report - Banco Nacional de Costa Rica

Transcription

A
N
N
U
A
L
2012
REPORT
Table of Contents
•
Banco Nacional - Corporate Profile
4
•
Institutional Philosophy 5
•
Strategic Objectives 2011-2014 6
•
Message from the Chairman of the Board of Directors
7
•
Report from the General Manager
9
•
Board of Directors
12
•
Organizational Chart 13
•
Economic Context 14
•
Financial Analysis
20
•
Office of the Deputy General Manager for Development
•
Office of the Deputy General Manager for Corporate Banking
31
40
•
Office of the Deputy General Manager for Administration
43
•
Office of the Deputy General Manager for Risk and Finance 46
•
Compliance with Law 8204
50
•
Subsidiaries 52
•
Financial Statements 60
Banco Nacional • Annual Report 2012
3
Banco Nacional - Corporate Profile
Banco Nacional de Costa Rica was founded on
October 9, 1914 as a State-owned institution.
It is an autonomous and administratively
independent institution governed by public
law. It is directed by a seven-member Board
of Directors appointed by the Cabinet of the
President of the Republic. Administrative
responsibility is vested in the General Manager.
Since its founding, Banco Nacional has
been recognized for its involvement in and
contribution to the country’s economic
growth; initially in agriculture and then in other
productive activities, including services and
tourism. In light of technological advances, and
given increased competition, the Bank currently
serves all market segments, offering a variety of
financial products and services.
The Bank has diversified its operations and is
now involved in the stock market, investment
funds, pension funds, and insurance brokerage
through its wholly owned subsidiaries: BN
Valores (Stocks); BN Fondos (Investment Funds);
BN Vital (Pension Funds), and BN Corredora de
Seguros (Insurance Brokerage). Furthermore, it
owns 49% of stock in the Banco Internacional de
Costa Rica (BICSA).
Banco Nacional has been a pioneer and a leader
in undertaking initiatives that have benefitted
the country, such as Development Banking,
which encompasses loans and technical support
4
programs for micro and small businesses
and agricultural producers; home financing;
personal and corporate banking; e-banking;
and the development and implementation
of financing schemes for the development of
public infrastructure.
All Costa Ricans, in one way or another, have
benefited from the Bank’s activities over its 99year history. Its leadership in this and other fields
is undisputed in Costa Rica and Central America,
where it is recognized for its pioneering financial
support of different business activities in the
financial sector.
In order to reach these goals, Banco Nacional
has developed a strong technological platform,
which includes a transactional website (called
Internet Banking) that offers a wide variety of
services at the national and international levels,
in addition to an extensive network of ATMs and
drive-through facilities, and 169 branches offices
throughout the country. In addition, as part
of its modernization program, Banco Nacional
established its first Business Development
Center (CED, Spanish initials) in Heredia, Costa
Rica, in 2012.
The growth of Banco Nacional is the result of
the trust more than 1.7 million customers have
placed in the institution, and of the diligent
efforts of our some five thousand employees.
Institutional Philosophy
Mission
To improve the quality of life for as many people as possible,
providing premium financial services that will promote sustainable
wealth creation.
Vision
To be the leading bank in Costa Rica in the area of customer service.
Institutional Values
• Integrity
• Creativity
• Perseverance
• Teamwork
• Quality of service
5
Strategic Objectives 2011-2014
1. To be the leading bank in Costa Rica in the area of customer service.
B. To make adjustments in the Bank’s resources and services as required on order to meet the
needs of the different segments of customers.
C. B. To work more closely with customers through the use of mobile devices, technology,
alliances, and business expansion.
D. C. To continually improve delivery times for products and services.
2. To achieve a level of efficiency in keeping with the best international
practices.
A. To improve human resources management practices in order to obtain maximum productivity
per employee.
B. To update technology as needed and make maximum use of it to reduce costs and improve
competitiveness.
C. To maintain a portfolio of products and services that will make it possible to maximize riskadjusted returns.
3. To promote sustainable development in Costa Rica.
A. To strengthen the Bank’s role as the leading institution in the provision of financing for
infrastructure, housing, and small businesses.
B. To support customers’ efforts to diversify, innovate and break into new markets.
C. To lead the country’s financial efforts to become carbon neutral.
6
Message from the Chairman of
the Board of Directors
I am honored to present to the people of Costa Rica the 99th annual report of the Banco Nacional
de Costa Rica, the first State-owned bank in the country, which, thanks to this year’s outstanding
results, including the highest earnings in the history of the institution, is preparing to celebrate its
first centennial.
This year, 2012, has undoubtedly been a difficult one for all: workers, enterprises, banks,
institutions, and the government. As a result, our achievements give us an even greater sense of
satisfaction, and attest to our success as a team despite the ups and downs of the national local
and international economy, as explained in detail in the letter from the General Manager.
The year began with adjustments to the institution’s strategy and organizational structure,
streamlining processes in an effort to make the Banco Nacional more competitive and efficient.
After long deliberation, the Transformation Project was approved in July 2012. Also approved,
in September, was a reorganization of the top management positions, separating the risk and
finance functions and placing the loan process under the sole responsibility of the Office of the
Deputy General Manager for Risk and Finance, headed by Mr. Bernardo Alfaro. With the same
purpose in mind, the Office of the Deputy General Manager for Corporate Banking, headed by Mr.
Gerardo Ulloa, was assigned responsibility for all corporate, institutional, and investment banking
customers. In addition, the Office of the Deputy General Manager for Development, headed by Mr.
Juan Carlos Corrales, which is responsible for the Business and Development Centers, as well as
the Zones Department, was completely revamped to serve our business and personal customers.
The Office of the Deputy General Manager for Administration, headed by Mr. Rigoberto Alpízar,
was also reorganized. In addition to its regular duties, the Office is now responsible for the Human
Development Department. Once this process concludes, the multifunctional regional bank scheme
will be replaced with the new specialized approach, which includes corporate banking, 11 Business
Development Centers and three strategic zones that will group the remaining branch offices
throughout the country and an efficient center for the processing of loans, our principal product.
On the subject of loans, the portfolio is sound and grew by 11% this year, a very respectable figure
given the current market situation. It is important to point out that Banco Nacional loaned US$105
million, the largest amount in the history of the institution, to ICE, for the Toro III hydroelectric
project. At the other end of the spectrum, approval was given for BN Vivienda Solidaria, a product
that will provide financing, on very favorable terms, to build or repair homes for the victims of
earthquakes and other natural disasters.
7
Earnings exceeded ¢43 billion, which are, as said before,
the highest in the history of the Bank. We closed the
year with all indicators at normal levels, a good rating
in the SUGEF (financial entities regulatory body) model,
and an unqualified opinion from the external auditors
on the Bank’s financial statements.
In defense of the Bank’s interests, throughout the year
it was necessary to appear before commissions of
the Legislative Assembly to explain, together with the
General Manager, how the State-owned banks would
be affected negatively should the proposed Joint Tax
Liability law be approved. Likewise, together with
representatives of other State-owned banks, it was
necessary to contest the provisions of an Executive
Decree that regulates the contributions of State-owned
entities to the Caja Costarricense de Seguro Social
(CCSS) (Costa Rican Social Security System), required
under the Worker Protection Act.
reprioritizing the Bank’s most important projects.
Once authorization was received from the Central Bank
of Costa Rica, the entry of the Bank into the derivatives
market was approved, making Banco Nacional the first
State-owned bank to participate in this market.
Another important agreement reached by the Board
of Directors was the approval of regulations governing
telecommuting, which will greatly benefit workers, the
Bank and for the country in the long term.
Once again, I wish to congratulate the entire staff of
the Banco Nacional for their positive attitude and for
their efforts to contribute to the continued success of
the Bank. As I have said many times before, the best is
yet to come.
To all of you, thank you very much.
Visits from the former President of Chile and Executive
Director of UN Women, Dr. Michelle Bachelet, and
from the Vice-president of Honduras, afforded us an
opportunity to explain the nature and achievements of
our Banca Mujer program.
On the subject corporate governance, the boards
of directors of the wholly-owned subsidiaries were
reorganized as follows: two representatives of the Bank’s
Board of Directors, two from Senior Management and
two from outside the bank, including the Supervisor.
In July, Mr. Juan José Rivera Coto, a highly experienced
employee, was appointed Deputy Auditor General.
We are pleased to report the approval of important
projects and initiatives such as the Strategic Technology
and Information Plan, which made it possible to begin
the process of replacing the core banking systems and
8
Alfredo Volio
Chairman, Board of Directors
Report from the General Manager
The results achieved by the Bank in 2012 were extraordinary. We can report the highest earnings in
the history of the institution, due mainly to loan recovery and to income derived from services and
commissions. In tune with our mission, which is “to improve the quality of life for as many people
as possible, providing premium financial services that will promote sustainable wealth creation,”
we granted more personal, business, and institutional loans than ever before and provided an
increasing variety of financial services to our customers.
As a result of the Bank’s active involvement in the national financial market, offering competitive
interest rates and prices, the entire banking system has become more efficient, which contributes
to the development of the country and to the economic well-being of families. Through programs
such as BN Pymes (SMEs) and Banca Mujer (Women Entrepreneurs), we have incorporated tens
of thousands of micro-entrepreneurs, men and women, into the formal economy, offering them
loans and, equally important, business assistance and support for the sustainable growth of their
businesses.
We continue to be the leading bank in the provision of financing for SMEs, housing and vehicles.
New and advanced systems for the measurement of risk enable us to offer pre-approved loans to
good customers of the Bank, as well as credit lines to business customers, who in turn can access
financial resources easily, thus reducing paperwork and waiting times.
Trust fund management is one of our services that has a positive impact on the country. In 2012,
we assumed responsibility for managing the trust fund of the National Telecommunications Fund
(FONATEL, acronym in Spanish), constituted with contributions from companies that have recently
entered the national telecommunications market in an effort to expand the coverage of such
services throughout the entire country. We also took on the management of the trust fund to be
used in the administration of the new National Stadium, favoring a flexible and transparent model
for the management of public facilities.
We accomplished all of this in 2012 in an orderly and prudent manner, while at the same time
undertaking a major internal transformation and modernization process.
As part of this process, we took the first steps in establishing CEDs in different parts of the country,
in order to be even closer to those who produce, invest in production and are the lifeblood of the
economy of the country. All CEDs are expected to be operational in 2013.
9
As part of any major institutional or business
transformation process, technology must be updated.
Banco Nacional has always been and will continue
to be a leader in this area. In 2012, we strengthened
innovative projects in the areas of management of
channels, accounting, purchases, human resources
management and customer relations.
Intense efforts have been under way to incorporate
new functions into the BN Móvil (Mobile Devices)
application. The IP Convergence Project allowed for
greater use of Internet resources and the wireless
network for the connection of mobile devices was
improved to ensure the level of security required by the
Bank.
In an effort to promote greater efficiency, and to more
objectively acknowledge the efforts of our personnel,
we introduced a new performance evaluation system
the effects of which will be felt in 2013.
A new version of the systems and applications used in
loan processes was delivered, and the security level
of the domain consulting tool on the Bank’s Internet
Banking site was raised, both of which were reported as
success stories at the Internet Corporation for Assigned
Names and Numbers (ICANN) World Conference.
In addition, the email inbox of each employee was
increased from 30 to 120 Megas, and the capacity of
our computers was expanded, increasing the maximum
size of each email from two to five Megas.
I want to call particular attention to the results in the
area of information technologies, which are essential
in keeping Banco Nacional at the forefront, and in the
area of social responsibility, ensuring that the Bank is a
good corporate citizen.
Information Technologies
In addition to our ongoing efforts to modernize and
increase the capacity and functionality of the Bank’s
technological infrastructure, and in keeping with market
trends and the institution’s strategy, the four-part
Technology Modernization Project went into operation
this year. The four parts are: a) incorporation of the
concept of “Channel Manager” to improve the Teller
Windows and Customer Services Platform applications
under the ‘suite’ environment, b) enterprise Resource
Planning (ERP) to change the existing Human Resources,
Procurement, Purchases and Inventories applications, c)
strengthening of the Customer Relations Management
(CRM) tool and d) acquisition of the new core banking
systems.
10
Lastly, Banco Nacional acquired a new security tool
intended to improve the current system and safeguard
the information in the Bank’s computer equipment.
Social Responsibility
In the area of Social Responsibility, Banco Nacional
made important progress, as evidenced by the results
of the most recent IndiCARSE self-assessment exercise. The Bank earned a score of 89, which is higher than the
national and regional averages. In general, according to
the responses given by 251 companies from the region
and 34 from Costa Rica in particular, the score received
by Banco Nacional is superior to the national and
regional averages, and that of companies with 1,000 or
more employees and companies in the field of finance.
Thanks to our Environmental Management Program,
from 2011 and 2012, we were able to reduce the Bank’s
carbon dioxide CO2 output by 700 tons, reaching the
goal of increasing the positive impact of the Bank on the
environment by 5%; to decrease water and electricity
consumption by 5% (15% with respect to the base year
of 2008); and to use 300% less paper from 2008 to the
present. This translates into ¢200 million in savings over
the last three years.
The Bank entered into an alliance with the Ministry
of Agriculture and Livestock Farming (MAG, Spanish
initials) to compensate for the emissions of carbon
dioxide produced as a result of the Bank’s production
activities, by means of a project unique to Costa Rica for
the promotion of sustainable agriculture.
In the field of Community and Public Policy, ¢200 million
was invested in community projects and ¢35 million in
the PIAD, a technological tool intended to bring about
positive changes in the country’s educational system.
We were able to reach between 7,000 and 9,000
students and 300 educators through Banco Labor@,
a financial technological platform with a transactional
simulator that enables students of in technical schools
to participate in entrepreneurship courses.
Also, thanks to the alliance with the Ministry of Science,
Technology and Telecommunications (MICIT, Spanish
Initials), in 2012, 556 young people were incorporated
into the Talento Joven platform, an initiative that
promotes the development of promising students in
science and technology.
Our employees attended eight gender equality
workshops and performed 5,045 hours of volunteer
work, and 45 companies joined our Responsible
Supplier Program. Seven completed the program and
graduated with the knowledge required to comply with
the basic social responsibility standards.
To conclude, these results and those presented in this
2012 Annual Report are proof of the fact that Banco
Nacional is undergoing a major process of renewal, one
that will consolidate the Bank’s position as leader of the
Costa Rican financial sector, a leader whose primary
objective is to create opportunities for as many Costa
Ricans as possible.
Important challenges await us in the years ahead.
However, the initial results of this process, in which
2012 has been decisive, indicate that we are on the
right track.
Fernando Naranjo,
General Manager
11
Board of Directors
Lic. Alfredo Volio Pérez
Chairman
Dra. Jennifer Morsink Schaefer
Vice-Chairman
Licda. Janina Del Vecchio Ugalde
Secretary
MBA. Arnoldo Madrigal Pastor
Director
MBA. Olivier Castro Pérez
Director
Lic. Jorge Méndez Zamora
Director
MBA. Federico Ruzicka Tarragó
Director
From left to right: Arnoldo Madrigal, Federico Ruzicka, Janina Del Vecchio,
Alfredo Volio, Jennifer Morsink, Jorge Méndez and Olivier Castro.
12
Organizational Chart
General Board of
Directors
Office of the Auditor
General
Office of the
General Manager
Technology,
Information
and Communications
Division
General Secretariat
Risk Division
Legal Division
Institutional
Relations Division
Corporate Strategy
Office of the
Deputy Director
General for Corporate
Banking
•
•
Office of the Deputy
Director General
for Development
Director General for
Risk and Finance
Director General
for Administration
BN Fondos, BN Valores and BN Seguros report to the Office of the Deputy General Manager for Corporate Banking. BN Vital
reports to the Office of the Deputy General Manager for Development.
Approved by Board of Directors in session 11,791, article 2, held on 11 September 2012.
13
Economic Context
For Costa Rica, 2012 was characterized by highly positive results for the external sector and for foreign direct
investment, and by a low level of inflation and a very acceptable level of economic growth. However, the country
suffered from fiscal pressures which had an effect on certain monetary and financial variables.
Production grew at an average interannual rate of nearly 5%, and by year’s end was close to the level forecast by
the Central Bank in its Macroeconomic Program. The trend-cycle of the Monthly Index of Economic Activity (IMAE,
Spanish initials) showed an average growth of 5.1% over the last twelve months, and an annual variation of 3.3%.
Costa Rica. Behavior of the IMAE, percentages
10.0
8.0
6.0
4.0
2.0
0.0
-2.0
-4.0
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
-6.0
Annual growth
Average growth, last 12 months
Source: BCCR
Starting in May, 2012, economic activity, illustrated by both the curves in the figure above, began to fall off due to a
decline in manufacturing, which started the year at levels above 12% and, by October, showed a negative variation of
0.5% with respect to 2011. Positive growth in the services sector, particularly the external sector, made it possible to
report good overall economic growth at the end of the year.
14
The largest contribution to this growth was made
by the services industry, particularly transportation,
storage and communications, services to companies
and financial intermediation services. The provision of
services to companies is bringing about a major shift in
production in the country. In this sector, foreign direct
investment in high technology reached a record level of
US$574 million, with an annual growth rate of 22%.
Attention was focused on the construction sector,
which by the end of the year showed an annual growth
rate of 5.4%, after growing only 1.3% the previous year
(2011). The public looked at growth in this sector as
evidence that the effects of the crisis, triggered in 2010,
had disappeared. It should be pointed out that most of
the growth in the sector was spurred by private-sector
investment, with few public construction projects
reported in 2012.
Another sector targeted by analysts was the hotel
industry, seriously affected by the international crisis.
Nonetheless, it closed out the year at a level (3.7%)
considerably above the figure for the previous year.
Economic activity, influenced by the results of the
external sector, was complemented by activity in the
loan market. Loans granted by the banking system
to the private sector totaled ¢9,049.1 trillion as of
December, a variation of 12.5% with respect to 2011
and the largest since the onset of the international crisis
in 2008.
Some degree of improvement was observed in
the composition of government spending: capital
expenditures increased significantly compared to those
of the previous year, and recurrent expenses, although
they remained high (9.2%), grew less than in 2011
(9.7%), due mostly to public sector salaries and current
transfers.
One important event in the fiscal sector was when the
country placed Eurobonds in November in the amount
of US$1 billion, with a rate of 4.25% and a term of
10 years. As a result, the net international monetary
reserves of the Central Bank grew to more than US$6
billion.
The fiscal shortage and pressure for government
resources gave rise to lower liquidity levels and
competition among financial agents, which led to
increases in the Tasa Básica Pasiva throughout 2012,
from 8% at the beginning of the year to 10.75% in
October. This triggered a debate among different sectors
(government, the treasury, public banks, analysts,
and the public in general) which led to variations in
the methodology used to calculate this variable. Such
variations began to take effect in late 2012, bringing the
rate down to 9.2% by year’s end.
One “minus” in 2012 was the finances of the central
government. Although growth in revenues continued
at an acceptable rate of 10%, growth in expenditures
wiped out any gains, leading to a fiscal shortage in
the neighborhood of 4.4% of Gross Domestic Product
(GDP). Last year the figure was 4.1% of GDP.
15
BCCR. Daily base rate calculated by BCCR
11.00
10.50
10.00
9.50
9.00
8.50
8.00
7.50
7.00
11/15/09
12/5/09
12/25/09
1/14/10
2/3/10
2/23/10
3/15/10
4/4/10
4/24/10
5/14/10
6/3/10
6/23/10
7/13/10
8/2/10
8/22/10
9/11/10
10/1/10
10/21/10
11/10/10
11/30/10
12/20/10
1/9/11
1/29/11
2/18/11
3/10/11
3/30/11
4/19/11
5/9/11
5/29/11
6/18/11
7/8/11
7/28/11
8/17/11
9/6/11
9/29/11
10/16/11
11/5/11
11/25/11
12/15/11
1/4/12
1/24/12
2/13/12
3/4/12
3/24/12
4/13/12
5/3/12
5/23/12
6/12/12
7/2/12
7/22/12
8/11/12
8/31/12
9/20/12
10/10/12
10/30/12
11/19/12
12/9/12
12/29/12
6.50
Source: BCCR
The weighted lending rate for operations in local currency was approximately 20.48% at year’s end; for loans
in other currencies, the weighted rate was 11.1%.
Local interest rate levels caused an additional imbalance in the economy. There was talk of the inflow of
speculative capital (called hot money), triggered by high local vs. low international interest rates. Such
investments, which yielded high rates of return, picked up greatly in the middle of the year.
It is important to recall that the inflow of capital was also influenced by the size of the emissions of government
bonds, and the image of the country following its placement of Eurobonds, which made the country a target
for such capital because Costa Rica’s risk level is quite acceptable.
This imbalance had implications for the value of the dollar and, therefore, for the steps taken by the Central
Bank to defend the exchange rate band system and maintain the level of its monetary reserves, because this
inflow of resources put pressure on the supply of dollars in the market and kept the exchange rate at the lower
end of the band.
16
On this topic, it is important to add that, in the first quarter of 2012, the Central Bank announced the program it
would implement in 2012 and 2013 to accumulate US$1.5 billion in monetary reserves. Nonetheless, as a result of
the variations in the exchange rate and the inflow of capital mentioned above, by the close year, the Central Bank
had almost reached its goal. The reserves had risen to US$6.8 billion and the program had already accumulated
US$1.3 billion.
Costa Rica. BCCR net reserves as of december of each year.
Millons of US$
8,000
6,856.5
7,000
6,000
5,000
4,000
3,000
2,000
1,000
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
0
Source: BCCR
During 2012, the exchange rate underwent revaluations. The real exchange rate (bilateral and multilateral) kept
moving further away from the parity level of 100. At the beginning of the year, the average purchase and sale price
of the dollar was ¢511.84, which had fallen to ¢499.75 by the end, for an approximate revaluation of 1.13% in one
year, showing only two small “spikes” at the beginning of November and in late December.
This activity in the foreign exchange market, the price of the dollar and the achievement of this goal were again
addressed by the Executive President of the Central Bank in a presentation made at the end of the year. This
presentation breathed new life into the rumor that the exchange rate band system would be dropped in favor
of a managed floating exchange rate system. This sparked a new debate among the sectors that would be more
affected by this measure (export, financial, social and business sectors).
For the fourth consecutive year, the country reported single-digit inflation. For economic authorities, this factor
marked a “trend that had not been seen in the last 35 years”. The annual variation in the consumer price index was
4.55%, which fell within the range established in the macroeconomic programming of the Central Bank (between
4% and 6%) and was lower than that of 2011 (4.74%).
17
Costa Rica. Annualized inflation and devaluation
17.0%
12.0%
7.0%
2.0%
-3.0%
-8.0%
Inflation
-13.0%
Dec-12
Jun-12
Sep-12
Mar-12
Dec-11
Jun-11
Sep-11
Mar-11
Dec-10
Jun-10
Sep-10
Mar-10
Dec-09
Jun-09
Sep-09
Mar-09
Dec-08
Jun-08
Sep-08
Mar-08
Dec-07
Jun-07
Sep-07
Mar-07
Dec-06
Jun-06
Sep-06
Mar-06
Dec-05
Jun-05
Sep-05
Mar-05
Dec-04
Jun-04
Sep-04
Mar-04
Dec-03
Jun-03
Sep-03
Mar-03
Dec-02
Jun-02
Sep-02
Mar-02
Devaluation
-18.0%
Source: BCCR
Exports of goods and services grew at an annual rate of 9.4% and generated US$ 11.3 billion in 2012. Exports of goods
under the free trade zone regime grew by 11.1%, whereas the definitive regime grew by 4.7%.
Costa Rican goods are exported as follows: 38.9% to the United States, 7.6% to Holland and 5.2% to Panama.
Imports generated US$17.5 billion, for an annual variation of 8.3%. The current account deficit was 5.2% of GDP, which
continues to be financed with medium- and long-term resources and with foreign direct investment, a variable that
improved greatly throughout the year. The trade deficit grew by 6%, on average, throughout 2012.
It is important to point out that the export sector generates 553,690 direct jobs, which is 28% of all jobs in the economy
and one of the highest figures in the region. The direct result of actions aimed at having a more open economy is that
Costa Rica is now a regional leader in the area of services, which has resulted in an increase in the number of people
and companies interested in investing in the country.
18
According to a report from the Costa Rican Coalition for Development Initiatives, in 2012, the country again
broke the record for attracting direct foreign investment in the field of high technology (US$574.5 million). A
total of 40 new projects were implemented, which generated 8,236 jobs.
During the third quarter of 2012, the economy, the private sector in particular, generated enough sources
of employment to absorb the increasing supply of labor, and even slightly lowered the rate of open
unemployment, which fell from 11.1% in 2011 to 10.2% of the workforce by the end of 2012. In spite of the
slight improvement in the level of unemployment, the figure is still very high, which had a negative impact
on the results expected in the social sector.
The percentage of families living beneath the poverty line was greater than 20%. Income distribution,
measured using the Gini Coefficient (the higher the indicator the more unequal the distribution) went from
0.50 to 0.52 in 2012 despite positive growth in production.
19
Financial Analysis
Introduction
Banco Nacional reported the highest earnings in its history in 2012, with after-tax profits and nonequity minority interests totaling ¢43.7 billion (US$87 million).
This successful year in the generation of earnings by Banco Nacional Financial Conglomerate was
due in great part to a reduction in the expenditures involved in estimating the loan portfolio,
and to the number of goods received in lieu of payment of loan, which in previous years had
had a negative impact on results. Earnings as of December 2012 were attributable to reversals of
provisions, illustrating the important contribution of service commissions to the operational gross
profit of the Bank.
The year started out with a more robust loan portfolio, both efficiency and the capital adequacy
ratio at acceptable levels, and normal levels of liquidity. This growth in earnings will reinforce the
belief of Costa Ricans in the soundness and reliability of Banco Nacional.
Behavior of Assets
The total assets of Banco Nacional increased to ¢4,014 trillion by the end of December, 2012; that
is to say, they grew by ¢447.7 billion (12.6%) over the previous year.
Banco Nacional. Evolution of assets
4,014
(Billions of colones)
3,566
3,372
2012
2010
20
2011
The Gross Loan Portfolio is the main component of the assets and grew by 11% in one year,
totaling ¢253.6 billion in absolute terms. As for the health of the loan portfolio, the percentage
of delinquencies of more than 90 days was 2.64%, and all delinquencies accounted for 7.12%
of the portfolio.
The portfolio of investments in securities, and cash assets, account for 16% of total assets.
Banco Nacional. Composition of assets 2012
4% 1%
16%
16%
Net loan portfolio
63%
Cash assets
Investments in securities
Fixed assets
Others
Loans to customers
With respect to loans, and given the consequences of a marked expansion in the previous
decade, the Bank applied a cautious policy in order to balance risk, service, contribution to
the development of the national economy, and the health of the portfolio.
The loan portfolio of the Bank grew at an annual rate of 11% (6.45% in real terms), with
new placements totaling more than ¢1.26 billion. The amount placed reached ¢2.56
billion, which enabled the Bank to keep its position as leader in the market, with a 21.7%
share in placements in the country.
21
The health of the portfolio improved substantially, with delinquencies of less than 90 days at 7.37%
and loans delinquent for over 90 days at 2.64%. These levels fall within the range established by
the regulatory authorities of the country. It must be emphasized that Banco Nacional was more
successful than any other bank in reducing the number of loans delinquent for more than 90 days
in 2012.
Banco Nacional. Gross Loan Portfolio by sectors, 2010-2012
Billions of colones
BNCR: Cartera crediticia bruta por sectores. 2010-2012
Activity
Housing
Services
Trade
Consumption
Others
Industry
Tourism
Agriculture
Livestock farming
Construction
Total
Miles de millones de colones
2011
%
%
34.7%
815.4
35.3%
16.8%
460.4
20.0%
16.0%
354.0
15.3%
8.4%
184.1
8.0%
2.4%
57.8
2.5%
4.8%
101.7
4.4%
6.2%
108.0
4.7%
3.3%
78.3
3.4%
2.7%
61.0
2.6%
4.5%
86.6
3.8%
100%
2,307.1
100%
2010
691.7
335.4
317.8
168.1
48.1
96.3
123.1
66.1
53.8
90.3
1,990.7
2012
862.7
568.2
358.3
213.8
123.8
121.4
102.7
86.9
62.3
60.7
2,560.7
%
33.7%
22.2%
14.0%
8.3%
4.8%
4.7%
4.0%
3.4%
2.4%
2.4%
100%
VaR. %
5.8%
23.4%
1.2%
16.1%
114.3%
19.4%
-4.9%
11.0%
2.2%
-29.9%
11.0%
Housing continues to account for 33.7% of the resources held in the loan portfolio, followed by
services (22.2%) and trade (14%).
Banco Nacional. Composition of portfolio 2012
Livestock farming
2.4%
Construction
Agriculture
2.4%
3.4%
Tourism
4.0%
Industry
4.7%
Housing
33.7%
Others
4.8%
Consumption
8.3%
Trade
14.0%
Services
22.2%
22
Credit risk
In managing credit risk1 , Banco Nacional applies an internal model in order to estimate the Expected Losses (EL)
and the Value at Risk (VaR) of the loan portfolio for one year, applying the “Monte Carlo Simulation” method. Risk
for the loan portfolio is analyzed, controlled and monitored on a monthly basis and one-year projections are made,
based on a level of confidence of 99%.
The application requires the use of the “Matlab” computer software. In addition, the credit-risk model takes
into account the impact of changes in macroeconomic variables that are endogenous and exogenous to the loan
portfolio in determining the systemic factors. These results are compared to the estimations from the previous
month and historical trends. To accomplish this, information on the loan portfolio from as far back as 2003 is
available for consultation.
Furthermore, the VaR is also calculated for each one of the thirteen economic activities, as well as for credit card
accounts and the BN Desarrollo portfolio.
Different technical tools are applied that make it possible to perform other analyses and estimations, such as the
seasonal nature of delinquencies of less than 90 days, the concentration of the portfolio by economic activities,
loan recovery, stress and sensitivity tests for new loans and/or follow-up of existing loans. Banco Nacional has
developed specialized internal methodologies for modeling credit risk, which in turn have made it possible to
quantify indicators of risk and eventual impacts on the development of the institution. This has led to the adoption
of sound credit risk management practices that have helped to substantially reduce the level of delinquency in
the loan portfolio, helped along by
Banco Nacional. Evolution of VaR of Loan Portfolio,
strict control of efforts to collect
by currency. December 2011-2012
delinquent loans.
4.0%
3.66%
3.5%
3.0%
3.00%
2.61%
2.5%
2.41%
1.80%
1.98%
1.5%
1.63%
VaR BN
Colones
Dollars
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Feb-12
1.44%
Jan-12
1.0%
Dec-12
2.0%
Dec-11
In line with this, the value at risk
of the loan portfolio showed an
interannual decrease of 0.18
percentage points, going from
1.98% in December 2011 to 1.80%
in December 2012. The effect was
mostly on the portfolio denominated
in dollars, in which VaR dropped
from 3.66% to 2.41% between
December 2011 and December
2012. In contrast, the VaR for the
colones portfolio increased by 0.19
percentage points, reaching 1.63%
at the close of 2012, as a result of an
increase in delinquencies on loans
made in this currency.
Dus
Possible loss assumed by a financial agent as a consequence of the breach in contractual obligations pertaining to the counterparts with which
it is related.
1
23
Interannually, the VaR in most economic activities, especially agriculture, increased. This sector
reported an increase of 1.52 percentage points, and the estimate for December 2012 is 2.90%. This
situation was caused by a sharp increase in delinquency. Other activities in which the VaR increased
due to delinquency were industry, livestock farming, tourism, trade and services.
In contrast, important decreases were reported in construction, transportation and mining. In
the first two, a contraction of delinquencies was reported, which impacted the behavior of VaR
indicated in the preceding paragraph. In the latter, the concentration of this portfolio was the cause.
In addition, it is important to mention that two of the major portfolios within the consolidated
portfolio of Banco Nacional, housing and consumption, reported stability for the period under
consideration, and are estimated to reach 2.05% and 2.49%, respectively, in December 2012.
Banco Nacional. VaR of institutional loan portfolio as
per economic activity. December 2011 - 2012
Activity
Agriculture
Livestock farming
Mining
Industry
Energy
Housing
Construction
Trade
Transportation
Financial Services
Consumption
Services
Tourism
BNCR
24
Dec-11
Dec-12
1.38%
1.88%
3.87%
1.77%
2.39%
2.08%
14.01%
1.83%
3.54%
3.43%
2.65%
1.35%
3.91%
1.98%
2.90%
3.09%
0.00%
2.68%
2.97%
2.05%
6.03%
2.22%
2.43%
3.29%
2.49%
1.44%
4.26%
1.80%
Customers‘ Funds
Liabilities, which totaled ¢3,593 trillion grew by ¢404 billion, (12.7%). This growth came in the segment of bonds
payable. The largest growth was reported in checking accounts (¢161 billion), followed by term deposits (¢153
billion) and savings accounts (¢63 billion). By currencies, deposits in colones have shown the largest growth.
Regarding products, term deposits showed the largest increase in volume. However, this was not the largest
absolute growth reported among all funding sources since its growth can be attributed to higher deposit rates in
the later months of the year.
Regarding the national banking system as a whole, Banco Nacional is by far the leader in the area of deposits in
checking accounts, with a 35% share of the market. As for deposits in savings accounts, its share is 37.7%.
Banco Nacional. Detailed liabilities 2011-2012
Liabilities BCCR
Accrued liabilities
Other financial liabilities
Other liabilities
4%
24%
5%
23%
28%
30%
41%
40%
Deposits in savings accounts
Deposits in Checking Accounts
Term deposits
2011
2012
Term deposits continue to play an important role in the Bank’s funding structure (40%).
25
Source and use of funds
In 2012, Banco Nacional generated resources through sight liabilities totaling ¢ 210.1 billion, followed by ¢153.3
billion in term liabilities. Also, 11.1% of the resources generated corresponds to other liabilities ¢51.1 billion
and equity ¢43.7 billion, for a total of ¢458.3 billion. These resources were applied as follows: 55% to the loan
portfolio, 19.7% to investments in securities, 12.6% to cash assets, 6.7% to other assets and 2.2% to obligations
with the BCCR.
Banco Nacional. Source and Use of Funds
December 2011 - December 2012 (Millions of colones)
Source of funds
Application of funds
Sight liabilities
Term liabilities
Other liabilities
Equityl
Amount
210,156
153,392
51,094
43,716
%
45.6%
33.3%
11.1%
10.1%
TOTAL
458,358
100%
Loan portfolio
Investments in securities
Cash assets
Remaining assets
Notes receivable
Liabilities with BCCR
Amount
253,338
90,823
57,901
28,228
18,034
10,034
%
55.0%
19.7%
12.6%
6.7%
3.9%
2.2%
458,358
100%
Results
In 2012, after-tax profits and non-equity minority interests were the highest in the history of the Bank, to date.
They totaled ¢43.7 billion, which is an annual growth rate of 73.1%. That is to say, they surpassed the figure for
2011 by ¢18.4 billion.
26
Banco Nacional. Statement of Results
Millions of colones
Var %
Financial income
Financial Expenditures
Gross Margin
2010
597,304
440,128
157,177
2011
386,359
206,475
179,884
2012
319,593
124,877
194,716
-17.3%
-39.5%
8.2%
Income from recovery of assets
Bad debt expenses
Net Margin
6,603
25,692
138,087
17,532
46,522
150,894
15,724
45,104
165,336
-10.3%
-3.0%
9.6%
Other operational income
Other operational expenditures
Operational Gross Profit
87,873
51,534
174,426
107,763
83,304
175,353
123,194
89,762
198,768
14.3%
7.8%
13.4%
Administration expenses
Before-taxes Profit for Period
Taxes and non-equity minority interests
Afert - tax profit
130,687
43,739
13,390
30,349
142,687
32,666
7,404
25,262
156,318
42,451
- 1,265
43,716
9.6%
30.0%
73.1%
Var. Abs
- 66,766
- 81,598
14,831
- 1,808
- 1,418
14,441
15,431
6,457
23,415
13,631
9,785
- 8,669
18,454
The Gross Margin grew by ¢14.8 billion over December, 2011; in percentage terms, this represents an increase
of 8.2%.
In addition, the operational gross profit, which includes income and expenditures related to the provision of
services, grew by 13.4%.
In 2012, after-tax profits and non-equity minority interests amounted to ¢43.7 billion, which are 73% higher
than those of the previous year ¢25.2 billion and are the largest in the history of the institution
Banco Nacional. After-tax profits and non-equity minority interests
in millions of colones as of December of each year
50,000
38,434
40,000
30,000
39,134
43,716
42,026
29,933
29,640
30,349
25,262
20,000
10,000
-
2005
2006
2007
2008
2009
2010
2011
2012
27
Behavior of income
In 2012, the greatest amount of income came from the recovery of loans, which grew at an annual rate of 22.7%.
The loan portfolio generated ¢282.5 billion in income and investments in securities another ¢26.6 billion, with
annual growth of 3.3%.
Income generated from the recovery of assets decreased by 10.3% with respect to 2011. In 2012, income from
service commissions grew by ¢10.1 billion, due mostly to income from credit cards (enrollment of businesses) ¢4.9
billion, other income ¢4.2 billion and bank drafts and transfers of funds (¢690 million).
The second largest growth in service commissions was, in absolute terms, ¢6.2 billion. This growth can be broken
down as follows: the income received by Banco Nacional from its subsidiaries, the sale of realizable assets, and
foreign exchange activities.
Banco Nacional. Income Itemized
Millions of colones
Financial Income
From loans
From investments
2010
597,304
206,064
21,655
2011
386,359
229,911
25,825
2012
319,593
282,205
26,675
VaR. %
-17.3%
22.7%
3.3%
Other financial income
369,586
130,624
10,712
-91.8%
Income from recovery of assets
17,532
17,532
15,724
-10.3%
Operating income
Commissions
Others
87,873
55,569
32,304
107,763
63,921
43,842
123,194
74,108
49,086
14.3%
15.9%
12.0%
702,709
511,654
458,511
-10.4%
Total Income
28
Behavior of Expenditures
Operating expenses grew by ¢6.4 billion (7.8%), due mostly to labor-related provisions. The increase can be traced
to a change in the rules for making certain accounting entries adopted in 2012.
Due to their effect on the financial results, in 2012, attention was also paid to expenses incurred to estimate the
goods received in lieu of payment of loan. One positive note was that they decreased with respect to the total for
2011 (¢1.4 billion), which had a positive impact on the efficiency rating and profitability of the Bank.
Administrative expenditures increased by 9.6% with respect to December 12, 2011, with personnel costs showing
the greatest absolute growth, as a result of wage increases, the salary market and the contribution to ASEBANACIO.
At the close 2012, the statement of results showed negative ¢1.2 billion in Taxes and Non-equity minority interests,
because of reversals of provisions related to the payment of income tax, as well as some additional adjustments.
Banco Nacional. Expenditures Itemized
Millions of colones
Financial expenditures
2010
440,128
2011
206,475
2012
124,877
VaR. %
-39.5%
Sight liabilities
Term liabilities
Liabilities with BCCR
Other financial expenditures
22,970
59,867
6
357,284
24,191
61,411
4
120,868
33,692
89,912
2
1,270
39.3%
46.4%
-44.1%
-98.9%
Provisions related to assets
25,692
46,522
45,104
-3.0%
Operating expenditures
51,534
83,304
89,762
7.8%
Administrative expenditures
Personnel costs
Operating Expenditures
Expenditures for infrastructure and depreciation
130,687
85,432
20,103
25,152
142,687
94,819
22,471
25,397
156,318
105,996
23,845
26,477
9.6%
11.8%
6.1%
4.3%
Total expenditures
Taxes and non-equity minority interests
Total
648,041
7,404
655,445
478,988
7,404
486,392
416,060
-1,265
414,795
-13.1%
-14.7%
29
CAMELS Model
As of December, 2012, the Bank´s CAMELS rating was 1.08, equaling that of the previous month. All indicators
were rated Normal.
The capital adequacy ratio as of December 2012 was 11.90%, a drop of 36 basis points. This is explained by the
increase in the loan portfolio from new placements and the revaluation of the portfolio denominated in dollars, as
a result of the increase in the accounting exchange rate that occurred at year’s end.
All other financial and risk indicators show that Banco Nacional evolved very positively and that it not only held on
to its leadership position in the national banking system, but also added considerably to the solvency which has
always characterized it.
Banco Nacional. Summary of Financial Ratios SUGEF
30
Capital
2010
1.00
2011
1.00
2012
1.00
Quality of Assets
1.00
1.00
1.00
Management
1.00
1.00
1.00
Profitability
1.00
1.00
1.00
Liquidity
1.00
1.00
1.00
Sensitivity to Market Risks
1.00
1.00
1.00
Quantitative rating
1.00
1.00
1.00
Qualitative rating
1.40
1.40
1.40
Overall Rating
Capital Adequacy Ratio
1.08
12.78%
1.08
12.26%
1.08
11.90%
Office of the Deputy Director General
for Development
Personal Banking Division
Products:
- Deposits
a) Savings for natural persons, mostly through
electronic accounts.
-Loans
a) Housing loans to individuals and families for
different purposes: purchase of lot, construction
of new home, purchase of existing home,
remodeling, sustainable housing and refinancing
of existing loans. This product showed an upward
trend in the second semester of the year as a result
of important changes in rules and regulations
which brought our products into line with market
conditions, and of increased loan activity. By year’s
end, the housing portfolio had grown by 6%.
b) BN Soluciones focuses on the provision of different
types of personal loans.
Services
a) BN Servicios: is one of the fundamental pillars of
the Bank. In 2012, it provided 2,635 BN Servicios
through 560 service points in 20 entities which
serve as channels for the distribution of Bank
services.
2012, for an increase of 125% when the payment
of bank drafts is taken into consideration. Most
were sent via the BN Servicios network
c) BN PayPal: This successful service, introduced
into the market in May 2012, makes it possible
for micro entrepreneurs, small businesses and
individuals who sell products and services through
the Internet to join PayPal using the Bank’s Internet
Banking tool. The original goal was to open 1,500
related accounts; however, the number actually
opened was 4,085 (272% of target).
d) BN Marchamos [vehicle circulation permit
fees]: Once again, the Bank was the leader in
the collection of such fees. It reached its goal,
collecting ¢36 billion and generating commissions
totaling ¢648.6 million in eight weeks.
Principal Achievements
a) Some 1,845 new programed savings contracts
were signed, bringing in ¢4.5 billion by the end of
the year.
b) The housing portfolio grew by 6%.
c) BN Vehículos grew by 213%, making the products
offered by the Bank the best in the market in terms
of price and response time.
d) BN Soluciones grew by 5%, with an upsurge
following the launch of the Cuota Única Loan
(Consolidation loan).
b) Remittances: Remittances from immigrants in
Costa Rica, mostly from Nicaragua and Colombia,
generated US$300 thousand in commissions in
31
Electronic Payments Division
Products:
The commercial activities carried out by the Electronic
Payments Division in 2012 were aimed at:
•
•
•
•
•
Increasing market share by increasing product
placement.
Communicating effectively through advertising
campaigns aimed at specific market segments.
Launching new commercial schemes.
Increasing the use of products that have existed in
the payments market for some time.
Increasing profitability.
In 2012, the Division was able to introduce several
schemes linked to credit cards into the market. These
schemes offer different payment methods and better
interest rates to customers who acquire this product
either through the Bank or other banks.
As a result, the credit portfolio grew by 12.22% from
2011 to 2012, or ¢8.8 billion in absolute growth, going
from ¢72.3 billion to ¢81.1 billion.
A relevant and historical fact is that the number of
credit cards grew by 15.81% in one year, climbing
from 121,808 cards in 2011 to 141,707 in 2012. It is
important to mention that the increases in both the
portfolio and the number of cards were the largest
in recent years. Furthermore, the first steps were to
taken to change a long-standing way of thinking in
which customers bought cards from the Bank, adopting
32
instead a successful model in which Banco Nacional
designs the strategies to sell cards.
In addition, the number of businesses affiliated with
the Bank’s acquirer network grew by 12.53%, which led
to an increase of 9.91% in billing. Important declines in
both the credit and debit transactions were reported
in 2012, which had a negative effect on clients’ use of
the cards. Therefore, even though the number of debit
purchases and the commissions and profits generated
by such cards increased, the increase was not as great
as in other years. The same behavior was reported in
billing in businesses affiliated with the Bank’s acquirer
network.
Accordingly, and considering that the search for
increased profits was a major pillar of the commercial
strategies for 2012, it is important to mention that
profits for this period grew by 9.39% over 2011, taking
into account the credit card, debit cards and Bicsa Card
products.
Lastly, total profits for the Electronic Payment Division
for 2012 were the best ever, reaching ¢30.3 billion.
Foreign Trade Banking Division
Correspondent Banks
Products and Services:
- Letters of credit
• Import letters of credit
• Clean letters of credit
• Export letters of credit
• Standby letters of credit from other
countries
- Collections
• Documentary collection for imports
• Clean collection from other countries
• Documentary collection for exports
• Simple collections other countries
- ACH debits:
• Automatic payment of mortgages from
accounts in U.S. banks, via ACH
- Foreign currencies
• Purchase and sale of foreign currencies
• Distribution desk
• Operations involving exchange rate
derivatives
- International securities
- Bank drafts
- Bank drafts for foreign banks
- Transfer check
- Purchase of international checks
- Payments to U.S. pensioners
- SWIFT (Society for Worldwide Interbank Financial
Telecommunication) Services
• Administration of local accounts from
abroad at the international level
• Delivery of statements of account via the
SWIFT system
- Transfers
• Transfers from other countries
• Transfers to other countries
• International transfers to other countries
with the amount guaranteed to the
beneficiary
- BN - Red SWIFT
Correspondent banking entities in 2012.
Name
City
Country
England,
USA
HSBC Bank PLC
London
New York
London,
New York
Commerzbank A.G.
Frankfurt
Germany
Toronto Dominion Bank
Toronto
Canada
UBS, AG
Zurich
Switzerland
Deutsche Bank AG
Frankfurt,
New York
Germany,
USA
Banco Santander Central Hispano
Madrid
Spain
Rabobank
Utrecht
Holland
BNP - Paribas
Paris
France
Banca Nazionale del Lavoro
Rome
Italy
The Bank of Tokio - Mitsubishi UFJ Ltd.
Tokyo
Japan
Bank of America N.A.
Miami
USA
Deutsche Bank Trust Company Americas
New York
USA
Bank of New York Mellon N.A
New York
USA
Citibank N.A
New York
USA
Wells Fargo Bank N.A
New York
USA
Bank of China
New York
USA
Standard Chartered Bank N.A.
New York
USA
Banco Internacional de Costa Rica
Miami,
Panama
USA,
Panama
JP Morgan Chase Bank N.A
England
A US$40 million credit line was negotiated with the
Brazilian Development Bank (BNDES) and made
available to businesses interested in importing Brazilian
products. The SCORE system was implemented, which
allows the companies to carry out transactions directly
with Banco Nacional via the SWIFT platform.
In addition, all the Foreign Trade Banking processes were
certified in compliance with ISO-9000 International
Quality standards. The Division also earned awards for
excellence in Straight Through Processing) by major
international banks: Standard Chartered, J.P. Morgan,
Citibank, Bank of America. In the case of J.P. Morgan,
Banco Nacional was the only bank in Central America
to receive the award, given its greater than 98% level
of effectiveness.
33
Banca Mujer Division
Products
The BN Banca Mujer Program is designed to meet the
needs of women entrepreneurs and business operators.
Its main product is loans to finance investments in and
operate micro, small and medium businesses.
The following achievements were reported in 2012:
The program offers competitive interest rates,
repayment periods based on the investment plan, as
well as access to guarantee programs when sufficient
funding is not available to secure the required financing.
This is possible thanks to the benefits offered by the
Development Bank or the Trust Fund of the Instituto
Mixto de Ayuda Social (IMAS) (institution focused on
reduction of poverty), plus a one-time disbursement
fee, no commissions for follow-up or early payment, and
the personal attention provided by our Development
Executives located throughout the country.
Loans cover needs such as:
• Working capital: resources necessary to operate
the business, such as purchase of raw materials,
payroll and others.
• Investment: for machinery or infrastructure.
• Special loans for inventories, in colones or dollars.
There is also another product, the BN Empresaria credit
card for women entrepreneurs, which is designed to
meet immediate working capital needs.
34
The BN Banca Mujer Program has contributed to
the creation and growth of a significant number of
businesses in Costa Rica run by women. Thanks to the
business assistance we provide to our customers, 2,821
women entrepreneurs participated, free of charge, in
training, technical assistance, marketing, advertising
and other activities. These activities have not only
helped to grow their businesses, but also served to gain
the loyalty of customers in all three segments: micro,
small and medium businesses.
In 2012, 5,855 operations were approved, including
loan and credit card operations, an increase in total
placements of ¢7.6 billion. Of these, 3,719 were loan
operations and 2,136 were BN Empresaria credit cards.
The loan portfolio reached ¢105.8 billion as of
December, and the credit card portfolio ¢7.4 billion for
a total of ¢113.3 billion, or annual growth of 7% over
December 2011.
In this period, joint efforts were undertaken with IMAS
to meet the funding needs of child care networks.
Some networks are already operational thanks to
the loans granted to date. Also under study at the
present time are the needs of certain groups of women
entrepreneurs interested in this type of activity, with
an eye to meeting their financial needs and providing
them with the business support they need to get their
businesses off to a good start. This initiative provides an
important social benefit: many women will be able to
have their children properly looked after while making
a living for their families. These actions contribute
to achieving the goals of the 2011-2014 National
Development Plan.
Development Banking
Division
Products and services
Loans for micro, small and medium businesses:
Access to resources is essential in enabling businesses
to develop, innovate, diversify, promote and/or export
their products and services. Funding is available for
working capital and investment (e.g., machinery and
infrastructure, with a maximum 12-year repayment
period depending on investment plan); as well as a
special five-year loans for inventory, in colones or
dollars (provided the business generates dollars).
SME Cards: The SME business credit cards are a
resource for business operators (men and women) who
require fast and flexible funding.
We have three types of cards:
•
•
•
BN Desarrollo for local businesses,
BN Mujer Empresaria for women who run micro,
small and medium businesses,
BN Pymex for export businesses.
Business Support Services: Thousands of businesses,
customers of BN Desarollo, benefit from business
support services provided through a network of
strategic partners from public and private institutions
across the country. These services include financial
advisory services, training and technical assistance,
local and international promotion of products and
services in trade fairs and trade missions, as well as
publicity and support for exporters.
BN Green SME: A program to finance environmentallyfriendly investments in preventive or clean technologies
(designed to lower air pollution levels or promote the
use of alternative or cleaner fuels); biomass-based and
electrical insulation equipment; LPG or natural gas
burners; low, medium and high efficiency air filters;
vents for odors and corrosive gases, high efficiency dust
filters, gas purification plants, etc.
Rural loans for farmers: To contribute to the
development of the agricultural production, fisheries
and livestock farming sectors, there are special
programs such as the Programa Nacional de Renovación
Cafetalera (for coffee sector) and the Programa
Reactivación de Caña LAICA-BNCR (sugarcane sector).
35
At the close of 2012, BN Desarrollo reported a balance
of ¢621.9 billion, which represented annual growth
of 4.8%, which is 92.1% of the balance projected for
December. Micro and small businesses and rural loans
accounted for 78.5% of the balance.
In this period, new loans totaled ¢187.1 billion and
credit cards ¢1.5 billion, for a grand total of ¢188.6
billion, generated by 14,324 loan operations and 5,137
cards. Delinquencies of less than 90 days stood at 9.53%
and those of more than 90 days at 3.89%. Neither of
the goals (7.5% and 2.7%, respectively) set by the Bank
was reached. The A+B portfolio accounted for 87.9%
and the D+E portfolio stood at 8.8%. The expected loss
was 1.9%.
Profits, measured as the contribution margin, exceeded
expectations. It amounted to ¢58.1 billion, which is an
18% increase over December 2011, and surpassed the
goal by 85%. Microenterprises provides 46% of the
contribution margin.
BN Desarrollo customers used a total of 383,569
services, an average of 6.1 services per customer
(including loans); this is an increase of 24,758 services
over December 2011.
36
The Heredia-Limón and Alajuela-Norte zones have
the largest share of the BN Desarrollo loan portfolio,
contributing 22% and 21%, respectively. As regards
operations, the Cartago-Sur region accounts for the
largest number, whereas the Central Region reports the
highest interannual growth (17%).
By economic activity, the sectors with higher growth
compared to the previous year were services (14%)
and agriculture (9%). In the area of new placements,
trade and services contributed the most (67.5%). These
same economic sectors have the largest share of the
BN Desarrollo portfolio (69%).
By the close of the year, BN Desarrollo customers
held 23,911 cards, which add up to a balance of ¢22.7
billion. Distribution of cards by type was as follows:
MYPES (61%), PYMEX (16%) and BN Mujer Empresaria
(15.5%) of the balance.
In the BN Pymex program for micro, small and medium
enterprises, in activities related to the direct or indirect
export of goods and services, or those with export
potential, the portfolio balance amounted to ¢79.5
billion, which is 13% of the BN Desarrollo portfolio,
which exceeded the goal by 88%.
Business Banking Division
Products and services
Business Services: Banco Nacional offers all the
financial services businesses may require, regardless
of their size or business activity. For example, the Bank
can assist them in structuring financing models and
mechanisms; grant them loans; facilitate their sales,
payments and collections over the Internet; support
their foreign trade activities; and even manage their
physical or financial assets.
Business Loans: Banco Nacional business loans are
adjusted to meet the needs of the business in question,
offering competitive interest rates and the most
favorable repayment periods in the market. These
financial instruments include conventional loans, credit
lines and open mortgages.
Business Credit Cards: The Banco Nacional Business
Credit Card is designed to help manage and finance
expenditures, reducing the need to cover them with
cash and providing instant credit the business can use
whenever necessary to improve cash flow.
Cash Management and Control Services for Businesses:
•
•
Delivery of Deposits: A service the Bank provides
through an outside contractor, who picks up
deposits at the company and delivers them to the
corresponding branch office.
Night Deposit Box: A box for deposits into
checking accounts (after normal bank business
hours), accessible only to customers who pay for
the service.
Over 300 banking transactions can carried be out
automatically through Internet Banking Corporativo,
BN Páguese (payments to suppliers), BN PAR (scheduled
payments), BN PAS (automatic deposit of salaries), and
BN Conectividad (collections); there are also options for
paying suppliers, employees and public utilities.
The creation of the Business Banking Division in
the Office of the Deputy General Manager for
Development in July 2012 brought important changes
in rules and regulations that make it possible to provide
loan services that are intended to meet the needs of
business customers.
The Bank has tried to tailor loans to the needs of its
customers, to reflect changes in their needs.
Regarding balances, by product, within the Business
Banking Division, the largest percentage of growth over
December 2012 was in total loans, including 18% in
commercial loans and 20% in business credit cards. As
for total deposits, they increased by 10% in checking
accounts and 13% in investment funds. During the
months of November and December, along with the
Personal Banking Division, a strategy was developed
to enable business to collect vehicle circulation permit
fees. Collections increased significantly in businesses
with fleets of vehicles.
Electronic products: Banco Nacional offers customers
a wide variety of options for carrying out transactions
from their place of business, home or wherever they
may be, through Internet Banking Services.
37
Commercial Management Division
Products and services:
Principal Achievements:
BN Internet: This electronic services platform is designed
for businesses and individuals, enabling them to securely
carry out an array of banking transactions from a business
computer or a personal computer.
•
Conectividad: This financial product enables customers to
identify accounts receivable and charge for the goods and
services that the business offers.
BN Móvil: This service enables customers to carry out most
transactions from mobile phones, via BN Internet Banking
BN Celular: This service enables customers, via text
messaging, to consult balances, pay utilities, make transfers,
etc.
BN Banca Telefónica: Customers can carry out a number of
transactions by dialing 2212-2627.
Check Certification: This service is provided upon request
to the customer (physical or juridical person (payer) or the
beneficiary (payee). The Bank certifies, on the check, that
there are enough funds in the account to cover it, thus
ensuring that it can be cashed.
38
•
•
•
•
•
Incorporation of the recognition of the Dimex ID card
as of October 1st, 2012.
Pre-approved: 285 publicity campaigns were
conducted which brought in 529,061 customers; 8,941
cards were issued in the amount of US$44.7 billion,
with a effectiveness rate of 19%, delinquencies of less
than 90-days at 5.04% and those of more than 90 days
at 0.15%.
Installation of 11 new ATMs.
Relocation of the Palmares, Río Frío, Centro Comercial
Tibás branches and transfer of the San Sebastián
branch to Plaza Higuerones, and the opening of a teller
window for business customers in the bank in Guatuso.
Connectividad: processed 30.4 million transactions
(¢2.5 million more than 2011), and generated
commissions totaling ¢9.6 billion (¢950 million more
than 2011).
At the close of 2012, our electronic services had the
following users:
Comparison of Users per Channel
Channel
Internet Banking
Banca Celular
Banca Telefónica
Banca Móvil
Total BN Clients
No. Users Share %
2011
330,803 19.00%
18,788
1.08%
417,281 23.96%
9,732
0.56%
1,741,413
No. Users
Share %
2012
415,262 22.78%
31,793
1.74%
314,934 17.28%
25,063
1.37%
1,822,990
The following is a breakdown of transactions in the different channels at the close of 2012:
Comparison of Transactions
Channel
Internet Banking
Banca Celular
Banca Telefónica
Banca Móvil
BN Servicios
ATMs
Teller windows and plataforms**
Total
Dec-11
3,425,151
115,516
320,549
10,831
1,073,024
4,024,534
3,252,841
12,222,446
Dec-12
4,089,372
123,828
290,558
62,345
1,412,621
4,210,429
2,916,251
13,105,404
Rel. Share
31.2%
0.9%
2.2%
0.5%
10.8%
32.1%
22.3%
100.0%
Diff.
664,221
8,312
-29,991
51,514
339,597
185,895
-336,590
882,958
VaR. %
19.4%
7.2%
-9.4%
475.6%
31.6%
4.6%
-10.3%
7.2%
** Data does not include platforms
•
•
•
•
Implementation of PayPal (service that enables customers to transfer funds from their
PayPal accounts to their Banco Nacional accounts).
Incorporation of the transfer function into Internet Banking Corporativo (IBC), making
it possible to send multiple national transfers (one to many). This project constitutes an
improvement in the process, which previously was performed manually.
Registation for BN Celular from an ATM (option that allows customers to sign up for the
Banca Celular service from an ATM, and for IBC, enrolling debit card accounts).
Application for paying vehicle circulation permit fees for fleets of vehicles (payments
automatically debited).
Improvements in the BN Más Cerca de Usted application:
»» Creation of the “BN Más Cerca de Usted” application for customers with Android
mobile phones (6,005 enrolled since July 2012).
»» BN Más Cerca de Usted application adapted for use with iPads (3,585 enrolled since
December 2012).
»» Access to the Bank’s social networks through Facebook and Twitter, via the BN
Contactos option of the application.
• Advertisement campaigns on: vehicles, housing, credit cards, vehicles circulation permit
fees, punctuality, Banca Mujer and Banca de Desarrollo.
• Sponsorship of Fiestas Palmares 2013, Festival de la Luz 2012, first-division soccer teams,
Monster Jam, Expomóvil 2012, Expoconstrucción 2012 (summer edition), among others.
• Logistics for events: one Expomóvil, two Expoconstrucción, two editions of Expocasa, as
well as other smaller fairs.
39
Office of the Deputy General Manager for Corporate
Banking
Investment Banking
Division
updated. It was then presented to the Superintendencia
General de Valores (SUGEVAL) (Securities oversight body) in
accordance with existing rules and regulations.
State of Projects
Superintendencia de Telecomunicaciones (SUTEL):
This trust fund was set up to manage the resources of
the Fondo Nacional de Telecomunicaciones (FONATEL)
(National Telecommunications Fund), created to provide
telecommunications, wireless internet and other services
to areas of the country with limited coverage. All necessary
manuals and procedures required for the smooth operation
of the trust fund were prepared. In addition, a hearing was
held to announce the procedures and requirements for
hiring the Management Unit, attended by all interested
parties.
Instituto Costarricense de Electricidad - Banco Nacional
(ICE-BNCR) (Peñas Blancas and Cariblanco): A financialaccounting analysis was conducted in order to determine
the status of the trust fund, and the trustor was advised on
ways to address temporary liquidity problems that might
arise in the future. The proposal presented to the Senior
Management of ICE by this Division was well received and
will be implemented once the loan application is approved.
The behavior of these resources is monitored through the
Bolsa Nacional de Valores (BNV) (stock market).
Instituto Costarricense del Deporte y Recreación (ICODER)
(Stadium): In the first quarter of year, the Bank undertook
the administration of this trust fund, the main objective
being an effective and first-class management of the new
National Stadium. The Administrative Board was appointed. All necessary manuals and procedures required for the
smooth operation of the trust fund were prepared and
then approved by the Board. An employee of this Division
assumed responsibility for managing the stadium for some
four months and coordinated everything related to large
events to be held there. Lastly, the process of appointing
the members of Management Unit got under way.
Fideicomiso de Titularizacion Hipotecaria. IMPROSABNCR: All administrative actions requested by the trustee
were taken and the commission generated monthly by
this trust fund was received. Then it was sent to the Bank’s
accounting department, and the annual prospectus was
40
The firm of Ernst & Young was selected to operate the
Management Unit. The Bank worked with the Management
Unit to develop a project aimed at providing regular
access to voice and Internet services for communities in
the canton Siquirres, in the province of Limón. The Bank
also participated, along with the SUTEL team and the
Management Unit, in visits to other parts of the country to
determine the needs of other communities
Instituto Costarricense del Puertos del Pacífico (INCOP)Instituto Costarricense de Turismo (ICT) - BNCR: The Trust
Fund Division of the Bank continues to administer this trust
fund and handle all matters related to its Management
Unit. Throughout the year, a number of public work projects
were proposed, and built on schedule. The 2011 budget
was settled, the 2012 budget was presented, and a number
of special budgets required for the operation of the trust
fund were approved. The Bank participated in the meetings
of the INCOP Board of Directors and a report was presented
on the future of the trust fund. Based on this report, and
at the request of the INCOP Executive Chairman, a loan
was requested from BICSA, which is in currently in the
formalization stage.
country. Meetings were held with the INVU team to
continue the analysis of the first draft of the contract to be
signed between INVU and the Bank for the implementation
of housing projects. In addition, a lawyer from the Bank’s
Legal Department was assigned to work with the group.
Other Projects
At the close of the semester, the contributions of these
clients could be seen in the final figures for the Center thanks
to the personalized attention they had received. This made
it possible to carry out important projects, beginning with
a shift toward the mentality that characterizes a Corporate
Center. Although it was opened in January 2013 in the Calle
Blancos branch office, the contributions of those customers
increased the Bank’s profits in 2012.
Ministerio de Educación Pública (MEP)-BNCR Trust Fund:
The draft contract was analyzed with the MEP. The Bank
monitored the progress of the proposed law that will
regulate this trust fund, which has yet to be approved by
the Legislative Assembly
Corporate Banking Division
The Corporate Center located in Calle Blancos was opened to
provide preferential treatment to customers who are most
important to the Bank in terms of length of association and
profitability. These customers were assigned new account
executive beginning in the second half of 2012.
Asociación Pro Hospital Nacional de Niños (APHNN)-BNCR
Trust Fund: There was renewed discussion of this topic,
given the interest shown by the senior management of the
CCSS in continuing their participation in this project.
Instituto Nacional de Vivienda y Urbanismo (INVU): A
meeting was held with the Executive Chairman of the
Institute to make yet another presentation on possible
financial structures in order to promote the housing
projects it wishes to implement in different areas of the
41
Commercial Indicators
Total deposits grew by 37%, loans by 155% and Customer
Segmentation (SECLI) by 132%. This growth was measured
on an interannual basis using the balances of the selected
companies. This was a clear illustration of the good work
being done by the Corporate Banking team, and of the
approach Banco Nacional wants to provide through a
project focused on shifting toward large companies.
Also noteworthy is the number of customers assigned to
the Center in keeping with the established parameters.
Although this figure is less than 1% of the total, the Center
has a 58.6% share, making it a fundamental part of the
Bank. The Center has a 79.3% share in placements and a
72.8% share in accumulated profits.
Institutional Banking
Division
a. Increased commissions: At the close of December 2012,
institutional customers had made 2,197,726 payments
through Connectividad, 4,165 fewer payments than in
December 2011. This is the result of the Bank’s strategy
aimed at encouraging customers to make public utility
payments through its electronic channels: BN Internet
Banking, BN Celular, BN Móvil, Banca Telefónica, the entire
ATM network and more than 2,100 BN Servicios partners
throughout the country.
In June 2012, the Bank, through the Institutional Banking
Division, introduced a ¢350 commission for each public
utility payment made at a teller window. This measure led
to a decrease in the number of such transactions compared
to 2011. This was a natural reaction on the part of the
population, who sought alternative ways to pay their utility
bills, while ignoring, in many cases, that the Bank’s that
electronic channels are available free of charge.
42
Nevertheless, the number of payments made through
Connectivity led to an increase in the profitability of this
service of 17.8% from one year to next, and to a decrease
in the number of such transactions at teller windows. This,
in addition to improving customer service, encourages the
population to become more financially and technologically
savvy and to use the Bank’s electronic channels for such
transactions.
b. Commercial Indicators: Below is the performance of the
main commercial indicators, comparing December 2011
and December 2012.
Total deposits for Institutional Banking customers (checking
accounts and certificates of deposit mostly) grew by 15%
from one year to the next, and totaled ¢927.3 billion
by December 2012. Deposits in subsidiaries (mainly
investment funds, trust funds and BN Valores) increased by
1.1% from one year to the next, and totaled ¢1.6 billion,
while placements grew by 40.3% from one year to the next,
totaling ¢293.8 billion.
In general, total balance for Institutional Banking customers
grew by 8.4% by December 2012, for a total of ¢2.9 billion. Lastly, these customers generated ¢39.8 billion in profits,
an increase of 44.6% compared to the close of December
2011.
The growth in placements contributed to overall growth
in accrued profits at the close of 2012, and was in keeping
with the growth generated throughout the entire Banco
Nacional Conglomerate.
c. Creation of new products and new regulations:
Changes to the Organic Law of the National Banking System
and the Organic Law of the Central Bank of Costa Rica:
Management and
Continuous Improvement
Department
Beginning in early 2012, the Institutional Banking Division
proposed to the Legislative Assembly amendments to
Article 61 of the Organic Law of the National Banking
System (LOSBN, Spanish initials), and Article 135 of the
Organic Law of the Central Bank of Costa Rica, which define
the amount of debt that can be carried by all public sector
institutions, vis-à-vis the amount of funding they can secure
from commercial banks, which to date is set at 20% of the
capital and reserves of each bank for loans.
Through the Management and Continuous Improvement
Department, the petty cash scheme of the Bank was
updated. Traditionally, certain units were authorized to
keep cash on hand, with the risk this entailed. This scheme
was replaced with an electronic system that allows for
improved control of petty cash, and regulates its use, with
each purchase being reported in a statement of account.
On Monday, December 10, 2012, proposed Law 18.353,
which amended these articles, was approved. From now
on, municipalities are excluded from the sector limit and a
separate limit is assigned to each, as is done in the case of
the Instituto Costarricense de Acueductos y Alcantarillado
(AyA) (national water company), the CCSS and ICE. This
modification made it possible to promote some 36
municipal projects valued at more than ¢792 million.
The Department participated directly in the preparation
of documents and requirements related to projects
submitted by the Bank to compete for the National Award
for Quality and Recognition of Promising Practices in
Public Management; an award granted by the Ministry of
National Planning and Economic Policy (MIDEPLAN, Spanish
acronym) to the Bank in the Quality System and Monitoring
Center category.
Office of the Deputy
General Manager for
Administration
The Department participated in efforts to modify, gain
approval for and implement the model for increasing
the productivity of ATMs. This model provides a more
comprehensive assessment of the productivity of each
ATMs, reduces the workload of managers and supervisors,
helps to speed up decision making, calls for more frequent
measurement of the productivity of the branch offices
and the ATMs, and helps reduce waiting times, one of the
variables of the model. Lastly, it allows for the evaluation
of productivity vs. a given value, not comparatively, and
fosters healthy competition aimed at improving customer
service.
This Office played a major role in the design, development
and implementation of the Transformation Project, which
has enabled the Bank to achieve important synergies,
focus commercial activities by segment, introduce more
specialized customer services, and improve human
resources processes and management. This project would
not have been possible without the active participation of
the Offices of the other Deputy Managers and the Board of
Directors.
43
A pilot program for programming ATMs was
implemented. The model implemented for eleven
ATMs has increased operational efficiency and
improved customer service by ensuring they run out of
cash less frequently.
The Virtual Office project was implemented, which,
through Internet Banking, responded to requests from
8,500 physical persons regarding new accounts, credit
cards and replacement of debit cards for both physical
and juridical persons.
The new Virtual Transactions Office, which handles
requests for products online, became operational.
This office makes interaction with customers possible
though electronic channels, speeding up response
times.
The project aimed at centralizing the files of the Bank
Headquarters Office and the Regional Directorates in
the Administrative Archive was concluded. By the close
of December, boxes of files were still being received
from CIPAC.
The Department worked with together with the
Foreign Trade Division/International Division to offer
derivatives to Bank customers.
As for the sale of goods, the goal established by Senior
Management was exceeded by105.5%.
Operations Department
In order to expedite loan procedures and reduce
response times, the process of centralizing the Centro
Institucional de Procesamiento y Administración de
Crédito (CIPAC) (loan processing and administration
center) was restarted, working first with the branch
offices and agencies of the Atlantic Region. Additionally,
the project designed to digitize files containing
documentation on new and closed loan operations was
implemented. Such files are used as reference by the
branch offices and agencies.
The building that will house the Contact Center
was rented. The Center will serve as the first point
of contact for customers, via telephone, and will
decrease the number of phone calls that offices must
receive directly. It will provide information on different
products and services, respond to inquiries and
perform certain procedures.
44
Human Development
Department
Through the Human Development Department,
personnel received training in areas that directly
and indirectly contribute to reaching the goals of the
Bank regarding the portfolio. The working climate was
assessed and the compensation system was reviewed.
The main achievements are below:
In 2012, the personnel of the (regional) offices received
training in appropriate work behavior and the duties
and responsibilities of employers and employees. This
involved 96% of the offices, or nearly 4,000 employees.
As for Culture and Social Welfare, the Division provided
assistance to those employees and management and
administrative personnel who are going through a difficult
time in their offices. Action plans were drawn up for 39
offices. A total of 121 employees received therapeutic
support related to personal, family, and work-related crises.
Similarly, 240 employees who felt vulnerable in terms
of their job security, family and socioeconomic position
received support. The Medical Service performed 7,000
medical evaluations.
Training in Liderazgo de Equipos Facultados (LEF)
(leadership training), with high-level in-house facilitators
began for more than 400 management personnel (at all
levels). Participants achieved a mutual understanding of
the issues and committed to promoting and living a culture
of excellence.
A working climate survey was conducted at Bank
Headquarters, which revealed room for improvement
in areas such as values, leadership, decision making,
teamwork and quality of life.
In terms of staff development, the Department worked
with more than 230 leaders, especially from branch offices.
Growth paths were defined for the three main and the other
positions in branch offices. An individual development plan
was prepared in order to narrow the gap detected, using a
psychometric test (DISC).
Security Division
As for the Security Division, despite an increase in
some types of crimes that affect banks, for the seventh
consecutive year, there was no increase in bank holdups,
break-ins, phishing, check fraud, and ATM theft.
Together with judicial and bank security authorities,
a criminal ring comprising two Venezuelans and four
Bulgarians engaged in skimming was successfully
dismantled, leading to the recovery of US$42 thousand.
Thanks to new electronic surveillance capabilities, a criminal
ring involved in singling out customers to hold up outside
the La Casona Bank in Tibás was also dismantled.
Thanks to our participation in a year-end security operation,
once again no cases involving the theft of year-end bonuses
were reported.
Lastly, the Division was recognized for digitizing the records
of the Security Monitoring Center, as part of the National
Award for Quality and Recognition of Promising Practices in
Public Management.
One of the most important processes carried out in 2012
was the implementation of a new management model,
which seeks to ensure that the entire Bank is working
toward the established strategic goals.
45
Office of the Deputy General Manager
for Risk and Finance
Risk Department
In order to ensure the comprehensive management of
risk for exchange rate derivatives, in accordance with
the provisions of Agreement SUGEF 9-08, in 2012 the
Department worked on three fronts: methodological
(valuation and pricing of products and the identification
and quantification of risk); administrative (preparation
of guidelines on exchange rate derivatives); and
operational (identification of Bank documents that
support operations with exchange rate derivatives).
Thanks to this effort, the Bank was able to submit
to the SUGEF documentation required to request a
license to operate as an exchange rate intermediary
(granted in November 2012), which enabled the Bank
to plan future operations in this area. The main product
for 2012 is the Manual on the Operation, Control and
Management of Risk Related to Derivatives, which
contains all relevant documentation on derivatives.
Because the Risk Division was directly involved in
the preparation of the document, it has been selling
exchange rate derivatives to customers since December
2012.
In addition, a new in-house methodology was
developed for estimating value at risk (VaR) of the
portfolios containing Bank fixed-income investments.
The methodology makes it possible to quantify the VaR
of investments more accurately and effectively. The
new methodology (RiMer) offers several advantages
over the current system (OFSA):
1) It allows for greater control and flexibility over the
parameters of the model and, in general, over the
modules of the application.
2) It makes it possible to identify loss and gain
vectors.
46
3) The results of backtesting are expected to improve
because a more accurate estimate of the VaR of
the investment market will be produced.
4) It includes the calculation of CVaR, which would
make it possible to obtain the consolidated VaR
and stress tests directly.
The model involves yield curves, the estimation of
rate model parameters, the simulation of scenarios,
and, lastly, the calculation of VaR. One of the main
innovative aspects is the use of a two-factor rate model
(G2++) vs. the one-factor Hull-White model used in the
OFSA system, which was not producing satisfactory
results.
The G2++ model breaks the short rate into two processes
similar to those of Hull-White and a deterministic
function to be specified. This methodology has been
developed for the VaR module, and it was tested in
the second half of 2012 on the colones, dollars, euros
and Development Units (DUs) portfolios. The results
are more volatile because the evolution of market
risk factors has been more carefully considered. The
Consolidated VaR and stress tests modules are in the
final stages of development.
Parallel to these activities, work was under way to
allocate capital by line of business. This model is
intended to improve the allocation of capital on the
basis of the return adjusted for consumption of capital,
and takes into consideration certain restrictions
regarding net capital adequacy such as the risk
charge of for each activity and the risk level set by the
Administration for this indicator.
Basically, the model consists of improving the return
adjusted for capital requirements, subject to restrictions
related to to capital adequacy ratio constraints, the goal
being to keep the capital adequacy ratio above a moving
threshold. It also allows for the inclusion of other necessary
restrictions, for example, related to regulatory matters or
liquidity.
Banco Nacional has tools for rating current loan customers
(behavior score and rating), checking account customers
and savings accounts and CDP customers (score of
deposits), as well as potential customers (origination
score). In 2012, the five origination scores were validated
using Equifax, revealing that the scores of the Bank have
prediction rates that fall within international standards.
The application has been developed in such a way that
greater effectiveness can be achieved using the data on
profitability and capital consumption entered in an Excel
file by the user, generating results by loan activity and by
currency in the case of investments. Preliminary results
allocated 80% to loans and 20% to investments. In the
case of loans, this benefits the activities of the housing,
services and trade sectors; in the case of investments, it
benefits colones.
The behavior and deposits scores are used for the
origination of loans. As a result, customers who have
the best scores do not need the origination score, thus
speeding up the loan process. These tools are also used
to conduct pre-approved loan campaigns, which provide
customers with loan options when they require financing.
Taking the Basel III guidelines as a reference, in 2012, the
Market Risk Division proposed a new, three-part scheme
known as “Comprehensive Approach to Liquidity.” The first
part involved monitoring macro factors and local market
factors, by conducting technical analyses to support the
management of the legal minimum reserve requirement
(limits on transactions through Internet Banking and direct
credits and debits, as well as analyses of seasonal factors)
and bimonthly reports on the macro situation in local
money markets.
The second was the presentation of a preliminary dynamic
cash flow and the dynamic structure it should have, for at
least one week and then for longer periods, which should
be updated at least weekly. Using the flow as a basis, the
third part of the approach would involve estimating the
indicators proposed by Basel III (liquidity coverage ratio
(LCR) and net stable funding ratio), which would provide
early warning indicators.
For the second and the third parts, it is essential to have an
adequate system of information and data, a task that has
been proposed for completion this year.
Regarding ratings for businesses, the tool was adjusted,
making it possible to establish loan limits based on the
funding needs of our best customers. This provides our
corporate clients, who account for a large share of the loan
portfolio, with a quick and efficient service.
Furthermore, in 2012, a methodology for mapping critical
Information Technology (IT) systems, and processes, was
developed and fine tuned. It covered critical processes
such the issuance of securities, information and fiduciary
technologies, securitization, etc. As regards all institutional
processes, liaison employees were appointed and
workshops were held to conduct a preliminary identification
of risks, which is estimated to be 80% complete. Because
the proposed methodology for identifying critical processes
was approved by the Corporate Committee, it will be used
in the mapping exercises planned for 2013.
Behavior in the area of fraud was very positive this year. It
continued to be less than 0.2%, relating data on operating
losses data to the income generated by the service
networks, even though the Administration has set 0.35%
as an acceptable level of risk. This was possible thanks to
a multidisciplinary and sustained effort that involved the
adoption of appropriate control procedures for different
processes and training in the area of fraud.
47
The Compliance Risks Division increased the number of
reports sent to competent authorities by 80%, making
the task of monitoring transactions and customers more
efficient and automated. This lowered the number of
cases referred to the offices, and led to a concentration
of analyses and assessments in the Division. It also
intensified activities intended to control the quality and
quantity of transactions that must be reported to the
regulators on a monthly basis. Participation in on-site
training activities also increased.
In 2012, the updating of data on Banco Nacional
customers was 58.85% complete. Even though
the deadline, according to CONASSIF regulations,
is 12/31/2013, this level of progress is considered
acceptable. It is important to mention that this project
is being implemented in close coordination with the
business areas, considering that having access to
accurate and complete information contributes directly
to the improved management of sales and better
service for our customers.
Regarding loans, efforts were focused on ongoing
training and specialization for personnel, which placed
emphasis on the most important aspects of placement
such as capacity to repay loans and valuation of
collateral.
Moreover, customers were provided with quick access
to their Behavior Rating and Score over the Internet.
Following best international banking practices, “credit
limits” were established, making it easier to extend
loans to customers who preset the lowest credit risk.
The process of establishing and enforcing a plan to deal
with delinquencies, a joint effort on the part of the
risk and credit areas, made it possible to evaluate key
customers who could have an impact on the indicators
for the portfolio, and to plan actions intended to mitigate
that impact, such as payment plans, adjudications and
foreclosures.
Thanks to efforts to constantly follow up on and
monitor the loan portfolio, it was possible to avoid
48
approximately ¢2.4 billion in loan-loss reserves, which
contributed directly to our financial profits.
Thanks to the creation of a system to keep track of the
agreements of the Special Credit Commission, it is now
possible to monitor those pending implementation and
verifying compliance.
Special reports were prepared that make it easier
to evaluate adjustments in the rules and regulations
for loans, with a view to streamlining the process
or correcting problems in the management of the
process. These include: the report on the portfolio of
placements with gas station operators, the report on
the portfolio of placements for vehicles, of portfolios
placed despite rejection of score, the report on the real
estate (housing) segment, the report on the assessment
of repayment capacity for the Development Banking
portfolio, and the report on the credit card portfolio,
among others.
The effective and always relevant work of the Special
Loans Division made it possible, working with 37 new
customers, to set up payment plans totaling US$74.7
million, for a total portfolio of over US$127 million.
Applying the principles of proactivity and continuous
improvement, and in pursuit of the objectives set by
the Bank’s Transformation Project, during the last
quarter of 2012, the Credit Division underwent a major
transformation. It became the Credit Department and
was no longer responsible for developing standards and
policies for loans, but rather for the entire process of
granting, monitoring and ensuring repayment of loans.
This was done in order to speed up the process, with a
view to improving customer services without lowering
the standards for defining acceptable levels of credit
risk.
As a result of this “transformation,” it has been
necessary to modify loan structures, adjust processes
and documentation requirements and train staff in the
performance of their new duties.
Finance Department
From the financial point of view, the Bank reported
significant achievements in 2012. In close coordination with
the Risk and Foreign Trade Area, authorization was obtained
from authorities for Banco Nacional to act as intermediary in
the exchange rate derivatives market. This is a fundamental
aspect of customer service related to the external sector of
the economy, especially when the foreign exchange regime
introduces greater levels of uncertainty into the setting of
the exchange rate of the Costa Rican colon. It should be
mentioned that the first negotiation of a term exchange
rate has been completed with a counterpart.
Together with other areas of the Bank, an accounting and
budgeting system built on a technological platform that
integrates the different systems was implemented, making
all related processes more efficient and having a very
positive impact on customer service.
In addition, the Bank’s investment management and custody
process was given an ISO: 9001 certification. This was the
culmination of an effort lasting several years, which led to
the implementation of a management system consistent
with international standards that helps customers to trust
in these services.
Financial assets in the custody of the Bank reached the
historic level of US$10.6 billion. This increase in the amounts
administered made it possible, thanks to this service, for
the Bank to bill over one million dollars.
The Manual on Commissions was posted on our website,
informing customers of the prices the Bank charges for each
service it provides.
The Investment Committee approved a new investment
strategy for the domestic currency portfolio. The results
became evident in the latter months of the year, when the
accrued valuation that had been carried forward for some
time was turned around. In September 2012, it stood at a
level of -¢1.7 billion; in December it stood at ¢4.3 billion;
and by January 21, 2013, it stood at ¢11.7 billion.
Thanks to sound management of budget resources, in
respect of the principles of economy, effectiveness and
efficiency and in adherence to all relevant laws, in 2012,
Banco Nacional succeeded in prioritizing execution,
containing administrative costs by 53% (43% permanently),
thus improving net capital adequacy rate and the operational
efficiency of the institution.
The project aimed at increasing balances in the vault and
reducing remittances got under way, already resulting in
US$50 thousand in savings per month.
A model for estimating the probability of criminal activity
was designed and implemented for the Security Division. The model uses crime statistics to determine which offices
are more likely to be victims of crime.
In terms of international agreements, those signed
with Nicaragua and El Salvador through the Securities
Clearinghouses in those countries (CEDEVAL and CENIVAL,
respectively) were implemented. These agreements allow
for the reciprocal custody and administration of financial
instruments, as well as the settlement of related stock
exchange operations, making it possible for local investors
to participate in regional markets.
Talks on the national economy were held in different parts
of the country as a service of the Bank. They were aimed
at employees and customers to provide them with micro
and macroeconomic information they may need to more
effectively carry out their activities.
49
Interacion with Regulators
The Bank’s process for coordinating with regulatory bodies received an ISO/9001- 2008 certification for Quality
Management Systems.
Compliance with Law 8204
Commitment
Banco Nacional is one of the strongest and most well-established institutions in the national financial system and
in Central America, and has always been a model of sound banking practices. It is characterized by values such
as teamwork, innovation and its concern for the quality of customer service, in addition to being persevering
and honest in all its activities.
Today, when corruption, drug trafficking and other serious crimes pose a threat to peace and security in Costa
Rica, the Bank has taken a firm stance against money laundering, organized crime and funding for terrorism.
The efforts undertaken, from the Board of Directors and Senior Management to all personnel, to comply with
ethical principles include a commitment to implementing the Know-Your-Customer policy day by day. Each
employee contributes, with their work, to making the Bank the leader in efforts to combat money laundering
and funding for terrorism.
The Bank has a department with personnel who specialize in the detection of alerts and their knowledge is
shared with the other personnel in an effort to keep all areas informed, in order to prevent situations that can
put the Bank at risk, and, in this way, contribute to the preventive efforts already under way in the country in
this important issue.
50
US Patriot Act
51
Subsidiaries
BN Vital
2. BN Vital Products
1. Main Achievements 2012
a. Régimen Obligatorio de Pensiones Complementarias
(ROP) (mandatory pension fund for all workers)
b. Fondo de Capitalización Laboral (part of ROP - can
be withdrawn every five years)
c. Benefit Plans for ROP
• One-time payment of funds accumulated
• Scheduled payment of funds accumulated
d. Fondo de Pensión Voluntario en colones o dólares
(voluntary in addition to ROP)
e. Planes de Pensión Collectivo Empresarial (business
group pension plans)
f. Fondo de Garantía Notarial
The profitability of the funds managed by BN Vital
increased and risk limits were established for each fund
managed, in line with the Strategic Plan.
BN Vital reported very positive performance figures for
2012. During the second half of the year, it became the
retirement fund operator with the greatest growth in
the industry, even achieving a positive net performance
compared with all operators with respect to the free
transfer process.
In terms of customer service, more was done to meet the
needs of our customers, through a policy implemented
in accordance with standards of service which had
an impact on the services they receive via telephone.
Response times were reduced by more than 50%. Thus,
the prompt provision of the service became an essential
part of the BN Vital strategy.
New Products: BN Vital has always been known for being
at the forefront in terms of new services and products.
Thanks to this, the foundations were laid for the launch,
in the first quarter of 2013, of a new service channel, as
well as an additional product that will complement the
value-added strategy of the subsidiary.
In addition, the ISO 9001 was recertified throughout the
organization, as was INTE 30-01-01-08 in the process of
investment and risk.
52
BN Valores
1. Financial Aspects
In 2012, BN Valores generated a net financial profit of
¢1.93 billion, an increase of 12% over the previous
year. In addition, ¢2.5 billion in operating income was
generated from commissions on services.
After-tax profits and non-equity minority interests
totaled ¢821.3 billion in 2012.
At the close of 2012, total assets were valued at ¢55.2
billion, an increase of 36% over 2011. The subsidiary’s
capital totaled ¢15.7 billion, one of the best in the stock
market.
2. Commercial Aspects
Placement of Bonds
2011 Great Place to Work Award
In December 2012, BN Valores participated in the
placement of a standardized bond issue of the Costa
Rican Oil Refinery (RECOPE, Spanish acronym) in the
amount of US$50 million. Of the total auctioned, BN
Valores acquired 99.48% of the issue for its customers,
showing that it has the experience and capital and
financial capacity required to participate in the issue
placement service.
Market share of the volume of memorandum accounts
External Client Satisfaction Index
As of December 2012, BN Valores had a 23% market share
in the volume of memorandum accounts, surpassing all
other participants in the market.
96%
Placement of Resources
94%
93%
92%
2012
2011
2010
2009
90%
2008
91%
2002
In 2012, the Bank placed term certificates of deposit and
participated standardized auctions totaling ¢134 billion,
doubling the amount placed in 2011.
95%
2007
•
BN Valores, as part of its commitment to building longterm relationships, established customer satisfaction as
a strategic objective. Surveys are conducted to measure
customer satisfaction with the service. Illustrated below
are the ratings for the last decade:
2006
•
Number 33 on the list of the best companies to
work for with less than 1.000 employees.
Number 13 on the list of the best companies to
work for in Central America.
Number 7 on the list of the best companies to work
for in Costa Rica.
2005
•
External customer satisfaction level
2004
The categories in which BN Valores received awards
were:
2003
In a ceremony organized for the best companies to
work for in Central America and the Caribbean, BN
Valores received three awards granted by the Great
Place to Work Institute, with over 25 years of experience
studying and identifying the best places to work around
the world.
53
Products and Services:
Added Value Services:
•
•
•
•
•
•
Purchase and sale of securities
Purchase and sale of non-equity minority interests in
investment funds
Purchase and sale of foreign exchange currencies
Individual management of portfolios
Safekeeping of securities and cash
•
•
•
Refresher courses on economic and stock exchange
topics
Web Ticker stock market monitoring tool
Exchange rate ticker
Investment accounting for customers
bnvalores.com web page, with market information
Stock market monitoring, via BN Valores Ticker mobile
devices
WebChat with clients
BN @Comunica electronic newsletter
Personalized messenger service
•
•
•
•
•
BN Fondos
1. BN products in 2012:
54
•
•
•
BN DinerFondo Colones no diversificado
BN DinerFondo Dólares no diversificado
BN DinerFondo Euros no diversificado
•
•
BN RediFondo Mensual en Colones no diversificado
BN RediFondo Trimestral en Dólares no diversificado
•
•
BN SuperFondo Colones no diversificado
BN SuperFondo Dólares no diversificado
•
•
BN CreciFondo Colones no diversificado
BN CreciFondo Dólares no diversificado
•
•
BN FonDepósito Colones no Diversificado
BN FonDepósito Dólares no Diversificado
•
BN Fondo de Titularización Hipotecaria en dólares,
FHIPO
2. Summary of Main Achievements
2.1 Commercial Results
Managed Balance
BN Fondos closed 2012 with a managed balance of financial funds of ¢201.7 billion. This figure represents a
market share of 24.68%, making it the leader, a position it has held since 2011.
The following figure shows the balances, according to information provided by SUGEVAL, as of January 10,
2013.
Financial investment funds / Net assets managed
As of December 31, 2012
250,000
Millions
200,000
150,000
100,000
50,000
-
BN Fondos
BCR
INS
Multifondos BCT
Scotia
BAC
Popular
Aldesa
Sama
Mutual
Vista
Interbolsa
Number of Customers
Number of customers
BN16,000
Fondos continues to have the largest number of customers (14,713), or a market share of 40.38%.
14,000
In 12,000
2012, BN Fondos added 2,226 customers, an increase of 17.83%. The industry as a whole picked up an
10,000
additional
3,899 customers (including those of BN Fondos), for a growth of 11.98%. The growth of BN Fondos
8,000
is the
result
of strategies aimed at making it easier for the public to access investment funds. Such strategies
6,000
include
making
this product available in all Banco Nacional offices, developing applications that facilitate
4,000
the2,000
opening of new accounts, and developing electronic applications to simplify the process of opening new
accounts.
0
BN Fondos
Scotia
Multifondos BAC
BCR
INS
Aldesa
Sama
Popular
BCT
Vista
Interbolsa Mutual
The technological foundations are in place to ensure rapid, but orderly growth. Therefore, we are confident
that 2014 will bring even more positive results in terms of growth in the number of investors.
55
250,000
Millions
200,000
150,000
100,000
The
following figure shows the number of investors in financial investment funds at the close of 2012 (with
50,000
information from SUGEVAL, as of January 10, 2013).
-
BN Fondos
BCR
INS
Multifondos BCT
Scotia
BAC
Popular
Aldesa
Sama
Mutual
Vista
Interbolsa
Financial Investment Funds / Number of Customerss
As of December 31, 2012
Number of customers
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
BN Fondos
Scotia
Multifondos BAC
BCR
INS
Aldesa
Sama
Popular
BCT
Vista
Interbolsa Mutual
2.2 Financial Results
Financial results were very satisfactory despite the fact that the effects of the global crisis that began in
2007 still persist. After-tax profits and non-equity minority interests totaled ¢632 million, an increase of
8.36% compared to 2011, when they totaled ¢583 million.
Net ROE was 18.04%, making BN Fondos among the best investment fund managers in the industry. The
following figure shows the after-tax profits and non-equity minority interests for the last two years, for
purposes of comparison.
BN Fondos Profits
in millions of colones
700
600
500
400
300
200
100
0
2010
2011
2012
A number of important challenges arose and were successfully met in 2012, resulting in satisfactory growth
in the commercial area and in financial results.
56
BN Corredora de Seguros
Background on the Insurance Market
The opening up of the insurance market in Costa Rica in 2008 resulted in the entry of new players (insurance
companies and intermediaries), as shown in the following table:
Summary of participants in the insurance market
(as ofby
November,
2008-2012,
(accumulated
November,
2008-2012
registered
and
conditionally
licensed)
(
Insurance
Providers
Insurance Intermediaries Transboundary Providers
Nov/2008
1
0
737
0
0
Low-cost
Insurance
Operators
0
Nov/2009
5
79
958
2
5
0
Nov/2010
10
79
1158
7
27
0
Nov/2011
11
76
1393
12
79
34
Nov/2012
13
66
1546
17
143
50
Cut-off date
Insurance
Companies
Insurance
Outlets
Insurance
Agents
Brokerage
Firms
Insurance
Broker
Source: statistics from the Superintendencia General de Seguros (SUGESE)
(insurance oversight body) www.sugese.fi.cr
As seen in the table above, the situation went from having only one State-owned insurance company in 2008,
to having 13 registered and licensed providers. In addition, 17 brokerage firms (with 143 brokers) have been
registered, and the number of low-cost insurance operators has increased.
Consumers can now choose from among 388 products in market that has been growing nearly 12% annually,
which at the close of 2012 accumulated US$800 million in insurance premiums.
57
As a brokerage firm, BN Corredora de Seguros can
work with all the insurance companies authorized
to operate in the country. This not only provides
greater leeway in its operations, but also improves its
position when negotiating with them. This generates
significant benefits for the Bank and its customers,
which translates into better rates, lower deductibles
and wider coverage, as well as innovative products
tailored to the needs of our customers.
Main Programs Managed by BN Corredora de Seguros:
1. Group automobile insurance – ASSA
2. Unpaid Balance Group Insurance (Life Insurance
for Credit Card Holders) - PALIC
3. Group Unemployment Insurance for Credit Card
Holders – INS
4. Group Insurance for Gas Stations - ASSA
5. Group Business Fire Insurance – INS
6. Group Automobile Insurance – INS
7. Group Multi-risk Business Insurance – MAPFRE
8. Group Insurance for Taxi Cabs – INS
9. Life and Unemployment Insurance for BN
Soluciones without a co-signer
10. Life and Medical Insurance for employees of
Banco Nacional Conglomerate
11. Group Unpaid Balance Insurance Colones and
Dollars
drop in the price. It should also be recalled that the
drop in prices is the result of our brokerage activities,
aimed at ensuring the best insurance conditions for
our customers.
In 2011, 36,840 policies were sold vs. 48,837 in 2012,
evidence of the increase in placements. However,
there was a significant decrease in the rates charged
to customers. In other words, despite a growth of
over 32% in our placement volume, our revenues fell
significantly as a result of lower premiums for the
policies we offer.
Expenditure-Income Ratio
The figure below shows (in colones) the ratio between
expenditure and income for each month of 2012.
It also shows the seasonal nature of sales of group
policies, and that a large percentage of our income
is earned at the end of the year. Several actions have
already been taken to mitigate this effect: home fire
and business fire policies were annualized, so that the
total income is received in the month that the policy
was issued. Additionally, because debit balance life
insurance policies are now paid monthly, income is
received on a monthly basis.
Financial Results
58
300,000,000.00
250,000,000.00
200,000,000.00
150,000,000.00
Income
100,000,000.00
Expense
50,000,000.00
nu
ar
y
ua
M ry
ar
ch
Ap
ril
M
ay
Ju
ne
Ju
l
Au y
Se gu
pt st
em
Oc ber
No tob
ve er
m
De be
ce r
m
be
r
0.00
Ja
It is important to point out, however, that the difference
is not a decrease in the placement of policies, but a
350,000,000.00
Fe
The drop in insurance prices, due to increased
competition among insurance companies (between
30% and 50%) following the break-up of the monopoly
that lasted until 2008, has had a direct impact on the
commissions charged by BN Corredora de Seguros for
its intermediation services.
Expenditure-Income Ratio
br
Commercial Achievements
Accrued Profits
The following chart shows the behavior of our after-tax profits and non-equity minority interests holdings for
2012. It also shows how, in keeping with the behavior of our income, our profits followed the same pattern. This
effect will gradually decrease year by year as the adjustments mentioned above take effect.
Profits
250,000,000.00
200,000,000.00
150,000,000.00
100,000,000.00
Profit
50,000,000.00
De
ce
m
be
r
r
be
r
m
r
be
ve
No
to
be
Oc
st
em
Se
pt
gu
ly
Au
Ju
ne
Ju
ay
M
ril
Ap
ar
M
ua
br
Fe
Ja
nu
ar
y
ry
-50,000,000.00
ch
0.00
Management Model
As noted above, from 2011 to 2012, there was significant growth in the number of policies placed. In 2011,
36,840 policies were sold, compared with 48,837 in 2012. However, given the drop in insurance prices, certain
goals established in the Management Model were not reached. For example, 72.17% of the established sales
goal was reached, which made it possible to reach only 68.52% of the gross profits goal.
The above notwithstanding, management of the subsidiary was successful and, at the close of December reported
some good indicators. For example, Return on Equity (ROE) was 50.69% and the ratio between administrative
expenditures and income was 65.66% (the established target was not to exceed 80%).
59
Financial Statements
60
61
62
TABLE A
1 of 2
BANCO NACIONAL DE COSTA RICA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2012
(With corresponding figures for 2011)
(In U.S. dollars)
ASSETS
Cash and due from banks
Cash
Demand deposits in BCCR
Demand deposits in local financial entities
Demand deposits in foreign financial entities
Other cash and due from banks
Accounts and accrued interest receivable
Investments in financial instruments
Available for sale
Held to maturity
Difference between positions in derivative financial instruments
(Allowance for impairment of investments in financial instruments)
Loan portfolio
Current
Past due
Legal collections
(Allowance for loan impairment)
Accounts and fees commissions receivable
Fees and commissions receivable
Accounts receivable for brokerage operations
Accounts receivable for operations with related parties
Deferred tax and income tax receivable
Other receivables
Accrued interest receivable
(Allowance for impairment of accounts and fees and commissions receivable)
Foreclosed assets
Assets and securities acquired in lieu of payment
Other foreclosed assets
(Allowance for impairment of foreclosed assets and per legal requirements)
Investments in other companies, net
Property and equipment
Other assets
Deferred charges
Intangible assets
Other assets
TOTAL ASSETS
The notes are an integral part of these consolidated financial statements.
Note
4
5
6
7
8
9
10
11
2012
1,304,672,683
126,361,372
951,246,551
28,159,789
147,665,183
51,237,841
1,947
1,236,076,977
1,154,370,852
66,161,361
66,535
16,691,822
(1,213,593)
5,054,551,145
4,735,826,688
230,658,448
133,860,331
38,468,433
(84,262,755)
7,070,805
1,826,410
22,474
52,577
7,175,287
3,855,710
3,015
(5,864,668)
59,425,633
144,292,083
3,499
(84,869,949)
76,461,317
288,460,668
40,117,972
3,260,894
6,808,323
30,048,755
8,066,837,200
2011
1,144,063,517
84,984,187
853,415,097
9,163,065
181,235,053
15,262,249
3,866
1,033,249,289
958,163,924
62,575,503
17,588
13,722,584
(1,230,310)
4,520,432,827
4,227,968,056
203,699,371
133,763,799
34,443,783
(79,442,182)
3,792,878
1,697,134
1,968
56,266
1,800,924
3,559,417
4,787
(3,327,618)
28,360,332
97,587,644
5,292
(69,232,604)
68,624,358
272,167,168
27,980,601
4,459,866
2,299,756
21,220,979
7,098,670,970
Continued…
63
TABLE A
2 of 2
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2012
(In U.S. dollars)
LIABILITIES AND EQUITY
LIABILITIES
Obligations with the public
Deposits and other demand obligations
Deposits and other term obligations
Other obligations with the public
Finance charges payable
Obligations with BCCR
Term obligations
Finance charges payable
Obligations with entities
Demand obligations with financial entities
Term obligations with financial entities
Finance charges payable on obligations with financial and non-financial entities
Accounts payable and provisions
Accounts payable for brokerage services
Deferred tax
Provisions
Other sundry accounts payable
Other liabilities
Deferred income
Allowance for stand-by credit losses
Other liabilities
TOTAL LIABILITIES
EQUITY
Share capital
Paid-up capital
Equity adjustments
Surplus from revaluation of property and equipment
Adjustment for valuation of available-for-sale investments
Adjustment for valuation of restricted financial instruments
Surplus from revaluation of other assets
Adjustment for valuation of investments in other companies
Adjustment for conversion of financial statements
Capital reserves
Prior period retained earnings
Income for the year
Capital of the Development Financing Fund
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
DEBIT MEMORANDA ACCOUNTS
TRUST ASSETS
TRUST LIABILITIES
TRUST EQUITY
TRUST MEMORANDA ACCOUNTS
OTHER DEBIT MEMORANDA ACCOUNTS
Own debit memoranda accounts
Third-party debit memoranda accounts
Own debit memoranda accounts for custodial activities
Third-party debit memoranda accounts for custodial activities
64
Note
12
13
14
15
16
17
18
19-a
19-b
19-c
19-c
19-d
47
20
21
22
2012
2011
6,356,619,513
3,818,772,231
2,419,585,325
74,870,883
43,391,074
451,395
450,340
1,055
521,068,286
49,889,367
467,359,549
3,819,370
246,414,497
2,121,460
25,052,780
119,800,851
99,439,406
104,114,866
5,147,389
689,921
98,277,556
7,228,668,557
5,710,804,076
3,371,077,998
2,265,403,273
48,513,822
25,808,983
20,304,927
20,296,623
8,304
346,056,524
48,815,641
295,820,821
1,420,062
237,763,320
1,715,375
23,140,097
138,158,021
74,749,827
37,865,623
4,380,677
685,478
32,799,468
6,352,794,470
234,520,465
234,520,465
105,100,866
97,524,908
928,557
(4,620,375)
139,458
9,530,992
1,597,326
339,398,774
53,858,311
87,918,905
17,371,322
838,168,643
8,066,837,200
133,013,040
133,013,040
103,496,494
96,847,171
(4,288,749)
91,885
138,663
9,373,364
1,334,160
307,253,316
138,728,207
50,368,502
13,016,941
745,876,500
7,098,670,970
836,088,289
1,738,508,299
173,198,179
1,565,310,121
85,565,731
25,833,063,448
9,457,180,083
2,969,789,634
438,812,629
12,967,281,102
647,361,355
1,634,187,778
179,847,314
1,454,340,464
77,945,189
22,257,199,919
7,917,278,793
2,445,957,674
355,792,302
11,538,171,150
TABLE B
1 of 2
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2012
(In U.S. dollars)
Note
Finance income
Cash and due from banks
Investments in financial instruments
Loan portfolio
Foreign exchange gain and development units
Gain on available-for-sale financial instruments
Gain on derivative instruments
Other finance income
Total finance income
Finance expenses
Obligations with the public
Obligations with BCCR
Obligations with financial entities
Loss on available-for-sale financial instruments
Loss on derivative instruments
Other finance expenses
Total finance expenses
Allowance for impairment of assets
Recovery of assets and decrease in allowances
GROSS FINANCE INCOME
Other operating income
Service fees and commissions
Foreclosed assets
Gains on investments in other foreign companies
Gains on investments in other local companies
Foreign currency exchange and arbitrage
Other operating income
Total other operating income
26
26
27
28
29
30
31
32
33
2012
2011
356,226
61,367,324
567,558,439
11,867,837
2,795,922
434,436
7,007,026
651,387,210
284,541
59,019,015
458,438,542
9,351,103
4,936,436
154,849
6,540,548
538,725,034
234,122,128
4,775
17,142,112
259,295
391,900
2,004,899
253,925,109
90,716,011
31,623,766
338,369,856
160,340,133
8,462
13,580,748
726
182,675
623,586
174,736,330
92,764,755
22,527,874
293,751,823
173,959,106
33,225,170
7,930,642
859
38,629,940
15,212,365
268,958,082
151,549,378
28,404,723
7,880,908
35,620,781
23,852,304
247,308,094
Continued…
65
TABLE B
2 of 2
CONSOLIDATED INCOME STATEMENT
(In U.S. dollars)
Other operating expenses
Services fees and commissions
Foreclosed assets
Sundry assets
Provisions
Foreign currency exchange and arbitrage
Other operating expenses
Total other operating expenses
GROSS OPERATING INCOME
Administrative expenses
Personnel expenses
Other administrative expenses
Total administrative expenses
NET OPERATING INCOME BEFORE TAXES AND
STATUTORY ALLOCATIONS
Income tax
Deferred tax
Decrease in income tax
Decrease in prior period income tax
Deductible temporary differences
Statutory allocations
Decrease in statutory allocations
INCOME FOR THE YEAR
66
Note
34
35
36
37
38
15
15
15
15
15
39
39
2012
2011
9,405,356
59,747,762
326,128
40,642,654
4,214
74,232,971
184,359,085
422,968,853
8,656,422
84,311,475
238,080
17,426,224
8,210
57,607,912
168,248,323
372,811,594
229,266,184
107,069,987
336,336,171
205,445,139
100,909,042
306,354,181
86,632,682
10,761,211
146,892
4,406,934
24,227,522
199,720
18,668,217
2,028,367
87,918,905
66,457,413
8,216,305
161,399
2,897,046
190,182
53,301
12,318,279
1,466,543
50,368,502
TABLE C
1 of 1
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(In U.S. dollars)
Equity adjustments
Balances at December 31, 2010
Adjustment for valuation of available-for-sale investments,
net of deferred tax
Adjustment for valuation of restricted financial instruments,
net of deferred tax
Income for the year
Legal reserve and other statutory reserves
Adjustment for changes in equity of BN Vital
Statutory allocations - Mandatory pension funds,
Employee Protection Law No. 7983
Realization of surplus from revaluation of property and equipment,
due to sale of property
Recognition of deferred tax due to sale of property
Equity of the Development Financing Fund
Capitalization of retained earnings for capital increases
Adjustment for valuation of available-for-sale investments, net of deferred tax
Adjustment for valuation of restricted financial instruments,
net of deferred tax
Income for the year
Legal reserve and other statutory reserves
Adjustment for changes in equity of BN Vital
Statutory allocations - Mandatory pension funds,
Employee Protection Law No. 7983
Adjustment to deferred tax from surplus from revaluation
of property and equipment
Equity of the Development Financing Fund
Note
Share capital
126,509,037
19
-
91,885
-
-
-
-
-
6,504,003
133,013,040
100,744,272
-
763,153.00
234,520,465
(219,161)
(475,904)
4,769,570
96,847,171
122,083
555,654
97,524,908
(7,060,778)
Surplus from
revaluation of
other assets
131,883
-
-
19
Adjustment for valuation of
available-for-sale
investments and restricted
financial instruments
2,636,484
-
15
Surplus from
revaluation of
property and
equipment
92,772,666
135,545
(4,196,864)
5,149,500
(4,620,375)
(24,079)
(3,691,818)
-
6,780
138,663
795
139,458
Adjustment for
valuation of
investments in other
companies
9,405,626
(515,818)
483,556
9,373,364
103,849
53,779
9,530,992
Adjustment for
conversion of
financial
statements
31,136,339
Total equity
adjustments
136,082,998
-
(7,060,778)
-
91,885
(515,818)
-
(29,802,179)
1,334,160
263,166
1,597,326
-
Capital reserves
257,364,058
-
Opening retained
earnings
172,177,233
-
36,657,820
-
Capital of the
Development
Financing Fund
8,339,513
Total
700,472,839
-
(7,060,778)
50,368,502
(36,657,820)
11,092
-
91,885
50,368,502
(515,818)
11,092
(553,754)
-
(553,754)
(219,161)
(475,904)
(24,406,728)
103,496,494
5,149,500
13,231,438
307,253,316
-
219,161
475,904
(4,248,682)
7,305,073
189,096,709
(100,744,272)
-
(4,620,375)
103,849
-
30,382,614
-
87,918,905
(30,382,614)
54,954
-
(4,620,375)
87,918,905
103,849
54,954
(462,555)
-
(462,555)
122,083
849,315
105,100,866
1,762,844
339,398,774
(4,279,697)
575,786
141,777,216
4,248,682
428,746
13,016,941
-
4,279,697
74,684
17,371,322
3,062,532
745,876,500
5,149,500
122,083
4,025,782
838,168,643
67
TABLE D
1 of 1
CONSOLIDATED STATEMENT OF CASH FLOWS
(In U.S. dollars)
Cash flows from operating activities
Income for the year
Items not requiring cash
Gain on sale of idle property and equipment
Gain on foreign exchange and development units, net
Loss on allowance for loan impairment
Income for reversal of allowance for impairment of investments
Loss on allowances for foreclosed assets and other receivables
Expense for severance accrual, net of payments
Depreciation and amortization
Share in net profit of foreign associate
Statutory allocations
Deferred tax
Current tax expense
Finance income on loan portfolio and investments
Finance expense on term obligations with the public and financial entities
Note
15
Net (increase) decrease in assets
Credits and cash advances
Foreclosed assets
Accrued interest receivable on other receivables
Other assets
Net increase (decrease) in liabilities
Demand and term obligations
Other accounts payable and provisions
Other liabilities
Interest received on loan portfolio and investments
Income tax paid
Interest paid on term obligations with the public and financial entities
Net cash from (used in) operating activities
Cash flows from investing activities
Increase in financial instruments (except trading)
Decrease in financial instruments (except trading)
Acquisition of property and equipment
Sale of property and equipment
Cash investments in other companies
Net cash (used in) from investing activities
Cash flows from financing activities
Other new financial obligations
Settlement of obligations
Net cash from financing activities
Net increase in cash and cash equivalents
Effects of exchange rate conversion on cash and cash equivalentes
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
68
4
2012
2011
87,918,906
50,368,502
(24,592)
(14,076,751)
59,619,705
(16,935)
50,063,502
(5,960,965)
20,651,272
(7,930,642)
18,668,217
(663,322)
10,761,211
(628,925,763)
180,808,052
(229,108,105)
(9,310)
(12,441,967)
81,211,403
(398,240)
68,132,252
7,859,707
23,390,343
(7,880,908)
12,318,279
212,531
8,216,305
(517,457,557)
122,424,682
(164,053,978)
(557,382,232)
(77,444,476)
1,804
(22,719,680)
(886,652,689)
(687,235,973)
(31,898,525)
10,655
(13,650,911)
(896,828,732)
604,330,824
(7,222,236)
65,245,068
(224,299,033)
616,179,467
(8,259,475)
(159,267,637)
224,353,322
280,940,768
(31,239,593)
13,853,309
(633,274,248)
506,643,294
(9,749,587)
(116,874,419)
(253,254,960)
(21,464,999,483)
21,371,762,287
(31,064,465)
534,205
160,754
(123,606,702)
(12,593,358,287)
12,911,067,161
(20,541,291)
470,957
894,787
298,533,327
268,322,609
(119,298,204)
149,024,405
146,321,592
(71,311,417)
75,010,175
249,771,025
10,183,829
1,220,533,435
1,480,488,289
120,288,542
6,657,185
1,093,587,708
1,220,533,435
Produced by:
Institutional Relations Division
Tel. (506) 2212-2000
www.bncr.fi.cr

report - Banco Nacional de Costa Rica

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