Societe Generale bank annual report

Transcription

2014.
ANNUAL REPORT
TABLE OF CONTENTS
1. SOCIETE GENERALE GROUP
4
2. WORD OF MANAGEMENT
6
3. SOCIETE GENERALE BANKA SRBIJA A.D. BEOGRAD
10
4. MACROECONOMIC OVERVIEW FOR 2014
12
5. RETAIL BANKING
14
6. CORPORATE BANKING
18
7. FINANCIAL MARKETS ACTIVITIES
20
8. HUMAN RESOURCES
24
9. CORPORATE SOCIAL RESPONSIBILITY
30
10. RISK MANAGEMENT
34
11. LIQUIDITY MANAGEMENT AND INTEREST RATE RISK
40
12. CAPITAL MANAGEMENT AND CAPITAL ADEQUACY INDICATORS
44
13. FINANCIAL INDICATORS
46
14. EXPECTED FUTURE DEVELOPMENT
50
15. BANK’S FINANCIAL REPORT AS OF DECEMBER 31, 2014
53
16. INDEPENDENT AUDITOR’S REPORT
149
ANNUAL REPORT 2014
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1.
SOCIETE GENERALE GROUP
In 2014, Societe Generale celebrated its
150 anniversary. Today, it is one of the
leading financial institutions in the world
that plays a key role in the economy in
the countries where it operates.
Societe Generale Group is one of the leading financial
institutions combining financial solidity and sustainable growth
strategy, has a diversified universal banking model with the
ambition of being the relationship-focused bank close to its
customers, and recognized for the quality and the commitment
of its teams. The core of the Group’s strategy is to develop
long-term relationships with its customers and partners
through continuous anticipation, understanding, meeting the
needs and expectations of clients.
Societe Generale Group understands that it is necessary to
transform, adapt and develop in order to keep the pace with
the activities of clients. The banking industry is experiencing
a period of change, marked by profound economic, regulatory
and technological changes. The Group, in 2014, launched
a transformation strategy with an aim to
adapt its business to meet these challenges,
continuously striving to provide tomorrow’s
solutions to its customers.
Societe Generale is very competitive on
the market in the businesses of specialized
financial services for the purchase of
equipment, in car renting and fleet
management. Societe Generale Insurance's
performance shows continued growth in
2014 integrating bancassurance model
as well as its ability to invest in expanding
its product ranges, to develop innovative
services for the Group's customers and to
seize the opportunities offered by the digital
transformation.
With 148 300 employees across 76 countries, who serve
more than 32 million customers across the globe, Societe
General’s teams offer advisory and other service to
individual customers, companies and institutions as a part
of three main business lines:
Societe Generale Group is embracing the digital
revolution, developing the mobile solutions
and promoting new payment methods, while
ensuring the security of systems, data and
transactions.
French Retail Banking
Societe Generale was founded on May
4th, 1864 in France by a decree signed by
Napoleon III. Initially, the bank was founded by
its shareholders with the aim to improve the
economy, initiate growth, stimulate industrial
investment and develop communication and
social spirit.
International Retail Banking, Financial Services and
Insurance
Global Banking and Investor Solutions: Corporate and
Investment Banking, Private Banking, Asset & Wealth
Management and Securities Services
4
SOCIETE GENERALE BANKA SRBIJA A.D. BEOGRAD
ANNUAL REPORT 2014
5
2.
WORD OF MANAGEMENT
Goran Pitić
President of the Board of Directors
6
Serbia in 2014 faced serious challenges,
and to the country’s performance, despite
the difficulties that have affected many other
economies in the world, significantly influenced
the May storms that had caused enormous
damage to the economy and citizens of our
country. The market is still quite unpredictable,
and geopolitical risks are certainly something
that we need to consider when talking about
economic growth in Serbia, especially bearing
in mind our commitment to European integration
while maintaining friendly relations with other
major geopolitical partners. Developments in
the world will significantly affect the position
of Serbia, but for our country it is important to
continue with the reforms, that are primarily
focused on improving the business climate and
creating a predictable economic environment
that will facilitate foreign investments. In 2014,
significant efforts have been made in that
direction, notably the adoption of amendments
of the Labour Law, Law on planning and
construction, improvement of legislation
relating to bankruptcy and restarting the
privatization process. However, there is a lot
more that needs to be done, both in terms of
reducing bureaucracy and in terms of better
enforcement, which includes work on by-laws
that are currently in delay. It is necessary
to further strengthen the capacity of the
Government's reform and administration, raising
the efficiency of the state and significantly improving
the management of state resources, as well as freeing
up space for the strengthening of the private sector.
Fiscal consolidation requires developing institutions at
all levels, while its successful implementation depends
on the conditions for long-term sustainable economic
growth because a healthy budget, despite the fact that
it is the basis of macroeconomic stability, is the best
guarantee that supports the private sector. This year, it
is necessary to complete the process of privatization of
entities that are in the process of restructuring, which is
an important prerequisite for successful consolidation.
The reduction of the grey economy, is certainly a good
way to increase the inflow into the budget, but also
reduces its negative impact on companies operating in
accordance with the regulations.
All of this indicates that there is still a lot of work and
only if as a country we stand firmly together towards the
reform commitments, we can expect results.
Banks shared the fate of the market and certainly
felt the consequences from the previous period,
not only in terms of profits, but also in terms of
problems with non performing loans and a deficit in
the quality of demand. On the market there has been
some consolidation of the banking sector, which now
accounts for a smaller number of participants on the
market in comparison to a few years ago, and I believe
that the consolidation process will continue. Financial
institutions present in the country, mostly subsidiaries
of major European and world banking groups, are
ready to respond to client requests, and this is
certainly true for Societe Generale in Serbia.
The Bank has access to affordable sources of financing
from various origins, its parent company and the
international agencies, resulting in the fact that Societe
Generale in Serbia, at every moment is capable and
able to finance the everyday needs, as well as realise
projects and investments demands, of all its clients.
However, the most important goal of the Bank is to
continue to strengthen the relationship with customers,
to respond to their requests as comprehensively as
possible, and remain, above all, a service provider. In
that sense, we continue to invest in business operations
by constructing a new office building, continuously
innovative in technology, developing products and
services that will help customers and finally even further
strengthen our cooperation with the clients. I believe
that the increase in the customer base of about 7.5 per
cent in such an unstable environment confirms the fact
that clients have recognized our quality and are willing to
give us their trust.
ANNUAL REPORT 2014
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2.
WORD OF MANAGEMENT
The Serbian market was still facing recession
in 2014 and the consequences affected
everybody, including the banks, which are
the pillar of the economy, both because of
the pressures on the side of their revenues,
and because of the increased cost of risk.
In this context, the process of banking
sector consolidation continues: some of our
competitors withdrew from the market, while
other reduced their presence.
Frederic Coin
President of the Executive Board
8
Despite the unfavorable situation, Societe
Generale Banka Srbija a.d. Beograd has
succeeded to improve its business activities by
increasing its NBI and deposits, by maintaining
stability of its financing and at the same time
carefully managing risks. The bank improved
the quality of its products and services and
optimized its processes. We have implemented
new, sate-of-the-art technologies in order to
respond to the requirements of our clients in
domain of e-banking and mobile banking, saving
them both time and money. We have justified the
image of an innovative bank in 2014, and in this
regard, I would certainly mention the possibility
for cost of package accounts reduction and new
approach to small business. Instead of income,
the bank based its offer on specific needs of
its customers related to their business, tailoring
that offer to the needs of small companies and
entrepreneurs in the segment of manufacturers,
transporters, traders and professional services.
This kind of approach was met with a good response.
Our client base, despite the unfavorable market
conditions, increased by 7.5 percent, which is, I believe,
an important proof of the constant growth of confidence
of citizens and businesses in Societe Generale bank. So,
for 2015, our most important task remains to strengthen
relationships with customers, to give our best in order to
really understand their plans, needs and capabilities and
to identify ways of tailoring our offer to each client.
more generally the reduction of the bureaucracy in
order to have more investors, which will lead to less
unemployment and increase of living standard of the
citizens and consequently to increase of loan demand.
Societe Generale remains committed to the financing
of the Serbian economy and continues to strengthen
its long-term presence in the country. The start of the
construction of a new administrative building that will be
finished in 2016 is another evidence of this commitment.
An important segment of our activities is related to
risk management. Although it involved high costs,
the bank gave its maximum in order to adequately
cover its NPLs. At the same time, in 2014, we made
great progress in segment of a risk culture and better
conceived and supervised loan processing, so I believe
that we will start to enjoy the benefits of investing in risk
management and better loan selection during this year.
The slowdown of the global, and consequently the
Serbian economy, has led to credit slowdown, and
I would like to stress that the main reason for that
is the lack of quality demand. However, during past
months, certain steps were made that raised optimistic
expectations and which already reflected on financing,
primarily in terms of certain decreasing of interest
rates. The State has taken important steps, not only
in terms of cooperation with the IMF, but also in terms
of adopting important Laws intended on business
climate improvements, making it more favorable for
investors. There is still room for improvements in
terms of simplification of the administrative rules, and
ANNUAL REPORT 2014
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3.
SOCIETE GENERALE BANKA
SRBIJA A.D. BEOGRAD
Societe Generale Bank Srbija a.d. Beograd, ended 2014 with a 7.5% increase in customer
base compared to the previous year, once again confirming its stability and ability to overcome
the difficulties of the recession felt in 2014, that affected the whole market. The Bank made
significant investments to increase the quality of its products, services and operational processes
in order to meet existing and future client’s needs as efficiently as possible. The increase in the
number of clients shows that both individuals and corporations continue to have confidence and
trust towards the Bank.
In 2014, the Bank had a net profit of RSD 369 million while the gross operating income
amounted to RSD 4.8 billion which in comparison to 2013 is a 3.9% increase.
In a challenging environment and strong competition in the banking sector, Societe Generale
Bank Srbija a.d. Beograd managed to maintain its position on the market and positioned itself
as the fifth largest bank with respect to most indicators,
fourth in terms of loan amount and fourth in terms of
total deposits with respect to 29 banks that operate in
Serbia. Also, with respect to mortgage loans, the Bank
remained a leader on the market (third with respect to
the number of approved mortgage loans), as well as in
the segment of cash and consumer loans.
At the same time, Societe Generale Banka Srbija
a.d. Beograd has continued to invest in cutting-edge
technology to enable its clients to use electronic, mobile
and telephone banking services in accordance with the
highest standards in this area.
The prestigious professional magazine TMI (Treasury
Management International), specialized for experts in
business of treasury and finance, recognized Societe
Generale Global Transaction Banking (SG GTB) as
the best Bank in this scope of business activity in
Central Eastern Europe. TMI’s recognition highlights
the commitment of Societe Generale GTB to provide
high quality, efficient, innovative and tailored cash
management services to corporations and institutions
around the world. With this award, Societe Generale
Group was recognised as an institution that, in a
new and efficient manner, to clients in 55 countries,
offers wide spectar of global transactions services,
including documentary operations, asset management,
correspondent banking services and factoring.
During 2014, significant emphasis was given towards the
improvement transaction banking services. In addition to
the recognition of Societe Generale, further confirmation
of the quality of service that Societe Generale offers in
Serbia, is confirmed by the fact that the world's leading
financial magazine Euromoney named Societe Generale
Banka Srbija a.d. Beograd as the best in the domain of
Cash Management in Serbia in 2014. This prestigious
award is given based on a detailed analysis of opinions
of the surveyed companies (financial and non-financial
institutions), users of these services.
Societe Generale Bank Srbija a.d. Beograd is present
in Serbia since 1977, when the Bank opened a
representative office in Belgrade, and in 1991 was
founded as Societe Generale Yugoslav Bank, the first
10
bank with majority foreign capital, firstly, focusing on the
corporate sector. It became a Universal Bank in 2001,
when it opened its first branch to work with individuals
as well, in the street of Kralja Petra in Belgrade. In 2006
the Bank built its own headquarters in Zoran Djindjic
Boulevard in New Belgrade.
In 2014, after 37 years of business activity in Serbia,
Societe Generale continues to indicate confidence in
the market where it operates, and for the second time
invests in commercial property for its employees.
In July of 2014, the Bank signed a preliminary contact
on the sale and purchase of a part of the building under
construction. The completion of construction, as well
and transfer to the other business location is planned for
the first half of 2016, following which the Bank would
concentrate all activities in two locations, that are in the
immediate vicinity of each other.
New office space, modern building class A, is being built
in the immediate vicinity of the current headquarters of
the Bank, in Zoran Djindjic Boulevard in New Belgrade.
The Bank decision from 2014 to conclude the
preliminary contract is a result of its long-term
orientation to develop its business operations in Serbia.
The Bank is especially proud of the voluntary actions
organised post catastrophic May 2014 floods, realised in
Obrenovac as a result of the need to reconstruct the most
affected areas in the country. This was most probably
the biggest volunteering action ever realised by the Bank,
counting over 600 employees, volunteers. The Bank’s
employees also collected over 800 Kg of various goods for
the flood affected persons while the Bank as an institution
donated funds and further supported to raise additional
funds through two Teleton actions, with its long term
partners Ringier – TV Prva and Radio Television of Serbia.
Societe Generale Bank Srbija a.d. Beograd will continue
to strive to serve efficiently, create ongoing innovation
in business operations, introduce IT solutions, including
frequent monitoring and improvement of processes
understanding, as it understands that these are
the criteria for sustainable and long term activity in
delivering high quality services.
ANNUAL REPORT 2014
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4.
THE MACROECONOMIC
ENVIRONMENT IN 2014
Serbian economy up to 2008, recorded among the fastest
growth rates in Europe, with average GDP growth coming
in at around 5%. The global crisis interrupted this trend in
2009, when economic growth in Serbia decreased by 3.5%.
The economy returned to growth in 2010 and 2011, but
considerably slower, averaging 1.3% in the two-year period.
In 2012, as a result of low growth throughout the region,
economic growth is negative, -1.7%. In 2013, the economy
advanced by 2.5%. The largest part of the growth was
achieved thanks to the recovery of the agricultural sector and
strong export growth.
In 2014, growth was expected; however, the May floods
caused the GDP to decline by 1.8%, mainly due to the
slowdown in exports and the reduced mine and electric
power production.
In 2015, the GDP is expected to increase by 1.0% , with
a further increase in exports and a recovery of industrial
production, especially in energy production. The Government
of the Republic of Serbia passed needed measures last year,
so that we feel that results of such laws will be visible through
increased foreign direct investment in the second half of 2015.
The high unemployment rate in Serbia significantly improved
during the 2005 to 2008 period, when it fell from 20.8%
to 13.6%. The beginning of the global economic crisis
dramatically reversed this trend, so that in the first half of
2012, the unemployment rate reached 25.5%. Since then,
the unemployment rate has steadily declined, so that by the
second half of 2013 it stood at 20.1% and at the end of 2014
it fell to 16.8%.
12
However, the number of persons registered as employed
increased from 1.703 million at the end of 2013 to
1.706 million at the end of 2014, an increase of 0.2%.
During the same time spam, the number of people who
identify themselves as unemployed fell from 770K to
742K, a decrease of 3.6%.
High unemployment has affected earnings and
consequently consumer spending. According to National
Bank of Serbia statistics, the average net wage,
expressed in EUR at the middle exchange rate, fell
from an average more than EUR 402/month in 2008 to
approximately EUR 367/month in 2014.
This fall, measured in Euro, is connected with the
exchange rate. The fall in employee income has reduced
domestic consumption in the specified period, however,
citizens' savings continued to slightly increase.
Since December 2014, the total retail savings of
reached almost EUR 8.8 billion, compared to EUR 4.8
billion in 2008. With this in mind, there is a significant
potential base for future spending and borrowing,
which will recover when more sustainable economic
growth is achieved.
One consequence of low consumer demand is a decline
in the level of inflation. In early 2013, inflation fell from
nearly 13% to 2.2% at the end of that year. A trend
continued in 2014, so that December inflation was
1.7%. Low aggregate demand, cheaper agricultural
products, a drop in energy prices on the world market
and restrictive monetary policy measures have all led to
a decline in inflation.
As a result of lower inflationary pressure and stable
exchange rates the National Bank of Serbia started
lowering its benchmark interest rate. The Key Policy
Rate was 11.75% in February 2013 while by the end of
2013, it down to 9.5%, a decrease of 225 basis points.
In 2014 and early 2015, the National Bank of Serbia
continued with the lowering of the Key Rate, which now
stands at 7.5%.
It is expected that the Serbian economy will grow
in 2015, driven by continued growth in exports and
increased FDI, as well as the positive mood of investors
due to the expected further convergence with the EU, as
well as a more liberal monetary policy of the European
Central Bank. While last year the biggest economic
issue was slow global economic growth, the May floods,
as well as risk perception by investors; for 2015, we
believe that the decline in the euro against the dollar,
low oil prices and divergence of direction between the
American and European central banks as the most
significant on Emerging markets.
It is expected that in the next few years the main
drivers of economic growth will be agriculture,
construction and energy sectors, particularly with
further market liberalization, harmonization with EU
standards and the recovery of the world economy.
These factors should lead to an increase Serbian
exports and foreign direct investment.
ANNUAL REPORT 2014
13
5.
RETAIL BANKING
Societe Generale Banka Srbija a.d. Beograd, as a socially
responsible company provides active support to young
people through collaboration with faculties, students and
various other organizations dealing with questions of the
youth, as well as in the framework of internship programs.
In this context, in 2014, the Bank created a special offer
of products and services intended for young people, in
cooperation with representatives of this target audience
- young people from Youth Advisory Team consisting of
students from different faculties in Belgrade and Novi
Sad. Within this, in addition to financing basic and master
studies, students are able to use, at no cost, all aspects of
the account package including a current account service,
electronic, telephone and mobile banking, standing orders
and Masterata international payment card.
The Bank offers, the young under 30 that just started
working at the Bank, to use products and services within
the package account with twice lower maintenance costs,
and as special bonus for the ones with university education
the offer also includes the Masterata credit card, with
a 20,000 dinars limit, regardless of whether the user is
employed part time.
In 2014, the Retail business continued to
be focused on the needs of its clients, as
well as developing long-term relationships
with them. This sector is continuously
working on improving processes,
products and services, responding to the
needs of existing and new clients.
One of the key indicators that mirrors
the support that the Bank provides to
its individual clients, is the strong loan
growth, of 12.8% compared to 2013,
increasing the Bank's market share in
this segment, to 9.7% (from 9.4%). At the
end of 2014, the total value of net loans
amounted to 65.6 billion dinars (542
million euros). Also, the number of active
clients in 2014 increased by 7.5%.
14
When we talk about cash loans Societe Generale Banka
Srbija a.d. Beograd has achieved placement growth of 11%
compared to the previous year, while growth in mortgage loan
placements increased by 7% compared to 2013, enabling the
Bank to reaffirm its position on the market, once again, as a
leader in mortgage loans.
In 2014, Societe Generale Banka Srbija a.d. Beograd has
collected a significant amount of deposits, individual and
corporate, even with a moderate interest rate policy despite
the stimulating conditions during the Savings Month, allowed
interest rates on deposits to remain at a competitive level. The
total amount of deposits in Retail reached 66 billion dinars
(EUR 546 million), an increase of 3.4% compared to 2013.
ANNUAL REPORT 2014
15
Good results were also achieved in the Small
Business Department, which recorded an
increase in customer base by 7.1% compared
to the previous year. The loan portfolio grew
by 4%, while deposits grew by 21% compared
to 2013. The growth in this portfolio is a result
of the unique market approach to this client
segment, as instead of income, the Bank
reviews the activity of specific companies
or entrepreneurs, and adapts its offer to
specific needs in the areas of production,
transport, trade and professional services. This
classification is important because the client
needs are more conditioned by business cycles
and the needs of specific industries to which
they belong to, rather that the revenues.
The network of 104 branches of Societe
Generale Banka Srbija a.d. Beograd has
41 personal bankers, specializing in Small
Businesses and entrepreneurs, who are in the
Bank’s network every day focused on activities
in this area, in order to facilitate and promote
business and cooperation with this category
of clients, facilitating all needs of the actual
businesses and their employees, providing
difference service from one location.
Societe Generale Banka Srbija a.d. Beograd is
committed and believes that Small Businesses
have great potential and importance for the
national economy, further evidenced through
the support of the action "Blic Entrepreneur".
The company in the segment of small
and medium-sized enterprises, which the
professional jury declares the best as part of
this action, receives significant funding for
business improvement.
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ANNUAL REPORT 2014
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6.
CORPORATE BANKING
The focus of the Sector for
Corporate business, during 2014,
was in providing continuous
service, following the model of a
universal bank. Societe Generale
Bank Srbija a.d. Beograd, like in
previous years, fully supported its
customers in their business plans
and activities. Nevertheless it has
to be noted that 2014 was marked
by recession in overall economy of
the country and generally difficult
and unstable environment.
Consequently, in terms of
lending activity the accent
has been put to improving of
the quality of the risk of the
portfolio through development on
products with better risk profile
such as factoring and leasing
(Societe Generale Banka Srbija
a.d. Beograd has 100% equity
share of Sogelease Srbija d.o.o.
Beograd) through diversification
and further focus on lending to
medium size companies, and
through general consolidation of
18
existing portfolio. The trends of lending activity were
mostly in line with developments on the market, and
local companies were funded with EUR 372 million in
short term financing, EUR 256 million in long term and
investment loans. In addition, consistent and successful
cooperation was continued with major multinational
companies and foreign investors, which represent the
basis for the activities of the corporate business.
Societe Generale Banka Srbija a.d. Beograd, besides
from its own sources, offered loans from several
credit lines in cooperation with international financial
institutions. Total sum of these credit lines is EUR 242
million, out of which EUR 58 million remains available to
final beneficiaries. With these funds, Societe Generale
Banka Srbija a.d. Beograd aimed to help development
of projects with specific purposes, important for
improvement of general business outlook in the
country: energy efficiency, creation and preservation
of sustainable jobs, protection of environment,
improvement of quality and production efficiency,
agriculture, economy, health, education, industry,
tourism and other services.
Additionally, highlight should be put on recent
development of transactional services through
consolidation and creation of Global Transaction Banking
at the beginning of 2014, which comprises services
such as Corporate Cash Management, Trade Services,
Factoring and Correspondent banking. Results of these
services in 2014 have been recognized and awarded in
the category Best Corporate Cash Management Bank
in Serbia by Euromoney magazine. This award goes
in line with the best Cash and Liquidity Management
award won by Societe Generale Group in Central and
Eastern Europe including Serbia that was recognized
by the Treasury Management International Magazine.
Furthermore, in 2014, Cash Management services of the
Bank have been enriched by introduction of new state
of the art e-banking online platform, with wide range of
new functionalities related to payments, FX conversions,
and statements, mobile and other features.
Also, as a confirmation of the quality of services in
Trade finance activities the Bank has managed to keep
full stability of its portfolio of documentary products
throughout whole year, in spite of the overall decline in
the economy and the banking sector.
Good results have been achieved in factoring business,
where Societe Generale Banka Srbija A.D. Beograd
reached the first place on local market, with EUR 105
million turnover, which represented 25% of total turnover
in Serbia. Specific emphasis has also been put on
modernization of Factoring service through investment in
the new processing platforms that contributed to speed
and quality of the service. Several new services have been
introduced - the international factoring in the two-factor
system, the Bank became a member of the International
Factoring Association, FCI - Factors Chain International.
Also, throughout the year the Bank has worked on
implementation of Supply Chain Finance scheme that
offers to Large clients online platform for effortless and
fast financing of suppliers, which also includes payment
agent role. Built in 2014, this Supply Chain platform
constitutes a real innovation on Serbian Market allowing
the bank to deliver once again a real added value service
to its Key clients but also to their suppliers. Benefit in
term of profitability of this new platform shall be more
significant in 2015 and following years.
In still difficult macroeconomic conditions, the Bank
managed to increase its market share of corporate
deposits in 2014 to 12.32 percent from 11.66 percent
previous year improving in meantime the cost of these
external sources and the currency structure.
Also, the total number of clients in Corporate sector
also increased by 4.75 percent, compared to the
end of December 2013. This growth of clients is the
consequence of the diversification strategy engaged few
years ago with mid-size companies as considered more
resilient to current crisis environment but is also the
signal that all investments made in quality of services
are recognized by our clients.
ANNUAL REPORT 2014
19
Custody Services
In 2014 Societe Generale Bank Srbija a.d. Beograd
became Custody Bank for all registered Voluntary
Pension Funds in Serbia, what put Bank in a position
to be the absolute market leader in servicing of this
segment of Custody clients. Market share in this
segment is increased for 40 percent in comparison
with 2013. Asset under Societe Generale Bank Srbija
a.d. Beograd Custody belonging to Voluntary Pension
Funds and Investment Funds were 23,9 billion dinars
at the end of 2014.
During 2014 significant success and increase of
market share are achieved in provided services
to clients from segment of foreign companies
and financial institutions, which mainly invested
in government bonds (debt securities) on primary
market, as well as on secondary market.
Capability for providing of custody services abroad
also contributed to be well positioned on market. For
its local Custody clients who invested abroad, Custody
unit provides services through Global Custodian or sub
custodian in accordance with agreements signed.
20
ANNUAL REPORT 2014
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7.
FINANCIAL MARKETS
ACTIVITIES
Societe Generale Bank Srbija a.d. Beograd strongly supported its Corporate
clients on local FX market and managed to remain among the top four banks
on the local market in terms of total volume of transactions in 2014. According
to the official statistics of National Bank of Serbia, the Bank reached a market
share of 11.20% and was ranked 4th in trading with Corporate clients. Besides
providing support to the local Corporate clients, the Bank was an important
partner for International Corporate clients and financial institutions. Societe
Generale Bank Srbija a.d. Beograd reached a market share of 28.10%, and
was ranked 2nd by transaction volume. Another very important segment is
trading with domestic banks where the Bank reached
market share of 10.66%, ranking the Bank on the 2nd
position. In trading with domestic Corporate clients
Societe Generale Bank Srbija a.d. Beograd increased
market share for 11%, and in trading with international
Corporate clients and financial institutions market
share increased by 20% compared to 2013. In trading
with domestic banks, Societe Generale Bank Srbija
a.d. Beograd decreased its market share by 11.3%,
compared to 2013. Bearing in mind strong competition
on the local FX market, results achieved in 2014 in this
segment of business activities point to a permanent
growth, in comparison to the previous period.
Bank has been actively involved in the interbank money
market, the NBS repo auctions and government securities
debt market. The Bank is participated in the primary
market of government securities in 2014 and purchased
bonds denominated in RSD in the amount of 19.2 billion,
as well as bonds denominated in EUR in the amount of
25 million. The market share of the bank in 2014 was
5.6% with an average maturity of 844 days of placement.
On the interbank market, bank deposits have been very
active with the actual market share of about 3%.
Since 2004, Investment Services Unit functions as
a separate organizational unit of the bank. In 2014,
Investment Services Unit continued to provide to
its clients various services related to the financial
instruments and capital market:
22
Brokerage services in trading with financial
instruments on regulated and OTC market,
Corporate agent services,
Services in the privatization process,
Agent and/or underwriter services in the issuance of
securities.
In 2014, investors' focus was kept on the government
debt securities, that is, treasury bills. Thanks to
existing, as well as new clients who have signed
the brokerage agreement last year, the Investment
Services Unit has remained among the five most active
investment companies and authorized banks - when
it comes to realized turnover with treasury bills on the
primary market.
In the past year, turnover on the organized, stock
exchange market has significant decline. Total turnover
by the end of 2014 on the Belgrade Stock Exchange
reached RSD 20.3 billion, which represents a decrease
of more than 30% compared to 2013. In last year,
Investment Services Unit has participated in the stock
exchange trading with nearly 5,500 transactions (growth
of more than 50% compared to the 2013), and with
realized annual turnover of more than RSD 71 million.
There have been no significant events subsequent to the
reporting date, which would require adjustments and/or
disclosures in the notes to the accompanying financial
statements of the Bank as at and for the year ended 31
December 2014.
ANNUAL REPORT 2014
23
8.
HUMAN RESOURCES
Societe Generale Bank Srbija a.d. Beograd ended 2014 year with 1379 employees,
and during 2014, 96 new colleagues have joined our team. According to market
requirements and new trends, the most common profiles in the recruitment
process were experts in the field of Risk Management, Information Technology and
Small Business.
During 2013, the Bank conducted "Employee satisfaction barometer" (survey that
aimed to investigate employee satisfaction and determine the key directions of
development of Societe Generale Group, as well as every individual entities) and
defined an action plan. During 2014, in cooperation
with business lines, a large number of defined activities
have been conducted in order to increase employee
satisfaction by working on areas which employees
defined as important: presentations/workshops with
HR business partners on HR issues/processes; revised
talent management process; new internal programs for
talent development (mentoring, intensified involvement
in the education of colleagues through the trainers
club); empowered employees through the process of
nomination and selection of colleagues for Super banker
annual reward has changed (employees nominate, and
employee committee vote for best in each category).
In order to approach in more transparent way the
employee development and obtain better feedback on
the performance and contribution of each individual,
talent management process was improved. The basic
idea of this process is to prepare the organization for
future activities through support to current and future
management structure. This year the process was
improved in a way that greater number of employees was
in scope, and their impact and potentials was discussed
by all levels of managers, from line to top managers.
This approach has enabled us to perceive more clearly
potential of employees, as well as to define specific
action plans for each individual. The result of these
improved processes will enable us to implement our
strategic plans thanks to maximum use of internallydeveloped resources.
Through listening to the needs of employees, in order
to balance between business and private life, as well as
the taking care of the need to put everyday stress to a
minimum level, the bank has enabled its employees in
the Head office to attend business yoga. The exercises
are designed to help employees to reduce stress,
improve health and concentration, and therefore easier
to cope with everyday business commitments.
During 2014, the Bank worked on developing managerial
skills of our managers through the continuation of the
24
"People Management" program, as well as through
workshops for top management of the bank on the topic
of strategy and cooperation between sectors.
Bearing in mind that during 2014, one of the bank's
focus was to support and help the development of the
small business segment, we organized a large number
of training sessions for Small Business Officers. The
trainings aimed to improve business skills, introduce
new segmentation and offer for these clients and
strengthen technical knowledge, in order to enable us
continuation in providing quality service and advice.
Also, we did education of all other colleagues in the
commercial sector through training that meet their
current needs. Corporate Relationship Officers, Key
Account Managers and Corporate support passed
training Keys to efficiency, during which they went
through all segments relevant to their daily work,
together with the trainers-internal experts. Colleagues
from retail sector (Branch Managers, Account officers,
Cashiers) passed commercial training and introduction
of new bank’s offer trainings (offer for young people,
offer for pensioners, services improvements...)
In 2014 we have introduced a new tool for scoring that
significantly accelerate the approval process of credit for
retail and small business clients, and we have organized
in two modalities training to use the new tools (in the
classroom and video training). We also supported two
major projects MERCI (new tool for collection) and
New Charts of Accounts by creating training plan and
program and implementing them.
Implementing a new tool for creating modules for
distance learning, enable us to continue work on
effectiveness of training delivery improvement, and
among other things, the tool was used for introduction
of FATCA regulations. Through modules for distance
learning and using video training we conducted training
on various regulatory issues: AML-CFT, IT Security
Systems, Reputational risk, Combating corruption.
ANNUAL REPORT 2014
25
Employee branding
The Bank is committed to the education of young people and pays very
focused attention to educational programs, which is confirmed by the large
list of faculties and schools we cooperate with: FON, Faculty of Economics,
Faculty of Economics Subotica, FEFA, College of Information Technology,
Belgrade Banking Academy, High School of Economics from Niš, Subotica
and Užice, School of Economics in Belgrade. Societe Generale Bank Srbija
a.d. Beograd organizes lectures and workshops in determined intervals.
Lectures cover various topics related to finance-investment banking,
basic knowledge of banking and so on. In this way, the classical teaching
methods for students and high school students convey the necessary
information. Lectures are organized in partnership with the NBS initiative
Global Compact, both for students and for teachers.
Workshops are organized in consultation with the faculties. Some of
the workshops are: HR workshops, simulations of job interviews, case
studies show, and communication skills. The aim of these activities is
to involve students to actively participate in financial education. On the
other hand, there are projects such as the Youth Advisory Team of Bank.
Within these projects, students are directly involved in the process of
creating a certain type of offers (eg. The offer for young people).
The Bank offers young people the opportunity to do internship. During
2014, 110 interns participated to our internship program.
26
ANNUAL REPORT 2014
27
Societe Generale Banka Srbija a.d. Beograd
organization chart 31.12.2014.
BOARD OF DIRECTORS
Comliance
DIVISION
Internal Audit
DIRECTION
General
Secretariat
EXECUTIVE BOARD
AML & KYC
DEPARTMENT
Frederic Coin
Stanislas Tertrais
President of Executive Board
Vice-President of Executive Board
Sonja Miladinovski
Zdravko Krunić
Pierre Boscq
Miroslav Rebić
Communication
Human
Resources
UNIT
Guillaume d'Escrivan
RESOURCES DIVISION
RISK DIVISION
Resources Support and
Services
Risk direction
Special Affairs
FINANCIAL DIVISION
RETAIL DIVISION
Accounting
Assets Liability
Management
Financial Control
Macroeconomic
Research and
Analysis
Resources GTB and
Banking Operations
Direction for
Individuals
Small Business
Market Animation
Strategy and
Marketing
CORPORATE DIVISION
Credit Analysis
Corporate Large
International clients
Project and
Network
Animation
Corporate Large
Domestic clients
Mid Market
Data Quality and
Projects
Tax
Dealing Room
Factoring
Custody
Investment services
SoGeLease
28
ANNUAL REPORT 2014
29
SG Insurance
9.
CORPORATE SOCIAL
RESPONSIBILITY
Societe Generale Bank Srbija a.d. Beograd, as part of a global banking
group Societe Generale, which operates in 76 countries, applies high
standards in the policy to employees, customers, local communities and
the environment, integrating the principles of social responsibility in the
whole business.
Corporate volunteering integral factor of all
Bank’s initiatives
In an effort to promote awareness of the importance of
corporate volunteering, Societe Generale Bank Srbija a.d.
Beograd realised most project and activities by engaging
volunteers, where the key role is played by the Volunteer
Club of the Bank. This approach enables employees to
actively contribute to solving problems in the community,
to professionally develop, strengthen team spirit and the
corporate values of the bank. Societe Generale in Serbia
Volunteer club has 74 members from all sectors of the
Bank. Club members had a key role in the implementation
of Bank’s corporate social activities in 2014.
Due to catastrophic floods that hit Serbia in May
2014, Societe Generale Bank Srbija a.d. Beograd
has initiated and implemented the most important
humanitarian action in the history of the
Bank's employees "Together as One". Nearly
600 volunteers, Bank's employees who were
gathered from 38 cities in Serbia, assisted
and supported citizens of Obrenovac, city
that was completely ruined post floods. The
number of volonteers in this humanitarian
action distinguishes this action, as one of the
greatest volontary actions organised by any
institution in Serbia.
Employees, together with the coordinators of
the Red Cross, were efficient and dedicated
to the activities in Obrenovac in 9 locations throughout
the city.
Also, in the shortest possible time frame, the employees
of the Bank collected food, and other goods to help
their colleagues and their families, as well as all other
citizens, more than 800 kg of various goods, amounting
to more than EUR 7,000.
30
In addition to the help organised by the staff to help
the ones in most need in Serbia, the Bank initiated and
was part of humanitarian action Teleton, on RTS „Help
Flooded Serbia“. Program was attended by more than
100 guests who spoke with over 32,000 spectators,
collecting over 550,000 euros. Societe Generale Bank
Srbija a.d. Beograd donated 86,000 euros.
In a special action “Pozovi pomozi” in May 2014, with
the Foundation Blic Ringier Axel Springer, biggest
international media agency in the region, on TV Prva, the
Bank participated in collecting additional funds for those
affected by the floods, during which over EUR 180 000
has been raised and in which Societe Generale Bank
Srbija a.d. Beograd participated with one million dinars.
All funds collected, an impressive commitment and
dedication of all employees in Societe Generale Bank in
a truly difficult moments - are testament not only of the
humanity but also the strength of each team spirit, rooted
in the foundations of all business activities of the Bank.
The Bank was awarded corporate volunteering award,
prize for corporate volunteering by the Responsible
Business Forum and the Smart Collective. The reason
Societe Generale Bank Srbija a.d. Beograd was awarded,
is a result of all activities together, in which employeesvolunteers participated in, as well as significant financial
assistance donated to flood victims in Serbia.
ANNUAL REPORT 2014
31
Inclusive Academy
The Inclusive Academy is a successful project that
reflects the seriousness with which the Bank employees
accept voluntary activities, for which the Bank received
a fifth award for the third year in a row. This project’s
core is social inclusion, improving the educational profile
of people with disabilities. In 2014, Societe Generale
Bank Srbija a.d. Beograd has won the fourth prize for
Inclusive Academy program allocated by Stanton Chase,
an international company to locate and development
managers. The program, managed and ran by the
Human Resources Direction has been recognised as
the most original approach to talent development and
awarded based upon the assessment of the quality of
the program.
Hyppotherapy – sustainable program for children with
special needs
and disabled children living in orphanages all around
Serbia. Children, after joining the hypotherapy, have
a more stable behavior, they demonstrate a greater
intensity of attention, a decreasing aggressiveness
and anxiety, a greater coordination of upper and
lower extremities, better motor skills and balance of
the body. This treatment has a positive impact on the
further psycho motor development, as well as an open
communication directed towards others. The Bank, as a
socially responsible company recognized the importance
of hyppotherapy and the need to support children
with disabilities, along with its partner, a humanitarian
organization"Mali veliki Ljudi", which cares for children
with disabilities through various projects.
The activities of this organization are focused on the
fight to improve the quality of life of socially vulnerable
groups and children with disabilities who live in homes
throughout Serbia.
Since 2008, Societe Generale Bank Srbija a.d. Beograd
is supporting the humanitarian organization “Mali
Veliki Ljudi” that takes care of mentally disabled and
handicapped children through various projects. The
activities of the organization are focused on fighting
for improving the quality of lives of socially vulnerable
32
Better conditions to the Fertility centre as a result of cross
sectorial synergy
Retail, Corporate Division, but also on the level of the whole
bank, including the partner companies of the Bank, worked in
synergy in collecting, raising funds for the Fertility Centre and
part of the General Hospital in Valjevo.
Mutual engagement of various banking sectors and the
involvement of partner companies bank in humanitarian action,
raised the amount of RSD 1.7 million or approximately EUR 14,500.
The importance of the Fertility Centre in Valjevo lies in the fact
that it is a regional center that covers 20 cities situated in the
Central and Western Serbia. The Fertility Centre, established two
years ago, is one of four heath institutions of this kind in Serbia
that started working only 2 years ago but is gaining importance.
In fact, additional argumentation to invite our partners to support
this humanitarian action refers on the fact that Fertility Centre in
Valjevo is the only one of four existing public health centres for
this purpose (CC Novi Sad, GAC Visegradska and GAC Narodni
Front in Belgrade) without waiting list, which is the reason why
the couples from Vojvodina and Belgrade start to be redirected to
the Fertility Centre in Valjevo.
The event has attracted a huge media attention and has been
covered by media both, at the local and national level, including
the most reputable TV station RTS. The TV reportage has
been broadcasted during the morning program of the national
television (RTS) and has been seen by almost 2 million viewers.
ANNUAL REPORT 2014
33
10.
RISK MANAGEMENT
Credit Risk
Credit risk is the risk that the Bank will incur a loss
because its borrowers will not be able to fully or partially
fulfil its obligations according to contractually defined
deadlines. Credit risk mainly originates from loans
disbursed to clients of the Bank and similar placements.
Risk Management Policy
Risk exposure is an integral part of the
banking business, given that banks operate
assuming a certain level of risk. In this
sense, risk exposure cannot be eliminated
completely. However, with adequate
management, risk exposure can be mitigated
and reduced to a level that is acceptable to
the Bank from the standpoint of available
capital and the uninterrupted functioning
of its business. In order to establish an
effective system of risk management the
Bank continuously identifies, assesses,
Credit Risk Management
measures, evaluates, prevents, controls and
internally communicates its risk exposure.
Such an integrated risk management system
is a guarantor of stability of the Bank and its
successful performance.
In its operations the Bank is exposed to
the following risks: credit risk, exposure to
a single entity or group of related entities
(concentration risk), liquidity risk, interest
rate risk, foreign exchange risk and
operational risk.
Organization of Risk Management Process
Risk management is organized in
accordance with the provisions of the
Law on Banks, the relevant decisions of
the National Bank of Serbia which define
the field of risk management and capital
adequacy of banks, as well as the provisions
of the Statute of the Bank.
Central role in the process of risk
management plays a special organizational
unit of the Bank that specializes in risk
management - Risk Division.
An important role in this process plays the
management of the Bank. In this sense, the
34
The Bank manages its credit risk exposure on the level
of individual counterparties as well as on the level of
its portfolio. At the level of individual customers the
Bank adheres to rules not to approve loans or other
placements unless having enough information to be able
to adequately assess the creditworthiness of borrowers
and all risks associated with a specific transaction.
At the level of the total portfolio The Bank manages
the credit risk by matching loan maturities with the
purpose of the loan, type of loan or client. By analyzing
the individual debtors of the Bank and their business
activities as well as macroeconomic trends Risk Division
provides guidance to management of the Bank to direct
the business activities towards customers, markets and
products whose risk profile is acceptable to the Bank.
Impairment and Provisioning Policy
Under impaired loans the Bank includes all
exposures for which it was determined that in total
or partially cannot be collected due to significant
deterioration in the financial condition of the debtor.
W ith its procedures, the Bank has provided
adequate identification and measurement of the
amount of impairment of receivables that are
accounting-wise covered through the allowance
for impairment of balance sheet assets and offbalance sheet provisions.
Allowance for impairment of balance sheet assets
and off-balance sheet provisions are determined
based on available historical data on losses arising
from placements with similar characteristics in
terms of credit risk, as well as on the basis of
individual assessments of debt collection through
realization of collaterals.
Board of Directors is in charge of establishes
the risk management strategy, capital
management strategy of the Bank, as well
as risk management policies for individual
risks. The Executive Board is responsible
for implementing strategies and policies for
risk management, as well as strategy for
managing capital. The Executive Board is
in charge of adopting procedures for the
identification, measurement and assessment,
as well as risk management. It also reports to
the Board of Directors on the adequacy of the
risk management process.
ANNUAL REPORT 2014
35
Credit Risk Management Achievements
In spite of unfavorable macroeconomic environment
with slow economic growth, the Bank has significantly
improved its risk management processes, in order
to prevent negative consequences for its business.
Among major improvements are automatization of the
risk identification and reporting process, as well as
automatization in the process of approving loans and
other placements to retail and small business clients.
The mentioned improvements led to a slowdown
in increase of non-performing loans during 2014.
Participation of non-performing loans in total portfolio
of the Bank as of end of 2014 was at the level of
19.16%, which is significantly lower compared to the
average indicator on the banking sector of 23% .
This was reflected in decrease of net expenditures for
impairment of financial assets in 2014 to 4,611,317
thousand RSD, compared to the level in 2013 of
5,813,577 thousand RSD.
Conservative policy of credit risk management provides
a sound basis for further development of the business
model and obtaining positive results in the future.
This is further supported by the high capital base
with the capital adequacy ratio at the end of 2014 of
16.10%, which is well above the minimum regulatory
requirements of 12%.
Detailed overview and analysis of the process of credit
risk management is given in the notes to financial
statements for 2014.
Operational risk
Operational risk shall be the risk of possible adverse
effects on financial result and capital of the bank
caused by omissions (unintentional and intentional)
of employees, inadequate internal procedures and
processes, inadequate management of information
and other bank’s systems, as well as by unforeseeable
external events, including low probability events with
risk of high losses. With exception of strategic risk,
36
operational risk shall also include legal risk, noncompliance and reputation risks, in accordance with
SG Group standards.
With the purpose of successful management of
operational risk, Societe Generale Banka Srbija a.d.
Beograd has implemented permanent system of
identification, measurement, monitoring and control/
mitigation of operational risk.
Operational risk management encompasses:
Activities aiming to identify, monitor and measure
operational risk:
--Internal loss collection
--Key Risk Indicators
--Risk and Control Self Assessment
--Scenario Analysis
Preventive activities:
-- Permanent Supervision as a base for internal control
system
-- Business Continuity planning which protect us from
extreme risks
Operational risk is inherent to all products, activities,
procedures and systems of the Bank. Dealing with
operational risk is an integral part of management
positions at all levels. It is based in large part on internal
control system, which notably includes the Permanent
Supervision carried out at all levels and the periodic
controls performed through audits. This system implies
that operational risk shall be considered a risk category
in its own right and thus subject to special detection
and assessment methods, follow-up and controls, all
contributing to the development of appropriate risk
reduction measures, and possibility to determine the
Bank's overall risk profile.
To be effective, management of operational risk needs
the settlement of an adapted governance, leaded
particularly through Operational Risk Committee;
the implementation system of internal controls, i.e.
Permanent Supervision, used to ensure that each
operational unit implements the necessary day-to-day
controls and verifies their effectiveness; appropriate
organisation structure, cornerstone being Operational
Risk unit that proposes policies, methodologies, plans
and procedures for operational risk management, and
the deployment of appropriate tools (loss collection,
RCSA etc.).
Management of operational risk is mainly based on
information received from Division/Department Heads.
Based on analysis of the information, taking into account
the assessment of exposure to operational risk, in cooperation with relevant parties, Operational Risk Unit
proposes measures to reduce or mitigate operational
risk identified, and informs Operational Risk Committee.
Operational Risk Committee (ORCO)
Considering, among other elements, the fact that
operational risk is the second largest source of risks
in banks after credit risks, and in order to ensure that
proper management of such risk is well developed and
understood by all employees of the bank, the bank
established Operational Risk Committee (ORCO).
The Committee responsibilities:
To coordinate with all necessary parties the
management of operational risk.
To inform Management about respective operational
risk issues.
To formalize issues linked to operational risks,
and through ORCO members, spread knowledge
and information on such issues throughout the
organization of the Bank.
Management of operational risk arising
from introduction of new products/
services
With the purpose of timely inclusion in its risk
management system operational risk that arise from the
introduction of new products or services, including new
activities relating to the bank’s processes and systems,
Operational Risk Unit identifies and assesses the related
operational risk.
ANNUAL REPORT 2014
37
Management of operational risk arising
from outsourced activities
With the purpose of timely inclusion in its risk
management system operational risk that arises from
the outsourcing of activities or services to a third party,
Operational Risk Unit identifies and assesses the related
operational risk.
It is duty of all responsible employees across
various organisational units that are included in the
outsourcing process, to strictly adhere to outsourcing
procedure which comprises conduction and
formalization of process of outsourcing of activities,
risks analyses included.
Permanent Supervision
Market Risk
Market risk arises as the consequence of the possibility
of occurrence of adverse effects on the bank’s financial
result and capital due to changes in the value of
balance sheet positions and off-balance sheet items
arising from changes of market parameters. Market
risks include foreign exchange risk, price risk on
debt securities, price risk on equity securities and
commodities.
Foreign exchange risk is risk of occurrence of
adverse effect on the bank’s result and capital due to
unfavorable movements of exchange rates and price of
gold on the market. Price risk is risk of occurrence of
adverse effect on the bank’s result and capital due to
changes of the market prices of the securities portfolio
(debt securities or stocks) or commodities.
The general principle of the Bank regarding mitigation of
foreign exchange exposure is to hedge this risk whenever
possible by taking the opposite position compared to the
one that caused opening of the position.
In accordance with the Societe Generale Group
normative bank rules, the Bank is not allowed to
invest in equities, commodities nor commodity based
derivatives. Investment in debt securities is done only
for liquidity management purposes, respecting local
regulation and Societe Generale Group rules.
Limits are used as a main instrument for the control of
risks. Several types of limits are applied: limits on the
FX net open position, counterparty limits, product limits
and dealers’ limits.
Internal Audit
Permanent Supervision is defined as all of the measures
taken on a permanent basis to ensure the legitimacy,
security and authenticity of transactions performed at
the operational level.
In the process of market risk identification,
measurement, mitigation an monitoring the Bank
respects local regulation set out by the National bank
of Serbia as well as SG Group directives guidelines,
principles and strategies for market risk management.
Through performance of planned audit missions and
special engagements / investigations, Internal Audit
assesses adequacy and reliability of Bank’s internal
control system and compliance of its business operations.
Business Continuity Plan
The Bank applies the following principles in the market
risk management:
To ensure continuity of its operation, the Bank adopted
Business Continuity Plan, which ensures smooth and
continuous functioning of all important systems and
processes of the bank, as well as limitation of losses in
emergency situations.
Approach to managing market risks is conservative,
The Internal Audit communicates the results of its work
to the Bank's management, thus ensuring that risks are
appropriately identified and controlled.
Capital requirement for operational risk
For the purpose of calculation of capital requirement for
operational risk the Bank uses Basic Indicator Approach
in line with NBS Decision on Capital Adequacy by Banks.
Internal capital requirement for operational risk is
quantified using the special approach based on
expected losses and scenario analyses.
38
Universal rule governing market risk management
is to „match“ (minimizing of open positions) and
to „centralize“ (managing positions in one place)
positions.
The Bank has established separate organizational parts
for concluding transactions that are bearing market risk
(front-office) and separate for the activities of control,
recording and reporting on these transactions (middle
office and back office) as well as for controlling and
managing market risk (risk) thereby implementing
independent supervision system structure for market risks.
The Internal Audit regularly prepares reports on its
activities and submits them to the Board of Directors
and the Audit Committee.
Compliance
In accordance with the Law on Banks, Societe
Generale Banka Srbija a.d. Beograd has established the
Compliance unit. Regular activities, responsibilities and
reporting of Compliance Unit are defined by Compliance
Policy as well with relevant Program and methodology.
Compliance Unit is reporting to Executive Board, Board
of Director and Audit Committee.
The annual Plan of activities defines specific activities
in the following year which are in line with the assessed
non compliance risks.
Non-compliance risk is defined as the risk of exposure
to the legal or regulatory sanctions, to the occurrence
of significant financial losses or loss of reputation which
Bank may suffer as the result of non-compliance with
laws, rules, regulations and with the standards related
thereto as well as Code of professional conduct which
apply to the Bank's operations (abbreviated: compliance
with the regulations, rules and standards).
Compliance risk especially comprises following risks:
regulatory risk
financial loss risk
reputation risk
Non compliance risks may arise because of the breach
of the provisions specific to banking activities:
laws, bylaws and other legislative regulative
internal Bank’s rules
anti-money laundering and terrorism financing
procedures
business rules, good business practice and Bank’s
ethics.
Collateral Policy
The Bank seeks to secure all its placements with
appropriate collateral. By using collaterals the Bank
reduces exposure to credit risk. The Bank pays special
attention to liquidity and adequate appraisal of the
collateral value.
ANNUAL REPORT 2014
39
11.
LIQUIDITY MANAGEMENT
AND INTEREST RATE RISK
converted into cash with minimum loss of value, such
as portfolio of securities having the highest credit
rating, i.e. treasury bills and bonds issued by the
Republic of Serbia Ministry of Finance, in accordance
with the Investment portfolio policy of the Bank;
To provide available credit lines that can be used at
any time, for the purpose of liquidity management;
Maintaining mandatory dinar and foreign currency
reserves, in accordance with the regulations of the
National Bank of Serbia;
Liquidity management represents a continuous process
of perceiving liquidity needs in a various business
scenarios, including business as usual and contingency
planning. It implies securing and maintaining a
satisfactory level of liquid assets based on the analysis
of liquidity demand and changes of balance and offbalance sheet structure of the Bank.
Liquidity represents an ability to provide sufficient liquid
assets in order to unconditionally meet all matured
obligations arising from balance sheet liabilities
(withdrawal of deposits and other funding sources),
assets (financing of new loans), as well as engagement
of off-balance sheet items.
ALM Department within the Financial sector is
responsible for the liquidity management of the
Bank. ALM Operational Team of ALM Department is
responsible for management of daily liquidity and short
term liquidity with time horizon up to 30 days. Daily or
operational liquidity is managed with the objective to
meet all payment and settlement obligations in timely
manner by providing sufficient liquidity in each currency
under both normal and stressed conditions. ALM
Reporting Unit within the ALM Department is responsible
for the assessment of Bank’s liquidity position in longer
terms that arises from overall on and off-balance sheet
structure. ALM Department is on regular basis reporting
to Assets and Liability Committee (ALCO) which is
40
responsible for monitoring of Bank's exposure to risks
arising from the structure of assets and liabilities of
the balance sheet of the Bank, i.e. the structure of its
claims, liabilities and off-balance sheet items. ALCO
Committee is obliged to ensure adequate organizational
and procedural infrastructure for continuous monitoring
of structural risk to which the Bank is exposed in
the ordinary course of business and in unforeseen
circumstances, to ensure mechanisms and procedures
for adequate management, i.e. timely identification,
measurement and monitoring of Bank's exposure
towards liquidity risk, interest rate risk and exchange rate
risk in the structural part of the balance sheet and to
adopt measures to mitigate the structural risks.
Planning of inflow and outflow of funds; analyzing
structure, stability and concentration of deposits;
establishing, measuring and monitoring of liquidity
ratios.
The level of liquidity is shown by the liquidity ratio,
which represents a ratio of the sum of liquid assets of
first and second order (cash, funds held in the accounts
with banks with appropriate credit rating, deposits
with the National Bank of Serbia, claims in process of
realization, irrevocable credit lines granted to the Bank,
financial instruments listed on stock exchanges and
other receivables that are due within one month) and
the sum of liabilities, both a vista deposits in the defined
percentage and contractual obligations with maturities
within the next 30 days.
The Bank is obliged to manage the liquidity in such a
manner to ensure that level of liquidity ratio is:
The main objectives in process of liquidity management
of the Bank are:
at least 1.0 when calculated as an average of
liquidity ratios for all business days in a month
Providing diversified funding sources;
not lower than 0.9 for more than three consecutive
business days
Ensuring the optimal current daily liquidity by
providing sufficient funds in the amount and
currency structure needed for the smooth settlement
of all transactions, by taking into consideration an
assessment of expected cash flows for the period of
up to 30 days, as well as the medium and long term
liquidity projections;
Maintaining a sufficient liquidity buffer consisted
of high quality liquid assets which can be easily
at least 0.8 when calculated for a single business day
Liquidity ratio for 2014 was always within the prescribed
level and varied in relation to 2013:
Average for the period
Highest
Lowest
2014
2.03
2.55
1.40
2013
2.03
2.48
1.70
Bank is also calculating and following "narrow" liquidity
ratio prescribed by the Central Bank, which was in
accordance with the defined limits as well.
Besides the local regulatory liquidity ratios, the Bank is
calculating and analyzing the Liquidity Coverage Ratio
(LCR) in accordance with BASEL III criteria. Liquidity
Coverage Ratio was developed in order to promote
the short-term resilience of the liquidity risk profile of
banks. The objective of LCR is to measure the Bank’s
ability to meet its liquidity needs during a significant
stress scenario lasting 30 calendar days, by ensuring
an adequate stock of unencumbered high quality liquid
assets (HQLA) that consists of cash or assets that can
be converted into cash at little or no loss of value in
financial markets.
Long term or structural liquidity is managed through the
analyses of balance and off-balance sheet structure,
projection of cash flows and liquidity gaps separately
for each of the main currencies. Forecast of liquidity
gaps is done on the basis of contractual maturity
and amortization plans, but taking also into account
behavioural assumptions, i.e. modelling of cash flows
for items without the defined maturity or amortization
schedule, like current accounts, a vista savings, etc.
Within the process of liquidity risk monitoring, the Bank
has established a system of early warning indicators
for the recognition of potential liquidity crisis in timely
manner. In order to perform the assessment of cash
flows and adequacy of liquidity buffer in the event of
unforeseen, adverse events, the Bank has developed
stress scenarios for specific, systemic and combined
liquidity crisis for the purpose of stress testing in
accordance with Liquidity contingency plan.
Diversification of funding sources and optimization of
funding costs is managed through the collection of
commercial deposits, both retail and corporate, entering
the credit arrangements with International Financial
Institutions and credit lines with mother company, issuing
the bonds and utilization of all available capacities for
interbank money market.
ANNUAL REPORT 2014
41
During 2014 the Bank has extended its cooperation with
International Financial Institutions by concluding the loan
agreement with the German development bank KfW in
the amount of EUR 20 million, intended for financing of
investments and working capital in the sector of micro,
small and medium enterprises in the field of agricultural
primary production and agro industry , which will be
utilized in 2015.
The Bank has continued to use the existing credit facilities
from the European Investment Bank (EIB), the European
Bank for Reconstruction and Development (EBRD) and
APEX line concluded with the National Bank of Serbia
in order to attain financial agreements between the
European Investment Bank, Republic of Serbia and the
National Bank of Serbia.
The Bank has at its disposal the resources granted by the
Council of Europe development bank (CEB) for financing
micro, small and medium-sized enterprises (SMEs) in
order to strengthen their competitiveness, job creation
and preservation that will be utilized in 2015.
Interest rate risk:
Interest rate risk is defined as exposure of Bank’s financial
condition to adverse movements of market rates. In order
to manage interest rate risk appropriately, the Bank is:
Conducting the process of identification,
assessment, mitigation and monitoring of interest
rate risk on regular basis
Producing and analyzing interest rate gap report on
monthly basis in order to identify and measure this risk;
Regularly reports to Assets and Liability Committee
about interest rate risk exposure;
Interest rate risk is measured and analyzed both from
the earnings perspective and economic value of equity
perspective (EVE).
Earnings perspective refers to interest rates changes
that cause the variations in net interest income of the
Bank. Measurement is carried out based on cash flow
projections for the interest sensitive positions of the
banking book and certain off-balance sheet items,
i.e. projection of interest rate gap on which different
scenarios of interest rate changes are applied in order
to measure the impact of different types of interest rate
risk on the financial result of the Bank, such as repricing
risk, basis risk, yield curve risk, etc. Cash flows for the
purposes of assessing interest rate risk are determined
based on the earlier of the following two dates:
The date of the next change of interest rates and
The maturity date, including the projection based on
other assumptions for the conversion of balance and
off-balance sheet items without the contractually
defined maturity and amortization schedule in cash
flows (demand deposits, etc.).
Economic value perspective focuses to interest rates
changes that cause movement of the present value of
Bank’s assets, liabilities and economic value of equity.
Assessment of sensitivity of economic value of equity
is carried out on monthly basis and for all the relevant
currencies.
Results of the interest rate risk measurement are
reported to the ALCO Committee on a regular basis.
During 2014 indicators of sensitivity of economic value
of equity to market rates movement, i.e. 100bp and
200bp increase of interest rates (parallel shift) were in
line with the defined limits.
At the end of 2014, the Bank together with its affiliated
company Sogelease Srbija d.o.o. Beograd started
negotiations on the conclusion of a new loan agreement
with the European Investment Bank for small and
medium enterprises in the amount of EUR 80 million,
whose implementation is expected in the first quarter of
2015 and will contribute to the development and further
strengthening of the financial stability of SME sector.
42
ANNUAL REPORT 2014
43
12.
CAPITAL MANAGEMENT
AND CAPITAL ADEQUACY
INDICATORS
The main strategic goal in terms of capital management
is tendency to ensure that available sources of capital
are used carefully and in accordance with defined
perspectives of the Bank’s business development.
In Capital management policy, covering of potential
negative effects from exposure to risks have priority over
return of equity. Focus of Capital management process
is on permanent supervision of capital adequacy. Bank
may consider its own capital as adequate if it covers
all risk that Bank is exposed to performing its business
activities.
Capital management is based on following principles:
Process of identifying, measurement risk and risk
assessment.
Providing an adequate level of capital in accordance
with Bank’s risk profile.
Adequate incorporation of capital management in the
management system and decision-making system of
the Bank.
Regular analysis, monitoring and checking of Bank’s
Capital management process.
Centralnu funkciju u procesu upravljanja kapitalom ima
rukovodstvo Banke – Skupština, Upravni odbor i Izvršni
odbor.
Main role in Capital management process is delegated
to Bank’s management –Shareholders assembly,
Board of Directors and Executive Board.
The Shareholder assembly is in charge for making
decision on capital increase, as well as for approving
Business policy and strategy of Bank that presents a
source for all inputs necessary for following year capital
planning.
44
The primary responsibility of the Board of Director in
terms of risks is to set the risk management strategy
and policy of the Bank and supervise the risks taken by
the bank from its operations and that reflects to level of
Bank’s Capital adequacy.
The primary responsibility of the Board of Director in
terms of risks is:
to set the risk management strategy of the Bank
and supervise the risks taken by the bank from its
operations and that reflects to level of Bank’s Capital
adequacy.
to set strategy of Capital management process.
Within the frame of strategic risk management, Executive
Board of Bank prepares proposals to Board of Directors
regarding Business policy and strategy of Bank, strategy
of capital management process, Risk management
strategy and policy, conduct all these policies and
strategies and approves procedures for identifying,
measurement, assessment and monitoring of risks that
Bank is exposed to, and that have influence on Capital
adequacy level and future business decisions. In scope
of the capital management process, Executive Board
of the Bank is obliged to incorporate capital planning
in every business decision and procedures related to
business planning, to inform Board of Directors of capital
needs and ensure adequate informing of Bank’s external
controlling institutions regarding level of capital adequacy.
Since capital management process is strongly related to
Bank’s risk profile, apart from organizational part of Bank
that are components of common management hierarchy,
several Boards were established to be responsible for
monitoring Bank’s exposure to existing risk as well as for
monitoring possibilities of exposure to new risks.
Capital of Bank in 2014
Capital of bank presents a sum of core capital and
additional capital, reduced by capital deductions.
effect of changes in fair value of securities disclosed
according to IFRS/IAS.
Core capital of Bank represents sum of share capital,
share premium and reserves from Bank`s profit reduced
by deduction from core capital such as: intangible
assets, unrealized losses in respect of securities
available for sale and needed reserve for estimated
losses regarding balance sheet assets and off balance
sheet positions.
Capital deductions are shares in capital of other related
entities of Bank.
Additional capital represents sum of subordinated
liabilities and part of positive revalorization reserves as
Capital
Tier 1
Core capital
Share Capital (including emission premium)
Reserves from earnings
Tier 1 deductibles
Needed reserve as deductible from Core capital
Other Tier 1 deductibles
Tier 2
Subloans
Revaluation reserve
Other capital deductables
Total deductables
Deductibles from Tier 1
Deductibles from Tier 2
Total Tier 1
Total Tier 2
Regulatory capital
Total RWA for credit risk
Total RWA for operational risk
Total RWA
Total NBS needed provisions
Needed provisions to be deducted from Tier 1
Needed provisions to be deducted from Tier 2
Tier 2 / Tier 1 (max 50%)
Capital adequacy ratio
During 2014 capital of Bank remain in scope of
regulatory prescribed limits.
In 2014 total, amount of needed reserve was treated
as deduction from core capital which is final step in
process of progressive including of needed reserve in
core capital calculation in period 2012-2014 provided
Decision on capital adequacy of Bank prescribed that
level of Capital adequacy ratio, as relation between
capital of Bank and risk weighted assets of Bank, could
not be lower than 12%.
In quarterly review, during 2014, Capital level and
capital adequacy ratios were as follows:
MAR 14
20,211,638
33,249,099
23,724,274
9,524,825
(13,037,461)
(12,738,672)
(298,789)
7,838,968
7,730,762
108,206
(520,618)
(520,618)
(260,309)
(260,309)
19,951,329
7,578,988
27,529,988
133,938,622
12,047,358
145,985,980
(12,738,672)
100%
0%
39%
18.86%
In thousands RSD
JUN 14
SEP 14
19,402,403
14,376,239
33,249,099
33,249,099
23,724,274
23,724,274
9,524,825
9,524,825
(13,846,696)
(18,872,860)
(13,443,025)
(18,490,643)
(403,671)
(382,217)
7,943,165
7,448,511
7,757,615
7,188,119
185,550
260,392
(463,747)
(463,747)
(463,747)
(463,747)
(231,874)
(231,874)
(231,874)
(231,874)
19,170,530
14,144,366
7,711,292
7,216,638
26,881,821
21,361,003
125,892,782
120,885,742
12,047,358
12,047,358
137,940,140
132,933,100
(13,443,025)
(18,490,643)
100%
100%
0
0
41%
50%
19.49%
16.07%
DEC 14
15,888,494
33,249,099
23,724,274
9,524,825
(17,360,605)
(16,891,965)
(468,640)
7,558,133
7,257,498
300,635
(463,474)
(463,747)
(231,874)
(231,874)
15,656,621
7,326,260
22,982,880
129,673,895
13,109,533
142,783,428
(16,891,965)
100%
0
46%
16.10%
by National bank of Serbia regulations, and all that in
purpose of full reconciliation with Basel Standards.
Calculated that way, lower level of core capital
represents limitation for including subordinated liabilities
in capital calculation. In 2014, there was no need for
capital increase by issuing new shares.
ANNUAL REPORT 2014
45
13.
FINANCIAL INDICATORS
OF THE BANK
1. Income Statement
2014
11,346,188
14,432,880
(5,636,584)
8,796,296
3,349,805
(1,369,326)
1,980,479
133,334
74,193
361,886
(6,558,782)
(3,165,464)
(453,168)
(2,940,150)
4,787,406
(4,611,317)
176,089
192,433
368,522
Net banking income
Interest income
Interest expenses
Net interest income
Fees and commissions income
Fees and commissions expense
Net fees and commissions income
Net gains (losses) from financial assets held for trading
Net exchange rate gains and gains from effects of foreign currency clause
Other operating revenues
Operating expenses
Salaries, wages and other personal expenses
Amortization expenses
Other expenses
Gross operating income
Net charge for imairment of financial assets and offbalance sheet credit risk items
Profit / loss before tax
Income tax
Profit from deffered tax
Profit / loss after tax
46
In 2015, the Bank will remain focused on further
improvement of its activities, creation of more efficient
processes and better quality of service, with the aim to
stay the reference bank on the local market and achieve
further growth in market shares.
2. Balance Sheet
Result Analysis
Despite difficult economic and market conditions during
2014, when Serbian economy was in recession, and
banking sector faced lack of credit demand and rising
level of non-performing loans, Societe Generale Bank
Srbija a.d. Beograd proved resilience and managed
to improve its performance. Along with continued
increase in number of clients improvement in quality
of services and efficiency of processes, the Bank has
negative result in 2013 due to the efforts to strengthen
its balance sheet by implementing more conservative
risk policies, the Bank posted profit after tax of 369
RSD million.
RSD 000
2013 % changed 14/13
10,674,372
6.3%
14,324,281
0.8%
(6,244,149)
-9.7%
8,080,132
8.9%
3,251,742
3.0%
(1,194,812)
14.6%
2,056,930
-3.7%
(217,594)
213,816
-65.3%
541,088
-33.1%
(6,066,988)
8.1%
(3,126,014)
1.3%
(438,140)
3.4%
(2,502,834)
17.5%
4,607,384
3.9%
(5,821,527)
-20.8%
(1,214,143)
405,891
-52.6%
(808,252)
managed to improve financial results. Net banking
income increased by 6.3% y/y to 11.3 RSD billion in
2014, mainly due to strong commercial activity in
retail segment, coming as a result of consolidation of
client base taken over from KBC and continued growth
in lending and market share in this segment.
Gross operating income amounted to 4.8 RSD billion
in 2014, rising by 3.9% vs. 2013. After posting
Assets
Cash and balance with central banks
Financial assets at fair value through profit or loss held for trading
Financial assets available for sale
Loans and receivables to banks and other financial institutions
Loans and receivable to costumers
Retail
Corporate
Investments in associates and joint ventures
Investments in subsidiaries
Intangible investments
Property, plant and equipment
Investments immovable
Current tax assets
Deferred tax assets
Other assets
Total Assets
31.12.2014.
32,329,563
6,637
23,705,967
10,198,273
150,536,414
64,586,770
84,949,645
149,649
314,098
468,640
1,825,926
80,245
234,594
623,590
1,837,205
222,310,801
In RSD 000
31.12.2013. % changed 14/13
35,690,424
-9.4%
11,824
-43.9%
13,904,137
70.5%
13,984,850
-27.1%
151,793,110
-0.8%
58,127,929
12.8%
93,665,181
-9.3%
206,520
-27.5%
314,098
0.0%
413,902
13.2%
1,969,743
-7.3%
87,004
-7.8%
179,374
30.8%
484,065
28.8%
1,029,190
78.5%
220,068,241
1.0%
Liabilities
Financial liabilities at fair value through income statement held for trading
Deposits and other liabilities to banks , other financial organisations and central bank
Deposits and other liabilities to other customers
Retail
Corporate
Issued own securities and other borrowed assets
Subordinated liabilities
Provisions
Other liabilities
Total Liabilities
31.12.2014.
3,972
41,472,236
127,042,019
66,047,489
60,994,530
1,745,291
14,548,352
1,142,653
2,438,065
188,392,588
RSD 000
31.12.2013. % changed 14/13
8,031
-50.5%
52,937,997
-21.7%
115,312,824
10.2%
63,882,478
3.4%
51,430,346
18.6%
1,751,808
-0.4%
13,790,405
5.5%
984,597
16.1%
1,923,659
26.7%
186,709,321
0.9%
31.12.2014.
23,724,274
368,522
9,825,417
33,918,213
222,310,801
RSD 000
31.12.2013. % changed 14/13
23,724,274
0.0%
(808,252)
10,442,898
-5.9%
33,358,920
1.7%
220,068,241
1.0%
Capital
Share capital
Profit
Loss
Reserves
Total Capital
Total Liabilities
ANNUAL REPORT 2014
47
The bank increased its balance sheet by 1.0% to
220 RSD billion at the end of 2013 to 222.3 RSD
billion in 2014.
Loans to customers were at 151 RSD billion in
2014, staying stable in comparison with last year.
Retail loans recorded significant increase in 2014
(+12.8% vs. 2013 to 65.6 RSD billion), as a result
of further growth in mortgage loans where Societe
Generale Bank Srbija a.d. Beograd is already among
leaders, as well as in cash and consumer loans.
In Corporate, the focus was on achieving more
balanced business model and on efforts to
strengthen risk management and better secure the
portfolio, with loan outstanding at 85 RSD billion in
2014 (-9.3% vs. 2013).
The deposit base expanded to 127 RSD billion in
2014 (+10.2% vs.2013). Corporate deposits posted
strong growth (to 61 RSD billion, +18.6% vs. 2013),
with increasing share of transaction deposits as a
result of the bank’s intention to attract more stable,
less volatile deposits. Retail deposits also recorded
growth (+3.4% to 66 RSD billion), confirming high
level of confidence of clients in Societe Generale
Bank Srbija a.d. Beograd.
48
ANNUAL REPORT 2014
49
14.
EXPECTED FUTURE
DEVELOPMENT
For 2015, the Bank has defined the following strategic goals:
to be the reference bank on the market, among top three
with improvement of the overall market share
to continue the growth in Retail, along with the Corporate
comeback to the level from the previous years, which will
ensure its further improvement
to enhance cross selling among various business lines
(investment banking, private banking, cash management,
factoring, leasing, bancossurance etc.) and revenues
synergies
to keep focus on operational efficiency, disciplined cost
control, careful risk, RWA and capital management
to remain proactive and open for external growth
opportunities
Along with the above mentioned goals, the central position in
the Bank’s business policy and strategy for 2015, regardless of
the business lines, the products and services provided, is the
CLIENT. The Bank works on development and enhancement of
quality in relationship with clients in order to better understand,
serve and anticipate their needs as well as to ensure long term
cooperation and support.
All these strategic goals will ensure the sustainability of the
Societe Generale Banka Srbija a.d. Beograd business model
and prepare the Bank for the future growth, ensuring its proper
capital adequacy and improved financial performances.
50
ANNUAL REPORT 2014
51
15.
The Annual business report for Societe Generale Banke Srbija a.d. Beograd, for the
year completed on December 31st, 2014 was approved by Bank’s Management
on April 23rd, 2014.
Sanja Đeković
Menadžer Odeljenja
računovodstva
Sonja Miladinovski
Član Izvršnog odbora
SOCIETE GENERALE SRBIJA
INCOME STATEMENT
54
STATEMENT OF COMPREHENSIVE INCOME
55
BALANCE SHEET
56
STATEMENT OF CHANGES IN EQUITY
57
STATEMENT OF CASH FLOW REPORT
58
FINANCIAL STATEMENT NOTES
60
Frederic Coin
Predsednik Izvršnog odbora
1
52
FINANCIAL STATEMENT AND
NOTES FOR THE YEAR ENDED
ON DECEMBER 31ST 2014 1
This version of the financial statements and the accompanying notes is translation of the original which were
published in Serbian. All possible care has been taken to ensure that the translation is accurate representation of the
original. However, in all the matters of interpretation of information, views and opinions, the original language version
of the documents takes precedence over this translation.
ANNUAL REPORT 2014
53
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Napomena
RSD 000
2014
2013
Interest income
3
14,432,880
14,324,281
Interest expenses
3
(5,636,584)
(6,244,149)
Net interest income
8,796,296
8,080,132
Fee and commission income
4 3,349,805
3,251,742
RSD 000 2014
Profit (loss) for the period
2013
368,522
(808,252)
The components of other results that can not be reclassified to profit or loss:
Actuarial gains
545
-
Fee and commission expense
4 (1,369,326)
(1,194,812)
The components of other results that may be reclassified to profit or loss:
Net fee and commission income
1,980,479
2,056,930
The positive effects of fair value adjustments on financial assets available for sale
243,132
102,893
(Loss) / Profit after Income taxes relating to other periods result
(52,907)
46
TOTAL RESULT FOR THE PERIOD
559,292
(705,313)
Net profit/(loss) from financial instruments for trading
5 133,334
(217,594)
Net profit/(loss) from exchange rate differences
6 74,193
213,816
Other operating income
7 361,886
541,088
Net charge for impairment of financial assets and off-balance sheet credit risk items
8 (4,611,317)
(5,821,527)
Salaries, salary fees and other personal expenses
9 (3,165,464)
(3,126,014)
Amortization expenses
10 (453,168)
(438,140)
Other expenses
11 (2,940,150)
(2,502,834)
PROFIT/(LOSS) BEFORE TAX
176,089
(1,214,143)
Income tax
-
-
Gain from created deferred tax
12 192,433
405,891
368,522
(808,252)
PROFIT/(LOSS) AFTER TAX
Sanja Đeković
Accounting Department Manager
Belgrade, March 30 , 2015.
th
Sanja Đeković
54
Belgrade, March 30 th, 2015.
Sonja Miladinovski
Executive Board Member
Sonja Miladinovski
Frederic Coin
Executive Board Chairman
Frederic Coin
ANNUAL REPORT 2014
55
BALANCE SHEET
STATEMENT OF CHANGES IN EQUITY
Assets
Cash and balances with the central bank
Financial assets at fair value through income statement held for trading
Loans and receivables from banks and other financial institutions
Loans and receivables from customers
Intangibles
Property, plant and equipment
Investment property
Current tax assets
Deferred tax assets
Other assets
NOTE
13
14
15
16
17
18
19
20
20
20
21
21
22
31.12.2014.
32,329,563
6,637
23,705,967
10,198,273
150,536,414
149,649
314,098
468,640
1,825,926
80,245
234,594
623,590
1,837,205
RSD 000
31.12.2013.
35,690,424
11,824
13,904,137
13,984,850
151,793,110
206,520
314,098
413,902
1,969,743
87,004
179,374
484,065
1,029,190
01.01.2013.
29,211,042
11,886
8,895,011
6,366,930
154,069,548
257,410
85,984
405,411
2,019,398
91,823
116,130
78,128
537,353
222,310,801
220,068,241
202,146,054
31.12.2014.
RSD 000
31.12.2013.
01.01.2013.
23
3,972
8,031
405
24
25
26
27
28
29
41,472,236
127,042,019
1,745,291
14,548,352
1,142,653
2,438,065
52,937,997
115,312,824
1,751,808
13,790,405
984,597
1,923,659
62,706,089
87,666,764
1,752,622
13,683,696
875,184
1,397,061
188,392,588
186,709,321
168,081,821
01.01.2013.
23,724,274
102,852
10,237,107
Total assets
Liabilities
Financial liabilities at fair value, initially recognized through income statement held for
trading
Deposits and other liabilities to banks, other financial organizations and central bank
Deposits and other liabilities to other customers
Issued own securities and other borrowed funds
Provisions
Other liabilities
NOTE
Total liabilities
Equity
Share capital
Profit
Loss
Reserves
NOTE
30
30
30
30
31.12.2014.
23,724,274
368,522
9,825,417
RSD 000
31.12.2013.
23,724,274
(808,252)
10,442,898
Total Equity
33,918,213
33,358,920
34,064,233
Total Liabilities
222,310,801
220,068,241
202,146,054
Balance as of January 1st 2013
Transfer of retained earnings to other reserves from
profit
Unrealized gains based on reduction of securities
available for sale to market value
Current year loss
Balance as of December 31st 2013
Coverage of losses charged to other reserves from
profit
Actuarial gains on defined benefit plans
Unrealized gains on revaluation of securities availablefor-sale securities
Profit for the year
Balance as of December 31st 2014
RSD 000
Reserves
from profit
Reserve
and other
revaluation
reserves
Equity
Emission
premium
23,723,021
1,253
10,230,225
-
-
-
Profit (loss)
Total
6,882
102,852
34,064,233
102,852
-
(102,852)
-
-
-
102,939
-
102,939
-
-
-
-
(808,252)
(808,252)
23,723,021
1,253
10,333,077
109,821
(808,252)
33,358,920
-
-
(808,252)
-
808,252
-
-
-
-
464
-
464
-
-
-
190,307
-
190,307
-
-
-
-
368,522
368,522
23,723,021
1,253
9,524,825
300,592
368,522
33,918,213
Sanja Đeković
Sonja Miladinovski
Frederic Coin
Sanja Đeković
56
Sonja Miladinovski
Frederic Coin
ANNUAL REPORT 2014
57
STATEMENT OF CASH FLOW
RSD 000
31.12.2014.
RSD 000
31.12.2014.
18,706,408
31.12.2013.
17,983,033
CASH FLOWS FROM FINANCING ACTIVITIES
14,952,007
3,326,321
428,080
(12,402,542)
(5,627,031)
(1,369,247)
(3,169,800)
(99,801)
(2,136,663)
6,303,866
16,560,347
11,757,690
14,203,995
3,202,734
576,304
(13,390,060)
(6,318,795)
(1,194,796)
(3,067,491)
(85,682)
(2,723,296)
4,592,973
8,206,413
-
Cash inflows from financing activities
Proceeds from borrowings
Cash outflow used in financing activities
Cash outflow from subordinated liabilities
Cash outflows from borrowings
Outflows issued its own securities
Net cash inflow from financing activities
Net cash outflow from financing activities
TOTAL CASH INFLOW
TOTAL CASH OUTFLOW
NET INCREASE IN CASH
NET DECREASE IN CASH
138,521
-
4,664,136
-
8,206,413
5,581,215
5,363,683
-
217,532
22,864,213
(55,220)
22,808,993
7,218,171
(63,243)
7,154,928
CASH FLOWS FROM INVESTING ACTIVITIES
13,878,007
9,812,403
Cash inflow from investing activities
Proceeds from investments in investment securities
Proceeds from sales of investments in subsidiaries associates and joint ventures
Proceeds from sale of intangible assets, property, plant and equipment
Cash outflows from investing activities
Outflows from investments in investment securities
Purchase of investments in subsidiaries and associates and joint ventures
Purchase of intangible assets, property, plant and equipment
Net cash outflow from investing activities
13,821,327
56,434
246
(24,296,236)
(23,259,241)
(1,036,995)
(10,418,229)
9,812,377
26
(15,405,793)
(14,732,316)
(228,114)
(445,363)
(5,593,390)
Cash flows from operating activities
Proceeds from interest
Proceeds from fees
Receipts from other operating activities
Cash outflow from operating activities
Interest payments
Fee and commission payments
Payment of gross salaries, benefits and other personal expenses
Taxes, contributions and other duties paid
Payments for other operating expenses
Net cash inflow from operating activities before
decrease in loans and deposits
Decrease in loans and increase in deposits and other liabilities
Decrease in loans and advances to banks, other financial institutions, central banks and customers
Reduction of financial assets that are initially recognized at fair value through profit or loss, financial assets held
for trading and other securities that are not intended for investment
Increase in deposits and other liabilities to banks, other financial institutions, central banks and customers
Increase in loans and decrease in deposits and other liabilities
Increase in loans and advances to banks, other financial institutions, central banks and customers
Increase in financial assets that are initially recognized at fair value through profit or loss, financial assets held for
trading and other securities that are not intended for investment
Net cash inflow from operating activities before income tax
Income tax paid
Net cash inflow from operating activities
58
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
POSITIVE FOREIGN EXCHANGE RESULTS
CASH AND CASH EQUIVALENTS AT END OF PERIOD
31.12.2013.
1,596,910,055
1,596,910,055
(1,609,422,220)
(373,902)
(1,608,791,500)
(256,818)
(12,512,165)
1,646,054,817
(1,646,176,218)
(121,401)
1,370,277,633
1,370,277,633
(1,361,378,495)
(37,500)
(1,361,288,373)
(52,622)
8,899,138
1,406,279,482
(1,395,818,806)
10,460,676
-
26,431,375
15,710,542
966,380
260,157
27,276,354
26,431,375
Sanja Đeković
Sonja Miladinovski
Frederic Coin
ANNUAL REPORT 2014
59
FINANCIAL STATEMENT NOTES
In these separate financial statements, equity investments in subsidiary and associated legal entities are stated at
purchase cost.
Consolidated Financial Statements are issued on 30. 03. 2015.
The submitted financial statements have been prepared under the historical cost, except for the items that are measured
at fair value: securities available for sale, derivatives, other financial assets and liabilities held for trading, financial assets
and liabilities at fair value through profit or fair success and obligations for the payment of shares based on cash.
1. BASIC INFORMATION ABOUT THE BANK
The amounts in the accompanying financial statements are presented in thousands of RSD, unless otherwise indicated.
Dinar (RSD) is the functional and reporting currency of the Bank. All transactions in currencies other than the functional
currency are treated as transactions in foreign currencies.
Societe Generale Banka Srbija a.d. Beograd (hereinafter: the “Bank”) was founded on December 14th, 1990 and entered
into the Registry with the Commercial Court in Belgrade by the decision no. Fi-95/91 from February 14th, 1991. The
majority founder of the Bank is Societe Generale SA, Paris (99.00%), member of Societe Generale Group.
Financial statements are prepared on the basis of going concern principle which foresees that the Bank will continue with
the business in the foreseeable future.
The Bank has executed a compliance with the Law on Banks and Other Financial Organizations, which was entered into
the Registry with the Commercial Court in Belgrade by the Decision no. Fi-20525/96 from December 31st, 1996. The
Bank is registered to, besides the performance of loan and deposit business, to perform payments and credit transactions
with foreign countries, based on the Decision of the National Bank of Yugoslavia no. 65 from February 28th, 1991.
Tax identification number of the Bank is 100000303, and the registry number of the Bank is 07552335.
Decision of the Business Registers Agency number BD 165078 from October 13th, 2006 registers the Bank as a closed
joint stock company.
Decision number 1431-70/2007 from November 1st, 2007 altered the name of the Bank from Societe Generale Yugoslav
Bank A.D. Belgrade to Societe Generale Banka Srbija a.d. Beograd.
Bank's Headquarters office is located in Belgrade, Bulevar Zorana Đinđića street number 50 a/b. On December 31st,
2014 the Bank had 1.379 employees (2013: 1.397 and 104 branches (2013: 108 branches).
Basic activities of the Bank are: domestic and foreign payments, loans, deposit business and foreign exchange acquisition
business. Other activities include warranty issuance, letters of credit and other bank business and broker services. During
2005 the Bank registered for the execution of custody business.
2. ACCOUNTING POLICIES
2.1. Basis for the Production and Presentation of Financial Statements
The Bank, in the preparation of these financial statements applied the accounting policies further described in Note 2.
2.2. First-time Adoption of International Financial Reporting Standards
The financial statements which have been prepared for the year ending December 31st, 2014, are the first financial
statements compiled by the Bank in accordance with International Financial Reporting Standards.
In order to prepare the financial statements in accordance with IFRS:
The Bank has prepared and presented the initial balance sheet as of January 1st, 2013 in accordance with IFRS;
The Bank has determined that there were no disclosed changes on the capital amount on January 1st 2013 and
December 31st 2013 nor the net result for the year ending December 31st, 2013, in order to achieve harmonization
with IFRS. Assumptions applied on January 1st, 2013 and December 31st, 2013 are consistent with those applied on
the same dates as the previously applied regulations.
The Bank changed the presentation of the Balance Sheet and Income Statement in comparison to the previous
requested manner of presentation, and presented the report on other results. The difference between the amount
of the total assets in the financial statements and the amount of total assets previously presented on December
31st, 2013 and January 1st, 2013, in amounts of RSD 845 234 thousand and RSD 779 179 thousand respectively,
represent the following:
Loan origination fees in the amounts of RSD 686 721 thousand, on December 31st, 2013 and RSD 616 073
thousand on January 1st 2013. Fees are presented to the related financial instrument, while previously have
been shown under liabilities.
Financial statements of the Bank for 2014 have been prepared in accordance with the International Financial Reporting
Standards ("IFRS"), and the accompanying regulation of the National Bank of Serbia that regulate financial reporting of banks.
Deposit origination fees in the amount of RSD 158 513 thousand on December 31st, 2013 and RSD 163 106
thousand on January 1st, 2013. Costs are included within deposits and subordinated debt, while previously has
been shown within receivables.
The accompanying financial statements are presented in the form prescribed by the Decision on the Form and Content of
the Financial Statements of Banks (Official Gazette of the Republic of Serbia No. 71/2014 and 135/2014).
The Bank changed the presentation of the Cash Flow Report. Cash and cash equivalents that are included in the Cash
Flow Report are reflected in Note 38.
The accompanying financial statements represent separate financial statements. The Bank separately completes the
Consolidated Financial Statements in accordance with the International Financial Reporting Standards.
The Bank has a 100% share in the equity of the subsidiary Sogelease Serbia doo Belgrade and 49% equity share of the
associated legal entity Societe Generale SA Insurance Life Insurance Belgrade.
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ANNUAL REPORT 2014
61
2.3. Significant Accounting Evaluations and Judgement
Production and presentation of financial statements demands from the Bank management the usage of best possible
evaluation and reasonable assumptions, which have an effect on the presented values of assets, liabilities, income and
expenses, accompanying disclosure and the disclosure of contingent liabilities at the date of the financial statements.
These evaluations and assumptions are based on information available on the day of financial statement production. Real
results can differ from stated evaluations. Estimates and judgments are continually reviewed and re-evaluated. Changes
in accounting estimates are recognized in the period in which the estimate is changed if the change affects only that
period or in the period in which the change occurred and future periods, if the change affects the assessment of current
and future periods.
Further text includes key evaluations and assumptions used in preparing the financial statements.
Fair Value of Financial Instruments
Fair value is the price that would be received for the transaction to sell the asset or transfer the liability to pay in a regular
transaction between market participants at the valuation date. The determination of fair value is based on the assumption
that the transaction took place on the primary asset or liability market or, in the absence of the primary market, the most
favorable market for the asset or liability.
Impairment of Financial Assets
The Bank assesses, on each reporting date, whether there is objective evidence that a financial asset or group of financial
assets that are not measured at fair value, is reduced (impaired). A financial asset or group of financial assets is impaired
and losses based on impairment are recognized when there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset (loss event) and when loss event impact on the estimated future
cash flows of the financial asset or group of financial assets that can be reliably estimated. The Bank considers evidence
of impairment on an individual and group basis. For all individually significant financial assets impairment assessment
is conducted on an individual basis. All significant funds for which an individual basis is not determined impairment is
estimated on a group basis to determine impairment, that happened but has not yet been identified. Assets that are not
individually significant and which are carried at amortized cost are grouped based on similar risk characteristics.
Objective evidence of impairment of financial assets, including participation in equity ,including delay in the payment of
the debtor, restructuring of a loan by the Bank under terms that the Bank in other circumstances would not consider,
an indication that a borrower or issuer is in liquidation or bankruptcy, as well as any other available information such as
adverse changes in the status of settlement of obligations of the debtor or issuer or economic conditions that indicate a
default of obligations in the group.
When assessing impairment on an aggregate basis, the Bank uses statistical models and historical trends of the probability
of loss, recovery and collection and incurred losses. The Bank conducts regular back-testing models.
In the event that a primary market exists for the asset or liability, fair value represents the price on that market.
a. Impairment of Assets Carried at Amortized cost
The fair value of the assets or liabilities is measured using the assumptions that market participants use when determininig
the price of an asset or liability, assuming that market participants act in their best economic interest.
Impairment of assets carried at amortized cost is calculated as the difference between the book value of the financial
asset and the present value of estimated future cash flows discounted at the original effective interest rate of the asset.
Losses are recognized in the income statement and reflect the changes in the allowance for loan. When a subsequent
event lead to a reduction in the amount of impairment, the previously recognized impairment loss is reversed through the
income statement.
The fair value of non-financial assets takes into account the ability of market participants to generate the highest and best
use of the economic benefits of the asset sales or other participant in the market that would be the highest and best use
of the asset.
The fair value of non-financial assets takes into account the ability of market participants to generate the highest and best
use of the economic benefits of the asset sales or other participant in the market that would be the highest and best use
of the asset.
The Bank uses valuation techniques that are appropriate in the circumstances and for which data are available to be used
to determine fair value, whereby the use of relevant observable inputs is optimised and use of unobservable input data
minimized. Valuation techniques are revised periodically, in order to appropriately reflect current market conditions.
All assets and liabilities that are measured at fair value and whose fair value disclosed in the financial statements were
classified into three levels of the fair value hierarchy:
Level 1 - Quoted market prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – The use of valuation techniques for which the lowest level of input data is important for determining the fair
value directly or indirectly visible
Level 3 - The use of valuation techniques for which the lowest level of significant input data for the determination of fair
value is not visible
b. Impairment of Financial Assets Available for Sale
In the case of financial assets available for sale, at the balance sheet date, the Bank assesses whether there is objective
evidence of impairment, based on the same criteria that are valid for financial assets carried at amortized acquisition cost.
If there is evidence of impairment of debt financial assets available for sale, the cumulative loss, measured as the
difference between amortized cost and the current fair value, less any impairment loss previously recognized in the income
statement, is transferred from equity to the income statement, while the increase in the fair value after impairment are
recorded through the income statement. When a subsequent event leads to a reduction in the amount of impairment
of debt financial assets intended for sale, the previously recognized impairment loss is reversed through the income
statement.
In the case of participation in capital available-for-sale, objective evidence is considered a "significant" or "prolonged"
decline in the fair value of the capital instrument below its cost. In this case, the cumulative loss is measured as the
difference between the acquisition cost and the current fair value, and the same is transferred from equity to the income
statement. When a subsequent event leads to a reduction in the amount of impairment of equity investments, the loss is
reversed and recognized directly in equity.
For the asset or liability that are continuously measured at fair value in the financial statements, the Bank establishes
re-evaluation of categorization at each balance sheet date in order to ensure transitions between levels of the hierarchy.
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ANNUAL REPORT 2014
63
c. Renegotiated Loans
2.4. Overview of Significant Accounting Policies
Whenever possible, the Bank seeks to restructure loans rather than to take possession of collateral. This may involve
extending the payment and the loan conditions. When conditions are changed, impairment is determined using the original
effective interest rate, prior to altering the conditions of the loan. Once the terms change, it is considered that the loan
is not due. Management continuously reviews reprogrammed loans to ensure realisation of all criteria, as well as future
payments. Restructured loans are subject to an ongoing assessment of impairment.
2.4.1. Calculation of Foreign Currencies
Useful life of Intangible Assets and Fixed Assets
Useful lifetime of intangible assets and fixed assets are reviewed annually or when there is an indication that there has
been significant changes in the underlying assumptions for determining useful life.
Provision for Litigations
The Bank is involved in a number of legal disputes arising from daily operations that relate to commercial and contractual
issues, as well as issues with labor relations, which are handled and defended in the ordinary course of business. The
Bank periodically assesses the likelihood of negative outcomes to these matters as well as ranges of probable and
reasonable estimated losses.
Items included in financial statements of the Bank are measured with the usage of the currency of primary business
environment in which the Bank conducts business (functional currency). As it was stated in Note 2.1, the financial
statements are presented in thousands of RSD which represents the functional and reporting currency of the Bank.
Business changes occurring in foreign currency are calculated in RSD by average exchange rate determined on the inter
banking foreign currency market, valid on the day of the business change.
Assets and liabilities denominated in foreign currencies at the balance sheet date are translated into dinars at the official
exchange rate determined on the Interbank Market, prevailing at that date.
CURRENCY
EUR
CHF
USD
31.12.2014
120.9583
100.5472
99.4641
31.12.2013
114.6421
93.5472
83.1282
Positive or negative currency differences that occur when balance sheet positions are recalculated and during transactions
in foreign currency, are recorded in favor of or charged to the income statement as income and expenses arising from
exchange rate differences.
Reasonable estimates involve judgments made by management after considering information including notifications,
settlements, estimates by the legal representatives of the Bank, available facts, identification of other potentially responsible
parties and their ability to contribute, prior experience.
Gains and losses arising on translation of financial assets and liabilities indexed to foreign currency are recorded in the
income statement as income, expense arising from exchange differences on foreign currency clause. Commitments and
contingent liabilities denominated in foreign currencies are translated into dinars at the exchange rates prevailing at the
balance sheet date.
A provision is recognized when it is based on all available evidence and information that is estimated is likely to lead
to litigation liabilities of the Bank. Provision can be corrected in the future due to the emergence of new events or new
information available.
2.4.2. Interest Income and Expenses
Deferred Tax Assets
Deferred tax assets are recognized for all deductible temporary differences and unused amounts of transferable tax
credits and tax losses, to the extent that it is probable that future taxable profit will be unused as tax losses / credits.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that future taxable profit will allow the total value, or part of the deferred tax asset to be utilized. Deferred
tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that
future taxable profit will allow the deferred tax asset to be utilized.
Retirement Pension and Other Benefits to Employees upon Termination of Employment
The costs of defined benefits to employees upon termination of employment or retirement in accordance with the legal
requirements are determined based on actuarial valuation. The actuarial valuation includes an assessment of the discount
rate, future movements in salaries, mortality rates and employee turnover. Due to the long-term nature of these plans,
significant uncertainties influence the outcome of the assessment.
64
For all financial instruments measured at depreciated cost, interest-bearing financial instruments available for sale and
financial instruments at fair value through profit or loss, income or expense is recognized on an effective interest rate
that exactly discounts estimated future cash payments or receipts through the expected life financial instrument or, when
appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability.
In determining the effective interest rate takes into account all contractual terms of the financial instrument, including
fees or additional costs that are directly attributable to a financial asset and an integral part of the effective interest rate,
except for future credit losses.
2.4.3. Income and Expenses from Fees and Commissions
Income and expenses from fees and commissions produced by providing, or using banking services are recognized per
principle of causality of income and expenses or on calculation basis and are determined for the period when they were
incurred, that is, when the service was provided.
Fees and commissions are mostly fees for payment services, warranties issued and other banking services.
ANNUAL REPORT 2014
65
2.4.4. Dividend Income
2.4.8. Intangible Assets
Dividend income is recognized with the Bank's right to receive the dividend, usually after shareholders approve the dividend.
Intangible assets consist of licenses and other intangible assets.
Intangible assets are recognized only when their purchase cost can be reliably evaluated and it is probable that the Bank
will have expected future economic benefits from their use.
2.4.5. Net Trading Result
Intangible assets are initially recorded at purchase cost, and are subsequently measured at cost less the accumulated
depreciation and any losses arising from net value of assets.
Gains and losses on trading includes gains and losses on the sale of financial assets held for trading, based on changes
in their fair value on the valuation of derivatives held for trading.
2.4.6. Cost of Operational Leasing
Payments made under operating leases are recognized in the income statement on a uniform basis throughout the life of
the lease. Incentives for the lease are recognized as an integral part of the total cost of the lease throughout the duration
of the lease.
The time frame during which intangible assets can be used is assessed to be either finite or indefinite. Intangible assets
with finite time frames, are depreciated over the economic life it can be used. The period and the depreciation method for
intangible assets with finite life is used and reviewed at least annually. Changes in the expected life of use, or the expected
pattern of use of future economic benefits embodied in the asset are accounted for by changing the amortization period
or method of the assets and treated as changes in accounting estimates.
Depreciation is calculated using the straight-line depreciation with the goal to lower the value of intangible assets to their
residual values over their estimated lives of use. Most frequently estimated time, life span of the asset ranges from 2 to 10 years.
Depreciation of intangible assets with finite usage time frames is recognized in the income statement. Expenses for
maintaining computer software programs are recognized as an expense when incurred. Intangible assets under preparation,
are not subject to depreciation, as well as intangible assets with indefinite usage time frames.
2.4.7. Property and Equipment
Property and equipment are stated at purchased price lowered by the accumulated amortisation and any losses that arose
from net value of assets. The purchase cost represents the invoiced value, and any related costs based on the supply and
cost of bringing the asset into function.
Subsequent costs are included in the asset's purchase cost or recognized as a separate asset only when it is probable that
the Bank will have future economic benefits of the asset and if their value can be reliably determined. All other repairs and
maintenance are charged to the income statement during the financial period in which they are incurred.
Depreciation of property and equipment is calculated using the straight-line depreciation, by which the purchase cost is
written off over the estimated life of the asset and is recognized in the income statement. The applied principal annual
depreciation rates are as follows:
Buildings
Computers
Furniture and equipment
Motor vehicles
Annual
2-10%
20%
10-16%
15.50%
Buildings are depreciated according to the estimated time it can be used, useful life, which is different for each object of
the Bank. Plot of ground works of art are not subject to depreciation, as well as assets under construction.
Changes in the expected useful life of an asset are calculated as changes in accounting estimates.
Property and equipment is no longer recognised, upon disposal or when the Bank no longer expects future economic
benefits from their use. Gains or losses arising that arise when property and equipment is no longer recognised, are in
favor or against the income statement.
66
2.4.9. Investment Property
Investment property of the Bank brings income from rent. The initial assessment of the value of the investment property
is measured at purchase cost or purchase cost, increased by attributable costs that can be accounted to the purchase
cost or cost price. The subsequent measurement of investment property is carried at cost less accumulated depreciation
and any losses on net worth.
Investment property
Annual depreciation rate
2-10%
Investment property stops being recognised upon disposal or when the investment property is permanently withdrawn
from use and no expected future economic benefits are assessed.
2.4.10. Impairment Non-Financial Assets
At the balance sheet date, the Bank determines whether there is an indication that the asset is impaired. If any such
indication exists, the Bank estimates the recoverable amount of the asset, which is the use value or fair value of the asset
less costs to sell, depending on which of these two values is greater. If the recoverable amount of the asset is less than its
carrying value, the asset is considered impaired and the carrying value of the asset is reduced to its recoverable amount.
An impairment review requires subjective judgments concerning estimates of future cash flows that are discounted to their
present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and
the risks specific to the asset.
ANNUAL REPORT 2014
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2.4.11. Financial Instruments
Classificationof Financial Instruments
The Bank's management determines the classification of its investments at initial recognition. The classification of
financial instruments at initial recognition depends on the purpose for which the financial instruments were acquired and
their characteristics.
The Bank classified its financial assets in the following categories: financial assets at fair value through the income
statement, securities held to maturity, loans and receivables and financial assets available for sale.
The Initial Valuation of Financial Instruments
Financial instruments are initially recognized/assessed at fair value plus transaction costs (except for financial assets or
financial liabilities that are measured at fair value through the income statement) which are directly attributable to the
acquisition or issue of the financial asset or financial liability.
Financial assets and financial liabilities are recognized in the balance sheet, from the moment when the Bank is bound to
the contractual provisions of the instrument. Purchases or sales of financial assets in "usual way" are recognized on the
settlement date, ie the date the asset is delivered to the other side.
Subsequent Valuation of Financial Instruments
Subsequent valuation of financial instruments depends upon their classification, such as the following:
i. F inancial Assets at Fair Value through the Income Statement
This category has two sub-categories: financial assets held for trading and at fair value through the income statement. The
management did not, during initial recognition, classify financial assets in the sub-category of assets carried at fair value
through the income statement. Financial assets are classified as assets for trading if they are acquired for the purpose of
selling or repurchasing in the near term and generating profit from short-term price fluctuations or are derivatives. These
assets are recorded in the balance sheet at fair value. All gains and losses arising upon valuation of financial assets at fair
value are recognized in the income statement.
After initial recognition, securities held to maturity are recorded at depreciated cost using the effective interest method,
less any impairment. Depreciated cost is calculated by taking into account any discount or premium on acquisition, over
the period to maturity.
Revenues from accrued interest on these instruments is calculated using the effective interest method and are included in
interest income. Losses from impairment are recognized in the income statement as expenses for impairment of financial assets.
iii. Financial Assets Available for Sale
Securities that are 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, foreign exchange rates or equity prices, are classified as "securities available for sale".
Securities available for sale include equity instruments of other entities and debt securities.
Securities available for sale consist of shares of other legal entities as well as securities issued by the Republic of Serbia.
After initial recognition, investment securities available for sale are stated at fair value. The fair value of securities listed
on stock exchanges are based on current bid prices. Unrealized gains and losses on securities available for sale are
recorded within other overall results, until the security is sold, collected or otherwise realized, or until the securities are not
impaired. When securities available-for-sale are sold or when they are impaired, the accumulated fair value adjustments
is recognized under other total results.
Interest income on debt securities is recognized in the income statement as interest income using the effective interest
method.
Income from dividends on securities available-for-sale are recognized in the income statement within other income when
incurred Bank's right to receive the dividend.
When it comes to participation in the capital and other securities available for sale, the Bank at the balance sheet date
assesses whether there is objective evidence that one or more investment is impaired. In the case of equity investments
in other entities classified as available-for-sale, objective evidence are classified as significant or prolonged decline in the
fair value of the investment below its cost.
When there is evidence of impairment, the cumulative loss, measured as the difference between the purchase price
and the current fair value, less any impairment loss on that investment previously recognized in the income statement,
is removed from capital and recognized in the income statement. Allowances for impairment of equity investments are
not reversed through the income statement, while the increase in fair value subsequent to the impairment is recognized
directly in the equity.
The Bank uses derivatives such as forward purchase and sale of foreign currency and currency swaps. Derivatives are
accounted for at fair value and recorded as an asset when their fair value is positive and as liabilities when their fair value
is negative. Changes in the fair value of derivatives are recognized in gains / losses on financial assets held for trading.
Allowances for impairment of equity investments that are not quoted in an active market and whose fair value cannot be
reliably measured are measured as the difference between the carrying amount and the present value of expected future
cash flows, recognized in the income statement and not reversed until derecognition.
The currency clause represents an embedded derivative that is not accounted for separately from the basic contract since
the economic characteristics and risks of the embedded derivative are closely related to the basic contract. Gains and
losses arising from such application of the currency clause are recorded in the income statement as income or expenses
from the effects of currency clause contracted.
In the case of debt instruments classified as available for sale, impairment is assessed based on the same criteria as
financial assets carried at amortized cost. If, in a subsequent year, the fair value of a debt instrument increases and if this
increase can be objectively related to an event occurring after the impairment loss recognized in the income statement,
the loss due to the impairment is reversed through the income statement.
ii. Securities Held to Maturity
iv. Equity Investments in Subsidiaries
Securities held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturities that the Bank has the positive intention and ability to hold to maturity.
Subsidiaries are legal entities in which the reporting legal entity has ownership. Ownership is established when the Bank is
exposed, or has rights to, variable returns from investments in entities in which it has invested and has the ability to affect
the yield on the basis of the power it has over the entity in which it invested.
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As at December 31st, 2014 the Bank has 100% ownership of the company Sogelase Srbija d.o.o. Beograd. Shares in
the aforementioned subsidiary are stated at purchase cost less accumulated depreciation (Note 19).
v. Investments in Shares of Associated Legal Entities
Investments in associated legal entities are investments over which the Bank has significant influence. Subsequently it
is evaluated at cost less impairment, if any.
As at December 31st, 2014 the Bank has equity share in Societe Generale SA Insurance Life Insurance Belgrade,
participating in the total capital of the Company with 49% (Note 18).
vi. Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. Loans and receivables include loans and advances to banks and customers. Loans and advances
to banks and customers originated by the Bank are recorded in the balance sheet when assets are transferred to the
user of the loan. After initial recognition, loans and placements to banks and customers are stated at depreciated cost
using the effective interest method, less any impairment. Depreciated cost is calculated by taking into account any initial
increase or decrease of the amount of the premium or discount, as well as fees and other costs that are an integral part
of the effective interest rate. Depreciation is recognized as income in the income statement. Losses on impairment are
recognized in the income statement as an expense for impairment of financial assets.
Impairment of Financial Assets and Provisions for Risks
In accordance with the internal policy of the Bank, on the balance sheet date the Bank assesses whether there is objective
evidence for lowering (impairment) the value of a financial asset or group of financial assets. Impairment losses are
recognized only if there is objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of an asset and when the same have an impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the borrower or group of borrowers is experiencing significant
financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy
or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated
future cash flows, such as changes in the domain of unsettled liabilities or economic conditions that are in correlation with
deviations from the contracted terms.
When assessing impairment of loans and placements to banks and customers carried at depreciated cost, the Bank
conducts a detailed assessment for each financial asset, completes an individual assessment to determine whether there
is objective evidence of impairment, while financial assets that are not individually significant collectively assesses them
on impairment of placements.
If the Bank determines that no objective evidence of impairment exists for financial assets that are individually assessed
the Bank classifies such assets in a group of financial assets with similar credit risk characteristics and collectively
assesses them for impairment. Assets that are individually assessed for impairment and for which loss is declared based
on the recognized impairment, are not included in a collective assessment of impairment. If there is objective evidence of
impairment, the amount of the loss is measured as the difference between the book values amount and the present value
of future cash flows (excluding future expected credit losses that have not yet been incurred).
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The present value of expected future cash flows are discounted using contracted effective interest rates of financial
assets. If a loan has a variable interest rate, the current effective interest rate is used. The calculation of the present value
of estimated future cash flows of a collateralized financial asset takes into consideration the cash flows that may result
from foreclosure less costs for obtaining and selling the collateral.
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of an internal
classification system used by the Bank taking into account the credit risk characteristics.
Future cash flows on a group of financial assets that are collectively evaluated for impairment are estimated on the basis
of historical loss experience for assets with similar credit risk characteristics. Historical experience is corrected on the
basis of available current data in order to reflect the effects of current conditions that did not have an impact on the years
of historical experience, that does not exist on the date of the balance sheet.
The methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce any differences
between loss estimates and actual loss experience.
Book value of the asset is reduced through the use of a price adjustment account, while losses arise from impairment of
loans and receivables and other financial assets carried at depreciated cost are recognized in the income statement as an
expense from impairment of financial assets (Note 8). Loans together with the associated price adjustments are written
off when there is no realistic prospect of future recovery and when collateral has been realized or has been transferred
collateral to the Bank.
If, in a subsequent period, there is a reduction in the amount of recognized impairment loss, which occurs as a consequence
of an event that occurred after the impairment was recognized, the previously recognized impairment loss is reversed by
adjusting the allowance account, and the amount of the reversal is recognized in the income statement as income from
the reversal of provisions (Note 8).
Write-offs of uncollectible receivables is made on the basis of the court's decision, the General Assembly or the Executive
Board when there is no realistic possibility of billing and when all collateral loan repayment are activated.
vii. Securities Issued and other Borrowed Funds
Liabilities on loans, deposits and issued securities are subsequently measured at depreciated cost using the effective
interest method.
Derecognition of Financial Assets and Liabilities
The Bank ceases to recognize a financial asset when the contractual rights to the cash flows expire or if the contractual
rights to the cash flows are transferred in a transaction in which all the risks and rewards of ownership of the financial
asset. Any interest of the transferred financial asset that is recognized and retained by the Bank is recognized as a
separate asset or liability.
Financial liabilities are derecognized when the foreseen obligation under the liability is realised, canceled or expired. In the
case where an existing financial liability is replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition
of the original liability and the recognition of a new liability, and the difference between the original and the new value of
the liability are recognized in the income statement.
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2.4.12. Cash and Cash Equivalents
2.4.15. Offsetting Financial Instruments
For purposes of reporting cash flows, cash and cash equivalents include cash in dinars - on the bank’s account at the
National Bank of Serbia and current accounts with commercial banks, cash in foreign currency - the regular and special
(purpose) foreign currency bank accounts, as well as cash and effective foreign cash with cashiers, cash and effective
foreign cash in the vault, cash and effective foreign cash on the road and other assets in dinars and foreign currency
where the Bank has no restrictions and that are readily convertible to known amounts of cash, subject to an insignificant
risk of changes in value.
Financial assets and financial liabilities get offset, while the net amount is recognized in the balance sheet if and only if
there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or
to, at the same time sell the asset and settle obligations.
2.4.16. Provisions
Cash and cash equivalents are carried at depreciated cost in the balance sheet.
2.4.13. Reverse Repo Placements
Securities purchased under contract which stipulates that they will be sold at a specified future date are not recognized
in the balance sheet.
Cash paid out on this basis, including deferred interest, is recognized in the balance sheet. The difference between the
purchase price and the resale price is treated as interest income using the effective interest rate and is deferred over the
life of the contract.
Provisions are recognized when the Bank has a present obligation, legal or constructive, as a result of past events, when
it is probable that there will be an outflow of resources to settle the obligation and when there is a reliable estimate of the
amount of the obligation. In order to maintain the best possible estimates, are considered, determined and, if necessary,
adjusted at each balance sheet date.
Provisions are measured at the present value of the expenditures expected to settle the obligation. If the effect of the
time value of money is material, present value is obtained by discounting, using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability.
When probable outflow of economic benefits to settle legal or constructive liabilities is no longer obvious, provisions are
reversed to income. Provisions are followed by class and may be used only for expenditures for which it was originally
recognized. Provisions are not recognized for future operating losses.
Contingent liabilities are not recognized in the financial statements. Contingent liabilities are disclosed in the notes to the
financial statements, unless the possibility of an outflow of resources that contain economic benefits is remote.
2.4.14. Leasing
Consideration of whether a particular contract is a contract for leasing, or contains leasing elements, is based on the
contract and requires an assessment of whether the fulfillment of the contract depends on the use of a specific asset
or group of assets and whether the agreement involves the transfer of rights to use the assets.
The Bank does not recognize contingent assets in the financial statements. Contingent assets are disclosed in the notes
to the financial statements when an inflow of economic benefits is probable.
2.4.17. Employee Fees
Operating Leasing - Bank as Lessee
a. Taxes and Contributions for Compulsory Social Insurance - Defined Contribution Plans
Lease of assets where all the risks and rewards incidental to ownership with the lessor does not transfer to the lessee is
classified as operating leasing.
In accordance with the regulations that are applied in the Republic of Serbia, the Bank makes contributions to various
state social security funds. These obligations include contributions paid by employees and the employer in an amount
calculated by applying the statutory rates. The Bank has a legal obligation to transfer the withheld funds to the appropriate
government funds. The Bank is not obliged to pay compensation to employees that represent an obligation of the Pension
Fund of the Republic of Serbia. Taxes and contributions relating to the defined benefit plans based upon compensation,
are recorded as expenses in the period in which they arise.
Payments under operating leasing are recognized as an expense in the income statement on a straight-line depreciation
(when they occur) during the period of the lease.
Operating leasing - Bank as Lessor
Lease is an agreement whereby the lessor conveys to the lessee the right to use the asset over an agreed period of time in
exchange for one or more payments. When the tool is given in the operating lease that asset is recognized in the balance
sheet depending on the type of asset. Lease income is recognized on a straight-line basis over the lease period.
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Also, the Executive Board of the Bank during 2009 made a decision, for all employees of the Bank who have over four
years of service in the Bank, that the Bank will make payments of contributions in favor of the voluntary pension fund
„Societe Generale Penzije“ in the amount defined by the decision, at the expense of the Bank. During 2013, the Voluntary
Pension Funds (VPF) Management Company Societe Generale Penzije, transferred the assets under management of
Voluntary Pension Fund "Societe Generale Štednja " and "Societe Generale Ekvilibrio" to the VPF Management Company
"DDOR -Garant", so the Bank, starting from December 26th, 2013 makes payments following the above plan favor of the
VPF "DDOR - Garant" , under the same conditions. Contributions relating to this plan are recorded as expenses in the
period in which they arise.
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b. Liabilities Based on Other Fees – Retirement Pension
In accordance with the regulations applicable in the Republic of Serbia, that regulate the employment status, the Bank has
an obligation to pay compensation to employees upon retirement (severance), at least in the amount prescribed by law.
Costs and obligations under these plans are not provided for the funds. Liabilities for fees and related expenses are
recognized at the present value of expected future cash flows using the actuarial method of projected unit. The Bank
recognizes the cost of past service as an expense in the income statement when there is a modified or significant
reduction of the plan, or when the Bank honors related restructuring costs or severance pay, depending on which
moment occurs sooner.
Interest expense is calculated using the discount rate determined by the amount of the liability for retirement
benefits. Actuarial gains and losses are recognized in other total score, and the cost of services performed previously
recognized in the income statement as incurred.
c. Short-term Paid Leave
Accumulated paid leaves may be carried forward and used in future periods if not fully used in the current period.
The expected costs of paid leave are recognized in the amount of accumulated unused rights on the balance sheet
date, which are expected to be utilized in the future. In the case of non-accumulated paid leave, liability or expense is
recognized at the time of the absence.
d. Distribution of Free Shares
The Board of Directors of the parent company, Societe Generale Paris, on November 2nd of 2010, decided to adopt a plan
of allocation of free shares to all employees of Societe Generale Group.
Bank on this basis calculates the obligation for a period up to the moment of acquisition of shares by employees (Note
28). Changes in the fair value of the liability are recognised by the Bank in the income statement as part of the cost of
employee fees.
2.4.18. Equity
Equity consists of share equity (commom shares), emission premiums, reevaluated reserves, gain reserves and gain of the
current and previous year (Note 30).
Dividends on shares are recorded as obligations in the period in which the decision on their payment was made. Dividends
approved for the year after the balance sheet date are disclosed in the note on events after the balance sheet date.
Bank is obliged to maintain its capital at the level which is necessary to cover all risks to which it is exposed or can be
exposed in its business activity, whereas the capital adequacy ratio can not be below 12%. In accordance to the Capital
adequacy decision, if the ratio of the Bank is bigger or, due to profit distribution would be bigger not less than 2,5% than
the prescribed minimal level (12%), Bank can distribute its profit only to the elements of the core capital.
2.4.19. S
pecial Reserve for Estimated Loss Incurred Based on Balance Assets
and Off Balance Items
Special reserve for estimated loss incurred based on balance assets and off balance items, the Bank determines following
the Decision of the National Bank of Serbia on the classification of balance assets and off balance items of the Bank
(„Official Gazette of Republic of Serbia“ 94/2011, 57/2012, 123/2012, 43/2013 and 113/2013).
Total claims from one debtor (balance assets and off balance items) are classified in the category from A to D, depending
on the collection probability. Collection of the claim from one debtor is estimated based on the regularity of obligations
servicing of the debtor and its financial position, number of days of lag for principal and interest payment, as well as quality
of submitted security means.
Based on the claims classification, in accordance with the stated Decision of the National Bank of Serbia, special reserve for
estimated loss is calculated with the application of the following percentage: A (0%), B (2%), V (15%), G (30%) and D (100%)
The Bank determines the amount of required reserves for potential losses, which represents the sum of the positive
difference between the reserve for estimated losses calculated in accordance with this decision and determined amount
of impairment of balance sheet assets and provisions for losses on off-balance sheet items at the level of the debtor.
2.4.20. Financial Guarantees
In the normal course of business, the Bank gives financial guarantees, consisting of payment guarantees and performance
bonds, letters of credit, acceptances and other warranties. Financial guarantees are contracts which obligate the issuer
of a guarantee to make the payment or compensate the loss to the warranty, or if a certain creditor fails to perform its
obligations in accordance with the terms of the contract.
Financial guarantees are initially recognized in the financial statements at fair value on the date the guarantee is given.
After initial recognition, the Bank's obligations arising from the financial guarantee is measured at the amortized premium
and the best estimate of expenditure required to settle any financial obligation arising as a result of warranty, whichever
is the greater.
The increase in the liability relating to financial guarantees is recognized in the income statement as net expense for
impairment of financial assets and off-balance sheet credit risk items. Received fees are recognized in the income
statement within net fee and commission income evenly over the term of the warranty.
2.4.21. Taxes and contributions
a. Income tax
Current taxes
Income tax represents the amount calculated and paid in accordance with the regulations of the Legal Entity Income Tax
Law of the Republic of Serbia. The Bank pays income tax in monthly installments throughout the year, estimated on the
basis of the tax return for the previous year.
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Accounting profit in order to get the amount of the taxable income, adjusted for certain permanent differences and
reduced for certain investments made during the year, as shown in the annual accounts to be submitted within 180 days
from the date of expiration for the period for which tax liability is established.
Taxpayers who by 2014 in accordance with the Legal Entity Income Tax Law of the Republic of Serbia have been
entitled to a tax credit for investments in fixed assets, can use up to 33% of the calculated tax. Unused tax credits can
be transferred to the account of income tax in future periods, but not longer than ten years, ie. up to the amount of tax
credits carried forward.
Tax regulations in the Republic of Serbia do not allow tax losses of the current period to be used to recover taxes paid
within a specific previous period. However, current year losses may be used to reduce the tax base in future periods, but
not longer than 5 years.
Deferred taxes
Deferred income tax is calculated per method of obligation according to balance sheet to all temporary differences on
balance sheet date between the current value and obligations in financial statements and their values for taxing purposes.
Rate of 15% is used for the calculation of amounts of deferred taxes.
Deferred tax obligations are recognized to all taxable temporary differences, except if deferred tax obligation come out of
the initial recognition of goodwill or funds and obligations in the transaction that is not a business combination and in the
moment of occurrence has no influence on the accounting gain or taxable gain or loss, and if it refers to taxable temporary
difference regarding the share in different companies, joint companies and mutual intestments where the moment of
temporary difference can be controlled and it is probable that the temporary difference will not be cancelled in near future.
Deferred tax funds are recognized to all taxable temporary differences and unused amounts of transferable tax loans and
tax losses, to the measure that it is probable that the level of future taxable gain is sufficient to use all taxable temporary
differences, transferred unused tax loans and unused tax losses, except if deferred tax funds refer to temporary differences
from initial recognition of funds or obligations in transaction that is not a business combination and in the moment of
occurrence there is not influence on the accounting gain or taxable gain or loss or reduced temporary difference regarding
the share in dependable companies, joint companies and mutual investments, when the deferred tax funds are recognized
only to measure to which it is probable that the temporary difference will be terminated in the near future and that the
level of expected future taxable gain is sufficient that the temporary difference can be used.
Book value of deferred tax funds is reviewed on every reporting date and reduced to the mere where it is no longer
certain that the level of excepted future taxable income is sufficient that the total value of part of the value of deferred
tax assets can be used. Deferred tax funds that are not recognized are estimated on every reporting date and accepted
to the merasure that it has become probable that the level of expected future taxable gain is sufficient that the deferred
tax funds can be used.
Current and deferred taxes are recognized as income and expense and are included in the net gain/(loss) of the period.
Deferred income tax that relates to the items directly recorded for the benefit or at the burden of the equity are also
recorded on the burden, or for the benefit of equity.
Deferred tax assets and deferred tax liabilities are offset when there is a legal opportunity to offset current tax
assets with current tax liabilities and when the deferred income taxes relate to the same taxable entity and the same
taxation authority.
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b. Taxes and Contributions not Dependent on Business Results
Taxes and contributions not dependent on business results include property tax, added value tax, employer earnings fees
taxes, as well as other taxes and contributions paid in accordance with the republic and local tax regulations. These taxes
and contributions are presented within other business expenses.
2.4.22. Earnings per Share
Basic earnings per share is calculated by dividing net profit belonging to shareholders, owners of common shares of the
Bank, weighted by average number of issued common shares within the reporting period.
Decision of the Business Registers Agency number BD 165078/2006 of 13th October 2006, the Bank was registered as
a closed joint stock company and is not obliged to calculate and disclose earnings per share in accordance with IAS 33
"Earnings per Share".
2.4.23. Managed Funds
Funds for business in favour and on behalf of third parties, which the Bank runs for a fee, are included in the off balance
records of the Bank. The Bank has no risk on given placements.
2.4.24. Monitoring of Operations by Segment
The Bank discloses information about the business activities per segment are disclosed in the consolidated financial report.
2.5. New and Amended Standards and Interpretations
The following are new and amended IFRS, which came into force on January 1st 2014:
IAS 32 Financial Instruments: Presentation (amendment) - Offsetting of Financial Assets and Financial Liabilities
IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements
IFRS 12 Disclosure of interests in other entities
IAS 39 Financial instruments (amendment): Recognition and Measurement - Replacing or extending the maturity of
hedging instruments and hedge accounting
IAS 36 Impairment of Assets (Amendment) - Recoverable Amount Disclosures for Non-Financial Assets
IFRIC 21: Levies
The impact of the adoption of the standards or interpretations on the financial statements is described below.
IAS 32 Financial Instrument: Presentation (Amendment) – Offsetting Financial Assets and Financial Liabilities
These amendments clarify the meaning of “currently has a legally enforceable right to set-off”. The amendments also
clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems)
which apply gross settlement mechanisms that are not simultaneous. The effect of applying the amendments did not
have an impact on the financial position and performance of the Bank.
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Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
These amendments provide an exception to the consolidation requirement for entities that meet the definition of an
investment entity under IFRS 10 Consolidated Financial Statements and must be applied retrospectively, subject to
certain transition relief. The exception to consolidation requires investment entities to account for subsidiaries at fair
value through profit or loss. These amendments have no impact on the Bank.
IAS 39 Financial Instruments (Amended): Recognition and Measurement - Novation of Derivatives and
Continuation of Hedge Accounting
Under the amendment there would be no need to discontinue hedge accounting if a hedging derivative was novated,
provided certain criteria are met. The IASB made a narrow-scope amendment to IAS 39 to permit the continuation
of hedge accounting in certain circumstances in which the counterparty to a hedging instrument changes in order
to achieve clearing for that instrument. The effect of this amendment does not have impact on financial position and
performance of the Bank.
IAS 36 Impairment of Assets (Amended) – Recoverable Amount Disclosures for Non-Financial Assets
These amendments remove the unintended consequences of IFRS 13 on the disclosures required under IAS 36.
In addition, these amendments require disclosure of the recoverable amounts for the assets or CGUs for which
impairment loss has been recognised or reversed during the period. The effect of this amendment does not have
impact on financial position and performance of the Bank.
IFRIC 21: Levies
The Interpretations Committee was asked to consider how an entity should account for liabilities to pay levies imposed
by governments, other than income taxes, in its financial statements. This Interpretation is an interpretation of IAS 37
Provisions, Contingent Liabilities and Contingent Assets. IAS 37 sets out criteria for the recognition of a liability, one of
which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating
event). The Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity
described in the relevant legislation that triggers the payment of the levy. This interpretation does not have effect on
financial performance of the Bank.
2.6. Amended Standards not Yet Adopted
IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception (Amendments)
The amendments address issues arising in practice in the application of the investment entities consolidation exception.
The amendments are effective for annual periods beginning on or after 1 January 2016. The amendments clarify that
the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an
investment entity, when the investment entity measures all of its subsidiaries at fair value. Finally, the amendments to
IAS 28 Investments in Associates and Joint Ventures allow the investor, when applying the equity method, to retain
the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries
IAS 16 Property, Plant & Equipment and IAS 38 Intangible Assets (Amendment): Clarification of Acceptable
Methods of Depreciation and Amortization
The amendment is effective for annual periods beginning on or after 1 January 2016. This amendment clarifies the
principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue reflects a pattern of
economic benefits that are generated from operating a business (of which the asset is part) rather than the economic
benefits that are consumed through use of the asset. As a result, the ratio of revenue generated to total revenue
expected to be generated cannot be used to depreciate property, plant and equipment and may only be used in very
limited circumstances to amortize intangible assets. It is not expected that the amendments will have impact on
financial statements of the Bank.
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Changes and Amendments to IAS 19 - Defined Benefit Plans: the Contributions of Employees
Changes and amendments of this amendment is effective for periods beginning July 1st, 2015 or thereafter. IAS
19 requires the Bank to consider contributions from employees or third parties during the recognition of defined fee
plans. The purpose of the changes and amendments is to simplify the recognition of these contributions, which, for
example, does not affect the number of years of service of the employee, which would be the case when calculating
the contribution of the employee who would be counted as a fixed percentage of the profits. It is not expected that the
amendments will have any impact on the Bank's financial reporting.
IFRS 9 Financial Instruments – Classification and Measurement
The standard is applied for annual periods beginning on or after 1 January 2018 with early adoption permitted. The
final phase of IFRS 9 reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments:
Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for
classification and measurement, impairment, and hedge accounting. The Bank currently assesses the impact of this
standard on financial statements.
Amendments to IFRS 11: Investments in Joint Ventures: Accounting of Acquisition of Shares in Joint Operations
These changes and amendments are effective for annual periods beginning January 1, 2016, or any period
thereafter. IFRS 11 applies to the accounting of acquisition of shares in joint ventures and joint operations.
Amendments to IFRS 11 provide new guidelines for the acquisition of shares in the joint venture, whose activities
consist of business operatons in accordance with IFRS, confirming appropriate/relevant treatment of such
acquisitions. It is not expected that the amendments and changes will impact the Bank's financial reporting.
IFRS 14 Regulatory Deferral Accounts
The standard is effective for annual periods beginning on or after 1 January 2016. The IASB has a project to consider
the broad issues of rate regulation and plans to publish a Discussion Paper on this subject in 2014. Pending the
outcome of this comprehensive Rate-regulated Activities project, the IASB decided to develop IFRS 14 as an interim
measure. IFRS 14 permits first-time adopters to continue to recognize amounts related to rate regulation in accordance
with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that
already apply IFRS and do not recognize such amounts, the standard requires that the effect of rate regulation must
be presented separately from other items. An entity that already presents IFRS financial statements is not eligible to
apply the standard. The Bank currently assesses the impact of this standard on financial statements.
IFRS 15 Revenue from Contracts with Customers
The standard is effective for annual periods beginning on or after 1 January 2017. IFRS 15 establishes a five-step
model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of
the type of revenue transaction or the industry. The standard’s requirements will also apply to the recognition and
measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s
ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required,
including disaggregation of total revenue; information about performance obligations; changes in contract asset and
liability account balances between periods and key judgments and estimates. The Bank currently assesses the impact
of this standard on financial statements.
IAS 27 Separate Financial Statements (amended)
The amendment is effective from 1 January 2016. This amendment will allow entities to use the equity method to
account for investments in subsidiaries, joint ventures and associates in their separate financial statements and will
help some jurisdictions move to IFRS for separate financial statements, reducing compliance costs without reducing
the information available to investors. The Bank currently assesses the impact of this standard on financial statements.
Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint
Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS
28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main
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consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business
(whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets
that do not constitute a business, even if these assets are housed in a subsidiary. The amendments will be effective
from annual periods commencing on or after 1 January 2016. It is not expected that the amendments will have impact
on financial statements of the Bank.
IAS 1: Disclosure Initiative (Amendment)
The amendments to IAS 1 Presentation of Financial Statements further encourage companies to apply professional
judgment in determining what information to disclose and how to structure it in their financial statements. The
amendments are effective for annual periods beginning on or after 1 January 2016. The narrow-focus amendments
to IAS clarify, rather than significantly change, existing IAS 1 requirements. The amendments relate to materiality,
order of the notes, subtotals and disaggregation, accounting policies and presentation of items of other comprehensive
income (OCI) arising from equity accounted Investments.
Annual improvements - Cycle 2010- 2012
Committee on IAS has made annual improvements to IFRSs 2010-2012 cycle, which represent a set of amendments to
the IFRS. The changes are effective for annual periods beginning on July 1st, 2015 years.
IFRS 2 Share-based Payment: This improvement amends the definitions of 'vesting condition' and 'market condition'
and adds definitions for 'performance condition' and 'service condition' (which were previously part of the definition
of 'vesting condition').
IFRS 3 Business combinations: This improvement clarifies that contingent consideration in a business acquisition
that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within
the scope of IFRS 9 Financial Instruments.
IFRS 8 Operating Segments: This improvement requires an entity to disclose the judgments made by management
in applying the aggregation criteria to operating segments and clarifies that an entity shall only provide reconciliations
of the total of the reportable segments' assets to the entity's assets if the segment assets are reported regularly.
IFRS 13 Fair Value Measurement: This improvement in the Basis of Conclusion of IFRS 13 clarifies that issuing IFRS
13 and amending IFRS 9 and IAS 39 did not remove the ability to measure short-term receivables and payables with
no stated interest rate at their invoice amounts without discounting if the effect of not discounting is immaterial.
IAS 16 Property Plant & Equipment: The amendment clarifies that when an item of property, plant and equipment
is revalued, the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying
amount.
IAS 24 Related Party Disclosures: The amendment clarifies that an entity providing key management personnel
services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity.
IFRS 3 Business Combinations: This improvement clarifies that IFRS 3 excludes from its scope the accounting for
the formation of a joint arrangement in the financial statements of the joint arrangement itself.
IFRS 13 Fair Value Measurement: This improvement clarifies that the scope of the portfolio exception defined
in paragraph 52 of IFRS 13 includes all contracts accounted for within the scope of IAS 39 Financial Instruments:
Recognition and Measurement or IFRS 9 Financial Instruments, regardless of whether they meet the definition of
financial assets or financial liabilities as defined in IAS 32 Financial Instruments: Presentation.
IAS 40 Investment Properties: This improvement clarifies that determining whether a specific transaction meets
the definition of both a business combination as defined in IFRS 3 Business Combinations and investment property as
defined in IAS 40 Investment Property requires the separate application of both standards independently of each other.
Annual improvements - Cycle 2012 - 2014
The International Accounting Standards Board issued the annual improvements to cycle 2012 - 2014, which represents
a collection of amendments to the IFRS. These improvements are effective from 1 January 2016. Management does not
expect the amendments to have any impact on the Bank's financial reporting.
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: The amendment clarifies that changing
from one of the disposal methods to the other (through sale or through distribution to the owners) should not be
considered to be a new plan of disposal, rather it is a continuation of the original plan. There is therefore no interruption
of the application of the requirements in IFRS 5. The amendment also clarifies that changing the disposal method does
not change the date of classification.
IFRS 7 Financial Instruments: Disclosures: The amendment clarifies that a servicing contract that includes
a fee can constitute continuing involvement in a financial asset. Also, the amendment clarifies that the IFRS 7
disclosures relating to the offsetting of financial assets and financial liabilities are not required in the condensed
interim financial report.
IAS 19 Employee Benefits: The amendment clarifies that market depth of high quality corporate bonds is assessed
based on the currency in which the obligation is denominated, rather than the country where the obligation is located.
When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used.
IAS 34 Interim Financial Reporting: The amendment clarifies that the required interim disclosures must either be
in the interim financial statements or incorporated by cross-reference between the interim financial statements and
wherever they are included within the greater interim financial report (e.g., in the management commentary or risk
report). The Board specified that the other information within the interim financial report must be available to users
on the same terms as the interim financial statements and at the same time. If users do not have access to the other
information in this manner, then the interim financial report is incomplete..
IAS 38 Intangible Assets: The amendment clarifies that when an intangible asset is revalued the gross carrying
amount is adjusted in a manner that is consistent with the revaluation of the carrying amount.
Annual improvements - Cycle 2011 - 2013
Committee on IAS has made annual improvements to IFRSs 2011-2013 cycle, which represent a set of amendments to
the IFRS. The changes are effective for annual periods beginning on July 1st, 2015 years.
IFRS 1 First-time adoption of IFRS: This improvement clarifies that an entity may choose to apply either a current
standard or a new standard that is not yet mandatory, but that permits early application, provided either standard is
applied consistently throughout the periods presented in the entity’s first IFRS financial statements.
80
ANNUAL REPORT 2014
81
3. INCOME AND EXPENSES FROM INTEREST
Revenues and expenses by class of financial instruments are given in the following table:
Interest Income
Loans
Deposits
Faktoring
Forfaiting
Overnight with the National Bank of Serbia
Obligatory reserve with the National Bank of Serbia
Protests by guarantees
Cards
Discounted bills
Reverse repo transactions with the National Bank of Serbia
Treasury bills intended for sale
Other placements
Other
Total interest income
Revenues and expenses by class of financial instruments are given in the following table:
RSD 000
2014
11,504,501
6,596
222,215
50,472
75,378
255,278
13,235
211,123
7,373
387,569
1,697,873
1,102
165
14,432,880
2013
11,747,169
3,468
262,127
372
170,119
240,630
1,932
176,368
23,471
519,303
1,179,322
14,324,281
RSD 000
Interest expense
Loans
Deposits
Issued bonds
Other liabilities
Total interest expense
2014
(1,659,298)
(3,365,259)
(250,301)
(789)
(360,937)
(5,636,584)
2013
(1,509,970)
(4,096,402)
(286,119)
(2,855)
(348,803)
(6,244,149)
Net earnings from interest
8,796,296
8,080,132
RSD 000
2014
Interest income
National Bank of Serbia
Related banks (Note 32)
Other related parties (Note 32)
Other banks and financial institutions
Companies
Public sector
Entrepreneurs
Retail
Foreign persons
Other customers
718,225
514
4,150
219,259
4,776,575
1,923,416
69,132
6,657,710
29,446
34,453
14,432,880
930,052
1,969
18,304
667,959
5,571,545
1,499,059
71,950
5,424,433
30,046
108,964
14,324,281
(956,553)
(19,768)
(515,333)
(1,770,029)
(18,973)
(997)
(1,382,655)
(917,248)
(55,027)
(5,636,584)
(1,368,596)
(26,346)
(506,941)
(1,660,909)
(70,899)
(828)
(1,820,714)
(743,097)
(45,819)
(6,244,149)
8,796,296
8,080,132
Interest expenses
Related banks (Note 32)
Other related parties (Note 32)
Companies
Public sector
Entrepreneurs
Retail
Foreign persons
Other customers
Interest income
Interest income on impaired placement of legal entities amounted to RSD 718,539 thousand in 2014.
82
2013
ANNUAL REPORT 2014
83
4. I NCOME AND EXPENSES FROM FEES AND
COMMISSIONS
5. NET GAIN FROM FINANCIAL ASSETS HELD FOR
TRADING
RSD 000
2014
2013
Income from fees and commissions
Payment transactions in the country
Payment transactions with foreign countries
Buying and selling of foreign currency
Credit transactions
Cards operations
Guarantees and other warranties
Tasks related to management of funds for the benefit of other persons
Account Maintenance
Collection and processing of cash
Insurance representation
Fee based on SPOT and SWAP transactions
Provision of Electronic Banking
The fee for money transfer Western union
Other
295,855
308,294
894,997
65,614
529,970
346,407
28,228
632,255
71,358
65,101
22,954
45,666
16,242
26,864
260,989
260,421
1,050,635
60,197
440,987
385,399
22,258
543,191
42,660
50,726
67,041
34,370
11,880
20,988
3,349,805
3,251,742
Expenses from fees and commissions
Payment transactions in the country
Payment transactions with foreign countries
Buying and selling of foreign currency
Credit transactions
Cards operations
Brokerage operations
Electronic Banking
Guarantee operations
The processing of credit cards
Maintenance of accounts
Fee based on SWAP transactions
Other
(58,554)
(7,232)
(318,618)
(373,776)
(237,073)
(249)
(10,848)
(61,991)
(251,299)
(16,832)
(8,862)
(23,992)
(48,989)
(6,000)
(490,836)
(183,523)
(187,217)
(196)
(45,936)
(191,362)
(18,625)
(5,812)
(16,316)
Total fee and commission income
(1,369,326)
(1,194,812)
Profit from fees and commissions
1,980,479
2,056,930
Total fee and commission income
84
RSD 000
2014
1,884,307
(1,750,973)
Net gains on financial assets held for trading
Income from changes in fair value of derivatives held for trading
Losses from changes in fair value of derivatives held for trading
Total net gains on financial assets held for trading
2013
3,456,151
(3,673,745)
133,334
(217,594)
6. NET FOREIGN EXCHANGE INCOME AND EFFECT OF
FOREIGN EXCHANGE CLAUSE
RSD 000
2014
20,966,101
(26,876,140)
(5,910,039)
(1,468,054)
7,452,286
5,984,232
Net foriegn exchange income and effect of forign exchange clause
Revenue from exchange rate differences
Losses from foreign exchange differences
Net foreign exchange losses
Expenses of the negative exchange differences on foreign currency clause
Income from foreign exchange gains arising from foreign currency clause
Net income from foreign exchange differences arising from foreign currency clause
Total net income from foreign exchange differences and the effect of foreign currency clause
74,193
2013
28,640,721
(29,249,796)
(609,075)
(5,786,970)
6,609,861
822,891
213,816
7. OTHER
Other operating income
Rental income
Gains on sale of fixed assets and intangible asse
Income from reversal of provisions for liabilities
Surpluses
Other income
RSD 000
2014
20,574
58
472
46,595
294,187
Total other operating income
361,886
ANNUAL REPORT 2014
85
2013
20,450
147
344
23,005
497,142
541,088
8. N
ET LOSSES FROM DETERIORATION IN VALUE OF
FINANCIAL ASSETS AND CREDIT RISK IN
OFF-BALANCE SHEET ITEMS
RSD 000
2014
Net losses from deterioration of financial assets and off-balance sheet credit risk items
10. DEPRECIATION
2013
Losses based on deteriation in value of financial assets
(15,912,531)
(11,174,175)
Cash and balances with central bank (Note 13)
Financial assets available for sale (Note 15)
Loans and advances to banks and other financial institutions (Note 16)
Loans and receivables to customers (Note 17)
Investments in associates companies (Note 18)
Other assets (Note 22)
(711)
(23)
(201,586)
(15,589,345)
(120,866)
(18,655)
(10,993,795)
(39,860)
(121,865)
(2,167,273)
(1,490,845)
Provisions for credit risk off-balance sheet items (Note 28)
Write-off of uncollectible receivables
(199,644)
(59,574)
11,614,038
5,583,450
Loans and receivables from banks and other financial institutions (Note 16)
Loans and receivables from clients (Note 17)
Other assets (Note 22)
115,416
11,437,158
61,464
21,702
5,520,262
41,486
Income from cancellation of provisions for credit risk of off-balance sheet items (Note 28)
2,049,283
1,319,552
4,810
65
(4,611,317)
(5,821,527)
Income from reversal of deteriation in value of financial assets
Income Recoveries
Total net losses from deteriation in value of financial assets and off-balance sheet
credit risk items
9. SALARIES, WAGES AND OTHER PERSONNEL
EXPENSES
Wages, salaries and other personal expenses
Wages
Benefits expenses
Income tax and benefits
Contributions on salaries and benefits
Compensation costs for temporary and occasional services
Other personal expenses
Provisions for pensions and free shares (Note 28)
Reversal of provisions for pensions and free shares (Note 28)
Expense of short-term liabilities for unused vacation days (Note 28)
Income from reversal of current liabilities for unused vacation days (Note 28)
Total salaries expenses, benefits and other personal expenses
RSD 000
2014
(1,702,166)
(221,129)
(259,039)
(925,120)
(27,197)
(45,140)
(22,103)
10,250
26,180
(3,165,464)
2013
(1,640,469)
(198,096)
(267,359)
(886,163)
(32,611)
(42,448)
(32,174)
(106,434)
79,740
(3,126,014)
Depreciation and amortization expenses
Fixed assets
Investment property
Intangible assets
RSD 000
2014
296,855
6,759
149,554
2013
291,124
6,624
140,392
Total depreciation costs
453,168
438,140
RSD 000
2014
591,047
407,705
259,172
175,698
148,563
144,965
133,371
131,918
113,448
108,967
94,866
85,583
83,302
63,362
53,565
53,117
47,532
42,554
28,901
25,661
23,624
20,131
18,888
18,310
12,814
11,244
11,202
8,279
5,007
4,616
3,596
3,421
3,327
2,393
2013
328,618
401,051
276,517
148,972
137,483
143,964
147,155
133,262
87,189
13,968
92,629
81,345
55,723
59,957
45,291
51,599
28,271
21,128
27,332
35,842
23,658
6,827
13,745
23,924
13,141
4,189
25,690
8,476
6,959
10,331
44,101
1,441
791
2,265
11. OTHER EXPENSES
Other expenses
Insurance costs
Branch rental costs
Production expenses
Technical assistance costs
Advertising costs
Cost of materials
Postal services costs
Maintenance costs of fixed assets
Reimbursed costs of benefits
Other expenses
Other intangible expenses
Security expenses
Tax expense
The cost of cleaning the premises
The costs of telecommunication services
Net cost of employee transport
Expenditure on advertising and promotional materials
Cost of intellectual services
Cost of utilities
Legal services
Other rental expenses
Cost of donactions
Other costs of product services
Travel expense
Cost of seminars and conferences
Losses for the disposal and write-off of fixed assets and intangible assets
The costs of consultancy services
Cost of financing handicapped
Membership fees
Taxi fees
Contributions
Extraordinary expenses
Expenses on provisions for litigation
Costs of professional literature
Total operating and other business expenses
86
2,940,150
ANNUAL REPORT 2014
87
2,502,834
12. INCOME TAX
13. CASH AND BALANCES WITH THE CENTRAL BANK
Components of income tax
Current income tax
Gain from created deferred tax assets and reduction of deferred tax liabilities
RSD 000
2014
192,433
2013
405,891
Total income tax
192,433
405,891
Reconciled income taxes and results of operations before tax
Profit / (Loss) before tax
Income tax is calculated at the rate of 15%
Tax effect of expenses not deductible for tax purposes
Tax effect of adjusting income
Unused tax credits for investments in fixed assets
RSD 000
2014
176,089
26,412
92,906
(311,751)
-
Cash and balances with the central bank
Cash
Income tax expense reported in the income statement
(192,433)
2013
(1,214,143)
(182,121)
70,746
(253,800)
(40,716)
(405,891)
Other funds
Other funds in foreign currency
Less: value adjustment
RSD 000
2014
52,972
82
53,054
2013
146
-
Changes in the account for corrections of value - Other funds
Balance on January 1st
New correction of value
Reversal of correction of value
Foreign exchange differences
As of December 31st
1,430,613
1,299,286
Giro account
Deposits of surplus liquidity in dinars
Obligatory reserve with the National Bank of Serbia in foreign currency
Accruals based on cash and balances with central banks in dinars
The foregoing disclosures are based on current expectations of the Bank in connection with the Tax balance sheet in
2014. These expectations can be corrected until the final surrender of the balance to 30.06.2015. in accordance with the
Income Tax Law for Legal entities, upon the deadline for submission of the final tax balance.
Deferred taxes related to capital are:
Profit from securities available for sale
Actuarial gains from long-term employee benefits
Cash in hand in dinars
Cash on hand in foreign currency
Balances with central bank
RSD 000
31.12.2013.
31.12.2014.
1,492,124
722,213
14,315,368
15,194,903
10,320
01.01.2013.
1,071,518
747,151
14,587,490
1,000,000
17,873,391
10,268
11,480,981
15,892,815
9,769
79,823
(750)
4,938
-
8,808
-
32,329,563
35,690,424
29,211,042
2014
711
39
RSD 000
2013
-
2012
-
750
-
-
146
Bank reserve requirements in dinars and foreign currency in accordance with the National Bank of Serbia on mandatory
reserves with the National Bank of Serbia ("Official Gazette of the Republic of Serbia", no. 3/2011, 31/2012, 57/2012,
78/2012, 87 / 2012, 107/2012 and 62 / 2013.125 / 2014, 135/2014 and 4/2015).
Obligatory reserve is calculated at the rate of 5% of the average daily balance of non-indexed dinar liabilities with agreed
maturity up to two years, or at the rate of 0% of the average daily balance of non-indexed dinar liabilities with agreed
maturity of over two years, during one month. The Bank is required to maintain the accounting period average daily
balance of dinar required reserves on its bank account. Calculated obligatory reserve whose level has to be maintained on
the giro account in the period 18 December 2014 to 17 January 2015 amounted to RSD 10,614,602 thousand and was
in compliance with the aforementioned Decision of the National Bank of Serbia. The average interest rate on the amount
of allocated dinar reserves during 2014 was 2.50% per annum.
On December 31, 2014 mandatory foreign exchange reserves is calculated at the rate of 26% for commitments by the
initial maturity of up to two years, or at the rate of 19% for liabilities with an initial maturity of over two years, with 38% of
the foreign currency reserves allocated in dinars with an initial maturity of up to two years, or 30% of liabilities with initial
maturity over 2 years. Accrued foreign currency reserve for the period 18 December 2014 - 17. January 2015 was in line
with the aforementioned Decision of the National Bank of Serbia and amounted to EUR 128,748 thousand. On the average
balance of reserves in foreign currency, the National Bank of Serbia does not pay interest.
88
ANNUAL REPORT 2014
89
14. F INANCIAL ASSETS AT FAIR VALUE IN THE INCOME
STATEMENT INTENDED FOR TRADING
Financial assets at fair value in the income statement intended for trading
Claims arising from derivatives held for trading
16. L OANS AND CLAIMS TO BANKS AND OTHER
FINANCIAL INSTITUTIONS
31.12.2014.
RSD 000
31.12.2013.
01.01.2013.
6,637
11,824
11,886
15. FINANCIAL ASSETS AVAILABLE FOR SALE
31.12.2014.
RSD 000
31.12.2013.
01.01.2013.
In Dinar
Treasury bills
Treasury bonds of the Republic of Serbia
Shares of the Belgrade Stock Exchange
Shares Money Market 89 89 89
Correction in the value of shares of Money Market
6,475,536
14,111,139
906
89
(89)
20,587,581
9,479,472
4,421,805
906
89
(89)
13,902,183
7,755,041
- 906
89
(89)
7,755,947
RSD 000
31.12.2013.
31.12.2014.
Loans and claims
to banks and other
financial institutions
Foreign currency account
Loans under reverse repo
transactions
Loans for liquidity and
working capital
Other loans in dinars
Factoring in foreign
currency
Other placements in
foreign currency
Gross
amount
Correction
of
valuation
Net amount
Gross
amount
Correction
of
valuation
Net amount
Gross
amount
Correction
of
valuation
Net amount
10,248,245
(96,232)
10,152,013
9,624,610
-
9,624,610
2,402,084
-
2,402,084
-
-
-
4,000,824
-
4,000,824
3,005,660
-
3,005,660
15,672
(142)
15,530
358,064
(3,238)
354,826
965,471
(6,285)
959,186
-
-
-
4
-
4
-
-
-
26,137
(245)
25,892
-
-
-
-
-
-
4,838
-
4,838
4,586
-
4,586
-
-
-
(3,238) 13,984,850
6,373,215
10,294,892
(96,619) 10,198,273 13,988,088
31.12.2014.
Changes in the account for correction of valuation
As of December 31st
238,132
2,877,788
2,489
(23)
3,118,386
- 1,954
1,954
1,136,820
- 2,244
- 1,139,064
23,705,967
13,904,137
8,895,011
2014
89
23
RSD 000
2013
89
-
2012
89
-
112
89
89
Loans and claims to banks and other
National bank of Serbia
Druge banke i finansijske institucije
Foreign banks
As of Decebmer 31st
Dinari Strana valuta
RSD 000
31.12.2013.
01.01.2013.
15,530
-
4,838
10,177,905
4,000,824
354,830
-
4,586
9,624,610
3,005,660
959,185
-
2,402,085
15,530
10,182,743
4,355,654
9,629,196
3,964,845
2,402,085
As of December 31st, 2014, no receivables under reverse repo transactions existed. On December 31st, 2013, the Bank’s
receivables by reverse repo transactions amounted to RSD 4,000,824 thousand relates to the reverse repo transactions
with the National Bank of Serbia, with maturities of 7-8 days.
Changes in the account for corrections of value
Cancellation of the correction of value
Foreign exchange difference
90
(6,285) 6,366,930
Overview of loans and claims to banks and other financial institutions by currency in which they were given as follows:
In foreign currency
Treasury bills
Treasury bonds of the Republic of Serbia
Shares of SWIFT
Correction in the value of shares SWIFT
01.01.2013.
2014
3,238
201,586
(115,416)
7,211
RSD 000
2013
6,285
18,655
(21,702)
-
2012
4,877
19,509
(18,544)
443
96,619
3,238
6,285
ANNUAL REPORT 2014
91
17. LOANS AND RECEIVABLES TO CUSTOMERS
Loans and receivables to customers
Loans under transaction accounts
Consumer loans in dinars
Liquidity loans, loans for working capital
Export loans in dinars
Investment loans in dinars
Housing loans in dinars
Cash loans in dinars
Other loans in dinars
Receivables arising from purchased placements – forfeiting in dinars
Receivables based on factoring in dinars
Activated guarantees
Other placements in dinars
Loans for payment of goods and services imports in foreign currency
Other loans in foreign currency
Activated guarantees in foreign currency
Other placements in foreign currency
Gross amount
5,988,009
2,820,728
77,037,821
11,172,486
40,535,894
21,342,098
1,369,316
2,049,089
2,645,074
791,053
791,129
4,295,560
471,099
1,202,506
-
31.12.2014.
Provisions
(649,512)
(432,250)
(15,075,393)
(1,517,152)
(256,294)
(1,143,870)
(891,412)
(19,265)
(101,753)
(661,364)
(45,086)
(55,487)
(1,126,610)
-
Net amount
5,338,497
2,388,478
61,962,428
9,655,334
40,279,600
20,198,228
477,904
2,029,824
2,543,321
129,689
746,043
4,240,073
471,099
75,896
-
172,511,862
(21,975,448)
150,536,414
Gross amount
4,872,441
3,117,869
75,235,184
516,712
18,361,709
35,586,189
18,046,584
1,287,741
350,595
3,613,195
823,098
113,991
4,054,434
889,272
2,027,659
-
RSD 000
31.12.2013.
Provisions
(545,727)
(412,177)
(9,828,184)
(4,389)
(2,285,811)
(259,918)
(1,334,138)
(160,004)
(3,355)
(113,295)
(614,899)
(29,317)
(53,948)
(1,458,401)
-
Net amount
4,326,714
2,705,692
65,407,000
512,323
16,075,898
35,326,271
16,712,446
1,127,737
347,240
3,499,900
208,199
84,674
4,000,486
889,272
569,258
-
Gross amount
5,756,005
3,657,333
82,857,834
1,610,194
14,324,984
26,289,998
13,497,959
1,000,117
3,627,746
708,482
278,738
5,834,988
1,323,422
1,665,885
4,549
01.01.2013.
Provisions
(422,279)
(383,261)
(4,346,168)
(36,693)
(347,124)
(149,963)
(989,274)
(140,093)
(41,503)
(356,513)
(2,544)
(53,096)
(1,100,175)
-
Net amount
5,333,726
3,274,072
78,511,666
1,573,501
13,977,860
26,140,035
12,508,685
860,024
3,586,243
351,969
276,194
5,781,892
1,323,422
565,710
4,549
168,896,673
(17,103,563)
151,793,110
162,438,234
(8,368,686)
154,069,548
Overview of loans and receivables to customers by type of customer and currency is given below:
RSD 000
31.12.2013.
31.12.2014.
Loans and receivables to customers
Companies
Entrepreneurs
Public sector
Individuals
Foreign entities
Other customers
77,687,162
744,721
1,903,129
64,738,718
103,112
570,709
Foreign
Currency
4,116,765
471,099
179,736
21,263
145,747,551
4,788,863
Dinars
01.01.2013.
86,910,598
709,426
1,019,135
57,282,332
134,304
278,299
Foreign
Currency
4,396,782
1,867
889,272
171,095
-
100,725,905
552,474
809,726
44,085,466
108,097
112,307
Foreign
Currency
6,234,589
1,327,971
113,013
-
146,334,094
5,459,016
146,393,975
7,675,573
Dinars
Dinars
Changes in provisions
Balance as of January 1st
New provision allowances
Provision allowances cancellation
Exchange rate differences
Write off
Other
2014
17,103,564
15,589,345
(11,437,158)
600,450
(52,960)
172,207
RSD 000
2013
8,368,687
10,893,192
(5,520,262)
106,333
(571,043)
3,826,656
2012
5,080,468
6,090,745
(3,043,794)
241,472
(205)
Balance as of December 31st
21,975,448
17,103,563
8,368,686
92
ANNUAL REPORT 2014
93
Loans to companies were mostly approved for: financing of daily liquidity (overdrafts), purchase of working capital,
imports and financing of investments. Interest on loans approved in 2014 is calculated by using the interest rate
expressed as 1-month, 3-month and 6-moth EURIBOR or LIBOR increased by 4.40% on average for FX indexed loans
and 1-month and 3-month BELIBOR rate increased for 1,37% on average for loans in RSD. As of June 2014, subsidized
RSD loans were also approved to enterprises with a fixed interest rate of 5.45% annually, using the compound interest
method, with interest subsidized by the government of 5.00% per annum.
During 2014, the individuals were approved long term loans for the purchase of housing space with maturity from 5 to 25
years. The Bank’s tariff for housing loans at variable interest rate in 2014 was based on 6M EURIBOR increased for 4,25%
- 4.85%, or by 5.75% - 6.90% for loans with fixed interest rate. Also, RSD long term loans for the purchase of housing
space are approved with maturity of 5 to 25 years and interest rate based on 6M BELIBOR increased for 4.75% to 5.00%.
During 2014 individuals were granted RSD cash loans with maturity from 12 up to 60 months, as well as refinancing
loans with maturity from 12 to 84 months. In 2014, Bank’s tarriff for cash loans with variable interest rate was 6-month
Belibor increased by between 6.9% and 10.9% , e.g. ranged from 19.95% to 23% for cash loans with fixed interest
rates. In 2014, tariff of the Bank for refinancing loans with variable interest rate was based on a 6-month Belibor
increased by 6.4% - 7.9%, e.g. ranged between 19.50% and 21.50% for the first 5 years of repayment and between
6-months Belibor plus 6.9% - 8.9%.
Loans to small businesses, entrepreneurs and registered farmers were also granted during 2014. The interest rate for
short-term loans, earmarked for working capital financing, ranged from 8.5% to 17.75% per annum for EUR-indexed loans
and from 16% to 24.50% annually for RSD loans with maturity of up to 2 years, while long-term investment loans were
approved with interest rates based on the 6-month Euribor plus 7.5% -14.25% per annum. In 2014, subsidized loans with
a fixed interest rate of 5.45% (compound interest method) with state subsidy amounting to 5.00% were granted as well.
18. INVESTMENTS IN AFFILIATES AND JOINT VENTURES
RSD 000
Investments in affiliates and joint ventures
Societe Generale Osiguranje
Societe Generale Penzije in liquidation
Minus: impairment
% stake
49%
49%
31.12.2014.
149,649
-
31.12.2013.
149,649
96,731
(39,860)
01.01.2013.
160,679
96,731
149,649
206,520
257,410
Changes in provision
New provisions
Payment of liquidation reminder
2014
39,860
(39,860)
RSD 000
2013
39,860
-
2012
-
-
39,860
Since the Pension Fund management company DPF "Societe Generale Pensions" following the consent of both of its
shareholders transferred the management of voluntary pension funds to DPF "DDOR-Garant" and thus decided to stop
performing the activity for which it was registered, the National Bank of Serbia revoked its license on November 7th, 2013,
thus creating conditions for initiation of voluntary liquidation. Based on the decision APR BD 128768/2013 liquidation
proceedings of the DPF "Societe Generale Pensions" were initiated, ending on June 18 th, 2014 following the adoption of
decision APR BD51873/2014 to delete Fund management company Societe Generale Pensions ad in liquidation from the
Business Register.
Based on the preliminary initial liquidation balance sheet in 2013, The Bank estimated the existence of impairment of equity
investments in the amount of RSD 39,860 thousand, which was closed in 2014 after liquidation remainder was paid out.
19. INVESTMENTS IN SUBSIDIARIES
RSD 000
Investments in affiliates and joint ventures
Sogelease Srbija d.o.o. Beograd
% stake
31.12.2014.
31.12.2013.
01.01.2013.
100%
314,098
314,098
85,984
As of December 31st, 2014, the Bank owns 100% stake in legal entity Sogelase Srbija d.o.o. Beograd. The Bank has
carried out capital increase of Sogelease d.o.o. Srbija amounting to RSD 228,114 thousand on November 29, 2013.
94
ANNUAL REPORT 2014
95
20. INTANGIBLE ASSETS, FIXED ASSETS, EQUIPMENT
AND INVESTMENT PROPERTY
RSD 000
Buildings and
structures
Land
Equipment and
other fixed assets
Investments in
other owner's
fixed assets
1,647,025
97,642
1,744,487
1,744,487
71,049
71,049
71,049
1,539,527
165,293
(97,266)
(74,856)
1,532,698
129,000
(175,654)
19,006
1,505,050
510,552
26,904
(13,300)
(46,326)
477,830
21,450
(34,960)
(19,006)
445,314
97,433
186,939
(295,365)
63,700
52,707
164,282
(150,450)
66,539
3,865,586
186,939
(5,706)
(110,566)
63,700
(121,182)
3,878,771
164,282
(210,614)
3,832,439
24,584
144,035
(81,992)
1,707
88,334
204,292
(111,496)
181,130
891,911
85,893
(10,834)
121,182
1,088,152
111,496
(71)
1,199,577
916,495
144,035
3,901
(10,834)
1,707
121,182
1,176,486
204,292
(71)
1,380,707
138,985
1,805
140,790
140,790
4,921,066
330,974
(121,400)
65,407
5,196,047
368,574
(210,685)
5,353,936
Balance as of 01.01.2013.
Amortization (Note 10)
Disposals and write-offs
Other
Amortization (Note 10)
Other
Unwritten-off value as of: 31.12.2014.
523,014
89,783
612,797
99,758
712,555
1,031,932
71,049
1,067,272
153,962
(96,835)
(74,856)
1,049,543
151,085
(174,681)
19,006
1,044,953
460,097
255,903
47,379
(10,268)
(46,326)
246,688
46,012
(24,689)
(19,006)
249,005
196,309
66,539
1,846,189
291,124
(107,103)
(121,182)
1,909,028
296,855
2,006,513
1,825,926
1,969,743
181,130
511,084
140,392
(10,074)
121,182
762,584
149,554
(71)
912,067
287,510
511,084
140,392
(10,074)
121,584
762,584
149,554
(71)
0
912,067
468,640
47,,162
6,624
53,786
6,759
60,545
80,245
2,404,435
438,140
(117,177)
0
2,725,398
453,168
(199,441)
2,979,125
2,374,811
Unwritten-off value as of: 31.12.2013.
1,131,690
71,049
483,155
231,142
52,707
88,334
325,568
413,902
87,004
2,470,649
Fixed assets in
preparation
Total property and
equipment
Intangible assets
in preparation
Intangible assets
Total intangible
assets
Investment
Property
Total
PURCHASE VALUE OF FIXED ASSETS
Increases during the year
Transfers from/to
Transfers from advances
Other
Increases during the year
Transfers from/to
Other
CUMMULATED PROVISIONS
The Bank has no buildings and structures given as pledge, as security for loans repayment.
Due to incomplete cadastre records as of December 31st, 2014 the Bank has no real estate list extracts for buildings of
net current value of RSD 108,530 thousand. Management of the Bank has taken all necessary steps in order to obtain
the missing documents.
As of 31.12.2014., the Bank had an investment property in the amount of RSD 80,245 thousand, consisting of leased
premises.
Fair value of investment property as of 31.12.2014. assesed by the certified appreiser hired by the Bank, was at 286,006
thousand and is above the book value by 205,760 thousand.
96
ANNUAL REPORT 2014
97
21. CURRENT AND DEFFERED TAX ASSSETS
Tax assets elements
Current tax assets
Deferred tax assets
Deferred tax assets elements
Deferred tax funds coming from the difference between net book value of the fixed
assets and their net tax value
Deferred tax funds from calculated and not settled obligations towards the state
authorities
Deferred tax funds from calculated and not paid severance for retirement
Deferred tax funds based on unused tax credits for investment in fixed assets
Deferred tax assets coming from tax losses carried forwards from the previous years
Deferred tax liabilities based on adjusting treasury bills and treasury bonds available for
sale to fair value
Other
31.12.2014.
234,594
623,590
RSD 000
31.12.2013.
179,374
484,065
01.01.2013.
116,130
78,128
858,184
663,439
194,258
31.12.2014.
RSD 000
31.12.2013.
01.01.2013.
73,093
79,047
59,343
16,110
11,780
10,366
5,341
40,716
541,384
9,144
40,716
343,524
8,610
-
(52,759)
-
-
(295)
(146)
(191)
623,590
484,065
78,128
Changes in deferred tax are presented in the table below:
From the difference between net book value of the fixed assets and their net tax value
From calculated and not settled obligations towards the state authorities
From calculated and not paid severance for retirement
Carried forward tax losses
Unused tax credits for investment in fixed assets
Adjustment of treasury bills and bonds to fair value
Other
Deferred tax
assets
73,093
16,110
5,341
541,384
40,716
676,644
31.12.2014.
Deferred tax
Income
liabilities
statement
(5,954)
4,330
(3,803)
197,860
(52,759)
(295)
(53,054)
192,433
Effect on
capital
(52,759)
(149)
Deferred tax
assets
79,047
11,780
9,144
343,524
40,716
-
(52,908)
484,211
RSD 000
31.12.2013.
Deferred tax
Income
liabilities
statement
19,704
1,413
534
343,524
40,716
(146)
(146)
405,891
Effect on
capital
45
Deferred tax
assets
59,343
10,366
8,610
-
45
78,319
01.01.2013.
Deferred tax
Income
liabilities
statement
35,208
9,340
(191)
(191)
44,548
Effect on
capital
(68)
(68)
Deferred tax assets of the Bank are coming mainly from tax losses as of 2013 and 2014, and tax credit based on
investment in fixed assets. The periods of their usage are presented as follows:
Based on tax losses as of 2013
Based on tax losses as of 2014
Based on unused transferable tax credit related to investment in fixed assets in 2013
98
Iznos
343,524
197,860
RSD 000
Poslednja godina korišćenja
2018
2019
40,716
2023
ANNUAL REPORT 2014
99
22. OTHER ASSETS
23. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH
THE INCOME STATEMENT INTEDNED FOR TRADING
31.12.2014.
143,388
5,844
662,047
408
1,129
13,940
69,735
21,759
123,468
367,179
182,021
275,238
2,549
5,240
13,548
8,350
7,466
2,739
155,879
542
1,174
30,595
65
(257,098)
RSD 000
31.12.2013.
123,626
5,966
564
188
989
11,789
312,830
29,620
101,694
593
157,773
304,742
3,180
5,470
13,069
27,402
2,985
823
86,486
660
36,188
(197,447)
01.01.2013.
105,023
5,947
5,222
461
1,353
24,942
26,536
47
60,039
1,869
189,484
101,610
1,566
5,122
12,342
5,462
3,947
68,306
46,251
(128,176)
1,837,205
1,029,190
537,353
New provisions (Note 8)
Provision cancellation (Note 8)
Other
Direct write off
2014
197,447
120,866
(61,464)
945
(154)
(542)
RSD 000
2013
128,176
121,865
(41,486)
149
(2,615)
(8,642)
2012
90,156
69,081
(32,398)
1,337
- - Balance as of December 31
257,098
197,447
128,176
Ostala sredstva
Receivables for calculated fee and commission in respect of other assets in dinars
Receivables from advance payments for working capital in dinars
Receivables from advance payments for non-current investments in dinars
Receivables from employees in dinars
Receivables coming from overpaid taxes and contributions in dinars
Other receivables from business operations in dinars
Other receivables from payment cards operations in dinars
Other receivables from operations – for sick leave in dinars
Other receivables from operations – for court and administrative fees in dinars
Receivables in calculation in dinars
Receivables in calculation from payment cards business in dinars
Receivables in calculation in dinars related to ATM transactions
Receivables for calculated fee and commission based on other assets in foreign currency
Receivables based on advance payments given for working capital in foreign currency
Receivables from employees in foreign currency
Other receivables from operation in foreign currency
Receivables in calculation in foreign currency
Accrued interest expenses in dinars
Accrued other expenses in dinars
Other prepayments and accrued income in dinars
Accrued interest expenses in foreign currency
Accrued other expenses in foreign currency
Assets acquired through collection of receivables
Impairment
RSD 000
Financial liabilities, at fair value through the income statement intended for
trading
Liabilities under derivatives intended for trading
31.12.2014.
31.12.2013.
01.01.2013.
3,972
8,031
405
24. D
EPOSITS AND OTHER LIABILITIES TO BANKS,
OTHER FINANCIAL ORGANIZATIONS AND CENTRAL
BANK
Deposits, other liabilities to banks, other financial
organizations and central bank
Transaction deposits
Deposits in respect of granted loans
Special purpose deposits
Term deposits
Other deposits
Deposits maturing in 1 day (overnight)
Loans received
Other financial liabilities
Deposits, other liabilities to banks, other financial
organizations and central bank
National bank of Serbia
Foreign banks
31.12.2014.
Foreign
Dinars
currency
1,848,523
607,897
3,427,500
3,959
282,198
795,389
6,626,337
237,640
50,151
41,135
210
- 27,550,912
368
17
RSD 000
31.12.2013.
Foreign
Dinars
currency
2,349,124
110,505
8,741,046
80,610
332,746
1,142,386
1,315,212
329,501
47,090
29,355
- 38,460,123
299
-
01.01.2013.
Foreign
Dinars
currency
1,198,253
257,073
- 10,756,748
2,738
700,561
789,560
1,203,594
210,898 15,953,853
3,229,600
- 28,402,931
280
-
2,927,014 38,545,222
3,931,275 49,006,722
2,201,729 60,504,360
31.12.2014.
Foreign
Dinars
currency
368
2,886,541
1,352,115
40,105
37,193,107
RSD 000
31.12.2013.
Foreign
Dinars
currency
17,726
509
3,255,710
877,035
657,839 48,129,178
01.01.2013.
Foreign
Dinars
currency
7,130
5,042
1,837,632
1,528,438
356,967 58,970,880
2,927,014 38,545,222
3,931,275 49,006,722
2,201,729 60,504,360
Borrowings as of December 31st 2014 include loans received from the European Investment Bank (EIB), the European
Bank for Reconstruction and Development (EBRD), loans received from the parent bank Societe Generale Paris and longterm line from KBC Bank NV Brussels.
Loan from the European Investment Bank (EIB) with the outstanding amount of RSD 9.268.989 thousand is related to
loans for small and medium-sized enterprises financing, maturing in 2023, bearing an interest rate of 3M EURIBOR +
0.25% annually and amounting to a total of RSD 2.745.210 thousand and the EIB loan as of 25.10.2013. amounting to RSD
6.523.780 thousand with an interest rate of 3M EURIBOR / 6M LIBOR + margin ranging from 0.241% (on LIBOR) to 1.392%.
Balance of RSD 11.222.853 thousand as at 31 December 2014 concernes several long-term lines of the European
Bank for Reconstruction and Development (EBRD), which are due in the period 2015 to 2018 with an interest rate of 6M
EURIBOR + margin in the range of 2.05% to 2.75% per annum.
100
ANNUAL REPORT 2014
101
Long-term loans from Societe Generale Paris in the amount of RSD 6.065.828 thousand were approved with fixed rates
ranging from 5.45% to 6.61% per annum with maturity up to 2033.
Balance of RSD 993.175 thousand as of 31st December 2014 relates to the long-term line of KBC Bank NV Brussels,
maturing in August 2016 with an interest rate of 6M EURIBOR + margin of 0.775% per annum.
In December 2014, the Bank carried out early repayment of two credit lines to the IFC - EUR 13,333.33 thousand under
the Agreement of 25 June 2010 and EUR 46,666.67 thousand under the Agreement of 19 June 2012.
25. D
EPOSITS AND OTHER LIABILITIES TO OTHER
CUSTOMERS
Deposits and other liabilities to other
customers
Transaction deposits
Savings deposits
Deposits in respect of granted loans
Special purpose deposits
Term deposits
Other deposits
Deposits and loans maturing in one day
(overnight)
Loans received
Other financial liabilities
RSD 000
31.12.2013.
31.12.2014.
01.01.2013.
12,622,933
1,749,478
259,590
122,270
13,365,272
3,392
8,215,463
997,404
199,311
255,918
7,533,844
201,493
Foreign
currency
10,207,656
47,648,279
1,973,865
1,219,205
3,804,534
73,424
797,494
3,982,249
541,657
2,440,866
590,846
3
8,646
3,181,403
-
4,911
3,309,271
4
24,501
2,280,133
22
43,644,719
83,397,300
32,110,095
83,202,729
19,868,800
67,797,964
16,001,998
2,268,225
574,036
205,651
19,274,905
26,522
5,284,733
Dinars
Dinars
An overview of deposits and other liabilities to customers by type of customer and currency structure is given below:
Deposits and other liabilities to
customers
Companies
Entrepreneurs
Public sector
Individuals
Foreign entities
Other customers
31.12.2014.
33,155,653
432,078
511,646
4,988,923
265,823
4,290,596
Foreign
currency
18,023,538
58,799
3,282,549
56,132,772
5,520,887
378,755
43,644,719
83,397,300
Dinars
RSD 000
31.12.2013.
01.01.2013.
23,148,141
312,110
101,484
4,254,644
291,230
4,002,486
Foreign
currency
19,841,565
33,507
3,339,475
55,291,216
4,481,317
215,649
14,774,176
163,044
87,221
2,615,631
248,284
1,980,444
Foreign
currency
14,102,247
22,312
2,411,940
46,713,179
4,316,906
231,380
32,110,095
83,202,729
19,868,800
67,797,964
Dinars
Dinars
Loans from customers in foreign currency totaling RSD 3.181.403 thousand as of December 31st, 2014 (RSD 3.309.271
thousand as of December 31st, 2013) are related to APEX loans signed with the National Bank of Serbia (NBS) and
maturing in 2022., with an interest rate of 3M/6M EURIBOR plus margin of 0,96%-1,27% annually, amounting to RSD
3.177.775 thousand and deferred income.
The bank is financing projects approved by the NBS based on payment of the funds by the NBS. Apex loans are signed
between the Bank and the NBS acting as an agent of the Republic of Serbia, with the aim of realization of signed financial
agreement between the European Investment bank, Republic of Serbia and the National Bank of Serbia.
102
Issued own securities and other borrowed funds
In dinars
Liabilities for issued securities
Deferred liabilities in respect of calculated interest and other expenses on issued own
securities and other borrowed funds
31.12.2014.
1,700,000
RSD 000
31.12.2013.
1,700,000
01.01.2013.
1,700,000
45,291
51,808
52,622
1,745,291
1,751,808
1,752,622
On April 23, 2012, the Bank issued 1,700,000 bonds, each having a nominal value of 1,000.00 RSD with maturity on
April 23, 2015.
Foreign
currency
13,822,102
56,510,375
2,003,994
1,198,754
5,729,995
86,577
Foreign
currency
15,908,157
57,177,493
1,742,662
753,888
3,719,915
116,288
Dinars
26. ISSUED OWN SECURITIES AND OTHER BORROWED
FUNDS
The Bonds are long-term, issued with maturirty of 3 years, with unlimited transferability and are registered in the name of
the holder in the Central Securities Depository and Clearing House.
Bonds are bearing variable interest rate, consisting from fixed and varaiable part. The variable part of the interest rate is
equal to the Reference rate of the National Bank of Serbia on a given date. The fixed part is unchangeable if the Bonds
are held to maturity and is 5.25% annauly. If the Reference rate is set for a period of less than two-weeks, the value of
the variable interest rate is increased by 0.15% per annum.
27. SUBORDINATED LIABILITIES
In foreign currency
Subordinated liabilities in foreign currency
Deferred liabilities in respect of interest on subordinated liabilities in foreign currency
31.12.2014.
RSD 000
31.12.2013.
01.01.2013.
14,514,996
33,356
13,757,052
33,353
13,646,196
37,500
14,548,352
13,790,405
13,683,696
Subordinated obligations in foreign currency in the amount of RSD 14.548.352 thousand as of December 31st 2014 refer
to subordinated obligations towards Societe Generale Paris. In details:
On August 23rd, 2005 an agremment on EUR 10,000 thousand subordinated loan was signed with Societe Generale Paris.
The loan, maturing on August 31st 2015, comes with the interest rate equalling 6M EURIBOR + 0.5% per year.
As of December 31st 2014, the loan outstanding amounts to RSD 1.209.628 thousand. Out of this amount RSD 1.209.583
thousand is related to subordinated loan, while RSD 45 thousand is related to the accrued interest due for payment on
June 30 th 2015.
On December 19 th, 2007, the Bank has received funds based on the Agreement on subordinated loan worth EUR 50.000
signed with Societe Generale Paris. The maturity of the loan was in December 2012. During 2009 an Annex to the
contract was signed, changing the maturirty date to June 19 th 2015, while an interest rate of 6M EURIBOR + 2.06%
annually was contracted.
At the end of 2013 new anex was signed, postponing the maturity by January 19 th, 2019 with an interest rate of 6M
EURIBOR+ 8,03 % annually for the period starting from June 19 th, 2015 to the new maturity. As of December 31st, 2014,
the loan outstanding amounts to RSD 6.048.351 thousand. Of this amount, RSD RSD 6.047.915 thousand is related to
ANNUAL REPORT 2014
103
the subordinated loan, whereas RSD 436 thousand concerns accrued interest related to this loan due for payment on
June 30 th, 2015.
Provisions for losses on credit risk off-balance sheet assets (a)
On September 23rd, 2009 an agreement on subordinated loan worth EUR 35,000 thousand was signed with Societe
Generale Paris, with March 30 th, 2015 set as maturity date and with an interest rate of 6M EURIBOR + 2.64% annually. As
of December 31st 2014, the loan outstanding was at RSD 4.264.415 thousand. Of this amount, RSD 4.233.541 thousand
is related to the subordinated loan, while RSD 30,874 thousand relates to the accrued interest on this subordinated loan
due for payment on March 30 th, 2015.
Provisions cancellation (Note 8)
Other changes
On December 21st, 2009 an agreement on EUR 25,000 thousand subordinated loan was signed with Societe Generale Paris,
with due date on December 23rd, 2019 and an interest rate of 6M EURIBOR + 2.47% annually. As of December 31st, 2014 the
loan outstanding amounts to RSD 3.025.959. Out of this amount, RSD 3.023.958 thousand relates to the subordinated loan,
while RSD 2,001 thousand is related the accrued interest on this loan, due for payment on June 23rd, 2015.
Provisions for other long-term reimbursements of employees (b)
Provisions for free shares
Subordinated loans are recognized as suplementary capital up to the amount of 50% of the core capital of the Bank. The
amount of suboridnated liability of the Bank, included in its supplementary capital is reduced by 20% of the paid amount
per year over the last five years before the maturity of that liability and hence in the last year before the maturity , it can
no longer be included in the supplementary capital. Subordinated loans amounting to EUR 10,000 and EUR 35,000 ,
contracted as of 31.12.2014 can no longer be included in the supplementary capital of the Bank’s regulatory capital as
they entered the last year of use.
28. PROVISIONS
Provisions
Provisions for losses on credit risk off-balance sheet assets (a)
Provisions for other long-term reimbursements of employees (b)
Provisions for court disputes and liabilities coverage (c)
31.12.2014.
1,014,026
124,766
3,861
RSD 000
31.12.2013.
855,797
128,010
790
01.01.2013.
772,020
102,821
343
1,142,653
984,597
875,184
Provisions for retirement severance payment
Interest expense
The expense of the current work
The expense of prior services
Used provisions
Actuarial gains
Provisions for court disputes and liabilities coverage (c)
Provisions for court disputes ( c)
Provision for liabilities coverage
31.12.2014.
855,797
2,167,273
(2,049,283)
40,239
1,014,026
124,766
67,057
22,103
89,160
60,952
2,888
(2,839)
(10,300)
(14,550)
(545)
35,606
3,861
790
3,327
(256)
3,861
-
RSD 000
31.12.2013.
772,021
1,490,845
(1,319,552)
782
(88,299)
855,797
128,010
45,423
21,635
67,058
57,397
4,017
(6,522)
(6,984)
60,952
790
790
790
343
(343)
-
01.01.2013.
638,685
996,796
(902,144)
38,683
772,020
102,821
23,963
21,460
45,423
46,674
3,267
(15,137)
(7,681)
57,397
343
343
343
a. Provisions for risk off-balance sheet assets (guarantees, issued acceptances, endorsements, irrevocable commitments
for undisbursed loans and other) are calculated based on internal methodology for credit risk assets and off-balance
sheet assets calculation.
b. Provisions for other long-term reimbursements of employees in dinars include provisions for free shares to employees
and provisions for retirement severance payment.
In 2010, Societe Generale Group defined free shares distribution plan to all the employees in the Group, on condition
of fullfilling the certain criteria and goals set by the Group by 2015.In order to obtain right to get free shares, an
employee of any subsidiariy within the Group should be empolyed in the Group since november 2010 up to the data of
obtaining the right on free shares. In that way, the employees have obtained the right on 40 free shares, of which 16
should be distibuted by the end of March 2015 on condition that the Group achieved an after-tax Retrun on equity of
no less than 10% and the remaining 24 should be distrbuted by the end of March 2016, on condition of achieving the
goal of increased client satisfaction in the period from 2010 up to 2013, in the amount proportional to the degree of
fulfiling this condition. As of 31.12.2014., the bank has calculated provisions based on free shares distribution to the
employees in the amount of RSD 89.160 thousand (2013. RSD 67.058 thousand).
104
ANNUAL REPORT 2014
105
c. Provisions for retirement severance payment amounting to RSD 35.606 thousand (2013. RSD 60.952 thousand) are
formed based on the report of an independet actuary using projecting per right unit method as at the balance sheet
data and are stated in the amount of the present value of the expected future payments. Decrease in provisions
for retirement severance payment results from the Amendments to the Labor law as of July 2014, which stipulates
decrease in the amount of retirement severance payment, as well as lifting of the retirement age.
The amount of severance payments upon retirement is defined by the Internal Work Rulebook, stipulating that the given
employee is paid his two average net salaries or two gross salaries in the Republic of Serbia according to the latest
published information of the relevant authority in charge of statistics or the amount approved by the bank's Executive
director, depending which solution is more favourable for the employee.
Actuarial asumptions used for calcualtion are the following:
Demographic assumptions, based on tables of demographic mortality from 2000 -2002, published by the Statistical
Office of the Republic of Serbia
Expected long-term rate of growth of salaries of 5.00%, in line with the actual nominal growth of salaries in 2014
compared to 2013.
The key reference rate, which was at 8% at the day of calculation is used as discount rate.
29. OTHER LIABILITIES
Other liabilities
Liabilities for non-distributed inflows in foreign currency
Deferred liabilities for other calculated expenses in foreign currency
Other operating liabilities in foreign currency
Liabilities to suppliers in dinars
Other operating liabilities in dinars
Liabilities to suppliers in foreign currency
Other liabilities for employees in foreign currency
Deferred liabilities for other calculated expenses in dinars
Short-term liabilities for cumulated non-used annual leaves
Other accrued liabilities in dinars
Other accrued liabilities in foreign currency
Other accrued liabilities from payment cards operations
Other accrued income in dinars
Accrued interest income in dinars
Liabilities for other tax and contributions in dinars
Accrued interest income in foreign currency
Liabilities for value added tax in dinars
Other liabilities to employees in dinars
Suspense accounts in dinars
Liabilities arising from temporary and occasional work in dinars
Liabilities based on received funds for operations for and on behalf of the client in dinars
Accrued other income in foreign currency
Liabilities under fees and commissions on other liabilities in dinars
Other
106
31.12.2014.
470,609
379,659
376,224
209,483
184,133
167,314
151,097
121,237
89,291
73,340
42,707
42,558
35,799
32,713
17,973
12,642
12,511
10,296
7,513
479
205
119
163
RSD 000
31.12.2013.
191,981
203,094
84,227
108,212
95,231
178,414
133,136
87,963
115,470
63,896
64,333
115,776
16,783
77,892
24,882
340,336
18,523
245
1,655
257
102
843
96
312
01.01.2013.
94,461
240,774
70,104
81,062
104,548
152,074
100,677
130,679
88,776
39,482
53,702
110,026
19,173
78,115
22,159
7,103
389
2,899
136
7
79
636
2,438,065
1,923,659
1,397,061
Short term liabilities for cummulated, unused annual leaves
Increase in liability
Decrease in liability
2014
115,471
- (26,180)
RSD 000
2013
88,776
106,434
(79,740)
2012
43,127
45,649
- Balance as of December 31st
89,291
115,470
88,776
As of December 31st, 2014, the Bank has calculated liabilities for cummulated, unused annaul leaves in the amount of
RSD 89.291 thousand (RSD 115.470 thousand as of December 31st,2013), which can be transffered and used in the
future period.
30. EQUITY
a. Strucutre of the Bank's equity
KAPITAL
Share capital-common shares (i)
Share premium
Other reserves (ii)
Revaluation reserves based on securities available for trading
Actuarial gains
Profit/(Loss) of the current year
31.12.2014.
23,723,021
1,253
9,524,825
300,128
464
368,522
RSD 000
31.12.2013.
23,723,021
1,253
10,333,077
109,821
(808,252)
01.01.2013.
23,723,021
1,253
10,230,225
6,882
102,852
33,918,213
33,358,920
34,064,233
Share capital
Share capital consists of 5,331,016 shares with nominal value of 4,450 RSD per share. Out of this one share is in the
ownership of Genebanque S.A while 5,331,015 of shares is owned by Societe Generale S.A. Paris.
There were no share issues in 2014.
Other reserves from profit
Other reserves from profit are formed by the Bank based on decisions of the Shareholders Assembly on results distribution.
b. Bank performance indicators – compliance with legal indicators
The Bank is obliged to adjust the volume and structure of its operations and risk placements with the performance
indicators regulated by the Law on Banks and relevant decisions of National Bank of Serbia adopted based on this Law. As
of December 31st, 2014 the Bank’s performance indicators were compliant with values required by the regulation (Note 35).
ANNUAL REPORT 2014
107
31. OFF BALANCE POSITIONS
32. RELATIONS WITH RELATED PARTIES
Off balance positions
Guarantees and other taken irrevocable obligations (a)
Derivatives (b)
Operations in the name and for the account of third parties (c)
Other off balance positions (d)
31.12.2014.
37,558,066
723,310
4,028,878
136,066,792
RSD 000
31.12.2013.
41,217,738
10,668,413
3,437,079
70,117,833
01.01.2013.
40,540,330
799,820
2,826,282
59,227,005
178,377,046
125,441,063
103,393,437
a) Guarantees and other taken irrevocable obligations
In dinars
Financial guarantees
Performance guarantees
Issued acceptances
Taken irrevocable obligations
31.12.2014.
4,371,457
8,202,710
14,184
6,834,069
RSD 000
31.12.2013.
4,367,502
8,588,323
34,143
7,356,706
19,422,420
20,346,674
15,515,767
7,615,546
9,051,833
1,314,567
153,699
9,072,918
6,639,986
1,197,380
3,960,780
11,266,051
4,350,254
1,490,356
7,917,902
18,135,645
20,871,064
25,024,563
31.12.2014.
723,310
-
RSD 000
31.12.2013.
562,112
10,106,301
01.01.2013.
799,820
-
723,310
10,668,413
799,820
31.12.2014.
RSD 000
31.12.2013.
01.01.2013.
4,028,878
3,437,079
2,826,282
4,028,878
3,437,079
2,826,282
31.12.2014.
16,385,514
6,239,210
43,916,904
63,579,242
2,616,327
2,037,176
1,280,826
11,567
27
RSD 000
31.12.2013.
16,410,470
4,598,700
4,000,000
30,414,572
12,202,926
85,187
1,705,189
624,635
76,133
21
01.01.2013.
17,129,829
5,273,835
3,000,000
21,649,680
6,673,851
3,643,611
881,858
72,736
901,585
20
136,066,792
70,117,833
59,227,005
In foreign currency
Financial guarantees
Performance guarantees
Uncovered letters of credit
Taken irrevocable obligations
b) Derivatives
Currency forward contracts
Currency swap contracts
c) Operations in the name and for the account of third parties
Subsidized part of housing loans disbursed in the name and for the account of Republic
of Serbia
d) Other off balance positions
Received guarantees
SPOT transactions
Bills from reverse repo operations
Taken callable liabilities
Securities of custody clients
Securities received as pledge
Evidential interest
Foreign cheques sent to payment
A vista nostro letters of credit
Other
108
01.01.2013.
2,405,938
7,558,882
40,808
5,510,139
In its daily operations the Bank conducts usual business transactions with different related entities. Related entities are the
Bank’s shareholders (owners) and other members of the Societe Generale Group, as well as key management of the Bank.
The overview of transactions with related parties in the course of 2014. and 2013. is presented in the following tables:
RSD 000
31.12.2014.
ASSETS-BALANCE
SHEET ITEMS
ALD Automotive doo
Beograd
SKB Banka dd Ljubljana
Ajdovscina 4
Societe Generale Banka
Montenegro ad
Societe Generale New York
Mcgrow-Hil
Societe Generale
Osiguranje ado Beograd
Societe Generale Paris
Sogelease Srbija doo
Beograd
Bank management
Balance as of December
31st
Financial assets,
initially recognized Loans and receivables
at fair value through
to banks and other
income statement
intended for trading
Loans and
receivables from
other customers
Other assets
Stake in
equity
Total
-
-
-
17
-
17
-
-
-
6
-
6
-
-
-
512
-
512
-
83,382
-
-
-
83,382
-
-
-
101,294
149,649
250,943
91
137,528
-
1,784
-
139,403
-
14,379
-
1,924
314,098
330,401
-
-
84,507
143
-
84,650
91
235,290
84,507
105,679
463,747
889,314
The balances on the position of loans and receivables from banks and other financial institutions are related to:
Societe Generale New York, funds on nostro accounts
Societe Generale Paris, funds on nostro accounts
Sogelease Srbija Belgrade, short term loans for working capital disbursed based on credit lines
ANNUAL REPORT 2014
109
RSD 000
31.12.2014.
Financial liabilities at fair value through
income statement intended for trading
LIABILITIES
ALD Automotive doo Beograd
BRD Groupe Societe Generale
Komercni Banka As Prague
Ohridska Banka ad Ohrid
SG Expressbank
SKB Banka dd Ljubljana Ajdovscina 4
Societe Generale Banka Montenegro ad
Societe Generale New York Mcgrow-Hil
Societe Generale Osiguranje ado Beograd
Societe Generale Splitska Banka
Sogelease Srbija doo Beograd
Bank management
1,545
-
1,545
Deposits and other liabilities to banks,
Deposits and other Issued own securities and
other financial organizations and the
liabilities to customers
other borrowed funds
central bank
23,708
3,715
1,405
396
371,813
5,982
15,733,185
9,228
9,948
207,562
16,129,690
231,270
Provisions for losses on
off-balance sheet assets
Other provisions
Other liabilities
Total
569
1,304
231
136
966
1,736
9,284
545
10,092
-
10,264
14,548,352
-
64
230
332,151
24,781
24,340
1,304
231
136
966
3,715
3,142
396
378,025
30,624,518
9,773
20,040
242,607
24,864
10,264
14,548,352
357,226
31,309,193
5,982
As of December 31st, 2014, the amount of deposits received from Societe Generale Paris as coverage (guarantee) for
loans disbursed amounts to RSD 3.427.500 thousand.
INCOME
Sogelease Srbija d.o.o.
Societe Generale Penzije
Societe Generale SKB Banka
Societe Generale ALD
Societe Generale Podgoricka Banka
Bank management
Interest income
3,696
514
454
3,003
RSD 000
2014
Fee and commission income
2
49,905
29,741
503
75
1
12
216
Other operating revenues
12,314
2,782
5
10,579
2,943
-
Total
16,012
52,687
5
30,255
503
75
11,034
2,955
3,219
7,667
80,455
28,623
116,745
RSD 000
2014
Societe Private Banking Geneve
Societe Generale Newyork
Societe Generale SG Express Banka
Societe Generale India
CGA Pariz
SG Faktoring Italia
Bank management
3,662
12,118
3,988
943,793
12,760
6,355
Fee and commission
expense
93,010
6
3,752
5
31
80
-
982,676
96,884
EXPENSES
Interest expense
110
ASSETS OFF-BALANCE SHEET
ITEMS
SG Expressbank
Bank management
19,048
241,425
49,174
1,156
35
Staff expenses
(gross)
230,811
3,662
31,166
3,988
1,278,228
12,760
6
3,752
5
49,174
1,156
31
80
237,201
310,838
230,811
1,621,209
Other expenses
Issued
guarantees and
other sureties
138,692
24,623
14,439
102,815
184,703
293,628
57,937
816,836
RSD 000
31.12.2014.
Irrevocable commitments
Taken revocable
for undisbursed loans
commitments
and placements
60,479
694,051
60,000
1,013,631
6,624
754,051
Total
2,183,980
-
60,479
138,692
24,623
14,439
102,815
184,703
3,171,659
57,937
1,073,631
6,624
2,183,980
4,835,601
1,080,734
Received guarantees
173,976
24,623
74,918
102,815
190,751
2,220,954
70,033
RSD 000
31.12.2014.
Other off balance liabilities
2,183,980
-
Total
173,976
24,623
74,918
102,815
190,751
4,404,934
70,033
2,858,070
2,183,980
5,042,050
Total
PASIVA VANBILANSNE POZICIJE
SG Expressbank
Other off
balance assets
As of December 31st, 2014 the commitment to the head office Societe Generale Paris amounting to RSD 2.183.980
thousand and receivable from head office in the same amount is related to spot transactions agreed between Societe
Generale Srbija and Societe Generale Paris at the end of 2014, matured on the first working day in 2015.
ANNUAL REPORT 2014
111
ASSETS –BALANCE SHEET ITEMS
SKB Banka dd Ljubljana Ajdovscina 4
Societe Generale New York Mcgrow-Hil
Societe Generale Osiguranje ado
Beograd
Bank management
44,552
RSD 000
31.12.2013.
Loans and
receivables from
other customers
56,774
-
44
-
25,924
149,650
175,618
92,432
335,575
-
97,336
1,118
-
314,098
-
93,550
649,673
97,336
472,603
154,110
27,317
520,619
1,174,649
Loans and receivables to banks
and other financial institutions
Other
assets
Stake in
equity
Total
3
190
15
66
0
56,871
-
56,774
56,874
190
15
66
44,552
INCOME
Interest income
Societe Generale Podgoricka Banka
Societe Generale Ohridska Banka
Bank management
18,304
1,470
499
1,741
22,014
RSD 000
2013
Fee and commission
income
1
40,280
356
75,724
725
110
151
Societe Generale Paris, funds on nostro accounts
Sogelease Srbija Belgrade, short term loans for working capital dibursed based on credit lines
Deposits
and other
liabilities to
customers
-
10,343
548
-
-
-
ALD Automotive doo
Beograd
BRD Groupe Societe
Generale
SG Expressbank
SKB Banka dd
Ljubljana
Ajdovscina 4
Societe Generale
Banka Montenegro
ad
Societe Generale
Paris
Societe Generale
Splitska Banka
Sogelease Srbija doo
Beograd
Bank management
Balance as of
December 31st
Societe Generale Pariz
Societe Generale Newyork
Societe Generale Vienna
Societe Generale Brisel
Societe Generale Amsterdam
Societe Generale Frankfurt
Societe Generale BRD group
Societe Generale SG Express Banka
Societe Generale India
Bank management
2,166
12,010
12,170
1,344,604
23,992
7,418
Fee and
commission
expense
59,156
6
4,100
20
17
30
57
11
11
5
-
1,402,360
63,413
EXPENSES
Deposits and other
liabilities to banks, other
financial organizations
and the central bank
Subordinated
liabilities
Other
liabilities
Total
-
-
45
10,936
1,317
-
-
-
1,317
-
931
-
-
-
931
3,645
-
-
-
-
-
3,645
-
-
1,076
-
-
-
1,076
18,492,100
-
-
-
13,790,405
71,096
32,353,600
1,949
-
606
-
-
-
2,555
ASSETS : OFF BALANCE ITEMS
211,923
-
7,505
-
-
-
219,428
-
193,262
-
6,438
-
19,169
218,869
18,709,617
203,605
11,982
6,438
13,790,405
90,309
32,812,357
As of December 31st, 2013, the amount of deposits received from Societe Generale Paris as coverage (guarantee) for
loans disbursed amounts to RSD 8.741.046 thousand.
SG Expressbank
Bank management
112
40,635
179,996
Total
RSD 000
2013
Societe Generale New York, funds on nostro accounts
LIABILITIES
BALANCE SHEET
ITEMS
32,117
42,546
2,204
88,739
725
110
10,160
814
499
190
1,892
117,347
The balances on the position of loans and receivables from banks and other financial institutions are related to:
RSD 000
31.12.2013.
Provisions
for losses on
Other
off-balance
provisions
sheet assets
Other operating
revenues
13,812
2,266
1,848
11,545
10,160
814
190
-
Interest
expense
Issued
guarantees and
other sureties
137,846
97,446
112,693
369,094
63,394
780,473
Total
Interest
expense
2,551
72,660
43,392
1,298
-
Staff
expenses
(gross)
171,087
39,860
-
2,166
14,561
52,030
1,476,420
6
4,100
20
17
30
57
11
11
43,392
5
23,992
1,298
178,505
119,901
171,087
39,860
1,796,621
Other expenses
RSD 000
31.12.2013.
Irrevocable commitments Receivables
for undisbursed loans and
from
placements derivatives
57,321
663,000
3,364,612
785,750
1,506,071
3,364,612
Taken
callable
liabilities
5,686
Other off
balance
assets
928,632
-
57,321
137,846
97,446
112,693
5,325,339
63,394
785,750
5,686
5,686
928,632
6,585,475
ANNUAL REPORT 2014
113
Total
In regards to the issued guarantees, exposure to the parent company (Societe Generale Paris) is related to issuing
guarantees based on received counterguarnatees of the parent company, for the account of clients of the parent bank
who are operating in the terriorty of the Republic of Serbia in the amount of RSD 293.628 thousand as of 31.12.2014.
e.g. RSD 369.094 thousand as of 31.12.2013. Within the liabilities to the parent company, major part consists of issued
guarantees representing the coverage for payments stemming from cross border loans paid to the Bank clients by Societe
Generale Paris.
RSD 000
31.12.2013.
155,101
97,446
124,157
4,061,196
80,591
Druga
vanbilansna
pasiva
930,030
-
155,101
97,446
124,157
8,361,704
80,591
4,518,491
930,030
8,818,999
LIABILITIES: OFF BALANCE ITEMS
Obaveze po
derivatima
Primljene
garancije
SG Expressbank
3,370,478
-
Balance as of December 31
3,370,478
st
Ukupno
33. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the comparison between book values and fair values of classes of financial instruments:
RSD 000
31.12.2014.
FINANCIAL ASSETS
Cash and balances with the central
bank
Financial assets, recognised at
fair value through the income
statement intended for trading
Loans and receivables from banks
and other financial organizations
Loans and receivables to
customers
31.12.2013.
Book value
Fair value
Unrecognized
gain/loss
Book value
Fair value
Unrecognized
gain/loss
32,329,563
32,329,563
-
35,690,424
35,690,424
-
6,637
6,637
-
11,824
11,824
-
23,705,967
23,705,967
-
13,904,137
13,904,137
-
10,198,273
10,198,273
-
13,984,850
13,984,850
-
150,536,414
150,626,915
90,501
151,793,110
151,802,638
9,528
RSD 000
31.12.2014.
FINANCIAL LIABILITIES
Financial liabilities, recognized at fair
value through the income statement
intended for trading
Deposits and other liabilities to banks
,other financial organizations and the
central bank
Deposits and other liabilities to other
customers
Issued own securities and other
borrowed funds
114
31.12.2013.
Book value
Fair value
Unrecognized
gain/loss
Book value
Fair value
Unrecognized
gain/loss
3,972
3,972
-
8,031
8,031
-
41,472,219
41,475,745
3,526
52,937,997
52,937,252
(745)
127,042,036
127,095,789
53,753
115,312,824
115,342,597
29,773
1,745,291
1,745,829
538
1,751,808
1,752,884
1,076
14,548,352
14,548,352
-
13,790,405
13,790,405
-
RSD 000
FINANCIAL ASSETS
Cash and balances with the
central bank
Financial assets, recognized at
fair value through the income
Financial assets available for
sale
Loans and receivables from
banks and other financial
organizations
Cash and balances with the
central bank
Level 1
31.12.2014.
Level 2
Level 3
Total
Level 1
31.12.2013.
Level 2
Level 3
Total
-
-
32,329,563
32,329,563
-
-
35,690,424
35,690,424
-
-
6,637
6,637
-
-
11,824
11,824
-
23,702,595
3,372
23,705,967
-
13,737,342
166,795
13,904,137
-
10,198,273
-
10,198,273
-
13,984,850
-
13,984,850
- 150,626,915
- 150,626,915
- 151,802,638
- 151,802,638
RSD 000
FINANCIAL LIABILITIES
Financial liabilities, recognized
at fair value through the income
Deposits and other liabilities
to banks ,other financial
organizations and the central
bank
Deposits and other liabilities to
other customers
Issued own securities and other
borrowed funds
Level 1
31.12.2014.
Level 2
Level 3
Total
Level 1
31.12.2013.
Level 2
Level 3
Total
-
-
3,972
3,972
-
-
8,031
8,031
-
41,475,745
-
41,475,745
-
52,937,252
-
52,937,252
- 127,095,789
- 127,095,789
- 115,342,596
- 115,342,596
-
1,745,829
-
1,745,829
-
1,752,884
-
1,752,884
-
-
14,548,352
14,548,352
-
-
13,790,405
13,790,405
Assets Recognized at Fair Value
Financial instruments that the bank values and records at fair value are securities available for sale.
Having in mind underdeveloped market in the Republic of Serbia on one hand, and the fact that the securities portfolio
available for sale is comprised of Republic of Serbia state bills, the Bank estimates the financial instruments’ fair value
using the comparative „mark to mark“ approach, using the information on similar financial instruments or other market
information based on which a value of the financial instrument can be derived, by comparing interest rates with valid
interest rates for similar products on the market-level 2.
Assets and Obligations for which Fair Value is Approximately Equal
to the Book Value
For liquid financial assets and financial obligations it is presumed that the book values are approximative to fair value.
ANNUAL REPORT 2014
115
34. RISK MANAGEMENT
Assets and Liabilities for which the Fair Value is determined by Valuation
Techniques
34.1. Introduction
Fair value of financial assets and obligations recorded per amortized purchase value is estimated by comparing market
interests rate with initial recognition with current market rates currently valid for similar financial instruments. Estimated
fair value of the deposit is based on discounted cash flows using overall interest rates on money market for contracts
with similar credit risk and due date, meaning that the Level 2 approach is used. For all other financial assets and
liabilites which are recorded per amortized value, fair value is deterimined by using mark-to-mark apporach, which is
not based on market information, but on information derived from theoretical model adequate for determination of fair
value of the instrument.
The Bank uses the following hierarchy for determining and disclosing the fair value of financial instruments:
Level 1: Market quotations of identical financial instruments (mark-to-market);
Risk Management Policy
The Bank established risk management system which is constantly being improved in order be able to identify, evaluate,
measure, hedge, monitor and communicate risks it which it is exposed in its business operations. Through the risk
management system the Bank defines goals and principles of risk management as well as general policies, methodologies
and procedures regarding the risk management.
Level 3: Mark-to-model approach, which uses information not obtained from the market, but are derived from the
theoretical model adequate to determine financial value of the instruments.
Basic principles and rules regarding the risk management strategy, as well as the defining of global principles of the Bank
it handling risk in long term are defined by the Risk Management Strategy. It also defines concepts and general terms for
risk exposure, identification of risk category and risk appetite. On the other hand, by Risk management policy the Bank
defines organization and responsibilities in every phase of the risk taking process, through identification methodology,
measurements and analysis of special risk types. Also, the policy defines control and risk exposure limits.
The following table shows the fair values of financial instruments available for sale e.g. debt securities issued by the state
(T bills/bonds) for which there are no data on market prices and whose fair values were obtained by using the above
mentioned techniques of valuation as at 31st December 2014 and 31 December 2013.
Organizational Set Up of Risk Management
Level2: Comparative mark-to-model approach, which uses information on similar financial instruments or other market
information based on which can be derived value finanskog instrument; and
FINANCIAL ASSETS
Financial instruments available for sale
FINANCIAL ASSETS
Financial instruments available for sale
Level 1
RSD 000
2014.
Level 2
Level 3
23,702,595
Level 1
RSD 000
2013.
Level 2
Level 3
13,737,342
The structure of risk management is organized in line with the provisions of the Law on Banks and respective decisions
of the National Bank of Serbia which define the area of risk management and capital adequacy, as well as the Bank’s
Articles of Association.
The Board of Directors defines Risk Management Policy, Risk management Strategy and Capital Management Strategy.
Executive Board is responsible for carrying out the Risk Management Policy, Risk management Strategy and Capital
Management Strategy. Executive Board also adopts procedure for identifying, measuring and evaluating risks. It also
analyses the efficiency of their implementation and reports to the Board of Directors. In line with the article 28 of the Law
on Banks, the Bank formed a special organizational part for managing risks – Risk Division.
The main roles in risk management in the Bank fall upon the following bodies:
Board of Directors
The responsibility of the Board of Directors regarding the risk is to determine the strategy of risk management of the Bank
and to supervise risks taken by the Bank in its activities.
The Board of Directors is also in charge of giving prior consent for exposures to a single client or a group of related parties
exceeding 10% of the Bank’s capital, including increase of those exposures to over 20% of the capital. These decisions
are based on recommendations of the Risk Sector.
The Board of Directors defines limits up to which the Executive Board can approve exposures, as well as conditions under
which those exposures are approved.
Finally, the Board of Directors appoints and dismisses the members of the Credit Committee.
116
ANNUAL REPORT 2014
117
Executive Board
determination, measurement and monitoring of daily liquidity ratio
The main responsibility of the Executive Board is to determine the policy of risk management and follow the strategy of risk
management. In case some activities or risks are not in accordance with the defined policy and principles the Executive
Board is obligated to notify the Board of Directors of it.
When it comes to risk management, the Executive Board follows the portfolio segmentation on quarterly level, and in case
of approved limit excess, determines the position to be taken.
The Executive Board is also responsible for approving the exposures to clients within the limits determined by the Board
of Directors. These decisions are adopted considering the recommendation of Risk.
Finally, the Executive Board decides and notifies the Board of Directors on exposures to parties related to the Bank, in
accordance with the definition of related persons defined by the National Bank of Serbia.
Credit Committee
The basic obligation of the Credit Committee is to make decisions on approval of loans and other placements to bank's
clients within the frame of the Bank's credit policy and within its limits of authorization.
In addition to deciding on credit files, the Credit Committee and Risk Division also provide opinion on new products
generating risk and other general areas which include risk taking.
securing the monitoring of total level of transactions within determined limits on daily level,
Internal and external reporting on liquidity movement
Internal Audit
Through carrying out periodic planned audits and special engagements, the function of Internal Audit evaluates the
adequacy and reliability of the system of internal controls and the Bank’s compliance function.
Internal Audit communicates the output of its work to the Bank’s management securing thus that the risks are appropriately
identified and controlled. Internal audit regularly prepares reports on its activities and delivers them to Board of Directors
and Audit Board.
34.2. Credit Risk
Credit risk is the risk that the bank will suffer a loss because its clients or the contractual parties will not be able to
fully or partially settle their due payment obligations to the Bank in a timely manner, and arises largely from loans and
advances to clients and banks and investment securities. For the purpose of reporting on risk management, the Bank
considers and consolidates all the elements of credit risk exposure (non-compliance of an individual debtor, activity
risk, repayment risk, etc.).
Assets and Liabilities Committee
The main role of the Assets and Liabilities Committee (hereinafter: ALCO) is to identify, measure and manage risks which
originate from the structure of its balance sheet and off-balance items, and first of all liquidity risk, interest rate risk and
currency risk in structural part of the Bank's balance sheet.
Risk Division
The obligation of the Risk Division (Hereinafter: Risk) is identification, measurement, evaluation and management of risks
taken by the Bank in regular business (credit risk including client risk, sector risk, country risk, replacement risk, etc.).
Credit Risk Management
The Bank manages the credit risk by granting loans in accordance with its business policy having adjusted loan
maturity dates and interest rates with the loan purpose, loan type or the client and client’s creditworthiness. Applying
the internal procedures, in accordance with its business policy, the Bank seeks to ensure its financial investments with
adequate collaterals.
Risk also provides opinion on new products generating risk and other general areas including risk.
The Executive Board has, by its decision, decentralized powers and limits for decisions on granting loans, having maintained
the risk standards at the adequate level. For the purpose of homogenization of risk evaluation and facilitated and adequate
monitoring of obligations, the Bank uses the risk ratings for its clients.
Assets and Liabilities Management Department
Loans are granted only when the Bank has sufficient information on the creditworthiness of the client. Collaterals will be
accepted in terms of reducing the credit risk exposure.
Liquidity is unconditional ability of the Bank to secure sufficient liquid funds to timely satisfy all maturing liabilities
stemming from the balance sheet liabilities (withdrawal of deposits and other sources of financing), assets (financing new
loans) as well s based on off-balance items.
Team for operational affairs within Assets and Liabilities Management Department is responsible for managing of current
liquidity. It secures its function through the following activities:
planning of inflow and outflow of funds
securing the missing liquidity or placing the surplus of liquidity on financial markets, as well as the maintenance of
appropriate currency and time deposit structure for the settlement of due obligations in time;
analysis of structure and quality of deposits and evaluation of its stability,
118
ANNUAL REPORT 2014
119
Impairment and Provisioning Policy
The debtor rating scale has been graded per probability of default. Debtor rating makes it possible to determine the
probability of default of another contractual party within the period of one year.
Objective evidence of impairment includes the events that condition measurable impairment of the estimated future cash
flows. Objective evidence includes:
The Rating Scale of Societe Generale Group
Moody`s
S&P
Aaa
AAA
SG Group Debtor Rating
1
Fitch IBCA
AAA
Significant deterioration in financial position of a debtor or a group of debtors,
2+
Aa1
AA+
AA+
Delay in settling commitments,
2
Aa2
AA
AA
Bankruptcy or another form of debtor’s reorganization that jeopardizes timely and complete settlement of commitments
and
2-
Aa3
AA-
AA-
3+
A1
A+
A+
3
A2
A
A
Similar events that indicate the occurrence of measurable reduction in the expected future cash flows.
3-
A3
A-
A-
4+
Baa1
BBB+
BBB+
4
Baa2
BBB
BBB
4-
Baa3
BBB-
BBB-
5+
Ba1
BB+
BB+
5
Ba2
BB
BB
The Bank performs individual assessment of impairment for individually significant exposures or groups of exposures. The
amount of loss shall be determined as a difference between the book value and present value of future cash flows from
the client.
The calculated amount of balance sheet assets impairment shall be recorded by the Bank’s accounting as expenses,
credited to account of provisions for such assets, while the calculated amount of the probable loss based on off-balance
sheet items shall be recorded as expenses, credited to account of provisions for losses per off-balance sheet items.
Collective evaluation of impairment shall be performed for exposures not belonging to the group of individually significant
exposures.
For the purpose of collective evaluation, the investments shall be grouped in groups homogenous in terms of credit risk,
according to the type of product i.e. the level of sensitivity in accordance with the internal Bank methodology, consistent
with the methodology of Societe Generale Group.
Future cash flows for homogenous groups of investments shall be determined based on the available historical data on losses
arising from investments with similar characteristics in terms of credit risk. The evaluation process shall include currently
available data for the purpose of eliminating the effects that were ongoing in the previous period, and have ceased to be, as
well for the purpose of including the effects that are significant nowadays, but had no significance in the previous period.
5-
Ba3
BB-
BB-
6+
B1
B+
B+
6
B2
B
B
6-
B3
B
B
7+
Caa1
CCC+
CCC+
7
Caa2
CCC
CCC
7-
Caa3
CCC-
CCC-
8
Ca
DDD
9
C
D
DD
10
D
The maximum exposure to credit risk is shown in the following table:
RSD 000
While evaluating the future cash flows, the flows that shall obliviously occur by realization of collaterals are also taken into
account, reduced by the costs of realization.
The System of Ranking (Rating) the Clients
Rating system of the Societe Generale Group is based on the qualitative analysis and may be used both for clients and
transactions. The scale has 10 levels and 22 sub-levels with seven classes, 19 of which denote “in bonis” clients and 3
problem clients. This rating scale covers the business activities in all sectors except for financial sector, where the special
model is used. The rating depends on the client’s quality and enables the rating of all lines of a certain loan subject to be
in accordance with the rating of a client himself and the transactions structure.
Revisions of clients’ ratings are performed at least once a year, on occasion of issuing financial statements, or during
the course of the year in case an extraordinary event changes the client’s risk profile (it is essential as an element of risk
control and therefore must be evaluated independently of “the event” related to the loan subject.).
For all the subjects outside the local limit of approval, this rating should be approved by RISQ/BHF (of another competent
department within the Societe Generale Group in charge of a client.)
120
31.12.2014.
Loans and receivables
from banks and other
from customers
Financial assets
available for sale
Financial assets at fair
value through income
statement held for
trading
Investments in
associates and joint
ventures
Investments in
subsidiaries
Total
31.12.2013.
Net
Exposure to
Credit Risk
Maximum
Balance
Sheet
Exposure to
Credit Risk
Allowance
for
Impairment
Of which
Portfolio
based
Allowance
Net
Exposure to
Credit Risk
-
10,198,273
13,988,088
(3,238)
-
13,984,850
(21,975,448)
(1,275,461)
150,536,414
168,896,673
(17,103,563)
(1,376,466)
151,793,110
23,706,079
(112)
-
23,705,967
13,904,226
(89)
-
13,904,137
6,637
-
-
6,637
11,824
-
-
11,824
149,649
-
-
149,649
246,380
(39,860)
-
206,520
314,098
-
-
314,098
314,098
-
-
314,098
Maximum
Balance
Sheet
Exposure to
Credit Risk
Allowance
for
Impairment
Of which
Portfolio
based
Allowance
10,294,892
(96,619)
172,511,862
206,983,217 (22,072,179)
(1,275,461) 184,911,038 197,361,289 (17,146,750)
ANNUAL REPORT 2014
(1,376,466) 180,214,539
121
RSD 000
31.12.2014.
Payable Guarantees
Performance
Guarantees
Non-Covered Letters of
Credit and Avals
Irrevocable
Commitments
Derivatives
Allowance
for
Impairment
Of which
Portfolio
based
Allowance
(323,636)
(255,388)
Maximum
Of which
Off-Balance
Allowance for
Portfolio
Sheet
Impairment
based
Exposure to
Allowance
Credit Risk
11,663,368
13,440,420
(279,062)
(195,699)
17,254,543
(465,853)
(367,615)
16,788,691
15,228,309
(316,182)
(221,731)
14,912,127
1,328,751
(35,875)
(28,310)
1,292,876
1,231,523
(25,570)
(17,932)
1,205,953
6,987,768
(188,662)
(148,877)
6,799,107
11,317,486
(234,983)
(164,788)
11,082,503
723,310
-
-
723,310
10,668,413
-
-
10,668,413
38,281,375
(1,014,026)
(800,190)
37,267,352
51,886,151
(855,797)
(600,150)
51,030,355
Maximum
Off-Balance
Sheet
Exposure to
Credit Risk
11,987,003
Total
31.12.2013.
Net OffBalance
Exposure to
Credit Risk
Net OffBalance
Exposure to
Credit Risk
The Bank issues guarantees and letters of credit to its clients, based on which the Bank has a contingent liabilities to
effect payments on behalf of third parties. In this way the Bank is exposed to risks related to credit risk, which can be
overcome by the same control processes and procedures.
Maximum Exposure to Credit Risk related to Balance and Off-Balance Exposures
Maximum exposure to credit risk of the Bank as of December 31, 2013 and December 31, 2014, prior to taking into
account the collaterals and other means of protection against credit risk, may be analyzed through the following geographic
areas based on the residency status for individuals and for the legal entities for balance sheet exposures:
Serbia
European Union
Of which France
Rest of Europe
Rest of World
Loans and
receivables
financial organizations from customers
1,304,742
172,146,117
6,164,439
190,504
140,721
130,715
48,802
37,351
2,636,188
7,175
Total
Serbia
European Union
Of which France
Rest of Europe
Rest of World
10,294,892
172,511,862
Loans and
receivables
financial organizations from customers
4,272,808
168,628,065
8,375,873
10,987
91,203
3,124
66,309
191,609
1,181,895
62,888
Total
13,988,088
122
168,896,673
Investments in
associates and
joint ventures
149,649
-
Investments
in
subsidiaries
314,098
-
6,637
149,649
314,098
RSD 000
31.12.2013.
Financial
assets available
for sale statement held for trading
13,902,272
1,954
11,824
-
Investments in
associates and
joint ventures
246,380
-
Investments
in
subsidiaries
314,098
-
246,380
314,098
23,706,079
13,904,226
11,824
Serbia
European Union
Of which France
Rest of Europe
Payable
Guarantees
11,683,543
223,571
79,889
-
Performance
Guarantees
14,626,359
1,943,148
213,738
471,298
RSD 000
31.12.2014.
Non-Covered Letters
of Credit and Avals
1,328,751
-
Total
11,987,003
17,254,543
1,328,751
6,987,768
Serbia
European Union
Of which France
Rest of Europe
Payable
Guarantees
13,100,165
250,678
89,577
-
Performance
Guarantees
12,908,758
1,714,960
188,638
415,953
RSD 000
31.12.2013.
Non-Covered Letters
of Credit and Avals
1,231,523
-
Irrevocable
commitments
11,317,486
-
Total
13,440,420
15,228,309
1,231,523
11,317,486
13,161,359
Other Risks Related to Credit Risk
RSD 000
31.12.2014.
Financial assets
available for
sale statement held for trading
23,703,590
2,489
6,637
-
Maximum exposure to credit risk of the Bank as of December 31, 2013 and December 31, 2014, prior to taking into
account the collaterals and other means of protection against credit risk, may be analyzed through the following geographic
areas based on the residency status for individuals and for the legal entities for off-balance sheet exposures:
Irrevocable
commitments
6,987,768
-
Derivatives
723,310
723,310
Derivatives
10,668,413
10,668,413
Coverage with Collaterals
For most of its exposures approved to clients (except for banks) the Bank requires the collaterals.
Amount and the type of the required collateral depend on assessed level of credit risk for each client as well as the
characteristics and the maturity for related exposure.
Assessment of the fair value of the collateral is based on the on the value of the collateral is based on the market value of
the collateral instrument which is assessed at the moment of exposure origination. In line with the Bank’s policy the fair
value is being reassessed within the defined deadlines.
The Bank uses following collaterals for the purpose of calculating provisions and net present values of cash flows from
clients where the bank expects collection from collaterals and where provisions are individually assessed:
Prime collaterals include:
Cash deposits in dinars of foreign currency
Guarantees and other forms of collaterals from prime banks
Guarantees and other forms of collaterals from sovereigns
Adequate collaterals include:
Mortgages on residential real-estate
Mortgages on commercial real-estate
Management of the Bank monitors market value of collaterals and seeks additional means of securities in line with the
contracts. Additionally, the management takes into consideration market value of collaterals in the course of reexamining
adequacy of provisions for impairment.
ANNUAL REPORT 2014
123
The following table indicates coverage with collaterals as of December 31st, 2014 and December 31st, 2013 in such a
manner that prime and adequate instruments are collaterals are additionally segmented to categories of cash deposits and
guarantees of banks and sovereigns and residential and commercial mortgages.
as of 31. December 2014
Balance Sheet Assets
customers – Individuals
Of which:
Consumer Loans
Working Capital Loans
Investment Loans
Housing Loans
Other Balance Sheet Exposures
customers – Legal entities
Of which:
Investment Loans
Total
RSD 000
Of which Secured
Secured by Of which Secured Of which Secured
Secured
Of which
by Guarantees
Adequate
by Residential
by Commercial
by Prime
Secured by
of Banks or
Collaterals
Real-Estate
Real-Estate
Collaterals Cash Collateral
Sovereigns
37,989
37,989
-
21,965,782
21,877,150
88,632
474
37,515
474
37,515
-
1,337
1,239
10,316
21,944,237
8,653
959
21,867,538
8,653
1,337
1,239
9,357
76,699
-
9,639,416
2,256,306
7,383,110
22,819,407
3,690,564
19,128,843
6,967,194
2,627,493
44,729
1,621,264
596,819
38,223
5,345,931
2,030,674
6,505
19,295,327
2,812,240
711,840
3,485,090
145,409
60,065
15,810,237
2,666,831
651,775
9,677,405
2,294,295
7,383,110
44,785,189
25,567,714
19,217,475
Bilansna aktiva
customers – Individuals
Of which:
Consumer Loans
Investment Loans
Housing Loans
customers – Legal entities
Of which:
Investment Loans
Total
124
RSD 000
Of which Secured
Secured by Of which Secured
by Guarantees
Adequate
by Residential
of Banks or
Collaterals
Real-Estate
Sovereigns
Of which
Secured by
Commercial
Real-Estate
Secured
by Prime
Collaterals
Of which
Secured
by Cash
Collateral
142,178
142,178
-
33,174,067
33,015,372
158,695
142,178
142,178
-
21,262
13,996
18,586
30,493,271
2,626,952
1,728
30,386,692
2,626,952
21,262
13,996
16,858
106,579
-
15,272,426
8,855,031
6,417,395
23,680,315
3,311,100
20,369,216
3,851,914
2,870,030
8,550,482
896,339
651,910
7,306,782
2,955,575
2,218,120
1,243,700
16,000,886
6,945,637
733,792
2,890,054
359,129
61,917
13,110,833
6,586,508
671,875
15,414,604
8,997,209
6,417,395
56,854,382
36,326,472
20,527,911
Individuals
Of which:
Off-Balance Commitments
Legal entities
Of which:
Payable and performance
guarantees, non-covered letters of
credit and avals
Other off-balance exposures
916
916
3,901,672
RSD 000
Of which Of which Secured
Secured
by Guarantees
Adequate
by Residential
by Cash
of Banks or
Collaterals
Real-Estate
Collateral
Sovereigns
916
916
1,991,446
1,910,226
4,811,021
861,907
3,545,851
1,903,850
1,642,000
3,487,969
688,498
2,799,471
355,821
87,596
268,226
1,323,052
173,409
1,149,643
Total
3,902,588
1,991,446
1,911,142
4,811,021
861,907
3,949,114
Off-Balance Assets
Secured
by Prime
Collaterals
Off-balance Assets
Individuals
Of which:
credit and avals
Legal entities
Of which:
credit and avals
Total
Of which
Secured by
Commercial
Real-Estate
3,949,114
RSD 000
Of which Secured
by Guarantees
Adequate
by Residential
of Banks or
Collaterals
Real-Estate
Sovereigns
Of which
Secured by
Commercial
Real-Estate
5,696
Of which
Secured
by Cash
Collateral
5,696
573
573
-
-
-
-
5,123
1,281,814
-
5,123
315,557
-
966,257
-
3,325,223
3,194,401
17,147
-
3,308,076
3,194,401
1,281,814
315,557
966,257
130,822
17,147
113,675
1,287,510
321,253
966,257
3,325,223
17,147
3,308,076
Secured
by Prime
Collaterals
ANNUAL REPORT 2014
125
Concentration Risk
Analysis of Bank’s exposure by industrial sectors, before taking into consideration means of collateral and other risk
mitigatigants as of December 31st, 2014 and December 31st, 2013 is shown in the following table:
RSD 000
31.12.2014.
31.12.2013.
Gross Maximum
Net Maximum
Gross Maximum
Net Maximum
Exposure
Exposure*
Exposure
Exposure*
70,267,416
48,262,729
62,387,928
29,065,986
35,479,168
26,563,894
10,345,108
8,066,075
43,215,237
31,339,719
19,101,315
16,436,854
6,587,543
4,715,406
2,769,498
1,479,104
10,015,892
8,681,368
3,761,745
2,547,793
Individuals
Mining and Quarrying and manufacturing industry
Trade
Agriculture, Hunting, Fishing and Forestry
Construction
Traffic, Storage and Communications, Power Supply, Hotels and
Restaurants
Activities related to real-estate, renting and business activities,
other community, social, personal and service activities
Other
Total
9,688,073
7,355,392
7,257,592
4,206,726
4,835,318
4,022,782
1,592,218
683,291
52,949,952
183,891,242
142,116,709
249,332,113
102,273,350
164,759,179
65,921,988
246,010,635 * Collaterals taken into consideration are cash collaterals, bank guarantees, guarantees from sovereigns and mortgages.
Portfolio Quality
The Bank manages the quality of financial assets by using internal classification of exposures. The following indicates portfolio
quality per types of exposures, based on Bank’s system of asset quality classification as of December 31st, 2014 and December
31st, 2013:
31.12.2014.
RSD 000
Undue and Unimpaired
Due
Total
Quality Level
Loans and receivables from banks and other
Financial assets at fair value through income
statement held for trading
Total
High Quality
Standard Quality
Substandard Quality
Allowance for impairment
Net Exposure
Due and unimpaired
Impaired
10,266,842
26,404
58
(96,618)
10,196,686
1,547
41
(1)
85,881,666
23,706,079
36,331,982
-
9,959,268
-
(805,337)
(112)
131,367,579
23,705,967
4,812,020
-
35,526,926
-
6,637
-
-
-
6,637
-
149,649
314,098
-
-
-
149,649
314,098
-
120,324,971
36,358,386
9,959,326
(902,067)
165,740,616
31.12.2014.
Allowance for impairment Net Exposure
Total Gross Exposure
Total Net Exposure
1,587
10,294,892
(96,619)
10,198,273
(21,170,111)
-
19,168,835
-
172,511,862
23,706,079
(21,975,448)
(112)
150,536,414
23,705,967
-
-
-
6,637
-
6,637
-
-
-
149,649
314,098
-
149,649
314,098
4,813,567 35,526,967
(21,170,112)
19,170,422
206,983,217
(22,072,179)
184,911,038
RSD 000
Due
Total
Quality Level
Payable Guarantees
Performance Guarantees
Non-Covered Letters of Credit and Avals
Irrevocable Commitments
Derivatives
Total
126
High Quality
Standard Quality
Substandard Quality
Net Exposure
Due and unimpaired
Impaired
Net Exposure
Total Gross Exposure
Total Net Exposure
7,276,901
11,453,422
900,007
4,733,043
723,310
3,036,146
4,370,343
336,555
1,769,907
-
831,664
1,197,129
92,189
484,818
-
(156,237)
(419,416)
(35,875)
(188,661)
-
10,988,474
17,440,310
1,364,626
7,176,429
723,310
95,147
46,863
-
747,145
186,786
-
(167,398)
(46,436)
-
674,894
187,213
-
11,987,003
17,254,543
1,328,751
6,987,768
723,310
(323,635)
(465,852)
(35,875)
(188,661)
-
11,663,368
16,788,691
1,292,876
6,799,107
723,310
25,086,683
9,512,951
2,605,800
(800,189)
37,693,149
142,010
933,931
(213,834)
862,107
38,281,375
(1,014,023)
37,267,352
ANNUAL REPORT 2014
127
31.12.2013.
RSD 000
Due
Total
Quality Level
Loans and receivables from banks and other financial organizations
Financial assets at fair value through income statement held for trading
Total
High Quality
Standard Quality
13,563,115
96,612,990
13,904,226
11,824
246,380
314,098
154
28,351,448
-
Substandard Quality Allowance for impairment
424,798
16,557,885
-
124,652,633
28,351,602
16,982,683
(3,217)
(1,376,466)
(89)
(39,860)
-
Net Exposure Due and unimpaired
Impaired Allowance for impairment
Net Exposure
Total Gross Exposure Allowance for impairment Total Net Exposure
13,984,850
140,145,857
13,904,137
11,824
206,520
314,098
4
8,395,632
-
17
18,978,718
-
(21)
(15,727,097)
-
11,647,253
-
13,988,088
168,896,673
13,904,226
11,824
246,380
314,098
(3,238)
(17,103,563)
(89)
(39,860)
-
13,984,850
151,793,110
13,904,137
11,824
206,520
314,098
(1,419,632) 168,567,286
8,395,636
18,978,735
(15,727,118)
11,647,253
197,361,289
(17,146,750)
180,214,539
31.12.2013.
RSD 000
Due
Total
Nivo kvaliteta
Payable Guarantees
Non-Covered Letters of Credit and Avals
Irrevocable Commitments
Derivatives
Total
High Quality
Standard Quality
Substandard Quality
Impaired
Net Exposure
7,461,851
9,314,882
775,860
7,130,016
10,668,413
4,300,934
4,873,059
394,087
3,621,596
-
672,021
761,415
61,576
565,874
-
(93,426)
(246,171)
(25,570)
(234,983)
-
Net Exposure Due and unimpaired
12,341,380
14,703,185
1,205,953
11,082,503
10,668,413
113,596
55,949
-
892,018
223,004
-
(185,635)
(70,011)
-
819,979
208,942
-
Total Gross Exposure Allowance for impairment Total Net Exposure
13,440,420
15,228,309
1,231,523
11,317,486
10,668,413
(279,061)
(316,182)
(25,570)
(234,983)
-
13,161,359
14,912,127
1,205,953
11,082,503
10,668,413
35,351,022
13,189,676
2,060,886
(600,150)
50,001,434
169,545
1,115,022
(255,646)
1,028,921
51,886,151
(855,796)
51,030,355
Classification of the undue and unimpaired financial assets (high, standard and sub-standard level of quality) is in accordance
with the Internal rating model of the Bank.
Undue and unimpaired financial assets include exposure towards the clients which are not in delay with settling their
obligations and have not been individually impaired.
Due and unimpaired financial assets include exposure towards the clients who are in delay at least one day with settling
their obligations, but are not individually impaired.
Impaired financial assets include exposures for which the Bank created individual allowances for impairment in line with
its assessment of the recovery and collectability of those assets.
This overview uses the following division of the exposures:
High quality exposures are those exposures without current delay in payments with the following internal ratings
assigned:
1, 2+, 2, 2-, 3+, 3, 3-, 4+, 4, 4-, 5+, 5 i 5-
31.12.2014.
Payable Guarantees
Total
31.12.2013.
Payable Guarantees
Total
1 to 30 days
1,546
2,592,348
51,258
25,246
31 to 60 days
1
1,895,842
37,486
18,463
RSD 000
61 to 90 days
323,830
6,403
3,154
2,670,398
1,951,792
333,387
-
4,955,577
1 to 30 days
4,627,420
70,431
34,130
31 to 60 days
2,442,640
37,486
19,582
RSD 000
61 to 90 days
4
521,032
5,679
2,237
Over 90 days
804,540
-
Total
4
8,395,632
113,596
55,949
4,731,981
2,499,708
528,952
804,540
8,565,181
Over 90 days
-
Total
1,547
4,812,020
95,147
46,863
Standard quality exposures are those exposures without current delay in payments with the following internal ratings
assigned:
6+, 6 i 6 Substandard quality exposures are those exposures without current delay in payments with the following internal
ratings assigned:
7+, 7, 7-, 8, 9 i 10
Delay structure of due but unimpaired portfolio as of December 31st, 2014 and December 31st, 2013 is shown below:
128
ANNUAL REPORT 2014
129
The following table shows due but unimpaired and impaired portfolios which are not covered neither with prime nor
adequate collaterals.
Total Exposure
Payable Guarantees
Of which:
Exposure not Covered by collaterals
Payable Guarantees
RSD 000
31.12.2014.
31.12.2013.
Due and Unimpaired
Impaired Due and Unimpaired
Impaired
4,955,577
36,460,898
8,565,181
20,093,757
1,547
41
4
17
4,812,020
35,526,926
8,395,632
18,978,718
95,147
747,145
113,596
892,018
46,863
186,786
55,949
223,004
3,653,513
29,937,375
4,633,221
16,664,087
1,547
3,509,956
95,147
46,863
41
29,003,403
747,145
186,786
4
4,463,672
113,596
55,949
17
15,549,048
892,018
223,004
In line with internal methodologies the Bank pays special attention to exposures which were subjects to restructuring
due to increased level of credit risk. Under these exposures the bank includes loans and other placements which were
subjects to changes to initially agreed contractual terms due to inability of the client to meet its obligations in line with
the contractually agreed terms and deadlines, due to business related problems, worsening of the financial indicators, or
significant worsening of the credit-worthiness of clients.
Bookkeeping values of restructured exposures are shown in the table below:
Total Restructured Allowance for
Exposures
Impairment
10,620,965
(5,718,691)
31.12.2013.
Net Exposure
4,902,274
Total
Allowance for
Restructured
Impairment
Exposures
5,193,436
(2,706,323)
Net Exposure
2,487,113
From the total volume of restructured exposures part secured by adequate collaterals (as defined in part vi. Coverage with
Collaterals) as of December 31st, 2014 amounts to RSD 5,550,956 thousands (December 31st, 2013 RSD 1,798,026
thousands).
Write-Offs
The bank write-offs balance sheet exposures when determines inability to collect them. Write-off is performed only
after examining all important information on client like changes in financial position which lead to debtor not making
any repayments, at the same time without having any prospects for collection from collaterals as all such options were
exhausted. The decision to write-off is made on level of each individual client. During 2014 the Bank performed write-off
for loans and other claims from clients in the amount of 52,960 thousands (in 2013: RSD 571,043 thousands).
130
Liquidity risk management plays a key role in cautious and bona fide banking activities. Liquidity management represents
a continued process of reviewing needs for liquidity under different operating scenarios, as well as planning under
extraordinary circumstances. In order to implement the said activities, the greatest attention will be directed towards
analyzing the compliance of inflows and outflows by currency, the stability and level of concentration of deposits and other
Bank financing sources, as well as continued analysis of conditions on the financial market which affects the Bank ability
to procure liquid assets or sell parts of liquid assets on the market under favorable conditions.
Liquidity risk management implies the process of identification, measurement, mitigation and monitoring or liquidity risks
on a continuous basis. In order to reduce and/or limit this risk, the Bank shall attempt to:
Continuously monitor and analyze all factors that affect the Bank liquidity;
Ensure diversification of sources of financing;
Ensure optimum current daily liquidity by securing funds in sufficient amount and currency structure (for each currency)
to secure smooth settlement of obligations, including estimated of expected cash flows for a 30 day period;
Review and follow long-term liquidity position on the basis of liquidity gap projections, i.e. monitoring of matching of
pecuniary inflows and outflows under balance sheet and off-balance items on the long term;
RSD 000
31.12.2014.
customers
Liquidity risk is a risk of negative effects to financial results and capital of the Bank proceeding from Bank inability to fulfill
its due obligations without incurring inacceptable losses. The liquidity problem is expressed as a lack of liquid assets for
the settlement of all due obligations and coverage of unexpected outflow of deposits and non-deposit liabilities, due to
inability to procure or difficulties in procuring new or renewing existing sources of financing at a reasonable market price
(liquidity risk of source of financing).
Liquidity Risk Management
Restructured Exposures
Restructured loans and
receivables from customers
34.3 Liquidity risk and assets management
Secure liquidity reserve on the basis of analysis of maturity compliance of balance sheet positions, and thereby secure
the marketability of receivables and assets in a over a short period of time, where needed;
Maintain top credit rating of liquid securities portfolio (securities issued by the NBS or the state of Serbia);
Place short-term inter-banking deposits within defined limits;
Maintain availability of general credit line which it may use for liquidity maintenance purposes at any time;
Maintain required level of obligatory dinar and foreign currency reserves, in accordance with the regulations of the
National Bank of Serbia.
The Bank manages liquidity by ensuring stability, diversification and flexibility of sources of financing. As part of the
diversification process, the Bank dedicates special attention to sources of financing, in particular retail deposits. The Bank
successfully works on implementing the set objectives, which is reflected in the preservation of deposit base stability with
further diversification of maturity structure and reduction of costs.
The adopted policies and procedures ensure adequate assets management, which coupled with monitoring cash flows and
setting daily limits, as well as drafting long-term (structural) liquidity gaps on monthly basis, should ensure minimization
of liquidity risk.
The Bank maintains the portfolio of highly liquid and easily marketable securities, primarily of Serbian government papers
and NBS t-bills. This portfolio serves as liquidity reserve which may easily, quickly and with minimal losses be converted
into cash in order to settle due obligations, as well as extraordinary outflows and discontinuance of cash flows.
ANNUAL REPORT 2014
131
The liquidity level indicator in 2014 was always within the prescribed limits (never below 1) and is presented in the
following table:
RSD 000
LIABILITIES
Liquidity level indicator
Average over period
Highest
Highest
As of December 31
2014
2.03
2.55
1.40
1.56
2013
2.03
2.48
1.70
2.23
Analysis of financial assets and liabilities according by remaining maturity –
liquidity gap
In addition to regular liquidity indicators, the bank closely monitors its liquidly balance by measuring total cash flows
proceeding from all of its assets and liabilities, including off-balance items. Cash flows statements are drafted for all major
currencies operated by the Bank. Periodical cash flow statements are used to identify major discrepancies and in order to
assess future liquidity needs, as well as excess of liquidity. The Decisions regarding liquidity management are based on
the analysis of cash flow mismatch.
As for cash flows forecasts, the classification of balance sheet assets is based on the principle of remaining contractual
maturity of provided items (remaining number of day till maturity). Also, the remaining maturity is being established and
items without maturity term are being distributed, namely items without contractual maturity date such as obligatory
reserves, overdraft receivables, transaction deposits, other at sight deposits and all other receivables and obligations
without contractual maturity. With respect to this, the Bank has adopted a moderately conservative approach.
As for the remaining off-balance items (conditional receivables and obligations), they are posted separately from balance
flows on the side of assets and liabilities.
Enclosed below are tables containing the analysis of assets and liabilities of the Bank as per remaining maturity, taking
into account the expected time of realization of assets and settlement of obligations as of 31.12.2014 and 31.12.2013.
Financial assets at fair value through
income statement intended for trade
Deposits and other liabilities towards
banks, other fin. org. and central banks
Deposits and other liabilities towards
other partners
Issued own liabilities towards other
partners
Provisioning
Other liab.
TOTAL FINANCIAL LIABILITIES
MATURITY MISMATCH –MARGINAL
IQUIDITY GAP
MATURITY MISMATCH –
CUMULATIVE LIQUIDITY GAP
Up to one
month
Between
one and
three
months
3,972
-
-
-
7,569,738
671,411
1,736,638
30,603,365
8,507,450
-
Between Between six
Between
three and months and one and five
six months
one year
years
Over five
years
Total
-
-
3,972
4,570,258
17,889,285
9,034,906
41,472,236
11,920,982
26,960,525
44,939,510
4,110,187
127,042,019
-
1,745,291
-
-
-
1,745,291
31,740
2,438,065
40,646,880
4,264,415
63,481
13,506,757
2,482
95,221
15,500,614
1,209,583
190,442
32,930,808
9,071,872
761,769
72,662,436
6,398,136
(3,658,585)
1,304,535
(1,074,159)
285,098
27,430,193
-
6,398,136
2,739,551
4,044,086
2,969,927
3,255,025
30,685,218
-
Over five
years
Total
Liquidity risk 31.12.2014. Analysis of maturity structure of assets and liabilities
RSD 000
ASSETS
Up to one
month
Between
one and
three
months
Between Between six
Between
six months
one year
years
Cash and assets held at central bank
Loans and receivables from banks and
other fin. org.
Loans and receivables from partners
Investments into joint ventures and
enterprises
Investments into dependent companies
Other assets
35,690,424
35,690,424
11,824
11,824
TOTAL FINANCIAL ASSETS
60,759,903
996,685
934,313
5,023,506
9,419,170
11,509,430
13,608,944
Cash and assets with central bank
other fin. org.
enterprises
Other assets
32,329,563
6,637
ASSETS
132
Between Between six
Between
six months
one year
years
LIABILITIES
Over five
years
Total
-
-
-
-
32,329,563
-
-
-
-
-
6,637
351,724
1,113,057
4,095,958
4,970,887
13,170,970
3,371
23,705,967
10,156,531
40,794
214
437
297
-
10,198,273
3,036,487
8,694,321
12,708,977
26,885,325
59,776,267
39,435,037
150,536,414
-
-
-
-
-
149,649
149,649
1,164,074
-
-
-
-
314,098
673,131
314,098
1,837,205
47,045,016
9,848,172
16,805,149
31,856,649
72,947,534
26,856,776
4,421,805
2,860
13,904,137
341,183
19,057
13,984,850
57,222,805
33,175,985
151,793,110
206,520
206,520
314,098
12,000
314,098
1,029,190
1,017,190
12,443,743
18,632,450
29,381,744
61,985,793
33,730,520 216,934,153
RSD 000
RSD 000
Up to one
month
2,524,968
13,624,610
Liquidity risk 31.12.2014. Analysis of maturity structure of assets and liabilities
Between
one and
three
months
-
- 14,548,352
1,142,653
2,438,065
13,145,093 188,392,588
40,575,286 219,077,806
Financial assets at fair value through income
statement intended for trade
Deposits and other liabilities towards banks,
other fin. org. and central banks
Deposits and other liabilities towards other
partners
Issued own liabilities towards other partners
Provisioning
Other liab.
IQUIDITY GAP
MATURITY MISMATCH – CUMULATIVE
LIQUIDITY GAP
Up to one
month
Between
one and
three
months
Between Between six
Between
six months
one year
years
Over five
years
8,031
Total
8,031
3,508,331
1,548,376
4,031,941
6,764,666
28,301,003
8,783,680
52,937,997
25,734,112
9,653,449
10,560,577
23,478,593
39,940,491
5,945,602
115,312,824
27,350
1,923,659
31,201,483
30,858
54,700
1,751,808
2,494
82,050
164,100
11,287,383
16,428,870
30,407,359
29,558,420
1,156,360
2,203,580
29,558,420
30,714,780
32,918,360
1,751,808
13,790,405
984,597
1,923,659
74,056,786 23,327,440 186,709,321
5,158,895
656,397
8,598,158
(1,025,615) (12,070,993) 10,403,080
-
31,892,745
-
19,821,752 30,224,832
ANNUAL REPORT 2014
133
Analysis of off-balance records of maturity structure
RSD 000
LIABILITIES
Liquidity risk –off-balance items
31.12.2014.
Guarantees and other
assumed irrevocable
obligations
Derivatives
TOTAL
31.12.2013.
Guarantees and other
assumed irrevocable
obligations
Derivatives
TOTAL
RSD 000
Between six
Between one
months and
and five years
one year
Up to one
month
Between one
and three
months
Between
three and six
months
7,510,044
1,941,699
5,085,224
3,669,306
557,386
165,924
-
8,067,430
2,107,623
5,085,224
Up to one
month
Between one
and three
months
Between
three and six
months
7,334,885
3,501,181
4,527,396
16,824,916
10,516,286
152,128
-
-
17,851,171
3,653,309
4,527,396
Over five
years
Total
18,857,780
494,012
37,558,065
-
-
-
723,310
3,669,306
18,857,780
494,012
38,281,375
RSD 000
Between six
Between one
months and
and five years
one year
16,824,916
Over five
years
Total
8,555,290
474,071
41,217,738
-
-
10,668,413
8,555,290
474,071
51,886,152
The enclosed tables contain maturity mismatch of financial assets and liabilities, taking into account all future contractual
interests to items with defined maturity, i.e. all future non-discounted cash flows.
31.12.2014.
RSD 000
Cash and assets at central bank
oth. Fin. inst.
oth. Fin. insti.
Investments into joint ventures and joint
enterprises
Investments into depending companies
Other assets
32,329,563
Between
one and
three
months
-
6,637
TOTAL FIN. ASSETS
Up to one
month
ASSETS
134
Between Between six
Between
six months
one year
years
Over five
years
Total
-
-
-
-
32,329,563
-
-
-
-
-
6,637
351,724
1,166,329
4,042,800
4,169,451
16,434,580
1,800,000
27,964,884
10,156,531
40,794
214
437
297
-
10,198,273
4,484,596
10,009,248
14,644,680
30,168,198
72,949,456
49,670,574
181,926,752
-
-
-
-
-
149,649
149,649
1,164,074
-
-
-
-
314,098
673,131
314,098
1,837,205
48,493,125
11,216,371
18,687,694
34,338,086
89,384,333
52,607,452 254,727,061
Financial liab. At fair value through
Deposits and oth. Liab. To banks, oth.
Fin. org. and central bank
Deposits and other liab. To other partners
Issued owned securities and other
borrowed assets
Subordinated liab.
Provisioning
Other liab.
IQUIDITY GAP
Up to one
month
Between
one and
three
months
3,972
-
-
-
7,591,494
800,653
1,976,047
30,811,011
8,731,318
60,388
Between Between six
Between
six months
one year
years
Over five
years
Total
-
-
3,972
4,938,912
19,630,688
11,383,777
46,321,571
12,127,125
27,343,154
45,163,465
-
1,756,950
-
-
31,740
2,438,065
40,936,670
4,293,233
63,481
13,888,685
111,554
95,221
16,066,897
1,318,435
190,442
33,790,943
9,808,257
761,769
75,364,179
15,531,479
1,142,653
2,438,065
15,500,787 195,548,161
7,556,455
(2,672,314)
2,620,797
547,143
14,020,154
37,106,665
-
7,556,455
4,884,141
7,504,938
8,052,081
22,072,235
59,178,900
-
Between Between six
Between
six months
one year
years
Over five
years
Total
4,117,010 128,293,083
-
1,817,338
31.12.2013. Liquidity risk with future cash flows/interest
RSD 000
other fin. org.
enterprises
Other assets
35,690,424
Between
one and
three
months
-
11,824
TOTAL FIN. ASSETS
ASSETS
Up to one
month
-
-
-
-
35,690,424
-
-
-
-
-
11,824
1,000,000
950,000
5,360,000
2,970,000
5,180,000
-
15,460,000
13,631,206
-
-
-
341,183
19,057
13,991,446
25,849,917
11,516,390
13,606,849
32,004,664
68,198,677
40,352,137
191,528,634
-
-
-
-
-
206,520
206,520
1,017,190
-
-
-
-
314,098
12,000
314,098
1,029,190
77,200,561
12,466,390
18,966,849
34,974,664
73,719,860
Up to one
month
Between
one and
three
months
8,031
-
-
-
3,593,532
1,512,361
4,741,743
26,628,282
9,868,452
69,077
40,903,812 258,232,136
RSD 000
LIABILITIES
Deposits and oth. Liab. To banks, oth.
Deposits and other liab. To other partners
borrowed assets
Subordinated liab.
Provisioning
Other liab.
IQUIDITY GAP
Between Between six
Between
six months
one year
years
Over five
years
Total
-
-
8,031
7,498,439
31,189,617
11,781,497
60,317,189
10,751,934
23,860,024
40,179,931
5,965,695
117,254,318
-
63,325
124,416
1,817,338
-
2,074,156
30,558
1,808,189
32,137,669
59,786
61,115
11,501,714
116,304
91,672
15,764,978
176,090
183,345
31,842,314
6,113,405
733,378
80,033,669
8,691,830
15,157,415
1,100,068
1,808,189
26,439,022 197,719,366
45,062,892
964,676
3,201,871
3,132,350
(6,313,809)
14,464,790
-
45,062,892
46,027,568
49,229,439
52,361,789
46,047,980
60,512,770
-
ANNUAL REPORT 2014
135
34.4. Market risk
Market risk is a risk that the Bank’s financial results might be subject to negative effects due to change of balance sheet
positions caused by change of value of market prices. of the market risks, the Bank is exposed to foreign currency risk
and risk of change of interest rates.
of interest rate (EVE Sensitivity Analysis).
In order to adequately manage interest risk, the Bank has established limits that are monitored on a regular basis.
Competent bodies are regularly advised of compliance with limits (Assets and Liabilities Management Committee).
Interest Risk Management
Market risk management
Rules defined by Bankl applicable to market risk management:
Risk management is operated on centralized basis
Market risks are centralized, consolidated and are subject to regular standard reporting;
Exposure to certain risks defined under the limits approved may be permitted, depending on the type of market activity
for which the limit has been set.
The market risk control system is exercised by distribution and independence of the risk assumption functions (front) from
its monitoring (middle office) and management (Risk Dpt.) and support (back offices).
The basic interest risk management principle which the Bank applies is the principle of matching its assets and liabilities
by interest rate type (fixed or variable) and by maturity or date or renewed interest determination. This principle applies on
individual or group basis, depending on the size of the transaction.
The Bank devises a maturity gap to measure interest risk and computes interest rate changes onto the economic value of
capital (net bank worth). While classifying interest gap positions, the bank is governed by the following principles:
For items with variable interest rate – date of renewed determination of interest rate;
For items with fixed interest rate – maturity date;
While designing the interest gap, non interest bearing items are treated as items with fixed zero interest rate and are
shown according to expected cash flow maturity;
Capital is treated as non-interest bearing source of financing that never matures;
Market Risk Committee- MARCO
Items bearing interest but lacking contractual maturity date and interest rate change are shown according to excepted
cash flow maturity.
The Market Risk Committee – MARCO has been set up to determine, monitor and management market risk.
The projection of interest rap in accordance with maturity schedule of balance asset sheet items with fixed interest rate,
i.e. planned change of interest rate for balance asset items with contractual variable interest rate, on December 31, 2014
and December 31, 2015 are enclosed in the following table:
MARCO is primarily competent for:
Identifying, assessing and monitoring market risks arising in transactions with the Bank;
Controlling compliance of market activities and transactions with SG Group standards and instructions;
Ensuring independence of activities between risk control, back and middle offices, in relation to departments and units
negotiating transactions (front-office).
Controlling and monitoring compliance with adopted limits in the area of market risk;
Initiating, examining and confirming new limits, amending and/or suspending existing limits that are granted locally;
confirmation of notified limited by SG Group affecting market risks;
Communication with the EB and BoD on issues pertaining to market risk.
34.4.1. Interest rate risk
Interest risk is a risk of occurrence of negative effects on the financial result and capital of the Bank due to unfavorable
market trends of interest rates. The mains types of interest risks are: maturity time gap (between asset and liabilities items
related to fixed, variable interest rate) and renewed determination of prices (for items related with variable interest rate),
yield curb risk, base risk and built-in options risk ie. Optionality risk.
The internet rate risk management process is conducted through the monitoring, identification, measurement and
mitigation of effects of adverse interest trends on the financial result and capital of the bank. The measurement of effect
which interest risk may have on the financial results of the bank is performed by calculation of changes of net interest
margin under certain scenarios of future market interest trend (NII sensitivity analysis), whereas the measurement of
interest risk effect on the bank capital is conducted by monitoring change of economic value of capital, in case of change
136
Risk from change of interest rate 31.12.2014.
RSD 000
ASSETS
other fin. org.
enterprises
Other assets
Off-balance items (receivables from
value spot, forward and swap)
TOTAL
19,772,116
Between
one and
three
months
896,160
6,637
Up to one
month
Between Between six
Between
six months
one year
years
Over five
years
Total
1,308,591
3,448,832
5,512,262
1,391,602
32,329,563
-
-
-
-
-
6,637
4,704,757
886,514
3,581,006
3,209,348
11,320,970
3,372
23,705,967
10,171,046
26,279
214
437
297
-
10,198,273
87,826,744
12,994,627
10,775,714
6,378,144
26,792,507
5,768,678
150,536,414
1,247
2,494
3,741
7,482
59,860
74,825
149,649
2,617
1,164,074
123,649,238
5,235
14,811,309
7,852
15,677,118
15,705
13,059,948
125,639
43,811,535
157,050
673,131
8,068,658
314,098
1,837,205
219,077,806
6,565,049
22,135
11,976
-
-
-
6,599,160
130,214,287
14,833,444
15,689,094
13,059,948
43,811,535
ANNUAL REPORT 2014
8,068,658 225,676,966
137
RSD 000
LIABILITIES
RSD 000
Up to one
month
Between
one and
three
months
3,972
-
-
-
9,375,316
9,205,815
13,991,676
49,233,273
13,713,502
1,745,291
Between Between six
Between
six months
one year
years
Over five
years
Total
-
-
3,972
1,810,517
2,288,396
4,800,516
41,472,236
11,759,304
23,815,282
24,093,716
4,426,942
127,042,019
-
-
-
-
-
1,745,291
31,740
60,389,592
4,264,415
63,481
27,247,213
10,283,937
95,221
36,130,138
190,442
25,816,241
761,769
27,143,881
Deposits and oth. Liab. to banks, oth.
Deposits and other liab. to other partners
borrowed assets
Subordinated liab.
Provisioning
Other liab.
TOTAL FIN. LIABILITIES
Variable items (receivables from value
spot, forward and swap transactions)
TOTAL
6,467,346
97,655
34,159
-
-
66,856,938
27,344,868
36,164,297
25,816,241
27,143,881
INTEREST GAP
63,357,349 (12,511,424) (20,475,203) (12,756,293)
16,667,654
TOTAL
-
-
-
5,204,984
9,340,074
27,841,561
36,799,788
16,386,360
1,751,808
Over five
years
Total
-
-
8,031
3,741,370
2,035,730
4,774,278
52,937,997
13,422,432
26,131,126
19,135,285
3,437,833
115,312,824
-
-
-
-
-
1,751,808
27,349
43,791,960
4,043,332
54,700
29,824,466
9,747,073
82,050
51,093,116
164,100
30,036,596
656,398
21,827,413
8,173,376
54,975
19,833
-
-
11,665,523 194,991,748
51,965,336
29,879,441
51,112,949
30,036,596
21,827,413
10,135,770 194,957,505
(3,596,865)
INTEREST GAP
79,382,380
(7,227,052) (36,027,879) (17,265,037)
12,764,743
(1,402,323)
- 14,548,352
1,142,653
2,438,065
2,438,065
11,665,523 188,392,588
-
6,599,160
-
RSD 000
other fin. org.
enterprises
Other assets
Off-balance items (receivables from
value spot, forward and swap)
8,031
Between Between six
Between
six months
one year
years
13,790,405
984,597
1,923,659
1,923,659
10,135,770 186,709,321
-
8,248,184
-
Measuring sensitivity of economic value of capital to change of interest rate is performed for each major currency. It is
based on the assumption of parallel change of interest rate by 200 base points (2 percentage points).
20,383,260
Between
one and
three
months
1,200,584
11,824
Up to one
month
Up to one
month
Deposits and oth. Liab. to banks, oth.
Deposits and other liab. to other partners
borrowed assets
Subordinated liab.
Provisioning
Other liab.
TOTAL FIN. LIABILITIES
Variable items (receivables from value
TOTAL
Risk from change of interest rate 31.12.2013.
ASSETS
LIABILITIES
Between
one and
three
months
Between Between six
Between
six months
one year
years
Over five
years
Total
1,585,193
4,372,577
6,516,667
1,632,143
35,690,424
-
-
-
-
-
11,824
1,272,461
931,855
5,014,105
2,510,604
4,172,252
2,860
13,904,137
13,984,850
-
-
-
-
-
13,984,850
86,502,929
20,454,326
8,452,384
5,862,347
23,694,990
6,826,134
151,793,110
1,721
3,442
5,163
10,326
82,608
103,260
206,520
2,617
1,017,190
123,176,852
5,235
22,595,442
7,852
15,064,697
15,705
12,771,559
125,639
34,592,156
8,170,864
56,947
20,373
-
-
131,347,716
22,652,389
15,085,070
12,771,559
34,592,156
157,050
314,098
12,000
1,029,190
8,733,447 216,934,153
-
8,248,184
8,733,447 225,182,337
The effect of interest rate rise by 200 base points on the capital measures on December 31, 2014 is listed in the following
table:
31.12.2014.
Short-term
Mid-term
Long-term
RSD
(115,759)
(646,961)
104,524
RSD 000
EUR
Oth. currencies
414,674
18,997
(473,115)
120,016
362,737
72,269
Total
(658,195)
304,295
211,282
Total
317,912
(1,000,059)
539,530
(142,618)
Effect of interest rate rise by 200 bp on capital, measured on December 31, 2013 is listed in the following table:
31.12.2013.
Short-term
Mid-term
Long-term
Total
RSD
(82,801)
(443,514)
92,039
(434,276)
RSD 000
EUR
Oth. currencies
506,711
40,275
(442,603)
120,233
49,741
68,569
113,848
229,077
Total
464,185
(765,885)
210,349
(91,351)
Effect of the rise of interest rate by 200 bp on net interest income measured on December 31, 2014 is listed in the
following table:
138
31.12.2014.
Up to one month
Between 1 and 3 month
Between 3 and 6 months
Between 6 months and 1 year
RSD
(234,793)
18,068
53,581
31,560
Total
(131,584)
RSD 000
EUR
Oth. currencies
796,221
(8,557)
(228,225)
2,503
(315,186)
90
(96,199)
(9,347)
156,610
(15,311)
ANNUAL REPORT 2014
139
Total
552,871
(207,654)
(261,515)
(73,986)
9,715
Effect of the rise of interest rate by 200 bp on net interest income measured on December 31, 2013 is listed in the
following table:
31.12.2013.
Up to one month
Between 1 and 3 month
Between 3 and 6 months
Between 6 months and 1 year
RSD
(15,881)
(21,256)
49,888
18,536
Total
31,288
RSD 000
EUR
Oth currencies
1,015,281
(30,132)
(88,803)
(11,422)
(481,877)
(29,182)
(107,390)
(11,284)
337,212
(82,020)
Total
969,269
(121,481)
(461,171)
(100,137)
286,480
Foreign Currency Risk Management
In order to manage foreign currency risk, the Market Risk Department, together with the Market Back Office identifies
foreign currency risk and monitors foreign currency positions on a daily basis, defines methods, models and procedures
for their monitoring, measurement; proposes and defines limits and provides external and internal reporting.
Pursuant to regulatory requirements of the NBS, the Bank continuously maintains its foreign currency position within
permitted limits. The foreign currency risk indicator stood within legal maximums in 2014 in relation to capital, where the
bank is obliged to ensure that its overall net open foreign currency position does not exceed 20% of its capital on a daily
basis.
The following table expresses Bank exposure to foreign currency risks on December 31, 2014 and December 31 2013:
34.4.2. Foreign currency risk
Foreign currency risk
Foreign currency risk is a current or potential risk of loss in the financial result and capital which proceeds from the change
of balance assets positions and off-balance items of the banks due to trends and changes of foreign currency value on
the market.
Foreign currency risks are calculated onto:
Assets and obligations expressed in foreign currency
Foreign currency transactions
Financial derivates in foreign currency (foreign currency forward contracts, swaps)
The following tables show the analysis of balance sheet of the Bank onto foreign exchange rates by 5%, 10% and 20%:
Net open foreign currency position in RSD - long
Net open foreign currency position in EUR – long
Foreign currency volatility +5%
Positive effect on balance sheet RSD
Net open foreign currency position in RSD – long
Foreign currency volatility -5%
Negative effect on income statement in RSD
3,630,063
30,011
3,811,566
181,503
3,630,063
30,011
3,448,560
(181,503)
RSD 000
120.9583
127.0062
120.9583
114.9104
3,630,063
30,011
3,993,069
363,006
3,630,063
30,011
3,267,057
(363,006)
RSD 000
120.9583
133.0541
120.9583
108.8625
Exchange rate 31/12/2014
Exchange rate +10%
Exchange rate -10%
3,630,063
30,011
4,356,076
726,013
3,630,063
30,011
2,904,050
(726,013)
RSD 000
120.9583
145.1500
120.9583
96.7666
Exchange rate +20%
Exchange rate -20%
140
Exchange rate +5%
Exchange rate -5%
FOREIGN CURRENCY RISK ASSETS
EUR
USD
15,970,586
Fin. assets available for sale
3,118,387
7,253,653
oth. Fin. org.
109,712,006
enterprises
Immovables , machines and equipment
Investment immovables
Current taxes
Deferred taxes
Other assets
48,455
TOTAL BALANCE SHEET ASSETS
136,103,087
Off-balance items (receivables from value
2,233,737
150,475
TOTAL
138,336,824
RSD 000
31.12.2014.
Oth.
CHF
currency
403,341
48,860
Total in FC Total in RSD
Total
16,573,262
15,756,301
32,329,563
-
-
-
-
6,637
6,637
-
-
-
3,118,387
20,587,580
23,705,967
2,547,482
47,837
348,152
10,197,124
1,149
10,198,273
601,217
2,786,028
24
113,099,275
37,437,139
150,536,414
-
-
-
-
149,649
149,649
710
3,299,884
75
3,237,281
1,822,196
5,122,080
3,237,281
23
49,263
397,059 143,037,311
4,055,933
314,098
314,098
468,640
468,640
1,825,926
1,825,926
80,245
80,245
234,594
234,594
623,590
623,590
1,787,942
1,837,205
79,273,490 222,310,801
2,543,227
6,599,160
397,059 147,093,244
81,816,717 228,909,961
ANNUAL REPORT 2014
141
FOREIGN CURRENCY RISK
EUR
LIABILITIES
Financial obligations at fair value through
Deposits and oth. Obligations towards
banks, oth. Fin. organizations and central
36,429,391
bank
Deposits and otrh. Obligations towards
77,756,365
other partners
borrowings
14,548,352
Provisioning
578,435
Oth. liabilities
1,509,765
TOTAL BALANCE LIABILITIES
130,822,308
Off-balance items (obligations from value
4,117,048
TOTAL
134,939,356
FOREIGN CURRENCY RISK ASSETS
USD
Total
-
-
-
3,972
3,972
393,313
1,721,377
1,127
38,545,208
2,927,028
41,472,236
4,302,439
1,174,710
365,435
83,598,949
43,443,070
127,042,019
-
-
-
-
1,745,291
1,745,291
73,605
4,769,357
1,182
2,897,269
49,557
313,270
4,818,914
3,210,539
USD
18,331,699
Fin. assets available for sale
1,865
8,266,756
oth. Fin. org.
118,632,358
enterprises
Immovables , machines and equipment
Investment immovables
Current taxes
Deferred taxes
Other assets
70,676
TOTAL BALANCE SHEET ASSETS
145,303,354
Off-balance items (receivables from value
1,776,953
83,970
147,080,307
-
EUR
TOTAL
RSD 000
31.12.2014.
Oth
CHF
currency
- 14,548,352
82,611
661,046
15,955
1,600,507
465,128 138,954,062
-
4,479,875
465,128 143,433,937
RSD 000
31.12.2013.
Oth
CHF
currency
150,188
34,686
- 14,548,352
481,607
1,142,653
837,558
2,438,065
49,438,526 188,392,588
2,119,285
6,599,160
51,557,811 194,991,748
Total
18,600,543
17,089,881
35,690,424
-
-
-
-
11,824
11,824
-
-
-
1,865
13,902,272
13,904,137
1,181,979
190,180
326,051
9,964,966
4,019,884
13,984,850
888,785
2,715,106
0
122,236,249
29,556,861
151,793,110
-
-
-
-
206,520
206,520
609
2,155,343
980
3,056,454
3,720,767
-
5,876,110
3,056,454
48
72,313
360,785 150,875,936
-
5,497,720
360,785 156,373,656
314,098
314,098
413,902
413,902
1,969,743
1,969,743
87,004
87,004
179,374
179,374
484,065
484,065
956,877
1,029,190
69,192,305 220,068,241
2,750,464
8,248,184
71,942,769 228,316,425
FOREIGN CURRENCY RISK
EUR
LIABILITIES
Financial obligations at fair value through
income statement intended for trading
Deposits and oth. obligations towards
banks, oth. Fin. organizations and central
46,965,034
bank
Deposits and otrh. obligations towards
76,410,881
other partners
borrowings
13,790,405
Provisioning
546,520
Oth. liabilities
1,184,423
TOTAL BALANCE LIABILITIES
138,897,263
Off-balance items (obligations from value
5,991,187
TOTAL
144,888,450
USD
RSD 000
31.12.2013.
Oth
CHF
currency
Total
-
-
-
-
8,031
8,031
277,226
1,600,742
474
48,843,476
4,094,521
52,937,997
5,420,063
889,008
336,427
83,056,379
32,256,445
115,312,824
-
-
-
-
1,751,808
1,751,808
15,828
9,160
5,722,277
3,424
2,493,174
478,700
5,722,277
2,971,874
13,790,405
562,348
3,858
1,200,865
340,759 147,453,473
6,469,887
340,759 153,923,360
13,790,405
422,249
984,597
722,794
1,923,659
39,255,848 186,709,321
1,778,298
8,248,185
41,034,146 194,957,506
34.5 Operational Risk
Operational risk is a risk of negative effect on financial result and capital of the Bank due to lapses (intentional or nonintentional) in the work of employees, inappropriate procedures and processes, inadequate management of IT and other
systems, as well as unforeseeable external events, including events that are unlikely to occur but that might entail great
losses. With the exception of strategic risk, operational risk includes legal risk, compliance risk and reputation risk, in
accordance with SG Group standards.
The purpose of managing operational risk is to ensure proactive management of this risk, adequate allocation of necessary
capital, as well as providing relevant data on exposure to operational risks for the needs of bank management, external
audit and competent entities of SG Group. Operational risk management is based on the system of measurement and
control defined at SG Group level, which is applied within the bank.
In order to ensure efficient risk management, a proper management structure needs to be set up, led by a specialized
Operational Risk Committee, and internal control system i.e. Permanent Supervision needs to be implemented, in order
to ensure that each organizational unit applies appropriate procedures and verifies their efficiency; and also appropriate
organizational structure, necessary tools and methodology that have been developed locally by SG Group (collecting data,
self-assessment of risks and control, scenario analysis, key risk indicators etc.)
Special organizational unit – the Operational Risk Management Dpt is competent for recording, monitoring and managing
operational risks, for coordination and communication with all organizational parts of the Bank and for regular reporting
to bank management and headquarter in Paris. The Operational Risk Committee (ORCO) is competent to coordinate
operational risk management, apply corrective measures aimed at reducing operational risk and raise awareness on Op.
Risk management through the Bank’s organizational system. The monitoring and reporting of operational risks events is
the obligation and responsibility of all management levels and all employees.
142
ANNUAL REPORT 2014
143
34.6. Reputation Risk
34.9. Country Risk
Reputation risk may arise due to negative effect of the Bank’s market positioning.
Risk related to a country of origin of a person to whom the Bank is exposed implies negative effects which may affect
its financial result and capital due to Bank inability to collect receivables from that person for reasons proceeding from
political, economic or social circumstances in the person’s country of origin.
34.7. Bank exposure risk
The Bank exposure risk encompasses Bank exposure risk towards one person or a group of related persons, as well
as exposure risk towards a person related with the bank. The bank manages exposure risk in accordance with the risk
management strategy and policy. The bank management defines the limits and concentration of placements by certain
legal persons or group of related persons, or persons related with the Bank.
The Risk Division monitors, measures and reports to competent Bank bodies about risk exposure towards one person or
a group of related persons.
Under the said measures the Bank management and appropriate bank bodies and persons vested with powers in the Bank
strive to secure exposure compliance with prescribed limits, i.e. secure that Bank exposure towards one person or a group
of related persons does not exceed 25% of the Bank capital, that the sum of large exposures does not exceed 400% of
the Bank capital, that the total bank exposure to a person related with the bank does not exceed 5% of the Bank capital,
and that exposure towards persons related with the bank does not exceed 20% of the Bank capital.
In 2014, the bank continuously ensured compliance of exposure risk and this risk remained within the legally prescribed
limits during 2014 as well as on December 31, 2014.
34.8. Investment Risk
Investments risks include investment risk into capital of other legal persons and into equity.
The Bank manages investments risks in accordance with the risk management strategy and policy.
Pursuant to NBS regulations, the risk management sector follows bank investments, notifies the BoD and ensures that
bank investment to one person outside of the financial sector does not exceed 10% of the Bank capital, and that Bank
investments into persons who are external to the financial sector and into Bank equity do not exceed 60% of the bank
capital.
During 2014 as well as on December 31, 2014, the Bank continuously monitored investment risk which remained within
legally prescribes indicators.
In July of 2014, the Bank signed a preliminary contact on the sale and purchase of a part of the building under construction.
The completion of construction, as well and transfer to another business location is planned for the first half of 2016,
following which the bank would concentrate all activities to two locations, that are in the immediate vicinity of each other.
The Bank decision from 2014 to conclude the said preliminary contract is the result of its long-term orientation to develop
its business operations in Serbia.
The Bank manages country risk in accordance with the risk strategy and managing policy.
While assuming risks in relation to banks located outside of the Republic of Serbia and while determining related limits,
the country risk is also taken into account.
Whereas the general rating rule defined by top international rating agencies prescribes that the rating for general
transactions of a certain entity may not exceed the rating of a country where the seat of entity is located, we may consider
that this bank’s rating in relation to transaction duration, may be considered a main country risk indicator.
35. CAPITAL MANAGEMENT
The bank manages capital with the aim to:
Ensure compliance with the requirements of the National Bank of Serbia
Ensure adequate level of capital for business continuity
Maintain capital at a level that ensures future bank development
The bank management monitors bank capital adequacy on a monthly basis.
The Law on Banka and relevant decisions of the NBS prescribe that banks are required to maintain a minimum capital
amount equivalent to a dinar counter-value of 10 million euros at the official median exchange rate, a capital adequacy
ratio of at least 12%, and to adjust the volume and structure of their businesses with operating indicators prescribed
under the Risk Management Decision (Official Gazette RS, numbers 45/2011, 94/2011, 119/2012, 123/2012, 23/2013,
43/2011, 43/2013 and 92/2013) and the Capital Adequacy Decision (Official Gazette RS no. 46/2011, 6/2013 and
51/2014).
The said decision of the National Bank of Serbia on bank capital adequacy defines the terms of calculation of bank capital
and capital adequacy ratio. The total Bank capital comprises core and supplementary capital and deductibles, while risky
balance and off-balance assets are establishes in accordance with prescribed risk weighting factors for all types of assets.
The bank capital adequacy ratio equals the ratio of the bank capital and the sum of capital requirement for credit risk, for
market risk and for operational risk multiplied by reciprocal value of capital adequacy ratio (12%).
The bank equity is defined under the said decision and has to amount to at least 50% of the Bank capital. Equity are made
of share capital based on ordinary and priority shares, issue premium, reserves from gains, undistributed gains, capital
gain under redeemed own shares. Equity deductibles include intangible investments, acquired own shares, loss from the
current and previous years and regulatory harmonization (unrealized losses from securities available for sale, other net
negative revalorization reserves, gains from bank obligations valued by fair value reduced due to change of credit rating,
required reserves from gains for estimated losses under balance sheet and off-balance assets of the bank).
Additional capital is share capital from priority cumulative shares, premium issue from priority cumulative shares, and
part of positive revalorized reserves and subordinated obligations. Additional capital deductibles comprise acquired own
preferential cumulative shares.
144
ANNUAL REPORT 2014
145
Deductibles from total capital comprise share in capital of other banks and other financial organizations exceeding 10%
of the capital of these banks i.e. other persons.
The required reserves from gains for estimated losses, as of December 31, 2014, in the amount of RSD 16,891,930 k
(2013: RSD 11,928,835 k) has been calculated as the difference between calculated special reserves for estimated losses
and established amount of balance assets appreciation and provisioning for losses from off-balance assets, in accordance
with the Decision on the Classification of Balance Sheet Assets and Off-Balance Items (Official Gazette RSD 94/2011,
57/2012, 123/2012, 43/2013 and 113/2013 and 135/2014) prescribed by the National Bank of Serbia.
The following chart presents calculated amounts of capital assets, additional capital and total capital of the bank, as well
as calculation of capital adequacy:
RSD 000
2014
2013
15,888,451
26,870,737
7,558,133
9,723,444
23,446,584
36,594,181
(463,748)
(6,485,036)
22,982,836
30,109,145
105,462,378
107,395,854
20,573,264
23,746,279
8,186
15,733
435,608
224,440
126,479,436
131,382,306
1,573,144
1,444,525
Capital management
Share capital
Additional capital
Total share and additional capital
Capital deductibles
Capital
Total risky balance assets
Total risky off-balance assets
Derivatives traded on the financial market
Total open foreign currency position
Total risky assets
OP risk capital requirement (key indicator access)
Capital adequacy on December 31
16.10%
20.76%
The bank is required to adjust the volume and structure of its operations with business indicators prescribed under
the Risk Management Decision (Official Gazette of the Republic of Serbia, 45/2011, 94/2011, 119/2012, 123/2012,
23/2013, 43/2013 and 92/2013). The realized operating indicators of the Bank on December 31, 2014 and December
31, 2013 were the following:
Operating indicators
Bank investment into share capital and entities outside the banking sector
Exposure to persons related with the bank
Sum of major bank exposures
Average monthly liquidity indicator for December
Foreign risk indicator
Bank exposure to group of related persons
Capital adequacy
Bank exposure to person related with the bank
Bank investment into persons in the financial sector
Prescribed value
%
Maximum 60%
Maximum 20%
Maximum 400%
Maximum 1%
Maximum 20%
Maximum 25%
Maximum 12%
Maximum 5%
Maximum 10%
RSD 000
Realized value
Realized value
31.12.2014.
31.12.2013.
7.94%
6.83%
7.28%
4.03%
234.91%
101.06%
1.63%
2.09%
16.99%
8.16%
21.71%
16.01%
16.10%
20.76%
2.24%
1.70%
2.03%
1.74%
36. P
OTENTIAL AND TAKEN OBLIGATIONS AND LEASING
CONTRACTS
Receivables from operational leasing
RECEIVABLES FROM IMMOVABLES LEASE - OPERATIONAL LEASING
RSD 000
Due between 01.01.2015 and 31.12.2015
Due between 01.01.2016 and 01.08.2020
2014
25,209
44,598
Total:
69,807
RSD 000
Due between 01.01.2014 and 31.12.2014
Due between 01.01.2015 and 01.08.2020
2013
23,893
52,929
Total:
76,822
Obligations under operational leasing
In 2011, the bank signed an operational leasing contract under which vehicles have been leased. The future obligations
on that ground have been presented in the following table:
OBLIGATIONS FROM CAR RENT OPERATIONAL LEASING
RSD 000
Due between 01.01.2015 and 31.12.2015
Due between 01.01.2016 and 01.10.2017
2014
44,623
66,054
Total:
110,677
RSD 000
Due between 01.01.2014 and 31.12.2014
Due between 01.01.2015 and 05.12.2016
2013
22,694
3,172
Total:
25,866
Court litigations
On December 31, 2014, the Bank has had 45 opened court litigations with the status of indicted party. Based on the
estimate of legal representatives of the Bank in the said litigations, the Bank has allocated provisions in the amount of RSD
3861 k as of 31.12.2014 for litigations expected to be incurred by the Bank on the respective date.
Tax risk
The tax system of the Republic of Serbia is in the process of contiguous revision and alternation. In the Republic of Serbia,
the tax period is open over a period of 5 years. In various circumstances, tax bodies may take different approaches to
certain issues and may establish additional tax obligations jointly with default interests and fines. The Bank management
believes that tax obligations are recorded in enclosed financial statements have been accurately expressed.
146
ANNUAL REPORT 2014
147
37. C
OMPLIANCE BETWEEN LIABILITIES AND
RECEIVABLES
As of October 31, 2014, the Bank proceeded with harmonization of liabilities and receivables with legal persons and
banks, in accordance with the Law on Accounting. The disclosure of mismatched receivables has been provided in
accordance with the requirement under article 18 of that Law.
16.
INDEPENDENT AUDITOR’S
REPORT
RSD 000
2014
TOTAL
Matched
Mismatched
Non-replied
Aktiva
Pasiva
123,860,761
100,161,549
39,039
23,660,174
58,976,862
45,835,286
46,178
13,095,398
Vanbilansna
potraživanja
81,810,998
74,414,526
47,816
7,348,656
38. ADDITIONAL CASH FLOW FIGURES
Cash and cash equivalents, which are included in the statement of cash flows are presented in the table below
Cash and cash equivalents in cash flows statement
Gyro account
Balance in cash
Foreign currency account at banks
Other pecuniary assets
RSD 000
31.12.2014.
14,315,368
2,729,898
10,152,014
79,074
31.12.2013.
14,587,490
2,214,337
9,624,610
4,938
Total
27,276,354
26,431,375
39. EVENTS FOLLOWING BALANCE ASSETS SHEET DATE
Following balance sheet date, there have been no events which might affect the financial condition and operating results
presented in financial statements of the Bank for the year completed in December 31st, 2014.
Sanja Đeković
148
Sonja Miladinovski
Frederic Coin
ANNUAL REPORT 2014
149
150

Societe Generale bank annual report

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