Annual Report 2010 - ProCredit Bank

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72 Annual Report 2010 At 31 December 2009 No later than From 1 – 2 From 2 – 5 Over 5 Total 1 year years years years Approved but unused overdraft limits for consumer clients 141,080 15 12 – 141,107 Approved but unused overdraft limits for business clients 1,166,839 10 – – 1,166,849 Approved but unused credit card limits 419,152 152,769 4,238 – 576,159 Payments and guarantees 2,101,309 562,609 1,373,372 958,888 4,996,178 Letters of credit 43,036 – – – 43,036 Performance guarantees 599,052 896 5,875 – 605,823 Total 4,470,468 716,299 1,383,497 958,888 7,529,152 E) Fair values of financial assets and liabilities The following table summarizes the carrying amounts and fair values of those financial assets and liabilities not presented on the Group’s balance sheet at their fair value. Carrying value Fair value 2010 2009 2010 2009 Financial assets Loans and advances to customers 47,033,829 40,671,768 47,718,580 41,515,967 Business 25,617,817 21,235,424 26,252,557 21,903,945 Agro 11,264,906 9,586,248 12,223,785 10,476,780 Housing Loans 4,002,508 3,834,506 4,190,888 4,027,293 Consumer 2,265,065 2,571,657 821,988 1,340,844 Leasing 2,233,984 1,349,394 3,475,172 2,428,961 Other 1,649,549 2,094,539 754,190 1,338,143 Loans and advances to banks 697,202 779,572 673,625 753,299 Total Financial Assets 47,731,031 41,451,340 48,392,205 42,269,266 Financial liabilities Deposits from banks 2,195,180 349,697 2,120,947 341,252 Due to customers 33,542,406 37,645,140 33,675,520 37,791,032 Corporate 4,620,996 7,062,409 4,601,991 7,047,872 SME 10,768,884 10,533,415 10,793,956 10,554,413 Private individuals 18,152,526 20,049,316 18,279,573 20,188,747 Due to IFI’s and other borrowings 15,799,082 16,543,430 15,100,878 16,585,310 Subordinated debt 2,886,643 2,621,912 2,971,608 2,162,599 Total Financial Liabilities 54,423,311 57,160,179 53,868,953 56,880,192 Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Quoted market prices in an active market are the best evidence of fair value and should be used, where they exist to measure the financial instrument. The estimated fair values of financial instruments have been determined by the Group using available market information, where it exists, and appropriate valuation methodologies. However, judgment is necessarily required to interpret market data to determine the estimated fair value. The carrying amounts of other financial assets and other financial liabilities represent reasonable approximation of fair value due to their short term maturity. Loans and advances to banks The fair value of placements with and loans to other banks approximately equals the carrying amount since they all have less than a six-month maturity. The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using prevailing money-market interest rates for debts with similar credit risk and remaining maturity. Loans and advances to customers The fair value of loans and advances to customers is their expected cash flow discounted at current market rates. Current market rates are interest rates we would charge at the moment (year end). Loans and advances to customers are stated net of provisions for impairment. Deposits from banks The fair value of liabilities to banks approximately equals the carrying amount since they all have less than a six-month maturity. Due to customers The estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits, is the amount repayable on demand. The estimated fair value of term deposits is calculated by discounting the cash flows at agreed dates with current market rates on deposit that have more than a six-month maturity and where actual interest rate is not the same as the agreed for these deposits. Other borrowed funds Fair value of Liabilities to International Financial Institutions shows that the Group, based on its current position in the market, strong shareholders and achieved results was able to contract very good conditions for long term loans. Fair value is smaller than carrying amount, discounted by interest rate that ProCredit Holding would ask for.
Financial Statements 73 Subordinated debts Subordinated debts carry predominantly floating rates and due to the interest rate reprising carrying value is not materially different from their fair value. Fair value hierarchy IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable inputs reflect the Group’s market assumptions. These two types of inputs have created the following fair value hierarchy: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity securities (from New York Stock Exchange). • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). This level includes the majority of the OTC derivative contracts. The sources of input parameters like LIBOR yield curve or counterparty credit risk are Bloomberg and Reuters. • Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs). This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market prices in its valuations where possible. Assets and liabilities measured Level 1 Level 2 Level 3 Total at fair value as at 31 December 2010 Financial assets Derivative financial assets – 105 – 105 Available for sale financial assets 13,618 – – 13,618 Total Financial Assets 13,618 105 – 13,723 Financial liabilities Derivative financial liabilities – 5,649 – 5,649 Total Financial Liabilities – 5,649 – 5,649 In 2010 there was no transfer between level 1 and level 2 of the fair value hierarchy. There were no Level 3 items as of 31 December 2010 and 2009. F) Operational Risk In line with Basel II Accord, we define operational risks as the risk of loss resulting from inadequate or failed internal processes, people and systems and/or external events. This category includes all “risk events” in the areas of personnel, processes, and information technology. To further expand the processes for managing operational risks, a new Operational Risk Policy was implemented in the bank in 2009. The principles outlined in this document have been designed to effectively manage the operational risk exposure, and they are in compliance with the Basle II requirements for the “standard approach”. The overall framework to manage operational risks is as a complementary and balanced system with its key components Corporate Culture, Governance Framework, Policies and Procedures, Risk Assessments, New Risk Approvals (NRAs) and the Risk Event Database. While of the Corporate Culture, the Governance Framework, and Policies and Procedures are installed to set the basic organisational requirements, Risk Assessments, New Risk Approvals (NRAs) and the Risk Event Database are the key instruments to execute the risk management process. The overall objectives of the Group’s approach to the management of operational risks are: • to understand the drivers of the bank’s operational risks; • to be able to identify critical issues as early as possible; • to avoid losses caused by operational risks; and • to ensure efficient use of the bank’s capital.
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Annual Report 2010
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Contents 3 Mission Statement 4 Lett
Page 5 and 6:
Letter from the Board of Directors
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The Bank and its Shareholders 7 Com
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Special Feature 9 of life, ProCredi
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Management Business Review 11 Polit
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Management Business Review 13
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Management Business Review 15 the b
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Management Business Review 17 Domes
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Management Business Review 19 partn
Page 21 and 22: Risk Management 21 Credit Risk Mana
Page 23 and 24: Risk Management 23 bia, like the ot
Page 25 and 26: Risk Management 25 In 2010 the bank
Page 27 and 28: Branch Network 27 tegic, often dens
Page 29 and 30: Organisation, Staff and Staff Devel
Page 31 and 32: Business Ethics and Environmental S
Page 33 and 34: The ProCredit Group: Responsible Ne
Page 35 and 36: The ProCredit Group: Responsible Ne
Page 37 and 38: ProCredit in Eastern Europe 37 Bela
Page 39 and 40: ProCredit in Eastern Europe 39 Name
Page 41 and 42: Our Clients 41 Katalin Muzlai, Catt
Page 43 and 44: Our Clients 43 Aleksandra Zoric Krz
Page 45 and 46: Financial Statements 45
Page 47 and 48: Financial Statements 47
Page 49 and 50: Financial Statements 49 Consolidate
Page 51 and 52: Financial Statements 51 Group Cash-
Page 53 and 54: Financial Statements 53 Gains and l
Page 55 and 56: Financial Statements 55 N) Property
Page 57 and 58: Financial Statements 57 Y) Comparat
Page 59 and 60: Financial Statements 59 Table below
Page 61 and 62: Financial Statements 61 Individual
Page 63 and 64: Financial Statements 63 2010 2009 I
Page 65 and 66: Financial Statements 65 (b) Loans a
Page 67 and 68: Financial Statements 67 2010 2009 P
Page 69 and 70: Financial Statements 69 31 December
Page 71: Financial Statements 71 Assessment
Page 75 and 76: Financial Statements 75 6. Net fee
Page 77 and 78: Financial Statements 77 Loans and a
Page 79 and 80: Financial Statements 79 22. Other a
Page 81 and 82: Financial Statements 81 27. Subordi
Page 83 and 84: Financial Statements 83 At 31 Decem
Page 85 and 86: Contact Addresses 85 Sabac 1 Cara D
Page 87: Contact Addresses 87
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Annual Report 2010 - ProCredit Bank

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