Annual Report - Raiffeisen Bank Kosovo JSC

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Financial Statements Notes to the Financial Statements for the years ended 31 December 2006 and 2005 (in thousands of Euro unless otherwise stated) 1. Principal Activities The current 100% shareholder of Raiffeisen Bank Kosovo J.S.C (“the Bank”) is Raiffeisen International Bank-Holding AG (RI), formerly Raiffeisen International Beteiligungs AG (RIB). The ultimate parent of the Bank is Raiffeisen Zentralbank Osterreich AG (RZB). At the date of foundation of the Bank and up to February 2003 the Bank was called the “American Bank of Kosovo”. In February 2003 the shareholders of the Bank decided to change the name of the Bank to Raiffeisen Bank Kosovo J.S.C. The change of the name was approved by the Central Banking Authority of Kosova (the “CBAK”, formerly known as Banking and Payments Authority of Kosovo - BPK) on 28 April 2003. The Bank operates under a banking licence issued by the CBAK (formerly BPK) on 8 November 2001. The Bank’s principal business activities are commercial and retail banking operations within Kosovo. As at 31 December 2006 the Bank has 8 branches and 24 sub-branches within Kosovo (31 December 2005: 8 branches and 20 sub-branches). The Bank’s registered office is located at the following address: UCK Street No 51, Prishtina, Kosovo – UNMIK. The number of the Bank’s employees as at 31 December 2006 was 481 (31 December 2005: 386 employees). 2. Operating Environment of the Bank Under Resolution 1244 (1999) of the United Nations Security Council, Kosovo is administered by the United Nations Interim Administration Mission in Kosovo (UNMIK) headed by the Special Representative of the Secretary-General. Since 1999 legislative and executive authority with respect to Kosovo has been vested in UNMIK. The Constitutional Framework for Provisional Self-Government adopted by UNMIK Regulation 2001/9 of 15 May 2001 provides for division of powers between UNMIK and Provisional Institutions of Self-Government, as well as the transfer of powers and responsibilities to the Provisional Institutions of Self-Government, which is currently underway. During year 2006, several rounds of negotiations were held between the representatives of Serbia and Kosovo with the purpose to reach an agreement on the final status of Kosovo. The negotiation process is undergoing. The recent economic growth in Kosovo has been mainly driven by large foreign assistance and remittances from Kosovars living abroad. However, the donors’ transfers to Kosovo are gradually declining and there is an urgent need for a transformation from an aid-dependent economy. This in turn 42 www.raiffeisen-kosovo.com Supervisory Board Management Board Organisational Structure Vision and Mission RZB and RI .
Financial Statements is dependent on the status of Kosovo as a region and has a long term impact on all aspects of the Bank’s operations. The economy of Kosovo represents an emerging market. Political structure and the regulatory and legal framework are currently under development. The volume of activity in financial markets is insignificant. Although the existing regulations provide rules for the registration and enforcement of collateral, extremely long delays in the handling of commercial court cases are hampering the imposition of market discipline. Additionally, the market in Kosovo for assets taken as collateral is underdeveloped. Therefore, it is not possible to estimate the fair value of collateral taken. The prospects for future economic stability in Kosovo are largely dependent upon the effectiveness of economic measures undertaken by the authorities, together with legal, regulatory and political developments, which are beyond the Bank’s control. Major uncertainties that impact the economic prospects of Kosovo relate to the prospects of remittances, donor support and the resolution of Kosovo’s final status. 3. Basis of Presentation The financial statements of the Bank are prepared in accordance with International Financial Reporting Standards (“IFRS”), including International Accounting Standards (“IAS”) and Interpretations issued by the International Accounting Standards Board. In the current year, the Bank has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning on 1 January 2006. The adoption of these new and revised Standards and Interpretations has resulted in no significant changes to the Bank’s accounting policies. At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective: IFRS 7 Financial Instruments: Disclosures Annual periods beginning on or after 1 January 2007. IFRS 8 Operating segments Annual periods beginning on or after 1 January 2009. IAS 1 Presentation of Financial Statements Added disclosures about an entity’s capital Annual periods beginning on or after 1 January 2007. IFRIC 7 Applying the Restatement Approach under IAS 29, Annual periods beginning on or after 1 March 2006. Financial Reporting in Hyperinflationary Economies IFRIC 8 Scope of IFRS 2 Annual periods beginning on or after 1 May 2006. IFRIC 9 Reassessment of Embedded Derivatives Annual periods beginning on or after 1 June 2006. IFRIC 10 Interim Financial Reporting and Impairment Annual periods beginning on or after 1 November 2006. IFRIC 11 IFRS 2: Group and Treasury Share transactions Annual periods beginning on or after 1 March 2007. IFRIC 12 Service Concession Arrangements Annual periods beginning on or after 1 January 2008. Glossary Macroeconomic Environment Overview Segment Reports Financial Statements Addresses www.raiffeisen-kosovo.com 43
Page 1 and 2: Annual Report 2006
Page 3 and 4: Table of Contents Contents Introduc
Page 5 and 6: Introduction Introduction by the Ch
Page 7 and 8: Organisational Structure Organisati
Page 9 and 10: The RZB Group and Raiffeisen Intern
Page 11 and 12: Raiffeisen-Glossary Raiffeisen-Glos
Page 13 and 14: The Macroeconomic Environment The M
Page 15 and 16: The Macroeconomic Environment Trade
Page 17 and 18: Raiffeisen Bank Kosovo - Overview R
Page 19 and 20: Raiffeisen Bank Kosovo - Overview T
Page 21 and 22: Corporate Banking Corporate Banking
Page 23 and 24: Corporate Banking Key Issues when C
Page 25 and 26: Corporate Banking Liquidity and Int
Page 27 and 28: Retail Banking Retail Banking Small
Page 29 and 30: Retail Banking PI Loans and Overdra
Page 31 and 32: Retail Banking Risk and Credit Mana
Page 33 and 34: Retail Banking Local In/Out Tranfer
Page 35 and 36: Retail Banking Personnel Training a
Page 37 and 38: Financial Statements Financial Stat
Page 39 and 40: Financial Statements Independent Au
Page 41 and 42: Financial Statements Income Stateme
Page 43: Financial Statements Statements of
Page 47 and 48: Financial Statements The provision
Page 49 and 50: Financial Statements The income tax
Page 51 and 52: Financial Statements 5. Cash and Ca
Page 53 and 54: Financial Statements 107,953 thousa
Page 55 and 56: Financial Statements As at 31 Decem
Page 57 and 58: Financial Statements 12. Other Liab
Page 59 and 60: Financial Statements 16. Other Inco
Page 61 and 62: Financial Statements Differences be
Page 63 and 64: Financial Statements Assets Currenc
Page 65 and 66: Financial Statements Overdue assets
Page 67 and 68: Financial Statements The table belo
Page 69 and 70: Financial Statements The total outs
Page 71 and 72: Financial Statements The remunerati
Page 73 and 74: Addresses and Contacts Skenderaj Su
Page 75 and 76: Addresses and Contacts Leasing Aust
Page 77 and 78: Addresses and Contacts Russia Moska

Annual Report - Raiffeisen Bank Kosovo JSC

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