Annual Report 2009 - ProCredit

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10 Annual Report 2009 Management Business Review Management from left to right: Senad Redžić Executive Director, Small and Medium Business Sector Maja Hrnjić Director of Operations Vedran Hadžiahmetović Executive Director, General Services Sector Frieder Wöhrmann Director Edin Hrnjica Executive Director, Retail and Payments Sector Sabina Mujanović Executive Director, Finance Sector Radomir Savić Executive Director, Risk and Compliance Sector
Management Business Review 11 Political and Economic Environment BiH is behind other Western Balkan countries in the EU integration process. The European Commission’s progress report for 2009 concluded that only very limited progress had been made in addressing the political criteria required by the Stabilisation and Association Agreement (SAA), which was signed in June 2008. In particular, the report pointed to the deteriorating political situation, delays in reforms, and problems with the work of state-level executive and legislative bodies. Crucially, the report highlighted the need to break the deadlock over constitutional reform, singling out the entity-based voting system as one of the main obstacles to a more efficient state apparatus. According to a report by the Agency for Statistics of BiH, overall industrial production in BiH contracted by 3.9% year on year in the first three quarters of 2009. 2 Although a decline was recorded in the Federation of BiH, growth was positive in the Republika Srpska. Manufacturing shrank by 5.8%, mainly because of reduced foreign demand, while mining output declined by 2.9%. The utilities sector (electricity, gas and water) was alone in showing a positive trend with output up by 1.4%. Exports remained low due to reduced demand for principal products such as metals and wood in the main markets of the Eurozone, Croatia and Serbia. Merchandise exports fell by 21.4% year on year in the first three quarters, but this was outpaced by the contraction in imports, which shrank by 26.1%. 3 The currency board arrangement remained in place with the convertible mark (BAM) pegged to the euro at a rate of 1.96. The currency board promotes macroeconomic stability. A three-year stand-by facility was arranged with the IMF in May 2009. Under this arrangement, BiH must concentrate on maintaining macroeconomic stability through fiscal consolidation, an area that has received much criticism in the past. The IMF also advocated further structural reforms and a greater degree of privatisation. However, the authorities must focus instead on short-term measures to mitigate the impact of the global economic downturn. One important condition of the SAA is already in effect: customs duties on a wide range of imports from the EU were reduced or abolished as of January 2009, intensifying competition for many local producers. After GDP growth of 5.8% in 2008, economic output contracted by an estimated 3.2% in 2009. 1 This was partly the result of increased unemployment as well as measures taken to rein in the budget deficit, such as public-sector wage cuts and reductions in social welfare benefits. Access to loans was also restricted, mainly because banks were still reeling from the international financial crisis. Average consumer prices remained the same as in 2008: annual inflation was 0.0% in December. 4 Food, housing and heating costs account for over half the average household’s consumption in BiH, and inflation is expected to increase to around 2% in 2010. Financial Sector Developments At the end of 2009, 31 commercial banks and 25 microcredit organisations (MCOs) were operating in the country. 5 The financial sector is dominated by foreign investors: only nine banks are owned by domestic shareholders. Concentration in the market remains moderate. At the end of the year, the three largest banks, Raiffeisen Bank, UniCredit Bank and Hypo Bank, held 60% of the sector’s total assets. 6 1 Economic Intelligence Unit, Country Report, December 2009. 2 Agency for Statistics of BiH, Basic indicators available at www.bhas.ba, December 2009. 3 ibid. 4 Agency for Statistics of BiH, Consumer Price Index in BiH, December 2009. 5 Unless otherwise indicated, financial sector data based on statistics of the Central Bank of BiH: www.cbbh.ba. 6 Based on the respective banks’ financial statements as of December 31, 2009.
Page 1 and 2: Annual Report 2009
Page 3 and 4: Contents 3 Mission Statement 4 Lett
Page 5 and 6: Letter from the Supervisory Board 5
Page 7 and 8: The Bank and its Shareholders 7 Com
Page 9: Special Feature 9 Furthermore, the
Page 13 and 14: Management Business Review 13
Page 15 and 16: Management Business Review 15 salar
Page 17 and 18: Management Business Review 17 ents
Page 19 and 20: Management Business Review 19 the d
Page 21 and 22: Risk Management 21 tive in 2009 was
Page 23 and 24: Risk Management 23 Together with th
Page 25 and 26: Branch Network 25 and service provi
Page 27 and 28: Organisation, Staff and Staff Devel
Page 29 and 30: Business Ethics and Environmental S
Page 31 and 32: The ProCredit Group: Responsible Ba
Page 33 and 34: The ProCredit Group: Responsible Ba
Page 35 and 36: ProCredit in Eastern Europe 35 Bela
Page 37 and 38: ProCredit in Eastern Europe 37 Name
Page 39 and 40: Our Clients 39 Ivica Zovko, Electri
Page 41 and 42: Our Clients 41 Admir Mišut, Confec
Page 43 and 44: Financial Statements 43
Page 45 and 46: Financial Statements 45 Statement o
Page 47 and 48: Financial Statements 47 Statement o
Page 49 and 50: Financial Statements 49 Notes to th
Page 51 and 52: Financial Statements 51 Additionall
Page 53 and 54: Financial Statements 53 Actuarial g
Page 55 and 56: Financial Statements 55 agement, in
Page 57 and 58: Financial Statements 57 (d) Loans a
Page 59 and 60: Financial Statements 59 The local c
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Financial Statements 61 4.3 Liquidi
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Financial Statements 63 in the proc
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Financial Statements 65 13. Income
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Financial Statements 67 19. Intangi
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Financial Statements 69 27. Share c
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Financial Statements 71 Additional
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Financial Statements 73
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Contact Addresses 75 Posušje Fra G
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