Notes to the unconsolidated financial statements - Raiffeisen Bank
Notes to the unconsolidated financial statements - Raiffeisen Bank
Notes to the unconsolidated financial statements - Raiffeisen Bank
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
Annual Report<br />
2011
Survey of key data<br />
<strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina<br />
Monetary values in EUR million<br />
Income statement<br />
2011 2010 Change<br />
Net interest income after value adjustment and provisioning 51.3 33.6 52.7%<br />
Net commission income 28.6 27.1 5.4%<br />
Trading profit 6.8 7.5 -9.3%<br />
General administrative expenses 60.3 61.0 -1.2%<br />
Profit before tax 25.2 4.0 525.5%<br />
Profit after tax 22.4 3.0 646.8%<br />
Balance sheet<br />
Loans and advances <strong>to</strong> banks 115.5 128.0 -9.7%<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers 1,179.4 1,146.9 2.8%<br />
Deposits from banks 239.3 300.7 -20.4%<br />
Deposits from cus<strong>to</strong>mers 1,505.5 1,341.0 12.3%<br />
Equity (incl. profit) 256.2 190.2 34.7%<br />
Balance sheet <strong>to</strong>tal 2,053.2 1,903.1 7.9%<br />
Regula<strong>to</strong>ry information<br />
Risk weighted assets 1,500.5 1,590.5 -5.7%<br />
Capital adequacy ratio 16.0% 14.9% 1.1 PP<br />
Performance<br />
Return on equity before tax 11.3% 2.1% 9.2 PP<br />
Return on equity after tax 10.0% 1.6% 8.5 PP<br />
Cost/income ratio 59.9% 66.1% -6.2 PP<br />
Return on assets before tax 1.3% 0.2% 1.1 PP<br />
Resources<br />
Number of employees 1,576 1,634 -3.5%<br />
Business outlets 92 92 0.0%
Content<br />
Annual Report 2011<br />
Report by <strong>the</strong> Chairman of <strong>the</strong> Supervisory Board ........................................................................26<br />
Preface by <strong>the</strong> CEO ....................................................................................................................28<br />
Macroeconomic Overview...........................................................................................................29<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International at a glance .....................................................................................34<br />
<strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina...................................................................................36<br />
The Management Board .............................................................................................................38<br />
Organisational Structure.............................................................................................................40<br />
Balance sheet.............................................................................................................................42<br />
Statement of Income ..................................................................................................................43<br />
Key <strong>financial</strong> indica<strong>to</strong>rs ...............................................................................................................44<br />
Corporate <strong>Bank</strong>ing.....................................................................................................................49<br />
SME – Small & Micro Clients .......................................................................................................50<br />
Retail <strong>Bank</strong>ing ............................................................................................................................55<br />
Treasury, Financial Markets and Investment <strong>Bank</strong>ing.....................................................................63<br />
Head Office and Branches..........................................................................................................70<br />
Addresses ..................................................................................................................................71<br />
Responsibility for <strong>the</strong> Financial Statements....................................................................................76<br />
Independent audi<strong>to</strong>rs’ report.......................................................................................................77<br />
Unconsolidated income statement ...............................................................................................78<br />
Unconsolidated statement of comprehensive income....................................................................79<br />
Unconsolidated balance sheet.....................................................................................................80<br />
Unconsolidated statement of cash flows.......................................................................................81<br />
Unconsolidated statement of changes in equity ............................................................................82<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> .........................................................................83<br />
www.raiffeisenbank.ba 3
Report by <strong>the</strong> Chairman of <strong>the</strong> Supervisory Board<br />
26<br />
Report by <strong>the</strong> Chairman<br />
of <strong>the</strong> Supervisory Board<br />
www.raiffeisenbank.ba<br />
Ladies and Gentlemen,<br />
2011 was once again a fairly eventful year. The developments in Europe,<br />
and particularly in <strong>the</strong> peripheral states of <strong>the</strong> eurozone, left <strong>the</strong>ir mark on<br />
<strong>the</strong> group headed by <strong>Raiffeisen</strong> <strong>Bank</strong> International AG (RBI), <strong>the</strong> parent<br />
company of <strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina. While our exposure<br />
<strong>to</strong> <strong>the</strong>se states was traditionally low and we were not directly affected,<br />
we <strong>to</strong>o were unable <strong>to</strong> escape <strong>the</strong> effects of <strong>the</strong> market environment following<br />
<strong>the</strong> sovereign debt crisis.<br />
RBI and banks in general are facing a lot of new rules. From our point of<br />
view, however, <strong>the</strong>y are introduced at an unfortunate time and in <strong>to</strong>o much<br />
haste. The regulations published by <strong>the</strong> European <strong>Bank</strong>ing Authority (EBA)<br />
at <strong>the</strong> end of Oc<strong>to</strong>ber which call for a core tier 1 capital ratio of 9 per<br />
cent by <strong>the</strong> end of June 2012 put pressure on many banks in Europe. However, we – <strong>to</strong> be more exact,<br />
<strong>the</strong> RZB Group – are well-equipped <strong>to</strong> handle this. We have put <strong>to</strong>ge<strong>the</strong>r a comprehensive bundle of<br />
measures, consisting of numerous individual measures. We are also in <strong>the</strong> fortunate position of making<br />
profits which are streng<strong>the</strong>ning our equity. As a result, we can meet <strong>the</strong> new requirements from our<br />
own resources.<br />
By meeting <strong>the</strong> EBA ratio, RBI is also reaching <strong>the</strong> Basel III ratio of 7 per cent, which <strong>the</strong> Austrian regula<strong>to</strong>rs<br />
have set as manda<strong>to</strong>ry earlier than previously planned, namely from <strong>the</strong> start of 2013. Moreover,<br />
<strong>the</strong> Austrian regula<strong>to</strong>rs implemented a ratio system for banks operating in Central and Eastern<br />
Europe <strong>to</strong> bring funding from o<strong>the</strong>r sources than <strong>the</strong> shareholder and loans in<strong>to</strong> balance. We do not<br />
regard <strong>the</strong> guideline that only EUR 110 should be lent for every EUR 100 of deposits (including certain<br />
o<strong>the</strong>r forms of funding) as a major restriction. As growth in lending is tied <strong>to</strong> economic growth, it is likely<br />
<strong>to</strong> be moderate in <strong>the</strong> next few years. Looking at growth rates, we have <strong>to</strong> distinguish between markets.<br />
While in <strong>the</strong> eurozone we are facing a real systemic and political crisis, in Central and Eastern Europe<br />
<strong>the</strong> economic uptrend is largely continuing. This region is and will continue <strong>to</strong> be <strong>the</strong> growth driver for<br />
Europe. Even if economic growth in <strong>the</strong> CEE region slows from 3.7 per cent in 2011 <strong>to</strong> 2.6 per cent in<br />
2012, this is still higher than in <strong>the</strong> eurozone. This is not a bad outlook for us.<br />
In this difficult environment, <strong>the</strong> RBI Group generated a profit before tax of EUR 1.37 billion, which is<br />
a solid result we can rightly be proud of. One thing that made this possible is that <strong>the</strong> markets in Central<br />
and Eastern Europe continued <strong>to</strong> show comparatively high economic growth, which also resulted<br />
in a significant improvement in our risk situation. Our result confirms our sustainable business model,<br />
which will continue <strong>to</strong> keep us very competitive!<br />
Economic trends in Bosnia and Herzegovina during <strong>the</strong> second half of 2010 saw slight improvement;<br />
<strong>the</strong> beginning of 2011 saw economic trends of similar intensity, bringing measured optimism <strong>to</strong> <strong>the</strong> local<br />
market – driving <strong>the</strong> economy in<strong>to</strong> a positive direction. For <strong>the</strong> first time since <strong>the</strong> onset of <strong>the</strong> global<br />
economic crisis, Bosnia and Herzegovina saw a record increase in exports, a positive impact of private<br />
consumption, and investments on economic growth in <strong>the</strong> country. However, this positive trend came<br />
<strong>to</strong> a halt due <strong>to</strong> <strong>the</strong> escalation of <strong>the</strong> debt crisis in <strong>the</strong> second half of <strong>the</strong> year and economic recovery<br />
slowed down significantly.<br />
The debt crisis in <strong>the</strong> eurozone brought instability <strong>to</strong> both global and regional <strong>financial</strong> markets, including<br />
<strong>the</strong> market of Bosnia and Herzegovina, which is heavily dependant on <strong>the</strong> EU.
Report by <strong>the</strong> Chairman of <strong>the</strong> Supervisory Board<br />
Political instability and <strong>the</strong> suspension of reform processes had additional adverse effects on economic<br />
development which subsequently led <strong>to</strong> termination of <strong>the</strong> stand-by arrangement with <strong>the</strong> International<br />
Monetary Fund (IMF). A rapid decrease of foreign investments and <strong>the</strong> downgrade of Bosnia and Herzegovina’s<br />
credit rating ensued inevitable consequences of <strong>the</strong> before mentioned developments.<br />
However, despite this negative economic environment, <strong>the</strong> local banking sec<strong>to</strong>r has remained buoyant,<br />
succeeding in generating positive business results which were a marked improvement over those from<br />
<strong>the</strong> previous year. These improved results are mainly due <strong>to</strong> <strong>the</strong> implementation of cost consolidation<br />
and business optimization processes. Even with such results, we must not neglect <strong>the</strong> fact that <strong>the</strong> banking<br />
sec<strong>to</strong>r is part of <strong>the</strong> national economy, which is closely linked <strong>to</strong> all o<strong>the</strong>r sec<strong>to</strong>rs; <strong>the</strong> banking sec<strong>to</strong>r<br />
shares <strong>the</strong> fate of <strong>the</strong> country’s overall economy, both in <strong>the</strong> short-term and long-term.<br />
It is all <strong>the</strong> more gratifying that <strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina had kept its market position<br />
in 2011. We achieved superior industry results in a hostile economic climate, <strong>the</strong> likes which have not<br />
been seen in decades, making <strong>Raiffeisen</strong>’s achievements even that more remarkable. Improvement in<br />
business efficiency, as well as support from our cus<strong>to</strong>mers throughout <strong>the</strong> year, made <strong>Raiffeisen</strong>’s<br />
achievements possible.<br />
The achievement of our business goals would not have been made possible without <strong>the</strong> tireless efforts<br />
of <strong>Raiffeisen</strong> <strong>Bank</strong>’s management and employees, <strong>to</strong> whom I would like <strong>to</strong> express my most sincere appreciation<br />
and thanks.<br />
Peter Lennkh<br />
Chairman of <strong>the</strong> Supervisory Board<br />
www.raiffeisenbank.ba 27
Preface by <strong>the</strong> CEO<br />
28<br />
Preface by <strong>the</strong> CEO<br />
www.raiffeisenbank.ba<br />
The review of a past year is not only an analysis of accomplishments, but<br />
of a reflection on where fur<strong>the</strong>r improvements could have been made. For<br />
several years now, we have looked back on previous years’ accomplishments<br />
and challenges–2011 was an exceptional year shaped by unique<br />
circumstances that were highly challenging.<br />
Overall, 2011 was ra<strong>the</strong>r successful seeing market recovery and significant<br />
economic gains, especially in its first half. Given <strong>the</strong> fact that Bosnia and<br />
Herzegovina’s national economy is reliant on <strong>the</strong> European Union, <strong>the</strong> effects<br />
of <strong>the</strong> debt crisis in <strong>the</strong> eurozone at year’s end shook Bosnia and Herzegovina’s<br />
national economy almost immediately. This resulted in a considerable<br />
slow down in economic recovery. Unlike <strong>the</strong> year before, <strong>the</strong> entire banking<br />
sec<strong>to</strong>r enjoyed increased business success and regained profitability which<br />
contributed greatly <strong>to</strong> economic trends in <strong>the</strong> country as a whole.<br />
It is a pleasure <strong>to</strong> highlight <strong>the</strong> fact that our business ratios, such as returns on equity, exceeded <strong>the</strong> industry<br />
average which only encourages us <strong>to</strong> continue on with our business strategy. The fact that our<br />
<strong>to</strong>tal deposits recorded a stronger growth rate than <strong>to</strong>tal deposits in <strong>the</strong> entire banking sec<strong>to</strong>r is a reflection<br />
of <strong>the</strong> trust and confidence cus<strong>to</strong>mers have in us, signifying <strong>the</strong> strength of <strong>the</strong> <strong>Raiffeisen</strong> brand.<br />
Measures aimed at cost optimisation in previous years have produced notable outcomes as seen in <strong>the</strong><br />
business achievements of 2011. As in <strong>the</strong> preceding year, we will maintain our focus in 2012 on higher<br />
cost-awareness and an even more systematic approach <strong>to</strong> fund allocation in order <strong>to</strong> achieve higher<br />
business efficiency.<br />
We remain committed <strong>to</strong> our cus<strong>to</strong>mers as we consider this a main duty and task. In 2011, as in previous<br />
years, we have done our utmost <strong>to</strong> find <strong>the</strong> best solutions and products for our cus<strong>to</strong>mers. This is<br />
because our cus<strong>to</strong>mers’ success is also our success. Cus<strong>to</strong>mer satisfaction and support, as well as<br />
awards from <strong>the</strong> renowned local and international magazines, encourage us <strong>to</strong> continue on with our<br />
business strategy.<br />
We have extended our business activities <strong>to</strong> <strong>the</strong> brokerage business in <strong>the</strong> Federation of Bosnia and<br />
Herzegovina through <strong>the</strong> successful integration of <strong>Raiffeisen</strong> BROKERS in<strong>to</strong> <strong>Raiffeisen</strong> <strong>Bank</strong>. This integration<br />
was particularly aimed at quality improvement and service availability. The integration of<br />
<strong>Raiffeisen</strong> BROKERS in<strong>to</strong> <strong>Raiffeisen</strong> <strong>Bank</strong> has immediately manifested positive results that have yet <strong>to</strong><br />
meet <strong>the</strong>ir full potential. The year-end was also marked by <strong>the</strong> successful establishment of a new Group<br />
member, namely <strong>Raiffeisen</strong> INVEST.<br />
According <strong>to</strong> macroeconomic forecasts, 2012 will bring even fur<strong>the</strong>r challenges; however, this will not<br />
discourage us. On <strong>the</strong> contrary, it only serves <strong>to</strong> motivate us more <strong>to</strong> endeavour <strong>to</strong> be even better and<br />
more successful at what we do. As a leader of <strong>the</strong> local banking sec<strong>to</strong>r and important driver of national<br />
economic processes, we will keep developing <strong>the</strong> best possible solutions for our cus<strong>to</strong>mers and ourselves<br />
<strong>to</strong> meet <strong>the</strong>se business challenges.<br />
Moreover, we will strive <strong>to</strong> remain a reliable partner at all times, continuing <strong>to</strong> gain respect and recognition<br />
from our cus<strong>to</strong>mers and <strong>the</strong> general public.<br />
Sincerely,<br />
Michael Müller,<br />
CEO
Macroeconomic Overview<br />
Macroeconomic Overview<br />
In global terms, 2011 was shaped by a new wave escalation of <strong>the</strong> debt crisis in <strong>the</strong> eurozone. European<br />
economies were presented with extremely challenging tasks, for example, finding an efficient way<br />
<strong>to</strong> s<strong>to</strong>p its fur<strong>the</strong>r expansion and <strong>the</strong> threat of ano<strong>the</strong>r risk <strong>to</strong> its system. This task was intended <strong>to</strong> preserve<br />
<strong>the</strong> sustainability of <strong>the</strong> single European currency area and create conditions for a sustainable economic<br />
recovery following <strong>the</strong> global <strong>financial</strong> crisis.<br />
The strong pace of recovery of <strong>the</strong> eurozone’s largest economies in 2010 <strong>to</strong> <strong>the</strong> first half of 2011, came<br />
under pressure again when Portugal became <strong>the</strong> third country, after Ireland and Greece, <strong>to</strong> turn <strong>to</strong> <strong>the</strong><br />
eurozone members and <strong>the</strong> International Monetary Fund (IMF) for a fiscal support package. Greece<br />
struggled for its second support package <strong>to</strong> escape threatening bankruptcy. Moreover, driven by fear<br />
and increasing mistrust, <strong>financial</strong> markets put pressure on <strong>the</strong> sustainability of <strong>the</strong> refinancing of Spain’s<br />
and Italy’s debt, which in turn threatens <strong>the</strong> sustainability of <strong>the</strong> eurozone.<br />
Mistrust and increased risk aversion led <strong>to</strong> new ill-liquidity in <strong>the</strong> inter-bank market. This is due <strong>to</strong> increasing<br />
refinancing costs, volatility on <strong>the</strong> global s<strong>to</strong>ck exchange, record-high gold prices and exchange<br />
rates of <strong>the</strong> Swiss franc against <strong>the</strong> Euro, <strong>the</strong>refore dampening <strong>the</strong> prospects for fur<strong>the</strong>r recovery<br />
of <strong>the</strong> European economic area. Finally, <strong>the</strong> European Central <strong>Bank</strong> had <strong>to</strong> make decisive moves <strong>to</strong> calm<br />
<strong>financial</strong> markets while supporting <strong>the</strong> sustainability of <strong>the</strong> eurozone. This was done in <strong>the</strong> form of a<br />
program <strong>to</strong> purchase bonds of <strong>the</strong> debt-ridden countries, great volumes of liquidity assistance <strong>to</strong> banks<br />
by long-term refinancing measures in <strong>the</strong> market, and a fur<strong>the</strong>r cut in <strong>the</strong> base interest rate down <strong>to</strong> 1<br />
per cent. Coordinated measures <strong>to</strong> mitigate <strong>the</strong> debt crisis, consolidation and coordination of <strong>the</strong> fiscal<br />
policy at <strong>the</strong> European level, as well as continuing <strong>the</strong> expansive monetary policy aimed at preventing<br />
a new wave of recession will be at <strong>the</strong> <strong>to</strong>p of <strong>the</strong> agenda for European leaders in times ahead.<br />
The positive external environment revealed increased demand in EU countries for exports from Bosnia<br />
and Herzegovina, especially in <strong>the</strong> first half of <strong>the</strong> year. This made exports and export-oriented industrial<br />
production <strong>the</strong> main drivers of continued economic recovery in Bosnia and Herzegovina again in<br />
2011. There were, however, no significant investments or reforms in <strong>the</strong> local market, due <strong>to</strong> <strong>the</strong> continued<br />
political crisis after parliamentary elections in 2010. However, exports of goods showed a remarkable<br />
two-digit annual of 15.6 per cent, thanks <strong>to</strong> exports of metals and metal products, electricity,<br />
mineral products, and machinery. This led <strong>to</strong> a revival of 5 per cent growth in <strong>the</strong> domestic processing<br />
industry, 15.6 per cent growth in <strong>the</strong> mining industry, and finally, 5.6 per cent growth in overall industrial<br />
production compared with <strong>the</strong> previous year.<br />
Moreover, for <strong>the</strong> first time in almost two years of recessionary developments, private consumption and<br />
investments are expected <strong>to</strong> make positive contributions <strong>to</strong> economic growth, above all thanks <strong>to</strong><br />
stronger credit growth and higher availability of financing in <strong>the</strong> banking sec<strong>to</strong>r. Never<strong>the</strong>less, <strong>the</strong><br />
growth rate of private consumption and investment will remain at modest annual levels of 2.5 per cent<br />
and 6 per cent, respectively, this due <strong>to</strong> a fur<strong>the</strong>r increase in unemployment rates and limited real<br />
growth of private income. Based on <strong>the</strong>se speculations, <strong>to</strong>tal annual real economic growth was predicted<br />
at 1.9 per cent in 2011, due mainly <strong>to</strong> <strong>the</strong> strong pace of recovery seen in <strong>the</strong> first half of <strong>the</strong> year. While<br />
in <strong>the</strong> rest of <strong>the</strong> year, particularly in <strong>the</strong> final quarter, <strong>the</strong> first negative affects of <strong>the</strong> economic downturn<br />
from <strong>the</strong> eurozone were felt. The economic growth of 1.9 per cent in Bosnia and Herzegovina remains<br />
far below <strong>the</strong> average recorded in <strong>the</strong> years before <strong>the</strong> economic crisis. Additionally, it is far<br />
below <strong>the</strong> average level needed for visible improvement in <strong>the</strong> living standard and meeting average European<br />
development levels.<br />
www.raiffeisenbank.ba 29
Macroeconomic Overview<br />
30<br />
www.raiffeisenbank.ba<br />
The considerably low economic growth rate in Bosnia and Herzegovina was primarily due <strong>to</strong> <strong>the</strong> stagnation<br />
in economic processes and European integrations, as well as <strong>the</strong> decline of credibility of <strong>the</strong><br />
country’s state institutions. This was due <strong>to</strong> <strong>the</strong> 15-month political crisis, which resulted in termination<br />
of <strong>the</strong> stand-by arrangement with <strong>the</strong> International Monetary Fund (IMF), <strong>the</strong> downgrade of <strong>the</strong> country’s<br />
credit rating, and record-low foreign direct investments in <strong>the</strong> past two years. Bosnia and Herzegovina’s<br />
fiscal situation was additionally aggravated when it became clear that due <strong>to</strong> <strong>the</strong> failure <strong>to</strong><br />
establish a state government, <strong>the</strong> planned IMF budget would not be disbursed and <strong>the</strong> entire IMF agreement<br />
would be suspended. The governments at entity level amended <strong>the</strong>ir budgets and for <strong>the</strong> first time<br />
financed <strong>the</strong>ir deficits by issuing securities (treasury bills and bonds), which opened up a new capital<br />
market segment in 2011. Due <strong>to</strong> <strong>the</strong> very low levels of liquidity, banks became <strong>the</strong> key inves<strong>to</strong>rs with a<br />
share above 95 per cent, as <strong>the</strong> Finance Ministries at entity level successfully placed <strong>the</strong>ir <strong>to</strong>tal amounts<br />
of treasury bills at around BAM 150 million at very low average yields ranging from 2.35 per cent <strong>to</strong><br />
3.5 per cent.<br />
Despite <strong>the</strong> fact that <strong>the</strong> processes of fiscal reforms and public finance consolidation were s<strong>to</strong>pped due<br />
<strong>to</strong> <strong>the</strong> suspension of <strong>the</strong> IMF agreement, <strong>the</strong> fiscal deficits at entity-level and <strong>the</strong> consolidated deficit at<br />
state-level are likely <strong>to</strong> remain at an acceptable level of up <strong>to</strong> 3 per cent of GDP. The foreign debt level<br />
grew by BAM 357 million, which caused its relative share in GDP <strong>to</strong> fall <strong>to</strong> 25.5 per cent. The share of<br />
<strong>to</strong>tal public debt also declined <strong>to</strong> 37.4 per cent of GDP. In November, <strong>the</strong> political and institutional crisis,<br />
combined with <strong>the</strong> suspension of <strong>the</strong> stand-by arrangement with <strong>the</strong> IMF and fiscal uncertainty<br />
eventually resulted in <strong>the</strong> downgrade of Bosnia and Herzegovina’s sovereign rating by S&P <strong>to</strong> B with<br />
negative outlook. This downgrade in <strong>the</strong> sovereign rating by S&P, in turn, strongly reduced foreign direct<br />
investments (FDI) in Bosnia and Herzegovina. The FDI volume in 2011 was just EUR 290 million,<br />
or 2.2 per cent of GDP, which despite <strong>the</strong> fact that it presents nominal growth from <strong>the</strong> previous year,<br />
it is <strong>to</strong>o low an amount for starting serious investments, increasing employment and <strong>the</strong> level of economic<br />
growth. It is <strong>the</strong>refore not surprising that unemployment continues <strong>to</strong> rise at a worrisome pace,<br />
reaching a rate of 27.6 per cent this year 1 .<br />
In addition <strong>to</strong> increasing unemployment and <strong>the</strong> low growth rate of salaries, inflationary pressure is ano<strong>the</strong>r<br />
driving force behind <strong>the</strong> relatively low recovery of domestic demand and overall real economic<br />
growth this year. Once again, fac<strong>to</strong>rs on <strong>the</strong> domestic supply side, combined with <strong>the</strong> phenomenon of<br />
import inflation, played a key role in increasing <strong>the</strong> overall level of consumer prices in 2011. Economic<br />
pressures coming from <strong>the</strong> energy sec<strong>to</strong>r caused erratic gas and electricity prices in <strong>the</strong> first half of <strong>the</strong><br />
year. This was due <strong>to</strong> <strong>the</strong> strong effects of import inflation through price increases for gas imports from<br />
international markets. This led <strong>to</strong> an inflation level of 4.2 per cent at <strong>the</strong> end of <strong>the</strong> second quarter–<br />
<strong>the</strong> highest in <strong>the</strong> past five years. After that, <strong>the</strong> inflationary pressure flattened out gradually, due partly<br />
<strong>to</strong> <strong>the</strong> base effect and partly <strong>to</strong> dropping petrol prices in international markets later in <strong>the</strong> year, which<br />
brought inflation <strong>to</strong> an average annual level of 3.7 per cent in 2011.<br />
Despite <strong>the</strong>se continuous strains, volatile external framework, and local economic environment, <strong>the</strong><br />
banking sec<strong>to</strong>r recorded ano<strong>the</strong>r successful business year, recording an improvement in <strong>the</strong> capitalization<br />
level, profitability and growth. This acted as a key driver <strong>to</strong> <strong>the</strong> real sec<strong>to</strong>r’s recovery and overall<br />
economic growth in 2011. Fur<strong>the</strong>rmore, almost every stability and performance indica<strong>to</strong>r recorded<br />
growth trends. The capitalization level measured by <strong>the</strong> capital adequacy rate s<strong>to</strong>od at 16.4 per cent,<br />
which is not only far above <strong>the</strong> regula<strong>to</strong>ry minimum of 12 per cent but also one of <strong>the</strong> best banking<br />
sec<strong>to</strong>r capitalizations in <strong>the</strong> region. Most banks successfully restructured <strong>the</strong>ir loan portfolios this year,<br />
1 This unemployment rate is derived from <strong>the</strong> Labour Force Survey conducted by recommendation of <strong>the</strong> International<br />
Labour Organization and requirements of <strong>the</strong> EU Statistic Bureau (EUROSTAT). It is not comparable with <strong>the</strong><br />
official/registered unemployment rate based on <strong>the</strong> number of unemployed persons registered with <strong>the</strong> Employment<br />
Agency of Bosnia and Herzegovina. The key reason for <strong>the</strong> difference between <strong>the</strong>se two rates lies in <strong>the</strong> diverging<br />
definitions of unemployment. By definition of <strong>the</strong> Employment Agency, an unemployed person is any person<br />
who meets <strong>the</strong> legal requirements and is registered with any of <strong>the</strong> employment agencies. According <strong>to</strong> <strong>the</strong> Labour<br />
Force Survey, an unemployed person is a person aged 15 or over who was without work for pay or profit during <strong>the</strong><br />
survey reference week and who was currently available for work and was actively seeking work in <strong>the</strong> past four<br />
weeks.
Macroeconomic Overview<br />
which aided in s<strong>to</strong>pping <strong>the</strong> upward trend in non-performing loans after three years and reducing <strong>the</strong>ir<br />
share in <strong>to</strong>tal loans <strong>to</strong> 11.8 per cent. As a result, <strong>the</strong> banking sec<strong>to</strong>r returned <strong>to</strong> positive business results<br />
and generated a net profit of BAM 175.2 million in 2011. ROA and ROE reached 0.8 per cent and<br />
7.2 per cent, respectively, returning <strong>to</strong> <strong>the</strong>ir levels before <strong>the</strong> <strong>financial</strong> and economic crisis of 2008 <strong>to</strong><br />
2010. <strong>Bank</strong>ing sec<strong>to</strong>r liquidity, measured by <strong>the</strong> share of cash and marketable cash funds in <strong>to</strong>tal banking<br />
assets, remained at a stable level of 27.3 per cent thanks <strong>to</strong> <strong>the</strong> stabilization of provisioning costs<br />
and portfolio restructuring.<br />
The recovery trend of <strong>to</strong>tal credit growth and <strong>to</strong>tal banking assets continued in 2011. This was due <strong>to</strong><br />
more favorable funding <strong>to</strong> South-East Europe from <strong>the</strong> international banking market, which made banks<br />
one of <strong>the</strong> recovery drivers of <strong>the</strong> real sec<strong>to</strong>r and exports. It is <strong>the</strong>refore not surprising that <strong>the</strong> largest<br />
annual credit growth average of 7.3 per cent was recorded in <strong>the</strong> private and public companies sec<strong>to</strong>r,<br />
which is at <strong>the</strong> same time <strong>the</strong> leading segment in <strong>to</strong>tal lending with a 51.4 per cent share, or EUR<br />
4 billion. The private cus<strong>to</strong>mers segment, due <strong>to</strong> <strong>the</strong> already mentioned slow recovery of <strong>the</strong> labor market<br />
and <strong>the</strong> level of available real income, combined with <strong>the</strong> high level of average debt in a SEE comparison,<br />
recorded a significantly slower average credit growth rate of 2.4 per cent.<br />
The <strong>to</strong>tal level of loans given in <strong>the</strong> banking sec<strong>to</strong>r increased by 5.3 per cent, which was an expectedly<br />
lower grow rate compared with <strong>the</strong> average credit growth recorded in <strong>the</strong> period before <strong>the</strong> <strong>financial</strong><br />
crisis. As a result, <strong>the</strong> growth of <strong>to</strong>tal banking assets increased by 3.4 per cent, which is a lower growth<br />
rate compared with <strong>the</strong> nominal economic growth achieved in 2011–leading <strong>to</strong> a drop of <strong>the</strong>ir share<br />
in GDP <strong>to</strong> 84.5 per cent. On <strong>the</strong> o<strong>the</strong>r hand, <strong>the</strong> stable growth of deposits was almost identical <strong>to</strong> <strong>the</strong><br />
annual growth rate of 3.8 per cent recorded in <strong>the</strong> previous year, driven mostly by <strong>the</strong> strong two-digit<br />
growth of deposits from private individuals. The loan/deposit ratio remained at a stable level of 117.8<br />
per cent.<br />
The year 2011 saw just one M&A 2 transaction, in which a bank was acquired by a strategic partner in<br />
<strong>the</strong> Federation of Bosnia and Herzegovina. As a result, <strong>the</strong> number of banks operating in <strong>the</strong> local<br />
banking market remained unchanged at 29. As <strong>the</strong>re were no o<strong>the</strong>r significant changes in <strong>the</strong> consolidation<br />
of <strong>the</strong> banking sec<strong>to</strong>r, <strong>the</strong> concentration level of <strong>the</strong> five <strong>to</strong>p banking groups (CR 5) in <strong>the</strong> market<br />
remained at almost 80 per cent of <strong>to</strong>tal banking assets.<br />
In summery, worsening economic outlooks already recorded at <strong>the</strong> end of 2011 and <strong>the</strong> new wave of<br />
recessionary developments emanating from <strong>the</strong> debt crisis and fiscal consolidation will affect <strong>the</strong><br />
economies of <strong>the</strong> eurozone in 2012. Therefore, this will have a negative impact on <strong>the</strong> small and open<br />
economies of South-East Europe, in which Bosnia and Herzegovina is a part; as <strong>the</strong>y are directly dependant<br />
on demand and funding from <strong>the</strong> eurozone. Due <strong>to</strong> <strong>the</strong> fact that <strong>the</strong> strength and duration of<br />
<strong>the</strong> new recession cycle will be much shorter and less intense than that in <strong>the</strong> period 2008-2009, we<br />
expect a deterioration of trends in <strong>the</strong> real sec<strong>to</strong>r and <strong>the</strong> overall level of consumption. As a result,<br />
lending in <strong>the</strong> local banking sec<strong>to</strong>r is likely <strong>to</strong> slow down compared with <strong>the</strong> above mentioned period.<br />
Given <strong>the</strong> expected stagnation trends in <strong>the</strong> local economy, <strong>the</strong> banking sec<strong>to</strong>r will face ano<strong>the</strong>r challenging<br />
year. Difficulties in business operations and in <strong>the</strong> corporate sec<strong>to</strong>r’s liquidity, combined with<br />
pressure on <strong>the</strong> local labor market, will be <strong>the</strong> key obstacles <strong>to</strong> finding good lending opportunities and<br />
<strong>the</strong>refore <strong>the</strong> banking sec<strong>to</strong>r’s growth.<br />
Head of Research and Analysis/Chief Economist<br />
Ivona Kristi}<br />
2 Corporate actions of mergers and acquisitions<br />
www.raiffeisenbank.ba 31
Macroeconomic Overview<br />
32<br />
Key economic figure<br />
www.raiffeisenbank.ba<br />
2007 2008 2009 2010e 2011f 2012f 2013f<br />
Nominal GDP (in EUR billion) 11.1 12.6 12.3 12.5 13.3 13.6 14.2<br />
Real GDP (% yoy) 6.2 5.7 -2.9 0.7 1.9 0.0 2.0<br />
GDP per capita (EUR) 2,898 3,290 3,195 3,254 3,449 3,541 3,697<br />
GDP per capita (EUR in PPP) 6,300 6,600 6,400 6,550 6,700 7,000 7,300<br />
Private consumption (real growth % yoy) 5.9 6.0 -3.9 -1.3 2.5 -0.5 2.5<br />
Gross investment (real growth % yoy) 40.9 16.0 -27.6 -8.1 6.0 -5.0 4.0<br />
Industrial output (% yoy) 6.6 7.3 -3.3 1.6 5.6 1.1 5.0<br />
Production prices (average % yoy) 1.1 8.6 -3.2 0.9 3.7 1.9 1.9<br />
Consumer prices – inflation (average % yoy) 1.5 7.4 -0.4 2.1 3.7 2.2 2.0<br />
Average gross salaries in industry (% yoy) 8.0 14.9 5.6 2.1 5.0 2.0 4.0<br />
Unemployment rate¹ (average %) 29.0 23.4 24.1 27.2 27.6 27.9 27.6<br />
Budget deficit (% GDP) 1.2 -2.2 -4.5 -2.2 -3.0 -3.0 -2.0<br />
Public debt (% GDP) 32.9 30.1 35.1 38.4 37.4 39.7 40.1<br />
Trade deficit (% GDP) -37.2 -38.2 -27.8 -26.0 -27.9 -24.8 -26.1<br />
Current account deficit (% GDP) -10.7 -14.2 -6.2 -5.3 -8.1 -6.6 -8.1<br />
Net foreign investments (% GDP) 13.7 5.0 1.4 1.4 2.2 1.4 3.2<br />
Foreign reserves (in EUR billion) 3.4 3.2 3.2 3.3 3.3 3.2 3.3<br />
Gross foreign debt (% GDP) 47.5 49.0 54.2 58.3 58.9 61.0 60.6<br />
EUR/KM (eop.) 1.96 1.96 1.96 1.96 1.96 1.96 1.96<br />
EUR/KM (average) 1.96 1.96 1.96 1.96 1.96 1.96 1.96<br />
USD/KM (eop.) 1.34 1.46 1.34 1.48 1.48 1.50 1.45<br />
USD/LCY (average) 1.43 1.34 1.41 1.48 1.41 1.42 1.48<br />
Source: Central <strong>Bank</strong> of B&H, Statistics Agency of B&H, <strong>Raiffeisen</strong> RESEARCH<br />
1 An explanation of <strong>the</strong> unemployment rate is given on page 30.
Overview of banking sec<strong>to</strong>r developments<br />
Balance sheet data<br />
Macroeconomic Overview<br />
2004 2005 2006 2007 2008 2009 2010 2011<br />
Total assets, EUR million 4,806.0 6,071.4 7,541.4 10,023.0 10,797.6 10,742.0 10,828.0 11,194.5<br />
growth in % yoy 22.3% 26.3% 24.2% 32.9% 7.7% -0.5% 0.8% 3.4%<br />
Total credits, EUR million 3,030.5 3,857.3 4,703.5 6,059.5 7,418.6 7,183.7 7,435.9 7,829.3<br />
growth in % yoy 15.7% 27.3% 21.9% 28.8% 22.4% -3.2% 3.5% 5.3%<br />
Total deposits, EUR million 2,852.2 3,515.8 4,480.6 6,180.1 6,071.6 6,182.6 6,406.5 6,646.8<br />
growth in % yoy 27.8% 23.3% 27.4% 37.9% -1.8% 1.8% 3.6% 3.8%<br />
Loan/deposit ratio 106.3% 109.7% 105.0% 98.0% 122.2% 116.2% 116.1% 117.8%<br />
Structural information<br />
Number of banks 33 33 32 32 30 30 29 29<br />
Market share of state-owned banks,<br />
in %<br />
Market share of foreign-owned<br />
banks, in %<br />
Profitability and efficiency<br />
80 90.8 94.0 93.7 95.0 94.6 92.8 92.2<br />
Return on assets (RoA) 0.7 0.7 0.9 0.9 0.4 0.1 -0.6 0.8<br />
Return on equity (RoE) 5.8 6.2 8.4 8.9 4.3 0.8 -5.5 7.2<br />
Non-performing loans<br />
(% of <strong>to</strong>tal loans)<br />
Source: Central <strong>Bank</strong> of B&H, <strong>Bank</strong>ing Agencies of FB&H and RS<br />
6.1 5.3 4.0 3.0 3.1 5.9 11.4 11.8<br />
www.raiffeisenbank.ba 33
<strong>Raiffeisen</strong> <strong>Bank</strong> International at a glance<br />
34<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International<br />
at a glance<br />
www.raiffeisenbank.ba<br />
A leading bank in Central and Eastern Europe, including Austria<br />
<strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina is a subsidiary of <strong>Raiffeisen</strong> <strong>Bank</strong> International AG (RBI),<br />
which regards Central and Eastern Europe (including Austria), as its home market. For nearly 25 years,<br />
RBI has been operating in <strong>the</strong> Central and Eastern Europe (CEE) region, where <strong>to</strong>day it maintains a<br />
closely knit network of subsidiary banks, leasing companies and numerous specialized <strong>financial</strong> service<br />
providers in 17 markets. As a universal bank, RBI ranks among <strong>the</strong> leading banks in <strong>the</strong> region. The<br />
powerful role played by <strong>the</strong> bank is supported by <strong>the</strong> <strong>Raiffeisen</strong> brand, which is one of <strong>the</strong> most widely<br />
recognized brands in <strong>the</strong> region. Following its strategic realignment in 2010, RBI has positioned itself<br />
as a fully integrated corporate and retail banking group in CEE. The bank not only has good access <strong>to</strong><br />
retail and corporate cus<strong>to</strong>mers, but also a comprehensive product offering. At <strong>the</strong> end of 2011 around<br />
56,000 staff served approximately 13.8 million cus<strong>to</strong>mers in around 2,915 business outlets in CEE.<br />
In Austria, RBI is one of <strong>the</strong> <strong>to</strong>p corporate and investment banks. It primarily serves Austrian cus<strong>to</strong>mers<br />
but also international as well as major multinational clients operating in CEE. Moreover, RBI is represented<br />
in <strong>the</strong> world’s <strong>financial</strong> centers and operates branches and representative offices in Asia. All in<br />
all, RBI employs about 59,000 staff and has <strong>to</strong>tal assets of approximately EUR 147 billion.<br />
RBI operates subsidiary banks in <strong>the</strong> following CEE markets:<br />
• Albania <strong>Raiffeisen</strong> <strong>Bank</strong> Sh.a.<br />
• Belarus Priorbank, OAO<br />
• Bosnia and Herzegovina <strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina<br />
• Bulgaria <strong>Raiffeisen</strong>bank (Bulgaria) EAD<br />
• Croatia <strong>Raiffeisen</strong>bank Austria d.d.<br />
• Czech Republic <strong>Raiffeisen</strong>bank a.s.<br />
• Hungary <strong>Raiffeisen</strong> <strong>Bank</strong> Zrt.<br />
• Kosovo <strong>Raiffeisen</strong> <strong>Bank</strong> Kosovo J.S.C.<br />
• Poland <strong>Raiffeisen</strong> <strong>Bank</strong> Polska S.A.<br />
• Romania <strong>Raiffeisen</strong> <strong>Bank</strong> S.A.<br />
• Russia ZAO <strong>Raiffeisen</strong>bank<br />
• Serbia <strong>Raiffeisen</strong> banka a.d.<br />
• Slovakia Tatra banka, a.s.<br />
• Slovenia <strong>Raiffeisen</strong> <strong>Bank</strong>a d.d.<br />
• Ukraine VAT <strong>Raiffeisen</strong> <strong>Bank</strong> Aval<br />
As <strong>the</strong> parent company of <strong>the</strong>se banks, RBI’s shareholding in <strong>the</strong>m is at or near <strong>to</strong> 100 per cent in most<br />
cases.
RBI's development<br />
RBI was established in Oc<strong>to</strong>ber 2010 through <strong>the</strong> merger of <strong>Raiffeisen</strong> International with <strong>the</strong> principal<br />
business areas of <strong>Raiffeisen</strong> Zentralbank Österreich AG (RZB). RBI’s position as one of <strong>the</strong> leading banks<br />
in CEE (including Austria) was fur<strong>the</strong>r reinforced by <strong>the</strong> merger. RBI has been listed on <strong>the</strong> Vienna s<strong>to</strong>ck<br />
exchange since 25 April 2005 (until 12 Oc<strong>to</strong>ber 2010 as <strong>Raiffeisen</strong> International). It is represented in<br />
several leading national and international indices, including <strong>the</strong> ATX and EURO STOXX <strong>Bank</strong>s. RZB remained<br />
<strong>the</strong> majority shareholder following <strong>the</strong> merger, holding approximately 78.5 per cent of <strong>the</strong><br />
shares. The remaining 21.5 per cent of RBI’s shares are in free float.<br />
RZB was formed in 1927 as “Genossenschaftliche Zentralbank” (GZB). <strong>Raiffeisen</strong> gained its first foothold<br />
in Central and Eastern Europe back in 1987, when it established its first subsidiary bank in Hungary.<br />
O<strong>the</strong>r own subsidiaries have since been established; from 2000 onwards, <strong>Raiffeisen</strong>’s expansion in <strong>the</strong><br />
CEE countries has mainly been achieved by acquiring existing banks, which were combined in<strong>to</strong> a holding<br />
company that from 2003 until Oc<strong>to</strong>ber 2010 operated under <strong>the</strong> name <strong>Raiffeisen</strong> International.<br />
<strong>Raiffeisen</strong> International was listed on <strong>the</strong> s<strong>to</strong>ck exchange in April 2005 in order <strong>to</strong> finance its future<br />
growth as efficiently as possible. RBI was subsequently established in 2010 through <strong>the</strong> merger of<br />
<strong>Raiffeisen</strong> International with <strong>the</strong> principal business areas of RZB.<br />
125 years of <strong>Raiffeisen</strong> in Austria<br />
<strong>Raiffeisen</strong>’s strong roots in Austria date back more than 125 years. <strong>Raiffeisen</strong>’s first Austrian credit cooperative<br />
was founded in Mühldorf, a village in Lower Austria, in 1886. Local cooperatives soon started<br />
working <strong>to</strong>ge<strong>the</strong>r and, in turn, founded regional cooperatives marking <strong>the</strong> beginning of <strong>the</strong> multi-tiered<br />
structure of <strong>the</strong> <strong>Raiffeisen</strong> organization. This not only helped <strong>to</strong> streng<strong>the</strong>n <strong>the</strong>ir position in <strong>the</strong> market,<br />
but also enabled better management and risk control. Numerous product and service cooperatives<br />
were founded on <strong>the</strong> back of increasing specialization and market integration. In mid-2011, <strong>the</strong><br />
<strong>Raiffeisen</strong> <strong>Bank</strong>ing Group Austria (RBG), <strong>the</strong> country’s largest banking group, managed EUR 83.8 billion<br />
in Austrian cus<strong>to</strong>mer deposits (excluding building society savings), of which around EUR 50.3 billion<br />
was held in savings deposits; with a market share of 32.2 per cent, RBG has continued <strong>to</strong> expand<br />
its role as market leader among Austria’s banks. RBG has achieved its strong market position through<br />
healthy organic growth.<br />
For more information please refer <strong>to</strong> www.rbinternational.com and www.rzb.at.<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International at a glance<br />
www.raiffeisenbank.ba 35
<strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina<br />
36<br />
<strong>Raiffeisen</strong> BANK d.d.<br />
Bosna i Hercegovina<br />
www.raiffeisenbank.ba<br />
<strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina is a subsidiary of <strong>Raiffeisen</strong> <strong>Bank</strong> International AG (RBI), a<br />
leading universal bank in Central and Eastern Europe (CEE) and one of <strong>the</strong> foremost providers of corporate<br />
and investment banking services in Austria. RBI originated from <strong>the</strong> merger of <strong>the</strong> spun-off business<br />
areas of <strong>Raiffeisen</strong> Zentralbank Österreich AG (RZB) with <strong>Raiffeisen</strong> International <strong>Bank</strong>-Holding AG.<br />
Our bank has been operating as a <strong>financial</strong> institution since November 1992 when it was first founded<br />
as Market <strong>Bank</strong>a d.d. Sarajevo, backed predominantly with private capital of over 90 per cent. Thanks<br />
<strong>to</strong> its exceptional performance, our bank quickly s<strong>to</strong>od out as a very successful and profitable player.<br />
Between 1996 and 2000 we were one of <strong>the</strong> leading partner banks <strong>to</strong> international <strong>financial</strong> institutions<br />
(World <strong>Bank</strong>, IFC, KfW, SOROS and EBRD) in implementing <strong>the</strong>ir credit lines. The British <strong>financial</strong><br />
magazine Central European awarded Market <strong>Bank</strong>a <strong>the</strong> title of <strong>the</strong> best banking institution in Bosnia<br />
and Herzegovina in 1999. On 21 July 2000 <strong>Raiffeisen</strong> Zentralbank Österreich AG-Vienna acquired Market<br />
<strong>Bank</strong>a and successfully integrated it in<strong>to</strong> <strong>the</strong> <strong>Raiffeisen</strong> network under <strong>the</strong> name <strong>Raiffeisen</strong> BANK d.d.<br />
Bosna i Hercegovina.<br />
In May 2001 RZB became <strong>the</strong> sole owner of Hrvatska Poštanska banka which was <strong>the</strong>n renamed<br />
<strong>Raiffeisen</strong> BANK HPB. Since 1 January 2003, when <strong>Raiffeisen</strong> BANK HPB was successfully integrated with<br />
<strong>Raiffeisen</strong> BANK, we have been operating under a single name, <strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina.<br />
This acquisition has fur<strong>the</strong>r streng<strong>the</strong>ned our position in <strong>the</strong> market in Bosnia and Hercegovina:<br />
our balance sheet has grown <strong>to</strong> over BAM one billion and our branch network has undergone<br />
significant expansion.<br />
Ownership Structure of <strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina:<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International 96.99 %<br />
Millenia Beteiligungsverwaltungs GmbH 3.00 %<br />
O<strong>the</strong>r shareholders 0.01 %<br />
As of 31 December 2011 our bank operated through a network of 92 offices and had 1,576 employees.<br />
The numerous national and international awards are testimony <strong>to</strong> our success. They include: “The Best<br />
<strong>Bank</strong> in BiH” and “The Best Internet <strong>Bank</strong>” from Global Finance; “The Best <strong>Bank</strong> in BiH” from Euromoney;<br />
“<strong>Bank</strong> of <strong>the</strong> Year” from The <strong>Bank</strong>er; “The Most Active Trade Finance <strong>Bank</strong> in <strong>the</strong> Region” from<br />
EBRD; “The Best <strong>Bank</strong> in BiH” from EMEA Finance; and <strong>the</strong> national awards “Zlatni BAM” and “Kristalna<br />
prizma”.<br />
Our bank retains its competitive edge in <strong>the</strong> B&H market in part through investments in new technologies,<br />
our experienced and trained staff who undergo continual professional education, our focus on an<br />
individual approach <strong>to</strong> each cus<strong>to</strong>mer and <strong>the</strong> introduction of new distribution channels and modern<br />
products and services.<br />
Once <strong>the</strong> Securities Market Law created <strong>the</strong> conditions for banks operating in <strong>the</strong> FB&H <strong>to</strong> offer brokerage<br />
and securities intermediation services, <strong>Raiffeisen</strong> <strong>Bank</strong> merged its subsidiary <strong>Raiffeisen</strong><br />
BROKERS d.o.o. Sarajevo in<strong>to</strong> <strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina and brought its securities business<br />
under one roof. <strong>Raiffeisen</strong> now offers professional intermediary services and is able <strong>to</strong> meet <strong>the</strong><br />
needs of a more extensive cus<strong>to</strong>mer network.<br />
In addition <strong>to</strong> <strong>Raiffeisen</strong> BANK, <strong>the</strong> <strong>Raiffeisen</strong> Group is represented in Bosnia and Herzegovina by<br />
<strong>Raiffeisen</strong> INVEST, <strong>Raiffeisen</strong> LEASING, <strong>Raiffeisen</strong> CAPITAL and <strong>Raiffeisen</strong> Special Assets Company.
Vision<br />
• <strong>Raiffeisen</strong> is <strong>the</strong> leading <strong>financial</strong> services Group in Bosnia and Herzegovina.<br />
Client satisfaction is at <strong>the</strong> highest level.<br />
Mission<br />
<strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina<br />
• We achieve highest client satisfaction, offer excellent service quality and <strong>the</strong> full range of<br />
banking, leasing, insurance and brokerage products. We set standards in partnering<br />
and are committed <strong>to</strong> long-term relationships with our clients.<br />
• Our employees are <strong>the</strong> key contribu<strong>to</strong>rs in achieving our vision and strategic goals. Their<br />
commitment, loyalty and motivation lead <strong>to</strong> a unique team-spirit and strong corporate<br />
culture. We strongly support <strong>the</strong> personal development of our employees.<br />
• We achieve <strong>the</strong> highest level of sustainable profitability in B&H banking market in order<br />
<strong>to</strong> fulfil shareholders expectations.<br />
• We see ourselves as a responsible part of society in supporting local developments and<br />
initiatives with <strong>the</strong> goal of creating value.<br />
The gable cross is part of <strong>the</strong> trademark used by almost every company in <strong>the</strong><br />
<strong>Raiffeisen</strong> <strong>Bank</strong>ing Group and RZB Group in CEE. It represents two stylized horse’s<br />
heads, crossed and attached <strong>to</strong> <strong>the</strong> gable of a house. It is a symbol of protection<br />
rooted in old European folk tradition: a gable cross on <strong>the</strong> roof was believed <strong>to</strong> protect<br />
<strong>the</strong> house and its occupants from outside dangers and <strong>to</strong> ward off evil. It symbolizes<br />
<strong>the</strong> protection and security that <strong>the</strong> members of <strong>the</strong> <strong>Raiffeisen</strong> banks enjoy through <strong>the</strong>ir<br />
self-determined collaboration. Today, <strong>the</strong> gable cross is one of Austria’s best-known trademarks and a<br />
well recognized brand in CEE.<br />
www.raiffeisenbank.ba 37
Organisational Structure
Balance sheet<br />
42<br />
Balance sheet<br />
as at 31 December 2011 and 2010<br />
ASSETS<br />
www.raiffeisenbank.ba<br />
2011<br />
(000 BAM)<br />
2011<br />
(000 EUR)<br />
2010<br />
(000 BAM)<br />
2010<br />
(000 EUR)<br />
Cash and cash equivalents 716,868 366,529 434,964 222,393<br />
Obliga<strong>to</strong>ry reserve at Central <strong>Bank</strong> of B&H 266,540 136,280 305,865 156,386<br />
Placements with o<strong>the</strong>r banks 225,917 115,510 250,282 127,967<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers 2,306,730 1,179,412 2,243,190 1,146,925<br />
Assets classified as held for sale 403 206 - -<br />
Financial assets available-for-sale 3,299 1,687 2,241 1,146<br />
Financial assets at FVTPL 158,897 81,243 164,784 84,253<br />
Financial assets held-<strong>to</strong>-maturity 138,090 70,604 137,408 70,255<br />
Investments in subsidiaries 2,436 1,245 2,288 1,170<br />
Investments in associate 8,173 4,179 8,173 4,179<br />
Deferred tax assets 846 432 469 240<br />
O<strong>the</strong>r assets and receivables 31,597 16,155 16,971 8,677<br />
Tangible and intangible assets 155,893 79,707 155,598 79,556<br />
TOTAL ASSETS 4,015,689 2,053,189 3,722,233 1,903,147<br />
LIABILITIES<br />
Due <strong>to</strong> banks 468,004 239,287 588,150 300,716<br />
Due <strong>to</strong> cus<strong>to</strong>mers 2,944,442 1,505,469 2,622,705 1,340,968<br />
Provisions 7,491 3,830 24,825 12,693<br />
O<strong>the</strong>r liabilities and payables 29,167 14,913 32,613 16,675<br />
Subordinated debt 65,484 33,481 82,016 41,934<br />
TOTAL LIABILITIES 3,514,588 1,796,980 3,350,309 1,712,986<br />
EQUITY<br />
Share capital 237,388 121,374 237,388 121,374<br />
Share premium 4,473 2,287 4,473 2,287<br />
Investment revaluation reserves 3,201 1,637 2,191 1,120<br />
Regula<strong>to</strong>ry reserves 89,035 45,523 - -<br />
Retained earnings 167,004 85,388 127,872 65,381<br />
TOTAL EQUITY 501,101 256,209 371,924 190,162<br />
TOTAL LIABILITIES AND EQUITY 4,015,689 2,053,189 3,722,233 1,903,148<br />
COMMITMENTS AND CONTINGENCIES 871,216 445,446 898,766 459,532
Statement of Income<br />
for <strong>the</strong> years ended 31 December 2011 and 2010<br />
2011<br />
(000 BAM)<br />
2011<br />
(000 EUR)<br />
2010<br />
(000 BAM)<br />
Statement of Income<br />
2010<br />
(000 EUR)<br />
Interest and similar income 208,215 106,459 210,296 107,523<br />
Interest and similar expenses (71,705) (36,662) (86,540) (44,247)<br />
Net interest income 136,510 69,797 123,756 63,276<br />
Fee and commission income 65,008 33,238 61,099 31,239<br />
Fee and commission expenses (9,143) (4,675) (8,090) (4,136)<br />
Net fee and commission income 55,865 28,563 53,009 27,103<br />
Net <strong>financial</strong> income 13,347 6,824 14,714 7,523<br />
O<strong>the</strong>r operating income 7,226 3,694 2,999 1,533<br />
Operating income 212,948 108,878 194,478 99,435<br />
Administrative expenses (117,879) (60,270) (119,356) (61,026)<br />
Depreciation and amortization (9,655) (4,937) (9,235) (4,722)<br />
Operating expenses (127,534) (65,207) (128,591) (65,748)<br />
PROFIT BEFORE IMPAIRMENT LOSSES,<br />
PROVISIONS AND INCOME TAX<br />
85,414 43,671 65,887 33,687<br />
Impairment losses and provisions (40,513) (20,714) (69,497) (35,533)<br />
Recoveries 4,373 2,236 11,487 5,873<br />
PROFIT BEFORE INCOME TAX 49,274 25,193 7,877 4,027<br />
Income tax (5,421) (2,772) (2,005) (1,025)<br />
NET PROFIT FOR THE YEAR 43,853 22,421 5,872 3,002<br />
Earnings per share (in BAM) 46.18 23.61 6.18 3.16<br />
www.raiffeisenbank.ba 43
Key <strong>financial</strong> indica<strong>to</strong>rs<br />
44<br />
Key <strong>financial</strong> indica<strong>to</strong>rs<br />
At year-end<br />
www.raiffeisenbank.ba<br />
The figures shown below are ei<strong>the</strong>r extracted or recomputed from <strong>the</strong> <strong>Bank</strong>'s audited <strong>financial</strong> <strong>statements</strong>.<br />
2011<br />
(000 BAM)<br />
2010<br />
(000 BAM)<br />
2009<br />
(000 BAM)<br />
2008<br />
(000 BAM)<br />
Total assets 4,015,689 3,722,233 4,196,962 4,270,413<br />
Deposits from cus<strong>to</strong>mers 2,944,442 2,622,705 2,723,531 2,483,277<br />
Loans <strong>to</strong> cus<strong>to</strong>mers 2,306,730 2,243,190 2,315,721 2,819,874<br />
Share capital 241,861 241,861 241,861 241,861<br />
Share capital and reserves 501,101 371,924 367,006 357,610<br />
Result for <strong>the</strong> year<br />
Total income 226,464 214,055 193,008 215,398<br />
Total operating expenses 177,190 206,178 183,428 180,073<br />
Profit before tax 49,274 7,877 9,580 35,325<br />
Profit after tax 43,853 5,872 8,364 27,583<br />
Ratios<br />
Return on assets 1.3% 0.2% 0.2% 0.7%<br />
Return on equity 10.0% 1.6% 2.3% 9.5%<br />
Cost/income ratio 59.9% 66.1% 69.1% 64.6%<br />
At year-end<br />
2011<br />
(000 EUR)<br />
2010<br />
(000 EUR)<br />
2009<br />
(000 EUR)<br />
2008<br />
(000 EUR)<br />
Total assets 2,053,189 1,903,148 2,145,873 2,183,427<br />
Deposits from cus<strong>to</strong>mers 1,505,469 1,340,968 1,392,519 1,269,679<br />
Loans <strong>to</strong> cus<strong>to</strong>mers 1,179,412 1,146,925 1,184,009 1,441,779<br />
Share capital 123,662 123,662 123,662 123,662<br />
Share capital and reserves 256,209 190,162 187,647 182,843<br />
Result for <strong>the</strong> year<br />
Total income 115,789 109,445 98,683 110,131<br />
Total operating expenses 90,596 105,417 93,785 92,070<br />
Profit before tax 25,193 4,027 4,898 18,061<br />
Profit after tax 22,422 3,002 4,276 14,103<br />
Ratios<br />
Return on assets 1.3% 0.2% 0.2% 0.7%<br />
Return on equity 10.0% 1.6% 2.3% 9.5%<br />
Cost/income ratio 59.9% 66.1% 69.1% 64.6%
Total assets with loan data<br />
2011<br />
(000 BAM)<br />
2010<br />
(000 BAM)<br />
2009<br />
(000 BAM)<br />
2008<br />
(000 BAM)<br />
Key <strong>financial</strong> indica<strong>to</strong>rs<br />
2007<br />
(000 BAM)<br />
Total assets 4,015,689 3,722,233 4,196,962 4,270,413 3,799,313<br />
Loans <strong>to</strong> cus<strong>to</strong>mers 2,306,730 2,243,190 2,315,721 2,819,874 2,405,697<br />
2011<br />
(000 EUR)<br />
2010<br />
(000 EUR)<br />
2009<br />
(000 EUR)<br />
2008<br />
(000 EUR)<br />
2007<br />
(000 EUR)<br />
Total assets 2,053,189 1,903,148 2,145,873 2,183,427 1,942,558<br />
Loans <strong>to</strong> cus<strong>to</strong>mers 1,179,412 1,146,925 1,184,009 1,441,779 1,230,013<br />
www.raiffeisenbank.ba 45
Key <strong>financial</strong> indica<strong>to</strong>rs<br />
46<br />
Lending<br />
www.raiffeisenbank.ba<br />
2011<br />
(000 BAM)<br />
2011<br />
(000 EUR)<br />
2010<br />
(000 BAM)<br />
2010<br />
(000 EUR)<br />
Change<br />
%<br />
Corporate loans 1,300,668 665,021 1,216,580 622,027 6.9%<br />
Retail loans 1,280,927 654,928 1,153,610 589,831 11.0%<br />
Gross loans 2,581,595 1,319,949 2,370,190 1,211,859 8.9%<br />
Provisioning for impairment losses 274,865 140,536 127,000 64,934 116.4%<br />
Net loans 2,306,730 1,179,412 2,243,190 1,146,925 2.8%<br />
Deposits from cus<strong>to</strong>mers<br />
2011<br />
(000 BAM)<br />
2011<br />
(000 EUR)<br />
2010<br />
(000 BAM)<br />
2010<br />
(000 EUR)<br />
2009<br />
(000 BAM)<br />
2009<br />
(000 EUR)<br />
2008<br />
(000 BAM)<br />
2008<br />
(000 EUR)<br />
Corporate deposits 1,172,076 599,273 958,899 490,277 1,197,151 612,094 1,113,403 569,274<br />
Retail deposits 1,772,366 906,196 1,663,806 850,690 1,526,380 780,426 1,369,874 700,405
Total income (with structure)<br />
2011<br />
(000 BAM)<br />
2010<br />
(000 BAM)<br />
2009<br />
(000 BAM)<br />
2008<br />
(000 BAM)<br />
Key <strong>financial</strong> indica<strong>to</strong>rs<br />
2007<br />
(000 BAM)<br />
Total income 226,464 214,055 193,008 215,398 199,707<br />
Net interest income 136,510 123,756 117,702 137,858 122,997<br />
Commission income 65,008 61,099 55,107 57,353 51,194<br />
O<strong>the</strong>r operating income 24,946 29,200 20,199 20,187 25,516<br />
2011<br />
(000 EUR)<br />
2010<br />
(000 EUR)<br />
2009<br />
(000 EUR)<br />
2008<br />
(000 EUR)<br />
2007<br />
(000 EUR)<br />
Total income 115,789 109,445 98,683 110,131 102,109<br />
Net interest income 69,796 63,275 60,180 70,486 62,887<br />
Commission income 33,238 31,239 28,176 29,324 26,175<br />
O<strong>the</strong>r operating income 12,755 14,930 10,328 10,321 13,046<br />
www.raiffeisenbank.ba 47
Key <strong>financial</strong> indica<strong>to</strong>rs<br />
48<br />
Comparison of operating expenses and <strong>to</strong>tal income<br />
www.raiffeisenbank.ba<br />
2011<br />
(000 BAM)<br />
2010<br />
(000 BAM)<br />
2009<br />
(000 BAM)<br />
2008<br />
(000 BAM)<br />
2007<br />
(000 BAM)<br />
Total operating expenses 177,190 206,178 183,428 180,073 169,206<br />
Total income 226,464 214,055 193,008 215,398 199,707<br />
2011<br />
(000 EUR)<br />
2010<br />
(000 EUR)<br />
2009<br />
(000 EUR)<br />
2008<br />
(000 EUR)<br />
2007<br />
(000 EUR)<br />
Total operating expenses 90,596 105,417 93,785 92,070 86,514<br />
Total income 115,789 109,445 98,683 110,131 102,109
Corporate <strong>Bank</strong>ing<br />
Corporate <strong>Bank</strong>ing<br />
Although 2011 was generally described as a difficult year with many challenges and uncertainties, <strong>the</strong><br />
Corporate Division of <strong>Raiffeisen</strong> <strong>Bank</strong> achieved satisfac<strong>to</strong>ry results again this year.<br />
Total assets remained at <strong>the</strong> same level as in <strong>the</strong> previous year and non-performing loans were maintained<br />
at a satisfac<strong>to</strong>ry level. Despite <strong>the</strong> liquidity squeeze in <strong>the</strong> market, <strong>the</strong> deposits base increased<br />
by 6.5 per cent.<br />
Thanks <strong>to</strong> sound management and ongoing control of costs, <strong>Raiffeisen</strong> <strong>Bank</strong> managed <strong>to</strong> improve its<br />
Cost/Income Ratio by 2 per cent compared with that of 2010.<br />
Recognizing <strong>the</strong> development objective of <strong>the</strong> EAF World <strong>Bank</strong> and <strong>the</strong> RS Investment <strong>Bank</strong>’s Project<br />
aimed at facilitating access <strong>to</strong> SME financing in Bosnia and Herzegovina, <strong>Raiffeisen</strong> BANK d.d. Bosna<br />
i Hercegovina has enhanced its product offer with ano<strong>the</strong>r product from this project. From this credit<br />
line, <strong>Raiffeisen</strong> <strong>Bank</strong> has financed loans for projects implemented by SMEs and o<strong>the</strong>r companies that<br />
stimulate growth in <strong>the</strong> regional economy, create jobs and raise exports. Additionally, SMEs and o<strong>the</strong>r<br />
companies that are also engaged in agro-processing, food production, general industrial production,<br />
and provide services that create added value are also financed loans by <strong>Raiffeisen</strong> <strong>Bank</strong>.<br />
In <strong>the</strong> Cash Management, <strong>the</strong> focus in 2011 was on <strong>the</strong> following products:<br />
• RBBHnet – Corporate Online <strong>Bank</strong>ing – improvement of Corporate Online <strong>Bank</strong>ing products in<br />
order <strong>to</strong> achieve STP (straight <strong>to</strong> process) order processing<br />
• Swift MT 940 – new functionalities: multiple message; swift MT 940 SEPA standard, au<strong>to</strong>matic<br />
processing of Swift MT 940<br />
• SWIFT SCORE (The Standardized Corporate Environment) – this service enables <strong>Raiffeisen</strong> <strong>Bank</strong><br />
<strong>to</strong> exchange SWIFT messages with cus<strong>to</strong>mers via <strong>the</strong> SWIFT network. The cus<strong>to</strong>mer can forward<br />
SWIFT messages <strong>to</strong> <strong>Raiffeisen</strong> <strong>Bank</strong> via SWIFT and also use SWIFT messages at <strong>the</strong> SCORE level.<br />
With this service <strong>Raiffeisen</strong> <strong>Bank</strong> offers its cus<strong>to</strong>mers <strong>to</strong> send payment orders through <strong>the</strong> MT 101<br />
message send reports on changes and account balances in <strong>the</strong> form of <strong>the</strong> MT 940 message<br />
and exchange non-<strong>financial</strong> MT 199 messages<br />
The CRM project (Cus<strong>to</strong>mer Relationship Management) for corporate cus<strong>to</strong>mers was successfully implemented<br />
in 2011, which helped in <strong>the</strong> improvement of sales quality. A special focus in 2011 was on<br />
X-sale activities.<br />
By dealing fairly with our cus<strong>to</strong>mers and providing <strong>the</strong>m with <strong>financial</strong> support, <strong>Raiffeisen</strong> <strong>Bank</strong> not only<br />
managed <strong>to</strong> retain existing cus<strong>to</strong>mers but acquired new cus<strong>to</strong>mers, thus ending 2011 with more than<br />
a <strong>to</strong>tal of 5,500 cus<strong>to</strong>mers in our base.<br />
www.raiffeisenbank.ba 49
SME – Small & Micro Clients<br />
50<br />
SME – Small & Micro Clients<br />
www.raiffeisenbank.ba<br />
The Small & Micro Clients segment or SME of <strong>Raiffeisen</strong> <strong>Bank</strong> includes legal entities or groups of connected<br />
cus<strong>to</strong>mers (GCC), whose annual revenues are less than EUR 2.5 million (BAM 5 million) and<br />
where exposure is lower than EUR 1 million (BAM 2 million).<br />
The SME Excellence project was finalized in 2011, by which a cus<strong>to</strong>mer sub-segmentation was established<br />
in <strong>the</strong> SME segment. <strong>Raiffeisen</strong> <strong>Bank</strong> in Bosnia and Herzegovina is <strong>the</strong> first bank in <strong>the</strong> RBI network<br />
that has successfully realized this project.<br />
The SME cus<strong>to</strong>mer sub-segmentation was carried out with <strong>the</strong> following goals:<br />
• Building lasting relations with affluent cus<strong>to</strong>mers<br />
• Improving and streng<strong>the</strong>ning cus<strong>to</strong>mer relations<br />
• Identifying existing cus<strong>to</strong>mers and potential cus<strong>to</strong>mers from o<strong>the</strong>r banks with whom we intend<br />
<strong>to</strong> build long-term business relations<br />
• Developing new <strong>to</strong>ols for creating target groups and for cus<strong>to</strong>mer communication<br />
The SME cus<strong>to</strong>mer’s sub-segmentation was based on <strong>the</strong> following criteria:<br />
• Total annual revenues generated by <strong>Raiffeisen</strong> <strong>Bank</strong> per cus<strong>to</strong>mer<br />
• Total annual turnover of <strong>the</strong> cus<strong>to</strong>mer accounts at <strong>Raiffeisen</strong> <strong>Bank</strong><br />
• Total risk exposure at <strong>Raiffeisen</strong> <strong>Bank</strong><br />
• Total amount of term deposits<br />
Based on <strong>the</strong>se criteria, <strong>Raiffeisen</strong> <strong>Bank</strong>’s SME cus<strong>to</strong>mers were sub-segmented in<strong>to</strong> Premium, Standard<br />
and Marginal.<br />
We have defined and established a strategy for each individual sub-segment, through product and service<br />
offers, pricing policies, and cus<strong>to</strong>mer communication channels.<br />
For <strong>the</strong> individual sub-segments, a series of CRM campaigns were carried out in 2011, as well as a marketing<br />
campaign <strong>to</strong> promote Refinancing Loans.<br />
In order <strong>to</strong> meet <strong>the</strong> demands of our cus<strong>to</strong>mers, we have focused on continued service quality improvement,<br />
development of new products while making improvements <strong>to</strong> existing products for legal entities,<br />
<strong>the</strong> SME segments, as well as tailoring our products <strong>to</strong> <strong>the</strong> needs of <strong>the</strong> market and optimizing<br />
processes.<br />
By providing high-quality staff services and granting financing <strong>to</strong> our cus<strong>to</strong>mers, we managed not only<br />
<strong>to</strong> retain existing cus<strong>to</strong>mers, but also <strong>to</strong> acquire new ones, thus ending 2011 with more than 9,000 cus<strong>to</strong>mers<br />
in our base.
Loans<br />
(000 BAM) 2010<br />
Development of <strong>the</strong> loan and deposit portfolios (Micro segment):<br />
SME – Small & Micro Clients<br />
The focus in <strong>the</strong> SME business in 2011 was on retaining portfolio quality while closely moni<strong>to</strong>ring cus<strong>to</strong>mer<br />
relationships.<br />
Jan<br />
2011<br />
Feb<br />
2011<br />
Mar<br />
2011<br />
Apr<br />
2011<br />
May<br />
2011<br />
Short-term loans 42,911 43,721 44,395 44,162 44,145 44,093 44,032 43,402 43,012 43,072 42,762 43,415 43,025<br />
Long-term loans 52,363 51,820 51,713 52,695 52,918 52,191 51,803 51,445 51,054 51,151 52,031 51,811 51,886<br />
Total 95,274 95,541 96,108 96,857 97,063 96,284 95,835 94,847 94,066 94,223 94,793 95,226 94,911<br />
Jun<br />
2011<br />
Jul<br />
2011<br />
Aug<br />
2011<br />
Sep<br />
2011<br />
Oct<br />
2011<br />
Nov<br />
2011<br />
Dec<br />
2011<br />
www.raiffeisenbank.ba 51
SME – Small & Micro Clients<br />
52<br />
Portfolio structure 2011 – MICRO segment<br />
Deposits<br />
(000 BAM) 2010<br />
www.raiffeisenbank.ba<br />
Jan<br />
2011<br />
Feb<br />
2011<br />
Mar<br />
2011<br />
Apr<br />
2011<br />
May<br />
2011<br />
Sight deposits 64,878 62,191 59,842 57,332 55,761 57,414 59,991 62,505 61,052 61,414 63,413 61,641 65,520<br />
Term deposits 5,490 5,445 5,117 4,978 4,880 4,450 4,431 4,210 4,292 4,260 4,178 4,048 4,030<br />
Total 70,368 67,636 64,959 62,310 60,641 61,864 64,422 66,715 65,344 65,674 67,591 65,689 69,550<br />
Jun<br />
2011<br />
Jul<br />
2011<br />
Aug<br />
2011<br />
Sep<br />
2011<br />
Oct<br />
2011<br />
Nov<br />
2011<br />
Dec<br />
2011
Loans<br />
(000 BAM) 2010<br />
Development of <strong>the</strong> loan and deposit portfolios (SE segment):<br />
SME – Small & Micro Clients<br />
In <strong>the</strong> SE segment, <strong>the</strong> beginning of <strong>the</strong> year 2011 was marked by a re-segmentation in<strong>to</strong> Corporate<br />
– CMM, placing <strong>the</strong> focus on affluent SE cus<strong>to</strong>mers and maintaining <strong>the</strong> portfolio quality by moni<strong>to</strong>ring<br />
cus<strong>to</strong>mer relationships.<br />
Jan<br />
2011<br />
Feb<br />
2011<br />
Mar<br />
2011<br />
Apr<br />
2011<br />
May<br />
2011<br />
Short-term loans 65,818 66,133 69,465 65,731 66,070 66,562 69,202 67,614 65,422 66,642 65,488 64,119 66,195<br />
Long-term loans 113,641 111,916 108,522 100,281 99,320 98,366 97,510 96,238 98,337 98,545 97,361 96,317 93,874<br />
Total 179,459 178,049 177,987 166,012 165,390 164,928 166,712 163,852 163,759 165,187 162,849 160,436 160,069<br />
Jun<br />
2011<br />
Jul<br />
2011<br />
Aug<br />
2011<br />
Sep<br />
2011<br />
Oct<br />
2011<br />
Nov<br />
2011<br />
Dec<br />
2011<br />
www.raiffeisenbank.ba 53
SME – Small & Micro Clients<br />
54<br />
Portfolio structure 2011 – SE segment<br />
Deposits<br />
(000 BAM) 2010<br />
www.raiffeisenbank.ba<br />
Jan<br />
2011<br />
Feb<br />
2011<br />
Mar<br />
2011<br />
Apr<br />
2011<br />
May<br />
2011<br />
Sight deposits 52,682 48,452 45,581 52,697 45,694 45,550 45,439 48,209 46,636 46,446 49,456 51,969 54,402<br />
Term deposits 5,153 5,054 4,923 3,860 3,845 4,529 4,172 3,938 3,959 3,941 4,003 3,944 4,719<br />
Total 57,835 53,506 50,504 56,557 49,539 50,079 49,611 52,147 50,595 50,387 53,459 55,913 59,121<br />
Jun<br />
2011<br />
Jul<br />
2011<br />
Aug<br />
2011<br />
Sep<br />
2011<br />
Oct<br />
2011<br />
Nov<br />
2011<br />
Dec<br />
2011
Retail <strong>Bank</strong>ing<br />
PI deposit portfolio<br />
In <strong>the</strong> Retail Segment, <strong>Raiffeisen</strong> <strong>Bank</strong> is constantly working <strong>to</strong> fur<strong>the</strong>r improve service quality, introduce<br />
new products and tailor existing products <strong>to</strong> its cus<strong>to</strong>mers’ needs. The focus is on state-of-<strong>the</strong>-art technology<br />
solutions in modern banking, specifically for <strong>the</strong> deposit, credit, and card business areas.<br />
To address <strong>the</strong> needs of our most distinguished cus<strong>to</strong>mers, we have created <strong>Raiffeisen</strong> Premium <strong>Bank</strong>ing,<br />
which is based on a proactive approach <strong>to</strong> <strong>the</strong> needs of our Premium cus<strong>to</strong>mers.<br />
Deposits from private individuals<br />
In <strong>the</strong> deposit business area, <strong>to</strong>tal savings of private individuals grew in 2011 by 6.5 per cent compared<br />
with that of 2010.<br />
This growth was <strong>the</strong> result of our ongoing efforts <strong>to</strong> preserve our cus<strong>to</strong>mers’ trust in <strong>the</strong> safety of <strong>the</strong>ir<br />
deposits. The following activities are particularly noteworthy:<br />
• Establishing <strong>the</strong> Loyalty Program – a strategy <strong>to</strong> keep existing term deposits in <strong>the</strong> <strong>Bank</strong><br />
• Quarterly CRM actions aimed at routing free funds from a-vista accounts <strong>to</strong> term deposit accounts<br />
• Launching <strong>the</strong> promotional savings product Bonus Savings, which was covered by <strong>the</strong> marketing<br />
campaign, Save and earn more!<br />
These activities not only increased <strong>the</strong> volume of term deposits, but also improved <strong>the</strong>ir maturity structure,<br />
as attractive prices for longer terms were offered. As a result, long-term savings rose by 7.6 per<br />
cent compared with that of <strong>the</strong> previous year.<br />
(000 BAM) 2008 2009 growth in % 2010 growth in % 2011 growth in %<br />
Short-term savings 89,979 152,664 69.7% 89,424 -41.4% 67,830 -24.2%<br />
Long-term savings 827,426 933,983 12.9% 976,968 4.6% 1,051,432 7.6%<br />
Sight deposits 450,901 438,248 -2.8% 595,892 36.0% 651,229 9.3%<br />
Purpose deposits 1,909 1,516 -20.6% 1,577 4.0% 2,085 32.2%<br />
Total 1,370,215 1,526,411 11.4% 1,663,861 9.0% 1,772,576 6.5%<br />
Retail <strong>Bank</strong>ing<br />
www.raiffeisenbank.ba 55
Retail <strong>Bank</strong>ing<br />
56<br />
Structure of deposits by private individuals<br />
www.raiffeisenbank.ba<br />
Private lending<br />
In <strong>the</strong> course of 2011, <strong>Raiffeisen</strong> <strong>Bank</strong> increased <strong>the</strong> overall loan portfolio by 4.1 per cent and <strong>the</strong> new<br />
lending volume by 77 per cent. This was mainly due <strong>to</strong> <strong>the</strong> launch of new loan products, marketing campaigns<br />
for new and existing products and ongoing CRM approach <strong>to</strong> existing cus<strong>to</strong>mers.<br />
The following new loan products were introduced in 2011:<br />
• <strong>Raiffeisen</strong> Integral Refinancing Loan<br />
Intended <strong>to</strong> refinance existing debt with o<strong>the</strong>r banks and with <strong>Raiffeisen</strong> <strong>Bank</strong><br />
• “Flexi” Housing Loan<br />
Provides flexible financing <strong>to</strong> purchase a home, with special cus<strong>to</strong>mer benefits<br />
• “XS” Non-Purpose Loan<br />
Without guaran<strong>to</strong>rs, a loan combined with <strong>the</strong> “MasterCard Shopping Card” credit card<br />
The <strong>to</strong>tal volume of loan products was slightly above BAM 462 million. The loan portfolio was dominated<br />
by non-purpose loans with a 76.7 per cent share, followed by mortgage loans, Lombard loans<br />
and purpose loans with shares of 11.1 per cent, 4.7 per cent and 7.3 per cent, respectively. The best<br />
selling products from <strong>the</strong> non-purpose loan offer were <strong>the</strong> “XXL non-purpose loan without guaran<strong>to</strong>rs”<br />
and <strong>the</strong> “Consolidation loan”, which made <strong>the</strong> main contribution <strong>to</strong> <strong>to</strong>tal lending in 2011, with 40 per<br />
cent or BAM 185 million, and 21.7 per cent or BAM 100 million, respectively.
PI loan portfolio<br />
(000 BAM) 2008 2009 growth in % 2010 growth in % 2011 growth in %<br />
Short-term loans 17,106 9,111 -46.7% 8,262 -9.3% 9,194 11.3%<br />
Long-term loans 1,385,920 1,150,351 -17.0% 1,055,916 -8.2% 1,100,699 4.2%<br />
Card products 73,711 90,683 23.0% 90,442 -0.3% 92,330 2.1%<br />
Total 1,476,737 1,250,145 -15.3% 1,154,620 -7.6% 1,202,223 4.1%<br />
Structure of <strong>the</strong> PI loan portfolio<br />
Neutral Business<br />
In <strong>the</strong> neutral business area, significant results were achieved in 2011, in particular in <strong>the</strong> exchange office<br />
business. Exchange transactions increased by 10.2 per cent compared <strong>to</strong> 2010, which was primarily<br />
due <strong>to</strong> contract signing with <strong>the</strong> allocation of new authorized exchange offices in 2011. This drove<br />
up <strong>the</strong> commission income from <strong>the</strong> money-exchange business by 38.6 per cent compared <strong>to</strong> 2010.<br />
Fast money transfer and receipt via <strong>the</strong> Western Union system plays a key role in <strong>the</strong> neutral business<br />
segment. Despite <strong>the</strong> recession and <strong>the</strong> negative market development across <strong>the</strong> world, Western Union<br />
continues its upward trend in transactions with <strong>the</strong> <strong>Bank</strong> and its sub-agents. Transactions increased in<br />
2011 by 8.6 per cent compared with <strong>the</strong> previous year. These outstanding results were driven by <strong>the</strong><br />
newly introduced Loyalty Program, an incentive system rewarding cus<strong>to</strong>mer loyalty in <strong>the</strong> use of Western<br />
Union’s fast money transfer and receipt services.<br />
In addition <strong>to</strong> that, <strong>the</strong>re was huge cus<strong>to</strong>mer demand for <strong>the</strong> <strong>Bank</strong>’s Account Sets, which drove up <strong>the</strong><br />
number of account sets by 24.8 per cent compared <strong>to</strong> 2010.<br />
Retail <strong>Bank</strong>ing<br />
www.raiffeisenbank.ba 57
Retail <strong>Bank</strong>ing<br />
58<br />
www.raiffeisenbank.ba<br />
Over <strong>the</strong> past two years, <strong>Raiffeisen</strong> <strong>Bank</strong> worked on updating its base of active cus<strong>to</strong>mers, that is, cus<strong>to</strong>mers<br />
using at least one of our products. In this regard, a new application was implemented in 2011,<br />
which allows moni<strong>to</strong>ring <strong>the</strong> number of cus<strong>to</strong>mers according <strong>to</strong> <strong>the</strong>ir status. This is a new <strong>to</strong>ol in <strong>the</strong> cus<strong>to</strong>mer<br />
relationship management area.<br />
<strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina serviced nearly 600,000 private individuals as per year-end<br />
2011.<br />
Card Business<br />
The card portfolio continued <strong>to</strong> grow throughout 2011. The year ended with a <strong>to</strong>tal of 504,864 cards<br />
(in cumulative numbers), with 57,688 cards issued in 2011 alone. This translates in<strong>to</strong> a growth of 10.9<br />
per cent compared <strong>to</strong> 2010.<br />
The strongest growth drivers were credit cards (Revolving and Charge cards) and business cards, which<br />
grew by 14.4 per cent and 12.9 per cent, respectively.<br />
The card business area registered an annual growth of newly issued cards of 10.9 per cent, with credit<br />
cards growing by 64.2 per cent.<br />
The increase in <strong>the</strong> number of credit cards issued was driven by <strong>the</strong> new product MasterCard Shopping<br />
Card. With its many features and benefits, <strong>the</strong> card proved <strong>to</strong> be an attractive product as it enables cus<strong>to</strong>mers<br />
<strong>to</strong> pay in installments without any fees and interest; in addition, get extended warranties for <strong>the</strong><br />
goods purchased with <strong>the</strong> card.<br />
A significant contribu<strong>to</strong>ry fac<strong>to</strong>r <strong>to</strong> <strong>the</strong> number of debit cards issued was an action for acquisition of public<br />
sec<strong>to</strong>r entities and corporate entities <strong>to</strong> pay staff salaries in<strong>to</strong> accounts linked <strong>to</strong> debit cards.<br />
From <strong>the</strong> vast range of new products/services presented during 2011, <strong>the</strong> following products/services<br />
should be noted:<br />
• MasterCard Business Revolving Card<br />
The first business revolving card in <strong>the</strong> local market<br />
• E–Statement Service<br />
A new service allowing private cus<strong>to</strong>mers <strong>to</strong> view <strong>statements</strong> on all active card accounts online;<br />
it comes with an archive with <strong>the</strong> last six <strong>statements</strong>, and <strong>the</strong> option <strong>to</strong> receive <strong>statements</strong> by email<br />
Distribution Channels<br />
While <strong>the</strong> period from 2002 <strong>to</strong> 2008 was characterised by an extensive expansion of <strong>the</strong> business outlet<br />
network, <strong>the</strong> years 2009, 2010 and 2011, in <strong>the</strong> light of <strong>the</strong> market environment, were shaped by<br />
consolidation through which <strong>the</strong> <strong>Bank</strong> achieved an optimum number of business outlets.<br />
As of 31 December 2011, <strong>the</strong> <strong>Bank</strong> had a business outlet network of 92 branches offering products and<br />
services <strong>to</strong> cus<strong>to</strong>mers, and six regional branches acting as hubs of <strong>the</strong> <strong>Bank</strong>’s business network.<br />
Regional branches were established in <strong>the</strong> country’s large administration and political centres <strong>to</strong> provide<br />
<strong>the</strong> branch network with administrative and professional support.<br />
Over <strong>the</strong> course of <strong>the</strong> year, <strong>the</strong> <strong>Bank</strong> also worked on expanding its network of POS, ATMs, info terminals<br />
and alternative sales channels by adding new retailers and car dealers <strong>to</strong> its agent sales network.
Development of <strong>the</strong> business outlet network from 2006 <strong>to</strong> 2011<br />
Geographical distribution of business outlets<br />
Retail <strong>Bank</strong>ing<br />
www.raiffeisenbank.ba 59
Retail <strong>Bank</strong>ing<br />
60<br />
Structure of business outlets across <strong>the</strong> years<br />
www.raiffeisenbank.ba<br />
Quality Management<br />
Services and Data Quality<br />
Introduced in 2009, in line with expectations, <strong>the</strong> quality indica<strong>to</strong>r served as a good starting point for<br />
identifying weaknesses in <strong>Raiffeisen</strong> <strong>Bank</strong>’s network of business outlets and its continued development.<br />
Based on quality indica<strong>to</strong>r reports and reports on mystery shopping–carried out twice a year, plans<br />
were prepared for bank branches that had failed <strong>to</strong> meet <strong>the</strong> set threshold. For <strong>the</strong> first time, mystery<br />
calls were carried out this year <strong>to</strong> bank branches, Call Centers, SE account managers, and virtual managers.<br />
Towards <strong>the</strong> end of 2011, actions were taken <strong>to</strong> improve <strong>the</strong> quality indica<strong>to</strong>r, such as introducing new<br />
parameters and applying <strong>the</strong> quality indica<strong>to</strong>r <strong>to</strong> each employee where feasible. Additionally, Call Centers<br />
and Electronic Sales Channels are both about <strong>to</strong> be included in<strong>to</strong> this new quality index calculation<br />
methodology.<br />
The activities in <strong>the</strong> area of data quality improvement continued in 2011. Beside <strong>the</strong> regular activities<br />
of updating cus<strong>to</strong>mer data, a new application was implemented in August 2011 with <strong>the</strong> aim at additionally<br />
improving <strong>the</strong> quality of data entries.<br />
We would like <strong>to</strong> stress <strong>the</strong> fact that improvement in cus<strong>to</strong>mer service quality is ongoing, e.g., staff training<br />
and awareness of <strong>the</strong> significance of data quality and its impact on business results.
Alternative Sales Channels<br />
Card Acquiring at Point of Sale (POS) and Au<strong>to</strong>mated Teller Machines (ATMs)<br />
In 2011 <strong>the</strong> Card Acquiring Unit at <strong>Raiffeisen</strong> <strong>Bank</strong> continued its activities in <strong>the</strong> area of service quality<br />
improvement. The implementation of additional reforms enabled <strong>the</strong> acquiring of Credit Card Services<br />
Diner’s and American Express, respectfully. Additionally, prepaid charge-up was made possible at<br />
Au<strong>to</strong>mated Teller Machines (ATMs) for all telecommunication opera<strong>to</strong>rs in Bosnia and Herzegovina.<br />
These purchases and reforms, <strong>to</strong>ge<strong>the</strong>r with <strong>the</strong> replacement of Point of Sale (POS) terminals by stateof-<strong>the</strong>-art<br />
Hypercom terminals, helped us not only <strong>to</strong> increase our competitive advantage in <strong>the</strong> market<br />
but also <strong>to</strong> create ideal fiscal preconditions <strong>to</strong> fur<strong>the</strong>r increase <strong>Raiffeisen</strong> <strong>Bank</strong>’s market share. At<br />
<strong>the</strong> end of 2011, turnover grew by 36.9 per cent, fees by 29.2 per cent and <strong>the</strong> number of transactions<br />
at merchants’ POS terminals by 44.3 per cent, this as compared <strong>to</strong> 2010.<br />
As of 31 December 2011, <strong>Raiffeisen</strong> <strong>Bank</strong> had a network of 1,859 merchants, 4,684 POS terminals<br />
and 3,971 Sales Points. Additionally, <strong>the</strong> number of Au<strong>to</strong>mated Teller Machines (ATMs) was reported at<br />
201.<br />
These results allowed <strong>Raiffeisen</strong> <strong>Bank</strong> <strong>to</strong> fur<strong>the</strong>r streng<strong>the</strong>n its leading position in <strong>the</strong> local market with<br />
a market share of 36 per cent (source: VISA).<br />
While continually improving its cus<strong>to</strong>mer relations, <strong>the</strong> Card Acquiring Unit at <strong>Raiffeisen</strong> <strong>Bank</strong> launched<br />
a new service, <strong>the</strong> first of its kind, called <strong>Raiffeisen</strong> E-Pay. Introduced in <strong>the</strong> local market, <strong>Raiffeisen</strong><br />
E-Pay allows card acquisition at internet points of sale. <strong>Raiffeisen</strong> E-Pay was implemented <strong>to</strong>wards <strong>the</strong><br />
end of <strong>the</strong> 2011, adhering <strong>to</strong> <strong>the</strong> strictest world security standards. In doing so, <strong>Raiffeisen</strong> <strong>Bank</strong> has set<br />
emphasis on its long term goals for its banking cus<strong>to</strong>mers, market demands, and global trends.<br />
Moreover, <strong>the</strong> Card Acquiring Unit has been working <strong>to</strong> reach an optimum network of Card Acquiring<br />
Merchants since <strong>the</strong> roll-out of <strong>the</strong> MasterCard Shopping Card program. As a result, <strong>the</strong> coverage of<br />
<strong>the</strong> POS merchants’ network, with this additional functionality, was at 45 per cent as of 31 December<br />
2011.<br />
Beside <strong>the</strong> development in <strong>the</strong> area of card acquiring at POS terminals, <strong>the</strong> ATM network is constantly<br />
expanded and renewed, e.g., redesigned moni<strong>to</strong>rs were installed as part of <strong>the</strong> new ATM configuration<br />
project. The prepaid functionality at ATMs manifested positive results in 2011, by <strong>to</strong>taling 61,872<br />
transactions in <strong>the</strong> amount of BAM 417,360.2.<br />
Electronic Sales Channels<br />
In addition <strong>to</strong> <strong>the</strong> development of electronic services in 2011, <strong>the</strong> redesign of RBBHnet – Corporate Online<br />
<strong>Bank</strong>ing, brought significant progress <strong>to</strong> existing services compared with previous years, in terms<br />
of <strong>the</strong> number of users, electronic orders and SMS inquiries.<br />
Online <strong>Bank</strong>ing<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> offers online banking <strong>to</strong> both corporate and personal cus<strong>to</strong>mers. Additionally, personal<br />
cus<strong>to</strong>mers can choose between <strong>Raiffeisen</strong> Direct NET, with authorization via mini <strong>to</strong>ken; and <strong>Raiffeisen</strong><br />
NET via SMS, with authorization via a SMS password.<br />
Retail <strong>Bank</strong>ing<br />
www.raiffeisenbank.ba 61
Retail <strong>Bank</strong>ing<br />
62<br />
www.raiffeisenbank.ba<br />
Compared <strong>to</strong> 2010, at <strong>the</strong> close of 2011 <strong>the</strong> number of Corporate Online <strong>Bank</strong>ing cus<strong>to</strong>mers grew by<br />
approximately 11 per cent and <strong>the</strong> number of Personal Online <strong>Bank</strong>ing cus<strong>to</strong>mers grew by 23,767.<br />
Special attention in 2011 was paid <strong>to</strong> <strong>the</strong> analysis of <strong>the</strong> number of orders carried out through <strong>the</strong>se<br />
channels. Electronic orders accounted for 40.4 per cent of all domestic payment orders carried out in<br />
2011.<br />
This remarkable result was due, above all, <strong>to</strong> <strong>the</strong> continuous increase in cus<strong>to</strong>mer orders. Compared<br />
with 2010, domestic payment orders by corporate cus<strong>to</strong>mers grew by 10 per cent and 23 per cent for<br />
private individuals.<br />
<strong>Raiffeisen</strong> Direct SMS Service<br />
The number of <strong>Raiffeisen</strong> Direct SMS cus<strong>to</strong>mers, which s<strong>to</strong>od at 60,729 at <strong>the</strong> end of 2011, clearly<br />
shows that our cus<strong>to</strong>mers have recognized <strong>the</strong> benefits of this service. The number of generated SMS<br />
inquiries on account balances and <strong>the</strong> year-by-year increase of 47 per cent in this service illustrates that<br />
this is vitally utilized service.<br />
Agents and Co-operations<br />
The Agents and Co-operations Unit enacted reforms again in 2011 <strong>to</strong> make banking with <strong>Raiffeisen</strong><br />
<strong>Bank</strong> easier for banking cus<strong>to</strong>mers.<br />
In 2011 <strong>the</strong> number of direct sales agents (mobile bankers), whose task it is <strong>to</strong> make lending services<br />
available for cus<strong>to</strong>mers “24/7 at <strong>the</strong>ir doorstep” increased by 290 per cent. This enabled cus<strong>to</strong>mers <strong>to</strong><br />
apply for loans not only at <strong>the</strong> <strong>Raiffeisen</strong> <strong>Bank</strong> branches but also by using <strong>the</strong> services of 186 mobile<br />
bankers who are evenly distributed across Bosnia and Herzegovina.<br />
After <strong>the</strong> Foreign Exchange Law was passed in <strong>the</strong> Federation of Bosnia and Herzegovina in <strong>the</strong> last<br />
quarter of 2010, prohibiting payments in Euro and o<strong>the</strong>r foreign currencies in retail shops, <strong>the</strong> Agents<br />
and Co-operations Unit was quick <strong>to</strong> establish relations with trade centers, post offices and various<br />
travel agencies, <strong>to</strong> act as authorized exchange offices. The efforts engaged in building a network of authorized<br />
exchange offices resulted in business relations with 13 new partners. In doing so, <strong>Raiffeisen</strong><br />
<strong>Bank</strong> has enabled <strong>to</strong>urists and non-residents <strong>to</strong> easily make currency conversions in all of Bosnia and<br />
Herzegovina at hundreds of locations.<br />
Call Centers<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> Call Center opera<strong>to</strong>rs answered a <strong>to</strong>tal of 596,758 calls and 15,736 emails during<br />
2011.<br />
Although <strong>the</strong> service level indica<strong>to</strong>r of 70 per cent and <strong>the</strong> abandon rate of 7 per cent suggest a satisfac<strong>to</strong>ry<br />
quality service level, quality improvement remains ongoing.<br />
By continuing <strong>the</strong> Call Center Sales Excellence project, during which a new sales approach through <strong>the</strong><br />
Outbound Team had been implemented in 2010, this sales approach was also introduced for <strong>the</strong> Inbound<br />
Team, which means moving from <strong>the</strong> service-oriented approach <strong>to</strong> <strong>the</strong> “Service <strong>to</strong> Sale – S2S”<br />
approach, <strong>the</strong>reby exploiting <strong>the</strong> potential of <strong>the</strong> huge number of inbound calls for achieving significant<br />
sales results.
Treasury, Financial Markets<br />
and Investment <strong>Bank</strong>ing<br />
Treasury Sales and Dealing<br />
Treasury, Financial Markets and Investment <strong>Bank</strong>ing<br />
As in previous years, <strong>the</strong> foreign exchange business in 2011 was marked by high volatility caused by<br />
strong daily oscillations in <strong>the</strong> value of global currencies.<br />
One of <strong>the</strong> main activities of <strong>the</strong> Trading Department in 2011 was efficient FX risk management, while<br />
keeping its profit-orientation in <strong>the</strong> present environment.<br />
Special attention was paid <strong>to</strong> encouraging cus<strong>to</strong>mers <strong>to</strong> use <strong>the</strong> Cus<strong>to</strong>mer Desk service, which enables<br />
<strong>the</strong>m <strong>to</strong> trade with currencies at an exchange rate offer that is not only realistic but also reflects <strong>the</strong> current<br />
situation in <strong>the</strong> global <strong>financial</strong> markets.<br />
In <strong>the</strong> money markets area, we were successful in placing funds with o<strong>the</strong>r banks, by fully utilizing <strong>the</strong><br />
approved limits and making sure that <strong>the</strong> liquidity principle was always preserved.<br />
Global money markets in 2011 were shaped by strong oscillations in <strong>the</strong> development of reference interest<br />
rates. After a strong rise in <strong>the</strong> reference interest rates recorded at <strong>the</strong> beginning of <strong>the</strong> year, later<br />
in <strong>the</strong> year interest rates returned <strong>to</strong> <strong>the</strong> lower levels of <strong>the</strong> previous two years.<br />
The Trading Department continued <strong>to</strong> play an active role in <strong>the</strong> FX and cash trading areas, striving <strong>to</strong><br />
intensify cash purchases from local banks, in order <strong>to</strong> remain a leader in this business area.<br />
Funding and Financial Institutions<br />
In 2011 Funding and Financial Institutions focused its funding activities on using special-purpose credit<br />
lines with an energy efficiency component made available by <strong>the</strong> European <strong>Bank</strong> for Reconstruction and<br />
Development (EBRD) and KfW (Kreditanstalt für Wiederaufbau). Ano<strong>the</strong>r key activity was concluding<br />
loan facility agreements with <strong>the</strong> Foundation for Sustainable Development (ODRAZ) from a World <strong>Bank</strong><br />
credit line, based on a Framework Agreement signed earlier.<br />
The funding portfolio was expanded in 2011, by signing two credit line agreements with <strong>the</strong> European<br />
Fund for South-East Europe (EFSE) in June 2011. Both facilities are long-term in nature, one is intended<br />
for housing loans in <strong>the</strong> amount of EUR 15 million and <strong>the</strong> o<strong>the</strong>r for micro and small enterprises in <strong>the</strong><br />
amount of EUR 5 million. In addition <strong>to</strong> that, we finalized our negotiations with <strong>the</strong> OPEC Fund for International<br />
Development (OFID) on new funding for privately owned companies and signed a loan<br />
agreement worth EUR 10 million <strong>to</strong>ward <strong>the</strong> end of <strong>the</strong> year.<br />
At <strong>the</strong> end of <strong>the</strong> year, our funding portfolio was structured as follows:<br />
• Development banks and institutions with a share of 30.1 per cent<br />
• Supranational <strong>financial</strong> institutions with a share of 30.3 per cent<br />
• Our mo<strong>the</strong>r bank and Group members with a share of 39.6 per cent<br />
In <strong>the</strong> correspondent banking area, <strong>the</strong> focus in 2011 was on optimizing our network of intermediary<br />
banks and improving <strong>the</strong> international payment terms for our cus<strong>to</strong>mers and <strong>Raiffeisen</strong> <strong>Bank</strong>, by good<br />
business relations and intense negotiations with <strong>the</strong> key intermediary banks.<br />
In addition <strong>to</strong> that, we expanded our base of correspondent banks and banks with whom we perform<br />
trade finance business.<br />
www.raiffeisenbank.ba 63
Treasury, Financial Markets and Investment <strong>Bank</strong>ing<br />
64<br />
www.raiffeisenbank.ba<br />
Investment <strong>Bank</strong>ing<br />
Again in 2011, Bosnia & Herzegovina’s capital market was shaped by negative trends, marked by a<br />
drop of <strong>the</strong> blue-chip index along with extremely low liquidity in <strong>the</strong> secondary market. Although <strong>to</strong>tal<br />
turnover on <strong>the</strong> local s<strong>to</strong>ck exchanges recorded significant growth, reaching BAM 244 million (by 125<br />
per cent) on <strong>the</strong> Sarajevo S<strong>to</strong>ck Exchange (SASE) and BAM 425.5 million (by 141.5 per cent) on <strong>the</strong><br />
Banja Luka S<strong>to</strong>ck Exchange (BLSE), this growth resulted merely from <strong>the</strong> development of <strong>the</strong> primary<br />
market for debt instruments issued by <strong>the</strong> Finance Ministries of both entities, which generated high 50<br />
per cent of <strong>the</strong> <strong>to</strong>tal turnover.<br />
Regular bond trading on SASE and BLSE<br />
In 2011, SASE successfully carried out two auctions for six-month treasury bills of <strong>the</strong> FB&H Ministry of<br />
Finance in <strong>the</strong> amount of BAM 90 million, while BLSE held three auctions for treasury bills in <strong>the</strong> amount<br />
of BAM 121.8 million and seven-year bonds in <strong>the</strong> amount of BAM 120 million. The average yields at<br />
which <strong>the</strong> Finance Ministries of <strong>the</strong> two entities collected <strong>the</strong>se amounts were extremely low and far<br />
below <strong>the</strong> average market values in <strong>the</strong> region, with an average yield <strong>to</strong> maturity between 2.3 per cent<br />
and 3.4 per cent for treasury bills and 6.8 per cent for long-term seven-year bonds.<br />
Additionally, due <strong>to</strong> <strong>the</strong> continuously high risk aversion on <strong>the</strong> part of foreign inves<strong>to</strong>rs and weak demand,<br />
regular share trading was shaped by extremely poor liquidity. SASE achieved a turnover of just<br />
BAM 83.6 million and BLSE of BAM 83.6 million, which caused both blue-chip indices <strong>to</strong> decline. The<br />
blue chip indices SASX-10 and BIRS recorded much higher losses than in <strong>the</strong> previous year, of 16.3 per<br />
cent and 8.3 per cent, respectively.
Indices: SASX-10, BIFX, BIRS, FIRS<br />
Treasury, Financial Markets and Investment <strong>Bank</strong>ing<br />
Despite <strong>the</strong> negative trends in <strong>the</strong> local capital market, 2011 was ano<strong>the</strong>r successful year for <strong>the</strong> Investment<br />
<strong>Bank</strong>ing Department, as both income and <strong>the</strong> number of cus<strong>to</strong>mers increased in almost every<br />
business area.<br />
The merger of <strong>Raiffeisen</strong> BROKERS d.o.o. in<strong>to</strong> <strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina, aimed at improving<br />
<strong>the</strong> quality and efficiency of brokerage services, was successfully completed in May 2011. With<br />
this merger, <strong>Raiffeisen</strong> <strong>Bank</strong> brings under one roof all <strong>the</strong> brokerage services in domestic and foreign<br />
capital markets. Cus<strong>to</strong>mers will benefit from being able <strong>to</strong> access our bundled and optimized products<br />
and services from a single competent source–<strong>the</strong> Investment <strong>Bank</strong>ing Department. Within <strong>the</strong> next step,<br />
treasury, <strong>financial</strong> markets, and investment banking activities were joined in<strong>to</strong> a single division in Oc<strong>to</strong>ber<br />
2011 and security intermediation activities are now organized within <strong>the</strong> following teams of <strong>the</strong><br />
Investment <strong>Bank</strong>ing Department:<br />
• Capital Markets (cus<strong>to</strong>dy, deposi<strong>to</strong>ry operations, underwriting, M&A)<br />
• Brokerage and Investment Consulting<br />
• Proprietary Business and Research and Analysis<br />
2011 was a very successful year for Capital Markets, as it managed <strong>to</strong> increase <strong>the</strong> number of its cus<strong>to</strong>mers<br />
in all business areas and increase <strong>to</strong>tal assets under cus<strong>to</strong>dy. The renowned magazine “The<br />
Global Cus<strong>to</strong>dian” recognized <strong>Raiffeisen</strong> <strong>Bank</strong>’s success in <strong>the</strong> cus<strong>to</strong>dy business, as a bank “recommended<br />
by its cus<strong>to</strong>mers” (Award for Excellence 2011). <strong>Raiffeisen</strong> <strong>Bank</strong>’s prime status was confirmed<br />
www.raiffeisenbank.ba 65
Treasury, Financial Markets and Investment <strong>Bank</strong>ing<br />
66<br />
www.raiffeisenbank.ba<br />
as it was again TOP RATED for cus<strong>to</strong>dy services. The <strong>to</strong>tal number of cus<strong>to</strong>dy accounts grew by 30 per<br />
cent and <strong>to</strong>tal assets under cus<strong>to</strong>dy by a high of 35 per cent which is strong proof of <strong>the</strong> confidence cus<strong>to</strong>mers<br />
place in <strong>Raiffeisen</strong> <strong>Bank</strong> and illustrates <strong>the</strong> increase in <strong>the</strong> number of cus<strong>to</strong>mers.<br />
In <strong>the</strong> deposi<strong>to</strong>ry business area, <strong>Raiffeisen</strong> <strong>Bank</strong> successfully performed deposi<strong>to</strong>ry deals for its existing<br />
cus<strong>to</strong>mers, as well as deposi<strong>to</strong>ry deals in <strong>the</strong> securities issue and trading area. In <strong>the</strong> fund administration<br />
area, <strong>Raiffeisen</strong> <strong>Bank</strong> focused its activities on including closed-ended investment funds in<strong>to</strong> <strong>the</strong><br />
RBBHnet service and on implementing <strong>the</strong> Chart of Account Rules. Upon <strong>the</strong> Ruling of <strong>the</strong> FB&H Securities<br />
Commission, <strong>Raiffeisen</strong> <strong>Bank</strong> ended its provisional management of <strong>the</strong> ZIF Bosfin fund on September<br />
30, 2011 and <strong>the</strong> management tasks were transferred <strong>to</strong> DUF Euro-investment d.d. Tuzla.<br />
The Brokerage team continued its activities related <strong>to</strong> <strong>the</strong> purchase and sale of securities for <strong>Raiffeisen</strong><br />
<strong>Bank</strong>’s account, thus continuing <strong>to</strong> make a significantly contribution <strong>to</strong> <strong>the</strong> <strong>Bank</strong>’s overall profitability<br />
and liquidity in 2011. After <strong>the</strong> merger of <strong>Raiffeisen</strong> BROKERS in<strong>to</strong> <strong>Raiffeisen</strong> <strong>Bank</strong> and obtaining a<br />
dealing license, <strong>the</strong> Brokerage team continued its trading activities through direct access <strong>to</strong> <strong>the</strong> Sarajevo<br />
S<strong>to</strong>ck Exchange, without intermediaries. <strong>Raiffeisen</strong> <strong>Bank</strong> participated actively in <strong>the</strong> primary and secondary<br />
securities markets, especially in <strong>the</strong> local market.<br />
With <strong>the</strong> merger of <strong>Raiffeisen</strong> BROKERS in<strong>to</strong> <strong>Raiffeisen</strong> <strong>Bank</strong>, all brokerage and investment consulting<br />
activities are now performed within <strong>Raiffeisen</strong> <strong>Bank</strong>. 2011 was a successful business year, marked by<br />
an increase in <strong>the</strong> number of cus<strong>to</strong>mers, especially in <strong>the</strong> area of forwarding brokerage orders <strong>to</strong> foreign<br />
markets. Our success was recognized by <strong>the</strong> Sarajevo S<strong>to</strong>ck Exchange, which honored our brokerage<br />
business with <strong>to</strong>p awards in three categories:<br />
• Bond trading volume<br />
• Share trading volume<br />
• Number of transactions<br />
In <strong>the</strong> category of <strong>to</strong>tal turnover <strong>Raiffeisen</strong> won second rank.<br />
The Research and Analysis Department continued <strong>to</strong> develop and expand its range of publications and<br />
specialized analyses for <strong>the</strong> needs of its investment banking cus<strong>to</strong>mers, as well as o<strong>the</strong>r cus<strong>to</strong>mers and<br />
<strong>the</strong> members of <strong>the</strong> public. The quality and reliability of publications prepared by Research and Analysis<br />
were not only recognized by <strong>the</strong> local media and <strong>the</strong> <strong>Bank</strong>’s cus<strong>to</strong>mers across all business segments<br />
but also by numerous international <strong>financial</strong> institutions and organizations.
Addresses<br />
70<br />
Head Office and Branches<br />
www.raiffeisenbank.ba<br />
Head Office Sarajevo<br />
Zmaja od Bosne bb<br />
<strong>Raiffeisen</strong> direkt info: + 387 33 75 50 10<br />
E–mail: info.rbbh@rbb-sarajevo.raiffeisen.at<br />
Internet: www.raiffeisenbank.ba<br />
Branches<br />
MB Sarajevo and<br />
Branch Centar<br />
Zmaja od Bosne bb<br />
71 000 Sarajevo<br />
Branch Novo Sarajevo<br />
Kolodvorska 12<br />
71 000 Sarajevo<br />
Branch Ilidža<br />
Rustempašina bb<br />
71 210 Ilidža<br />
Branch Pale<br />
Milana Simovića bb<br />
71 420 Pale<br />
Branch Goražde<br />
Ti<strong>to</strong>va bb<br />
73 000 Goražde<br />
MB Banja Luka and<br />
Branch Banja Luka<br />
Vase Pelagića 2<br />
78 000 Banja Luka<br />
Branch Banja Luka 2<br />
Vojvode S. Stepanovića bb<br />
78 000 Banja Luka<br />
Branch Prijedor<br />
Vožda Karađorđa 14<br />
79 101 Prijedor<br />
Branch Gradiška<br />
Vidovdanska bb<br />
78 400 Gradiška<br />
Branch Doboj<br />
Nemanjina bb<br />
74 000 Doboj<br />
MB Zenica and<br />
Branch Zenica<br />
Maršala Tita bb<br />
72 000 Zenica<br />
Branch Žepče<br />
Stjepana Tomaševića bb<br />
72 230 Žepče<br />
Branch Kakanj<br />
Zgošćanska P+4+M<br />
72 240 Kakanj<br />
Branch Vitez<br />
Poslovni centar PC 96-2<br />
72 250 Vitez<br />
Branch Visoko<br />
Alije Izetbegovića 1<br />
71 300 Visoko<br />
Branch Tešanj<br />
Kralja Tvrtka bb<br />
74 260 Tešanj<br />
Branch Travnik<br />
Konatur bb<br />
72 270 Travnik<br />
MB Tuzla and<br />
Branch Tuzla<br />
15 Maja bb<br />
75 000 Tuzla<br />
Branch Tuzla 2<br />
Univerzitetska 16<br />
75 000 Tuzla<br />
Branch Bijeljina<br />
Karađorđeva bb<br />
76 300 Bijeljina<br />
Branch Brčko<br />
Reisa Džemaludina<br />
Čauševića 10<br />
76 100 Brčko<br />
MB Bihać and<br />
Branch Bihać<br />
Pape Ivana Pavla II 4<br />
77 000 Bihać<br />
Branch Cazin<br />
Generala Izeta Nanića bb<br />
77 220 Cazin<br />
Branch Velika Kladuša<br />
Maršala Tita “Diletacija C”<br />
77 230 Velika Kladuša<br />
Branch Sanski Most<br />
Muse Ćazima Ćatića 24<br />
79 260 Sanski Most<br />
Branch Bosanska Krupa<br />
Trg Alije Izetbegovića bb<br />
77 240 Bosanska Krupa<br />
MB Mostar and<br />
Branch Mostar<br />
Kneza Domagoja bb<br />
88 000 Mostar<br />
Branch Konjic<br />
Suhi do bb<br />
88 400 Konjic<br />
Branch Čitluk<br />
Kralja Tomislava 120<br />
88 260 Čitluk<br />
Branch Široki Brijeg<br />
Zaobilaznica bb<br />
88 220 Široki Brijeg<br />
Branch Trebinje<br />
Vuka Mičunovića bb<br />
89 101 Trebinje<br />
Branch Livno<br />
Trg kralja Tomislava bb<br />
80 101 Livno
Addresses<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG<br />
Austria<br />
Am Stadtpark 9<br />
1030 Vienna<br />
Phone: +43-1-71707 0<br />
Fax: +43-1-71707 1715<br />
www.rbinternational.com<br />
ir@rbinternational.com<br />
rbi-pr@rbinternational.com<br />
<strong>Bank</strong>ing network<br />
Albania<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> Sh.a.<br />
“European Trade Center”<br />
Bulevardi "Bajram Curri"<br />
Tirana<br />
Phone: +355-4-238 1000<br />
Fax: +355-4-227 5599<br />
SWIFT/BIC: SGSBALTX<br />
www.raiffeisen.al<br />
Belarus<br />
Priorbank JSC<br />
31-A, V. Khoruzhey Str.<br />
220002 Minsk<br />
Phone: +375-17-289 9090<br />
Fax: +375-17-289 9191<br />
SWIFT/BIC: PJCBBY2X<br />
www.priorbank.by<br />
Bosnia and Herzegovina<br />
<strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina<br />
Zmaja od Bosne bb<br />
71000 Sarajevo<br />
Phone: +387-33-287 101<br />
Fax: +387-33-213 851<br />
SWIFT/BIC: RZBABA2S<br />
www.raiffeisenbank.ba<br />
Bulgaria<br />
<strong>Raiffeisen</strong>bank (Bulgaria) EAD<br />
18/20 Gogol Str.<br />
1504 Sofia<br />
Phone: +359-2-9198 5101<br />
Fax: +359-2-943 4528<br />
SWIFT/BIC: RZBBBGSF<br />
www.rbb.bg<br />
Croatia<br />
<strong>Raiffeisen</strong>bank Austria d.d.<br />
Petrinjska 59<br />
10000 Zagreb<br />
Phone: +385-1-456 6466<br />
Fax: +385-1-481 1624<br />
SWIFT/BIC: RZBHHR2X<br />
www.rba.hr<br />
Czech Republic<br />
<strong>Raiffeisen</strong>bank a.s.<br />
Hvezdova 1716/2b<br />
14078 Prague 4<br />
Phone: + 420-221-141 111<br />
Fax: +420-221-142 111<br />
SWIFT/BIC: RZBCCZPP<br />
www.rb.cz<br />
Hungary<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> Zrt.<br />
Akadémia utca 6<br />
1054 Budapest<br />
Phone: +36-1-484 4400<br />
Fax: +36-1-484 4444<br />
SWIFT/BIC: UBRTHUHB<br />
www.raiffeisen.hu<br />
Kosovo<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> Kosovo J.S.C.<br />
UÇK Str. No. 51<br />
10000 Pristina<br />
Phone: +381-38-222 222<br />
Fax: +381-38-203 01130<br />
SWIFT/BIC: RBKORS22<br />
www.raiffeisen-kosovo.com<br />
Addresses<br />
www.raiffeisenbank.ba 71
Addresses<br />
72<br />
www.raiffeisenbank.ba<br />
Poland<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> Polska S.A.<br />
Ul. Piękna 20<br />
00-549 Warsaw<br />
Phone: +48-22-585 2001<br />
Fax: +48-22-585 2585<br />
SWIFT/BIC: RCBWPLPW<br />
www.raiffeisen.pl<br />
Romania<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> S.A.<br />
15 Charles de Gaulle Square<br />
011857 Bucharest 1<br />
Phone: +40-21-306 1000<br />
Fax: +40-21-230 0700<br />
SWIFT/BIC: RZBRROBU<br />
www.raiffeisen.ro<br />
Russia<br />
ZAO <strong>Raiffeisen</strong>bank<br />
Smolenskaya-Sennaya Sq. 28<br />
119020 Moscow<br />
Phone: +7-495-721 9900<br />
Fax: +7-495-721 9901<br />
SWIFT/BIC: RZBMRUMM<br />
www.raiffeisen.ru<br />
Serbia<br />
<strong>Raiffeisen</strong> banka a.d.<br />
Bulevar Zorana \in|ića 64a<br />
11070 Novi Beograd<br />
Phone: +381-11-320 2100<br />
Fax: +381-11-220 7080<br />
SWIFT/BIC: RZBSRSBG<br />
www.raiffeisenbank.rs<br />
Slovakia<br />
Tatra banka, a.s.<br />
Hodžovo námestie 3<br />
81106 Bratislava<br />
Phone: +421-2-5919 1111<br />
Fax: +421-2-5919 1110<br />
SWIFT/BIC: TATRSKBX<br />
www.tatrabanka.sk<br />
Slovenia<br />
<strong>Raiffeisen</strong> <strong>Bank</strong>a d.d.<br />
Zagrebeška cesta 76<br />
2000 Maribor<br />
Phone: +386-2-229 3100<br />
Fax: +386-2-303 442<br />
SWIFT/BIC: KREKSI22<br />
www.raiffeisen.si<br />
Ukraine<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> Aval JSC<br />
9, Leskova Street<br />
01011 Kiev<br />
Phone: +38-044-490 8888<br />
Fax: +38-044-285 3231<br />
SWIFT/BIC: AVALUAUK<br />
www.aval.ua<br />
Leasing companies<br />
Austria<br />
<strong>Raiffeisen</strong>-Leasing International GmbH<br />
Am Stadtpark 3<br />
1030 Vienna<br />
Phone: +43-1-71707 2966<br />
Fax: +43-1-71707 762966<br />
www.rli.co.at<br />
Albania<br />
<strong>Raiffeisen</strong> Leasing Sh.a.<br />
“European Trade Center”<br />
Bulevardi “Bajram Curri”<br />
Tirana<br />
Phone: +355-4-2274 920<br />
Fax: +355-4-2232 524<br />
www.raiffeisen.al<br />
Belarus<br />
JLLC “<strong>Raiffeisen</strong>-leasing”<br />
31-A, V. Khoruzhey Str.<br />
220002 Minsk<br />
Phone: +375-17-289 9394<br />
Fax: +375-17-289 9394<br />
www.priorbank.by<br />
Bosnia and Herzegovina<br />
<strong>Raiffeisen</strong> Leasing d.o.o. Sarajevo<br />
Zmaja od Bosne 11<br />
71000 Sarajevo<br />
Phone: +387-33-254 354<br />
Fax: +387-33-212 273<br />
www.rlbh.ba<br />
Bulgaria<br />
<strong>Raiffeisen</strong> Leasing Bulgaria OOD<br />
Mladost 4, Business Park Sofia<br />
Building 7B, 4 th floor<br />
1504 Sofia<br />
Phone: +359-2-491 9191<br />
Fax: +359-2-974 2057<br />
www.rlbg.bg
Croatia<br />
<strong>Raiffeisen</strong> Leasing d.o.o.<br />
Radni~ka cesta 43<br />
10000 Zagreb<br />
Phone: +385-1-6595 000<br />
Fax: +385-1-6595 050<br />
www.rl-hr.hr<br />
Czech Republic<br />
<strong>Raiffeisen</strong>-Leasing s.r.o.<br />
Hvezdova 1716/2b<br />
14078 Prague 4<br />
Phone: +420-221-5116 11<br />
Fax: +420-221-5116 66<br />
www.rl.cz<br />
Hungary<br />
<strong>Raiffeisen</strong> Lízing Zrt.<br />
Hungaria krt. 40-44<br />
1087 Budapest<br />
Phone: +36-1-298 8000<br />
Fax: +36-1-298 8010<br />
www.raiffeisenlizing.hu<br />
Kazakhstan<br />
<strong>Raiffeisen</strong> Leasing Kazakhstan LLP<br />
Shevchenko St. 146, No. 12<br />
050008 Almaty<br />
Phone: +7-727-3785 430<br />
Fax: +7-727-3785 447<br />
www.rlkz.kz<br />
Kosovo<br />
<strong>Raiffeisen</strong> Leasing Kosovo<br />
Gazmend Zajmi n.n., Sunny Hill<br />
10000 Pristina<br />
Phone: +381-38-222 222<br />
Fax: +381-38-203 03011<br />
www.raiffeisen-leasing-ks.com<br />
Moldova<br />
I.C.S. <strong>Raiffeisen</strong> Leasing S.R.L.<br />
Alexandru cel Bun 51<br />
2012 Chisinau<br />
Phone: +373-22-2793 13<br />
Fax: +373-22-2283 81<br />
www.raiffeisen-leasing.md<br />
Poland<br />
<strong>Raiffeisen</strong>-Leasing Polska S.A.<br />
Ul. Prosta 51<br />
00-838 Warsaw<br />
Phone: +48-22-326 36 66<br />
Fax: +48-22-3263 601<br />
www.rl.com.pl<br />
Romania<br />
<strong>Raiffeisen</strong> Leasing IFN S.A.<br />
Nusco Tower<br />
Sos Pipera Nr. 42<br />
Etaj 1A<br />
020112 Bucharest<br />
Phone: +40-21-306 9696<br />
Fax: +40-37-287 9998<br />
www.raiffeisen-leasing.ro<br />
Russia<br />
OOO <strong>Raiffeisen</strong>-Leasing<br />
Stanislavskogo St. 21/1<br />
109004 Moscow<br />
Phone: +7-495-721 9980<br />
Fax: +7-495-721 9901<br />
www.raiffeisen-leasing.ru<br />
Serbia<br />
<strong>Raiffeisen</strong> Leasing d.o.o.<br />
Milutina Milankovića 134a<br />
11000 Novi Beograd<br />
Phone: +381-11-20177 00<br />
Fax: +381-11-31300 81<br />
www.raiffeisen-leasing.rs<br />
Slovakia<br />
Tatra Leasing s.r.o.<br />
Hodžovo námestie 3<br />
81106 Bratislava<br />
Phone: +421-2-5919 3168<br />
Fax: +421-2-5919 3048<br />
www.tatraleasing.sk<br />
Slovenia<br />
<strong>Raiffeisen</strong> Leasing d.o.o.<br />
Bleweisova cesta 30<br />
1000 Ljubljana<br />
Phone: +386-1-241 6250<br />
Fax: +386-1-241 6268<br />
www.rl-sl.si<br />
Addresses<br />
www.raiffeisenbank.ba 73
Addresses<br />
74<br />
www.raiffeisenbank.ba<br />
Ukraine<br />
LLC <strong>Raiffeisen</strong> Leasing Aval<br />
9, Moskovskiy Av.<br />
Corp. 5 Office 101<br />
04073 Kiev<br />
Phone: +38-044-590 2490<br />
Fax: + 38-044-200 0408<br />
www.rla.com.ua<br />
Real estate leasing companies<br />
Czech Republic<br />
<strong>Raiffeisen</strong> Leasing Real Estate s.r.o.<br />
Hvezdova 1716/2b<br />
14078 Prague 4<br />
Phone: +420-221-5116 10<br />
Fax: +420-221-5116 41<br />
www.rlre.cz<br />
Branches and representative<br />
offices – Europe<br />
Germany<br />
RBI Representative Office Frankfurt<br />
Mainzer Landstraße 51<br />
60329 Frankfurt<br />
Phone: +49-69-2992 1918<br />
Fax: +49-69-2992 1922<br />
France<br />
RBI Representative Office Paris<br />
9-11 Avenue Franklin D. Roosevelt<br />
75008 Paris<br />
Phone: +33-1-4561 2700<br />
Fax: +33-1-4561 1606<br />
Malta<br />
<strong>Raiffeisen</strong> Malta <strong>Bank</strong> plc<br />
52 “Il Piazzetta” Tower Road<br />
Sliema SLM 1607<br />
Phone: +356-2260 0000<br />
Fax: +356-2132 0954<br />
UK<br />
RBI London Branch<br />
10, King William Street<br />
London EC4N 7TW<br />
Phone: +44-20-7929 2288<br />
Fax: +44-20-7933 8099<br />
Sweden<br />
RBI Representative Office Nordic Countries<br />
Drottninggatan 89<br />
P.O. Box 3294<br />
10365 S<strong>to</strong>ckholm<br />
Phone: +46-8-440 5086<br />
Fax: +46-8-440 5089<br />
Branches and representative<br />
offices – Asia and America<br />
China<br />
RBI Beijing Branch<br />
Beijing International Club 200<br />
2nd floor<br />
Jianguomenwai Dajie 21<br />
100020 Beijing<br />
Phone: +86-10-653 23388<br />
Fax: +86-10-653 25926<br />
RBI Representative Office Hong Kong<br />
Unit 2106-08, 21st Floor,<br />
Tower One, Lippo Centre<br />
89 Queensway, Hong Kong<br />
Phone: +85-2-2730 2112<br />
Fax: +85-2-2730 6028<br />
RBI Representative Office Xiamen<br />
Unit 01-02, 32/F Zhongmin Building<br />
No 72 Hubin North Road<br />
Fujian Province<br />
301012 Xiamen<br />
Phone: +86-592-2623 988<br />
Fax: +86-592-2623 998<br />
India<br />
RBI Representative Office Mumbai<br />
803, Peninsula Heights<br />
C.D. Barfiwala Road, Andhere (W)<br />
400 058 Mumbai<br />
Phone: +91-22-2623 0657<br />
Fax: +91-22-2624 4529<br />
Korea<br />
RBI Representative Office Korea<br />
Leema Building, 8 th floor<br />
146-1 Soosong-dong<br />
Chongro-ku<br />
Seoul 110-755<br />
Phone: +82-2-398 5840<br />
Fax: +82-2-398 5807
Malaysia<br />
RBI Labuan Branch<br />
Suite No. 28.02, Level 28<br />
Johor Bahru City Square Office Tower<br />
106-108 Jalan Wong Ah Fook<br />
80000 Johor Bahru<br />
Phone: +607-291 3800<br />
Fax: +607-291 3801<br />
Singapore<br />
RBI Singapore Branch<br />
One Raffles Quay<br />
#38-01 North Tower<br />
Singapore 048583<br />
Phone: +65-6305 6000<br />
Fax: +65-6305 6001<br />
USA<br />
RB International Finance (USA) LLC<br />
1133 Avenue of <strong>the</strong> Americas, 16 th Floor<br />
10036 New York<br />
Phone: +01-212-845 4100<br />
Fax: +01-212-944 2093<br />
RBI Representative Office New York<br />
1133 Avenue of <strong>the</strong> Americas, 16 th Floor<br />
10036 New York<br />
Phone: +01-212-593 7593<br />
Fax: +01-212-593 9870<br />
Vietnam<br />
RBI Representative Office Ho Chi Minh City<br />
6 Phung Khac Khoan Street,<br />
Room G6<br />
District 1, Ho Chi Minh City<br />
Phone: +84-8-3829 7934<br />
Fax: +84-8-3822 1318<br />
<strong>Raiffeisen</strong> Zentralbank AG<br />
Austria<br />
Am Stadtpark 9<br />
1030 Vienna<br />
Phone: +43-1-71707 0<br />
Fax: +43-1-71707 1715<br />
www.rzb.at<br />
Selected <strong>Raiffeisen</strong> Specialist<br />
Companies<br />
F.J. Elsner Trading GmbH<br />
Am Heumarkt 10<br />
1030 Vienna<br />
Phone: +43-1-797 36 0<br />
Fax: +43-1-797 36 230<br />
www.elsner.at<br />
Kathrein Privatbank Aktiengesellschaft<br />
Wipplingerstraße 25<br />
1010 Vienna<br />
Phone: +43-1-53 451 239<br />
Fax: +43-1-53 451 233<br />
www.kathrein.at<br />
<strong>Raiffeisen</strong> Centro <strong>Bank</strong> AG<br />
Tegetthoffstraße 1<br />
1050 Vienna<br />
Phone: +43-1-515 20 0<br />
Fax: +43-1-513 43 96<br />
www.rcb.at<br />
<strong>Raiffeisen</strong> Investment Aktiengesellschaft<br />
Krugerstraße 13<br />
1015 Vienna<br />
Phone: +43-1-710 5400 0<br />
Fax: +43-1-710 5400 169<br />
www.raiffeisen-investment.com<br />
ZUNO BANK AG<br />
Am Stadtpark 3<br />
1030 Vienna<br />
Phone: +43-1-71707 2691<br />
Fax: +43-1-71707 762691<br />
www.zuno.eu<br />
Addresses<br />
www.raiffeisenbank.ba 75
Financial Statements<br />
76<br />
Responsibility for <strong>the</strong> Financial Statements<br />
Pursuant <strong>to</strong> <strong>the</strong> Law on Accounting and Audit of Federation of Bosnia and Herzegovina (Official Gazette No. 83/09), <strong>the</strong><br />
Management Board is responsible for ensuring that <strong>financial</strong> <strong>statements</strong> are prepared for each <strong>financial</strong> year in accordance<br />
with International Financial Reporting Standards (IFRS) which give a true and fair view of <strong>the</strong> state of affairs and<br />
results of <strong>Raiffeisen</strong> BANK dd Bosna i Hercegovina (<strong>the</strong> “<strong>Bank</strong>”) for that period. IFRS are published by <strong>the</strong> International<br />
Accounting Standards Board (IASB).<br />
After making enquiries, <strong>the</strong> Management Board has a reasonable expectation that <strong>the</strong> <strong>Bank</strong> has adequate resources <strong>to</strong><br />
continue in operational existence for <strong>the</strong> foreseeable future. For this reason, <strong>the</strong> Management Board continues <strong>to</strong> adopt<br />
<strong>the</strong> going concern basis in preparing <strong>the</strong> <strong>financial</strong> <strong>statements</strong>.<br />
In preparing those <strong>financial</strong> <strong>statements</strong>, <strong>the</strong> responsibilities of <strong>the</strong> Management Board include ensuring that:<br />
• suitable accounting policies are selected and <strong>the</strong>n applied consistently;<br />
• judgements and estimates are reasonable and prudent;<br />
• applicable accounting standards are followed, subject <strong>to</strong> any material departures disclosed and explained in <strong>the</strong><br />
<strong>financial</strong> <strong>statements</strong>; and<br />
• <strong>the</strong> <strong>financial</strong> <strong>statements</strong> are prepared on <strong>the</strong> going concern basis unless it is inappropriate <strong>to</strong> presume that <strong>the</strong> <strong>Bank</strong><br />
will continue in business.<br />
The Management Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy<br />
at any time <strong>the</strong> <strong>financial</strong> position of <strong>the</strong> <strong>Bank</strong> and must also ensure that <strong>the</strong> <strong>financial</strong> <strong>statements</strong> comply with <strong>the</strong> Accounting<br />
and Auditing Law of Federation of Bosnia and Herzegovina. The Management Board is also responsible for safeguarding<br />
<strong>the</strong> assets of <strong>the</strong> <strong>Bank</strong> and hence for taking reasonable steps for <strong>the</strong> prevention and detection of fraud and o<strong>the</strong>r<br />
irregularities.<br />
Signed on behalf of <strong>the</strong> Management Board<br />
Michael Georg Müller, Direc<strong>to</strong>r<br />
<strong>Raiffeisen</strong> BANK dd Bosna i Hercegovina<br />
Zmaja od Bosne bb<br />
71000 Sarajevo<br />
Bosnia and Herzegovina<br />
28 February 2012<br />
www.raiffeisenbank.ba
INDEPENDENT AUDITORS’ REPORT<br />
Financial Statements<br />
To <strong>the</strong> shareholders of <strong>Raiffeisen</strong> BANK dd Bosna i Hercegovina:<br />
We have audited <strong>the</strong> accompanying <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> of <strong>Raiffeisen</strong> BANK dd Bosna i Hercegovina (<strong>the</strong><br />
“<strong>Bank</strong>”), set out on pages 4 <strong>to</strong> 55, which comprise of <strong>the</strong> <strong>unconsolidated</strong> balance sheet as at 31 December 2011, and<br />
<strong>the</strong> <strong>unconsolidated</strong> income statement, statement of comprehensive income, statement of changes in equity and statement<br />
of cash flows for <strong>the</strong> year <strong>the</strong>n ended, and a summary of significant accounting policies and o<strong>the</strong>r explana<strong>to</strong>ry<br />
notes.<br />
Management’s responsibility for <strong>the</strong> <strong>financial</strong> <strong>statements</strong><br />
Management is responsible for <strong>the</strong> preparation and fair presentation of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong> in accordance with <strong>the</strong><br />
International Financial Reporting standards and for such internal control as Management determines is necessary <strong>to</strong> enable<br />
<strong>the</strong> preparation of <strong>financial</strong> <strong>statements</strong> that are free from material misstatement, whe<strong>the</strong>r due <strong>to</strong> fraud or error.<br />
Audi<strong>to</strong>r’s responsibility<br />
Our responsibility is <strong>to</strong> express an opinion on <strong>the</strong>se <strong>financial</strong> <strong>statements</strong> based on our audit. We conducted our audit in<br />
accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements<br />
and plan and perform <strong>the</strong> audit <strong>to</strong> obtain reasonable assurance whe<strong>the</strong>r <strong>the</strong> <strong>financial</strong> <strong>statements</strong> are free from material<br />
misstatement.<br />
An audit involves performing procedures <strong>to</strong> obtain audit evidence about <strong>the</strong> amounts and disclosures in <strong>the</strong> <strong>financial</strong><br />
<strong>statements</strong>. The procedures selected depend on <strong>the</strong> audi<strong>to</strong>r’s judgment, including <strong>the</strong> assessment of <strong>the</strong> risks of material<br />
misstatement of <strong>the</strong> <strong>financial</strong> <strong>statements</strong>, whe<strong>the</strong>r due <strong>to</strong> fraud or error. In making those risk assessments, <strong>the</strong> audi<strong>to</strong>r considers<br />
internal control relevant <strong>to</strong> <strong>the</strong> entity’s preparation and fair presentation of <strong>the</strong> <strong>financial</strong> <strong>statements</strong> in order <strong>to</strong> design<br />
audit procedures that are appropriate in <strong>the</strong> circumstances, but not for <strong>the</strong> purpose of expressing an opinion on <strong>the</strong><br />
effectiveness of <strong>the</strong> entity’s internal control. An audit also includes evaluating <strong>the</strong> appropriateness of accounting policies<br />
used and <strong>the</strong> reasonableness of accounting estimates made by management, as well as evaluating <strong>the</strong> overall presentation<br />
of <strong>the</strong> <strong>financial</strong> <strong>statements</strong>.<br />
We believe that <strong>the</strong> audit evidence we have obtained is sufficient and appropriate <strong>to</strong> provide a basis for our audit opinion.<br />
Opinion<br />
In our opinion, <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> present fairly, in all material respects, <strong>the</strong> <strong>financial</strong> position of <strong>the</strong><br />
<strong>Bank</strong> as at 31 December 2011 and of its <strong>financial</strong> performance and cash flows for <strong>the</strong> year <strong>the</strong>n ended, in accordance<br />
with International Financial Reporting Standards.<br />
Emphasis of Matter<br />
We draw attention <strong>to</strong> <strong>the</strong> fact that consolidated <strong>financial</strong> <strong>statements</strong> have not been published by <strong>the</strong> <strong>Bank</strong> at <strong>the</strong> date of<br />
this report. Note 3 <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> describes that <strong>the</strong> <strong>Bank</strong> is <strong>the</strong> parent company of <strong>Raiffeisen</strong><br />
<strong>Bank</strong> Group and that consolidated <strong>financial</strong> <strong>statements</strong> of <strong>the</strong> Group prepared in accordance with International Financial<br />
Reporting Standards will be issued separately. In accompanying <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> investments in<br />
subsidiaries and associates are valued at cost. For a better understanding of <strong>the</strong> Group as a whole, users should read<br />
<strong>the</strong> consolidated <strong>financial</strong> <strong>statements</strong>. Our opinion is not modified in respect of this matter.<br />
Deloitte d.o.o.<br />
Se ad Ba hta no vi}, di re c<strong>to</strong>r Mirza Bihorac, licenced audi<strong>to</strong>r<br />
Sa ra je vo, Bosnia and Herzegovina<br />
28 February 2012<br />
www.raiffeisenbank.ba 77
Financial Statements<br />
78<br />
Unconsolidated income statement<br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
www.raiffeisenbank.ba<br />
<strong>Notes</strong> 2011 2010<br />
Interest and similar income 5 208,215 210,296<br />
Interest and similar expenses 6 (71,705) (86,540)<br />
Net interest income 136,510 123,756<br />
Fee and commission income 7 65,008 61,099<br />
Fee and commission expenses 8 (9,143) (8,090)<br />
Net fee and commission income 55,865 53,009<br />
Net <strong>financial</strong> income 9 13,347 14,714<br />
O<strong>the</strong>r operating income 11 7,226 2,999<br />
Operating income 212,948 194,478<br />
Administrative expenses 12 (117,879) (119,356)<br />
Depreciation and amortization 25 (9,655) (9,235)<br />
Operating expenses (127,534) (128,591)<br />
PROFIT BEFORE IMPAIRMENT LOSSES,<br />
PROVISIONS AND INCOME TAX<br />
The accompanying notes form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.<br />
85,414 65,887<br />
Impairment losses and provisions 13 (40,513) (69,497)<br />
Recoveries 10 4,373 11,487<br />
PROFIT BEFORE INCOME TAX 49,274 7,877<br />
Income tax 14 (5,421) (2,005)<br />
NET PROFIT FOR THE YEAR 43,853 5,872<br />
Earnings per share (in KM) 32 46.18 6.18
Unconsolidated statement of comprehensive income<br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
The accompanying notes form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.<br />
Financial Statements<br />
<strong>Notes</strong> 2011 2010<br />
Net profit for <strong>the</strong> year 43,853 5,872<br />
O<strong>the</strong>r comprehensive income:<br />
Fair value gain / (loss) on <strong>financial</strong> assets available-for-sale<br />
19 1,010 (317)<br />
Total comprehensive income for <strong>the</strong> year 44,863 5,555<br />
www.raiffeisenbank.ba 79
Financial Statements<br />
80<br />
Unconsolidated balance sheet<br />
as at 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
ASSETS<br />
www.raiffeisenbank.ba<br />
<strong>Notes</strong><br />
The accompanying notes form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.<br />
Signed on behalf of <strong>the</strong> <strong>Bank</strong> on 28 February 2012:<br />
31 December<br />
2011<br />
President of <strong>the</strong> Management Board Head of Finance division<br />
Michael Georg Müller Mar ko Jur je vi}<br />
31 December<br />
2010<br />
Cash and cash equivalents 15 716,868 434,964<br />
Obliga<strong>to</strong>ry reserve at Central <strong>Bank</strong> of B&H 16 266,540 305,865<br />
Placements with o<strong>the</strong>r banks 17 225,917 250,282<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers 18 2,306,730 2,243,190<br />
Assets classified as held for sale 25 403 -<br />
Financial assets available-for-sale 19 3,299 2,241<br />
Financial assets at FVTPL 20 158,897 164,784<br />
Financial assets held-<strong>to</strong>-maturity 21 138,090 137,408<br />
Investments in subsidiaries 22 2,436 2,288<br />
Investments in associate 23 8,173 8,173<br />
Deferred tax assets 14 846 469<br />
O<strong>the</strong>r assets and receivables 24 31,597 16,971<br />
Tangible and intangible assets 25 155,893 155,598<br />
TOTAL ASSETS 4,015,689 3,722,233<br />
LIABILITIES<br />
Due <strong>to</strong> banks 26 468,004 588,150<br />
Due <strong>to</strong> cus<strong>to</strong>mers 27 2,944,442 2,622,705<br />
Provisions 28 7,491 28,959<br />
O<strong>the</strong>r liabilities and payables 29 29,167 28,479<br />
Subordinated debt 30 65,484 82,016<br />
TOTAL LIABILITIES 3,514,588 3,350,309<br />
EQUITY<br />
Share capital 31 237,388 237,388<br />
Share premium 4,473 4,473<br />
Investment revaluation reserves 3,201 2,191<br />
Regula<strong>to</strong>ry reserves 89,035 -<br />
Retained earnings 167,004 127,872<br />
TOTAL EQUITY 501,101 371,924<br />
TOTAL LIABILITIES AND EQUITY 4,015,689 3,722,233<br />
COMMITMENTS AND CONTINGENCIES 28 871,216 898,766
Unconsolidated statement of cash flows<br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
OPERATING ACTIVITIES<br />
The accompanying notes form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.<br />
Financial Statements<br />
2011 2010<br />
Profit before taxation 49,274 7,877<br />
Adjustments:<br />
Depreciation and amortization 9,655 9,235<br />
Impairment losses and provisions 40,832 70,931<br />
(Gain) / loss on disposal of tangible and intangible assets (2,567) 455<br />
Realized losses and FV adjustments on <strong>financial</strong> assets at FVTPL 3,415 2,372<br />
Release of accrued expenses in previous year (509) (561)<br />
Net loss on disposal of <strong>financial</strong> assets held-<strong>to</strong> maturity 920 -<br />
Written-off liabilities (443) (400)<br />
Effect of change of accounting policy on commitments and contingencies 115 -<br />
Dividend income recognized in <strong>the</strong> income statement (55) (79)<br />
Changes in operating assets and liabilities:<br />
Net decrease in obliga<strong>to</strong>ry reserve at Central <strong>Bank</strong> of B&H 39,325 37,142<br />
Net decrease in placements with o<strong>the</strong>r banks 24,442 455,901<br />
Net (increase) / decrease in loans <strong>to</strong> cus<strong>to</strong>mers, before impairment losses (44,640) 6,750<br />
Net (increase) / decrease in o<strong>the</strong>r assets and receivables,<br />
before impairment losses<br />
(12,583) 4,707<br />
Net decrease in due <strong>to</strong> banks – deposits (2,738) (2,817)<br />
Net increase / (decrease) in due <strong>to</strong> cus<strong>to</strong>mers 321,737 (100,826)<br />
Net (decrease) / increase in o<strong>the</strong>r liabilities and payables (765) 4,576<br />
425,415 495,263<br />
Income tax paid (2,939) (1,447)<br />
NET CASH USED IN OPERATING ACTIVITIES 422,476 493,816<br />
INVESTING ACTIVITIES<br />
Net proceeds from / (purchases of) <strong>financial</strong> assets at FVTPL 2,472 (46,523)<br />
Net increase in <strong>financial</strong> assets held-<strong>to</strong>-maturity (9,327) (32,443)<br />
Proceeds from bonds held-<strong>to</strong> maturity sold 8,859 -<br />
Investments in subsidiaries (400) -<br />
Investments in associates - (4,793)<br />
Cash acquired from business combination 49 -<br />
Dividends received 55 79<br />
Purchases of tangible and intangible assets (9,015) (25,075)<br />
Proceeds from tangible assets sold 3,763 130<br />
NET CASH USED IN INVESTING ACTIVITIES (3,544) (108,625)<br />
FINANCING ACTIVITIES<br />
Repayments of borrowings, net (117,408) (367,840)<br />
Repayments of subordinated debt, net (16,532) (14,647)<br />
Dividends paid (3,088) -<br />
NET CASH USED IN FINANCING ACTIVITIES (137,028) (382,487)<br />
NET INCREASE IN CASH AND CASH EQUIVALENTS 281,904 2,704<br />
CASH AND CASH EQUIVALENTS AT 1 JANUARY 434,964 432,260<br />
CASH AND CASH EQUIVALENTS AT 31 DECEMBER 716,868 434,964<br />
www.raiffeisenbank.ba 81
Financial Statements<br />
82<br />
Unconsolidated statement of changes in equity<br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
www.raiffeisenbank.ba<br />
Share<br />
capital<br />
Share<br />
premium<br />
Investments<br />
revaluation<br />
reserves<br />
Regula<strong>to</strong>ry<br />
reserves<br />
The accompanying notes form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.<br />
Retained<br />
earnings<br />
Balance as of 31 December 2009 237,388 4,473 2,508 - 122,637 367,006<br />
Tax adjustment - - - - (637) (637)<br />
Net profit for <strong>the</strong> year - - - - 5,872 5,872<br />
O<strong>the</strong>r comprehensive loss for <strong>the</strong><br />
year<br />
Total comprehensive income for<br />
<strong>the</strong> year<br />
Total<br />
- - (317) - - (317)<br />
- - (317) - 5,872 5,555<br />
Balance as of 31 December 2010 237,388 4,473 2,191 - 127,872 371,924<br />
Adjustments of <strong>the</strong> accounting<br />
policy (Note 3)<br />
Transfer <strong>to</strong> Regula<strong>to</strong>ry reserves<br />
(Note 3)<br />
Effects of merger of <strong>Raiffeisen</strong> Brokers<br />
d.o.o. Sarajevo in<strong>to</strong> <strong>the</strong> <strong>Bank</strong><br />
(Note 34)<br />
- - - - 89,035 89,035<br />
- - - 89,035 (89,035) -<br />
- - - - (1,633) (1,633)<br />
Dividend paid - - - - (3,088) (3,088)<br />
Net profit for <strong>the</strong> year - - - - 43,853 43,853<br />
O<strong>the</strong>r comprehensive gain for <strong>the</strong><br />
year<br />
Total comprehensive income for<br />
<strong>the</strong> year<br />
- - 1,010 - - 1,010<br />
- - 1,010 - 43,853 44,863<br />
Balance as of 31 December 2011 237,388 4,473 3,201 89,035 167,004 501,101
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
1. GENERAL<br />
His<strong>to</strong>ry and incorporation<br />
Financial Statements<br />
<strong>Raiffeisen</strong> BANK dd Bosna i Hercegovina, Sarajevo (<strong>the</strong> “<strong>Bank</strong>”) is a joint s<strong>to</strong>ck company incorporated in Bosnia and<br />
Herze govina and it commenced operations in 1993. Principal activities of <strong>the</strong> <strong>Bank</strong> are:<br />
1. accepting deposits from <strong>the</strong> public and placing of deposits;<br />
2. providing current and term deposit accounts;<br />
3. granting short- and long-term loans and guarantees <strong>to</strong> <strong>the</strong> local municipalities, corporate cus<strong>to</strong>mers, private individuals<br />
and o<strong>the</strong>r credit institutions dealing with finance lease and foreign exchange transactions;<br />
4. money market activities;<br />
5. performing local and international payments;<br />
6. foreign currency exchange and o<strong>the</strong>r banking-related activities;<br />
7. providing banking services through an extensive branch network in Bosnia and Herzegovina.<br />
The <strong>Bank</strong> considers that it operates in a single business segment, and a single geographical segment, that is <strong>the</strong> provision<br />
of banking services in Bosnia and Herzegovina.<br />
The registered address of <strong>the</strong> <strong>Bank</strong> is Zmaja od Bosne bb, Sarajevo. As at 31 December 2011, <strong>the</strong> <strong>Bank</strong> had 1,576 employees<br />
(2010: 1,630 employees).<br />
Supervisory Board<br />
Pe ter Len nkh President since 19 February 2011<br />
Fe renc Ber szan Member since 19 February 2011<br />
Kle mens Hal ler Member since 19 February 2011<br />
Fran ti sek Je zek Member since 19 February 2011<br />
Jo han nes Kel lner Member since 19 February 2011<br />
Her bert Ste pic President until 19 February 2011<br />
Zden ko Adro vi} Member until 19 February 2011<br />
Ho edl He inz Member until 19 February 2011<br />
Pe ter Len nkh Member until 19 February 2011<br />
Mar tin Gru ell Member until 19 February 2011<br />
Management Board<br />
Mic ha el Ge org Mül ler Direc<strong>to</strong>r<br />
Da mir Ka ra me hme do vi} Executive Direc<strong>to</strong>r since 15 March 2011<br />
Kar lhe inz Do bnigg Executive Direc<strong>to</strong>r since 15 March 2011<br />
Sa ne la Pa {i} Executive Direc<strong>to</strong>r since 15 March 2011<br />
Di no Osman be go vi} Executive Direc<strong>to</strong>r until 14 March 2011<br />
Zden ko Mi haj lo vi} Executive Direc<strong>to</strong>r until 14 March 2011<br />
Audit Committee<br />
Wolfgang Trost President<br />
Boris Tihi Member<br />
Izudin Keše<strong>to</strong>vić Member<br />
Miloš Trifković Member<br />
Ma hir D`a fi} Member from 15 March 2011<br />
Wol fgang Ket tner Member until 14 March 2011<br />
www.raiffeisenbank.ba 83
Financial Statements<br />
84<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
2. ADOPTION OF NEW AND REVISED STANDARDS<br />
2.1. Standards and Interpretations effective in current period<br />
The following amendments <strong>to</strong> <strong>the</strong> existing standards issued by <strong>the</strong> International Accounting Standards Board and interpretations<br />
issued by <strong>the</strong> International Financial Reporting Interpretations Committee are effective for <strong>the</strong> current period:<br />
• Amendments <strong>to</strong> IFRS 1 “First-time Adoption of IFRS”- Limited Exemption from Comparative IFRS 7 Disclosures for<br />
First-time Adopters (effective for annual periods beginning on or after 1 July 2010),<br />
• Amendments <strong>to</strong> IAS 24 “Related Party Disclosures” – Simplifying <strong>the</strong> disclosure requirements for government-related<br />
entities and clarifying <strong>the</strong> definition of a related party (effective for annual periods beginning on or after 1<br />
January 2011),<br />
• Amendments <strong>to</strong> IAS 32 “Financial Instruments: Presentation”– Accounting for rights issues (effective for annual periods<br />
beginning on or after 1 February 2010),<br />
• Amendments <strong>to</strong> various standards and interpretations “Improvements <strong>to</strong> IFRSs (2010)” resulting from <strong>the</strong> annual<br />
improvement project of IFRS published on 6 May 2010 (IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 27, IAS 34, IFRIC 13)<br />
primarily with a view <strong>to</strong> removing inconsistencies and clarifying wording (amendments are <strong>to</strong> be applied for annual<br />
periods beginning on or after 1 July 2010 or 1 January 2011 depending on standard/interpretation),<br />
• Amendments <strong>to</strong> IFRIC 14 “IAS 19– The Limit on a defined benefit Asset, Minimum Funding Requirements and <strong>the</strong>ir<br />
Interaction” – Prepayments of a Minimum Funding Requirement (effective for annual periods beginning on or after<br />
1 January 2011),<br />
• IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments” (effective for annual periods beginning on or<br />
after 1 July 2010).<br />
The adoption of <strong>the</strong>se amendments <strong>to</strong> <strong>the</strong> existing standards and interpretations has not led <strong>to</strong> any changes in <strong>the</strong> <strong>Bank</strong>’s<br />
accounting policies.<br />
www.raiffeisenbank.ba
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
2.2. Standards and Interpretations in issue not yet adopted<br />
Financial Statements<br />
At <strong>the</strong> date of authorization of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong> <strong>the</strong> following standards, revisions and interpretations were in issue<br />
but not yet effective:<br />
• IFRS 9 “Financial Instruments” (effective for annual periods beginning on or after 1 January 2013),<br />
• IFRS 10 “Consolidated Financial Statements” (effective for annual periods beginning on or after 1 January 2013),<br />
• IFRS 11 “Joint Arrangements” (effective for annual periods beginning on or after 1 January 2013),<br />
• IFRS 12 “Disclosures of Involvement with O<strong>the</strong>r Entities” (effective for annual periods beginning on or after 1 January<br />
2013),<br />
• IFRS 13 “Fair Value Measurement” (effective for annual periods beginning on or after 1 January 2013),<br />
• IAS 27 (revised in 2011) “Separate Financial Statements”(effective for annual periods beginning onorafter 1 January<br />
2013),<br />
• IAS 28 (revised in 2011) “Investments in Associates and Joint Ventures” (effective for annual periods beginning<br />
on or after 1 January 2013),<br />
• Amendments <strong>to</strong> IFRS 1 “First-time Adoption of IFRS”- Severe Hyperinflation and Removal of Fixed Dates for Firsttime<br />
Adopters (effective for annual periods beginning on or after 1 July 2011),<br />
• Amendments <strong>to</strong> IFRS 7 “Financial Instruments: Disclosures”- Transfers of Financial Assets (effective for annual periods<br />
beginning on or after 1 July 2011),<br />
• Amendments <strong>to</strong> IAS 1 “Presentation of <strong>financial</strong> <strong>statements</strong>” – Presentation of Items of O<strong>the</strong>r Comprehensive Income<br />
(effective for annual periods beginning on or after 1 July 2012),<br />
• Amendments <strong>to</strong> IAS 12 “Income Taxes” – Deferred Tax: Recovery of Underlying Assets (effective for annual periods<br />
beginning on or after 1 January 2012),<br />
• Amendments <strong>to</strong> IAS 19 “Employee Benefits” – Improvements <strong>to</strong> <strong>the</strong> Accounting for Post-employment Benefits (effective<br />
for annual periods beginning on or after 1 January 2013),<br />
• IFRIC 20 “Stripping Costs in <strong>the</strong> Production Phase of a Surface Mine” (effective for annual periods beginning on<br />
or after 1 January 2013).<br />
The <strong>Bank</strong> has elected not <strong>to</strong> adopt <strong>the</strong>se standards, revisions and interpretations in advance of <strong>the</strong>ir effective dates. The<br />
<strong>Bank</strong> anticipates that <strong>the</strong> adoption of <strong>the</strong>se standards, revisions and interpretations will have no material impact on <strong>the</strong><br />
<strong>financial</strong> <strong>statements</strong> of <strong>the</strong> <strong>Bank</strong> in <strong>the</strong> period of initial application.<br />
www.raiffeisenbank.ba 85
Financial Statements<br />
86<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES<br />
Statement of compliance<br />
These <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> have been prepared in accordance with International Financial Reporting Standards<br />
(“IFRS”) as published by <strong>the</strong> International Accounting Standards Board.<br />
Change of accounting policy<br />
Up <strong>to</strong> 31 December 2010, as it was required by local legislation and decisions of <strong>Bank</strong>ing Agency of <strong>the</strong> Federation of<br />
Bosnia and Herzegovina (“FBA”), <strong>the</strong> <strong>Bank</strong> was preparing <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> in accordance with<br />
IFRS as modified by <strong>the</strong> regula<strong>to</strong>ry requirements prescribed by FBA with respect <strong>to</strong> <strong>the</strong> calculation of provision for impairment<br />
of <strong>financial</strong> instruments. These rules required banks <strong>to</strong> calculate <strong>the</strong> allowance for impairment of <strong>financial</strong> assets<br />
and provision for commitments and contingencies using <strong>the</strong> matrix system based on number of overdue days. The<br />
matrix system applied on outstanding loan receivables, as well as on commitments and contingencies, was as follows:<br />
• 0 – 30 overdue days – 2%,<br />
• 31 – 50 overdue days – 5%,<br />
• 51 – 70 overdue days – 10%,<br />
• 71 – 90 overdue days – 15%,<br />
• 91 – 120 overdue days – 16%,<br />
• 121 – 140 overdue days – 20%,<br />
• 141 – 160 overdue days – 30%,<br />
• 161 – 180 overdue days – 40%,<br />
• 181 – 210 overdue days – 41%,<br />
• 211 – 230 overdue days – 45%,<br />
• 231 – 250 overdue days – 50%,<br />
• 251 – 270 overdue days – 60%,<br />
• Above 270 overdue days – 100%.<br />
This was not in accordance with International Accounting Standard (“IAS”) 39: ’Financial Instruments: Recognition and<br />
Measurement’, which requires assessment at each reporting period date as <strong>to</strong> whe<strong>the</strong>r <strong>the</strong>re is any objective evidence that<br />
a <strong>financial</strong> asset or group of <strong>financial</strong> assets is impaired. If <strong>the</strong>re is objective evidence that an impairment loss on loans<br />
and receivables carried at amortised cost has been incurred, <strong>the</strong> amount of <strong>the</strong> loss should be measured as <strong>the</strong> difference<br />
between <strong>the</strong> asset’s carrying amount and <strong>the</strong> present value of estimated future cash flows (excluding future credit<br />
losses that have not been incurred) discounted at <strong>the</strong> <strong>financial</strong> asset’s original effective interest rate.<br />
Additionally, <strong>the</strong> banks had <strong>to</strong> recognize <strong>the</strong> general provision of 2% for some o<strong>the</strong>r items of assets (such as tangible assets,<br />
o<strong>the</strong>r assets and o<strong>the</strong>r receivables).<br />
Based on <strong>the</strong> Guidelines on <strong>the</strong> changes <strong>to</strong> <strong>the</strong> means for creating, recording and reporting forms for <strong>the</strong> loan loss reserves,<br />
issued by FBA in January 2011, <strong>the</strong> banks are obliged <strong>to</strong> introduce a new methodology for assessment of impairment<br />
losses on <strong>the</strong> <strong>financial</strong> assets (loans and receivables), in line with <strong>the</strong> requirements of IAS 39, and provisions for<br />
commitments and contingencies, in line with <strong>the</strong> requirements of IAS 37: “Provisions, Contingent Liabilities and Contingent<br />
Assets”, effective from 1 January 2011. These guidelines also eliminated <strong>the</strong> requirement for <strong>the</strong> general provisions<br />
of 2% for o<strong>the</strong>r items of assets. Also, <strong>the</strong> banks are required <strong>to</strong> recognize <strong>the</strong> difference between <strong>the</strong> allowance for impairment<br />
losses on <strong>financial</strong> assets and provisions according <strong>to</strong> new accounting policy and <strong>the</strong> level of allowance for impairment<br />
losses on <strong>financial</strong> assets and provisions that would have been determined if <strong>the</strong> matrix system was still applied,<br />
under Regula<strong>to</strong>ry reserves within <strong>the</strong> equity. The <strong>to</strong>tal difference should be determined at <strong>the</strong> end of every year and kept<br />
at required level through <strong>the</strong> allocation of net result from Retained earnings <strong>to</strong> Regula<strong>to</strong>ry reserves.<br />
www.raiffeisenbank.ba
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Financial Statements<br />
Due <strong>to</strong> <strong>the</strong> fact that new accounting policy for impairment losses on <strong>financial</strong> assets and provisions by its nature is based<br />
on <strong>the</strong> approximations and <strong>the</strong> accounting estimates made by <strong>the</strong> Management, and it was issued in 2011, <strong>the</strong> <strong>Bank</strong> was<br />
not able <strong>to</strong> determine <strong>the</strong> effects of <strong>the</strong> change in <strong>the</strong> accounting balances <strong>to</strong> <strong>the</strong> individual balances in <strong>the</strong> income <strong>statements</strong>,<br />
statement of comprehensive income, statement of cash flows and changes in equity for <strong>the</strong> years ended 31 December<br />
2009 and 2010.<br />
Consequently, according <strong>to</strong> IAS 8: “Accounting Policies, Changes in Accounting Estimates and Errors” (paragraphs 50 –<br />
52), <strong>the</strong> new accounting policy was applied prospectively by making an adjustment <strong>to</strong> <strong>the</strong> opening balances of <strong>the</strong> equity<br />
in 2011.<br />
The adjustment may be presented as follows:<br />
As of 31 December 2011, <strong>the</strong> missing part of difference between <strong>the</strong> allowance for impairment losses on <strong>financial</strong> assets<br />
and provisions according <strong>to</strong> new accounting policy and <strong>the</strong> level of allowance for impairment losses on <strong>financial</strong> assets<br />
and provisions based on matrix system amounts KM 13,408 thousand. This amount will be transferred from Retained earnings<br />
<strong>to</strong> Regula<strong>to</strong>ry reserves in 2012, based on decision of <strong>the</strong> <strong>Bank</strong>’s Assembly.<br />
Basis of preparation<br />
Effect on Regula<strong>to</strong>ry reserves<br />
(within <strong>the</strong> equity)<br />
Adjustment on allowance for impairment losses on loans <strong>to</strong> cus<strong>to</strong>mers (Note 18) 59,604<br />
Adjustment on provision for commitments and contingencies (Note 28) 20,772<br />
Adjustment on allowance for impairment losses on o<strong>the</strong>r assets and receivables (Note 24) 6,679<br />
Release of allowance for impairment losses on tangible assets (Note 25) 1,701<br />
Release of allowance for impairment losses on investments in subsidiaries (Note 22) 202<br />
Release of allowance for impairment losses on placements with o<strong>the</strong>r banks (Note 17) 77<br />
89,035<br />
The <strong>financial</strong> <strong>statements</strong> have been prepared on <strong>the</strong> his<strong>to</strong>rical cost basis except for <strong>the</strong> revaluation of certain non-current<br />
assets and <strong>financial</strong> instruments.<br />
The <strong>financial</strong> <strong>statements</strong> are prepared on an accrual basis of accounting, under <strong>the</strong> going concern assumption.<br />
The <strong>financial</strong> <strong>statements</strong> are presented in thousands of Convertible Mark (KM ’000) which is <strong>the</strong> functional currency of<br />
<strong>the</strong> <strong>Bank</strong>.<br />
The preparation of <strong>financial</strong> <strong>statements</strong> in conformity with IFRS requires management <strong>to</strong> make estimates and assumptions<br />
that affect <strong>the</strong> reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at <strong>the</strong> date of<br />
<strong>the</strong> <strong>financial</strong> <strong>statements</strong> and <strong>the</strong>ir reported amounts of revenues and expenses during <strong>the</strong> reporting period. These estimates<br />
are based on <strong>the</strong> information available as at <strong>the</strong> reporting period date and actual results could differ from those<br />
estimates.<br />
The <strong>Bank</strong> has issued <strong>the</strong>se <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> as required by <strong>the</strong> law in Federation of Bosnia and Herzegovina,<br />
and its investments in subsidiaries and associates are presented in <strong>the</strong>se <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> at<br />
cost. The <strong>Bank</strong> will also prepare consolidated <strong>financial</strong> <strong>statements</strong> in accordance with IFRS. For a better understanding of<br />
<strong>the</strong> Group as a whole, users should read <strong>the</strong> consolidated <strong>financial</strong> <strong>statements</strong>.<br />
www.raiffeisenbank.ba 87
Financial Statements<br />
88<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Interest income and expense<br />
Interest income is accrued on a time basis, by reference <strong>to</strong> <strong>the</strong> principal outstanding and at <strong>the</strong> effective interest rate applicable,<br />
which is <strong>the</strong> rate that exactly discounts estimated future cash receipts through <strong>the</strong> expected life of <strong>the</strong> <strong>financial</strong><br />
asset <strong>to</strong> that asset’s net carrying amount.<br />
Loan origination fees, after approval and drawdown of loans, are deferred (<strong>to</strong>ge<strong>the</strong>r with related direct costs) and recognized<br />
as an adjustment <strong>to</strong> <strong>the</strong> effective yield of <strong>the</strong> loan over its life.<br />
Interest charged on deposits is added <strong>to</strong> <strong>the</strong> principal where this is foreseen by <strong>the</strong> agreement. Interest income is suspended<br />
when it is considered that recovery of <strong>the</strong> income is unlikely. Suspended interest is recognized as income when collected.<br />
Fee and commission income and expense<br />
Fees and commissions consist mainly of fees earned on domestic and foreign payment transactions, and fees for loans<br />
and o<strong>the</strong>r credit instruments issued by <strong>the</strong> <strong>Bank</strong>.<br />
Fees for payment transactions are recognised in <strong>the</strong> period when services are rendered.<br />
Taxation<br />
Income tax expense represents <strong>the</strong> sum of <strong>the</strong> tax currently payable and deferred tax.<br />
The tax expense is based on taxable income for <strong>the</strong> year. Taxable income differs from net income as reported in <strong>the</strong> income<br />
statement because it excludes items of income or expense that are taxable or deductible in o<strong>the</strong>r years and it fur<strong>the</strong>r<br />
excludes items that are never taxable or deductible. The <strong>Bank</strong>’s liability for current tax is calculated using tax rates<br />
that have been enacted or substantively enacted by <strong>the</strong> reporting period date.<br />
Deferred tax is <strong>the</strong> tax expected <strong>to</strong> be payable or recoverable on differences between <strong>the</strong> carrying amount of assets and<br />
liabilities in <strong>the</strong> <strong>financial</strong> <strong>statements</strong> and <strong>the</strong> corresponding tax basis used in <strong>the</strong> computation of taxable profit, and is accounted<br />
for using <strong>the</strong> balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary<br />
differences and deferred tax assets are recognised <strong>to</strong> <strong>the</strong> extent that it is probable that taxable profits will be<br />
available against which deductible temporary differences can be utilised.<br />
The carrying amount of deferred tax assets is reviewed at each reporting period date and reduced <strong>to</strong> <strong>the</strong> extent that it is<br />
no longer probable that sufficient taxable profit will be available <strong>to</strong> allow all or part of <strong>the</strong> asset <strong>to</strong> be recovered. Deferred<br />
tax is calculated at <strong>the</strong> tax rates that are expected <strong>to</strong> apply in <strong>the</strong> period when <strong>the</strong> liability is settled or <strong>the</strong> asset realised.<br />
Deferred tax is charged or credited in <strong>the</strong> income statement, except when it relates <strong>to</strong> items charged or credited directly<br />
<strong>to</strong> equity, in which case <strong>the</strong> deferred tax is also dealt with in equity.<br />
Deferred tax assets and liabilities are offset when <strong>the</strong>y relate <strong>to</strong> income taxes levied by <strong>the</strong> same taxation authority and<br />
<strong>the</strong> <strong>Bank</strong> has <strong>the</strong> ability and intention <strong>to</strong> settle on a net basis.<br />
The <strong>Bank</strong> is subject <strong>to</strong> various indirect taxes which are included in administrative expenses.<br />
Investments in subsidiaries<br />
A subsidiary is an entity which is controlled by <strong>the</strong> <strong>Bank</strong>. Control is achieved where <strong>the</strong> <strong>Bank</strong> has <strong>the</strong> power <strong>to</strong> govern <strong>the</strong><br />
<strong>financial</strong> and operating policies of an entity so as <strong>to</strong> obtain benefits from its activities.<br />
Investments in subsidiaries in <strong>the</strong>se <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> are stated at cost less any impairment in <strong>the</strong> value<br />
of individual investments if needed.<br />
www.raiffeisenbank.ba
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Investments in associates<br />
Financial Statements<br />
An associate is an entity over which <strong>the</strong> <strong>Bank</strong> has significant influence and that is nei<strong>the</strong>r a subsidiary nor an interest in a<br />
joint venture. Significant influence is <strong>the</strong> power <strong>to</strong> participate in <strong>the</strong> <strong>financial</strong> and operating policy decisions of <strong>the</strong> investee<br />
but is not control or joint control over those policies.<br />
Investments in associates in <strong>the</strong>se <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> are stated at cost less any impairment in <strong>the</strong> value<br />
of individual investments if needed.<br />
Cash and cash equivalents<br />
For <strong>the</strong> purpose of reporting cash flows, cash and cash equivalents are defined as cash, balances with <strong>the</strong> Central <strong>Bank</strong><br />
of Bosnia and Herzegovina (<strong>the</strong> “CBBH”) and current accounts with o<strong>the</strong>r banks.<br />
Cash and cash equivalents excludes <strong>the</strong> obliga<strong>to</strong>ry minimum reserve with <strong>the</strong> CBBH as <strong>the</strong>se funds are not available for<br />
<strong>the</strong> <strong>Bank</strong>’s day <strong>to</strong> day operations. The compulsory minimum reserve with <strong>the</strong> CBBH is a required reserve <strong>to</strong> be held by all<br />
commercial banks licensed in Bosnia and Herzegovina.<br />
Financial assets<br />
Financial assets are recognized and derecognized on a trade date where <strong>the</strong> purchase or sale of an investment is under<br />
a contract whose terms require delivery of <strong>the</strong> instrument within <strong>the</strong> timeframe established by <strong>the</strong> market concerned, and<br />
are initially measured at fair value, net of transaction costs, except for those <strong>financial</strong> assets classified as at fair value<br />
through profit or loss, which are initially measured at fair value.<br />
Financial assets are classified in<strong>to</strong> <strong>the</strong> following specified categories: <strong>financial</strong> assets as “at fair value through profit or<br />
loss” (FVTPL), “available-for-sale” (AFS), “held-<strong>to</strong>-maturity investments”, and “loans and receivables”. The classification<br />
depends on <strong>the</strong> nature and purpose of <strong>the</strong> <strong>financial</strong> assets and is determined at <strong>the</strong> time of initial recognition.<br />
Method of effective interest rate<br />
The effective interest method is a method of calculating <strong>the</strong> amortized cost of a <strong>financial</strong> asset and of allocating interest<br />
income over <strong>the</strong> relevant period. The effective interest rate is <strong>the</strong> rate that exactly discounts estimated future cash receipts<br />
(including all fees on points paid or received that form an integral part of <strong>the</strong> effective interest rate, transaction costs and<br />
o<strong>the</strong>r premiums or discounts) through <strong>the</strong> expected life of <strong>the</strong> <strong>financial</strong> asset, or, where appropriate, a shorter period.<br />
Income is recognized on an effective interest basis for <strong>financial</strong> instruments: “held-<strong>to</strong>-maturity investments”, “availablefor-sale”<br />
and “loans and receivables”.<br />
Loans and receivables<br />
Loans and o<strong>the</strong>r receivables that have fixed or determinable payments that are not quoted in an active market are classified<br />
as loans and receivables. Loans and receivables are measured at amortized cost using <strong>the</strong> effective interest method,<br />
less any impairment. Interest income is recognized by applying <strong>the</strong> effective interest rate, except for short-term receivables<br />
when <strong>the</strong> recognition of interest would be immaterial.<br />
www.raiffeisenbank.ba 89
Financial Statements<br />
90<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Financial assets at FVTPL<br />
The <strong>Bank</strong> classifies a <strong>financial</strong> asset as at FVTPL where <strong>the</strong> <strong>financial</strong> asset is ei<strong>the</strong>r held for trading or it is designated as<br />
at FVTPL.<br />
A <strong>financial</strong> asset is classified as held for trading if:<br />
• it has been acquired principally for <strong>the</strong> purpose of selling in <strong>the</strong> near future; or<br />
• it is a part of an identified portfolio of <strong>financial</strong> instruments that <strong>the</strong> <strong>Bank</strong> manages <strong>to</strong>ge<strong>the</strong>r and has a recent actual<br />
pattern of short-term profit-taking; or<br />
• it is a derivative that is not designated and effective as a hedging instrument.<br />
A <strong>financial</strong> asset o<strong>the</strong>r than a <strong>financial</strong> asset held for trading may be designated as at FVTPL upon initial recognition if:<br />
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would o<strong>the</strong>rwise<br />
arise; or<br />
• <strong>the</strong> <strong>financial</strong> asset forms part of a group of <strong>financial</strong> assets or <strong>financial</strong> liabilities or both, which is managed and<br />
its performance is evaluated on a fair value basis, in accordance with <strong>the</strong> <strong>Bank</strong>’s documented risk management<br />
or investment strategy, and information about <strong>the</strong> grouping is provided internally on that basis; or<br />
• it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits <strong>the</strong> entire combined<br />
contract (asset or liability) <strong>to</strong> be designated as at FVTPL.<br />
Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain<br />
or loss recognised in profit or loss incorporates any dividend or interest earned on <strong>the</strong> <strong>financial</strong> asset. Fair value is determined<br />
in <strong>the</strong> manner described in Note 36.10.<br />
Held-<strong>to</strong>-maturity investments<br />
Bills of exchange, debentures and government bonds with fixed or determinable payments and fixed maturity dates that<br />
<strong>the</strong> <strong>Bank</strong> has <strong>the</strong> positive intent and ability <strong>to</strong> hold <strong>to</strong> maturity are classified as held-<strong>to</strong>-maturity investments. Held-<strong>to</strong>maturity<br />
investments are recorded at amortized cost using <strong>the</strong> effective interest method less any impairment, with revenue<br />
recognized on an effective yield basis.<br />
AFS <strong>financial</strong> assets<br />
Listed shares and listed redeemable notes held by <strong>the</strong> <strong>Bank</strong> that are traded in an active market are classified as being<br />
AFS and are stated at fair value. Fair value is determined in <strong>the</strong> manner described in <strong>the</strong> Note 36.10. Gains and losses<br />
arising from changes in fair value are recognized directly in equity in <strong>the</strong> investments revaluation reserve with <strong>the</strong> exception<br />
of impairment losses, interest calculated using <strong>the</strong> effective interest rate method and foreign exchange gains and losses<br />
on monetary assets, which are recognized directly in profit or loss. Where <strong>the</strong> investment is disposed of or is determined<br />
<strong>to</strong> be impaired, <strong>the</strong> cumulative gain or loss previously recognized in <strong>the</strong> investments revaluation reserve is included in profit<br />
or loss for <strong>the</strong> period.<br />
Dividends on AFS equity instruments are recognized in profit or loss when <strong>the</strong> <strong>Bank</strong>’s right <strong>to</strong> receive payments is established.<br />
The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated<br />
at <strong>the</strong> spot rate at <strong>the</strong> reporting period date. The change in fair value attributable <strong>to</strong> translation differences that result<br />
from a change in amortized cost of <strong>the</strong> asset is recognized in profit or loss, and o<strong>the</strong>r changes are recognized in equity.<br />
www.raiffeisenbank.ba
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Impairment of <strong>financial</strong> assets<br />
Financial Statements<br />
Financial assets, o<strong>the</strong>r than those at FVTPL, are assessed for indica<strong>to</strong>rs of impairment at each reporting period date. Financial<br />
assets are impaired where <strong>the</strong>re is objective evidence that, as a result of one or more events that occurred after<br />
<strong>the</strong> initial recognition of <strong>the</strong> <strong>financial</strong> asset, <strong>the</strong> estimated future cash flows of <strong>the</strong> investment have been impacted.<br />
Objective evidence of impairment could include:<br />
• significant <strong>financial</strong> difficulty of <strong>the</strong> counterparty; or<br />
• default or delinquency in interest or principal payments; or<br />
• it becoming probable that <strong>the</strong> borrower will enter bankruptcy or <strong>financial</strong> re-organisation.<br />
For <strong>financial</strong> assets carried at amortised cost, <strong>the</strong> amount of <strong>the</strong> impairment is <strong>the</strong> difference between <strong>the</strong> asset’s carrying<br />
amount and <strong>the</strong> present value of estimated future cash flows, discounted at <strong>the</strong> <strong>financial</strong> asset’s original effective interest<br />
rate.<br />
The carrying amount of <strong>the</strong> <strong>financial</strong> asset is reduced by <strong>the</strong> impairment loss directly for all <strong>financial</strong> assets with <strong>the</strong> exception<br />
of trade receivables, where <strong>the</strong> carrying amount is reduced through <strong>the</strong> use of an allowance account. When a trade<br />
receivable is considered uncollectible, it is written off against <strong>the</strong> allowance account. Subsequent recoveries of amounts<br />
previously written off are credited against <strong>the</strong> allowance account. Changes in <strong>the</strong> carrying amount of <strong>the</strong> allowance account<br />
are recognized in profit or loss.<br />
With <strong>the</strong> exception of AFS equity instruments, if, in a subsequent period, <strong>the</strong> amount of <strong>the</strong> impairment loss decreases and<br />
<strong>the</strong> decrease can be related objectively <strong>to</strong> an event occurring after <strong>the</strong> impairment was recognized, <strong>the</strong> previously recognized<br />
impairment loss is reversed through profit or loss <strong>to</strong> <strong>the</strong> extent that <strong>the</strong> carrying amount of <strong>the</strong> investment at <strong>the</strong> date<br />
<strong>the</strong> impairment is reversed does not exceed what <strong>the</strong> amortised cost would have been had <strong>the</strong> impairment not been recognized.<br />
In respect of AFS equity securities, any increase in fair value subsequent <strong>to</strong> an impairment loss is recognized directly in<br />
equity.<br />
Derecognition of <strong>financial</strong> assets<br />
The <strong>Bank</strong> derecognizes a <strong>financial</strong> asset only when <strong>the</strong> contractual rights <strong>to</strong> <strong>the</strong> cash flows from <strong>the</strong> asset expire; or it transfers<br />
<strong>the</strong> <strong>financial</strong> asset and substantially all <strong>the</strong> risks and rewards of ownership of <strong>the</strong> asset <strong>to</strong> ano<strong>the</strong>r entity. If <strong>the</strong> <strong>Bank</strong><br />
nei<strong>the</strong>r transfers nor retains substantially all <strong>the</strong> risks and rewards of ownership and continues <strong>to</strong> control <strong>the</strong> transferred<br />
asset, <strong>the</strong> <strong>Bank</strong> continues <strong>to</strong> recognize <strong>the</strong> <strong>financial</strong> asset.<br />
Financial liabilities and equity instruments issued by <strong>the</strong> <strong>Bank</strong><br />
Classification as debt or equity<br />
Debt and equity instruments are classified as ei<strong>the</strong>r <strong>financial</strong> liabilities or as equity in accordance with <strong>the</strong> substance of<br />
<strong>the</strong> contractual arrangement.<br />
Equity instruments<br />
An equity instrument is any contract that evidences a residual interest in <strong>the</strong> assets of an entity after deducting all of its liabilities.<br />
Equity instruments issued by <strong>the</strong> <strong>Bank</strong> are recorded at <strong>the</strong> proceeds received, net of direct issue costs.<br />
www.raiffeisenbank.ba 91
Financial Statements<br />
92<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Financial guarantee contract liabilities<br />
Financial guarantee contract liabilities are measured initially at <strong>the</strong>ir fair values and are subsequently measured at <strong>the</strong><br />
higher of:<br />
• <strong>the</strong> amount of <strong>the</strong> obligation under <strong>the</strong> contract, as determined in accordance with IAS 37 “Provisions, Contingent<br />
Liabilities and Contingent Assets”; or<br />
• <strong>the</strong> amount initially recognized less, where appropriate, cumulative amortization recognized in accordance with<br />
<strong>the</strong> revenue recognition policies set out at above.<br />
Financial liabilities<br />
Financial liabilities are classified ei<strong>the</strong>r as “<strong>financial</strong> liabilities at FVTPL” or “o<strong>the</strong>r <strong>financial</strong> liabilities”. The <strong>Bank</strong> creates<br />
one category of <strong>financial</strong> liabilities, for which basis of accounting is disclosed below.<br />
O<strong>the</strong>r <strong>financial</strong> liabilities<br />
O<strong>the</strong>r <strong>financial</strong> liabilities, including borrowings, are initially measured at fair value, net of transaction costs.<br />
O<strong>the</strong>r <strong>financial</strong> liabilities are subsequently measured at amortized cost using <strong>the</strong> effective interest method, with interest<br />
expense recognized on an effective yield basis.<br />
The effective interest method is a method of calculating <strong>the</strong> amortized cost of a <strong>financial</strong> liability and of allocating interest<br />
expense over <strong>the</strong> relevant period. The effective interest rate is <strong>the</strong> rate that exactly discounts estimated future cash payments<br />
through <strong>the</strong> expected life of <strong>the</strong> <strong>financial</strong> liability, or, where appropriate, a shorter period.<br />
Derecognition of <strong>financial</strong> liabilities<br />
The <strong>Bank</strong> derecognizes <strong>financial</strong> liabilities when, and only when, <strong>the</strong> <strong>Bank</strong>’s obligations are discharged, cancelled or <strong>the</strong>y<br />
expire.<br />
Tangible assets<br />
Property and equipment are stated at cost, less accumulated depreciation and any recognized accumulated impairment<br />
losses. The purchase cost includes <strong>the</strong> purchase price and all costs directly related <strong>to</strong> bringing <strong>the</strong> asset in<strong>to</strong> operating condition<br />
for its intended use. The cost of ongoing maintenance and repairs, replacements and investment maintenance are<br />
recorded as a cost when incurred.<br />
Properties in <strong>the</strong> course of construction for supply or administrative purposes are carried at cost, less any recognised impairment<br />
loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with<br />
<strong>the</strong> <strong>Bank</strong>’s accounting policy. Such properties are classified <strong>to</strong> <strong>the</strong> appropriate categories of property and equipment<br />
when completed and ready for intended use.<br />
Depreciation is charged from <strong>the</strong> moment <strong>the</strong> fixed asset is ready for its intended use. It is calculated in <strong>the</strong> basis of <strong>the</strong><br />
estimated useful life of <strong>the</strong> asset, using <strong>the</strong> straight-line method as follows. Estimated depreciation rates were as follows:<br />
Buildings 1.3%<br />
Furniture and vehicles 11%-15.5%<br />
Computers 33.3%<br />
O<strong>the</strong>r equipment 7%-20%<br />
The gain or loss arising on <strong>the</strong> disposal or retirement of an asset is determined as <strong>the</strong> difference between <strong>the</strong> sales proceeds<br />
and <strong>the</strong> carrying amount of <strong>the</strong> asset and is recognized in <strong>the</strong> income statement in <strong>the</strong> period <strong>the</strong>y occur.<br />
www.raiffeisenbank.ba
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Impairment<br />
At each reporting period date, <strong>the</strong> <strong>Bank</strong> reviews <strong>the</strong> carrying amounts of its property and equipment <strong>to</strong> determine whe<strong>the</strong>r<br />
<strong>the</strong>re is any indication that those assets have suffered an impairment loss. If any such indication exists, <strong>the</strong> recoverable<br />
amount of <strong>the</strong> asset is estimated in order <strong>to</strong> determine <strong>the</strong> extent of <strong>the</strong> impairment loss (if any).<br />
Recoverable amount is <strong>the</strong> greater of net selling price and value in use. In assessing value in use, <strong>the</strong> estimated future<br />
cash flows are discounted <strong>to</strong> <strong>the</strong>ir present value using a pre-tax discount rate that reflects current market assessments of<br />
<strong>the</strong> time value of money and <strong>the</strong> risks specific <strong>to</strong> <strong>the</strong> asset.<br />
If <strong>the</strong> recoverable amount of an asset is estimated <strong>to</strong> be less than its carrying amount, <strong>the</strong> carrying amount of <strong>the</strong> asset<br />
is reduced <strong>to</strong> its recoverable amount. Impairment losses are recognized as an expense immediately, unless <strong>the</strong> relevant<br />
asset is land or buildings o<strong>the</strong>r than investment property carried at a revalued amount, in which case <strong>the</strong> impairment loss<br />
is treated as a revaluation decrease.<br />
Where an impairment loss subsequently reverses, <strong>the</strong> carrying amount of <strong>the</strong> asset is increased <strong>to</strong> <strong>the</strong> revised estimate of<br />
its recoverable amount, but so that <strong>the</strong> increased carrying amount does not exceed <strong>the</strong> carrying amount that would have<br />
been determined had no impairment loss been recognized for <strong>the</strong> asset in prior years. A reversal of an impairment loss<br />
is recognized as income immediately, unless <strong>the</strong> relevant asset is carried at a revalued amount, in which case <strong>the</strong> reversal<br />
of <strong>the</strong> impairment loss is treated as a revaluation increase.<br />
Intangible assets<br />
Intangible assets are measured initially at purchase cost and are amortised on a straight-line basis over <strong>the</strong>ir estimated<br />
useful lives.<br />
Employee benefits<br />
On behalf of its employees, <strong>the</strong> <strong>Bank</strong> pays personal income tax and contributions for pension, disability, health and unemployment<br />
insurance, on and from salaries, which are calculated as per <strong>the</strong> set legal rates during <strong>the</strong> course of <strong>the</strong> year<br />
on <strong>the</strong> gross salary. The <strong>Bank</strong> pays those tax and contributions in <strong>the</strong> favour of <strong>the</strong> institutions of <strong>the</strong> Federation of Bosnia<br />
and Herzegovina (on federal and can<strong>to</strong>nal levels), Republika Srpska and Br~ko District. In addition, meal allowances, transport<br />
allowances and vacation bonuses are paid in accordance with <strong>the</strong> local legislation. These expenses are recognized<br />
in <strong>the</strong> income statement in <strong>the</strong> period in which <strong>the</strong> salary expense is incurred.<br />
Retirement severance payments<br />
Financial Statements<br />
The <strong>Bank</strong> makes provision for retirement severance payments in <strong>the</strong> amount of ei<strong>the</strong>r three average net salaries of <strong>the</strong><br />
employee disbursed by <strong>the</strong> <strong>Bank</strong> or three average salaries of <strong>the</strong> Federation of Bosnia and Herzegovina as in <strong>the</strong> most<br />
recent published report by <strong>the</strong> Federal Statistics Bureau, depending on what is more favourable <strong>to</strong> <strong>the</strong> employee.<br />
The cost of retirement severance payments are recognized when earned.<br />
www.raiffeisenbank.ba 93
Financial Statements<br />
94<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Foreign currency translation<br />
Transactions in currencies o<strong>the</strong>r than Bosnia and Herzegovina KM are initially recorded at <strong>the</strong> rates of exchange prevailing<br />
on <strong>the</strong> dates of <strong>the</strong> transactions. Monetary assets and liabilities are translated at <strong>the</strong> rates prevailing on <strong>the</strong> reporting<br />
period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at <strong>the</strong><br />
rates prevailing on <strong>the</strong> date when <strong>the</strong> fair value was determined. Non-monetary items that are measured in terms of his<strong>to</strong>rical<br />
cost in a foreign currency are not retranslated. Profits and losses arising on translation are included in <strong>the</strong> income<br />
statement for <strong>the</strong> period.<br />
The <strong>Bank</strong> values its assets and liabilities by middle rate of <strong>the</strong> CBBH valid at <strong>the</strong> date of balance sheet. The principal rates<br />
of exchange set forth by <strong>the</strong> Central <strong>Bank</strong> and used in <strong>the</strong> preparation of <strong>the</strong> <strong>Bank</strong>’s balance sheet at <strong>the</strong> reporting dates<br />
were as follows:<br />
31 December 2011 EUR 1 = KM 1.95583 USD 1 = KM 1.511577<br />
31 December 2010 EUR 1 = KM 1.95583 USD 1 = KM 1.472764<br />
Provisions<br />
Provisions are recognized when <strong>the</strong> <strong>Bank</strong> has a present obligation (legal or constructive) as a result of a past event, it is<br />
probable that <strong>the</strong> <strong>Bank</strong> will be required <strong>to</strong> settle <strong>the</strong> obligation, and a reliable estimate can be made of <strong>the</strong> amount of<br />
<strong>the</strong> obligation.<br />
The amount recognized as a provision is <strong>the</strong> best estimate of <strong>the</strong> consideration required <strong>to</strong> settle <strong>the</strong> present obligation<br />
at <strong>the</strong> reporting period date, taking in<strong>to</strong> account <strong>the</strong> risks and uncertainties surrounding <strong>the</strong> obligation. Where a provision<br />
is measured using <strong>the</strong> cash flows estimated <strong>to</strong> settle <strong>the</strong> present obligation, its carrying amount is <strong>the</strong> present value<br />
of those cash flows.<br />
www.raiffeisenbank.ba
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
4. CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATIONS<br />
Financial Statements<br />
In <strong>the</strong> application of <strong>the</strong> <strong>Bank</strong>’s accounting policies, which are described in Note 3, <strong>the</strong> Management is required <strong>to</strong> make<br />
judgements, estimates and assumptions about <strong>the</strong> carrying amounts of assets and liabilities that are not readily apparent<br />
from o<strong>the</strong>r sources. The estimates and associated assumptions are based on his<strong>to</strong>rical experience and o<strong>the</strong>r fac<strong>to</strong>rs<br />
that are considered <strong>to</strong> be relevant. Actual results may differ from <strong>the</strong>se estimates.<br />
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions <strong>to</strong> accounting estimates are<br />
recognised in <strong>the</strong> period in which <strong>the</strong> estimate is revised if <strong>the</strong> revision affects only that period or in <strong>the</strong> period of <strong>the</strong> revision<br />
and future periods if <strong>the</strong> revision affects both current and future periods.<br />
Key sources of estimation uncertainty<br />
The following are <strong>the</strong> key assumptions concerning <strong>the</strong> future, and o<strong>the</strong>r key sources of estimation uncertainty at <strong>the</strong> reporting<br />
period date, that have a significant risk of causing a material adjustment <strong>to</strong> <strong>the</strong> carrying amounts of assets and<br />
liabilities within <strong>the</strong> next <strong>financial</strong> year.<br />
Useful lives of property and equipment<br />
As described at Note 3 above, <strong>the</strong> <strong>Bank</strong> reviews <strong>the</strong> estimated useful lives of property and equipment at <strong>the</strong> end of each<br />
annual reporting period.<br />
Impairment losses on loans and receivables<br />
As described at Note 3 above, at each reporting period date, <strong>the</strong> <strong>Bank</strong> assessed indica<strong>to</strong>rs for impairment of loans and<br />
receivables and <strong>the</strong>ir impact on <strong>the</strong> estimated future cash flows from <strong>the</strong> loans and receivables.<br />
Fair value of <strong>financial</strong> instruments<br />
As described in Note 36.10, <strong>the</strong> Management use <strong>the</strong>ir judgement in selecting an appropriate valuation technique for <strong>financial</strong><br />
instruments not quoted in an active market. Valuation techniques commonly used by market practitioners are applied.<br />
Financial instruments, o<strong>the</strong>r than loans and receivables, are valued using a discounted cash flow analysis based<br />
on assumptions supported, where possible, by observable market prices or rates. The estimation of fair value of unlisted<br />
shares includes some assumptions not supported by observable market prices or rates.<br />
www.raiffeisenbank.ba 95
Financial Statements<br />
96<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
5. INTEREST AND SIMILAR INCOME<br />
6. INTEREST AND SIMILAR EXPENSES<br />
7. FEE AND COMMISSION INCOME<br />
www.raiffeisenbank.ba<br />
2011 2010<br />
Citizens 113,085 117,284<br />
Companies 83,443 85,265<br />
Financial assets held-<strong>to</strong>-maturity – Government bonds (Note 21) 4,881 3,441<br />
Domestic banks 4,367 2,268<br />
Foreign banks 2,413 2,004<br />
Non-for-profit organizations 26 34<br />
208,215 210,296<br />
2011 2010<br />
Citizens 36,010 43,734<br />
Companies 24,664 30,543<br />
Foreign banks 10,405 12,171<br />
Non-for-profit organizations 594 28<br />
Domestic banks 32 64<br />
71,705 86,540<br />
2011 2010<br />
Payment transactions 26,771 26,810<br />
Transactions with citizens 22,758 19,656<br />
Loans and guarantees 10,540 10,772<br />
FX transactions 3,665 2,862<br />
O<strong>the</strong>r 1,274 999<br />
65,008 61,099
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
8. FEE AND COMMISSION EXPENSES<br />
9. NET FINANCIAL INCOME<br />
10. RECOVERIES<br />
11. OTHER OPERATING INCOME<br />
Financial Statements<br />
2011 2010<br />
Borrowed funds and o<strong>the</strong>r bank services 7,001 5,485<br />
Correspondent accounts 1,498 1,970<br />
Domestic payment transactions 644 635<br />
9,143 8,090<br />
2011 2010<br />
Net gains on foreign exchange business transactions 10,969 9,443<br />
Interest income from bonds at FVTPL (Note 20) 8,695 9,107<br />
Net gain from sale of shares / securities at FVTPL (Note 20) 94 23<br />
Dividend income 55 79<br />
Net losses on reconciliations with CBBH’s exchange rates (2,031) (1,542)<br />
Fair value adjustment on bonds at FVTPL (Note 20) (1,852) (1,614)<br />
Net loss from sale of bonds at FVTPL (Note 20) (1,519) (374)<br />
Net loss from sale of bonds held-<strong>to</strong>-maturity (Note 21) (920) -<br />
Fair value adjustment on shares / securities at FVTPL (Note 20) (138) (407)<br />
Net loss from forward operations (6) (1)<br />
13,347 14,714<br />
2011 2010<br />
Interest 3,099 3,321<br />
Principal 1,271 8,160<br />
Fees 3 6<br />
4,373 11,487<br />
2011 2010<br />
Net gain on disposal of tangible assets 2,567 -<br />
Rent income 886 242<br />
Release of accrued expenses from previous year 509 561<br />
Written-off liabilities 443 400<br />
O<strong>the</strong>r income 2,821 1,796<br />
7,226 2,999<br />
www.raiffeisenbank.ba 97
Financial Statements<br />
98<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
12. ADMINISTRATIVE EXPENSES<br />
13. IMPAIRMENT LOSSES AND PROVISIONS<br />
www.raiffeisenbank.ba<br />
2011 2010<br />
Gross salaries 47,948 47,168<br />
O<strong>the</strong>r employee benefits 11,687 12,002<br />
Deposit insurance premiums 7,452 7,372<br />
Services 7,178 7,047<br />
Maintenance 7,073 5,607<br />
Consultancy expenses 5,616 6,163<br />
Telecommunication expense 5,309 5,514<br />
Rent 4,693 5,055<br />
Representation and marketing expense 4,158 3,882<br />
O<strong>the</strong>r taxes and dues 2,753 1,731<br />
Material expenses 2,734 2,930<br />
Asset insurance premiums 2,400 2,599<br />
Energy 2,372 2,013<br />
Insurance expense for employees 1,224 1,534<br />
Education 493 742<br />
Provision for o<strong>the</strong>r employee benefits per IAS 19 (Note 28) 319 1,434<br />
Transportation 203 243<br />
Donations 149 124<br />
Settlement of court cases - 1,440<br />
Net loss on disposal of tangible assets - 455<br />
O<strong>the</strong>r expenses 4,118 4,301<br />
117,879 119,356<br />
2011 2010<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers (Note 18) 39,164 65,781<br />
Commitments and contingencies (Note 28) 673 1,434<br />
Legal proceedings (Note 28) 585 -<br />
O<strong>the</strong>r assets and receivables (Note 24) 91 1,391<br />
Tangible assets (Note 25) - 860<br />
Placements with o<strong>the</strong>r banks (Note 17) - 43<br />
Investments in subsidiaries (Note 22) - (12)<br />
40,513 69,497
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
14. INCOME TAX<br />
Financial Statements<br />
Tax liability is based on accounting income taking in<strong>to</strong> <strong>the</strong> account non-deductible expenses and non-taxable income. Tax<br />
income rate for <strong>the</strong> year ended 31 December 2011 and 31 December 2010 was 10%. Total tax recognized in <strong>the</strong> income<br />
statement may be presented as follows:<br />
Adjustment between income tax presented in tax balance and accounting income tax is presented as follows:<br />
Changes in deferred tax asset can be presented as follows:<br />
2011 2010<br />
Current income tax 5,798 2,312<br />
Deferred income tax (377) (307)<br />
5,421 2,005<br />
2011 2010<br />
Profit before income tax 49,274 7,877<br />
Income tax expense at 10% 4,928 788<br />
Effects of non-deductible expenses 1,281 924<br />
Effects of non-taxable income (780) (249)<br />
Effects of unrecognized income 368 307<br />
Effects of transfer pricing 1 5<br />
Effects of different income tax legislation – Republika Srpska - 537<br />
Current income tax 5,798 2,312<br />
Effective tax rate 11.77% 29.35%<br />
2011 2010<br />
Balance as at 1 January 469 162<br />
Recognized deferred tax asset for <strong>the</strong> year 377 307<br />
Balance as at 31 December 846 469<br />
The Management of <strong>the</strong> <strong>Bank</strong> believes that <strong>the</strong> deferred asset will be recoverable and/or utilized in near future, and <strong>the</strong>refore,<br />
deferred tax assets have been recognized in <strong>the</strong> accompanying <strong>financial</strong> <strong>statements</strong>.<br />
www.raiffeisenbank.ba 99
100<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
15. CASH AND CASH EQUIVALENTS<br />
16. OBLIGATORY RESERVE AT CENTRAL BANK OF BOSNIA AND HERZEGOVINA<br />
Minimum obliga<strong>to</strong>ry reserve was calculated as a percentage of <strong>the</strong> average amount of <strong>to</strong>tal deposits and borrowings for<br />
each working day during 10 calendar days following <strong>the</strong> period of maintaining <strong>the</strong> obliga<strong>to</strong>ry reserve. The rates of minimum<br />
obliga<strong>to</strong>ry reserve were as follows:<br />
• from 1 January 2010 <strong>to</strong> 31 January 2011 – 14% of <strong>to</strong>tal short-term deposits and borrowings and 7% of <strong>to</strong>tal<br />
long-term deposits and borrowings;<br />
• from 1 February <strong>to</strong> 31 December 2011 – 10% of <strong>to</strong>tal short-term deposits and borrowings and 7% of <strong>to</strong>tal longterm<br />
deposits and borrowings.<br />
Interest rate on funds kept up <strong>to</strong> minimum obliga<strong>to</strong>ry reserve amounts <strong>to</strong> 0.2%. Cash held at <strong>the</strong> obliga<strong>to</strong>ry reserve account<br />
with <strong>the</strong> CBBH is not available for daily operations without specific approval from <strong>the</strong> CBBH and FBA.<br />
www.raiffeisenbank.ba<br />
31 December 2011 31 December 2010<br />
Account with <strong>the</strong> CBBH in domestic currency 572,763 323,321<br />
Correspondent accounts with banks in foreign currency 83,461 49,082<br />
Cash on hand in domestic currency 41,034 41,783<br />
Cash on hand in foreign currency 19,562 20,745<br />
Checks in foreign currency 48 33<br />
716,868 434,964<br />
31 December 2011 31 December 2010<br />
Obliga<strong>to</strong>ry reserve 266,540 305,865<br />
266,540 305,865
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
17. PLACEMENTS WITH OTHER BANKS<br />
During 2011, <strong>the</strong> interest rates for placements in EUR were within <strong>the</strong> range from 0.12% p.a. <strong>to</strong> 1.62% p.a. (2010: from<br />
0.13% p.a. <strong>to</strong> 1.00% p.a.) and for placements in USD from 0.01% p.a. <strong>to</strong> 1.00% p.a. (2010: from 0.03% p.a. <strong>to</strong> 0.65%<br />
p.a.). Interest rates on placements in o<strong>the</strong>r currencies were from 0.02% p.a. <strong>to</strong> 5.10% p.a. (2010: from 0.01% p.a. <strong>to</strong><br />
5.00% p.a.).<br />
The movements in <strong>the</strong> allowance for impairment losses are summarized as follows:<br />
18. LOANS AND ADVANCES TO CUSTOMERS<br />
Financial Statements<br />
31 December 2011 31 December 2010<br />
OECD countries 225,917 250,313<br />
Bosnia and Herzegovina - 46<br />
225,917 250,359<br />
Less: Allowance for impairment losses on placements - (77)<br />
225,917 250,282<br />
2011 2010<br />
Balance as at 1 January 77 34<br />
Effects of change of accounting policy – release of allowance<br />
(Note 3)<br />
(77) -<br />
Increase in allowances (Note 13) - 43<br />
Balance as at 31 December - 77<br />
Short-term loans:<br />
31 December 2011 31 December 2010<br />
Short-term loans in domestic currency 733,802 635,771<br />
Short-term loans in foreign currency 4,696 224<br />
Current portion of long-term loans 584,308 472,647<br />
Long-term loans:<br />
1,322,806 1,108,642<br />
Long-term loans in domestic currency 1,817,636 1,701,490<br />
Long-term loans in foreign currency 25,461 32,705<br />
(Current portion of long-term loans) (584,308) (472,647)<br />
1,258,789 1,261,548<br />
Total loans before allowance 2,581,595 2,370,190<br />
Less: allowance for impairment losses (274,865) (127,000)<br />
2,306,730 2,243,190<br />
Short-term loans are granted for periods of 30 <strong>to</strong> 365 days. The majority of short-term loans in domestic currency are<br />
granted <strong>to</strong> clients for working capital financing. Long-term loans are mostly granted <strong>to</strong> individuals for housing and vehicle<br />
purchases. During 2011 <strong>the</strong> <strong>Bank</strong> decreased <strong>the</strong> level of new approved loans and concentrated more on collection<br />
of existing receivable balances.<br />
www.raiffeisenbank.ba 101
102<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
The movements in <strong>the</strong> allowance for impairment losses are summarized as follows:<br />
Total amount of non-performing loans on which interest was suspended as at 31 December 2011 and 2010 was KM<br />
300,638 thousand and KM 111,578 thousand, respectively.<br />
Total loans before allowance for impairment losses per industry may be presented as follows:<br />
Interest rates for granted loans as at 31 December 2011 and 2010 are summarized as follows:<br />
www.raiffeisenbank.ba<br />
31 December 2011 31 December 2010<br />
Citizens 1,280,927 1,153,610<br />
Trade 619,948 607,455<br />
Agriculture, forestry, mining and energy 371,187 347,072<br />
Services, finance, sport, <strong>to</strong>urism 103,392 76,791<br />
Construction industry 86,092 81,420<br />
Transport and telecommunications 47,881 43,099<br />
Administrative and o<strong>the</strong>r public institutions 25,707 49,778<br />
O<strong>the</strong>r 46,461 10,965<br />
Domestic currency<br />
2,581,595 2,370,190<br />
31 December 2011 31 December 2010<br />
KM ’000 Annual interest rates KM ’000 Annual interest rates<br />
Companies 1,271,478 5.53% - 18.00% 1,185,247 5.53% - 18.00%<br />
Citizens 1,279,960 2.00% - 18.00% 1,152,014 2.00% - 18.00%<br />
Foreign currency<br />
Companies 29,190 0.00% - 16.00% 31,333 8.55%<br />
Citizens 967 5.31% - 12.00% 1,596 7.00% - 9.60%<br />
2,581,595 2,370,190<br />
2011 2010<br />
Balance as at 1 January 127,000 118,319<br />
Effects of change of accounting policy – re-recognition of<br />
receivables previously written-off in full amount according <strong>to</strong><br />
superseded FBA’s decision (E category)<br />
Effects of change of accounting policy – release of allowance<br />
(Note 3)<br />
168,305 -<br />
(59,604) -<br />
Increase in allowances (Note 13) 39,164 65,781<br />
Write-offs - (57,100)<br />
Balance as at 31 December 274,865 127,000
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
19. FINANCIAL ASSETS AVAILABLE-FOR-SALE<br />
Movements in <strong>the</strong> fair value of <strong>the</strong>se assets were as follows:<br />
20. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS<br />
Government bonds<br />
Financial Statements<br />
31 December 2011 31 December 2010<br />
Visa International Service Association 3,111 2,101<br />
S.W.I.F.T. Belgium 121 121<br />
Securities’ Register of <strong>the</strong> Federation of B&H 32 14<br />
Sarajevo S<strong>to</strong>ck Exchange dd 30 -<br />
Bamcard dd Sarajevo 3 3<br />
Bosna Sunce Osiguranje dd Sarajevo 1 1<br />
<strong>Raiffeisen</strong> Training centar d.o.o. 1 1<br />
3,299 2,241<br />
2011 2010<br />
Balance as at 1 January 2,241 2,558<br />
Effect of <strong>the</strong> merger of <strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo<br />
in<strong>to</strong> <strong>the</strong> <strong>Bank</strong> (Note 34)<br />
48 -<br />
Fair value gain / (loss) 1,010 (317)<br />
Balance as at 31 December 3,299 2,241<br />
31 December 2011 31 December 2010<br />
Government bonds 153,011 163,120<br />
Shares / securities 5,886 1,664<br />
158,897 164,784<br />
31 December 2011 31 December 2010<br />
Romania 86,442 89,503<br />
France 14,787 9,742<br />
Germany 13,424 13,968<br />
Belgium 11,271 11,662<br />
Finland 10,771 11,072<br />
The Ne<strong>the</strong>rlands 10,634 10,679<br />
Italy 3,691 3,842<br />
Slovenia 1,991 2,111<br />
Spain - 6,483<br />
Portugal - 4,058<br />
153,011 163,120<br />
www.raiffeisenbank.ba 103
104<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
The <strong>Bank</strong> continued with trading activities of above-mentioned bonds in 2011 with <strong>the</strong> purpose of selling <strong>the</strong>m in <strong>the</strong> near<br />
future. Bonds are valued based on report obtained from Reuters showing <strong>the</strong> latest bids for <strong>the</strong> bonds as of 31 December<br />
2011. The <strong>Bank</strong> selects <strong>the</strong> six most active traders and takes <strong>the</strong> average of <strong>the</strong> latest bids <strong>to</strong> <strong>the</strong>se contribu<strong>to</strong>rs.<br />
Movements in <strong>the</strong> fair value of bonds at FVTPL were as follows:<br />
Interest income earned on <strong>the</strong> bonds portfolio in 2011 was KM 8,695 thousand (2010: KM 9,107 thousand) (Note 9).<br />
Shares / securities<br />
The <strong>Bank</strong> continued with trading activities of above-mentioned shares / securities in 2011 with <strong>the</strong> purpose of selling<br />
<strong>the</strong>m in <strong>the</strong> near future. Securities are quoted at <strong>the</strong> Sarajevo S<strong>to</strong>ck Exchange and Banja Luka S<strong>to</strong>ck Exchange.<br />
Movements in <strong>the</strong> fair value of shares / securities at FVTPL were as follows:<br />
www.raiffeisenbank.ba<br />
2011 2010<br />
Balance as at 1 January 163,120 118,781<br />
(Sales) / purchases during <strong>the</strong> year, net (6,738) 46,327<br />
Realised loss on disposal (Note 9) (1,519) (374)<br />
Fair value loss (Note 9) (1,852) (1,614)<br />
Balance as at 31 December 153,011 163,120<br />
31 December 2011 31 December 2010<br />
<strong>Raiffeisen</strong> CASH – Open Investment Fund 4,890 -<br />
Intesa Sanpaolo <strong>Bank</strong>a dd Bosna i Hercegovina 483 485<br />
Fabrika duhana Sarajevo dd Sarajevo 256 428<br />
BH Telecom dd Sarajevo 95 284<br />
Telecom Srpske a.d. Banja Luka 79 145<br />
Vakufska banka dd Sarajevo 40 53<br />
Klas dd Sarajevo 29 30<br />
Sarajevo osiguranje dd Sarajevo 13 113<br />
Velprom dd Sanski Most 1 1<br />
Nova banka a.d. Banja Luka - 91<br />
Metal a.d. Gradi{ka - 29<br />
Union banka dd Sarajevo - 5<br />
5,886 1,664<br />
2011 2010<br />
Balance as at 1 January 1,664 1,852<br />
Purchases during <strong>the</strong> year, net 4,266 196<br />
Realised gain on disposal (Note 9) 94 23<br />
Fair value loss (Note 9) (138) (407)<br />
Balance as at 31 December 5,886 1,664
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
21. FINANCIAL ASSETS HELD-TO-MATURITY<br />
(GOVERNMENT BONDS & TREASURY BILLS)<br />
Financial Statements<br />
31 December 2011 31 December 2010<br />
Austria 40,900 40,766<br />
Republika Srpska 29,500 -<br />
Belgium 20,585 21,024<br />
The Federation of Bosnia and Herzegovina 12,576 5,507<br />
Italy 12,471 12,615<br />
The Ne<strong>the</strong>rlands 10,132 10,191<br />
Slovenia 7,891 7,955<br />
Kommunalkredit Austria 4,035 4,034<br />
Albania - 25,206<br />
Portugal - 10,110<br />
138,090 137,408<br />
In 2010 <strong>the</strong> <strong>Bank</strong> purchased:<br />
• Bonds issued by <strong>the</strong> government of <strong>the</strong> Republic of Austria with <strong>the</strong> nominal value of EUR 6 million and USD 18<br />
million. The EUR bonds bear interest at <strong>the</strong> rates between 3.40% <strong>to</strong> 5.00% p.a. and mature between 15 July 2012<br />
and 20 Oc<strong>to</strong>ber 2014. The USD bonds bear interest at <strong>the</strong> rates between 3.25% p.a. and 5.00% p.a. and mature<br />
between 25 June 2013 and 19 May 2014.<br />
• Bonds issued by <strong>the</strong> government of <strong>the</strong> Kingdom of Belgium in <strong>the</strong> <strong>to</strong>tal value EUR 5 million and USD 6.5 million.<br />
The EUR bonds bear interest at 8% p.a. and mature on 24 December 2012. The USD bonds bear interest at 4.25%<br />
p.a. and mature on 3 September 2013.<br />
• Bonds issued by <strong>the</strong> Federation of Bosnia and Herzegovina with <strong>the</strong> nominal value of KM 8,044 thousand. The<br />
bonds bear interest at 2.5% p.a. and mature between 30 September 2011 and 30 June 2020.<br />
• Bonds issued by <strong>the</strong> government of <strong>the</strong> Republic of Italy with <strong>the</strong> nominal value of EUR 2 million and USD 5.5 million.<br />
The EUR bonds bear interest at 4.25% p.a. and mature on 15 Oc<strong>to</strong>ber 2012. The USD bonds bear interest<br />
at 5.625% p.a. and mature on 15 June 2012.<br />
• Bonds issued by Fortis <strong>Bank</strong> Nederland, <strong>the</strong> Ne<strong>the</strong>rlands with <strong>the</strong> nominal value of EUR 5 million. The bonds are<br />
under <strong>the</strong> guarantee of <strong>the</strong> government of <strong>the</strong> Ne<strong>the</strong>rlands. The bonds bear interest at 3.375% p.a. and mature<br />
on 19 May 2014.<br />
• Bonds issued by Nova Ljubljanska <strong>Bank</strong>a, Slovenia with <strong>the</strong> nominal value of EUR 3,959 thousand. The bonds are<br />
under <strong>the</strong> guarantee of <strong>the</strong> government of Slovenia. The bonds bear interest at 3.25% p.a. and mature on 23 July<br />
2012.<br />
• Bonds issued by Komunalkredit, Austria with <strong>the</strong> nominal value of EUR 2 million. The bonds are under <strong>the</strong> guarantee<br />
of <strong>the</strong> government of <strong>the</strong> Republic of Austria. The bonds bear interest at 3.125% p.a. and mature on 8 July<br />
2013.<br />
• 7,000 bonds issued by <strong>the</strong> government of Albania (EUR 13,086 thousand). The bonds did not bear any interest<br />
and <strong>the</strong>y matured on 29 March 2011 and 27 December 2011.<br />
• Bonds issued by Banif Banco International, Portugal with <strong>the</strong> nominal value of EUR 5 million. These bonds were<br />
under <strong>the</strong> guarantee of <strong>the</strong> government of Portugal. The bonds were bearing interest at 3.25% p.a. and should<br />
mature on 8 May 2012. However, due <strong>to</strong> significant deterioration in <strong>the</strong> creditworthiness of <strong>the</strong> government of Portugal,<br />
on 30 November 2011 <strong>the</strong> <strong>Bank</strong> reclassified <strong>the</strong>se bonds <strong>to</strong> <strong>financial</strong> assets available-for-sale and sold<br />
<strong>the</strong>m on 5 December 2011. Net loss from sale amounted <strong>to</strong> KM 920 thousand (Note 9).<br />
www.raiffeisenbank.ba 105
106<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
In 2011 <strong>the</strong> <strong>Bank</strong> purchased:<br />
• Bonds issued by <strong>the</strong> Federation of Bosnia and Herzegovina with <strong>the</strong> nominal value of KM 31,252 thousand bonds.<br />
The bonds bear interest at 2.5% p.a. and mature between 30 September 2011 and 30 June 2020.<br />
• Treasury bills issued by <strong>the</strong> Republika Srpska with <strong>the</strong> nominal value of KM 20 million, with no interest. The amount<br />
of KM 10 million matured on November 2011 and <strong>the</strong> rest matures on 15 June 2012.<br />
In 2011, <strong>the</strong> <strong>Bank</strong> recognized KM 1,832 thousand (2010: KM 1,833 thousand) of premium amortization expense and<br />
interest income earned on <strong>the</strong> bonds purchased from abroad amounting <strong>to</strong> KM 4,264 thousand (2010: KM 4,396 thousand).<br />
The <strong>Bank</strong> also recognized <strong>the</strong> amortized discount amounting <strong>to</strong> KM 1,998 thousand (2010: KM 834 thousand) and<br />
interest income amounting <strong>to</strong> KM 451 thousand (2010: KM 44 thousand) on bonds purchased from <strong>the</strong> Government of<br />
Federation of BiH. Therefore, <strong>to</strong>tal net interest income on bonds held-<strong>to</strong>-maturity was KM 4,881 thousand (2010: KM 3,441<br />
thousand) – Note 5.<br />
22. INVESTMENTS IN SUBSIDIARIES<br />
Subsidiary Industry<br />
<strong>Raiffeisen</strong> Special Assets Company d.o.o.<br />
Sarajevo<br />
<strong>Raiffeisen</strong> INVEST dru{tvo za upravljanje<br />
fondovima d.o.o. Sarajevo<br />
Investment in subsidiary <strong>Raiffeisen</strong> CAPITAL a.d. Banja Luka has been obtained through <strong>the</strong> merger of <strong>Raiffeisen</strong><br />
BROKERS d.o.o. Sarajevo in<strong>to</strong> <strong>the</strong> <strong>Bank</strong> (Note 34).<br />
The movements in <strong>the</strong> allowance for impairment losses are summarized as follows:<br />
www.raiffeisenbank.ba<br />
2011 2010<br />
Balance as at 1 January 202 214<br />
Effects of change of accounting policy – release of allowance<br />
(Note 3)<br />
% of<br />
share<br />
31 December<br />
2011<br />
31 December<br />
2010<br />
Financial advisory services 100% 1,983 1,983<br />
Fund management 100% 400 -<br />
<strong>Raiffeisen</strong> CAPITAL a.d. Banja Luka Agent for shares /securities 100% 53 -<br />
<strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo Agent for shares /securities 100% - 507<br />
2,436 2,490<br />
Less: allowance for impairment losses - (202)<br />
2,436 2,288<br />
(202) -<br />
Decrease in allowances (Note 13) - (12)<br />
Balance as at 31 December - 202
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Financial information about <strong>the</strong> <strong>Bank</strong>’s subsidiaries as of 31 December 2011 was as follows:<br />
<strong>Raiffeisen</strong> Special Assets Company d.o.o.<br />
Sarajevo<br />
<strong>Raiffeisen</strong> INVEST dru{tvo za upravljanje<br />
fondovima d.o.o. Sarajevo<br />
23. INVESTMENTS IN ASSOCIATE<br />
Total<br />
assets<br />
Owner’s<br />
equity / registered<br />
capital<br />
Financial information about <strong>the</strong> <strong>Bank</strong>’s associate as of 31 December 2011 was as follows:<br />
Total equity Revenue<br />
Financial Statements<br />
Profit /<br />
(loss) for<br />
<strong>the</strong> year<br />
3,420 1,983 2,271 559 78<br />
362 400 325 - (75)<br />
<strong>Raiffeisen</strong> CAPITAL a.d. Banja Luka 557 355 53 131 (9)<br />
Associate Industry<br />
% of<br />
share<br />
31 December<br />
2011<br />
31 December<br />
2010<br />
<strong>Raiffeisen</strong> LEASING d.o.o. Sarajevo Leasing 49.00% 8,173 8,173<br />
8,173 8,173<br />
31 December 2011<br />
Total assets 237,847<br />
Owners’ equity 17,191<br />
Total equity 17,774<br />
Revenue 14,136<br />
Net profit for <strong>the</strong> year 583<br />
www.raiffeisenbank.ba 107
108<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
24. OTHER ASSETS AND RECEIVABLES<br />
* These bonds were bought on 30 December 2010 with <strong>the</strong> settlement date on 5 January 2011. As of 5 January 2011 <strong>the</strong><br />
<strong>Bank</strong> transferred this amount <strong>to</strong> <strong>the</strong> held-<strong>to</strong>-maturity portfolio.<br />
The movements in allowance for impairment losses are summarized as follows:<br />
www.raiffeisenbank.ba<br />
31 December 2011 31 December 2010<br />
Receivable from spot FX transactions 9,295 2,524<br />
Receivables from credit cards operations 8,660 6,759<br />
Prepaid income tax 3,385 6,242<br />
Prepaid expenses 2,334 1,095<br />
Receivables from <strong>the</strong> tax authorities 2,070 1,830<br />
Fee receivables 1,460 620<br />
Advances paid 133 437<br />
Payments for purchase of bonds of <strong>the</strong> Federation of Bosnia<br />
and Herzegovina *<br />
- 1,134<br />
O<strong>the</strong>r assets 4,794 3,060<br />
32,131 23,701<br />
Less: allowance for impairment losses (534) (6,730)<br />
31,597 16,971<br />
2011 2010<br />
Balance as at 1 January 6,730 5,363<br />
Effects of change of accounting policy – re-recognition of<br />
receivables previously written-off in full amount according <strong>to</strong><br />
superseded FBA’s decision (E category)<br />
Effects of change of accounting policy – release of allowance<br />
(Note 3)<br />
392 -<br />
(6,679) -<br />
Increase in allowances (Note 13) 91 1,391<br />
Write-offs - (24)<br />
Balance as at 31 December 534 6,730
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
25. TANGIBLE AND INTANGIBLE ASSETS<br />
Land and<br />
buildings<br />
Vehicles<br />
Office<br />
equipment<br />
Work in<br />
progress<br />
Intangible<br />
assets<br />
Financial Statements<br />
COST<br />
Balance at 31 December 2010 100,247 1,617 44,191 36,310 13,580 195,945<br />
Additions - - - 9,015 - 9,015<br />
Increase due <strong>to</strong> merger of <strong>Raiffeisen</strong> Brokers<br />
d.o.o. Sarajevo (Note 34)<br />
150 30 164 - 158 502<br />
Transfer from small <strong>to</strong>ols and consumables in use - - 701 - - 701<br />
Transfers (from) / <strong>to</strong> 34,814 246 3,611 (42,199) 3,528 -<br />
Transfer <strong>to</strong> assets held for sale (403) - - - - (403)<br />
Disposals (770) (195) (2,443) (241) (43) (3,692)<br />
Balance at 31 December 2011<br />
ACCUMULATED DEPRECIATION<br />
134,038 1,698 46,224 2,885 17,223 202,068<br />
Balance at 31 December 2010 3,624 929 25,552 - 8,541 38,646<br />
Depreciation 1,464 234 5,849 - 2,108 9,655<br />
Increase due <strong>to</strong> merger of <strong>Raiffeisen</strong> Brokers<br />
d.o.o. Sarajevo (Note 34)<br />
- 7 127 - 90 224<br />
Transfer from small <strong>to</strong>ols and consumables in use - - 146 - - 146<br />
Disposals (20) (90) (2,343) - (43) (2,496)<br />
Balance at 31 December 2011 5,068 1,080 29,331 - 10,696 46,175<br />
Net book value at 31 December 2011, before<br />
allowance for impairment losses<br />
128,970 618 16,893 2,885 6,527 155,893<br />
Allowance for impairment losses at<br />
31 December 2010<br />
- - 1,701 - - 1,701<br />
Effects of change of accounting policy – release<br />
of allowance (Note 3)<br />
- - (1,701) - - (1,701)<br />
Allowance for impairment losses at<br />
31 December 2011<br />
- - - - - -<br />
NET BOOK VALUE AT 31 DECEMBER 2011<br />
COST<br />
128,970 618 16,893 2,885 6,527 155,893<br />
Balance at 31 December 2009 100,174 1,993 44,861 17,318 13,042 177,388<br />
Additions - - - 25,075 - 25,075<br />
Transfers (from) / <strong>to</strong> 73 91 4,530 (6,066) 1,372 -<br />
Disposals - (467) (5,200) (17) (834) (6,518)<br />
Balance at 31 December 2010<br />
ACCUMULATED DEPRECIATION<br />
100,247 1,617 44,191 36,310 13,580 195,945<br />
Balance at 31 December 2009 2,417 1,060 24,101 - 7,766 35,344<br />
Depreciation 1,207 273 6,146 - 1,609 9,235<br />
Disposals - (404) (4,695) - (834) (5,933)<br />
Balance at 31 December 2010 3,624 929 25,552 - 8,541 38,646<br />
Net book value at 31 December 2010, before<br />
allowance for impairment losses<br />
96,623 688 18,639 36,310 5,039 157,299<br />
Allowance for impairment losses at<br />
31 December 2009<br />
- - 841 - - 841<br />
Increase in allowance (Note 13) - - 860 - - 860<br />
Allowance for impairment losses at 31 December<br />
2010<br />
- - 1,701 - - 1,701<br />
NET BOOK VALUE AT 31 DECEMBER 2010 96,623 688 16,938 36,310 5,039 155,598<br />
Total<br />
www.raiffeisenbank.ba 109
110<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
26. DUE TO BANKS<br />
Short-term borrowings:<br />
Long-term borrowings from foreign banks and non-banking <strong>financial</strong> institutions as at 31 December 2011 and 2010 were<br />
as follows:<br />
During 2011, interest rates on new long-term borrowings, obtained during <strong>the</strong> year, were in <strong>the</strong> range from 6M EURI-<br />
BOR+1% p.a. <strong>to</strong> 6M EURIBOR+2.5%, while interest rates on <strong>to</strong>tal borrowings were in <strong>the</strong> range from 1.00% <strong>to</strong> 4.95%<br />
p.a. (fixed), and from EURIBOR+0.09% <strong>to</strong> EURIBOR+5.75% (variable). During 2010, interest rates on <strong>to</strong>tal borrowings<br />
were in <strong>the</strong> range from 1.00% <strong>to</strong> 4.95% p.a. (fixed) and from EURIBOR+0.095% p.a. <strong>to</strong> EURIBOR+5.75% p.a. (variable).<br />
www.raiffeisenbank.ba<br />
31 December 2011 31 December 2010<br />
Add: Current portion of long-term borrowings 143,181 148,587<br />
Long-term borrowings:<br />
Long-term borrowings from foreign banks and non-banking<br />
<strong>financial</strong> institutions<br />
Long-term borrowings from domestic banks and non-banking<br />
<strong>financial</strong> institutions<br />
458,823 576,270<br />
4,094 4,055<br />
Less: Current portion of long-term borrowings (143,181) (148,587)<br />
Current accounts:<br />
319,736 431,738<br />
Current accounts in domestic currency 499 195<br />
Current accounts in foreign currency 106 105<br />
Short-term deposits:<br />
605 300<br />
Short-term deposits in domestic currency 259 1,188<br />
Short-term deposits in foreign currency 1,854 1,967<br />
2,113 3,155<br />
Long-term deposits 2,369 4,370<br />
468,004 588,150<br />
31 December 2011 31 December 2010<br />
Supranational and development banks 275,953 321,502<br />
Commercial banks – related parties 41,714 66,766<br />
O<strong>the</strong>r <strong>financial</strong> institutions 141,156 188,002<br />
458,823 576,270
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
27. DUE TO CUSTOMERS<br />
A vista deposits:<br />
Citizens:<br />
During 2011, interest rates were as follows:<br />
• a vista deposits in KM – from 0.00% <strong>to</strong> 0.10% p.a. (2010: from 0.10% p.a. <strong>to</strong> 0.30% p.a.),<br />
• a vista deposits in foreign currency – from 0.00% <strong>to</strong> 1.75% p.a. (2010: from 0.00% <strong>to</strong> 2.72% p.a.),<br />
• short-term deposits – from 0.00% <strong>to</strong> 3.60% p.a. (2010: from 0.00% <strong>to</strong> 3.60% p.a.),<br />
• long-term deposits – from 0.00% <strong>to</strong> 4.50% p.a. (2010: from 1.50% p.a. <strong>to</strong> 5.00% p.a.).<br />
Financial Statements<br />
31 December 2011 31 December 2010<br />
In KM 333,187 298,791<br />
In foreign currencies 318,049 297,105<br />
Legal entities:<br />
651,236 595,896<br />
In KM 720,886 667,791<br />
In foreign currencies 119,811 106,214<br />
Term deposits:<br />
Citizens:<br />
840,697 774,005<br />
1,491,933 1,369,901<br />
In KM 159,959 129,530<br />
In foreign currencies 961,171 938,380<br />
Legal entities:<br />
1,121,130 1,067,910<br />
In KM 150,829 64,311<br />
In foreign currencies 180,550 120,583<br />
331,379 184,894<br />
1,452,509 1,252,804<br />
2,944,442 2,622,705<br />
www.raiffeisenbank.ba 111
112<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
28. PROVISIONS<br />
Commitments and contingencies<br />
In <strong>the</strong> ordinary course of business, <strong>the</strong> <strong>Bank</strong> enters in<strong>to</strong> credit related commitments which are recorded in off-balance sheet<br />
accounts and primarily include guarantees, letters of credit and undrawn loan commitments.<br />
Movements in provision for commitments and contingencies were as follows:<br />
www.raiffeisenbank.ba<br />
31 December 2011 31 December 2010<br />
Provisions for commitments and contingencies 4,841 24,825<br />
Provisions for o<strong>the</strong>r employee benefits 2,065 4,134<br />
Provisions for legal proceedings (Note 13) 585 -<br />
Commitments<br />
7,491 28,959<br />
31 December 2011 31 December 2010<br />
Framework agreements 325,665 337,995<br />
Unused portion of overdraft loans 176,413 220,392<br />
Contingent liabilities<br />
502,078 558,387<br />
Performance bonds 207,460 182,594<br />
Payment guarantees 140,969 123,031<br />
Letters of credit 20,709 34,687<br />
Advances - 67<br />
369,138 340,379<br />
Total commitments and contingencies 871,216 898,766<br />
2011 2010<br />
Balance as at 1 January 24,825 23,391<br />
Effects of change of accounting policy – re-recognition of<br />
written-off items, previously classified under E category<br />
Effects of change of accounting policy – release of provision<br />
(Note 3)<br />
115 -<br />
(20,772) -<br />
Increase in allowances (Note 13) 673 1,434<br />
Write-offs - -<br />
Balance as at 31 December 4,841 24,825
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
O<strong>the</strong>r employee benefits<br />
Changes in provisions for o<strong>the</strong>r employee benefits are as follows:<br />
29. OTHER LIABILITIES AND PAYABLES<br />
30. SUBORDINATED DEBT<br />
Retirement<br />
severance payments<br />
Unused<br />
vacation days<br />
Jubilee<br />
awards<br />
Financial Statements<br />
Balance as at 1 January 2010 1,157 1,604 157 2,918<br />
Additional provisions recognized (Note 12) 1,696 1,499 1,499 3,195<br />
Reductions resulting from re-measurement or<br />
settlement without cost (Note 12)<br />
31 December 2011 31 December 2010<br />
Unallocated principal and interest paid upfront 8,084 8,677<br />
Deferred income 5,209 5,176<br />
Liabilities from credit card operations 4,264 3,057<br />
Liabilities <strong>to</strong>ward suppliers 4,076 3,207<br />
Employee payables 3,877 4,206<br />
O<strong>the</strong>r tax liabilities 56 164<br />
Liabilities <strong>to</strong>wards shareholders 11 11<br />
O<strong>the</strong>r liabilities 3,590 3,981<br />
29,167 28,479<br />
31 December 2011 31 December 2010<br />
Commercial banks – related parties 45,858 62,532<br />
Supranational and development banks 19,626 19,484<br />
65,484 82,016<br />
Commercial banks – related parties: <strong>the</strong>re are 6 active loans, received in period from 27 May 2003 <strong>to</strong> 12 September 2007,<br />
in <strong>to</strong>tal amount of KM 75,691 thousand. Those loans mature in period from 20 March 2012 <strong>to</strong> 12 September 2014, with<br />
semi-annual repayments.<br />
As of 18 May 2008, one loan was received from supranational and development banks in <strong>to</strong>tal amount of 19,558 thousands<br />
KM with maturity on 18 May 2015, repaid semi-annually.<br />
Interest rates of subordinated loans are in range from EURIBOR+2% <strong>to</strong> EURIBOR+2.8%.<br />
The amount of <strong>to</strong>tal subordinated debt as of 31 December 2011 and 2010 includes accrued interest liabilities in amount<br />
of KM 615 thousand and KM 634 thousand, respectively, decreased for prepaid expenses related <strong>to</strong> fees for borrowed funds.<br />
Subject <strong>to</strong> <strong>the</strong> approval of FBA, subordinated debt may be used as additional capital for regula<strong>to</strong>ry purposes.<br />
Total<br />
- (1,604) (157) (1,761)<br />
Reductions arising from payments (218) - - (218)<br />
Balance as at 31 December 2010 2,635 1,499 - 4,134<br />
Additional provisions recognized (Note 12) 389 1,429 - 1,818<br />
Reductions resulting from re-measurement or<br />
settlement without cost (Note 12)<br />
- (1,499) - (1,499)<br />
Reductions arising from payments (2,388) - - (2,388)<br />
Balance as at 31 December 2011 636 1,429 - 2,065<br />
www.raiffeisenbank.ba 113
114<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
31. SHARE CAPITAL<br />
The global ultimate parent of <strong>the</strong> <strong>Bank</strong> is <strong>Raiffeisen</strong> International <strong>Bank</strong> Holding AG Vienna, Austria. The shareholding structure<br />
as of 31 December 2011 and 2010 was as follows:<br />
Shareholders No. of shares Amount KM ’000 %<br />
<strong>Raiffeisen</strong> International <strong>Bank</strong> Holding AG, Vienna, Austria 921,016 230,254 96.99<br />
Millenia Beteiligungsverwaltungs GmbH, Graz, Austria 28,488 7,122 3.00<br />
O<strong>the</strong>r shareholders 48 12 0.01<br />
Total 949,552 237,388 100.00<br />
Capital is made up of 949,552 ordinary shares at nominal value of KM 250. Equity instruments of <strong>the</strong> <strong>Bank</strong> are not<br />
traded in a public market and <strong>the</strong>se <strong>financial</strong> <strong>statements</strong> are not under <strong>the</strong> regulative of <strong>the</strong> Security Commission for <strong>the</strong><br />
purpose of issuing any class of instruments in a public market.<br />
32. BASIC EARNINGS PER SHARE<br />
Basic earnings per share is calculated by dividing <strong>the</strong> net profit attributable <strong>to</strong> ordinary shareholders by weighted average<br />
number of ordinary shares in issue during <strong>the</strong> year.<br />
Diluted earnings per share are not presented, as <strong>the</strong> <strong>Bank</strong> has not issued dilutive equity instruments.<br />
33. MANAGED FUNDS<br />
The <strong>Bank</strong> manages assets on behalf of third parties. These assets are recorded separately from <strong>the</strong> <strong>Bank</strong>’s assets. For its<br />
services, <strong>the</strong> <strong>Bank</strong> charges a fee amounting <strong>to</strong> 1% of <strong>the</strong> <strong>to</strong>tal amount contributed.<br />
The <strong>Bank</strong> has not issued any guarantees related <strong>to</strong> managed funds.<br />
www.raiffeisenbank.ba<br />
2011 2010<br />
Income attributable <strong>to</strong> ordinary shareholders (KM ’000) 43,853 5,872<br />
Weighted average number of regular shares outstanding 949,552 949,552<br />
Basic earnings per share (KM) 46.18 6.18<br />
Liabilities<br />
31 December 2011 31 December 2010<br />
Citizens 362 2,041<br />
Government 5,953 5,852<br />
Companies 4,636 4,892<br />
O<strong>the</strong>r 82 122<br />
Assets<br />
11,033 12,907<br />
Loans <strong>to</strong> companies 3,912 5,613<br />
Loans <strong>to</strong> citizens 7,121 7,294<br />
11,033 12,907
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
34. BUSINESS COMBINATION WITH RAIFFEISEN BROKERS D.O.O. SARAJEVO<br />
Financial Statements<br />
Based on decision of <strong>the</strong> Supervisory Board of <strong>the</strong> <strong>Bank</strong> dated 4 April 2011, <strong>the</strong> wholly-owned subsidiary – <strong>Raiffeisen</strong> BRO-<br />
KERS d.o.o. Sarajevo has been merged in<strong>to</strong> <strong>the</strong> <strong>Bank</strong> starting from 1 May 2011. As of that date, <strong>the</strong> <strong>Bank</strong> has introduced<br />
assets and liabilities from <strong>the</strong> merged subsidiary in its accounting records.<br />
Balance sheet of <strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo as of 30 April can be presented as follows:<br />
30 April 2011<br />
Tangible and intangible assets 278<br />
Investments in subsidiary 53<br />
Financial assets available-for-sale 48<br />
Trade and o<strong>the</strong>r receivables 3<br />
Cash and cash equivalents 49<br />
TOTAL ASSETS 431<br />
Owner’s equity 1,000<br />
Accumulated losses (2,126)<br />
Borrowings 1,540<br />
Trade and o<strong>the</strong>r payables 17<br />
TOTAL EQUITY AND LIABILITIES 431<br />
Primarily registered amount of <strong>the</strong> owner’s equity of <strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo was KM 507 thousand (equal<br />
<strong>to</strong> <strong>the</strong> <strong>Bank</strong>’s investment – Note 22). However, during 2006, <strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo has increased <strong>the</strong> registered<br />
owner’s equity <strong>to</strong> KM 1 million through <strong>the</strong> capitalization of part of retained earnings (KM 493 thousand).<br />
On 1 May 2011, <strong>the</strong> <strong>Bank</strong> has recognized <strong>the</strong> effect of merger of <strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo on its retained earnings<br />
in <strong>the</strong> amount of KM 1,633 thousand as result of <strong>the</strong> following:<br />
Elimination of <strong>the</strong> owner’s equity of <strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo 1,000<br />
Elimination of investment in subsidiary in <strong>the</strong> <strong>Bank</strong> (507)<br />
Booking of accumulated losses of <strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo (2,126)<br />
(1,633)<br />
www.raiffeisenbank.ba 115
116<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
35. RELATED PARTY TRANSACTIONS<br />
Balances with related parties as of 31 December 2011 are summarized as follows:<br />
Receivables<br />
Placements with o<strong>the</strong>r banks:<br />
www.raiffeisenbank.ba<br />
31 December 2011 31 December 2010<br />
<strong>Raiffeisen</strong>landesbank Oberösterreich AG, Linz 52,807 19,558<br />
<strong>Raiffeisen</strong>landesbank Niederösterreich-Wien AG, Vienna 19,558 19,558<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 2,350 678<br />
Cash and cash equivalents:<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 25,929 6,826<br />
<strong>Raiffeisen</strong>bank Austria dd Zagreb 6,532 2,187<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers:<br />
<strong>Raiffeisen</strong> SAC d.o.o. Sarajevo 1,119 1,119<br />
<strong>Raiffeisen</strong> INVEST d.o.o. Sarajevo 1 -<br />
<strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo - 1,476<br />
O<strong>the</strong>r receivables:<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 9,077 1,999<br />
<strong>Raiffeisen</strong> LEASING d.o.o. Sarajevo 32 3<br />
<strong>Raiffeisen</strong>bank Austria dd Zagreb 5 4<br />
<strong>Raiffeisen</strong> <strong>Bank</strong>a dd Maribor 1 1<br />
Payables<br />
Borrowings:<br />
117,411 53,409<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 39,823 62,360<br />
<strong>Raiffeisen</strong>landesbank Oberösterreich AG, Linz 1,937 4,406<br />
Subordinated debt:<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 19,256 35,955<br />
<strong>Raiffeisen</strong>landesbank Oberösterreich AG, Linz 13,845 13,822<br />
<strong>Raiffeisen</strong>-Landesbank Steiermark AG, Graz 12,757 12,755<br />
Due <strong>to</strong> banks – deposits:<br />
<strong>Raiffeisen</strong> LEASING d.o.o. Sarajevo 6,846 2,069<br />
<strong>Raiffeisen</strong> SAC d.o.o. Sarajevo 1,135 899<br />
<strong>Raiffeisen</strong> INVEST d.o.o. Sarajevo 286 -<br />
<strong>Raiffeisen</strong> <strong>Bank</strong>a dd Maribor 19 -<br />
<strong>Raiffeisen</strong>bank Austria dd Zagreb 13 -<br />
<strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo - 50<br />
O<strong>the</strong>r liabilities<br />
Centralised <strong>Raiffeisen</strong> International Services & Payments 50 -<br />
<strong>Raiffeisen</strong>bank Austria dd Zagreb 15 -<br />
<strong>Raiffeisen</strong> SAC d.o.o. Sarajevo 12 52<br />
<strong>Raiffeisen</strong> Treningcentar d.o.o. Zagreb 10 -<br />
96,004 132,368
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Financial Statements<br />
A number of banking transactions are entered in<strong>to</strong> with related parties in <strong>the</strong> normal course of business. These transactions<br />
were carried out on commercial terms and conditions and at market rates.<br />
Income<br />
Interest and similar income:<br />
2011 2010<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 699 571<br />
<strong>Raiffeisen</strong> SAC d.o.o. Sarajevo 61 72<br />
<strong>Raiffeisen</strong> LEASING d.o.o. Sarajevo 24 5<br />
<strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo - 29<br />
Fee and commission income:<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 135 92<br />
<strong>Raiffeisen</strong>bank Austria dd Zagreb 67 -<br />
<strong>Raiffeisen</strong> LEASING d.o.o. Sarajevo 48 57<br />
<strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo - 17<br />
O<strong>the</strong>r operating income:<br />
<strong>Raiffeisen</strong> LEASING d.o.o. Sarajevo 553 179<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 21 -<br />
<strong>Raiffeisen</strong> SAC d.o.o. Sarajevo 15 -<br />
<strong>Raiffeisen</strong> Treningcentar d.o.o. Zagreb 3 -<br />
<strong>Raiffeisen</strong> <strong>Bank</strong>a dd Maribor 1 -<br />
<strong>Raiffeisen</strong> BROKERS d.o.o. Sarajevo - 4<br />
Expenses<br />
Interest and similar expenses:<br />
1,627 1,026<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 2,926 4,736<br />
<strong>Raiffeisen</strong>landesbank Oberösterreich AG, Linz 650 -<br />
<strong>Raiffeisen</strong>-Landesbank Steiermark AG, Graz 534 436<br />
<strong>Raiffeisen</strong> LEASING d.o.o. Sarajevo 12 33<br />
<strong>Raiffeisen</strong> SAC d.o.o. Sarajevo 9 12<br />
Fee and commission expenses:<br />
<strong>Raiffeisen</strong> <strong>Bank</strong>a dd Maribor 1 -<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna - 1,291<br />
Consulting services:<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 2,635 2,328<br />
O<strong>the</strong>r expenses:<br />
<strong>Raiffeisen</strong> <strong>Bank</strong> International AG, Vienna 3,033 1,213<br />
Centralised <strong>Raiffeisen</strong> International Services & Payments 1,048 -<br />
<strong>Raiffeisen</strong> LEASING d.o.o. Sarajevo 528 497<br />
<strong>Raiffeisen</strong> Treningcentar d.o.o. Zagreb 200 253<br />
<strong>Raiffeisen</strong> SAC d.o.o. Sarajevo 168 152<br />
11,744 10,951<br />
www.raiffeisenbank.ba 117
118<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Direc<strong>to</strong>r’s and executives’ remuneration<br />
The remuneration of direc<strong>to</strong>rs and o<strong>the</strong>r members of key management during <strong>the</strong> year ended 31 December 2011 were<br />
as follows:<br />
36. FINANCIAL INSTRUMENTS<br />
36.1 Capital risk management<br />
The <strong>Bank</strong>’s objectives when managing capital, which is a broader concept than <strong>the</strong> ’equity’ on <strong>the</strong> face of balance sheets, are:<br />
• To comply with <strong>the</strong> capital requirements set by <strong>the</strong> regula<strong>to</strong>rs of <strong>the</strong> banking markets;<br />
• To safeguard <strong>the</strong> <strong>Bank</strong>’s ability <strong>to</strong> continue as a going concern so that it can continue <strong>to</strong> provide returns for shareholders<br />
and benefits for o<strong>the</strong>r stakeholders; and<br />
• To maintain a strong capital base <strong>to</strong> support <strong>the</strong> development of its business.<br />
The <strong>Bank</strong> expects <strong>to</strong> maintain its debt <strong>to</strong> capital ratio. Solvency indica<strong>to</strong>rs were as follows:<br />
Debt is defined as liabilities <strong>to</strong>ward clients, o<strong>the</strong>r banks and <strong>financial</strong> institutions presented in detail in <strong>Notes</strong> 26, 27 and<br />
30. Capital includes share capital, share premium and retained earnings.<br />
Capital adequacy and <strong>the</strong> use of regula<strong>to</strong>ry capital are moni<strong>to</strong>red daily by <strong>the</strong> <strong>Bank</strong>’s management, employing techniques<br />
based on <strong>the</strong> guidelines developed by FBA for supervisory purposes. The required information is filed with <strong>the</strong> FBA on a<br />
quarterly basis.<br />
FBA requires each bank <strong>to</strong>: (a) hold <strong>the</strong> minimum level of <strong>the</strong> share capital and <strong>the</strong> lowest level of net capital (regula<strong>to</strong>ry<br />
capital) of KM 15 million, and (b) maintain a ratio of <strong>to</strong>tal regula<strong>to</strong>ry capital <strong>to</strong> <strong>the</strong> risk-weighted asset at or above <strong>the</strong><br />
minimum of 12%.<br />
The <strong>Bank</strong>’s regula<strong>to</strong>ry capital is divided in<strong>to</strong> two tiers:<br />
• Tier 1 capital or Core Capital: share capital (net of any book values of <strong>the</strong> treasury shares), share premium, retained<br />
earnings and reserves created by appropriations of retained earnings; and<br />
• Tier 2 capital or Supplementary Capital: qualifying subordinated loan capital, collective impairment allowances<br />
and unrealized gains arising on <strong>the</strong> fair valuation of equity instruments held as available for sale.<br />
The risk-weighted assets are measured by means of a hierarchy of four weights classified according <strong>to</strong> <strong>the</strong> nature of – and<br />
reflecting an estimate of credit, market and o<strong>the</strong>r risks associated with – each asset and counterparty, taking in<strong>to</strong> account<br />
any eligible collateral or guarantees. A similar treatment is adopted for off-balance sheet exposure, with some adjustments<br />
<strong>to</strong> reflect <strong>the</strong> more contingent nature of <strong>the</strong> potential losses.<br />
During <strong>the</strong> years ended 31 December 2011 and 2010, <strong>the</strong> <strong>Bank</strong> complied with all of <strong>the</strong> externally imposed capital requirements.<br />
As of 31 December 2011 <strong>the</strong> adequacy of <strong>the</strong> <strong>Bank</strong>’s capital amounts <strong>to</strong> 14.7% (2010: 14.7%).<br />
www.raiffeisenbank.ba<br />
2011 2010<br />
Net salaries 545 815<br />
Salary taxes and contributions 327 522<br />
O<strong>the</strong>r benefits 1,562 433<br />
Taxes and contribution on o<strong>the</strong>r benefits 904 269<br />
3,338 2,039<br />
31 December 2011 31 December 2010<br />
Debt 3,477,930 3,292,871<br />
Capital 395,457 369,733<br />
Net debt <strong>to</strong> capital ratio 8.79 8.91
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
36.2 Significant accounting policies<br />
Financial Statements<br />
Details of <strong>the</strong> significant accounting policies and methods adopted, including <strong>the</strong> criteria for recognition, <strong>the</strong> basis of<br />
measurement and <strong>the</strong> basis on which income and expenses are recognized, in respect of each class of <strong>financial</strong> asset, <strong>financial</strong><br />
liability and equity instruments are disclosed in Note 3 <strong>to</strong> <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.<br />
36.3 Categories of <strong>financial</strong> instruments<br />
Financial assets<br />
36.4 Financial risk management objectives<br />
The <strong>Bank</strong>’s Finance & Risk divisions provide services <strong>to</strong> <strong>the</strong> business, co-ordinates access <strong>to</strong> domestic and international<br />
<strong>financial</strong> markets, moni<strong>to</strong>rs and manages <strong>the</strong> <strong>financial</strong> risks relating <strong>to</strong> <strong>the</strong> operations of <strong>the</strong> <strong>Bank</strong> through internal risk<br />
reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency<br />
risk and fair value interest rate risk), credit risk, liquidity risk and cash flow interest rate risk.<br />
36.5 Market risk<br />
31 December 2011 31 December 2010<br />
Cash and cash equivalents 716,868 434,964<br />
Obliga<strong>to</strong>ry reserve at Central <strong>Bank</strong> of B&H 266,540 305,865<br />
Placements with o<strong>the</strong>r banks 225,917 250,282<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers 2,306,730 2,243,190<br />
Financial assets available-for-sale 3,299 2,241<br />
Financial assets at FVTPL 158,897 164,784<br />
Financial assets held-<strong>to</strong>-maturity 138,090 137,408<br />
Financial liabilities<br />
At amortized cost:<br />
3,816,341 3,538,734<br />
Due <strong>to</strong> banks 468,004 588,150<br />
Due <strong>to</strong> cus<strong>to</strong>mers 2,944,442 2,622,705<br />
Subordinated debt 65,484 82,016<br />
3,477,930 3,292,871<br />
The <strong>Bank</strong>’s activities expose it primarily <strong>to</strong> <strong>the</strong> <strong>financial</strong> risks of changes in foreign currency exchange rates and interest<br />
rates.<br />
Market risk exposures are supplemented by sensitivity analysis. There has been no change <strong>to</strong> <strong>the</strong> <strong>Bank</strong>’s exposure <strong>to</strong> market<br />
risks or <strong>the</strong> manner in which it manages and measures <strong>the</strong> risk.<br />
www.raiffeisenbank.ba 119
120<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
36.6 Foreign currency risk<br />
The <strong>Bank</strong> is exposed <strong>to</strong> foreign currency risk due <strong>to</strong> cash flows denominated in foreign currencies that differ from <strong>the</strong> base<br />
currency used by <strong>the</strong> <strong>Bank</strong> when <strong>the</strong>re is no matching between assets and liabilities denominated in <strong>the</strong> foreign currency.<br />
Portfolio exposure <strong>to</strong> foreign currency risk arises from portfolio sensitivity <strong>to</strong> fluctuations in exchange rate levels. The degree<br />
of foreign currency risk depends on <strong>the</strong> amount of open positions and <strong>the</strong> degree of potential change in foreign currency<br />
rates.<br />
The carrying amounts of <strong>the</strong> <strong>Bank</strong>’s monetary assets and liabilities per currency at <strong>the</strong> reporting period date were as follows:<br />
ASSETS<br />
36.6.1 Foreign currency sensitivity analysis<br />
The <strong>Bank</strong> is not exposed <strong>to</strong> foreign currency risk related <strong>to</strong> EUR due <strong>to</strong> <strong>the</strong> fact that Convertible Mark is pegged <strong>to</strong> Euro<br />
(1 EUR = KM 1.955830). Exposure is more prominent for USD and some o<strong>the</strong>r currencies. The following table outlines<br />
<strong>the</strong> Value-at-Risk (VaR). VaR is a calculation based on 99% reliability under which <strong>the</strong> <strong>Bank</strong>’s portfolio denominated in foreign<br />
currencies can be changed in a 10-day period due <strong>to</strong> changes in foreign currency exchange rates, as well as daily<br />
changes over <strong>the</strong> last 250 days of trading.<br />
www.raiffeisenbank.ba<br />
KM EUR USD<br />
O<strong>the</strong>r<br />
currencies<br />
Cash and cash equivalents 613,796 75,329 3,524 24,219 716,868<br />
Obliga<strong>to</strong>ry reserve at CBBH 266,540 - - - 266,540<br />
Placements with o<strong>the</strong>r banks - 118,733 83,271 23,913 225,917<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers 2,276,573 15,452 1 14,704 2,306,730<br />
Financial assets available-for-sale 3,176 123 - - 3,299<br />
Financial assets at FVTPL 5,886 149,320 3,691 - 158,897<br />
Financial assets held-<strong>to</strong>-maturity 42,076 49,861 46,153 - 138,090<br />
LIABILITIES<br />
Total<br />
3,208,047 408,818 136,640 62,836 3,816,341<br />
Due <strong>to</strong> banks 7,205 447,367 - 13,432 468,004<br />
Due <strong>to</strong> cus<strong>to</strong>mers 1,364,860 1,393,308 136,440 49,834 2,944,442<br />
Subordinated debt - 65,484 - - 65,484<br />
As of 31 December 2010:<br />
1,372,065 1,906,159 136,440 63,266 3,477,930<br />
Total assets 2,890,519 465,407 129,625 53,183 3,538,734<br />
Total liabilities 1,170,232 1,940,450 130,511 51,678 3,292,871<br />
(in KM '000) VaR<br />
Currency 31 December 2011 31 December 2010<br />
USD 7 7<br />
CHF 1 5<br />
HRK
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
The following table details <strong>the</strong> <strong>Bank</strong>’s sensitivity <strong>to</strong> a 10% increase or decrease in foreign currency rates against <strong>the</strong> relevant<br />
local currencies. The sensitivity rate of 10% is used when reporting foreign currency risk internally <strong>to</strong> key management<br />
personnel and represents management’s assessment of <strong>the</strong> reasonably possible change in foreign exchange rates.<br />
(in KM '000) USD Effect (KM '000) CHF Effect (KM '000)<br />
36.7 Interest rate risk<br />
Interest rate risk reflects <strong>the</strong> possibility of loss of profit and/or erosion of capital due <strong>to</strong> a change in interest rates. It relates<br />
<strong>to</strong> all products and balances that are sensitive <strong>to</strong> changes in interest rates. This risk comprises two components: income<br />
component and investment component.<br />
The income component arises from a lack of harmonization between <strong>the</strong> active and passive interest rates of <strong>the</strong> <strong>Bank</strong> (interest<br />
on placements is fixed, interest for liabilities is variable, and vice versa).<br />
The investment component is a consequence of <strong>the</strong> inverted relationship between price and interest rate fluctuations of<br />
securities.<br />
The <strong>Bank</strong> strives <strong>to</strong> protect itself from interest rate risk by harmonizing <strong>the</strong> type of interest rate (fixed and variable), currency,<br />
related interest rate and <strong>the</strong> date of interest rate change for all products for which it concludes contracts (which are<br />
sensitive <strong>to</strong> interest rate changes). Any incongruity among <strong>the</strong> abovementioned elements results in exposure of <strong>the</strong> <strong>Bank</strong><br />
<strong>to</strong> interest rate risk.<br />
36.7.1 GAP interest rate sensitivity analysis<br />
The aforementioned analysis enables <strong>the</strong> calculation of <strong>the</strong> Basis Point Value (value of gain or loss on a particular portfolio<br />
arising from a change in interest rate values by +50 Basis Points with a parallel displacement of <strong>the</strong> curve).<br />
In <strong>the</strong> instance of a change (increase) of interest rates by 50 Basis Points, <strong>the</strong> <strong>Bank</strong> would realize:<br />
• for EUR – loss in <strong>the</strong> amount of KM 6,357 thousand (2010: loss – KM 3,576 thousand),<br />
• for KM – loss in <strong>the</strong> amount of KM 765 thousand (2010: gain – KM 490 thousand),<br />
• for USD – loss in <strong>the</strong> amount of KM 180 thousand (2010: gain – KM 510 thousand),<br />
For o<strong>the</strong>r currencies <strong>the</strong>re are no significant amounts.<br />
36.8 Credit risk<br />
Financial Statements<br />
2011 2010 2011 2010<br />
Profit or loss 122 23 (25) (88)<br />
Credit risk refers <strong>to</strong> <strong>the</strong> risk that counterparty will default on its contractual obligations resulting in <strong>financial</strong> loss <strong>to</strong> <strong>the</strong> <strong>Bank</strong>.<br />
The <strong>Bank</strong> has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where<br />
appropriate, as a means of mitigating <strong>the</strong> risk of <strong>financial</strong> loss from defaults.<br />
The <strong>Bank</strong>’s exposure and <strong>the</strong> credit ratings of its counterparties are continuously moni<strong>to</strong>red and <strong>the</strong> aggregate value of<br />
transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits<br />
that are reviewed and approved by <strong>the</strong> risk management committee annually.<br />
The <strong>Bank</strong> does not have any significant credit risk exposure <strong>to</strong> any single counterparty or any company of counterparties<br />
having similar characteristics. The <strong>Bank</strong> defines counterparties as having similar characteristics if <strong>the</strong>y are related entities.<br />
For <strong>the</strong> particular loan exposures that are ei<strong>the</strong>r past due or impaired, <strong>the</strong> <strong>Bank</strong> could renegotiate <strong>the</strong> contracted terms.<br />
The carrying amount of such <strong>financial</strong> assets as of 31 December 2011 amounted <strong>to</strong> KM 78,868 thousand (2010: KM<br />
100,211 thousand).<br />
The carrying amount of <strong>financial</strong> asset presented in <strong>financial</strong> <strong>statements</strong>, decreased for losses based on impairments, represents<br />
<strong>the</strong> <strong>Bank</strong>’s maximum exposure <strong>to</strong> credit risk without taking account of <strong>the</strong> value of any collateral obtained.<br />
www.raiffeisenbank.ba 121
122<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Financial assets<br />
31 December 2011<br />
www.raiffeisenbank.ba<br />
Total<br />
gross<br />
carrying<br />
amount<br />
Unimpaired<br />
assets<br />
Individually<br />
impaired assets<br />
(<strong>to</strong>tal carrying<br />
amount)<br />
Allowance<br />
for<br />
impairment<br />
losses<br />
Total net<br />
carrying<br />
amount<br />
Cash and cash equivalents 716,868 716,868 - - 716,868<br />
Obliga<strong>to</strong>ry reserve at CBBH 266,540 266,540 - - 266,540<br />
Placements with o<strong>the</strong>r banks 225,917 225,917 - - 225,917<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers:<br />
Public sec<strong>to</strong>r 27,284 27,284 - - 27,284<br />
Corporate – large clients 989,600 858,807 130,793 (99,921) 889,679<br />
Corporate – SMEs 205,522 138,541 66,981 (62,482) 143,041<br />
Retail – individuals 1,233,615 1,144,627 88,988 (103,840) 1,129,775<br />
Retail – micro enterprises 118,301 115,502 2,799 (8,623) 109,679<br />
O<strong>the</strong>r 7,272 7,272 - - 7,272<br />
Financial assets available-for-sale 3,299 3,299 - - 3,299<br />
Financial assets at FVTPL 158,897 158,897 - - 158,897<br />
Financial assets held-<strong>to</strong>-maturity 138,090 138,090 - - 138,090<br />
31 December 2010<br />
4,091,206 3,801,645 289,561 (274,865) 3,816,341<br />
Cash and cash equivalents 434,964 434,964 - - 434,964<br />
Obliga<strong>to</strong>ry reserve at CBBH 305,865 305,865 - - 305,865<br />
Placements with o<strong>the</strong>r banks 250,359 250,359 - (77) 250,282<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers:<br />
Public sec<strong>to</strong>r 48,351 48,351 - - 48,351<br />
Corporate – large clients 922,392 816,450 105,942 (57,170) 865,222<br />
Corporate – SMEs 187,084 151,780 35,304 (14,202) 172,882<br />
Retail – individuals 1,096,384 1,083,251 13,133 (48,253) 1,048,131<br />
Retail – micro enterprises 115,978 112,207 3,772 (7,375) 108,603<br />
Financial assets available-for-sale 2,241 2,241 - - 2,241<br />
Financial assets at FVTPL 164,784 164,784 - - 164,784<br />
Financial assets held-<strong>to</strong>-maturity 137,408 137,408 - - 137,408<br />
3,665,811 3,507,660 158,151 (127,077) 3,538,734
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Credit exposure and collateral<br />
Financial Statements<br />
The <strong>Bank</strong> estimates <strong>the</strong> fair value of collateral based on recoverable amount of collateral in case that collateral needs <strong>to</strong><br />
be liquidated under <strong>the</strong> current market conditions. Different types of collateral bear different level of risks for <strong>the</strong> <strong>Bank</strong>.<br />
31 December 2011<br />
Maximal credit risk exposure<br />
Net exposure<br />
Commitments /<br />
guarantees<br />
issued<br />
Estimated fair<br />
value of<br />
collateral<br />
Cash and cash equivalents 716,868 - -<br />
Obliga<strong>to</strong>ry reserve at CBBH 266,540 - -<br />
Placements with o<strong>the</strong>r banks 225,917 29,835 -<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers:<br />
Public sec<strong>to</strong>r 27,284 7,533 1,246<br />
Corporate – large clients 889,679 574,064 932,901<br />
Corporate – SMEs 143,041 81,183 151,538<br />
Retail – individuals 1,129,775 137,175 399,345<br />
Retail – micro enterprises 109,679 40,963 64,072<br />
O<strong>the</strong>r 7,272 462 44<br />
Financial assets available-for-sale 3,299 - -<br />
Financial assets at FVTPL 158,897 - -<br />
Financial assets held-<strong>to</strong>-maturity 138,090 - -<br />
31 December 2010<br />
3,816,341 871,215 1,549,146<br />
Cash and cash equivalents 434,964 - -<br />
Obliga<strong>to</strong>ry reserve at CBBH 305,865 - -<br />
Placements with o<strong>the</strong>r banks 250,282 23,851 -<br />
Loans and advances <strong>to</strong> cus<strong>to</strong>mers:<br />
Public sec<strong>to</strong>r 48,351 52,991 1,557<br />
Corporate – large clients 865,222 542,740 1,048,325<br />
Corporate – SMEs 172,882 107,359 209,151<br />
Retail – individuals 1,048,131 130,552 157,671<br />
Retail – micro enterprises 108,603 41,272 43,692<br />
Financial assets available-for-sale 2,241 - -<br />
Financial assets at FVTPL 164,784 - -<br />
Financial assets held-<strong>to</strong>-maturity 137,408 - -<br />
3,538,734 898,765 1,460,396<br />
www.raiffeisenbank.ba 123
124<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
Value impairment and collection delays (for loans and advances <strong>to</strong> cus<strong>to</strong>mers)<br />
31 December<br />
2011<br />
Undue + in late<br />
up <strong>to</strong> 30 days<br />
Nei<strong>the</strong>r value impairment nor maturity delays were identified for o<strong>the</strong>r items of <strong>financial</strong> assets.<br />
www.raiffeisenbank.ba<br />
In late<br />
31-90 days<br />
In late<br />
91-180<br />
days<br />
In late<br />
181-270<br />
days<br />
In late over<br />
270 days<br />
Total<br />
Allowance for<br />
Total net carrying<br />
impairment<br />
amount<br />
losses<br />
Collateral<br />
for<br />
individually<br />
impaired<br />
assets<br />
Interest<br />
income for<br />
individually<br />
impaired<br />
assets<br />
Public sec<strong>to</strong>r 27,272 12 - - - 27,284 - 27,284 - -<br />
Corporate 561,873 435,245 35,131 47,742 122,403 1,202,394 (162,402) 1,039,992 59,521 315<br />
Retail 1,100,874 113,948 20,633 23,167 93,295 1,351,917 (112,463) 1,239,454 1,075 68<br />
TOTAL 1,690,019 549,205 55,764 70,909 215,698 2,581,595 (274,865) 2,306,730 60,596 383<br />
31 December<br />
2010<br />
Public sec<strong>to</strong>r 45,608 2,743 - - - 48,351 (27) 48,324 - -<br />
Corporate 541,039 497,057 56,614 14,766 - 1,109,476 (71,345) 1,038,131 63,106 372,636<br />
Retail 1,067,580 105,987 20,604 18,192 - 1,212,363 (55,628) 1,156,735 662 172,712<br />
TOTAL 1,654,227 605,787 77,218 32,958 - 2,370,190 (127,000) 2,243,190 63,768 545,348
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
36.9 Liquidity risk<br />
Financial Statements<br />
The ultimate responsibility for liquidity risk management lies with <strong>the</strong> Supervisory Board, which has created an adequate<br />
framework for <strong>the</strong> management of liquidity risk <strong>to</strong> be used for <strong>the</strong> management of long-, mid- and short-term needs for<br />
<strong>the</strong> management of <strong>the</strong> <strong>Bank</strong>’s liquidity. The <strong>Bank</strong> manages this type of risk by maintaining adequate reserves, loans<br />
from o<strong>the</strong>r banks and o<strong>the</strong>r sources of financing, by constantly moni<strong>to</strong>ring <strong>the</strong> projected and actual cash flows and by<br />
comparing maturity profiles of <strong>financial</strong> assets and liabilities.<br />
36.9.1 Liquidity and interest risk tables<br />
The following tables detail <strong>the</strong> <strong>Bank</strong>’s remaining contractual maturity for its non-derivative <strong>financial</strong> assets. The tables have<br />
been drawn up based on <strong>the</strong> undiscounted contractual maturities of <strong>the</strong> <strong>financial</strong> assets including interest that will be<br />
earned on those assets except where <strong>the</strong> <strong>Bank</strong> anticipates that <strong>the</strong> cash flow will occur in a different period.<br />
Maturity for non-derivative <strong>financial</strong> assets<br />
31 December 2011<br />
Weighted<br />
average<br />
effective<br />
interest rate<br />
Less than<br />
1 month<br />
2-3<br />
months<br />
4 months<br />
<strong>to</strong><br />
1 year<br />
2-5 years 5+ years Total<br />
Non-interest bearing - 717,864 - - - - 717,864<br />
Variable interest rate<br />
instruments<br />
Fixed interest rate<br />
instruments<br />
31 December 2010<br />
11.27% 325,729 184,055 802,318 980,500 322,613 2,615,215<br />
0.55% 506,435 19,500 150,633 116,831 11,183 804,582<br />
1,550,028 203,555 952,951 1,097,331 333,795 4,137,661<br />
Non-interest bearing - 436,628 - - - - 436,628<br />
Variable interest rate<br />
instruments<br />
Fixed interest rate<br />
instruments<br />
11.24% 115,541 224,116 787,094 1,221,546 312,605 2,660,902<br />
0.55% 561,514 5,990 73,380 317,716 527 959,127<br />
1,113,683 230,106 860,474 1,539,262 313,132 4,056,657<br />
www.raiffeisenbank.ba 125
126<br />
Financial Statements<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
The following tables detail <strong>the</strong> <strong>Bank</strong>’s remaining contractual maturity for its non-derivative <strong>financial</strong> liabilities. The tables<br />
have been drawn up based on <strong>the</strong> undiscounted cash flows of <strong>financial</strong> liabilities based on <strong>the</strong> earliest date on which <strong>the</strong><br />
<strong>Bank</strong> can be required <strong>to</strong> pay. The table includes both interest and principal cash flows.<br />
Maturity for non-derivative <strong>financial</strong> liabilities<br />
31 December 2011<br />
The <strong>Bank</strong> expects <strong>to</strong> meet its o<strong>the</strong>r obligations from operating cash flows and proceeds of maturing <strong>financial</strong> assets.<br />
www.raiffeisenbank.ba<br />
Weighted<br />
average<br />
effective<br />
interest rate<br />
Less than<br />
1 month<br />
2-3<br />
months<br />
4 months<br />
<strong>to</strong><br />
1 year<br />
2-5 years 5+ years Total<br />
Non-interest bearing - 1,564,809 164 12 4 - 1,564,989<br />
Variable interest rate<br />
instruments<br />
Fixed interest rate<br />
instruments<br />
31 December 2010<br />
4.77% 6,899 55,548 110,581 366,423 38,644 578,095<br />
4.01% 879 88,516 445,646 844,917 85,700 1,465,658<br />
1,572,587 144,228 556,239 1,211,344 124,344 3,608,742<br />
Non-interest bearing - 1,429,434 - 10 17 67 1,429,528<br />
Variable interest rate<br />
instruments<br />
Fixed interest rate<br />
instruments<br />
4.77% 5,120 18,338 165,999 485,773 54,791 730,021<br />
4.21% 64,039 110,046 442,188 622,105 34,437 1,272,815<br />
1,498,593 128,384 608,197 1,107,895 89,295 3,432,364
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong><br />
for <strong>the</strong> year ended 31 December 2011<br />
(all amounts are expressed in thousands of KM, unless o<strong>the</strong>rwise stated)<br />
36.10 Estimated fair value of <strong>financial</strong> assets and liabilities<br />
Financial Statements<br />
Fair value of <strong>financial</strong> instruments is <strong>the</strong> amount for which an asset could be exchanged, or a liability settled, between<br />
knowledgeable, willing parties in an arm’s-length transaction. If available, <strong>the</strong> fair value is based on quoted market<br />
prices. However, no readily available market prices exist for a significant portion of <strong>the</strong> <strong>Bank</strong>’s <strong>financial</strong> instruments. In<br />
circumstances where <strong>the</strong> quoted market prices are not readily available, <strong>the</strong> fair value is estimated using discounted cash<br />
flow models or o<strong>the</strong>r pricing techniques as appropriate. Changes in underlying assumptions, including discount rates<br />
and estimated future cash flows, significantly affect <strong>the</strong> estimates. Therefore, <strong>the</strong> calculated fair market estimates may not<br />
be realisable in a current sale of <strong>the</strong> <strong>financial</strong> instrument.<br />
It is <strong>the</strong> opinion of <strong>the</strong> Management of <strong>the</strong> <strong>Bank</strong> that <strong>the</strong> fair value of <strong>the</strong> <strong>Bank</strong>’s <strong>financial</strong> assets and liabilities are not<br />
materially different from <strong>the</strong> amounts stated in <strong>the</strong> balance sheets as at 31 December 2011 and 31 December 2010.<br />
The fair values of <strong>financial</strong> assets and <strong>financial</strong> liabilities are determined as follows:<br />
• The fair values of <strong>financial</strong> assets and <strong>financial</strong> liabilities with standard terms and conditions and traded on active<br />
liquid markets are determined with reference <strong>to</strong> quoted market prices.<br />
• The fair values of o<strong>the</strong>r <strong>financial</strong> assets and <strong>financial</strong> liabilities are determined in accordance with generally accepted<br />
pricing models based on discounted cash flows analysis using prices from observable current market transactions<br />
and dealer quotes for similar instruments.<br />
Analyses of <strong>financial</strong> instruments that are measured subsequent <strong>to</strong> initial recognition at fair value are grouped in<strong>to</strong> Levels<br />
1 <strong>to</strong> 3 as follows:<br />
• Level 1 – fair value measurements for those derived from quoted prices in active market;<br />
• Level 2 – fair value measurements for those derived from inputs o<strong>the</strong>r than quoted prices included in level 1;<br />
• Level 3 – fair value measurements for those derived from valuation techniques that are not based on observable<br />
market data.<br />
As of 31 December 2011 and 2010, respectively, <strong>the</strong> <strong>Bank</strong>’s <strong>financial</strong> instruments related <strong>to</strong> Level 1 such amounting <strong>to</strong>:<br />
Financial assets at FVTPL:<br />
The <strong>Bank</strong> had no Level 2 and 3 <strong>financial</strong> instruments as of 31 December 2011 and 2010, respectively.<br />
37. APPROVAL OF THE FINANCIAL STATEMENTS<br />
These <strong>unconsolidated</strong> <strong>financial</strong> <strong>statements</strong> were approved by <strong>the</strong> Management Board on 28 February 2012.<br />
Signed on behalf of <strong>the</strong> Management Board:<br />
31 December 2011 31 December 2010<br />
– Bonds 153,011 163,120<br />
– Shares / securities 5,886 1,664<br />
Financial assets available-for-sale 3,299 2,241<br />
162,196 167,025<br />
President of <strong>the</strong> Management Board Head of Finance division<br />
Michael Georg Müller Mar ko Jur je vi}<br />
www.raiffeisenbank.ba 127
Edi<strong>to</strong>r: <strong>Raiffeisen</strong> BANK d.d. Bosna i Hercegovina<br />
Design & graphics: McCann-Erickson Sarajevo<br />
Pho<strong>to</strong>s: Irfan Red`ovi}<br />
Sources of <strong>the</strong> texts<br />
on <strong>the</strong> cultural and<br />
his<strong>to</strong>rical heritage: The FB&H Tourist Community<br />
http://bs.wikipedia.org<br />
http://www.nota.tavla.ba<br />
http://www.bh<strong>to</strong>urism.ba<br />
http://www.vinskacesta.ba<br />
www.hercegovina.ba<br />
http://www.turizam.mostar.ba<br />
http://jajce<strong>to</strong>urism.com<br />
http://jajceportal.com<br />
http://www.kostajnica.com<br />
http://www.bistrobih.ba<br />
www.panonika.ba<br />
www.zemuzej.ba<br />
www.sarajevo.ba<br />
http://www.turizamrs.org<br />
http://www.opstinavisegrad.com