Annual Report 2011 Banka Celje, d.d., and the Banka Celje Group

Transcription

Annual Report 2011
Banka Celje, d.d., and the Banka Celje Group
Celje, March 2012
Banka Celje, d.d., and the Banke Celje Group
Annual Report 2011, prepared in accordance with
International Financial Reporting Standards, as adopted by the European Union.
2
Content
A WORD BY THE PRESIDENT OF THE MANAGEMENT BOARD
REPORT OF THE SUPERVISORY BOARD OF BANKA CELJE, d.d.
I
BUSINESS REPORT
1
2
3
4
5
6
7
8
9
10
11
II
HIGHLIGHTS
PRESENTATION
STRATEGY
SIGNIFICANT EVENTS
ECONOMIC AND BANKING ENVIRONMENT
5.1
Economic environment
5.2
Banking environment
REPORT ON THE OPERATIONS IN 2011
6.1.
Financial results
6.2.
Financial position
6.3
Operations according to key areas
6.4
Shareholder information
6.5
Assuming and managing banking risks
6.6
Development
6.7
Social responsibility
6.8
Internal Audit Department operations
MANAGING BODIES OF THE BANK
ORGANIZATIONAL STRUCTURE OF THE BANK
STATEMENT OF CORPORATE GOVERNANCE
STATEMENT OF MANAGEMENT’S RESPONSIBILITIES
REPORT OF THE AUDITORS
FINANCIAL STATEMENTS
1
2
3
4
5
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
1
2
GENERAL INFORMATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1
Basis for the presentation of financial statements
2.2
Comparative information
2.3
Consolidation
2.4
Segment reporting
2.5
Foreign currency translation
2.6
Interest income and expenses
2.7
Fee and commission income
2.8
Dividend income
2.9
Financial instruments
2.10 Impairment of financial assets
2.11 Offsetting
2.12 Sale and repurchase agreements
2.13 Cash and cash equivalents
2.14 Accounting for leases
2.15 Investment property
2.16 Property and equipment
2.17 Intangible assets
2.18 Inventories
2.19 Taxes
2.20 Employee benefits
2.21 Loans taken, deposits and debt securities issued
2.22 Provisions
2.23 Financial guarantees
2.24 Share capital
5
6
9
11
12
13
14
15
15
15
16
16
18
21
27
28
32
32
33
34
35
36
41
42
45
47
48
49
50
51
53
53
53
53
56
56
56
56
56
57
57
57
59
60
60
60
60
61
61
61
61
61
61
62
62
62
62
3
2.25
2.26
2.27
Management of bank risks
Critical accounting estimates and judgements
Segment reporting
NOTES TO INDIVIDUAL ITEMS INCLUDED IN CONSOLIDATED
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
4
Net interest and similar income
Dividend income
Net fee and commission income
Gains less losses from financial assets and liabilities
not classified at fair value through profit or loss
Gains less losses from financial assets and liabilities held for trading
Gain less losses from financial assets and liabilities
designated at fair value through profit or loss
Changes in fair value from hedge accounting
Gains less losses from foreign exchange differences
Gains less losses from derecognition of assets
Other net operating profit / loss
Administrative expenses
Amortisation and depreciation
Provisions
Impairment charges
Income tax expense
Basic and diluted earnings per share
Cash and balances with the Central Bank
Financial assets held for trading
Financial assets designated at fair value through profit or loss
Available for sale financial assets
Loans and advances to banks
Loans and advances to customer
Held to maturity investments
Hedging derivatives
Property and equipment
Investment property
Intangible assets
Investments in subsidiaries
Income tax assets
Other assets
Deposits from Central Bank
Financial liabilities held for trading
Financial liabilities designated at fair value through profit or loss
Financial liabilities at amortised cost – deposits from banks
Financial liabilities at amortised cost – due to customers
Financial liabilities at amortised cost – borrowings from banks
Financial liabilities at amortised cost – borrowing from customers
Debt securities
Subordinated liabilities
Financial liabilities associated with transferred assets
Derivatives - hedge accounting
Provisions
Other liabilities
Share capital
Dividend per share
Contingent liabilities and commitments
Cash and cash equivalents
Related party transactions
Information on the results of organizational units abroad
Events after the reporting date
62
96
97
101
101
101
102
102
103
103
103
104
104
104
105
105
106
106
107
107
108
108
109
110
111
111
115
116
116
118
119
121
121
123
123
124
124
125
126
127
127
128
129
130
130
130
131
132
134
134
135
136
140
140
A WORD BY THE PRESIDENT OF THE MANAGEMENT BOARD
2011 was marked significantly by the economic and financial crises, with the debt crisis joining the fray. Due to the aforementioned,
the Bank took measures to ensure secure and stable operations, preserve good operational and structural liquidity and to keep capital adequacy stable. The capital adequacy ratio amounted to 14.42%, with tier 1 capital ratio coming in at 10.65%. Based on the cost
rationalisation programme in place, these having decreased by 6% in 2011, the Bank improved its overall cost efficiency. The cost to
net income ratio amounted to 51.90%.
In spite of the difficult conditions, the Bank was successful in selling bonds in an amount of EUR 34 million in the domestic market
and was able to raise a syndicated loan in an amount of EUR 65 million. In December it participated successfully in the European
Central Bank's auction.
The Bank made a profit of EUR 34.7 million before impairment and provisioning. The challenging market conditions, apparent in the
operations of the Bank's customers and subsequently in the deterioration of the credit portfolio quality, influenced the requirement
for impairment and provisioning. The Bank covered the negative net financial result in the amount of EUR 14.9 million from other
profit reserves. Compared with 2010, impairment costs and provisions were 73% higher.
This past year was a year that saw country and bank credit ratings decrease. Due to the economic conditions, the decreased country
rating and the decrease in the rating of the banking system as a whole, the international rating agency Fitch Ratings also changed
its rating for Banka Celje. In spite of the decreased credit rating we did not see any larger repayment requirements in relation to the
loans raised abroad.
Of the more significant events from last year, the due diligence by a potential buyer in the second half of May warrants special mention (later the owners temporarily suspended the sale of the Bank) and the constitution of a new Supervisory Board.
Macroeconomic forecasts for 2012 are negative, which is why the Bank is not yet planning growth in total balance sheet business.
The Bank will encourage increased investments in loans to non-banking clients and it will increasingly direct its efforts into attaining
stable funding from the non-banking sector to decrease its dependence on international funding sources. Despite less than promising
forecasts the Bank's objective is to improve key operational ratios from 2011.
Respected owners, business partners and co-workers, speaking on behalf of the Management Board, I would like to express my sincere appreciation of the trust you have shown us and thank you for the good cooperation.
Dušan Drofenik, M.Sc.
President of the Management Board
5
REPORT OF THE SUPERVISORY BOARD OF BANKA CELJE, d.d.
The framework of the Supervisory Board's operations and its
responsibilities as well as its obligations is determined by the
applicable legislation (the Banking Act, the Companies Act, the
Regulation on the diligence of members of the management
and supervisory boards of banks and savings banks) and the
Bank's internal acts (the Articles of Association and the Rules of
procedure related to the operations of the Supervisory Board and
its committees) as well as other legal norms, which pertain to the
Bank's operations.
In its decision-making process during 2011, the Supervisory
Board was supported by the Audit Committee.
Operations of the Supervisory Board
In May 2011 the term of office of the Supervisory Board elected
in May 2007 expired. It held three regular meeting prior to the
expiry of its term, where it dealt with 39 items on the agenda,
also adopting the annual reports of Banka Celje, d.d., and the
Banka Celje Group, d.d., for 2010 with the Auditor's reports and
the Letter of the Auditor to the Bank's Management Board and
the Supervisory Board. It also approved the materials for the
calling of the 26th Annual Regular Meeting of Shareholders and
submitted a list of candidates for membership in the Supervisory
Board for the new term.
At the 26th Annual Regular Meeting of Shareholders held in
May 2011 the new Supervisory Board of the Bank was elected,
comprising: Jure Peljhan, M. Sc., as President, Zvonko Ivanušič,
M. Sc., as Vice-President and with the following members: Uroš
Čufer, Ph.D., Melita Malgaj, Tomaž Subotič, Ph.D., Bojan Šrot, and
Zdenko Zanoški, M. Sc. The Supervisory Board members’ term of
office expires on fourth anniversary of their election, being the
General Meeting of Shareholders in 2015.
After election the Supervisory Board in its new make-up met at
four regular meetings, where it dealt with 50 items on the agenda
and held a correspondent session. At its meetings the Supervisory
Board acquainted itself with the Bank's interim results on the
basis of reports prepared by the Management Board. It addressed
letters the Bank received from the Bank of Slovenia, acquainted
itself with the Bank's measures implemented in relation to risk
management and reviewed the Bank's policies and strategies on
risk management and the risk profile for 2012. The Supervisory
Board adopted the operational policies and the financial plan of
the Bank for 2012 as well as its strategies and financial plans for
the period from 2012 to 2016.
At its 6th regular meeting in 2012 the Supervisory Board also
reviewed and approved the annual report of the Bank and the
Group for 2011, the disclosures document for 2011, the report on
the operations of the Internal Audit Service for the period from
July to December 2011, gave its consent to the auditor's report
and confirmed the Bank's Statement on Compliance with the
Corporate Governance Code. It also reviewed the proposal by
the Audit Committee on the naming of the auditor for 2012.
Additionally, it reviewed the entire documentation relating to
the 27th Annual Regular Meeting of Shareholders and adopted
the report to the Meeting of Shareholders on it own operations
during 2011.
6
The President of the Supervisory Board was in constant contact
with the Management Board, which allowed the Supervisory
Board constantly supervise the operations of the Management
Board. The Supervisory Board invited the authorised auditor to
its regular meetings, thus making it possible for the auditor to
present the findings related to audit of the Bank.
Based on the decision of the Bank of Slovenia, stating that,
according to its criteria, Banka Celje has the status of a bank
with systemic significance, the Supervisory Board named a
Remuneration Committee, which all systemically significant
banks in the Republic of Slovenia must name in accordance
with the regulations by the Bank of Slovenia. The Remuneration
Committee comprises: Jure Peljhan, M.Sc., as President and
members: Zvonko Ivanušič, M.Sc., and Tomaž Subotič, Ph.D.
In January 2012 the Committee reviewed and confirmed the
Remuneration Policies at Banka Celje, which were subsequently
adopted by the Supervisory Board.
The Supervisory Board also ascertains the in 2011 its' members
were not subject to conflict of interest and have performed
their duties as Supervisory Board members autonomously and
independently. The members attended the Supervisory Board
meetings regularly, based on which it was able to meet in full
composition, with all members actively participating in the
creation of decisions by taking part in discussions related to
individual items on the agenda. The members of the Supervisory
Board attended a training course for supervisory board members
and acquainted themselves with the most recent views related to
the role and the meaning of membership.
Based on the scope of activities conducted during 2011 and
due to the fact that the Supervisory Board operated in full
composition at its meetings, the President and the members of
the Supervisory Board assess the operations of the Supervisory
Board in 2011 to have been performed with all due diligence and
care without any deviations from good practice.
Operations of the Audit Committee
In 2011 2 audit committees were in operation at the Bank.
The old committee comprised Borut Stanič as President, Tadej
Tufek as Vice President and Marina Poboljšaj as an external
independent member. The committee performed its duties until
its term of office expired in May 2011 (the term of office of Audit
Committee members expires with the expiry of the term of office
of the Supervisory Board). Until the expiry of its term the Audit
Committee met at a single meeting, where it reviewed with the
annual reports of the Bank and the Group together with the
Letter from the Auditor to the Management Board. It was also
presented with the document on the Bank's disclosures, prepared
a proposal to the Supervisory Board on the naming of the auditor
for the 2011 business year, it reviewed the report on its own
operations during 2010 and approved the plan for its operations
until the expiry of its term and the report on the operations of the
Internal Audit in 2010 (semi-annual and annual) and the Report
to the Bank of Slovenia on the execution of the ICAAP process.
The new committee was named at the 1 st meeting of the newly
appointed Supervisory Board in June 2011 and comprises: Uroš
Čufer, Ph.D., as President, Tomaž Subotič as Vice-President and
Zdenka Habe, authorised auditor, as the external independent
member. In 2011 the new Committee met three times (in
September, October and in December). It dealt with 28 items on
the agenda. The materials it reviewed pertained to the adoption
of the plan of operation of the Audit Committee in 2011 (since
being named), to the presentation of the Rules of Procedure
on the operations of the Audit Committee and the proposal on
changes to the aforementioned document, to the report on the
operations of the Internal Audit during the first half of 2011 and to
the plan of operations of the Internal Audit for the second
half of 2011. The Committee was also informed of the threeyear strategic plan of the Internal Audit (2012 – 2014) and the
programme of the Internal Audit's operations for 2012, of the
review by the Bank of Slovenia (ICAAP process); it reviewed the
strategies and policies on risk management, the trading strategy
and the Bank's risk profile – all for 2012, as well as the report
on the implementation of both strategies during the first ten
months of 2011. It also monitored the Bank's interim results, the
Bank's exposure to credit risk (on a quarterly basis), its five-year
development plan, its business policies and financial plan for
2012. It was presented with the Agreement on the Audit of the
Bank's Operations in 2011, with the findings of the external auditor
after the completion of the initial phase of the audit for 2011 and
with the report on the operations of the Posest subsidiary.
The President of the Audit Committee kept the Supervisory Board
informed of the committee's activities on a regular basis through
reports at the Supervisory Board meetings. The Committee was
successful in the execution of all planned assignments during
the first months of its active operation all the while offering the
Supervisory Board support with its advice, which is what it was
established for.
The Bank’s and the Group's financial statements have been
prepared in line with the International Financial Reporting
Standards as adopted by the EU.
In 2011 the annual audit of the Bank’s and the Group's financial
statements was conducted by the authorized auditors of
PricewaterhouseCoopers, d.o.o., Ljubljana, which approved the
Bank’s financial statements without reservation and confirmed
the content as being in line with the Bank’s business report. It
also issued a special auditor's report on the compliance with the
regulations pertaining to risk management as requested by the
Bank of Slovenia, which does not form part of the annual reports
of the Bank or the Banka Celje Group.
Resolutions and positions of the Supervisory Board
The Supervisory Board reviewed the audited annual report for
2011 at its 6th Regular Meeting on April 18, 2012, giving its consent
and approval without remark. The auditor's report, forming an
integral part of the annual report, was approved.
The Supervisory Board also confirmed the proposal of the
Management Board on covering for loss from other profit reserves
in line with the legislation.
In addition to the aforementioned the Supervisory Board
members ascertain that the macroeconomic conditions in 2011
were extremely unfavourable and that the Bank, in spite of a net
loss from operations, ensured safe and stable as well as cost
efficient operations during the past business year.
Jure Peljhan, M. Sc.
President of the Supervisory Board
Annual Report 2011
In line with the legislative requirements the Bank prepared annual
reports for the Bank and its Group. Both reports were merged into
a single report in 2011 for the first time. The Group comprises
the Bank and its subsidiary Posest, d.o.o., Celje, wherein the
Bank holds a 100% interest. The subsidiary deals mainly with the
realisation of bad debt, the marketing of own and the Bank’s real
estate, own and other property engineering, property leasing,
real estate and equipment appraisals and the supervision of
purposeful use of loans granted to investors.
7
I BUSINESS REPORT
I BUSINESS REPORT
1 HIGHLIGHTS
- amounts in thousands of EUR
Bank
1.
2.
Statement of financial position (on 31 December)
Total assets
Total deposits from the non-banking sector
- corporates
- retail
Total amount of loans to the non-banking sector
- corporates
- retail
Total equity
Impairment of financial assets at cost and provisions
Commitments and contingent liabilities
Income statement (from 1 January to 31 December)
Net non-interest income
Labour costs, general and administrative costs
Depreciation and amortisation
Impairment and provisions
Profit before income tax
Income tax expense
3.
Number of employees (on 31 December)
4.
Shares
Number of shareholders
Number of shares
Nominal share value (in EUR)
Book value per share (in EUR)
5.
Ratios in %
Capital
Capital
Capital adequacy ratio
Asset quality
Impairment charges on financial assets, measured at
amortised cost, and provisions for guarantees and
commitments / classified balance and off-balance
sheet asset items
Profitability
Interest margin
Financial mediation margin
Return on assets - before tax
Return on equity - before tax
Return on equity - after tax
Operational costs
Operational expenses / average assets
Liquidity
Average liquid assets / average short-term deposits
from non-banking sector
Average liquid assets / average assets
GROUP
2011
2010
2009
2011
2010
2009
Balance
Balance
Balance
Balance
Balance
Balance
2,490,913
2,598,080
2,559,083
2,492,765
2,599,217
2,560,233
1,485,029
1,507,808
1,453,439
1,485,025
1,507,805
1,453,436
756,301
781,172
750,184
756,299
781,169
750,181
728,728
726,636
703,255
728,726
726,636
703,255
1,693,360
1,710,049
1,705,475
1,690,161
1,707,367
1,700,739
1,355,464
1,378,530
1,399,426
1,352,198
1,375,778
1,394,652
337,896
331,519
306,049
337,963
331,589
306,087
181,333
199,926
198,873
182,169
200,702
199,391
152,460
111,297
88,879
152,515
111,318
88,892
676,866
472,090
455,875
674,955
471,867
455,688
48,927
55,067
53,888
48,895
55,008
53,505
23,171
20,837
22,734
23,939
21,595
23,462
33,658
35,992
36,349
34,298
36,384
36,818
3,764
3,757
3,876
3,791
3,771
3,914
53,266
30,730
27,880
53,275
30,763
27,910
(18,590)
5,425
8,517
(18,530)
5,685
8,325
(3,715)
925
1,746
(3,715)
926
1,773
530
538
571
534
542
576
704
708
703
704
703
703
508,629
508,629
508,629
508,629
508,629
508,629
33
33
33
33
33
33
357
393
391
357
393
391
277,717
297,629
298,997
278,489
298,141
299,729
14,42
15,19
15,35
14,46
15,21
15,36
6,68
4,79
3,80
6,68
4,79
3,80
1,95
2,14
2,17
1,95
2,13
2,15
2,88
2,95
3,08
2,91
2,97
3,09
-0,74
0,21
0,34
-0,74
0,22
0,33
-9,49
2,70
4,34
-9,42
2,82
4,23
-7,60
2,24
3,45
-7,53
2,36
3,33
1,49
1,54
1,62
1,52
1,56
1,64
49,14
49,95
40,65
49,14
49,95
40,65
19,06
20,38
19,25
19,06
20,38
19,25
Business report 2011
11
2 PRESENTATION
On 31 December 2011 the Banka Celje Group comprised:
Banka Celje, d.d. (the ''Bank''), as the parent bank and Posest, d.o.o.,
Celje (the ''Subsidiary''). The Bank owns 100% of the Subsidiary.
Head office
The Bank's head office is located in Celje, at Vodnikova 2.
History
The beginnings of the Bank reach as far back as 1864, when
Hranilnica mestne občine Celje was established. As the Kreditna
banka Celje it joined Ljubljanska banka in 1971. The Bank was
transformed into a joint-stock company in at the end of 1989 and
remained part of the Ljubljanska banka system as a subsidiary
bank until 1994.
Subsidiary's head office
The Posest, d.o.o., subsidiary's headquarters is situated in Celje
at Vrunčeva 1.
Scope of operations
The Bank is an independent financial institution, established as
a joint-stock company to execute all banking and other financial
services based on the Banking Act (Zban-1) and the Companies
Act (ZGD-1). Based on the authorisations it holds, it is licensed to
perform the following mutually recognised financial sevices in
accordance with Article 10 of the Banking Act:
- accepting deposits;
- lending that also includes: consumer loans, mortgage loans,
factoring with or without recourse, financing of commercial
transactions, including forfeiting;
- payment services and »e-money« issuing;
- issuing and managing of other payment instruments (such as
travellers cheques and bank notes);
- issuing guarantees and other commitments;
- trading for own account or for the account of customers in:
foreign exchange, including currency exchange transactions,
financial futures and options, exchange and interest rate
instruments;
- t rading for own account in: money market instruments,
transferable securities;
- safe custody services;
- investment services and operations.
Since 15 June 1994, the Bank has been operating independently
under the name it holds today, namely Banka Celje, d.d. In line
with the strategy of extending its operations outside the Celje
region, the Bank acquired Banka Noricum, d.d., Ljubljana in 1996
and transformed it into its main branch in Ljubljana, named
Glavna Podružnica Ljubljana. The Bank also acquired Hmezad
banka, d.d., Žalec in 1998 and first transformed it into a branch,
namely Podružnica Hmezad (Hmezad branch), later making
it a business unit at the start of 2011. In 1999 the Bank signed
a Strategic partnership and business cooperation agreement
with Nova Ljubljanska banka, d.d., thus becoming an associated
member of its banking group.
The Posest subsidiary company was established in 1991 as a
limited liability company.
The Bank may also perform the following other financial services
in accordance with Article 11 of the Banking Act:
- insurance brokerage in accordance with the act governing
insurance business;
- m arketing of mutual funds, sale of investment coupons or
mutual fund shares.
The Bank complements its range of services on offer through its
specialist subsidiary company Posest, d.o.o., Celje, which deals
in real estate and offers leasing products, while also providing
advisory services in the recovery of bad debt.
Subsidiary's scope of operation
The company is registered to perform a number of different
types of activities, with its core business comprising:
- repayment of the Bank's bad debt;
- marketing of real estate owned by the company and the Bank;
- owned and other property engineering;
- property leasing;
- property and equipment appraisals;
- supervision of the purposeful use of loans granted to investors.
12
3 STRATEGY
In December of 2011 the Bank prepared a strategy of operation
for the period from 2012 to 2016 as well as the business policies
and the financial plan for 2012.
The strategy for the coming five-year period includes the decision
that the Bank must remain a universal bank with emphasis on
operations with low-risk customer segments, a subsequently
more diversified portfolio of investments and funding sources
and an offer of banking and financial services, which will, while
using minimal capital, ensure good profitability and full worktime utilisation at the Bank. A stable strategic owner will play an
important role in the further long-term sustainable development
of the Bank, supporting its tradition and preserving its universal
banking status through the offer of comprehensive banking
services in domestic and international operations.
In setting strategic indicator goals the Bank took into
consideration the risk profile, a decrease in dependency on
international funding, a dividend policy, which should enable
retained profits to become the main generator of capital and an
increase in profitability based on increased cost efficiency and
a more optimal structure of operations. A stable capital position
remains one of the Bank’s key objectives in coming five-year
period.
To attain its strategic goals, the Bank set key objectives for 2011,
including the maintenance of the ratio of net loans to deposits
from the non-banking sector, acquisition of other long-term
funding sources by taking dedicated long-term loans from
domestic and foreign financial institutions, active credit risk
management aimed at decreasing receivables due, ensuring
the adequate amount of capital and capital adequacy, further
rationalisation of operations and the optimisation of the number
and structure of employees.
The Bank will improve the organisation of operations in the
coming years through internal optimisation measures and
by streamlining business processes. At the same time it will
actively adjust its product mix to market conditions, develop
new, marketable services and introduce modern marketing
approaches. In the area of promotion, it will focus on product
advertising, while boosting the Banka Celje brand awareness at
the same time.
Due to the unfavourable macroeconomic forecasts on economic
growth, employment and funding the Bank does not plan to
increase the volume of operations in 2012, it does however
expect the volume to gradually start increasing in the coming
years. In investment operations it plans for a moderate growth
of lending to the non-banking sector. Special emphasis will be
put on the quality of investments and on accelerated recovery
to reduce the volume of outstanding claims. The objective
of the Bank is to focus on clients while using less capital and
offering services with lower capital requirements. The volume of
securities investments will gradually be decreased. Investment
activities in prime debt securities will be adjusted to suit the
requirements of secondary liquidity reserves, whereby matured
debt securities will be reinvested in government bonds with the
best quality ratings.
With regard to risk the Bank will focus on adequately covering
the risk portfolio with impairments and provisions, all the while
decreasing the share of bad debt in gross loans. It will ensure
an adequate liquidity position, with special attention given to
upgrading the system of liquidity risk management in accordance
with European guidelines. By regularly monitoring and with timely
action, the Bank will maintain a stable capital position, whereby
it will carefully monitor the new capital accord set to come into
effect on 2013. It will also continue to develop the procedures
of measuring and estimating capital requirements and internal
capital, while using the findings in the decision-making process.
Due to the global financial and economic crisis the Banks saw a
dramatic slide in business results and the coming years likely will
not allow for the achievement of the level of return on capital as
was the case prior to the crisis. In spite of this, the Bank has planned
for a positive financial result in 2012, with special attention put
on ensuring stable income. Net interest income is set to remain at
the 2011 level, with non-interest income coming in lower, as the
Bank does not expect major effects from the sale or valuation of
financial instruments. Operating costs will continue to decrease
with continued rationalisation of operations, while the volume
of impairments and provisions will gradually begin to go down
subject to effective risk management procedures.
In 2012 the Bank will continue to gradually reduce the number
of employees, which it will attain by providing for flexibility in
substituting for absence and during temporarily increased
workload. New jobs will be minimal, which is why the process of
employment will require a high level of selectivity.
To ensure adequate quality of IT support to operational
processes, the Bank will, within the framework of its key strategic
activities, provide for uniformity in IT support, upgrade the
data warehouse, move to more modern software, update the
content of application software, upgrade computer hardware by
transitioning to a modern setup in the form of slice computing.
The Subsidiary prepared its plan of operations for 2012, wherein
it wrote that it will continue to follow its core mission, being the
performance of activities to satisfy the Bank’s needs. It plans to
perform analyses of investment projects, perform appraisals and
monitor the purposeful use of loans granted to investors. It also
plans to sell housing in Velenje, continue to actively disinvest
the housing facilities in the Ljubljanska building and increase
the volume of real estate brokerage, while also devoting more
attention the recovery of property of the Bank’s debtors.
13
4 SIGNIFICANT EVENTS
2011:
- issue and successful sale of regular long-term bonds in the domestic market amounting to EUR 34 million in March 2011 and their
listing on the Ljubljana Stock Exchange;
- due diligence of the Bank’s operations by a potential buyer in the second half of May 2011, with an ensuing temporary suspension
of the sale by the owners;
- closure of the Prešernova branch on 16 May 2011 based on the analysis of the usage of modern banking services, which are
increasingly replacing the traditional operations;
- at the 26th Regular Meeting of Shareholders on 24 May 2011 all of the proposed resolutions were adopted – new members of the
Bank’s Supervisory Board having been named as well;
- signing of the agreement on a long-term syndicated loan in an amount of EUR 65 million with a consortium of 8 foreign banks on
8 June 2011;
- the first constitutive meeting of the new Supervisory Board on 8 June 2011;
- dividend payment on 22 June 2011 in an amount of EUR 2.1 per ordinary and preference shares pursuant to the decision made at
the Meeting of Shareholders;
- since 26 September 2011 clients have a new service at their disposal, the E-account, which allows for the exchange of invoices
between their issuers and recipients in electronic form;
- rating received at the end of September 2011 (long-term BB, short-term B, individual C/D, support 3, outlook negative), which was
lowered due to the harsh economic conditions, the downgrade of the country rating and the downgrade of the banking system
as a whole.
14
5 ECONOMIC AND BANKING ENVIRONMENT
5.1 Economic environment
The international economic and financial crisis, persisting since
2008, have been joined by the debt crisis in 2011. Economic
conditions were harsh in most developed countries, especially
in the euro area, which was driven mainly by weak demand and
uncertainty pertaining to the funding of peripheral eurozone
countries. The final quarter of 2011 saw economic growth in
the US strengthen, while contracting in some of the euro area
countries, with 2012 forecasts even lower still. 2011 was marked
by rating downgrades of European countries and banks, including
Slovenia and Slovene banks, which results in more expensive
borrowing. Rating agencies downgraded Slovenia and its banks
on account of political instability within the country and due to
the delay in the increasing of capital at the banks.
The public finance deficit reached 4.2% of gross domestic
product in 2011 according to November data, thus coming in
lower than planned by the supplementary budget. State budget
revenues were 4.1% higher year-on-year, while expenditure
increased by 0.7%, wherein pension payments, transfers to the
unemployed and interest payments increasing most. Revenue
from the European Union budget was highest ever in 2011.
For the purposes of reducing the deficit in 2012 to 3.6% of the
gross domestic product, a new act on the further intervention
measures was adopted in December 2011, followed in January
2012 by the measure of suspending the execution of the budget
until a supplementary budget is adopted, which is required due
to the deterioration of economic conditions.
According to the latest data economic growth in Slovenia
decreased in real terms by 0.2% in 2011. Quarter-on-quarter
growth was negative for the entire year, with conditions
deteriorating in the second half of the year in particular, due an
acceleration in the decline of domestic consumption and the
simultaneous deterioration of conditions in the international
markets. The continuing decrease in the volume of investments
in fixes assets, with total volume of investments having decreased
since the start of the economic crisis in 2008 by approximately
40%. Economic growth was also negatively impacted by the
restriction in government consumption, which was especially
evident in the final quarter of the last year. With employment
dropping further and due to a real decrease in salaries, endconsumption by households fell also. In spite of an increase in
exports these were not sufficient to compensate for the drop
in domestic spending. Slovenia exported 12.2% more goods in
2011 than in 2010, with import coming in higher by 11.1%. The
import to export ratio thus reached 92.4%. Industrial production
increased by 2.5% in 2011.
In 2011 consumer prices increased in Slovenia by 2.0%, where
goods prices increased by 2.7% and prices of services increased
by 0.4%. The annual inflation rate, measured by the harmonised
index of consumer prices, reached 2.7% in the European Monetary
Union member states, whereas it came in at 2.1% in Slovenia.
Energy and food prices contributed most to the inflation rate due
to higher commodity prices in the world markets in early 2011.
In spite of increases in some sectors with limited competition,
inflation is expected to decrease in 2012.
The registered number of unemployed persons exhibits a seasonal
increase in December 2011, though less than in previous years
and the end-of-year figure reached 112,754 persons. Loss of fixed
term employment was the most frequent reason for registering
as unemployed. Among the persons no longer registered as
unemployed approximately half were employed again, with the
other half no longer registered due to increased retirement,
especially by persons registered at the Employment Service of
Slovenia in December 2010 with the intention to wait so that they
could retire in accordance with the more favourable stipulations
of the old pension legislation. The registered unemployment rate
in 2011 amounted to 12.1% according to December data, having
stood at 11.8% in December 2010. Despite the increase the trend
in the job market in 2011 was more favourable as compared with
the past crisis ridden years. Especially the large number of new
jobs was encouraging.
5.2 Banking environment
The Slovene banking system maintained adequate liquidity in
2011, also with the assistance of increased use of funding from
three-year refinancing auctions with the European Central Bank
in December.
The worsening of economic conditions was very much reflected
in the balance sheets of Slovene banks in 2011. These reduced the
volume of lending to the non-banking sector, with factors having
had a negative impact on credit activity for quite some time
including the decreased credit ratings and high borrowing costs,
deteriorating macroeconomic conditions and the position of
some industries, high indebtedness and poor company solvency.
Reduced lending also meant that the total assets of the Slovene
banking system decreased by 3.0% in 2011.
The deterioration of economic conditions also affected the
increased need to make additional impairments and provisions,
which led the banking system to a loss after tax.
Credit risk, measured by the share of receivables in banks classified
as being over 90 days overdue, remained high. Financing terms
at banks abroad deteriorated both in size and maturity, with the
banks adjusting to this by deleveraging at foreign banks and
borrowing from the Eurosystem. This funding source will remain
reliable and relatively favourable in 2012 as well.
15
6 REPORT ON THE OPERATIONS IN 2011
Report on the operations in 2011, including assuming and managing banking risk is based on the Bank's operations, being the dominant entity within the Group. Based on permission issued by the Bank of Slovenia the subsidiary company is not included in the
consolidated supervision in accordance with the decision by the Bank of Slovenia on Supervision of Banks and Savings Banks on a
Consolidated Basis, as from the aspect of the aim of supervision the Subsidiary does not represent any significant effect.
6.1 Financial results
6.1.1 The Bank’s financial result
Due to the global financial and economic crisis resulting in the subsequently greater requirement for additional impairments and
provisioning, Slovene banks saw their performance deteriorate markedly in 2011.
The Bank was faced with similar problems afflicting the entire Slovene banking system. In 2011 it recorded a profit before impairments
and provisions in the amount of EUR 34,676 thousand. After decreases by the impairments and provisions made, however, the result
was a pre-tax loss in the amount of EUR 18,590 thousand and a net loss of EUR 14,875 thousand. Data shows that the decrease in gross
profit mainly resulted from the requirement for additional impairments and provisions.
Analysis of the Bank’s net income and expenses in 2011:
Net income and expenses
Dividend income
Net gains from financial operations
Realization
Realization
2011
2010
Change
Index
1
2
3=1-2
4=1:2
48,927
55,067
(6,140)
89
120
876
728
148
16,386
16,261
125
101
6,253
4,307
1,946
145
Net other operating loss
(344)
(459)
115
75
(33,658)
(35,992)
2,334
94
100
(3,764)
(3,757)
(7)
Impairment charges and provisions
(53,266)
(30,730)
(22,536)
173
Profit / loss from operations
(18,590)
5,425
(24,015)
(343)
Income tax expense
Net profit / loss
Other comprehensive income
Comprehensive income after tax
3,715
(925)
4,640
(402)
(14,875)
4,500
(19,375)
(331)
(2,687)
(689)
(1,998)
390
(17,562)
3,811
(21,373)
(461)
Net interest came in at EUR 48,927 thousand, being 11% or EUR 6,140 thousand less than in 2010. Compared with 2010, interest income
was 3% higher and interest expenses increased by 16%. The average lending rate rose by 0.13 percentage points, while the average
deposit rate increased by 0.37 percentage points. The cumulative interest margin amounted to 1.95% for the year, having come in at
2.14% in 2010.
Dividend income reached EUR 876 thousand, increasing in comparison with the 2010 figure by 20% or by EUR 148 thousand. The
Bank made 52% of all dividend income from investments in securities held for trading, with the other 48% coming from dividends on
securities available for sale.
Net fee and commission income from banking services rendered amounted to EUR 16,386 thousand in 2011. The increase of EUR 125
thousand as compared with 2010 was mainly a consequence of higher net fees and commissions from card operations. The services
accounting for the majority of the Bank’s net non-interest income from fees and commissions in 2011 have included payments and
card operations, as has been the case for the past few years now.
Financial transactions resulted in a profit totalling EUR 6,253 thousand. Compared with the results from 2010 the profit increased by
45% or by EUR 1,946 thousand. The Bank generated most of the positive effects from the valuation of bonds issued and the related
interest rate swaps, amounting in total to EUR 5,092 thousand. Positive effects also came from the sale of mutual funds, resulting in a
profit of EUR 1,017 thousand.
16
Net other operating loss reached EUR 344 thousand, while amounting to EUR 459 thousand in 2010. The loss in 2011, for the most
part, came from the implementation of tax on total assets, as the tax liability amounted to EUR 291 thousand. In 2010 the loss mainly
came from the payment of refunds for withdrawals from ATMs of other banks in the Republic of Slovenia, totalling EUR 298 thousand.
Administrative expenses accounted for EUR 33,658 thousand in 2011, thus decreasing by EUR 2,334 thousand as compared with 2010.
Labour costs amounted to EUR 18,752 thousand, being EUR 1,801 thousand lower than in 2010 and coming in EUR 957 thousand
lower than the estimated figure for 2011. The decrease in labour costs is mainly a result of a decreased number of employees, lower
severance payments from terminations for business reasons and a lower holiday bonus. Costs of materials and services at EUR 14,906
thousand were EUR 533 thousand less than in 2010, with IT, maintenance and advertising costs decreasing most.
Depreciation and amortization amounted to EUR 3,764 thousand, holding steady at the 2010 levels.
The Bank’s cost efficiency, measured with the share of operating costs in the Bank's assets, improved from 1.54% to 1.49% in 2011. The
cost/income ratio (the CIR) came in at 51.90%, also improving on the 2010 figure of 52.37%.
Impairments and provisions were made in a total amount of EUR 53,266 thousand, being 73% higher than in 2010, when they amounted to EUR 30,730 thousand. In 2011 the Bank made a total of EUR 39,574 thousand of credit risk provisions, impaired EUR 13,510
thousand of financial assets, provisioned for the denationalisation procedure in an amount of EUR 108 thousand and made provisions
for employees in an amount of EUR 74 thousand.
6.1.2 The Group’s financial result
Analysis of the Group’s net income and expenses in 2011:
Net income and expenses
Dividend income
Net gains from financial operations
Realization
Realization
2011
2010
Change
Index
4=1:2
1
2
3=1-2
48,895
55,008
(6,113)
89
876
728
148
120
16,385
16,260
125
101
6,253
4,313
1,940
145
145
Net other operating loss
425
294
131
(34,298)
(36,384)
2,086
94
(3,791)
(3,771)
(20)
101
Impairment charges and provisions
(53,275)
(30,763)
(22,512)
173
Profit / loss from operations
(18,530)
5,685
(24,215)
(326)
Income tax expense
Net profit / loss
Other comprehensive income
Comprehensive income after tax
3,715
(926)
4,641
(401)
(14,815)
4,759
(19,574)
(311)
(2,687)
(689)
(1,998)
390
(17,502)
4,070
(21,572)
(430)
The gross loss that the Group recorded was EUR 60 thousand lower than the gross loss recorded by the Bank, with the Group’s net loss
lower by the same amount. The Group’s income statement differs from the Bank’s income statement under other net operating profit,
mainly due to income from real estate sales. The Subsidiary sold part of the flats and parking spaces and a portion of the merchandise
inventory.
17
6.2 Financial position
6.2.1 Financial position of the Bank
End 2011 the Bank’s total assets amounted to EUR 2,490,913 thousand. As compared to 2010 the figure decreased by EUR 107,167
thousand or by 4%.
The Bank’s assets according to individual items:
Bank’s assets
2011
Str.
2010
Str.
Change
Index
1
2
3
4
5=1-3
6=1:3
Cash and balances with Central Bank
168,163
7
128,324
5
39,839
131
Financial assets
533,152
22
639,502
25
(106,350)
83
1,748,414
70
1,795,957
69
(47,543)
97
55,054
2
85,908
3
(30,854)
64
1,693,360
68
1,710,049
66
(16,689)
99
22,723
1
24,827
1
(2,104)
92
2,257
-
2,257
-
-
100
Loans and advances
- loans and advances to banks
- loans and advances to customers
Fixed assets
Investments in subsidiaries, associates
and joint ventures
Other assets
Total
16,204
-
7,213
-
8,991
225
2,490,913
100
2,598,080
100
(107,167)
96
The Bank’s most liquid assets increased by 31% or EUR 39,839
thousand in 2011. Cash fell by 4% to amount to EUR 10,241
thousand, while balances with the Central Bank increased from
EUR 117,633 thousand to EUR 157,923 thousand and include
obligatory deposits and overnight deposits as well as other shortterm deposits with the Central Bank.
Investments in financial assets decreased by 17% or by EUR
106,350 in 2011 in line with business objectives, thus amounting
to EUR 533,152 thousand end 2011. Their share in the Bank’s assets
decreased from 25% to 22%. According to value the largest portion
of the Bank’s portfolio consists of investments in financial assets
held to maturity.
Investments in property and equipment and intangible assets
amounted to EUR 22,723 thousand, having decreased by 8%
in 2011 due to amortisation in spite of new acquisitions and
investments, primarily in computer equipment.
Investments in subsidiaries, associates and joint ventures include
an investment in the Posest, d.o.o., company, 100-percent owned
by the Bank. In 2011 the amount of the investment did not change.
Other assets include receivables from the valuation of derivative
financial instruments in the amount of EUR 4,838 thousand,
receivables for the payment of current advances and deferred
taxes in the amount of EUR 9,208 thousand and other assets
totalling EUR 2,158 thousand.
Loans and advances to banks decreased by 36% amounting to EUR
55,054 thousand end 2011. The decrease of EUR 30,854 thousand
mainly came from short-term deposits with domestic banks with
maturities up to 30 days.
Although loans and advances to customers dropped by 1% or EUR
16,689 thousand in 2011, reaching EUR 1,693,360 thousand, these
still represent the strongest category in the Bank’s investment
operations with a 68% share. The gross value of loans to
customers came in at EUR 1,826,713 thousand, with impairments
amounting to EUR 133,353 thousand having increased by EUR
36,402 thousand in a year. Loans to corporates, comprising loans
to companies and private entrepreneurs, fell by 2%, while retail
loans were up 2%. Across the board lender categories exhibited an
increase in long-term loans.
18
The Bank’s liabilities per item have been realized as follows:
Bank’s liabilities
Financial liabilities designated at fair value
through profit or loss
Financial liabilities at amortised cost
- deposits and borrowings from banks
- due to customers
2011
Str.
2010
Str.
Change
Index
1
2
3
4
5=1-3
6=1:3
90,082
4
70,013
3
20,069
129
90
36,146
1
40,050
2
(3,904)
2,159,994
87
2,227,372
85
(67,378)
97
417,028
17
473,770
18
(56,742)
88
1,485,029
60
1,507,808
58
(22,779)
98
- debt securities in issue
185,520
7
160,436
6
25,084
116
- subordinated liabilities
72,417
3
85,358
3
(12,941)
85
-
-
30,993
1
(30,993)
-
12,598
1
13,237
1
(639)
95
Financial liabilities associated to transferred assets
Provisions
Other liabilties
10,760
-
16,489
-
(5,729)
65
Total liabilities
2,309,580
93
2,398,154
92
(88,574)
96
Total equity
Total liabilities and equity
181,333
7
199,926
8
(18,593)
91
2,490,913
100
2,598,080
100
(107,167)
96
Short-term financial liabilities from deposits from the European
Central Bank increased by 29% to EUR 90,082 thousand. Of
this, EUR 10,060 thousand pertains to a short-term loan, taken
in August, while EUR 80,022 thousand are long-term liabilities
maturing in three years.
Liabilities from debt securities in issue amounted to EUR 185,520
thousand end 2011 and include liabilities from issued plain vanilla
bonds and certificates of deposit. In 2011 liabilities pertaining to
this item increased by 16% or by EUR 25,084 thousand due the
15th bonds issue.
Financial liabilities at fair value through profit or loss recorded
EUR 36,146 thousand end 2011, thus falling by 10% due to
interest payments and negative valuation. This item includes
subordinated bonds issued in 2007 and maturing in 2017 as
well as certificates of deposit maturing in 2012, which the Bank
includes in the capital requirement and the capital adequacy
ratio calculations in the amounts allowed.
Subordinated liabilities decreased by 15% or by EUR 12,941
thousand due to the maturity of the eighth subordinated bonds
issue. The Group did not issue any new subordinated bonds in
2011.
Financial liabilities at amortized cost decreased by 3% compared
to 2010 and their amount of EUR 2,159,994 thousand represents
87% of the Bank’s total liabilities.
Deposits and borrowings from banks amounted to EUR 417,028
thousand, which represents EUR 56,742 thousand less than the
2010 figure. Even though their share in the structure of the Bank’s
liabilities has gradually been decreasing, it remains the second
most important funding category with a 17% share. In 2011
access to long-term funding from abroad remained limited due
to the euro debt crisis, in spite of this however, the Bank was able
to acquire some new funding, while regularly repaying liabilities
due. Due to a decrease in its rating the Bank also prepaid part of
its loans.
Due to customers decreased by 2% or by EUR 22,779 thousand,
amounting to EUR 1,485,029 thousand end 2011. Retail
deposits increased by EUR 2,092 thousand, while deposits from
corporates dropped by EUR 24,871 thousand. The ratio of net
loans and deposits from the nonbanking sector was 1.15, which
was favourable when compared with the average of the banking
system.
Financial liabilities associated with transferred assets, include
interbank short-term repo transactions. At the end of 2010
liabilities from interbank repo transactions amounted to EUR
30,993 thousand, the Bank however did not enter into any
interbank repo transactions end 2011.
End 2011 the Group made provisions amounting to a total of EUR
12,598 thousand. Compared with 2010 provisioning went down
by 5% or EUR 639 thousand. Provisions for denationalization
proceedings decreased by EUR 1,059 thousand amounting to
EUR 7,110 thousand at the end of the year, due to the fact that the
Bank used part of the provisions formed to pay compensation for
the use of the office building, which is the subject of the
proceedings. Provisions for liabilities toward employees were
made at the end of 2011 in a total amount of EUR 2,171 thousand
while the remaining provisions pertained to commitments and
contingent liabilities in an amount of EUR 3,042 thousand and
the provisions from the National Housing Savings Scheme in the
amount of EUR 275 thousand.
19
Other liabilities include financial liabilities held for trading, liabilities from hedging derivative instruments and other liabilities. Compared
with 2010 this item decreased by 35%, while in value liabilities from the valuation of derivatives decreased the most, namely by EUR 3,847
thousand.
The Bank’s capital decreased by EUR 18,593 thousand or 9% in 2011 and stood at EUR 181,333 thousand at the end of the year. Net loss
achieved during the 2011 business year impacted the decrease the most.
6.2.2 Financial position of the Group
The Group’s assets according to individual items:
Group’s assets
2011
Str.
2010
Str.
Change
Index
1
2
3
4
5=1-3
6=1:3
168,163
7
128,324
5
39,839
131
Financial assets
533,152
22
639,502
25
(106,350)
83
1,745,215
70
1,793,275
69
(48,060)
97
55,054
2
85,908
3
(30,854)
64
1,690,161
68
1,707,367
66
(17,206)
99
23,677
1
24,914
1
(1,237)
95
Loans and advances
Fixed assets
Investments in subsidiaries, associates and joint
ventures
Total
Skupaj
3,270
-
1,807
-
1,463
181
19,288
-
11,395
-
7,893
169
2,492,765
100
2,599,217
100
(106,452)
96
The Group’s total assets came in EUR 1,852 thousand higher than the total assets of the Bank, comparing the figure with 2010 when
total assets were EUR 106,452 thousand higher.
Looking at Group assets, the higher total assets pertain mainly to the inventory and investment property of the Subsidiary. Investment
property includes the net carrying value of land and buildings purchased for the purpose of an operating lease.
The Group’s liabilities per item have been realized as follows:
Group’s liabilities
2011
Str.
2010
Str.
Change
Index
1
2
3
4
5=1-3
6=1:3
90,082
4
70,013
3
20,069
129
90
Financial liabilities designated at fair
value through profit or loss
36,146
1
40,050
2
(3,904)
2,159,991
87
2,227,369
85
(67,378)
97
417,029
17
473,770
18
(56,741)
88
- deposits and borrowings from banks
- due to customers
1,485,025
60
1,507,805
58
(22,780)
98
185,520
7
160,436
6
25,084
116
72,417
3
85,358
3
(12,941)
85
-
-
30,993
1
(30,993)
-
12,630
1
13,268
1
(638)
95
Provisions
Other liabilties
11,747
-
16,822
-
(5,075)
70
Total liabilities
2,310,596
93
2,398,515
92
(87,919)
96
Total equity
182,169
7
200,702
8
(18,533)
91
2,492,765
100
2,599,217
100
(106,452)
96
The liabilities of the Group are higher than the liabilities of the Bank mainly in the items of capital and other liabilities, wherein the
majority pertains to the liability of the Subsidiary to the contractors.
20
6.3 Operations according to key areas
6.3.1 Corporate banking
Corporate banking, pertaining to businesses and individual
entrepreneurs, represent a key area for the Bank, as it is the
strongest segment of its operations.
The Group’s credit operations with corporates came in EUR
3,266 thousand lower than the Bank’s credit operations due to
the elimination of mutual claims, while deposit operations with
corporates were only lower by EUR 4 thousand.
Turning to the Bank’s credit operations the gross value of loans
to corporates amounted to EUR 1,479,382 thousand, while
impairments totalled EUR 123,918 thousand, having increased
by EUR 35,411 thousand in a year. The net value of loans to
corporates decreased by 2%, representing a decrease of EUR
23,066 thousand. With the net amount of EUR 1,355,464 thousand
the share of loans to corporates increased within the structure of
the assets from 53% to 54%.
As the procedures pertaining to compulsory settlement,
bankruptcy and insolvency continued in the corporate sector,
which holds a large share of outstanding liabilities toward the
Bank, this meant that the Bank put a lot of effort into recovery
activities. It carefully collected information on the business
environment, monitored enforcement procedures and prepared
proposals for the rehabilitation of companies.
The Subsidiary successfully continued the business cooperation
it started in 2005 with a lessee, who is regularly paying off two
financial leasings for the manufacturing facility in Prebold.
Deposit operations have seen deposits from the non-banking
sector decrease by 3% or by EUR 24,871 thousand, thus amounting to EUR 756,301 thousand end 2011. Deposits from the Central Bank remained at the level from 2010, representing 26% of all
corporate deposits.
In lending to corporates the Bank devoted special attention to
the selection of borrowers, actively focusing on commercial
and additional after-sales activities. Successful cooperation with
SID banka continued, allowing the Bank to attain guarantees
for certain projects as well as favourable long-term funding
dedicated for lending activities.
1,600,000
1,400,000
in thousands of EUR
1,200,000
1,000,000
31 December 2009
800,000
31 December 2010
600,000
31 December 2011
400,000
200,000
0
Loans to corporates
Deposits from corporates
21
6.3.2 Retail operations
The Bank also puts a lot of emphasis on retail operations, having
put in place a broadly diversified retail network, which it uses to
bring its services to as many clients as possible.
The retail credit operations of the Group were larger than the
credit operation of the Bank by EUR 67 thousand, while retail
deposit operations of the Group did not differ from the operations
of the Bank.
Retail loans increased by 2% in 2011 reaching EUR 337,896
thousand. The gross value of loans amounted to EUR 347,244
thousand, with impairments amounting to EUR 9,348 thousand,
having increased during the year by EUR 904 thousand.
To promote retail loans, the Bank introduced new form of
housing loans with a combined interest rate, it also added to its
offer of NATUR housing and mobile loans. During the summer
months it introduced special offer consumer loans dedicated to
storm damage repair and special deals for university students.
Throughout the year special retail loan offers were available with
favourable interest rates.
Retail deposits increased in value by EUR 2,092 thousand in 2011,
representing 29% of the Bank’s total liabilities. They are extremely
important for the Bank’s stability, which is why it actively adapts
its deposit services to cater for the needs and wishes of its clients.
The Bank provided its clients with numerous savings offers,
based on which it attained a substantial number of new clients.
It actively marketed the ''Prava odločitev'' (''Right Choice'')
package, which in addition to free account management for the
first year of operation also includes other more favourable or free
services. The ''Plus paket'' (''Plus Package'') special offer enabled
new clients to perform basic banking services at markedly lower
costs. To further increase the amount of deposits and to sell
other services, the Bank introduced the ''Novoletni paket'' (''New
Year's Package') at the end of the year, while offering its clients
favourable deposits of different maturities during the year.
800,000
700,000
in thousands of EUR
600,000
500,000
31 December 2009
400,000
31 December 2010
31 December 2011
300,000
200,000
100,000
0
Retail Loans
Retail deposits
Alternative savings instruments are also something the Bank provides its savers with. It has been selling investment products and
insurance services for a number of years now, thus complementing the traditional banking and financial transactions on offer. In
relation to investment products on offer it accepts and forwards orders to buy or sell asset units of the NLB Skladi umbrella fund with
the related sub-funds and the NFD umbrella fund with the related sub-funds. Within the framework of insurance services it offers
its clients a number of different insurance types, with insurance in the event of unemployment requiring special mention due to
increased volumes, as well as tourist insurance and additional payment card holder insurance. The Bank holds a licence for insurance
brokerage and cooperates with insurance companies NLB Vita, Zavarovalnica Maribor, Zavarovalnica Triglav and Adriatic Slovenica.
22
In addition to the classical counters, the Bank has been offering
its clients more modern services that it continuously develops
and has been upgrading for a number of years. These comprise
non-cash and self-service operations, phone banking, bank
letters and the ever more popular E-banking.
A modern E-banking branch has been available to clients since
July 2000 and it enables quick, safe and simple performance of
most of the services offered by the Bank. E-banking is constantly
adapting to new modern technologies. Safety has been provided
for with the use of the most modern internet technologies. In
2011 the Bank enabled users of the NLB Klik to perform electronic
banking using mobile phones and tablet PCs, while all clients of
the Bank have been enabled to use E-accounts from September
onward.
In non-cash operations the Bank offers a wide spectrum of card
services. It issues payment cards of the Activa Maestro, Activa /
Mastercard and Activa / Visa brands, distinguished by recognition
value and applicability in Slovenia and abroad. These may be
used at numerous points of sale equipped with POS terminals,
banks, post office counters, ATMs and over the internet
With regard to self-service operations clients had at their disposal
92 ATMs at the end of 2011, connected into the BA network across
Slovenia. Constant monitoring of the number of transactions at
ATMs allowed the Bank to correspondingly relocate existing ATMs
to locations more accessible to clients, as well as enhance the
safety of ATM transactions by upgrading the system of technical
security and video surveillance as well as mechanical protection.
6.3.3 Banking operations
Operations with other banks are performed by the Bank, with the
Subsidiary only dealing with the parent bank.
In 2011 the Bank was efficient in liquidity management and it
adopted measures leading to the strengthening of the operational
as well as structural liquidity. The Bank’s liquidity position in
2011 was good, with the trend continuing in 2012 as well. It
maintain surplus operational short-term liquidity, while placing
liquidity surpluses in the inter-bank market and the European
Central Bank in the form of overnight deposits or weekly liquidity
placements at bided interest rate, which should not be higher
than the reference interest rate.
The Bank obtained liquid assets for banking operations from
the European Central Bank on the basis of long-term funding
operations, from the SID banka, the EIB and from the inter-bank
market. It holds sufficient eligible financial assets to acquire
funds from the European Central Bank or to enter into inter-bank
repo transactions.
Liabilities to commercial banks decreased by 12% in 2011. The
deepening of the euro debt crisis and the subsequent credit-rating
downgrades of European countries and financial institutions
resulted in limited access to long-term foreign funding and higher
borrowing costs. In spite of this the Bank signed an agreement on
a syndicated loan in the amount of EUR 65 million in June, it took
new and renewed some existing bilateral loans and drew funds
from the European Central Bank, dedicated to funding the longterm development of the economy and the public sector. New
dedicated long-term funding sources were also attained from SID
banka. At the same time the Bank was also regularly repaying
instalments and the principal due and prepaid part of the loans to
foreign banks in an amount of EUR 49 million on account of the
credit rating downgrade, even though it holds EUR 133 million
worth of loan agreements with a compulsory prepayment option
within 30 days of notification that the credit rating dropped
below BBB-.
Due to the reluctance for interbank lending, especially in the
longer term, the Governing Council of the European Central
Bank adopted additional measures for the stabilisation of the
situation in the banking system and offered the banks the option
of 36-month financing. The first operation was carried out on 21
December and it replaced the 13-month facility. In this operation
the Bank replaced the EUR 40 million 13-month loan taken in
October with a three-year facility, while also taken another
three year EUR 40 million loan. Additionally, the Bank raised a
short-term loan with the European Central Bank in August in an
amount of EUR 10 million.
23
700,000
in thousands of EUR
600,000
31 December 2009
31 December 2010
500,000
31 December 2011
400,000
300,000
200,000
100,000
0
and ECB
Deposits and borrowings from
banks and ECB
6.3.4 Financial instrument operations
The Bank conducts transactions with securities and derivative
financial instruments, while the Subsidiary does not.
The total volume of investments in securities fell in comparison
with 2010 by 17%. Investments in all categories of financial assets
decreased, with investments in financial assets held-to-maturity
decreasing in value the most.
Held for trading financial assets include investments in equity
and debt securities, which the Bank holds in its portfolio and the
valuation of derivate financial instruments. In line with the business policies of the Bank 2011 saw investments in trading securities decrease by 19%, with investments in shares decreasing as
well as forwards agreements on certificates of deposit.
include structured bonds and bonds hedged with interest rate
swaps. This item decreased by 73%, being EUR 21,622 thousand
in value, mainly as a consequence of bonds maturing.
Available for sale financial assets represent part of the secondary
liquidity reserve and are used for the management of currency,
exchange and interest rate risk. In 2011 investments in this category of financial assets fell by 14%, or by EUR 32,828 thousand. Investments in equity securities decreased due to impairments, the
sale of an equity investment and the sale of mutual fund units. At
the same time the Bank decided to buy shares of two companies
in 2011, its stake in the companies’ capital is small. Investments
in debt securities decreased due to the lessening of reinvestment
from bonds due and sold.
The Bank classifies fixed income securities as held to maturity
investments, which it provisionally expects to hold until final maturity. In 2011 the Bank reduced this investment category, as it
did not reinvest all of the matured securities. The Bank predominantly bought government bonds and treasury bills with a government guarantee as well as prime-rated bank bonds.
The Bank does not state any assets pledged in 2011, whereas
the figure amounted to EUR 32,390 thousand in 2010. The Bank
recorded pledged securities in its books, however in a separate
item, with related repurchase obligations shown under financial
liabilities associated with transferred assets.
Liabilities from securities in issue increased by a total of 3% in
2011.
Financial liabilities at fair value through profit or loss decreased
by 10% in 2011 and include subordinated bonds at a nominal of
EUR 37 million, issued in 2007 and maturing in 2017 as well as
certificates of deposit at a nominal amount of EUR 1.5 million,
maturing in 2012. The Bank has hedged these securities with interest derivatives.
Debt securities in issue increase by 16% and include regular bonds and certificates of deposit. In March the Bank issued a new
series of long-term regular bonds in the amount of EUR 34.15
million with the intention of increasing its long-term assets, thus
providing for an adequate structure of funding sources and substituting matured subordinated BCE8 series bonds. The volume
of certificates of deposit decreased due to larger maturities in
2011, even though the Bank regularly issued new series of longand short-term certificates.
24
Subordinated liabilities dropped by 15% in 2011 due to the maturing eighth series in the amount of EUR 12.5 million. In 2011 the Bank
did not issue any new subordinated bonds.
800,000
700,000
in thousands of EUR
600,000
500,000
31 December 2009
400,000
31 December 2010
31 December 2011
300,000
200,000
100,000
0
Securities investments
Securities issued
In 2011 the Bank, in line with its business objectives, carried out foreign currency forward transactions and share futures transactions,
dealt in certificates of deposit and bonds. To hedge its interest rate positions it entered into interest rate swap transactions. The total
volume of derivative transactions at the end of 2011 was 1% higher than in 2010. It mainly increased on the basis of interest rate swaps.
6.3.5 Risk bearing commitments and contingent liabilities
Risk bearing commitments and contingent liabilities increased by 8% in 2011.
280,000
270,000
in thousands of EUR
31 December 2009
260,000
31 December 2010
31 December 2011
250,000
240,000
230,000
220,000
Commitments and contingent liabilities
Risk bearing commitments and contingent liabilities saw the volume of guarantees issued increase by 20% or by EUR 16,351 thousand.
According to maturity the volume of shorter term guarantees grew more.
25
Assumed liabilities, having increased by 3% in 2011, include liabilities from the undrawn stand-by credit lines and overdraft
accounts, liabilities from approved and undrawn loans, liabilities
from spot transactions, liabilities from issued letters of intent and
liabilities from short-term loans to cover for letters of credit. Undrawn loans to corporates increased the most in value for the
year.
On 1 June 2011 the Bank became part of the E-account system
through the central Bankart processor, with limited functionality
at first and with full functionality provided to its clients in September. All integration testing as well as performance testing was
completed successfully. Based on the prepared detailed report the
E-account was introduced as a new service offered by the Bank,
which is already working on the project of issuing own E-accounts.
Other categories within commitments and contingent liabilities
also include liabilities based on an agreement to gradually invest
into foreign investment funds, potential liabilities from premiums
received in accordance with national housing savings schemes
and a potential exposure from derivatives.
In 2011 the Bank executed 8.6 million payment transactions totalling EUR 58,841 million. The majority is represented by domestic
payments, with Germany still standing out in international payments according to number of orders and value with a 33% share
of the total international payments flow.
The total volume of risk bearing commitments and contingent
liabilities of the Group was EUR 1,911 thousand less in 2011 as
compared with the Bank due to an undrawn credit line granted
to the Subsidiary.
End 2011 the Bank maintained 6,506 corporate transaction accounts and 5,793 transaction accounts belonging to private entrepreneurs and to private undertakings, which represents a 2%
increase as compared with the end of 2010. A total of 349 corporate accounts amounting to EUR 97.4 million as well as 396
private entrepreneur and private undertaking accounts in the
amount of EUR 16.4 million were frozen. The Bank was also authorised to execute final court decisions in a total amount of EUR
48.5 million.
6.3.6 Payment operations
The Bank performs international and domestic payment operations, while the Subsidiary does not.
In 2011 the Bank put a lot of emphasis on activities related to SEPA
payments (Single Euro Payments Area), namely the unified area
for euro payments which includes payment instruments most
frequently used in Europe, being credit payments, direct debits,
payment cards and euro cash. The migration of credit payments
to SEPA compliant was successfully concluded for most of the
aforementioned payments. The processing of special payment
orders and direct approvals through the processing centre was
eliminated, with the special payment order and the BN02 order
being entirely replaced by the new UPN payment order. In 2011
the Bank also prepared to migrate direct debits. For the purposes
of migrating the direct debit authorisations, all mandatory testing
was completed.
26
6.4 Shareholder information
The Bank’s equity comprises share capital, share premium, revaluation reserve, profit reserves and net profit, while own shares decrease it. In 2011 the equity decreased by EUR 18,593 thousand to amount to EUR 181,333 thousand at the end of the year.
During the year the Bank did not acquire or dispose of own shares. As at 31 December 2011 it held 251 regular own share in an amount
of EUR 31 thousand in its portfolio, representing in total only 0.05% of its share capital. The Bank did not hold any indirectly acquired
own shares, while 1,354 shares were pledged as security.
Equity in 2011 is shown in the table below:
Equity
2011
Str.
2010
Str.
Change
Index
1
2
3
4
5=1-3
6=1:3
Share capital
16,980
9
16,980
7
-
100
Share premium
51,380
28
51,380
26
-
100
Revaluation reserve
Profit reserves
Treasury shares
1,284
1
3,971
2
(2,687)
32
126,595
70
125,376
63
1,219
101
(31)
-
(31)
-
-
100
Profit for the year
(14,875)
(8)
2,250
1
(17,125)
(661)
Total
181,333
100
199,926
100
(18,593)
91
The share capital of the Bank in the Group comprises 508,629 no par value shares after the increase of capital from approved capital
completed in 2008. Changes in 2011 pertain to the net loss for the year, the fluctuation of the revaluation reserve and the distribution
of profit for 2010. The revaluation reserve decreased by EUR 2,687 thousand to EUR 1,284 thousand in 2011 due to the valuation of
most available for sale securities to a lower fair value. After the Meeting of Shareholders in May, the Bank paid dividends for 2010 totalling EUR 1,068 thousand, with the remaining distributable profit for 2010 having been allocated to profit reserves. Unpaid dividends
from previous years were also transferred to profit reserves in a total of EUR 37 thousand. 2011 saw a net loss in an amount of EUR
14,875 thousand, reducing the Bank’s capital.
The Group equity end 2011 amounted to EUR 182,169 thousand exceeding the Bank equity by EUR 836 thousand, with EUR 162 thousand of the figure pertaining to the share premium, EUR 614 thousand pertaining to the revaluation reserve and net profit representing
EUR 60 thousand.
The book value of the Bank’s share amounted to EUR 357 as at 31 December 2011 and was the same for regular and preference shares.
More detailed information on the structure of share capital and the rights and obligations based on the shares of an individual class
are shown in Chapter I. 10.2.9 of this annual report.
End 2011 the share register of the Bank showed 704 shareholders, 220 of which were corporates while 484 were private individuals.
Nova Ljubljanska banka remains the Bank’s largest shareholder, holding a 40.99% ownership share and a 49.42% share of the voting
rights end of 2011.
The following companies represent the Bank’s 10 largest shareholders:
10 largest shareholders as at 31 December 2011
Nova Ljubljanska banka d.d. Ljubljana
Slovenska odškodninska družba d.d. Ljubljana
- in %
Ownership share
40.99
9.36
Vzajemni sklad NFD 1 Delniški
9.21
Abanka Vipa d.d. Ljubljana
4.00
Unior d.d. Zreče
3.88
Zavarovalnica Triglav d.d. Ljubljana in Kritni sklad
3.75
Nova Kreditna banka Maribor d.d. Maribor
2.67
Juteks d.d. Žalec
2.43
Opus Invest d.o.o. Velenje
1.79
Polzela d.d. Polzela
1.53
Total
79.61
27
6.5 Assuming and managing banking risks
In its operations the Bank is exposed to a number of different
risks, which is why it developed a number of different procedures
and methods for their management. The quality of assessing all
risk types and responding to them in a timely manner as well
as decreasing exposure to risk are important factors for the
attainment of the Bank’s strategic goals. It has prepared a strategy
of assuming and managing risk together with nine policies, which
feature detailed descriptions of procedures in connection with
identifying, measuring or assessing, managing and monitoring
risk. The strategy and policies of assuming and managing risk
are updated annually, whereby environmental conditions and
their effect on the Bank’s operations are taken into consideration
as well as the newly acquired experience and know-how in the
area of risk management. The Bank’s largest exposure pertains
to credit risk, followed by liquidity and capital risk, profitability
risk, market, operational, strategic and interest rate risk as well as
reputation risk.
The problems faced by the domestic economy and the uncertain
conditions in the European financial markets and economies
further impact the deterioration of the credit portfolio. With
the number of insolvency proceedings increasing and with
rising unemployment in 2011, the share of defaulters and nonperforming assets increased also. An economic recovery is not
yet expected in 2012, which is why the Bank will continue to
implement the measures to mitigate the negative effect of the
crisis (regular monitoring of debtor operations and their rating,
active recovery of receivables due, stricter lending conditions,
acquiring additional collateral, granting new loans to financially
stable companies and financing investments in core business,
granting housing loans, etc.). It will also continue to follow the
strategy of maximizing diversification of its credit portfolio and
reducing exposure individual debtors and groups of related
parties all the while limiting investments in sectors and regions it
estimates as high risk.
The following includes definitions of individual banking risk types.
Market risk
Credit risk
Credit risk, representing the risk of loss resulting from a debtor's
inability to meet its obligation to the Bank, is considered one of
the most important banking risks.
The aim of assuming and managing credit risk is for the Bank to
ensure up-to-date management and assessment of debtor risk or
the risk related with investments and the credit portfolio. The Bank
measures the risk associated with a debtor prior to granting a loan
as accurately as possible and measures the exposure to credit risk
for the entire duration of the credit relationship thereafter. The
Bank directs investments toward debtors with a high rating and
toward less risky sectors and regions. It builds the risk associated
with the investment into the interest rate and ensures the best
possible collateral. The Bank limits portfolio concentration by
setting up limits toward debtors or toward groups of related
entities, by setting limits in connection with portfolio structure
(according to sector, region, type of transaction, activity). Most of
the transactions are entered into within the Republic of Slovenia,
with treasury transactions and low risk investments being
performed in other European Union members, while selectively
entering the SEE region with corporate lending activities. The
Bank has set up a system of early increased credit risk detection
and is actively working on recovery of receivables past due. In
the event of objective evidence on increased credit risk, the Bank
assesses loss from credit risk and recognizes impairment charges
and provisions in line with international financial reporting
standards, while ensuring their adequacy on an ongoing basis
later on.
The Bank calculates credit risk capital requirements using the
standardised approach. It also calculates an internal assessment
of capital requirements to cover for unexpected loss from credit
risk on a quarterly basis. It also estimates the assessed internal
capital requirements based on external factors and performs
stress tests, while also measuring the effect extraordinary,
but probable, events have on income and the Bank’s financial
position.
In its operations the Bank assumes market risk, being the risk of a
change in the fair value of financial instruments due to the change
in risk factors, namely interest rates, currency rates and financial
instrument prices. The most significant risk type within market
risk is positional risk in equity and debt financial instruments and
derivatives. Exposure to currency risk is low.
In trading with financial instruments the Bank is predominantly
active in the Slovene financial market, the European Union
(securities transactions with prime banks and sovereigns) and,
to a lesser extent, in other low risk countries (investment-grade
countries). The Bank defines investments and trading in financial
instruments by applying limits to a number of different factors
(according to issuer, transaction type, region, etc.), which the
Bank constantly adjusts to take into account the conditions in the
financial markets and the Bank’s business strategy. Additionally, it
has also adopted stop-loss limits.
The Bank enters into transactions with foreign currency and
interest rate derivatives. Its basic policy in connection with
derivatives trading is entering into transactions for the purpose
of hedging own positions and client positions, whereby the latter
transactions are hedged with counter positions. Transactions are
entered into with prime foreign banks.
In relation to foreign currency risk, the Bank’s policy is that of a
closed position across individual foreign currencies. Managing the
open currency positions is performed through prompt transactions
and with the use of foreign currency derivatives in line with the
limits set. Limits are low and are meant for the management of
currency open positions within the scope of regular operations,
not intended for speculative trading.
The Bank calculates market risk capital requirements using the
standardised approach. At the same time it also calculates capital
requirements with the use of advanced methods such as the
statistical method of value-at-risk (VaR). Additionally, it calculates
the internal estimated capital requirement to cover for unexpected
28
loss from market risk by using the value-at-risk method (VaR) and
performs stress tests. It also measures the effect of extraordinary,
but probable, events on income and the financial position of the
Bank.
By continuously adapting the system of limits to cope with the
uncertain conditions in the financial markets and by implementing
the investment policies aimed at decreasing equity holdings and at
channelling investments into prime debt instruments, the Bank is
decreasing its exposure to credit risk.
Interest rate risk
The risk of change in interest rates pertains to the exposure of the
Bank’s financial balances to unfavourable fluctuations in interest
rate. It affects the Bank’s earnings and the economic value of its
equity.
The Bank analyses exposure to interest rate risk using the method
of interest rate gaps, calculating the effects that changes in interest
rates have on net interest income. It also analyses interest rate risk
with the use of the duration model, where it assesses the effect that
of change in interest rates on the economic value of equity.
In relation to interest rate risk the Bank follows the policy of a
closed net banking book position, meaning that the objective is to
minimise the amount of interest rate gaps. The interest rate risk
associated with the trading book is analysed within the framework
of market risk.
In the event that the implementation of measures to decrease
interest risk is required, the Bank uses traditional balance sheet
transactions, such as lending, securities purchases, deposit
taking, issue of securities, etc. In addition to the aforementioned
transactions, the Bank also enters into agreements based on interest
derivatives to hedge individual transactions and close interest rate
gaps. It does not enter into interest derivative transactions for
speculative purposes.
The Bank will continue to close interest rate gaps in 2012 by
using on-balance sheet instruments and by entering into interest
derivatives, which will allow it to decrease the impact on the
income statement resulting from a change in the fair value of an
interest derivative with the use of hedge accounting.
On a quarterly basis the Bank calculates internal capital requirement
estimates to cover for unexpected loss from banking book interest
rate risk in line with internal methodologies.
Liquidity risk
Liquidity risk is the risk type that includes the risk of providing
liquidity funding, when the Bank is unable to settle all of its due
obligations or is forced to obtain sources of liquidity at significantly
higher costs. It also includes market liquidity risk, pertaining
to positions in financial instruments, which cannot be sold or
replaced in a short period of time without significantly affecting the
market price. From the aspect of time liquidity risk management
is separated into operational liquidity management and structural
liquidity management.
The Bank provides for efficient management of operational and
structural liquidity, representing the management of cash flows
for a chosen time interval while taking into consideration the
liquidity of available assets and the stability of asset sources. Based
on simulations done in relation to the maturity of asset sources
on the one side and the maturity of assets and the categorization
of assets according to their capacity for prompt realization on the
other, limits pertaining to the largest open liquidity position have
been set. In connection with structural liquidity the Bank has
defined target value indicators and limits for the management
of liquidity risk. Structural liquidity limits have been set up so
as to ensure the required reserves on the basis of structural
liquidity surpluses in accordance with the Decision on minimal
requirements for ensuring adequate liquidity for banks and
savings banks. Based on scenarios pertaining to extraordinary
liquidity conditions, the Bank determined the structure of the
liquidity reserve and set its minimum amount, while also defining
the contingency plan for its actions at the first sign of a liquidity
crisis. By employing a system of limits, the Bank is also following
its goal of maximizing diversification of funding sources.
The Bank calculates the internal estimate of capital requirements
to cover for unexpected loss from liquidity risk in line with its
internal methodologies on a quarterly basis. In doing so it takes
into account stress test results.
In line with its specific characteristic the Bank utilises the
conservative approach to liquidity risk management, which is
reflected through its system of limits, the spectrum and size of
banking book investments in securities and in the methodology
of monitoring liquidity flows.
In 2011 the Bank managed liquidity risk in line with adopted
policies, however the conditions in relation to accessing liquidity
changed. The Bank did not have any problem in relation to
operational liquidity, as it provided for sufficient liquidity reserves
(highly liquid assets, which are also eligible to be pledged as
collateral pertaining to obligations toward the European Central
Bank and in the interbank repo market) to manage the required
level of operational liquidity.
More of its activities were aimed at providing adequate
diversification of liquidity sources, which allowed it to follow the
goal of an optimal structure of these while emphasizing stable
liquidity sources. It also followed its objective of an adequate
ratio of loans to the non-banking sector with deposits from the
non-banking sector.
In 2011 the Bank started with preparations for the calculation of
the value of the Liquidity Coverage Ratio (the LCR) as defined by
Basel III. It will continue to intensively perform these activities in
2012. It also prepared a simulation of the LCR ratio calculation
and ascertained that the amount of its high-quality liquid assets
exceed the net liquidity outflows in extreme liquidity conditions
(30 days), which is why it will continue to work toward ensuring
an adequate amount of top-quality liquid assets in relation to the
expected liquidity inflows and outflows.
29
Operational risk
Operational risk pertains to the risk of loss as a consequence of
inadequate or unsuccessful execution of internal processes, the
actions of individual persons or the functioning of systems or due
to external factors.
Due to its fast development and the characteristics of the financial
system, the importance of operational risk is growing. It requires
the setting up of a solid and reliable system for assuming and
managing this risk type. In defining the way it assumes and
manages operational risk, the Bank takes into consideration its
size and development as well as the nature and complexity of
its business activities. It has prepared a comprehensive review of
its potential exposure to operational risk according to business
processes, which is based on exposure according to category of
operational risk, the frequency of an event occurring and the risk
impacts.
The Bank has prepared a list of operational processes, which
served as basis for the preparation of a profile of potential exposure
to operational risk according to individual processes, for the Bank
as a whole, for the preparation of a catalogue of all operational risk
it identifies and for the preparation of a matrix of links between
organisational units in the business processes.
It calculates operational risk capital requirements according
to the basic indicator approach. The calculation of the internal
capital assessment and the capital requirements to cover for
unexpected loss from operational risk is done in line with adopted
methodologies on a quarterly basis.
Continuous operation of the Bank is regulated by the rulebook
defining procedures, activities and processes of operation and
organisation in the event of a crisis, which are part of operational
risk. The purpose of the plan for continuous operation is to
ensure the safety of employees and clients and to set up smooth
operation of key business processes in the shortest possible time
at the existing and the alternate location. All business processes
performed by the Bank have plans in place for their performance
in the event of non-functional IT. The goal of organised
operations is to reduce operating and financial damage, which
would materialise should activities and procedures defined in the
continuous operation plans for the Bank and in the recovery plan
be suspended.
With an aim to provide for safe and profitable operations, the Bank
maintains an adequate level of capital at all times along with its
appropriate structure. With the intention of assessing the capacity
for assuming risk, the Bank prepares a plan of movement in
capital and capital requirements once a year as well as the plan
of the internal capital assessment and capital requirements for
a period of three years in line with its annual business plan and
the three-year development plan, which shows the fluctuations
of capital adequacy ratios in accordance with the planned
volume of operations. In the event that planned fluctuations of
capital adequacy ratios deviate from target values, the Bank will
commence activities to decrease exposure to risk or increase
regulatory capital.
As a matter of priority the Bank increases capital with an adequate
dividend policy and allocation of net profit to other profit reserves.
Thus it ensures an adequate amount of capital pertaining to the
volume and types of services it provides and in relation to the
risks it is exposed to while performing these services. Within the
framework of capital structure and quality, the Bank provides
continuity, availability for the coverage of loss and legislative
subordination to the right of investors and other creditors. The
Bank also assesses the ownership structure, as a responsible
dividend policy defined by the owners is essential from the aspect
of capital risk, as well as the capital structure and quality.
In 2011 a proposal of the new capital directive CRD IV was
published in response to Basel III, which provides the framework
for amending and supplementing the legislation to improve the
resilience of banks to risk. New legislation will come into effect
with 2013. Key requirements of the new capital regulations pertain
to increased amounts and quality of capital, the harmonisation
of regulatory adjustments and detailed disclosures. The major
features of the new regulation that will affect the calculation of
Bank capital, relate to more stringent criteria on the inclusion of
hybrid instruments in the calculation of capital, the consideration
of unrealised profits and losses from securities at fair value and the
introduction of capital buffers. A transitional period is provided for
in relation to the introduction of these changes.
The Bank started to prepare for the changes in the capital
regulations in 2011. To detect the need for a potentially required
increase in capital in the coming years it prepared simulations of
capital and capital ratios in line with the provisions of the new
capital regulations.
Capital and capital adequacy
In its operations the Bank must always have at its disposal an
adequate amount of capital, which depends on the volume
and types of services the Bank provides and on its strategy.
An adequate capital base represents a contingency reserve
pertaining to different risk types, which the Bank is exposed
to in its operations. To cover unexpected loss, the capital of
any bank must always amount to at least the sum of the capital
requirements for the credit, market and operational risk, while
capital adequacy, representing the ratio between capital and the
sum of risk-adjusted items, must always amount to at least 8%. The
management of the capital and capital adequacy within the Bank
is based on adopted policies of assuming and managing capital
risk and in line with annual business principles, also expressed in
the need for adequate regulatory capital.
Profitability risk
Profitability risk pertains to an inadequate structure or diversification
of income or to the Bank’s inability to provide ample and constant
levels of profitability. Underlying documentation for profitability
risk management within the Bank is based on adopted policies of
assuming and managing profitability risk.
The methodology of assessing profitability risk is based on
determining the adequacy of the structure of the financial position,
the income statement items, the interest margin, the return on
assets and the capital and cost efficiency. The profitability risk
management methodology includes measures and rules of
assuming, reducing, dispersing, transferring and avoiding risk,
which the Bank has identified and measured.
30
The Bank prepares monthly quantitative and qualitative analyses
of the statement of financial position, the income statement, the
statement of comprehensive income and the statement of cash
flows.
To assess the adequacy of internal capital the Bank calculates the
internal estimate of capital requirements to cover for unexpected
loss from profitability risk on a quarterly basis in line with the
adopted methodology.
Strategic risk
Strategic risk pertains to the risk of loss from erroneous operational
decisions, the inappropriate implementation of decisions made
or due to too low responsiveness to the changes in the operating
environment. Managing strategic risk is based on the adopted
policies of assuming and managing strategic risk.
The management of strategic risk within the Bank is based on
the definition of own vision, the clarity and conservative nature
of strategy, on ensuring correct strategic policies and the required
capital and personnel as well as technology to support the
execution of strategic goals. Regular assessment of the elements
of strategic risk ensures that the Bank implements high standards
of internal culture and the corporate value system as well as a clear
strategy, which is adequately supported with required calculations.
To this aim the Bank prepares framework strategic documents and
regularly verifies their implementation, which allows it to adapt to
the changes in the internal and external business environments on
time.
In line with its risk profile the Bank did not calculate any capital
requirements in 2011.
Reputation risk
Reputation risk represents the risk of loss due to a negative image,
which the Bank has in the eyes of its clients, business partners,
owners, investors and supervisors. This image impacts the
establishment of new business relationships and services as well as
the managing of existing ones. Negative effects may include loss
of revenue, a deterioration of operational results, a decrease in at
sight deposits and other funding sources, a decline in the number
of clients, drop of share value, etc.
ICAAP process
In line with the new Basel II capital accord the Bank has set up a
process of assessing adequate internal capital (the ICAAP process),
which:
- is based on the identification, measurement and assessment
of risk, the preparation of an aggregate risk estimate and the
monitoring of significant risk types;
- allows for ensuring adequate internal capital levels in relation to
the risk profile of the Bank;
- is appropriately included in the management process (decisionmaking, risk management, etc.).
For the purpose of assessing internal capital the Bank calculates
internal capital requirement estimates for risks it deems significant
on the basis of the risk profile or it determines through the
procedure of risk identification, measurement or assessment,
management and monitoring, so that these might significantly
impact its operations, thus requiring it to ensure appropriate
capital levels. The Bank calculates the internal capital assessment
and capital requirements on a quarterly basis, with the calculation
being confirmed at the Risk Committee and considered at ALCO.
In 2011 the Bank continued to perform a number of activities in
relation to the implementation of the ICAAP process. It developed
new methodologies and perfected existing methodologies for the
calculation of internal capital requirement estimates, prepared and
implemented stress tests, calculated the amount of internal capital
assessment on a quarterly basis and planned an internal capital
estimate as well as the internal capital requirements for the coming
five-year period.
The Bank re-assessed the level of the exposure to individual
risk types in major business lines and the quality of the control
environment. It calculated the Bank’s risk profile and prepared a
risk matrix. Based on the risk profile the Bank’s exposure to risk is
acceptable, with it being most exposed to credit, liquidity, capital,
profitability, market, operational, strategic and interest rate risk
as well as profitability risk. The calculated risk profile minimally
exceeds the desired risk profile, as defined in the Strategy of
assuming and managing risk, it does however still allow for the
Bank’s stable and safe operations in the ordinary and extraordinary
course of business.
The Bank manages reputation risk by ensuring safe and stable
high quality operations, by having the Management Board and
Supervisory Board conduct themselves with in accordance
with professional prudence and the highest ethical standards of
management, by providing for transparent operations, monitoring
its media image, systematically communicating with the varied
public groups, managing its human resources with utmost care
and by being socially responsible.
The Bank’s business policy has been set up so as to ensure that at
achievement of the goals set, the image it has will not represent a
greater element of risk than usual. The Bank pays special attention
to communication at special or extraordinary events.
31
6.6 Development
The Bank provides its clients with universal banking services.
It has taken care of its further development during the entire course of its operation by investing in efficient IT support systems,
its business network and in its human resource potential.
Human resources
In 2011 the number of employees in the Bank decreased from
538 to a total of 530, with the average complement over the past
year amounting to 535 employees. During the year there were 21
employment terminations and 13 new employees were taken on.
At the end of the year 11 employees were employed on temporary employment contracts.
Retail and internal organisation
The Bank only has business units in Slovenia. Through a welldeveloped business network it operates in all major towns of the
Celje region as well as in Ljubljana, being the financial centre of
Slovenia and has opened a business unit in Maribor in September 2009 as well as one in Koper in July 2010. Within 8 business
units operate 8 branch offices with 22 agencies for individuals
and 6 branch offices for corporates and private individuals. The
Bank follows modern trends and is adapting to individual client
needs by investing in its retail network. Based on an analysis of
the volume of operations the Bank closed a branch office in Celje
in 2011 and the Vitanje agency in 2012. It also implemented some
organisational changes in 2011. It reorganised its Main Branch in
Ljubljana, the Public Relations Department and Secretarial Services Department as well as electronic banking, the coordination
of inventory-taking and the monitoring of recovery activities.
The Subsidiary does not have any subsidiaries or affiliates.
Investments
The Bank earmarked EUR 1,594 thousand for investments in 2011.
Most of the funds were used for the ATM upgrades, POS terminal purchases and signal safety devices, application upgrades,
licenses, external advisory services pertaining to the setting up
of a data warehouse, the upgrading of retail IT and for equipment
purchases.
IT support
Most of the activity in IT support pertained to the adjustments
and upgrading of software related to the migration of card operations to the eXcat within the Activa system, the streamlining
of operations and to providing alternative solutions regarding IT
support in the area of retail banking. Part of the software adjustments was related to legal requirements, the changes in the environment and the provision of sufficient hardware and software
capacities to support increased volumes of payment transactions.
The development of a data warehouse, which the Bank started
in line with the recommendations of the Bank of Slovenia as early as 2005, was completed in January 2011, with its upgrading
continuing in 2011 due to the advantages that it brings in terms
of improved quality of reporting and a better management of
operations.
In 2011 the Bank also started a partial renovation of its own IT
system, under which configurations of hardware and software
were selected, a methodology for the management and supervision of projects was prepared, with basic infrastructure of new
application support under construction. A development environment is being prepared, the process however is comprehensive
and lengthy due to its complexity.
The structure of employees by age shows the group of 51 to 55
years was dominant, followed by the group of 46 to 50 years of
age. Younger employees, aged up to 30 years represented only
3.8%, which points to a relatively high average age at the bank,
which was 44.8 years of age in 2011.
The educational structure of employees improved at the higher
education and master’s levels in line with the personnel policy if
compared with 2010, namely by 2.8%. The share of employees
with at least university level education was 58.6%, while the secondary education group held a 38.5% share.
The average work time efficiency was 80.2%, with absenteeism
predominantly coming from use of annual leave.
Achievement of strategic goals requires investments focused in
the development of employee skills and abilities. The Bank subsequently manages the quality of employee education. In 2011
employees attended 198 training events in all areas of banking
operations. The Bank also encourages part-time study, which is
why it has 29 education agreements in place with employees,
17 of those are acquiring university level education, while 12 are
attending specialist studies and master’s degree studies.
The subsidiary company employed 4 people at the end of 2011.
In addition to its regular employees the company also cooperates
with external appraisers, is in a contractual relationship with a
real-estate broker and has outsourced its accounting. One of the
employees in the subsidiary company holds a Master's Degree
in Economics, two have university degrees in finance and architecture, while another holds a high school diploma. The head of
projects and the head of property sales both have acquired individual licenses in the field construction, real estate operations
and real estate appraisal.
6.7 Social responsibility
The Bank has successfully been operating for over 145 years,
continuously improving its operations in every way. The Bank’s
Management Board continues to operate with due professional
diligence, manages the Bank with prudence, takes care of investor interests and fulfils liabilities toward shareholders, the Supervisory Board and the general public, all the while actively and
transparently communicating with the interested public as well
as operating within the framework of established risk management mechanisms. All of the above is done with the purpose of
sustainable long-term development and with an aim of increasing the Bank’s reputation.
32
It is aware of the fact that its continued efficiency and success
depend on the support of the environment and the trust given to it
by different groups of interest. Therefore in line with its vision and
strategy, the Bank operates with a high degree of social responsibility to the local community and the wider social and economic
environment, its employees, all business partners and the natural
environment.
It supports sports and culture through sponsorship, takes part in
a number of charity events and is actively engaged in community
and social activities. It is also an active partner in social and welfare activities.
The Bank enables it business partners to invest in environmental
projects, the construction of treatment plants, the implementation of welfare and socially responsible projects. It facilitates the
procurement of environmentally safe materials, waste separation,
collects waste paper and cartridges and uses a centrally controlled
thermal heating to promote rational use of energy.
In its operations it show a special concern for underprivileged customer classes, as it offers special benefits to seniors, students, to
humanitarian and other organisations.
6.8 Internal Audit Department operations
The operations performed by the Internal Audit are consistent with
the internal audit standards of professional practice, the code of
internal auditing principles and the internal auditor’s professional
ethics code. In its operations the service also takes into account
the provisions of the Banking Act pertaining to internal auditing
and the Rulebook on the Operation of the Internal Audit. It is an
independent department, which reports directly to the Management Board, at the Division General Manager level and the branch
manager level. The aforementioned gives its employees the possibility to give opinions, assessments and recommendations while
relying on internationally established professional internal audit
standards and to operate independently of other parts of the Bank.
The two basic planning documents of the Internal Audit comprise
the three-year strategic plan and the annual operational program,
which the Management Board adopts annually, with approval given by the Supervisory Board, after due discussion at the Audit
Committee. Both documents are based on the Bank’s risk profile,
its annual and development plan, the fundamental characteristics
of the environment in which it operates, while taking into consideration the requirements by the Supervisory Board on compulsory
internal auditing of certain operational areas.
The planned activities of the service are detailed in semi-annual
operational plans, which the Management Board adopts. To monitor the Internal Audit’s activities on an ongoing basis the Management Board and the Supervisory Board endorse semi-annual
reports on its activities, showing the significant activities performed by it, as well as an overview of issued and implemented recommendations. The reports are also considered at the Supervisory Board’s advisory body, the Audit Committee. In line with the
legislation the Supervisory Board is regularly kept appraised of the
audits conducted by external supervisory.
The assignments of Internal Audit are defined by the legislation
and pertain foremost to quality assessment in connection with
the management of all types of risk (including the setting up of
an adequate system of internal controls) and the monitoring of
compliance of the Bank’s operations with regulations and internal
rules as well as the principles of rational operations. A framework
system for comprehensive monitoring of implementation of the
annual operational program has been set up comparing the plan
and execution of internal audits. The Bank’s Management Board is
made aware of the realization of all recommendations after internal auditing has been performed on at least two levels: first after
every internal audit has been completed and after that a comprehensive annual report on the implementation of all the recommendations is given. The Internal Audit also coordinates activities
in connection with the selection of the external auditors (through
the Management Board, the Audit Committee and the Supervisory
Board).
The annual operational program provided for audits of the Bank’s
23 business areas and the completion of 5 internal audits from
2010, with the assumption there would be no large scale extraordinary assignments (a total of 28 internal audits). Actually, 22 planned internal audits were completed by end January 2011, with 2
extraordinary audits having been performed (a total of 24 audits);
5 internal audits were completed by end of March 2012 and one
to be completed in the beginning of 2012 in accordance with the
decision of the Management Board. The Internal Audit prepared 41
expert opinions pertaining to different areas of operation. There
were a total of 65 instances where internal audits were performed
and expert advice was given in 2011, 6 are still running.
The most significant areas of operation, which were audited in
2011 include: credit risk management, compliance with limits set
pertaining to securities, management quality of continuous IT
system operations, management quality of ATM and card operations, compliance of the Bank’s operations in relation to the changes in legislation, adequate usage of acquired funding.
In all internal audits and reviews special emphasis was given to:
identification of procedures built-in for the management of risk,
assessing the current situation, the quality of internal control
systems, compliance with the legislation and internal rules, the
possibilities for improvement of existing procedures, all aimed at
further raising the quality of the Bank’s operations. Special attention is directed at the areas subject to new regulations (external or
internal), frequently in cooperation with the Compliance Department. The operations of the Subsidiary are usually audited every
three years.
All of the Internal Audit’s assignments described were performed
in 2010 by five employees (the figure includes the department’s
General Manager). One of the employees is a certified internal
auditor, another is a certified information systems auditor (CISA)
and is a Master of Science. All the employees are educated at
the university level at least. Additionally, one employee holds an
insurance broker licence and three employees hold the European
Banking Certificate. One of the employees continued with a postgraduate Master’s studies in 2011. As in previous years 2011 saw
education and training of employees remain a constant mission,
with additional knowledge attained in internal auditing, banking
operations, IT skills, risk management and corporate governance.
33
7 MANAGING BODIES OF THE BANK
GENERAL MEETING OF SHAREHOLDERS
Audit Committee
SUPERVISORY BOARD
Remuneration Committee
Credit Committee
MANAGEMENT BOARD
Liquidity Committee
Management Committee
Organisational units
Assets and Liabilities
Committee - ALCO
IT Committee
Other committees and councils
34
8 ORGANIZATIONAL STRUCTURE OF THE BANK
MANAGEMENT BOARD
Member of the Management Board
President & CEO
Board & Deputy CEO
Aleksander Vozel, M.Sc.
Davorin Leskovar
ACCOUNTING
DIVISION
IT DIVISION
EXECUTIVE DIRECTOR
EXECUTIVE DIRECTOR
LEGAL AFFAIRS, DEBT
ENFORCEMENT AND
COMPLIANCE
OPERATIONS
DIVISION
CORPORATE
DIVISION
FINANCIAL MARKETS
DIVISON
MAIN BRANCH
LJUBLJANA
RETAIL DIVISION
RISK
MANAGEMENT
DIVISION
GENERAL AFFAIRS
PAYMENTS AND
OPERATIONAL
SUPPORT DIVISION
PERSONNEL AND
ORGANISATIONAL
SERVICES
INTERNAL AUDIT
CELJE
BUSINESS UNIT
SLOVENSKE KONJICE
BUSINESS UNIT
ŽALEC
BUSINESS UNIT
ŠENTJUR
BUSINESS UNIT
LAŠKO
BUSINESS UNIT
ROGAŠKA SLATINA
BUSINESS UNIT
MARIBOR
BUSINESS UNIT
KOPER
BUSINESS UNIT
35
9 STATEMENT OF CORPORATE GOVERNANCE
The Bank’s Corporate Governance statement is prepared in line
with the provisions of the Companies Act (the ZGD-1) and pertains to the year 2011. It includes the Statement on compliance
with the Corporate Governance Code made by the Management
Board and the Supervisory Board under item 10.1 and additional
Notes in accordance with Paragraphs 5 and 6 of Article 70 of the
Companies Act under item 10.2.
Clause 5.5
9.1 Statement of the Banka Celje d.d.,
Management Board and Supervisory
Board on compliance with the
Corporate Governance Code
Clause 5.7
As a public company Banka Celje, d.d., which has bonds listed on
the Ljubljana Stock Exchange d.d., is compliant with the Banking
Act (the ZBan-1) and the Companies Act as well as the Market in
Financial Instruments Act (the ZTFI) and the Rules of the Ljubljana Stock Exchange and with all the additional general rules, dealing with topics that are dealt with in the Corporate Governance
Code, which is in the public domain, attainable at the Ljubljana
Stock Exchange website at http://www.ljse.si/ under (''za izdajatelje/predpisi, brošure'').
Banka Celje, d.d., Celje complies with the Corporate Governance Code dated 8 December 2009 (the Code) with the exception
of some deviations or particularities, explained under individual
item of the Code below.
The Posest, d.o.o., as a non-public company, is not subject to any
code in its operations.
Clause 1
The Bank's goals are defined in its annual and development plan,
both of which are approved by the Supervisory Board and are not
separately defined in its Articles of Association.
Clauses 2, 2.1 and 2.2
As of yet the Bank has not prepared or adopted a Bank Management Policy as an independent document, rather this area is
regulated with different internal documents, such as prescribed
by the Bank of Slovenia, the ZGD-1, the ZTFI and other sectorspecific legislation.
Clause 4.2
The Bank would like to see large and institutional shareholders
inform the public with their management policies, this decision
however is up to them.
The proposal to the General Meeting of Shareholders for the nomination of Supervisory Board members includes all of the legally required data, the rest is public domain data.
Clause 5.6
The Bank, in line with general practice, as a rule, nominates the
members of the Supervisory Board collectively.
The Supervisory Board sets the policy of remuneration of the Management Board.
Clause 5.8
The General Meeting of Shareholders of Banka Celje decides on
the use of distributable profit separately, however it decides on
the discharge of the Management Board and the Supervisory Board by single unified vote.
Clause 5.9
Financial statements form part of the annual report, which together with the auditor’s opinion is presented to the General Meeting of Shareholders. A representative of the Bank’s authorised
auditor is not invited to the Meeting. Were however the Meeting
authorised to adopt the annual financial statements, a representative of the authorised auditor would be invited.
Clause 8
Statements with which the Supervisory Board members would
take a position on the fulfilment of each of the criteria pertaining
to independence under item C.3 of Supplement C has not been
signed as of yet, nor has there been any such announcement
made on the website. In the future the Bank will endeavour to
comply with the recommendation on this matter.
Clause 8.9
The Supervisory Board of the company has not formed a Personnel Committee nor any other body, which would set the criteria
and recommendations pertaining to the nomination of the Management Board in advance. The Bank will deal with this option
in the future also.
Clause 8.12
In its report the Supervisory Board also includes all of the requirements from the decision of the Bank of Slovenia pertaining to the
due care and professional diligence of Management Board and
Supervisory Board members and endeavours to include as much
information as possible to adequately represent its activities during the year. In the future the recommendations from Clause
8.12 of the Code will be observed as much as possible.
Clause 5.2 (second paragraph)
The Bank does not publish data on the costs it incurred from the
collection of powers of attorney, these are included in the cost of
the organisation and execution of the annual General Meeting of
Shareholders.
Clause 11
In its operations until now the Supervisory Board has not yet nominated a secretary. In accordance with consensus between the
Management Board and the Supervisory Board this job is performed by the expert department of the company.
Clause 5.4
The Bank’s shares are currently not listed on the stock exchange.
36
Clause 12.2
The Bank will assess the option of a proposal to introduce reimbursement to the Supervisory Board members with a decision
taken at the General Meeting of Shareholders in line with the stipulations from the Code.
Clause 13.1
The Commission for Term Appointment finished its term on the
day the new Supervisory Board was named.
Clauses 16.5 and 16.6
The Bank has no option plan or comparable financial instruments
in place which would provide for variable reimbursement of the
Management Board members.
Clause 17.2
Statements on compliance with individual items from supplement C.3 of Supplement C (Conflict of Interest) of the Code have
not been signed by Supervisory Board members at replacement
or at each change, nor were these presented to the Supervisory
Board. Supervisory Board members were already signing Statements on Conflict of Interest pertaining to the Code previously in
effect. The Bank will endeavour to comply with this recommendation in the future.
Clause 20.2
Individual areas of communication have been regulated by individual internal acts until now, however the Bank will endeavour
to comply with this recommendation in the future.
Clause 20.3
The Bank has not special internal act in place in connection with
the limitations and disclosures pertaining to treasury share transactions, as it considers this to be sufficiently regulated by the
existing legislation.
Clause 20.4
In making significant shareholder and public announcements the
Bank considers statutory time limits, which is why it does not
prepare a calendar of significant announcements. It will endeavour to comply with this recommendation in the future.
Clause 22.2
The company does not prepare a separate sustainability report as
this area forms part of the annual report.
Clause 22.3
In line with the ZGD-1, the ZBan-1 and the ZTFI the Bank informs
the competent authorities on the acquisition of a qualifying share.
Clause 23
The Statement of Corporate Governance forms part of the annual
report, which is published on the Bank’s website.
9.2 Additional Notes in line with Paragraphs
5 and 6 of Article 70 of the ZGD-1
9.2.1 T he main characteristics of internal controls
and risk management in connection with
financial reporting
The Bank has always had a system of internal controls set up
during its operations, as it is the duty of the Bank's Management
Board to conduct its operations in a manor ensuring an adequate
risk management system in relation to all the business partners,
owners and supervisory institutions. The system of internal
controls is connected into a comprehensive whole in the sense
of an umbrella act, determining all of the dimensions of control
activities.
The internal control system at the Bank, must be set up in a way as
to provide adequate assurances on the following activities:
- the Bank's operations must be managed with great care and
conducted on the basis of the approved development plan as
well as the Bank's approved annual policies and financial plan
resulting in profitable operations,
- all operational activities, which have the potential to increase the
Bank's liabilities, must be approved by the authorized person,
with a segregation of responsibilities clearly defined,
- a ssets must be secured appropriately, receivables insured, liabilities monitored,
- a strategy and policies for risk management must be prepared,
special care must be given to the monitoring of the Bank's capital adequacy, liquidity and credit risk, interest rate and operational risk, profitability and market risk,
- a system for the prevention of loss due to irregularities, especially in connection with timely detection of fraud, abuse, anomalies or errors must be set up,
- the system of financial records needs to provide timely, reliable,
up-to-date and complete information,
- a system for the transmission of reliable, timely, up-to-date and
complete information for reporting to owners and external institutions must be set up,
- a supervised system for the introduction of new financial services and new banking products as well as entering new markets
needs to be provided for.
9.2.2 S ignificant direct and indirect ownership of the
Bank’s securites
Qualifying holdings, as defined by the law dealing with the market in financial instruments, in the Bank's equity are held by three
companies, namely:
- Nova Ljubljanska banka, holding 201,096 regular shares, thus
having a 49.42% share in the voting rights,
- NFD1 Investicijski sklad, holding 39,276 regular shares, thus having a 9.65% share in the voting rights and
- Slovenska odškodninska družba, holding 27,247 regular shares,
thus having a 6.70% share in the voting rights.
The voting rights of the Bank's other owners do not exceed the qualifying shares as defined by the act dealing with the market in financial
instruments.
37
9.2.3 H olders of securities ensuring special rights
of control
The Bank's shares do not give their holders any special rights of control.
9.2.4 Restrictions related to voting rights
The shareholder's voting right depends on the number of shares
held and is not limited to a certain share or a certain number of
votes.
The right to vote at the General Meeting of Shareholders is given
to shareholders holding registered shares with voting rights entered into the register at least 10 days prior to the General Meeting
of Shareholders and which remain so registered until the end to
the meeting.
The convenor of the General Meeting may restrict the voting rights of an individual shareholder, which acquired shares contrary
to the regulations.
Agreements, which, with the Bank's cooperation, would mean financial rights based on shares have been separated from ownership of the shares, do not exist.
9.2.5 The Bank's rules on:
- appointment and replacement of the
management or supervisory body members
- changes in the Articles of Association
The Bank's rules on appointment and replacement of the members
of its management or supervisory body and on the changes in the
Articles of Association are defined in the Banka Celje, d.d., Articles
of Association and in the Working Rules on the Operations of the
Banka Celje, d.d., Supervisory Board.
The Supervisory Board is appointed and discharged at the General
Meeting of the Bank's shareholders. To be appointed Supervisory
Board member one must fulfil membership conditions for bank
supervisory boards as defined by the Companies Act and the Banking Act.
Supervisory Board members are appointed for a period of 4 years
and may be re-appointed. The term for Supervisory Board members expires on the day of the General Meeting held in the fourth
year after appointment.
In the event of an early termination of appointment of Supervisory
Board members having been appointed at the General Meeting of
Shareholders, replacements are appointed at the following General
Meeting. The replacement is appointed until the end of the originally appointed member's term. Each member of the Supervisory
Board may resign prior to the expiry of their term on giving three
months notice. A written letter of resignation is to be sent to the
President of the Supervisory Board, in the event of resignation by
the President of the Supervisory Board it is to be sent to his deputy
and the Bank's Management Board.
At the General Meeting of Shareholders individual members of the
Supervisory Board or the Supervisory Board collectively may be
recalled early. Such a resolution shall be adopted with at least a
three-quarter majority of votes present at the Meeting.
Supervisory Board members appoint an Audit Committee, serving
as a body of the Supervisory Board.
The president and members of the Bank's Management Board are
appointed and discharged by the Supervisory Board. Only a candidate, fulfilling all the conditions for appointment as defined by the
Companies Act and the Banking Act may be appointed to the post
of president or member of the Management Board.
The President and Members of the Bank's Management Board are
appointed for a term of five years and may be re-appointed.
The President and Members of the Bank's Management Board
may be recalled early in line with the applicable legislation. Each
member of the Bank's Management Board may resign prior to the
expiry of their term on giving six months notice. A written letter of
resignation is to be sent to the President of the Supervisory Board.
The Articles of Association may be amended based on the decision made at the General Meeting of Shareholders, such a decision
having been adopted by a majority of at least three quarters of
votes present. Should an amendment of the Articles of Association
alter the existing ratio of the share classes to the detriment of one
of the classes, consent by the affected shareholders is required,
given by way of a special resolution.
The General Meeting of the Bank's shareholders may authorize the
Supervisory Board to amend the Articles of Association to harmonise the text with the adopted resolutions in effect.
9.2.6 Authorizations of the Management Board
Based on the amendment to the Articles of Association having
been entered into the Court's Companies Register on 28 May
2008 during a five year period following the entry the Management Board, under approval by the Bank's Supervisory Board,
is authorized to increase share capital by no more than EUR
7,045,952.26 (authorized capital) by issuing no more than 211,061
new shares, being 168,849 regular and 42,212 non-voting rights
shares.
The Bank may acquire and dispose of own shares in line with
the Companies Act. The Management Board decides on the conditions of the acquisition and disposal of own shares and must
report own share transactions at the General Meeting.
38
9.2.7 D ata on the activity of the General Meeting of
the Bank’s shareholders, its key responsibilities,
description of shareholder rights and how these
are exercised
The Bank's Management Board calls the Meeting of Shareholders.
It convenes at least once a year. The Supervisory Board calls the
Meeting in the following cases:
- if the Management Board does not call it at least once a year;
- if the Management Board does not call it upon request of the
minority as stipulated in the Articles of Association.
The General Meeting of Shareholders passes decisions on:
- the use of distributable profit and the discharge to the Management Board and Supervisory Board;
- the adoption of the annual report in cases as defined by the
Companies Act;
- the appointment and recall of Supervisory Board members;
- amendments to the Articles of Association;
- measures taken to increase or decrease capital;
- changes in status;
- the appointment of the auditor;
- authorization of the Management Board to acquire own shares
in accordance with the Companies Act;
- other matters within the scope of its competencies in accordance with the Companies Act the Banking Act.
Shareholders, holding 20% of the share capital in total, may
request, in writing, the General Meeting to be convened. Such a
request must include a reason for the Meeting to be convened and
the matter that the Meeting is to pass decision on. In such an event
the Management Board is required to call the Meeting no later than
5 weeks after receiving a written request.
Shareholders, holding 20% of the share capital collectively, may
request, in writing, for a certain item to be included in the agenda
of the General Meeting of Shareholders. The Bank's Management
Board must accede to such a request, if it includes a prepared proposition of a decision falling under the responsibilities of the General Meeting and if the request was made in writing three days
after the call of the General Meeting at the latest, so that the item
may be made public at least 10 days after the General Meeting
has been called in the publications as defined by the Articles of
Association.
9.2.8 Data on the composition and activities of
management and supervisory bodies and
their committees
The Supervisory Board monitors and supervises the management of
the Bank and its operations. It conducts its assignment in accordance
with the provisions of the statutory acts dealing with the operations
of banks and companies and in accordance with the Bank’s Articles of
Association. It was elected at the General Meeting of Shareholders in
May 2007 and acted in the following composition until 24 May 2011:
Alojz Jamnik as President, Tadej Tufek, M.Sc. as Vice President, Ivan
Ferme, Matej Narat, M.Sc., Borut Stanič, Štefan Špilak, Ph.D. and Bojan
Šrot as members. At the General Meeting of Shareholders on 24 May
new Supervisory Board members were elected: Jure Peljhan, M.Sc. as
President, Zvonko Ivanušič, M.Sc. as Vice President, Uroš Čufer, Ph.D.,
Melita Malgaj, Tomaž Subotič, Ph.D., Bojan Šrot, Zdenko Zanoški, Ph.D.
In 2008 the Supervisory Board of Banka Celje, d.d., established a
consulting body, namely the Audit Committee of Banka Celje, d.d.,
with the following members: Borut Stanič, President, Tadej Tufek, M.
Sc., Member and Marina Poboljšaj, Member – independent expert.
Their term of office expired with the expiry of the Supervisory Board
members’ term, namely at the General Meeting of Shareholders in
2011, when new members of the Audit Committee were named on
8 June 2011, namely: Uroš Čufer, Ph.D., President, Tomaž Subotič,
Ph.D., Deputy and Zdenka Habe, Member, as an independent expert.
The Supervisory Board named the Reimbursement Committee
at its 3rd meeting on 19 October 2012. It comprises Jure Peljhan,
M.Sc., as president, Zvonko Ivanušič, M.Sc., as vice president,
Tomaž Subotič, Ph.D., as member and Bojan Salobir, Executive
Director, as the Bank's representative with a standing invitation.
The Management Board represents and manages the Bank’s
operations according to the principles of joint liability. In accordance
with the Articles of Association it comprises three members:
President of the Management Board, Dušan Drofenik, M. Sc., Vice
President of the Management Board, Davorin Leskovar and Member
of the Management Board, Aleksander Vozel, M.Sc. The Bank’s
Management Board usually meets once a week and considers
materials from areas as defined by the Banking Act and the Banka
Celje, d.d., Management Board Working Rules at its meetings.
The President of the Management Board, Dušan Drofenik, M.Sc.
is a member of the Supervisory Board at The Bank Association
of Slovenia, a member of the Supervisory Board at the SloveneGerman Chamber of Commerce and a member of the Supervisory
Board at the Skupna pokojninska družba. Davorin Leskovar and
Aleksander Vozel, M.Sc. are not members of any supervisory boards.
The Credit Committee comprises nine members and defines the
conditions and criteria for acquiring and placement of assets,
makes decisions on lending and guarantee transactions and
decides on distribution in line with its operational rulebook. In
2011 it comprised: the President of the Management Board at
the post of President of the Credit Committee, the Vice President
of the Management Board at the post of Vice President of the
Credit Committee and the following members: Member of the
Management Board, both Executive Directors, General Manager
of the Risk Management Division, General Manager of the Retail
Division and the General Manager of the Financial Markets Division
and the General Manager of the Corporate Division. The President
of the Credit Committee may invite other General Managers to
the Credit Committee meetings. When proposals from the Retail
Division are being considered, business unit Heads are also invited.
The Liquidity Committee comprised seven members in 2011: General Manager of the Financial Markets Division as Committee President and the following members: President of the Management
Board, Vice President of the Management Board, Member of the Management Board, Executive Director, General Manager of the Retail
Division and General Manager of the Risk Management Division. The
Liquidity Committee meets at least three times a week and supervises the Bank’s liquidity position. It performs its duties in line with the
Liquidity Committee Working Rules.
39
The Bank’s Management Committee operates as the Management Board’s advisory and informative body. In 2011 it comprised
the Bank's Management Board, the Executive Directors, General
Managers of the functionally independent organisational units,
who in accordance with their operative functions answer directly to the Management Board and the Director of the subsidiary
company.
The Management Board may also appoint other attendees to the
Management Body’s meetings. Operational rules are set with the
Management Body Working Rules and meetings are usually held
once a month and are intended for the presentation of the financial and income position of the Bank as well as the consideration
of the execution of project assignments all the while allowing for
discussion on other significant decisions to be made in relation
to the Bank’s operations.
The Assets and Liabilities Committee – the ALCO monitors the
conditions in the financial markets, analyzes the balances and
changes in the Bank’s statements and prepares the decisions aimed at the attainment of an adequate balance sheet structure.
In line with the Working Rules on its operations the Committee
meets once a month. The members: Vice President of the Management Board as President of the Committee, the President of the
Management Board at the post of Vice President of the Committee, Member of the Management Board, General Manager of the
Accounting Division, General Manager of the Risk Management
Division and the General Manager of the Financial Markets Division.
The IT Committee is the Management Board’s counselling body
in connection with the execution of its rights and obligations related to IT. It meets once a month. In addition to the President of
the Management Board, the Vice President of the Management
Board and Member of the Management Board as the president
of the IT Committee, it also comprises the General Manager of
the IT Division and the Business Consultant for IT. Standing invitations were extended to the Assistant General Manager of the
IT Division, the Business Consultant for the development of IT,
the internal auditor in charge of IT and to the security systems
engineer.
9.2.9 Structure of share capital, with special
reference to:
- r ights and obligations, provided by shares
or shares from individual classes, and
- s hould multiple share classes exist, the
proportion of share capital represented
by an individual class
Shareholders exercise their rights in the matters of the Bank's
operations at the General Meeting of Shareholders. Regular shares
are voting right shares, whereby each share ensures one vote at the
Meeting.
Preferred shareholders do not have the right to vote at the Meeting,
except when deciding on the amendments to the Articles of
Association, which pertain to the ratio of the number of these shares
to the share capital and in connection with changes in status. In the
event that the holders of preferred shares were not paid the entire
dividend for an individual year they are allowed to vote as holders of
regular shares for the period. In such an event preferred shares are
taken into consideration in the calculation of the required majority of
capital. Preferred shares carry the right to priority in the payment of
fixed dividends in the amount of at least 6% of the amount attributed
to a no par value share in the share capital. In cases where the
payment of dividends in full is not possible it is effected partially.
9.2.10 Share transfer restrictions, especially:
- restriction of security ownership and
- e xplanatory note on the requirement to
acquire permission from the company or
other holders of securities for the transfer
The Bank's shares are transferred in line with the regulations pertaining to dematerialized securities. Current shareholders have priority, in proportion with their portion of the share capital, to subscribe
new shares from the authorized capital. There is no other shareholding restrictions imposed by the Bank, whereas acquiring a qualifying share requires the approval by the Bank of Slovenia. There is
no requirement to get approval by the Bank or other shareholders
to transfer shares.
9.2.11 Employee stock options
The Bank does not have an employee stock option scheme in place.
9.2.12 Shareholder agreements that could result in
the restriction of the transfer of shares or
voting rights
Agreements between shareholders that could result in the restriction of the transfer of shares or voting rights are not in force.
The Bank's share capital is represented by 508,629 no par value
shares, 406,904 or 80% of which are regular shares and 101,725 or
20% being preferred shares.
Celje, 18th April 2012
40
Davorin Leskovar
Member of the
Management Board
Member of the
Management Board
President of the
Management Board
10 STATEMENT OF MANAGEMENT’S RESPONSIBILITIES
The Management Board herewith confirms the financial statements of the Bank and the Group for the year ended 31 December 2011,
on pages 47 to 52 and the accounting policies and notes to the accounting policies on pages 53 to 140 of the annual report.
The Management Board is responsible for the preparation of the annual report in a way as to be a true and fair representation of the
Bank’s assets and the Group's assets and the results of their operations for the year ended 31 December 2011.
The Management Board additionally confirms that appropriate accounting policies were consistently used and that the accounting
estimates were prepared according to the principles of prudence and good management. The Management Board furthermore confirms that the financial statements together with the notes have been prepared on the basis of the assumption of continued operations of the Group and in line with the existing legislation and the IFRS, as adopted by the European Union.
The Management Board is also responsible for appropriate accounting practice, for the adoption of appropriate measures for the
insurance of property and for the prevention and identification of fraud and other irregularities or unlawfulness.
The tax authorities may at any time within 5 years from the day of the tax charge examine the operations of the company, which
in turn may cause the obligation of an additional tax payment, default interest payment and penalty from Corporate Income Tax or
other taxes or duties. The Management Board is not aware of any circumstances, which could result in any such potentially significant
obligation.
Managment Board:
Davorin Leskovar
Member of the
Management Board
Member of the
Management Board
President of the
Management Board
Celje, 27th March 2012
41
11 REPORT OF THE AUDITORS
42
43
II FINANCIAL STATEMENTS
II FINANCIAL STATEMENTS
1 INCOME STATEMENT
Bank
Group
Note
1 January to
31 December
2011
Interest and similar income
3
115,799
112,663
115,778
112,628
Interest and similar expense
3
(66,872)
(57,596)
(66,883)
(57,620)
3
48,927
55,067
48,895
55,008
Dividend income
4
876
728
876
728
5
18,772
18,812
18,771
18,811
Fee and commission expense
5
(2,386)
(2,551)
(2,386)
(2,551)
5
16,386
16,261
16,385
16,260
Net gains from financial assets and liabilities not
classified at fair value through profit or loss
6
551
1,397
551
1,397
Net (losses) / gains from financial assets and
liabilities held for trading
7
2,989
(6,818)
2,989
(6,818)
Net (losses) from financial assets and liabilities
8
3,598
(53)
3,598
(53)
Changes in fair value from hedging
1 January to 1 January to 1 January to
31 December 31 December 31 December
2010
2011
2010
9
(200)
98
(200)
98
Foreign exchange translation net gains
10
(680)
9,663
(680)
9,663
Net gains from derecognition of assets
11
(5)
20
(5)
26
Net other operating income
12
(344)
(459)
425
294
13
(33,658)
(35,992)
(34,298)
(36,384)
14
(3,764)
(3,757)
(3,791)
(3,771)
Provisions
15
(596)
279
(597)
251
Impairment charges
16
(52,670)
(31,009)
(52,678)
(31,014)
(18,590)
5,425
(18,530)
5,685
3,715
(925)
3,715
(926)
(14,875)
4,500
(14,815)
4,759
(29)
9
(29)
9
PROFIT / (LOSS) BEFORE INCOME TAX
Income tax expense
17
PROFIT / (LOSS) FOR THE YEAR
Basic and diluted earnings per share in EUR
18
The Notes form an integral part of these Financial Statements.
Financial statements 2011
47
2
STATEMENT OF COMPREHENSIVE INCOME
Bank
Group
1 January to
31 December
2011
1 January to
31 December
2010
1 January to
31 December
2011
1 January to
31 December
2010
(14,875)
4,500
(14,815)
4,759
OTHER COMPREHENSIVE INCOME
(2,687)
(689)
(2,687)
(689)
Net (losses) / gains from available for sale financial assets
(3,359)
(861)
(3,359)
(861)
(12,231)
(8,041)
(12,231)
(8,041)
8,872
7,180
8,872
7,180
672
172
672
172
(17,562)
3,811
(17,502)
4,070
PROFIT FOR THE YEAR
Valuation (losses) / gains taken to other
comprehensive income
Recycled to income statement
Income tax relating to other comprehensive income
TOTAL COMPREHENSIVE INCOME FOR
THE YEAR AFTER TAX ATRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT
48
3
STATEMENT OF FINANCIAL POSITION
Note
Loans and advances
Assets pledged
Derivatives - hedging
Investment property
Intangible assets
Investments in subisidiaries,
associates and joint ventures
Income tax assets
- current tax assets
- deferred tax assets
Other assets
TOTAL LIABILITIES
Share capital
Share premium
Revaluation reserve
Profit reserves (including retained earnings)
Treasury shares
Profit / loss for the year
GROUP
31 December 31 December
2011
2010
2011
2010
19
168,163
128,324
168,163
20
52,817
65,365
52,817
65,365
21
7,823
29,445
7,823
29,445
22
128,324
203,201
236,029
203,201
236,029
1,748,414
1,795,957
1,745,215
1,793,275
23
55,054
85,908
55,054
85,908
24
1,693,360
1,710,049
1,690,161
1,707,367
25
269,311
276,273
269,311
276,273
-
32,390
-
32,390
26
4,838
-
4,838
-
27
17,802
19,576
18,752
19,658
21, 22, 25
28
-
-
3,270
1,807
29
4,921
5,251
4,925
5,256
30
2,257
2,257
-
-
31
9,208
4,994
9,211
4,997
1,582
1,409
1,582
1,409
31,2
7,799
3,412
7,802
3,415
32
2,158
2,219
5,239
6,398
2,490,913
2,598,080
2,492,765
2,599,217
33
90,082
70,013
90,082
70,013
34
2,167
6,014
2,167
6,014
TOTAL ASSETS
Financial liabilities designated at fair value through
profit or loss
- deposits from banks
- due to customers
- borrowings from banks
- borrowings from other customers
Provisions
Other liabilities
BANK
35
36,146
40,050
36,146
40,050
2,159,994
2,227,372
2,159,990
2,227,369
36
21,005
54,435
21,005
54,435
37
1,478,805
1,498,961
1,478,801
1,498,958
38
396,023
419,335
396,023
419,335
39
6,224
8,847
6,224
8,847
40
185,520
160,436
185,520
160,436
41
72,417
85,358
72,417
85,358
42
-
30,993
-
30,993
43
8
348
8
348
44
12,598
13,237
12,630
13,268
45
8,585
10,127
9,573
10,460
2,309,580
2,398,154
2,310,596
2,398,515
46
16,980
16,980
16,980
16,980
46
51,380
51,380
51,542
51,542
46
1,284
3,971
1,284
3,971
46
126,595
125,376
127,209
125,731
46
(31)
(31)
(31)
(31)
46
(14,875)
2,250
(14,815)
2,509
TOTAL EQUITY
181,333
TOTAL LIABILITIES AND EQUITY
2,490,913
199,926
2,598,080
182,169
2,492,765
200,702
2,599,217
These Financial Statements have been approved for Issue by the Management Board on 27th March 2012 and signed on its behalf by:
Davorin Leskovar
Member of the
Management Board
Member of the
Management Board
President of the
Management Board
49
4 STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
Bank
BALANCE AT 1 JANUARY 2010
Comprehensive income
for the year after tax
Share
capital
Share
premium
Revaluation
reserve
Profit
reserves
16,980
51,380
4,660
122,499
Retained earnings
(including net Treasury
profit for the year)
shares
3,385
(31)
Total
equity
198,873
-
-
(689)
-
4,500
-
3,811
Dividends paid
-
-
-
-
(2,796)
-
(2,796)
Allocation of net profit
to profit reserves
Other
-
-
-
2,839
(2,839)
-
-
-
38
-
-
38
BALANCE AT 31 DECEMBER 2010
16,980
51,380
3,971
125,376
2,250
(31)
199,926
16,980
51,380
3,971
125,376
2,250
(31)
199,926
-
-
(2,687)
-
(14,875)
-
(17,562)
-
-
-
-
(1,068)
-
(1,068)
-
-
-
1,182
(1,182)
-
-
-
37
-
-
37
16,980
51,380
1,284
126,595
(14,875)
(31)
181,333
Dividends paid
to profit reserves
Other
-
-
GROUP
Retained earnings
(including net Treasury
profit for the year)
shares
Share
capital
Share
premium
Revaluation
reserve
Profit
reserves
16,980
51,542
4,660
122,697
3,543
(31)
199,391
-
-
(689)
-
4,759
-
4,070
Dividends paid
to profit reserves
-
-
-
-
(2,796)
-
(2,796)
-
-
-
2,839
(2,839)
-
-
Other
-
-
-
37
-
-
37
16,980
51,542
3,971
125,573
2,667
(31)
200,702
Dividends paid
to profit reserves
Other
16,980
51,542
3,971
125,573
2,667
(31)
200,702
-
-
(2,687)
-
(14,815)
-
(17,502)
-
-
-
-
(1,068)
-
(1,068)
-
-
-
1,182
(1,182)
-
-
-
-
-
37
-
-
37
16,980
51,542
1,284
126,792
(14,398)
(31)
182,169
Total
equity
50
5 STATEMENT OF CASH FLOWS
BANK
1 January to
31 December
2010
1 January to
31 December
2011
A.
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Interest paid
Dividends received
96,569
106,790
96,548
106,470
(60,991)
(53,203)
(60,980)
(53,168)
876
728
876
728
Fee and commission received
18,640
18,829
18,640
18,829
Fee and commission paid
Realized gains from financial assets and financial liabilities
not classif ied as fair value through profit or loss
Realized (losses) from financial assets and financial
liabilities designated at fair value through profit or loss
Gains / (losses) from financial assets and financial liabilities
held for trading
(2,383)
(2,562)
(2,383)
(2,562)
1,358
2,416
1,358
2,416
(199)
(574)
(199)
(574)
Payments to employees and suppliers
Operating income
6,387
(6,773)
6,387
(6,773)
(34,928)
(35,708)
(34,928)
(36,100)
296
301
388
355
(1,875)
(1,203)
(1,875)
(1,203)
29,041
23,832
28,418
11,600
30,509
9,187
22,016
12,367
22,016
348
21,025
348
13,730
13,051
13,730
13,051
(10,739)
(23,740)
(9,914)
(28,272)
a)
Operating expenses
Cash flows from operating activities before changes
in operating assets and liabilities
23,750
b)
Decreases / (increases) in operating assets
29,938
Net decrease in trading assets
Net decrease in financial assets, designated at fair value
12,367
21,025
Net decrease in available for sale financial assets
Net (increase) in loans and advances
c)
GROUP
1 January to
31 December
2010
1 January to
31 December
2011
Net (increase) of hedging derivative financial liabilities
(4,838)
-
(4,838)
-
Net (increase) in other assets
(1,607)
(75)
(1,861)
2,044
Decreases / (increases) in operating liabilities
(73,731)
45,863
(73,513)
48,901
Net (decrease) in deposits from Central Bank
Net (decrease) / increase in financial liabilities held for
trading
Net (decrease) / increase in financial liabilities designated at
fair value through profit or loss
Net (decrease) / increase in deposits and loans measured at
amortised cost
Net increase of debt securities issued measured at
amortised cost
Net (decrease) / increase of hedging derivative financial
liabilities
(10,992)
(29,008)
(10,992)
(29,008)
(3,361)
227
(3,361)
227
(2,054)
28
(2,054)
28
(81,770)
48,828
(82,085)
51,646
25,185
25,662
25,185
25,662
(340)
348
(340)
348
(399)
(222)
134
(2)
(20,043)
86,504
(19,172)
86,506
42
(1,121)
42
(1,121)
(20,001)
85,383
(19,130)
85,385
č)
Net (decrease) / increase in other liabilities
Cash flow generated from operating activities
(a + b + c)
d)
Income tax returned / (paid)
e)
Net cash flow from operating activities (d + e)
51
Note
BANK
1 January to 1 January to
2011
2010
GROUP
1 January to
31 December
2010
1 January to
31 December
2011
B. CASH FLOWS FROM INVESTING ACTIVITIES
a) Receipts from investing activities
Proceeds from sale of property and equipment and
investment property
163,309
Redemption of held to maturity investments
b) Payments from investing activities
(Purchase of property and equipment and investment
property)
(Purchase of intangible assets)
(Purchase of held to maturity investments)
c) Net cash provided by investing activities (a - b)
25
132,042
163,309
132,042
15
71
15
71
163,294
131,971
163,294
131,971
(113,526)
(114,408)
(114,397)
(114,410)
(1,109)
(728)
(1,980)
(730)
(1,022)
(1,461)
(1,022)
(1,461)
(111,395)
(112,219)
(111,395)
(112,219)
49,783
17,634
48,912
17,632
-
-
-
-
C. CASH FLOWS FROM FINANCING ACTIVITIES
a) Proceeds from financing activities
Issue of subordinated liabilities
b) Expenditure from financing
(Dividends paid)
(Subordinated liabilities repayed)
-
-
-
-
(18,850)
(18,278)
(18,850)
(18,278)
(1,068)
(2,796)
(1,068)
(2,796)
(17,782)
(15,482)
(17,782)
(15,482)
(18,850)
(18,278)
(18,850)
(18,278)
178
850
178
850
10,932
84,739
10,932
84,739
Cash and cash equivalents at beginning of year
212,038
126,449
212,038
126,449
G. Cash and cash equivalents at end of year (D + E + F)
223,148
212,038
223,148
212,038
c)
Net cash used in financing activities (a - b)
D. Effects of exchange rate changes on cash and
cash equivalents
E. Net increase in cash and cash equivalents
(Ae+Bc+Cc)
F.
52
NOTES TO THE FINANCIAL STATEMENTS
1 GENERAL INFORMATION
The Banka Celje, d.d., Group (the Group) is comprised of the bank
and its subsidiary Posest, d.o.o. (the Subsidiary).
Banka Celje d.d. (“the Bank”) is a Slovene joint stock company, providing universal banking services. Its largest shareholders are Nova
Ljubljanska banka d.d., with an ownership share of 40.99% and
Slovenska odškodninska družba d.d. Ljubljana, with an ownership
share of 9.36%.
The Posest subsidiary company was established in 1991 as a limited
liability company. The Bank is a 100% owner of the Subsidiary.
Based on permission issued by the Bank of Slovenia the subsidiary
company is not included in the consolidated supervision in accordance with the decision by the Bank of Slovenia on Supervision of
Banks and Savings Banks on a Consolidated Basis, as from the aspect of the aim of supervision the Subsidiary does not represent any
significant effect. Notes to the Financial Statements refer to the Bank
and the Group.
After the annual report has been approved by the Supervisory
Board, standalone and consolidated Financial Statements can no
longer be amended.
Amounts in these standalone and consolidated Financial Statements and the Notes thereto are expressed in thousands of euros,
except where stated otherwise.
2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
standalone and consolidated financial statements are set out below
and have been consistently applied to both years presented.
The disclosures in accordance with the Regulation on disclosures
by banks and saving banks are presented in a separate document.
2.1 B
asis for the presentation of financial
statements
Standalone and consolidated financial statements for 2011 have
been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the European Union. Where required, notes comply with the requirements of local regulations.
The standalone and consolidated financial statements comprise
the income statement and the statement of comprehensive income
shown as two independent statements, the statement of financial
position, the statement of changes in shareholder’s equity, the statement of cash flows and the principal accounting policies and the
notes.
The financial statements have been prepared under the historical
cost convention, as modified by the revaluation of available for sale
financial assets, financial assets and financial liabilities at fair value
through profit or loss and all derivative contracts, which have been
measured at fair value.
The Group classifies its expenses, recognized in standalone and
consolidated income statements, by nature of the expense.
The standalone and consolidated statements of cash flows show
the changes in cash and cash equivalents arising from financial
flows during the period classified according to operating activities,
investment activities and financing activities. Cash and cash equivalents include highly liquid investments and are shown in Note 49.
The standalone and consolidated statements of cash flows have
been prepared using the direct method, by amending the appropriate items from the consolidated income statement with income and
expenses or changes in operating assets and liabilities from investments and financing during the period. Interest paid and received
has been classified as operating cash flows except where they are
based on financing.
The preparation of financial statements in accordance with IFRS
requires the use of certain estimates and assumptions, which influence the value of reported assets and liabilities as well as the disclosure of potential assets and liabilities on the reporting date and
the amount of income and expenses during the reported period.
Estimates and judgements are evaluated on a continuing basis and
are based on past experience and other factors, including expectations with regard to future events. The most significant policies and
estimates are disclosed in Note 2.26.
In 2011 the Group implemented all of the new and revised Standards and Interpretations, issued by the International Accounting
Standards Board (IASB) and the International Financial Reporting
Interpretations Committee (IFRIC) and adopted by the EU, the use
of which is mandatory for the accounting period beginning on 1
January 2011.
a) A doption of New or Revised Standards and
Interpretations
The following new standards and interpretations became effective for the Group from 1 January 2011:
Amendment to IAS 24, Related Party Disclosures (issued in November 2009 and effective for annual periods beginning on or after 1 January 2011). IAS 24 was revised in 2009 by: (a) simplifying
the definition of a related party, clarifying its intended meaning
and eliminating inconsistencies; and by (b) providing a partial
exemption from the disclosure requirements for government-related entities. As a result of the revised standard, the Group now
also discloses contractual commitments to purchase and sell goods or services to its related parties, and provided disclosures of
only individually significant transactions with government-related entities.
53
Improvements to International Financial Reporting Standards (issued in May 2010 and effective from 1 January 2011).
The improvements consist of a mixture of substantive changes and clarifications in the following standards and interpretations:
IFRS 1 was amended (i) to allow previous GAAP carrying value to be used as deemed cost of an item of property, plant
and equipment or an intangible asset if that item was used
in operations subject to rate regulation, (ii) to allow an event
driven revaluation to be used as deemed cost of property,
plant and equipment even if the revaluation occurs during a
period covered by the first IFRS financial statements and (iii)
to require a first-time adopter to explain changes in accounting policies or in the IFRS 1 exemptions between its first IFRS
interim report and its first IFRS financial statements;
IFRS 3 was amended (i) to require measurement at fair value
(unless another measurement basis is required by other IFRS
standards) of non-controlling interests that are not present
ownership interest or do not entitle the holder to a proportionate share of net assets in the event of liquidation, (ii) to
provide guidance on the acquiree’s share-based payment
arrangements that were not replaced, or were voluntarily replaced as a result of a business combination and (iii) to clarify that the contingent considerations from business combinations that occurred before the effective date of revised
IFRS 3 (issued in January 2008) will be accounted for in accordance with the guidance in the previous version of IFRS 3;
IFRS 7 was amended to clarify certain disclosure requirements,
in particular (i) by adding an explicit emphasis on the interaction
between qualitative and quantitative disclosures about the nature and extent of financial risks, (ii) by removing the requirement
to disclose carrying amount of renegotiated financial assets that
would otherwise be past due or impaired, (iii) by replacing the
requirement to disclose fair value of collateral by a more general
requirement to disclose its financial effect, and (iv) by clarifying
that an entity should disclose the amount of foreclosed collateral
held at the reporting date, and not the amount obtained during
the reporting period;
IAS 1 was amended to clarify the requirements for the presentation and content of the statement of changes in equity;
IAS 27 was amended by clarifying the transition rules for
amendments to IAS 21, 28 and 31 made by the revised IAS 27 (as
amended in January 2008);
IAS 34 was amended to add additional examples of significant
events and transactions requiring disclosure in a condensed interim financial report, including transfers between the levels of
fair value hierarchy, changes in classification of financial assets
or changes in business or economic environment that affect the
fair values of the entity’s financial instruments;
and IFRIC 13 was amended to clarify measurement of fair value
of award credits.
The above amendments resulted in additional or revised disclosures, but had no material impact on measurement or recognition of transactions and balances reported in these financial statements.
Other revised standards and interpretations effective for the
current period:
IFRIC 19 “Extinguishing financial liabilities with equity instruments”, amendments to IAS 32 on classification of rights issues,
clarifications in IFRIC 14 “IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction”
relating to prepayments of minimum funding requirements and
amendments to IFRS 1 “First-time adoption of IFRS”, did not have
any impact on these financial statements.
b) New Accounting Pronouncements
Certain new standards and interpretations have been issued that
are mandatory for the annual periods beginning on or after 1 January 2012 or later, and which the Group has not early adopted.
IFRS 9, Financial Instruments Part 1: Classification and Measurement. IFRS 9, issued in November 2009, replaces those parts of
IAS 39 relating to the classification and measurement of financial
assets. IFRS 9 was further amended in October 2010 to address
the classification and measurement of financial liabilities. Key features of the standard are as follows:
- Financial assets are required to be classified into two measurement categories: those to be measured subsequently at fair
value, and those to be measured subsequently at amortised
cost. The decision is to be made at initial recognition. The classification depends on the entity’s business model for managing
its financial instruments and the contractual cash flow characteristics of the instrument.
- An instrument is subsequently measured at amortised cost only
if it is a debt instrument and both (i) the objective of the entity’s
business model is to hold the asset to collect the contractual
cash flows, and (ii) the asset’s contractual cash flows represent
payments of principal and interest only (that is, it has only “basic loan features”). All other debt instruments are to be measured at fair value through profit or loss.
- All equity instruments are to be measured subsequently at fair
value. Equity instruments that are held for trading will be measured at fair value through profit or loss. For all other equity
investments, an irrevocable election can be made at initial recognition, to recognise unrealised and realised fair value gains
and losses through other comprehensive income rather than
profit or loss. There is to be no recycling of fair value gains and
losses to profit or loss. This election may be made on an instrument-by-instrument basis. Dividends are to be presented in
profit or loss, as long as they represent a return on investment.
- Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged
to IFRS 9. The key change is that an entity will be required to
present the effects of changes in own credit risk of financial
liabilities designated at fair value through profit or loss in other
comprehensive income.
While adoption of IFRS 9 is mandatory from 1 January 2015, earlier adoption is permitted. The Group is considering the implications of the standard, the impact on the Group and the timing of
its adoption by the Group.
54
IFRS 10, Consolidated Financial Statements (issued in May 2011
and effective for annual periods beginning on or after 1 January
2013), replaces all of the guidance on control and consolidation
in IAS 27 “Consolidated and separate financial statements” and
SIC-12 “Consolidation - special purpose entities”. IFRS 10 changes
the definition of control so that the same criteria are applied to
all entities to determine control. This definition is supported by
extensive application guidance. This interpretation holds no significance to the Group.
IFRS 11, Joint Arrangements, (issued in May 2011 and effective for
annual periods beginning on or after 1 January 2013), replaces
IAS 31 “Interests in Joint Ventures” and SIC-13 “Jointly Controlled
Entities—Non-Monetary Contributions by Ventures”. Changes in
the definitions have reduced the number of types of joint arrangements to two: joint operations and joint ventures. The existing
policy choice of proportionate consolidation for jointly controlled entities has been eliminated. Equity accounting is mandatory
for participants in joint ventures. This interpretation holds no significance to the Group.
IFRS 12, Disclosure of Interest in Other Entities, (issued in May
2011 and effective for annual periods beginning on or after 1 January 2013), applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated
structured entity. It replaces the disclosure requirements currently found in IAS 28 “Investments in associates”. IFRS 12 requires
entities to disclose information that helps financial statement readers to evaluate the nature, risks and financial effects associated
with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. To meet these
objectives, the new standard requires disclosures in a number of
areas, including significant judgements and assumptions made
in determining whether an entity controls, jointly controls, or significantly influences its interests in other entities, extended disclosures on share of non-controlling interests in group activities
and cash flows, summarised financial information of subsidiaries
with material non-controlling interests, and detailed disclosures
of interests in unconsolidated structured entities. This interpretation holds no significance to the Group.
IFRS 13, Fair value measurement, (issued in May 2011 and effective for annual periods beginning on or after 1 January 2013), aims
to improve consistency and reduce complexity by providing a
revised definition of fair value, and a single source of fair value
measurement and disclosure requirements for use across IFRSs.
The Group is currently assessing the impact of the standard on
its financial statements.
IAS 27, Separate Financial Statements, (revised in May 2011 and effective for annual periods beginning on or after 1 January 2013),
was changed and its objective is now to prescribe the accounting
and disclosure requirements for investments in subsidiaries, joint
ventures and associates when an entity prepares separate financial statements. The guidance on control and consolidated financial statements was replaced by IFRS 10, Consolidated Financial
Statements. The Group is currently assessing the impact of the
amended standard on its financial statements.
IAS 28, Investments in Associates and Joint Ventures, (revised in
May 2011 and effective for annual periods beginning on or after 1 January 2013). The amendment of IAS 28 resulted from the
Board’s project on joint ventures. When discussing that project,
the Board decided to incorporate the accounting for joint ventures using the equity method into IAS 28 because this method is
applicable to both joint ventures and associates. With this exception, other guidance remained unchanged. The amendments are
of no relevance to the Group.
Disclosures—Transfers of Financial Assets – Amendments to
IFRS 7 (issued in October 2010 and effective for annual periods
beginning on or after 1 July 2011.). The amendment requires
additional disclosures in respect of risk exposures arising from
transferred financial assets. The amendment includes a requirement to disclose by class of asset the nature, carrying amount
and a description of the risks and rewards of financial assets that
have been transferred to another party, yet remain on the entity's
balance sheet. Disclosures are also required to enable a user to
understand the amount of any associated liabilities, and the relationship between the financial assets and associated liabilities.
Where financial assets have been derecognised, but the entity
is still exposed to certain risks and rewards associated with the
transferred asset, additional disclosure is required to enable the
effects of those risks to be understood. The Group is currently
assessing the impact of the amended standard on disclosures in
its financial statements.
Amendments to IAS 1, Presentation of Financial Statements (issued June 2011, effective for annual periods beginning on or
after 1 July 2012), changes the disclosure of items presented in
other comprehensive income. The amendments require entities
to separate items presented in other comprehensive income into
two groups, based on whether or not they may be reclassified to
profit or loss in the future. The suggested title used by IAS 1 has
changed to ‘statement of profit or loss and other comprehensive
income’. The Group expects the amended standard to change
presentation of its financial statements, but have no impact on
measurement of transactions and balances.
Amended IAS 19, Employee Benefits (issued in June 2011, effective for periods beginning on or after 1 January 2013), makes
significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to
the disclosures for all employee benefits. The standard requires
recognition of all changes in the net defined benefit liability (asset) when they occur, as follows: (i) service cost and net interest
in profit or loss; and (ii) remeasurements in other comprehensive
income. This interpretation holds no significance to the Group.
Disclosures—Offsetting Financial Assets and Financial Liabilities
- Amendments to IFRS 7 (issued in December 2011 and effective for annual periods beginning on or after 1 January 2013).
The amendment requires disclosures that will enable users of an
entity’s financial statements to evaluate the effect or potential
effect of netting arrangements, including rights of set-off. The
amendment will have an impact on disclosures but will have no
effect on measurement and recognition of financial instrumentsof the Group.
Offsetting Financial Assets and Financial Liabilities - Amendments
to IAS 32 (issued in December 2011 and effective for annual periods beginning on or after 1 January 2014). The amendment
added application guidance to IAS 32 to address inconsistencies
identified in applying some of the offsetting criteria.
55
This includes clarifying the meaning of ‘currently has a legally
enforceable right of set-off’ and that some gross settlement systems may be considered equivalent to net settlement. The Group is considering the implications of the amendment, the impact
on the Group and the timing of its adoption by the Group.
Other revised standards and interpretations: The amendments
to IFRS 1 “First-time adoption of IFRS”, relating to severe hyperinflation and eliminating references to fixed dates for certain
exceptions and exemptions, will not have any impact on these
financial statements. The amendment to IAS 12 “Income taxes”,
which introduces a rebuttable presumption that an investment
property carried at fair value is recovered entirely through sale,
will not have any impact on these financial statements. IFRIC 20,
Stripping Costs in the Production Phase of a Surface Mine, considers when and how to account for the benefits arising from the
stripping activity in mining industry.
Unless otherwise described above, the new standards and interpretations are not expected to affect significantly the Group’s financial statements.The Group did not early-adopt new or amended standards.
operations and the financial markets. The Assets and Liabilities
Committee (ALCO) was organized as the decision-making body.
2.5 Foreign currency translation
a) Functional and presentation currency
Items, reported in these standalone and consolidated financial
statements, are measured using the currency of the primary economic environment in which the Bank and the Group operates
(the functional currency). The financial statements are reported
in euros, which is the Bank’s and the Group's functional and presentation currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional
currency according to the exchange rates prevailing on the date
of the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Except for the amendment to IFRS 7 (disclosures – transfers of
financial assets), none of the new accounting announcements
described above have been endorsed by the EU.
Translation differences resulting from changes in amortised
costs of monetary items denominated in foreign currency classified as available for sale financial assets are recognized in the
income statement.
2.2 Comparative information
Translation differences on non-monetary items, such as equities
at fair value through profit or loss, are reported as part of fair value gain or loss in the income statement.
The standalone and consolidated financial statements for 2011
did not feature any adjustments or reclassifications in relation
to 2010, except in the case of comparative data for reporting by
segments, which is adjusted to the changes in accordance with
the data for the current year.
2.3 Consolidation
The financial statements of the Subsidiary, used for the preparation of consolidated financial statements, were prepared as of
the Bank’s reporting date. The consolidation principles remained
unchanged in comparison with the previous year.
The subsidiary has been fully consolidated since the day of the
set-up and will be excluded from consolidation on the date control is lost. Where necessary, accounting policies of the Subsidiary have been adjusted to ensure consistency with the policies
adopted by the Bank.
In the process of consolidation all intercompany claims and liabilities as well as revenues and expenditures within the Group have
been eliminated.
2.4 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting to the body that makes decisions on funding,
investments and the operating performance of the Bank and its
segments. The criterion for the definition of the Bank’s and the
Group’s segments is represented by services, which are allocated
based on similar characteristics to retail operations, corporate
Translation differences on non-monetary items, such as equities
classified as available for sale, are included together with valuation reserves at fair value within other comprehensive income.
Gains and losses from foreign exchange trading are shown in the
income statement under »Net gains/(losses) from financial assets
and liabilities held for trading«.
2.6 Interest income and expenses
Interest income and expenses are recognised for all debt instruments using the effective interest rate method. The aforementioned method serves the calculation of amortised cost of a financial asset or financial liability and distributes interest income
and expenses across the expected life of a financial instrument.
Interest income includes interest from fixed income investments
and investments in securities held at fair value through profit or
loss and from discounts and premiums on bonds. The effective
interest rate calculation includes all fees paid between parties as
well as transaction costs, however excluding future losses due
to credit risk. Once a financial asset or a group of related assets
is impaired, the interest revenue is recognised on the basis of
the interest rate used to discount future cash flows to calculate
impairment.
The interest income and expenses from all financial assets and
liabilities are shown in the income statement as part of net interest.
56
2.7 Fee and commission income
Fees and commissions are generally recognised as the service is
provided. Fee and commission income includes fees and commissions from guarantees to companies issued by the Bank, from
payment operations and foreign exchange as well as from credit
card operations. Fees and commissions included in the calculation of the effective interest rate are shown in interest income
and expenses.
2.8 Dividend income
Dividend income is recognised in the income statement when
the Group’s right to receive payment has been established.
2.9 Financial instruments
2.9.1 Classification
The classification of financial instruments on initial recognition depends on the purpose of acquisition and the instruments’
characteristics. The Group classifies financial instruments in the
following categories: financial instruments at fair value through
profit or loss, loans and advances, held to maturity investments
and available for sale financial assets.
- those that the Group upon initial recognition designates as
available-for-sale; or
- those for which the holder may not recover substantially all of
its initial investment, for reasons other than the deterioration of
creditworthiness.
c) Held to maturity investments
Held to maturity investments are non-derivative financial instruments with fixed or determinable payments and a fixed maturity,
which do not meet the definition of loans and receivables and which the Group intends to hold until maturity and is able to do so.
d) Available for sale financial assets
Available for sale financial assets are those non-derivative financial assets, which the Group intends to hold for an indefinite period of time and which it may sell in response to liquidity needs or
due to changes in interest rates, exchange rates or prices.
2.9.2 Measurement and recognition
Financial assets, except financial assets at fair value through profit or loss, are initially recognised at fair value increased by transaction costs.
Financial instruments at fair value through profit or loss are initially recognised at fair value with transaction costs recorded in
the income statement.
a) Financial instruments at fair value through profit or loss
This category includes financial instruments held for trading and
financial instruments designated at fair value through profit or
loss at inception.
Purchases and sales of financial instruments at fair value through
profit or loss, held to maturity investments and available for sale
financial assets are recognized on trade date. Loans are recognized when cash is advanced to the borrowers.
A financial asset is classified in the held for trading category if
acquired principally for the purpose of selling in the short term
or for the creation of short-term profits. Derivatives are always
categorised as held for trading unless they are designated as
hedging instruments in the application of accounting rules for
hedge accounting.
Financial assets at fair value through profit or loss and available
for sale financial assets are measured at fair value. Gains and losses from financial assets at fair value through profit or loss are
included in the income statement in the period in which they
arise. Gains and losses from changes in the fair value of available
for sale financial assets are recognized in other comprehensive
income until the financial asset is derecognized or impaired, at
which time the cumulative amount previously included in other
comprehensive income is transferred to the income statement.
Interest calculated using the effective interest rate method and
foreign currency gains and losses on monetary assets classified
as available for sale are recognized directly in the income statement.
Financial assets and liabilities are designated at fair value through
profit or loss when the following conditions are met:
- w ith such a classification the Group eliminates or significantly reduces measurement or recognition inconsistencies that
would arise from the valuation of financial assets and liabilities
on different bases or
- a financial instrument contains one or more embedded derivatives, which may significantly modify its cash flows.
b) Loans and advances
Loans and advances are non-derivative financial assets with
fixed or determinable payments, which are not quoted in an active market, other than:
- those that the Group intends to sell immediately or in the short
term, which are classified as held for trading, and those that
the Group upon initial recognition designates as at fair value
through profit or loss;
Dividends on available for sale equity instruments are recognized in the income statement when the Group’s right to receive
payment is established.
Loans and held to maturity investments are carried at amortized
cost.
57
2.9.3 R eclassification
If due the a change in the purpose of an instrument, it is no longer eligible for classification as held for trading and is eligible
for classification as loans and advances, it may be reclassified.
Financial assets that are not eligible for classification as loans and
receivables may be transferred from the held for trading category only in rare circumstances. For instruments designated at fair
value through profit and loss and held to maturity instruments
reclassification is not permitted.
2.9.4 Derecognition
Hedge accounting is used, provided certain criteria are met. When
a hedge is introduced a formal document is prepared, describing
the relationship between hedged items and hedging instruments,
as well as its risk management purpose and strategy and the valuation methodology. The Group also documents the effectiveness
assessment of hedging instruments at exposure to changes in the
fair value of a hedged instrument, which are attributable to hedging. The Group assesses the effectiveness of a hedge at its inceptions and then on an ongoing basis during the duration of the hedge,
where the hedge effectiveness must always fall within a range of
80 to 125 percent.
Financial assets are derecognised when the contractual rights to
receive cash flows from these assets have ceased to exist or the
assets have been transferred in the transfer that fulfills the criteria for derecognition. Financial liabilities are derecognised when
they have been discharged, cancelled or have expired.
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges are recognized in the income statement, together with any changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk. Effective
changes in fair value of hedging instruments and the related hedged items are reflected in the income statement under ‘fair value
adjustments in hedge accounting’’.
Collateral (shares and bonds) provided by the Group under standard repurchase agreements and securities lending and borrowing transactions is not derecognised because the Group retains substantially all the risks and rewards on the basis of the
predetermined repurchase price, and the criteria for derecognition are therefore not met.
If the hedge no longer meets the criteria for hedge accounting, the
adjustment to the carrying amount of a hedged item for which the
effective interest method is used is transferred to profit or loss over
the period to maturity. The adjustment in the carrying amount of
the hedged equity investment is included in operating profit at the
moment of sale.
2.9.5 Fair value measurement principles
The fair value of financial instruments traded on active markets is
based on the current best bid price at the statement of financial
position date, excluding transaction costs. If a market price is not
available, fair value is determined using discounted future cash
flow or a pricing model.
When using discounted future cash flow models, these are determined based on the most probable estimate and the discount
rate is a market based rate of an instrument with similar characteristics on the last day of the reporting period. If the pricing
model is used market data at the reporting date is used.
The fair value hierarchy is disclosed under 2.25.5.b).
2.9.6 Derivative financial instruments and hedge
accounting
Derivatives, including forwards, futures and swaps, are initially recognised in the statement of financial position at fair value. The fair value valuation is determined on the basis of a listed market price, the
model of discounted future cash flows and with the use of pricing
models. Interest accruals on interest rate derivatives are recorded
separately from fair value measurement in the income statement.
The method of recognizing the resulting fair value gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group
uses derivatives to hedge the fair value of recognised assets and
liabilities.
Individual derivative financial instruments that provide effective
economic hedges, which however do not qualify for hedge accounting under the specific accounting rules, are treated as derivatives held for trading. Changes in the fair value of those derivative
instruments are recognised immediately in the income statement
under »Net gains/(losses) from financial assets and liabilities held
for trading«.
2.10 Impairment of financial assets
2.10.1 Assets measured at amortised cost
The Group assesses impairments of financial assets individually for
all individually significant assets where there is objective evidence
of impairment, while all other financial assets are impaired collectively. According to the Regulation on credit risk loss assessment by
the Bank of Slovenia a financial asset or off-balance sheet liability
is individually significant if total exposure to the client exceeds EUR
650 thousand or 0.5% of the bank’s equity. The Bank defines as
individually significant all exposures to banks and other exposure
to legal entities, rated A through C and all legal entities rated C2, D
and E. If the Group determines that no objective evidence of impairment exists in an individually significant financial asset, it includes
this asset in a group of financial assets with similar credit risk characteristics and collectively assess them for impairment.
At each reporting date of the statement of financial position the
Group assesses whether there is objective evidence that an individually significant financial asset is impaired as a consequence of
one or more events that occurred after initial recognition of the
asset and that event has an impact on the asset’s future cash flows,
which can be reliably estimated.
58
The criteria the Group uses to determine the existence of objective evidence on an impairment loss pertaining to a financial asset
or asset class include:
- late payment of contractual interest or principal;
- debtor’s significant liquidity problems;
- breach of contract;
- start of bankruptcy proceedings, compulsory settlement proceedings or a different form of financial restructuring;
- deterioration of the borrower’s competitive position;
- deterioration in the value of collateral; and
- credit rating downgraded below investment grade.
The Group estimates that the period between the occurrence of
problems, which prevent the client from fulfilling his obligations to
the Group, and identification of these problems by the Group typically varies from between one to three months. Junior management determines the assessment period on a case by case basis.
If there is objective evidence that an impairment loss on loans
and advances or held to maturity investment has been incurred,
the amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future
cash flows. The carrying amount of the asset is reduced through
an allowance account and the amount of the loss is recognized
in the income statement. The calculation of the present value of
the estimated future cash flows of collateralized financial assets
reflects the current value of future cash flows from foreclosure,
less cost of obtaining and selling the collateral. Assumed off-balance sheet liabilities are also assessed individually and where
necessary related provisions are recognized as liabilities.
For the purpose of collective impairment evaluation the Group
uses migration matrices, which illustrate the expected migration
of customers between internal rating classes. The probability of
migration is assessed on the basis of past experience, namely the
annual migration matrices for different types of customers. This
data is then adjusted to the predicted future trends, since historic experience does not necessarily reflect the actual economic
conditions. The Bank includes the estimates in the impairment
percentages with an estimate of the general risk factor. Exposure to retail clients is analysed additionally from the aspect of
transaction type. For corporates impairments are assessed on the
basis of expected client transitions and with it the transition of
good debt to C, D and E rating classes with individually estimated
average recovery rates from C2 (bad debt class), D and E clients.
In retail the expected migrations from good rating classes to C, D
and E are assessed for individual transaction types, the average
recovery is subsequently calculated on the basis of actual loss
from bad debt for individual transaction type.
If the amount of the impairment subsequently decreases due to
an event occurring after the write down, the reversal of loss is
recognized as a reduction of an allowance for loan impairment.
When a loan is uncollectible, it is written off against the related
allowance for loan impairment. Such loans are written off after all
the necessary procedures have been completed and the amount
of the loss has been determined. Subsequent recoveries of amounts previously written off decrease the amount of the provision
for loan impairment in the income statement.
The Group decides to write receivables off on the basis of the
following criteria:
- the debtor no longer performs his regular activities (termination of the legal entity);
- the Group has no adequate collateral, which it could liquidate,
at its disposal; and
- legal recovery proceedings have been concluded.
2.10.2 Assets available for sale
At the reporting date the Group assesses whether there is objective evidence that available for sale financial assets are impaired.
A significant or prolonged decrease in the fair value of an equity
instrument below its cost may provide objective evidence of impairment. If any such evidence exists for available for sale assets,
the cumulative loss is removed from equity and recognized in
the income statement as an impairment loss. A subsequent derecognition of loss due to impairment of an equity instrument as a
result of an increase in its fair value is recognised through other
comprehensive income.
If, in a subsequent period, the fair value of a debt instrument
classified as available for sale increases and the increase can be
objectively related to an event occurring after the impairment
loss was recognized, the impairment loss is reversed through the
income statement.
The criteria the Group uses to determine whether a debt instrument is impaired:
- late payment of contractual interest or principal;
- issuer’s significant liquidity problems;
- breach of contract;
- start of bankruptcy proceedings at issuer;
- deterioration of the issuer’s competitive position;
- c redit rating downgraded below investment grade.
Impairment losses recognized in the income statement are measured as the difference between the carrying amount of the
financial asset and its current fair value. The current fair value
of the instrument is its market price or discounted future cash
flows, when the market price is not obtainable.
2.10.3 Repossessed assets
In certain cases assets are repossessed in payment of outstanding obligations. Repossessed assets are initially recognised in
the Group statements at fair value. They are sold as soon as possible. After initial recognition, repossessed assets are measured
and accounted for in accordance with policies relating to the
adequate asset category.
59
2.10.4Renegotiated loans
Loans that are either subject to collective impairment assessment or individually significant and whose terms have been renegotiated, due to a deterioration of the debtor’s solvency, are no
longer considered to be past due, but are treated as new loans.
These loans continue to be measured in accordance with the
original effective interest rate. In subsequent years, the asset is
considered as restructured and is disclosed only if renegotiated.
b) the Group is the lessor
In operational leasing the Group transfers the right to use an asset for a contractually agreed amount of time to the lessee in
exchange for a payment or a string of payments.
Payments received under operating leasing are recognised as
other operating income in the income statement on a straight
line basis over the period of the lease. Assets leased out under
operating leases are presented in the consolidated statement
of financial position as investment property or as property and
equipment.
2.11 Offsetting
Financial assets and liabilities are offset when a legally enforceable right to offset the recognised amounts exists and there is an
intention to settle on a net basis, or realise the asset and settle the
liability simultaneously.
2.12 Sale and repurchase agreements
Securities sold under sale and repurchase agreements (repos)
are retained in the financial statements and the related liabilities
are included in financial liabilities associated with the transferred assets. Securities sold subject to sale and repurchase agreements are reclassified in the financial statements as pledged
assets when the counterparty has the right by contract to sell
or re-pledge the collateral. The difference between the sale and
repurchase price is treated as interest and accrued over the life
of the repo agreements using the effective interest rate method.
2.13 Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents comprise cash and balances with the Central Bank,
debt securities held for trading and loans to banks with a maturity of less than 90 days.
2.14 Accounting for leases
A lease is an agreement whereby the lessor conveys to the lessee,
in return for a payment or series of payments, the right to use an
asset for an agreed period of time. Lease agreements are accounted for in accordance with their classification as finance leases
or operating leases at the inception of the lease. The key classification factor is the extent to which the risks and rewards incidental to ownership of a leased asset lie with the lessor or lessee.
a) the Group is the lessee
The leases entered into by the Group are operating leases. The
total payments made under operating leases are included in the
income statement on a straight line basis over the period of the
lease and are recorded in administrative expenses.
Assets are leased under finance lease when the risks and rewards
related to ownership of a leased asset are transferred to the lessee. When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable.
Income from finance leasing transactions is apportioned systematically over the lease period. Receivables from a financial lease
are shown as net investments in the finance lease including the
unguaranteed residual value.
2.15 Investment property
Investment property includes buildings held for leasing and not
occupied by the Group.
Investment property is initially recognized at cost. Direct transaction costs are included in the initial measurement. Subsequently it is measured at cost less accumulated depreciation
and any accumulated impairment loss. When there is a change
in use the Group makes transfers to or from investment property.
Investment property is later measured using cost model. Depreciation is provided for on a straight-line basis using depreciation
rate of 1.0%.
2.16 Property and equipment
All property and equipment is initially recognized at cost. Subsequently it is measured at cost less accumulated depreciation
and any accumulated impairment loss.
Each year the Group assesses whether there are any indications
that assets may be impaired. If such an indication exists, the Group estimates the recoverable amount. The recoverable amount is
the higher of the fair value less cost to sell and value in use. If the
recoverable amount exceeds the carrying value, the assets are
not impaired. As at 31 December 2011 no property or equipment
item was impaired.
Depreciation is provided for on a straight-line basis over their
estimated useful lives.
When an operating lease is terminated before the lease period
has expired, any payment required to be made to the lessor is
recognised as an expense for the period in which termination
takes place.
60
2.19 Taxes
The following are approximations of the annual rates used:
The Bank and the Group
Buildings
Furniture and equipment
%
1.9 – 3.0
7.0 – 20.0
Computer equipment
10.0 – 33.0
Leasehold improvements
10.0 – 20.0
Assets in the course of transfer or construction are not depreciated until they are available for use.
The assets' residual value and useful life are reviewed, and adjusted if appropriate, on each statement of financial position date.
Gains and losses on disposal of property and equipment are determined as a difference between the sale proceeds and their carrying amount and are recognized in the income statement. Maintenance and repairs are charged to the income statement during
the financial period in which they are incurred.
Day-to-day servicing costs are recognized in profit or loss as incurred. Subsequent costs that increase future economic benefits
are recognized in the carrying amount of a property and equipment item.
2.17 Intangible assets
Intangible assets comprise computer software and software licences. They are initially recognised at cost, decreased by the
accumulated amortization and impairment losses.
2.19.1 Corporate income tax
Corporate income tax is calculated using the provisions of the
Corporate Income Tax Act at a tax rate of 20% and is recorded
together with the changes in deferred taxes as tax expense in the
income statement.
Deferred income tax is provided using the balance sheet liability method, for all temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are
measured at tax rates that are expected to apply to the period
when the asset is realized or the liability is settled.
Deferred tax assets are recognised on all temporary differences, if
there is a probability that a taxable profit will be available, against
which the temporary differences can be utilised.
Deferred tax related to fair value remeasurement of available for
sale investments is charged or credited directly to other comprehensive income and subsequently recognized in the income statement together with the deferred gain or loss from sale.
In 2011 the Group made a loss. The basis for the recognition of
deffered tax assets according to the reporting date is planned
future profits. Should the planned result not be obtainable, the
Group will adjust the deffered tax assets accordingly.
2.19.2 Tax on total assets
Intangible assets with a definite useful life are amortized using the
straight-line method over their estimated useful economic life. At
each reporting date intangible assets are reviewed for indications
of impairment or changes in estimated future economic benefits. If such indications exist, the intangible assets are analysed
to assess whether their carrying amount is fully recoverable. An
impairment loss is recognized if the carrying amount exceeds the
recoverable amount.
In 2011 the Tax on bank total assets law was implemented, introducing the obligation to declare and pay tax on the total assets of
banks. The tax liability is represented by the difference between
the tax base and the tax relief, while the basis for tax in levied at
a rate of 0.1% of the bank’s total assets in the reporting period
and the tax relief at a rate of 0.167% from loans granted to non-financial companies and private entrepreneurs during the period.
Amortization of intangible assets with a finite useful life is calculated on a straight-line basis at rates designed to write down the
cost of intangible asset over its estimated useful life. Software and
licences are amortised over a period of three to five years.
Intangible assets begin to be amortised when they are available
for use.
2.20 Employee benefits
Employee benefits include: jubilee benefits and retirement indemnity bonuses. In accordance with the legislation employees
retire after 35 to 40 years of service and are entitled to a lump
sum severance pay out at such a time. Employees are also entitled to long service bonuses for every ten years of service at
the Group.
2.18 Inventories
Inventories are measured at the lower of cost or net realizable
value. The Group uses the weighted average cost method to determine inventories.
The valuation of the provisions for these obligations is carried
out by independent qualified actuaries. These obligations are
measured in the amount of the present value of future expenses,
taking into consideration future salary increases and other conditions apportioned to past and future period of employment.
All gains and losses due to the changes in assumptions are immediately recognised in the income statement.
61
The Group contributes to the State Pension Scheme (8.85% of
gross salaries) in accordance with the legislation. Once contributions have been paid, the Bank has no further payment obligation. The regular contributions constitute net periodic costs for
the year in which they are due and are disclosed under labour
costs in the income statement.
to the income statement over the contract term using the straight-line method. After initial recognition the guarantees issued
are shown in the statement of financial position in the amount
of undivided fees or the estimated expenditure, which is required
for the settlement of liabilities in accordance with the agreement.
The greater of the two values is taken into account.
2.21 Loans taken, deposits and debt
securities issued
2.24 Share capital
Loans taken, deposits and debt securities issued are initially recognised at fair value decreased by the transaction costs. Loans
taken, deposits and debt securities issued are usually measured
at cost, with the difference between initial recognition and final
value recognised in the income statement under interest income
with the use of the effective interest rate. A debt security issued,
where the interest rate risk is hedged with an interest rate swap is
recognised at fair value.
Purchases of own debt reduce the liabilities in the statement of
financial position. The difference between the carrying amount
and the price of the own debt is shown in the income statement.
2.22 Provisions
Provisions are recognised when the Group exhibits current obligations due to a past event (legally or indirectly) and it is likely
that in the settlement of the liability an outflow of factors will be
required, which shall enable the inflow of economic benefits and
the amount of the obligation is reliably measurable.
When there is a number of similar obligations, the likelihood of an
outflow of funds in their settlement is determined by considering
the class of obligations as a whole. A provision is recognized even
though the likelihood of outflow for any item is small, but it is
quite likely that outflows will be required to settle the obligation
as a whole.
he Bank and the Group uses the provisions to directly cover costs
or expenses for which they were established. The justification of
their size or existence as related to the current value of expenses,
which are assumed to be required for the settlement of obligations, for which the provisions were formed is assessed on the
reporting date.
2.23 Financial guarantees
Financial guarantees are agreements that require the issuer to
make specific payments to reimburse the holder for a loss it incurs because a specific debtor fails to make payments when due,
in accordance with the terms of debt instruments at the initial or
adjusted due date. Such financial guarantees are given to banks,
other financial institutions and other parties as a form of collateral
on loans, overdrafts and other banking facilities.
Financial guarantees are initially recognized at fair value, which is
normally evidenced by the fees received. The fees are transferred
a) Share issue costs
Expenses, directly connected with the issue of new shares are recognized in equity as a decrease in share premium.
b) Dividends on shares
Dividends on shares are recognised in equity in the period in which they are approved by the Bank’s owners.
c) Treasury shares
Should the Bank purchase treasury shares, the proceeds are shown as a decrease in share capital. In the event of a subsequent
sale of the acquired treasury shares the amount is shown as an
increase in share capital. The Group formed share reserves for the
acquired treasury shares.
2.25 Management of bank risks
In its operations the Bank and the Group assume a number of
different types of risk, the amount of which depends on the type
of transaction and the preparedness to assume risk. The Bank and
the Group mainly focus on the performance of traditional banking
operations and they provide their clients with services pertaining to treasury and other financial transactions to a lesser extent.
Most of their operations are conducted in the Republic of Slovenia, whereas they are present in interbank market of other EU
member states as well as other low credit risk exhibiting countries
throughout the world. They are also active, to a limited extent, in
the countries of the South East Europe, lending to corporate and
retail clients.
To achieve strategic goals in operations and risk management
the Bank and the Group are putting a lot of emphasis on credit,
liquidity and capital risk, profitability risk, market risk, operational
risk as well as strategic, interest rate and reputation risk. The organisation of the Bank and the Group ensures the separation of
commercial organisational units or the units that enter into transactions and assume risk (front office) from the back office, which
books the transactions and keeps accounts. The risk monitoring
and management function is also separated from the aforementioned two. The organisation of the Bank and the Group is such as
to provide for independent operations of individual organisational
units up to the managerial level and for an adequate flow of information up and down as well as between the organisational units.
The Bank and the Group have prepared a strategy and a policy of
assuming and managing risk per respective risk type. The strategy of assuming and managing risk reflects the Bank’s and the
Group's core relationship toward risk within the framework of
operations and includes the objectives and general principles or
62
policies pertaining to assuming and managing risk, the approach to the management of individual risk types and the approach
to the process of assessing adequate internal capital. A policy on
assuming risk and risk management has been prepared for each
individual risk type, detailing the capability to assume risk, the risk
management process (organization rules on the implementation
of the process, the procedures of identifying, measuring or evaluation, the management and monitoring, the system of internal
controls), the responsibility of the Management Board and senior
management and other. The strategy and policies updated annually are confirmed by the Management Board and the Supervisory
Board.
2.25.1.1 Measuring and managing credit risk
By developing internal reporting and the consideration and decision-making process at a number of different bodies within the
Banka and the Group, the Management Board and the entire senior management are actively involved in the risk management
process. By managing risk well, the Bank and the Group intend
to be more responsive and efficient when it comes to changes in
the environment, to get closer to client needs and to ensure longterm financial stability. Assuming and managing risk has become
an important element of the Bank's and the Group’s comprehensive strategy due to the development and characteristics of the
financial system.
Loans and advances to customers
Risk management is directly monitored:
- in the Risk Management Division: all risks;
- at Credit Committees (once a week): credit risk;
- at the Liquidity Committees (three times a week): liquidity risk;
- on a monthly basis at the Assets and Liabilities Committee
(ALCO): credit, market, liquidity, interest rate, capital and profitability risk;
- at the Management Board level or the Management Committee:
operational and strategic risk as well as reputation risk;
- at the Risk Committee: all types of risk.
2.25.1 Credit risk
Credit risk is the risk of loss resulting from a debtor’s inability to
meet, for any reason, its financial or contractual obligations entirely. This type of risk includes subcategories, namely country
risk, risk of concentration and residual risk. The Risk Management
Division, being an organizationally independent unit in relation
to commercial units and directly answering to the Management
Board, manages the implementation of the policy of assuming
and managing credit risk and regularly reports to the ALCO on the
exposure to credit risk and limit consideration.
The Bank and the Group measure credit risk for active on-balance sheet items and for commitments and contingent liabilities.
Credit risk is assessed for financial assets measured at amortised
cost, for financial assets designated at fair value and for assumed
liabilities from commitments and contingent liabilities. Credit risk
is the result of business, commercial and housing loans, credit
card operations, transaction account overdrafts, guarantees and
granted but still undrawn loans, as well as a consequence of the
investments in debt securities and the exposure from transactions with derivatives.
Exposure to credit risk depends on three elements: (1) The probability of default or exposure to the debtor’s rating class, (2) Current
exposure from statement of financial position and commitment
and contingent liability items, and (3) The amount of outstanding
debt paid off, in case of default.
(1) T he probability of default or exposure to the debtor’s rating class
Internal rating systems have been developed for the classification
of the Bank’s debtors into rating classes and for the measurement
of probability of default for different debtor groups (legal entities,
individual entrepreneurs and banks). Debtor classification is based on the estimated qualitative and quantitative elements. In the
classification of banks and sovereigns (state) external ratings are
usually considered (Moody’s Investor Service, Fitch Ratings, Standard & Poor’s). Prior to every individual private loan or investment
approval each individual’s creditworthiness is assessed and the
settlement of existing liabilities checked. Before approving a loan,
as a rule, an inquiry is made with the use of the SISBON system
(Slovenski informacijski sistem bonitet fizičnih oseb – the Slovene
Information System on the Rating of Retail Clients), which includes data on indebtedness and settlement of liabilities by retail clients in the Slovene banking environment.
Prior to approving a transaction the Bank classifies a debtor into
a rating class, measuring the probability of default and loss. On
an ongoing or at least on a quarterly basis, the Group verifies the
adequacy of a classification in relation to the debtor’s financial
standing, the settlement of due liabilities and the assessment of
qualitative factors, on the basis of which the classification is retained or the debtor is classified into a higher or lower rating class.
Transitional matrices are prepared regularly, showing the transitions between rating classes and measuring the number of defaults
in an individual period. On the basis of data on defaults, estimates
on the probability of default for an individual rating class are adjusted.
The granting of loans includes commercial organizational units,
the Risk Management Division and the Operational Support Division. Granting loans and other transactions are subject to authorizations and legal limitations. Authorizations depend on the rating
of the debtor, the size of the total exposure, loan size, the total
limit, collateral and deviation from other conditions. Loans are
granted at different levels within the Group.
The Bank and the Group manage credit risk related to a single
debtor or investment (stand-alone risk), as well as the risk relating
to the entire credit portfolio (portfolio risk).
63
The internal ratings system with the description of rating classes and the comparison with external ratings:
Risk level
Comparison with
the Bank of Slovenia
ratings
Comparison with the Moody’s
Investors Service* ratings
Prime
Investment grade
A
from Aaa to Aa3, from A1 to A3,
from Baa1 to Baa3
B1, B2, B3
Standard
Investment grade
B
from Ba1 to Ba3, from B1 to B3
C1, C2
Substandard
Sub-investment grade
C
from Caa1 and lower
D
Default
Default
D
Default
E
Default - recovery
Default
E
Default
Internal rating class
Internal rating
description
A1, A2, A3
* comparison prepared for banks
(2) Current exposure from statement of financial position and commitment and contingent liability items
The level exposure in items of the statement of financial position (loans) and the level of commitment and contingent liability exposures
equal their carrying amount.
(3) The amount of outstanding debt paid off, in case of default
The loss amount in case of default depends on the amount of exposure and the collateral obtained. The Bank and the Group strive
toward securing their receivables to minimize loss. It is important for the Bank and the Group to begin procedures for the settlement of
overdue, unpaid receivables as soon as possible.
Debt securities
In managing credit risk from debt securities, the Bank utilizes external ratings (Moody's Investor Service, Fitch Ratings, Standard &
Poor's) of securities and issuers. In cases, where the fair value of an individual security is significantly lower than the original cost and
the drop in value is attributable to reasons pointing to objective evidence of impairment, the Bank recognizes the impairment charge
for the investment.
Assumed commitments and contingent liabilities
Assumed commitments and contingent liabilities (off-balance sheet items) include the undrawn part of loans granted, guarantees and
letters of credit. By issuing these instruments the Bank and the Group commit to provide cash to the counterparty, when so instructed.
The potential exposure to loss from these instruments pertains to credit risk. The same methodologies are applied in measuring credit
risk from assumed commitments and contingent liabilities as are used in measuring credit risk pertaining to loans.
Derivatives
The exposure to credit risk from derivatives pertains to exposure to counterparty risk, namely the risk of a counterparty defaulting
prior to final settlement of cash flow from the transaction. The exposure to credit risk equals the credit replacement value, calculated
on the basis of the current exposure method. The Bank enters into derivative instrument agreements with prime debtors mainly in
foreign currency transactions, interest rate swaps. In the event of increased credit risk, the Bank tries to acquire additional collateral.
The exposure to credit risk is managed within the framework of limits pertaining to lending agreements, which are confirmed by the
Credit Committee.
64
Limit definition and monitoring
The Bank calculates limits for loans to individual debtors and to
groups of related entities on the basis of data on the existing and
future operations. In doing so it takes into consideration the legal
requirements in connection with the largest exposure limits related to an individual entity or a group of related entities, which
must not exceed 25% of the Bank’s capital, while taking into account its policies as well. The diversification of exposure to individual debtors or groups of related entities is one of the objectives the
Bank is working toward, which is why it is reducing the number
and value of exposures that exceed 10% of its capital. Limits are
monitored on an ongoing basis and are adjusted in relation to
the risk profile of the debtor or a group of related entities and
the sector the debtor is active in. Total limits and their possible
increases or decreases are confirmed by the Bank’s Credit Committee. Exposures exceeding 10% of the Bank's capital require the
approval of the Supervisory Board. The Bank has prepared a methodology of indebtedness ceiling calculation for corporate and
bank clients as well.
In addition to limits set for individual debtors or groups of related
entities, the Bank also implements structural limits according to
sector or category of debtor, according to geographic area and
according to type of activity - thus limiting the risk of portfolio
concentration. Structural limits are usually confirmed annually at
ALCO meetings, with their consideration and trends monitored
on the basis of monthly reports. If required, due to economic conditions and exposure to risk, these limits may also be adjusted.
Collateral
The Bank and the Group’s exposure to credit risk is reduced with
the implementation of policies regarding collateral. To minimize loss in the event of default, the Banka and the Group tend to
acquire adequate collateral from the debtor, such as a mortgage on
commercial or residential real estate, pledges of financial property
(bank deposits, securities) or the acquisition of personal credit insurance by an adequate provider. The Bank and the Group consider
other forms of collateral such as physical collateral, inventories and
cash claims to be of lesser quality. Usually long-term loans are collateralized, with a large portion of short-term loans collateralized as
well and the only ones not requiring collateral being those granted
to debtors of a higher credit rating. In cases where a debtor’s rating
worsens, the Bank and the Group would negotiate additional collateral or a reduction in exposure.
The significant types of appropriate collateral the Banka and the
Group utilise and the related valuation:
- fi
nancial assets used as collateral (bank deposits with the Group
or cash assimilated instruments, debt securities, issued by sovereigns, the central bank or institution, equity and other securities,
listed on stock exchanges), which is valued at market and is revaluated on a daily basis;
- pledged commercial or residential property, valued at fair value;
- personal assurances given by: sovereigns and central banks, regional or local authorities, public sector entities, institutions, insurance companies and companies with a high credit rating (100
% percent of the value).
deal of attention was directed at monitoring the fair value of collateral and toward ensuring the contractually agreed ratios between
exposure and collateral coverage.
To reduce credit risk the Bank and the Group do not use utilise
netting of the items from the statement of financial position and
credit derivatives.
Estimating credit risk losses
A methodology for the estimation of credit risk losses has been
prepared in accordance with IFRS, which is updated at least once a
year and adapted to the economic conditions. Continuously or at
least on a quarterly basis estimations are made, whether there is
objective evidence of impairment relating to financial assets and
liabilities assumed on the basis of commitments and contingent
liabilities. Should such evidence exist, the Bank must calculate the
amount of loss due to impairment and make provisions for commitments and contingent liabilities. The methodology of estimating impairment charges is set up according to type of debtor: legal entities and individual entrepreneurs, retail clients, banks and
savings banks and prime debtors. The methodology of assessing
impairment charges for exposure to retail clients was supplemented in 2010.
(1) Assessment of impairment charges for exposure to legal entities and private entrepreneurs
The impairment charge may be calculated individually on the basis of the estimated future cash flows or collectively on the basis
of historical data on defaults and losses for groups of exposures
with similar characteristics, adjusted to account for current conditions, thus reflecting the effects of recent operating conditions.
Individual estimates pertain to assets individually exhibiting significant characteristics (exposures above EUR 650,000) and showing
signs of impairment (exposures classified lower than A3). If there
are no signs of impairment, the exposure is classified into a group
of financial assets with similar characteristics and the impairment
is assessed collectively. Individually impairment is also assessed for
financial assets, which have already been recognized as impaired
(exposures classified C2, D and E). Impairment is appraised on the
basis of estimated future cash flow, including expected repayment
from realization of collateral.
For exposures not exhibiting signs of impairment or exhibiting
individually insignificant impairment (exposures classified A1,
A2, A3 and exposures under EUR 650,000), the charge is assessed collectively on the basis of historical default data and loss
estimates. The Bank estimation percentage includes a general
risk factor, reflecting the deterioration of economic conditions
and a higher probability of defaults. The value of the general
risk factor is assessed at least once a year on the basis of fluctuations in the general price levels, interest rates, the settlement
of liabilities, fluctuations in the financial and capital markets as
well as the real estate market conditions, the economic activity,
conditions in the job market and the trends in the energy and
raw material markets.
The macroeconomic conditions and the circumstances prevailing
in the real estate and capital markets in 2011 dictate that a great
65
(2) Assessment of impairment charges for exposure to retail
The Bank and the Group classify financial assets in rating groups
A, B, C, D, E on the basis of the settlement of liabilities. Individually significant financial assets (exposures above EUR 400,000),
where there is objective evidence to suggest there is a need for
the establishment of an impairment, are impaired individually.
The same applies to financial assets already recognised as impaired (exposures classified C, D and E). For the purpose of collective impairment financial assets are divided into homogenous
groups on the basis of the settlement of liabilities and in accordance with product groups (housing loans, consumer loans,
quick loans, account overdrafts). Impairment charge percentages are based on past data and adjusted to current conditions,
thus differing for every product group and every rating class.
Impairment charge percentages are reestimated once a year.
(3) A
ssessment of impairment charges for exposure to banks and
prime debtors
For banks impairment is estimated solely on an individual basis.
Exposures to prime debtors (sovereigns and central banks) are
assessed using the collective or individual approach.
Managing credit risk during the crisis
The slow and unstable recovery of the domestic economy and
uncertainty in the European financial markets require the Banka
and the Group to continue to implement measures aimed at reducing the effect of the crisis on the financial position and the
profitability of the Bank and the Group.
It limits lending to financially unstable debtors and to debtors
from riskier industries and regions. The Bank and the Group
tries to obtain additional collateral, keep in contact with borrowers, monitor their operations and cash flow for the repayment
of debt, adjust debtor classification and limits. It works on the
recovery of outstanding receivables and liquidates collateral in
some cases. New investments are granted to debtors mainly for
the financing of regular business operations with good quality.
In the area of retail lending stricter criteria for the assessment
of creditworthiness were applied. The Bank and the Group continued to follow their goal of diversifying the credit portfolio according to debtor or groups of related entities and activity.
It is the Bank’s and the Group’s assessment that the number of
insolvency proceedings and defaults might increase in 2012, as it
expects the economy not to improve. A positive impact on the domestic economy is expected to come from government measures
to increase payment discipline, stimulate investment activity and
raise the competitiveness of the domestic economy, as well as from
economic activity in the European countries and the stabilisation
of conditions in the financial markets. The Bank and the Group will
continue to closely monitor debtor rating and the credit portfolio
while adapting the lending policy and credit risk management to
the current conditions. They will also reduce exposure to individual
clients or groups of related parties and limit investments in high
risk industries and regions. They will continue to actively work on
recovery and foreclose on bad debt.
66
2.25.1.2 Maximum credit risk exposure
31 December 2011
Bank
Statement of financial position assets
Loans
31 December 2010
Maximum
exposure to
credit risk
Fair value of
collateral3
Maximum
exposure to
credit risk
Fair value of
collateral3
2,248,103
1,738,162
2,375,897
1,803,495
1,748,414
1,656,544
1,795,957
1,680,720
Loans and advances to state1
2,705
-
5,409
-
55,054
10,002
85,908
-
337,896
496,476
331,518
479,726
35,000
21,110
34,032
20,049
- housing loans
168,963
330,106
154,993
312,632
- consumer and other loans
133,484
145,047
142,009
146,792
449
213
484
253
1,352,759
1,150,066
1,373,122
1,200,994
Loans and advances to private individuals
- overdraft accounts and cards
- unauthorised account overdrafts
Loans to companies2:
- large companies
617,730
435,944
652,615
453,577
- small and medium sized enterprises (SME)
655,483
672,590
677,209
729,332
- other
79,546
41,532
43,298
18,086
37,562
-
44,668
-
Derivatives
17,153
-
12,645
-
20,409
-
32,023
-
7,823
-
29,445
1,845
Debt securities
Financial assets designated
at fair value through P&L
Debt securities
7,823
-
29,445
1,845
177,997
66,534
194,954
48,372
Debt securities
177,997
66,534
194,954
48,372
269,311
15,084
276,273
72,558
Debt securities
269,311
15,084
276,273
72,558
Assets pledged
-
-
32,390
-
Debt securities
Derivative financial intruments
designated for hedging
-
-
32,390
-
4,838
-
-
-
Other financial assets
2,158
-
2,209
-
269,683
116,575
248,860
122,616
95,360
48,778
79,289
49,966
174,323
67,797
169,571
72,651
2,517,786
1,854,737
2,624,757
1,926,112
Off-balance sheet exposures
Guarantees
Other off-balance sheet exposures
Total
67
31 December 2011
GROUP
Fair value of
collateral3
Fair value of
collateral3
2,247,985
1,738,162
2,377,403
1,803,495
Statement of financial position assets
Loans
1,745,215
1,656,544
1,793,275
1,680,720
Loans and advances to state1
2,705
-
5,409
-
55,054
10,002
85,908
-
Loans and advances to private individuals
337,963
496,476
331,589
479,726
35,000
21,110
34,032
20,049
- housing loans
169,030
330,106
155,064
312,632
- consumer and other loans
133,484
145,047
142,009
146,792
449
213
484
253
1,349,493
1,150,066
1,370,369
1,200,994
Loans to companies2
- large companies
626,594
435,944
661,968
453,577
643,353
672,590
665,103
729,332
- other
79,546
41,532
43,298
18,086
37,562
-
44,668
-
Derivatives
17,153
-
12,645
-
20,409
-
32,023
-
7,823
-
29,445
1,845
29,445
1,845
177,997
66,534
194,954
48,372
Debt securities
177,997
66,534
194,954
48,372
269,311
15,084
276,273
72,558
Debt securities
269,311
15,084
276,273
72,558
Assets pledged
-
-
32,390
-
Debt securities
Derivative financial intruments
-
-
32,390
-
4,838
-
-
-
5,239
-
6,398
-
Off-balance sheet exposures
267,771
116,575
248,637
122,616
Guarantees
95,360
48,778
79,289
49,966
Other off-balance sheet exposures
172,411
67,797
169,348
72,651
2,515,756
1,854,737
2,626,041
1,926,112
Debt securities
Debt securities
Total
1
2
31 December 2010
Maximum
exposure to
credit risk
Maximum
exposure to
credit risk
7,823
S tate (sovereigns) includes direct beneficiaries of the Republic of Slovenia budget and foreign central state level units (sovereigns).
S ize of companies defined in accordance with the Companies Act; the micro, small and medium size enterprises (SME) comprise those, which fulfil two
of the following criteria:
- average number of employees is less than 250,
- net sales income does not exceed EUR 35,000 thousand,
- the value of assets does not exceed EUR 17,500 thousand.
Large companies are all those companies, which do not fit the SME criteria.
’’Other’’ shows regional and local state levels, public sector entities, new companies, companies in receivership, societies and other debtors, which do not
provide information on their size.
3
Fair value of collateral equals:
- the market value of financial assets held as collateral,
- 100% of the value of insurance company guarantees, bank guarantees, state and municipal guarantees and prime rated companies,
- values of residential and commercial real estate are equal to market values of comparable real estate.
68
The table shows the Group’s maximum gross credit risk exposure from loans, investments in securities and commitments and
contingent liabilities as at 31 December 2011 and 2010. In 2011 the exposure to credit risk decreased in comparison with the previous
year. Loans decreased by 3% due to a drop in lending to corporates and banks, while exposures from debt financial instruments fell by
16%. Commitments and contingent liabilities increased by 8% and the exposure from derivatives grew by 36%.
The continuation of the economic and financial crisis also had an impact on the credit portfolio. By carefully managing investment
policy during the crisis and responsibly managing credit risk, the Group achieved the following results in 2011:
- a s at 31 December 2011 loans that were classified into the highest of investment grade rating classes, namely A and B, represented
79.27% of all loans (2010: 85.26%), impairment charge coverage increased to 7.10% (2010: 5.13%);
- in spite of a drop in the fair value of collateral the coverage of exposure with adequate collateral stayed similar due to additional
collateral applied to existing loans as well as collateral obtained for new loans, thus 65% of all loans was collateralised as at 31
December 2011;
- the Group holds 87% of debt security investments rated at least A;
- the consolidated income statement shows impairment charges amounting to EUR 52,678 thousand (2010: EUR 31,014 thousand),
wherein impairment charges for loans measured at amortized cost represented EUR 39,160 thousand (2010: EUR 23,496 thousand)
and securities impairment charges amounted to EUR 13,510 thousand (2010: EUR 7,518 thousand). Provisions for commitments and
contingent liabilities were made in an amount of EUR 415 thousand (2010: decrease of EUR 67 thousand). Increased impairment
charges reflect the economic and financial crisis, which resulted in increased defaults and in the drop in the fair value of collateral
and financial assets.
2.25.1.3 Exposure to credit risk according to type of collateral
Exposure from loans
The table below lists loans according to type of collateral. Secured loans are the ones where the fair value of collateral is greater or equal
to the carrying amount of the loan. Unsecured loans are represented by loans, which are entirely unsecured and by the parts of loans,
where the fair value of collateral is not sufficient for their repayment.
Bank
Group
31 December 2011 31 December 2010
31 December 2011 31 December 2010
Loans
Loans
Loans
Loans
8,958
8,199
8,958
8,199
Collateral:
- deposits
- government guarantee
- insurance company and bank guarantee
- securities
65,782
59,149
65,782
59,149
124,780
125,001
124,780
125,001
82,074
132,074
82,074
132,074
- residential real estate
174,446
153,418
174,446
153,418
- commercial real estate
620,574
620,349
620,574
620,349
55,753
58,510
55,753
58,510
1,132,367
1,156,700
1,132,367
1,156,700
616,047
639,257
612,848
636,575
1,748,414
1,795,957
1,745,215
1,793,275
- other*
Secured loans - carrying amount
Unsecured loans - carrying amount
Loans - carrying amount
* Other collateral mainly refers to guarantees by guarantors - companies, rated A and to physical collateral to a lesser extent.
For the most part, loans are secured with commercial real estate followed by residential real estate as well as insurance company and
bank guarantees. The latter are mainly used to secure retail loans. In 2011 the value of loans, where securities are used for collateral, has
decreased the most due to loans being repaid and due to decreased fair value of collateral. Increases mainly come from loans secured
with residential real estate.
69
According to loan type
Loans to private individuals
Bank
31 December 2011
Loans to companies
UnauOverdraft
thorised
accounts Housing Consumer
account
and cards
loans
loans overdrafts
Large
companies
Loans
Loans
and
and
advances advances
SME Other
to state to banks
Total
Collateral:
- deposits
- insurance company
and bank guarantee
19
107
2,702
-
3,071
3,035
24
-
-
8,958
-
-
-
-
53,214
504
2,062
-
10,002
65,782
26,921
19,482
75,354
196
2
2,815
10
-
-
124,780
- securities
8
100
2,503
-
30,060
40,547
8,856
-
-
82,074
7
126,313
9,990
-
392
36,596
1,149
-
-
174,447
-
8,713
7,377
-
248,550 342,492
13,442
-
-
620,574
- other
-
526
4,759
-
14,298
31,197
4,973
-
-
55,753
Secured loans
- carrying amount
26,955
155,241
102,685
196
349,587
457,186
30,516
-
Unsecured loans
- carrying amount
8,045
13,722
30,799
253
268,143 198,297
49,030
2,705
45,052
616,046
Loans
- carrying amount
35,000
168,963
133,484
449
617,730 655,483
79,546
2,705
55,054
1,748,414
Secured loans
- carrying amount
25,530
139,037
105,623
231
374,312
501,376
10,591
-
Unsecured loans
- carrying amount
8,502
15,956
36,386
253
278,303
175,833
32,707
5,409
85,908
Loans
- carrying amount
34,032
154,993
142,009
484
652,615 677,209
43,298
5,409
85,908 1,795,957
10,002 1,132,368
31 December 2010
- 1,156,700
639,257
70
GROUP
31 December 2011
Loans to companies
UnauOverdraft
thorised
account
Large
and cards
loans
loans overdrafts companies
Loans
Loans
and
and
advances advances
SME Other
to state to banks
Total
Collateral:
- deposits
- insurance company
and bank guarantee
19
107
2,702
-
3,071
3,035
24
-
-
8,958
-
-
-
-
53,214
504
2,062
-
10,002
65,782
26,921
19,482
75,354
196
2
2,815
10
-
-
124,780
- securities
8
100
2,503
-
30,060
40,547
8,856
-
-
82,074
7
126,313
9,990
-
392
36,596
1,149
-
-
174,447
-
8,713
7,377
-
248,550
342,492
13,442
-
-
620,574
- other
-
526
4,759
-
14,298
31,197
4,973
-
-
55,753
Secured loans
- carrying amount
26,955
155,241
102,685
196
349,587
457,186
30,516
-
Unsecured loans
- carrying amount
8,045
13,789
30,799
253
277,007
186,167
49,030
2,705
45,052
Loans
- carrying amount
35,000
169,030
133,484
449
626,594
643,353
79,546
2,705
55,054 1,745,215
Secured loans
- carrying amount
25,530
139,037
105,623
231
374,312
501,376
10,591
-
- 1,156,700
Unsecured loans
- carrying amount
8,502
16,027
36,386
253
287,656
163,727
32,707
5,409
85,908
Loans
- carrying amount
34,032
155,064
142,009
484
661,968
665,103
43,298
5,409
85,908 1,793,275
10,002 1,132,368
612,847
31 December 2010
636,575
71
2.25.1.4 Credit risk exposure according to rating classes
Exposure from loans
Bank
Group
31 December 2011
31 December 2010
31 December 2011
31 December 2010
Rating class
Loan
amount
Impairment
amount
Loan
amount
Impairment
amount
Loan
amount
Impairment
amount
Loan
amount
Impairment
amount
Total
1,881,779
(133,365)
1,892,948
(96,991)
1,878,584
(133,369)
1,890,271
(96,996)
Str.
Str.
Prime (A)
51.33%
2.03%
55.25%
3.70%
51.22%
2.03%
55.16%
3.70%
Standard (B)
28.00%
9.67%
30.05%
22.12%
28.05%
9.67%
30.10%
22.12%
Substandard (C)
9.17%
24.17%
8.36%
22.91%
9.19%
24.17%
8.38%
22.91%
Default (D)
Default (E) recovery
4.13%
19.13%
2.71%
10.51%
4.15%
19.13%
2.72%
10.51%
7.38%
45.01%
3.64%
40.76%
7.39%
45.01%
3.64%
40.77%
Gross exposure to loans as at 31 December 2011 amounted to EUR 1,878,854 thousand, representing a 1% drop as compared with the
previous year (2010: EUR 1,890,271 thousand). After accounting for impairment charges the loan carrying amount is EUR 1,745,215
thousand, 3% less in comparison to the previous year (2010: EUR 1,793,275 thousand). Portfolio quality deteriorated due to the
continuing unfavourable economic conditions, with the percentage of highest rated loans (classes A and B) decreased to 79.27%
(2010: 85.26%). Exposure to loans, classified as substandard and default increased to 20.73% (2010: 14.74%), with the Group establishing
additional impairment charges on these loans.
According to loan class
BANK
31 December 2011
Rating class
Prime (A)
Loans to companies
UnauOverdraft
thorised
account
Large
and cards
loans
35,205
163,300
123,324
296
376,688
SME
Loans
Loans
and
and
advances advances
Other
to state to banks
166,079
48,024
2,705
50,212
965,833
158,955 349,654
9,150
-
4,853
526,896
13
-
-
172,555
-
-
Standard (B)
-
2,051
2,135
98
Substandard (C)
-
3,942
10,634
96
29,948
Default (D)
-
891
1,345
39
48,279
26,799
320
Default (E) - recovery
-
1,842
1,682
364
37,152
59,636
38,146
Impairments
Total
(205)
(3,063)
(5,636)
(444)
35,000
168,963
133,484
449
Total
127,922
(33,292) (74,607) (16,107)
617,730 655,483
79,546
77,673
138,822
-
(11)
(133,365)
2,705
55,054
1,748,414
72
BANK
31 December 2010
Rating class
Loans to companies
UnauOverdraft
thorised
account
Large
and cards
loans
Prime (A)
SME
Loans
Loans
and
and
advances advances
Other
to state to banks
Total
34,264
152,060
132,937
310
433,187
165,043
36,898
5,409
-
1,800
1,801
118
156,205 402,888
5,651
-
284
568,747
Substandard (C)
-
1,960
10,502
112
60,555
85,072
18
-
-
158,220
Default (D)
-
222
311
32
11,895
38,789
80
-
-
51,328
11,112
Standard (B)
Impairments
Total
-
1,086
2,043
403
(232)
(2,135)
(5,586)
(491)
34,032
154,993
142,009
484
85,664 1,045,772
48,752
5,484
-
-
68,881
(20,340) (63,335)
(4,832)
-
(40)
(96,991)
652,615
43,299
5,409
85,908
1,795,957
677,209
GROUP
31 December 2011
Rating class
Loans to companies
UnauOverdraft
thorised
account
Large
and cards
loans
Prime (A)
35,205
163,367
123,324
296
385,429
SME
Loans
Loans
and
and
advances advances
Other
to state to banks
48,025
2,705
50,212
962,291
158,955 349,724
9,149
-
4,853
526,965
13
-
-
172,555
-
-
Standard (B)
-
2,051
2,135
98
Substandard (C)
-
3,942
10,634
96
29,948
Default (D)
-
891
1,345
39
48,402
26,950
320
-
1,842
1,682
364
37,152
59,640
38,146
Impairments
Total
(205)
(3,063)
(5,636)
(444)
35,000
169,030
133,484
449
Total
153,728
(33,292)
127,922
(74,611) (16,107)
626,594 643,353
79,546
77,947
138,826
2,705
(11)
(133,369)
55,054 1,745,215
GROUP
31 December 2010
Rating class
Loans to companies
UnauOverdraft
thorised
account
Large
and cards
loans
Prime (A)
SME
Loans
Loans
and
and
advances advances
Other
to state to banks
Total
34,264
152,097
132,938
310
442,540 152,578
36,897
5,409
85,663
1,042,696
-
1,834
1,801
118
156,205 403,129
5,651
-
285
569,023
Substandard (C)
-
1,960
10,502
112
60,556
85,192
18
-
-
158,340
Default (D)
-
222
311
32
11,894
38,789
80
-
-
51,328
11,112
Standard (B)
Impairments
Total
-
1,086
2,043
403
48,756
5,484
-
-
68,884
(232)
(2,135)
(5,586)
(491)
(20,339) (63,341)
(4,832)
-
(40)
(96,996)
34,032
155,064
142,009
484
661,968 665,103
43,298
5,409
85,908
1,793,275
Loans to retail increased by 2% as compared to the previous year. Housing loans increased most, namely by 9%, overdraft accounts
increased by 3%, whereas consumer loans went down. Loan quality remained high like the previous year (2011: 94% of loans was
classified prime).
Lending to corporates decreased by 2% compared with the previous year, with the quality of these loans decreasing on account of the
increase in insolvency proceedings and defaults.
Credit exposure to banks and sovereigns decreased in 2011. The Bank mainly deals with low risk sovereign entities and banks.
73
2.25.1.5 Credit risk exposure according to maturity
Loans according to maturity
31 December 2011
Bank
Loans neither past
due nor impaired
Loans past due
- individually impaired
Loans past due
- not impaired
Impairments
Total
Loans to
private
Loans to
individuals companies
31 December 2010
Loans to
state
Loans to
banks
Loans to
private
Loans to
Loans to
state
Loans to
banks
340,866
1,264,650
2,705
55,064
335,138
1,354,975
5,409
85,947
5,437
202,495
-
1
3,773
105,283
-
1
941
9,620
-
-
1,051
1,371
-
-
(9,348)
(124,006)
-
(11)
(8,444)
(88,507)
-
(40)
337,896
1,352,759
2,705
55,054
331,518
1,373,122
5,409
85,908
31 December 2011
GROUP
Loans neither past
due nor impaired
Loans past due
- individually impaired
Loans past due
- not impaired
Impairments
Total
Loans to
private
Loans to
31 December 2010
Loans to
state
Loans to
banks
Loans to
private
Loans to
Loans to
state
Loans to
banks
340,932
1,261,347
2,705
55,064
335,208
1,352,204
5,409
85,947
5,437
202,536
-
1
3,773
105,305
-
1
942
9,620
-
-
1,052
1,372
-
-
(9,348)
(124,010)
-
(11)
(8,444)
(88,512)
-
(40)
337,963
1,349,493
2,705
55,054
331,589
1,370,369
5,409
85,908
The increase in defaulting loans is the result of unfavourable economic conditions and the increase in insolvency proceedings.
Loans and advances past due and individually impaired
31 December 2011
Bank
Loans to
private
Loans to
31 December 2010
Loans to
state
Receivables
up to 30 overdue
Receivables over
30 to 90 days overdue
Receivables over
90 days overdue
4,005
Total
5,437
Fair value of collateral
5,385
135,758
-
Total
Loans to
private
Loans to
Loans to
state
Total
45
2,112
-
2,157
60
2,782
-
2,842
1,387
20,336
-
21,723
212
13,098
-
13,310
180,047
1
184,053
3,500
89,403
1
92,904
202,495
1
207,933
3,773
105,283
1
109,057
3,021
88,264
-
74
31 December 2011
GROUP
Loans to
private
Loans to
31 December 2010
Loans to
state
Receivables
up to 30 overdue
Receivables over
Receivables over
90 days overdue
4,005
Total
5,437
5,385
135,758
-
Total
Loans to
private
Loans to
Loans to
state
Total
45
2,114
-
2,159
60
2,782
-
2,842
1,387
20,339
-
21,726
213
13,098
-
13,311
180,083
1
184,089
3,500
89,425
1
92,926
202,536
1
207,974
3,773
105,305
1
109,079
3,021
88,264
-
Loans and advances past due but not impaired
31 December 2011
31 December 2010
Bank
Retail loans
Corporate
loans
Loans to
banks
Total
Retail loans
Corporate
loans
Loans to
banks
336
6,598
-
6,934
696
1,040
-
1,736
479
2,346
-
2,825
354
221
-
575
Total
Receivables
up to 30 overdue
Receivables over
Receivables over
90 days overdue
126
676
-
802
-
110
-
110
Total
941
9,620
-
10,561
1,051
1,371
-
2,422
912
7,215
-
1,093
1,421
-
31 December 2011
31 December 2010
GROUP
Receivables
up to 30 overdue
Receivables over
Receivables over
90 days overdue
Total
Retail loans
Corporate
loans
Loans to
banks
Total
Retail loans
Corporate
loans
Loans to
banks
337
6,598
-
6,935
697
1,041
-
1,738
479
2,346
-
2,825
355
221
-
576
126
676
-
802
-
110
-
110
942
9,620
-
10,562
1,052
1,372
-
2,424
1,093
7,215
-
1,093
1,421
-
Total
75
2.25.1.6 Credit risk exposure according to impairment approach
Exposure from loans
Bank
31 December 2011
Group approach
Rating class
31 December 2010
Individual approach
Loans Impairments
Group approach
Loans Impairments
Individual approach
Loans Impairments
Loans Impairments
Prime (A)
915,621
(2,702)
50,212
-
960,108
(3,585)
85,664
-
Standard (B)
433,671
(8,984)
93,225
(3,917)
339,717
(8,553)
229,031
(12,900)
11,386
(1,555)
161,169
(30,674)
9,681
(1,687)
148,539
(20,536)
Substandard (C)
Default (D)
2,425
(1,217)
75,248
(24,292)
3,138
(1,788)
48,190
(8,404)
8,283
(7,879)
130,539
(52,145)
6,825
(6,721)
62,055
(32,817)
1,371,386
(22,337)
510,393
(111,028)
1,319,469
(22,334)
573,479
(74,657)
Total
1,325,120
331,424
1,254,627
426,093
GROUP
31 December 2011
Group approach
Rating class
31 December 2010
Individual approach
Loans Impairments
Group approach
Loans Impairments
Individual approach
Loans Impairments
Loans Impairments
Prime (A)
912,079
(2,702)
50,212
-
957,032
(3,585)
85,664
-
Standard (B)
433,740
(8,984)
93,225
(3,917)
339,992
(8,553)
229,031
(12,900)
(20,537)
Substandard (C)
11,386
(1,555)
161,169
(30,674)
9,681
(1,687)
148,659
Default (D)
2,576
(1,217)
75,371
(24,292)
3,138
(1,788)
48,190
(8,404)
8,287
(7,883)
130,539
(52,145)
6,829
(6,725)
62,055
(32,817)
1,368,068
(22,341)
510,516
(111,028)
1,316,672
(22,338)
573,599
(74,658)
Total
1,325,120
331,424
1,254,627
426,093
The Bank and the Group recognize impairment charges in accordance with the internal methodology on the formation of impairment
charges and provisions in line with IFRS. Individually significant exposures and exposures where there is objective evidence for
impairment are impaired individually on the basis of estimated future cash flows, while other exposures are impaired collectively. As
at 31 December 2011 27% of the loan portfolio was assessed individually, representing 83% of impairment provisions (2010: 30% of the
loan portfolio or 76% of impairment charges).
According to loan type
Retail loans
Bank
31 December 2011
Group approach
Corporate loans
Overdraft
accounts
Unauthorised
and card Housing Consumer
account
limits
loans
loans
overdrafts
Large
companies
SME
Loans
and
advances
Other to state
Loans
and
advances
to banks
Total
35,205
171,549
129,038
893
519,807
453,247
58,942
2,705
-
1,371,386
(205)
(2,946)
(3,017)
(444)
(3,526)
(10,308)
(1,891)
-
-
(22,337)
Individual approach
-
477
10,082
-
131,215
276,843
36,711
-
55,065
510,393
- Impairments
-
(117)
(2,619)
-
(29,766) (64,299) (14,216)
-
(11)
(111,028)
0,58%
1,78%
4,05%
49,72%
35,000
168,963
133,484
449
- Impairments
Impairment compared to loan value
Total
5,11%
10,22%
16,84%
-
0,02%
7,09%
617,730 655,483
79,546
2,705
55,054
1,748,414
76
Retail loans
Bank
31 December 2010
Corporate loans
Overdraft
accounts
Unauthorised
account
limits
loans
loans
overdrafts
Group approach
Large
companies
SME
Loans
and
advances
Other to state
Loans
and
advances
to banks
Total
34,264
157,128
138,187
975
522,508
416,866
44,132
5,409
-
1,319,469
(232)
(2,135)
(3,257)
(491)
(3,324)
(11,169)
(1,726)
-
-
(22,334)
Individual approach
-
-
9,408
-
150,447
323,678
3,998
-
85,948
573,479
- Impairments
-
-
(2,329)
-
(17,016)
(52,166)
(3,106)
-
(40)
(74,657)
- Impairments
Total
0.68%
1.36%
3.78%
50.36%
3.02%
8.55%
10.04%
-
0.05%
5.12%
34,032
154,993
142,009
484
652,615
677,209
43,298
5,409
85,908
1,795,958
Retail loans
GROUP
31 December 2011
Corporate loans
Overdraft
accounts
Unauthorised
account
limits
loans
loans
overdrafts
Group approach
- Impairments
35,205
171,616
129,038
893
Loans
and
advances
Other to state
Large
companies
SME
528,548
441,121
58,942
2,705
Loans
and
advances
to banks
Total
-
1,368,068
(22,337)
(205)
(2,946)
(3,017)
(444)
(3,526)
(10,308)
(1,891)
-
-
Individual approach
-
477
10,082
-
131,338
276,843
36,711
-
55,065
510,516
- Impairments
-
(117)
(2,619)
-
(29,766)
(64,303) (14,216)
-
(11)
(111,032)
0.58%
1.78%
4.05%
49.72%
5.05%
10.39%
16.84%
-
0.02%
7.10%
35,000
169,030
133,484
449
626,594
643,353
79,546
2,705
55,054
1,745,215
Total
Retail loans
GROUP
31 December 2011
Corporate loans
Overdraft
accounts
Unauthorised
account
limits
loans
loans
overdrafts
Group approach
- Impairments
34,264
157,199
138,187
975
Large
companies
SME
531,859 404,647
Loans
and
advances
Other to state
44,132
5,409
Loans
and
advances
to banks
Total
-
1,316,672
(22,338)
(232)
(2,135)
(3,257)
(491)
(3,324)
(11,173)
(1,726)
-
-
Individual approach
-
-
9,407
-
150,449
323,797
3,998
-
85,948
573,599
- Impairments
-
-
(2,329)
-
(17,016)
(52,167)
(3,106)
-
(40)
(74,658)
0.68%
1.36%
3.78%
50.36%
2.98%
8.70%
10.04%
-
0.05%
5.13%
34,032
155,064
142,009
484
661,968
665,104
43,298
5,409
85,908
1,793,275
Total
Loans to banks are assessed individually, while loans to other borrowers are assessed individually and collectively, depending on the
amount of exposure and on the classification or assessment, whether there is objective evidence for impairment.
77
2.25.1.7 Concentration of exposures according to region and activity
Credit risk exposure according to region
The table below shows credit exposure according to geographical regions. The exposure according to region is determined in accordance
with address of the debtor or the issuer of a financial instrument.
BANK
31 December 2011
Loans and advances to state
Loans and advances to retail
Loans to corporates:
Slovenia
EU*
SE Europe
Other regions
Total
2,705
-
-
-
2,705
10,931
39,093
782
4,259
55,065
340,580
487
6,177
-
347,244
1,476,765
1,343,849
1,563
124,769
6,584
- large companies
633,509
-
14,317
3,196
651,022
614,687
1,563
110,452
3,388
730,090
- other
95,653
-
-
-
95,653
Impairments
(122,442)
(21)
(10,783)
(119)
(133,365)
Total
1,575,623
41,122
120,945
10,724
1,748,414
1,713,222
40,858
129,879
8,989
1,892,948
(86,406)
(20)
(10,381)
(184)
(96,991)
1,626,817
40,837
119,497
8,805
1,795,957
31 December 2010
Loans and advances
Impairments
Total
GROUP
31 December 2011
Slovenia
EU*
SE Europe
Other regions
Loans and advances to state
2,705
-
-
-
2,705
10,931
39,093
782
4,259
55,065
340,647
487
6,177
-
347,311
Loans and advances to retail
Total
1,340,587
1,563
124,769
6,584
1,473,503
- large companies
642,373
-
14,317
3,196
659,886
602,561
1,563
110,452
3,388
717,964
95,653
-
-
-
95,653
Impairments
(122,446)
(21)
(10,783)
(119)
(133,369)
Total
1,572,424
41,122
120,945
10,724
1,745,215
1,890,271
- other
31 December 2010
Loans and advances
Impairments
Total
1,710,547
40,858
129,878
8,988
(86,411)
(20)
(10,381)
(184)
(96,996)
1,624,136
40,838
119,497
8,804
1,793,275
* EU stands for countries included in European Union, except Slovenia.
Exposure according to region remains at the similar level as in the previous year. The Bank enters the SE Europe markets with due care
and only on the basis of good collateral. Loans are mainly granted to corporates owned by Slovene parent companies or to corporates
that Slovene companies cooperate with. A limit is in place for the largest exposure to the region.
78
Credit risk exposure according to industry
Bank
31 December 2011
Commerce
and motor
vehicle
Manufacturing
repairs Construction Finance Real estate
Loans and advances
to state
Loans and advances
to banks
Loans and advances
to retail
Professional,
scientific and
business
industry
Other
Private
individuals
Total
-
-
-
-
-
-
2,705
-
2,705
-
-
-
55,065
-
-
-
-
55,065
-
-
347,244
347,244
167,000 292,279
-
1,476,765
-
651,022
730,090
-
-
-
-
-
300,958
250,490
166,007
197,244
102,787
- large companies
191,090
119,373
45,606
103,100
10,492
34,087
- small and
medium sized
103,220
129,062
110,361
94,144
90,333
105,959
97,011
-
6,648
2,055
10,040
-
1,962
26,954
47,994
-
95,653
Impairments
(14,689)
(8,540)
(23,524)
(34,600)
(14,709)
(18,212)
(9,743)
(9,348)
(133,365)
Total
286,269
241,950
142,483
217,709
88,078
148,788 285,241
337,896
1,748,414
Loans and advances
306,101
246,004
155,617
297,202
94,929
152,987 300,146
339,962 1,892,948
Impairments
(13,893)
(9,044)
(19,071)
(14,987)
(9,601)
(13,686)
(8,265)
(8,444)
(96,991)
Total
292,208
236,960
136,546
282,215
85,328
139,301
291,881
331,518
1,795,957
- other
147,274
31 December 2010
GROUP
31 December 2011
Commerce
and motor
vehicle
Manufacturing
repairs Construction Finance Real estate
Loans and advances
to state
Loans and advances
to banks
Loans and advances
to retail
Professional,
scientific and
business
industry
Other
Private
individuals
Total
-
-
-
-
-
-
2,705
-
2,705
-
-
-
55,065
-
-
-
-
55,065
-
-
-
-
-
-
-
347,311
347,311
309,855
250,490
166,130
197,244
90,505
-
1,473,503
- large companies
199,831
119,373
45,729
103,100
10,492
34,087
147,274
-
659,886
- small and
medium sized
103,376
129,062
110,361
94,144
78,051
105,959
97,011
-
717,964
- other
167,000 292,279
6,648
2,055
10,040
-
1,962
26,954
47,994
-
95,653
Impairments
(14,693)
(8,540)
(23,524)
(34,600)
(14,709)
(18,212)
(9,743)
(9,348)
(133,369)
Total
295,162
241,950
142,606
217,709
75,796
148,788 285,241
337,963
1,745,215
Loans and advances
315,622
246,004
155,737
297,202
82,541
152,987 300,146
340,033
1,890,271
Impairments
(13,897)
(9,044)
(19,071)
(14,987)
(9,602)
(13,686)
(8,265)
(8,444)
(96,996)
Total
301,725
236,960
136,666
282,214
72,939
139,301
291,881
331,589
1,793,275
31 December 2010
In term of exposure by industry the exposure remains highest toward manufacturing, being quite a diversified group in itself, as it includes several types of production. In 2011 exposure to finance decreased the most. The Bank and the Group will continue to pursue the
objective of diversified investments according to industry and limit or reduce investments in the higher risk industries in 2012.
79
2.25.1.8 Exposure to credit risk from debt financial instruments
The table below features the carrying value of debt financial instruments classified according to issuer and rating by Moody’s Investor
Service.
31 December 2011
Issuer
Governments
Bank and Group
Rating by
Moody's
Financial
assets held
for trading
Held to maturity
investments
Total
financial
assets
Aaa do Aa3
-
-
21,818
31,415
53,233
-
-
23,212
190,342
213,554
-
-
-
1,261
1,261
1,148
3,956
34,136
23,195
62,435
A1 do A3
-
2,048
65,603
7,821
75,472
Baa1 do Baa3
-
-
7,458
-
7,458
11,406
606
4,822
-
16,834
535
1,213
-
-
1,748
-
-
5,736
5,072
10,808
Aaa do Aa3
Ba1 do Ba3
B2
Other
Available for sale
financial assets
A1 do A3
Ca
Banks
Financial assets
designated at fair
value through P&L
Aaa do Aa1
unrated *
Total
7,320
-
15,212
10,205
32,737
20,409
7,823
177,997
269,311
475,540
* All unrated securities has been classif ied into the highest rating class A in accordance with internal methodology. A quarter of the investments is government guaranteed and rated A1.
31 December 2010
Bank and Group
Issuer
Rating by
Moody's
Financial
assets held
for trading
Governments
Aaa do Aa3
1
12,255
45,659
Ba1 do Ba3
-
-
2,901
Banks
Aaa do Aa3
Total
financial
assets
190,447
32,390
280,753
-
-
2,901
-
9,337
81,333
75,623
-
166,293
1,984
39,615
-
-
44,792
18,446
3,831
7,460
-
-
29,737
Ba1 do Ba3
2,885
2,038
1,874
-
-
6,797
Neocenjeni *
7,498
-
16,111
10,203
-
33,812
32,023
29,445
194,954
276,273
32,390
565,085
Baa1 do Baa3
Total
Assets
pledged
3,193
A1 do A3
Other
Financial assets
designated at fair Available for sale Held to maturity
value through P&L financial assets
investments
* All unrated securities has been classif ied into the highest rating class A in accordance with internal methodology.
The Bank holds 89% of investments in sovereign and bank debt securities with a rating no lower than Baa3. As at 31 December 2011 investments in EU countries represent 99% of all investments, with exposure to more risky European Union countries (Italy, Spain, Greece)
amounting to EUR 15,201 thousand.
In 2011 the Bank additionally recognised impairment charges on debt financial instruments due to increased credit risk of the Republic
of Greece. The carrying amount of impaired financial instruments as at 31 December 2011 amounted to EUR 1,261 thousand (2010: EUR
2,466 thousand).
80
2.25.1.9 Exposure to credit risk from derivatives
Bank and Group
31 December 2011
31 December 2010
Fair value
Fair value
Derivatives - trading
Futures and forwards
9,313
6,965
Interest rate swaps
6,517
5,203
Currency swaps
1,314
443
9
34
17,153
12,645
Interest rate swaps
4,838
-
Total
4,838
-
Option
Total
Exposure to credit risk in derivatives is based on the possibility of counterparty failure to deliver. The Bank enters into interest rate swap
transactions with foreign banks (rating A1 or better), with the volume of these transactions increasing in 2011, also having a positive
impact from valuation. Currency swaps are also done with foreign banks and, to a lesser extent, with corporates.
The Bank enters into securities forwards with corporate clients. In the event of increased credit risk the Bank collateralizes its receivables
additionally with appropriate types of collateral. The fair value was up in 2011 due to a drop in the fair value of the underlying instrument.
2.25.1.10 Exposure to credit risk from Credit Linked Notes (CLN)
On 31 December 2011 the Bank held 3 bonds in an amount of EUR 6,852 thousand (2010: EUR 8,465 thousand) with Credit Linked Note
characteristics.
An overview of structured debt securities as at 31 December 2011:
CLN
Assumed credit
risk
ING AMSTERDAM
CLN type
Moody's rating
2011
Book value
‘CLN on Subordinated Loan’
-
3,137
Bank I.
AFINANCE B. V.
‘CLN on Subordinated Loan’
Bank II.
UBS ZURICH
‘Credit Inverse Note Floater’
Country I.
Caa1
1,748
-
1,967
Baa3
Two pertain to subordinated debt and another is a ‘’Credit Inverse Note Floater’’, meaning that the assumed credit risk of the state is
reflected in the price of the issued security.
In addition to the assumed credit risk all of the aforementioned structured debt securities also mean taking on the credit risk of the issuer.
The structured securities mentioned are recognized at fair value through profit or loss. The Bank monitors these carefully and limits the
volume of trading with them.
The Bank evaluates positions in these securities in accordance with the principle of ensuring an available market price. All of the securities that are quoted on the Reuters and Bloomberg terminals are valued at the quoted price.
In addition to the captioned methods of acquiring prices, the Bank also monitors the movement of zero-coupon interest rates (i.e. the
Zero Curve). To control fair value determination, the Bank uses prices and price fluctuations of comparable securities.
81
2.25.2 Market risk
Market risk is risk of change in the fair value of financial instruments due to changes in risk factors, being interest rates, currency rates
and financial instrument prices. The most significant risk type within market risk is positional risk pertaining to equity and debt financial
instruments and derivatives. Exposure to currency risk is low.
The Bank assesses market risk as the risk it is exposed to when performing trading activities and the risks it is exposed to in non-trading
activities pertaining to market risk factors.
Monitoring and reporting on the amount of exposure to market risk is done using limit systems and using a number of different methods
to measure market risk.
2.25.2.1 Measuring and managing market risk
Positional risk (the risk of change in value of financial investments) in equity and debt securities is present at the entire portfolio level as
well as at the level of individual transactions. The Bank calculates the exposure to positional risk at the portfolio level using the VaR method. As the usefulness of this method is limited, the exposure to positional risk, is also monitored using sensitivity analyses, whereby the
effect of change in different risk factors (e.g. interest rates) on the value of a financial instrument or a portfolio of financial instruments is
measured. The Bank also applies extraordinary conditions stress scenarios, which reflect the effect that such conditions in the financial
markets have on the value of financial instruments.
The Bank manages exposure to positional risk by also utilising a system of limits, which it regularly updates. These are basically separated
into trading and banking book limits and further from the aspect of financial instrument type, region and issuer. The Group measures
exposure to positional risk at the level of individual transactions, which is why it has put in place stop limits within its limit system, defined on the basis of the Group’s preparedness to assume risk.
Currency risk is measured daily by monitoring net positions according to individual foreign currencies, while also calculating daily
exposure to currency risk with the use of the VaR method. The exposure to currency risk is monitored with the use of foreign currency
position limits, which define the maximum level of an open net position according to an individual currency.
The Bank also enters into currency and interest rate derivative transactions. Its basic policy in the area of derivative trading is to enter
into transactions to hedge own positions and the positions of clients, whereby the latter transactions are hedged with counter positions.
Transactions are entered into with prime foreign banks.
In measuring market risk the Bank calculates the capital requirements pertaining to market risk for all items held for trading in line with
the Decision on the calculation of market risk capital requirements for banks and savings banks. The Group also calculates the capital
requirement for currency risk when the total open position exceeds 2% of regulatory capital.
On 31 December 2011 the Bank performed a potential stress scenario, where it simulated the effect a decrease of the carrying amounts of all equity instruments from the trading book by 20% and all debt instruments from the trading book by 10% would have on
the income statement an the capital. The simulation did not include instruments sold forward. The results of the stress scenario are
shown in the table below.
31 December 2011
Bank and Group
Effect on income statement
Effect on equity
Total
31 December 2010
Debt
securities
Equity
securities
Total
Debt
securities
Equity
securities
Total
(1,286)
(604)
(1,890)
(1,838)
(131)
(1,968)
(474)
(4,405)
(4,880)
(400)
(5,967)
(6,366)
(1,760)
(5,009)
(6,770)
(2,237)
(6,097)
(8,335)
82
2.25.2.2 Value-at-Risk analysis
The Value-at-Risk (VaR) technique is used by the Bank for trading items in normal market conditions. In doing so it tries to estimate potential loss, at a certain degree of probability and for a certain period of time. The technique is complemented by other methods, used
for assessment of a change in the value of financial instruments in the event of changes in risk factors.
For foreign currency and positional risk related to equity instruments (net trading position) the Bank utilises historical simulation. Both
models feature market data for 1 year, a 99% level of confidence and a 10 day holding period. Testing in extreme situations, the so-called
’’stress testing’’ is undertaken periodically.
Trading VaR for the Group – (10 day holding period, 99% level of confidence):
31 December 2010
Average
value in 2011
Maximum
value in 2011
Minimum
value in 2011 31 December 2011
Total VaR
1,781
2,767
4,290
1,272
3,177
EQ VaR
1,779
2,761
4,259
1,270
3,172
2
6
31
2
5
FX VaR
Notes:
EQ VaR FX VaR Tradable equity securities VaR
Foreign currency VaR
The VaR of equity securities from the trading book fluctuated between EUR 1,270 thousand and EUR 4,259 thousand in 2011. The Bank
follows the closed currency position policy, which is why the value-at-risk for currency risk remained low throughout the year, fluctuating between EUR 2 thousand and EUR 31 thousand.
2.25.2.3 Sensitivity analysis for financial instruments included in the banking book
The interest rate sensitive financial instruments in the banking book are analysed using the method of interest rate gaps, where the
amount of the gap in an individual time interval is also limited. Exposure to interest rate risk is also measured using sensitivity analyses
and stress tests, prepared on the basis of the estimated duration gap. Based on these two methods different analyses of interest rate
sensitivity are performed, including stress scenarios.
The sensitivity analysis of all interest rate sensitive financial instruments in the banking book as at 31 December 2011 shows that with a
parallel increase of the interest curve by 50 basis points the net present value of financial instruments would increase by EUR 1,930 thousand. The effect on the net present value of financial instruments is calculated using the method of duration gaps between financials
assets and liabilities in the banking book.
The simulation of the effect of a change in the interest rate on the income statement shows than an increase of the interest rate by a 50
basis points increases the asset side interest income by EUR 6,880 thousand per year, while the liabilities side interest expenses increase
by EUR 5,621 thousand per year. The net interest income thus increases by EUR 1,259 thousand should the interest rate increase by fifty
basis points. The analysis included all interest sensitive transactions maturing or subject to interest fixing within a one year interval.
The liabilities side excludes at sight deposits as the Bank or the Group estimate these pertain to liabilities not sensitive to interest rates. A
change in the interest rate is anticipated, not however in the credit premium.
The banking book interest rate sensitive financial instruments are analysed in more detail within the framework of market risk, where
modified duration and value at risk are calculated.
83
2.25.2.4 Foreign currency risk
Foreign currency risk is financial risk and represents the danger of financial loss due to changes in currency rates. It is based on the
positions open in foreign currency. A change in rates thus directly affects asset value as well as foreign currency denominated liabilities,
expressed in the reporting currency. The Bank encounters foreign currency risk in international operations, being the result of:
- the assets and the liabilities of the Group are denominated in different currencies;
- the Group trades foreign currencies for its own account.
The risk of foreign currency exposure depends on the net foreign currency positions, on portfolio structure, the volatility of foreign
currencies and on the correlation between these variables.
The table below shows exposure to currency risk on 31 December 2011. It shows the carrying amounts of assets and liabilities according
to currency.
Exposure to foreign currency risk
Bank
31 December 2011
USD
CHF
Other
EUR
Total
112
212
450
167,389
168,163
-
-
-
52,817
52,817
Financial assets designated at fair value through P&L
-
-
-
7,823
7,823
-
-
-
203,201
203,201
Derivative financial instruments designated for hedging
-
-
-
4,838
4,838
Loans and advances
8,253
40,624
5,057
1,694,480
1,748,414
3,692
570
4,629
46,163
55,054
4,561
40,054
428
1,648,317
1,693,360
-
-
-
269,311
269,311
Assets pledged
-
-
-
-
-
1
-
3
2,154
2,158
TOTAL ASSETS
8,366
40,836
5,510
2,402,013
2,456,725
-
-
-
90,082
90,082
-
-
-
2,167
2,167
Financial liabilities designated at fair value through P&L
-
-
-
36,146
36,146
8,431
8,160
5,303
2,138,100
2,159,994
356
165
275
20,209
21,005
8,075
7,995
5,028
1,457,707
1,478,805
-
-
-
396,023
396,023
-
-
-
6,224
6,224
-
-
-
185,520
185,520
-
-
-
72,417
72,417
-
-
-
8
8
- due to customers
Other financial liabilities
2
-
-
8,583
8,585
8,433
8,160
5,303
2,275,086
2,296,982
(67)
32,676
207
126,927
159,743
-
32,797
485
287,014
320,296
21,285
53,819
5,376
2,485,374
2,565,854
8,611
13,140
2,730
2,357,718
2,382,199
Net balance sheet position on 31 December 2010
12,674
40,679
2,646
127,656
183,655
Off-balancesheet position on 31 December 2010 - Derivatives
13,027
40,699
2,286
41,685
97,697
TOTAL LIABILITIES
Off-balance sheet position on 31 December 2011 - Derivatives
31 December 2010
TOTAL ASSETS
TOTAL LIABILITIES
84
GROUP
31 December 2011
USD
CHF
Other
EUR
Total
112
212
450
167,389
168,163
-
-
-
52,817
52,817
Financial assets designated at fair value through P&L
-
-
-
7,823
7,823
-
-
-
203,201
203,201
-
-
-
4,838
4,838
Loans and advances
8,253
40,624
5,057
1,691,281
1,745,215
3,692
570
4,629
46,163
55,054
4,561
40,054
428
1,645,118
1,690,161
-
-
-
269,311
269,311
Assets pledged
-
-
-
1
-
3
5,235
5,239
8,366
40,836
5,510
2,401,895
2,456,607
-
-
-
90,082
90,082
-
-
-
2,167
2,167
Financial liabilities designated at fair value through P&L
-
-
-
36,146
36,146
8,431
8,160
5,303
2,138,097
2,159,991
356
165
275
20,209
21,005
8,075
7,995
5,028
1,457,703
1,478,801
-
-
-
396,024
396,024
-
-
-
6,224
6,224
-
-
-
185,520
185,520
TOTAL ASSETS
- due to customers
-
-
-
-
-
72,417
72,417
-
-
-
8
8
2
-
-
9,570
9,572
8,433
8,160
5,303
2,276,070
2,297,966
(67)
32,676
207
125,825
158,641
-
32,797
485
287,014
320,296
21,285
53,819
5,376
2,482,829
2,563,309
8,611
13,140
2,730
2,357,890
2,382,371
12,674
40,679
2,646
124,939
180,938
13,027
40,699
2,286
41,685
97,697
TOTAL LIABILITIES
31 December 2010
TOTAL ASSETS
TOTAL LIABILITIES
The table makes the high level of the open long CHF position evident. The Bank manages it using foreign currency derivatives (e.g. foreign
currency swaps).
Taking into account the foreign currency derivative transactions currency positions are nearly+ closed, which is why the effects of changes in foreign exchange rates are negligible.
85
2.25.2.5 Interest rate risk
Interest rate risk represents the exposure of the Bank’s and the Group’s financial position to unfavourable interest rate fluctuations, thus
impacting income statement as well as the economic value of receivables, liabilities and commitments and contingent liabilities or the
economic value of the Banka and the Group equity. For the most part the exposure is derived from interest rate sensitive assets with
different maturities and dynamics of interest rate changes as compared to interest sensitive liabilities.
The measurement of interest rate risk is based on the division of interest rate sensitive products to the banking book and the trading
book.
The interest rate risk the Bank and the Group were exposed to in 2011, was based on the unmatched maturities and renewed interest
rate fixing between interest rate sensitive assets and liabilities. This was the result of acquiring long-term fixed interest rate funding and
its use for variable interest rate investments as well as fixed ones with different maturities. The Bank and the Group reduced exposure
to interest rate risk with interest rate derivatives, using hedge accounting, to close larger transactions which had a significant effect on
the size of the interest rate gap. They plan to continue closing interest rate gaps in 2012 with the use of balance sheet instruments and
interest rate derivatives, whereby they will decrease the effect on the income statement due to a change in the fair value of the interest
rate derivative with the use of hedge accounting.
Bank
31 December 2011
Financial assets designated at
fair value through P&L
Loans and advances
Derivative financial instruments
Up to 1
month
1-3
months
3 -12
months
1- 5
years
Over 5 Noninterest
years
bearing
157,922
-
-
-
-
10,241
168,163
1,796
530
2,630
13,472
1,980
32,409
52,817
Total
2,099
1,200
-
3,929
595
-
7,823
11,462
45,716
21,535
95,858
3,426
25,204
203,201
489,945
396,590
772,849
67,069
21,961
-
1,748,414
54,988
-
66
-
-
-
55,054
434,957
396,590
772,783
67,069
21,961
-
1,693,360
6,884
15,212
10,406
183,397
53,412
-
269,311
4,838
-
-
-
-
-
4,838
-
-
-
-
-
2,158
2,158
TOTAL ASSETS
Financial liabilities designated
674,946
459,248
807,420
363,725
81,374
70,012
2,456,725
82
10,000
-
80,000
-
-
90,082
-
-
-
-
-
2,167
2,167
1,385
33,270
1,491
-
-
-
36,146
- due to customers
814,053
515,050
657,159
169,283
4,449
-
2,159,994
15,520
5,075
410
-
-
-
21,005
685,916
364,216
329,944
98,515
214
-
1,478,805
101,320
52,000
232,821
5,647
4,235
-
396,023
24
2,700
3,500
-
-
-
6,224
11,253
91,059
30,234
52,974
-
-
185,520
20
-
60,250
12,147
-
-
72,417
8
-
-
-
-
-
8
-
-
-
-
-
8,585
8,585
815,528
558,320
658,650
249,283
4,449
10,752
2,296,982
(140,582)
(99,072)
148,770
114,442
76,925
59,260
159,743
TOTAL LIABILITIES
GAP on 31 December 2011
31 December 2010
TOTAL ASSETS
698,710
494,247
885,216
329,204
71,297
87,180
2,565,854
TOTAL LIABILITIES
879,804
402,234
669,186
397,810
19,742
13,423
2,382,199
(181,094)
92,013
216,030
(68,606)
51,555
73,757
183,655
86
GROUP
31 December 2011
Loans and advances
Up to 1
month
1-3
months
3 -12
months
1- 5
years
Over 5 Noninterest
years
bearing
Total
157,922
-
-
-
-
10,241
168,163
1,796
530
2,630
13,472
1,980
32,409
52,817
2,099
1,200
-
3,929
595
-
7,823
11,462
45,716
21,535
95,858
3,426
25,204
203,201
489,910
395,022
771,439
66,883
21,961
-
1,745,215
54,988
-
66
-
-
-
55,054
434,922
395,022
771,373
66,883
21,961
-
1,690,161
6,884
15,212
10,406
183,397
53,412
-
269,311
4,838
-
-
-
-
-
4,838
-
-
-
-
-
5,239
5,239
TOTAL ASSETS
674,911
457,680
806,010
363,539
81,374
73,093
2,456,607
82
10,000
-
80,000
-
-
90,082
-
-
-
-
-
2,167
2,167
1,385
33,270
1,491
-
-
-
36,146
- due to customers
814,049
515,050
657,159
169,283
4,449
-
2,159,990
15,520
5,075
410
-
-
-
21,005
685,912
364,216
329,944
98,515
214
-
1,478,801
101,320
52,000
232,821
5,647
4,235
-
396,023
24
2,700
3,500
-
-
-
6,224
11,253
91,059
30,234
52,974
-
-
185,520
20
-
60,250
12,147
-
-
72,417
8
-
-
-
-
-
8
-
-
-
-
-
9,573
9,573
815,524
558,320
658,650
249,283
4,449
11,740
2,297,966
(140,613)
(100,640)
147,360
114,256
76,925
61,353
158,641
TOTAL LIABILITIES
31 December 2010
TOTAL ASSETS
698,636
492,172
884,685
329,204
71,296
87,316
2,563,308
TOTAL LIABILITIES
879,801
402,234
669,186
397,810
19,742
13,598
2,382,371
(181,165)
89,937
215,499
(68,605)
51,554
73,718
180,937
In the up-to 1 month interval the Bank included all at sight deposits on the liabilities side, which is why the interest rate gap is negative.
In 2011 it entered into interest rate swap transactions on bonds issued and deposits taken, which also affected the size of the interest rate
gap. By entering into interest rate swaps the Bank and the Group decreased its exposure to interest rate risk.
87
2.25.3 Liquidity risk
Liquidity risk is the risk of ensuring liquidity, when the Bank and
the Group are not able to settle all due liabilities or they are forced to acquire funding at significantly higher cost and the market
liquidity risk, which arises when it is not possible to sell a position
in a financial instrument or replace it in a short period of time without significantly influencing market prices. From the time point
of view it is possible to distinguish between the management of
operational liquidity and the management of structural liquidity.
In banks the duration gaps in assets and liabilities are common,
as transforming short-term funding into long-term loans is a core
role they play, however the Bank and the Group expose themselves
to liquidity risk in doing so. Due to this fact the Bank and the Group have set up an efficient liquidity management system, which
includes:
- analysis and planning of future cash flows,
- maintaining very liquid assets within liquidity reserves,
- monitoring target values and limits pertaining to operational and
structural liquidity through the system of internal and external
reporting,
- ensuring an adequate diversification of liquidity sources and
- preparing scenarios simulating extraordinary liquidity conditions.
The Bank prepares three different scenarios of extraordinary liquidity conditions, which are based on a dynamic analysis of liquidity
gaps:
- a scenario adapted to its own liquidity position (an idiosyncratic
scenario), which assumes the impossibility of renewing liquidity
sources,
- a scenario based on the market situation (market scenario), which provides for a drop in the liquidity of assets, and
- scenarios based on a combination of the above two scenarios.
Based on the results of scenarios dealing with extreme liquidity
conditions the Bank determined the minimum amount of liquidity
reserves and its structure. The Bank has set up procedures of early liquidity shortage detection, whereby it also regularly monitors
the trends related to individual products and the market situation.
Additionally, it pays special attention to warning signals pointing
to extreme liquidity conditions. At the onset of possible warning
signs the Bank has set up a crisis plan, which defines the most efficient ways of managing the positions in the event of extraordinary
liquidity conditions. In such an event the Bank would be active
in two ways, namely in the acquisition of additional, alternative
funding and in the appropriate communication with the public.
88
Exposure to liquidity risk
Bank
31 December 2011
Financial assets designated at fair
Loans and advances
TOTAL ASSETS
Carrying
amount
Total cash flow
(undiscounted)
Up to 1
1-3
3 - 12
month months months
1 - 5 Over 5
years
years
168,163
168,170
168,170
-
-
-
-
52,817
63,285
32,707
6
3,749
16,180
10,643
7,823
9,101
61
196
182
4,875
3,787
123,164
4,042
203,201
219,337
28,885
20,039
43,207
1,748,414
1,944,846
315,157
140,017
505,679
55,054
55,070
55,003
-
67
1,693,360
1,889,776
260,154
140,017
505,612
269,311
327,064
3,688
20,172
17,226
212,543
73,435
4,838
4,838
4,838
-
-
-
-
2,158
2,158
2,158
-
-
-
-
2,456,725
2,738,799
555,664
180,430
570,043
90,082
92,686
-
10,144
-
82,542
-
2,167
2,167
2,167
-
-
-
-
674,963 309,030
-
-
674,963 309,030
1,031,725 400,937
36,146
46,484
-
2,537
2,455
7,405
34,087
2,159,994
2,278,310
711,618
286,461
569,442
602,388
108,401
21,005
21,218
15,580
5,218
420
-
-
1,478,805
1,519,386
674,433
232,332
377,676
233,526
1,419
396,023
433,909
13,661
6,228
150,674
207,868
55,478
6,224
6,591
-
377
2,781
3,433
-
185,520
208,770
7,888
42,258
34,560
124,064
-
72,417
88,436
56
48
3,331
33,497
51,504
8
8
8
-
-
-
-
-
-
- due to customers
TOTAL LIABILITIES
8,585
8,585
8,585
-
-
2,296,982
2,428,240
722,378
299,142
571,897
692,335 142,488
159,743
310,559
(166,714) (118,712)
(1,854)
339,390 258,449
96,612
96,612
OFF-BALANCE SHEET
Guarantees
96,612
-
-
-
-
Other commitments
176,113
176,113
176,113
-
-
-
-
TOTAL on 31 December 2011
272,725
272,725
272,725
-
-
-
-
TOTAL ASSETS
2,565,854
2,825,408
578,232
255,161
684,630
967,514
339,871
TOTAL LIABILITIES
2,382,199
2,516,734
787,598
306,585
607,621
664,982
149,948
183,655
308,675
(209,366)
(51,424)
77,009
302,532
189,923
31 December 2010
OFF-BALANCE SHEET
Guarantees
80,261
80,261
80,261
-
-
-
-
Other commitments
171,227
171,227
171,227
-
-
-
-
251,488
251,488
251,488
-
-
-
-
89
GROUP
31 December 2011
Financial assets designated at fair
Loans and advances
TOTAL ASSETS
Carrying
amount
Total cash flow
(undiscounted)
Up to 1
1-3
3 - 12
month months months
1 - 5 Over 5
years
years
168,163
168,170
168,170
-
-
-
-
52,817
63,285
32,707
6
3,749
16,180
10,643
7,823
9,101
61
196
182
4,875
3,787
203,201
219,337
28,885
20,039
43,207
123,164
4,042
1,745,215
1,941,608
315,200
137,592
505,159
674,920
308,737
55,054
55,070
55,003
-
67
-
-
1,690,161
1,886,538
260,197
137,592
505,092
674,920
308,737
269,311
327,064
3,688
20,172
17,226
212,543
73,435
4,838
4,838
4,838
-
-
-
-
5,239
5,239
5,239
-
-
-
-
2,456,607
2,738,642
558,788
178,005
569,523
1,031,682
400,644
90,082
92,686
-
10,144
-
82,542
-
2,167
2,167
2,167
-
-
-
-
36,146
46,484
-
2,537
2,455
7,405
34,087
2,159,990
2,278,305
711,613
286,461
569,442
602,388
108,401
- due to customers
21,005
21,218
15,580
5,218
420
-
-
1,478,801
1,519,381
674,428
232,332
377,676
233,526
1,419
396,023
433,909
13,661
6,228
150,674
207,868
55,478
-
6,224
6,591
-
377
2,781
3,433
185,520
208,770
7,888
42,258
34,560
124,064
-
72,417
88,436
56
48
3,331
33,497
51,504
TOTAL LIABILITIES
8
8
8
-
-
-
-
9,573
9,573
9,573
-
-
-
-
2,297,966
2,429,223
723,361
299,142
571,897
692,335
142,488
158,641
309,419
(164,573) (121,137)
(2,374)
339,347
258,156
OFF-BALANCE SHEET
Guarantees
96,612
96,612
96,612
-
-
-
-
Other commitments
174,202
174,202
174,202
-
-
-
-
270,814
270,814
270,814
-
-
-
-
TOTAL ASSETS
2,563,309
2,823,541
578,348
251,932
684,139
968,277
340,845
TOTAL LIABILITIES
2,382,371
2,516,906
787,770
306,585
607,621
664,982
149,948
180,938
306,635
(209,422)
(54,653)
76,518
303,295
190,897
31 December 2010
OFF-BALANCE SHEET
Guarantees
80,261
80,261
80,261
-
-
-
-
Other commitments
171,004
171,004
171,004
-
-
-
-
251,265
251,265
251,265
-
-
-
-
90
The table discloses undiscounted cash flow on 31 December 2011,
which in addition to the carrying amounts of financial instruments
includes the anticipated future cash flows from interest. The
amounts disclosed are based on spot rates and interest rates at
the reporting date. Innovative subordinated bonds do not mature
at any certain date, are however callable in 2017. This is the reason
these instruments have been included in the ‘’over 5 years’’
category. The interest cash flow has been calculated for 6 years.
Despite the abovementioned ratios and limits between individual
categories or capital components, hybrid instruments, which may
be included in Tier 1 capital, carry additional limitations.
Potential surpluses in individual categories or capital components
above the limits set may not be considered in the calculation of
capital.
Tier 1 capital
The liquidity gap within the up to one month time interval is
negative, however the fact must be taken into account that it
includes all at sight deposits within financial liabilities, even
though the Central Bank, in line with the regulation, only considers
at sight deposits 60% weighted for stability. Financial assets
though feature securities included in liquidity reserves recorded
at remaining maturity, not in the up to one month interval. Taking
into account the group stated in the interval up to one month, the
Bank and the Group actually recorded a liquidity surplus.
Liquidity gaps changed as compared with 31 December 2010,
especially in the 1 to 3 month and the 3 to 12 month intervals,
both namely saw a decrease in asset side transactions, which was
higher than the decrease in the liabilities side transactions. The
Bank and the Group liquidity gaps in the over 1 year interval are
positive and have exceeded the surpluses from the previous year.
2.25.4 Capital and capital adequacy
In its operations the Bank and the Group must always exhibit an
appropriate level of capital to be able to secure the assets of its
clients and investors. An adequate capital base is security for the
different types of risks the Bank and the Group are exposed to
in their ordinary course of business. They must have sufficient
capital to suit the risk of their operations and their business
strategy.
In accordance with the provisions of Basel II and the Decision on
the calculation of bank and savings bank capital, it is divided into
three categories:
- Tier 1 capital,
- Tier 2 capital,
- Tier 3 capital.
Tier 1 capital represents the highest quality of capital and may
be used, together with Tier 2 capital, for the fulfilment of capital
requirements relating to credit, market and operational risk. Tier 3
capital may only be used for the fulfilment of capital requirements
relating to market risk, except the capital requirements for
settlement risk and counterparty credit risk.
The Bank and the Group must fulfil certain ratios and adhere to
certain limits in connection with individual capital components at
all times. The more significant ratios and limits comprise:
- Tier 2 capital may not exceed the level of Tier 1 capital,
- the sum of preferential cumulative shares with a fixed return and
subordinated debt included in the Tier 2 capital may not exceed
50% of the Tier 1 capital.
The components of Tier 1 capital:
- paid up share capital and capital reserves from regular shares,
except share capital, paid in on the basis preferred cumulative
shares of related capital reserves,
- reserves and retained profit, free from potential future liabilities
and approved at the General Meeting of Shareholders in the
amount, which is assumed to remain part of capital and will not
be distributed; retained loss is included under this item as well,
- hybrid instruments based on Tier 1 capital within limits, namely:
∞ transitional period hybrid instruments without incentive for
pay-out (preferred non-cumulative shares) and
∞ transitional period hybrid instruments with incentive for payout (subordinated registered bond).
Deductibles from the Bank’s and the Group’s Tier 1 capital:
- own shares, with the characteristics of Tier 1 capital,
- other negative effects from (net) revaluation surpluses, namely
the negative effects from revaluation surpluses in connection
with equities and shares, available-for-sale and designated at fair
value (included in the banking and trading book) and availablefor-sale debt securities as well as those recognised at fair value
(included in the trading book).
- intangible long-term assets,
- hybrid instrument surpluses above the prescribed Tier 1 limit.
Tier 2 capital
The Bank’s and the Group’s Tier 2 capital comprises:
- 80% of the amount of positive effects from surplus from the
revaluation of available-for-sale equities and interests as well
as those designated at fair value (included in the banking and
trading book) and available-for-sale debt securities as well as
those recognised at fair value (included in the trading book),
- surplus from hybrid instruments in the part exceeding the limit
for inclusion in Tier 1 capital (subordinated registered bond),
- subordinated debt for inclusion in Tier 2 capital (which is
gradually discounted from Tier 2 capital at a 20% cumulative
discount during the last five years prior to maturity).
Deductions from Tier 1 and Tier 2 capital
As at 31 December 2011 and 31 December 2010 the Bank and the
Group did not exhibit any deduction from Tier 1 and Tier 2 capital,
as stipulated under Article 30 of the Decision on the calculation
of own funds, capital requirements and capital adequacy of banks
and savings banks.
Tier 3 capital
As at 31 December 2011 and 31 December 2010 the Bank and the
Group did not have any debt instruments in issue, which would
merit inclusion into Tier 3 capital.
91
Capital and capital requirements
I.
1.
TOTAL CAPITAL for capital adequacy
requirements (1+2)
TIER 1 capital
2011
2010
2011
2010
277,717
297,629
278,489
298,141
220,461
205,101
219,859
206,009
13,584
13,584
13,584
13,584
Share premium (regular shares)
36,658
36,658
36,820
36,820
111,720
125,376
112,334
125,731
68,102
68,067
68,102
68,067
18,102
18,067
18,102
18,067
50,000
50,000
50,000
50,000
(24,963)
(23,826)
(24,831)
(23,741)
(401)
(401)
(401)
(401)
(4,921)
(5,251)
(4,925)
(5,256)
(406)
(1,153)
(406)
(1,153)
(19,235)
(17,021)
(19,099)
(16,931)
Hybrid instruments
Transitory period hybrid instruments,
without pay-out incentives
Transitory period hybrid instruments,
with pay-out incentives
Deductibles from TIER 1 capital:
(-) Own shares
(-) Intangible long-term assets
(-) Revaluation reserves (RR) - available
for sale - prudential filters
(-) Hybrid instrument surplus
II.
GROUP
Paid-up share capital (regular shares)
Profit reserves and retained profit
2.
Bank
TIER 2 capital
72,616
77,770
72,480
77,680
Surplus of individual capital compnents,
distributable to Tier 2 capital
(Hybrid instruments surplus)
Tier 1 capital adjustments, transferable
to Tier 2 capital - prudential filter
19,235
17,021
19,099
16,931
2,563
5,452
2,563
5,452
Subordinated debt
50,818
55,297
50,818
55,297
154,092
156,784
154,073
156,778
136,834
138,638
136,935
138,715
CAPITAL REQUIREMENTS
Capital requirements for
credit and counterparty risks
Capital requirements for position
and foreign exchange risks
5,822
6,548
5,822
6,548
Capital requirement for operational risk
11,436
11,598
11,316
11,515
III.
CAPITAL ADEQUACY RATIO
(I / II x 8) (in %)
14.42%
15.19%
14.46%
15.21%
IV.
TIER 1 CAPITAL ADEQUACY RATIO
(I.1. / II x 8) (in %)
10.65%
11.22%
10.70%
11.25%
The capital for capital adequacy purposes decreased in comparison the year before due to the loss the Bank and the Group made in
2011. Lower capital requirements are the consequence of additional impairment costs in 2011, which decreased the Bank’s and the
Group’s exposure to credit risk. The drop in capital also impacted the decrease of the capital adequacy and Tier 1 capital ratios.
In 2011 a proposal of the new capital directive CRD IV was adopted, with new legislation coming into effect in 2013. In preparing for the
changes brought about by the new legislation, the Bank has been analysing the movements in capital and the fluctuations in capital
ratios in line with the provisions of the new capital accord.
92
2.25.5 Fair value of financial assets and liabilities
a) Financial instruments not measured at fair value
Bank
Carrying amount
Fair value
2011
2010
2011
2010
1,748,414
1,795,957
1,785,761
1,827,052
55,054
85,908
55,063
85,917
1,693,360
1,710,049
1,730,698
1,741,135
269,311
276,273
268,132
286,636
-
32,390
-
33,574
2,017,725
2,104,620
2,053,893
2,147,262
Financial assets
Loans
Assets pledged
Total financial assets
Financial liabilities
Deposits from the Central bank
- due to customers
- borrowings from costumers
Financial liabilities associated
to transferred assets
Total financial liabilities
90,082
70,013
85,031
69,964
2,159,994
2,227,372
2,158,343
2,241,468
21,005
54,435
21,171
54,433
1,478,805
1,498,961
1,483,804
1,505,400
396,023
419,335
393,997
421,940
6,224
8,847
6,192
8,858
185,520
160,436
181,422
163,861
72,417
85,358
71,757
86,976
-
30,993
-
30,995
2,250,076
2,328,378
2,243,374
2,342,427
93
GROUP
Carrying amount
2011
Fair value
2010
2011
2010
Financial assets
Loans
1,745,215
1,793,275
1,782,544
1,824,375
55,054
85,908
55,063
85,917
1,690,161
1,707,367
1,727,481
1,738,458
269,311
276,273
268,132
286,636
Assets pledged
-
32,390
-
33,574
2,014,526
2,101,938
2,050,676
2,144,585
90,082
70,013
85,031
69,964
2,159,990
2,227,369
2,158,339
2,241,466
21,005
54,435
21,171
54,433
1,478,801
1,498,958
1,483,800
1,505,398
396,023
419,335
393,997
421,940
6,224
8,847
6,192
8,858
185,520
160,436
181,422
163,861
72,417
85,358
71,757
86,976
-
30,993
-
30,995
2,250,072
2,328,375
2,243,370
2,342,425
Total financial assets
Financial liabilities
Deposits from the Central bank
- due to customers
- borrowings from costumers
Total financial liabilities
To calculate the fair values of held-to-maturity financial assets
the Bank and the Group used the quoted market prices and the
methodology based on discounting future cash flows for all other
items.
Discount factors for financial assets are calculated on the basis of
the reference zero coupon curve according to individual currency.
The discount factors for financial liabilities are calculated on the
basis of the interest rate curve for institutions with international
ratings such as those assigned to the Bank.
The statement of financial position shows loans and other
receivables in net amounts, meaning that these have been
decreased by the impairment charges.
b) Fair value hierarchy
The Bank defines a hierarchy of valuation techniques based on
whether the inputs for those valuations are published or not.
Published inputs reflect market data obtained from independent
sources; non-published inputs reflect the Group’s market
assumptions.
Level 2 – inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices). This level
includes the majority of the OTC derivative contracts, issued
structured debt, certificates of deposit and financial liabilities
issued by the Group (subordinated bonds BCE 10 and certificates
of deposit). The sources of input parameters like EURIBOR yield
curve or counterparty credit risk are Bloomberg and Reuters.
Level 3 - inputs for an asset or liability that are not based on
published market data. This level includes equity investments
with significant components not based on observable market
data.
This hierarchy requires the use of published market data when
available. The Group considers relevant and published market
prices in its valuations where possible.
These two types of inputs have created the following fair value
hierarchy:
Level 1 – quoted prices (unadjusted) in active markets for identical
assets or liabilities. This level includes listed equity securities and debt
instruments on exchanges (for example, Ljubljana Stock Exchange).
94
Assets and liabilities measured at fair value (Bank and Group)
31 December 2011
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value:
19,771
27,690
5,356
52,817
Debt securities
9,872
10,537
-
20,409
Equity securities
9,899
-
5,356
15,255
Derivatiaves
-
17,153
-
17,153
5,834
1,989
-
7,823
Debt securities
5,834
1,989
-
7,823
25,605
29,679
5,356
60,640
Financial liabilities designated at fair value
-
36,146
-
36,146
Derivatives
-
2,167
-
2,167
Total liabilities
-
38,313
-
38,313
Total assets
Financial liabilities measured at fair value:
31 December 2010
Level 1
Level 2
Level 3
Total
26,075
31,091
8,199
65,365
Debt securities
13,576
18,446
-
32,023
Equity securities
12,498
-
8,199
20,698
Derivatiaves
-
12,645
-
12,645
27,460
1,985
-
29,445
Debt securities
27,460
1,985
-
29,445
Total assets
53,534
33,077
8,199
94,810
at fair value through profit or loss
-
40,050
-
40,050
Derivatives
-
6,014
-
6,014
Total liabilities
-
46,064
-
46,064
Financial liabilities measured at fair value:
95
b) Fair value of financial instruments
Reconciliation of Level 3 items (Bank and Group)
The fair value of financial instruments traded on an organised
market is determined using observable market prices on the
reporting date, being the price, representing the best bid for the
financial instrument.
Equity instruments
As at 1 January 2010
Profit / Loss
Sale
Settlements
Profit / Loss
Sale
Settlements
As at 31 December 2010
17,841
(9,642)
8,199
(2,843)
-
Fair values of financial instruments not traded on organized markets are determined using valuation models. These include comparisons with the prices from the most recent transactions, the
use of discounted future cash flows and other frequently used
valuation methods. All models in use have been verified to ensure
that the results offer an adequate representation of actual market
conditions, including the relative liquidity of the market and the
use of adequate market surpluses. Changes in the estimates of
these factors would impact the reported fair value of held for trading investments and available for sale financial assets.
5,356
c) Available for sale equity instruments
The Bank performed a sensitivity analysis, wherein it simulated
the effect a 3rd level decrease in the carrying amount of equity
financial instruments has on the income statement. Should the
fair value of these financial instruments decrease by 20%, this
would have a negative effect on the income statement in the
amount of EUR 1,071 thousand (2010: EUR 1,640 thousand).
2.26 Critical accounting estimates and
judgements
All the estimates and judgements used represent the best judgements in accordance with IFRS, made in line with the applicable
standards and are based on the principles of an active company,
on past experience and other factors, including expectations with
regard to future events.
a) Impairment losses on loans and advances
With the objective of determining impairment charges the Bank
and the Group are constantly (or at least on a quarterly basis) reviewing their loan portfolio. Prior to making the decision
on recognising loss through the income statement, they make
judgement if any information exists, which could signify a drop in
the estimated cash flows from loans. Such evidence includes the
information on deterioration of debtor creditworthiness or on
deterioration of economic conditions and circumstances. Future
cash flows from financial assets are estimated on the basis of past
experience and loss from credit risk bearing assets, like assets
within the group. In estimating future cash flow data is also considered, which reflects the effects of current circumstances. Individual estimations are prepared on the basis of projected future
cash flows including all relevant information in relation to the financial position and debtor creditworthiness as well as collateral.
The methodology and presumptions, used in estimating future
cash flow are based on regular reviews aimed at decreasing the
differences between the estimated and actual losses. Should the
current value of future cash flows decrease by 1 percentage point,
it would result in additional impairment charges in the amount of
EUR 3,994 thousand for the Bank and EUR 3,995 thousand for the
Group.
Available for sale equity instruments are impaired when a substantial or long-term drop in their fair value below original cost
has been recorded. The determination of what represents a substantial and long-term decrease in fair value is based on estimates.
In setting these estimates, in addition to other factors, the Group
takes into account share price volatility. The impairment is designated by evidence on the deterioration of the financial position
of the instrument’s issuer, the deterioration in the industry and a
decrease in operational and financial cash flows. If all decreases
of fair value below original cost were significant or long-term the
Bank and the Group would realize additional losses from impairment charges in the amount of EUR 2,781 thousand, with the reclassification from the statement of comprehensive income to the
income statement for the year.
d) Held to maturity investments
This group of investment features non-derivative financial instruments with fixed payments and a fixed maturity. Prior to classification the intention and capacity to hold such an investment
until maturity is verified. Should the Group not be able to hold
the investment until maturity, the entire group would have to be
reclassified as available for sale financial assets. In this case the
investments are required to be revalued at fair value, which would
result in an increase of the value of investments, subsequently
increasing equity by EUR 1,605 thousand.
96
2.27 Segment reporting
The Bank's operations comprise three segments:
- retail, incorporating private client accounts, savings, deposits,
certificates of deposit, insurance brokerage products, credit
and debit cards, loans, mainly small businesses and private
individuals;
- corporates, incorporating current accounts, deposits, loans and
other credit facilities and payment operations, mainly small and
large corporates;
- financial markets, incorporating financial instruments trading,
securities issued and interbank relationships.
In its operations the Bank primarily performs credit and deposit
operations. Segments are disclosed according to the methodology
used in the preparation of internal report and are discussed at the
ALCO, which also comprises Management Board members. The
heads of individual areas of operation receive detailed reports on
the operation of their units during the year. Throughout the year
there have been no significant changes in reportable segments.
Transactions between segments for the purpose of internal
accounting are based on harmonized transfer bases (internal
transfers of income effects between segments, keys for the
transfer of service and administrative unit costs to profit centres).
Net interest is included in the report in accordance with the
market transfer prices, whereby transfer income is applied to
some transactions and transfer expenses to others as well as
transfer interest margins, pointing to the contribution of an
individual transaction to the net interest of the Group.
The transfer pricing system for the allocation of net interest
revenue has been methodologically designed and confirmed by
the Assets and Liabilities Management Committee, which receives,
together with individual segment heads, reports on the transfer
prices of interest bearing assets and liabilities on a monthly basis.
Liabilities and assets are shown according to segment based on
the segment they were acquired from or the segment they were
invested in.
97
The report on operations according to segments in 2011:
Bank
31 December 2011
Retail
Corporates
Financial markets
Total
Total income
43,402
65,579
32,300
141,281
- external income
43,402
65,248
32,300
140,950
-
331
-
331
Net interest and similar (loss)
24,596
22,451
1,880
48,927
10,937
5,717
(268)
16,386
364
(403)
7,168
7,129
(129)
(113)
(102)
(344)
(26,654)
(8,115)
(2,653)
(37,422)
(137)
112
(571)
(596)
(1,563)
(35,939)
(15,168)
(52,670)
7,414
(16,290)
(9,714)
(18,590)
-
-
-
- income from other segments
Net gains from financial transactions
Depreciation and amortisation expenses
Provisions
Impairment charges
Deferred tax
Net loss
Segment assets
3,715
(14,875)
538,305
1,178,496
740,999
2,457,800
Subisidiary
-
12,340
-
12,340
Not allocated
-
-
-
Total assets
Segment liabilities
20,773
2,490,913
796,641
706,512
792,628
Not allocated
-
-
-
13,799
Equity
-
-
-
181,333
Other segment items
Investments in property and equipment
and in intangible assets
2,295,781
2,490,913
515
777
383
1,675
1,156
1,747
861
3,764
Reconciliation of segment results to consolidated financial statements:
Total segment
reporting
Consolidation and
adjustments
Total consolidated
48,927
(32)
48,895
16,386
(1)
16,385
7,129
-
7,129
31 December 2011
Amortisation
Provisions
(344)
769
425
(37,422)
(667)
(38,089)
(596)
(1)
(597)
Impairment charges
(52,670)
(8)
(52,678)
(18,590)
60
(18,530)
3,715
-
3,715
(14,875)
60
(14,815)
Total assets
2,490,913
1,852
2,492,765
Segment liabilities
2,309,580
1,016
2,310,596
181,333
836
182,169
2,490,913
1,852
2,492,765
Income tax expense
Profit for the year
Equity
98
The report on operations according to segments in 2010:
Bank
31 December 2010
Retail
Corporates
Financial markets
Total
Total income
37,475
68,489
30,086
136,050
- external income
37,475
68,169
30,086
135,730
-
320
-
320
Net interest and similar (loss)
19,584
30,697
4,786
55,067
10,247
6,288
(274)
16,261
543
118
4,375
5,036
(270)
(156)
(33)
(459)
(27,428)
(9,559)
(2,763)
(39,750)
272
(131)
127
268
(1,827)
(21,650)
(7,521)
(30,998)
1,121
5,607
(1,303)
5,425
-
-
-
- income from other segments
Depreciation and amortisation expenses
Provisions
Impairment charges
Deferred tax
Net loss
Segment assets
(925)
4,500
508,981
1,225,707
830,470
Subisidiary
-
14,697
-
14,697
Not allocated
-
-
-
18,225
Total assets
Segment liabilities
2,565,158
2,598,080
800,812
725,525
855,751
Subisidiary
-
13
-
13
Not allocated
-
-
-
16,053
Equity
-
-
-
199,926
Other segment items
Investments in property and equipment
and in intangible assets
2,382,088
2,598,080
761
1,389
611
2,761
1,035
1,891
831
3,757
Reconciliation of segment results to consolidated financial statements:
Total segment
reporting
Consolidation and
adjustments
Total consolidated
55,067
(59)
55,008
16,261
(1)
16,260
5,035
6
5,041
31 December 2010
Amortisation
Provisions
Impairment charges
(459)
753
294
(39,749)
(406)
(40,155)
279
(28)
251
(31,009)
(5)
(31,014)
5,425
260
5,685
Income tax expense
(925)
(1)
(926)
Profit for the year
4,500
259
4,759
Total assets
2,598,080
1,137
2,599,217
Segment liabilities
2,398,154
361
2,398,515
Equity
199,926
776
200,702
2,598,080
1,137
2,599,217
99
Reconciliation of results by geographic area:
Bank
31 December 2011
Revenues
Non current assets
Slovenia
113,517
1,441,482
European Union
18,664
205,079
7,779
43,433
Former Yugoslav countries
Other
Total
1,321
28,357
141,281
1,718,351
Bank
31 December 2010
Revenues
Non current assets
123,827
1,445,199
European Union
6,576
260,433
6,940
28,946
Other
(1,293)
50,748
Total
136,050
1,785,326
Slovenia
Structurally, the Group makes the major share of revenue in the domestic market. During the reported period in 2011 the Group did not
make 10% or more of total revenue from operations with any single client. The same applies to the previous reporting period.
100
NOTES TO INDIVIDUAL ITEMS INCLUDED IN CONSOLIDATED
3 Net interest and similar income - amounts in thousands of EUR
Bank
GROUP
2011
2010
2011
2010
Interest and similar income
115,799
112,663
115,778
112,628
Loans and advances to customers
90,858
89,639
90,837
89,604
Securities
- held for trading
- financial assets designated at fair value through profit or loss
- available for sale financial assets
- held to maturity investments
Deposits with Central Bank
671
404
671
404
18,108
19,837
18,108
19,837
1,266
1,374
1,266
1,374
386
971
386
971
5,915
5,680
5,915
5,680
10,541
11,812
10,541
11,812
559
374
559
374
5,603
2,409
5,603
2,409
(66,872)
(57,596)
(66,883)
(57,620)
Loans and advances from customers
(34,201)
(30,844)
(34,212)
(30,868)
Loans and advances from banks
(15,820)
(12,188)
(15,820)
(12,188)
(334)
(974)
(334)
(11,792)
(1,798)
Derivatives - interest rate swap
Interest and similar expense
Loans and deposits from Central Bank
Issued securities and CDs
(13,347)
(11,792)
(13,347)
Derivatives - interest rate swap
(3,170)
(1,798)
(3,170)
(974)
48,927
55,067
48,895
55,008
In 2011 the Bank and the Group realized EUR 23,853 thousand of revenue from individually impaired loans (2010: EUR 28,709 thousand).
The Bank and the Group accounted for EUR 4,608 thousand interest from subordinated bonds (of which EUR 125 thousand are discounts from bond sales) and EUR 262 thousand is interest from the subordinated certificates of deposit included in interest expense.
4 Dividend income
Bank and Group
2011
2010
Dividends from financial assets held for trading
453
441
Dividends from available for sale financial assets
423
287
Total
876
728
101
5 Net fee and commission income
Bank
Group
2011
2010
2011
2010
18,772
18,812
18,771
18,811
Card operations
6,954
7,006
6,954
7,006
Payment services
6,794
6,597
6,793
6,596
Guarantees
1,741
1,662
1,741
1,662
Account maintenance
3,012
3,142
3,012
3,142
Other services
271
405
271
405
Fee and commission expenses
(2,386)
(2,551)
(2,386)
(2,551)
Card operations
(1,496)
(1,639)
(1,496)
(1,639)
Payment services
(619)
(600)
(619)
(600)
Brokerage commissions and other securities transactions
(178)
(172)
(178)
(172)
Other services
(93)
(140)
(93)
(140)
16,386
16,261
16,385
16,260
6Gains less losses from financial assets and liabilities
not classified at fair value through profit or loss
Bank and Group
Debt securities
2011
2010
1,085
1,637
(14)
706
Equity securities
1,099
931
Financial assets recognised at amortised cost
(534)
(240)
551
1,397
Total
In 2011 a small profit was attained from financial assets not classified at fair value through profit or loss. It was mainly the
result of the sale of mutual fund units.
102
7 Gains less losses from financial assets
and liabilities held for trading
Bank and Group
2011
2010
Equity securities
(573)
(296)
Debt securities
(163)
(10)
599
740
Forwards and futures with underlying securities
Currency derivative financial instruments
IRS and options (Interest rate cap)
Foreign currency trading
Total
924
(8,884)
1,815
1,303
387
329
2,989
(6,818)
The Group uses currency derivatives to economically hedge open currency positions, therefore their effects must be
considered together with the effects of foreign exchange differences (Note 10).
8 Gain less losses from financial assets and liabilities
Bank and Group
2011
2010
(Losses) / gains from bond valuation
(332)
108
Gains / (losses) from valuation securities in issue
3,930
(161)
Total
3,598
(53)
Income from the valuation of bonds is the result of the fair value valuation of bonds purchased. The Group provides fair value
on the basis of quotes available from information platforms (Reuters or Bloomberg).
In 2011 the Group recognized a profit of EUR 3,930 thousand from securities issued based on valuation in accordance with
its internal model.
9 Changes in fair value from hedge accounting
Bank and Group
2011
2010
Net profit / (loss) from hedging derivatives
4,906
(390)
Net profit / (loss) from hedged instruments
(5,106)
488
(200)
98
Total
Using hedge accounting the Group hedged the fair value of some of its financial liabilities related to a change in interest rates.
103
10 Gains less losses from foreign exchange differences
Bank and Group
Positive exchange rate differences
Negative exchange rate differences
Total
2011
2010
13,967
24,460
(14,647)
(14,797)
(680)
9,663
Compared with the previous year, 2011 saw a substantially lower result from foreign exchange differences.
11 Gains less losses from derecognition of assets
Bank
Sale of office space and housing
GROUP
2011
2010
2011
2010
-
18
-
24
Sale of computer and other equipment
(5)
2
(5)
2
Total
(5)
20
(5)
26
Loss from derecognition of assets other than held for sale in 2011 pertains to disposal of obsolete computer and other equipment.
12 Other net operating profit / loss
Bank
GROUP
2011
2010
2011
2010
296
301
1,065
1,058
-
-
769
757
Income from leases
182
186
182
186
Other operating income
114
115
114
115
Expenses
(640)
(760)
(640)
(764)
Taxes and other duties
(448)
(108)
(448)
(111)
-
(298)
-
(298)
(91)
(119)
(91)
(120)
Income
Income from property sales
Fees and commissions reimbursed
Membership fees
Contributions to humanitarian organisations
(79)
(112)
(79)
(112)
Other expenses
(22)
(123)
(22)
(123)
(344)
(459)
425
294
Total
Taxes and other duties in 2011 pertain to expenses from tax on total assets.
104
13 Administrative expenses
Bank
GROUP
2011
2010
2011
2010
Labour costs
(18,752)
(20,553)
(19,022)
(20,819)
Gross salaries and compensations
(13,486)
(14,357)
(13,694)
(14,553)
Pension insurance
(1,903)
(2,047)
(1,918)
(2,072)
Social security
(1,022)
(1,097)
(1,048)
(1,111)
Other labour expenses
(2,341)
(3,052)
(2,362)
(3,083)
(14,906)
(15,439)
(15,276)
(15,565)
General and administrative expenses
IT
(3,516)
(4,125)
(3,516)
(4,125)
Business cards
(2,383)
(2,365)
(2,383)
(2,365)
Maintenance
(1,771)
(1,885)
(1,784)
(1,901)
(893)
Advertising
(787)
(893)
(787)
Rent
(719)
(740)
(720)
(740)
Material and energy costs
(658)
(668)
(675)
(696)
(407)
Office stationery costs
(564)
(399)
(569)
Audit and consultancy
(244)
(237)
(440)
(358)
(4,264)
(4,127)
(4,402)
(4,080)
(33,658)
(35,992)
(34,298)
(36,384)
Other services
Total
On 31 December 2011 the Bank had 530 employees (2010: 538 employees), of which 39.10% were educated at the university level at
least, 19.60% were held post-secondary school education, 38.50% held secondary school diplomas, while 2.80% were educated at a
lower level. The average complement in 2011 was 535 employees. Data on employees is given in more detail under item 6.6 of the
business report.
The Subsidiary employed 4 workers as at 31 December 2010 and 2011.
In the amount of auditing and consultancy costs for 2011 the figure of EUR 53 thousand comes from the auditing of the annual report,
with the rest of the costs represented by the payment for supervision and other consultancy services.
14 Amortisation and depreciation
Note
BANK
GROUP
2011
2010
2011
2010
27
(2,364)
(2,527)
(2,367)
(2,531)
Amortisation of intangible assets
29
(1,400)
(1,230)
(1,401)
(1,231)
Depreciation of investment property
28
-
-
(23)
(9)
(3,764)
(3,757)
(3,791)
(3,771)
Depreciation of property and equipment
Total
105
15
Provisions
Note
BANK
GROUP
2011
2010
(414)
85
2011
2010
Provisions for contingent liabilities
43
Provisions for liabilities to employees
43
(74)
462
(74)
452
Provisions for pending legal action
43
(108)
(268)
(108)
(268)
(596)
279
(597)
251
Total
(415)
67
Most of the provisions in 2011 were made for contingent liabilities from granted undrawn loans and from guarantees, while provision
were released in 2010.
16
I mpairment charges
BANK
Impairment of loans measured at amortised cost
GROUP
2011
2010
2011
2010
(39,160)
(23,491)
(39,160)
(23,496)
Impairment of available for sale financial assets
(9,758)
(7,518)
(9,758)
(7,518)
Impairment of equity securities
(7,518)
(9,782)
(7,518)
(9,782)
Impairment of debt securities
92
-
92
-
Impairment of mutual funds
(68)
-
(68)
-
(3,752)
-
(3,752)
-
-
-
(8)
(5)
(52,670)
(31,009)
(52,678)
(31,019)
Impairment of held to maturity investments
Impairment of other assets
Total
In 2011 the Group saw loans and securities impaired more than in the previous year. The deterioration of economic conditions and
increased lack financial discipline increased the volume of impairment charges on financial investments of the Bank and Group by
70%.
106
17
Income tax expense
BANK
Note
Current tax
Deferred tax
31,2
Income tax expense
Pre-tax loss
GROUP
2011
2010
2011
2010
-
(1,409)
-
(1,409)
3,715
484
3,715
483
3,715
(925)
3,715
(926)
(18,590)
5,425
(18,530)
5,455
Tax calculated at 20%
3,717
(1,085)
3,733
(1,091)
Expenses not deductible for tax purposes
(169)
(248)
(172)
(250)
224
Tax relief / (utilization of unrecognized tax losses)
Income not assessable for tax purposes
Total
-
222
(13)
167
186
167
191
3,715
(925)
3,715
(926)
Deferred tax receivables result from the loss and the valuation of available for sale financial assets to a lower fair value.
The tax administration may conduct a tax audit for the current reporting period at any time during the next five years and impose
additional liability or penalty on the basis of its findings. The Management Board is not aware of any circumstances, which could
potentially cause liability.
18
Basic and diluted earnings per share
BANK
Net loss - holders of preference shares
GROUP
2011
2010
2011
2010
(2,976)
900
(2,964)
952
Net loss - holders of regular shares
(11,899)
3,600
(11,851)
3,807
Number of regular shares
406,653
406,653
406,653
406,653
(29)
9
(29)
9
Basic and diluted net earnings
per share (EUR per share)
Basic loss or earnings per share are calculated by dividing net profit by the weighted average number of ordinary shares issued,
decreased by the treasury shares. Issued subordinated debt securities are not convertible to equity, which is why they do not
represent potential new shares.
107
19
Bank and Group
2011
2010
Cash in hand
10,240
10,691
Balances with Central Bank
157,923
117,633
Total
168,163
128,324
The Group increased deposits with the Central Bank in 2011 on the basis of the balance of overnight deposits.
The average minimum reserve requirement amounted to EUR 25,696 thousand in 2011 (2009: EUR 26,535 thousand).
The Bank must fulfil the minimum reserve requirement with the Central Bank. The minimum reserve requirement amount depends
on the volume and structure of deposits received. Currently the Bank of Slovenia requires a minimum reserve in the amount of 2% on
all deposits and debt securities with maturities up to 2 years. The Bank was able to fulfil the reserve requirement in 2010
without difficulty.
The minimum reserve requirement funds are usually at the full disposal of the Bank for daily operations, that is why they are included
in cash and cash equivalents in full (Note 49).
20
financial assets Held for trading
Bank and Group
Note
Derivatives
20a
2011
2010
17,153
12,645
Debt instruments
20,409
32,023
Bonds
11,019
14,722
- listed on stock exchange
11,019
14,722
- OTC
-
-
9,390
17,301
Equity securities
15,255
20,697
Shares
Certificates of deposit
15,255
20,697
- listed on stock exchange
9,899
12,498
- OTC
5,356
8,199
Total
52,817
65,365
The Group reduced the held for trading financial assets in 2011 in the debt as well as equity instruments segment.
Financial assets held for trading did not form part of assets pledged in 2010 nor in 2011, and no debt securities with original maturities
up to three months are held.
108
20a Derivatives
Bank and Group
Contractual amount
Fair value
2011
2010
2011
2010
Derivatives
IRS
Currency swaps
Option (Interest rate cap)
Total
33,611
46,140
9,313
6,965
131,724
75,303
6,517
5,203
56,766
75,306
1,314
443
12,000
10,000
9
34
234,101
206,749
17,153
12,645
In 2011 the Group decreased the volume of forward agreements, the fair value of which amounted to EUR 9,313 at the end of the
year (2010: EUR 6,965 thousand). The higher fair value for the segment is the result of a decrease in the market prices of securities.
Interest rate swaps for the hedging of a bond issued have the largest effect on the fair value recorded pertaining to interest rate
swaps. Here the Group paid lower variable interest to receive higher fixed interest thus achieving a net positive result. The positive
valuation of interest rate swaps increased, mainly due to an increase in their volume.
In 2011 the Group reduced the volume of currency swap transactions, whereby the fair value increased due to the fluctuation of
foreign currency rates.
21
F inancial assets designated aT fair value
Bank and Group
2011
2010
Bonds
7,823
29,445
Total
7,823
29,445
Debt instruments
The decrease in investments in financial assets at fair value through profit or loss in 2011 is the result of securities maturing, with a
negative impact totalling EUR 332 thousand coming from the loss from valuation of bonds to a higher fair value (Note 8).
Under financial instruments recognized at fair value through profit or loss, the Group reports particularly bonds with built-in
derivative financial instruments that may have a significant impact on expected cash flows. The Group has prepared a policy for
these investments, which also defines the required return and the investment period.
In 2011 and 2010 the Group did not pledge any financial assets designated at fair value through profit and loss.
109
22
2011
Bank and Group
2010
Balance
Impairment
Balance
Impairment
Debt instruments
177,997
-
195,046
(92)
Bonds
177,997
-
191,098
(92)
-
-
3,948
-
Equity instruments
49,716
(26,663)
50,699
(16,881)
Shares
(16,881)
Bills and treasury bonds
46,758
(24,953)
47,742
Interests
2,958
(1,710)
2,957
-
Mutual funds
3,015
(864)
10,403
(3,146)
Total gross
230,728
(27,527)
256,148
(20,119)
Total net
203,201
236,029
Investments in equity securities comprise investments in shares and interests shown at fair value and at cost. The investments at
cost include investments in the amount of EUR 3,172 thousand, comprising investments in Bankart, d.o.o., Ljubljana, Kreditni biro
Sisbon, d.o.o., Skupna pokojninska družba, d.d., Ljubljana, KDD, d.d., Ljubljana, Regionalna razvojna agencija, d.o.o., Celje and in Swift
La Hulpe, Belgium. With the exception of the Regionalna razvojna agencija, d.o.o., Celje, where the Bank holds an interest of 15.7%,
the Bank’s other investments represent a smaller equity interests.
Changes in available for sale financial assets:
Equity securities
Balance on 1 January 2011
Debt securities
Shares
Interests
Mutual
funds
Bonds and
certificates of deposit
Bills and
treasury notes
Total
available for sale
financial assets
30,861
2,957
7,257
191,006
3,948
236,029
Purchase
892
-
350
50,305
-
51,547
Sale
(6,000)
(26)
-
(5,974)
-
-
Investments
-
-
-
(5,001)
-
(5,001)
Realization at maturity
-
-
-
(57,815)
(4,000)
(61,815)
Change in fair value
(1,849)
-
587
(591)
52
(1,801)
Transfer to impairment
(8,071)
(1,711)
(68)
92
-
(9,758)
Balance on 31 December 2011
21,807
1,246
2,152
177,996
-
203,201
Equity securities
Shares
Balance as at 1 January 2010
Purchase
Sale
Investments
Change in fair value
Transfer to impairment
Balance as at 31 December 2010
Interests
Debt securities
Mutual
funds
Bonds and
certificates of deposit
Bills and
treasury notes
Total
available for sale
financial assets
48,859
506
6,539
191,307
9,950
257,161
6,606
2,451
-
44,469
3,944
57,470
(16,478)
-
-
(13,113)
-
(29,591)
-
-
-
(31,504)
(9,997)
(41,501)
(608)
-
718
(987)
(13)
(890)
(7,518)
-
-
-
-
(7,518)
-
-
-
834
64
898
30,861
2,957
7,257
191,006
3,948
236,029
Impairments of shares amounted to EUR 8,071 in 2011.
110
23
2011
Bank and Group
At sight
2010
Balances
Impairment
Balances
Impairment
19,418
-
22,027
-
Short-term loans
35,569
-
61,687
-
Long-term loans
78
(11)
2,234
(40)
Total gross
55,065
(11)
85,948
(40)
Total net
55,054
85,908
Cash and cash equivalents (Note 49) include loans to banks with maturity up to 90 days, in the amount of EUR 54,985 thousand (2010:
EUR 83,714 thousand).
In 2010 and 2011 impairments were reported for loans to one foreign commercial bank.
24 Loans and advances to customer
24.1 Analysis by types of borrowers, by transactions, maturity and currency:
Bank
31 December 2011
Short-term
Impairment of
short-term
Long-term
Impairment of
long-term
582,295
(82,703)
1,196,783
(48,058)
-
-
2,705
-
49,310
(3,080)
275,915
(5,128)
35,205
(205)
-
-
-
-
156,050
(2,747)
13,212
(2,431)
119,865
(2,381)
893
(444)
-
-
Loans to companies
532,985
(79,623)
918,163
(42,930)
- large companies
186,326
(20,930)
456,182
(12,289)
- SME
313,792
(47,259)
399,484
(25,974)
32,867
(11,434)
62,497
(4,667)
7,255
(92)
40,381
(2,501)
-
-
22,019
(1,140)
- housing loans
-
-
15,976
(316)
Local currency
Loans and advances to public sector
- housing loans
- consumer loans
- other
Foreign currency
- consumer loans and other
-
-
6,043
(824)
7,255
(92)
18,362
(1,361)
- large companies
5,103
(58)
3,411
(14)
- SME
2,152
(34)
14,662
(1,341)
-
-
289
(6)
589,550
(82,795)
1,237,164
(50,559)
Loans to companies
- other
Total
Net total according to maturity
Net total according to total maturity
506,755
1,186,605
1,693,360
111
BanK
31 December 2010
Local currency
Short-term
Impairment of
short-term
Long-term
Impairment of
long-term
670,128
(57,174)
1,060,270
(37,232)
-
-
5,409
-
50,574
(3,318)
265,282
(4,338)
34,264
(232)
-
-
-
-
139,151
(2,003)
15,335
(2,595)
126,131
(2,335)
- housing loans
- consumer loans
975
(491)
-
-
619,554
(53,856)
789,579
(32,894)
- large companies
264,125
(13,726)
397,940
(6,523)
- SME
350,960
(37,389)
348,935
(24,288)
4,469
(2,741)
42,704
(2,083)
Loans to companies
- other
Foreign currency
16,677
(400)
59,925
(2,145)
-
-
24,107
(788)
- housing loans
-
-
17,978
(132)
-
-
6,129
(656)
16,677
(400)
35,818
(1,357)
5,753
(58)
5,137
(32)
10,924
(342)
29,724
(1,317)
-
-
957
(8)
686,805
(57,574)
1,120,195
(39,377)
Loans to companies
- large companies
- SME
- other
Total
629,231
1,080,818
1,710,049
GROUP
31 December 2011
Short-term
Impairment of
short-term
Long-term
Impairment of
long-term
578,645
(82,703)
1,197,238
(48,062)
-
-
2,705
-
49,310
(3,080)
275,982
(5,128)
35,205
(205)
-
-
Local currency
- housing loans
-
-
156,117
(2,747)
13,212
(2,431)
119,865
(2,381)
893
(444)
-
-
Loans to companies
529,335
(79,623)
918,551
(42,934)
- large companies
186,326
(20,930)
465,045
(12,289)
- SME
310,138
(47,255)
391,009
(25,978)
32,871
(11,438)
62,497
(4,667)
7,255
(92)
40,381
(2,501)
-
-
22,019
(1,140)
- housing loans
-
-
15,976
(316)
- consumer loans
- other
Foreign currency
-
-
6,043
(824)
7,255
(92)
18,362
(1,361)
- large companies
5,103
(58)
3,411
(14)
- SME
2,152
(34)
14,662
(1,341)
-
-
289
(6)
585,900
(82,795)
1,237,619
(50,563)
Loans to companies
- other
Total
503,105
1,187,056
1,690,161
112
GROUP
31 December 2010
Local currency
Short-term
Impairment of
short-term
Long-term
Impairment of
long-term
667,081
(57,171)
1,060,640
(37,240)
-
-
5,409
-
50,578
(3,318)
265,348
(4,338)
34,264
(232)
-
-
4
-
139,217
(2,003)
15,335
(2,595)
126,131
(2,335)
- housing loans
- consumer loans
975
(491)
-
-
Loans to companies
616,503
(53,853)
789,883
(32,902)
- large companies
264,820
(13,726)
406,597
(6,523)
347,214
(37,386)
340,582
(24,296)
4,469
(2,741)
42,704
(2,083)
- SME
- other
Foreign currency
16,677
(400)
59,925
(2,145)
-
-
24,107
(788)
- housing loans
-
-
17,978
(132)
-
-
6,129
(656)
16,677
(400)
35,818
(1,357)
5,753
(58)
5,137
(32)
10,924
(342)
29,724
(1,317)
-
-
957
Loans to companies
- large companies
- SME
- other
Total
683,758
(57,571)
626,187
1,120,565
(8)
(39,385)
1,081,180
1,707,367
113
24.2 Impairments and write-offs for customers, by types of credit facilities:
Bank
Balance on
1 January 2010
Changes in
impairments
Write-offs
Balance on
31 December 2010
Changes in
impairments
Write-offs
Balance on
31 December 2011
Account
overdrafts
Unauthorised
and credit Housing Consumer
account
Loans to
Large
card limits
loans
loans
overdrafts Others individuals companies
323
2,988
3,825
546
49
(91)
(825)
-
(28)
1,812
76
(49)
(51)
(131)
-
232
2,135
5,586
491
-
(27)
932
-
(4)
221
27
(171)
(74)
205
3,063
5,636
444
7,731
Loans to
SME Others companies
66,025
Total
14,298
47,192
4,535
73,756
923
7,198
16,437
297
23,932
24,855
(210)
(1,157)
(293)
-
(1,450)
(1,660)
8,444
20,339
63,336
4,832
88,507
96,951
-
1,153
12,952
12,885
11,275
37,112
38,265
-
(249)
-
(1,613)
-
(1,613)
(1,862)
-
9,348
33,291
74,608
16,107
124,006
133,354
GROUP
Balance on
1 January 2010
Changes in
impairments
Write-offs
Balance on
31 December 2010
Changes in
impairments
Write-offs
Balance on
31 December 2011
Account
overdrafts
Unauthorised
and credit Housing Consumer
account
Loans to
Large
card limits
loans
loans
overdrafts Others individuals companies
323
2,988
3,825
546
49
(91)
(825)
-
(28)
1,812
76
(49)
(51)
(131)
-
232
2,135
5,586
491
-
(27)
932
-
(4)
221
27
(171)
(74)
205
3,063
5,636
444
7,731
Loans to
SME Others companies
66,029
Total
14,298
47,196
4,535
73,760
923
7,198
16,438
297
23,933
24,856
(210)
(1,157)
(293)
-
(1,450)
(1,660)
8,444
20,339
63,341
4,832
88,512
96,956
-
1,153
12,952
12,880
11,279
37,111
38,264
-
(249)
-
(1,613)
-
(1,613)
(1,862)
-
9,348
33,291
74,608
16,111
124,010
133,358
114
25
25a Analysis by type of held to maturity investments
Bank and Group
2011
2010
Balance
Impairment
Balance
Impairment
Bonds
221,058
(3,752)
276,273
-
Treasury bills
52,005
-
-
-
Total
273,063
(3,752)
276,273
-
Total 25a
269,311
276,273
25b Securities pledged
Bank and Group
2011
2010
Balance
Impairment
Balance
Impairment
Government bonds
-
-
32,390
-
Total 25b
-
-
32,390
-
Total 25a and 25b
269,311
308,663
The Bank did not have any government bonds held to maturity pledged in 2011 (2010: EUR 32,390 thousand).
Changes in held to maturity investments:
Bank and Group
Debt instruments
Bonds
Treasury bills
Total held to maturity
investments
308,663
-
308,663
Purchase
59,533
51,862
111,395
Transfer from AFS
5,025
-
5,025
Impairment
Accrued interest
(3,752)
-
(3,752)
(150,557)
-
(150,557)
11,130
143
11,273
Interest paid
(12,736)
-
(12,736)
217,306
52,005
269,311
Bank and Group
Debt instruments
Total held to maturity
investments
Bonds
Treasury bills
231,849
83,346
315,195
112,218
-
112,218
(36,498)
(83,346)
(119,844)
12,090
102
12,192
Interest paid
(10,996)
(102)
(11,098)
308,663
-
308,663
Purchase
Accrued interest
During 2011 the Bank reclassified Greek Government bonds from available for sale financial assets to held to maturity investments.
In 2011 the Bank purchased bonds of the Republic of Slovenia as well as bonds issued by prime banks.
115
26 Hedging derivatives
Contractual amount
Bank and Group
Fair value
2011
2010
2011
2010
Hedge accounting
189,150
20,000
4,838
-
Total
189,150
20,000
4,838
-
The Bank hedged issued bonds and some deposits from interest rate risk by entering into an interest rate swap in 2011. These instruments are accounted for in accordance with hedge accounting practices as fair value hedges.
27
Bank
Note
Cost on 1 January 2010
Additions
Transfer from assets in
course of construction
Assets in
course of
construction
Total
8,316
1
54,710
-
1,617
1,617
Land and
buildings
Computer
hardware
Other
equipment
33,508
12,885
-
-
11
1,344
218
(1,573)
-
(144)
(997)
(475)
-
(1,616)
33,375
13,232
8,059
45
54,711
19,761
9,238
5,167
-
34,166
645
1,232
650
-
2,527
(125)
(974)
(459)
-
(1,558)
Revaluation on 31 December 2010
20,281
9,496
5,358
-
35,135
Net present value on 31 December 2010
13,094
3,736
2,701
45
19,576
33,375
13,232
8,059
45
54,711
-
-
-
605
605
Disposals
Cost on 31 December 2010
Revaluation on 1 January 2010
Depreciation charge
14
Disposals
Additions
61
316
144
(521)
-
-
(1,188)
(283)
-
(1,471)
33,436
12,360
7,920
129
53,845
20,281
9,496
5,358
-
35,135
Disposals
Depreciation charge
515
1,247
602
-
2,364
-
(1,179)
(277)
-
(1,456)
20,796
9,564
5,683
-
36,043
12,640
2,796
2,237
129
17,802
Disposals
14
116
GROUP
Note
Additions
Disposals
Land and
buildings
Computer
hardware
Other
equipment
Assets in
course of
construction
Total
33,584
12,902
8,378
1
54,865
-
-
-
1,619
1,619
11
1,344
220
(1,575)
-
(144)
(998)
(477)
-
(1,619)
33,451
13,248
8,121
45
54,865
19,766
9,248
5,222
-
34,236
Depreciation charge
14
645
1,236
650
-
2,531
(125)
(974)
(461)
-
(1,560)
20,286
9,510
5,411
-
35,207
13,165
3,738
2,710
45
19,658
33,451
13,248
8,121
45
54,865
-
-
-
1,475
1,475
Disposals
Additions
Disposals
Depreciation charge
Disposals
14
61
317
145
(523)
-
-
(1,196)
(286)
-
(1,482)
33,512
12,369
7,980
997
54,858
20,286
9,510
5,411
-
35,207
515
1,248
604
-
2,367
-
(1,188)
(280)
-
(1,468)
20,801
9,570
5,735
-
36,106
12,711
2,799
2,245
997
18,752
Larger purchases in 2011 are represented by purchases of computer equipment totalling EUR 316 thousand (POS terminals, ATMs,
personal computers) and the purchases of other equipment.
Property and equipment have not been pledged in 2011 or 2010.
The Group’s fixed assets in acquisition amounting to EUR 868 thousand pertain to the building of a new manufacturing facility in
Prebold that is intended to be leased.
117
28 Investment property
Group
Land
Buildings
Total
33
295
328
Additions
-
-
-
Transfer from inventory
-
1,539
1,539
Disposals
-
(29)
(29)
33
1,805
1,838
-
22
22
Depreciation charge
-
9
9
Disposals
-
-
-
-
31
31
-
1,774
1,807
33
1,805
1,838
Transfer from inventory
-
1,609
1,609
Disposals
-
(123)
(123)
33
3,291
3,324
-
31
31
Depreciation charge
-
23
23
Disposals
-
-
-
-
54
54
33
3,237
3,270
The total value of investment property pertains to the carrying amount of land and buildings acquired to be sold or leased out under
operating lease. The increase is the result of housing transferred from completed product inventories.
On 31 December 2011 estimated fair value of investment property amounted to EUR 3,695 thousand (2010: EUR 2,004 thousand).
118
29 Intangible assets
Bank
Note
Additions
Transfer from fixed assets in installatin
Software
licenses
Assets in course of
installation
Total
11,814
368
12,182
-
1,144
1,144
1,247
(1,247)
-
13,061
265
13,326
6,845
-
6,845
1,230
-
1,230
Value adjustments on 31 December 2010
8,075
-
8,075
4,986
265
5,251
13,061
265
13,326
-
1,070
1,070
1,175
(1,175)
-
Value adjustments on 1 January 2010
Amortisation charge
14
Additions
Disposals
(122)
-
(122)
14,114
160
14,274
8,075
-
8,075
1,400
Amortisation charge
1,400
-
Disposals
14
(122)
-
(122)
9,353
-
9,353
4,761
160
4,921
119
GROUP
Note
Additions
Software
licenses
Assets in course of
installation
Total
11,819
368
12,187
-
1,145
1,145
1,248
(1,248)
-
13,067
265
13,332
6,845
-
6,845
1,231
-
1,231
8,076
-
8,076
4,991
265
5,256
13,067
265
13,332
-
1,070
1,070
1,175
(1,175)
-
Amortisation charge
14
Additions
Disposals
Amortisation charge
14
(122)
-
(122)
14,120
160
14,280
8,076
-
8,076
1,401
1,401
-
Disposals
(122)
-
(122)
9,355
-
9,355
4,765
160
4,925
Larger purchases in 2011 are represented by investments in the completion of the data warehouse and investments in software,
mainly for retail operations, amounting to EUR 466 thousand, for payment operations in an amount of EUR 91 thousand and for Eaccount issues in the amount of EUR 77 thousand. EUR 234 thousand was spent for the purchasing of software licences (Microsoft).
The fair value of intangible assets at the end of the business year does not deviate from their carrying value.
120
30 Investments in subsidiaries
Posest d.o.o., Celje
Investment
amount
% of
ownership
% voting
rights
Equity
31 December 2010
2,257
100.00
100.00
2,124
29
31 December 2011
2,257
100.00
100.00
2,124
56
31
Operating
result
Income tax assets
31.1 Current tax assets
Bank
Group
2011
2010
2011
2010
Current tax
1,409
1,582
1,409
1,582
Deferred tax
7,799
3,412
7,802
3,415
Balance of assets as at 31 December
9,208
4,994
9,211
4,997
Current tax assets represent the tax paid in advance in an amount of EUR 1,409 thousand. Deferred tax in the amount of EUR 7,802
thousand (the Bank EUR 7,799 thousand) is detailed under item 31.2.
31.2 Deferred tax assets
Bank
Available-for-sale securities
Tax loss
Marketable securities
Deferred tax assets
Group
2011
2010
2011
2010
5,935
3,030
5,935
3,030
375
343
372
346
1,521
-
1,521
-
-
10
-
10
7,799
3,412
7,802
3,415
The major part of deferred taxes is represented by receivables for deferred tax from impairment of available for sale instruments.
Due to the decrease in their fair value and the recorded revaluation expenses the Bank formed deferred tax assets. Based on the loss
it made and the planned profits for the coming five-year period, the Bank established deferred tax assets.
121
Changes in deferred tax:
Bank
GROUP
2011
2010
2011
2010
3,412
2,756
3,415
2,760
(10)
-
(10)
-
- establishment of assets for impairment
2,720
1,504
2,720
1,504
- derecognition on disposal
(488)
(893)
(488)
(893)
Balance as at 1 January
Income statement changes
in deferred taxes:
Trading securities
- elimination of assets
Available for sale instruments - impairment
- establishment of assets
1
3
1
4
(29)
(130)
(29)
(132)
- establishment of assets
1,521
-
1,521
-
Changes in deferred taxes recorded
in income statement as at 31 December
3,715
484
3,715
483
- valuation by fair value
502
(1,453)
502
(1,453)
- elimination
170
1,625
170
1,625
Changes in deferred taxes recorded in
other comprehensive income as at 31 December
672
172
672
172
7,799
3,412
7,802
3,415
- elimination of assets
Tax loss
Changes in deferred taxes recorded
in OTHER COMPREHENSIVE INCOME:
Available for sale securities
Statement of financial position on 31 December
122
32 Other assets
Bank
Group
2011
2010
2011
2010
Financial assets
1,987
2,071
2,264
2,208
Other retail claims
2,021
2,045
2,021
2,045
Receivables from forwards
1,637
-
1,637
-
Receivables for credit / debit cards
550
734
550
734
Fee and commission due
413
281
413
281
-
-
310
145
112
79
98
82
Due from clients
Other claims
Impairment
(2,746)
(1,068)
(2,765)
(1,079)
Non-financial assets
171
148
2,975
4,190
Deferred operating expenses
130
141
130
146
41
7
2,732
4,027
-
-
113
17
2,158
2,219
5,239
6,398
Inventories
Input VAT receivables
Total
The decrease of other assets is the result of the decrease in inventories at the subsidiary company due to the sale of flats in the amount
of EUR 646 thousand and the transfer to investment property in the amount of EUR 1,353 thousand.
Changes in other asset impairments:
Balance 1 January 2010
Impairments
Bank
Group
1,078
1,084
42
47
(52)
(52)
Balance 31 December 2010
1,068
1,079
Impairments
1,739
1,747
(61)
(61)
2,746
2,765
Impairments release
Impairments release
33 Deposits from Central Bank
2011
2010
Short-term loans from ECB in local currency
10,060
70,013
Long-term loans from ECB in local currency
80,022
-
Total
90,082
70,013
Bank and Group
123
34financial liabilities Held for trading
Bank and Group
Contractual amount
Fair value
2011
2010
2011
2010
33,611
46,140
609
1,679
IRS
131,724
75,303
814
1,691
Foreign currency swaps
56,766
75,306
735
2,610
Options (interest rate cap)
12,000
10,000
9
34
234,101
206,749
2,167
6,014
Total
In securities forward transactions the fair value represents negative valuations due to forward sale price differences.
In 2011 the Group reduced the volume of currency swaps and subsequently the liabilities from these.
35
F inancial liabilities designated at fair value through profit or loss
Bank and Group
Interest rate as at
31 December 2011
2011
2010
Certificates of deposit with maturity 2012
5.00 %
1,491
1,547
Subordinated bonds BCE10, with maturity 2017
5.00 %
34,655
38,503
36,146
40,050
Total
Financial liabilities designated at fair value include those securities that are economically hedged, consistently with the risk
management policy, by a derivative – interest rate swap. Within the interest rate swap, the Group swapped the nominal interest rate
with a variable one, thus hedging the risk of a - decrease in long-term interest rates.
The nominal value of the BCE10 subordinated bond amounts to EUR 37,000 thousand, while the fair value amounted to EUR 34,655
thousand on 31 December 2011 (2010: EUR 38,503 thousand).
Based on the Decision on the calculation of capital in banks and savings banks the BCE10 bonds represent the Group’s subordinated
debt, thus being included in Tier 2 capital up to an amount representing 50% of the Group’s Tier 1 capital and exhibiting the following
characteristics:
- the bonds are not especially insured or guaranteed, the Group’s property being the only collateral;
- liabilities from bonds are subordinated to plain debt instruments in the event of bankruptcy or winding up procedures and are
only redeemed, once all non-subordinated liabilities to creditors and subordinated liabilities included in Tier 3 capital have been
redeemed, therefore they represent a high risk instrument;
- subordinated bonds paid in are only disposable to cover the Group’s loss in the event of bankruptcy or winding up procedures and
are not used to cover loss during the time of the Group’s regular operations.
Accounting for financial liabilities, designated at fair value through profit and loss is based on the elimination of measurement
inconsistencies that would otherwise result from the recognized gains and losses on different bases. In this way the Bank acquires
more appropriate information about liabilities and the related derivatives on financial liabilities carried at amortized cost and interest
rate swaps carried at fair value.
Subordinated bonds BCE10 are listed on stock exchange and certificates of deposit are not.
124
36
Financial liabilities at amortised cost – deposits from banks
36.1 Analysis by currency and maturity
Bank and Group
At sight
In local currency
In foreign currency
2011
2010
1,044
955
248
439
796
516
Short-term
19,961
53,480
In local currency
19,961
53,480
Total
21,005
54,435
36.2 Analysis by region
Bank and Group
Slovenia
2011
2010
12,727
34,986
3,220
14,395
EU
5,058
5,054
21,005
54,435
Total
125
37Financial liabilities at amortised cost – due to customers
37.1 Analysis by currency and maturity and by type of customer
2011
Bank
2010
at sight
short-term
long-term
at sight
short-term
long-term
Corporate
121,663
311,007
317,407
120,800
320,668
330,857
domestic currency
118,321
310,783
317,317
118,881
320,539
330,857
3,342
224
90
1,919
129
-
Retail
326,207
204,420
198,101
321,012
245,655
159,969
domestic currency
313,712
201,421
196,152
313,165
241,377
158,245
12,495
2,999
1,949
7,847
4,278
1,724
447,870
515,427
515,508
441,812
566,323
490,826
foreign currency
foreign currency
Total
Total at sight, short-term
and long-term
1,478,805
1,498,961
2011
GROUP
2010
at sight
short-term
long-term
at sight
short-term
long-term
Corporate
121,659
311,007
317,407
120,797
320,668
330,857
domestic currency
118,317
310,783
317,317
118,878
320,539
330,857
3,342
224
90
1,919
129
-
Retail
326,207
204,420
198,101
321,012
245,655
159,969
domestic currency
313,712
201,421
196,152
313,165
241,377
158,245
12,495
2,999
1,949
7,847
4,278
1,724
447,866
515,427
515,508
441,809
566,323
490,826
foreign currency
foreign currency
Total
Total at sight, short-term
and long-term
1,478,801
1,498,958
Bank
Group
2011
2010
2011
2010
1,461,024
1,485,663
1,461,020
1,485,660
7,305
7,086
7,305
7,086
EU
8,222
4,550
8,222
4,550
Other
2,254
1,662
2,254
1,662
1,478,805
1,498,961
1,478,801
1,498,958
Slovenia
Total
126
38Financial liabilities at amortised cost – borrowings from banks
38.1 Analysis by currency and maturity
Bank and Group
Domestic currency
2011
2010
396,023
411,267
Short-term loans
15,046
32,110
Long-term loans
380,977
379,157
Foreign currency
-
8,068
Long-term loans
Total
-
8,068
396,023
419,335
Bank and Group
2011
2010
Slovenia
223,533
198,256
EU
172,490
221,079
Total
396,023
419,335
39
F inancial liabilities at amortised cost – borrowing from customers
Bank and Group
2011
2010
short-term
long-term
short-term
long-term
Domestic currency
-
6,224
-
8,847
Total
6,224
8,847
127
40Debt securities
Bank and Group
Interest rate as at
31 December 2011
Certificates of deposit in local currency
2011
2010
86,540
99,405
up to 1 year
3.85 %
11,681
6,555
above 1 year up to 2 years
4.05 %
29,021
28,988
5.00 %
42,164
18,739
-
-
41,454
4.97 %
3,674
3,669
Bonds in local currency
bonds BCE13 and BCE14, maturity 2015
4.68 %
bonds BCE15, maturity 2016
5.00 %
Total
98,980
61,031
61,755
61,031
37,225
-
185,520
160,436
To increase long-term funding and ensure an adequate structure of funding sources and replace matured BCE8 series bonds, the
Bank issued 15th series bonds in February 2011 in a total of EUR 34,150 thousand at an interest rate of 5% annually. The issue pertains
to regular euro denominated non-materialized bonds designated BCE15. Interest is paid on an annual basis, with final maturity falling
on 15 February 2016. The Bank is liable for all obligations from its bonds. The liabilities from bonds are not hedged or guaranteed in
any other way.
The BCE13, BCE14 and BCE15 series bonds are all listed on the stock exchange, while certificates of deposit are not.
128
41Subordinated liabilities
Interest rate as at
31 December 2011
2011
2010
-
-
13,032
Subordinate certificates of deposit due in 2014 (EUR)
2.75 %
10,284
10,278
Subordinate bonds BCE12 due in 2016 (EUR)
6.50 %
12,511
12,497
3.66 %
49,622
49,551
72,417
85,358
Bank and Group
Total
In October and November of 2007 the Group issued subordinated certificates of deposit in a total amount of EUR 10.25 million at
an interest rate of 6M EURIBOR increased by 1 percentage point,
maturing in 7 years. Interest is paid on a semi-annual basis.
To improve capital adequacy and ensure further growth of operations the Bank again issued subordinated bonds in 2007 (BCE11).
In line with the stipulations in the Decision on the calculation of
capital in banks and savings banks these are deemed innovative
financial instruments and are included in the calculation of Tier
1 capital in accordance with the decision of the Bank of Slovenia
dated 4 December 2007, with any eventual surplus included in
Tier 2 capital. The following are the main characteristics of the
issued innovative subordinated bonds:
- the instrument does not have a set maturity, it can however be
called, but no earlier than 10 years after the date of issue, in full,
not in part with the approval of the Bank of Slovenia;
- payment of all liabilities from bonds is guaranteed by the Bank’s
property without limitation;
- they are neither secured nor covered by a guarantee of the
issuing bank or related entity or any other form of arrangement that legally or economically enhances the seniority of
the claim;
- liabilities from these bonds are subordinated in full to liabilities
toward regular creditors and to liabilities based on subordinated debt instruments, meaning that in an event of bankruptcy
or winding up procedures they are redeemed only after the
non-cumulative preferential shares and regular shares, making
them a high risk instrument;
- the Group cannot pay out the Group’s operating profit, should
it not settle liabilities from innovative instruments during the
current year;
- the Group has power of disposal over the funding from the
bonds without condition and it may utilize it to cover loss during regular operations;
- the Group has the option of withholding interest payments
from bonds, should it not have record distributable profit in the
previous year, interest payments are non-cumulative, which is
why any holder of the bond no longer has any claim to the
interest withheld.
The Bank issued the aforementioned innovative perpetual subordinated bonds in a nominal amount of EUR 50 million at an
interest rate of 6M EURIBOR plus 2 percentage points. The stated
interest rate is valid for a period of 10 years, when the bond is callable. Should it not be called the interest margin step-up will be 1
percentage point. The first interest payment was due on 28 June
2008, with the following coupons paid on semi-annual basis.
To ensure additional capital for the management of risk and to
secure the funding for the Group's long-term investments, the
Management Board of the Bank, on May 13, 2009, adopted the
decision to issue subordinated registered bonds – 12th issue (designated BCE12). As at December 31, 2011 the amount subscribed
was EUR 12,511 thousand at a fixed nominal interest rate of 6.5%,
maturing on 15 June 2016. Interest is paid out annually, with the
first interest coupon having matured on 15 June 2010 and the
final coupon maturing on 15 June 2016.
The subordinated BCE12 bonds have the characteristics of subordinated debt and the Group includes them in the calculation
of Tier 2 capital. The subscribed subordinated bonds will only
be available to cover the Group’s loss in the event of bankruptcy
or winding up procedures and are not available to cover for loss
coming from the Group’s regular operations. The bonds neither
secured nor covered by a guarantee of the issuing bank or related
entity or any other form of arrangement that legally or economically enhances the seniority of the claim. The Bank is fully liable
for the obligations from bonds without limit. Liabilities from the
bonds are subordinated to regular debt instruments in the event
of bankruptcy or winding up and are only paid once all unsubordinated liabilities to regular creditors have been settled and the
liabilities based on subordinated debt included in Tier 3 capital
have been settled as well.
Subordinated bonds of the BCE11 and BCE12 series are listed on
the stock exchange.
129
42Financial liabilities associated with transferred assets
Bank and Group
2011
2010
Short-term financial liabilities to foreign banks
in domestic currency
-
30,993
Total
-
30,993
43 Derivatives - hedge accounting
Contractual amount
Bank and Group
Fair value
2011
2010
2011
2010
Fair value hedging - hedge accounting
189,150
20,000
8
348
Total
189,150
20,000
8
348
In 2011 the Group hedged issued bonds and some deposits taken from interest rate risk with an interest rate swap (IRS). The mentioned
instruments are accounted for by the Group in accordance with the rules of Hedge Accounting as a fair value hedge.
44Provisions
Bank
Group
Note
Unresolved legal proceedings
Provisions for commitments and
contingent liabilities
Employee related provisions
Other provisions
Total
2011
2010
2011
2010
48a
7,110
8,169
7,110
8,169
48d
3,042
2,628
3,043
2,628
2,171
2,128
2,202
2,159
275
312
275
312
12,598
13,237
12,630
13,268
As at 31 December 2011 provisions were made amounting to EUR 7,110 thousand for pending legal action from the denationalization
proceedings pertaining to the office building at its headquarters. Additionally, the Group formed EUR 108 thousand worth of provisions to this effect during the year and spent EUR 1,167 thousand worth of provisions for payments to denationalization beneficiaries.
The significant assumptions, used in the actuarial calculation, are:
- salary growth, in line with the inflation index, taking into account promotions and with respect to the period of employment, was
assumed equal to 4% annually (2010: 3.50%);
- a discount rate of 5.20% (2010: 3.90%);
- 534 (530 at the Bank) employees eligible to claim benefits (2010: 542 employees at the Group, 538 employees at the Bank).
Other provisions pertain to the national housing savings scheme (NSVS). Should a saver in the scheme not use the option to take a
housing loan according to the conditions of the NSVS, the Group must return all of the premiums that the saver received in during the
saving period to the Republic of Slovenia Housing Fund.
130
Changes in provisions:
Bank
Provisions made / (released)
Provisions (utilized)
Provisions or
unsettled
disputes
Provisions for
off-balance
sheet liabilities
Retirement
benefit
provisions
Other
provisions
Total
7,901
2,713
2,743
602
13,959
268
(85)
(462)
-
(279)
-
-
(153)
(290)
(443)
8,169
2,628
2,128
312
13,237
108
414
74
-
596
(1,167)
-
(31)
(37)
(1,235)
7,110
3,042
2,171
275
12,598
Group
Provisions or
unsettled
disputes
Provisions for
off-balance
sheet liabilities
Retirement
benefit
provisions
Other
provisions
Total
7,901
2,695
2,783
602
13,981
268
(67)
(471)
-
(270)
-
-
(153)
(290)
(443)
8,169
2,628
2,159
312
13,268
108
415
74
-
597
(1,167)
-
(31)
(37)
(1,235)
7,110
3,043
2,202
275
12,630
45 Other liabilities
Bank
Group
2011
2010
2011
2010
Liabilities from card operations
3,261
3,584
3,261
3,584
Liabilities from salaries
1,534
2,369
1,574
2,412
Liabilities toward suppliers
1,478
1,913
2,051
2,020
Accrued expenses
708
727
770
794
Taxes payable
538
349
628
464
Fees and commissions
63
60
63
60
Other
1,003
1,125
1,226
1,126
Total
8,585
10,127
9,573
10,460
All other liabilities, except for taxes payable and liabilities from salaries are financial liabilities, carried at amortized cost.
131
46 Share capital
46.1 Subscribed capital
The Bank’s share capital comprises 508,629 dematerialized no par value registered shares. 80 % are regular voting right shares, with
20 % represented by preferred shares. The latter carry the right to preferential treatment in relation to fix dividend payments. They are
non-cumulative and do not bear the right to cumulative dividend payments.
The Subsidiary is a registered limited liability company.
At the 23rd Regular Annual Meeting of Shareholders on May 22, 2008 the Bank's owners authorized the Management Board to
increase share capital during the next 5 years by issuing new shares. The amount of authorized capital may not exceed 50% of the
ordinary shares the time when the authorization was given, meaning 211,061 shares. The Bank may only issue new shares upon
consent of the Supervisory Board.
In October 2008 the Bank successfully increased capital from authorised capital by selling 86,506 shares, the value of the issue
reaching EUR 35 million. The Bank did not issue any new shares in 2009, 2010 or 2011.
Bank shareholders with shareholdings exceeding 3% are listed in the following table:
- in %
Shareholding rights
Voting rights
40.99 %
49.42 %
Slovenska odškodninska družba d.d. Ljubljana
9.36 %
6.70 %
Vzajemni sklad NFD 1 Delniški Ljubljana
9.21 %
9.65 %
Abanka Vipa d.d. Ljubljana
4.00 %
3.36 %
Unior d.d. Zreče
3.88 %
4.84 %
Zavarovalnica Triglav d.d. in Kritni sklad Ljubljana
3.75 %
2.68 %
Nova Ljubljanska banka d.d. Ljubljana
Number of shares and amount of share capital:
Share capital
Bank
Number of
shares
Ordinary
shares
Preference
shares
Total
508,629
13,584
3,396
16,980
508,629
13,584
3,396
16,980
508,629
13,584
3,396
16,980
46.2 Treasury shares
As at 31 December 2011 and as at 31 December 2010 the Bank’s portfolio included 251 regular treasury shares in total amount of EUR
31 thousand; these shares are recorded as a deduction of the capital.
46.3 Share premium
During 2009, 2010 and 2011 the share premium stood unchanged at EUR 51,380.
The Group share premium amounted to EUR 51,542 exceeding the Bank’s total by EUR 162 thousand.
132
46.4Reserves
Changes in reserves:
bank
Statutory
reserves
Other reserves
from profit
Retained
earnings
Total
2,904
119,595
-
122,499
Increase from part of net profit for the year
-
2,839
-
2,839
Increase from past dividends not paid
-
38
-
38
2,904
122,472
-
125,376
-
1,182
-
1,182
At 1 January 2010
At 31 December 2010
At 31 December 2011
-
37
-
37
2,904
123,691
-
126,595
GROUP
At 1 January 2010
Statutory
reserves
Other reserves
from profit
2,904
-
Retained
earnings
Total
119,793
377
123,074
2,839
(220)
2,619
-
38
-
38
2,904
122,670
157
125,731
-
1,182
259
1,441
-
37
-
37
2,904
123,889
416
127,209
At 31 December 2010
At 31 December 2011
Based on the stipulations in Article 64 of the Companies Act, the Bank must form statutory reserves in an amount, which allows for the
sum of statutory reserves and capital reserves to reach 10% of the share capital. As at 31 December 2010 the Group’s statutory reserves
amounted to 17% of the share capital.
Other profit reserves are formed for unidentified risk. Loss for the year is chargeable to their account and the difference is included in
the calculation of Tier 1 capital in accordance with the Decision on the calculation of capital in banks and savings banks.
In line with the Articles of Association only retained profit may be paid out.
133
46.5 Revaluation reserve
Changes in the revaluation reserve:
Bank and Group
At 1 January 2010
Profits from changes in fair value of available-for-sale
4,660
(8,041)
Transfer to income statement due to impairment
7,518
Sale / disposal of available-for-sale securities
(166)
At 31 December 2010
3,971
Losses from changes in fair value of available-for-sale
Recycled to income statement due to impairment
(11,559)
9,758
Sale / recycled to income statement of available-for-sale
securities
(886)
At 31 December 2011
1,284
47
Dividend per share
Dividends payable are not accounted for until they have been ratified at the Bank's annual General Shareholders Assembly. Dividend per
share for 2010 in the amount of EUR 2.10 per ordinary and preference share was confirmed at the Bank's 26th Meeting of Shareholders
on 24 May 2011 and paid out in May 2011.
48
Contingent liabilities and commitments
a) Legal proceedings
As at 31 December 2011 the Group’s provisions for pending legal actions amounted to EUR 7,110 thousand from the denationalization
process (31 December 2010: EUR 8,169 thousand), which according to the estimation of the Group are sufficient for the settlement of
all potential denationalization liabilities. Part of the provisions made was used in 2011 to pay the denationalization beneficiaries. The
Bank in the Group filed a constitutional complaint in objection to the decision of the Supreme Court of the Republic of Slovenia stating
that a judicial review of the process in connection with the return of business premises in denationalization proceedings is dismissed.
At the same time, a claim was made against the Slovenska odškodninska družba (Slovenian Restitution Fund), as the property subject
to being so returned, was acquired at cost. The proceedings have not yet been concluded.
b) Capital commitments
As at 31 December 2011 the Group did not exhibit any future obligations to acquire property or equipment or intangible assets.
c) Potential and assumed liabilities
The basic aim of these instruments is to ensure, that assets are made available when so requested by the clients. Guarantees and
stand-by letters of credit represent irrevocable guarantees, that the Group will effect payment, should the client not be able to fulfil its
obligation to a third party. Cash requirements for guarantees and stand-by letters of credit are lower than the amount of the liabilities
in question, as, based on the data from the past years, the Group does not expect to see a third party claim fulfilment of obligation in
cash, which is why these are low risk instruments.
Commitments to extend credit represent unused portions of authorizations to extend credit in the form of loans, guarantees or letters
of credit. With respect to credit risk on commitments to extend credit, the Group is potentially exposed to loss in the amount equal to
the total unused commitments.
134
d) Breakdown of contractual amounts relating to bank guarantees, documentary letters of credit and assumed liabilities
Bank
Group
Note
2011
2010
2011
2010
96,612
80,261
96,612
80,261
Commitments to extend credits
176,113
171,227
174,202
171,004
- maturity up to 1 year
139,345
140,411
137,434
140,188
Guarantees and stand-by LCs
- maturity over 1 year
Total
Provisions for off-balance sheet risk
44
Total net
36,768
30,816
36,768
30,816
272,725
251,488
270,814
251,265
(3,042)
(2,628)
(3,043)
(2,628)
269,683
248,860
267,771
248,637
The guarantees total in 2011 include EUR 70,287 thousand performance guarantees (2010: EUR 52,338 thousand).
e) Changes in service guarantees
Bank and Group
47,476
Approved guarantees
50,230
Guarantees due
(45,368)
52,338
Approved guarantees
69,750
Guarantees due
(51,806)
70,282
Commission and fee income from service guarantees amounted to EUR 1,026 thousand in 2011 (2010: EUR 883 thousand).
49
Cash and cash equivalents
Cash and cash equivalents in the statement of cash flows represent instruments with an original maturity of less than 90 days.
Bank and Group
2011
2010
19
168,163
128,324
Loans to banks
23
54,985
83,714
223,148
212,038
Total
Note
135
50
Related parties comprise key management personnel (Management Board members, Supervisory Board members, senior management
and their immediate family members), companies with significant impact and the Subsidiary.
Gross amounts paid out to key management personnel
2011
Bank
2010
Management
Board
members
Supervisory
Board
members
Senior
management
Fix revenue
428
-
1,142
Variable revenue
132
-
110
89
-
133
-
56
-
649
56
1,385
Other revenue
Meeting fees
Total
Total
Management
Board
members
Supervisory
Board
members
Senior
management
Total
1,570
385
-
1,302
1,687
242
94
-
194
288
222
85
-
196
281
56
-
36
-
36
2,090
564
36
1,692
2,292
2011
GROUP
2010
Management
Board
members
Supervisory
Board
members
Senior
management
Fix revenue
428
-
Variable revenue
132
Other revenue
Total
Management
Board
members
Supervisory
Board
members
Senior
management
Total
1,246
1,673
385
-
1,385
1,770
-
113
245
94
-
199
293
89
-
142
231
85
-
204
289
-
56
-
56
-
36
-
36
649
56
1,500
2,205
564
36
1,788
2,388
Meeting fees
Total
The Bank’s Management Board comprise 3 members in 2011. The senior management comprised 13 members (Group: 14 members).
After the change of status of the Bank’s largest owners in mid- 2011, the Bank is indirectly owned by the Republic of Slovenia.
Consequently the gross amounts paid out to Management Board members and to senior management were coordinated with
legislation governing the salaries of management in companies majority-owned by the Republic of Slovenia.
Gross amounts paid out to Management Board and Supervisory Board members
BANK
2011
2010
Revenue
Revenue
Fixed
Variable
Other
Total
Fixed
Variable
Other
Total
President & CEO
Member of the Management
Board & Deputy CEO
158
50
38
246
151
48
37
236
139
42
27
208
129
41
27
197
Member of the Management Board
131
40
25
195
105
5
21
131
Total
428
132
89
649
385
94
85
564
Management Board Members
Fix remuneration includes gross salary, variable remuneration pertains to part of the salary based on performance during the previous
year, other pertains to holiday pay and premiums pertain to additional pension insurance and annuity savings and accrued bonuses.
136
2011
2010
Fix
remuneration
Cost
reimbursement
Total
Fix
remuneration
Cost
reimbursement
Total
4
-
4
-
-
-
Member of the Supervisory Board &
Deputy CEO
5
-
5
10
-
10
Member of the Supervisory Board
4
-
4
-
-
-
4
-
4
9
-
9
4
1
5
8
-
8
Member of the Supervisory Board &
Deputy CEO
5
-
5
-
-
-
5
-
5
-
-
-
4
-
4
-
-
-
4
-
4
-
-
-
4
2
7
-
-
-
4
-
4
-
-
-
4
-
4
9
-
9
53
3
57
36
-
36
Supervisory Board members
Old Supervisory Board
New Supervisory Board
Total
In May 2011 a new Supervisory Board was named at the Banka Celje, d.d., Meeting of Shareholders.
137
BANK
2011
Management and
with related parties
Senior
management with
related parties
Shareholders
with more than
20% of shares
Posest d.o.o.
Total
147
380
8,576
12,340
21,443
RECEIVABLES
Loans
Securities and derivatives
-
-
17,515
-
17,515
25
31
-
1,912
1,968
-
-
2,351
-
2,351
172
411
28,442
14,252
43,277
54
84
71,224
3,930
75,292
1,358
1,335
11,203
-
13,896
451
157
8,729
-
9,337
1,809
1,492
19,932
-
23,233
Interest income
5
16
1,056
331
1,408
Interest expense
94
77
550
-
721
Liabilities assumed
Guarantees issued
Total
Loan repayments during the year
LIABILITIES
Deposits
Bonds and certificates of deposit
Total
BANK
2010
Management and
Senior
management with
related parties
Shareholders
with more than
20% of shares
Posest d.o.o.
195
-
318
14,077
12,470
27,060
-
43,924
-
43,924
19
29
-
223
271
Total
RECEIVABLES
Loans
Liabilities assumed
Guarantees issued
Total
-
-
2,575
-
2,575
214
347
60,576
12,693
73,830
31
185
80,509
4,220
84,945
779
1,009
10,552
-
12,340
-
-
6,635
-
6,635
779
1,009
17,187
-
18,975
5
16
1,733
320
2,074
48
48
611
-
707
LIABILITIES
Deposits
Total
Interest income
Interest expense
138
Group
2011
Management and
Senior
management with
related parties
Shareholders
with more than
20% of shares
147
380
8,576
9,103
-
-
17,515
17,515
25
32
-
57
Total
RECEIVABLES
Loans
Liabilities assumed
Guarantees issued
Liabilities from derivatives
Total
-
-
2,351
2,351
172
412
28,442
29,026
54
90
71,224
71,368
1,358
1,511
11,203
14,072
LIABILITIES
Deposits
451
157
8,729
9,337
1,809
1,668
19,932
23,409
Interest income
5
16
1,056
1,077
Interest expense
94
83
550
727
Total
Group
2010
Management and
Senior
management with
related parties
Shareholders
with more than
20% of shares
Total
195
-
318
14,077
14,590
-
43,924
43,924
19
29
-
48
RECEIVABLES
Loans
Securities
Liabilities assumed
Guarantees issued
Total
-
-
2,575
2,575
214
347
60,576
61,137
31
185
80,509
80,725
779
1,141
10,552
12,472
-
-
6,635
6,635
779
1,141
17,187
19,107
5
16
1,733
1,754
48
53
611
712
LIABILITIES
Deposits
Total
Interest income
Interest expense
The Bank in the Group is since mid-2011 indirectly owned by The Republic of Slovenia, as more than 50% share is owned by 2 of
the government related companies, NLB d.d. Ljubljana and SOD d.d. Ljubljana. Individually significant transactions with government
related entities present loans and borrowings.
As at December 31, 2011 the total amount of individually significant transactions for loans (11 transactions) in the amount of EUR
115,000 thousand (31 December 2010: EUR 328,653 thousand, 23 transactions).
139
As at December 31, 2011 the total amount of borrowings (28 transactions) in the amount of EUR 471,264 thousand (31 December 2010:
EUR 376,000 thousand, 23 transactions) and for interest rate swaps in the amount of EUR 30,000 thousand (2010: none).
For loans, the Bank recognized interest income in the amount of EUR 16 thousand (2010: EUR 816 thousand) and for borrowings
interest expense in the amount of EUR 7,322 thousand (2010: EUR 1,648 thousand). The Bank recognized loss from interest rate swap
in the amount of EUR 97 thousand.
The Bank in the Group conducts transactions with related parties, including government related entities in accordance with Terms
and Conditions of Banka Celje d.d. and the Banka Celje Decision on Interest Rates, which is also used for other clients.
51
Information on the results of organizational units abroad
The Group has no subsidiaries or associated companies abroad.
52
Events after THE reporting date
After end 2011 there were no significant events that would have effect in the Group’s financial position, its profit for the year and on
the disclosures in this annual report.
140

Annual Report 2011 Banka Celje, d.d., and the Banka Celje Group

Transcription

Similar documents

Presentation for Investors

View Report - Financial Center Credit Union

Teleplan_GB_2006_Final

Teleplan Annual Report 2007 from website

Powerone FCU News - Power One Federal Credit Union

Over 100 Financial Institutions Mobilized to

guided tour "kaunas - hanza town"

What`s New Newsletter

PV laboratory equipment for the T.A. Marryshow

Montport III Business plan

ANNUAL REPORT 2014 BANKA CELJE, d.d., AND THE BANKA