Banco Nacional de Crédito, C.A., Banco Universal

Transcription

Banco Nacional de Crédito, C.A.,
Banco Universal
Report of Independent Accountants
and Financial Statements
December 31 and June 30, 2012
Balance sheet
December 31,
2012
June 30,
2012
(In bolivars)
Assets
Cash and due from banks (Notes 3, 4 and 29)
5,703,778,981
4,016,330,948
737,253,973
4,350,091,834
123,110
95,261,299
521,048,765
364,058,911
2,890,758,618
143,801
252,117,349
509,252,269
8,051,421,105
4,759,818,786
1,010,939,000
3,444,407,131
2,787,127,754
16,422,282
792,605,344
(80,406)
1,638,028,205
2,330,649,916
16,410,925
774,810,146
(80,406)
11,682,646,923
9,587,800,957
11,941,485,358
34,151,571
21,421,120
(314,411,126)
9,805,019,256
33,049,065
25,679,031
9,798,584
(285,744,979)
197,536,983
146,263,681
120,626,364
103,527,566
890,821
(27,507,768)
76,143,759
92,033,829
610,393
(22,524,300)
-
-
Available-for-sale assets (Note 9)
72,005,556
68,594,931
Property and equipment (Note 10)
488,059,504
403,819,313
Other assets (Notes 11 and 12)
233,808,348
187,511,873
26,429,257,400
19,170,140,489
779,712,523
971,641,295
595,110,949
787,135,059
479,233,604
42,288,981,218
354,214,463
28,053,448,525
44,519,568,640
29,789,908,996
Cash
Central Bank of Venezuela
Venezuelan banks and other financial institutions
Foreign and correspondent banks
Pending cash items
Investment securities (Note 5)
Deposits with the BCV and overnight deposits
Investments in available-for-sale securities
Investments in held-to-maturity securities
Restricted investments
Investments in other securities
(Provision for investment securities)
Loan portfolio (Note 6)
Current
Rescheduled
Overdue
In litigation
(Allowance for losses on loan portfolio)
Interest and commissions receivable (Note 7)
Interest receivable on investment securities
Interest receivable on loan portfolio
Commissions receivable
(Provision for interest receivable and other)
Investments in subsidiaries, affiliates and branches (Note 8)
Total assets
Memorandum accounts (Note 22)
Contingent debtor accounts
Assets received in trust
Debtor accounts from other special trust services
(Housing Loan System)
Other debtor memorandum accounts
The accompanying notes are an integral part of the financial statements
1
Balance sheet
December 31,
2012
June 30,
2012
(In bolivars)
Liabilities and Equity
Customer deposits (Note 13)
24,286,435,309
17,592,988,123
14,026,432,023
9,907,855,350
11,403,462,235
2,622,969,788
7,756,548,057
2,151,307,293
4,993,093,866
4,596,193,615
572,293,969
98,421,836
-
4,171,980,470
2,691,770,792
650,396,364
170,985,147
23,206,607
1,765,183
1,125,280
22,081,327
1,151,823
613,360
Other liabilities from financial intermediation (Note 15)
20,350,594
32,723,687
Interest and commissions payable (Note 16)
12,969,545
13,646,949
12,347,352
33,610
588,583
13,182,403
464,546
388,605,540
270,563,905
24,731,567,595
17,911,687,847
428,503,396
100,000,000
74,377,322
312,649,819
570,919,744
345,403,396
100,000,000
74,377,322
236,392,637
403,097,284
133,767,875
133,111,483
77,471,649
(33,929,480)
Demand deposits
Non-interest-bearing checking accounts
Interest-bearing checking accounts
Other demand deposits
Savings deposits
Time deposits
Securities issued by the Bank
Restricted customer deposits
Borrowings (Note 14)
Venezuelan financial institutions, up to one year
Foreign financial institutions, up to one year
Expenses payable on customer deposits
Expenses payable on borrowings
Expenses payable on other liabilities
Accruals and other liabilities (Note 17)
Total liabilities
Equity (Note 25)
Capital stock
Convertible bonds (Note 24)
Paid-in surplus
Capital reserves
Retained earnings
Exchange gain from holding foreign currency assets and
liabilities
Net unrealized gain (loss) on investments in
available-for-sale securities (Note 5)
Total equity
Total liabilities and equity
1,697,689,805
1,258,452,642
26,429,257,400
19,170,140,489
2
Income statement
Six-month periods ended December 31 and June 30, 2012
December 31,
2012
June 30,
2012
(In bolivars)
Interest income
1,284,884,477
996,796,072
28,665
304,197,508
891,447,488
89,188,607
22,209
49,132
231,856,631
688,855,421
76,034,888
-
(383,215,297)
(307,547,860)
374,521,450
86,599
8,367,471
239,777
298,907,089
39,731
8,311,726
289,314
901,669,180
689,248,212
5,469,496
6,454,603
(51,409,571)
(140,661,664)
855,729,105
555,041,151
171,880,620
(61,174,890)
241,526,813
(106,827,318)
966,434,835
689,740,646
(598,077,089)
(471,865,591)
166,661,545
317,327,240
103,832,542
10,255,762
140,063,772
238,317,061
85,840,431
7,644,327
368,357,746
217,875,055
2,865,945
6,317,786
(15,087,539)
(28,344,026)
312,965
4,335,432
(9,813,011)
(22,655,296)
334,109,912
190,055,145
85,617
(4,637,838)
1,570,561
(2,026,967)
329,557,691
189,598,739
(651,032)
(1,083,584)
Net income
328,906,659
188,515,155
Appropriation of net income
Legal reserve
Retained earnings
65,781,332
263,125,327
37,703,031
150,812,124
328,906,659
188,515,155
3,347,542
1,922,375
Income from cash and due from banks
Income from investment securities
Income from loan portfolio
Income from other accounts receivable
Other interest income
Interest expense
Expenses from customer deposits
Expenses from borrowings (Note 14)
Expenses from convertible bonds (Note 24)
Other interest expense
Gross financial margin
Income from financial assets recovered (Note 6)
Expenses from uncollectible and impaired financial assets
Expenses from uncollectible loans and other accounts receivable (Notes 6 and 7)
Net financial margin
Other operating income (Note 19)
Other operating expenses (Note 20)
Financial intermediation margin
Operating expenses
Salaries and employee benefits (Note 2-j)
General and administrative expenses (Note 21)
Fees paid to the Social Bank Deposit Protection Fund (Note 27)
Fees paid to the Superintendency of Banking Sector Institutions (Note 28)
Gross operating margin
Income from available-for-sale assets (Note 9)
Sundry operating income (Note 19)
Expenses from available-for-sale assets (Note 9)
Sundry operating expenses (Note 20)
Net operating margin
Extraordinary income
Extraordinary expenses
Gross income before tax
Income tax (Note 18)
Provision for the Law on Narcotic and Psychotropic Substances (LOSEP)
(Notes 1 and 20)
3
Statement of changes in equity
Total
Unrealized
gain (loss) on
investment
securities
(Note 5)
Total
equity
Convertible
bonds
Share
premium
and paid-in
surplus
Capital
reserves
Unappropriated
surplus
345,403,396
100,000,000
74,377,322
188,629,256
73,698,060
180,945,028
5,975,406
260,618,494
133,767,875
19,472,773
1,122,269,116
-
-
-
-
-
-
-
-
(656,392)
-
(656,392)
-
-
-
37,703,031
1,727,016
-
-
Paid-in
capital
stock
Retained earnings
Non
Restricted
distributable
surplus
surplus
Exchange
gain (loss)
from holding
foreign
currency
assets and
liabilities
(In bolivars)
Balances at December 31, 2011
Exchange loss from holding foreign currency
assets and liabilities (Notes 4 and 25)
Gain on sale of investments and adjustments of
investments in available-for-sale securities to
market value
Net income
Appropriation to the legal reserve (Note 25)
Creation of the social contingency fund (Note 25)
Reclassification of net income of the Curacao branch
(Note 25)
Reclassification to restricted surplus of 50% of
net income for the period (Note 25)
Reserve fund for convertible bonds (Note 24)
Balances at June 30, 2012
Capital increase (Note 25)
Exchange loss from holding foreign currency
assets and liabilities (Notes 4 and 25)
Gain on sale of investments and adjustments of
investments in available-for-sale securities to
market value
Net income
Appropriation to the legal reserve (Note 25)
Creation of the social contingency fund (Note 25)
Reclassification of net income of the Curacao branch
(Note 25)
Reclassification to restricted surplus of 50% of
net income for the period (Note 25)
Reserve fund for convertible bonds (Note 24)
188,515,155
(37,703,031)
-
-
-
-
-
(5,316,575)
-
5,316,575
-
-
-
8,333,334
(72,747,775)
(8,333,334)
72,747,775
-
-
345,403,396
100,000,000
74,377,322
236,392,637
138,112,500
253,692,803
11,291,981
83,100,000
-
-
-
(41,550,000)
(41,550,000)
-
-
-
-
-
-
-
-
65,781,332
2,142,517
-
328,906,659
(65,781,332)
(3,869,534)
-
-
-
-
188,515,155
(37,703,031)
(8,333,334)
403,097,284
(83,100,000)
-
328,906,659
(65,781,332)
(3,869,534)
(53,402,253)
-
(53,402,253)
188,515,155
1,727,016
-
-
-
-
-
-
133,111,483
(33,929,480)
1,258,452,642
-
-
-
656,392
-
656,392
-
111,401,129
-
111,401,129
328,906,659
(1,727,017)
-
-
-
-
(33,870,641)
-
33,870,641
-
-
-
-
-
-
8,333,333
(114,627,343)
(8,333,333)
114,627,343
-
-
(8,333,333)
-
-
-
428,503,396
100,000,000
74,377,322
312,649,819
198,986,976
326,770,146
45,162,622
570,919,744
133,767,875
77,471,649
1,697,689,805
Net income per share (Note 2-n)
Six-month periods ended
December 31,
June 30,
2012
2012
Weighted average of outstanding shares
Income per share
428,503,396
345,403,396
0.768
0.546
4
-
-
Cash flow statement
December 31,
2012
June 30,
2012
(In bolivars)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by
(used in) operating activities
Allowance for losses on loan portfolio
Provision for interest receivable and other
Provision for other assets
Depreciation of property and equipment and amortization of
available-for-sale and other assets
Accrual for length-of-service benefits
Transfers to trust fund and payment of length-of-service benefits
Income tax provision
Deferred tax asset
Net change in
Overnight deposits
Interest and commissions receivable
Other assets
Accruals and other liabilities
Net cash provided by (used in) operating activities
Cash flows from financing activities
Net change in
Customer deposits
Borrowings
Other liabilities from financial intermediation
Interest and commissions payable
Net cash provided by financing activities
Cash flows from investing activities
Loans granted during the period
Loans collected during the period
Net change in
Available-for-sale assets
Property and equipment
Net cash used in investing activities
Cash and due from banks
Net change
328,906,659
188,515,155
51,362,434
47,137
50,276
140,661,664
2,866,960
51,428,552
19,346,451
(16,946,451)
2,516,165
(1,865,133)
36,327,269
18,655,306
(13,614,721)
1,817,689
(734,105)
(1,010,939,000)
(57,065,566)
(63,863,260)
111,081,440
(65,262,792)
(32,151,898)
48,617,497
(585,940,296)
325,698,024
6,693,447,186
21,441,424
(12,373,093)
(677,404)
3,820,823,952
(212,729)
(64,048,330)
(8,023,612)
6,701,838,113
3,748,539,281
(9,949,133,621)
7,810,714,378
(8,873,812,663)
6,564,206,282
(1,694,684,682)
(456,114,561)
(11,357)
(19,522,215)
(18,430,590)
(101,267,136)
214,538,693
(1,252,985,379)
(3,467,749)
(405,881,146)
(34,599,917)
(71,123,540)
(4,428,449,784)
(3,863,125,419)
1,687,448,033
211,111,886
At the beginning of the period
4,016,330,948
3,805,219,062
At the end of the period
5,703,778,981
4,016,330,948
14,907,130
805,845
152,000,685
11,619,921
(5,742,176)
(2,044,030)
(6,864,531)
(718,225)
111,401,129
1,727,017
(53,402,253)
1,727,016
(281,598)
(363,277)
(11,517)
281,598
363,277
11,517
Supplementary information on non-cash activities
Write-off of loan principal
Write-off of interest receivable on loans
Reclassification of excess in (Notes 6 and 7)
Allowance for losses on loan portfolio to provision for interest receivable and other
Allowance for losses on loan portfolio to provision for contingent loans
Net change in unrealized gain (loss) on investments in
available-for-sale securities
Creation of the social contingency fund
Effect of exchange fluctuations on
5
Notes to the financial statements
1.
Activities and regulatory environment
Banco Nacional de Crédito, C.A., Banco Universal (the Bank) was authorized to operate as a
commercial bank in Venezuela in February 2003 under the name Banco Tequendama, C.A. and as a
universal bank on December 2, 2004. Its business objective is to provide financial intermediation
consisting in the procurement of funds for the purpose of granting credits or loans and investing in
securities.
The Bank is incorporated and domiciled in the Bolivarian Republic of Venezuela. Its legal address is:
Avenida Vollmer, Torre Sur del Centro Empresarial Caracas, Urbanización San Bernardino, ZP 1010.
Most of the Bank’s assets are located in the Bolivarian Republic of Venezuela. At December 31, 2012,
the Bank has 155 offices and external counters, a branch in Curacao, a main office, four regional
offices and 2,612 employees.
The Bank’s shares are traded on the Caracas Stock Exchange (Note 25).
As indicated in Note 26, the Bank conducts transactions with related companies.
The Bank’s financial statements at December 31 and June 30, 2012 were approved for issue by the
Board of Directors on January 9, 2013 and July 11, 2012, respectively.
In August 2003, the Superintendency of Banking Sector Institutions (SUDEBAN) issued Resolution
No. 202-03 dated August 4, 2003, published in Official Gazette No. 37,748 on August 7, 2003,
authorizing the Bank’s fiduciary operations.
The Law on Banking Sector Institutions was issued by the Venezuelan government on December 28,
2010 and amended and reissued on March 2, 2011. According to the temporary provisions of the new
Law, banks have a 135-day deadline to submit to SUDEBAN a plan to conform to the new legislation.
On May 11, 2011, the Bank filed the Adjustment Plan with SUDEBAN. Through Notice No. SBI-IIGGIBPV-GIBPV2-15590 of June 3, 2011, SUDEBAN made some observations regarding the
Adjustment Plan presented by Bank management and clarified certain issues set out in the Law. On
December 21, 2011, the Bank informed SUDEBAN about its progress in the implementation of the
Adjustment Plan and requested a 180-day extension to comply with certain articles of the Law.
Through Notice No. SIB-II-GGIBPV-GIBPV2-01873 of January 20, 2012, SUDEBAN granted the
extension requested by the Bank. In July 2012, the Bank sent SUDEBAN a status report on the
Adjustment Plan, which is in the final stages.
The Bank’s activities are ruled by the Law on Banking Sector Institutions and the Stock Market Law, as
well as the rules and instructions of SUDEBAN, the Higher Authority of the National Financial System
(OSFIN), the Central Bank of Venezuela (Banco Central de Venezuela - BCV) and the Venezuelan
Securities Superintendency (SNV).
The Law of the National Financial System is aimed at regulating, supervising, controlling and
coordinating the National Financial System in order to ensure that financial resources are used and
invested for the public interest and for economic and social development with a view to creating a
social and democratic State ruled by Law and Justice. The National Financial System is formed by the
group of public, private and communal financial institutions and any other form of organization
operating in the banking sector, the insurance sector, the stock market and any other sector or group
of financial institutions that the policy-making body deems should form part of the system. Individuals
and corporations that are users of the financial institutions belonging to the system are also included.
6
The National Financial System establishes rules for citizens to participate in the supervision of the
financial management and social controllership of the parties to the National Financial System, protects
user rights, and promotes collaboration among the sectors of the productive economy, including the
popular and communal sectors.
Curacao Branch
The banking activities of the Bank’s Curacao Branch (the Branch) are regulated by the Law of Banks of
Curacao and St. Maarten. The Branch is not an economically independent entity and conducts
transactions following the Bank’s guidelines. The Branch operates under an off-shore license granted
by the Federal Control Office for the Credit Banking System of Curacao and St. Maarten and
SUDEBAN in Venezuela. Capital assigned to the Branch has been contributed by the Bank (Note 8).
Other laws that regulate the Bank’s activities are described below:
Agricultural Loan Law
The Agricultural Loan Law requires the People’s Power Ministry for the Economy and Finance and the
People’s Power Ministry for Agriculture and Land to jointly fix within the first month of each year the
minimum percentage of the loan portfolio to be earmarked by each universal bank to finance
agriculture.
On February 16, 2012, through a joint Resolution, the aforementioned ministries established the
minimum percentages of the loan portfolio to be earmarked by each universal bank to finance
agriculture during 2012. This percentage is calculated based on the gross loan portfolio at December
31, 2011 and 2010 of each universal bank, and must be applied as follows: 20% in February; 21% in
March and April; 22% in May; 24% in June; 25% in July, August, September, October and November;
and 24% in December (Note 6).
The total amount of the quarterly agricultural loan portfolio of each public or private universal bank
must be distributed as follows:
Area
Activity
Percentage
Strategic
Primary agricultural production
Agroindustrial investments
Marketing
49.00
10.50
10.50
minimum
maximum
maximum
Non-strategic
Marketing
21.00
4.50
4.50
maximum
maximum
maximum
Total agricultural portfolio
100.00
This Resolution also established that commercial and universal banks must grant medium and longterm loans representing a least 10% of the total agricultural loan portfolio.
In addition, this Resolution requires the number of new individual and company borrowers of the
agricultural loan portfolio to be increased by 30% with respect to total agricultural borrowers at prior
year end. Of this percentage, at least half must be individual borrowers. Universal banks must
distinguish between agricultural loan borrowers maintained at prior year end and new borrowers for a
given year subject to measurement. Moreover, the Resolution establishes how the total quarterly
balance of each bank’s agricultural loan portfolio must be distributed among strategic and non-strategic
areas (Note 6).
7
According to the Resolution, only 5% of loans earmarked for strategic primary agricultural production
may be granted without guarantees to borrowers meeting the following conditions:
1. Borrowers must be individuals who are small producers.
2. Borrowers may not have another current agricultural loan with any public or private universal bank
at the loan application date.
3. The primary production project must be viable.
To comply with the aforementioned percentages, financial institutions may alternatively place funds
with public banks or contribute them to the Fund for Social Agricultural Development (FONDAS) in the
form of capital contributions to the Sociedad de Garantías Recíprocas para el Sector Agropecuario,
Forestal, Pesquero y Afines, S.A. (S.G.R. SOGARSA, S.A.), provided that the receiving entity
ultimately uses the funds to grant agricultural loans, in accordance with the terms and conditions
approved by the Agricultural Loan Monitoring Committee. Any such funds that are not used directly by
the receiving entity for agricultural loans may be returned at the Bank’s request after it has solved the
loan deficit that motivated the contribution of funds in the first place, but in no event before the financial
instrument agreed between the parties matures.
Public and private universal banks that deposited or invested money in the previously mentioned
institutions must inform SUDEBAN within the first 15 continuous days of the following month. Also,
these banks must keep up to date and available to the regulatory body all files and information
regarding these transactions.
Law on Benefits and Payment Facilities for Agricultural Debts on Strategic Crops for Food
Security and Sovereignty
The Law on Benefits and Payment Facilities for Agricultural Debts on Strategic Crops for Food Security
and Sovereignty was enacted on August 3, 2009. Subsequently, on September 17, 2009 and on
April 1, 2011, through a joint Resolution, the People’s Power Ministry for Planning and Finance and the
People’s Power Ministry for Agriculture and Land established the special terms and conditions for debt
restructuring and the procedures and requirements for filing and issuing response notices for debt
restructuring requests.
Agricultural Aid Law
On May 23, 2012, the Venezuelan President enacted the Agricultural Aid Law to meet the needs of
producers, farmers and fishermen who were affected by the floods that hit the country in late 2010.
This Law will benefit individuals or legal entities that had received agricultural loans to sow crops,
purchase raw materials, machinery, equipment and livestock, build and improve infrastructure,
reactivate distribution centers and finance working capital in relation to the production of strategic
crops.
The beneficiaries who received loans to finance the strategic crops defined under the Law shall be
granted partial or full debt relief by public and private banks.
Law for Creating, Supporting, Promoting and Developing the Microfinancial Business Sector
This Law establishes that the Bank must earmark 3% of its gross loan portfolio at prior semester
closing for microcredits or contributions to institutions that create, support, promote and develop the
microfinancial and small business sector in Venezuela.
8
Special Law for Home Mortgagor Protection
This Law requires banks and other financial institutions regulated by the Law on Banking Sector
Institutions to grant mortgage loans for acquisition, construction or subcontracted construction,
enlargement or remodeling of primary residences, based on a percentage of their annual loan portfolio,
excluding loans granted under the Housing Loan Law. Under this Law, loans will bear a social interest
rate.
The BCV, through an Official Notice, established special social interest rates applicable as from
September 2011 for primary residence mortgages and construction loans, granted or to be granted
from the financial institutions’ own resources as follows:
a. The maximum annual social interest rate applicable to loans granted under the Special Law for
Home Mortgagor Protection is 11.42%.
b. The maximum annual social interest rate applicable to mortgage loans for the acquisition of
primary residences, granted or to be granted from the financial institutions’ own resources varies
between 4.66% and 9.16%, depending on the monthly family income.
c. The maximum annual social interest rate applicable to mortgage loans for the construction of
primary residences, granted or to be granted from the financial institutions’ own resources, is
10.50%.
d. The maximum annual social interest rate applicable to mortgage loans for improvements to primary
residences varies between 1.40% and 2.40%, depending on the monthly family income.
e. The maximum annual social interest rate applicable to mortgage loans granted under the Housing
Loan Law varies between 1.40% and 4.60%, depending on the monthly family income.
The People’s Power Ministry for Housing established that maximum monthly installments for mortgage
loan payments shall not exceed 35% of the monthly family income.
Mortgage loans may be granted for up to the full value of the real property pledged, based on its
appraisal value and the monthly family income.
Through Official Gazette No. 39,890 of March 23, 2012, the People’s Power Ministry for Housing fixed
the minimum percentage of the annual gross loan portfolio to be earmarked by each universal bank
from its own resources for mortgage loans at 15% for the construction, acquisition, improvement,
9
expansion or subcontracted construction of primary residences. This percentage shall be distributed
based on the gross loan portfolio at December 31, 2011 as follows:
Financed activity
Construction of housing
Acquisition of primary residence
Monthly family income
Earmarked placements
Between three and six minimum salaries
Between six and eight minimum salaries
Between eight and fifteen minimum salaries
Between six and fifteen minimum salaries
Market
Primary
Secondary
Primary
Secondary
Improvement and expansion of
primary residence
Under or equal to five minimum salaries
-
Subcontracted construction of
primary residence
Under five minimum salaries
-
Total mortgage portfolio
Required
%
5.45
1.78
1.56
1.11
2.20
0.70
0.75
0.25
0.72
0.48
15.00
The distribution of the percentage for the construction of residences shall be defined by the Higher
Authority of the National Housing System.
The measurement of long-term mortgage loans for the acquisition of primary residences is calculated
based on: a) the balances of long-term mortgage loans granted at December 31 of the year preceding
the year subject to measurement and b) loans actually granted in 2012. The measurement of shortterm mortgage loans granted for construction of primary residences is calculated based on actual
payments made during 2012.
On August 2, 2011, the People’s Power Ministry for Housing issued Resolution No. 121 containing the
guidelines for granting loans for the subcontracted construction, expansion or improvement of primary
residences.
In addition, this Resolution establishes the financing conditions for each type of loan regardless of the
source of funds. Some of these conditions are: maximum debt capacity of the loan applicant or coapplicant, required guarantees, and the general requirements for the loan applicant and co-applicant.
On September 6, 2011, the People’s Power Ministry for Planning and Finance set the annual social
interest rates at between 1.4% and 4.66%.
Compliance with and distribution of the aforementioned percentages are measured at December 31 of
each year.
Tourism Law
The Tourism Law was published in Official Gazette No. 39,251 on August 27, 2009. The Tourism Law
requires the People’s Power Ministry for Tourism to fix within the first month of each year the
percentage of the gross loan portfolio to be earmarked by banks to finance tourism, ranging between
2.5% and 7%. Short, medium and long-term loans must be included in the loan portfolio percentage.
The interest rate may only be modified for the benefit of the loan applicant and loans shall be repaid in
equal consecutive monthly installments.
In addition, this Law establishes amortization periods between 5 and 15 years depending on the
activities to be conducted by loan applicants. This Law also establishes special conditions in respect
of terms, interest rates and subsidies, among others, for projects to be executed in tourist areas,
potential tourist areas or endogenous tourist development areas.
10
In addition, tourism guarantees are created within the National System for Reciprocal Guarantees for
loans granted.
The total monthly balance of each bank’s tourism loan portfolio must be distributed as follows:
Required
percentage
Segment
A
B
C
40
35
25
Through a Resolution issued on February 23, 2012 (February 28, 2011 at December 31, 2011), the
People’s Power Ministry for Tourism established at 3% the minimum percentage of the gross loan
portfolio to be earmarked by each universal bank to finance tourism. This percentage is calculated
based on the gross loan portfolio balance at December 31, 2011 and 2010, and must be applied as
follows: 1.5% at June 30, 2012 and 3% at December 31, 2012 (Note 6).
Through a joint Resolution on April 13, 2010, published in Official Gazette No. 39,402, the People’s
Power Ministries for Tourism and for Planning and Finance established the grace periods for tourism
loans. These grace periods range from one to three years depending on the activity that is being
financed. Loans for tourism projects to be developed in tourist areas will have the maximum grace
periods considering the type of activity to be developed.
Manufacturing loans
The Manufacturing Loan Law published on April 17, 2012 requires the people’s power ministries in
charge of finance and industries to jointly fix within the first month of each year, and with the binding
opinion of SUDEBAN and the BCV, the terms, conditions, periods and minimum percentage of the loan
portfolio to be earmarked by each universal bank to finance manufacturing activities. In no event may
the minimum percentage fall below 10% of each bank’s gross loan portfolio for the immediately prior
year.
BCV regulations
The BCV has established regulations on lending and deposit rates to be applied by banks and
restrictions on certain service fees. In July 2011 the BCV established maximum rates to be charged
for commissions, fees or surcharges on each type of transaction.
Regarding lending rates, the BCV established that banks may not charge for lending operations,
except for consumer loans, an annual interest or discount rate higher than the rate periodically set by
the BCV’s Board of Directors for discount, rediscount, repurchase and advance operations, reduced by
5.5%, except in the case of agricultural, tourism, manufacturing and mortgage loans for primary
residences (Note 6). As from June 5, 2009, the annual interest rate to be charged by the BCV on
discount, rediscount and advance operations, except as regards operations conducted under special
regimes, was set at 29.5%.
Regarding deposit rates, the BCV established that the interest rate to be paid by banks on savings
deposits, including liquid asset accounts, shall not be lower than 12.5% per annum. In addition, interest
rates to be paid by banks on time deposits and certificates of deposit may not be lower than 14.5% per
annum, regardless of their maturity. This rate will not be applicable to time deposits received by
development banks whose main objective is to foster, finance or promote microfinancial activities when
the depositor is another bank or financial institution.
11
The BCV established that banks may not charge commissions, fees or surcharges to their customers
for transactions, operations or services directly related to savings accounts. Banks may charge a
commission amounting to the existing balance of dormant savings and current accounts that have
been closed if it is below Bs 1. In addition, banks may not charge commissions, fees or surcharges for
operations other than those published by the BCV.
Through Resolution No. 10-11-01 of November 23, 2010 and Resolution No. 11-07-01 of July 13,
2011, the BCV established that banks may only charge their customers up to Bs 5 for the second plus
savings account books issued in the year. Likewise, banks may fix by mutual agreement with their
customers the amounts to be charged for commissions, fees or surcharges for providing specialized
products or services, as defined in these Resolutions. However, the BCV must approve all amounts
before collection.
In July 2007, the Constitutional Chamber of the Supreme Tribunal of Justice ruled partly in favor of the
lawsuit filed by the National Users’ and Consumers’ Alliance (ANAUCO) against the Venezuelan
Banking Association (ABV), the National Banking Council (CBN), SUDEBAN and the BCV. As part of
this process, the BCV established that banks may not charge an annual interest rate in excess of 29%
or under 17% for credit card lending operations. Moreover, banks may not charge customers
commissions, fees or charges for maintaining or renewing credit cards, collecting balances owed,
issuing statements or issuing classic or similar credit cards, or for claims filed by credit card holders,
whether legitimate or otherwise. Furthermore, the aforementioned Resolution requires banks to pay on
amounts credited in excess of the total credit card debt or on any amounts in favor of the cardholder
(except for prepaid instruments) annual interest not below that established by the BCV for savings
deposits.
The BCV established the maximum discount rates and commissions to be charged by banks to
affiliated businesses for authorizing and processing point-of-sale operations through credit, debit and
prepaid cards or any other financing or electronic payment instrument.
Through Resolution No. 10-10-02 issued on June 30, 2011, the BCV reduced by 3 percentage points
the 17% minimum legal reserve that banks are required to maintain at the BCV, as per the previous
Resolution of October 26, 2010, provided that they use the available resources to purchase
instruments issued within the framework of Venezuela’s Great Housing Mission. The terms and
conditions of these investments will be as established by the BCV.
Through Resolution No. 10-06-01 published in June 2010, the BCV issued the rules for conducting
exchange operations. According to these rules, the trading in bolivars of securities denominated in
foreign currency issued or to be issued by the Bolivarian Republic of Venezuela, its decentralized
agencies or any other issuer may only be conducted through the System for Transactions with
Securities in Foreign Currency (SITME). These purchase and sale transactions in bolivars shall be
conducted within a certain price band by universal banks, commercial banks, and savings and loan
institutions following the terms and conditions established by the BCV. In August 2010, Resolution
No. 10-08-01 was issued to allow the BCV’s participation in foreign currency trading operations.
Subsequently, through Circular No. SBIF-II-GGNR-GNP-08555 of June 14, 2010, SUDEBAN decided
to establish a regulatory exception for authorization requests provided for in the Accounting Manual for
Banks, Other Financial Institutions, and Savings and Loan Entities (Accounting Manual) relating to the
assignment of National Public Debt Bonds in foreign currency issued by the Bolivarian Republic of
Venezuela, its decentralized agencies or any other issuer in circumstances other than those expressly
described in the Accounting Manual. This regulatory exception only applies to held-to-maturity
securities negotiated through SITME. To qualify for the exception, the transactions must be notified to
SUDEBAN, which must receive documentation supporting the transactions together with the approval
of the institution’s Treasury Committee or whoever may be acting in its stead (Note 5).
12
Through Resolution No. 10-09-01, the BCV established that duly authorized universal banks may
operate as brokers or intermediaries on the currency market and advertise this activity, in accordance
with the BCV’s guidelines, terms and conditions.
Other regulations
Law for the Advancement of Science, Technology and Innovation
This Law establishes that the country’s major corporations will annually earmark 0.5% of gross income
generated in Venezuela in the prior year. For the six-month periods ended December 31 and June 30,
2012, the Bank recorded expenses in this connection of Bs 3,266,966 for each semester, included
under sundry operating expenses (Note 20).
In December 2010, the Venezuelan government enacted the Reform of the Law for the Advancement
of Science, Technology and Innovation, which became effective on December 16, 2010. This legal
instrument creates the National Fund for Science, Technology and Innovation (FONACIT), which shall
be responsible for managing, collecting, controlling, verifying, and quantitatively and qualitatively
determining the contributions for science, technology and innovation and their applications. Likewise,
the Reform indicates that taxpayers may apply to use the contributions to science, technology and
innovation, provided that they develop annual projects, plans, programs and activities for the priority
areas defined by the national authority responsible for matters related to science, technology and
innovation and their applications and submit them within the third quarter of each year. Subsequently,
also within the third quarter of each year, users of the contributions for science, technology and
innovation must submit to FONACIT a technical and administrative report of the activities conducted in
this connection during the prior year.
The partial regulations of the Law for the Advancement of Science, Technology and Innovation were
published on November 8, 2011. These regulations govern the contributions, financing and its results,
and research, technology and innovation ethics, and require the payment and declaration of
contributions within the second quarter after the closing of the period in which gross income was
generated.
Antidrug Law
The Antidrug Law was published in Official Gazette No. 39,510 on September 15, 2010. This Law
requires all private corporations, consortia and business-oriented public entities with 50 or more
employees to contribute 1% of their annual operating income to the National Antidrug Fund (FONA)
within 60 days of their respective year end. Companies belonging to economic groups will make
contributions on a consolidated basis.
The FONA shall use these contributions to finance plans, projects and programs for the prevention of
illegal drug traffic.
The contributions to the FONA shall be distributed as follows: 40% for prevention projects for the
contributor’s employees and their families; 25% for child welfare protection programs; 25% for antidrug
traffic programs; and 10% to finance the FONA’s operating costs. In addition, companies are required
to employ rehabilitated individuals to facilitate their social reintegration.
The Antidrug Law repeals the Law on Narcotic and Psychotropic Substances published in Official
Gazette No. 38,337 on December 16, 2005, and its Partial Regulations of June 5, 1996, published in
Official Gazette No. 35,986 on June 21, 1996. Resolution No. 004-2011 was published in Official
Gazette No. 39,643 on March 28, 2011 to establish the regulations for payment of contributions and
special contributions according to applicable laws. This Resolution also established that the Antidrug
Law will be effective for periods beginning after September 15, 2010 when the Law was enacted, and
for periods that began before that date the Law on Narcotic and Psychotropic Substances will apply.
13
For the six-month periods ended December 31 and June 30, 2012, the Bank recorded expenses in this
connection of Bs 3,347,542 and Bs 1,922,375, respectively, included under sundry operating expenses
(Note 20).
Exchange Offenses Law
A Reform of the Exchange Offenses Law was published on May 17, 2010 to include in the legal
definition of foreign currency securities denominated in foreign currency or which can be traded in
such. The Reform also grants the BCV exclusive control over foreign currency trading, regardless of
the amount of the transaction, whether through money or the purchase of securities that are intended
to be sold prior to their maturity date.
Law against Organized Crime and Terrorism Financing
The Law against Organized Crime and Terrorism Financing was published in Official Gazette
No. 39,912 on April 30, 2012 to prevent, investigate, prosecute, typify and punish offenses involving
organized criminal groups and terrorism.
Sports and Physical Education Law
The Sports and Physical Education Law was passed in August 2011. This Law seeks to regulate
physical education and the sponsorship, organization and management of sporting activities as public
services. Companies subject to this Law must contribute 1% of their net income to the activities
contemplated therein. The first Partial Regulations to this Law were published on February 28, 2012 to
establish the method for declaring and paying this contribution, the former within 190 days of period
end. Through Circular No. SIB-II-GGR-GNP-12159 of May 4, 2012, SUDEBAN established regulations
on how this contribution must be paid and recorded.
New Labor Law
The new Labor Law was published in Official Gazette No. 39,916 on May 7, 2012. This Law
incorporates certain changes to the previous Labor Law of June 19, 1997 and its reform of May 6,
2011, particularly with respect to the calculation of certain employee benefits, such as vacation bonus,
profit sharing, maternity leave, and the retrospective accrual of length-of-service benefits. In addition,
the new Law reduces working hours and extends job security for new parents. This Law became
effective upon its publication in the Official Gazette. Through Notice No. SIB-II-GGR-GNP-38442 of
November 27, 2012, SUDEBAN clarified that, in accordance with the Accounting Manual, banks must
apply International Accounting Standards as supplemental guidance for issues not treated in said
Accounting Manual, prudential regulations or prevailing accounting principles generally accepted in
Venezuela issued by the Venezuelan Federation of Public Accountants (FCCPV), such as the liability
arising from the new labor legislation. SUDEBAN also indicated that the methodology used to
determine this liability must be applied consistently, must be contemplated in the Bank’s rules and
policies, and must be approved by the Board of Directors. As reflected in Minutes No. 218 of the Board
of Directors’ Meeting on February 6, 2013, the Bank will use a simplified calculation, which has been
duly approved, to determine its liability with respect to length-of-service benefits. Such liability shall be
the greater of the sum of 15 days of salary deposited quarterly in employee trust funds plus two
additional days of salary for each year of service–amount that had already been recorded as salaries
and employee benefits–and the sum of 30 days of salary for each year of service or fraction over six
months, calculated based on the last salary earned by the employee. At December 31, 2012, the Bank
has set aside a provision of Bs 6,274,709 in this connection, recorded against expenses for the sixmonth period ended December 31, 2012 (Bs 5,930,754 at June 30, 2012) (Note 17).
14
2.
Basis of preparation
The accompanying financial statements at December 31 and June 30, 2012 have been prepared
based on the accounting rules and instructions of SUDEBAN included in the Accounting Manual, which
differ in certain material respects from generally accepted accounting principles (VEN NIF) published
by the Venezuelan Federation of Public Accountants (FCCPV), of mandatory application in Venezuela
as from January 1, 2008. VEN NIF are mainly based on International Financial Reporting Standards
(IFRS) issued by the International Accounting Standards Board (IASB), except for certain criteria
concerning adjustments for inflation and the valuation of foreign currency assets and liabilities, among
others.
Through Resolution No. 648.10 of December 28, 2010, SUDEBAN deferred the presentation of
consolidated or combined financial statements prepared under VEN NIF as supplementary information
and established that, until otherwise stated, consolidated or combined financial statements and their
notes must continue to be presented as supplementary information in accordance with generally
accepted accounting principles in effect at December 31, 2007 (VEN GAAP).
At December 31 and June 30, 2012, the main differences identified by management between the
accounting rules and instructions of SUDEBAN and VEN NIF that affect the Bank are the following:
1) VEN NIF Adoption Bulletin No. 2 (BA VEN NIF 2) establishes criteria for applying International
Accounting Standard No. 29 (IAS 29), “Financial reporting in hyperinflationary economies” in
Venezuela and requires that the effects of inflation on the financial statements be recognized in
accordance with IAS 29, provided that inflation for the year exceeds one digit. SUDEBAN has
stipulated that inflation-adjusted financial statements must be provided as supplementary
information. For purposes of additional analysis, the Bank has prepared inflation-adjusted financial
statements using the General Price Level (GPL) method. The inflation rate for the six-month period
ended December 31, 2012 was 11.70% (7.49% for the six-month period ended June 30, 2012)
(Note 34).
2) The Accounting Manual establishes that interest earned on overdue or in-litigation loans shall not
be recognized as income but shall be recorded under memorandum accounts, as shall all
subsequent interest earned. VEN NIF establish that for financial instruments carried at amortized
cost, the amount of the impairment is the difference between the instrument’s carrying amount and
the present value of estimated future cash flows generated by the instrument, discounted at the
original effective interest rate. Impairment exists when the present value of an instrument’s future
cash flows is lower than the carrying amount, in which case interest income shall be recognized
taking into account the discount rate applied to future cash flows for determining impairment
losses.
3) The Accounting Manual establishes that loans whose original repayment schedule, term, or other
conditions have been modified at the request of the debtor must be reclassified within rescheduled
loans. VEN NIF provide no specific guidance. However, they do state that impairment losses on
financial assets carried at amortized cost shall be charged to the results for the period in which
they are incurred.
In addition, the Accounting Manual establishes that loans classified as overdue must be written off
within 24 months after inclusion in this category. Loans in litigation must be fully provided for after
24 months in the in-litigation category. In addition, overdue monthly loan installments that have
been repaid must be classified to the category to which they pertained before being classified as
overdue. Likewise, when a debtor repays pending loan installments of a loan in litigation, thereby
15
terminating the lawsuit, the loan must be reclassified to the category to which it pertained before
being classified as in litigation or overdue. According to VEN NIF, accounts receivable are
recorded based on their recoverable amount.
4) Assets received as payment are recorded at the lower of cost and market value and amortized
using the straight-line method over one to three years. Idle assets must be written out of asset
accounts after 24 months. In accordance with VEN NIF, assets received as payment are stated at
the lower of cost and market value, and are classified as available-for-sale assets or investment
property depending on their use. Investment properties are depreciated over their expected
income-generating term.
5) The Accounting Manual establishes that property and equipment is initially recorded at acquisition
or construction cost, as applicable. However, VEN NIF allows property and equipment to be
revalued, and any increase in value is credited to equity under revaluation surplus.
6) Significant leasehold improvements are recorded as amortizable expenses and included under
other assets. According to VEN NIF, they must be shown as part of property and equipment.
Gains or losses on the sale of personal and real property are shown in the income statement.
7) The Bank computes a deferred tax asset or liability in respect of temporary differences between
the tax bases and carrying amounts in the financial statements, except for provisions for losses on
other than high risk or unrecoverable loans. A deferred tax asset is not recognized for any amount
exceeding future taxable income. In accordance with VEN NIF, a deferred tax asset is recognized
in respect of all temporary differences between the carrying amount of assets and liabilities and
their tax bases, provided that its realization is assured beyond any reasonable doubt.
8) The Bank presents convertible bonds as part of equity (Note 24). In accordance with VEN NIF,
convertible bonds must be presented as a financial instrument forming part of the Bank’s liabilities.
9) Other assets include deferred expenses incurred by the Bank during the currency redenomination
process, which are amortized as from April 2008 using the straight-line method (Note 12). Other
assets also include deferred personnel, general, administrative and operating expenses related to
the acquisition of Stanford Bank, S.A., which will be amortized over 15 years as from
January 1, 2010 (Note 11). In accordance with VEN NIF, these types of costs may not be deferred
and must be recorded in the income statement as incurred.
10) In conformity with SUDEBAN rules, the Bank sets aside the general allowance for the loan portfolio
with a charge to the results for the period. VEN NIF require that these allowances be recorded as
a restricted amount of retained earnings in equity, provided that they do not meet conditions
established in IAS 37, “Provisions, contingent liabilities and contingent assets.”
11) At December 31 and June 30, 2012, the Bank, in conformity with SUDEBAN rules, maintains a
general 1% allowance of the loan portfolio balance, except for the balance of the microcredit
portfolio, for which it maintains a general 2% allowance. VEN NIF require that the Bank first
assess whether objective evidence of impairment exists individually for loans that are individually
significant, or collectively for loans that are not individually significant. Impairment losses shall be
recognized in the results for the period.
12) SUDEBAN rules require foreign currency balances and transactions to be measured at the
prevailing official exchange rate established by the BCV of Bs 4.30/US$1, except for foreign
currency securities issued by the Bolivarian Republic of Venezuela or by state-owned companies,
which are measured at the average exchange rate of securities traded through SITME the last day
of each month. In conformity with VEN NIF, foreign currency transactions and balances shall be
16
measured and recorded taking into consideration a comprehensive assessment of the entity’s
financial position, its monetary position in foreign currency and the financial impact of the
applicable exchange regulations. In addition, instructions issued by the FCCPV on this matter state
that:
-
Foreign currency items shall be measured: a) at the official exchange rates established in the
different exchange agreements issued by the BCV and the Venezuelan government, or b) on
the basis of best estimates of future cash flows in bolivars expected to be required or received
to settle liabilities or realize assets at the transaction or balance sheet date, using the exchange
or settlement mechanisms permitted under Venezuelan law (e.g., SITME).
-
Assets in foreign currency required to be sold to the BCV shall be measured at the official
exchange rates established by the BCV.
-
Assets in foreign currency not required to be sold to the BCV shall be measured: a) on the
basis of the liabilities that are not reasonably expected to be settled with foreign currency
purchased from the Venezuelan government at the official exchange rate, or b) on the basis of
best estimates of future cash flows in bolivars expected to be received to realize these assets
at the transaction or balance sheet date, using the exchange or settlement mechanisms
permitted under Venezuelan law (e.g., SITME).
13) Investments in trading securities may not remain in this category for more than 90 days after they
have been classified. In conformity with VEN NIF, these investments may remain in this category
indefinitely.
14) In accordance with SUDEBAN rules, available-for-sale assets reclassified to the held-to-maturity
category are recorded at their fair value at the reclassification date. Unrealized gains or losses are
maintained separately in equity and are amortized over the investment’s remaining life as an
adjustment to yield.
In conformity with VEN NIF, the fair value of the investment at the reclassification date becomes
the new amortized cost basis, and any gain or loss previously recognized in equity is accounted for
as follows: a) gains or losses on fixed maturity investments, as well as any difference between the
new amortized cost and value at maturity, are taken to profit and loss and amortized over the
investment’s remaining life, and b) gains or losses on non-maturing investments will remain in
equity until the asset is sold or otherwise disposed of, when it shall be recognized in profit or loss.
Any subsequent impairment losses recorded in equity shall be recognized in the results for the
period.
15) Discounts or premiums on held-to-maturity investments are amortized over the term of the security
with a debit or credit to gain or loss on investment securities under other operating income or other
operating expenses, respectively. In conformity with VEN NIF, discounts or premiums must be
accounted for as part of the security’s yield and, therefore, must be recognized under interest
income.
16) Subsequent recoveries of permanent losses arising from impairment in the fair value of investment
securities do not affect the new cost basis. VEN NIF allow recovery of impairment losses on debt
securities.
17
17) The Accounting Manual establishes timeframes to record provisions for bank reconciling items,
matured securities, pending items and accounts receivable forming part of other assets, loan
interest suspension, interest receivable and derecognition of certain assets, among others.
VEN NIF do not establish timeframes for creating provisions for these items; provisions are
recorded based on best estimates of collection or recovery.
18) Other assets include the difference between the purchase price and the book value of Stanford
Bank’s assets and liabilities, which will be amortized using the straight-line method over 15 years.
According to VEN NIF, goodwill should not be amortized but tested for impairment annually or
whenever events or circumstances indicate that the value of the respective reporting unit may be
impaired. Impairment is determined by comparing the carrying amount of the cash generating unit
to its recoverable amount, and if the carrying amount exceeds the recoverable amount, an
impairment loss is recognized in the income statement.
19) At December 31 and June 30, 2012, other assets include deferred expenses of Bs 10,848,455 and
Bs 16,320,460, respectively, related to disbursements for the new chip-based credit and debit
cards. These disbursements include advisory, training and other personnel expenses, advertising,
and client education on the adequate use of electronic payment services, accommodation of
physical spaces, and replacement of debit and credit cards. They will be amortized beginning
January 2011 using the straight-line method (Note 12). In accordance with VEN NIF, these
expenses may not be deferred but must be recorded in the income statement when incurred.
20) SUDEBAN established that gains and losses resulting from foreign exchange fluctuations must be
recorded in equity. Under VEN NIF, gains and losses resulting from foreign exchange fluctuations
must be recorded in the income statement for the period in which they occur. During the six-month
period ended December 31, 2012, the Bank did not record exchange fluctuations with regard to its
foreign currency assets and liabilities (Notes 4 and 25-c).
21) For purposes of the cash flow statement, the Bank considers as cash equivalents cash and due
from banks. VEN NIF consider as cash equivalents investments and deposits maturing within 90
days.
22) SUDEBAN established that expenses incurred in relation to the social contribution provided in
Article No. 48 of the Law on Banking Sector Institutions shall be recorded as a prepaid expense
within other assets and amortized during the six-month period in which the contribution was paid.
Under VEN NIF, this contribution must be expensed as incurred.
23) SUDEBAN established that expenses incurred in relation to the contribution under the Sports and
Physical Education Law shall be expensed when paid. Under VEN NIF, this contribution must be
expensed as incurred.
24) The Accounting Manual establishes that transfers between investment categories or sales of
investments for reasons other than those established in said Accounting Manual must be
authorized by SUDEBAN. The sale or transfer of held-to-maturity investments shall not be
considered to be inconsistent with their original classification under the following circumstances:
a) a significant deterioration in the issuer’s creditworthiness;
b) a change in tax law that eliminates or reduces the tax-exempt status of interest on the debt
security;
18
c) a major business combination or major disposition that necessitates the sale or transfer of the
security to maintain the enterprise’s existing interest rate risk position or credit risk policy;
d) a change in statutory or regulatory requirements significantly modifying either what constitutes
a permissible investment or the maximum level of investments in certain kinds of securities;
e) a significant increase by the regulator in the industry’s capital requirements; and
f)
a significant increase in the risk weights of debt securities used for regulatory risk-based
capital purposes. Changes in circumstances and other events that are isolated, nonrecurring
and unusual and that could not have been reasonably anticipated may cause an entity to sell
or transfer held-to-maturity investments without calling into question the entity’s intent to hold
other securities to maturity.
According to VEN NIF, if an entity sells or reclassifies more than an insignificant proportion of
held-to-maturity investments before maturity, the entity may not classify any financial asset as
held-to-maturity for two years from the date the sale or transfer occurred. In addition, any
remaining held-to-maturity securities must be reclassified as available for sale and measured at
fair value.
The accounting policies followed by the Bank are:
a) Foreign currency
Foreign currency transactions and balances are recorded at the official exchange rate in effect at the
transaction date. Foreign currency balances at December 31 and June 30, 2012 are shown at the
official exchange rate of Bs 4.30/US$1, except for foreign currency securities issued by the Bolivarian
Republic of Venezuela or by state-owned companies, which since October 2011 are recorded at the
average implicit exchange rate of securities traded through SITME the last day of each month. At
December 31, 2012, the SITME rate was Bs 5.30/US$1 (Note 4). Exchange gains and losses other
than those resulting from the official currency devaluation are included in the results for the period
(Note 25).
The Bank does not engage in hedging activities in connection with its foreign currency transactions and
balances. The Bank is exposed to foreign exchange risk.
b) Translation of financial statements in foreign currency
Assets, liabilities and income accounts of the Curacao Branch were translated at the official exchange
rate of Bs 4.30/US$1, except for foreign currency securities issued by the Bolivarian Republic of
Venezuela or by state-owned companies, which were translated at the average implicit exchange rate
of securities traded through SITME the last day of each month. The adjustment resulting from
translating the financial statements of the Branch into bolivars is shown in the income statement under
other operating income (in equity at June 30, 2012) (Notes 19 and 25).
c) Investment securities
Investment securities are classified upon acquisition, based on their intended use, as overnight
deposits, investments in trading securities, investments in available-for-sale securities, investments in
held-to-maturity securities, restricted investments and investments in other securities.
All transfers between different investment categories or sales of investments under circumstances
other than those established in the Accounting Manual must be authorized by SUDEBAN.
19
Excess liquidity deposited in overnight deposits and debt securities issued by Venezuelan financial
institutions maturing within 60 days are included in this account.
Investments in trading securities
Investments in trading securities are recorded at fair value and comprise investments in debt and
equity securities which may be converted into cash within 90 days of their acquisition. Unrealized
gains or losses resulting from differences in fair values are included in the income statement. Gains
and losses from fluctuations in the exchange rate are included in equity.
These securities, regardless of their maturity, must be negotiated and written out of this account within
90 days of their classification, i.e., they may not remain in this category for more than 90 days.
Investments in available-for-sale debt and equity securities are recorded at fair value and unrealized
gains or losses, net of income tax, resulting from differences in fair value are included in equity. If
investments in available-for-sale securities correspond to instruments denominated in foreign currency,
the fair value will be determined in foreign currency and then translated at the official exchange rate in
effect. Gains or losses from fluctuations in the exchange rate are included in equity. Permanent
losses from impairment in the fair value of these investments are recorded in the income statement
under other operating expenses for the period in which they occur. Any subsequent recovery in fair
value is recognized as an unrealized gain, net of income tax, in equity (Note 5-a).
These investments may not remain in this category for more than one year, except for securities issued
and guaranteed by the Venezuelan government and investments in shares of mutual guarantee
companies.
Investments in debt securities that the Bank has the firm intention and ability to hold until maturity are
recorded at cost, which should be consistent with market value at the time of purchase, subsequently
adjusted for amortization of premiums or discounts. Discounts or premiums on acquisition are
amortized over the term of the securities as a credit or debit to other operating income and other
operating expenses. The book value of investments denominated in foreign currency is adjusted at the
exchange rate in effect at period end. Gain and losses from fluctuations in the exchange rate are
included in equity.
The Bank assesses at each balance sheet date, or sooner if circumstances require it, whether there is
any objective evidence that a financial asset or group of financial assets is impaired. An impairment in
the fair value of held-to-maturity and available-for-sale securities is charged to the results for the period
when management considers that it is other than temporary. Certain factors identified as indicators of
impairment are: 1) a prolonged period where fair value remains substantially below cost, 2) the
financial difficulty of the issuer, 3) a fall in the issuer’s credit rating, 4) the disappearance of an active
market for the security, and 5) the Bank’s intention and ability to hold the investment long enough to
allow for recovery of fair value, among others. For the six-month periods ended December 31 and
June 30, 2012, the Bank has identified no permanent impairment in the value of its investments
(Note 5-b).
Sales or transfers of investments in held-to-maturity securities do not affect the original intention for
which these securities were acquired when: a) the sale occurs so close to their maturity date that
interest rate risk is extinguished (i.e., changes in market interest rates will not significantly affect the
realizable value of the investment) or b) the sale occurs after the entity has collected a substantial
portion (more than 85%) of the outstanding principal at the transaction date, in addition to all other
conditions established in the Accounting Manual.
20
Restricted investments originating from other investment categories are measured using
criteria used to record those investments from which they are derived. Securities or loans
Bank contractually sells and commits to repurchase at an agreed date and price, i.e., for
Bank acts as the reporting entity, are valued using the same criteria as for investments
securities.
the same
which the
which the
in trading
Investments in other securities include investment trusts, as well as investments not classified under
any other category.
The Bank uses the specific identification method to determine the cost of securities and this same
basis to calculate realized gains or losses on the sale of trading or available-for-sale securities.
d) Loan portfolio
Commercial loans and term, mortgage and credit card loan installments are classified as overdue if
repayment is more than 30 days past due. In conformity with SUDEBAN rules, advances on negotiated
letters of credit are classified as overdue if not repaid within 270 days after they were granted by the
Bank. Furthermore, when any related installment is more than 90 days past due, the entire principal
balance is classified as overdue.
In addition, the entire balance of microcredits, payable in weekly or monthly installments, is considered
past due if repayment of at least one weekly installment is 14 days overdue or one monthly installment
is 60 days overdue. Rescheduled loans are those whose original repayment schedule, term, or other
conditions have been modified based on a refinancing agreement and certain terms and conditions set
out in the Accounting Manual. Loans in litigation are those in the legal collection process.
Loans classified as overdue must be written off within 24 months after inclusion in this category. Loans
in litigation must be fully provided for after 24 months in the in-litigation category. In addition, overdue
monthly loan installments that have been repaid must be reclassified to the category to which they
pertained before being classified as overdue. Likewise, when an individual repays pending loan
installments of a loan in litigation, thereby terminating the lawsuit, the Bank must reclassify the loan to
the category to which it pertained before being classified as in litigation or overdue.
e) Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with SUDEBAN rules requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of
income and expenses during the reporting period. Actual results may differ from those estimates.
Below is a summary of the main estimates used in the preparation of the financial statements:
Investment securities
Investment securities and interest not collected 30 days after maturity date are provided for in full.
Loan portfolio and contingent loans
The Bank performs a quarterly review of at least 90% of its loan portfolio and contingent loans to
determine the specific allowance for possible losses on each loan. This review takes into account
factors such as economic conditions, client credit risk and credit history. Moreover, each quarter the
Bank calculates an allowance for losses on loans not individually reviewed, equivalent to the risk
percentage resulting from the specific review of loans. In addition, in accordance with SUDEBAN rules,
21
the Bank maintains a general 1% allowance of the loan portfolio balance, except for the balance of the
microcredit portfolio, for which it maintains a general 2% allowance, plus any additional general
allowances deemed necessary. General or specific allowances may not be released without the
authorization of SUDEBAN.
Other assets
The Bank assesses collectibility of items recorded under other assets using the same criteria, where
applicable, as those applied to the loan portfolio. Furthermore, the Bank sets aside provisions for those
items that require them due to their nature or aging.
Provision for legal and tax claims
The Bank sets aside a provision for legal and tax claims considered probable and reasonably
quantifiable based on the opinion of its legal advisors. Based on this opinion, management believes
that the outcome of legal and tax claims outstanding at December 31 and June 30, 2012 will be
favorable to the Bank (Note 30). However, this opinion is based on events to date; the outcome of
these lawsuits could differ from that expected.
f) Available-for-sale assets
Personal and real property received as payment is recorded at the lower of assigned value, book
value, market value or appraisal value not older than one year, and is amortized using the straight-line
method over one to three years, respectively. The remaining available-for-sale assets are recorded at
the lower of cost and realizable value. Gains or losses from the realization of available-for-sale assets
are included in the income statement.
Other available-for-sale assets and assets idle for more than 24 months must be written out of asset
accounts.
g) Property and equipment
Property and equipment is recorded at cost, net of accumulated depreciation. Depreciation is
calculated using the straight-line method over the estimated useful lives of the assets. Significant
leasehold improvements are recorded as amortizable expenses and included under other assets.
Gains or losses on the sale of personal and real property are shown in the income statement.
h) Deferred expenses
Deferred expenses mainly include start-up, leasehold improvement and software license costs. These
expenses are recorded at cost, net of accumulated amortization. Amortization is calculated using the
straight-line method over four years.
Expenses incurred during the currency redenomination process related to advisory, training, travel and
other personnel, advertising, software and security expenses will be amortized as from April 2008
using the straight-line method over one to six years (Note 12).
Deferred expenses related to the Stanford Bank merger shall be amortized using the straight-line
method over 15 years as from January 2010 (Notes 11 and 12).
The difference between the purchase price and the book value of Stanford Bank’s assets and liabilities
is amortized using the straight-line method over 15 years as from June 2009 (Notes 11 and 12).
Deferred expenses related to the project for the new chip-based credit and debit cards will be
amortized using the straight-line method over one to six years as from January 2011 (Note 12).
22
i) Income tax
The Bank’s tax year ends on December 31. The tax provision is based on management’s projection of
tax results. The Bank records a deferred tax asset when, in the opinion of management, there is
reasonable expectation that future tax results will allow its realization. In addition, according to the
Accounting Manual, the amount by which the deferred tax asset exceeds tax expense for the year is
not recognized (Note 18).
j) Employee benefits
The Bank accrues for its liability in respect of length-of-service benefits, which are a vested right of
employees, based on the provisions of the new Labor Law (LOTTT) (Note 1) and the prevailing
collective labor agreement and deposits amounts accrued in a trust fund on behalf of each employee.
The Bank does not have a pension plan or other post-retirement benefit programs for its employees; it
does not grant stock purchase options.
Profit sharing
Under the collective labor agreement, the Bank is required to pay a share of its annual profits to its
employees of up to 120 days of salary. Expenses incurred in this connection during the first six-month
period of each year are paid in April and July, and the remaining liability in November. At December
31 and June 30, 2012, the Bank has recorded Bs 23,684,119 and Bs 18,742,072, respectively, in this
connection, shown under salaries and employee benefits.
Vacation leave and vacation bonus
The new Labor Law and the collective labor agreement grant each employee a minimum of 15 days of
vacation leave each year and a vacation bonus based on length of service. The Bank accrues amounts
accordingly (Note 17).
k) Recognition of revenue and expenses
Interest on loans, investments and accounts receivable is recorded as income when earned by the
effective interest method, except: a) interest receivable more than 30 days overdue, b) interest on
loans overdue or in litigation, or loans classified as real risk, high risk or unrecoverable, and c) overdue
interest, all of which are recorded as income when collected. Interest collected in advance is included
under accruals and other liabilities as deferred income and recorded as income when earned
(Note 17).
Interest on current and rescheduled loan portfolios collectible after six months or more is recorded as
deferred income under accruals and other liabilities when earned and as income when collected.
Commissions from loans granted are recorded as income upon collection under income from other
accounts receivable.
Income from financial leases and amortization costs of leased property are shown net in the income
statement as interest income from the loan portfolio.
Interest on customer deposits, liabilities and borrowings is recorded as interest expense when incurred
using the effective interest method.
l) Residual value
Residual value is the estimated value of assets upon termination of the financial lease. The Bank
recognizes residual value as income when collected.
23
m) Assets received in trust
Assets received in trust are valued using the same parameters used by the Bank to value its own
assets, except for investment securities, which are shown at cost and subsequently adjusted for
amortization of premiums or discounts. Any permanent impairment in the value of these investments is
recorded in trust fund results for the period in which it occurs. During the six-month periods ended
December 31 and June 30, 2012, no permanent losses were identified.
n) Net income per share
Basic net income per share has been determined by dividing net income for the six-month period by
the weighted average of shares outstanding during the period.
o) Cash flows
For purposes of the cash flow statement, the Bank considers as cash equivalents cash and due from
banks.
p) Use of financial instruments
The Bank is mainly exposed to credit, foreign exchange, market, interest rate and liquidity risks. Below
is the risk policy used by the Bank for each type of risk:
Credit risk
The Bank assumes exposure to credit risk when a counterparty is unable to pay off its debts at
maturity.
The Bank monitors credit risk exposure by regularly analyzing payment capabilities of its borrowers.
The Bank structures the level of credit risk by establishing limits for individual and group borrowers.
The Bank requests fiduciary or mortgage guarantees, collateral or certificates of deposit after
assessing specific borrower characteristics.
Foreign exchange risk
Foreign exchange risk arises from fluctuations in the value of financial instruments due to changes in
foreign currency exchange rates. The Bank’s transactions are mainly in bolivars. However, when the
Bank identifies short or medium-term market opportunities, investments might be deposited in foreign
currency instruments, mainly in U.S. dollars.
Market risk
The Bank assumes exposure to market risk. Market risk arises from open positions in interest rate,
currency and equity products, all of which are exposed to general and specific market movements.
The Bank evaluates market risk on a regular basis and the Board of Directors sets limits on the level of
risk concentrations that may be assumed, which is regularly supervised.
Interest rate risk
The Bank assumes exposure from the effects of fluctuations in market interest rate levels on its
financial position and cash flows.
Interest margins may increase as a result of such changes but may diminish or lead to losses in the
event of unexpected movements.
24
The Bank analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated
taking into consideration renewal of existing positions, alternative financing and hedging. Based on
these scenarios, the Bank calculates the impact on profit and loss of a given interest rate shift.
Simulations are performed regularly. Based on various scenarios, the Bank manages its cash flow
interest rate risk.
Liquidity risk
The Bank reviews on a daily basis its available cash resources, overnight deposits, current accounts,
maturing deposits and loans, as well as its guarantees and margins.
The Bank’s investment strategy is aimed at guaranteeing an adequate liquidity level. A large portion of
the investment portfolio includes securities issued by the Bolivarian Republic of Venezuela and other
highly liquid obligations.
Operational risk
The Bank considers exposure to operational risk arising from direct or indirect losses that result from
inadequate or defective internal processes, human error, system failures or external events.
The structure used by the Bank to measure operational risk is based on a qualitative and quantitative
approach. The first identifies and analyzes risks before related events occur; the second mainly relies
on the analysis of events and experiences gained from them.
Fiduciary activities
The Bank acts as custodian, administrator and manager of third-party investments. As a result, in
certain cases, the Bank purchases and sells a wide range of financial instruments. These trust fund
assets are not included in the Bank’s assets. At December 31, 2012, trust fund assets amount to
Bs 971,641,295 (Bs 787,135,059 at June 30, 2012), shown under memorandum accounts (Note 22).
3.
At December 31, 2012, the balance of the account with the BCV mainly includes Bs 3,070,135,180 in
respect of the legal reserve deposit in local currency (Bs 1,964,240,629 at June 30, 2012) (Note 29).
In addition, at December 31, 2012, the account with the BCV includes Bs 1,279,956,654 in respect of
demand deposits held by the Bank at the BCV (Bs 926,517,989 at June 30, 2012).
At December 31 and June 30, 2012, pending cash items relate to clearinghouse operations conducted
by the BCV and other banks.
4.
Foreign currency assets and liabilities
In February 2003, the Venezuelan government established an exchange control regime coordinated,
managed and controlled by the Commission for the Administration of Foreign Currency (CADIVI).
On January 8, 2010, the Venezuelan government and the BCV enacted Exchange Agreement No. 14
to introduce an exchange rate of Bs 2.60/US$1 applicable to priority imports, and Bs 4.30/US$1
applicable to all other imports.
25
On December 30, 2010, the Venezuelan government and the BCV enacted Exchange Agreement
No. 14 to eliminate, as from January 1, 2011, the two-tiered exchange rate system and reinstate a
single exchange rate of Bs 4.2893/US$1 (purchase) and Bs 4.30/US$1 (sale).
In January, July and August 2010, SUDEBAN established the guidelines for the accounting treatment
of gains and losses resulting from the effect of the variation in the official exchange rate established in
Exchange Agreement No. 14. These gains or losses shall be recorded in equity under exchange gain
(loss) from holding foreign currency assets and liabilities. Furthermore, the SUDEBAN Resolution
restricts the use of exchange gains to: a) cover any losses incurred until September 30, 2010 from the
trading of Venezuelan Government National Public Debt Bonds through SITME; b) set aside provisions
for contingencies or cover deficit balances; and c) increase capital.
Through a Circular issued on January 4, 2011, the BCV informed commercial and universal banks
participating in the System for the Electronic Custody of Securities (SICET) and the System for
Collateral and Credit Lines (SIGALC) that secondary market transactions with Principal and Interest
Covered Bonds (TICCs) would be settled at the exchange rate of Bs 4.30/US$1, and related coupons
payable for interest due would be settled at the exchange rate in effect two bank days prior to the
coupon starting date.
Subsequently, on October 14, 2011, the BCV established that public-sector securities in foreign
currency would be measured and recorded at the average value date exchange rate at the last day of
each month for transactions conducted through SITME managed by the BCV.
In January and October 2011, SUDEBAN established the guidelines for the accounting treatment of
gains and losses resulting from the effect of changes in the official exchange rate established in
Exchange Agreement No. 14 and Resolution No. 11-10-01. These gains shall be recorded in equity
within exchange gain (loss) from holding foreign currency assets and liabilities. Furthermore, this
Resolution restricts the use of exchange gains to: a) absorb operating losses or deficit maintained in
equity accounts at June 30, 2011; b) cover deficit balances through asset contingency provisions, and
make adjustments or record losses as determined by SUDEBAN until March 31, 2012; c) offset
deferred expenses based on special plans approved by SUDEBAN until December 31, 2011, as well
as costs and goodwill generated until March 31, 2012; d) absorb other losses incurred from applying
the adjustment plan established in the temporary provisions of the Law on Banking Sector Institutions,
approved by SUDEBAN, until March 31, 2012; and e) increase capital stock when exchange gains are
realized.
The Bank’s balance sheet with its Curacao Branch at December 31 and June 30, 2012 includes the
following foreign currency balances denominated mainly in U.S. dollars (US$) and stated at the official
exchange rates mentioned above:
December 31, 2012
US$
Curacao
Branch
Eliminations
Total
999,005
12,925,381
15,842,715
21,698,261
31,648,847
(12,469,855)
-
999,005
22,153,787
47,491,562
4,295,721
95,261,284
246,045,663
32,804,064
394,083
25,817,574
823,611
-
25,817,574
32,804,064
1,217,694
111,015,568
141,057,475
6,299,520
1,000,000
1,318,887
24,130
4,675
(1,000,000)
-
24,130
1,323,562
103,759
5,691,317
65,284,135
80,017,098
(13,469,855)
131,831,378
609,770,307
Bank
Assets
Cash
Loan portfolio, net of provision
Current loan portfolio
Outstanding letters of credit issued and negotiated
Investments in subsidiaries, affiliates and
branches and agencies abroad
Other assets, net of provision
Total assets
26
Equivalent
in bolivars
December 31, 2012
US$
Liabilities
Customer deposits
Borrowings
Total liabilities
Bank
Curacao
Branch
Eliminations
Total
5,000,000
4,732,694
7,816
2,183,354
73,865,484
22,034
527,268
(12,469,855)
-
61,395,629
5,000,000
4,732,694
29,850
2,710,622
264,001,205
21,500,000
20,350,584
128,355
11,655,675
11,923,864
74,414,786
(12,469,855)
73,868,795
317,635,819
Equity
Assigned capital
Other debtor memorandum accounts (Note 22)
Foreign currency purchases
Foreign currency sales
Equivalent
in bolivars
-
1,000,000
(1,000,000)
-
-
11,923,864
75,414,786
(13,469,855)
73,868,795
317,635,819
7,768,459
(7,768,459)
-
-
7,768,459
(7,768,459)
33,404,374
(33,404,374)
June 30, 2012
US$
Curacao
Branch
Bank
Assets
Cash
Loan portfolio, net of provision
Current loan portfolio
Outstanding letters of credit issued and
negotiated
Investments in subsidiaries, affiliates and
branches and agencies abroad
Other assets, net of provision
Eliminations
Equivalent
in bolivars
Total
656,489
8,838,152
10,588,778
49,872,449
7,569,879
(78,659)
-
656,489
58,631,942
18,158,657
2,822,903
252,117,349
92,628,045
-
12,604,082
-
12,604,082
54,197,553
25,419,901
267,196
142,958
-
25,419,901
410,154
109,305,574
2,110,110
1,000,000
2,271,022
28,302
11,283,607
(1,000,000)
(11,278,932)
28,302
2,275,697
121,699
9,785,497
49,041,538
81,501,277
(12,357,591)
118,185,224
523,088,730
Liabilities
Customer deposits
Borrowings
7,610,160
2,310,358
77,946,078
8,068
142,467
(11,357,591)
-
66,588,487
7,610,160
8,068
2,452,825
286,330,494
32,723,688
34,692
10,547,143
9,920,518
78,096,613
(11,357,591)
76,659,540
329,636,017
Total assets
Total liabilities
Equity
Assigned capital
Other debtor memorandum accounts (Note 22)
Foreign currency purchases
Foreign currency sales
-
1,000,000
(1,000,000)
-
-
9,920,518
79,096,613
(12,357,591)
76,659,540
329,636,017
8,943,258
(8,943,258)
-
-
8,943,258
(8,943,258)
38,456,023
(38,456,023)
At December 31, 2012, the Bank has a net monetary asset position in foreign currency of
US$53,360,271, equivalent to Bs 243,071,748 (US$39,121,020, equivalent to Bs 176,464,786, at June
30, 2012), calculated based on the rules laid down by the BCV. This amount does not exceed the
maximum limit set by the BCV, which at December 31 and June 30, 2012 is 30% of the Bank’s equity,
equivalent to US$118,132,119 and US$84,552,525, respectively. At December 31 and June 30, 2012,
the calculation of this limit includes convertible bonds of Bs 100,000,000 since SUDEBAN allowed their
inclusion in the Bank’s equity structure.
27
At December 31, 2012, calculation of the net foreign currency position does not include balances of the
Curacao Branch or TICCs with a par value of US$90,489,793 (US$90,484,193 at June 30, 2012),
bonds issued by Petróleos de Venezuela, S.A. (Petrobonos 2013, 2014, 2015 and 2016) and
International Sovereign Bonds 2019, 2022, 2024 and 2031 with a par value of US$16,629,500
(US$28,129,000 at June 30, 2012) and interest receivable in connection with these securities of
US$1,437,137 (US$1,512,691 at June 30, 2012), as they are not required for this calculation.
At December 31 and June 30, 2012, the Bank has other liabilities from financial intermediation arising
from letters of credit.
During the six-month period ended December 31, 2012, the Bank recorded exchange gains and losses
of Bs 34,872,525 and Bs 19,346,900, respectively (Bs 20,877,343 and Bs 14,172,293, respectively,
during the six-month period ended June 30, 2012), arising from exchange fluctuations of the U.S. dollar
with respect to other foreign currencies (Notes 19 and 20).
During the six-month period ended December 31, 2012, the Bank recorded US$1,953,546, equivalent
to Bs 8,400,248 (US$1,721,280, equivalent to Bs 7,401,504, at June 30, 2012) in respect of service
fees, mainly from client transactions with CADIVI (Note 19).
Subsequent event
On February 8, 2013, the Venezuelan government and the BCV amended Exchange Agreement
No. 14 and established, as from that date, a single exchange rate of Bs 6.2842/US$1 (purchase) and
Bs 6.30/US$1 (sale). Where certain conditions are met, some transactions will be liquidated at the
official exchange rate established in Exchange Agreement No. 14 of December 30, 2010 of
Bs 4.30/US$1.
Article No. 12 of this Exchange Agreement provides for the creation of the Office for the Optimization of
the Currency Exchange System (OSOSC). This agency was created on February 8, 2013 through
Decree No. 9,381, published in Official Gazette No. 40,108, with the task of designing, planning and
executing the government’s currency exchange strategies to achieve maximum transparency and
efficiency in the allocation of foreign currency among the country’s economic sector.
In addition, through an Official Notice published in Official Gazette No. 40,109 of February 13, 2013,
the BCV informed financial institutions authorized to trade foreign currency-denominated securities for
bolivars on the secondary market that, as from February 9, 2013, purchase or sale bids for securities
will no longer be processed through SITME.
The accounting effect for the Bank of measuring and recording its foreign currency balances at
February 8, 2013 at the exchange rate of Bs 6.2842/US$1, including securities issued by the national
public sector denominated in foreign currency and TICCs for US$119,398,493, was an increase in
assets, liabilities and equity of Bs 310,308,686, Bs 20,431,229 and Bs 289,877,457, respectively,
which will be recorded in the financial statements at February 28, 2013.
28
5.
Investments in debt securities, shares and other have been classified in the financial statements based
on their intended use as shown below:
December 31,
2012
June 30,
2012
(In bolivars)
Investments
Available-for-sale
Held-to-maturity
Restricted
Other securities
Provision for investment securities
1,010,939,000
3,444,407,131
2,787,127,754
16,422,282
792,605,344
(80,406)
1,638,028,205
2,330,649,916
16,410,925
774,810,146
(80,406)
8,051,421,105
4,759,818,786
a) Investments in available-for-sale securities
These investments are shown at fair value and comprise the following:
Acquisition
cost
December 31, 2012
Net
unrealized
gain
(loss)
Book value
(equivalent
to fair
value)
(In bolivars)
Securities issued or guaranteed by the Venezuelan government
Vebonos, with a par value of Bs 842,494,085, annual yield at between
10.93% and 17.70%, maturing between April 2013 and May 2021
Fixed Interest Bonds (TIF), with a par value of Bs 1,342,388,161, annual yield at
between 9.90% and 18.00%, maturing between April 2014 and 2019
Treasury Notes, with a par value of Bs 556,616,000, annual yield at between
0.92% and 3.54%, maturing between January and October 2013
Principal and Interest Covered Bonds (TICC), payable in bolivars, with a reference
par value of US$22,321,966, annual yield at between 5.25% and 8.63%,
maturing between November 2013 and March 2019 (Note 4)
Sovereign Bonds in foreign currency, with a par value of US$124,500, annual yield at
between 7.75% and 12.75%, maturing between October 2019 and
August 2031 (Note 4)
Global Bonds, with a par value of US$33,707,800, annual yield at between 5.75% and
13.63%, maturing between September 2013 and 2027 (Note 4)
Agriculture Bonds, with a par value of Bs 104,400,000, 9.10% annual yield,
maturing between March 2013 and 2014 (Note 6)
Bonds and debt securities issued by Venezuelan non-financial public-sector
companies (Note 4)
Petrobonos issued by Petróleos de Venezuela, S.A., with a par value of US$512,000,
fixed annual yield at between 5.13% and 8.00%, maturing between
November 2013 and October 2016
PDVSA Bonds issued by Petróleos de Venezuela, S.A., with a par value of
US$5,452,000, annual yield at between 5.25% and 12.75%, maturing
between April 2017 and 2037
Bonds and debt securities issued or guaranteed by foreign countries (Note 4)
Argentine Government National Public Debt Bonds, with a par value of
US$103,900, maturing in October 2015
Equity in Venezuelan non-financial private-sector companies
Common shares
Sociedad de Garantías Recíprocas (SGR) del Estado Aragua, C.A.,
10,128 common shares with a par value of Bs 10 each, 1.7% owned
Sociedad de Garantías Recíprocas (SGR) del Estado Falcón C.A., 10,000 common
shares with a par value of Bs 10 each, 2.77% owned
S.G.R.- SOGAMIC, S.A., Sociedad de Garantías Recíprocas del Sector Microfinanciero,
S.G.R.- SOGARSA, S.A., Sociedad de Garantías Recíprocas para el Sector
Agropecuario Forestal Pesquero y Afines S.A., 3,000 shares with a par value of
Bs 10 each, 0.028% owned
Unrealized loss on transfer of available-for-sale securities as per
SUDEBAN Notice No. SIB-II-CCD-36481
924,902,326
36,089,837
960,992,163
(1)
1,479,228,412
46,261,914
1,525,490,326
(1)
550,331,973
3,765,717
554,097,690
(2)
92,258,482
(5,402,292)
86,856,190
637,330
101,765
739,095
(1)
175,251,105
1,119,772
176,370,877
(1)
(1)
104,836,096
(436,096)
104,400,000
3,327,445,724
81,500,617
3,408,946,341
2,490,894
257,137
2,748,031
(1)
28,518,669
3,429,498
31,948,167
(1)
31,009,563
3,686,635
34,696,198
393,575
13,132
406,707
(1)
101,280
6,063
107,343
(3)
100,000
(47,437)
52,563
(3)
175,000
(11,722)
163,278
(3)
(3)
30,000
4,701
34,701
406,280
(48,395)
357,885
3,359,255,142
85,151,989
3,444,407,131
(7,680,340)
77,471,649
29
Acquisition
cost
June 30, 2012
Net
unrealized
gain
(loss)
Book value
(equivalent
to fair
value)
(In bolivars)
A
10.32% and 17.37%, maturing between April 2013 and June 2020
Fixed Interest Bonds (TIF), with a par value of Bs 734,744,625, annual yield at
between 9.5% and 18%, maturing between December 2012 and August 2018
Treasury Notes, with a par value of Bs 166,000,000, annual yield at between
2.85% and 3.27%, maturing between July 2012 and May 2013
par value of US$22,316,366, annual yield at between 5.25% and
8.63%, maturing between November 2013 and March 2019 (Note 4)
Sovereign Bonds in foreign currency, with a par value of US$171,000, annual
yield at between 7.75% and 12.75%, maturing between October 2019
and August 2031 (Note 4)
Global Bonds, with a par value of US$4,240,800, annual yield at between
7% and 13.63%, maturing between September 2013 and 2027
maturing between September 2012 and March 2014 (Note 6)
companies (Note 4)
Petrobonos issued by Petróleos de Venezuela, S.A., with a par value of
US$11,965,000, fixed annual yield at between 4.9% and 8%,
maturing between November 2013 and October 2016
PDVSA bonds issued by Petróleos de Venezuela, S.A., with a par value of
US$5,477,700, annual yield at between 5.25% and 12.75%, maturing between
April 2017 and 2037
Debt securities with Fondo de Desarrollo Nacional Fonden, S.A., with a par value of
Bs 200,000,000, 9.1% annual yield, maturing between April 2015 and 2017
Bonds and debt securities issued or guaranteed by foreign countries (Note 4)
Argentine Government National Public Debt Bonds, with a par value of
US$102,600, maturing between August 2012 and October 2015
Debt securities issued by foreign banks and other financial institutions (Note 4)
Bancolombia, S.A., with a par value of US$200,000, 4.25% annual yield,
maturing in January 2016
Central American Bank, with a par value of US$250,000, 5.38% annual yield,
maturing in September 2014
BBVA Banco Comercial, S.A., with a par value of US$200,000,
7.25% annual yield, maturing in April 2020
Common shares
Sociedad de Garantías Recíprocas (SGR) del Estado Aragua, C.A.,
Sociedad de Garantías Recíprocas (SGR) del Estado Falcón C.A., 10,000
common shares with a par value of Bs 10 each, 2.77% owned
S.G.R.- SOGAMIC, S.A., Sociedad de Garantías Recíprocas del Sector Microfinanciero,
S.G.R.- SOGARSA, S.A., Sociedad de Garantías Recíprocas para el Sector Agropecuario
Forestal Pesquero y Afines S.A., 3,000 shares with a par value of Bs 10 each,
0.028% owned
166,277,898
(6,713,367)
159,564,531
(1)
800,495,358
(14,149,352)
786,346,006
(1)
164,115,426
1,053,421
165,168,847
(2)
92,245,874
(495,078)
91,750,796
(2)
736,766
(13,733)
723,033
(1)
18,899,076
(1,575,814)
17,323,262
(1)
(1)
114,836,096
(436,096)
114,400,000
1,357,606,494
(22,330,019)
1,335,276,475
63,394,943
(303,359)
63,091,584
(1)
28,484,018
(1,612,711)
26,871,307
(1)
218,741,450
(9,554,100)
209,187,350
(1)
310,620,411
(11,470,170)
299,150,241
369,970
6,931
376,901
(1)
873,330
(33,540)
839,790
(1)
1,161,000
(17,737)
1,143,263
(1)
(1)
920,200
(36,550)
883,650
2,954,530
(87,827)
2,866,703
101,280
6,063
107,343
(3)
100,000
(47,437)
52,563
(3)
175,000
(11,722)
163,278
(3)
(3)
30,000
4,701
34,701
406,280
(48,395)
357,885
1,671,957,685
(33,929,480)
1,638,028,205
(1)
Estimated fair value is determined from trading operations on the secondary market per valuation screens or yield curves. The fair value of investments denominated
in foreign currencies issued by the Venezuelan government is their equivalent amount in bolivars calculated at the SITME exchange rate.
(2)
Value is determined based on the present value of estimated future cash flows in conformity with the Accounting Manual. The fair value of TICCs is their equivalent
amount in bolivars at the official exchange rate.
(3)
Equity value, considered as fair value, is based on unaudited financial statements.
Through Notice No. SIB-II-GGIBPV2-40535 of December 13, 2012, SUDEBAN informed the Bank that
since the Reuters and Bloomberg services—which offer reference prices for all key global financial
markets—do not provide reference prices for the Bank’s available-for-sale investments, the Bank must
use similar services or, if unavailable, must apply the present value (yield curve) to measure its
available-for-sale investments, as required by the Accounting Manual. The Bank followed these
guidelines to measure its available-for-sale portfolio at December 31, 2012.
30
Through Notice No. SIB-II-CCD-36481 of November 12, 2012, SUDEBAN instructed the Bank to
transfer the balances of non-convertible bearer bonds (2012 issue) issued by Fondo de Desarrollo
Nacional FONDEN, S.A. for Bs 209,187,351 and those issued by Petróleos de Venezuela, S.A. for
Bs 91,359,660 from the available-for-sale portfolio to the held-to-maturity portfolio, in conformity with
Circular No. SIB-II-GGR-GNP-CCD-15075 of May 30, 2012. At December 31, 2012, the Bank
calculated the fair value of the available-for-sale investments at the date of transfer and recorded an
unrealized loss on these investments of Bs 7,680,340 in a separate equity account, which will be
amortized until these securities mature, as required by the Accounting Manual (Note 2).
TICCs issued by the Bolivarian Republic of Venezuela, payable in local currency and referenced to the
U.S. dollar at the official exchange rate of Bs 4.30/US$1, have foreign exchange indexing clauses at
variable quarterly yields.
At period end, the Bank records fluctuations in the market value of these investments as an unrealized
gain or loss on investments in available-for-sale securities in equity. These unrealized gains or losses
comprise the following:
December 31,
2012
June 30,
2012
(In bolivars)
Unrealized gain
Securities issued or guaranteed by the Venezuelan government in local currency
Securities issued or guaranteed by the Venezuelan government in foreign currency
Bonds and debt securities issued by Venezuelan non-financial public-sector companies
Bonds and debt securities issued or guaranteed by foreign countries
Unrealized loss
Securities issued or guaranteed by the Venezuelan government in local currency
Securities issued or guaranteed by the Venezuelan government in foreign currency
Bonds and debt securities issued or guaranteed by foreign countries
86,117,468
1,221,537
3,686,635
13,132
10,764
1,053,421
6,931
10,764
91,049,536
1,071,116
(436,096)
(5,402,292)
(59,159)
(21,298,815)
(2,084,625)
(11,470,170)
(87,827)
(59,159)
(5,897,547)
(35,000,596)
85,151,989
(33,929,480)
Unrealized loss on transfer of available-for-sale securities as per
SUDEBAN Notice No. SIB-II-CCD-36481
(7,680,340)
Net unrealized gain (loss) on available-for-sale securities
77,471,649
(33,929,480)
Below is the classification of investments in available-for-sale securities according to maturity:
Fair value
December 31,
June 30,
2012
2012
(In bolivars)
Up to six months
Six months to one year
One to five years
Over five years
Without maturity
623,926,558
88,412,925
1,422,197,947
1,309,511,816
357,885
167,692,618
84,671,128
808,850,018
576,456,556
357,885
3,444,407,131
1,638,028,205
During the six-month period ended December 31, 2012, the Bank sold investments in available-for-sale
securities amounting to Bs 5,006,728,645 (Bs 11,760,963,434 during the six-month period ended June
30, 2012), resulting in gains and losses of Bs 23,816,309 and Bs 7,744,273, respectively
31
(Bs 140,207,451 and Bs 71,207,498, respectively, during the six-month period ended June 30, 2012),
shown under other operating income and other operating expenses, respectively (Notes 19 and 20).
At December 31 and June 30, 2012, the Bank has Agriculture Bonds of Bs 104,400,000, considered as
investments in the agricultural sector to meet the minimum legal percentage that it is required to
earmark in this connection (Note 6).
b) Investments in held-to-maturity securities
Investments in held-to-maturity securities are shown at amortized cost and comprise debt securities
that the Bank has the firm intention and ability to hold until maturity. These securities comprise the
following:
Acquisition
cost
December 31, 2012
Amortized
cost
Fair
value
(In bolivars)
10.92% and 12.97%, maturing between May 2013 and April 2018
Fixed Interest Bonds (TIF), with a par value of Bs 1,303,837,836, annual yield
at between 9.63% and 18.00%, maturing between May 2013 and October 2020
Sovereign Bonds in foreign currency, with a par value of US$15,993,000,
annual yield at between 7.75% and 8.25%, maturing between October
2019 and 2024 (Note 4)
Principal and Interest Covered Bonds (TICC), payable in bolivars, with a reference par
value of US$68,167,827, annual yield at between 5.25% and 8.63%, maturing
between November 2013 and March 2019 (Note 4)
Dematerialized Participation Certificate issued by Fondo Simón Bolívar para la
Reconstrucción, S.A., with a par value of Bs 233,458,108, 3.75% annual
yield, maturing in May 2015
Global Bonds issued by La Electricidad de Caracas, C.A., with a par value of
US$250,000, 8.5% annual yield, maturing in April 2018 (Note 4)
Agriculture Bonds issued by Fondo de Desarrollo Nacional Fonden, S.A., with a par
value of Bs 350,000,000, 9.10% annual yield, maturing between April
2015 and July 2017 (Note 6)
PDVSA Bonds issued by Petróleos de Venezuela, S.A., with a par value of
November 2017 and April 2037 (Note 4)
Agriculture Bonds issued by Petróleos de Venezuela, S.A. with a par value of
Bs 90,000,000, 9.1% annual yield, maturing between July 2015 and
2017 (Note 6)
Debt securities issued by foreign non-financial private-sector companies (Note 4)
AES Andre B.D. Dominicana, with a par value of US$200,000, 9.5% annual yield,
maturing in November 2020
Telemovil Finance Co. Ltd., with a par value of US$200,000, 8% annual yield,
maturing in October 2017
Cemex S.A.B. de C.V., with a par value of US$200,000, 9% annual yield,
Debt securities issued by foreign financial private-sector companies (Note 4)
Banco Bradresco S.A. Grand Cayman Branch, with a par value of US$250,000,
8.75% annual yield, maturing in October 2013
Ford Motor Credit Company, with a par value of US$400,000, annual yield at
between 7% and 8.7%, maturing between January 2014 and April 2015
BBVA Bancomer S.A., with a par value of US$200,000, 6% annual yield,
maturing in May 2022
Braskem Finance LTD, with a par value of US$200,000, 7% annual yield,
BanColombia, S.A, with a par value of US$200,000, 4.25% annual yield,
International Cooperative UA, with a par value of US$100,000, 10.38% annual yield,
Morgan Stanley, with a par value of US$200,000, 4.2% annual yield,
32
225,910,920
227,871,434
244,399,348 (1)
1,506,334,958
1,446,570,344
1,449,568,728 (3)
114,893,718
106,785,060
78,851,213 (1)
280,945,772
288,543,313
2,128,085,368
2,069,770,151
290,049,715 (3)
233,458,108
233,458,108
233,458,108 (2)
610,063
747,022
950,300 (1)
373,028,500
370,299,431
365,534,650 (1)
12,010,219
12,011,158
12,081,422 (1)
2,062,869,004
91,359,660
91,319,812
710,466,550
707,835,531
703,384,140
91,359,660 (1)
920,200
908,129
935,250
903,000
890,384
920,200
870,320
867,415
937,400
2,693,520
2,665,928
(1)
(1)
2,792,850 (1)
1,236,250
1,122,105
1,128,664
1,917,800
1,802,396
1,921,919
872,900
870,658
894,400
900,850
892,208
971,800
858,710
859,218
853,550
435,590
434,456
363,350
(1)
(1)
(1)
(1)
(1)
890,874
875,103
878,954 (1)
7,112,974
6,856,144
7,012,637 (1)
2,848,358,412
2,787,127,754
2,776,058,631
Acquisition
cost
June 30, 2012
Amortized
cost
Fair
value
(In bolivars)
10.3% and 12.7%, maturing between August 2012 and April 2018
Fixed Interest Bonds (TIF), with a par value of Bs 1,326,111,214, annual yield
at between 9.5% and 18%, maturing between December 2012 and October 2020
Sovereign Bonds in foreign currency, with a par value of US$15,993,000,
annual yield at between 7.75% and 8.25%, maturing between October 2019
and 2024 (Note 4)
par value of US$68,167,827, annual yield at between 5.25% and 8.63%,
maturing between November 2013 and March 2019 (Note 4)
maturing between April 2015 and 2017 (Note 6)
companies (Note 4)
Global Bonds issued by La Electricidad de Caracas, C.A., with a par value of
US$250,000, 8.5% annual yield, maturing in April 2018
Debt securities with Fondo de Desarrollo Nacional Fonden, S.A., with a par value of
Bs 46,694,500, 9.1% annual yield, maturing in April 2015
PDVSA bonds issued by Petróleos de Venezuela, S.A., with a par value of
November 2017 and April 2037
262,575,077
264,388,250
249,268,354
(1)
1,527,563,739
1,487,742,615
1,423,951,863
(3)
114,893,718
108,039,528
62,830,500
(1)
280,945,774
287,357,910
274,612,010
(3)
(1)
112,993,454
112,823,412
107,927,858
2,298,971,762
2,260,351,715
2,118,590,585
610,063
715,934
755,188
(1)
50,847,696
50,696,034
48,419,442
(1)
(1)
8,371,891
9,292,005
10,006,652
59,829,650
60,703,973
59,181,282
920,200
911,190
885,800
(1)
903,000
893,583
885,800
(1)
(1)
Debt securities issued by foreign non-financial private-sector companies (Note 4)
AES Andre B.D. Dominicana, with a par value of US$200,000, 9.5% annual yield,
Telemovil Finance Co. Ltd., with a par value of US$200,000, 8% annual yield,
maturing in October 2017
Cemex S.A.B. de C.V., with a par value of US$200,000, 9% annual yield,
Debt securities issued by foreign financial private-sector companies (Note 4)
Banco Bradesco, S.A. Grand Cayman Branch, with a par value of US$250,000,
Ford Motor Credit Company, with a par value of US$400,000, annual yield
at between 7% and 8.7%, maturing between January 2014 and April 2015
BBVA Bancomer, S.A., with a par value of US$200,000, 6% annual yield,
Braskem Finance Ltd., with a par value of US$200,000, 7% annual yield,
BanColombia, S.A., with a par value of US$200,000, 4.25% annual yield,
International Cooperative UA, with a par value of US$100,000, 10.38% annual yield,
Morgan Stanley, with a par value of US$200,000, 4.2% annual yield,
870,320
868,153
772,925
2,693,520
2,672,926
2,544,525
1,236,250
1,151,043
1,163,193
(1)
1,917,800
1,831,695
1,911,350
(1)
872,900
871,227
842,800
(1)
900,850
894,398
942,990
(1)
858,710
859,089
839,790
(1)
435,590
434,743
339,700
(1)
(1)
890,874
879,107
864,988
7,112,974
6,921,302
6,904,811
2,368,607,906
2,330,649,916
2,187,221,203
(1) Estimated fair value is determined from trading operations on the secondary market or the present value of estimated future cash flows. The fair value of
investments denominated in foreign currencies issued by the Venezuelan government is their equivalent amount in bolivars calculated at the SITME
exchange rate.
(2) Shown at par value, which is considered as fair value.
(3) Estimated market value based on the present value of estimated future cash flows or yield curves.
33
Below is the classification of held-to-maturity securities according to maturity:
December 31, 2012
Amortized
Fair
cost
value
June 30, 2012
Amortized
Fair
cost
value
(In bolivars)
Less than one year
One to five years
Five to ten years
Over ten years
331,436,738
2,251,255,979
110,794,026
93,641,011
328,004,744
2,282,153,705
93,593,544
72,306,638
106,236,879
1,449,337,851
720,399,926
54,675,260
105,615,986
1,390,161,911
661,031,926
30,411,380
2,787,127,754
2,776,058,631
2,330,649,916
2,187,221,203
The Accounting Manual establishes that all sales of held-to-maturity securities for reasons other than
those indicated in the Accounting Manual must be authorized by SUDEBAN (Note 2). On December
14, 2012, the Curacao Branch sold a held-to-maturity security for US$2,265,627, maturing on
November 17, 2017, without SUDEBAN’s authorization. On January 9, 2013, the Bank informed
SUDEBAN that the Branch had made an honest mistake and that when the Branch became aware of
it, it immediately purchased another security of identical characteristics at the same sale price of the
original security (97.825%), and recorded it in account 123 “held-to-maturity securities” at the new
acquisition cost. The Bank also informed SUDEBAN that the gain on sale of US$465,099 was recorded
in the liability account “other deferred income” until the security is paid at maturity (Note 17). Through
Notice No. No. SIB-II-GGIBPV-GIBPV2-04502 issued on February 18, 2013, SUDEBAN informed the
Bank that the transaction was duly noted while stressing the obligation to comply with the Accounting
Manual as regards authorization from SUDEBAN for this type of transaction.
At December 31, 2012, the Bank has agriculture bonds issued by Fondo Nacional de Desarrollo
Nacional FONDEN, S.A. and Petróleos de Venezuela, S.A. for Bs 370,299,431 and Bs 91,319,812,
respectively (Bs 112,823,412 issued by Fondo Nacional de Desarrollo Nacional FONDEN, S.A. at June
30, 2012). Through Notice No. SIB-II-CCD-36481 of November 12, 2012, SUDEBAN informed the
Bank that the maximum amount of agriculture bonds that may be included in the agricultural loan
portfolio, as per Notice No. 093 of July 31, 2012 issued by the People’s Power Ministry for Agriculture
and Land, is Bs 958,981,100. At December 31, 2012, the Bank has agriculture bonds issued by Fondo
Nacional de Desarrollo Nacional FONDEN, S.A. totaling Bs 357,191,917 (Bs 112,823,412 at June 30,
2012), which may be computed as part of the agricultural loans that the Bank is required to grant
(Note 6).
At December 31, 2012, the Bank has Dematerialized Participation Certificates issued by Fondo Simón
Bolívar para la Reconstrucción, S.A. for Bs 233,458,108, which may be deducted from the legal
reserve amount required of financial institutions (Note 29). The Bank has the ability and intention to
hold these securities to maturity.
At December 31, 2012, unrealized losses of Bs 32,698,628 (Bs 144,037,722 at June 30, 2012) on
held-to-maturity securities issued by the Bolivarian Republic of Venezuela are considered temporary
since management believes that from the standpoint of the issuer’s credit risk, interest rate risk and
liquidity risk, the decrease in these securities’ fair value is temporary. In addition, the Bank has the
intention and ability to hold these securities to maturity. Accordingly, the Bank has identified no
impairment in the value of these investments.
34
c) Overnight deposits
These investments are recorded at realizable value, representing cost or par value, and comprise the
following:
December 31,
2012
June 30,
2012
(In bolivars)
Certificate of deposit with the Central Bank of Venezuela (BCV), with a par value of
Bs 1,010,939,000, annual yield at between 6% and 7%, maturing between
January and February 2013
1,010,939,000
-
d) Restricted investments
These investments are shown at par value, which is considered as fair value, and comprise the
following:
December 31, 2012
Amortized
Fair
cost
value
June 30, 2012
Amortized
Fair
cost
value
(In bolivars)
Other restricted investments
Certificates of deposit
JP Morgan Chase Bank, with a par value of
US$1,002,294 (Note 4)
PNC Bank, with a par value of US$1,611,945 (Note 4)
Social Contingency Fund (Note 25)
4,309,865
6,931,366
5,181,051
4,309,865
6,931,366
5,181,051
4,310,654
6,919,220
5,181,051
16,422,282
16,422,282
16,410,925
4,310,654 (1)
6,919,220 (1)
5,181,051 (1)
16,410,925
(1) Par value is used as fair value. Securities denominated in foreign currency are shown at the official exchange rate.
At December 31 and June 30, 2012, the certificates of deposit with JP Morgan Chase Bank and PCN
Bank are used as collateral to guarantee VISA and MasterCard credit card operations, respectively.
e) Investments in other securities
These investments are shown at par value and comprise the following
December 31,
2012
June 30,
2012
(In bolivars)
Liabilities from investment trusts issued by financial institutions
Certificates of participation issued by
Banco de Desarrollo Económico y Social de Venezuela (BANDES),
with a par value of Bs 251,289,000, 3.75% annual interest, maturing in
June 2014
Other liabilities
Special mortgage securities issued by Banco Nacional de Vivienda y Hábitat
(BANAVIH), with a par value of Bs 117,640,000, 2% annual yield, maturing
in November 2021
Simón Bolívar Dematerialized Participation Certificates, with a par value of
Bs 233,458,108, 3.75% annual yield, maturing in May 2015
Bolivarian Housing Securities issued by the Fondo Simón Bolívar para la
Reconstrucción, S.A., with a par value of Bs 418,557,594 (Bs 167,423,038 at June 30,
2012), 4.66% annual yield, maturing in June and October 2020
Deposits of the microfinancial sector
Bancrecer S.A. Banco Microfinanciero, with a par value of Bs 5,118,750,
9.5% annual yield, maturing in January 2013 (par value of Bs 5,000,000,
8% annual yield, maturing in July 2012 at June 30, 2012)
251,289,000
251,289,000 (1)
117,640,000
117,640,000 (1)
-
233,458,108 (1)
418,557,594
167,423,038 (1)
5,118,750
792,605,344
(1) Par value is considered as fair value.
35
5,000,000 (1)
774,810,146
At December 31, 2012, the Bank has Bolivarian Housing Securities issued by Fondo Simón Bolívar
para la Reconstrucción, S.A. for Bs 418,557,594 (Bs 167,423,038 at June 30, 2012). These securities
were awarded progressively as follows: 40% in June 2012, 30% in August 2012 and 30% in November
2012. These deposits were imputed to the construction mortgage loan portfolio compliance (Note 6).
The Bank has the intention and ability to hold these securities to maturity.
At December 31 and June 30, 2012, the Bank, acting as trustee, has certificates of participation for
Bs 251,289,000 issued by Banco Nacional de Desarrollo Económico y Social de Venezuela
(BANDES). These funds arise from the decrease by three percentage points in the legal reserve at
June 30, 2011, and have been earmarked for programs under “Venezuela’s Great Housing Mission.”
In September 2011, Petróleos de Venezuela, S.A. (PDVSA) signed an agreement to guarantee
BANDES the availability of the resources needed to settle these liabilities. The Bank has the intention
and ability to hold these securities to maturity.
At June 30, 2012, the Bank had Dematerialized Participation Certificates issued by Fondo Simón
Bolívar para la Reconstrucción, S.A. for Bs 233,458,108, which could be deducted from the legal
reserve amount required of financial institutions (Note 29), as authorized by SUDEBAN through Notice
No. SBI-II-GGR-GNP-24064 of August 8, 2012. Subsequently, through Notice No. SIB-II-GGR-GNP30919 of September 27, 2012, SUDEBAN instructed the Bank to record these Participation Certificates
within the held-to-maturity portfolio. The Bank reclassified Bs 233,458,108 in this connection on
October 1, 2012 (Note 5-b).
At December 31 and June 30, 2012, the Bank maintains special mortgage securities for
Bs 117,640,000 with long-term mortgage loan guarantees issued by Banco Nacional de Vivienda y
Hábitat, which were computed in the construction loan portfolio at December 31, 2011 (Note 6). The
Bank has the intention and ability to hold these securities to maturity.
At December 31, 2012, the Bank has deposits in the microfinancial sector for Bs 5,118,750
(Bs 5,000,000 at June 30, 2012), which are considered for compliance with the minimum percentage of
the mandatory portfolios (Note 6).
The Bank’s control environment includes policies and procedures to determine investment risks by
entity and economic sector. At December 31, 2012, the Bank has investment securities issued or
guaranteed by the Venezuelan government of Bs 8,019,673,815, representing 99.61% of its investment
securities portfolio (Bs 4,725,292,550, representing 99.27% of its investment securities portfolio at June
30, 2012).
6.
Loan portfolio
The loan portfolio is classified by economic activity, guarantee, maturity and type of loan as follows:
Current
Rescheduled
December 31, 2012
Overdue
In litigation
Total
(In bolivars)
Economic activity
Wholesale and retail trade, restaurants and
hotels
Financial businesses, insurance, real estate
and services
Agriculture
Construction
Transportation, warehousing and communications
Utilities
Communal, social and consumer services
Manufacturing
Mining and oil
Sundry activities
5,578,129,081
1,132,210
1,580,597
-
5,580,841,888
962,996,601
1,331,877,119
850,558,262
342,065,901
597,441
1,503,467,171
537,262,953
118,331,474
716,199,355
31,712,524
232,222
69,066
1,005,549
-
5,444,213
12,547,361
19,044
1,804,461
11,859
13,585
-
968,440,814
1,376,137,004
850,809,528
342,134,967
597,441
1,506,277,181
537,274,812
118,331,474
716,212,940
11,941,485,358
34,151,571
21,421,120
-
11,997,058,049
(314,411,126)
11,682,646,923
36
Current
Rescheduled
December 31, 2012
Overdue
In litigation
Total
(In bolivars)
Guarantee
Endorsement
Real property mortgage
Other guarantees
Collateral
Pledge
Chattel mortgage
Written instruments
Non-possessory pledge
Unsecured
Maturity
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
Over 360 days
3,784,890,441
1,241,874,261
626,559,584
1,722,474,019
141,095,858
65,650,771
28,647,169
58,002,043
4,272,291,212
10,361,158
4,351,389
62,500
13,754,916
549,999
160,487
901,500
4,009,622
3,229,842
8,429,109
211,141
6,277,908
190,811
3,082,309
-
3,798,481,441
1,254,654,759
626,833,225
1,742,506,843
141,645,857
66,002,069
28,647,169
58,903,543
4,279,383,143
11,941,485,358
34,151,571
21,421,120
-
11,997,058,049
1,869,822,654
1,393,516,796
1,085,061,212
1,967,254,518
1,358,558,401
4,267,271,777
607,045
33,333
34,822
107,996
1,142,138
32,226,237
3,344,116
217,897
33,332
3,480,637
246,613
14,098,525
-
1,873,773,815
1,393,768,026
1,085,129,366
1,970,843,151
1,359,947,152
4,313,596,539
11,941,485,358
34,151,571
21,421,120
-
11,997,058,049
Current
Rescheduled
June 30, 2012
Overdue
In litigation
Total
(In bolivars)
Economic activity
Wholesale and retail trade, restaurants and
hotels
Financial businesses, insurance, real estate
and services
Agriculture
Construction
Transportation, warehousing and communications
Utilities
Communal, social and consumer services
Manufacturing
Mining and oil
Sundry activities
4,390,260,072
1,344,738
2,780,535
1,431,143
4,395,816,488
712,436,645
1,261,344,297
668,162,626
356,585,022
228,869
941,015,287
556,273,997
129,398,736
789,313,705
30,264,823
482,667
127,155
829,682
-
10,505,226
9,740,517
1,165,982
18,755
39,967
1,120,466
68,334
239,249
306,842
1,072,917
416,351
4,890,869
1,680,462
723,248,713
1,302,422,554
669,811,275
356,730,932
268,836
943,381,786
561,233,200
129,398,736
791,233,416
9,805,019,256
33,049,065
25,679,031
9,798,584
9,873,545,936
(285,744,979)
9,587,800,957
Guarantee
Endorsement
Real property mortgage
Other guarantees
Collateral
Pledge
Chattel mortgage
Written instruments
Non-possessory pledge
Unsecured
Maturity
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
Over 360 days
2,951,294,202
1,032,370,378
475,314,254
1,315,502,722
53,895,897
63,864,868
37,818,142
11,622,878
3,863,335,915
10,796,675
4,592,670
90,650
12,444,917
240,657
943,750
3,939,746
5,196,646
11,290,868
1,034,189
5,702,906
287,739
687,050
1,479,633
3,214,657
773,590
5,639,619
170,718
2,970,502,180
1,049,027,506
476,439,093
1,339,290,164
53,895,897
64,393,264
37,818,142
13,253,678
3,868,926,012
9,805,019,256
33,049,065
25,679,031
9,798,584
9,873,545,936
2,072,362,947
1,022,727,672
997,210,406
1,659,193,005
1,008,942,042
3,044,583,184
210,444
168,333
823,335
728,018
31,118,935
10,442,904
209,539
268,082
477,473
1,173,499
13,107,534
9,798,584
-
2,092,814,879
1,022,937,211
997,646,821
1,660,493,813
1,010,843,559
3,088,809,653
9,805,019,256
33,049,065
25,679,031
9,798,584
9,873,545,936
37
Below is a breakdown of the loan portfolio by type of loan:
December 31,
2012
June 30,
2012
(In bolivars)
Type of loan
Fixed term, includes US$26,138,903 (US$12,731,396 at
June 30, 2012) (Note 4)
Agriculture
Mortgage
Installment
Manufacturing
Vehicles
Credit cards
Letters of credit, includes US$32,804,067 (US$25,419,901
at June 30, 2012) (Note 4)
Microcredits
Tourism
Factoring and discounts
Financial leases
Other (employee loans)
Checking accounts
5,146,108,438
1,376,137,004
1,199,972,793
1,674,034,487
895,657,250
111,280,267
278,157,962
4,551,431,620
1,302,422,554
988,802,801
1,156,532,651
768,754,670
92,142,374
216,718,954
141,057,488
402,364,815
191,218,350
351,142,785
221,983,152
7,277,179
666,079
109,305,574
307,595,013
142,158,105
167,911,372
63,812,327
5,413,548
544,373
11,997,058,049
9,873,545,936
Through Resolution No. 33,211 of December 22, 2011, SUDEBAN established the parameters to set
aside provisions for loans or microcredits granted to individuals or corporations whose assets were
subject to expropriation, occupation or intervention from the Venezuelan government, effective from
December 1, 2011 to November 30, 2013. A modification of this Resolution was published in Official
Gazette No. 39,924 of May 17, 2012. At December 31, 2012, the Bank applied the aforementioned
Resolution to loans amounting to Bs 350,189,668 (Bs 212,980,197 at June 30, 2012).
At December 31, 2011, the Bank had overdue loans of Bs 125,310,000, of which Bs 95,059,000 was in
respect of agricultural loans with an economic group of companies currently subject to special
administration regimes managed by the Venezuelan government, for which the Bank maintains a
specific 15% allowance. Through Notice No. SBIF-DSB-II-GGI-GIBPV2-15564 of August 27, 2010,
SUDEBAN classified these loans as unrecoverable and assigned a specific allowance for these debtors
equivalent to 99% of loan balances. On January 25, 2011, the Bank sent a communication to
SUDEBAN requesting that it reconsider this instruction since the amounts will be collected in full as
these companies are managed by the Venezuelan government. SUDEBAN, through Notice
No. SBIF-II-GGIBPV-GIBPV2-07778 of March 30, 2011, notified the Bank that it has no objection in
maintaining these loans in the overdue loan portfolio with a specific 15% allowance. Based on the
opinion of its legal advisors, management considered that the guidelines established in Resolution No.
33,211 of December 22, 2011, described above, did not apply to loans maintained with these
companies due to the authorization previously received from SUDEBAN and considering that the
assumption for applying this Resolution is the existence of expropriation, occupation or intervention
measures from the Venezuelan government. During the six-month period ended June 30, 2012, the
Bank wrote off these loans against the allowance for losses on the loan portfolio.
In addition, in accordance with SUDEBAN rules, at December 31, 2012, the Bank maintains a general
allowance for losses on the loan portfolio of Bs 124,251,971 (Bs 101,811,409 at June 30, 2012),
equivalent to 1% of the principal balance of the loan portfolio, except for the balance of the microcredit
portfolio, for which it maintains a general 2% allowance (Note 2-d).
38
Below is the movement in the allowance for losses on the loan portfolio:
December 31,
2012
June 30,
2012
(In bolivars)
Balance at the beginning of the period
Provided in the period
Write-offs of uncollectible loans
Reclassification to the provision for interest receivable and other (Note 7)
Reclassification to the provision for contingent loans (Note 17)
Other
285,744,979
51,362,434
(14,907,130)
(5,742,176)
(2,044,030)
(2,951)
304,666,756
140,661,664
(152,000,685)
(6,864,531)
(718,225)
-
Balance at the end of the period
314,411,126
285,744,979
At December 31, 2012, overdue and in-litigation loans on which interest is no longer accrued amount
to Bs 21,421,120 (Bs 35,477,615 at June 30, 2012). In addition, at December 31, 2012, memorandum
accounts include Bs 11,754,285 (Bs 16,522,904 at June 30, 2012), in respect of interest not
recognized as income from loans on which interest is no longer accrued (Note 22).
During the six-month period ended December 31, 2012, the Bank wrote off loans of Bs 14,907,130
(Bs 152,000,685 during the six-month period ended June 30, 2012) against the allowance for losses on
the loan portfolio.
At December 31, 2012, the Bank recovered loans written off in previous periods of Bs 5,469,496,
shown in the income statement within income from financial assets recovered (Bs 6,454,603 during the
six-month period ended June 30, 2012). In addition, during the six-month period ended December 31,
2012, the Bank received personal and real property worth Bs 21,827,760 (Bs 35,578,793 during the
six-month period ended June 30, 2012) in lieu of loan payments (Note 9).
At December 31, 2012, the Bank maintains an agricultural loan portfolio for Bs 1,376,137,004 and
agriculture bonds issued by the Venezuelan government for Bs 461,591,917 (Notes 5-a and b),
representing 29.12% of the average gross loan portfolio at December 31, 2011 and 2010
(Bs 1,302,422,554 and Bs 227,223,412, respectively, representing 24.05% of the average gross loan
portfolio at December 31, 2011 and 2010). The agricultural loan portfolio is distributed as follows:
Balance
Bs
December 31, 2012
Maintained
%
Required
%
Financed sector
Activity
Strategic
Marketing
932,229,990
138,912,645
134,625,900
67.75
10.09
9.78
49.0
10.5
10.5
minimum
maximum
maximum
Non-strategic
Marketing
28,420,797
89,175,238
52,772,434
2.07
6.48
3.83
21.0
4.5
4.5
maximum
maximum
1,376,137,004
100.00
100.0
June 30, 2012
Maintained
%
Financed sector
Activity
Balance
Bs
Strategic
Marketing
791,796,927
313,674,387
85,005,996
60.80
24.08
6.53
49.0
10.5
10.5
minimum
maximum
maximum
Non-strategic
Marketing
40,754,590
56,961,399
14,229,255
3.13
4.37
1.09
21.0
4.5
4.5
maximum
maximum
maximum
1,302,422,554
100.00
100.0
39
Required
%
Interest income for the six-month period ended December 31, 2012 includes Bs 1,841,788
(Bs 2,782,066 for the six-month period ended June 30, 2012) for interest collected on loans overdue
and in litigation that had been deferred in previous periods.
At December 31, 2012, the Bank has Bs 303,835,476 in medium and long-term agricultural loans,
representing 20.06% of the total agricultural loan portfolio. Of this balance, Bs 3,155,542 is overdue
(Bs 276,319,166, representing 21% of the total agricultural loan portfolio, of which Bs 9,740,517 is
overdue at June 30, 2012).
At December 31, 2012, the Bank has de 439 borrowers in the current agricultural loan portfolio (498
borrowers at June 30, 2012), 62 are new borrowers, of which 44 are individuals (83 new borrowers, of
which 51 are individuals at June 30, 2012).
At December 31, 2012, the Bank has granted microcredits of Bs 402,364,815 and has deposits in
microfinancial institutions of Bs 5,118,750 (Note 5-e), representing 4.15% of its gross loan portfolio at
June 30, 2012 (at June 30, 2012, Bs 307,595,013 and Bs 5,000,000, respectively, representing 4.07%
of its gross loan portfolio at December 31, 2011). In addition, at December 31, 2012, the microcredit
portfolio comprises 2,053 debtors (1,712 debtors at June 30, 2012) and 2,676 loans were granted
during the period (2,537 loans during the six-month period ended June 30, 2012).
At December 31, 2012, the Bank’s mortgage loan portfolio amounted to Bs 1,199,972,793
(Bs 988,802,801 at June 30, 2012) and it has special mortgage securities of Bs 418,557,594 (Note 5-e)
(Bs 167,423,038 at June 30, 2012). At December 31, 2012, the Bank’s mortgage loan portfolio
comprises 2,408 debtors and 128 loans were granted during the period.
At December 31, 2012, effective disbursements of mortgage loans amount to Bs 1,161,731,596,
equivalent to 15.10% of the gross loan portfolio at December 31, 2011. Compliance percentages
established in BANAVIH Form BANAVIH-GCVH-03/2011 for the six-month period ended December
31, 2012 are as follows:
Financed activity
Market
Balance
Bs
Maintained
%
Required
%
-
418,557,594
11,004,245
75,619,831
289,404,824
5.45
0.14
0.98
3.76
5.45
1.78
1.56
1.11
Primary
Secondary
Primary
Secondary
75,647,345
27,153,690
148,033,907
116,310,160
0.98
0.35
1.93
1.51
2.20
0.70
0.75
0.25
-
-
0.72
primary residence
-
primary residence
-
40
-
-
0.48
1,161,731,596
15.10
15.00
At June 30, 2012, the Bank’s mortgage loan portfolio comprises 2,365 debtors and 105 loans were
granted during the period. Compliance percentages established in BANAVIH Form BANAVIH-GCVH03/2011 for the six-month period ended June 30, 2012 are as follows:
Financed activity
Market
Balance
Bs
Maintained
%
-
167,423,038
8,990,608
43,757,389
98,548,857
2.18
0.12
0.57
1.28
5.45
1.78
1.56
1.11
Primary
Secondary
Primary
Secondary
93,815,540
235,831,767
-
1.22
3.07
-
2.20
0.70
0.75
0.25
-
-
0.72
primary residence
-
primary residence
-
Required
%
-
-
0.48
648,367,199
8.44
15.00
At December 31, 2012, the Bank has granted tourism loans for Bs 191,218,350, representing 3.03% of
its average gross loan portfolio at December 31, 2011 and 2010 (Bs 142,158,105, representing 2.25%
at June 30, 2012). The tourism loan portfolio is distributed as follows:
Balance
Bs
Segment
A
B
C
December 31, 2012
Maintained
Required
%
%
1,613,116
12,153,500
177,451,734
0.84
6.36
92.80
40
35
25
Balance
Bs
June 30, 2012
Maintained
%
Required
%
1,062,785
7,896,114
133,199,206
0.75
5.55
93.70
40
35
25
191,218,350
Segment
A
B
C
142,158,105
At December 31, 2012, the tourism loan portfolio comprises 17 debtors and 6 new loans were granted
during the period (15 debtors and 6 loans granted during the six-month period ended June 30, 2012).
At December 31, 2012, the Bank has granted manufacturing loans for Bs 895,657,250, representing
11.65% of its gross loan portfolio at December 31, 2011 (Bs 768,754,670, representing 10% at June
30, 2012). In addition, at December 31, 2012, the manufacturing loan portfolio comprises 128 debtors
(98 debtors at June 30, 2012) and 605 new loans were granted during the period (49 loans during the
six-month period ended June 30, 2012).
The Bank’s control environment includes policies and procedures to determine credit risks by client
and economic sector. Concentration of risk is limited since loans are granted to a variety of economic
sectors over a broad customer base. At December 31 and June 30, 2012, the Bank does not have
significant risk concentrations in respect of individual customers, groups of related companies or
economic sectors.
41
7.
Interest and commissions receivable comprise the following:
December 31,
2012
June 30,
2012
(In bolivars)
Available for sale
Held to maturity
Other securities
Current
Rescheduled
Overdue
Microcredits
Agricultural
Trust fund
Provision for interest receivable and other
65,910,131
47,257,850
7,458,383
35,172,589
39,839,890
1,131,280
120,626,364
76,143,759
92,730,065
367,978
6,818,526
2,796,694
814,303
83,177,003
3,797,412
2,845,041
1,533,488
680,885
103,527,566
92,033,829
890,821
610,393
225,044,751
168,787,981
(27,507,768)
(22,524,300)
197,536,983
146,263,681
At December 31, 2011, the Bank had overdue interest on the loan portfolio of Bs 10,120,133
receivable from companies that have been intervened by the Venezuelan government (Note 6). The
Bank had set aside a provision for the full amount of interest receivable in this connection with a
charge to the equity account exchange gain (loss) from holding foreign currency assets and liabilities,
in conformity with an authorization granted by SUDEBAN through Notice No. SBII-DSB-II-GGI-GI804461 of May 26, 2010 and Notice No. SBII-DSB-II-GGI-BPV-GIBPV2-13090 of August 6, 2010.
During the six-month period ended June 30, 2012, the Bank wrote off the loans with the
aforementioned companies.
The Bank has provisions for losses on interest receivable and other meeting the minimum
requirements set by SUDEBAN.
Below is the movement in the provision for interest receivable and other:
December 31,
2012
June 30,
2012
(In bolivars)
Provided in the period
Write-off of interest receivable on loans
Reclassification from the allowance for losses on loan portfolio (Note 6)
22,524,300
47,137
(805,845)
5,742,176
27,279,690
(11,619,921)
6,864,531
27,507,768
22,524,300
During the six-month period ended December 31, 2012, the Bank wrote off interest receivable for
Bs 805,845 (Bs 11,619,921 at June 30, 2012) against the provision for interest receivable and other.
42
8.
Investment in subsidiaries, affiliates and branches
In October 2008, the Bank requested authorization from SUDEBAN to open a branch in Willemstad,
Curacao. SUDEBAN, through Notice No. SBIF-DSB-II-GGTE-GEE-07154 of May 18, 2009, and the
Central Bank of Curacao and St. Maarten, through Communication No. Lcm/ni/2009-001159 of
November 5, 2009, authorized the opening of this branch.
At a Board of Directors’ meeting on November 25, 2009, it was resolved to contribute US$1,000,000 to
the new branch’s capital stock. This amount was fully paid in January 2010.
Below is a summary of the financial statements of the Curacao Branch included in the Bank’s financial
statements:
Balance sheet
December 31, 2012
Equivalent
US$
in bolivars
Assets
Loan portfolio
Other assets
Customer deposits
Capital assigned
Capital reserves
Retained earnings
Exchange gain from holding foreign currency
assets and liabilities
Unrealized gain (loss) on investments in available-for-sale
securities
June 30, 2012
Equivalent
US$
in bolivars
21,698,261
31,648,847
25,817,574
823,611
24,130
4,675
93,302,523
165,256,142
111,015,565
4,210,882
103,760
20,101
49,872,449
7,569,879
12,604,082
142,958
28,302
11,283,607
214,451,529
36,968,318
54,197,553
693,973
121,700
48,519,509
80,017,098
373,908,973
81,501,277
354,952,582
73,865,484
22,034
527,268
317,621,586
94,746
2,267,252
77,946,078
8,068
142,467
335,168,137
34,690
612,606
74,414,786
319,983,584
78,096,613
335,815,433
1,000,000
847,368
3,740,076
4,300,000
3,643,682
41,518,943
1,000,000
418,521
2,024,686
4,300,000
1,799,644
9,492,340
-
4,387,021
-
3,730,629
14,868
75,743
(38,543)
(185,464)
5,602,312
53,925,389
3,404,664
19,137,149
80,017,098
373,908,973
81,501,277
354,952,582
Income statement
December 31, 2012
Equivalent
US$
in bolivars
Interest income
Interest expense
Expenses from uncollectible and impaired
financial assets
Other operating income
Other operating expenses
Operating expenses
Sundry operating expenses
Sundry operating income
Income tax expense
Net income for the period
43
June 30, 2012
Equivalent
US$
in bolivars
1,685,308
(141,880)
7,553,252
(610,083)
823,301
(67,715)
3,789,117
(291,175)
(220,197)
1,091,832
(106,985)
(154,438)
10,927
(16,571)
(3,759)
(946,845)
29,062,977
(484,148)
(664,080)
46,989
(71,256)
(16,165)
(55,414)
594,120
(68,786)
(171,566)
(474)
4,225
(4,114)
(238,280)
3,108,754
(312,545)
(737,736)
(2,038)
18,168
(17,690)
2,144,237
33,870,641
1,053,577
5,316,575
The equivalent amounts in bolivars shown in the above financial statements at December 31 and June
30, 2012 have been translated at the official exchange rate of Bs 4.30/US$1, except for securities
issued by the Bolivarian Republic of Venezuela or by state-owned companies, which are shown at the
average implicit exchange rate of securities traded through SITME on the last day of each month
(Note 2-b). At December 31, 2012, the SITME rate is Bs 5.30/US$1.
9.
Available-for-sale assets comprise the following:
Cost
December 31, 2012
Accumulated
amortization
Net
June 30, 2012
Accumulated
amortization
Cost
Net
(In bolivars)
Real property received as payment
Personal property and equipment received
as payment
Idle construction in progress
100,675,990
(29,186,294)
71,489,696
83,272,987
(14,881,795)
68,391,192
650,945
(135,085)
515,860
137,040
126,352
(59,653)
-
77,387
126,352
101,326,935
(29,321,379)
72,005,556
83,536,379
(14,941,448)
68,594,931
During the six-month period ended December 31, 2012, the Bank recorded amortization expenses of
Bs 15,019,965 (Bs 9,192,240 during the six-month period ended June 30, 2012), shown in the income
statement under expenses from available-for-sale assets. In addition, at December 31, 2012,
expenses from available-for-sale assets include Bs 67,574 (Bs 12,281 at June 30, 2012) in respect of
expenses incurred from the sale of assets received as payment during the period and Bs 608,490 for
the disposal of a share in a club at June 30, 2012.
During the six-month period ended December 31, 2012, the Bank sold personal and real property
received as payment with a book value of Bs 3,613,877, resulting in a gain on sale of Bs 2,865,945
(Bs 312,965 at June 30, 2012), shown in the income statement under income from available-for-sale
assets.
Below is the movement in the balance of available-for-sale assets for the six-month periods ended
December 31 and June 30, 2012:
Cost
Balances at
June 30,
2012
Additions
Disposals
and other
Balances at
December 31,
2012
(In bolivars)
Real property received as payment (Note 6)
Personal property and equipment received as payment (Note 6)
83,272,987
137,040
126,352
21,827,760
989,264
(4,424,757)
(137,040)
(464,671)
100,675,990
650,945
83,536,379
22,817,024
(5,026,468)
101,326,935
Accumulated amortization
Balances at
June 30,
2012
Additions
Disposals
And other
Balances at
December 31,
2012
(In bolivars)
Personal property and equipment received as payment
44
(14,881,794)
(59,654)
-
(14,873,460)
(11,420)
(135,085)
568,960
71,074
-
(29,186,294)
(135,085)
(14,941,448)
(15,019,965)
(640,034)
(29,321,379)
Cost
Balances at
December 31,
2011
Additions
Disposals
and other
Balances at
June 30,
2012
(In bolivars)
Real property received as payment (Note 6)
Personal property and equipment received as payment (Note 6)
48,949,359
443,820
609,420
35,441,753
137,040
126,352
(1,118,125)
(443,820)
(609,420)
83,272,987
137,040
126,352
50,002,599
35,705,145
(2,171,365)
83,536,379
Accumulated amortization
Balances at
December 31,
2011
Additions
Disposals
and other
Balances at
June 30,
2012
(In bolivars)
Personal property and equipment received as payment
10.
(6,678,309)
(137,035)
(9,035,802)
(156,438)
832,317
233,819
(14,881,794)
(59,654)
(6,815,344)
(9,192,240)
1,066,136
(14,941,448)
Property and equipment comprises the following:
Useful
life
(Years)
Cost
December 31, 2012
Accumulated
depreciation
Net
Cost
June 30, 2012
Accumulated
depreciation
Net
(In bolivars)
Land
Buildings and facilities
Computer hardware, includes
US$15,306 (US$20,282
at June 30, 2012) (Note 4)
Furniture and equipment, includes
US$8,824 (US$8,020 at
June 30, 2012) (Note 4)
Vehicles
Equipment for Chip project
Construction in progress
Other property
40
29,356,256
255,642,338
17,909,897
29,356,256
237,732,441
41,809,947
190,256,366
14,202,489
41,809,947
176,053,877
4
75,873,807
39,251,117
36,622,690
57,792,474
33,946,562
23,845,912
4-10
5
10
147,650,588
5,744,113
2,240,224
77,242,006
45,947,208
2,863,201
305,794
-
101,703,380
2,880,912
1,934,430
77,242,006
111,632,488
5,171,374
2,240,224
83,629,501
38,558,310
2,399,307
193,782
-
73,074,178
2,772,067
2,046,442
83,629,501
593,749,332
106,277,217
487,472,115
492,532,374
89,300,450
403,231,924
587,389
-
587,389
587,389
-
587,389
594,336,721
106,277,217
488,059,504
493,119,763
89,300,450
403,819,313
During the six-month period ended December 31, 2012, the Bank recorded depreciation expenses of
Bs 17,026,945 (Bs 12,813,629 during the six-month period ended June 30, 2012), shown in the income
statement under general and administrative expenses (Note 21).
At December 31 and June 30, 2012, the balance of construction in progress is in respect of
construction and remodeling work to the Bank’s main office and to existing and new agencies.
45
Below is the movement in property and equipment for the six-month periods ended December 31 and
June 30, 2012:
Cost
Balances at
June 30,
2012
Additions
Disposals
Reclassifications
and other
Balances at
December 31,
de 2012
(In bolivars)
Land
Computer hardware
Furniture and equipment
Vehicles
Other equipment for Chip project
Other property
41,809,947
190,256,366
57,792,474
111,632,488
5,171,374
2,240,224
83,629,501
587,389
5,735,984
18,460,814
17,349,692
79,939
62,824,706
-
(2,490)
(138,781)
(3,092,906)
-
(12,453,691)
59,649,988
(376,991)
18,807,189
492,800
(66,119,295)
-
29,356,256
255,642,338
75,873,807
147,650,588
5,744,113
2,240,224
77,242,006
587,389
493,119,763
104,451,135
(3,234,177)
-
594,336,721
Accumulated depreciation
Balances at
June 30,
2012
Depreciation
expense
Disposals
Reclassifications
And other
Balances at
December 31,
de 2012
(In bolivars)
Computer hardware
Vehicles
14,202,489
33,946,562
38,558,310
2,399,307
193,782
3,707,408
5,354,733
7,388,898
463,894
112,012
(50,178)
-
-
17,909,897
39,251,117
45,947,208
2,863,201
305,794
89,300,450
17,026,945
(50,178)
-
106,277,217
Cost
Balances at
December 31,
2011
Additions
Disposals
Reclassifications
and other
Balances at
June 30,
2012
(In bolivars)
Land
Computer hardware
Vehicles
Other property
37,704,238
184,584,557
53,053,688
95,782,460
3,491,374
1,708,224
45,252,484
464,189
11,077,518
4,738,786
9,287,122
1,680,000
532,000
50,983,069
123,200
(1,300,000)
(279,694)
(5,763,452)
-
4,105,709
(4,105,709)
6,842,600
(6,842,600)
-
41,809,947
190,256,366
57,792,474
111,632,488
5,171,374
2,240,224
83,629,501
587,389
422,041,214
78,421,695
(7,343,146)
-
493,119,763
Balances at
December 31,
2011
Depreciation
expense
Disposals
Reclassifications
and other
Balances at
June 30,
2012
(In bolivars)
Computer hardware
Vehicles
11,871,874
29,691,622
32,767,855
2,092,090
108,371
2,330,615
4,255,302
5,835,084
307,217
85,411
(362)
(44,629)
-
-
14,202,489
33,946,562
38,558,310
2,399,307
193,782
76,531,812
12,813,629
(44,991)
-
89,300,450
46
11.
Acquisition and merger of Stanford Bank, S.A., Banco Comercial
On February 18, 2009, SUDEBAN, with the approval of the BCV’s Board of Directors and the Higher
Banking Council and as authorized through Official Gazette No. 39,123, resolved to take control of
Stanford Bank, S.A., Banco Comercial in Venezuela (hereinafter Stanford Bank). At a Special
Shareholders’ Meeting of Stanford Bank on April 29, 2009, it was resolved to issue 757,000 new
common shares with a par value of Bs 100 each with a view to replenishing Stanford Bank’s capital
stock, which had been approved at a Special Shareholders’ Meeting on March 5, 2009. These shares
were fully subscribed by Banfoandes Banco Universal, C.A.
On May 5, 2009, SUDEBAN, through Notice No. SBIF-DSB-06532, notified the Bank that it was
qualified to participate in the auction for the acquisition of Stanford Bank to be held on May 8, 2009.
Likewise, SUDEBAN, through Notice No. SBIF-DSB-06535 of the same date, informed the Bank that
the auction winner would be awarded the following privileges:
a) A 15-year term over which to amortize expenses incurred during the first six months of operations
of Stanford Bank, such as personnel, administrative and operating expenses.
b) Authorization to maintain the accounting classification of loans that require rescheduling due to
Stanford Bank’s intervention resulting in a change of the original loan terms, provided that current
credit conditions were maintained.
c) Reduction of requirements necessary for approval of the Merger Plan.
d) Inclusion in the purchasing entity’s books of Stanford Bank’s assets and liabilities once SUDEBAN
authorized the merger. SUDEBAN would give such authorization within 120 days after the Merger
Plan was submitted.
e) SUDEBAN would request the BCV’s cooperation to increase the credit line granted to the auction
winner under the Reciprocal Payment Agreement of ALADI member countries by Stanford Bank’s
quota (US$3,500,000).
On May 8, 2009, the Bank won the bid to purchase Stanford Bank at an auction conducted at the
headquarters of the People’s Power Ministry for the Economy and Finance offering Bs 240,007,777.
On that same date, the Bank and Banfoandes signed a stock sale agreement that sets forth, among
other things:
-
The sale price of the 757,000 common shares was set at Bs 75,700,000.
- Regarding the difference between the offering price and the share price, the Bank would:
a) approve and pay Bs 121,973,325 to absorb Stanford Bank’s losses and b) approve capital
contributions of Bs 42,334,452 and record them under contributions pending capitalization in
Stanford Bank’s balance sheet.
- The Bank would conduct the merger by absorption of Stanford Bank under the terms set forth by
SUDEBAN.
On May 14, 2009, Banfoandes sold and transferred 757,000 common shares of Stanford Bank to the
Bank, with a par value of Bs 100 each.
In addition, Stanford Bank’s Intervention Board, appointed by SUDEBAN through Resolution
No. 139-09 of March 27, 2009, delivered Stanford Bank’s trial balance to the Bank at May 14, 2009.
47
Below is a summary of Stanford Bank’s (unaudited) balance sheet at May 14, 2009:
(In bolivars)
Assets
Loan portfolio
Other assets
44,034,196
42,015,988
244,598,426
10,260,148
7,930,389
12,522,149
Total assets
361,361,296
Liabilities
Customer deposits
Borrowings
326,110,212
39,837,565
24,177
413,842
26,876,443
Total liabilities
393,262,239
Equity (deficit)
(31,900,943)
361,361,296
Memorandum accounts
Contingent debtor accounts
41,537,662
370,467
829,373,870
The merger by absorption of Stanford Bank into the Bank was approved at a Special Shareholders’
Meeting of Stanford Bank held on May 14, 2009. Likewise, on May 21, 2009, SUDEBAN, through
Official Gazette No. 39,183, resolved to cease the intervention of Stanford Bank after it was acquired
by the Bank.
Subsequently, at a Special Shareholders’ Meeting of the Bank on May 26, 2009, the merger by
absorption of Stanford Bank, the Merger Plan and the merger balance sheet were approved. As a
result of the merger:
- Stanford Bank’s capital stock, assets and liabilities would be transferred to the Bank under universal
title, in conformity with the Venezuelan Code of Commerce.
- The Bank’s capital and number of shares would remain the same.
- Stanford Bank would cease to exist as established under Article No. 340 of the Venezuelan Code of
Commerce.
At the aforementioned meeting, the Board of Directors was authorized to conduct the merger.
On May 27, 2009, the Bank sent a communication to SUDEBAN that included the minutes of the
Special Shareholders’ Meeting held on May 26, 2009, the Merger Plan and a request for authorization
to make the merger effective at June 30, 2009. Subsequently, through Resolution No. 249.09
published in Official Gazette No. 39,193 on June 4, 2009, SUDEBAN authorized the merger by
absorption of Stanford Bank into the Bank and indicated that the merger would become effective when
the minutes were registered with the relevant Mercantile Registry. The merger became effective on
June 8, 2009.
48
A summary of the assets and liabilities absorbed by the Bank on June 8, 2009 is shown below:
(In bolivars)
Assets
Loan portfolio
Other assets
292,675,637
36,892,138
243,018,374
14,362,791
7,930,389
13,200,492
Total assets
608,079,821
Liabilities
Customer deposits
283,034,115
24,177
1,088,217
109,883,205
Total liabilities
394,029,714
Total net assets
214,050,107
Through a communication sent to SUDEBAN on July 8, 2009, the Bank reported the balances of other
assets related to goodwill arising from the difference between the purchase price and the book value of
Stanford Bank’s assets and liabilities at the merger date, and expenses incurred from the merger date
to June 30, 2009. The Bank also reported the balances of memorandum accounts related to unincurred
projected expenses from July 1 to December 8, 2009, recorded in conformity with the Merger Plan
authorized by SUDEBAN.
Subsequently, through a communication sent to SUDEBAN on February 22, 2010, the Bank reported
all expenses incurred from the merger date to December 8, 2009. Below is a breakdown of these
balances:
(In bolivars)
Deferred expenses
Salaries and employee benefits
General and administrative expenses
Other operating expenses and sundry operating expenses
Expenses from uncollectible loans and interest receivable
9,688,352
33,466,623
5,648,964
18,059,289
66,863,228
As a result of the purchase and subsequent merger by absorption of Stanford Bank, the Bank has
recorded Bs 19,756,671 at December 31, 2012 under other assets (Bs 20,621,927 at June 30, 2012),
related to goodwill arising from the difference between the purchase price and the book value of
Stanford Bank’s assets and liabilities at the merger date, net of accumulated amortization of
Bs 6,200,999 (Bs 5,335,743 at June 30, 2012), and deferred charges of Bs 52,754,278 for this entity’s
operations after it was acquired by the Bank (Bs 54,952,373 at June 30, 2012), net of accumulated
amortization of Bs 13,188,568 (Bs 10,990,473 at June 30, 2012) (Note 12).
The difference in the purchase price and deferred charges, in conformity with the Merger Plan
submitted to SUDEBAN on May 11 and 13, 2009 and approved at a Special Shareholders’ Meeting on
May 26, 2009, and following the instructions contained in Notice No. SBIF-DSB-06535 issued by
SUDEBAN on May 5, 2009 detailing the privileges that would be awarded to the Stanford Bank auction
winner, will be amortized over 15 years from June 8, 2009 and January 1, 2010, respectively.
49
12.
Other assets
Other assets comprise the following:
December 31,
2012
June 30,
2012
(In bolivars)
Deferred expenses
Leasehold improvements, net of amortization
Difference between the purchase price and the book value of Stanford Bank’s
assets and liabilities, net of accumulated amortization of Bs 6,200,999
(Bs 5,335,743 at June 30, 2012) (Note 11)
Chip project expenses (Note 2)
Licenses
Operating system (software)
Currency redenomination expenses (Note 1)
Other deferred expenses
Deferred expenses of Stanford Bank, net of accumulated amortization of
Bs 13,188,568 (Bs 10,990,473 at June 30, 2012) (Note 11)
Expenses from uncollectible loans
Resale agreements with Agroinvest Casa de Bolsa de Productos
Agrícolas, C.A., with a par value of Bs 56,867,535 and 13.5% annual yield
Guarantee deposits, includes US$4,675 (Note 4)
In-transit operations
Accounts receivable from the Mandatory Housing Savings Fund
Stationery and office supplies
Advances to suppliers
Other sundry accounts receivable in local currency
Prepaid insurance premiums, includes US$502,194
(US$680,550, at June 30, 2012) (Note 4)
Deferred income tax (Note 18)
Credit card-related accounts receivable and balance offsetting, includes
US$3,008 (US$61,713 at June 30, 2012) (Note 4)
Other prepaid expenses, includes US$20,195 (Note 4)
Accounts receivable from employees
Debit items pending reconciliation, includes US$703,830 and €9,080
(US$818,118 and €9,048 at June 30, 2012) (Note 4)
Matured time deposit with Banco Real, Banco de Desarrollo, C.A., with a par value of
Bs 1,800,000 and 15% annual yield
Prepaid taxes
Other, includes US$34,300 and €32,799 (US$425,841 and €216,002 at June 30, 2012) (Note 4)
Pending items
Contribution required under the Law for the Advancement of Science, Technology and Innovation
46,166,311
26,893,134
19,756,671
10,848,455
4,158,128
4,376,157
9,410
329,114
20,621,927
16,320,460
4,666,944
4,786,906
20,702
304,660
85,644,246
73,614,733
26,090,505
14,447,432
7,697,168
4,519,173
27,177,609
15,049,408
8,017,884
4,707,472
52,754,278
54,952,373
138,398,524
128,567,106
59,854,137
26,749,542
22,552,318
10,321,068
9,637,971
7,147,655
6,127,287
59,854,137
13,123,487
9,075,741
29,134
8,687,951
6,559,025
3,994,209
5,070,174
4,820,524
4,948,294
2,955,391
4,050,288
3,623,299
3,387,350
2,992,040
4,188,757
4,847,843
3,286,382
3,837,316
1,845,000
1,491,822
485,926
61,825
-
1,845,000
1,785,533
3,628,916
466,662
3,266,966
308,911,092
264,653,508
(75,102,744)
(77,141,635)
233,808,348
187,511,873
The Bank has a matured time deposit of Bs 1,800,000 and interest receivable of Bs 45,000 with Banco
Real, Banco de Desarrollo, C.A., which is being liquidated by the Venezuelan government. The Bank
has recorded a provision for the full amount of this deposit with a charge to the equity account
exchange gain (loss) from holding foreign currency assets and liabilities, in conformity with SUDEBAN
instructions contained in Notice No. SBII-DSB-II-GGI-G18-04461 of May 26, 2010 and Notice
No. SBII-DSB-II-GGI-BPV-GIBPV2-13090 of August 6, 2010.
The Bank has an expired resale agreement with Agroinvest Casa de Bolsa de Productos Agrícolas,
C.A. for Bs 56,867,535 and interest receivable in this connection for Bs 2,986,602, secured by pledge
bonds issued by a company whose assets have been preventively seized. The Bank recorded a
provision for these amounts with a charge to the equity account exchange gain (loss) from holding
50
foreign currency assets and liabilities, in conformity with SUDEBAN instructions contained in Notice
No. SBII-DSB-II-GGI-G18-04461 of May 26, 2010 and Notice No. SBII-DSB-II-GGI-BPV-GIBPV213090 of August 6, 2010.
Through a joint Resolution issued on July 29, 2011, the People’s Power Ministry for Planning and
Finance and the People’s Power Ministry for Communes and Social Protection established the
mechanisms to assign resources for financing projects developed by communal councils or other forms
of social organization. In accordance with this Resolution, banks will earmark 5% of their gross pre-tax
income to the National Communal Council Fund (SAFONACC) within 30 days of period end. On
August 22, 2011, SUDEBAN issued Resolution No. 233-11 to require banks to record this social
contribution as a prepaid expense forming part of other assets and to amortize it at a rate of 1/6 per
month in the income statement within sundry operating expenses beginning in January or July, as
appropriate to each six-month period. In July 2012 and January 2013, the Bank paid Bs 9,479,052 and
Bs 16,477,076, respectively, in this connection (Note 20).
Deferred expenses comprise the following:
December 31, 2012
Accumulated
amortization
Book
value
Cost
June 30, 2012
Accumulated
amortization
Book
value
102,887,328
56,721,017
46,166,311
75,683,234
48,790,100
26,893,134
25,957,670
20,010,773
8,511,651
8,693,371
411,463
142,012
3,959,948
6,200,999
9,162,318
4,353,523
4,317,214
411,463
132,602
3,630,834
19,756,671
10,848,455
4,158,128
4,376,157
9,410
329,114
25,957,670
19,480,937
7,870,207
8,367,206
411,463
142,012
3,712,428
5,335,743
3,160,477
3,203,263
3,580,300
411,463
121,310
3,407,768
20,621,927
16,320,460
4,666,944
4,786,906
20,702
304,660
32,613,131
6,522,626
26,090,505
32,613,131
5,435,522
27,177,609
18,059,289
9,621,462
3,611,857
1,924,294
14,447,432
7,697,168
18,059,289
9,621,462
3,009,881
1,603,578
15,049,408
8,017,884
Cost
(In bolivars)
Leasehold improvements
Difference between the purchase
price and the book value of Stanford
Bank’s assets and liabilities
Chip project expenses
Licenses
Incorporation expenses
Currency redenomination expenses
Deferred expenses of Stanford Bank
Expenses from uncollectible loan
portfolio
Other operating expenses and
sundry operating expenses
5,648,964
1,129,791
4,519,173
5,648,964
941,492
4,707,472
236,517,062
98,118,538
138,398,524
207,568,003
79,000,897
128,567,106
Through Resolution No. 262-10 of May 19, 2010, SUDEBAN modified the Accounting Manual to
require the recording of disbursements made in connection with the project for the new chip-based
credit and debit cards. These disbursements include licenses, software, training and other personnel
expenses, accommodation of physical spaces, and replacement of debit and credit cards. The
deadline for completing project stages is September 30, 2011. In addition, associated disbursements
may be amortized beginning January 2011 using the straight-line method provided that the financial
institutions have completed the project satisfactorily. The amortization terms are detailed below:
Years
Items
Advisory
Advertising and client information
Training and other personnel expenses
Accommodation of physical spaces
Replacement of debit and credit cards
Licenses
Software
1
2
2
3
3
6
6
Subsequently, through Notice No. SIB-II-GGIR-GRF-31209 of September 29, 2011, SUDEBAN
extended the deadline for project completion until December 31, 2011, maintaining the initial
amortization benefit for project-related expenses. At December 31 and June 30, 2012, deferred
expenses include Bs 10,848,455 and Bs 16,320,460, respectively, in this connection.
51
At December 31 and June 30, 2012, other sundry accounts receivable in local currency include
Bs 1,833,820 in respect of tax on financial transactions reimbursed to tax exempt clients, withheld by
the Bank and paid to the Tax Authorities. The Bank has set aside a provision for the full amount of this
balance.
At December 31 and June 30, 2012, in-transit operations include Bs 22,552,318 and Bs 9,075,741,
respectively, related to in-transit cash remittances from customer deposits, which clear in the first days
of January 2013 and July de 2012, respectively.
At December 31, 2012, guarantee deposits include Bs 26,417,005 (Bs 12,722,450 at June 30, 2012) in
respect of real property purchased in Urbanización Campo Alegre, Caracas, Venezuela.
The balance of pending items comprises the following:
December 31,
2012
June 30,
2012
(In bolivars)
In-transit operations related to credit and debit cards
Returned checks on credit card payments
Shortfall
965
13,051
47,809
460,332
6,330
61,825
466,662
At December 31 and June 30, 2012, in-transit operations related to credit and debit cards are in
respect of electronic offsetting operations, most of which clear in the first days of January 2013 and
July 2012, respectively.
Below is the movement in the provision for other assets:
December 31,
2012
June 30,
2012
(In bolivars)
Provided in the period (Note 20)
Write-offs of unrecoverable accounts
77,141,635
50,276
(2,089,167)
74,640,898
2,866,960
(366,223)
75,102,744
77,141,635
Below is the movement in deferred expenses for the six-month periods ended December 31 and June
30, 2012:
Cost
Balances at
June 30,
2012
Additions
Disposals
Balances at
December 31,
2012
(In bolivars)
Difference between the purchase price and the book
value of Stanford Bank’s assets and liabilities
Licenses
52
75,683,234
27,511,336
(307,242)
102,887,328
25,957,670
19,480,937
7,870,207
8,367,206
411,463
142,012
3,712,428
1,033,383
641,444
326,165
247,520
(503,547)
-
25,957,670
20,010,773
8,511,651
8,693,371
411,463
142,012
3,959,948
32,613,131
18,059,289
9,621,462
5,648,964
-
-
32,613,131
18,059,289
9,621,462
5,648,964
207,568,003
29,759,848
(810,789)
236,517,062
Balances at
June 30,
2012
Amortization
expense
Disposals
Balances at
December 31,
2012
(In bolivars)
Licenses
48,790,100
8,194,918
(264,001)
56,721,017
5,335,743
3,160,477
3,203,263
3,580,300
411,463
121,310
3,407,768
865,256
6,001,841
1,150,260
736,914
11,292
223,066
-
6,200,999
9,162,318
4,353,523
4,317,214
411,463
132,602
3,630,834
5,435,522
3,009,881
1,603,578
941,492
1,087,104
601,976
320,716
188,299
-
6,522,626
3,611,857
1,924,294
1,129,791
79,000,897
19,381,642
(264,001)
98,118,538
Disposals
Balances at
June 30,
2012
Cost
Balances at
December 31,
2011
Additions
(In bolivars)
Licenses
69,177,777
8,191,429
(1,685,972)
75,683,234
25,957,670
14,289,857
3,619,201
4,748,893
411,463
142,012
3,555,629
7,059,240
6,224,571
3,121,314
238,877
(1,868,160)
(1,476,566)
(82,078)
25,957,670
19,480,937
8,367,206
7,870,207
411,463
142,012
3,712,428
32,618,842
18,059,289
9,621,462
5,648,964
-
(5,711)
-
32,613,131
18,059,289
9,621,462
5,648,964
187,851,059
24,835,431
(5,118,487)
207,568,003
Balances at
December 31,
2011
Amortization
expense
Disposals
Balances at
June 30,
2012
(In bolivars)
Licenses
42.173.296
6.981.097
(364.293)
48.790.100
4,470,488
361,065
2,394,931
3,285,767
411,463
103,839
3,045,829
865,255
2,799,412
808,332
294,533
17,471
361,939
-
5,335,743
3,160,477
3,203,263
3,580,300
411,463
121,310
3,407,768
4,353,150
2,407,905
1,282,862
753,195
1,082,372
601,976
320,716
188,297
-
5,435,522
3,009,881
1,603,578
941,492
65,043,790
14,321,400
(364,293)
79,000,897
Leasehold improvements include additions in the second semester of 2012 for Bs 27,511,336 mainly in
respect of improvements to the Bank’s agencies.
53
During the six-month period ended December 31, 2012, the Bank recorded amortization of deferred
expenses of Bs 19,381,642 (Bs 14,321,400 during the six-month period ended June 30, 2012), shown
in the income statement under general and administrative expenses (Note 21).
13.
Customer deposits
Customer deposits comprise the following:
December 31,
2012
June 30,
2012
(In bolivars)
Demand deposits
Non-interest bearing checking accounts
Interest-bearing checking accounts, at 0.25% annual interest
Public, State and Municipal Administration
Non-negotiable demand deposits, bearing annual interest at between
0.12% and 14.5%, maturing in May 2013, includes US$2,346,989 (Note 4)
Cashier’s checks
Advance collections from credit card holders
Advance deposits for letters of credit
Trust liabilities (Note 22)
Housing Savings Fund liabilities (Note 22)
Savings deposits, bearing 12.5% annual interest for deposits in bolivars
(12.5% at June 30, 2012) and 0.125% for deposits in U.S. dollars,
includes US$28,790,150 and €1,291 (US$29,481,064 and
€7,781 at June 30, 2012) (Note 4)
Time deposits, bearing 14.5% annual interest for deposits in bolivars
and between 0.04% and 1.0295% for deposits in U.S. dollars
(0.0438% and 1.5%, respectively, at June 30, 2012), includes
US$23,582,481 (US$30,785,233 at June 30, 2012) with the following
maturities (Note 4)
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
Over 360
Dormant checking accounts
Dormant savings accounts, includes US$5,812,663 at June 30, 2012 (Note 4)
54
11,403,462,235
2,622,969,788
7,756,548,057
2,151,307,293
14,026,432,023
9,907,855,350
540,723,467
888,555,969
4,102,707,821
246,991,450
3,525,164
50,041,077
48,728,363
376,524
3,049,363,484
165,978,223
2,089,928
51,556,100
13,959,186
477,580
4,993,093,866
4,171,980,470
4,596,193,615
2,691,770,792
161,116,668
115,293,563
160,491,416
63,490,370
11,901,952
60,000,000
349,542,270
114,781,546
140,108,923
31,640,631
14,322,994
-
572,293,969
650,396,364
98,421,836
-
-
72,720,768
98,264,379
-
170,985,147
24,286,435,309
17,592,988,123
Deposits from the Venezuelan government and government agencies comprise the following:
December 31,
2012
June 30,
2012
(In bolivars)
Interest-bearing checking accounts, at 0.25% annual interest
(0.25% at June 30, 2012)
Savings deposits, at 12.5% annual interest
Non-negotiable demand deposits
Time deposits, at 14.5% annual interest
Dormant accounts
1,385,603,014
1,181,638,649
107,736,961
23,794,709
540,723,467
1,685,900
-
445,672,281
102,085,293
888,555,969
19,104,226
7,899,245
2,059,544,051
2,644,955,663
At December 31, 2012, securities issued by the Bank for Bs 98,421,836 are mainly in respect of the
issue of commercial paper with a par value of Bs 100,000,000, according to the minutes of the Special
Shareholder’s Meeting on September 28, 2011. This issue was approved by SUDEBAN through
Notice No. SIB-11-GGIBPV-GIBPV2-40721 of December 2, 2011 and by the SNV through Resolution
No. 070-2012 of June 21, 2012.
14.
Borrowings
Borrowings comprise the following:
December 31,
2012
June 30,
2012
(In bolivars)
Borrowings from Venezuelan financial institutions, up to one year
Demand deposits of financial institutions
Borrowings from foreign financial institutions, up to one year
Demand deposits
Checking account with Caracas International Banking Corporation, at
0.25% annual interest (Note 26)
Borrowings in foreign currency (Note 4)
Loan from Bancaribe Curacao Bank N.V., for US$5,000,000, at 2.96%
annual interest, maturing in January 2013
15.
1,125,280
1,151,823
581,327
613,360
21,500,000
-
22,081,327
613,360
23,206,607
1,765,183
At December 31 and June 30, 2012, other liabilities from financial intermediation of US$4,732,694,
equivalent to Bs 20,350,584, and US$7,610,160, equivalent to Bs 32,723,687, respectively,
correspond to liabilities arising from operations with letters of credit (Note 4).
55
16.
Interest and commissions payable comprise the following:
December 31,
2012
June 30,
2012
(In bolivars)
Deposits in interest-bearing checking accounts
Non-negotiable demand deposits
Time deposits, includes US$22,034 (US$8,068
at June 30, 2012) (Note 4)
Borrowings in foreign currency, includes US$7,816 (Note 4)
Expenses payable on convertible bonds (Note 24)
17.
39,479
8,282,852
31,459
7,225,468
4,025,021
5,925,476
12,347,352
13,182,403
33,610
-
588,583
464,546
12,969,545
13,646,949
Accruals and other liabilities comprise the following:
December 31,
2012
June 30,
2012
(In bolivars)
Pending items, includes US$1,684,032 and €13,073
Deferred interest income, includes US$501,643 (US$38,159
at June 30, 2012) (Notes 2-k, 4 and 5-b)
Suppliers and other sundry payables
Other provisions (Note 30)
Labor contributions and withholdings payable, includes US$1,885
Tax withholdings, includes US$8,451
Cashier’s checks
Municipal and other taxes
Accrual for length-of-service benefits (Notes 1 and 2-j)
Provisions for contingent loans (Note 22)
Professional fees payable, includes US$6,000 (US$8,000 at June 30, 2012) (Note 4)
Vacation bonus (Note 2-j)
Contribution for the prevention of money laundering
Income tax provision, includes US$7,873 (US$4,114
at June 30, 2012) (Notes 4 and 18)
Leases
Sports and Physical Education Law (Note 1)
Accounts payable in foreign currency, includes US$482,040
(US$276,768 at June 30, 2012) (Note 4)
Other employee expenses
Other, includes U$$3,302
Advertising
Profit sharing (Note 2-j)
168,989,747
83,725,480
39,575,038
25,643,250
25,282,369
24,272,727
19,330,299
17,975,940
14,694,600
9,755,631
7,797,125
7,298,315
5,971,282
5,377,397
35,393,093
21,961,855
22,259,802
19,647,671
12,283,404
10,146,074
8,349,190
9,411,677
5,753,095
6,871,103
5,513,091
2,029,855
5,203,810
4,571,291
3,497,861
2,703,810
4,689,944
2,347,021
2,072,771
701,128
447,641
83,511
63,807
1,190,104
6,225,371
322,195
98,410
9,641,660
388,605,540
270,563,905
Deferred interest income mainly relates to loan interest collected in advance, commissions and
deferred gain on sale of securities (Note 5-b).
56
At December 31, 2012, other provisions include Bs 6,450,000 in connection with accounts payable to
CADIVI on credit card transactions abroad from 2006 to 2009 and the first ten days of January 2010,
recorded in conformity with CADIVI’s Notice No. PREVECPGSCO-00001 of January 2, 2012.
Resolution No. 040, published in January 2011 by the People’s Power Ministry for Planning and
Finance and the SNV, requires individuals regulated by the SNV who publicly trade shares and
securities registered with the National Securities Registry to make a special annual contribution of 1.5%
to finance SNV operations, including maintenance fees, fees to public arbitrators and defenders,
technical upgrades, and human resource development and education.
In July 2011, the People’s Power Ministry for Planning and Finance and the SNV issued Resolution
No. 121 to require SNV-regulated entities to pay 100 tax units for the special annual contribution. At
December 31, 2011, the Bank maintained a provision of Bs 1,336,205 in this connection. On January
29, 2013, the Bank paid this contribution for the six-month period ended December 31, 2012, totaling
Bs 9,000.
At December 31 and June 30, 2012, accounts payable in foreign currency are mainly in respect of
interest payable to clients for intermediation of securities in foreign currency.
At December 31 and June 30, 2012, suppliers and other sundry payables are mainly in respect of
accounts payable for utilities and transportation of valuables.
Below is a breakdown of pending items:
December 31,
2012
June 30,
2012
(In bolivars)
In-transit operations
Point-of-sale transactions payable
Collection of government and municipal taxes
Suiche 7B transactions payable
Other
Other credit items in foreign currency pending reconciliation, includes
US$860,523 and €13,073 (US$1,256,888 and €12,917 at June 30, 2012) (Note 4)
Other credit items pending reconciliation, includes US$823,509 (US$837,900
at June 30, 2012) (Note 4)
Other credit items pending reconciliation
Other pending items
Operations under ALADI Agreement
Checks received from credit operations
Cash surplus
Private card transactions
Cirrus transactions payable
Most in-transit operations cleared during January 2013 and July 2012.
57
101,335,291
22,186,155
20,536,712
14,043,399
25,505,174
14,734,903
27,466,704
4,578,829
3,774,563
5,474,907
3,547,749
1,600,243
1,138,573
458,943
329,960
33,640
4,119
400
3,603,194
1,383,113
333,265
408,026
195,581
27,520
14,264
-
168,989,747
83,725,480
Point-of-sale transactions payable correspond to the use of points of sale of other financial institutions
by Bank customers. Most of these transactions clear in the month following period closing.
At December 31 and June 30, 2012, the account collection of government and municipal taxes
includes national and municipal taxes paid by individuals and corporations to the Tax Authorities
between January 2 and 4, 2013 and July 3 and 6, 2012, respectively.
18.
Taxes
a) Income tax
The Bank’s tax year ends on December 31. The main differences between income/loss recognized for
accounting and tax purposes arise from provisions and accruals that are normally tax deductible in
subsequent periods, tax-exempt income from National Public Debt Bonds and other securities issued
by the Venezuelan government and the net effect of the annual inflation adjustment.
Venezuelan Income Tax Law allows tax losses to be carried forward for three years to offset taxable
income, except those arising from the annual inflation adjustment, which may be carried forward for
only one year.
During the year ended December 31, 2012, the Bank estimated territorial tax losses of Bs 117,413,974
and extraterritorial tax gains of Bs 7,615,119. The latter gave rise to a tax expense of Bs 2,544,140.
At December 31 and June 30, 2012, the Bank recorded estimated income tax of US$3,759 and
US$4,114, equivalent to Bs 16,165 and Bs 17,690, respectively. According to Tax Ruling No. UR 111611 issued by the Curacao Tax Authorities on December 9, 2011, the Curacao Branch must calculate
tax payable on the basis of 7% of the costs of its activities (Note 8).
Below is the reconciliation between book income and net tax loss for the year ended December 31,
2012:
(In bolivars)
Statutory tax rate
34%
Book income for 2012 before tax
517,421,813
Difference between book income and taxable income
Effect of the annual inflation adjustment
Nondeductible provisions
Loan portfolio, net
Interest on loan portfolio and other
Other assets
Other provisions
Tax-exempt income, net of related expenses
Social contributions
Municipal taxes
Other effects, net
(243,327,202)
23,848,687
(2,887,661)
461,846
52,341,424
(438,888,455)
4,195,742
4,979,927
(35,560,095)
Territorial tax loss
(117,413,974)
Tax loss from previous periods
(45,347,551)
Extraterritorial tax gain
7,615,119
Extraterritorial tax loss from previous periods
-
At December 31, 2012, the Bank has tax loss carryforwards from the annual inflation adjustment of
Bs 45,347,552, which may be used until 2013.
58
The tax expense comprises the following:
December 31,
June 30,
2012
2012
(In bolivars)
Income tax
Deferred income tax
2,516,165
(1,865,133)
1,817,689
(734,105)
651,032
1,083,584
b) Deferred income tax
Bank management recognizes a deferred tax asset in its financial statements when there is reasonable
expectation that future tax results will allow its realization. Furthermore, the Accounting Manual
establishes, among other things, that the Bank may not recognize a deferred tax asset for any amount
exceeding taxable income (Note 2-i).
Bank management determined and evaluated the deferred tax asset recorded. The main differences
between the tax base and the carrying amount at December 31, 2012 relate to the provision for highrisk and uncollectible loans and interest receivable, property and equipment, deferred expenses and
sundry provisions (Note 12). At December 31, 2012, the Bank recognized a deferred tax asset of
Bs 1,865,133 (Bs 2,955,391 at June 30, 2012) in respect of the maximum amount allowed not
exceeding taxable income.
c) Transfer pricing
According to transfer-pricing regulations, taxpayers that conduct transactions with related parties
abroad are required to calculate income, costs and deductions applying the methodology set out in the
Law. The Bank conducts transactions with related parties abroad. In June 2012, the Bank filed the
transfer-pricing return (PT-99) for the year ended December 31, 2011.
19.
Other operating income comprises the following:
December 31,
June 30,
2012
2012
(In bolivars)
Service fees (Notes 4 and 22)
Exchange gain (Notes 4 and 25-c)
Gain on sale of available-for-sale securities (Note 5-a)
Income from amortization of discount on investments in held-to-maturity
securities (Note 5-b)
Commissions on trust funds (Note 22)
59
100,023,366
34,872,525
23,816,309
73,870,687
20,877,343
140,207,451
8,107,825
5,060,595
2,630,467
3,940,865
171,880,620
241,526,813
Sundry operating income comprises the following:
December 31,
June 30,
2012
2012
(In bolivars)
Income from expenses recovered
Other
20.
5,901,945
415,841
4,312,558
22,874
6,317,786
4,335,432
Other operating expenses comprise the following:
December 31,
June 30,
2012
2012
(In bolivars)
Amortization of premiums on held-to-maturity securities (Note 2-c)
Exchange loss (Note 4)
Service fees (Note 4)
Loss on sale of investments in available-for-sale securities (Note 5-a)
23,095,231
19,346,900
10,988,486
7,744,273
13,319,378
14,172,293
8,128,149
71,207,498
61,174,890
106,827,318
Sundry operating expenses comprise the following:
December 31,
June 30,
2012
2012
(In bolivars)
Provision for other contingencies (Notes 17 and 30)
Contribution to the National Fund for Communal Councils (Note 12)
Contribution for the prevention of money laundering (Note 1)
Contributions for science and technology programs (Note 1)
Provision for other assets (Note 12)
Other
60
12,200,090
9,479,052
3,347,542
3,266,966
50,276
100
6,953,350
6,306,323
1,922,375
3,266,966
2,866,960
1,339,322
28,344,026
22,655,296
21.
General and administrative expenses comprise the following:
December 31,
June 30,
2012
2012
(In bolivars)
Outsourced services
Maintenance and repairs
Leases
Advertising
Taxes and contributions
Transportation of valuables and communications
Amortization of deferred expenses (Note 12)
Depreciation and impairment of property and equipment (Note 10)
Stationery and office supplies
Sundry general expenses
Insurance
Public relations
Other
Utilities
Legal fees
22.
112,503,877
32,638,238
29,862,707
26,936,205
24,264,264
19,763,834
19,381,642
17,026,945
15,351,623
11,806,259
1,998,584
1,848,811
1,844,927
1,091,383
1,007,941
83,910,011
22,584,541
26,737,793
15,781,011
18,919,283
15,058,659
14,231,400
12,813,629
14,966,843
7,165,074
1,815,295
1,385,225
1,039,072
1,193,247
715,978
317,327,240
238,317,061
Memorandum accounts
Memorandum accounts comprise the following:
December 31,
June 30,
2012
2012
(In bolivars)
Contingent debtor accounts (Note 23)
Guarantees granted
Credit card lines
Letters of credit issued but not negotiated
357,006,621
339,798,212
82,907,690
207,176,948
243,119,631
144,814,370
779,712,523
595,110,949
971,641,295
787,135,059
Debtor accounts from other special trust services (Housing Mutual Fund)
479,233,604
354,214,463
2,650,010,151
1,437,288,157
48,845,901
28,782,592,222
9,946,021,216
286,507,502
11,754,285
299,090,115
56,187,002
19,252,031,249
6,542,363,973
271,700,387
16,522,904
299,090,115
151,198,496
15,116,783
1,616,964
161,048,936
13,118,043
939,591
(33,404,376)
(38,456,023)
33,404,376
94,168,925
2,058,658
38,456,023
1,548,000
1,610,168
42,288,981,218
28,053,448,525
Assets held in custody, includes US$68,071,658 and €152,000
(US$130,074,238 and €152,000 at June 30, 2012)
Collections in foreign currency, includes US$11,359,512 (US$13,066,745
at June 30, 2012)
Guarantees received, includes US$113,412,813 (US$127,416,700 at June 30, 2012)
Lines of credit available
Uncollectible accounts written off
Deferred interest receivable on loans overdue and in litigation (Note 6)
Mortgage guarantees pending release
Securities held by other financial institutions, includes
US$35,162,441 (US$37,453,241 at June 30, 2012)
Guarantees on collateral granted
Taxes receivable
Foreign currency purchases, includes US$6,834,317 and €706,662 (US$8,582,141 and
€285,358 at June 30, 2012) (Note 4)
Foreign currency sales, includes US$6,834,317 and €706,662 (US$8,582,141 and €285,358
at June 30, 2012) (Note 4)
Guarantees in foreign currency, includes US$21,899,750 (US$360,000 at June 30, 2012)
Other
61
At December 31, 2012, in accordance with the Accounting Manual, the Bank has set aside a general
and specific provision for contingent debtor accounts of Bs 7,797,125 (Bs 5,753,095 at June 30, 2012),
shown under accruals and other liabilities (Note 17).
Below is a breakdown of assets received in trust:
December 31,
2012
June 30,
2012
(In bolivars)
Type of trust fund
Administration
Length-of-service benefits
Investment
179,282,186
695,155,135
97,203,974
196,968,666
530,170,556
59,995,837
971,641,295
787,135,059
At December 31, 2012, combined trust fund assets include Bs 570,314,047 in respect of trust funds
opened by government agencies, representing 58.70% of total assets received in trust
(Bs 504,358,680, representing 64.08% at June 30, 2012).
Combined trust fund accounts include the following balances, according to the financial statements of
the trust:
December 31,
2012
June 30,
2012
(In bolivars)
Assets
Loan portfolio
Loans and advances to beneficiaries of length-of-service benefits
Loans receivable
Other assets
48,728,363
13,959,186
577,919,123
480,482,109
333,351,073
283,154,544
333,351,073
-
282,585,347
569,197
11,642,730
9,539,054
6
166
Total assets
971,641,295
787,135,059
Liabilities
Other liabilities
4,411,537
5,810,346
4,411,537
5,810,346
894,435,696
72,794,062
723,239,113
58,085,600
Total equity
967,229,758
781,324,713
971,641,295
787,135,059
Total liabilities
Equity
Capital assigned to trusts
Retained earnings
At December 31 and June 30, 2012, cash and due from banks includes Bs 48,728,363 and
Bs 13,959,186, respectively, related to funds received from trust fund operations that are managed
through checking accounts with the Bank, which are used to receive or pay all funds and earn 6%
annual interest.
62
Investment securities included in trust fund accounts, recorded at amortized cost, comprise the
following:
December 31, 2012
Amortized
cost
Cost
Fair
market
value
(In bolivars)
10.93% and 17.70%, maturing between May 2013 and 2021
Fixed Interest Bonds (TIF), with a par value of Bs 227,055,625, annual yield
at between 9.63% and 18.00%, maturing between May 2013 and August
2018
Debt securities issued by non-financial private-sector companies
Debenture bonds
FVI Fondo de Valores Inmobiliarios, with a par value of Bs 20,000,000,
11.26% annual yield, maturing in September 2017
328,688,214
328,403,203
351,213,190 (1)
230,840,791
229,515,920
253,466,768 (1)
559,529,005
557,919,123
604,679,958
20,000,000
20,000,000
579,529,005
577,919,123
20,000,000 (2)
624,679,958
June 30, 2012
Amortized
cost
Cost
Fair
market
value
(In bolivars)
10.32% and 17.37%, maturing between April 2013 and June 2020
Fixed Interest Bonds (TIF), with a par value of Bs 232,579,625, annual yield
at between 9.63% and 18.00%, maturing between May 2013 and August 2018
Treasury Notes, with a par value of Bs 5,000,000, maturing in July 2012
Debt securities issued by non-financial private-sector companies
Debenture bonds
Aserca Airlines, C.A., with a par value of Bs 3,266,592,
234,131,426
234,537,416
214,972,673 (1)
238,735,230
4,998,610
237,678,935
4,999,166
249,871,846 (1)
4,998,025 (1)
477,865,266
477,215,517
469,842,544
3,266,592
3,266,592
481,131,858
480,482,109
3,266,592 (2)
473,109,136
(1) Fair value is determined from trading operations on the secondary market or from the present value of estimated future cash flows.
(2) Corresponds to par value, which is considered as fair market value.
Below is the classification of investment securities according to maturity:
December 31, 2012
Amortized
Fair
cost
value
June 30, 2012
Amortized
Fair
cost
value
(In bolivars)
Up to six months
Six months to one year
One to five years
Over five years
63
2,586,648
3,970,972
275,855,823
295,505,680
2,656,375
4,120,000
297,164,161
320,739,422
8,265,758
24,028,077
255,914,524
192,273,750
8,264,617
23,048,557
264,631,150
177,164,812
577,919,123
624,679,958
480,482,109
473,109,136
At December 31, 2012, interest receivable on investment securities amount to Bs 11,642,730
(Bs 9,539,054 at June 30, 2012).
At December 31 and June 30, 2012, loans and advances to beneficiaries of the length-of-service
benefit trust fund are in respect of loans and advances granted to employees guaranteed by their
length-of-service benefits deposited in the trust fund. These interest-free loans are in respect of lengthof-service benefit trust fund plans of public and private-sector companies.
At December 31, 2012, loans and advances to beneficiaries of the length-of-service benefit trust fund
include Bs 36,608,424 (Bs 31,690,720 at June 30, 2012) from Bank employees (Note 1),
Bs 87,092,031 from private length-of-service benefit trust funds, and Bs 209,650,618 from government
agencies (Bs 70,443,279 and Bs 180,451,347, respectively, at June 30, 2012).
At December 31 and June 30, 2012, fiduciary remuneration payable to the Bank amounts to
Bs 890,821 and Bs 610,394, respectively. In addition, the commission paid by the trust fund and the
trustors to the Bank during the six-month period ended December 31, 2012 amounted to
Bs 5,060,595 (Bs 3,940,865 during the six-month period ended June 30, 2012) (Note 19).
At December 31, 2012, length-of-service benefit trust funds in favor of Bank employees amount to
Bs 72,721,699 (Bs 58,694,815 at June 30, 2012).
Debtor accounts from other special trust services (Housing Loan System) and Housing Savings
Fund
Debtor accounts from other special trust services (Housing Loan System) and Housing Savings Fund
comprise the following:
December 31,
2012
June 30,
2012
(In bolivars)
Assets
Cash and due from banks (Note 13)
Loan portfolio
Interest receivable
Other assets
Total assets
Liabilities
Contributions to the Housing Savings Fund
Liabilities to BANAVIH
Total liabilities
Income
Total liabilities and income
376,524
315,472,933
152,515,420
509,644
10,359,083
477,580
226,576,509
126,508,306
514,068
138,000
479,233,604
354,214,463
275,021,140
183,311,652
195,544,848
141,143,295
458,332,792
336,688,143
20,900,812
17,526,320
479,233,604
354,214,463
Housing programs, direct subsidies, eligibility schemes, the Guarantee Fund and the Rescue Fund are
subject to the Housing Loan Law. They are aimed mostly at families applying for housing loans through
the Housing Mutual Fund. Financial institutions authorized by BANAHIV to act as financial operators
receive monthly contributions from employers, employees and workers in the private and public sectors
to be deposited in a Housing Mutual Fund account on behalf of each employee. These funds will be
used to grant short and long-term mortgages for acquisition, construction or improvement of primary
residences.
64
At December 31, 2012, the Bank has an investment trust in BANAVIH for Bs 315,472,933
(Bs 226,576,509 at June 30, 2012) in respect of funds from deposits under the Housing Loan Law
collected and transferred by the Bank, shown as investment securities in conformity with the
Accounting Manual.
According to the Housing Loan Law, monthly mortgage loan repayments will represent between 5%
and 20% of the monthly family income. In addition, these loans will bear interest at the social interest
rate set by the People’s Power Ministry for Housing.
At December 31, 2012, the Bank has granted loans out of BANAVIH resources of Bs 152,515,420
(Bs 126,508,306 at June 30, 2012). These loans bear annual interest at between 4.66% and 8.55%.
At December 31, 2012, the Housing Savings Fund has 1,697 debtors (1,547 debtors at June 30,
2012).
During the six-month period ended December 31, 2012, the Bank recorded income of Bs 599,017
(Bs 439,321 during the six-month period ended June 30, 2012) from commissions charged to
BANAVIH for the administration of resources related to the Mandatory Housing Savings Fund, shown
under interest income.
23.
Financial instruments with off-balance sheet risks
Credit-related financial instruments
The Bank has outstanding commitments related to letters of credit, guarantees granted and lines of
credit to meet the needs of its customers. Since many of its credit commitments may expire without
being drawn upon, total commitment amounts do not necessarily represent future cash requirements.
Commitments to extend credit, letters of credit and guarantees granted by the Bank are recorded
under memorandum accounts.
a) Guarantees granted
After conducting a credit risk analysis, the Bank provides guarantees to certain customers within their
line of credit; they are issued to a beneficiary who may execute the guarantee if the customer fails to
comply with the terms of the agreement. At December 31 and June 30, 2012, these guarantees
earned annual commissions of 1%. These commissions are recorded monthly while the guarantees
are in force.
At December 31, 2012, Bank guarantees amount to Bs 357,006,621 (Bs 207,176,948 at June 30,
2012) (Note 22).
b) Credit limits
Credit limit contractual agreements are granted to customers subject to prior credit risk assessments
and, if needed, obtention of any guarantee required by the Bank to cover risk for each customer.
These agreements are for specific periods, provided that customers do not default on the terms set
forth therein (Note 22).
c) Letters of credit
Letters of credit usually mature within 90 days, and are renewable. They are generally issued to
finance a trade agreement for the shipment of goods from a seller to a buyer. At December 31 and
June 30, 2012, the Bank charged a commission of between 0.5% and 2% on the amount of letters of
credit. Unused letters of credit at December 31, 2012 amount to Bs 82,907,690 (Bs 144,814,370 at
June 30, 2012) (Note 22).
65
The Bank’s exposure to credit loss in the event of noncompliance by customers with terms for extended
credit, letters of credit and written guarantees is represented by the notional contractual amounts of
these credit-related instruments. The credit policies applied by the Bank for these commitments are the
same as those for granting loans.
In general, the Bank evaluates customer eligibility before granting credit. The amount of collateral
provided, if required by the Bank, is based on customer credit assessment. The type of collateral
varies, but may include accounts receivable, property and equipment and securities.
24.
Convertible bonds
At a Special Shareholders’ Meeting on July 19, 2006, a public offering of convertible bonds of up to
Bs 50,000,000 was approved, as well as the general terms of the offering. The shareholders also
resolved to create a reserve fund for payment of convertible bonds at maturity with a charge to
unappropriated surplus. The fund will accrue Bs 2,083,333 quarterly until it reaches the total amount
redeemable at maturity. The bond issue was authorized by SUDEBAN through Resolution No. 013-07
of January 22, 2007, published in Official Gazette No. 38,620 on February 6, 2007, and by the SNV
through Resolution No. 045-2007 of April 3, 2007.
In April 2007, the Bank completed the public offering of convertible bonds, traded as from May 2, 2007
at a par value of Bs 50,000,000, with annual nominal weighted average interest of the six main
commercial and universal banks payable on a quarterly basis and maturing in April 2013.
At a Special Shareholders’ Meeting on May 30, 2007, a second public offering of convertible bonds of
up to Bs 50,000,000 was approved. Under the terms of the offering, a reserve fund will be created for
payment of convertible bonds at maturity with a charge to unappropriated surplus amounting to
Bs 4,166,667 quarterly. This fund will be created as from the closing of the six-month period following
public offering commencement date. The bond issue was authorized by SUDEBAN through Resolution
No. 367-07 of October 31, 2007, published in Official Gazette No. 38,809 on November 13, 2007, and
by the SNV through Resolution No. 181-2007 of December 7, 2007.
The second public offering of convertible bonds began at the end of December 2007, with annual
nominal weighted average interest of the six main commercial and universal banks payable quarterly
and maturing in December 2013. This offering was completed in March 2008.
Bondholders may choose between receiving principal payments and converting their bonds into Bank
shares by paying 1.5 times the equity value of the share at bond maturity.
According to the Accounting Manual, financial institutions shall include convertible bonds as part of
their equity. SUDEBAN also authorized inclusion of these bonds as part of the Bank’s equity structure
for the purpose of any computation required by this entity.
At December 31 and June 30, 2012, bonds earned 14.50% annual interest (Note 16). During the sixmonth period ended December 31, 2012, interest expense in this connection amounts to Bs 8,367,471
(Bs 8,311,726 for the six-month period ended June 30, 2012).
66
Bonds issued and placed comprise the following:
December 31, 2012
Amount
Equity
Bs
%
Shareholders
Banco Sofitasa Banco Universal, C.A.
Banco Caroní Fideicomiso
Seguros Pirámide, C.A.
Multinacional de Seguros, C.A.
Fideicomiso Banco Canarias
Del Sur Banco Universal, C.A. Fideicomiso
Caja de Ahorros de Jubilados y Pensionados del INOS
Unidad Corporativa de Mercados de Inversión
Unidad Educativa Colegio Las Colinas, C.A.
Banco Guayana, C.A.
Estar Seguros, C.A.
BOD Fideicomiso
Seguros Altamira, C.A.
Inversora Multinacional, C.A.
Fideicomiso Banco Provincial S.A. - Banco Universal
Banco Bicentenario Banco Universal, S.A.
La Oriental de Seguros, C.A.
Other
25.
June 30, 2012
Amount
Equity
Bs
%
24,000,000
16,000,000
15,000,000
12,000,000
11,108,272
6,000,000
3,772,000
2,000,000
2,000,000
8,119,728
24.0
16.0
15.0
12.0
11.1
6.0
3.8
2.0
2.0
8.1
12,500,000
5,000,000
7,200,000
5,554,136
3,000,000
8,000,000
5,000,000
5,000,000
3,900,000
3,700,000
7,000,000
8,650,000
10,000,000
15,495,864
12.5
5.0
7.2
5.5
3.0
8.0
5.0
5.0
3.9
3.7
7.0
8.7
10.0
15.5
100,000,000
100.0
100,000,000
100.0
Equity
a) Capital stock and authorized capital
The Bank’s paid-in capital amounts to Bs 428,503,396 (Bs 345,403,396 at June 30, 2012), represented
by 428,503,396 (345,403,396 common shares at June 30, 2012) non-convertible common shares of
the same class with a par value of Bs 1 each, fully subscribed and paid-in.
The Bank complies with the minimum capital required under the current legislation.
At a Regular Shareholders’ Meeting on March 30, 2011, it was resolved to declare cash dividends of
Bs 14,100,000, which exceeds unappropriated surplus available for dividends of Bs 12,742,373 at
December 31, 2010; it was also resolved to increase capital stock by the same amount. On May 25,
2011, the Bank requested SUDEBAN’s authorization to reduce the amount of cash dividends declared
to Bs 12,742,373. Through Notice No. SIB-II-GGIBPV-GGIBPV2-17894 of June 23, 2011, SUDEBAN
ordered the Bank to call a new Shareholders’ Meeting before July 31, 2011 to annul the
aforementioned dividends declared and the capital stock increase. On July 27, 2011, the Bank
requested SUDEBAN’s authorization to modify the method for dividend declaration and payment, and
to increase capital stock to Bs 14,100,000 as follows: Bs 7,050,000 out of cash dividends declared
with a charge to unappropriated surplus, and Bs 7,050,000 out of stock dividends, with a charge to
restricted surplus. On August 12, 2011, SUDEBAN sent Notice No. SIB-II-GGIBPV-GIBPV2-24163 to
the Bank agreeing on the aforementioned changes and asked the Bank to inform shareholders who
express their will to participate in the share subscription and payment process with resources arising
from cash dividends declared. The aforementioned dividends were approved at a Special
Shareholders’ Meeting of August 31, 2011.
At a Regular Shareholders’ Meeting on September 28, 2011, it was resolved to declare and pay
dividends and a capital increase of Bs 28,000,000 as follows: Bs 14,000,000 in non-convertible
common shares of the same class with a par value of Bs 1; and Bs 14,000,000 payable in cash, which
may be converted into capital at shareholders’ will based on the agreed-upon term.
Through Notice No. SIB-II-GGIBPV-GIBPV2-41061 of December 7, 2011, SUDEBAN informed the
Bank that the requests submitted by the Special Shareholders’ Meeting of August 31, 2011 and the
Regular Shareholders’ Meeting of September 28, 2011 were pending authorization from OSFIN. On
67
January 24 and 27, 2012, and upon authorization from OSFIN, SUDEBAN issued Notices Nos. SIB-IIGGR-GA-01547 and SIB-II-GGR-GA-02015, respectively, authorizing the aforementioned dividends
and capital increases. On June 21, 2012, through Notices Nos. DSNV-1259-2012 and
DSNV-1263-2012, the SNV authorized the capital increases approved at the Special Shareholders’
Meeting of August 31, 2011 and the Regular Shareholders’ Meeting of September 28, 2011. In
addition, the Bank capitalized these dividends on July 20 and August 6, 2012, respectively, in
accordance with the notices sent to shareholders.
At a Regular Shareholders’ Meeting on February 22, 2012, it was resolved to increase capital by
Bs 10,000,000 through the public offering of non-convertible common shares with a par value of Bs 1.
Through Notice No. SIB-11-GGIBPV-GIBPV2-09791 of April 17, 2012, SUDEBAN ratified that the
Bank should formally request authorization for the capital increase. Subsequently, through Notice
No SIB-II-GGR-GA-32152 of October 10, 2012, with the binding opinion of OSFIN, SUDEBAN
authorized the aforementioned capital increase.
On February 4, 2013, through Notice
No. DSNV-0174-2013, the SNV authorized this capital increase.
At a Regular Shareholders’ Meeting on March 28, 2012, it was resolved to declare and pay dividends,
and to increase capital to up to Bs 41,000,000 as follows: Bs 20,500,000 out of cash dividends
declared with a charge to unappropriated surplus, and Bs 20,500,000 out of stock dividends with a
charge to restricted surplus. On May 14, 2012, SUDEBAN sent Notice No. SIB-II-GGIBPV-GIBPV213144 to the Bank agreeing on the aforementioned dividend declaration and payment. The Bank was
also instructed to request authorization for the Bs 41,000,000 capital increase and await OSFIN’s
opinion. On September 10, 2012, and upon authorization from OSFIN, SUDEBAN issued Notice
No. SIB-II-GGR-GA-28712 authorizing the aforementioned capital increase. On November 6, 2012,
through Notice No. DSNV-2082-2012, the SNV authorized the capital increase approved at a Regular
Shareholders’ Meeting of March 28, 2012. In addition, the Bank capitalized this dividend on
December 11, 2012, in accordance with the notices sent to shareholders.
At a Regular Shareholders’ Meeting on September 26, 2012, it was resolved to declare and pay
dividends, and to increase capital to up to Bs 70,000,000 as follows: Bs 35,000,000 out of cash
dividends declared with a charge to unappropriated surplus, and Bs 35,000,000 out of stock dividends
with a charge to restricted surplus. On December 27, 2012, SUDEBAN sent Notice No. SIB-IIGGIBPV-GIBPV2-42313 to the Bank agreeing on the aforementioned dividend declaration and
payment. The Bank should await a ruling, with the binding opinion of OSFIN for the authorization of
the aforementioned capital increase. To date, the Bank is awaiting approval from the regulatory
entity.
68
Shares subscribed by shareholders for the six-month periods ended December 31 and June 30, 2012
are identified as non-convertible common shares as follows:
Shareholder
Nogueroles García, Jorge Luis
Nogueroles López, José María
Halabi Harb, Anuar
Alintio International, S.L.
Valores Torre Casa, C.A.
De Guruceaga López, Gonzalo Francisco
Curbelo Pérez, Juan Ramón
Zasuma Inversiones, C.A.
Sucesión Talayero Tamayo, Alvaro
Inversiones Clatal, C.A.
Puig Miret, Jaime
Tamayo Degwitz, Carlos Enrique
García Arroyo, Sagrario
Inversiones Tosuman, C.A.
Kozma Ingenuo, Alejandro N.
Kozma Ingenuo, Carolina María
Teleacción, S.A.
Consorcio Toyomarca, S.A.
Juan Huerta, Salvador
Herrera de la Sota, Mercedes
Benacerraf Herrera, Jorge Fortunato
Benacerraf Herrera, Andrés Gónzalo
Benacerraf Herrera, Mercedes Cecilia
Chaar Chaar, Mouada
Nogueroles García, María Montserrat
Inversiones Fernández, S.A.
Cedeño, Eligio
Inversora Diarriveca, C.A.
Somoza Mosquera, David
Eurobuilding Internacional, C.A.
Kozma Solymosi, Nicolás A.
D Alessandro Bello, Nicolas Gerardo
Industria Venezolana Maicera Pronutricos, C.A.
Fondo de Jubilaciones y Pensiones UDO
Ponte Sucre, Gonzalo Luis
Velutini Urbina, Luis Emilio
Vollmer de Reuter, Luisa M.
Inversiones 747, C.A.
Sociedad Financiera Intercontinental I.T.D.
Domingo Alonso International, S.A.
Talayero Tamayo, Alvaro
Other
December 31, 2012
Number of
Equity
shares
%
June 30, 2012
Number of
Equity
shares
%
42,480,904
27,404,962
25,174,135
21,382,373
18,968,066
17,269,838
17,047,566
16,582,309
15,929,736
14,095,458
10,590,093
8,895,718
8,593,100
8,040,101
8,040,097
8,040,097
8,040,097
5,987,955
5,458,940
5,025,072
5,025,045
5,025,045
5,025,045
4,905,718
4,738,838
4,580,336
4,500,730
4,456,399
4,285,031
4,078,234
4,023,303
3,860,520
3,695,713
3,617,164
3,177,536
3,111,867
3,087,771
1,587,691
16,678
62,658,115
9.91
6.40
5.87
4.99
4.43
4.03
3.98
3.87
3.72
3.29
2.47
2.08
2.01
1.88
1.88
1.88
1.88
1.40
1.27
1.17
1.17
1.17
1.17
1.14
1.11
1.07
1.05
1.04
1.00
0.95
0.94
0.90
0.86
0.84
0.74
0.73
0.72
0.37
0.00
14.63
34,242,462
22,090,242
20,292,044
11,439,148
13,920,650
13,741,484
13,366,455
11,361,888
8,536,327
7,170,548
6,926,618
6,480,863
6,480,861
6,480,861
6,480,861
1,312,051
4,400,276
4,050,546
4,050,527
4,050,527
4,050,527
3,954,344
3,819,824
3,692,060
3,627,892
3,592,159
3,287,332
3,243,055
3,111,844
2,978,995
2,915,680
2,561,308
2,508,377
2,488,953
4,968,183
3,455,728
17,235,629
12,840,436
54,195,831
9.91
6.40
5.87
3.31
4.03
3.98
3.87
3.29
2.47
2.08
2.01
1.88
1.88
1.88
1.88
0.38
1.27
1.17
1.17
1.17
1.17
1.14
1.11
1.07
1.05
1.04
0.95
0.94
0.90
0.86
0.84
0.74
0.73
0.72
1.44
1.00
4.99
3.72
15.69
428,503,396
100.00
345,403,396
100.00
b) Capital reserves and retained earnings
Based on the provisions set out in its bylaws and the Law on Banking Sector Institutions, the Bank
makes an appropriation to the legal reserve every six months equivalent to 20% of its biannual net
income until the reserve reaches 50% of its capital stock. Once the legal reserve reaches this amount,
the Bank’s appropriation to the legal reserve will be 10% of its biannual net income until the reserve
covers 100% of its capital stock.
69
At December 31 and June 30, 2012, capital reserves include Bs 996,124 in respect of voluntary
reserves. In addition, at December 31, 2012, this account includes Bs 89,583,333 for payment of
convertible bonds (Bs 81,250,000 at June 30, 2012) (Note 24).
Through Notice No. SIB-II-GGIBPV-GIBPV2-07778 issued on March 30, 2011, SUDEBAN informed the
Bank that profit generated by Branch operations should be considered restricted surplus. During the
six-month period ended December 31, 2012, the Bank reclassified Branch income of Bs 33,870,641 for
the six-month period then ended (Bs 5,316,575 for the six-month period ended June 30, 2012).
Resolution No. 305.11 issued by SUDEBAN on November 28, 2011 was published in Official Gazette
No. 39,820 on December 14, 2011. This Resolution relates to the “Regulations Governing the Social
Contingency Fund” and establishes the guidelines to account for the social fund, in conformity with
Article No. 47 of the Law on Banking Sector Institutions.
On March 23, 2012, the Bank created the social fund through an investment trust fund with Banco
Exterior, C.A. Banco Universal, in conformity with Resolution No. 305-11 published in the Official
Gazette on December 14, 2011. The Bank made the respective accounting entries with a charge to
restricted investments and a credit to cash maintained with the BCV.
At June 30, 2012, the Bank recorded the social fund of Bs 1,727,016 with a charge to restricted
investments and a credit to capital reserves. In July 2012, the Bank informed SUDEBAN of a
discrepancy when recording the Fund and sent the accounting records of July 2012 showing a debit to
unappropriated surplus and a credit to cash maintained at the BCV.
At December 31, 2012, the Bank recorded the social contingency fund of Bs 2,142,517 with a charge
to unappropriated surplus and a credit to capital reserves. On January 10, 2013, the Bank transferred
Bs 2,142,517 to the investment trust fund with Banco Exterior and made the accounting record with a
debit to restricted investments and a credit to cash maintained at the BCV.
In compliance with SUDEBAN Resolution No. 329-99, during the six-month period ended December
31, 2012, the Bank reclassified Bs 114,627,343 (Bs 72,747,775 at June 30, 2012) to restricted surplus,
equivalent to 50% of income for the six-month period, net of appropriations to reserves and Branch
income. At December 31 and June 30, 2012, restricted surplus amounts to Bs 326,770,146 and
Bs 253,692,803, respectively. These amounts may be used for capital stock increase, but not for cash
dividend distribution.
Below is the movement in restricted surplus balances:
Resolution
No. 329-99
(In bolivars)
Balance at December 31, 2011
Appropriation of 50% of income for the period
180,945,028
72,747,775
Balance at June 30, 2012
253,692,803
Capital stock increase
Appropriation of 50% of income for the period
(41,550,000)
114,627,343
326,770,146
70
c) Exchange gain (loss) from holding foreign currency assets and liabilities
Exchange gain (loss) from holding foreign currency assets and liabilities at December 31 and June 30,
2012 comprises the following:
(In bolivars)
Exchange loss from holding foreign currency assets and liabilities (Note 4)
133,767,875
(656,392)
Balance at June 30, 2012
133,111,483
Reclassification according to SUDEBAN Notice No. SIB-II-GGIBPV-GIPV2-32501
656,392
133,767,875
Through Notice No. SIB-II-GGIBPV-GIBPV2-32501 of October 15, 2012, SUDEBAN informed the Bank
that the effect of translation for the Bank’s consolidation with the Curacao Branch financial statements
should not be recorded under exchange gain (loss) from holding foreign currency assets and liabilities.
Accordingly, SUDEBAN requested the Bank to reverse the effect recorded under exchange gain (loss)
from holding foreign currency assets and liabilities so as to show under this item the balance at
December 31, 2011. Furthermore, SUDEBAN informed the Bank that section 152 “Investments in
branches” of the Accounting Manual establishes the parameters for consolidating financial statements.
On October 25, 2012, the Bank sent SUDEBAN the corresponding accounting vouchers. At December
31, 2012, other operating income includes Bs 23,321,669 in respect of the effect of translation for the
Bank’s consolidation with the Curacao Branch financial statements (Notes 4 and 19).
d) Risk-based capital ratio
Ratios required and maintained by the Bank, in accordance with SUDEBAN rules, have been
calculated based on its published financial statements, as indicated below:
December 31, 2012
Required
Maintained
%
%
Total risk-based capital
Equity-to-total assets
12
8
13.83
8.36
June 30, 2012
Required
Maintained
%
%
12
8
13.32
8.02
In March 2007, SUDEBAN incorporated a scheme for gradually excluding goodwill from the index of
the equity solvency calculation, which consists in dividing goodwill for March 2007 into 48 parts and
deducting it from equity on a monthly basis by March 31, 2011. According to Resolution No. 305-09
issued by SUDEBAN on July 29, 2009, which introduced changes to the aforementioned scheme,
deduction of goodwill from equity is no longer required. Changes introduced to risk-based capital ratio
were as follows: a) contributions pending capitalization and treasury stock are considered as primary
equity (Tier 1); b) goodwill and investments in Venezuelan financial subsidiaries or affiliates must be
deducted from the primary equity (Tier 1); and c) 50% of pending cash items, overnight deposits and
deposits and credits related to microcredits, agriculture, manufacturing and tourism activities must be
included into the risk category. Furthermore, this Resolution establishes a new 75% risk weighting
applicable to overnight deposits in local currency.
Resolution No. 305-09 maintains the minimum total risk-based capital and equity-to-total assets
(solvency ratio) at 12% and 8%, respectively.
71
26.
Balances and transactions with related companies
In the ordinary course of business, the Bank conducts commercial transactions with related
companies. Because of those relationships, certain transactions may have taken place on terms other
than those that would characterize transactions between unrelated companies.
A breakdown of the Bank’s balances and transactions with its related company Caracas International
Banking Corporation is provided below:
December 31,
2012
June 30,
2012
(In bolivars)
Assets
Foreign and correspondent banks US$44,757 (US$249,161 at June 30,
2012)
192,453
1,071,391
Liabilities
Borrowings (Note 14)
Interest-bearing checking accounts, with 0.25% annual interest
581,327
613,360
4,429
46,612
Expenses for the period
Interest expense
Expenses from borrowings
27.
Deposit Guarantee and Bank Protection Fund
Venezuelan financial institutions regulated by the Law on Banking Sector Institutions are required to
pay fees to the Deposit Guarantee and Bank Protection Fund (FOGADE). Among other things,
FOGADE guarantees customer deposits up to a given amount per depositor.
Through Decree No. 7,207, published in Official Gazette No. 39,358 on February 1, 2010, the
Venezuelan government set at 0.75% the monthly fee that banks must pay to FOGADE through
monthly premiums equivalent to one-sixth of 0.75% of the total amount of customer deposits at the end
of each semester prior to the payment date, calculated in accordance with instructions issued by
FOGADE. This fee is shown under operating expenses.
28.
Special fee paid to the Superintendency of Banking Sector Institutions
The Law on Banking Sector Institutions requires Venezuelan banks and financial institutions regulated
by this Law to pay a special fee to support SUDEBAN operations.
At December 31, 2012 and June 30, 2012, the biannual fee is 0.06% of the average of the
Bank’s assets; it is payable monthly. This fee is shown under operating expenses.
29.
Legal reserve
The BCV requires financial institutions to maintain a minimum legal reserve deposit at the BCV equal
to a percentage of their placements, deposits, liabilities and investments assigned, excluding liabilities
with the BCV, FOGADE and other financial institutions; liabilities arising from funds received from the
Venezuelan government, local or foreign entities to finance special programs in the country (once
these funds have been allocated); liabilities arising from funds received from financial institutions to
finance and promote exports as required by Law (once these funds have been allocated); and liabilities
in foreign currency resulting from its offices abroad and those resulting from transactions with other
banks and financial institutions for which the latter have, in turn, created a reserve pursuant to the legal
72
reserve regulations. Liabilities arising from resources provided by Mandatory Housing Savings Funds
required under the Venezuelan Housing Loan Law and managed by financial institutions in trust funds
will not be computed. In addition, through Resolution No. 12-05-02 published in Official Gazette
No. 39,933 on May 30, 2012, the BCV reduced the legal reserve amount to be allocated by financial
institutions that purchased dematerialized certificates of participation issued by the Simón Bolívar Fund
by the balance of such certificates. For the six-month period ended December 31 and June 30, 2012,
the Bank purchased Bs 233,458,108 in this connection (Notes 5-b and e). The legal reserve must be
maintained in legal tender, regardless of the currency of the transactions from which it originated
(Note 3).
30.
Contingencies
At December 31, 2012, the Bank is defendant in the following legal proceedings:
a) Tax
Municipal taxes
The Bank received tax assessments from the Valencia Municipality in respect of unpaid taxes, fines
and overdue interest amounting to Bs 668,424, Bs 1,176,082 and Bs 285,270, respectively. At June
30, 2012, the Bank had fully provided for these balances, which had been recorded under other
provisions (Note 17). The case was subsequently dismissed and the Bank paid the respective fines.
The Bank received tax assessments from the El Hatillo Municipality in respect of tax on business
activities of Bs 145,623. In the opinion of the Bank’s legal advisors, a reduction of the fine is highly
probable.
b) Labor and other
The Bank received assessments from the National Institute for Socialist Education (INCES) in respect
of special contributions amounting to Bs 50,210. In the opinion of Bank management and its external
legal advisors, these matters should not have a material adverse effect on the Bank’s financial position
and results of operations.
The Bank has received legal claims from individuals in respect of length-of-service and other laborrelated benefits amounting to Bs 66,118,143 at December 31 and June 30, 2012. In the opinion of
Bank management and its external legal advisors, these claims are not well grounded in law and,
therefore, should not have a material adverse effect on the Bank’s financial position and results of
operations.
Bank management and its legal advisors believe most of these assessments are not well grounded in
law and, consequently, that the outcome of these claims will be favorable to the Bank. At December
31 and June 30, 2012, the Bank has set aside no provision in this connection.
Except for the aforementioned assessments, management is not aware of any other pending tax, labor
or other claim that may have a significant effect on the Bank’s financial position or result of operations.
73
31.
Maturity of financial assets and liabilities
Below is a breakdown of the estimated maturity of financial assets and liabilities:
December 31, 2012
Maturity
June 30,
2013
December 31,
2013
June 30,
2014
December 31,
2014
June 30,
2015
Beyond
December
2015
December 31,
2015
Total
(In bolivars)
Assets
Loan portfolio
Interest and commissions
receivable
Liabilities
Customer deposits
Borrowings
Liabilities from
financial intermediation
payable
5,703,778,981
1,710,655,834
6,323,514,358
365,600,419
1,359,947,152
51,627,666
552,193,293
154,558,495
532,447,709
431,921,560
657,967,591
95,917,734
522,170,869
5,241,219,803
2,048,817,077
5,703,778,981
8,051,501,511
11,997,058,049
225,044,751
-
-
-
-
-
-
225,044,751
13,962,993,924
1,725,547,571
603,820,959
687,006,204
1,089,889,151
618,088,603
7,290,036,880
25,977,383,292
24,214,533,357
23,206,607
11,901,952
-
-
-
-
60,000,000
-
-
24,286,435,309
23,206,607
20,350,594
-
-
-
-
-
-
20,350,594
12,969,545
-
-
-
-
-
-
12,969,545
24,271,060,103
11,901,952
-
-
-
60,000,000
-
24,342,962,055
June 30, 2012
Maturity
December 31,
2012
June 30,
2013
December 31,
2013
June 30,
2014
December 31,
2014
Beyond
June
2015
June 30,
2015
Total
(In bolivars)
Assets
Loan portfolio
receivable
Liabilities
Customer deposits
Borrowings
Liabilities from financial
intermediation
payable
32.
4,016,330,948
235,697,092
5,788,173,757
139,314,458
1,009,670,060
351,456,419
467,033,260
45,327,451
413,830,197
90,652,003
362,816,923
207,051,907
654,605,623
3,690,399,862
1,177,416,116
4,016,330,948
4,759,899,192
9,873,545,936
168,787,981
-
-
-
-
-
-
168,787,981
10,208,989,778
1,148,984,518
818,489,679
459,157,648
453,468,926
861,657,530
4,867,815,978
18,818,564,057
17,578,665,129
1,765,183
14,322,994
-
-
-
-
-
-
17,592,988,123
1,765,183
32,723,687
32,723,687
-
-
-
-
-
-
13,646,949
-
-
-
-
-
-
13,646,949
17,626,800,948
14,322,994
-
-
-
-
-
17,641,123,942
Fair value of financial instruments
The estimated fair value of the Bank’s financial instruments, their book value, and the main
assumptions and methodology used to estimate their fair values are shown below:
December 31, 2012
Estimated
Book
fair
value
value
June 30, 2012
Estimated
Book
fair
value
value
(In bolivars)
Assets
Investment securities, net
Loan portfolio, net
Interest and commissions receivable, net
Liabilities
Customer deposits
Borrowings
5,703,778,981
8,051,421,105
11,682,646,923
197,536,983
5,703,778,981
8,040,432,388
11,682,646,923
197,536,983
4,016,330,948
4,759,818,786
9,587,800,957
146,263,681
4,016,330,948
4,616,390,073
9,587,800,957
146,263,681
25,635,383,992
25,624,395,275
18,510,214,372
18,366,785,659
24,286,435,309
23,206,607
20,350,594
12,969,545
24,286,435,309
23,206,607
20,350,594
12,969,545
17,592,988,123
1,765,183
32,723,687
13,646,949
17,592,988,123
1,765,183
32,723,687
13,646,949
24,342,962,055
24,342,962,055
17,641,123,942
17,641,123,942
74
Short-term financial instruments
Short-term financial instruments, both assets and liabilities, are shown in the balance sheet at book
value, which does not significantly differ from fair value due to their short-term maturity. These
instruments include cash and due from banks, customer deposits with no fixed maturity and short-term
maturity, short-term borrowings, other liabilities from financial intermediation with short-term maturity,
and interest receivable and payable.
The fair value of investments in available-for-sale and held-to-maturity securities was determined using
quoted market prices, reference prices determined from trading operations on the secondary market,
the present value of estimated future cash flows and quoted market prices of financial instruments with
similar characteristics (Note 5-a and b). Investments in other securities are shown at par value, which
is considered as fair value (Note 5-e).
Loan portfolio
The Bank’s loan portfolio earns interest at variable rates that are reviewed regularly. In addition,
allowances are made for loans with some risk of recovery. Therefore, in management’s opinion, the
book value of the loan portfolio approximates its fair value.
Customer deposits and long-term liabilities
Customer deposits and long-term liabilities bear interest at variable rates, which are reviewed regularly.
Therefore, management considers fair value to be equivalent to book value.
33.
Legally established limits for loans and investments
At December 31 and June 30, 2012, the Bank has no loans with economic groups that individually
exceed 10% of the Bank’s equity and does not maintain investments or loans exceeding the limits
established in Article No. 99 of the Law on Banking Sector Institutions.
75
34.
Supplementary information - Inflation-adjusted financial statements
The Bank’s inflation-adjusted financial statements, prepared in accordance with the General Price
Level (GPL) method (Note 2), are provided below as supplementary information:
Supplementary balance sheet
December 31,
2012
June 30,
2012
(In constant bolivars at
December 31, 2012)
Assets
Cash
Central Bank of Venezuela
Venezuelan banks and other financial institutions
Pending cash items
(Provision for investment securities)
Loan portfolio
Current
Rescheduled
Overdue
In litigation
(Allowance for losses on loan portfolio)
5,703,778,981
4,486,241,669
737,253,973
4,350,091,834
123,110
95,261,299
521,048,765
406,653,804
3,228,977,376
160,626
281,615,079
568,834,784
8,051,421,105
5,316,717,583
1,010,939,000
3,444,407,131
2,787,127,754
16,422,282
792,605,344
(80,406)
1,829,677,505
2,603,335,956
18,331,003
865,462,933
(89,814)
11,682,646,923
10,709,573,669
11,941,485,358
34,151,571
21,421,120
(314,411,126)
10,952,206,509
36,915,806
28,683,478
10,945,018
(319,177,142)
197,536,983
163,376,532
120,626,364
103,527,566
890,821
(27,507,768)
85,052,579
102,801,787
681,809
(25,159,643)
83,687,887
82,709,751
885,342,454
819,130,205
Other assets
337,026,769
308,176,090
26,941,441,102
21,885,925,499
(Provision for interest receivable and other)
Total assets
76
Supplementary balance sheet
December 31,
2012
June 30,
2012
December 31, 2012)
Customer deposits
Demand deposits
Interest-bearing checking accounts
Savings deposits
Time deposits
Borrowings
Venezuelan financial institutions, up to one year
Foreign financial institutions, up to one year
24,286,435,309
19,651,367,734
14,026,432,023
11,067,074,426
11,403,462,235
2,622,969,788
8,664,064,180
2,403,010,246
4,993,093,866
4,596,193,615
572,293,969
98,421,836
-
4,660,102,185
3,006,707,975
726,492,739
190,990,409
23,206,607
1,971,709
1,125,280
22,081,327
1,286,586
685,123
20,350,594
36,552,358
12,969,545
15,243,642
Expenses payable on other liabilities
12,347,352
33,610
588,583
14,724,744
518,898
388,605,540
302,219,882
24,731,567,595
20,007,355,325
1,481,278,988
100,000,000
154,949,500
544,977,617
(355,444,931)
1,391,816,056
111,700,000
154,949,500
468,720,435
(417,137,362)
206,640,683
206,420,774
Total liabilities
Equity
Inflation-adjusted capital stock
Convertible bonds
Premium on cash capital contributions
Capital reserves
Retained earnings
Exchange gain from holding foreign currency assets and
liabilities
Unrealized gain (loss) on investments in available-for-sale
securities
Total equity
77
77,471,650
(37,899,229)
2,209,873,507
1,878,570,174
26,941,441,102
21,885,925,499
Supplementary income statement
December 31,
2012
June 30,
2012
December 31, 2012)
Interest income
Income from cash and due from banks
Income from investment securities
Income from loan portfolio
Income from other accounts receivable
Other
Interest expense
Expenses from customer deposits
Expenses from borrowings
Expenses from convertible bonds
Other interest expense
Gross financial margin
Income from financial assets recovered
Expenses from uncollectible and impaired financial assets
Expenses from uncollectible loans and other accounts receivable
Net financial margin
Financial intermediation margin
Operating expenses
Fees paid to the Deposit Guarantee and Bank Protection Fund (FOGADE)
Fees paid to the Superintendency of Banking Sector Institutions
Gross operating margin
Gain (loss) on available-for-sale assets
Sundry operating income
Expenses from available-for-sale assets
Sundry operating expenses
Net operating margin
Extraordinary income
Gross income before tax and loss from net monetary position
Income tax
Income before loss from net monetary position
Loss from net monetary position
Net income
78
1,360,800,587
1,146,307,124
29,477
321,716,136
944,272,219
94,759,767
22,988
56,394
266,316,143
792,663,381
87,271,206
-
(405,677,216)
(354,155,100)
(396,443,423)
(87,718)
(8,891,925)
(254,150)
(344,195,158)
(45,621)
(9,581,032)
(333,289)
955,123,371
792,152,024
5,756,460
7,421,261
(53,374,304)
(162,827,215)
907,505,527
636,746,070
179,582,383
(64,449,662)
278,679,724
(122,831,813)
1,022,638,248
792,593,981
(665,308,517)
(568,994,640)
176,751,635
367,422,259
110,245,447
10,889,176
160,751,996
300,537,736
98,897,794
8,807,114
357,329,731
223,599,341
2,736,499
6,883,293
(18,556,580)
(30,157,563)
(60,149)
5,115,902
(13,844,324)
(26,073,461)
318,235,380
188,737,309
580,774
(6,363,801)
1,774,473
(2,322,307)
312,452,353
188,189,475
(804,362)
(1,273,563)
311,647,991
186,915,912
(82,325,711)
(44,907,830)
229,322,280
142,008,082
Supplementary statement of changes in equity
Paid-in capital stock
Inflation
adjustment
Nominal
Convertible
bonds
Total
Share premium
and paid-in
surplus
Capital
reserves
Retained
earnings
Exchange gain
(loss) from
holding foreign
currency assets
and liabilities
Unrealized
gain (loss) on
investment
securities
Total
equity
207,520,997
23,380,244
1,805,379,041
(In constant bolivars at December 31, 2012, except nominal capital stock)
Exchange loss from holding foreign currency assets
and liabilities
Gain on sale of investments and adjustment of
investments in available-for-sale securities
to market value
Effect of restating unrealized gain on investments
in available-for-sale securities
Effect of restating convertible bonds
Net income
Appropriation to legal reserve
Reserve fund for convertible bonds
Balances at June 30, 2012
Capitalization of dividends declared
Exchange gain from holding foreign currency assets
and liabilities
Gain on sale investments and adjustment of
investments in available-for-sale securities
to market value
Effect of restating unrealized gain on investments
in available-for-sale securities
Effect of restating convertible bonds
Net income
Appropriation to legal reserve
Reserve fund for convertible bonds
345,403,396
1,046,412,660
1,391,816,056
-
-
-
-
-
-
-
345,403,396
83,100,000
154,949,500
415,368,738
-
-
-
-
(1,100,223)
-
(1,100,223)
-
-
-
-
-
-
(59,607,152)
(59,607,152)
-
(8,366,330)
-
-
42,114,286
1,929,077
9,308,334
142,008,082
(42,114,286)
(9,308,334)
-
(1,672,321)
-
(1,672,321)
(8,366,330)
142,008,082
1,929,077
-
1,046,412,660
1,391,816,056
111,700,000
154,949,500
468,720,435
(417,137,362)
206,420,774
(37,899,229)
1,878,570,174
6,362,932
89,462,932
-
-
-
(89,462,932)
-
-
-
-
-
-
-
-
-
-
219,910
-
219,910
-
-
-
-
-
-
-
-
111,401,129
111,401,129
-
-
-
(11,700,000)
-
-
65,781,332
2,142,517
8,333,333
229,322,280
(65,781,332)
(4,052,252)
(8,333,333)
-
3,969,749
-
3,969,749
(11,700,000)
229,322,280
(1,909,735)
-
428,503,396
1,052,775,592
1,481,278,988
100,000,000
154,949,500
544,977,617
(355,444,931)
206,640,684
77,471,649
2,209,873,507
79
120,066,330
(507,722,824)
Supplementary cash flow statement
December 31,
2012
June 30,
2012
December 31, 2012)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by (used in)
operating activities
Provision for interest receivable
Depreciation of property and equipment and amortization of available-forsale and other assets
Transfers to trust fund and payment of length-of-service benefits
Income tax provision
Deferred tax asset
Net change in
Overnight deposits
Other assets
Net cash provided by (used in) operating activities
Cash flows from financing activities
Convertible bonds
Effect of inflation on exchange gain (loss) from holding foreign
currency assets and liabilities
Net change in
Customer deposits
Borrowings
Net cash provided by financing activities
Cash flows from investing activities
Loans granted during the period
Loans collected during the period
Net change in
Net cash used in investing activities
229,322,280
142,008,082
53,325,393
48,287
430,263
87,597,967
157,119,079
3,202,394
71,266,435
20,537,598
(17,962,828)
2,669,495
(1,865,133)
20,837,977
(15,207,643)
2,030,359
(634,156)
(1,010,939,000)
(39,953,865)
(60,064,391)
79,770,475
(65,526,982)
(32,755,253)
36,370,850
(657,083,459)
318,711,142
(11,700,000)
(8,366,330)
452,691
(1,100,223)
4,635,067,575
21,234,898
(16,201,764)
(2,274,097)
3,115,635,652
(403,096)
(79,638,251)
(10,775,405)
4,626,579,303
3,015,352,347
(10,327,129,401)
9,307,846,799
(10,492,130,343)
8,532,344,993
(1,499,358,747)
(183,801,206)
1,908,721
70,715,072
(19,534,716)
(102,605,054)
397,808,336
(1,308,994,250)
(2,935,095)
(422,503,423)
(39,649,289)
(80,549,625)
(2,751,958,532)
(3,416,608,696)
Net change in cash and cash equivalents
1,217,537,312
(82,545,207)
At the beginning of the period
4,486,241,669
4,568,786,876
At the end of the period
5,703,778,981
4,486,241,669
153,468,874
2,075,258,810
(1,676,491,252)
(469,910,721)
90,001,381
1,171,766,031
(898,502,398)
(318,357,184)
82,325,711
44,907,830
In operating activities
In financing activities
In investing activities
From holding cash
80
Supplementary cash flow statement
December 31,
2012
June 30,
2012
December 31, 2012)
Supplementary information on non-cash activities
Write-off of uncollectible loans (principal)
Write-off of uncollectible loans (interest)
Reclassification of excess in
Allowance for losses on loan portfolio to provision for interest receivable
Allowance for losses on loan portfolio to provision for contingent loans
Net change in unrealized gain (loss) on investment securities
Effect of exchange fluctuations on
Interest receivable
16.484.304
805.846
169.784.765
12.979.452
(5.742.176)
(1.370.918)
115.370.879
2.142.517
(7.661.065)
(802.257)
(61.279.473)
1.929.077
94.343
121.708
3.858
472.005
608.912
19.306
Property and equipment comprises the following:
Cost
December 31, 2012
Accumulated
depreciation
Net
Cost
June 30, 2012
Accumulated
depreciation
Net
(In constant bolivars at December 31, 2012)
Land
Computer hardware
Vehicles
Other assets
72,322,592
558,896,948
166,205,240
336,377,166
12,086,594
82,040,018
(52,252,228)
(121,739,769)
(162,169,235)
(8,423,687)
-
72,322,592
506,644,720
44,465,471
174,207,931
3,662,907
82,040,018
106,117,960
459,425,183
147,036,612
296,484,986
11,448,142
104,832,879
(42,231,005)
(113,532,440)
(144,837,275)
(7,613,653)
-
106,117,960
417,194,178
33,504,172
151,647,711
3,834,489
104,832,879
1,227,928,558
(344,584,919)
883,343,639
1,125,345,762
(308,214,373)
817,131,389
1,998,815
-
1,998,815
1,998,816
-
1,998,816
1,229,927,373
(344,584,919)
885,342,454
1,127,344,578
(308,214,373)
819,130,205
Monetary assets and liabilities
Monetary assets and liabilities, including amounts in foreign currency are, by their nature, shown in
terms of purchasing power at December 31, 2012. The result from monetary position reflects the loss
or gain resulting from maintaining a net monetary asset or net monetary liability position during an
inflationary period and is shown separately in the income statement.
Nonmonetary assets and liabilities
These components (property and equipment, available-for-sale assets and deferred charges) have
been restated based on their dates of origin and are shown at restated cost by the GPL method.
Equity
All equity accounts, except convertible bonds, have been restated based on their dates of origin and
are shown in constant currency at December 31, 2012. Stock dividends are declared, as well as
voluntary, statutory or similar reserves are dated based on their dates of origin as equity and not on
their capitalization date. Cash dividends are adjusted based on the date they were declared.
81
Income statement
Operating income and expenses have been restated by multiplying them by the factor obtained from
dividing the NCPI at December 31, 2012 by the NCPI at the dates on which they were earned or
incurred. Costs and expenses in respect of nonmonetary items have been adjusted based on the
previously restated nonmonetary items to which they relate.
Analysis of monetary result for the period
An analysis of the monetary result for the period is provided below:
December 31,
June 30,
2012
2012
December 31, 2012)
Net monetary asset position at the beginning of the period
734,395,428
733,323,352
1,556,339,996
115,590,788
6,846,079
1,439,238,335
60,179,251
668,829
1,678,776,863
1,500,086,415
1,157,094,038
174,526,321
1,181,055,986
8,366,330
264,684,193
Subtotal
1,331,620,359
1,454,106,509
Estimated net monetary asset position at the end of the period
1,081,551,932
779,303,258
Net monetary asset position at the end of the period
999,226,221
734,395,428
(82,325,711)
(44,907,830)
Transactions that increased net monetary position
Income
Changes in equity
Sales price of available-for-sale assets
Subtotal
Transactions that decreased net monetary position
Expenses
Changes in equity
Additions to property and equipment, deferred charges and other
82

Banco Nacional de Crédito, C.A., Banco Universal

Transcription

Similar documents

Bank Macro Name CHange

HNSA thanks Ed Zajkowski for his generous loan of the original

BancoEstado`s social role and expanding banking

COVER SHEET FOR THE CEMALA FOUNDATION GRANT PACKET

PFC_Qualify_Brochure_English Website - Revised - NEW

Express Loan Approval

2013-09 Final Report Honduras Bamboo Banco Popular

Relevant Information

Clinuvel _ Epitan

Rocket iCluster Banco Lafise Customer Story