Annual Report 2012 - Raiffeisen Bank Kosovo JSC

Treasury
Kosovo money market and the cost of money
2012 was successful as far as the collection and consolidation of deposits was concerned. Raiffeisen Bank Kosovo
managed to retain its core deposit customers. Building on the increased trust in the financial system, especially the
brand of Raiffeisen Bank Kosovo, the Bank’s liquidity remained at stable levels, thus lowering significantly the liquidity
costs on a year on year basis. Prudent asset and liability management made it possible for the Bank to keep the lowest
cost of funds in the market compared to the competition, which in turn enabled lower lending rates for certain products.
However, the liquidity costs of Kosovo remain high due to the Euro interest rate curve. The liquidity costs are high mainly
due to Kosovo Country risk parameters. To date Kosovo has not been awarded an international rating by the rating
agencies. This makes the task of price discovery and, consequently foreign direct investments in Kosovo a difficult matter.
Government securities
The Banks bonds portfolio in government securities increased to € 64 million, or around 10 per cent of the total balance
sheet. In 2012, for the first time, the Kosovo Government issued short term T-bills. The Bank being one of the primary
dealers in Kosovo, successfully participated in most of the auctions.
Financial derivatives
The Bank’s interest rate swaps portfolio increased to € 42 million. The yields in the market had a negative effect on
the performance of this portfolio in 2012. Interest rate swaps are used to mitigate the risks from the probability of the
increased cost of funds. In the months and years to come we believe that the market rates will move from the current
historical lows.
Liquidity and risk management
Raiffeisen Bank Kosovo manages its overall liquidity and interest risk management through the Assets and Liability
Committee which includes the Treasury Department. The share of total liquid assets as part of total assets is 31 per cent
in all currencies. Raiffeisen Bank Kosovo applies the Raiffeisen Group standard, the Basel II, and Basel III framework
for assessing risks. The Time to Wall and Going Concern criteria for assessing liquidity risk is refreshed at least semiannually,
and there is daily reporting to the Treasury Management.
Foreign exchange business
Foreign exchange business produced more than € 1.67 million in revenues in 2012. The revenue is slightly lower than
in 2011. Raiffeisen Bank Kosovo desk is the most profitable desk in the banking industry in Kosovo. In addition, foreign
exchange business has fostered the Raiffeisen Bank Kosovo turnover in the funds transfer commission income business.
Year 2007 2008 2009 2010 2011 2012
FX income in thousands 1,052 1,073 1,392 1,326 1,766 1,543
Kosovo has the euro as its official country currency and this imposes limitations on Foreign Exchange business.
Custody business
In 2012, Raiffeisen Bank Kosovo launched the first custody business. The Bank’s customers are able to place trades in
almost all exchanges in the world. This feature enables customers to buy stocks and funds and maintain portfolios.
17
Addresses Glossary Financial Statements Segment Reports Overview Macroeconomic Environment RBI Vision and Mission Management Board Introduction