-
-
2,677
631
2,802
2,845 74,992
79,010
-
-
-
-
-
253
-
280
83
2,347
2,685
297,084
95,073
-
-
-
-
-
4
-
205
74
150
27
18,240
54,900
-
-
-
-
-
-
117
-
67
68
19
-
94,817
82,417
166,342
-
-
-
-
-
-
30
-
7,906
2,250
-
-
185,673
168,592
3,500,728
2,535,931
-
-
-
-
-
-
3,081
631
11,260
5,320 77,508
81,722
3,592,577 2,623,604
-
(284,248)
(243,213)
-
-
-
-
-
-
(135)
(34)
(7,713) (3,250) (1,247)
(1,006)
(293,343)
-
3,216,480
2,292,718
-
-
-
-
-
-
2,946
597
80,716
3,299,234 2,376,101
Carrying value of exposure
with an allowance for
impairment/special reserve
Carrying value of
individually significant
exposures, before the
allowance for impairment
and the special reserve, on
individual basis
(Allowance for impairment
and special reserve, on
individual basis)
Carrying value of
individually significant
exposures, less the
and the special reserve, on
individual basis
Carrying value of
exposures that are
assessed on group basis,
before allowance for
impairment and the special
reserve on group basis
3,547
2,070 76,261
2,996,763 2,222,622
(247,503)
32
A. Analysis of total credit risk exposure (continued)
Loans and
advances to banks
In Denar thousand
Carrying value of
exposures that are
assessed on group basis,
before allowance for
reserve on group basis
Individually insignificant
exposures (portfolio of small
loans)
Individually significant
exposures that are not
impaired on individual basis
(Allowance for impairment
and special reserve, Group
basis)
Carrying value of
exposures that are
assessed on Group basis,
less the allowance for
reserve, on group basis
Loans and
advances to
customers
Investment in
financial assets
sale
Investment in
financial assets
held – to –
maturity
Cash and cash
equivalent
Fee and
commission
receivables
Other receivables
Off-balance sheet
exposure
Total
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Carrying value of exposure
for which no allowance for
impairment/special reserve
is allocated
Past due receivables
Aging structure of past due
receivables for which no
allowance for impairment is
allocated
up to 30 days
Carrying value of past due
receivables for which there is
no allowance for impairment
33
A. Analysis of total credit risk exposure (continued)
Loans and
advances to banks
In Denar thousand
Not past due receivables
Restructured receivables
Other receivables
Carrying value of not past
due receivables for which
there no allowance for
impairment /special
reserve is allocated
Total carrying value of
the credit risk
receivables before the
and special reserve
(Total allowance for
impairment and special
reserve)
Total carrying value of
the credit risk
receivables less the
and special reserve
Investment in
financial assets
Loans and advances available – for –
to customers
sale
2012
2011
2012
-
2011
-
-
-
- 209,662
-
-
-
-
-
-
- 209,662 3,500,728 2,535,931
-
- (284,248)
(243,213)
- 209,662 3,216,480 2,292,718
2012
2011
-
Investment in
financial assets
held – to –
maturity
Cash and cash
equivalent
2011
2012
-
-
-
-
-
52,821 19,990
258,978
- 654,876
892,308
-
-
-
-
- 654,876
892,308
3,081
631 11,260
-
-
(135)
(34) (7,713) (3,250)
- 654,876
892,308
2,946
597
-
-
52,821 19,990
258,978
-
-
-
52,821 19,990
258,978
-
-
2012
Other Off-balance sheet
receivables
exposure
2012
-
2011
Fee and
commission
receivables
2011
2012
-
-
-
-
-
- 395,468 239,230 1,362,143 1,361,190
-
-
3,547
2011
2012
-
2011
Total
-
2012
-
2011
-
5,320 472,976 320,952 4,954,720 3,984,794
(1,247) (1,006)
(293,343) (247,503)
2,070 471,729 319,946 4,661,377 3,737,291
34
B. Value of collateral (fair value) for mitigating of credit risk
Loans and advances Loans and advances to
to banks
customers
Investment in
financial assets
Investment in
available – for – financial assets held
sale
– to – maturity
Cash and cash
equivalent
Other receivables
Off-balance sheet
exposure
Total
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
-
-
165,471
93,395
-
-
-
-
-
-
-
-
2,127
16,580
167,598
109,975
Government securities
Government unconditional
guarantees
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bank guarantees
Guarantees from insurance
companies and insurance
policies
Corporative guarantees
(except for banks and
insurance companies)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Guarantees from individuals
Property pledge
Property for own use (flats,
houses)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 1,371,291
1,068,958
-
-
-
-
-
-
-
-
39,970
29,576 1,411,261 1,098,534
Business property
-
- 3,793,417
2,434,220
-
-
-
-
-
-
-
-
327,818
142,086 4,121,235 2,576,306
Moveable property pledge
-
- 2,244,309
1,599,373
-
-
-
-
-
-
-
-
77,938
46,406 2,322,247 1,645,779
Other types of guarantees
Total value of collateral of
credit exposure which is
assessed for allowance for
impairment on individual
basis
-
-
-
22,908
-
-
-
-
-
-
-
-
-
-
- 7,574,488
5,218,854
-
-
-
-
-
-
-
-
447,853
In Denar thousand
Value of collateral of the credit
exposure which is assessed
for impairment on individual
basis
First class collateral
instruments:
cash deposits (in depot and/or
limited on bank accounts)
-
-
22,908
234,648 8,022,341 5,453,502
35
B. Value of collateral (fair value) for mitigating of credit risk (continued)
Investment in
Investment in
Loans and advances Loans and advances
financial assets financial assets held
to banks
to customers available – for – sale
– to – maturity
In Denar thousand
2012
2011
2012
2011
2012
2011
2012
2011
Value of collateral of the credit
exposure which is assessed
for impairment on Group basis
First class collateral
instruments:
cash deposits (in depot and/or
limited on bank accounts)
Government securities
Government unconditional
guarantees
Bank guarantees
Guarantees from insurance
companies and insurance
policies
Corporative guarantees
(except for banks and
insurance companies)
Property pledge
Property for own use (flats,
houses)
Business property
Moveable property pledge
Total value of collateral of
credit exposure which is
assessed for allowance for
impairment on group basis
-
Cash and cash
equivalent
2012
2011
Other receivables
2012
2011
Off-balance sheet
exposure
2012
2011
2012
Total
2011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36
C. Concentration of credit risk by geographical location and industrial sectors
The following table present a review of the Bank’s exposure to credit risk according to the carrying amounts, categorized according to the industrial sectors
as of 31 December 2012 and 2011:
Loans and
In Denar thousand advances to banks
2012
2011
Non residents
Agriculture, forestry and
fishery
Mining
Food industry
Textile industry and
production of clothing and
footwear
Chemical industry,
production of construction
materials production and
processing of fuels,
pharmaceutical industry
Production of metals,
machinery, tools and
equipment
Other manufacturing
Electricity, gas, steam and
air conditioning
Water, removing waste
water, waste management
and remediation activities
on the environment
Construction
-
-
-
Loans and
advances to
customers
2012
2011
-
Investment in
financial assets
sale
2012
2011
Investment in
financial assets
held – to –
maturity
2012
2011
Cash and cash
equivalent
2012
2011
-
-
-
-
-
-
30,306 13,761
471
314,258 306,866
-
-
-
-
-
-
-
136,196
97,383
-
-
-
-
-
-
258,624 135,335
-
-
-
-
-
115,854 126,038
1,151 55,404
-
-
-
-
5,055
-
-
-
749
591
222,062 135,342
-
45,974
268,171 253,582
Fee and
commission
Off-balance sheet
exposure
2012
2011
2012
2011
2012
2011
2012
Total
2011
-
-
-
-
-
- 268,171 253,582
-
18
122
-
-
3
2
128
4,611
- 30,452 13,764
471
10,246 318,991 317,114
-
-
36
-
-
97
12,922
12,109 149,154 109,589
-
-
-
18
-
-
57
4,098
-
-
-
-
188
-
-
75
15
6
22,758
-
-
-
-
-
-
10
-
-
8
150
-
-
-
-
-
3
29
-
-
45
8,940
-
262,740 135,392
14,426 138,800 140,479
1,238
1,226 56,648
23,230
46,134
28,293
206
752
797
3,551 231,031 138,938
37
C. Concentration of credit risk by geographical location and industrial sectors (continued)
Loans and
advances to banks
In Denar thousand
Wholesale and retail trade,
repair of motor vehicles
and motorcycles;
Transport and storage
Accommodation and food
service activities
Hotels and restaurants
Transport and storage
Information and
communication
Financial activities and
insurance activities
Activities related to real
estate
Technical and scientific
activities
Administrative and support
service activities
Public administration and
defence, compulsory social
security
Education
Activities of health and
social care
Arts, entertainment and
recreation
Other service activities
Activities of households as
employers of household
activities that produce
diverse goods and perform
various services for
personal needs
Loans and
advances to
customers
2012
2011
2012
-
-
-
-
44,812
-
-
-
- 209,662
Investment in
financial assets
sale
Investment in
financial assets
held – to –
maturity
Cash and cash
equivalent
Fee and
commission
Off-balance sheet
exposure
2011
2012
2011
Total
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2012
2011
917,996 676,486
273,817 176,601
-
-
-
-
-
-
1,079
287
297
-
2,330
-
41,484
-
-
-
-
-
-
-
51
-
-
2
2
19
-
12
-
5,670
-
44,875
2
2
47,173
-
30,565
26,082
-
-
-
-
-
-
145
-
-
-
480
13,950
31,190
40,032
-
2,423
52,821
19,990
-
-
386,705 638,726
-
-
6
914
240
1,710
3,703
31,918
-
-
-
-
-
-
-
-
-
-
718
1,973
864 243,845 129,619 1,165,250 807,266
40 17,126 16,757
291,230 193,398
439,772 873,425
-
-
4,421
33,891
-
-
165,580 128,821
-
-
-
-
-
-
109
-
-
-
22,889
11,748
-
-
134,586
49,114
-
-
-
-
-
-
-
-
-
-
18,649
3,108
153,235
52,222
-
-
1,604
4,218
1,920
-
- 258,978
-
-
-
-
60
-
-
-
5,200
5,172
260,582
9,478
7,092
-
-
44,437
26,534
-
-
-
-
-
-
-
-
-
-
-
283
44,437
26,817
-
-
15,926
44,500
4,100
2,001
-
-
-
-
-
-
1
-
283
-
-
18,081
293
16,923
367
34,290
44,794
21,023
2,368
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,519
-
4,519
188,578 140,569
38
C. Concentration of credit risk by geographical location and industrial sectors (continued)
Loans and
advances to banks
In Denar thousand
Activities of extraterritorial
organizations and bodies
Individuals
Sole proprietors and
individuals who are not
considered as traders
Total
Investment in
Investment in
financial assets financial assets
held – to –
to customers
sale
maturity
2012
2011
2012
2011
2012
2011
-
-
404,096
246,510
-
-
4,995
2,949
- 209,662 3,216,480 2,292,718 52,821
2012 2011
-
-
19,990 258,978
-
Cash and cash
equivalent
Fee and
commission
receivables
Other Off-balance sheet
receivables
exposure
Total
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
-
-
786
300
849
-
89,324
43,141
495,055
289,951
654,876 892,308
4
2,946
597
1,265
6,264
2,949
3,547 2,070 471,729 319,946 4,661,377 3,737,291
39
D. Credit risk concentration by geographic location
The following table gives review on the Bank’s exposure to credit risk according the carrying values categorized under geographic regions as of 31 December
2012 and 2011:
In Denar thousand
Geographical location
Republic of Macedonia
EU member countries
Europe (other)
OECD member countries
(without the European
member-countries of
OECD)
Other
Total
Loans and
advances to
banks
2012
2011
Investment in
Investment in
financial assets financial assets
held – to –
to customers
sale
maturity
2012
2011 2012
2011
2012 2011
- 209,662 3,216,480 2,292,718 52,821
-
-
-
-
-
-
- 209,662 3,216,480 2,292,718 52,821
19,990 258,978
-
-
-
19,990 258,978
Cash and cash
equivalent
2012
2011
- 386,706 638,726
- 268,170 253,582
-
Fee and
commission
Off-balance sheet
exposure
2012
2011
2012
2011
2012
2011
2,946
-
597
-
3,547
-
-
-
-
-
- 654,876 892,308
2,946
597
3,547
-
-
2012
Total
2011
2,070 471,729 319,946 4,393,207 3,483,709
268,170
253,582
-
-
-
-
-
-
2,070 471,729 319,946 4,661,377 3,737,291
40
2.2
Liquidity risk
Liquidity risk represents the risk for the Bank of becoming incapable to provide sufficient funds
for settlement of its short-term liabilities when such liabilities are due, or to provide such funds at
much higher costs.
Liquidity risk management
The management of liquidity risk includes assets and liabilities management that ensures timely and
regular settlement of liabilities of the Bank in regular operations or emergency.
The Bank has established Policy for managing liquidity risk, which was adopted by the Supervisory
Board and is regularly revised. The policy defines the manner of the Bank’s liquidity management
through the establishment of basic goals, the basic components of a system for managing liquidity
risk (organizational structure, steps and procedures for internal control and audit, information
systems, stress testing and liquidity contingencies plan), the basic elements of maintaining an
adequate level of liquidity.
The Bank has established procedures for identifying, measuring and monitoring liquidity risk,
which were adopted by the Managing Board of the Bank and are regularly reviewed. Within the
procedures, the actions for managing liquidity risk are developed in details, including: identifying
and measuring liquidity risk, liquidity stress testing, monitoring and control of the liquidity risk.
Planning and monitoring of cash inflows and outflows, establishing and maintaining adequate
maturity structure, monitoring the sources of funds and their concentration ratios of liquidity,
internal liquidity indicators, fulfilling the legal obligation for required reserve in Denars and foreign
currency, analysis of Denar and foreign currency operational liquidity, stress testing and other
methods used to measure the liquidity risk. Reports of liquidity on a regular basis are submitted to
the Board for monitoring and control of liquidity risk, the Risk Management Board and NBRM on
a monthly basis.
As of 31 December 2012, the maturity analysis of financial assets and liabilities of the Bank shows
maturity gap in the periods from three to twelve months and from one to two years. Cash flows
that the Bank expects to occur differ from the agreed ones. The maturity gap in the blocks of 3
months to 12 months cumulated in positive, taking into account the positive amount of the first
maturity block. The maturity gap in 1 to 2 years is due to time deposits of individuals. The total
remaining maturity of the Bank’s assets and liabilities is positive.
The following tables analyse Bank’s assets and liabilities, grouped according to their maturity based
on the remaining period from the reporting date to the agreed maturity date 31 December 2012
and 2011. Furthermore, the amounts as of 31 December 2012 are presented on a gross basis, i.e.
not taking into account the amounts of accumulated amortisation, impairment provision and
allocated special reserve.
41
Liquidity risk (continued)
Analysis according to the maturity of financial assets and liabilities (remaining maturity)
In Denar thousand
From 2
Less than From 1 to From 3 to From 1 to 2 to 5
Over 5
31 December 2012
1 month
3 months 12 month years
years
years
Total
Financial assets
1,002,788
71,647
50,080
71,078
- 1,195,593
Trading assets
Financial assets at fair value through
profit and loss at its/ their initial
recognition
Derivative assets held for risk
management
Investment in securities
Investment in associates
Current income tax receivables
Other receivables
Deferred tax assets
Total financial assets
Trading liabilities
Financial liabilities at fair value through
profit and loss at initial recognition
Derivative liabilities held for risk
management
Deposits to banks
Deposits to customers
Borrowings
Current income tax liabilities
Other liabilities
Total financial liabilities
Off-balance items
Off-balance assets
3,885
-
-
-
-
-
3,885
-
-
-
-
-
-
-
217,496
78,089
894
14,940
1,318,092
345,934 1,645,753
180,889
279
598,470 1,696,112
333,273 646,888
52,821
457,172 646,888
311,384 3,500,728
311,799
894
21,621
36,840
333,005 5,049,739
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,237
474,236
34,095
509,568
5,152
269,803 1,944,541
21,833
451
905
275,406 1,967,279
1,548,189 73,249
12,346 103,414
584
1,561,119 176,663
6,389
- 4,310,018
136,648
274,241
116,252
116,252
36,035
252,900 4,742,935
3,690
-
-
-
-
-
3,690
Off-balance liabilities
239,230
102,273
167,412
98,923
3,453
18,450
629,741
Net gap position
572,984
220,791 (438,579) (1,202,870) 466,772
61,655 (319,247)
42
Liquidity risk (continued)
Analysis according to the maturity of financial assets and liabilities (remaining maturity) (continued)
In Denar thousand
From 2
Less than From 1 to From 3 to From 1 to 2 to 5
Over 5
31 December 2011
1 month
3 months 12 month years
years
years
Total
Financial assets
1,207,631
76,098
- 1,283,729
Trading assets
recognition
management
209,662
209,662
429,315
325,721
956,018
260,652 434,815 140,782 2,547,303
19,990
19,990
150
455
1,153
1,758
Other receivables
7,868
2,422
10,290
Deferred tax assets
Total financial assets
1,854,476
325,871
956,473
357,893 437,237 140,782 4,072,732
Trading liabilities
Financial liabilities designated at fair
value through profit and loss at initial
recognition
management
Deposits to banks
Borrowings
Other liabilities
Total financial liabilities
Off-balance items
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,125
751,138
1
6,710
772,974
5,010
343,848
191
349,049
885,148
614
885,762
1,320,483 88,553
9,128 39,382
- 24,000
1,426
1,331,037 151,935
20,135
3,813 3,392,983
34,352
82,862
92,258
116,259
8,941
130,423 3,621,180
22,353
-
-
-
-
-
22,353
Off-balance liabilities
212,752
50,259
90,691
49,936
-
-
403,638
Net gap position
891,103
(73,437)
(19,980) (1,023,080) 285,302
10,359
70,267
Off-balance assets
43
2.3
Market risk
Market risk is the risk that changes in interest rates, equity prices, exchange rates and credit
margins (that do not concern the change in the borrower’s/issuer’s credit capability) will affect the
Bank’s profit or the value of own financial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable limits by optimizing the yield.
Risk of changes in interest rates in the banking book
Risk of changes in interest rates in the banking book presents a risk of loss arising from adverse
changes in interest rates, affecting the positions in the banking book of the Bank.
The Bank has established Policy for managing risk from changes in interest rates in the banking
book, which was adopted by the Supervisory Board and Board of Directors and is regularly
revised. The policy for managing the risk of changes in interest rates defines how the position and
/ or implementation of the following components: assessment, monitoring and controlling the risk
of changes in interest rates in the banking book, limits on risk exposure, organizational structure
risk management of change in interest rates, procedures for internal control and audit, information
system and stress testing.
The Bank has implemented Procedures for managing the risk from changes in interest rates in the
banking book, which were adopted by the Bank’s Supervisory Board and are regularly revised. The
procedures for managing the risk of changes in interest rates define the implementation of the
following components: assessment, monitoring and controlling the risk of changes in interest rates
in the banking book, limits on risk exposure, organizational structure risk management of change
in interest rates, procedures for internal control and audit, information system and stress testing.
When assessing exposure to risk from changes in interest rates in the banking book, the Bank takes
into account all positions of the banking book that are sensitive to changes in interest rates, which
may affect the profits and own assets of the Bank . The Bank determines the change in the
economic value of the banking book as a result of the exposure to the interest rate risk, by applying
the standardised interest rate shock.
44
Market risk (continued)
2.3.1
Analysis of sensitivity to changes in market risk of assets and liabilities
A. Analysis of sensitivity to changes in market risk on assets and liabilities
Gains/(losses)
In Denar thousand
2012
Balance before analysis of sensitivity/stress
tests (31.12.2012)
Effects of different scenarios
Risk of changes in exchange rates
- Scenario 1: Denar depreciates by 30%
compared to all other currencies
- Scenario 2: Denar appreciates by 30%
Risk of changes in interest rates
- Scenario 1: Change in interest rates for 600
basic points
- Scenario 2: Change in interest rate gap arising
from non-performing loans for 40%
2011
Balance before analysis of sensitivity/stress
tests (31.12.2011)
Effects of different scenarios
Risk of changes in exchange rates
- Scenario 1: Denar depreciates by 30%
- Scenario 2: Denar appreciates by 30%
Risk of changes in interest rates
- Scenario 1: Change in interest rates for 600
basic points
- Scenario 2: Change in interest rate gap arising
from non-performing loans for 40%
Assets
In Denar thousand
Risk-weighted assets
In Denar thousand
Capital adequacy rate
in %
(97,400)
480,677
4,177,026
11.51%
2,479
483,156
4,550,103
10.62%
(2,479)
478,198
3,803,949
12.57%
(35,015)
445,662
4,177,026
10.67%
(11,606)
469,071
4,177,026
11.23%
2,894
570,658
3,000,967
19.02%
34,464
605,122
3,347,939
18.07%
(34,464)
536,194
2,633,523
20.36%
(20,885)
549,773
3,000,967
18.32%
(15,757)
554,901
3,000,967
18.49%
45
Risk management (continued
Analysis of sensitivity to changes in market risk on assets and liabilities (continued)
B. Analysis of value exposed to market risk for the trading portfolio
2012
Balance at 31
Highest value
Lowest value
In Denar thousand
December
Average value
(maximum)
(minimum)
Value exposed to risk
at interest bearing
instruments
at instruments in
foreign currency
at equity instruments
Variance (offsetting
effect)
Total
-
2011
Balance at 31
December
Highest value
(maximum)
Average value
Lowest value
(minimum)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
46
2.3.2. Analysis of risk from changes in interest rates of financial assets and liabilities (without
assets for trading)
A. Analysis of sensitivity to changes in interest rates
Changes of economic values of the portfolio of bank activities at 31 December 2012
Position
Currency
1.1
Net weighted position of currencies EUR (FIR + VIR + AIR)
EUR
1.2
Net weighted position of currencies MKD (FIR + VIR + AIR)
MKD
1.3
Net weighted position for MKD cl. EUR currency (FIR + VIR + AIR)
MKD cl. EUR
1.4
Net weighted position for MKD cl. USD currency (FIR + VIR + AIR)
MKD cl. USD
1.5
Net weighted position for other currencies (FIR + VIR + AIR)
other
Total weighted value – changes in the economic value of the
2
portfolio of banking activities
3
Own assets
4
Total weighted value/assets (2/3*100)
Changes of economic values of the portfolio of bank activities at 31 December 2011
Position
Currency
1.1
Net position of currencies EUR (FIR + VIR + AIR)
EUR
1.2
Net position of currencies MKD (FIR + VIR + AIR)
MKD
1.3
Net weighted position for MKD cl. EUR currency (FIR + VIR + AIR)
MKD cl. EUR
1.4
Net weighted position for other currencies (FIR + VIR + AIR)
other
Total weighted value – changes in the economic value of the
2
portfolio of banking activities
3
Own assets
4
Total weighted value/assets (2/3*100)
Amount
(21,844)
39,803
541
23
(3,975)
14,548
480,677
3.03%
Amount
(21,706)
8,031
9,478
(3,595)
(7,792 )
570,658
(1.37%)
47
Market risks (continued)
Analysis of the risk of change in interest rates on financial assets and liabilities (excluding trading assets) (continued)
B. Analysis of compliance of interest rates
In Denar thousand
31 December 2012
Financial assets
Financial assets at fair value through the income
statement at initial recognition
Loans to and advances to banks
Loans to and advances to customers
Other not mentioned interest sensitive assets
Total interest sensitive financial assets
Financial liabilities at fair value through profits and
losses at initial recognition
Deposits to banks
Borrowings
Subordinated liabilities and hybrid instruments
Other not mentioned interest sensitive liabilities
Total interest sensitive financial liabilities
Net-balance position
Off-balance interest sensitive assets positions
Off-balance interest sensitive liabilities positions
Net off-balance position
Total net position
From 3 to 12
month From 1 to 2 years From 2 to 5 years
Total interest
bearing assets/
Over 5 years
liabilities
Less than 1
month
From 1 to 3
months
944,860
23,326
112,503
9,225
-
-
1,089,914
643,932
1,588,792
19,507
42,833
1,338,470
257,375
1,708,348
263,602
272,827
848,028
848,028
4,163
4,163
3,117,702
257,375
4,464,991
5,145
3,626,639
3,631,784
(2,042,992)
(2,042,992)
23,937
23,937
18,896
18,896
187,554
21,832
1,444
210,830
1,497,518
1,497,518
79,722
12,223
91,945
180,882
180,882
261,336
102,174
363,510
484,518
484,518
5
116,250
135,903
252,158
(247,995)
(247,995)
5,145
4,179,193
116,250
272,132
1,444
4,574,164
(109,173)
(109,173)
48
Analysis of the risk of change in interest rates on financial assets and liabilities (excluding trading assets) (continued)
B. Analysis of compliance of interest rates (continued)
From 1 to 3
months
1,204,307
-
-
-
-
-
1,204,307
-
-
-
-
-
-
-
209,039
636,883
-
1,139
-
1,126,752
-
232,216
-
203,427
-
-
209,039
2,200,417
-
2,050,229
1,139
1,126,752
232,216
203,427
-
3,613,763
Financial liabilities at fair value through profits and
losses at initial recognition
Deposits to banks
Borrowings
Subordinated liabilities and hybrid instruments
855
2,609,749
-
18,405
44,372
-
170,585
43,583
-
92,691
-
336,013
38,748
24,000
6
92,258
19,260
3,253,416
82,331
116,258
Other not mentioned interest sensitive liabilities
Total interest sensitive financial liabilities
Net-balance position
Off-balance interest sensitive assets positions
Off-balance interest sensitive liabilities positions
Net off-balance position
Total net position
-
-
2,293
-
-
-
2,610,604
(560,375)
(560,375)
62,777
(61,638)
(61,638)
216,461
910,291
910,291
92,691
139,525
139,525
398,761
(195,334)
(195,334)
92,264
(92,264)
(92,264)
In Denar thousand
31 December 2011
Financial assets
Financial assets at fair value through the income
statement at initial recognition
Loans to and advances to banks
Loans to and advances to customers
Other not mentioned interest sensitive assets
Total interest sensitive financial assets
From 3 to 12
month From 1 to 2 years From 2 to 5 years
Total interest
bearing assets/
Over 5 years
liabilities
Less tnan1
month
2,293
3,473,558
140,205
140,205
49
2.3.3
Currency risk
The currency risk is the risk of loss due to change in inter-currency courses and / or change of
value of Denar against the value of other foreign currencies.
The Bank’s estimation is that the net exposure is maintained to satisfactory level. Denar is bound
to Euro and the monetary projection is that the exchange rate against the Euro will be stable.
The Bank has established Policy for managing currency risk, which was adopted by the Supervisory
Board and is regularly revised. The policy defines the elements of an effective process of managing
currency risk (organizational structure, information system etc.) and the identification and
measurement of currency risk, sources of currency risk, indicators of exposure, exposure limits,
mechanisms of control and monitoring currency risk.
The Bank has established Procedures for managing currency risk, which are adopted by the Board
of Directors of the Bank and are regularly reviewed. The procedures define the managing currency
risk, including: organizational structure for managing currency risk, procedures for managing
currency risk, procedures for internal control and audit, information system and stress testing.
50
Currency risk (continued)
in Denar thousand
31 December 2012
Monetary assets
Trading assets
Financial assets at fair value through the
income statement at its/ their initial
recognition
management
Investments in associates
Other receivables
Deferred tax assets
Total monetary assets
Monetary liabilities
Trading liabilities
profit and loss at its/ their initial recognition
management
Due from banks
Due from customers
Borrowings
Other liabilities
Total monetary liabilities
Net position
MKD
EUR
USD
Other
currencies
Total
811,698
3,885
247,282
-
107,443
-
29,170
-
1,195,593
3,885
-
-
-
-
-
2,344,312
311,799
894
26,153
3,498,741
824,313
2,314
1,073,909
32,542
525
140,510
29,170
3,201,167
311,799
894
28,992
4,742,330
-
-
-
-
-
-
-
-
-
-
5,152
3,455,031
24,002
23,426
3,507,611
1,237
686,703
274,241
92,250
12,356
1,066,787
141,728
142
141,870
26,556
111
26,667
6,389
4,310,018
274,241
116,252
36,035
4,742,935
(8,870)
7,122
(1,360)
2,503
(605)
51
Currency risk (continued)
in Denar thousand
31 December 2011
Monetary assets
Trading assets
Financial assets at fair value through the
income statement at its/ their initial
recognition
management
Investments in associates
Other receivables
Deferred tax assets
Total monetary assets
Monetary liabilities
Trading liabilities
profit and loss at its/ their initial recognition
management
Due from banks
Due from customers
Borrowings
Other liabilities
Total monetary liabilities
Net position
MKD
EUR
USD
Other
currencies
Total
963,692
-
245,578
-
44,719
-
29,740
-
1,283,729
-
-
-
-
-
-
100,012
1,652,578
19,990
1,758
5,584
2,743,614
62,050
607,190
1,295
916,113
47,600
32,950
127
125,396
29,740
209,662
2,292,718
19,990
1,758
7,006
3,814,863
-
-
-
-
-
-
-
-
-
-
5,010
2,633,031
24,001
1,386
2,663,428
855
629,424
82,862
92,258
7,377
812,776
14,270
104,992
84
119,346
25,536
94
25,630
20,135
3,392,983
82,862
116,259
8,941
3,621,180
80,186
103,337
6,050
4,110
193,683
52
3
Capital management
The Bank’s objectives regarding capital management are:



To comply with the capital requirements by the National Bank of the Republic of Macedonia;
To safeguard the Bank’s ability to provide dividends to shareholders;
To maintain a strong capital base to support the development of its business.
Capital adequacy and the use of regulatory capital are regularly monitored by the Bank’s
Management, using techniques prescribed by national regulatory authority (National Bank of
Republic of Macedonia) and it is submitted to regulatory authority on a quarterly basis.
The National Bank of the Republic of Macedonia requires that each bank has to maintain capital
adequacy ratio at least 8%.
The Bank’s own assets are a sum of core capital, supplementary capital, less deductions
Investments in equity in other banks or financial institutions that exceeds 10% of the equity of
those institutions and direct investments of the Bank in insurance and re-insurance companies and
pension fund management companies are considered deductions in the calculation of regulatory
capital.
From a regulatory point of view, in accordance with the current regulations, the Bank manages the
appropriate level of capital, sufficient to cover:

The portfolio of banking activities: credit risk, currency risk, risk of changes in prices of
goods, operating risk;

The trading portfolio: Market risks (risk from investments in equity securities as part of
the trading portfolio; risk from investing in debt instruments as part of the trading
portfolio; risk of settlement/ delivery and risk from the contractual counterparty),
currency risk and risk from changes in prices of consumables.
In determining the capital needed to cover the risks, the Bank classifies the positions in the trading
portfolio and portfolio for banking activities.
The Bank classifies the positions that are included in the portfolio for banking activities by using
objective criteria in accordance with international standards.
53
Capital management (continued)
The capital necessary to cover risks is the sum of:

The capital needed to cover credit risk, which is calculated when the credit risk weighted
assets are multiplied by 8%.

The capital needed to cover the currency risk;

The capital needed to cover market risks;

The capital needed to cover the risk from changes in prices of goods; and

The capital needed to cover operational risks.
The Bank determines the capital necessary to cover operational risks by using the basic indicator.
The Bank implements the appropriate organizational structure to manage regulatory capital in
accordance with the strategy for risk management and the current regulations where the
Supervisory Board, the Board of Directors, the Risk Board, the Centre for Risk Management, the
Finance and Support Sector and the Centre for Internal Audit have a responsibility.
The capital adequacy ratio is the ratio between the Bank’s regulatory capital and the sum of credit
risk weighted assets, currency risk weighted assets, operational risk weighted assets and other risk
weighted assets.
The table below summarizes the compositions of regulatory capital and the capital adequacy ratio
of the Bank for the years ended 31 December 2012 and 2011 regarding the regulatory requirements
of the National Bank of the Republic of Macedonia.
54
Adequacy of capital
Ref. No.
I
1
1a
1b
1c
2
II
3
4
5
6
III
7
8
9
IV
10
11
11.1
11.1.1
11.1.2
11.1.3
11.1.4
11.2
11.3
11.4
11.5
12
13
V
14
VI
VII
Description
CREDIT RISK WEIGHTED ASSETS
Balance sheet credit risk weighted assets
Off-balance sheet credit risk weighted assets
Credit risk weighted assets with the use of a standardized approach
Credit risk weighted assets (1+1a+1b)
Capital necessary to cover credit risk
FOREIGN EXCHANGE RISK WEIGHTED ASSETS
Aggregate foreign currency position
Net-position of gold
Capital necessary to cover currency risk
Foreign exchange risk weighted assets
OPERATING RISK WEIGHTED ASSETS
Capital necessary to cover operating risk with the basic indicator
approach
Capital necessary to cover operating risk with the standardized
approach
Operating risk weighted assets
OTHER RISK WEIGHTED ASSETS
Capital necessary to cover the risk from price changes of goods
Capital necessary to cover market risks
(11.1+11.2+11.3+11.4+11.5+11.6+11.7+11.8)
Capital necessary to cover position risks
(11.1.1+11.1.2+11.1.3+11.1.4)
Capital necessary to cover the specific risk from investment in debt
instruments
Capital necessary to cover the general risk from investment in debt
instruments
Capital necessary to cover the specific risk from investment in
equity securities
Capital necessary to cover the general risk from investment in
equity securities
Capital necessary to cover the settlement risk
Capital necessary to cover counterpart risk
Capital necessary to cover overdraft of exposure limits
Capital necessary to cover market risks from options
Capital necessary to cover the other risks (10+11)
Other risk weighted assets
RISK WEIGHTED ASSETS RIZICI
Capital necessary to cover the risks
REGULATORY CAPITAL
ADEQUACY OF CAPITAL (V/IV)
31 December
2012
31 December
2011
3,950,932
3,950,932
316,075
9,755
780
9,755
-
2,611,377
264,475
2,875,852
230,068
125,115
10,009
125,115
-
17,307
-
216,339
-
-
-
-
-
-
-
-
-
-
-
4,177,026
334,162
480,677
0.1151
3,000,967
240,077
570,658
0.1902
55
Report on own funds
Ref.
Description
No.
Paid-in and subscribed ordinary and non- cumulative preference
1 shares and premiums
1.1 Nominal value
1.1.1 Nominal value of ordinary shares
1.1.2 Nominal value of non-cumulative preference shares
1.2 Premium
1.2.1 Premium of ordinary shares
1.2.2 Premium of non- cumulative preference shares
2 Reserves and retained earnings and loss
2.1 Reserve fund
2.2 Retained earnings
2.3 Accumulated loss from previous years
2.4 Current profit
2.5 Unrealised losses from equity securities available-for-sale
3 Positions arising from consolidation
3.1 Minority interest
3.2 Reserves from exchange rate differences
3.3 Other differences
4 Deduction
4.1 Loss at the year-end or current loss
4.2 Treasury shares
4.3 Intangible assets
4.4 Negative revaluation reserves, net
Differences between amounts of the required and allocated special
4.5 reserve
Amount of unallocated impairment and special reserve as a result of
4.6 accounting time lag
5 Ordinary shares, reserves, retained earnings and deductions
Amount of remaining positions that may be included in core
6 capital
I CORE CAPITAL
31 December
2012
31 December
2011
1,100,668
1,100,668
1,100,668
(383,539)
25,507
(409,046)
101,096
97,400
3,696
-
1,100,668
1,100,668
1,100,668
(386,433)
25,073
(411,506)
3,429
3,429
-
-
-
616,033
710,806
616,033
710,806
56
Adequacy capital (continued)
Report on own funds (continued)
Additional capital I
Paid-in and subscribed cumulative preference shares and
7 premium on such share
7.1 Nominal value
7.2 Premium
8 Revaluation reserves
9 Hybrid instruments
10 Subordinated instruments
Amount of cumulative preference shares and subordinated
11 instruments that may be included in the additional capital
II ADDITIONAL CAPITAL I
Deduction from core capital and additional capital I
Capital investments in other banks and financial institutions with
more than 10% share participation in such institutions (exc.
12 institutions under No.15)
Investments in subordinated and hybrid capital investments and
13 other instruments of institutions referred to in 12
Aggregate amount of investments in capital, subordinated and
14 hybrid instruments and other instruments exceeding 10% of (I+II)
Direct capital investments in insurance and reinsurance companies
15 and pension fund management undertakings
Investments in financial instruments issued by the insurance and
reinsurance companies where the Bank owns more than 10% of the
16 capital
Amounts representing excess of limits of investments in non –
17 financial institutions
18 Positions arising from consolidations (negative amounts)
III DEDUCTIONS
IV Core capital after deductions
V Additional capital I after deduction
Additional capital II
19 Subordinated instruments of additional capital II
20 Additional capital I and II
21 Allowed amount of additional capital I and II
21.1 Additional capital I
21.2 Additional capital II
22 Excess core capital
22.1 Excess core capital (150%)
22.2 Excess core capital (250%)
VI Allowed amount of additional capital II
Own funds
VII Core capital
VIII Additional capital I
IX Additional capital II
X OWN FUNDS
116,250
111,458
116,250
116,250
-
111,458
111,458
-
251,606
251,606
-
-
-
-
-
-
-
-
251,606
480,677
251,606
570,658
-
-
-
330,581
495,871
826,452
-
-
480,677
480,677
570,658
570,658
57
4
Segment reporting
Segment reporting is performed under Bank’s operating segments, as prescribed by the regulations
of the National Bank of the Republic of Macedonia.
Operating segment is a component of the Bank’s activities for which the following conditions are
met:

perform activities as a result of which income is derived income and expenses incurred;

Bank’s Supervisory Board reviews the operating results in the separate operating segment on a
regular basis (at least semi-annually) in order to assess performance and to make decision on
future business activities in this segment;

Certain financial information related to segment is available.
The Bank discloses information separately for each major operating segment. An operating
segment is considered significant if any of the following quantitative criteria are met:

Segment income (includes income from transfers between segments) participate with 10% or
more in total income of the Bank;

absolute amount of profit or loss of the segment represents 10% or more of the higher
absolute amount between: a) the total profit of all operating segments of the Bank which
showed profits, or b) the total loss of all operating segments of the Bank that showed loss;

Funds segment participate with 10% or more in total assets of the Bank.
The Bank should show information about the concentration of its business activities towards
certain significant customers. Significant client is the one from which the Bank achieves 10% or
more of total income or total expenditure of the Bank. As of 31 December 2012 and 2011 the
Bank has no significant customers.
The Bank should present an analysis of its business activities according to geographical areas where
they are executed, for the following geographic areas:

Member States of the European Union;

other European countries outside the European Union;

countries outside Europe, members of the Organization for Economic Cooperation and
Development (OECD);

Other countries.
58
Segment reporting (continued)
A. Operating segments
Retail Corporat Investme
customer
e
nt
s banking banking
In Denar thousand
2012
Net interest income /(expense)
(170,065)
Net income /(expenses) from fees
and commission
5,733
Net income from trading
Net income from other financial
instruments carried at their fair
value
Income realized between
segments
Total income per segment
(164,332)
Allowance for impairment of
financial assets, net
Impairment loss of non-financial
assets, net
Amortisation
Restructuring costs
Costs for investment in property
and equipment
Other expenses
Total expenses per segment
Financial performance per
segment
Income tax
Profit/(loss) for the financial
year
Total assets per segment
Unallocated assets per segment
Total assets
Total liabilities per segment
Unallocated liabilities per
segment
Total liabilities
Other
Governme
NonUnBanks
nt residents allocated
Total
234,601
-
19,248
3,956
(2,334)
-
85,406
51,578
-
-
(3,961)
-
140
-
(8,054)
-
778
45,436
778
-
-
-
-
-
14,737
14,737
286,179
-
15,287
4,096
(10,388)
15,515
146,357
2,950
(46,748)
-
-
-
-
(2,078)
(45,876)
-
-
-
-
-
-
(1,246)
(14,082)
-
(1,246)
(14,082)
-
2,950
(46,748)
-
-
-
-
-
-
- (181,689)
- (199,095)
(181,689)
(242,893)
(161,382)
239,431
-
15,287
4,096
(10,388) (183,580)
(96,536)
(864)
(97,400)
345,310 2,853,479
345,310 2,853,479
3,341,055
892,025
3,341,055
892,025
-
-
1,098,320
1,098,320
258,978
258,978
2,378
2,378
805,446
805,446
4,558,465
805,446
5,363,911
-
280,630
30,069
165,811
-
4,709,590
-
280,630
30,069
165,811
34,592
34,592
34,592
4,744,182
59
A. Operating segments (continued)
In Denar thousand
2011
Net interest income /(expense)
Net income /(expenses) from fees
and commission
Net income from other financial
instruments carried at their fair
value
Income realized between
segments
Allowance for impairment of
financial assets, net
Impairment loss of non-financial
assets, net
Amortisation
Restructuring costs
Costs for investment in property
and equipment
Other expenses
Total expenses per segment
Financial performance per
segment
Income tax
Profit/(loss) for the financial
year
Retail Corporat Investme
customer
e
nt
s banking banking
Governme
Banks
nt
Other
Non- Unalloca
residents
ted
Total
(65,944)
4,293
165,929
39,880
-
18,729
(3,156)
(2,165)
168
(1,891)
(5,911)
-
114,658
35,274
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,769
-
13,769
-
(61,651)
205,809
-
15,573
(1,997)
(7,802)
13,769
163,701
(6,062)
34,454
-
-
-
-
(2,393)
25,999
-
-
-
-
-
-
(706)
(16,977)
-
(706)
(16,977)
-
(6,062)
34,454
-
-
-
- (167,902)
- (187,978)
(167,902)
(159,586)
(67,713)
240,263
-
15,573
(1,997)
(7,802) (174,209)
4,115
(1,221)
2,894
Total assets per segment
Unallocated assets per segment
262,689 2,027,606
-
-
1,417,976
-
-
2,423
-
628,621
3,710,694
628,621
Total assets
262,689 2,027,606
-
1,417,976
-
2,423
628,621
4,339,315
2,187,656 1,165,305
-
102,997
30,057
129,523
-
3,615,538
2,187,656 1,165,305
-
102,997
30,057
129,523
6,648
6,648
6,648
3,622,186
Total liabilities per segment
Unallocated liabilities per
segment
Total liabilities
-
60
B. Concentration of total revenues and expenses by significant customers
Operating segments
in Denar thousand
2012
(The Bank should
show the total
revenues and
expenses derived
from a significant
customer
separately)
Customer 1
Revenues
(expenses)
Customer 2
Revenues
(expenses)
Customer 3
Revenues
(expenses)
Total per segment
All
other
insign
ificant
opera
ting
segm
ents
Nonallocat
ed
Total
signific
ant
custom
ers
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2011
(The Bank should
show the total
revenues and
expenses derived
from a significant
customer
separately)
Customer 1
Revenues
(expenses)
Customer 2
Revenues
(expenses)
Customer 3
Revenues
(expenses)
Total per segment
61
C. Geographic segments
In Denar
thousand
2012
Total
revenues
Total assets
2011
Total
revenues
Total assets
EU
member
The
s
Republic of countrie
Macedonia
s
Other
Other
insignificant
geographic
segments
Nonallocated
Total
Europe
(other)
OECD
members
countries
133
-
-
-
-
-
-
146,357
5,098,118 265,793
-
-
-
-
-
-
5,363,911
318
-
-
-
-
-
-
163,701
4,085,857 203,438
-
50,020
-
-
-
-
4,339,315
146,224
163,383
62
5
Fair value of financial assets and financial liabilities
Fair value represents the amount at which an asset could be replaced or a liability settled on an
arm’s length basis. Fair values have been based on Management assumptions according to the
profile of the asset and liability base.
The carrying value of cash and cash equivalents approximates their fair value, considering that they
include cash, bank accounts and bank deposits with short - terms maturity.
Loans and advances to banks and customers
Loans and advances are carried at amortized cost less the provisions for impairment. Loans and
advances to customers mostly are with variable interest rate and their estimated fair value is
determined by discounting the estimated future cash flows using the effective interest rate.
Other receivables
The fair value of other receivables approximates their carrying value, considering their short
maturity period.
Investments in securities include assets classified as available-for-sale, carried at fair value. The fair
value of assets available-for-sale is based on the published prices on an active market.
A financial asset is considered to be traded in an active market if the published prices are readily
and regularly available from the Stock Exchange, dealers, and brokers over the counter markets,
industry group or regulatory agencies and those prices represent the current and regular market
transactions on normal, commercial basis. The appropriate quoted market price for an asset held
or a liability that is to be issued is usually the current market (buying) price; for an asset that is
about to be acquired or a liability held it is the current sales/bid price.
If a market for a financial instrument is not active, the Bank establishes fair value by using
valuation techniques in the following order:
-
Application of information on negotiated prices for recent (from the past 6 months), normal
commercial transactions for the same financial instrument between informed, willing parties (if
available);
-
If the previous valuation technique cannot be applied (there is no information available on the
negotiated prices for recent transactions concerning the same financial instrument) then to
determine the fair value the current market price of another , basically same, instrument should
be used (in regards to the currency or the same or similar maturity date);
If the information for fair value of the previous two techniques is inappropriate or cannot be
applied, the fair value of the financial instrument is determined through analysis of the
discounted cash flows or other alternative models for price determination.
The analysis of discounted cash flows is an important and frequently applied technique for
determining the fair value of many assets and liabilities. One of the most important factors in the
application of this technique is the determination of an appropriate discount rate.
63
Fair value of financial assets and liabilities (continued)
Investment in securities (continued)
Discount rate should include:
- Uncertainties and risks from cash flow assessment, related to certain asset or liability, due to
the fact that those risks and uncertainties will change; and
- The purpose of the assessment.
If the fair value of equity instruments not traded in an active market and the derivatives related to
them that have to be settled with the delivery of unquoted equity instruments cannot be reliably
measured, those instruments should be assessed at their initial value.
Deposits, borrowings and subordinated liabilities
The estimated fair value of deposits on demand is the amount repayable on demand. The fair value
of the term deposits at variable interest rates approximates their carrying values as of the Balance
sheet. The fair value of borrowings with variable interest rates approximates their carrying value.
Other liabilities
The fair value of other liabilities approximates their carrying value, considering their short maturity
period.
64
A. Fair value of financial assets and liabilities
In Denar thousand
Trading assets
recognition
management
Loans and advances to other
customers
Other receivables
Deferred tax assets
Trading liabilities
Financial liabilities at fair value
through profit and loss at its/ their
initial recognition
management
Due from banks
Due from other customers
Borrowings
Other liabilities
Carrying value
2012
Fair value
Carrying value
2011
Fair value
1,195,593
1,195,593
1,283,729
1,283,729
3,885
3,885
-
-
-
-
-
-
3,201,167
311,799
894
28,992
-
3,201,167
311,799
894
28,992
-
209,662
2,292,718
19,990
1,758
7,006
209,662
2,292,718
19,990
1,758
7,006
-
-
-
-
-
-
-
-
-
-
6,389
4,310,018
274,241
116,252
36,035
6,389
4,310,018
274,241
116,252
36,035
-
-
20,135
3,392,983
82,862
116,259
8,941
20,135
3,392,983
82,862
116,259
8,941
65
B. Levels of fair value of financial assets and liabilities at fair value
B1. Level of fair value of financial assets and liabilities at fair value
In Denar thousand
Note
Level 1
Level 2
Level 3
Total
19
3,885
-
-
3,885
20
-
-
-
-
21
-
-
-
-
23.1
-
52,821
52,821
3,885
52,821
-
32
-
-
-
-
33
-
-
-
-
21
-
-
-
-
-
-
-
-
2012
Financial assets at fair
value
Trading assets
Financial assets at fair value
through the income
statement at its/ their initial
recognition
Derivative assets held for
risk management
available-for-sale
Total
Financial liabilities at fair
value
Trading liabilities
value through profit and loss
at its/ their initial recognition
Derivative liabilities held for
risk management
Total
56,706
66
B. Levels of fair value of financial assets and liabilities at fair value (continued)
B1. Level of fair value of financial assets and liabilities at fair value (continued)
In Denar thousand
2011
Financial assets at fair
value
Trading assets
through the income
statement at its/ their initial
recognition
Derivative assets held for
risk management
available-for-sale
Total
value
Trading liabilities
value through profit and loss
Derivative liabilities held for
risk management
Total
Note
19
Level 1
Level 2
Level 3
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
19,990
19,990
-
19,990
19,990
-
-
-
-
-
-
-
-
-
-
-
-
20
21
23.1
32
33
21
67
B2. Transfers between Level 1 and 2 of fair value
2012
2011
Transfers from
Transfers from
Transfers from
Transfers from
In Denar thousand
Level 1 to Level 2
Level 2 to Level 1
Level 1 to Level 2
Level 2 to Level 1
Trading assets
through the income statement
-
-
-
-
-
-
-
-
management
-
-
-
-
available-for-sale
-
-
-
-
Total
-
-
-
-
Trading liabilities
-
-
-
-
Financial liabilities at fair value
through the income statement at
its/ their initial recognition
-
-
-
-
management
-
-
-
-
Total
-
-
-
-
value
68
B3.Reconciliation of movements during the year at fair values measured in Level 3
Financial
assets at fair
value through
the income Investment in
Tradin
statement at
securities
Total
g its/ their initial available-forTrading
assets
In Denar thousand assets
recognition.
sale
liabilities
At 1 January 2011
-
Financial
assets at fair
value through
the income
statement at
its/ their initial
recognition.
Total
liabilities
-
-
Profit/(loss) recognized
in:
- Income statement
- Other profit/(loss) in
the period not
presented in the
Income Statement
Purchase of financial
instruments in the
period
Sold financial
instruments in the
period
Issued financial
instruments in the
period
Paid financial
instruments in the
period
Reclassified financial
instruments in the
period /(from) Level 3
Reclassified in loans
and advances
At 31 December 2011
Total profit/(loss)
recognized in the
Income statement as
of 31 December 2011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
69
B3.Reconciliation of movements during the year at fair values measured in Level 3 (continued)
Financial
Financial
assets at
assets at
fair value
fair value
through the
through the
income
income
statement Investment in
statement
at its/ their
securities
at its/ their
Total
Trading
initial
available-forTrading
initial
assets
In Denar thousand
assets recognition.
sale
liabilities recognition.
At 1 January 2012
Total
liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Profit/(loss)
recognized in:
- Income statement
- Other
profit/(loss) in the
period not
presented in the
Income Statement
Purchase of
financial
instruments in the
period
Sold financial
instruments in the
period
Issued financial
instruments in the
period
Paid financial
instruments in the
period
Reclassified
financial
instruments in the
period /(from) Level
3
Reclassified in
loans and
advances
At 31 December
2012
Total profit/(loss)
recognized in the
Income statement
as of 31
December 2012
70
As of and for the year ended 31 December 2012
(All amounts are expressed in Denar thousand unless otherwise stated)
6
Interest income and expense, net
A. Structure of interest income and expense according to the type of financial instruments
2012
In Denar thousand
2011
26,883
18,118
809
280,375
5,663
24,743
338,473
2,285
191,845
39,974
252,222
(250)
(243,791)
(8,363)
(581)
(82)
(253,067)
85,406
(371)
(135,051)
(1,560)
(582)
(137,564)
114,658
2012
In Denar thousand
2011
Interest income
Non-financial companies
Government
Non-profit institutions that serve households
Banks
Other financial institutions (non-banking)
Households
Non-residents
(Allowance for impairment of interest income, net)
Collected interest previously written off
242,532
5,664
2,645
27,691
3,753
31,445
24,743
-
166,354
289
20,403
885
24,317
39,974
-
Total interest income
338,473
252,222
(11,467)
(1,708)
(4,614)
(8,443)
(19,436)
(205,065)
(2,334)
(253,067)
85,406
(12,766)
(2,165)
(4,664)
(1,673)
(22,662)
(91,743)
(1,891)
(137,564)
114,658
Interest income
Financial assets at fair value through profit and loss at its/ their initial
recognition
Loans and advances to other customers
Other receivables
(Allowance for impairment of interest income, net)
Collected interest previously written off
Total interest income
Interest expense
Financial liabilities at fair value through profit and loss at its/ their initial
recognition
Due to banks
Due to customers
Loan liabilities
Other liabilities
Total interest expenses
Net interest income/ (expense)
B. Sector analysis of interest income and expenses according to sector
Interest expense
Government
Banks
Other financial companies (non-banking)
Households
Non-residents
Total income expense
Net interest income/(expense)
71
7
Fee and commission income and expense, net
A. Structure of fee and commission income and expense according to the type of financial activities
In Denar thousand
2012
2011
Loans
19,274
19,106
Payment’s operations
- in the country
15,425
11,800
- abroad
10,426
9,466
Letter of credit and guarantees
16,317
7,743
Brokerage operations
Asset management
234
205
Issuing securities
Other
335
389
Total fee and commission income
62,011
48,709
Fee and commission expense
Loans
Payment operations
- in the country
- abroad
Letter of credit and guarantees
Brokerage operations
Asset management
Issuing securities
Other
Total fee and commission expense
Net fee and commission income/(expense)
(7,352)
(8,934)
(289)
(16,575)
45,436
(6,758)
(6,677)
(13,435)
35,274
B. Sector analysis of fees and commission income and expenses per sector
Government
Banks
Households
Non-residents
Total fee and commission income
Government
Banks
Households
Non-residents
Total fee and commission expense
Net fee and commission income/(expense)
2012
In Denar thousand
2011
51,555
140
833
287
2,583
5,733
880
62,011
40,685
168
392
372
2,033
4,293
766
48,709
(80)
(4,248)
(3,313)
(8,934)
(16,575)
45,436
(3,528)
(3,230)
(6,677)
(13,435)
35,274
72
8
2012
in Denar thousand
2011
-
-
65
284
429
-
-
Profit/(loss) from fair value changes of debt securities, net
- realised
- unrealised
-
-
Profit/(loss) from fair value changes of trading deposits, net
- realised
- unrealised
-
-
Profit/(loss) from fair value changes of remaining financial liabilities
for trading, net
- realised
- unrealised
Interest expense of financial liabilities held for trade
-
-
778
-
Assets for trading
- realised
- unrealised
Profit/(loss) from fair value changes of equity instruments, net
- realised
- unrealised
Income from dividends from trading assets
Income from interest of trading assets
Liabilities for trading
Profit/(loss) from fair value change of derivatives held for trading,
net
- realised
- unrealised
73
9
Net income from other financial instruments carried at fair value
Financial assets carried at fair value through profit and loss at
their initial recognition
- realised
- unrealised
Profit/(loss) from fair value changes of equity instruments, net
- realised
- unrealised
Income from dividends from financial assets at fair value through profit
and loss
Profit/(loss) from the changes in fair value of loans and receivables at
fair value through profit and loss, net
- realised
- unrealised
2012
In Denar thousand
2011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial liabilities carried at fair value through profit and loss at
- realised
- unrealised
Profit/(loss) from the changes in fair value of deposits at fair value
through profit and loss, net
- realised
- unrealised
Profit/(loss) from the changes in fair value of borrowings at fair value
through profit and loss, net
- realised
- unrealised
Profit/(loss) from the changes in fair value of other financial liabilities at
fair value through profit and loss, net
- realised
- unrealised
Profit /(loss) from fair value changes of derivatives held for risk
management at fair value through profit and loss, net
- realised
- unrealised
Net income from other financial instruments carried at fair value
10
Net foreign exchange gains/ (losses)
Realized foreign exchange gains / (losses), net
Unrealized foreign exchange gains / (losses), net
- foreign exchange differences of allowance for impairment of financial
assets, net
- foreign exchange differences of special reserves of off-balance
exposure, net
- other foreign exchange differences, net
Net foreign exchange gains/(losses)
2012
8,731
In Denar thousand
2011
8,495
60
(40)
162
8,953
10
590
9,055
74
11
Profit from the sale of assets available – for – sale
Dividends from equity instruments available – for – sale
Net income from investment in subsidiaries and associates
Capital gain from the sale of:
- property and equipment
- intangible assets
- foreclosed assets
- non – current assets held for sale and group for disposal
Income from rent
Income from litigations
Collected receivables previously written off
Release of special reserve and provisions for:
- off – balance sheet credit exposure
- contingent commitments based on litigations
- pensions and other employee benefits
- restructuring
- adverse contracts
- other provisions
Income from over accrued expenses from previous years
Income based on court litigations, taxes and other administrative taxes
Other
Total other operating income
2012
In Denar thousand
2011
2,268
2,258
-
717
2,289
-
813
89
356
5,784
1,355
130
223
4,714
75
12
Impairment loss of financial assets, net
in Denar thousand
2012
Allowance for impairment, on individual basis
Additional allowance for impairment
(Release of allowance for impairment)
Allowance for impairment, on group basis
Total allowance for impairment of financial
assets, net
2011
Allowance for impairment, on individual basis
Allowance for impairment, on group basis
Total allowance for impairment of financial
assets, net
Investment in
financial assets
available-forsale
Investment in
financial assets
held to maturity
Cash and cash
equivalents
-
-
-
-
259,552
(218,241)
41,311
-
-
-
-
41,311
-
-
-
190,156
(219,016)
(28,860)
-
-
-
-
(28,860)
Loans and
advances to
banks
Loans and
advances to
other customers
-
Fees and
commission
receivables
Other
receivables
Total
-
259
(158)
101
-
5,176
(712)
4,464
-
264,987
(219,111)
45,876
-
-
101
4,464
45,876
-
-
1,228
(1,208)
20
4,182
(1,341)
2,841
195,566
(221,565)
(25,999)
-
-
-
-
-
-
-
-
-
20
2,841
(25,999)
76
13
Impairment loss of non-financial assets, net
in Denar thousand
2012
Additional impairment loss
(Release of impairment loss)
Total impairment loss of non-financial
assets, net
2011
Additional impairment loss
(Release of impairment loss)
Total impairment loss of non-financial
assets, net
Foreclosed assets
Non - current assets
held for sale and group
for disposal
Other nonfinancial assets
Non controlled
interest
Total
-
1,246
-
-
-
-
1,246
-
-
-
1,246
-
-
-
1,246
-
-
706
-
-
-
-
706
-
-
-
706
-
-
-
706
Property and
equipment
Intangible
assets
-
77
14
Employee benefits
in Denar thousand
2012
Short - term employee benefits
- Salaries
- Mandatory contribution for social and health insurance
- Short - term paid leave of absence
- Expenses for temporary employment
- Interest in profit and rewards
- Non-monetary benefits
Benefits after termination of employment
- Contribution to pension plans for defined contributions
- Benefits at retirement
- Increasing the obligation for pension plans and defined benefits
- Increasing the obligation for other long-term benefits
- Other benefits after the termination of employment
Benefits due to termination of employment
Employee payments based on shares, settled with equity instruments
Employee share-based payments, settled in cash
Other
Total employee expenses
15
2011
45,934
16,519
141
1,928
64,522
43,931
15,155
158
1,407
60,651
-
-
115
115
64,637
60,651
Amortisation and depreciation
in Denar thousand
2012
Amortisation of intangible assets
Internally developed software
Software purchased from external suppliers
Other internally developed intangible assets
Other non-material assets
Investment in intangible assets under lease
Depreciation of property and equipment
Buildings
Transport vehicles
Furniture and office equipment
Other equipment
Other items of property and equipment
Investment in property and equipment under lease
Total amortisation and depreciation
2012
3,064
1,480
4,544
3,794
1,247
5,041
1,885
1,386
6,267
9,538
14,082
2,757
1,877
7,302
11,936
16,977
78
16
Other operating expenses
in Denar thousand
2012
Loss due to the sale of assets available – for – sale
Expenses for software licensing
Insurance premiums on deposits
Insurance premiums on property and employees
Materials and services
Administrative and marketing expenses
Other taxes and contributions
Expenses for rent
Expenses for litigation
Special reserve for off-balance exposure, net
Provisions for pensions and other employee benefits, net
Provisions for contingent commitments based on litigations, net
Other provisions, net
Loss from the sale of:
- property and equipment
- non-material assets
- foreclosed assets
- non - current assets held for sale and group for disposal
Other
Total other operating expenses
17
20,302
1,530
54,352
10,211
487
29,243
241
686
117,052
2011
9,045
1,340
47,709
15,048
237
28,989
4,380
159
344
107,251
Income tax
A. Expenses/income for current and deferred income tax
in Denar thousand
2012
Current income tax
Expenses / (income) for current income tax for the year
Adjustments for previous years
Benefits for previously unrecognized tax losses, tax balance or temporary
differences from previous years
Changes in accounting policies and errors
Other
Deferred income tax
Deferred income tax that arises from temporary differences for the year
Recognition of previously unrecognized tax losses
Changes in the tax rate
Introducing new taxes
Benefits from previously unrecognized tax losses, balance or temporary
differences from previous years
Other
Total income tax expenses / (return)
Current income tax
Recognized in the Income statement
Recognized in equity and reserves
Deferred income tax
Recognized in the Income statement
Recognized in equity and reserves
Total income tax expenses / (return)
2011
864
-
1,221
-
864
1,221
-
-
864
1,221
864
864
1,221
1,221
864
1,221
79
Income tax (continued)
B. Reconciliation of the effective average tax rate with the variable tax rate
in Denar
thousand
in %
2012
Profit/(loss) before taxation
Income tax in accordance with the applicable tax
rate
Effect from various tax rates in other countries
Adjustment for previous years and changes in the
tax rate
Taxed income abroad
Expenses unrecognized for tax purposes
Tax exempted income
Tax exemptions unrecognized in the Income
statement
Recognition of previously unrecognized tax losses
Benefits from previously unrecognized tax losses,
tax balance or temporary differences from previous
years
Changes of deferred tax
Other
Total expenses/(return) of income tax
Average effective tax rate
in %
2011
in Denar
thousand
-
(96,536)
-
4,115
-
-
-
-
-
864
-
-
1,221
-
-
-
-
-
(0.9%)
864
-
1,221
29.7%
C. Income tax from other profit/ (loss) in the period not presented in the Income statement
Before
taxation
2012
(expenses)/inc
ome tax return
in Denar
thousand
2011
Before
taxation
Revaluation reserve for assets available-for-sale
-
-
-
-
Reserve for instruments for risk protection of
cash flows
-
-
-
-
Reserve for instruments for risk protection from
netinvestments in foreign operations
-
-
-
-
Reserve of foreign exchange differences from
investment in foreign operations
-
-
-
-
Participation in other gains/ (losses) in
associates not presented in the Income
Statement
-
-
-
-
Other gains.(losses) not presented in the Income
Statement
-
-
-
-
Total other gains/ (losses) in the period not
presented in the Income statement
-
-
-
-
in Denar thousand
80
18
in Denar thousand
2012
Cash in hand
Account and deposits with the NBRM, except for obligatory foreign
currency reserves
Current accounts and deposits with foreign banks
Current accounts and deposits with domestic banks
Treasury bills traded on the secondary market
Government bills traded on the secondary market
Term deposits with a maturity period less than, or equal to three months
Other short - term highly liquid assets
Interest receivables
(allowance for impairment loss)
Included in cash and cash equivalents for the purpose of the
Statement of cash flows
Obligatory foreign currency reserves
Restricted deposits
(allowance for impairment loss)
Total
2011
97,273
75,415
372,297
120,740
9,190
378,901
69
993
-
239,693
144,844
9,552
677,891
215
1,306
-
979,463
71,078
145,052
1,195,593
1,148,916
76,098
58,715
1,283,729
in Denar thousand
2012
Movement of allowance for impairment
As of 01 January
Allowance for impairment for the year
- additional allowance for impairment
- (release from allowance for impairment)
Effect of exchange rate difference
(Written-off receivables)
As of 31 December
2011
-
-
-
-
Based on the Decision on obligatory reserve brought by the National Bank of the Republic of
Macedonia, Bank’s reserve requirement ratio equals to 10.0% for liabilities in domestic currency,
20.0% for liabilities in domestic currency with foreign exchange clause and 13.0% for liabilities in
foreign currency. The basis for the reserve requirement is determined as an average of the Bank’s
liabilities for each calendar day of the preceding month. The period for obligatory reserve is from
11th in the current month until 10th in the following month.
The Bank fulfils the obligatory reserve in Denar on average basis. The Bank is required to keep an
obligatory reserve in foreign currency in separate accounts with the National Bank of the Republic
of Macedonia abroad, denominated in Euro at a fixed level.
The interest rate for the obligatory reserve in Denar, as of 2012 is 1% p.a. (2011: 2% p.a.) During
2012 and 2011, the interest rate for the obligatory reserve in foreign currency is 0.1% p.a.
Treasury bills issued by NBRM, as of 31 December 2012 and 2011 mature within 28 days with
interest rates of 3.72% and 3.74% p.a. (2011: 4.00% p.a.).
Restricted deposits in amount of Denar 145,052 thousand (2011: Denar 58,715 thousand)
represent deposits as collateral for issued letters of guarantees.
81
19
Trading assets
A. Structure of trading assets by type of financial instrument
In Denar thousand
2012
Trading Securities
Debt securities for trading
- Treasury bills for trading
- Government bills for trading
- Other instruments on the money market
- Bonds issued by the Government
- Corporative bonds
- Other debt instruments
Quoted
Unquoted
Owned instruments for trading
- Equity instruments issued by banks
- Other equity instruments
Quoted
Unquoted
Derivatives for trading
- Contracts dependent on the change of interest rate
- Contracts dependent on the change of exchange rate
- Contracts dependent on the change of price of securities
- Other contracts that meet the criteria of IAS 39
Total trading assets
2011
-
-
3,885
3,885
-
3,885
-
-
3,885
-
82
Eurostandard Banka AD, Skopje82
Trading assets (continued)
B. Reclassified trading assets
B1. Balance of reclassified trading assets
2012
In Denar thousand
Reclassified amount (at
date of reclassification)
Accounting value at
31.12.2012
2011
Fair value at
31.12.2012
Accounting value at
31.12.2011
Fair value at
31.12.20121
Trading assets reclassified in 2012 in:
- financial assets available-for-sale
- loans and advances to banks
- loans and advances to customers
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Trading assets reclassified in 2011 in:
- financial assets available-for-sale
- loans and advances to banks
- loans and advances to customers
83
B. Reclassified trading assets (continued)
B2. Income and losses from reclassification of trading assets
In Denar thousand
Period before reclassification
Trading assets reclassified in financial
assets available-for-sale
Reclassified during 2012
Income statement
Other income/
2012
(losses) 2012
-
-
In Denar thousand
-
Income statement
Other income/ (losses)
2012
2012
-
In Denar thousand
-
-
-
-
-
-
-
- net - income from trading
Trading assets reclassified in loans and
advances to banks
advances to customers
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Period after reclassification
Trading assets reclassified in financial
assets available-for-sale
-
-
-
-
-
-
-
-
-
-
-
-
- interest income
- impairment provision of financial assets,
net
- changes in fair value, net
advances to banks
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- interest income
net
advances to customers
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- interest income
net
84
B. Reclassified trading assets (continued)
B3. Income or losses recognised in income statement if the assets we not reclassified
in Denar thousand
Income statement 2012
Income statement 2012
in Denar thousand
Trading assets reclassified in financial assets available-for-sale
-
-
-
Trading assets reclassified in loans and advances to banks
-
-
-
-
-
-
Trading assets reclassified in loans and advances to customers
-
-
-
-
-
-
85
20
Financial assets at fair value through profit and loss at initial recognition
In Denar thousand
2012
Debt securities
- Treasury bills
- Government bills
- Other instruments on the money market
- Bonds issued by the government
- Corporative bonds
- Other debt instruments
2011
-
-
-
-
-
-
Quoted
Unquoted
-
-
Loans and advances to other customers
Total financial assets at fair value through profit and loss,
at initial recognition
-
-
-
-
Quoted
Unquoted
Equity instruments
- Equity instruments issued by banks
- Other equity instruments
86
21
Derivative assets and liabilities held for risk management
Derivative
assets
In Denar thousand
2012
(Derivative
Derivative
liabilities)
assets
2011
(Derivative
liabilities)
A. Derivatives for risk protection /Derivatives held
for risk management
A.1 According to type of variability
Derivatives held for risk management
Contracts dependent on the change of interest rate
Contracts dependent on the change of exchange rate
Contracts dependent on the change of price of securities
Other contracts that meet the criteria of IAS 39
Total derivatives held for risk management
-
-
-
-
A.2 According to risk protection
Fair value risk protection
Cash flow risk protection
Risk protection of net investment in foreign operations
-
-
-
-
B. Embedded derivatives
Contracts dependent on the change of interest rate
Contracts dependent on the change of exchange rate
Contracts dependent on the change of price of securities
Other contracts that meet the criteria of IAS 39
Total embedded derivatives
-
-
-
-
87
22
22.1
Loans and advances
in Denar thousand
Loans to banks
- domestic banks
- foreign banks
Term deposits, maturity over three months
- domestic banks
- foreign banks
Repo
- domestic banks
- foreign banks
Other receivables
- domestic banks
- foreign banks
Interest receivables
Current maturity
Total loans and advances to banks before
(Allowance for impairment)
Total loans and receivable to banks less
Short – term
2012
Long – term
Short – term
2011
Long – term
-
-
100,000
-
-
-
-
61,505
47,534
-
-
-
-
-
-
-
623
-
-
-
-
209,662
-
-
-
-
209,662
-
in Denar thousand
2012
2011
Movements of allowance for impairment
As of 1 January
allowance for impairment for the year
- (release of allowance for impairment)
Effect of exchange rate differences
(Written off receivables)
As of 31 December
-
-
88
Loans and advances (continued)
22.2
A. Structure of loans and advances to customers by type of debtor
Short – term
- receivables per principal
- interest receivables
Government
Financial companies, apart from banks
Households
housing loans
consumer loans
car loans
mortgages
credit cards
other loans
interest receivables
Non – residents, apart from banks
receivables per principal
interest receivables
Current maturity
Total loans and advances to other customers
before allowance for impairment
Total loans and advances to other customers
less allowance for impairment
in Denar thousand
2012
Long – term
Short – term
2011
Long – term
1,618,236
31,370
1,342,030
-
1,374,345
16,182
837,707
-
-
-
-
-
8,500
43
40,333
-
-
1,492
-
59,532
341
-
-
-
156
38,914
8,528
9,356
2,288
35,723
214,588
67,975
5,124
-
110
35,574
7,014
18,581
1,509
24,531
161,116
48,691
6,656
-
431,915
2,378
(431,915)
257,698
2,423
(257,698)
2,209,179
(258,652)
1,276,236
(25,596)
1,711,013
(228,346)
824,918
(14,867)
1,950,527
1,250,640
1,482,667
810,051
As of 31 December 2012 the non-performing loans included in loans and advances to customers
are in the amount of Denar 290,236 thousand (2011: Denar 303,486 thousand). Unrecognised
interest related to these loans is in the amount of Denar 137,859 thousand (2011: Denar 125,306
thousand).
89
Loans and advances (continued)
Loans and advances to customers (continued)
A. Structure of loans and advances to customers by type of debtor (continued)
in Denar thousand
2012
2011
Movements of allowance for impairment, individual basis
As of 1 January
As of 31 December
Movements of allowance for impairment, group basis
As of 1 January
As of 31 December
Total allowance for impairment of loans and advances to customers
243,213
281,697
259,552
(218,241)
(60)
(216)
284,248
190,156
(219,016)
40
(9,664)
243,213
-
-
284,248
243,213
B. Structure of loans and advances to customers per type of collateral
in Denar thousand
2012
2011
(net carrying amount of loans and advances)
First class instruments for guarantee
- Cash deposits (in depot and/or limited bank accounts)
- Government securities
- Government unconditional guarantees
- Bank guarantees
Guarantees from insurance companies and insurance policies
Corporate guarantees (apart from banking and insurance companies)
Property pledge
- Property for own use (flats, houses)
- Property for operating activities
Pledge over movable assets
Unsecured
Total loans and advances to customers less allowance for impairment
142,581
-
76,215
-
1,365,180
661,052
721,003
311,351
3,201,167
670,631
477,004
423,623
645,245
2,292,718
90
23
23.1
Investments in financial assets available-for-sale
A. Structure of investments in financial assets available – for – sale according to the type of financial instrument
in Denar thousand
2012
2011
Debt securities
Treasury bills
Government bills
Other instruments on the money market
Government issued bonds
Corporative bonds
Other debt instruments
Quoted
Unquoted
Equity instruments
Equity instruments issued by banks
Other equity instruments
Quoted
Unquoted
Total investment in financial instruments available – for –
sale before allowance for impairment
Total investment in financial instruments available – for –
sale less allowance for impairment
-
-
-
-
52,821
52,821
19,990
19,990
52,821
19,990
52,821
-
19,990
-
52,821
19,990
in Denar thousand
2012
As of 1 January
Foreign exchange differences
(Written – off receivables)
As of 31 December
2011
-
-
-
-
As of 31 December 2012 and 2011, the investments in other unquoted equity instruments in amount of
Denar 52,821 thousand (2011: Denar 19,990 thousand) are investment in local financial companies.
91
Investment in financial assets available – for – sale (continued)
B. Reclassified financial assets available - for - sale
B1. Balance of reclassified assets available-for-sale
In Denar thousand
Assets available - for - sale
reclassified in 2012 in:
- Loans and advances to banks
- Loans and advances to
customers
Assets available - for - sale
reclassified in 2011 in:
- Loans and advances to banks
- Loans and advances to
customers
2012
Reclassified amount (at the date
of reclassification)
Accounting value at 31.12.2012
2011
Fair value at
31.12.2012
Accounting value at 31.12.2011
Fair value at
31.12.2011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
92
Investment in financial assets available-for-sale (continued)
B. Reclassified financial assets available - for - sale (continued)
B2. Profit and loss from reclassified assets available-for-sale
In Denar thousand
Income statement (current)
Period before reclassification
Assets available - for - sale reclassified in loans
and advances to banks
- interest income
- impairment provision of financial assets , net
and advances to customers
Other profit /(loss) (current)
Income statement (previous)
Other profit /(loss) (previous)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- interest income
-
-
-
-
- impairment provision of financial assets , net
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Period after reclassification
and advances to banks
- interest income
- impairment provision of financial assets, net
- amount of revaluation reserves
and advances to customers
-
-
-
-
- interest income
-
-
-
-
-
-
-
-
-
-
-
-
- amount of revaluation reserves
93
Investment in financial assets available-for-sale (continued)
B. Reclassified financial assets available - for - sale (continued)
B3. Income or losses recognised if the assets are not reclassified
In Denar thousand
Assets available - for - sale reclassified in loans and advances to banks
Income statement
(current)
Other profit /(loss)
(current)
Income statement
(previous)
Other profit /(loss)
(previous)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- interest income
Assets available - for - sale reclassified in loans and advances to customers
- interest income
94
As of and for year ended 31 December 2012
23.2
Investments in financial assets held to maturity
In Denar thousand
2012
Debt securities
Treasury bills
Government bills
Other instruments on the money market
Government issued bonds
Corporative bonds
Other debt instruments
258,978
258,978
-
258,978
-
Total investments in financial instruments held-to-maturity
before allowance for impairment
258,978
-
-
Total investment in financial instruments held-to-maturity less
258,978
-
Quoted
Unquoted
In Denar thousand
2012
As of 1 January
As of 31 December
2011
-
-
-
-
Government bills issued by the Ministry of Finance of RM mature within 3 to 6 months with
interest rate of 4% p.a.
.
2011
95
24
Investments in subsidiaries and associates
A. Percentage of the Bank’s interest in subsidiaries and associates
in %
Name of subsidiaries and
associates
Percentage of interest in
ownership
2012
2011
Zemja
-
Percentage of right to vote
2012
2011
-
-
-
B. Financial information of associates – 100%
In Denar thousand
Total assets
Total liabilities
Total equity and
reserves
Income
Profit/
(loss) for
the financial
year
-
-
-
-
-
-
-
-
-
-
-
-
Name of associates
2012
2011
25
Other receivables
In Denar thousand
2012
Trade receivables
Prepaid expenses- VAT for foreclosed asset
Calculated deferred income
Fees and commission receivables
Receivables from the employees
Advances for intangible assets
Advances for property and equipment
Small inventory
Receivables in calculation from business operation in foreign currency - Western
Union
Receivables from expenses related to collection of litigations
Other
Total other receivables before allowance for impairment
(allowance for impairment)
Total other receivables less allowance for impairment
4,768
18,298
3,081
6
4,181
2,417
1,916
631
2,242
549
3,658
2,299
36,840
(7,848)
28,992
1,106
1,168
810
10,290
(3,284)
7,006
In Denar thousand
2012
Movement of allowance for impairment
As of 1 January
Foreign exchange rate differences
As of 31 December
2011
2011
3,284
1,625
5,435
(870)
(1)
7,848
5,410
(2,549)
(1,202)
3,284
96
26
Pledged assets
Debt securities
Owned instruments
Total pledged assets
27
2012
2011
-
-
Foreclosed assets
Residential
facilities
and
apartments
Other
Total
3,377
3,377
65,951
200,494
(3,375)
263,070
Land
Buildings
Equipment
Cost
At 1 January 2011
Foreclosed during the year
(Sold during the year)
(Transfer to own assets)
At 31 December 2011
2,771
7,527
10,298
99,364
99,364
19,520
19,520
40,283
93,603
(3,375)
130,511
At 1 January 2012
Foreclosed during the year
(Sold during the year)
At 31 December 2012
10,298
10,298
99,364
97,163
196,527
19,520
19,520
130,511
7,780
138,291
3,377
3,377
263,070
104,943
368,013
Impairment
At 1 January 2011
Impairment loss during the year
(sold during the year)
At 31 December 2011
-
35
35
16,103
230
16,333
436
441
877
3,377
3,377
19,916
706
20,622
At 1 January 2012
(sold during the year)
At 31 December 2011
-
35
378
413
16,333
262
16,595
877
606
1,483
3,377
3,377
20,622
1,246
21,868
2,771
10,298
10,298
99,329
196,114
3,417
3,187
2,925
39,847
129,634
136,808
-
46,035
242,448
346,145
Current carrying value
At 01 January 2011
At 31 December 2011
At 31 December 2012
During 2011, the Bank performed internal property transfer from the accounts for residential
buildings and apartments to accounts for construction buildings in the amount of Denar 15,151
thousand. The transfer is shown in the table above within "foreclosed during the year".
As of 31 December 2012 and 2011, the fair value of foreclosed assets is Denar 346,932 thousand
(2011: Denar 244,229 thousand).
97
28
Intangible assets
As of 31 December 2012, intangible assets consist of acquired software from external suppliers and other internally developed intangible assets. Movements
of carrying values for the reviewed periods are as follows:
A. Reconciliation of net carrying value
Cost
At 1 January 2011
Increase through new acquisitions
Increase through internal development
Increase through business combinations
(Disposal and write off)
(Disposal through business combinations)
(Transfer to non – current assets held for
sale)
transfer from non – current assets held for
sale
At 31 December 2011
At 1 January 2012
Increase through new acquisitions
Increase through internal development
Increase through business combinations
(Disposal through business combinations)
(Transfer to non – current assets held for
sale)
transfer from non – current assets held for
sale
At 31 December 2012
Internally
developed
software
Acquired
software from
external
suppliers
Other internally
developed
intangible
assets
Other intangible
assets
-
34,887
260
-
6,234
-
-
-
-
-
-
-
35,147
6,234
-
-
35,147
3,867
-
6,234
1,747
-
-
-
-
-
-
39,014
7,981
-
-
Intangible
assets in
preparation
Investments in
intangible assets
under lease
Non-controlling
interest
Total
-
-
-
41,121
260
-
-
-
-
-
-
-
41,381
-
-
-
41,381
5,614
-
-
-
-
-
-
46,995
-
-
98
Intangible assets (continued)
A. Reconciliation of net carrying value (continued)
Internally
developed
software
Acquired
software from
external
suppliers
Other internally
developed
intangible
assets
Other intangible
assets
Amortization and impairment
At 1 January 2011
Amortization for the year
(Release of impairment loss during the year)
At 31 December 2011
-
26,355
3,794
30,149
1,558
1,247
2,805
At 1 January 2012
Amortization for the year
(Release of impairment loss during the year)
At 31 December 2012
-
30,149
3,064
33,213
Current carrying amount
At 1 January 2011
At 31 December 2011
At 31 December 2012
-
8,532
4,998
5,801
Intangible
assets in
preparation
Investments in
intangible assets
under lease
Non controlled
interest
Total
-
-
-
-
27,913
5,041
32,954
2,805
1,480
4,285
-
-
-
-
32,954
4,544
37,498
4,676
3,429
3,696
-
-
-
-
13,208
8,427
9,497
-
-
-
B. Carrying value of intangible assets where there is limitation of ownership and/ or are pledge as collateral for Bank’s liabilities
Acquired
Other internally
Internally
software from
developed
developed
external
intangible
Other intangible Intangible assets
software
suppliers
assets
assets
in preparation
Current carrying amount
At 31 December 2011
At 31 December 2012
-
Investments in
intangible assets
under lease
Total
-
-
99
29
A. Reconciliation of the net carrying amount
Cost
At 1 January 2011
Increase
Increase through business
combinations
(Disposal through business
combinations)
(transfer to non – current assets
held for sale)
Transfer from non – current
assets held for sale
Other transfers- adjustments
At 31 December 2011
At 1 January 2012
Increase
Increase through business
combinations
(Disposal through business
combinations)
(transfer to non – current assets
held for sale)
At 31 December 2012
Other
equipment
Other items of
property and
equipment
Property and
equipment in
preparation
Investments in
property, plant
and equipment
under lease
Total
Land
Buildings
Transport
Furniture and
office
equipment
-
-
12,441
3,574
13,882
292
57,940
1,686
-
1,183
883
-
85,446
6,435
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
883
16,898
191
14,365
59,626
-
(883)
1,183
-
191
92,072
-
-
16,898
-
14,365
70
59,626
1,305
-
1,183
525
-
92,072
1,900
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,898
14,435
525
61,456
-
(525)
1,183
-
93,972
100
Property and equipment (continued)
A. Reconciliation of the net carrying amount (continued)
Other
equipment
Other items of
property and
equipment
Property and
equipment in
preparation
Investments in
property, plant
and equipment
under lease
Total
Land
Buildings
Transport
Furniture and
office
equipment
-
-
9,450
2,757
-
9,071
1,877
-
39,453
7,302
-
-
-
-
57,974
11,936
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,207
191
11,139
46,755
-
-
-
191
70,101
At 1 January 2012
Depreciation for the year
(Release of impairment loss
during the year)
(Transfer to non – current assets
held for sale)
At 31 December 2012
Net carrying amount
At 1 January 2011
At 31 December 2011
-
-
12,207
1,885
-
11,139
1,386
-
46,755
6,267
-
-
-
-
70,101
9,538
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,092
12,525
53,022
-
-
-
79,639
-
-
2,991
4,691
4,811
3,226
18,487
12,871
-
1,183
1,183
-
27,472
21,971
At 31 December 2012
-
-
2,806
1,910
8,434
-
1,183
-
14,333
Depreciation and impairment
At 1 January 2011
Depreciation for the year
(Release of impairment loss
during the year)
(Transfer to non – current assets
held for sale)
At 31 December 2011
101
Property and equipment (continued)
As at 31 December 2012 and 2011, all property and equipment are owned by the Bank. The Bank has no mortgages or other encumbrances over its property
and equipment.
B. Carrying amount of the items of property, plant and equipment where there are limitations of the ownership and/or are pledged as collateral/pledge for the Bank’s liabilities
Investments in
Furniture and
Other items of
Property and
property, plant
office
Other
property and
equipment in and equipment
Land
Buildings
Transport
equipment
equipment
equipment
preparation
under lease
Total
Current carrying amount :
At 31 December 2011
-
-
-
-
-
-
-
-
-
At 31 December 2012
-
-
-
-
-
-
-
-
-
102
30
30.1
Current and deferred tax assets and liabilities
Current tax assets and current tax liabilities
2012
2011
894
894
1,758
1,758
Income tax receivables (current)
Income tax liabilities (current)
30.2
Deferred tax assets and deferred tax liabilities
A. Recognized deferred tax assets and deferred tax liabilities
2012
Deferred
tax assets
(Deferred
tax
liabilities)
Net basis
-
-
-
management
Loans and advances to
customers
Intangible assets
Other receivables
management
Other liabilities
Unused tax losses and unused
tax credits
Other
Deferred tax assets/liabilities
recognized in profit or loss
Investments in financial assets
Deferred tax assets/liabilities
Total recognized deferred tax
assets/liabilities
2011
Deferred
tax assets
(Deferred
tax
liabilities)
Net basis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
B. Unrecognized deferred tax liabilities
Tax losses
Tax credits
Total unrecognized deferred tax assets
2012
-
2011
-
103
Current and deferred tax assets and liabilities (continued)
Deferred tax assets and deferred tax liabilities (continued)
C. Reconciliation of the movement of deferred tax assets and tax liabilities during the year
Recognized during
the year in:
As of 1
January
Income
statement
As of 31
December
Equity
2012
Intangible assets
Other receivables
Other liabilities
Unused tax losses and unused tax credits
Other
Investments in financial assets available – for – sale
Total recognized deferred tax assets/ liabilities
-
-
-
-
-
-
-
-
2011
Intangible assets
Other receivables
Other liabilities
Unused tax losses and unused tax credits
Other
Investments in financial assets available – for – sale
Total recognized deferred tax assets/ liabilities
104
31
A. Non – current assets held for sale
Intangible assets
Total non – current assets held for sale
2012
-
2011
-
2012
251,606
251,606
2011
251,606
251,606
-
-
2012
-
2011
-
B. Disposal group
Disposal group of assets
Financial assets
Intangible assets
Income tax receivables
Other assets
Total disposal group of assets
Liabilities directly related to the disposal group
Special reserve
Income tax liabilities
Other liabilities
Total liabilities directly related to the disposal group
C. Profit / (loss) recognized from the sale of assets held for sale and disposal group
Profit / (loss) recognized from the sale of assets held for sale and disposal group
Bank’s non-current assets held for sale represent non-current investments acquired exclusively for
sale. Namely, in 2005 Eurostandard Banka AD, Skopje acquired 66.66% of the shares of Postenska
Banka A.D Skopje (“Postenska Banka”) with voting right, by realization of pledge.
The Bank has implemented procedures for sale of shares in Postenska Banka AD Skopje, for
which written contracts with potential buyers have been signed in order to realise higher sales value
than the initial cost.
Transactions for the sale of shares were not realized due to reasons out of Bank’s control. The
Bank leads active negotiations for the sale of shares and the sale price at which the contract
package of shares in Postenska Banka AD Skopje negotiated is higher than the purchase cost.
Considering that the Bank has a real offer, the price for the shares of Postenska Banka AD Skopje,
higher than the purchase cost, it is confirmed that as of 31 December 2012 there are no indications
of impairment of assets.
Transactions with the subsidiary held for sale are stated in Note 44 – Related party transactions.
105
32
Trading liabilities
Due to banks
- Current accounts, demand deposits and overnight
deposits
- Term deposits
- Other deposits
Due to customer
- Current accounts, demand deposits and overnight
deposits
- Term deposits
- Other deposits
- Money market instruments
- Deposit certificates
- Issued bonds
- Other
Other financial liabilities
Trade derivatives
- Contracts dependent on the interest rate change
- Contracts dependent on the exchange rate change
- Contracts dependent on the price of securities
- Other contracts that meet the criteria of IAS 39
Total trading liabilities
2012
2011
-
-
-
-
-
-
-
-
106
33
Financial liabilities designated at fair value through profit and loss, at its/
Due to banks
Current accounts, demand deposits
and overnight deposits
Term deposits
Other deposits
Due to customer
Current accounts, demand deposits
and overnight deposits
Term deposits
Other deposits
Money market instruments
Deposit certificates
Issued bonds
Other
Subordinary debts
Other financial liabilities
Total financial liabilities through
recognition
Current carrying
amount
2012
Contractual
value, paid at
maturity
Current carrying
amount
2011
Contractual
value, paid at
maturity
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
107
34
34.1
Deposits
Due to banks
Current accounts
- Domestic banks
- Foreign banks
Demand deposits
- Domestic banks
- Foreign banks
Term deposits
- Domestic banks
- Foreign banks
Limited deposits
- Domestic banks
- Foreign banks
Other deposits
- Domestic banks
- Foreign banks
Interest
- Domestic banks
- Foreign banks
Current maturity
Total due to banks
Short – term
2012
Long – term
Short – term
2011
Long – term
381
855
-
855
-
-
-
-
-
5,145
-
-
19,260
-
-
-
-
-
-
-
-
-
-
8
6,389
-
20
20,135
-
108
Deposits (continued)
34.2
Due to customers
- Current accounts
- Demand deposits
- Term deposits
- Limited deposits
- Other deposits
- Interest
Government
- Current accounts
- Demand deposits
- Term deposits
- Limited deposits
- Other deposits
- Interest
Non-profit organizations that serve households
- Current accounts
- Demand deposits
- Term deposits
- Limited deposits
- Other deposits
- Interest
- Current accounts
- Demand deposits
- Term deposits
- Limited deposits
- Other deposits
- Interest
Households
- Current accounts
- Demand deposits
- Term deposits
- Limited deposits
- Other deposits
- Interest
Non-residents, apart from banks
- Current accounts
- Demand deposits
- Term deposits
- Limited deposits
- Other deposits
- Interest
Current maturity
Total due to other customers
Short - term
2012
Long-term
Short - term
2011
Long-term
166,754
25
235,316
35,476
10,202
738
448,511
17,932
1,202
19,134
398,669
9,275
199,644
22,749
3,168
829
634,334
11,533
7,797
19,330
30,000
69
30,069
-
30,000
58
30,058
-
12,620
51,728
8,399
17
1,073
73,837
30,270
30,270
20,378
71,898
79
75
928
93,358
31,758
31,758
7,424
88,636
17
1,381
97,458
193,756
2,856
196,612
6,006
242,483
17
2,288
250,794
105,090
4,020
109,110
72,888
52,305
553,508
31,761
27,837
738,299
2,568,970
33,296
2,602,266
57,563
36,688
718,626
18,112
1,856
21,394
854,239
1,306,475
26,262
1,332,737
15,864
12,860
118
302
29,144
1,271,262
2,688,580
29,957
14,461
44,418
(1,271,262)
1,621,438
11,523
5,482
1,653
217
18,875
98,476
1,980,134
18,390
18,390
(98,476)
1,412,849
109
35
Money market instruments
Deposit certificates
Issued bonds
Other
Interest on issued securities
Total issued debt securities
2012
2011
-
-
110
36
Borrowings
A. The structure of borrowings according to the type of liabilities and the donor’s sector
2012
Short - term
Long-term
Short - term
Banks
- Residential
Borrowings
Repo-transactions
Interest
- Non-residential
Borrowings
Repo-transactions
Interest
Borrowings
Repo-transactions
Interest
Government
Borrowings
Repo-transactions
Interest
Non-profit institutions that serve to households
Borrowings
Interest
Borrowings
Repo-transactions
Interest
Non-residents, apart from banks
- Non-financial companies
Borrowings
Repo-transactions
Interest
-Government
Borrowings
Repo-transactions
Interest
- Non-profit institutions that serve to households
Borrowings
Repo-transactions
Interest
- Financial companies, apart from banks
Borrowings
Repo-transactions
Interest
- Households
Borrowings
Interest
Current maturity
Total borrowings
2011
Long-term
2,109
272,132
-
531
82,331
-
2,109
272,132
531
82,331
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,724
21,833
(19,724)
252,408
531
1,062
(531)
81,800
111
Borrowings (continued)
B. Borrowings liabilities according to donor
Domestic sources:
MBDP
Lease company
Foreign sources:
Current maturity
Total borrowings
Short - term
2012
Long-term
Short - term
2011
Long-term
2,109
2,109
272,132
272,132
531
531
82,331
82,331
19,724
21,833
(19,724)
252,408
531
1,062
(531)
81,800
During 2012, the Bank has signed Contracts with the Macedonian Bank for Development
Promotion AD Skopje for placement of funds from the credit line for small and medium
enterprises and the Italian credit line with repayment period from 2013 to 2020 and with interest
rates 3% to 5% p.a. The Bank has pledged a bond as collateral for these borrowings.
37
Subordinated deposit liabilities
Interest
Subordinated credit liabilities
Publishing house Kultura AD Skopje
Gofi Bank of finance and investment
Interest
Subordinated liabilities on issued debt securities
Interest
Preference shares
Total subordinated liabilities
2012
2011
-
-
24,000
92,250
2
116,252
24,000
92,258
1
116,259
116,252
116,259
On18 June 2010, the Bank signed a subordinated loan contract with Gofi Bank of Finance and
Investment SA, Switzerland, with which the Bank has on disposal available financial assets as cash
yield in amount of EUR 400,000 with an interest rate of 0.5% p.a. There is no collateral for this
loan. The repayment date is five years after the date of incurred yield of cash. During 2012 an
Annex was added to the subordinated loan contract with which that the repayment date was
changed to 8 years from the date of cash transfers.
112
Subordinated liabilities (continued)
On 23 June 2010, the Bank signed a subordinated loan contract with Gofi Bank of Finance and
Investment SA, Switzerland, with which the Bank was given on disposal available financial assets as
cash yield in amount of EUR 500,000 with an interest rate of 0.5% p.a. There is no collateral for
this loan. The repayment date is five years after the date of incurred yield of cash. During 2012 an
Annex to the contact for subordinated loan was signed with which repayment date was changed to
8 years from the date of cash transfers.
On 23 July 2010, the Bank signed a subordinated loan contract with the Publishing House Kultura
AD Skopje, with which the Bank was given on disposal available financial assets as cash yield in
amount of Denar 24,000 thousand with an interest rate of 0.5% p.a. There is no collateral for this
loan. The repayment date is six years after the date of incurred yield of cash. During 2012 an
On 21 October 2010, the Bank signed a subordinated loan contract with Gofi Bank of Finance and
Investment SA, Switzerland, with which the Bank was given on disposal available financial assets as
cash yield in amount of EUR 600,000 with an interest rate of 0.5% p.a. There is no collateral for
this loan. The repayment date is six years after the date of incurred yield of cash. During 2012 an
113
38
Special reserve and provisions
Special reserve and
off-balance credit
exposure
Provisions for potential
liabilities based on Pension provisions and
litigations other employee benefits
Restructuring
provision
Provisions for
adverse contracts
Other provisions
Total
837
-
-
-
-
-
837
3,122
-
-
-
-
-
3,122
-
-
-
-
-
-
-
(2,963)
-
-
-
-
-
(2,963)
10
-
-
-
-
-
10
At 31 December 2011
1,006
-
-
-
-
-
1,006
At 1 January 2012
1,006
-
-
-
-
-
1,006
Additional provisions during the
year
4,149
-
-
-
-
-
4,149
-
-
-
-
-
-
-
(3,908)
-
-
-
-
-
(3,908)
-
-
-
-
-
-
-
1,247
-
-
-
-
-
1,247
At 1 January 2011
Additional provisions during the
year
(used provisions during the
year)
(release of provisions during the
year)
(used provisions during the
year)
(release of provisions during the
year)
At 31 December 2012
114
39
Other liabilities
Trade payables
Received advances
Fee and commission liabilities
Accrued expenses
Deferred income from the previous year
Short – term liabilities to employees
Short – term liabilities for employee benefits
VAT liabilities
Liabilities for overpaid retail loans
MIPS liabilities
Advances for credit exposure
Financial lease
Undistributed payments from non-residents to residents
Other
Total other liabilities
2012
2011
21,659
297
65
53
313
3,403
532
2,972
1,444
3,336
1,961
36,035
2,942
224
697
200
932
545
385
2,293
723
8,941
At 16 June 2011, the Bank signed a Contract for lease of vehicle with a domestic leasing company.
The total amount of the lease by the Contract is EUR 52,009, out of which EUR 42,709 is the
principal payment and the interest amounts to EUR 9,300. In accordance with the provisions in
the Contract, the repayment of the liability is divided into 36 equal monthly installments of EUR
1,445, starting from 16 July 2011 until 16 June 2014. The residual value of the vehicle with the
payment of the last installment equals zero (Note 29). In the audited financial statements as of and
for the year then ended 31 December 2011, the liabilities for financial lease in the amount of Denar
2,293 thousand are presented in note 36 Borrowings, and for the purposes of these financial
statements they have been reclassified to other liabilities, in accordance to regulatory requirements.
115
40
Share capital
A. Share capital
In Denars
Nominal value per share
preference
ordinary
shares not for
shares
sale
As at 1 January – fully paid
Recorded shares during the year
Realization of share option
Division / increase of nominal value per share
Other changes during the year (list them in detail):
______________________________
______________________________
______________________________
As at 31 December – fully paid
61,148.22
61,148.22
-
Ordinary shares
Number of issued shares
Preference shares not
for sale
In Denar thousand
Nominal value per share
2012
2011
2012
2011
2012
2011
18,000
18,000
18,000
18,000
-
-
1,100,668
1,100,668
1,100,668
1,100,668
116
Share capital (continued)
B. Dividends
B1. Declared dividends and paid dividends by the Bank
Declared dividends and paid dividends for the year
2012
-
2011
-
Ordinary share dividend
Preference share dividend
2012
-
2011
-
B.2 Declared dividends after the balance sheet date (the dividends liabilities are not shown in the balance
sheet)
Declared dividends after 31 December
2012
-
2011
-
Ordinary share dividend
Preference share dividend
2012
-
2011
-
C. Shareholders with more than 5% voting right
Shareholder’s name
Gofi Bank of Finance and Investment
SA-Switzerland
E.H.H. Eastern Hemisphere Holding
SA-Switzerland
Total
2012
Subscribed
capital (Nominal
value)
In Denar thousand
2011
Subscribed
capital (Nominal
value)
2012
in %
2011
Voting right
Voting right
550,334
550,334
50.0
50.0
550,334
1,100,668
550,334
1,100,668
50.0
100.0
50.0
100.0
117
41
Earnings per share
A. Basic earnings per share
Net - profit attributable to holders of ordinary shares
Net - profit for the year
Dividends for preference shares not for sale
Changes in net - profit attributable to holders of ordinary shares
Net profit / (loss) attributable to holders of ordinary shares
Weighted average number of ordinary shares
Issued ordinary shares as of 1 January
Effects of changes in number of ordinary shares during the year
Weighted average number of ordinary shares as of 31 December
Basic earnings per share (in Denars)
2012
2011
(97,400)
(97,400)
2,894
2,894
2012
Number of shares
2011
18,000
18,000
(5,411)
18,000
18,000
161
B. Diluted earnings per share
2012
2011
Net - profit attributable to holders of ordinary shares (diluted)
Net profit attributable to holders of ordinary shares
-
-
Changes in net profit attributable to holders of ordinary shares
for the effects of all issued potential ordinary shares
Net profit attributable to holders of ordinary shares (diluted)
-
-
2012
Number of shares
2011
Weighted average number of ordinary shares (diluted)
Issued ordinary shares as of 1 January
-
-
Effects of issuing potential ordinary shares
-
-
Weighted average number of ordinary shares (diluted) as of 31
December
Diluted earnings per share (in Denars)
-
-
118
42
42.1
Commitments
Payment guarantees
- in Denar
- in foreign currency
- in Denar with foreign clause
Performance guarantees
- in Denar
Uncovered letter of credit
- in Denar
Unused overdraft for current accounts
Unused credit card limits
Contingent liabilities for crediting and unused credit limits
Other commitments and contingencies
Issued covered collateral
Covered letter of credit
Other commitments
Total commitments before the special reserve
(Special reserve)
Total commitments less potential reserve
2012
2011
114,470
198,013
22,755
132,392
75,880
10,504
55,454
52
12,300
32,508
308
-
64,086
146,602
16,009
-
2,695
58,149
78,342
12,860
-
629,741
(1,247)
628,494
403,638
(1,006)
402,632
Part of contingent liabilities for approving loans and unused credit limits in the amount of Denar
139,331 thousand (2011: Denar 69,827 thousand) relates to revocable approved framework
agreements for use of funds from loans, credit letters and guarantees which use is subject to reapproval according the Bank’s procedures. The amount of Denar 489,163 thousand represents
irrevocable commitments (2011: Denar 332,805 thousand).
Litigations
As of 31 December 2012 there are no proceedings against the Bank. In addition, various legal
actions and claims may be asserted in the future against the Bank from litigations and claims
incident to the ordinary course of business. Related risks have been analysed as to likelihood of
occurrence. Although the outcome of these matters cannot always be ascertained with precision,
the management of the Bank believes that no material liabilities are likely to occur.
Taxation
The tax authorities may at any time inspect the books and records up to 5 years subsequent to the
reported tax year, and may impose additional tax assessments and penalties. The Bank’s
Management is not aware of any circumstances, which may give rise to a potential material liability
in this respect.
Capital commitments
As of the reporting date, there are no capital commitments that have been recognized in the
financial statements.
119
Commitments and contingencies (continued)
42.2
Contingent assets
Total contingent assets
43
2012
2011
-
-
Activities on behalf of third parties
Asset administration on behalf
and at the expense of third
parties
Deposits in Denar
Deposits in foreign currencies
Loans in Denar
Loans in foreign currencies
Other receivables in Denar
Other receivables in foreign
currencies
Asset management on behalf
and at the expense of third
parties
Deposits in Denar
Deposits in foreign currencies
Loans in Denar
Loans in foreign currencies
Other receivables in Denar
Other receivables in foreign
currencies
Bank accounts
Other
Total
Assets
Liabilities
2012
Netposition
Assets
Liabilities
2011
Netposition
7,592
-
(7,592)
-
-
7,592
-
(7,592)
-
-
110,853
(110,853)
-
65,853
(65,853)
-
-
-
-
-
-
-
-
-
-
-
-
-
118,445
(118,445)
-
73,445
(73,445)
-
The Bank manages the assets on behalf of third parties intended for purchasing government bills
and bonds or approving loans for customers. These assets are not owned by the Bank and are not
recognized in the Balance sheet. The Bank is not exposed to credit risk that arises from these
placements.
120
44
Related party transactions
According to the Law on Banks, related parties are considered: persons with special rights and
responsibilities in the Bank and persons related to them; shareholders with a qualified contribution
to the Bank (direct or indirect ownership of at least 5% of the total number of shares, or voting
right shares or that enable a significant influence on the Bank’s managing), affiliates and entities, as
well as the responsible persons of these shareholders - legal entities, Bank’s subsidiaries and other
persons related to the Bank.
The Bank grants loans, performs payment transfers and deposits funds of related enterprises and
financial institutions. It is the opinion of the Bank’s Management that these transactions are carried
out on normal market terms and conditions and during the regular course of business activities. As
of 31 December 2012 and 2011 the balances and volume of transactions with companies related to
companies that have common control over the Bank, and key management personnel of the Bank
and its related parties, are as follows:
A. Balance sheet
Parent Subsidiarie
Company
s Associates
At 31 December 2012
Assets
Current accounts
Trading assets
Loans and advances
- Mortgages
- Consumer loans
- Financial leasing receivables
- Factoring and forfeiting receivables
- Other loans and advances
Other assets
Total
Liabilities
Trading liabilities
Deposits
Issued securities
Borrowings
Other liabilities
Total
Commitments
Issued guarantees
Issued letter of credit
Other commitments
(Special reserves)
Total
Contingent assets
Received guarantees
Other potential assets
Total
Managemen
t of the
Bank
Other
related
parties
-
-
2,710
50,298
4,363
11,820
34,115
(1,033)
853
52,828
Total
37,202
9636
27,566
(836)
825
37,191
2,710
5,235
5,235
(95)
16
7,866
-
-
7,861
4,363
2,184
1,314
(102)
12
7,771
233,916
116,252
3,561
353,729
1,893
59
1,952
-
24,980
240
25,220
-
260,789
116,252
3,860
380,901
6,042
(9)
6,033
75
75
-
2,295
(27)
2,268
-
8,412
(36)
8,376
-
-
-
-
-
-
-
-
121
Related party transactions (continued)
A. Balance sheet (continued)
Parent Subsidiarie
Company
s Associates
At 31 December 2011
Assets
Current accounts
Trading assets
Loans and advances
- Mortgages
- Consumer loans
- Financial leasing receivables
- Factoring and forfeiting receivables
- Other loans and advances
Other assets
Total
Liabilities
Trading liabilities
Deposits
Issued securities
Borrowings
Other liabilities
Total
Commitments
Issued guarantees
Issued letter of credit
Other commitments
(Special reserves)
Total
Contingent assets
Received guarantees
Other potential assets
Total
Managemen
t of the
Bank
Other
related
parties
Total
-
7,102
-
-
-
-
7,102
-
2,322
10,531
22,094
(500)
621
35,068
5,171
(38)
1
12,236
-
3,846
2,531
4,880
(73)
2
11,186
-
6,168
13,062
32,145
(611)
624
58,490
228,311
2,293
116,259
13,438
360,301
898
593
1,491
-
21,511
8,136
29,647
-
250,720
2,293
116,259
22,167
391,439
2,811
2,820
(40)
5,591
183
183
-
2,457
(47)
2,410
-
2,811
5,460
(87)
8,184
-
-
-
-
-
-
122
Related party transactions (continued)
B. Income and expenses from other related party transactions
Parent Subsidiarie
Company
s Associates
2012
Income
Interest income
Dividend income
Capital gain from the sale of non - current
assets
Other income
Transfers between subjects
Total
Expenses
Interest expense
Net losses from trading
Expenses from purchase of non - current
assets
Allowance for impairment of financial
assets, net
Other expenses
Total
2011
Income
Interest income
Dividend income
Capital gain from the sale of non - current
assets
Other income
Total
Expenses
Interest expense
Net losses from trading
Expenses from purchase of non - current
assets
Allowance for impairment of financial
assets, net
Other expenses
Total
Managemen
t of the
Bank
Other
related
parties
Total
1,537
512
-
491
49
-
-
757
49
-
-
2,785
610
-
45
2,094
1
541
-
8
814
-
54
3,449
12,453
-
107
-
-
1,354
-
-
13,914
-
-
-
-
-
-
-
(334)
34,817
46,936
(57)
603
653
-
(30)
67,288
68,612
-
(421)
102,708
116,201
Parent Subsidiarie
Company
s Associates
Managemen
t of the
Bank
Other
related
parties
Total
3,471
550
-
508
-
-
1,080
83
-
-
5,059
633
-
273
4,294
133
641
-
666
1,829
-
1,072
6,764
8,574
-
17
-
-
-
-
8,591
-
-
-
-
-
-
-
24,439
33,013
894
911
-
837
837
-
26,170
34,761
-
-
123
Related party transaction (continued)
B. Key management compensation
Short - term employee benefits
Benefits after employment
Benefits due to termination of employment
Employee payment based on shares, settled with equity instruments
Employee payment based on shares, settled in cash
Other
Total
2012
2011
19,898
19,898
20,071
20,071
124
45
Leases
A. Lessor
A.1 Financial leases receivables
At 31 December 2012
Current value of minimum lease payments
Total
At 31 December 2011
Total
Total
financial
lease
receivables
-
Maturity period of financial lease
receivables
up to 1
From 1 to 5
Over 5
year
years
years
-
Total
irrevocable
operative
leases
liabilities
-
Maturity period of irrevocable operative
leases liabilities
A.2 Irreversible operative lease receivables
At 31 December 2012
Total
At 31 December 2011
Total
up to 1
year
-
Furniture and
office
Vehicles
equipment
From 1 to 5
years
-
Over 5
years
-
Other
equipment
Other items
of property
and
equipment
Total
Land
Buildings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Value of property
under operational
lease:
At 31 December
2012
At 31 December
2011
Total
B. Lessee
B.1 Financial lease liabilities
At 31 December 2012
Total
Total financial
leases liabilities
1,444
1,444
At 31 December 2011
Total
2,293
2,293
Maturity period of financial lease
liabilities
From 1 to 5
Over 5
up to 1 year
years
years
939
505
939
505
1,101
1,101
1,192
1,192
-
125
Leases (continued)
B. Lessee (continued)
B1. Financial lease liabilities (continued)
Land
Buildings
Vehicles
Furniture and
office
equipment
Other
equipment
Other items of
property and
equipment
Value of property under financial lease:
Cost
At 1 January 2011
- additions
- (disposal and write off)
- other
At 31 December 2011
Total
-
-
3,708
3,574
(3,708)
3,574
-
-
-
3,708
3,574
(3,708)
3,574
At 1 January 2012
- additions
- (disposal and write offs)
- other
At 31 December 2012
-
-
3,574
3,574
-
-
-
3,574
3,574
Accumulated depreciation and impairment
At 1 January 2011
- depreciation for the year
- impairment loss during the year
- (release of impairment loss during the year)
- other
At 31 December 2011
-
-
2,009
447
(2,009)
447
-
-
-
2,009
447
(2,009)
447
At 1 January 2012
- depreciation for the year
- impairment loss during the year
- (release of impairment loss during the year)
- other
At 31 December 2012
-
-
447
892
1,339
-
-
-
447
892
1,339
126
Leases (continued)
B. Lessee (continued)
B1. Financial lease liabilities (continued)
Land
Buildings
Vehicles
Furniture and
office
equipment
-
-
1,699
3,127
2,235
-
Current carrying value
At 1 January 2011
At 31 December 2011
At 31 December 2012
B.2 Irrevocable operative leases liabilities
At 31 December 2012
Total
Total
irrevocable
operative
leases
liabilities
-
Maturity period of irrevocable
operative leases liabilities
up to 1
year
-
From 1 to
5 years
-
Over 5
years
-
At 31 December 2011
Total
-
-
-
-
Other
equipment
Other items of
property and
equipment
Total
-
-
1,699
3,127
2,235
127
46
Share based payments
Date of giving option
Date of option expiry
Price of option realization
Share price on the date the option is given
Variance
Expected dividend return
Interest rate
Fair value on the date the option is given
2012
2011
-
-
2012
At 1 January
Changes during the year:
- options given to Supervisory Board members
- options given to Board of Directors members
- Other given options
- Forfeited options
- Realized options
- Options with expired deadline
At 31 December
47
2011
Number
of share
options
Weighted
average price of
share options
Number
of share
options
Weighted
average price of
share options
-
-
-
-
Pension plans
The Bank does not operate any defined contribution pension plans or share – based remuneration
options as of 31 December 2012 and 2011. The Management believes that the present value of the
future obligations to employees with respect to retirement benefits and jubilee awards are not
material to these financial statements as of 31 December 2012 and 2011.
48
Events after the reporting date
After 31 December 2012 - the reporting date until the approval of these financial reports, the Bank
was handed measures by the Governor of NBRM: Decision, written warning and
recommendation. The measures have been handed on the basis of findings by the Minutes of
partial field control performed on the Bank from 11 December 2012.
The Bank takes actions for their removal and notifies NBRM.
www.grant-thornton.com.mk

Stopanska Banka AD Bitola

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