2013
Annual Report
Sberbank CZ, a.s.
Contents
2
Board of Director’s statement
2
About Sberbank and Sberbank Europe
4
Key figures in summary
5
Governing bodies
6
Organisation chart
8
General economic background
9
Business activities
10
Risk management
16
Other Information
19
Corporate social responsibility of Sberbank CZ
27
Statement of comprehensive income for the year ended 31 December 2013
31
Statement of financial position as at 31 December 2013
32
Statement of changes in equity for the year ended 31 December 2013
33
Statement of cash flow for the year ended 31 December 2013
34
Notes to the financial statement
36
Quantitative indices
119
Report on relations
120
Independent auditor’s report
122
Report of the Supervisory Board
124
Our network
126
1
Board of Director’s
statement
Ladies and Gentlemen,
Dear Clients, Business Partners and Stakeholders
The year of 2013 was a year of significant changes in the
twenty years of our existence in the Czech market. In 2013,
we successfully underwent a comprehensive process
of rebranding and re-design following the change in our
main shareholder in 2012 and saw major changes in our
top management. Yet, we managed to keep a stable
position in the banking market and achieved successful
business results.
Our balance sheet total grew year-on-year by 14.94%
to CZK 70.5 billion with the adopted business strategy
leading to a year-on-year increase in client deposits including debt securities in issue (19.26%) and client loans
(11.92%) highly above the average seen in the banking
sector. Our net profit grew year-on-year by 10.05% compared to the year-on-year drop of 4.11% witnessed in the
banking sector.
These figures are clear evidence of our ambition and plan
to grow in the Czech market. In the following five years,
our balance sheet total is expected to be CZK 200 billion
with our key segments (retail, micro, SME, corporate
banking and global markets) further developed and our
client portfolio increased to 200,000 clients.
The year of 2013 was marked by rebranding. On 28 February 2013, we officially changed our name to Sberbank
CZ and in March 2013 opened the first flagship branch
in Prague in the presence of Herman Gref, CEO of Sberbank. In the first half of the year, we rebranded all our
branches and points of sale with the second flagship
branch opened in Karlovy Vary at the end of the year and
a marketing campaign launched to increase brand awareness.
In 2013, we saw major changes also in our top management. In August 2013, the position of chief executive
officer was taken by Vladimír Šolc and the Board of Directors welcomed new members Jiří Antoš, Martin
Muránsky and Karel Soukeník joining the remaining board
member Frank Guthan. Major changes were seen also
in our senior and middle management.
In 2013, we were named Most Client-Friendly Bank 2013
(Best Bank competition) and third Most Dynamic Bank
2013 (Fincentrum Bank of the Year competition) and won
recognition for our work and effort under the new brand.
On behalf of our management and our team, thank you
for your continued trust and confidence.
Board of Directors, Sberbank CZ
from left: Frank Guthan, Karel Soukeník, Vladimír Šolc, Martin Muránsky, Jiří Antoš
Vladimír Šolc
2
Jiří Antoš
Frank Guthan Martin Muránsky
Karel Soukeník
In 2013, Sberbank CZ was named Most Client-Friendly Bank 2013 (Best Bank competition) and third Most Dynamic
Bank 2013 (Fincentrum Bank of the Year competition).
SBERBANK CZ | ANNUAL REPORT 2013 | BOARD OF DIRECTOR’S STATEMENT
3
About Sberbank
and Sberbank Europe
Key figures in summary
CZK million
Ukraine
Czech Republic
Slovakia
Austria
Hungary
Slovenia
Croatia
Bosnia and
Herzegovina
2013
2012
2011
2010
2009
Total assets
70,472
61,312
51,790
49,334
47,598
Capital adequacy
15.77%
11.78%
13.22%
14.20%
15.46%
Client deposits (liabilities to clients, including debt
securities in issue)
57,408
48,135
36,816
34,779
30,170
Receivables from clients
51,421
45,944
41,611
39,147
38,093
Income on financial transactions before provisions and
allowances
1,829
1,699
1,678
1,595
1,488
Operating expenses
1,088
930
890
847
835
Profit on ordinary activities before tax
286
270
443
345
276
Profit for the year
230
209
346
271
185
719
668
637
622
695
22
24
24
45
57
Number of employees*
Serbia
Number of points of sale
* including employees on maternity leave
As an important part of one of the largest, fastest growing, and dynamic banking organisations in the world –
we at Sberbank Europe aspire to be recognised as a gamechanging innovator, an emerging leader in CEE banking
with growing presence and recognition in Western Europe. Sberbank Europe AG manages a banking network
of nine universal banks in eight Central and Eastern European countries: Slovakia, Czech Republic, Hungary,
Slovenia, Croatia, Bosnia-Herzegovina, Serbia, and the
Ukraine. In total the bank operates 280 branches and
has 4.500 employees (as at 31.12.2013).
In 2013 a lot of positive changes happened throughout
Sberbank Europe and its subsidiaries in Central and
Eastern Europe. We have started a fundamental transformation and integration program to benefit from the
synergies as a member of one of the leading banking
groups worldwide.
One of the most visible achievements was the introduction of the Sberbank brand to all our markets. During
the year we have rebranded all of our branches as well as
expanded our network. This change is more than a color
change. It’s a fundamental re-look of products, processes
and customer experience.
4
Understanding and addressing the financial needs of our
customers is our #1 priority. We have introduced new
products and services that enable our customers to fulfill
their aspirations – for their private lives, for their own
small and medium enterprises or for large corporate businesses. We will continue to bring innovative products and
services to our markets.
Sberbank is one of the most successful financial institutions in the world and a leading market player in delivering innovative products based on excellence and stateof-the-art technology. Combined with the local expertise
and customer focus of our employees, Sberbank Europe
is building bridges to Eastern business and is a unique
banking partner in the CEE region, Russia, the CIS countries and Turkey.
Total assets
47.6
49.3
51.8
2009
2010
2011
61.3
2012
70.5
2013
57.4
48.1
We aim to become the #1 financial partner in Central and
Eastern Europe by further developing ourselves and our
operations for the benefit of our customers.
2009
2009
1.60
1.68
1.70
2010
2011
2012
1.83
2013
Loans to clients
CZK billion
30.2
CZK billion
1.49
Client deposits
We are proud that in 2013 Sberbank continues to be recognized the “Best Bank in CEE and Russia” by the Euromoney magazine, another recognition after being named
“Bank of the Year 2012” by the Banker magazine.
SBERBANK CZ | ANNUAL REPORT 2013 | ABOUT SBERBANK AND SBERBANK EUROPE
Income on financial transactions
CZK billion
34.8
36.8
2010
2011
2012
2013
CZK billion
38.1
39.1
41.6
2009
2010
2011
45.9
2012
51.4
2013
SBERBANK CZ | ANNUAL REPORT 2013 | KEY FIGURES IN SUMMARY
5
Governing bodies
Supervisory Board
Supervisory Board Members
Board of Directors
Chairman
Irina KREMLEVA
Chairman
Mark ARNOLD
Appointed on: 1 March 2013
Experience:
19 years of banking experience, 19 years of management
experience
Membership on other companies’ bodies:
Sberbank Europe AG, Austria: Chairman of the Board
of Directors; Sberbank SK, Slovakia: Chairman of the
Supervisory Board
Vice-chairman
Valentin MIHOV
Appointed on: 4 July 2012
Experience:
6 years of banking experience, 6 years of management
experience
Membership on other companies’ bodies:
VS - Bank, Ukraine: Chairman of the Supervisory Board;
Sberbank Europe AG, Austria: Member of the Board of
Directors; Sberbank Banka d.d., Slovenia, Chairman of the
Supervisory Board; Sberbank Magyarországi Zrt., Hungary: Chairman of the Supervisory Board
Appointed on: 28 March 2012
Experience:
21 years of banking experience, 7 years of management
experience
Membership on other companies’ bodies:
United Credit Bureau, Russia: Chairman of the Board of
Directors; Cetelem Bank LLC, Russia: Member of the
Board of Directors; Sberbank of Russia, Russia: ViceChairman of the Board of Directors
Reinhard KAUFMANN
Appointed on: 14 June 2013
Experience:
11 years of banking experience, 9 years of management
experience
Membership on other companies’ bodies:
Sberbank SK, Slovakia: Member of the Supervisory Board
Vladimír ŠOLC
Appointed on: 1 August 2013
Experience:
15 years of banking experience, 12 years of management
experience
No membership on other companies’ bodies.
Members of the Board of Directors
Frank GUTHAN
Appointed on: 1 March 2012
Experience:
21 years of banking experience, 19 years of management
experience
No membership on other companies’ bodies.
Robert KVARDA
Jiří ANTOŠ
No membership on other companies’ bodies.
Membership on other companies’ bodies:
BranchPro, s.r.o., Slovakia: Chief Executive
Appointed on: 21 September 2012
Experience:
9 years of banking experience, 18 years of management
experience
Luboš VLČEK
Appointed on: 18 February 2010
Experience:
16 years of banking experience, 21 years of management
experience
No membership on other companies’ bodies.
Appointed on: 11 July 2013
Experience:
15 years of banking experience, 15 years of management
experience
Martin MURÁNSKY
Appointed on: 1 October 2013
Experience:
17 years of banking experience, 12 years of management
experience
No membership on other companies’ bodies.
Karel SOUKENÍK
Appointed on: 1 October 2013
Experience:
9 years of banking experience, 9 years of management
experience
No membership on other companies’ bodies.
6
SBERBANK CZ | ANNUAL REPORT 2013 | GOVERNING BODIES
SBERBANK CZ | ANNUAL REPORT 2013 | GOVERNING BODIES
7
Organisation chart
General economic background
Board of Directors
153
Security Office
001
Section 001
003
Section 003
004
Section 004
110
Translation Office
005
Section 005 (CEO)
056
Alternative & Digital
Channels
036
Underwriting
Division
020
Global Markets
015
Organisation, IT
014
Communication
057
Partnership and
Bankassurance
070
Integrated Risk
Management
027
Transaction Services
026
ALM / Treasury
130
Audit / Revision
058
Segment
Management
071
Market Risk
028
Corporate Banking
055
Banking Operations
160
HR Management
090
Distribution
072
Operation Risk
030
SME
080
Financial
Management
175
Compliance & AML
140
Marketing
370
Corporate Credit Risk
045
Business & Product
Support
170
Legal
155
Retail Products
371
Retail Credit Risk
021
Credit Support
8
002
Section 002
101
Administration Office
037
Work out and
Restructuring
SBERBANK CZ | ANNUAL REPORT 2013 | ORGANISATION CHART
190
Facility Management
In 2013, the Czech economy recovered from recession.
First positive signs of the economic recovery appeared
already in 2Q/2013, indicating a quarter-on-quarter
growth by 0.6%. This trend continued also during the
subsequent quarters. In 2013, the Czech economy saw
a year-on-year growth of 1.3%, especially considering the
result of 4Q/2013 (quarter-on quarter growth of 1.9%)
exceeded all expectations.
The Czech economy was primarily underpinned by the
relatively strong recovery in the industry prompted mainly by the positive development tendencies in the markets
of our largest business partners and partially by ending
a spell of fiscal consolidation. Impact of household consumption was found to be less significant, as the currency intervention by the Czech National Bank had prompted
the increase in demand for imported goods before the
expected rising of prices.
If the Czech economy maintains the same dynamics
in growth as seen in 4Q/2013, the Czech Republic’s GDP
could increase by 2% in 2014. Such scenario, however,
appears quite unlikely; nonetheless, we assume that the
Czech economy can achieve a 1% year-on-year growth
after years of recession.
Although the overall performance of the Czech economy
improved in 2013, the unemployment rate, on the other
hand, gradually increased reaching 8.18% at the end of the
year. With ending seasonal employments, the unemployment rate peaked at 8.63% at the beginning of 2014
(630,000 unemployed) hitting the worst level in the last
years. As it is assumed that the recovery of the Czech
economy will pick up pace soon, the unemployment rate
is expected to gradually decrease in 2014 and linger at 8%
by the end of the year.
Gradually decreasing from the level of 1.9% and fluctuating below the level of the inflation target set by the Czech
National Bank during the year, consumer inflation reached
1.4% at the end of 2013. The slight increase thereof was
observed in the last month of 2013 with respect to the
Czech crown weakened by the intervention in the country’s monetary policy by the Czech National Bank. Data
from the first months of 2014 indicate a continuing trend
of 2013, i.e. further decrease in consumer inflation. Considering the fact that no inflationary pressures are expected, the inflation shall remain below the inflation target set by the Czech National Bank, which is around 1%.
After several years of decrease and stagnation, the Czech
industry saw in 2013 the highest year-on-year growth
of the past 21 months. The industrial production in 2013
increased on a year-on-year basis by 9.3%, notably because of the significant growth in the last months of the
year. The results thereof reflect both the economic recovery of the Czech export market and the domestic
market, especially the Czech automotive industry, machinery and manufacture of other means of transport.
The positive trends shall prevail also for the rest of 2014,
supported by the expected positive outcome of foreign
exchange intervention by the Czech National Bank from
the end of 2013. In 2014, the industrial production is expected to grow by approximately 3%.
Development of interest rates and
the Czech crown
By decreasing the two-week key repo rate to 0.05%
in 2012, the Czech National Bank depleted one of the
monetary policy instruments. Consumer inflation fluctuated below the level of the inflation target for the most
part of the year. The CZK interest rates were close to
the lowest level in history for the most part of the year.
In reaction to the development of inflation, long-term
interest rates also fell and reached the historical low.
Considering the anticipated further development of the
consumer prices, CZK rates in 2014 will remain at the
levels achieved at the end of 2013. A rise in the interest
rates may be expected by 2015, or, in case of slower economic growth, after 2015.
For the most of 2013, the CZK exchange rate was quite
stable, without any deviations. Comments from central
bankers about contemplated interventions directed at
weakening the Czech currency also influenced the CZK
exchange rate against euro over the course of the year.
The Czech National Bank finally decided to use the interventions directed at weakening the Czech currency
at the beginning of November. The Czech National Bank
managed to keep the exchange rate at 27.50 CZK/EUR.
The Czech National Bank announced that it would keep
the exchange rate close to 27 CZK/EUR also in 2014.
Considering the comments thereon, the CZK exchange
rate is expected to remain above the announced level,
or in the lower part of the range thereof.
SBERBANK CZ | ANNUAL REPORT 2013 | GENERAL ECONOMIC BACKGROUND
9
Business activities
Retail banking
In 2013, retail banking went through some significant
changes, especially related to the visual appearance and
operation of all branches in connection with the rebranding of Volksbank to Sberbank. In addition, a plan for the
development of the branch network in 2014 and 2015
was prepared and approved.
The retail segment reported significant double digit
growth in total deposits (12%) and especially in the total
volume of granted loans (24%). This was especially the
result of a rise in the volume of mortgages loans (22%)
and consumer loans (8%). The total number of clients
in the retail segment increased by 10% in 2013.
At the end of February, a new flagship branch opened
at Na Příkopě Street in Prague. The opening ceremony
was attended by Herman Gref, CEO of Sberbank of Russia.
In November, a new branch opened in Karlovy Vary,
thanks to which the bank is now present in most regions
of the Czech Republic. According to the branch network
development plan, the number of points of sale will double in the next two years.
The branch network rebranding project following the
change in the bank’s name focused especially on the
creation of the points of sale with a maximum emphasis
on customer comfort. New technologies were also installed at Sberbank branches, including an iPad service
zone, touch screens and the interactive evaluation of
bankers directly at the counters. In addition, elements
of sensitive marketing were also used.
The bank consolidated its offer for retail clients under
the line of “FAIR” products and services, which are based
on transparency and mutual benefits for clients and the
bank. The concept is built on the FAIR Account available
in three versions based on client preferences, including
the basic version with zero monthly fees. The product
range has been extended by an attractive loan offer,
including the FAIR loan, FAIR Consolidation and FAIR
10
SBERBANK CZ | ANNUAL REPORT 2013 | BUSINESS ACTIVITIES
Credit Card. Clients also appreciated the “tip” loyalty programme, thanks to which they are able to get a bonus
of up to CZK 500 per month. As regards deposit products, Sberbank also offered a savings account with one
of the highest interest rates on the market, especially
during the second half of the year. The bank’s position
on the mortgage market strengthened because of the
growing interest in Sberbank mortgage loan products
during the summer months.
SME banking
SMEs are traditionally one of the bank’s key segments.
In terms of the volume of assets, loans granted to SMEs
represent 33% of the total volume of loan transactions.
Also, in terms of the number of clients, Sberbank CZ is
one of the leading players on the market – almost 10%
of corporations with turnover between CZK 25 million
and CZK 1.2 bn make use of some of our products and
services.
The important role this segment plays for the bank, not
only from the local but also the group-wide perspective,
is emphasised by the fact that in May 2013 a separate
business division was established for SME clients. This
organizational change was the bank’s first step towards
an intensive focus on small and medium enterprises.
In order to streamline our services and better match up to
our clients’ needs, important procedural changes were
launched in 2013. One of the implemented changes for
streamlining and improving the quality of the lending
process was the establishment of the Credit Analysis
unit in September 2013.
In 2013, SME banking not only focussed on credit products,
but also achieved success in the deposit business. Thanks
to the attractive deposit products offered to SME clients,
especially the Step-up Term Deposit, the volume of deposits was up by 15% compared to 2012. The change in
ownership also opened up new opportunities for the
bank in the area of export financing, not only in Russia.
Corporate banking
The Corporate Banking division was established in May
2013 together with the establishment of a separate division for SMEs to serve four specific customer groups:
large enterprises and corporations, financial institutions,
real estate service providers and the public sector. As of
31 December 2013, the Corporate Banking division reached
33% in the total volume of loans granted by the bank,
and 35% in the total volume of deposits.
In January 2013, Sberbank CZ opened a specialized customer service unit and established itself in the segment
of large enterprises and corporations. In addition, during
the year the bank created a specialized unit serving financial institutions. Both these new units were very
successful during the first year of their existence. The
Large Enterprise and Corporation division managed to
increase the volume of loans 360%. The increase thereof
was achieved especially as a result of structured and
syndicated financing trades. The Financial Institutions
unit increased its deposits by 76%, while the Public Sector reported a slight increase in deposits. On the other
hand, the results of the Real Estate Financing unit were
rather stagnant mainly due to the bank’s overall involvement in this sector. Among other achievements, the Large
Enterprise and Corporation unit signed the highest loan
in the bank’s history in 2013. With the amount of CZK 4.1 bn,
Sberbank CZ participated in financing the acquisition of
the majority stake in Telefónica Czech Republic, a.s. by PPF.
The new staff hired for the Larger Enterprise and Corporation and the Financial Institution units and the
streamlining of our processes, will contribute to further
improve of our services and create tailored solutions for
clients in these segments.
Structured Finance
& Syndications
The Structured Finance & Syndications subdivision increased its staff to four in 2013. Throughout the year, the
subdivision assessed more than 35 transactions (financing
of renewable sources, recapitalization, leverage buy-outs),
of which seven transactions with a total value of approximately CZK 9 bn were subsequently approved by the
bank’s loan committees and successfully implemented.
Export & Trade Finance
The volume of loans in Export & Trade Finance (ETF), including post-financed documentary letters of credit,
exceeded EUR 61 million in 2013; bank guarantees were
issued in a total value of EUR 39.9 million and the value
of documentary letters of credit amounted to EUR 6.6
million. The pipeline of ETF trades with EGAP insurance
exceeds EUR 200 million. Owing to the increase in funding
of loan resources, the bank managed to find a solution
in the form of unfunded risk participation in the customer
loans granted by Sberbank of Russia and insured by EGAP;
in this structure Sberbank CZ is the Co-Lender and CoInsured in the insurance contracts signed with EGAP.
Noteworthy among the marketing activities of ETF in 2013
were Russian Day at the International Engineering Fair
in Brno, where Sberbank had two presentations on export finance, and the Delovaya Sreda consumer platform.
SBERBANK CZ | ANNUAL REPORT 2013 | BUSINESS ACTIVITIES
11
Global markets
Financial markets
After the introduction of a strategic shareholder in 2012,
Sberbank continued to establish and expand business
cooperation with financial market players in 2013. The
Global Markets unit signed a series of general finance
market trade agreements with many major European
banks, providing the bank with access to new markets
and products.
In addition to trading in investment instruments on its
own account, the Global Markets unit especially focused
on providing investment services to institutional, retail
and corporate clients. Despite the difficult situation on
financial markets, most of the trading activities reached
growth year-on-year as regards trading volumes, the
number of active clients making use of the unit’s services
and the number of concluded trades.
Investment instrument sales
to corporate clients
One of the most important moments for Czech industry
and Czech companies in 2013 was the reports on the economic recovery in the euro area and subsequently the
first signs of economic recovery in the Czech economy
published in the second half of the year. After years of
recession, this was the first positive impulse indicating
a turning point in the development of the Czech economy.
As regards currency hedging, the first half of 2013 did not
deviate from the trend of the previous year. Thanks to
the steady situation on foreign exchange markets, the
interest among clients in currency hedging products was
very low. A significant change occurred in the last months
of the year in connection with the Czech National Bank’s
intervention to weaken the Czech currency. Many clients
thus took advantage of the favourable market conditions
to hedge currency risk.
A similar development was observed in trading products
used for hedging interest rate risk. Even though interest
rates were at historical lows, the interest in hedging
among clients was very weak. This was especially caused
12
SBERBANK CZ | ANNUAL REPORT 2013 | BUSINESS ACTIVITIES
by the expected future development in interest rates,
which suggests their long-term stagnation.
In addition to the sale of investment instruments to small
and medium-sized enterprises, the bank turned more of
its focus to large clients. The bank thus made successful
use of its position as a large banking group to attract and
support the sale of products among clients from this
segment.
The individual approach to resolving clients’ business
needs, long-term strategy and its proper timing in connection with the potential of new markets, products and
clients after the introduction of the strategic shareholder
helped the bank achieve further growth in the number
and volume of transactions concluded with clients yearon-year.
Financial institutions
In 2013, the Bank continued the trend of previous years
and further strengthened its position in providing services to financial institutions. The bank is aware of the
importance of this segment, and therefore the sales team
hired new members and the offer of new products and
services was extended in the course of the year. Thanks
to the individual approach to resolving clients’ needs and,
in particular, the security and strength gained by the introduction of the strategic shareholder, the number of
clients using the bank’s services further increased.
With the increasing number of clients, the volume of funds
deposited also recorded significant growth. The client
base of institutional clients was represented especially
by insurance companies, health insurance companies,
pension funds and state agencies.
Securities sales to clients
In looking at the development on financial markets, client
preferences in the area of investment did not change significantly compared to the previous year. In the context
of declining interest rates, clients were especially seeking
secure instruments with a guaranteed yield. Thus, the
bank was very successful in the sale of its own bond issues.
In addition to conservative instruments, clients also took
advantage of the possibility to invest directly in shares
on the Prague Stock Exchange and foreign stock exchanges. Due to the positive development in the second
half of the year, equity markets represented an interesting option for generating a return on invested funds.
The bank also continued in the sale of structured bonds
in the course of the year. In view of the current market
conditions, the bank focused on non-guaranteed issues,
or issues with partially guaranteed investment. In this
sector, the bank cooperated with prestigious issuers.
Despite the continuing complicated situation in the area
of securities sales, the bank continued to fulfil its longterm strategy which, in addition to securities sales, also
includes investment consultancy and the formulation of
individual investment solutions according to client requirements and expectations. The Bank further focused
on increasing the expertise of client advisors in the area
of securities sales and improving the training and certification system.
Organisation / IT
As regards all-group projects, the functionalities of the
system for the automatic approval of loans (Credit Factory) gradually expanded with more features and products. In addition, the area of treasury and market risk
underwent further development, where the group-wide
Murex functionality expanded with new features, and
additional systems were implemented in order to meet
the dynamic requirements in this area. The Mercury (collateral management system) and Zeus (limit watching
system) systems were other examples of the extension
of the portfolio of the group’s solution shared across the
entire Sberbank Group.
Towards the end of 2013, Sberbank CZ launched a Smart
Banking app for smartphones (iOS and Android) thanks
to which clients are provided with easy and quick access
to their accounts from mobile phones. This new Internet
banking service platform provides a new direct channel
based on advanced technology through clients’ mobile
phones. Towards the end of the year, changes were implemented in many systems to reflect the new Civil
Code which came into force in 2014. The “Lean” initiative
launched together with the new Civil Code aims to
streamline client processes at branches and transfer part
of the processes from the Front Office to the Back Office,
thus improving client convenience and service.
During the first half of 2013, rebranding associated with
the change of the Volksbank brand to the new progressive Sberbank brand was the primary project pursued by
the IT division. This project was associated with a large
amount of changes, tasks and sub-projects in the IT division. It was necessary to change the design of all applications, new technologies were installed at branches,
and two new “flagship” branches opened (in Prague and
Karlovy Vary). The rest of the branches implemented
new IT technologies of Sberbank (exchange rate panels,
info terminals, and at some locations also iPad zones and
Wi-Fi for visitors). The second key project in early 2013
was the implementation of the online validation of the
account balance upon cash withdrawal/use of payment
cards. This was an international project involving eight
companies from three countries; it was completed by
the successful gradual migration of the entire portfolio
of payment cards to this platform in March 2013. The
new technology helps the bank save costs and prevent
potential risks resulting from the unauthorized use of
cards (e.g. for Internet payments or resulting from skimming).
SBERBANK CZ | ANNUAL REPORT 2013 | BUSINESS ACTIVITIES
13
Electronic banking
Direct banking services continued to be provided to clients in 2013 by means of the Sberbank Online Banking,
Homebanking and MultiCash apps. Furthermore, the
bank extended its portfolio to include Smart Banking
in November 2013.
Sberbank Online Banking continues to be the most used
of the direct banking services. At the end of 2013, it had
nearly 34,239 users, which represents a 27% increase over
the previous year. In terms of price and also taking into
account their considerable convenience in execution,
online processing and transparency, electronic transactions are much more advantageous and efficient for the
customer.
Towards the end of the year, the token – electronic key
of Sberbank Online Banking was used by 27,151 of the total
of 34,239 users, which means over 80% token penetration,
and a 39% increase over the previous year. From a security
perspective, Online Banking has been sufficiently reinforced, and security remains the bank’s top priority.
Breakdown of direct banking channels
as at 31 December 2013
0.98% 0.21%
4.68%
From the perspective of direct banking, Sberbank CZ
changed the design of its online banking portal towards
the end of February 2013 and implemented the feature
of “co-signing” (authorization) of payments by more parties transacting with an account, especially for corporate
clients. As regards the retail segment, the bank focused
especially on the new Smart Banking channel towards
the end of the year, the popularity of which has been on
the rise.
Human resources
management
Human resources management is an important part of
the bank’s overall strategic management, as employees
are a decisive factor in creating long-term partnerships
with our clients, fulfilling sales targets, and creating an
effective foundation and environment for all banking
activities.
94.12%
Sberbank Online Banking
Homebanking
Smart Banking
Multicash
14
Compared with other applications, the share of said
major online service in the total number of direct banking
products is 95%. The trend shows the high popularity of
the Sberbank Online Banking channel; its position on the
market is based on its practical usefulness. Homebanking
and MultiCash account for 5%, and their number of users
is stable or slightly decreasing. Offline services are often
replaced with online systems. In contrast, the complementary Phone Banking service was cancelled in 2013
and replaced with a modern Smart Banking system,
providing a quick view of available branches and ATMs,
together with a range of basic online services such as
account balance, transaction statement, standard payments as well as urgent payments with the use of QR
codes.
SBERBANK CZ | ANNUAL REPORT 2013 | BUSINESS ACTIVITIES
After the bank established the Corporate Banking, Structured Finance and Syndication, and Export and Trade
Finance units in 2012, it focused on quality improvements
in the SME segment in 2013. The bank’s top management
was strengthened by top managers with long experience in corporate banking and export financing, both
in the area of business and product development. The
Bank also focused on the development of processes, with
the aim of increasing the traders’ capacities. The financial
analysis was detached from the Underwriting and SME
divisions and concentrated in the separate Credit Analyses unit. Loan proposals are now generated in cooperation of credit analysts and traders. At the end of 2013,
this new unit was staffed by eighteen employees working from offices in Prague, Brno and České Budějovice.
After the appointment of a new member of the board of
directors responsible for Retail, the bank strengthened
this part of its mission both in terms of organization and
personnel. In September new members were hired for
the management of the distribution network. There are
three regional directors and an internal team of coaches
and trainers providing support for the effective management of the network of branches and its future expansion.
As regards risk management, the main task was to recruit
staff with good knowledge of the CEE market for the
Underwriting Hub based in the Czech Republic, the
mission of which is to assess loans for several countries
within the Sberbank Europe Group.
The HR projects of the Sberbank Europe Group started
to be visible in Sberbank CZ in 2013. At the beginning of
the calendar year, the bank participated in a group-wide
employee survey programme. We consider the fact that
over 80% of employees sent their answers in the first
year of the survey a great success. We have intensified
communication between management and employees
based on employee feedback. We have introduced regular “Town Hall Meetings” in Prague and Brno, breakfasts
with individual members of the Board of Directors, and
regular personal meetings with the CEO and employees.
Our partner teams from Hungary and Bosnia offered their
help in the implementation of Sales Force Effectiveness
at our branches. Within the group-wide project entitled
“Talent has no boundaries”, the team of SME Prague and
Central Bohemia participates in the streamlining of SME
processes. Another example is the preparation for our
accession to the Performance Management process,
which will be identical in all countries where Sberbank
Europe operates.
Marketing &
communication
The bank’s marketing and communication activities in
2013 focused primarily on company rebranding. The process covered all communication channels, including new
presentation and POS materials based on the Sberbank
corporate identity, a new website presentation and
a brand new Facebook profile, which gained nearly 8,000
followers by the end of the year. Rebranding also covered
the branch network, where specific focus was placed on
the creation of the points of sale with a maximum emphasis on customer comfort. Our branches therefore offered
brand new features, such as an Internet café, iPad zone,
smile system for customer feedback, and some elements
of sensitive marketing – music and aromas.
In August, we launched an image-building campaign
entitled “Sberbank. Your Story. Your Bank”, with the aim
of building brand awareness. In September, this was followed by a product campaign aimed at the sale of consumer loans. The media campaign included TV, online,
print and massive outdoor advertising in the towns and
cities where the bank has branches. The campaign met its
objectives and has built a 3.3% spontaneous awareness
among the population.
In October, the bank exhibited at the International
Engineering Fair in Brno. The display booth was designed
as modern and timeless. Our participation in the fair also
included the active participation of Sberbank in the Russian Business Day, and the successful VIP Magic Party for
corporate and SME clients.
Towards the end of the year, the Communication subdivision was established as a separate organisational unit
aimed at strengthening the bank’s reputation and prestige among stakeholders and supporting the bank’s overall communication. The responsibilities will continue to
include the areas of external and internal communication and the bank’s social responsibility.
SBERBANK CZ | ANNUAL REPORT 2013 | BUSINESS ACTIVITIES
15
Risk management
Sberbank CZ maintains a prudential and balance approach
to risk management in order to achieve adequate return
at the acceptable level of risk, taking as its starting point
the applicable legal regulations and risk strategy of the
Group. The Bank uses a system of regulatory and internal
limits, the amounts of which and adherence thereto are
regularly monitored, and cooperates with its parent company in the gradual development of advance risk management instruments.
The overriding general principles in the risk management
process are optimisation of the relationship between risk
and expected return, an effective internal control system,
proper segregation of duties, identification and analysis of
risks, portfolio diversification, and ensuring accuracy and
completeness of the data in the Bank’s system. The Bank’s
management is regularly informed as to the level of risk
undertaken, and the risk management system is monitored
and evaluated.
The Bank’s Board of Directors plays a key role in risk management’s organisational structure. The Board determines
the risk management strategy; approves the key risk management documentation; and decides upon the most important risk positions. The risk management is facilitated
by the Risk Management Section directly subordinated to
the board member responsible for risk management. The
section units analyse the Bank’s risk positions, monitor compliance with established limits, report on the results of their
findings, and, as appropriate, approve their own risk positions within the scope of their assigned authorities.
Section units:
Integrated Risk Management – responsible for credit
risk management, capital adequacy and portfolio monitoring;
Market Risk – responsible for market risk management
and liquidity risk management;
Operational Risk – responsible for operational risk management and internal control system;
Credit Risk – responsible for loan process parameters;
Underwriting – responsible for the approval process; and
Work Out and Restructuring – responsible for the recovery of claims.
Risk management committees (part of the risk management system):
Risk Committee – monitoring of risks within the Bank’s
risk profile and related capital adequacy (internal capital adequacy assessment system);
Assets and Liabilities Committee;
Credit Committee; and
Distress Assets Committee – management of distress
assets portfolio.
The committee members include the Bank’s directors (board
members) and heads of the respective risk management
units.
Development of capital adequacy
Sberbank CZ
Czech banking sector
18%
14%
12%
SBERBANK CZ | ANNUAL REPORT 2013 | RISK MANAGEMENT
12/13
9/13
6/13
3/13
12/12
9/12
6/12
3/12
12/11
9/11
6/11
3/11
12/10
9/10
6/10
3/10
12/09
9/09
6/09
3/09
12/08
10%
16
In accordance with regulatory requirements, risks are sufficiently covered by capital. The Bank applies the principles
of standardised approach to credit and operational risks.
With regard to the Bank’s small trading portfolio, the market risk requirement is not determined.
At the end of 2013, the sole shareholder resolved on promoting further growth of the Bank and increasing its capital
(through a subordinated loan to be converted into equity
in the first half of 2014).
Following the requirements of Pillar II under the Basel
Capital Accord known as Basel II, the Bank assesses the
capital adequacy at least on an annual basis with respect
to all significant risks (internal capital adequacy assessment
system).
Credit risk
Providing loan products is one of the Bank’s most important
business activities, and the emphasis given to managing
credit risk reflects that fact. This process includes identifying
risks, measuring risk positions, monitoring limits and adopting measures leading to mitigation of the credit risk undertaken. The process takes place at the levels of both the
individual client and the loan portfolio.
In assessing a client’s credit quality, the Bank places particular emphasis on analysing the client’s financial situation,
his or her ability to repay the provided loan from cash flow,
and the experience with the client to date.
The credit quality of each client is assessed using an internal
rating system corresponding to the type of client being
assessed. Within each rating system, a client is classified
at one of 26 points on the internal rating scale. Each rating
point corresponds to a fixed one-year probability of the
client’s default. This probability is used as one of the parameters in the decision-making process. The rating tools
are regularly tested and adjusted accordingly to ensure
that the estimated probabilities of default are correct.
16%
8%
Capital adequacy
The quality of the collateral instruments is another criterion
taken into account in assessing a credit application. A cat-
alogue of these instruments defines the acceptable types
of collateral, the methods for establishing their fair values,
the frequency of revaluation, and the responsibilities of the
Bank’s individual branches.
The assessment and approval of credit applications is independent from the selling departments. Authorisation
powers are delegated by the Board of Directors and are
segmented by value into several layers.
The Bank regularly monitors individual exposures in order
to continuously check the quality of the loan portfolio. This
process increases the probability for timely recognition of
future client defaults. For such cases, the Bank has established a system to address problematic loans in a timely
manner. This reduces the probability of incurring losses
from providing loans.
The Bank is in compliance with all regulatory limits for its
investment portfolio exposure.
The Bank assesses claims against clients in terms of their
lowered value (if any), namely considering the lowered rating, default and other breach of original contractually agreed
terms and conditions by the respective counterparty. The
lowered value of claims is assessed with respect to:
collective impairment – applied to specific groups of
assets based upon statistical models and covered by the
collective impairment provisions; and
individual impairment – applied to claims with objective
evidence of lowered value and covered by the individual
impairment provisions.
Market risk
The main instrument for managing market risk is a system
of limits for individual types of market risk. Compliance with
these limits is regularly monitored. Information about any
exceeded limits and related remedial measures is reported
without delay to the Board of Directors, Risk Committee and
respective business units. The limits are established internally in cooperation with the parent company or based on
the relevant CNB regulations and approved by the Assets
and Liabilities Committee. Stress testing of market risks is
carried out regularly.
SBERBANK CZ | ANNUAL REPORT 2013 | RISK MANAGEMENT
17
Other information
The exchange risk is managed by closing the Bank’s foreign
exchange position through hedging. The foreign exchange
position of individual major currencies is monitored on a daily basis and compared with the applicable limits.
The exposure to interest rate risk is quantified by simulating
the impact of a standardised interest rate shock (shifting
the yield curve by 200 percentage points) on the Bank’s
capital where this impact is represented by the change
in the net present value of the Bank’s interest rate sensitive
assets and liabilities. The difference between assets and
liabilities with fixed long-term interest rates (the main
source of interest rate risk) is balanced using interest rate
swaps and debt issuance. The Bank’s interest rate position
is measured on a regular basis and compared to the applicable limits.
Exposure to securities market volatility occurs in relation
to the bonds portfolio held, in which Czech government
bonds predominate. From a regulatory point of view, the
Bank holds a small trading portfolio.
Liquidity risk
The operational liquidity risk management is carried out
on a daily basis by means of monitoring the short-term
and long-term residual maturities of assets and liabilities,
which are examined both in the individual major currencies
and on an aggregate basis for all currencies. Following
the results of these analyses, the Bank monitors daily the
compliance with internally established liquidity limits. The
Bank distinguishes between the contractual maturity of
balance items and modelled forecast maturity. The forecast models are approved by the Assets and Liabilities
Committee.
Stress scenarios of the Bank’s liquidity position are prepared on a weekly basis using the data on the existing
structure of assets and liabilities with respect to the forecast behaviour thereof in modelled stress situations. A contingency liquidity plan is prepared for the theoretical possibility that extraordinary circumstances would threaten
the Bank’s liquidity position.
18
SBERBANK CZ | ANNUAL REPORT 2013 | RISK MANAGEMENT
Operational risk
Information on relations
In accordance with regulatory requirements, the Bank has
an internal database of the requisite internal regulations
for operational risk management, including those for the
areas of information security, continuity of operations,
outsourcing, and the internal control system that is established for individual processes and units.
Sberbank of Russia
100%
The basic methods used are elimination, reduction, transfer
and acceptance of operational risk. The operational risk
management process includes identification, recording,
evaluation and evaluation of risks, as well as measures for
their minimisation, and it is applied at the levels of both
actual events and hypothetical risks.
The operational risk is managed and identified through:
collection, classification and subsequent evaluation of
operational risk events;
Risk Control Self Assessment; and
analysis of scenarios for risks with low frequency and
high impact.
Considering the identified operational risks, the Bank adopts
measures aimed at effectively minimising the probability
of a similar type of event’s occurring in future and designed
in accordance not only with the frequency of occurrence
and amount of the realised/anticipated loss/gain but also
their seriousness and original cause of origin.
A contingency plan for critical incidents is prepared to
facilitate a continuation of business activities within the
widest range possible as well as a recovery plan to resume
the operation of key IT applications.
Concentration risk
Sufficient diversification of underlying credit risk is ensured
by a system of limits on risk concentrations in relation to
economically connected groups of clients, sectors in which
clients operate, and countries.
The Bank also monitors risks resulting from concentration
of exposures under individual products or indirect exposures – for example, from a single type of collateral, collateral provider, or issuer of securities accepted as collateral.
In the liquidity area, the level of concentration in providers
of short-term liabilities is monitored.
Sberbank Europe AG
Sberbank BH d.d., Sarajevo
Bosnia and Herzegovina
100%
98.93%
Sberbank Magyarország Zrt.
Hungary
Sberbank CZ, a.s.
Czech Republic
100%
99.98%
Sberbank banka d.d.
Slovenia
Sberbank d.d.
Croatia
100%
99.50%*)
Sberbank Slovensko, a.s.
Slovakia
Sberbank Srbija a.d. Beograd
Serbia
100%
99.42%
Sberbank a.d. Banja Luka
Bosnia and Herzegovina
VS Bank
Ukraine
99.92%
Sberbank Europe AG (SBEU) is the controlling entity of
Sberbank CZ and is part of the Sberbank group. The
group’s structure is laid out in the diagram.
Measures that should ensure that the controlling entity
does not misuse its powers stem from the Commercial
Code. The measures concern, in particular, a prohibition
against misusing the majority of votes in the company
(Section 56a (1) of the Commercial Code); a prohibition
against misusing the controlling entity’s influence in order
to force adoption of a measure or execution of a contract
due to which financial loss may arise to a controlled en-
*)
as at 31 January 2014
tity, unless the controlling entity compensates for the
loss so arising no later than by the end of the accounting
period within which the loss occurred, or unless within
the same time limit an agreement is entered into establishing a reasonable period and method for the compensation of loss by the controlling entity (Section 66a (8)
of the Commercial Code); the company’s obligation to
prepare a report on relations between connected entities in accordance with Section 66a (9nn) of the Commercial Code (see page 120 of the Annual Report – Report
on Relations); the obligation of the controlling entity to
compensate damage incurred by the controlled entity
SBERBANK CZ | ANNUAL REPORT 2013 | OTHER INFORMATION
19
in accordance with Section 66a (14) of the Commercial
Code; and the liability of members of the controlling entity’s and controlled entity’s governing bodies in accordance with Section 66a(15) of the Commercial Code.
Since the Commercial Code was repealed on 31 December
2013 and replaced as of 1 January 2014 with respective
provisions of Act No. 89/2012 Sb., the Civil Code, and Act
No. 90/2012 Sb., the Business Corporations Act, Sberbank CZ intends to comply with the Business Corporations Act. Sberbank CZ hereby declares that, in 2014, it
intends to continue to observe and perform the aforementioned measures in compliance with the respective
provisions of the Business Corporations Act and hence
ensure that the controlling entity does not misuse its
powers; in particular, a prohibition against misusing the
controlling entity’s influence in order to force adoption
of a measure or execution of a contract due to which
financial loss may arise to a controlled entity and the
obligation of the controlling entity to compensate the
controlled entity for the loss incurred (Section 71 of the
Business Corporations Act); the obligation of Sberbank CZ
to prepare a report on relations between connected entities (Section of 82 et seq. of the Business Corporations
Act); liability of members of the controlling entity’s and
controlled entity’s governing bodies in accordance with
the Business Corporations Act; and other.
Contracts concluded by Sberbank CZ within the group:
Title
Party
Object
1
Loan Agreement
Sberbank Europe AG
Revolving loan facility
2
Loan Agreement - Termination
Sberbank Europe AG
Loan facility – termination
3
Loan Agreement
Sberbank Europe AG
Loan facility
4
Master Participation Agreement
Sberbank Europe AG
Facility for consortium lending
5
Services Agreement
Sberbank Europe AG
Advisory services
6
Group Audit Agreement
Sberbank Europe AG
Performance of audit activities
7
Services Agreement
Sberbank Europe AG
Evaluation of credit risk
8
IT Services Agreement
ALB-EDV GmbH
IT services
9
SW Maintenance Agreement
Sberbank Technology
Maintenance of SW MUREX
10
Services Agreement
Sberbank Slovakia
Evaluation of credit risk
11
Services Agreement
Sberbank Slovenia
Evaluation of credit risk
12
Services Agreement
Sberbank Croatia
Evaluation of credit risk
13
Services Agreement
Sberbank Hungary
Evaluation of credit risk
Information on treasury shares and securities
In 2013, Sberbank CZ did not trade or hold any of its own
shares, nor did it own any shares of the controlling entity,
SBEU.
No restriction exists on the transferability of securities
issued by Sberbank CZ except that treasury shares of
Sberbank CZ are not publicly traded.
20
SBERBANK CZ | ANNUAL REPORT 2013 | OTHER INFORMATION
Other than for the interests resulting from ownership,
there is no other significant direct or indirect participation in the voting rights of Sberbank CZ, nor are there
any restrictions on voting rights.
To the knowledge of Sberbank CZ, no agreements exist
between shareholders that may result in hindering the
transferability of shares or voting rights.
Apart from the statutes, there exist no special regulations
governing the election and dismissal of members of the
Board of Directors and modification of the company’s
statutes.
Sberbank CZ mortgage bonds (HZL)
as at 31 December 2013
The members of the Board of Directors have no special
powers such as the authorisation under Sections 161a
and 210 of the Commercial Code.
•
•
There exist no significant agreements to which Sberbank CZ is a contracting party and which will become
effective, change or lapse in the case of a change in the
control of Sberbank CZ due to a takeover bid and the
effects resulting from such agreements.
There exist no agreements between Sberbank CZ and the
members of its Board of Directors or employees that
Sberbank CZ is obliged to fulfil in the case that their offices
or employment will be terminated in relation to a takeover bid.
There exist no programmes on the basis of which employees and members of the company’s Board of Directors are allowed to acquire participating securities of
the company, options on these securities or other rights
thereto under advantageous conditions.
No persons or entities with management authority hold
shares or similar securities representing a share in Sberbank CZ
HZL VB CZ 5.30% payable in 2017
•
•
•
•
•
ISIN: CZ0002001688
Date, type and form of issue: 18 December 2007, bearer
securities, dematerialised
Total volume of issue: CZK 0.8 billion
Nominal value, quantity: CZK 10,000; 80,000
Coupon: fixed annual interest rate of 5.30% paid annually
in arrears
Traded in: --Maturity: 18 December 2017 (repaid at the nominal value).
HZL VB CZ 5.70% payable in 2014
• ISIN: CZ0002002116
• Date, type and form of issue: 27 October 2009, bearer
securities, dematerialised
• Total volume of issue: CZK 0.5 billion
• Nominal value, quantity: CZK 10,000; 50,000
• Coupon: fixed annual interest rate of 5.70% paid annually
in arrears
• Traded in: --• Maturity: 27 October 2014 (repaid at the nominal value)
HZL VB CZ 3.50% payable in 2013
•
•
ISIN: CZ0002002181
Date, type and form of issue: 14 April 2010, bearer securities, dematerialised
Total volume of issue: CZK 0.5 billion
Nominal value, quantity: CZK 10,000; 50,000
Coupon: fixed annual interest rate of 3.50% paid annually
in arrears
Traded in: --Maturity: 14 April 2013 (repaid at the nominal value)
Sberbank CZ and its issued bonds have not been assigned a rating.
•
•
•
Issued Securities
•
•
Sberbank CZ shares
as at 1 January 2014
HZL VB CZ 4.10% payable in 2016
•
•
•
•
•
•
•
Class: ordinary shares
Type: 401,076 registered ordinary shares
Form: dematerialised
Quantity: 401,076 shares in total
Total volume in issue: CZK 2,005,380,000
Nominal value per share: CZK 5,000
Traded in: not traded in any public market.
•
•
ISIN: CZ0002002199
Date, type and form of issue: 19 May 2010, bearer securities, dematerialised
• Total volume of issue: CZK 0.5 billion
• Nominal value, quantity: CZK 10,000; 50,000
• Coupon: fixed annual interest rate of 4.10% paid annually
in arrears
• Traded in: --• Maturity: 19 May 2016 (repaid at the nominal value)
SBERBANK CZ | ANNUAL REPORT 2013 | OTHER INFORMATION
21
HZL VB CZ VAR1 payable in 2015
HZL VB CZ 3.20% payable in 2016
• ISIN: CZ0002002298
• Date, type and form of issue: 24 March 2011, bearer securities, dematerialised
• Total volume of issue: CZK 0.3 billion
• Nominal value, quantity: CZK 10,000; 30,000
• Coupon: floating half-year 6M PRIBOR+1% interest rate
paid semi-annually in arrears
• Traded in: --• Maturity: 24 March 2015 (repaid at the nominal value)
• ISIN: CZ0002002611
• Date, type and form of issue: 11 October 2012, bearer
securities, dematerialised
• Total volume of issue: CZK 1 billion
• Nominal value, quantity: CZK 1; 1,000,000,000
• Coupon: fixed annual interest rate of 3.20% paid annually
in arrears
• Traded in: Prague Stock Exchange
• Maturity: 11 October 2016 (repaid at the nominal value)
HZL VB CZ VAR payable in 2017
HZL VB CZ 2.30% payable in 2018
•
•
• ISIN: CZ0002003254
• Date, type and form of issue: 24 October 2013, bearer
securities, dematerialised
• Total volume of issue: CZK 0.8 billion
• Nominal value, quantity: CZK 10,000; CZK 80,000
• Coupon: fixed interest rate 2.30% paid annually in arrears
• Traded in: BCPP
• Maturity: 24 October 2018 (repaid at the nominal value)
•
•
•
•
•
ISIN: CZ0002002454
Date, type and form of issue: 22 March 2012, bearer securities, dematerialised
Total volume of issue: CZK 0.5 billion
Nominal value, quantity: CZK 1; 500,000,000
Coupon: floating half-year 6M PRIBOR+2% interest rate
paid semi-annually in arrears
Traded in: Prague Stock Exchange
Maturity: 22 March 2017 (repaid at the nominal value)
FEES charged by auditing companies for 2013
in CZK million
KPMG
Ernst & Young
Total
Annual accounts (including VAT)
0.00
3.99
3.99
Auditing services (including VAT)
0.00
2.54
2.54
Tax services (including VAT)
0.00
0.33
0.33
Other (including VAT)
0.53
0.00
0.53
Total
0.53
6.86
7.39
Remunerating of
Sberbank CZ managers
Persons or entities with management competence at
Sberbank CZ include the managing entity and members
of the Supervisory Board.
Managing Entity of the Issuer
The managing entity of the Sberbank CZ issuer comprises
the Chairman of the Board of Directors, who is also the
22
SBERBANK CZ | ANNUAL REPORT 2013 | OTHER INFORMATION
chief executive director; the members of the Board of
Directors; and company secretaries. They are listed by
name on pages 6–7 “Governing Bodies”.
By law, the Board of Directors is the governing body directing the company’s operations and acting on its behalf. Members of the Sberbank CZ Board of Directors
perform their functions with due managerial care and
act in good faith, with appropriate diligence and care, and
in the best interest of the company and its shareholders.
They are experts in managing large corporations and have
international experience and ability to work as a team.
Their office requires ongoing development both in their
fields of expertise and in the general operation and management of companies; an active approach to fulfilling
their obligations and the ability to contribute to the company’s strategy development; and, last but not least,
loyalty to the company. Members of the Board of Directors adhere to high ethical standards and are responsible
for the company’s observance of the applicable laws. They
are personally liable for any damage that they may cause
by violating their legal obligations, and they also are functionally responsible to the company represented by the
shareholders.
The Chairman of the Board of Directors and members of
the Board of Directors are remunerated under a Service
Agreement entered into pursuant to Act No. 513/1991 Sb.,
the Commercial Code. The Service Agreements were
approved by the company’s Supervisory Board.
The company pays fixed monthly remuneration to the
Chairman and members of the Board of Directors for their
management activity, attendance at the body’s meetings, due preparation for those meetings, and for other
activities associated with discharging the office of a member of the Board of Directors.
Moreover, the Chairman and members of the Board of
Directors are remunerated in consideration of a performance evaluation regarding their activity, which is measured on the basis of their fulfilling established performance
criteria. The performance criteria, which are established
in cooperation with SBEU, are drawn up each calendar
year and are derived from the financial goals (profit before taxes of SBEU, profit before taxes of Sberbank CZ,
and profit of the controlled organisational unit) and the
fulfilment of structural duties. The variable component
of the remuneration may be as much as 50% of the fixed
component.
The chief executive director and company secretaries are
not additionally remunerated due to their positions. Thus,
only the employment salaries of company secretaries are
listed for other managers.
Based on their managerial and professional knowledge
and experience and their contribution to the company,
the Chairman of the Board of Directors, members of the
Board of Directors and company secretaries received:
all monetary earnings pertaining to members of the
Board of Directors in the total amount of CZK 29.225
million;
all monetary earnings pertaining to other managers
in the total amount of CZK 5.232 million;
all in-kind earnings pertaining to members of the
Board of Directors in the total amount of CZK 0.953
million; and
all in-kind earnings pertaining to other managers
in the total amount of CZK 0.131 million.
These earnings were paid on the basis of fulfilling financial,
qualitative and development criteria, as well as on the
basis of efficiency criteria.
Neither the Chairman of the Board of Directors, members
of the Board of Directors, company secretaries nor persons close to them own shares or options to purchase
shares of Sberbank CZ. The shares of Sberbank CZ are
not publicly tradable.
Supervisory Board
The Supervisory Board is the company’s controlling body
and oversees the performance of the Board of Directors
in carrying out the company’s business operations. The
Supervisory Board in particular monitors whether the
Board of Directors is performing its duties in accordance
with legal regulations and the company’s statutes and
whether members of the Board of Directors are acting
in accordance with the company’s interests while exercising a due managerial care. Members of the Supervisory Board perform their functions with a due managerial
care. To perform the duties of a member of the Supervisory Board, members must be expertly qualified and
maintain loyalty to the company and discretion regarding confidential information and facts.
Members of the Supervisory Board are liable for any damage that they may cause by failing to fulfil their legal
obligations. Moreover, members of the Supervisory Board
are functionally responsible to the company represented
by the shareholders. Members of the Supervisory Board
are remunerated in accordance with the relevant provisions of Act No. 513/1991 Sb., the Commercial Code. The
amount of the relevant remuneration for members of the
Supervisory Board is approved by the general meeting.
SBERBANK CZ | ANNUAL REPORT 2013 | OTHER INFORMATION
23
No monthly remuneration is paid for activities in the Supervisory Board of Sberbank CZ.
Neither members of the Supervisory Board nor persons
close to them own shares or options to purchase shares
of Sberbank CZ. The shares of Sberbank CZ are not publicly tradable.
No remunerations due to membership in the Supervisory
Board, including those of an in-kind nature, were paid
in 2013 to members of the Supervisory Board of Sberbank CZ for their activities in that body.
As remuneration for their employment, the members of
the Supervisory Board receive:
all monetary earnings pertaining to members of the
Supervisory Board in the total amount of CZK 2.471
million; and
all in-kind earnings pertaining to members of the
Supervisory Board in the total amount of CZK 0.154
million.
Sberbank CZ declares that there are no conflicts of interest in relation to the obligations of members of administrative, managing and supervisory bodies and their
private interests or other obligations.
Market position
in relation to Sberbank CZ
principal activities
Sberbank CZ has successfully operated in the Czech market since 1993. In 2013, Sberbank CZ held a 1.40% share
in the total assets of the Czech banking sector (44 banks
including building societies) compared to 1.32% held in
2012. The Sberbank CZ total assets grew year on year by
14.94%. By comparison, the growth in total assets for
the banking sector for 2013 was 8.83%.
The adopted Sberbank CZ business strategy saw a continued year-on-year growth in client deposits (including
debt securities in issue) by 19.26% (compared to the yearon-year growth in the banking sector of 6.79%) and client
loans by 11.92% (compared to the growth in the banking
sector of 6.54%). Sberbank CZ saw its share of client
24
SBERBANK CZ | ANNUAL REPORT 2013 | OTHER INFORMATION
deposits in the banking sector’s total client deposits increase from 1.33% to 1.43% and the volume of client loans
increase from 1.99% to 2.10%.
The net income of Sberbank CZ grew year on year by
10.05%, while that for the banking sector as a whole
dropped by 4.11%.
Information on the
company’s operating and
management principles
The governing bodies are the shareholders’ general meeting
as the supreme body, the Board of Directors, the Supervisory Board and the Audit Committee. The composition
of these bodies is set out in detail on pages 6–7, “Governing Bodies”. These bodies make decisions usually by
a simple majority of votes, unless the law or statutes
stipulate a different majority.
The general meeting is the Issuer’s supreme body. The
general meeting resolves, in particular, on:
amending the statutes;
increasing or decreasing the share capital;
issuing bonds;
appointing and dismissing the Supervisory Board
members with the exception of those elected by
employees;
approving the annual financial statements and deciding on profit distribution or covering a loss;
submitting an application for a licence for public trading of the company’s shares and for cancelling the
public tradability of shares;
selling the business, winding up the company with
liquidation, or transforming, merging, consolidating
or dividing the company;
changing the rights connected with individual classes
or types of shares;
restricting the transferability of registered shares and
cancelling the public transferability of shares;
eliminating or restricting the priority right to obtain
convertible and preference bonds and eliminating or
restricting the priority right to obtain new shares;
increasing the share capital with material noncash
investments; and
changing the subject of business.
The general meeting meets at least once per year. The
Board of Directors is obliged to convene the regular
general meeting annually no later than 6 months after
the end of the calendar year, unless valid legal regulations
establish an earlier date.
The Supervisory Board oversees the performance of the
Board of Directors in its competence and conduct of the
company’s business operations and represents the interests of the company’s shareholders in the period between general meetings.
The main shareholder only influences the company
through its votes at the general meeting.
The Supervisory Board has six members in total. The
Supervisory Board members are elected, unless the general meeting decides otherwise, for the period until the
adjournment of the third general meeting deciding on the
annual financial statements for the third business year
following the election. The business year in which the
election of the Supervisory Board took place is not calculated into this period. If the number of Supervisory Board
members drops during the term of office, the Supervisory Board is entitled in accordance with the conditions
established by law (Section 200(3) and Section 194(2) of
the Commercial Code) to appoint a replacement member until the next general meeting. Of the total number
of Supervisory Board members, two thirds are elected
by the general meeting from among the shareholders’
representatives and one third are elected by the company’s employees.
The Board of Directors is the company’s governing body
and directs its operations, acts on its behalf and represents the company externally. It is responsible for organising the company’s activities and exercises the rights of
an employer.
A record is drawn up of all the Board of Directors’ deliberations and votes and is kept throughout the company’s
existence.
The term of office for members of the Board of Directors
runs from their election until the adjournment of the
fourth general meeting deciding on the annual financial
statements for the fourth business year following the
election. The business year in which the election of the
Board of Directors took place is not calculated into this
period. The Supervisory Board can decide on a shorter
term of office. Re-election is permitted. The Supervisory
Board can recall individual members of the Board of Directors during their terms of office. A replacement election must be held upon the early termination of a term
of office. As at 31 December 2013, the Board of Directors
is comprised of five members. The Chairman of the Board
of Directors is elected by its members at the proposal of
the Supervisory Board.
The members of the Board of Directors also form the
company’s senior management.
Company secretaries act and sign on behalf of the company either both jointly or only one along with any member of the Board of Directors by means of an annex indicating the company’s business name, designating the
company secretary, and including his or her signature.
The Audit Committee follows the procedure for preparing and auditing the financial statements and fulfils
tasks in other areas that the statutes and relevant legal
regulations entrust to its competence and responsibility.
The Audit Committee is comprised of three members who
are elected by the general meeting. A member of the
Audit Committee can only be an individual, who at the
same time may not be a member of the Board of Directors, a company secretary, or a person authorised to act
on behalf of the company according to the entry in the
Commercial Register. Members of the Audit.
Committee are elected, unless the general meeting
decides otherwise, for the period until the adjournment
of the third general meeting deciding on the annual financial statements for the third business year following
the election. The business year in which the election of
the members of the Audit Committee took place is not
calculated into this period. The general meeting is entitled to approve the Audit Committee’s rules of procedure.
SBERBANK CZ | ANNUAL REPORT 2013 | OTHER INFORMATION
25
Corporate social responsibility
of Sberbank CZ
The financial reporting process may be exposed to risks
of inaccuracies resulting from human or technical factors. Sberbank CZ addresses these risks in the following
manners:
detailed systematic directives, accounting policies (see
pages 37–79 for more details) and risk management
strategy (see pages 80–109 for more details);
regular internal and external audit; and
automation of processes.
Risk events are monitored and regularly evaluated within
the process of managing operational risk. Appropriate
measures are established based on analyses of risk events.
Code on Client Mobility (CBA Standard No. 22/2009, Client
Mobility – Procedure for Changing Banks)
Compensation Guidelines in Interbank Payments (CBA
Standard No. 15/2002, updated April 2011)
Sberbank CZ has also agreed to and observes other CBA
Standards in the area of payment transactions.
Sberbank CZ has incorporated these codes and standards into its Code of Conduct for Employees and into
internal operating procedures.
The Board of Directors of Sberbank CZ has created an
internal control system and is responsible for maintaining its functionality and effectiveness. Sberbank CZ has
established control mechanisms at all management and
organisation levels, including corresponding information
flows. These control mechanisms are re-evaluated at
regular intervals and updated as needed. All the Sberbank CZ employees are involved in the internal control
system. The Board of Directors and Audit
Committee regularly evaluate its functionality and effectiveness. Internal audit independently examines the
Sberbank CZ activities, including the risk management
and internal control systems.
Sberbank CZ is a member of the Czech Banking Association and the Czech Capital Market Association and
voluntarily adheres to the following codes, which are
available for inspection on the websites www.czech-ba.cz
and www.akatcr.cz:
Sberbank CZ introduced a comprehensive long-term corporate social responsibility (CSR) strategy in 2012. Two
major projects were initiated as part of this strategy –
an employee charity fund and volunteering by Sberbank CZ employees. Thanks to the great interest among
employees and the general public, these projects also
continued in 2013. In addition, Sberbank CZ further developed some other CSR activities.
Volunteering by
Sberbank CZ employees
Under the volunteering project, each employee can spend
one day per year on volunteer work in place of working
in the office. In 2013, 10% of Sberbank CZ employees took
part in this project by participating in one of three centrally organized volunteering days. Other Sberbank CZ
employees participated in small local projects, including,
for example, helping flood sufferers, assisting in children
day-care centres, etc.
The fourth volunteering day and the first one under the
new Sberbank brand took place on 26 April 2013, on the
occasion of the Earth Day. Over thirty employees participated in the unique event of planting the “Sberbank
Forest”. The aim was to plant an economic forest with
varied species. The planting took place in Březová –
Podještědí, near the town of Český Dub.
Sberbank CZ entered into a long-term partnership with
Čmelák – Friends of Nature, a Czech environmental
organization which will take care of the Sberbank Forest.
In April 2013, almost 1,500 trees were planted and the
entire area allocated to the first Sberbank Forest was
covered with new trees.
The fifth volunteering day took place on 12 July 2013
in co-operation with the Centre for Environmental
Education Pálava at the Děvín nature preserve in the
Pálava Protected Landscape Area, where a total of 20
Sberbank CZ volunteers participated in cleaning the landscape and collecting waste in the locations of Děvín and
Stolová hora.
The sixth volunteering day took place on 1 November 2013
and involved 13 volunteers working again in the Sberbank Forest. Before the coming winter, it was necessary
to protect young trees from for-est animals. With commitments to intense work effort, Sberbank CZ volunteers
did a great job and installed approximately 350 metres
of fence.
Charity fund
In order to support charity projects, Sberbank CZ established a charity fund in 2012, to which any Sberbank CZ
employee can contribute, and opened a current account
exclusively for the purpose of collecting the funds. The
Ethical Code of the Czech Banking Association (updated
in 2012)
Ethical Code of the Czech Capital Market Association
Code of Conduct on Home Loans (CBA Standard No.
18/2005, Principles of Providing Pre-contractual Information on Home Loans)
Code of Conduct on Banks and Clients (CBA Standard
No. 19/2005, Code of Conduct in Relations between Banks
and Clients)
26
SBERBANK CZ | ANNUAL REPORT 2013 | CORPORATE SOCIAL RESPONSIBILITY OF SBERBANK CZ
SBERBANK CZ | ANNUAL REPORT 2013 | CORPORATE SOCIAL RESPONSIBILITY OF SBERBANK CZ
27
Helping flood sufferers
Projects supported from the charity fund in 2013
Organisation
Diakonie ČCE – středisko v Brně (Diaconal Association of the Evangelical Church of Czech
Brethren – Brno Centre)
CZK 20,000
LUISA, o. s. (citizens association)
CZK 15,000
Nadační fond Modrý hroch (Blue Hippo Endowment Fund)
CZK 11,000
Čmelák – Společnost přátel přírody, o.s. (Čmelák - Friends of Nature, citizens association)
CZK 10,000
Nadace Křižovatka (Crossroads Foundation)
CZK 8,700
Horní Poustevna integrated centre for people with disabilities
CZK 7,000
amount collected is then allocated at the end of the year
to specific charity projects nominated by the Sberbank CZ
employees throughout the year and selected by the fund’s
board of trustees elected by the Sberbank CZ employees. The fund focuses especially on supporting children
and women at-risk, people with disabilities, senior citizens, and promoting education and financial literacy and
environmental projects.
The deadline for making contributions for 2013 was set
for 31 October 2013; by that date, Sber-bank CZ employees contributed a total of CZK 71,700. At its second
meeting on 25 November 2013, the fund’s board of trustees decided to allocate the funds to 6 selected projects
of 13 proposed. The board gave preference to smaller
projects without large publicity and other sources of financing. Support was provided to specific projects with
particularly positive goals and the mission to spread joy.
At the beginning of 2014, the existing charity fund was
replaced with the institutionalized Sberbank CZ Endowment Fund. Thanks to its new form the fund is now also
open to public contributions. The Sberbank CZ top management expressed support for the fund and agreed to
contribute the Sberbank CZ resources to the endowment
fund.
28
Amount allocated
Other projects and
activities
Blood donation
Blood donation is one of the new Sberbank CZ corporate
social responsibility activities supported by the Sberbank CZ top management. Sberbank CZ employees are
encouraged to take part in this pro-ject in the course of
volunteering days. In 2013, approximately 20 Sberbank CZ
employees were regu-lar blood donors. In 2014, Sberbank CZ plans to organize a blood donation session directly at the Sberbank CZ premises.
In June 2013, large part of Bohemia was stricken by floods;
Sberbank CZ decided to help the flood sufferers by donating CZK 250,000. The donation was transferred to the
account of a public fundraising campaign run by the Czech
humanitarian organization ADRA and the major flood /
natural disasters relief coordinator in the Czech Republic.
Afternoon with children
In June 2013, Sberbank CZ employees of the Brno – Panská
branch took part in an event entitled “Afternoon with
children”. They visited children patients of the Primary
School and Kindergarten, University Hospital Brno (Children’s Hospital) and together drew and painted pictures
that were subsequently displayed and auctioned. Proceeds from the auction were donated to the Adam
dětem citizens asso-ciation to finance its project on the
ENT inpatient ward in the Children’s Hospital.
Road safety
In September 2013, Sberbank CZ joined the safety campaign called “Careful on the road – school year has begun”.
The campaign took place on four large screens situated
along the main roads and intersections in Prague and its
aim was to draw drivers’ attention to the fact that children were coming back to schools.
Day-to-day Sberbank CZ activities
and employees’ behaviour
Sberbank CZ declares that:
Sberbank CZ follows the Ethical Code of the Czech
Banking Association and the Sberbank CZ Employee
Code of Conduct.
Sberbank CZ guarantees equal opportunities for men
and women and employs people with disabilities.
Sberbank CZ promotes financial literacy; Sberbank
CZ supports the “With Vysočina Region to Europe”
knowledge contest for students and sends its experts
to various workshops and university lecturing programmes.
Sberbank CZ uses double-sided printing by default
on all company printers.
Sberbank CZ employees consider the nature before
their print their e-mails as claimed in the e-mail footer.
Sberbank CZ employees travel between towns and
cities in a most economical way, making use of the
car-sharing principle.
Sberbank CZ works with local charities; in 2013, Sberbank CZ facilitated catering for community events
organized by some of these charities.
As the corporate social responsibility projects elicit
positive response from Sberbank CZ employees
and the general public, Sberbank CZ will continue
to actively pursue and further develop these activities also in 2014.
Christmas gifts to children’s homes
After the huge success in 2012, Sberbank CZ decided to
repeat the 2013 event called “Christmas gifts for kids” for
children in children homes and seriously ill children staying
in hospital over the Christmas. Sberbank CZ employees
once again joined the campaign with great enthusiasm
and donated 80 nicely wrapped Christmas gifts that
brighten the smiles of dozens of children in the Department of Pediatric Oncology, University Hospital Brno,
Dagmar Children’s Home in Brno and the Children’s Home
in Zlín.
29
Statement of comprehensive
income for the year ended
31 December 2013
Prepared in accordance with International Financial Reporting Standards as adopted by the European Union
Note
in CZK million
2013
2012
Interest and similar income
2,137
2,033
(698)
(743)
1,439
1,290
Fee and commission income
467
464
Fee and commission expense
(110)
(78)
Interest expense and similar charges
Financial
statements
Year ended
31 December
Net interest income
3
Net fee and commission income
4
357
386
Net trading income
5
20
8
Net income from financial investments
6
13
15
Impairment charge for credit losses
14
(401)
(445)
Provisions
26
–
(2)
Administrative expenses
7
(1,088)
(930)
Other operating income
8
17
4
Other operating expenses
9
(71)
(56)
Operating profit
286
270
Profit before income tax
286
270
(56)
(61)
230
209
(40)
14
(5)
32
Other comprehensive income for the period, net of income tax
(45)
46
Total comprehensive income
185
255
– Owners of the Bank
230
209
Profit for the period
230
209
– Owners of the Bank
185
255
Total comprehensive income
185
255
Income tax expense
10
Profit for the year
Other comprehensive income
Fair value reserves (available-for-sale financial assets):
– Net change in fair value
– Net amount transferred to profit or loss
28
Profit attributable to:
SBERBANK CZ, a.s.
INDEPENDENT AUDITOR’S REPORT AND FINANCIAL STATEMENTS
(Prepared in accordance with International Financial Reporting Standards as adopted by the European Union)
Total comprehensive income attributable to:
FOR THE YEAR ENDED 31 DECEMBER 2013
30
SBERBANK CZ | ANNUAL REPORT 2013 | STATEMENT OF COMPREHENSIVE INCOME
31
Statement of financial position
as at 31 December 2013
Prepared in accordance with International Financial Reporting Standards as adopted by the European Union
Statement of changes in equity
for the year ended 31 December
2013
Prepared in accordance with International Financial Reporting Standards as adopted by the European Union
As at 31 December
in CZK million
Note
2013
11
11,746
7,196
Loans and advances to banks
12
3,462
4,894
13,14
51,421
45,944
Derivative financial instruments
15
269
283
Financial assets at fair value through profit or loss
16
31
265
Investment securities:
– Available for sale
17
2,997
2,253
– Loans and receivables
17
61
61
– Held to maturity
17
–
–
Intangible assets
18
115
110
Property and equipment
19
262
193
–
32
Current income tax assets
Deferred income tax assets
20
47
13
Other assets
21
39
40
Deferred items
21
22
28
70,472
61,312
Total assets
LIABILITIES
Deposits from banks
22
4,488
6,927
Due to customers
23
48,008
41,642
Derivative financial instruments
15
257
276
Debt securities in issue
24
9,400
6,493
2
–
356
347
Current income tax liabilities
Other liabilities
2,005
2,695
93
Net change in available-for-sale
investments, net of tax
–
–
Other comprehensive income
(recognized directly in equity)
–
Net profit
Total comprehensive income
for 2012
Retained
earnings
Total
Equity
(38)
646
5,401
–
46
–
46
–
–
46
–
46
–
–
–
–
209
209
–
–
–
46
209
255
Dividends relating to 2011
–
–
–
–
(346)
(346)
Transfer to statutory reserve
–
–
17
–
(17)
–
As at 31 December 2012
2,005
2,695
110
8
492
5,310
As at 1 January 2013
2,005
2,695
110
8
492
5,310
Net change in available-for-sale
investments, net of tax
–
–
–
(45)
–
(45)
Other comprehensive income
(recognized directly in equity)
–
–
–
(45)
–
(45)
Net profit
–
–
–
–
230
230
Total comprehensive income
for 2013
–
–
–
(45)
230
230
Dividends relating to 2012
–
–
–
–
–
–
Transfer to statutory reserve
–
–
10
–
(10)
–
2,005
2,695
120
(37)
712
5,495
in CZK million
Cash and balances with central banks
Loans and advances to customers
Share
capital
2012
ASSETS
25
Deferred items
25
27
29
Provisions
26
39
35
Subordinated debt
27
2,400
253
64,977
56,002
2,005
2,005
2,695
2,695
120
110
(37)
8
712
492
5,495
5,310
70,472
61,312
Total liabilities
Cumulative gains
not recognized
Statutory
in the profit
reserve
for the period
Share
premium
account
As at 1 January 2012
As at 31 December 2013
EQUITY
Share capital
28
Share premium account
Statutory reserve
Cumulative gains / (loss) not recognized in the profit for the period
Retained earnings
Total equity
Total equity and liabilities
32
SBERBANK CZ | ANNUAL REPORT 2013 | STATEMENT OF FINANCIAL POSITION
28
SBERBANK CZ | ANNUAL REPORT 2013 | STATEMENT OF CHANGES IN EQUITY
33
Statement of cash flow for the
year ended 31 December 2013
Prepared in accordance with International Financial Reporting Standards as adopted by the European Union
in CZK million
Note
2013
2012
Cash flow from / (used in) operating activities
Note
2013
2012
Purchase of investment securities
17
(3,034)
(2,015)
Proceeds from sale and redemption of securities
17
2,237
2,466
18,19
(169)
(55)
(966)
396
Cash flow from / (used in) investing activities
Profit before income tax
286
270
Adjustment for:
Impairment losses on loans and advances
14
354
218
Provisions
26
4
2
7
95
70
Depreciation of property and equipment
in CZK million
(Increase)/ decrease in operating assets:
Purchase of property, equipment and intangible assets
Net cash flow from (used in) investing activities
Cash flow from / (used in) financing activities
Issue of bonds
24
863
660
Increase / (decrease) in borrowings
27
2,147
(7)
Dividends paid
35
–
(346)
Net cash flow from financing activities
3,010
307
4,813
3,212
6,382
3,170
4,813
3,212
11,195
6,382
708
883
2,108
2,181
47
113
–
–
Due from banks, non-demand, over 3 months
318
(2,922)
Financial assets at fair value through profit or loss
248
(252)
(5,832)
(4,551)
(1)
(9)
Net increase / (decrease) in cash and cash equivalents
6
(4)
Cash and cash equivalents at the beginning of the year
Loans and advances
Other assets
Prepayments and accrued income
Increase / (decrease) in operating liabilities
Due to banks, term
Net increase / (decrease) in cash and cash equivalents
(1,062)
(978)
(19)
251
Due to customers
6,366
9,879
Promissory notes and certificates of deposits
2,044
780
Interest received
11
(111)
Income tax paid
(2)
(21)
Income tax received
2,816
2,622
(47)
(113)
2,769
2,509
Financial liabilities at fair value through profit and loss
Other liabilities
Accruals and deferred income
Net cash flow from / (used in) operating activities before income tax
Net income tax
Net cash flow from (used in) operating activities
31
Cash and cash equivalents at the end of the year
31
Operational cash flow from interest
Interest paid
These financial statements were approved for issue by the Board of Directors on 14 April 2014 and signed on its behalf by:
Signature of the
Person responsible
statutory representatives
for accounting
Person responsible
for the preparation
of the financial statements
Frank Guthan
Member of the Board of Directors
Libor Nosek
Karel Soukeník
Member of the
Board of Directors
Alena Sládková
The accompanying notes are an integral part of these financial statements.
34
SBERBANK CZ | ANNUAL REPORT 2013 | STATEMENT OF CASH FLOW
SBERBANK CZ | ANNUAL REPORT 2013 | STATEMENT OF CASH FLOW
35
Notes to the financial
statements
1 General information
Sberbank CZ, a.s. (hereinafter referred to as “the Bank”) was incorporated on 31 October 1996. The Bank had 22
domestic regional branches in the Czech Republic as at 31 December 2013 (as at 31 December 2012: 24 branches) and
employed on average 719 people (as at 31 December 2012: 649 people).
As at 31 December 2013 and 31 December 2012, the ultimate holding company was Sberbank, which is incorporated
in Russia and whose registered office is located at 117997 Moscow, 19 Vavilova St. (hereinafter referred to as “Sberbank RU”). The financial statements of the Bank were included in the consolidated financial statements of Sberbank RU. The direct holding company was Sberbank Europe AG (hereinafter referred to as “Sberbank EU”), which is
incorporated in Austria.
2 Accounting policies
(a) Statement of compliance and basis of preparation of financial statements
The statutory financial statements, comprising a statement of financial position, statements of comprehensive
income and of changes in equity, a statement of the cash flow and accompanying notes, of the Bank have been
prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“EU
IFRS”). The policies set out below have been consistently applied to all the reporting periods presented.
The financial statements have been prepared under the historical cost convention as modified by the revaluation
of available-for-sale financial assets, financial assets and liabilities held at fair value through profit or loss and all
derivative contracts.
Sberbank CZ, a.s. was using in the beginning of the year 2013 the company name Volksbank CZ, a.s. It was changed
on 28 February 2013 in the process of integrating into the Sberbank RU group, after an acquisition of 100% interest
in Sberbank EU (formerly Volksbank International AG) by Sberbank RU. Since 28 February 2013 the Bank uses the
company name Sberbank CZ and started the rebranding of its branch network.
The preparation of financial statements to conform with International Financial Reporting Standards as adopted
by the European Union (“EU IFRS”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Bank’s accounting policies.
In January 2012, both minority shareholders (see note 36) sold their shares at Sberbank CZ, a.s. to the company
Sberbank EU, which became the owner of a 100% share of Sberbank CZ, a.s.
The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in Note 2 (ab).
The Bank’s operations primarily consist of the following:
The financial statements are rounded to millions of Czech Crowns (“CZK million” or “CZKm”) unless otherwise stated.
• Providing Czech and foreign currency loans and guarantees
• Accepting and placing deposits in Czech and foreign currencies
• Accepting current and term accounts denominated in Czech and foreign currencies
• Rendering of general banking services through a network of branches and agencies
• Providing foreign exchange transactions on the inter-bank money market
(b) Operating segments reporting
The Bank determines and presents operating segments based on the information which is internally presented to the
Board of Directors as the Bank’s chief operating decision maker with regard to resources to be allocated to the segment and assesses its performance.
• Providing foreign trade finance and related banking services
The operating segment is a component of the Bank:
• Trading in securities and portfolio management
• That engages in business activities from which revenues and expenses may arise (including revenues and expenses
related to transactions with other components of the Bank)
• Issuing mortgage bonds
• Whose operating results are regularly reviewed by the Bank’s chief operating decision maker to make decisions
about resources to be allocated to the segment and to assess its performance
• For which discrete financial information is available.
(c) Foreign currencies translation
Functional and presentation currency
Items included in the financial statements of the Bank are measured using the currency of the primary economic
environment in which the Bank operates (“the functional currency”).
The financial statements are presented in CZK, which is the Bank’s functional and presentation currency.
36
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
37
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognized in the “net trading income”.
Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are reported
as part of net trading income. Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets, are included in the other comprehensive income in the fair value reserve in equity.
(d) Financial assets and liabilities and their valuation
Gains and losses arising from sale and changes in the fair value of financial assets and financial liabilities designated
at fair value through profit or loss at inception are recorded in the “net income from financial investments”.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market, other than: (a) those that the Bank intends to sell immediately or in the short term, which are
classified as held for trading, and those that the Bank upon initial recognition designates as fair value through
profit or loss; (b) those that the Bank upon initial recognition designates as available for sale; or (c) those for which
the Bank may not recover substantially all of its initial investment, other than because of credit deterioration. These
assets are carried at the amortized cost.
(iii) Held-to-maturity financial assets
The Bank classifies its financial assets in the following categories: financial assets at fair value through profit or loss,
loans and receivables, held-to-maturity investments and available-for-sale financial assets.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturities that the Bank’s management has the positive intention and ability to hold to maturity. These assets are
carried at the amortized cost.
The Bank classifies its financial liabilities in the following categories: financial liabilities at fair value through profit
or loss and other financial liabilities. The classification of financial assets and liabilities is based on management’s
intention at initial recognition and the relevant criteria for classification have to be met.
If the Bank has sold other than an insignificant amount of held-to-maturity assets before maturity (other than
in certain specific circumstances), the entire category has to be reclassified as available for sale. Furthermore, the
Bank would be prohibited from classifying any financial assets as held-to-maturity during the following two years.
(i) Financial assets and liabilities at fair value through profit or loss
(iv) Available-for-sale financial assets
A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or
repurchasing in the near term or if it is part of a portfolio of identified financial instruments that are managed
together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also
categorized as held for trading unless they are designated as hedging instruments.
(v) Financial liabilities at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at fair value through
profit or loss at inception.
Financial assets and financial liabilities are designated at fair value through profit or loss when:
• Doing so significantly reduces measurement inconsistencies that would arise if the related derivatives were
treated as held for trading and the underlying financial instruments were carried at amortized cost for loans
and advances to customers or banks and debt securities in issue
• The group of financial assets and financial liabilities, such as debt securities, are managed and evaluated on a fair
value basis in accordance with a documented risk management or investment strategy and reported to key
management personnel, and on that basis are designated at fair value through profit and loss
• Financial instruments, such as debt securities held, containing one or more embedded derivatives significantly
modifying the cash flows, are designated at fair value through profit and loss.
Gains and losses arising from sale and changes in the fair value of financial instruments held for trading, including
trading derivatives that are managed in conjunction with designated financial assets or financial liabilities, are recorded in the “net trading income”.
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SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
Available-for-sale investments are intended to be held for an indefinite period of time, which may be sold in response
to needs for liquidity or changes in interest rates, exchange rates or equity prices. These assets are carried at fair value.
For financial liabilities, the classification and rules referred to in paragraph (i) are applied.
(vi) Other financial liabilities
The Bank classifies all financial liabilities in this category, except for those classified in the category of financial
liabilities at fair value through profit or loss in accordance with those rules for classification in that category. Other
financial liabilities are carried at the amortized cost.
The Bank issues mortgage bonds. Bought-back mortgage bonds are reported directly as a deduction from liabilities
from issued securities
(vii) Recognition and derecognition of financial assets
Regular-way purchases and sales of financial assets at fair value through profit or loss, held to maturity and available
for sale are recognized on the trade date – the date on which the Bank commits to purchasing or selling the asset.
Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair
value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair
value, and transaction costs are recognized in the statement of comprehensive income under “fee and commission
expense”. Financial assets are derecognized when the rights to receive cash flows from the financial assets have
expired or when the Bank has transferred substantially all risks and rewards of ownership. Financial liabilities are
derecognized when they are extinguished − that is, when the obligation is discharged, cancelled or expires.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
39
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried
at fair value. Loans and receivables and held-to-maturity investments are carried at the amortized cost using the
effective interest method. Gains and losses arising from changes in the fair value of the “financial assets at fair value
through profit or loss” category -are included in the profit for the period in the period in which they arise. Gains and
losses arising from changes in the fair value of available-for-sale financial assets are recognized directly in equity,
until the financial asset is derecognized or impaired. At this time, the cumulative gain or loss previously recognized
in equity is recognized in profit or loss.
However, interest calculated using the effective interest method and foreign currency gains and losses on monetary
assets classified as available for sale are recognized in the profit for the period. Dividends on available-for-sale equity
instruments are recognized in the profit for the period when the Bank’s right to receive payment is established.
(viii) Determination of fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurable date in the principal, or in its absence, the most advantageous
market to which the Bank has access at that date.
The fair values of quoted investments in active markets are based on current bid prices. A market is regarded as active
if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information
on an ongoing basis. If there is no active market for a financial asset, the Bank establishes fair value using valuation
techniques that maximise the use of relevant observable inputs. These include for example the use of a discounted
cash flow analysis and other valuation techniques commonly used by market participants.
The Bank does not apply hedge accounting.
(g) Recognition of deferred day one profit and loss
The best evidence of fair value at initial recognition is the transaction price (i.e. the fair value of the consideration
given or received), unless the fair value of that instrument is evidenced by comparison with other observable current
market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation
technique where the variables of which include only data from observable markets.
When the transaction price differs from the fair value of other observable current market transactions in the same
instrument, or based on a valuation technique whose variables include only data from observable markets, the Bank
immediately recognizes the difference between the transaction price and fair value (a Day 1 profit or loss) in Net
trading income. In cases where fair value is determined using data which is not observable, the difference between
the transaction price and model value is only recognized in the income statement when the inputs become observable, or when the instrument is derecognized.
(h) Interest income and expense
Interest income and expense for all interest-bearing financial instruments, except for those classified as held for
trading, are recognized in the statement of comprehensive income under “interest and similar income” and “interest
expense and similar charges” using the effective interest method.
The Bank’s accounting methods on fair value are disclosed in the Note 34.
(e) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the
asset and settle the liability simultaneously.
(f) Derivative financial instruments and hedge accounting
Derivatives including foreign exchange contracts, currency and interest rate swaps are initially recognized at fair value
on the date on which a derivative contract is entered into and are subsequently re-measured at their fair value. Fair
values are obtained from quoted market prices in active markets, including recent market transactions, and valuation
techniques, including discounted cash flow models and options pricing models, as appropriate. All derivatives are
carried as assets when the fair value is positive and as liabilities when the fair value is negative.
The Bank occasionally purchases or issues financial instruments containing embedded derivatives. Certain derivatives
embedded in other financial instruments, such as the conversion option in a convertible bond, are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host contract
and the host contract is not carried at fair value through profit or loss. These embedded derivatives are measured
at fair value with changes in fair value recognized in the profit for the period unless the Bank chooses to designate
the hybrid contracts at fair value through profit or loss.
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SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability
and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial
instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial
liability. When calculating the effective interest rate, the Bank estimates cash flows considering all contractual
terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The
calculation includes all fees and points paid or received between parties to the contract that are an integral part
of the effective interest rate, transaction costs and all other premiums or discounts. The effective interest rate is
established when the financial assets or liability is firstly recognized and it is revised at the time of the change of
estimated future cash flows arising from the financial instruments with floating interest rate or with non-fixed
payments.
Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss,
interest income is recognized using the rate of interest used to discount the future cash flows for the purpose of
measuring the impairment loss.
(i) Fee and commission income and fee expense
Fees and commissions are generally recognized on an accrual basis when the service has been provided. Loan commitment fees for loans that are likely to be drawn down are deferred (together with related direct costs) and recognized as an adjustment to the effective interest rate on the loan. Loan syndication fees are recognized as revenue
when the syndication has been completed and the Bank has retained no part of the loan package for itself or has
retained a part at the same effective interest rate as the other participants. Commission and fees arising from ne-
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
41
gotiating, or participating in the negotiation of, a transaction for a third party – such as the arrangement of the
acquisition of shares or other securities or the purchase or sale of businesses – are recognized on completion of the
underlying transaction. Portfolio and other management advisory and service fees are recognized based on the
applicable service contracts, usually on a time-apportionated basis. Asset management fees related to investment
funds are recognized rateably over the period in which the service is provided. The same principle is applied for asset management, financial planning and custody services that are continuously provided over an extended period
of time. Performance linked fees or fee components are recognized when the performance criteria are fulfilled.
(j) Dividend income
Dividends are recognized in the profit for the period when the Bank’s right to receive payment is established.
(k) Sale and repurchase agreements
Securities sold subject to repurchase agreements (“repos”) are reclassified in the statement of financial position as
pledged assets when the transferee has the right by contract or custom to re-sell or re-pledge the collateral to the
third party. The counterparty liability is included in “deposits from banks” or “due to customers”, as appropriate.
Securities purchased under agreements to resell (“reverse repos”) are recorded as “loans and advances to banks” or
“loans and advances to customers”, as appropriate. The difference between the sale and repurchase price is treated
as interest and accrued over the life of the agreements using the effective interest method. Securities lent to counterparties are also retained in the financial statements.
(l) Impairment of financial assets
(i) Loans and receivables carried at amortized costs
The Bank assesses as at each balance sheet date whether there is objective evidence that a financial asset or group
of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are
incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the
initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future
cash flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Bank mainly uses to determine that there is objective evidence of an impairment loss include
the following:
• Delinquency in contractual payments of principal or interest
• Cash flow difficulties experienced by the borrower
• Breach of loan covenants or conditions
• Initiation of bankruptcy or insolvency proceedings
• Deterioration of the borrower’s competitive position
• Deterioration in the value of collateral
• Downgrading below investment grade level
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The estimated period between a loss occurring and its identification is determined by local management for each
identified portfolio. In general, the periods used vary between one and three months.
The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are
individually significant, and individually or collectively for financial assets that are not individually significant. If the
Bank determines that no objective evidence of impairment exists for an individually assessed financial asset,
whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics
and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which
an impairment loss is or continues to be recognized are not included in a collective assessment of impairment.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present value
of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial
asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance
account and the amount of the loss is recognized in the profit for the period. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest
rate determined under the contract.
As a practical expedient, the Bank may measure impairment on the basis of an instrument’s fair value using an observable market price.
The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the
cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit
risk characteristics (i.e. on the basis of the Bank’s grading process that considers asset type, industry, geographical
location, collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtor’s ability to pay all amounts
due according to the contractual terms of the assets being evaluated.
Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the
basis of the contractual cash flows of the assets in the Bank and historical loss experience for assets with credit risk
characteristics similar to those in the Bank.
Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period in which the historical loss experience is based and to remove the effects of
conditions in the historical period that do not currently exist.
Estimates of changes in future cash flows for groups of assets should reflect and be directionally consistent with
changes in related observable data from period to period (for example, changes in unemployment rates, property
prices, payment status, or other factors indicative of changes in the probability of losses in the Bank and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly by the
Bank to reduce any differences between loss estimates and actual loss experience.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit
rating), the previously recognized impairment loss is reversed either directly or by adjusting the allowance account.
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43
The reversal shall not result in a carrying amount of the financial asset that exceeds what the amortized cost would
have been had the impairment not been recognized at the date the impairment is reversed. The amount of the
reversal is recognized in the profit for the period in “impairment charge for credit losses”.
When a loan is uncollectible, it is written off against the related allowance for impairment. Such loans are written
off after all the necessary procedures have been completed and the amount of the loss has been determined. These
procedures mainly include (i) cession of a loan (if the debt is ceded at a lower price than the face value), (ii) report
from the executor that there is no other property of the debtor that may be punished by execution of the loan,
(iii) the final termination of the insolvency proceedings with the debtor.
In the statement of comprehensive income under “impairment charge for credit losses” proceeds from written-off
receivables are also reported.
(ii) Assets classified as available for sale
The Bank assesses as at each balance sheet date whether there is objective evidence that a financial asset or a group
of financial assets is impaired. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the assets are
impaired. If such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset
previously recognized in profit or loss – is removed from equity and recognized in the statement of income. Impairment losses recognized in the profit for the period on equity instruments are not reversed through the statement
of income. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and
the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or
loss, the impairment loss is reversed through the profit for the period.
(iii) Assets classified as held to maturity
Bonds classified as held to maturity are regularly tested for impairment. If the Bank concludes that there is objective
evidence that a bond is impaired, it is reflected in an allowance account and the impairment loss is recognized
in profit or loss. If an event occurring after the impairment was recognized causes the amount of impairment loss
to decrease, then the decrease in impairment loss is reversed through profit or loss.
(iv) Renegotiated loans and advances
Since the moment of renegotiation, such loans are treated as individually impaired for a period of six months. If a loan
performs according to the renegotiated schedule, it becomes treated as a watched loan during the subsequent
18 months, and as standard starting the third year since the renegotiation (according to the CNB methodology
descibed in the Note 33 (b)). Impairment of renegotiated receivables is measured using the original effective interest
rate. Management continuously reviews the performance of the agreed conditions of renegotiated loans and the
probability of future installments.
(m) Intangible assets
Depreciation on intangible assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Software
definite period under the contract, or according to the estimated useful life,
or (if there is no agreement for a definite period or estimation of useful life)
36 months
Audiovisual work
18 months
Other
72 months
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring the
specific software to use. These costs are amortized on the basis of the expected useful lives.
Costs associated with developing or maintaining computer software programs are recognized as an expense as Costs
associated with developing or maintaining computer software programs are recognized as an expense as incurred.
Costs that are directly associated with the production of identifiable and unique software products controlled by the
Bank, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Direct costs include software development employee costs and an appropriate portion of relevant
overheads.
Computer software development costs recognized as assets are amortized using the straight-line method over
their useful lives.
The cost of depreciation of intangible assets is recognized in the statement of comprehensive income under “Administrative expenses”.
(n) Property, premises and equipment
Land and buildings comprise mainly branches and offices. All property, premises and equipment is stated at historical cost less depreciation. Historical costs of property, premises and equipment and intangible assets include:
• The cost (expenditures that are directly attributable to the acquisition of the items)
• Directly attributable costs necessary to bring the asset into operation
• Estimated costs of dismantling and removing the asset and restoring the place where the property is located
• Borrowing costs incurred for the period of the preparation of the asset for its intended use or sale. The Bank is
currently buying property only from its own financial resources.
Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as appropriate,
only when it is probable that the future economic benefits associated with the item will flow to the Bank and the
cost of the item can be measured reliably. All other repairs and maintenance are charged to “other general administrative expenses” during the financial period in which they are incurred.
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Land, assets under construction and works of art are not depreciated. Depreciation on other long-term assets is
calculated using the straight-line method to allocate their cost to their residual values over their estimated useful
lives as follows (in years):
Buildings and construction (including Administrative buildings)
30
Hardware and equipment
4
Fixtures and fittings
6
Safes
12
Motor vehicles
4
The leasehold improvements are depreciated over the term of the lease.
When classifying new assets into depreciation groups, the Bank uses the component approach, i.e. the major components of assets with different useful lives are depreciated separately.
The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, as at each balance sheet date.
The cost of depreciation of property, premises and equipment are recognized in the statement of comprehensive
income under “Administrative expenses”. Gains and losses on disposals are determined by comparing proceeds with
the carrying amount. These are included in “other operating income“ or “other operating expenses” in the profit for
the period.
The Bank does not hold any assets for which it would use the revaluation model. All property under paragraphs (m)
and (n) is depreciated using the cost model. The Bank currently does not own the building, to which IAS 40 Investment property would be applied, i.e. property held primarily to earn rental income or for capital appreciation.
(o) Impairment of non-financial assets
Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Indicators of impairment can be external (drop in market
prices) or internal (information obtained from a review of useful lives and residual book values) carried out once
a year. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal
of the impairment at each reporting date.
(p)Leases
The determination of whether an arrangement is a lease, or contains a lease, is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use
of a specific asset or assets and the arrangement conveys a right to use the asset.
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The leases entered into by the Bank are primarily operating leases. The total payments made under operating leases
are charged to “other general administrative expenses” in the profit for the period on a straight-line basis over the
period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the
lessor by way of a penalty is recognized as an expense in the period in which the termination takes place.
(q) Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than 3 months
maturity from the date of acquisition including: cash and balances with central banks (including Mandatory Minimum Reserves), due from banks and due to banks.
(r)Provisions
Provisions for legal claims, restructuring, financial guarantees issued, promises of loans issued, letters of credit issued
and other contingent liabilities are recognized when the Bank has a present legal or constructive obligation as a result
of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and
the amount has been reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation
using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to the passage of time is recognized as interest expense.
(s) Financial guarantee contracts
The Bank gives financial guarantees, i.e. guarantees and letters of credit. Financial guarantee contracts are contracts
that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified
debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees are given to banks, financial institutions and other bodies on behalf of customers to secure loans, overdrafts
and other banking facilities.
Financial guarantees are initially recognized in the financial statements at fair value on the date the guarantee was
given. Subsequent to initial recognition, the Bank’s obligations from given guarantees are measured at the higher
of the initial measurement, less amortization of revenue from fees amortized on straight basis in “income from fees
and commissions” for the duration of the guarantee and the best estimate of expenses which will be required to
settle any financial obligation that existed at the balance sheet date. They are recognized as „provisions“. These
estimates are determined based on experience with similar transactions and the history of past losses, supplemented by the judgment of management.
Any change in the amount of „Provisions“ is recognized in „impairment charge for credit losses“ in the statement of
comprehensive income.
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47
(t) Staff costs
(u) Taxation and deferred income tax
Staff costs are included in “administrative expenses” and they also include remuneration of the members of the
executive and Supervisory Board.
Income tax
Employee benefits
Deferred tax
The Bank provides its employees with:
• Retirement benefit or disability benefit. The employees are entitled to receive retirement or disability benefits
if they are employed by the Bank until their retirement age or if they are entitled to receive a disability pension
but only if they were employed with the Bank for a minimum defined period
• Anniversary benefit. The employees are entitled to receive anniversary benefit if they were employed with the
Bank for a minimum defined period and their service was of appropriate quality throughout this period.
The Bank recognized a provision amounting to the present value of defined post-employment and other long-term
employee benefits. The defined benefit obligation is calculated in accordance with the projected unit credit method
which estimates the present value of defined benefit obligation based on generally recognized actuarial principles.
In determining the parameters of the model, the Bank refers to the most recent data (the length of employment
with the Bank, age, gender, benefit value and its anticipated growth) and actuarial assumptions (endowment age
according to mortality tables, legal retirement age, estimated amount of social security and health insurance contributions and discount rate). Due to the long-term nature of these plans, such estimates are subject to uncertainty.
Remeasurements of the net defined benefit liability, which comprises actuarial gains and losses, the return on plan
assets (excluding interest) and the effect of the asset ceiling are recognised immediately in „other comprehensive
income“.
Income tax payable on profits, based on Czech tax law, is recognized as an expense in the period in which profits arise.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are
expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
The principal temporary differences arise from the depreciation of property, plant and equipment, revaluation of certain financial assets and liabilities including derivative contracts, provisions and tax losses carried forward. However,
the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or
loss.
Deferred tax assets are recognized where it is probable that future taxable profit will be available against which the
temporary differences can be utilized.
The tax effects of income tax losses available for carry-forward are recognized as an asset when it is probable that
future taxable profits will be available against which these losses can be utilized.
Deferred tax related to fair value re-measurement of available-for-sale investments, which is charged or credited
directly to equity, is also credited or charged directly to equity and subsequently recognized in the profit for the
period together with the deferred gain or loss.
Net interest expense related to defined bendit plans are recognised in „personnel expenses” in profit or loss.
These employee benefits are provided by the Bank on a voluntary basis (not on the benefits provided under legal
regulations).
Pensions
The Bank currently executes a defined contribution plan for its employees. A defined contribution plan is a pension
plan under which the Bank pays fixed contributions into a separate entity. The Bank has no legal or constructive
obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits
relating to employee service in the current and prior periods.
For defined contribution plans, the Bank pays contributions to privately administered pension insurance plans
on a contractual or voluntary basis. The Bank has no further payment obligations once the contributions have been
paid. The contributions are recognized as an employee benefit expense when they are due.
Social fund
The Bank creates a social fund to finance the social needs of its employees and employee benefit programmes. The
allocation to the social fund is recognized in the “administrative expenses”.
(v) Value added tax
The Bank is registered for value added tax (“VAT”). Intangible and tangible fixed assets are stated at acquisition cost
including the appropriate VAT. The Bank does not claim a deduction of input VAT as the ratio of the taxable income
to the total income of the Bank is such that it is not economical for the Bank to claim the input VAT.
(w)Borrowings
Borrowings are recognized initially at fair value net of transaction costs incurred. Borrowings are subsequently
stated at amortized cost; any difference between the proceeds net of transaction costs and the redemption value
is recognized in the profit for the period over the period of the borrowings using the effective interest method.
(x) Share capital and reserves
Share issue costs
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax,
from the proceeds.
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Dividends on shares
Dividends on shares are recognized in equity in the period in which they are approved by the Bank’s shareholders.
Dividends for the year that are declared after the balance sheet date are dealt with in the subsequent events note.
Statutory reserve
In accordance with the Commercial Code, the Bank is required to set aside a statutory reserve in equity.
The statutory reserve represents accumulated transfers from retained earnings. Five percent of net profit shall be
allocated to the statutory reserve until the value of 20 % of share capital is achieved. This reserve is not distributable
and can be used exclusively to cover losses.
(y) Fiduciary activities
The Bank acts as a trustee and in other fiduciary capacities that result in the holding or placing of assets on behalf
of individuals, and other institutions. These assets and income arising thereof are excluded from these financial
statements, as they do not belong to the Bank.
(z) Collaterals valuation
Fair value of the collaterals is determined using market data, valuation models and independent expert estimations.
The dominant type of collateral is residential and non-residential property, where an expert estimation of the market
value is conservatively reduced by a factor for the type of collateral. The amounts of reduction factor are based
on conservative expert estimations, until the frequency of the realization of collaterals does not allow the determination of these factors on the basis of statistically significant observations. The reported financial effect of collateral
is limited up to the carrying amount of the related financial asset.
(aa)IFRS /IAS accounting and reporting developments
In 2013, the Bank adopted all of the new and revised Standards and Interpretations issued by the IASB and IFRIC as
adopted by the EU that are relevant to its operations and effective for accounting periods commencing 1 January 2013:
• Amendments to IAS 1, Presentation of financial statements (issued in June 2011; effective for the reporting
periods beginning on or after 1 July 2012). It revised the way of presenting other comprehensive income, separate
those that would be recognized in profit or loss in the future from those that would never be.
• Amendments to IFRS 1, First time adoption of IFRS – Government loans – (issued in March 2012; effective for
the reporting periods beginning on or after 1 January 2013). The standard prescribes how a first-time IFRS adopter
would account for government loans with a below-market rate.
• IFRS 10, Consolidated financial statements (issued in May 2011; effective for the reporting periods beginning
on or after 1 January 2013; the standard was endorsed by the European Union for use for reporting periods beginning on or after 1 January 2014). It replaces the requirements contained in IAS 27 and SIC-12. It introduces a single
consolidation model for all entities including special purpose entities (SPE). It introduces a consolidation based
on control, irrespective of the nature of the investee. It defines the three elements of control: power, exposure
or rights to variable returns from its involvement with the investee and ability to use its power over the investee
to affect the amounts of the returns.
50
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
• IFRS 11, Joint arrangements (issued in May 2011; effective for the reporting periods beginning on or after
1 January 2013; the standard was endorsed by the European Union for use for reporting periods beginning on or
after 1 January 2014). It replaces IAS 31. It introduces two forms of joint arrangements: joint venture and joint
operation. The option to apply the proportionate consolidation method to account for jointly controlled entities
is canceled.
• IFRS 12, Disclosure of interests in other entities (issued in May 2011; effective for the reporting periods beginning on or after 1 January 2013; the standard was endorsed by the European Union for use for reporting periods
beginning on or after 1 January 2014). It requires the extensive disclosure of information that enables users of
financial statements to evaluate the basis of control, any restrictions on consolidated assets and liabilities, risk
exposures arising from involvements with unconsolidated structured entities and from non-controlling interest
holder’s involvement in the activities of consolidated entities.
• Amendments to IFRS 10, IFRS 11, IFRS 12 (issued in June 2012; effective for the reporting periods beginning
on or after 1 January 2013). The amendments clarify the transition guidance for those standards and provides
relief to requirements to present comparative information.
• IFRS 13, Fair value measurement (issued in May 2011; effective for the reporting periods beginning on or after
1 January 2013). It replaces the guidance on fair value measurement in existing IFRSs and Interpretations with
a single standard. It contains a new definition of fair value and establishes valuation techniques. The standard
applies when another IFRS requires or permits fair value measurement. The Bank adopted revised definition of Fair
value (note 2d)vii) and expanded the disclosures in note 34 to conform with the standard’s requirements. The
change does not have significant effect on valuation of assets and liabilities.
• Amendments to IAS 19, Employee benefits (issued in June 2011 effective for the reporting periods beginning
on or after 1 January 2013). The standard defines and changes rules for accounting of defined benefit plans and
termination benefits and the corridor approach is canceled. Tha Bank has adopted new accounting policies regarding the calculation of income and expense on employee benefits to conform with IAS 19. This change does
not have significant effect on the Bank’s statements.
• IAS 27, Separate financial statements (issued in May 2011; effective for the reporting periods beginning on or
after 1 January 2013; the standard was endorsed by the European Union for use for reporting periods beginning
on or after 1 January 2014). The requirements for separate financial statements remain unchanged, the portion
of the original standard dealing with the consolidation has been moved to new IFRS 10.
• IAS 28, Investments in associates and joint ventures (issued in May 2011; effective for the reporting periods
beginning on or after 1 January 2013; the standard was endorsed by the European Union for use for reporting
periods beginning on or after 1 January 2014). The standard prescribes the requirements for application of the
equity method when accounting for associates and joint ventures. The standard defines significant influence
and provides guidance on how those entities should be tested for impairment.
• IFRIC 20, Stripping costs in the production phase of a surface mine (issued in October 2011; effective for the
reporting periods beginning on or after 1 January 2013).
• Amendments to IFRS 1, First time adoption of IFRS – Removal of fixed dates for first-time adopters (issued
in December 2010; effective for the reporting periods beginning on or after 1 July 2011; it can be applied according
to the EU endorsement for the period after 1 January 2013). The amendment provides relief for first-time adopters
from having to reconstruct transactions that occurred before their transition to IFRS.
• Amendments to IFRS 1, First time adoption of IFRS – Severe hyperinflation – (issued in December 2010; effective for the reporting periods beginning on or after 1 July 2011; it can be applied according to the EU endorsement
for the periods beginning on or after 1 January 2013). It provides guidance for entities emerging from severe hyperinflation.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
51
• Amendments to IAS 12, Income taxes – Deferred tax: Recovery of underlying assets (issued in December 2010
effective for the reporting periods beginning on or after 1 January 2012; it can be applied according to the EU
endorsement for the periods beginning on or after 1 January 2013). It provides a rebuttable presumption that
recovery of the carrying amount of an investment property (using the fair value model in IAS 40 or acquired
in business combination) will be recovered through sale of the asset. The way of recovering the asset has to be
taken into account, and an amendment is relevant, if the tax rates differ from usage and from sale.
• Amendments to IFRS 7, Financial instruments: Disclosures – (issued in December 2011; effective for the reporting periods beginning on or after 1 January 2013). It requires disclosure of information about recognized financial
assets and liabilities that are set off.
• Annual Improvements to IFRSs (2009–2011):
At the preparation date of these financial statements, the following standards, amendments to the existing standards, and interpretations adopted by the EU were in issue but not yet effective (effective dates are presented
in accordance with the text adopted by the European Union):
• Amendments to IAS 32, Financial instruments: Presentations – (issued in December 2011; effective for the
reporting periods beginning on or after 1 January 2014). It specifies disclosure of information about recognized
financial assets and liabilities that are set off.
• Amendments to IFRS 10, IFRS 12, IAS 27 (issued in October 2012; effective for the reporting periods beginning
on or after 1 January 2014). The amendments provide an exemption from requirements of the standards for
consolidation of entities that meet the definition of an investment entity. Such entities should measure their
investments in subsidiaries at fair value through profit and loss instead of the consolidation procedure.
– IFRS 1 First time adoption of IFRS (effective for the reporting periods beginning on or after 1 January 2013) –
the standard sets the procedure for repeated application of IFRSs in case of interruption to applying them.
If an entity does not elect to apply IFRS 1 again, it must apply IFRSs retrospectively as if there was no interruption.
• Amendments to IFRS 10, IFRS 12, IAS 27 (issued in October 2012; effective for the reporting periods beginning
on or after 1 January 2014). The amendments provide an exemption from requirements of the standards for
consolidation of entities that meet the definition of an investment entity. Such entities should measure their
investments in subsidiaries at fair value through profit and loss instead of the consolidation procedure.
– IFRS 1 First time adoption of IFRS (effective for the reporting periods beginning on or after 1 January 2013) –
the standard prescribes the requirements for borrowing costs capitalized before the transition date to IFRSs.
The capitalized amount need not be adjusted at the date of transition. If borrowing costs are incurred on the
date of transition or later, it is necessary to apply IAS 23 Borrowing costs.
• Amendments to IAS 39, Novation of derivatives and Continuation of Hedge Accounting – (issued in July 2013).
Sets the requirements and criteria for the continuation of hedge accounting (effective for the reporting periods
beginning on or after 1 January 2014).
– IAS 1 Presentation of financial statements (effective for the reporting periods beginning on or after 1 January
2013) – the standard clarifies the requirements for comparative information. If an entity provides additional
comparative information beyond the requirements of IAS 1, the information should be presented in accordance with IFRSs. The standard also regulates the extent of disclosure of financial statements in case of retrospective changes in accounting policies or application of reclassifications.
– IAS 16 Property, plant and equipment (effective for the reporting periods beginning on or after 1 January 2013) –
the standard clarifies the presentation of spare parts, stand-by equipment and servicing equipment. If they
meet the definition of property, plant and equipment they should be classified in this way, or otherwise as
an inventory.
– IAS 32 Financial instruments: Presentation (effective for the reporting periods beginning on or after 1 January
2013) – in case of accounting of income tax relating to distribution of an equity instrument to holders and to
related transaction costs of an equity transaction, IAS 12 Income Taxes should be applied.
– IAS 34 Interim financial reporting – (effective for the reporting periods beginning on or after 1 January 2013) –
the standard limits the obligation to separate presentation of total assets and liabilities for a particular
reportable segment in interim financial reporting only when a material change from the amounts disclosed
in the last annual financial statements has occurred.
The adoption of these new and revised standards and interpretations has not resulted in changes to the Bank’s
accounting policies to an extent that would have affected the amounts reported for the current year and prior period significantly.
• Amendments to IAS 36, Recoverable Amount Disclosures for Non-Financial Assets (issued in May 2013).
Clarify the disclosures requirements of information about recoverable amount of impaired assets and the discount rates that have been used when the recoverable amount is based on fair value less costs of disposal using
present value technique. (effective for the reporting periods beginning on or after 1 January 2014).
The Bank has decided not to adopt these standards, revisions and interpretations in advance of their effective dates.
The Bank anticipates that the adoption of these standards, amendments to the existing standards, and interpretations in future periods will have no material impact on the financial statements of the Bank.
At the preparation date of these financial statements, the following standards, amendments to the existing standards, and interpretations have not yet been endorsed for use in the EU. Endorsement is expected by the time the
standards and interpretations become effective:
• IFRS 9, Financial instruments – Classification and measurement (issued in November 2009; effective for the
reporting periods beginning on or after 1 January 2015). It introduces new requirements for classifying and
measuring financial assets into new categories.
• Additions to IFRS 9, Financial instruments – Financial liability accounting (issued in October 2010; effective for
the reporting periods beginning on or after 1 January 2018). A significant change from standard IAS 39 is, when
an entity chooses to measure a liability at fair value, then it will present the portion of the change in its fair
value due to changes in the entity’s own credit risk in the other comprehensive income, rather than within
profit or loss.
• Amendments to IFRS 9, Financial instruments and IFRS 7: Disclosures (issued in December 2011). It amended
the effective date of IFRS 9 to annual periods beginning on or after 1 January 2015 (previously: 1 January 2013).
• Amendments to IAS 19, Employee Benefits: Employee Contribution – (issued in November 2013). Clarify how
the employees or third party contributions should be allocated to periods of service. (effective for the reporting
periods beginning on or after 1 January 2014).
52
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
53
• IFRIC Interpretation 21 Levies – (issued in May 2013). Provides guidance on when to recognize a liability for a levy
imposed by a government. (effective for the reporting periods beginning on or after 1 January 2014).
• Annual Improvements to IFRSs (2010–2012) cycle: issued in December 2013, amending the following eight
pronouncements
– IFRS 2 Share-based Payment – definition of ‘vesting condition’ (effective for the reporting periods beginning
on or after 1 January 2014).
(ab)Critical accounting estimates and judgments
– IFRS 3 Business Combinations – accounting for contingent consideration in a business combination (effective for the reporting periods beginning on or after 1 January 2014).
The Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities within the
next financial year. Estimates and judgments are continually evaluated and based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the circumstances.
– IFRS 8 Operating Segments – required the entity to disclose the judgments made by management in applying
the aggregation criteria to operating segments (effective for the reporting periods beginning on or after
1 January 2014).
Impairment losses on loans and advances
– IFRS 13 Fair Value Measurement – clarification on measurement of short-term receivables and payables with
no stated interest rate (effective for the reporting periods beginning on or after 1 January 2014).
– IAS 16 Property, Plant and Equipment – Clarifies that when an item of property, plant and equipment is revalued the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying
amount (effective for the reporting periods beginning on or after 1 January 2014).
– IAS 24 Related Party Disclosures – Clarifies that an entity providing key management personnel services to the
reporting entity or to the parent of the reporting entity is a related party of the reporting entity (effective
for the reporting periods beginning on or after 1 January 2014).
– IAS 38 Intangible Assets – Clarifies that when an intangible asset is revalued the gross carrying amount is
adjusted in a manner that is consistent with the revaluation of the carrying amount (effective for the reporting
periods beginning on or after 1 January 2014).
• Annual Improvements to IFRSs (2011–2013) cycle: issued in December 2013, amending the following four pronouncements
– IFRS 1 First-time Adoption of IFRS – clarifies the definition of ‘effective standard’ for the first-time IFRS
adopters.
– IFRS 3 Business Combinations – clarifies the exception from the scope.
– IFRS 13 Fair Value Measurement – Clarifies that the scope of the portfolio exception defined in paragraph 52
of IFRS 13 includes all contracts accounted for within the scope of IAS 39 or IFRS 9 (effective for the reporting
period when IFRS 13 was first used).
– IAS 40 Investment Property – clarifies the relationship between IFRS 3 and IAS 40 (effective for the reporting
periods beginning on or after 1 January 2014).
In the years 2012 and 2013 the Bank and Sberbank Group assessed the impact of IFRS 9 Financial instruments –
Classification and measurement on financial statements. A detailed analysis of the adoption of IFRS 9 Financial
instruments – Classification and measurement on financial statements will be prepared during the year 2014 The
Bank has not assessed the impact of the amendment to IFRS 9 Financial instruments – Financial liability accounting
(issued in October 2010) yet.
The Bank anticipates that adopting other standards, amendments to the existing standards, and interpretations
in future periods will have no material impact on the financial statements of the Bank (except of the impact of IFRS 9
as described previously) in the period of the first application of the rules.
54
The Bank monitors the process of creating as yet unpublished standards, particularly IFRS 9 Financial Instruments,
proposals for new standards Leases and Revenue from contracts with customers, and annual Improvements to
IFRSs.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
The Bank reviews its loan portfolios to assess impairment at least on a monthly basis.
The amount of impairment loss reflects the decrease in expected future cash flows (payments) from the portfolio
of loans.
For receivables that are not past due, the amount of impairment was estimated based on historical observations
of credit losses of homogenous portfolio of clients with similar credit characteristics.
For receivables that are past due, the amount of impairment is calculated as the change in present value of estimated future cash flows. The expected cash flows are estimated based on the financial conditions of individual
clients and the realizable value of collateral, using historical observations of the loss portfolio and profitability of each
type of collateral.
Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly
to reduce any differences between loss estimates and actual loss experience. To the extent that the net present
value of estimated cash flows differs by +/-5%, the provision would be estimated at CZK 59 million lower or CZK
123 million higher (2012: the provision would be estimated at CZK 28 million lower or CZK 149 million higher).
Impairment of available-for-sale equity investments
The Bank determines that available-for-sale equity investments are impaired when there has been a significant
or prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires
judgment. In making this judgment, the Bank evaluates, among other factors, the normal volatility in share price.
In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the
investee, industry and sector performance, changes in technology, and operational and financing cash flows.
Fair value of financial instruments
The fair value of financial instruments that are not quoted in active markets are determined by using valuation
techniques. The valuation techniques include the net present value and discounted cash flow models, a comparison
to similar instruments for which market observable prices exist, and other valuation models. Assumptions and
inputs used in valuation techniques include risk-free rates, credit spreads, and other premiums used in estimating
discount rates, bond prices and foreign currency exchange rates. Where valuation techniques (for example, models)
are used to determine fair values, they are validated and periodically reviewed by qualified personnel independent
of the area that created them.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
55
All models are certified before they are used, and models are calibrated to ensure that outputs reflect actual data
and comparative market prices. To the extent practicable, models use only observable data; however, areas such
as credit risk (both own and counterparty), volatilities and correlations require management to make estimates.
Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Interest income from investment securities held to maturity
(CZKm)
Receivables from companies
Deferred tax
Significant estimates are required in determining deferred income tax. There are many transactions for which the
ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of
temporary differences is different from the amounts that were initially recorded, such differences will impact the
current income tax provision and deferred tax in the period in which such a determination is made.
(CZKm)
2013
2012
Loans and advances to customers
1,997
1,904
117
88
–
4
2,114
92
Investment securities available for sale
23
32
Investment securities held to maturity
–
1
2,137
2,029
0
4
2,137
2,033
(CZKm)
2013
2012
Receivables from companies and individuals including consumer loans
1,985
1,887
Receivables from municipalities
6
9
Receivables from governmental bodies
1
1
Other receivables from customers
5
7
1,997
1,904
Due from banks
Mandatory minimum reserves with central banks
Loans and advances to banks
Securities designated at fair value at initial recognition
Interest income from loans and advances to customers
–
1
–
1
Interest and similar expense
2013
2012
478
441
Due to banks
59
136
Debt securities in issue
157
157
694
734
4
9
698
743
2013
2012
Fee and commission income
467
464
Fee and commission expense
(110)
(78)
357
386
2013
2012
International payment transactions
157
161
Domestic payment transactions
106
112
Lending business (those which are not regarded as part of the effective interest rate)
90
91
Foreign exchange, foreign notes and coins transactions
85
76
Securities and custody business
21
11
8
13
467
464
Due to customers
Interest and similar income
2012
There was CZK 109 million in interest income recognized on impaired receivables in 2013 (2012: CZK 129 million).
(CZKm)
3 Net interest income
2013
Due to customers designated at fair value at initial recognition
4 Net fee and commission income
(CZKm)
Fee and commission income
(CZKm)
Other
Fee and commission income from securities and custody business includes CZK 2 million in fee income from custody
activities (2012: CZK 2 million).
56
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SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
57
5 Net trading income
(CZKm)
Personnel expenses
2013
2012
1
3
Net foreign exchange gains
17
6
Equity contracts
–
–
Interest rate contracts
9
(1)
(7)
–
20
8
Fixed-income securities and money market
Foreign exchange
Net foreign exchange gains include results arising from both customer and proprietary activities in foreign exchange
cash, spot, forward, swap and option operations.
Net income from revaluation of financial assets at fair value through profit and loss
(designated financial instruments)
Net income from revaluation of financial liabilities at fair value through profit and loss
(designated financial instruments)
Net income from sale of securities available for sale
2013
2012
(2)
8
2
(10)
13
17
13
15
7 Administrative expenses
(CZKm)
Personnel expenses
Depreciation of property and equipment and amortization of intangible assets
Other general administrative expenses
2013
2012
Salaries and bonuses of Board of Directors members
37
19
Salaries and bonuses of senior management
35
30
2
2
Salaries and bonuses of the employees
359
333
Social security costs
134
122
16
15
583
521
Salaries and bonuses of Supervisory Board members
Other personnel costs
Social security costs also include the contribution to the state pension scheme.
Management bonus scheme
6 Net income from financial investments
(CZKm)
(CZKm)
Salaries and remuneration of the Members of the Board of Directors, as well as the remuneration principles and
structure, are subject to approval by the Supervisory Board. Key performance indicators of the Annual performance
bonus is based on the financial results of the Bank, profit center / segment and the strategic and individual objectives.
The Annual performance bonus is paid if the requirements set out in the Group guidelines on remuneration and
in the Bank internal guidelines General principles of the remuneration are fulfilled. The annual bonus can also be
reduced or unpaid in relation to the achievement of the performance objectives.
Retirement benefits
The Bank provides its employees with a defined contribution retirement scheme in accordance with Act No. 42/1994
Coll. Participating employees can contribute a percentage of their salaries to a pension fund. The Bank contributes
up to CZK 3,600 a year per person. Total Bank expense for the retirement scheme in 2013 was CZK 1.4 million (2012:
CZK 1.3 million). The expenses for the retirement scheme are recognized on the line „Other personnel costs“ in the
table “Administrative expenses”.
Other general administrative expenses
2013
2012
583
521
95
70
410
339
1,088
930
(CZKm)
2013
2012
90
79
109
101
Marketing and public relations
63
41
Material consumption
40
22
31
41
2
2
75
53
410
339
Rent and leasing
Information technology
Audit, tax, legal consultancy
Tax and fees
Other
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SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
59
8 Other operating income
(CZKm)
11 Cash and balances with central banks
The Bank classifies its cash and balances with central banks, except for cash in hand, in the category of financial
assets “loans and receivables”.
2013
2012
Gain on disposal of fixed assets
4
1
Gain on contractual partners’ expense compensation
9
–
(CZKm)
Other
4
3
Loans and deposits to central bank
17
4
9 Other operating expenses
(CZKm)
Deposit insurance
Other
Current tax expense
Deferred tax income/expense relating to the origination and reversal of temporary
differences (Note 20)
2013
2012
65
54
6
2
71
56
2013
2012
79
56
(23)
5
56
61
2012
Profit before taxation
286
270
Applicable rates
19%
19%
54
52
4
5
(2)
4
56
61
Tax effect of non-deductible expenses
Other
6,200
Mandatory minimum reserves with central banks
823
599
Cash in hand
351
375
12
22
11,746
7,196
Mandatory minimum reserves with the Czech National Bank (“CNB”) are generally not available for use in the Bank’s
day-to-day operations. These deposits bear interest at the CZK repo rate, which was 0.05% as at 31 December 2013
(31 December 2012: 0.05%).
The Bank classifies its loans and advances to banks in the category of financial assets “loans and receivables”.
2013
Taxation at applicable tax rates
10,560
12 Loans and advances to banks
The following table shows how the tax on the Bank’s profit before tax differs from the theoretical amount that would
arise using the basic tax rate:
(CZKm)
31.12.2012
Balances with central banks
10 Income tax expense
(CZKm)
31.12.2013
(CZKm)
31.12.2013
31.12.2012
7
9
183
39
–
204
3,272
4,642
3,462
4,894
–
–
3,462
4,894
Analyzed by product and bank domicile
Current accounts
Domestic
Foreign
Term deposits
Domestic
Foreign
Allowances for credit losses
Net due from banks
Loans and advances to banks amounting to CZK 470 million (2012: CZK 1,584 million) are included in the item cash and
cash equivalents (Note 31).
The effective tax rate in 2012 was 19.58% (2012: 22.59%).
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SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
61
13 Loans and advances to customers
14 Impairment charge for credit losses
The Bank classifies its loans and advances to customers in the category of financial assets “loans and receivables”.
The movement in allowance for impairment of loans and advances to customers can be analyzed as follows:
(CZKm)
31.12.2013
31.12.2012
Analyzed by product
(CZKm)
Retail
Corporate
Total
404
611
1,015
235
410
645
(139)
(54)
(193)
(43)
(182)
(225)
(7)
–
(7)
–
(2)
(2)
As at 31 December 2012
450
783
1,233
Allocation to provision for loan impairment
233
284
517
Reversal of provision for loan impairment
(73)
(38)
(111)
Loans written off during the year as uncollectible
(45)
–
(45)
(5)
–
(5)
–
(2)
(2)
560
1,027
1,587
As at 1 January 2012
Investment loans
35,762
32,675
Working capital financing
4,948
4,515
Reversal of provision for loan impairment
Mortgages
11,212
9,326
Loans written off during the year as uncollectible
Consumer loans
1,086
661
Gross loans and advances
53,008
47,177
Allowance for impairment (Note 14)
(1,587)
(1,233)
Net loans and advances
51,421
45,944
In 2013, the Bank pledged collateral for the received long-term loan from the other bank to finance housing demands of the customers. The value of the pledged loan collateral at gross amortized cost is CZK 1,460 million (2012:
CZK 1,401 million).
For an analysis of individual categories of loans and advances to customers according to their credit quality see
Note 33 (b).
Allocation to provision for loan impairment
Recoveries received for loans earlier written off
Net foreign exchange difference
Recoveries received for loans earlier written off
Net foreign exchange difference
As at 31 December 2013
Segments Corporate/Retail are determined in accordance with the Basel II standardized approach as opposed to
Note 32, where the segments are defined based on the Bank’s organizational structure.
The Bank also realized a loss amounting to CZK 10 million (2012: CZK 158 million) on ceded receivables. The loss is
recognized in the “impairment charge for credit losses”.
15 Derivative financial instruments
The Bank’s trading activities primarily involve providing various derivative products to its customers and managing
positions for its own account. The trading derivatives also include those derivatives which are used for asset and
liability management (ALM) purposes to manage the interest rate position and which do not meet the criteria of
hedge accounting.
The contract or notional amounts and positive and negative fair values of the Bank’s outstanding derivative trading
positions as at 31 December 2013 and 31 December 2012 are set out in the table below. The contract or notional
amounts represent the volume of outstanding transactions at a point in time; they do not represent the potential
for gain or loss associated with market risk or credit risk of such transactions.
62
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63
Derivative financial instruments
Trading derivatives
(CZKm)
31.12.2013
17 Investment securities
31.12.2012
Contract/
nominal
Fair value
positive
Fair value
negative
Contract/
nominal
Fair value
positive
Fair value
negative
13,656
217
208
7,817
277
272
3,323
10
10
1,760
–
–
16,979
277
218
9,577
277
272
Interest rate derivatives
Swaps
Options
Foreign exchange derivatives
Swaps
Options
Forwards
The Bank classifies its investment securities in the categories of financial assets “available for sale”, “loans and
receivables” and “held to maturity”.
(CZKm)
31.12.2013
31.12.2012
2,997
2,253
2,997
2,253
61
61
61
61
–
–
–
–
Securities available for sale
Debt securities thereof:
– Listed
1,235
1
2
379
1
–
–
–
–
63
–
–
Securities in category loans and receivables
2,521
41
37
781
5
4
Debt securities thereof:
3,756
42
39
1,223
6
4
– Unlisted
Equity derivatives
Options
Total
–
–
–
250
–
–
Securities held to maturity
–
–
–
250
–
–
Debt securities thereof:
20,735
269
257
11,050
283
276
– Listed
Fair value gains less losses of trading derivatives are recognized in the profit for the period.
Certain derivative transactions, while providing effective economic hedges under the Bank’s risk management positions, do not qualify for hedge accounting, and are therefore presented above as trading derivatives with fair
value gains and losses recognized in the profit for the period.
(CZKm)
As at 1 January 2012
Securities
available
for sale
Securities
in category loans
and receivables
Securities
held to
maturity
Total
2,446
61
201
2,708
16 Financial assets at fair value through profit or loss
Additions
2,015
–
–
2,015
Disposals
(2,265)
–
(201)
(2,466)
Securities held for trading
Gains / losses from changes in fair value
57
–
–
57
As at 31 December 2012
2,253
61
–
2,314
Additions
3,034
–
–
3,034
Disposals
(2,237)
–
–
(2,237)
(53)
–
–
(53)
2,997
61
–
3,058
(CZKm)
Debt securities
31.12.2013
31.12.2012
31
11
Securities designated at fair value through profit or loss
(CZKm)
31.12.2013
31.12.2012
Fixed-yield debt securities
–
254
Total
31
265
In 2013 the fixed-yield debt securities in amount of CZK 254 million matured.
64
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
Gains / losses from changes in fair value
As at 31 December 2013
The Bank pledged securities for loans taken to finance SME and municipalities. The value of the pledged collateral
(securities available for sale) at fair value amounts to CZK 464 million in 2013 (2012: CZK 938 million).
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
65
18 Intangible assets
(CZKm)
19 Property and equipment
Software
Development
in progress
Other
Total
Costs
As at 1 January 2012
(CZKm)
Land and
buildings
Leasehold
improvement
Equipment
Other
Construction
in progress
Total
168
77
268
150
2
665
Costs
354
5
1
360
21
6
–
27
Additions
–
1
9
12
6
28
Transfer
2
(2)
–
–
Disposal
–
–
(2)
2
–
–
Disposal
(2)
–
–
(2)
Reclassification
–
–
(10)
(9)
–
(19)
375
9
1
385
168
78
265
155
8
674
Additions
33
13
–
46
10
42
35
35
1
123
Transfer
12
(12)
–
–
Transfer
–
5
–
3
(8)
–
Disposal
(6)
–
–
(6)
Disposal
–
(6)
(30)
(34)
–
(70)
414
10
1
425
178
119
270
159
1
727
(90)
(55)
(201)
(114)
–
(460)
(4)
(6)
(19)
(11)
–
(40)
Transfer
–
4
3
(7)
–
–
Disposals (accumulated
depreciation)
–
–
10
9
–
19
(94)
(57)
(207)
(123)
–
(481)
(5)
(8)
(22)
(15)
–
(50)
Transfer
–
–
–
–
–
Additions
As at 31 December 2012
As at 31 December 2013
Accumulated amortization
As at 1 January 2012
As at 1 January 2012
As at 31 December 2012
Additions
As at 31 December 2013
Accumulated depreciation
(246)
–
(1)
(247)
As at 1 January 2012
(30)
–
–
(30)
Depreciation charge
2
–
–
2
(274)
–
(1)
(275)
(41)
–
–
(41)
6
–
–
6
(309)
–
(1)
(310)
As at 1 January 2012
108
5
–
113
Disposals (accumulated
depreciation)
–
4
29
33
–
66
As at 31 December 2012
101
9
–
110
As at 31 December 2013
(99)
(61)
(200)
(105)
–
(465)
As at 31 December 2013
105
10
–
115
Net book value
As at 1 January 2011
78
22
67
36
2
205
As at 31 December 2011
74
21
58
32
8
193
As at 31 December 2012
79
58
70
54
1
262
Amortization charge
Disposals (accumulated amortization)
As at 31 December 2012
Amortization charge
Disposals (accumulated amortization)
As at 31 December 2013
Net book value
The acquisition amount of fully amortized intangible assets which are still in use was CZK 116 million in 2013 (2012:
CZK 63 million).
As at 31 December 2012
Depreciation charge
The acquisition amount of fully amortized property and equipment assets which are still in use was CZK 197 million
in 2013 (2012: CZK 213 million). The amount of received compensation from third parties for items of property and
equipment that were given up or lost was CZK 1.7 million (2012: CZK 1 million).
66
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
67
20Deferred income tax assets
21 Other assets
Deferred income taxes in 2013 are calculated on all temporary differences under the liability method using the 19%
income tax rate which is supposed to be applicable at recognition (19% for 2012).
(CZKm)
The movement on the deferred income tax account is as follows:
31.12.2013
31.12.2012
Prepayments and accrued income
22
28
Other debtors, net of provisions
25
24
2013
2012
Anticipated receivables
4
4
As at 1 January
13
29
Anticipated receivables
10
12
Profit for the period (debit) / credit (Note 10)
23
(5)
61
68
11
(11)
47
13
(CZKm)
Available-for-sale securities
The item “other debtors” includes an impairment of CZK 0 million (2012: CZK 1 million).
Fair value re-measurement (Note 28)
As at 31 December
Deferred income tax asset and liability are attributable to the following items:
(CZKm)
The Bank classifies its deposits from banks in the category of financial liabilities “measured at amortized cost”.
31.12.2013
31.12.2012
33
13
9
(2)
Depreciation of the fixed assets
(6)
(6)
Provisions
10
7
1
1
47
13
Allowance for impairment
Available-for-sale securities
Other temporary differences
The deferred tax (debit) / credit in the statement of income comprise the following temporary differences:
(CZKm)
22 Deposits from banks
(CZKm)
31.12.2013
31.12.2012
Domestic
68
7
Foreign
66
35
Domestic
892
1,485
Foreign
593
1,315
–
500
2,739
3,421
–
–
130
164
4,488
6,927
Analyzed by product and bank domicile
Current accounts
Term deposits
Borrowings
2013
2012
20
(8)
Depreciation of fixed assets
–
–
Reserves
3
3
Other temporary differences
–
–
Domestic
23
(5)
Foreign
Allowance for impairment
Total (Note 10)
The Bank’s management believes it is probable that the Bank will fully realize its gross deferred income tax assets
based upon the Bank’s current and expected future level of taxable profits and the expected offset from gross
deferred income tax liabilities.
Domestic
Foreign
Other
The Bank provided collaterals for its obligations by pledge of securities (Note 17) and pledge of receivables (Note 13).
Deposits from banks in the amount of CZK 1,021 million (2012: CZK 2,398 million) are included in the item cash and
cash equivalents (Note 31).
68
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
69
23 Due to customers
Due to customers at fair value through profit or loss includes time deposits which contain embedded derivatives.
Embedded derivatives modify the income from term deposits on the basis of market-specific variables (stock indexes).
The Bank classifies its due to customers in the category of financial liabilities “measured at amortized cost” or
„measured at fair value at initial recognition“.
Due to customers measured at amortized cost
(CZKm)
31.12.2013
31.12.2012
Current accounts
21,808
16,025
Term deposits
18,880
20,006
32
39
7,288
5,066
48,008
41,136
Private companies
22,351
20,258
Individual – households
13,048
11,837
Individual – entrepreneurs
3,031
2,638
Government bodies
4,538
3,499
705
795
2,327
1,779
2,008
330
48,008
41,136
Savings accounts
Analyzed by customer type
Non-profit institutions
Insurance companies and pension funds
Other financial institutions
24 Debt securities in issue
The Bank classifies its debt securities in issue in the category of financial liabilities “measured at amortized cost”.
Analyzed by product
Savings accounts with notice period
The Bank has not given any collateral for its liabilities..
(CZKm)
Issue date
Currency
Maturity date
31.12.2013
31.12.2012
Mortgage bond emission 5.30/17
18.12.2007
CZK
18.12.2017
825
830
Mortgage bond emission 5.70/14
27.10.2009
CZK
27.10.2014
504
508
Mortgage bond emission 3.50/13
14.4.2010
CZK
14.4.2013
–
118
Mortgage bond emission 4.10/16
19.5.2010
CZK
19.5.2016
517
520
Mortgage bond emission VAR1/15
24.3.2011
CZK
24.3.2015
255
254
Mortgage bond emission VAR1/17
22.3.2012
CZK
22.3.2017
506
175
Mortgage bond emission 3.20/16
11.10.2012
CZK
11.10.2016
1 020
1,000
Mortgage bond emission 2.30/18
24.10.2013
CZK
24.10.2018
641
–
4,268
3,405
5,049
3,081
83
7
5,132
3,088
9,400
6,493
Issued mortgage bonds
Promissory notes and certificates of deposits
Promissory notes and certificates of deposits short-term
Promissory notes and certificates of deposits long-term
Due to customers measured at fair value through profit or loss
(CZKm)
31.12.2013
31.12.2012
Analyzed by product
Term deposits
–
506
–
506
–
506
–
506
31.12.2013
31.12.2012
48,008
41,642
Analyzed by customer type
Government bodies
Debt securities in issue
The Bank released one mortgage bonds issue in 2013 in the nominal amount of CZK 800 million. (in 2012: two mortgage bonds issues in the nominal amount of CZK 1,500 million)
The Bank repaid one mortgage bond issue in 2013 in the nominal amount of CZK 118 million (in 2012: one issue in the
amount of CZK 700 million).
Issued mortgage bonds are collateralized by the Bank’s receivables arising from the granted mortgages in line with
Czech regulatory requirements.
Due to customers total
(CZKm)
Total
70
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
71
25 Other liabilities and accruals and deferred income
(CZKm)
31.12.2013
31.12.2012
Accruals and deferred income
27
29
Payments in transit
49
49
Other clearing accounts
126
148
Other creditors
117
105
Payables to Deposit insurance fund
17
15
Anticipated payables
38
25
VAT and other tax payables
4
4
Other
5
1
383
376
26Provisions
Employee
benefits
provision
Other
operating
provision
Total
provisions
9
20
4
33
(5)
–
–
(5)
Cover of costs
–
(3)
(1)
(4)
Additions
4
4
3
11
As at 31 December 2012
8
21
6
35
(2)
–
(3)
(5)
Cover of costs
–
(3)
–
(3)
Additions
3
8
1
12
As at 31 December 2013
9
26
4
39
As at 1 January 2012
Release
Release
The Bank classifies its subordinated debt in the category of financial liabilities “measured at amortized cost”.
The Bank received a subordinated liability of EUR 10 million from the European Bank for Reconstruction and Development on 24 December 2004, which is payable in one installment on 9 April 2015. As at 31 December 2013 this debt
bears 6M EURIBOR interest of 0.339% plus a margin of 1.5% p.a. (to the fifth year from the date of the agreement
plus a margin 0.80% p.a.), which is payable semi-annually. This liability of CZK 275.5 million, including accrued interest,
(31 December 2012: CZK 253 million) is subordinated to all other liabilities of the Bank and in the amount of CZK 110
million (31 December 2012: CZK 151 million) forms a part of the tier 2 capital of the Bank as defined by the CNB for
the purposes of determination of its capital adequacy (Note 33 (g)). In the third year before the maturity of the debt
an additional capital of 40% of the principal is included.
The Bank received a subordinated liability of EUR 77.3 million from Sberbank EU on 15 December 2013, which is payable
in one installment on 19 December 2021. As at 31 December 2013 this debt bears 3M EURIBOR interest of 0.298%
plus a margin of 5.61% p.a., which is payable quarterly. This liability of CZK 2,124.5 million, including accrued interest
is subordinated to all other liabilities of the Bank and to its full amount forms a part of the tier 2 capital of the Bank
(Note 33 (g)).
28Equity
Provision for financial
guarantees and other
contingent liabilities
(CZKm)
27 Subordinated debt
In 2013, there was no change in the amount of share capital. The preference shares were transformed to ordinary
shares on 9 January 2013 and on 1 February 2013 the issues number 770980001406 and 770980001414 were united
under one ISIN CZ0008040201. In the below table of share capital gradual increase, the uniting of original issues is
reflected.
Share capital
(CZKm)
Voting shares
Non-voting shares
Issued, paid and registered by the Commercial register
31.12.2013
31.12.2012
2,005
1,543
–
462
2,005
2,005
Other operating provisions also cover possible losses regarding legal proceedings. The provision of CZK 0.3 million
as at 31 December 2013 (31 December 2012: CZK 3 million) for litigation is not discounted to its net present value,
as the timing of its utilization could not be predicted with sufficient certainty.
72
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
73
29Contingent liabilities and commitments
Issues of shares
ISIN
Date of issue
Nominal value
of share
Number
of shares
Nominal
value
CZK
CZKm
CZ0008040201
23.10.1998
5,000
30,000
150
CZ0008040201
23.10.1998
5,000
100,000
500
CZ0008040201
7.8.2002
5,000
4,600
23
CZ0008040201
7.8.2002
5,000
15,400
77
CZ0008040201
23.11.2005
5,000
3,165
16
CZ0008040201
23.11.2005
5,000
10,555
53
CZ0008040201
31.7.2006
5,000
6,565
33
CZ0008040201
31.7.2006
5,000
21,895
109
CZ0008040201
20.12.2006
5,000
8,479
42
CZ0008040201
20.12.2006
5,000
28,281
142
CZ0008040201
16.5.2007
5,000
8,336
42
CZ0008040201
16.5.2007
5,000
27,804
139
CZ0008040201
21.12.2007
5,000
16,488
82
CZ0008040201
21.12.2007
5,000
54,992
275
CZ0008040201
30.7.2008
5,000
14,882
74
CZ0008040201
30.7.2008
5,000
49,634
248
401,076
2,005
The nominal value of ordinary securities is CZK 5,000. As at 31 December 2012 the nominal value of ordinary and
preference securities was CZK 5,000. Non-voting shares are not allowed to vote.
Commitments to provide a loan, loan guarantees to third parties and guarantees from acceptance of letters of credit
expose the Bank to credit risk and to loss in the event of a client’s inability to meet his obligations. Various commitments and contingent liabilities arise in the normal course of business involving elements of credit, interest rate and
liquidity risk.
Contingent liabilities include:
31.12.2013
(CZKm)
31.12.2012
Contract amount Contract amount
Documentary credits
182
97
Financial guarantees
1,487
1,006
(6)
(5)
Net financial guarantees
1,481
1,001
Un-drawn formal standby facilities, credit lines
7,782
5,784
(3)
(3)
7,779
5,781
9,442
6,879
Provision for guarantees (Note 26)
Provision for un-drawn credit lines (Note 26)
Net un-drawn formal standby facilities, credit lines
Total in gross amount
Un-drawn credit lines are irrevocable.
30Other contingent liabilities
(a)Litigation
Apart from litigations for which provisions have already been raised (Note 26), the Bank is not involved in any other
litigation with a material impact on its position.
Cumulative gains not recognized in the profit for the period may be analyzed as follows:
(CZKm)
2013
2012
8
(38)
(54)
57
Changes in provision for employee benefits
(2)
–
Change in deferred income taxes (Note 20)
11
(11)
(37)
8
As at 1 January
Net gains/(losses) from changes in fair value of available-for-sale securities
As at 31 December
74
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
(b)Taxation
Czech tax legislation, interpretation and guidance are still evolving. Consequently, under the current taxation environment, it is difficult to predict the interpretations the respective tax authorities may apply in a number of areas.
As a result, the Bank has used its current understanding of the tax legislation in the design of its planning and
accounting policies. The effect of the uncertainty cannot be quantified.
Czech tax authorities are authorized to perform tax inspections for three years retrospectively. The last tax inspection
was for the year 2007.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
75
31 Cash and cash equivalents
(c) Assets under management and custody
(CZKm)
31.12.2013
31.12.2012
5,155
3,117
Assets held under custody
Due from banks due up to 3 months (Note 12)
31.12.2013
31.12.2012
7,643
8,160
Assets held under management
Assets held under management are shown at their fair value.
Management considers that no present obligations were associated with these fiduciary duties as at 31 December 2013
and 31 December 2012.
(d) Operating lease commitments (the Bank as lessee)
Future minimum lease payments (cash outflow) under land, building and equipment operating leases are as follows:
(CZKm)
Due to banks due up to 3 months (Note 22)
31.12.2013
31.12.2012
1.1.2012
11,746
7,196
3,222
470
1,584
3,163
(1,021)
(2,398)
(3,215)
11,195
6,382
3,170
32 Operating segments
The Bank has the following four reportable segments in 2013 (three segments in 2012). Newly appropriated segment
SME was reported as part of Corporate banking segment in 2012. These operating segments are the Bank’s strategic
business units which offer different products and services, and are managed separately because they require different
technology, product distribution and service rendering methods and marketing strategies. The Board of Directors
reviews the internal management reports for each of these strategic business units on a monthly basis.
• Retail banking: Private individuals and entrepreneurs and companies with a turnover of less than CZK 30 million;
31.12.2013
31.12.2012
Up to 3 months
23
23
Not later than1 year
65
60
• SME banking: Small companies and entrepreneurs with turnover up to CZK 50 million;
Later than 1 year and not later than 5 years
153
162
• Treasury: Asset and liability management, dealing.
11
7
252
252
Later than 5 years
(e) Operating lease receivables (the Bank as lessor)
Future minimum lease payments (cash inflow) under land, building and equipment operating leases are as follows:
(CZKm)
76
(CZKm)
Cash and balances with central banks (Note 11)
Assets held under custody are shown at their nominal value.
(CZKm)
Analysis of the balances of cash and cash equivalents as shown in the balance sheets:
31.12.2013
31.12.2012
Up to 3 months
–
1
Not later than1 year
–
1
Later than 1 year and not later than 5 years
–
3
–
5
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
• Corporate banking: Companies with turnover greater than CZK 50 million and non-banking institutions in the
financial sector;
The result of other Bank activities (head office expenses, unallocated expenses and eliminating and reconciling
items) is reported within the reconciliation of the reportable segment revenues, profit or loss, assets and liabilities
and other material items with corresponding items in the Bank’s financial statements. The methods of reporting the
segments’ profit and loss, assets and liabilities is in accordance with the methods of reporting profit and loss, assets
and liabilities of the aggregate Bank level. In 2013 the definition of segments was changed – new SME segment was
excluded from the Corporate banking segment.
In 2013 and 2012, no client of the Bank (or group of related persons) constituted more than 10 % of the total revenues
of the Bank.
The accounting policies of the reportable segments are the same as described in Note 2.
Information regarding the results of each reportable segment is included below. Performance is measured based
on segment profit before income tax, as included in the internal management reports that are reviewed by the
Bank’s Board of Directors.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
77
Operating segment information for 2013 – new segmentation reporting
Operating segment information for 2012
Retail
Banking
Corporate
Banking
SME
Treasury
Total
(CZKm)
Net interest income
448
499
487
5
1,439
Non-interest income
132
25
190
(11)
336
580
524
677
(6)
1,775
(401)
(38)
(96)
(22)
(557)
(CZKm)
Total segment revenue
Segment expense
Other material non-cash items:
Allocation to provision for loan impairment
(443)
(356)
–
(1,070)
177
277
212
–
666
–
–
4
–
4
85
320
441
(28)
818
Reportable segment assets
18,456
17,717
17,084
17,215
70,472
Reportable segment liabilities
21,443
18,845
12,779
11,904
64,971
Capital expenditure
82
1
4
2
89
Depreciation
24
1
3
4
32
Loans written off during the year as
uncollectible
Reportable segment profit before income
tax
Treasury
Total
Net interest income
463
887
(60)
1,290
Non-interest income
146
277
(14)
409
Total segment revenue
609
1,164
(74)
1,699
Segment expense
(371)
(219)
(32)
(622)
(182)
(750)
(1)
(933)
145
337
1
483
2
3
–
5
203
535
(106)
632
Reportable segment assets
14,735
31,591
14,978
61,304
Reportable segment liabilities
19,205
19,124
14,268
52,597
7
2
2
11
14
3
3
20
Allocation to provision for loan impairment
Reversal of provision for loan impairment
Loans written off during the year as
uncollectible
Reportable segment profit before income tax
Capital expenditure
Depreciation
Reconciliations of reportable segment profit before income tax and assets and liabilities
Operating segment information for 2013 – segmentation as of 2012 reporting
(CZKm)
Retail
Banking
Corporate
Banking
Treasury
Total
Profit before income tax
Net interest income
448
986
5
1,439
Total profit before income tax for reportable segments
Non-interest income
132
215
(11)
336
580
1,201
(6)
1,775
Profit before income tax
(401)
(134)
(22)
(557)
Assets
(CZKm)
Total segment revenue
Segment expense
Allocation to provision for loan impairment
(271)
(799)
–
(1,070)
177
489
–
666
–
4
–
4
85
761
(28)
818
Reportable segment assets
18,456
34,801
17,215
70,472
Reportable segment liabilities
21,443
31,624
11,904
64,971
Capital expenditure
82
5
2
89
Depreciation
24
4
4
32
Reversal of provision for loan impairment
Loans written off during the year as
uncollectible
Reportable segment profit before income tax
Unallocated expenses
Total assets for reportable segments
Other material non-cash items:
78
Corporate
Banking
Other material non-cash items:
(271)
Reversal of provision for loan impairment
Retail
Banking
Unallocated assets
Total assets
2013
2012
818
632
(524)
(362)
294
270
70,472
61,304
–
8
70,472
61,312
64,971
52,597
–
3,405
64,971
56,002
Liabilities
Total liabilities for reportable segments
Unallocated liabilities
Total liabilities
Total Bank revenue is generated solely by the reportable segments.
The vast majority of the Bank’s total revenues is generated from customers domiciled in the Czech Republic.
All of the Bank’s Property, plant and equipment and intangible assets are located in the Czech Republic.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
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79
33 Financial risks
(a) Strategy in using financial instruments
The Bank’s activities are principally related to the use of financial instruments. The Bank accepts deposits from
customers at both fixed and floating interest rates and for various periods and seeks to earn above-average interest
margins by investing these funds in high quality assets. The Bank seeks to increase these margins by consolidating
short-term funds and lending for longer periods at higher rates whilst maintaining sufficient liquidity to meet all
claims that might become due.
The Bank seeks to raise its interest margins by obtaining above-average margins, net of provisions, through lending
to commercial and retail borrowers with a range of credit standings. Such exposures involve not just on-balance
sheet receivables and advances but the Bank also enters into guarantees and other commitments such as letters
of credit and other similar contingent liabilities.
The Bank also, to a limited extent, trades in financial instruments where it takes positions in traded and over-thecounter instruments to take advantage of short-term market movements in the debt securities markets, in currencies
and interest rates. The Board of Directors places trading limits on the level of exposure that can be taken in relation
to relevant market positions.
(b) Credit risk
The Bank defines credit risk as the risk that a counterparty will cause a financial loss for the Bank by failing to discharge a contractual obligation.
Credit risk management is performed in close co-operation with the Bank’s parent company, thus reflecting the
risk strategy and risk-appetite.
A conservative strategy to credit risk management is applied. Considered within the general context of the overall
business relations existing with each respective customer, every transaction for which the Bank knowingly undertakes risk should yield a contribution margin that is commensurate with the specific risk incurred.
The Bank structures the levels of accepted credit risk by regular measurement of the risk exposure, monitoring of the
limits and taking appropriate procedures leading to a decrease in the accepted level of credit risk. This process is
performed for each individual borrower and the whole loan portfolio. When deciding about the acceptance of a new
exposure, an analysis of the customer’s cash flow and overall financial situation is a key factor, as well as the existing
experience with the customer together with the quality of received collateral. The decision-making is performed
independently from the sales units.
Maximum exposure to credit risk before collateral held or other credit enhancements
(CZKm)
31.12.2013
31.12.2012
3 462
4,894
25,685
22,236
2,411
2,112
102
100
Investment loans
8,861
9,466
Working capital financing
2,190
2,164
11,093
9,212
1,079
654
269
283
31
265
3,058
2,314
61
68
Financial guarantees
1,487
1,006
Loan commitments and other credit related liabilities
7,964
5,881
67,753
60,655
Credit risk exposures relating to on-balance sheet assets
Loans and advances to banks
Loans and advances to customers:
– Corporate loans
Investment loans
Working capital financing
Mortgages
– Retail loans
Mortgages
Consumer loans
Derivative financial instruments
Financial assets at fair value through profit or loss
Debt securities
Investment securities
Debt securities
Other exposures
Credit risk exposures relating to off-balance sheet items (nominal amount)
Corporate loans include loans and advances to customers with a total exposure above EUR 1 million or with annual
turnover of at least EUR 50 million. Segments Corporate/Retail are determined in accordance with the Basel II
standardized approach for calculation of the capital requirement for credit risk in investment portfolios as opposed
to Note 32, where the segments are defined based on the Bank’s organizational structure.
The capital requirement for credit risk in the investment portfolio is calculated using the standardized approach.
The table below summarizes maximum exposure to credit risk before collateral held or other credit enhancements.
Included in the table are the Bank’s assets and liabilities at carrying amounts (after impairment).
80
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81
Financial effect of collateral held and other credit enhancements
(CZKm)
Maximum exposure to credit risk after collateral held or other credit enhancements
31.12.2013
31.12.2012
Credit risk exposures relating to on-balance sheet assets
Loans and advances to banks
–
–
Mortgages
Working capital financing
Mortgages
Consumer loans
3,462
4,894
Investment loans
9,214
7,096
Working capital financing
1,677
1,156
55
33
Investment loans
2,834
3,127
Working capital financing
1,285
1,295
Mortgages
1,263
1,006
337
175
269
283
31
265
3,058
2,314
61
68
Financial guarantees
1,487
1,006
Loan commitments and other credit related liabilities
7,964
5,881
32,997
28,596
Loans and advances to banks
– Corporate loans
16,471
15,140
734
956
47
67
– Retail loans
Investment loans
31.12.2012
Loans and advances to customers:
– Corporate loans
Working capital financing
31.12.2013
Credit risk exposures relating to on–balance sheet assets
Loans and advances to customers:
Investment loans
(CZKm)
Mortgages
– Retail loans
6,027
6,339
905
869
9,830
8,206
742
482
34,756
32,059
Consumer loans
Derivative financial instruments
Financial assets at fair value through profit or loss
Debt securities
Investment securities
Debt securities
Other exposures
Credit risk exposures relating to off-balance sheet items (nominal amount)
Only balance sheet items are subject to collaterals and other credit enhancements received.
82
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
83
Collateral held and other credit enhancements
Collateral held and other credit enhancements may be summarized by the collateral type as follows:
Financial effect of
collateral held and other
credit enhancements
(CZKm)
As at 31 December 2013
3,302
Mortgage right on real estate
27,556
Financial collateral
704
Other
3,194
Total
34,756
As at 31 December 2012
Bank and similar guarantees
486
Mortgage right on real estate
27,795
Financial collateral
813
Other
2,965
Total
32,059
The Bank’s exposure to credit risk from loans and advances is summarized as follows:
31.12.2013
31.12.2012
Loans and
advances
to banks
Loans and
advances
to customers
Loans and
advances
to banks
48,723
3,462
43,268
4,894
78
–
60
–
4,207
–
3,849
–
53,008
3,462
47,177
4,894
Allowances for impairment (Note 14)
(1,587)
–
(1,233)
–
Loans and advances – net
51,421
3,462
45,944
4,894
Loans and advances – gross
Internal rating has to be periodically updated. Validation and parameter changes are carried out in cooperation
with the parent company.
Individually not impaired loans and advances (loans and advances without default) are in accordance with CNB’s
regulations classified as follows (rating grades 1–24, or 1a–4e):
Individually impaired loans and advances (loans and advances in default) are in accordance with CNB’s regulations
classified as follows (rating grades 25 and 5a–5e):
Loans and
advances
to customers
Individually impaired
The rating scale for assessment of corporate customers with turnover over EUR 30 million consists of 25 grades,
divided into five rating classes in five stages. In classes 1 to 4 loans and receivables are without failure, while a Class 5
consists of loans and receivables with a failure (1a–5e). Receivables without failure are assigned in the Classes 1–4,
Class 5 represents receivables with failure.
• watched, when it is probable it will be fully repaid and they are not overdue for more than 90 days.
Loans and advances
Past due but not impaired
Each borrower is based on its credit quality rating grade assigned to a specified probability of a failure of the client
within one year (Probability of default, PD). The Bank uses two rating scales based on segment analysis and the
rating model. First rating scale is used to assess the corporate customers with turnover over EUR 30 million, the
other rating scale is used to assess other segments.
• standard, when the principal and interest are duly paid and they are not overdue for more than 30 days,
Accounting policies for collaterals are presented in the Note 2 (z).
Neither past due nor impaired
Internal rating of loans and advances and CNB categorization
The Bank uses internal rating models for the purposes of managing and monitoring the quality of the loan portfolio.
Bank and similar guarantees
(CZKm)
The total impairment provision for loans and advances as at 31 December 2013 is CZK 1,587 million (31 December 2012:
CZK 1,233 million) of which CZK 1,413 million (31 December 2012: CZK 1,166 million) represents the individually
impaired loans; the remaining amount of CZK 174 million (31 December 2012: CZK 67 million) represents the portfolio
provision.
• substandard when their full repayment is uncertain or they are overdue for 91 to 180 days,
• doubtful, when their full repayment is highly improbable or they are overdue for 181 to 360 days,
• loss, when the full repayment is impossible or the receivable is overdue for more than 360 days or under bankruptcy proceedings.
Total loans and advances to customers which are neither past due nor impaired represent CZK 26,682 million
(31 December 2012: CZK 22,973 million) Corporate loans and advances and CZK 22,042 million (31 December 2012:
CZK 20,295 million) belong to Retail loans and advances.
84
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85
Rating scale for customers with turnover over EUR 30 million.
86
The rating scale for other segments:
Rating
grade
PD
(for 1 year)
Rating
Moody’s
Rating S&P
Rating
Fitch
best creditworthiness
0.01%
Aaa, Aa1,
Aa2
AAA, AA+
AAA, AA+,
AA
1b
best creditworthiness
0.02%
Aa3
AA
AA-
0.14%
1c
best creditworthiness
0.03%
A1
AA-
A+
0.19%
0.27%
1d
best creditworthiness
0.04%
A2
A+
A
0.27%
0.32%
0.38%
1e
best creditworthiness
0.05%
A3
A
A-
Low
0.38%
0.43%
0.49%
2a
excellent creditworthiness
0.07%
A3
A-
A-
8
Low
0.49%
0.55%
0.63%
2b
excellent creditworthiness
0.11%
Baa1
BBB+
BBB+
9
Low
0.63%
0.71%
0.81%
2c
very good creditworthiness
0.16%
Baa2
BBB
BBB+
10
Low
0.81%
0.92%
1.04%
2d
very good creditworthiness
0.24%
Baa2
BBB
BBB
11
Low
1.04%
1.18%
1.34%
2e
very good creditworthiness
0.35%
Baa2
BBB
BBB-
12
Medium
1.34%
1.52%
1.73%
3a
good creditworthiness
0.53%
Baa3
BBB-
BBB-
13
Medium
1.73%
1.95%
2.22%
3b
good creditworthiness
0.80%
Ba1
BB+
BB+
14
Medium
2.22%
2.51%
2.86%
3c
good and medium creditworthiness
1.20%
Ba2
BB
BB+
15
Medium
2.86%
3.23%
3.67%
3d
medium creditworthiness
1.79%
Ba3
BB-
BB
16
Medium
3.67%
4.15%
4.72%
3e
acceptable creditworthiness
2.69%
Ba3
B+
BB-
17
High
4.72%
5.34%
6.08%
4a
poor creditworthiness
4.04%
B1
B+
B+
18
High
6.08%
6.87%
7.82%
4b
poor creditworthiness
6.05%
B2
B
B
19
High
7.82%
8.83%
10.05%
4c
very poor creditworthiness (Watch List)
9.08%
B3
B
B-
20
High
10.05%
11.36%
12.93%
4d
very poor creditworthiness (Watch List)
13.62%
B3
B-
B-
21
High
12.93%
14.62%
16.64%
4e
very poor creditworthiness (Watch List)
20.44%
Caa, Ca, C
CCC, CC, C
CCC, CC, C
22
High
16.64%
18.80%
21.40%
23
High
21.40%
24.18%
27.52%
5a
>90 days overdue
state
of failure
default
default
default
24
High
27.52%
31.11%
35.40%
5b
impairment due to the financial situation
state
of failure
default
default
default
25
High
35.40%
40.01%
100.00%
26
Default
100.00%
100.00%
100.00%
5c
renegotiation of the loan
state
of failure
default
default
default
5d
insolvency
state
of failure
default
default
default
5e
written off credit debt
state
of failure
default
default
default
Rating Grade
Risk
Min PD
Average PD
Max PD
1
Low
0.00%
0.01%
0.02%
2
Low
0.02%
0.02%
0.03%
1a
3
Low
0.03%
0.05%
0.07%
4
Low
0.07%
0.09%
5
Low
0.14%
6
Low
7
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
Description
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
87
Loans and advances neither past due nor impaired
Loans and advances which are not overdue are allocated to this category. These loans and advances are not individually
impaired.
Loans and receivables, individually not impaired –
customers with consolidated turnover over EUR 30 million:
Loans and advances from 1 up to 90 days overdue are generally not considered to be impaired by an individual
impairment provision.
Loans and receivables, individually not impaired –
customers with consolidated turnover over EUR 30 million:
(CZKm)
31.12.2013
(CZKm)
31.12.2013
Low risk
8,000
Low risk
1
Medium risk
2,166
Medium risk
–
High risk
1,865
High risk
8
Default
–
Default
–
Loans and receivables, individually not impaired – brutto
12,031
Loans and receivables, individually not impaired – brutto
9
Portfolio allowance for impairment for credit risks (Note 14)
(73)
Portfolio allowance for impairment for credit risks (Note 14)
–
Net loans and receivables, individually not impaired
9
Net loans and receivables, individually not impaired
11,958
Loan and receivables past due, individually not impaired
Loans and receivables, individually not impaired – other segments:
31.12.2013
31.12.2012
Class 1
–
–
7,833
Class 2
–
–
24,101
25,790
Class 3
40
30
Class 4
7,416
9,607
Class 4
29
30
Class 5
–
–
Class 5
–
–
36,693
43,268
Gross loans and receivables past due, individually not impaired
69
60
(100)
(67)
Portfolio allowance for impairment for credit risks (Note 14)
(2)
–
36,593
43,201
Net loans and receivables past due, individually not impaired
67
60
(CZKm)
31.12.2013
31.12.2012
Class 1
34
38
Class 2
5,142
Class 3
Gross loans and receivables, individually not impaired
Portfolio allowance for impairment for credit risks (Note 14)
Net loans and receivables, individually not impaired
As at 31 December 2012, the loans and receivables individually not impaired – other segments (e.i. Rating grades 1–5)
include also loans and receivables that are reported under the rating scale for customers with consolidated turnover
over EUR 30 million in 2013. The volume of these loans and receivables is CZK 5,252 million in 2012 (Rating grade 2:
CZK 2,195 million, Rating grade 3: CZK 2,579 million, Rating grade 4: CZK 478 million) and corresponding portfolio
allowance for impairment is CZK 8 million in 2012.
88
Loans and advances past due but not impaired
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
(CZKm)
In 2012 there was not any customer with consolidated turnover over EUR 30 million reported in the Rating grades 1–5.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
89
The table below summarizes the gross amount of loans and advances to customers past due but not impaired by
business segment along with the fair value of related collateral held by the Bank as security.
Retail
Corporate
Total loans
and advances
to customers
Loans and advances past due but not impaired
45
33
78
Financial effect of received collaterals
29
32
61
As at 31 December 2013
(CZKm)
Loans and receivables past due, individually impaired
(CZKm)
31.12.2013
31.12.2012
Class 5
4,207
3,849
Gross loans and receivables past due, individually impaired
4,207
3,849
Individual allowance for impairment for credit risks
(1,413)
(1,166)
Net loans and receivables past due, individually impaired
2,794
2,683
The table below summarizes the gross amount of individually impaired loans and advances to customers by business segment along with the fair value of related collateral held by the Bank as security.
Retail
Corporate
Total loans
and advances
to customers
Loans and advances past due but not impaired
59
1
60
Financial effect of received collaterals
41
–
41
As at 31 December 2012
(CZKm)
The table below summarizes the term structure of overdue:
Corporate
Individually impaired loans and advances
1,708
2,499
4,207
Financial effect of received collaterals
1,076
1,299
2,375
Retail
Corporate
Total loans
and advances
to customers
(CZKm)
As at 31 December 2012
Gross loans and receivables past due, individually not impaired
(CZKm)
Retail
Total loans
and advances
to customers
As at 31 December 2013
31.12.2013
31.12.2012
1–30 days overdue
37
31
Individually impaired loans and advances
1,590
2,259
3,849
30–60 days overdue
9
8
Financial effect of received collaterals
1,061
1,525
2,586
60–90 days overdue
32
21
Total gross amount
78
60
From the total loans and advances past due but not impaired as at 31 December 2013 48% were overdue by up to
1 month (2012: 52%).
Individually impaired loans and advances
The Bank performs an assessment for individual impairment of loans and advances that are above the materiality
threshold. Individually impaired loans and advances include exposures corresponding to the sub-categories of substandard, doubtful and loss loans and receivables in accordance with regulatory classifications. Therefore, they also
include loans and advances more than 90 days overdue. The remaining loans and advances from financial activities
are considered within the collective evaluation of impairment and for calculation of the portfolio provision.
90
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
(CZKm)
Loans and advances renegotiated
The Bank performs the restructuring of loans and advances in cases where according to the assessment of the current
legal and financial situation of the client it would probably suffers a loss if the restructuring was not performed. The
restructuring mainly includes a modification of the repayment schedule, adjustment of interest rates, forgiveness
of past due interests or extending the payment of the principal or accessory amounts.
In 2013, loans and advances totaling CZK 468 million (2012: CZK 337 million) were restructured. They were especially for the prolonging of bridging loans in real estate, which had a maturity in 2013, and the prolonging of loans
based on the requirements of clients in business sectors that were affected by economic conditions deteriorated.
Restructuring is associated with a temporary worsening of the grade classification of the client. After the successful completion of restructuring and repayment methods for the clients, and in accordance with the rules of the
CNB, they are reclassified back to a more creditworthy category. The client can be reclassified every six month by
maximum 2 grades if he fulfils the terms of restructuring and does not delay with the repayments.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
91
Loans and advances to banks
Geographical sectors
The Bank has a portfolio of only duly repaid loans and advances to banks, neither individually nor portfolio impaired.
As at 31 December 2013
For receivables from banks, the internal grade is derived from external ratings provided by recognized rating agencies.
(CZKm)
Domestic
European
Union
Other
Europe
Other
Total
7
1,833
1,616
6
3,462
46,213
4,744
434
30
51,421
31
–
–
–
31
3,058
–
–
–
3,058
Other financial assets
114
215
1
–
330
Total financial assets
49,423
6,792
2,051
36
58,302
Domestic
European
Union
Other
Europe
Other
Total
213
3,925
750
6
4,894
44,294
1,198
428
24
45,944
2
263
–
–
265
2,314
–
–
–
2,314
Other financial assets
88
263
–
–
351
Total financial assets
46,911
5,649
1,178
30
53,768
Assets
Loans and advances to banks, individually not impaired
Loans and advances to banks
(CZKm)
31.12.2013
31.12.2012
Class 1
66
54
Class 2
2,900
4,686
Class 3
496
154
3,462
4,894
Total
Loans and advances to customers
Financial assets at fair value through
profit or loss
Debt investment securities
Debt securities
The table below presents an analysis of debt securities by rating agency designation as at 31 December 2013, based
on Moody’s external ratings.
Financial assets at fair value
through profit or loss
Investment securities
Total
Aaa to A3
31
3,058
3,089
Baa1 to Baa3
–
–
–
Unrated
–
–
–
Total
31
3,058
3,089
(CZKm)
Concentration of risks of financial assets with credit risk exposure
Diversification is one of the key principles in managing credit risk. The Bank fully adheres to regulatory limits for
an exposure to single economically-linked groups of customers. Additionally, the Bank places and monitors limits
on the amount of risk accepted in relation to both geographical and industry sectors.
As at 31 December 2012
(CZKm)
Assets
Loans and advances to banks
Loans and advances to customers
Financial assets at fair value through
profit or loss
Debt investment securities
Industry sectors
As at 31 December 2013
(CZKm)
Trade
Real
and
Manuestate services facturing
Households
Financial
institutions
Public
sector
Other
industries
Total
Assets
Loans and advances to banks
–
–
–
–
3,462
–
–
3,462
15,487
11,316
10,860
12,303
390
945
120
51,421
Financial assets at fair value
through profit or loss
–
1
–
–
–
30
–
31
Investment securities
–
61
–
–
–
2,997
–
3,058
Other financial assets
16
14
1
–
299
–
–
330
Total financial assets
15,503
11,392
10,861
12,303
4,151
3,972
120
58,302
Loans and advances to
customers
92
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
93
As at 31 December 2012
(CZKm)
Trade
Real
and
Manuestate services facturing
Financial
Houseinstituholds
tions
Public
sector
Other
industries
Total
Assets
Loans and advances to banks
–
–
–
–
4,894
–
–
4,894
16,634
7,534
10,635
10,104
144
762
131
45,944
Financial assets at fair value
through profit or loss
–
1
–
–
262
2
–
265
Investment securities
–
61
–
–
–
2,253
–
2,314
Other financial assets
20
2
1
–
328
–
–
351
Total financial assets
16,654
7,598
10,636
10,104
5,628
3,017
131
53,768
Loans and advances to
customers
Derivatives
The Bank maintains strict control limits on credit risk from derivative positions, by both amount and term. Credit risk
exposure is expressed by a credit equivalent, which in relation to derivatives is only a small fraction of the derivative’s
notional amount outstanding. This credit risk exposure is managed as part of the overall lending limits with customers, together with potential exposures from market movements. Collateral or other security which is required
for credit transactions is obtained for credit risk exposures on these instruments.
Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation
of a corresponding receipt in cash, securities or equities. Daily settlement limits are established for each banking
counterparty so as to cover the aggregate of all settlement risk arising from the Bank’s market transactions on any
single day.
Financial instruments subject to offsetting, enforceable master netting arrangements and similar
arrangements
The following table sets out the analysis of possible impact of enforceable master netting agreements to the Bank’s
financial position.
Gross amounts – enforceable master
netting agreements
31 December 2013
Gross
amount
Gross
amount
netting
Derivatives
192
–
192
Total Assets
192
–
Derivatives
208
Total Liabilities
208
(CZKm)
Net
amount
Financial
reported instrument
Financial
collateral
Net
amount
(78)
(111)
3
192
(78)
(111)
3
–
208
(78)
(130)
–
–
208
(78)
(130)
–
Assets
Liabilities
94
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
Gross amounts – enforceable master
netting agreements
31 December 2012
Gross
amount
Gross
amount
netting
Derivatives
261
–
261
Total Assets
261
–
Derivatives
271
Total Liabilities
271
(CZKm)
Net
amount
Financial
reported instrument
Financial
collateral
Net
amount
(132)
(110)
19
261
(132)
(110)
19
–
271
(132)
(133)
6
–
271
(132)
(133)
6
Assets
Liabilities
The Bank discloses interest swaps as financial instruments that meet the condition for discosure of offsetting,
enforceable master netting arrangements and similar arrangements.
Credit–related commitments
The primary purpose of these instruments is to ensure that funds are available to a customer as required. Payment
guarantees and standby letters of credit with the characteristics of credit substitutes carry the same credit risk
as loans. Documents and commercial letters of credit – which are written undertakings by the Bank on behalf
of a customer authorizing a third party to draw drafts on the Bank up to a stipulated amount under specific terms
and conditions – are collateralized by the underlying shipments of goods to which they relate and therefore carry less
risk than a direct loan.
Commitments represent unused portions of authorizations to extend credit in the form of loans, guarantees or letters
of credit. With respect to credit risk on commitments to extend credit, the Bank is potentially exposed to loss
in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total unused
commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit
standards. The Bank monitors the term to maturity of credit commitments because longer-term commitments
generally have a greater degree of credit risk than shorter-term commitments.
(c) Currency risk
The Bank defines currency risk as a risk of financial loss because of changes in foreign exchange rates.
The Bank takes on exposure resulting from fluctuations in the prevailing foreign currency exchange rates on its
financial position and cash flows. The Bank manages its open foreign exchange position using foreign exchange deals
(spots and forwards). Foreign exchange derivatives made on behalf of clients are included in terms of accounting
in the trading portfolio. The Board of Directors sets limits on the level of currency position by currency and in total
for all currencies, which are monitored daily.
Sensitivity analysis
The tables below summarize the Bank’s exposure to currency risk. It is expressed by the sensitivity analysis showing
the effect of change in the CZK foreign exchange rate against significant currencies on the balance sheet, on the
Bank’s annual net profit and other movements in equity.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
95
In the year 2013 the effect of appreciation (+) / depreciation (-) in the CZK foreign exchange rate against the EUR by
10% and against USD by 20% was tested (in 2012: against the EUR by 10% and against USD by 20%) on the Bank’s
annual net profit and other movements in equity.
In the Bank’s management judgment such an annual change in foreign exchange rates may be reasonably possible
based on historical development. Included in the table are the respective changes in the Bank’s annual net profit and
other movements in equity from assets and liabilities denominated in the above mentioned currencies.
The Bank has set limits on open currency positions in each currency. Within these limits, the Bank manages currency
position so that it is balanced in all currencies (see the table Currency position). The impact of foreign exchange rate
changes in net profit in the individual currencies, as well as in the aggregate for all currencies, is immaterial.
As at 31 December 2013
(CZKm)
EUR
USD
10%
-10%
20%
-20%
(5)
5
(4)
4
Loans and advances to banks
(338)
338
(1)
1
Loans and advances to customers
(647)
647
(143)
143
(21)
21
–
–
(1,490)
1,490
(152)
152
(2,502)
2,502
(301)
301
179
(179)
–
–
488
(488)
279
(279)
33
(33)
12
(12)
240
(240)
–
–
27
(27)
1
(1)
1,536
(1,536)
11
(11)
2,503
(2,503)
303
(303)
1
(1)
3
(3)
Assets
Cash and balances with central banks
Other assets
Unsettled transactions with currency instruments
Liabilities
Deposits from banks
Due to customers
Debt securities in issue
Subordinated debt
Other liabilities
Unsettled transactions with currency instruments
Total (annual net profit)
As at 31 December 2012
EUR
(CZKm)
USD
10%
-10%
20%
-20%
(5)
5
(3)
3
Loans and advances to banks
(420)
420
(74)
74
Loans and advances to customers
(317)
317
(87)
87
(27)
27
–
–
(930)
930
(5)
5
(1,699)
1 699
(169)
169
Deposits from banks
240
(240)
1
(1)
Due to customers
418
(418)
145
(145)
Debt securities in issue
30
(30)
14
(14)
Subordinated debt
25
(25)
–
–
Other liabilities
31
(31)
3
(3)
951
(951)
6
(6)
1 695
(1,695)
169
(169)
(4)
4
–
–
Assets
Cash and balances with central banks
Other assets
Unsettled transactions with currency instruments
Liabilities
Unsettled transactions with currency instruments
Total (annual net profit)
Changes in the CZK foreign exchange rate against the EUR and USD do not have any effect on the Bank’s movements
in equity other than annual net profit.
Changes in the CZK foreign exchange rate against EUR and USD do not have any effect on the Bank’s movements
in equity other than annual net profit.
96
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SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
97
Currency position
The tables below summarize the Bank’s exposure to currency risk expressed by an open currency position. Included
in the table are the Bank’s assets, liabilities and equity at carrying amounts, categorized by currency.
As at 31 December 2013
(CZKm)
Loans and advances to banks
Loans and advances to customers
Financial assets at fair value through profit or loss
Investment securities
Other assets
CZK
EUR
USD
Other
Total
Due to customers
Debt securities in issue
Provisions
Subordinated debt
Other liabilities
Equity
Net assets/(liabilities and equity)
Net assets/(liabilities) from unsettled transactions
with currency instruments including derivatives
Net open currency position
52
20
32
11,746
Financial assets at fair value through profit or loss
12
3,384
7
59
3,462
Investment securities
44,197
6,470
715
39
51,421
Other assets
31
–
–
–
31
3,058
–
–
–
3,058
539
215
–
–
754
59,479
10,121
742
130
70,472
1,787
–
3
4,488
41,240
4,881
1,396
491
48,008
9,007
334
59
–
9,400
34
5
–
–
39
0
2,400
–
–
2,400
360
269
7
–
636
5,501
–
–
–
5,501
58,840
9,676
1,462
494
70,472
639
445
(720)
(364)
–
(612)
(461)
705
370
2
27
(16)
(15)
6
2
EUR
USD
Other
Total
Off-balance sheet items
Financial guarantees
98
Deposits from banks
Due to customers
Provisions
Subordinated debt
Other liabilities
Equity
Net assets/(liabilities and equity)
851
600
36
–
1,487
Loan commitments and other credit related liabilities
6,831
1,124
9
–
7,964
Currency position from off-balance sheet items
7,682
1,724
45
0
9,451
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
USD
Other
Total
7,108
52
13
23
7,196
29
4,195
368
302
4,894
42,303
3,166
433
42
45,944
265
–
–
–
265
2,314
–
–
–
2,314
431
268
–
–
699
52,450
7,681
814
367
61,312
4,516
2,403
4
4
6,927
36,399
4,180
724
339
41,642
6,110
302
68
13
6,493
30
5
–
–
35
–
253
–
–
253
330
307
15
–
652
5,310
–
–
–
5,310
52,695
7,450
811
356
61,312
(245)
231
3
11
–
Net assets/(liabilities) from unsettled transactions
with currency instruments including derivatives
232
(216)
(6)
(10)
–
Net open currency position
(13)
15
(3)
1
–
CZK
EUR
USD
Other
Total
641
352
12
–
1,006
Loan commitments and other credit related liabilities
4,558
1,318
5
–
5,881
Currency position from off-balance sheet items
5,199
1,670
17
–
6,887
As at 31 December 2012
(CZKm)
Off-balance sheet items
Financial guarantees
CZK
EUR
Liabilities and equity
Debt securities in issue
As at 31 December 2013
(CZKm)
Loans and advances to banks
11,642
2,698
CZK
Assets
Loans and advances to customers
Liabilities and equity
Deposits from banks
(CZKm)
Cash and balances with central banks
Assets
Cash and balances with central banks
As at 31 December 2012
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
99
(d) Interest rate risk
As at 31 December 2012
100 b.p.
(CZKm)
The Bank defines interest rate risk as the risk of financial loss because of changes in market interest rates.
The Bank takes on exposure resulting from fluctuations in the prevailing levels of market interest rates on its financial
position and cash flows. Bank exposure to interest rate risk is monitored daily using gap analysis in each foreign
currency and is aggregated for all currencies. Sensitivity to changes in the market interest rate is regularly measured
via a simulated change of the present value of the interest cash flows from individual interest instruments where
the interest rate is increased by a standardized value of interest rate shock of 200 basis points (b.p.). Interest rate
swaps or other fixed-rate instruments are used to manage interest rate positions.
The table below summarizes the Bank’s exposure to interest rate risks. It is expressed by the sensitivity analysis
showing the effect of change in market interest rates by 100 b.p. on the Bank’s annual net profit and other movements in equity. The two week repo rate, which is a key interest rate for the CNB’s monetary policy, is usually
changed several times a year. Having observed this rate’s average annual change over the last 5 years, in the Bank’s
management judgment a noticeable change in annual market interest rates by 100 b.p. may reasonably be possible.
Included in the table is the respective change in the Bank’s annual net profit and other movements in equity from:
Annual net profit
Assets
Cash and balances with central banks
60
(60)
Loans and advances to banks
43
(43)
245
(245)
(1)
1
9
(9)
356
(356)
(46)
46
(283)
283
(19)
19
(1)
1
(349)
349
Loans and advances to customers
Financial assets at fair value through profit and loss
Investment securities
Sensitivity analysis
-100 b.p.
Liabilities
Deposits from banks
Due to customers
Debt securities in issue
• interest-bearing financial assets and liabilities at fair value through profit or loss and interest-bearing availablefor-sale financial assets and
Subordinated debt
• loans and receivables, interest-bearing financial liabilities and held-to-maturity investments carried at amortized
cost.
Derivative financial instruments
1
(1)
Total
8
(8)
As at 31 December 2013
(CZKm)
100 b.p.
-100 b.p.
Annual net profit
Changes in the market interest rates do not have material effect on the Bank’s movements in equity other than
annual net profit.
Assets
Cash and balances with central banks
109
(109)
16
(16)
214
(214)
–
–
(114)
114
225
(225)
(35)
35
(262)
262
Debt securities in issue
(40)
40
Subordinated debt
(20)
20
(358)
358
0
0
(132)
132
Loans and advances to banks
Loans and advances to customers
Financial assets at fair value through profit and loss
Investment securities
Liabilities
Deposits from banks
Due to customers
Derivative financial instruments
Total
100
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
(e) Liquidity risk
The Bank defines liquidity risk as the risk that difficulties in meeting obligations associated with financial liabilities
are encountered, or the risk of losing the ability to finance assets.
The Bank is exposed to daily calls on its available cash resources from overnight deposits, current accounts, maturing
deposits, loan draw downs, guarantees and from the settlement of derivatives. Liquidity risk management is based
on both the planning of the cash inflows and cash outflows based on the remaining maturity of the assets and
liabilities, and on the experience gained from progress analysis of the previous years. The Bank prepares a liquidity
plan which is approved by the Board of Directors together with the business plan, and both these plans are closely
interconnected.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
101
Cash flows from balance sheet financial instruments
The table below presents the contractual undiscounted cash flows from the Bank’s financial liabilities as compared
with total financial assets based on the remaining contractual period as at the balance sheet date to the contractual
maturity date.
As at 31 December 2013
(CZKm)
Total
Within
3 months
3–12
months
1–5
years
Over
5 years
Undiscounted
cash flows
Carrying
amount
Financial liabilities
Deposits from banks
Due to customers
Debt securities in issue
Subordinated debt
1,242
880
2,086
402
4,610
4,488
40,189
6,517
1,453
17
48,176
48,008
2,656
2,964
4,248
–
9,868
9,400
6
–
281
2,491
2,778
2,400
44,093
10,361
8,068
2,910
65,432
64,296
17,237
5,892
19,896
42,030
85,055
69,718
(26,856)
(4,469)
11,828
39,120
(19,623)
5,422
Total financial liabilities
(remaining contractual maturities)
Total financial assets
(remaining contractual maturities)
Net financial assets/(liabilities)
As at 31 December 2012
(CZKm)
Total
Within
3 months
3–12
months
1–5
years
Over
5 years
Undiscounted
cash flows
Carrying
amount
2,682
1,336
999
2,145
7,162
6,927
29,864
9,331
2,685
17
41,897
41,642
563
2,682
3,692
–
6,937
6,493
1
–
262
–
263
253
33,110
13,349
7,638
2,162
56,259
55,315
13,115
7,188
17,145
36,870
74,318
60,896
(19,995)
(6,161)
9,507
34,708
18,059
5,581
Financial liabilities
Deposits from banks
Due to customers
Debt securities in issue
Subordinated debt
Total financial liabilities
(remaining contractual maturities)
Total financial assets
(remaining contractual maturities)
Net financial assets/(liabilities)
Cash flows from derivative financial instruments
Derivatives settled on a net basis
The Bank’s derivatives to be settled on a net basis include interest rate swaps. The table below analyses contractual
undiscounted cash flows from the Bank’s derivative financial liabilities settled on a net basis according to the remaining period as at the balance sheet date to the contractual maturity date.
As at 31 December 2013
Total
Within
3 months
3–12
months
1–5
years
Over
5 years
Undiscounted
cash flows
Carrying
amount
Interest rate swaps: assets
14
72
147
(14)
219
7,266
Interest rate swaps: liabilities
13
70
142
(14)
211
6,390
Interest options: assets
–
–
5
6
11
1,680
Interest options: liabilities
–
–
5
5
10
1,643
–
–
–
–
–
–
1
2
5
1
9
(CZKm)
Trading derivatives
– Interest derivatives
– Equity derivatives
Equity options: assets
Net financial assets/(liabilities)
As at 31 December 2012
Total
Within
3 months
3–12
months
1–5
years
Over
5 years
Undiscounted
cash flows
Carrying
amount
Interest rate swaps: assets
16
39
56
(4)
107
4,023
Interest rate swaps: liabilities
15
38
61
(3)
111
3,794
Interest options: assets
–
–
–
–
–
898
Interest options: liabilities
–
–
–
–
–
862
–
–
–
–
–
250
1
1
(5)
(1)
(4)
(CZKm)
Trading derivatives
– Interest derivatives
– Equity derivatives
Equity options: assets
Net financial assets/(liabilities)
Negative net financial liability with remaining maturity of less than three months is influenced by the fact that
customers are strictly divided into maturity time bands according to their remaining contractual maturities
(e.g. current accounts are contained within the “Within 3 months” column). However, as statistical evidence shows
it is unlikely that a majority of those customers will actually withdraw their deposits from the Bank on contractual
maturity.
102
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SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
103
Derivatives settled on a gross basis
The Bank’s derivatives to be settled on a gross basis include foreign exchange forwards, foreign exchange swaps and
foreign exchange options. The table below analyses contractual undiscounted cash flows from the Bank’s derivative
financial instruments settled on a gross basis according to the remaining period as at the balance sheet date to the
contractual maturity date.
As at 31 December 2012
(CZKm)
Financial guarantees
Loan commitments and other credit related liabilities
As at 31 December 2013
(CZKm)
Total
Within
3 months
3–12
months
1–5
years
Over
5 years
Undiscounted
cash flows
Capital commitments
Nominal
amount
Trading derivatives
Total
Within
3 months
3–12
months
1–5
years
Over
5 years
Total
237
492
222
55
1,006
5,881
–
–
–
5,881
23
162
–
–
185
6,140
654
222
55
7,072
Future minimum lease payments under operating lease commitments are analyzed in Note 30 (d).
– Foreign exchange derivatives
Outflow
1,990
1,628
274
–
3,892
3,892
Inflow
1,990
1,626
274
–
3,890
3,890
As at 31 December 2012
Total
Within
3 months
3–12
months
1–5
years
Over
5 years
Undiscounted
cash flows
Nominal
amount
Outflow
687
447
88
–
1,222
1,222
Inflow
687
448
88
–
1,223
1,223
(CZKm)
Trading derivatives
– Foreign exchange derivatives
Off-balance sheet items
The table below analyses the off-balance sheet items of the Bank exposed to a liquidity risk into relevant maturity
bands based on the remaining period as at the balance sheet date to the contractual maturity date.
As at 31 December 2013
(CZKm)
Financial guarantees
Loan commitments and other credit related liabilities
Capital commitments
Total
104
Within
3 months
3–12
months
1–5
years
Over
5 years
Total
459
472
488
68
1,487
7,964
–
–
–
7,964
–
–
–
–
–
8,423
472
488
68
9,451
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
(f) Operational risk
The Bank defines operational risk as the risk of a financial loss resulting from inadequate or failed internal processes,
people and systems or from external factors including legal risks. In cases of the breakdown of business processes
it also includes reputational risk.
In accordance with CNB measures, the Bank has an internal database of requisite regulations for operational risk
management, including those for the areas of information security, continuity of operations or internal control
systems. The Bank has also established an internal control system of individual processes, which is one of the fundamental elements of operational risk management.
The operational risk management process includes identification, collection and recording of operational risk events,
evaluation and valuation, measures and risk minimization, along with controlling the implementation of the designed measures and their effectiveness. The Bank applies the operational risk management process at the levels
of both actual events and hypothetical risks.
Every identified event is assessed and considered individually, and the measures to be taken are designed in accordance with the frequency of the event’s occurrence, the amount of the actual or anticipated loss or profit, as well as
its seriousness and cause. The objective is to ensure that the measures taken will effectively minimize or eliminate
occurrences of similar events in future.
Operational risk management is performed in close co-operation with the Bank’s parent company. The Bank applies
a standardized method for calculating the capital requirement for operational risk.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
105
(g) Capital management
The capital management process is coordinated within Sberbank Group in close communication with the Bank’s
shareholder. It is aimed at:
• ensuring the Bank’s long-term stability in relation to existing risks,
• compliance with the supervisory capital requirements (capital adequacy) and
• maintaining a strong capital base to support business expansion
The Bank fulfils the requirement of CNB Decree No. 123/2007 (“the Decree“) for ongoing compliance with the capital
adequacy limit by daily monitoring of risk-weighted assets. Required regulatory capital adequacy reports are filed
with the CNB on a monthly basis. The Bank also informs the parent company on compliance with the regulatory
capital requirements with the same frequency.
The methodology for calculation of capital is defined by the Decree. The Bank ensures that the capital level exceeds
regulatory capital requirements in coordination with the parent company.
The Bank estimates capital requirements for coverage of individual risks in compliance with the valid regulatory
legislation.
Additionally, the Bank’s internal capital adequacy assessment system ensures that internally determined capital
resources exceed the internally assessed capital required.
The table below summarizes the composition of the Bank’s capital and risk-weighted assets. During both years, the
Bank complied with the regulatory capital adequacy limit of 8%.
(CZKm)
31.12. 2013
31.12. 2012
Share capital (net of treasury shares)
2,005
2,005
Share premium account
2,695
2,695
Obligatory reserve funds
120
110
Retained earnings from previous period
482
283
Less: Intangible assets other than goodwill
(115)
(110)
–
–
5,187
4,983
Subordinated debt A
2,230
151
Tier 2 capital
2,230
151
Total capital
7,417
5,134
44,320
40,968
Credit risk in trading portfolio
–
–
General interest rate risk
–
–
2,712
2,626
47,032
43,594
15.77 %
11.78%
Tier 1
Other deductible items
Tier 1 capital
Tier 2
Risk-weighted assets
Credit risk in investment/banking portfolio
Operational risk
Total risk-weighted assets
Capital adequacy
106
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SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
107
(h) Maturity analysis of assets and liabilities
As at 31 December 2012
The table below analyses assets and liabilities and summarizes the composition of the Bank’s capital and risk-weighted
assets according to when they are expected to be settled or recovered:
(CZKm)
As at 31 December 2013
After
12 months
Total
Cash and balances with central banks
11,430
316
11,746
Loans and advances to banks
2,206
1,256
3,462
Loans and advances to customers
8,031
43,390
51,421
Derivative financial instruments
3
266
269
Financial assets at fair value through profit or loss
–
31
31
2,533
464
2,997
– Loans and receivables
–
61
61
Intangible assets
–
115
115
Property and equipment
–
262
262
Current income tax assets
–
–
–
Deferred income tax assets
47
–
47
Other assets
39
–
39
Deferred items
22
–
22
24,311
46,161
70,472
2,115
2,373
4,488
46,602
1,406
48,008
3
254
257
5,553
3,847
9,400
2
–
2
Other liabilities
356
–
356
Deferred items
27
–
27
Provisions
29
10
39
6
2,394
2,400
54,693
10,284
64,977
ASSETS
Investment securities:
– Available for sale
Total assets
LIABILITIES
Deposits from banks
Due to customers
Derivative financial instruments
Debt securities in issue
Current income tax liability
Subordinated debt
Total liabilities
108
After
12 months
Total
7,196
–
7,196
Loans and advances to banks
4,876
18
4,894
Loans and advances to customers
7,634
38,310
45,944
8
275
283
256
9
265
– Available for sale
–
2,253
2,253
– Loans and receivables
–
61
61
– Held to maturity
–
110
110
Intangible assets
–
193
193
Property and equipment
32
–
32
Deferred income tax assets
13
–
13
Other assets
40
–
40
Deferred items
28
–
28
20,083
41,229
61,312
4,010
2,918
6,927
39,092
2,549
41,642
4
272
276
3,221
3,272
6,493
Other liabilities
347
–
347
Deferred items
29
–
29
Provisions
12
23
35
1
252
253
46,716
9,286
56,002
ASSETS
Cash and balances with central banks
Within
12 months
(CZKm)
Within
12 months
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
Derivative financial instruments
Financial assets at fair value through profit or loss
Investment securities:
Total assets
LIABILITIES
Deposits from banks
Due to customers
Derivative financial instruments
Debt securities in issue
Subordinated debt
Total liabilities
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
109
34 Fair value of financial assets and liabilities
Fair value of financial assets and liabilities
As at 31 December 2012
The following table summarizes the carrying amounts and fair values of those financial assets and liabilities not
presented on the Bank’s balance sheet at their fair value:
Level 1
Fair value
total
Carrying
amount
3,483
3,462
44,149
44,149
51,421
8,692
8,692
12,820
35,457
35,457
38,601
63
63
61
2,954
1,457
4,411
4,488
21,808
26,429
48,237
48,008
460
12,666
13,126
13,048
21,348
13,763
35,111
34,960
9,527
9,527
9,400
92
92
89
9,435
9,435
9,311
2,412
2,412
2,400
Level 2
Level 3
Financial assets
Loans and advances to banks
3,483
Loans and advances to customers thereof:
Retail
Corporate
Securities in category loans and receivables
Financial liabilities
Deposits from banks
Due to customers thereof:
Retail
Corporate
Carrying
amount
4,920
4,894
41,554
41,554
45,944
Retail
18,189
18,189
21,490
Corporate
23,365
23,365
24,454
64
64
61
5,520
1,442
6,962
6,927
16,025
25,919
41,944
41,642
Retail
13,945
19,704
33,649
33,394
Corporate
2,080
6,215
8,295
8,248
6,614
6,614
6,493
986
986
980
5,628
5,628
5,513
Level 1
Level 2
Level 3
Financial assets
Fair value of financial assets and liabilities
As at 31 December 2013
(CZKm)
Fair value
total
(CZKm)
Debt securities in issue thereof:
Retail
Corporate
Subordinated Debt
Loans and advances to banks
4,920
Loans and advances to customers thereof:
Securities in category loans and receivables
Financial liabilities
Deposits from banks
Due to customers thereof:
Debt securities in issue thereof:
Retail
Corporate
The following methods and assumptions were used in estimating the fair values of the Bank’s financial assets and
liabilities:
Loans and advances to banks
The carrying amounts of current account balances are, by definition, equal to their fair values. The fair values of term
placements with banks are estimated by discounting their future cash flows using current inter-bank market rates.
A majority of the loans and advances re-price within relatively short time spans; therefore, it is assumed their carrying amounts approximate their fair values.
Loans and advances to customers
A substantial majority of the loans and advances to customers re-price within relatively short time spans; therefore,
it is assumed that their carrying amounts approximate their fair values. The fair values of fixed-rate loans to customers are estimated by discounting their future cash flows using current market rates adjusted for appropriate
risk premium. Fair value incorporates expected future losses, while amortized cost and related impairment include
only incurred losses as at the balance sheet date.
Deposits from banks
The carrying amounts of current account balances are, by definition, equal to their fair values. For other amounts
due to banks with equal to or less than one year remaining maturity, it is assumed their carrying amounts approximate their fair values. The fair values of other amounts due to banks are estimated by discounting their future cash
flows using current inter-bank market rates.
110
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
111
Due to customers
The fair values of current accounts as well as term deposits with equal to or less than one year remaining maturity
approximate their carrying amounts. The fair values of other term deposits are estimated by discounting their future
cash flows using rates currently offered for deposits of similar remaining maturities.
As at 31 December 2013
Level 1
Level 2
Level 3
Total
Derivative financial instruments
–
269
–
269
Mortgage bonds issued are not publicly traded and their fair values are based upon the quoted market prices of the
debt securities with similar characteristics. The carrying amounts of promissory notes and certificates of deposit approximate their fair values.
Financial assets at fair value through profit or loss
31
–
–
31
2,997
–
–
2,997
Fair value hierarchy
Financial liabilities
Derivative financial instruments
–
257
–
257
Due to customers
–
–
–
–
Level 1
Level 2
Level 3
Total
Derivative financial instruments
–
283
–
283
Financial assets at fair value through profit or loss
2
263
–
265
2,253
–
–
2,253
Derivative financial instruments
–
276
–
276
Due to customers
–
506
–
506
Debt securities in issue
The table below analyses financial instruments measured at fair value at the end of the reporting period. Information
about fair value measurements are disclosed using a hierarchy that reflects the significance of inputs used in measuring the fair values of financial instruments (they are categorized into three levels):
• Level 1 – fair value measurements using quoted prices (unadjusted) in active markets for identical assets and
liabilities.
• Level 2 – fair value measurements using inputs other than quoted prices included within Level 1 that are observable
for the asset or liability either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes
instruments valued using: quoted market prices in active markets for similar instruments, quoted prices for
identical or similar instruments in markets that are considered less than active, or other valuation techniques
in which significant inputs are directly or indirectly observable from market data.
• Level 3 – fair value measurements using inputs for the asset or liability that are not based on observable market
data (i.e., unobservable inputs) and these data have significant influence on the measurement. This category
includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.
The Bank has an established control framework with respect to the measurement of fair values of assets and liabilities. These controls include the verification of observable pricing, re-performance of model valuations, a review
and approval process for new models and changes to models, quarterly calibration and back-testing of models
against observed market transactions, analysis and investigation of significant daily valuation movements and review
of significant unobservable inputs, valuation adjustments and significant changes to the fair value measurement of
Level 3 instruments.
112
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
(CZKm)
Financial assets
Investment securities:
– Available for sale
In 2013 there were no transfers of financial assets or liabilities between level 1 and 2.
As at 31 December 2012
(CZKm)
Financial assets
Investment securities:
– Available for sale
Financial liabilities
In 2012 there were no transfers of financial assets or liabilities between level 1 and 2.
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
113
35Dividends
37 Related Parties
Final dividends are not accounted for until they have been ratified at the Annual General Meeting. The dividends for
the year 2012 and 2013 has not been declared yet. (At the Annual General Meeting held on 28 March 2012 the payment of dividends on 2011 profit and retained earnings was approved. The dividend amounted to CZK 863.75 per
ordinary share and CZK 863.75 per preferred share. The total amount of dividends paid from profit for the year 2011
is CZK 346 million).
The amounts of the income, expense and assets and liabilities balances regarding related parties were as follows:
Note
Ultimate
Parent
Management
Other
related
parties
Total
Interest income
3
14
–
93
107
As at 31 December 2013 and year then ended
(CZKm)
Distribution of the net profit after tax for the year 2011
346
Commission and fee income
4
–
–
–
–
Transfer to statutory reserve funds
(17)
Other operating income
8
–
–
7
7
Interest expense
3
–
–
15
15
Commission and fee expense
4
–
–
17
17
7
–
–
11
11
Transfer from retained earnings
Dividends to shareholders
17
(346)
Distribution of the net profit after tax for the year 2012
209
Administrative expense
Transfer to statutory reserve funds
(10)
Due from banks
12
1,284
–
2,066
3,350
Loans and advances
13
–
21
–
21
Securities classified as a financial assets from the
beginning at fair value through profit or loss
16
–
–
–
–
36Shareholders
Other assets
21
–
–
1
1
Due to banks
22
24
–
2,167
2,191
The shareholder structure of the Bank as at 31 December 2012 was as follows:
Due to customers
23
–
12
–
12
Other liabilities
25
–
–
–
–
Guarantees granted and commitments given
29
410
5
15
430
Guarantees granted and commitments received
–
–
4,058
4,058
Assets under custody
–
2
2,005
2,007
Transfer from retained earnings
Dividends to shareholders
10
–
Voting shareholders
Name and registered office
Sberbank Europe AG, Schwarzenbergplatz 3, Vienna (formerly Volksbank International AG)
Share in %
100.00
100.00
The ultimate parent company is Sberbank RU. The parent company Sberbank Europe AG (formerly Volksbank International AG) and companies within Sberbank Group other than the parent company are part of Other related
parties.
The shareholder structure of the Bank as at 31 December 2013 was as follows:
Voting shareholders
Name and registered office
Sberbank Europe AG, Schwarzenbergplatz 3, Vienna (formerly Volksbank International AG)
Share in %
The Bank has three recorded received guarantees from Sberbank Europe AG in total amount of CZK 4,058 million, one
denominated in CZK in amount of CZK 2,260 million and two denominated in EUR in total amount of EUR 65.5 million.
100.00
100.00
114
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
115
Receivables from related parties
Note.
Ultimate
Parent
Management
Other
related
parties
Total
Interest income
3
2
–
49
51
Commission and fee income
4
–
–
1
1
Other operating income
8
–
–
–
–
Interest expense
3
–
–
22
22
Commission and fee expense
4
–
–
–
–
Administrative expense
7
–
–
12
12
Due from banks
12
372
–
4,155
4,527
Loans and advances
13
–
5
–
5
Securities classified as financial assets from the
beginning at fair value through profit or loss
In the opinion of the management, all receivables from related parties were made in the ordinary course of business
on substantially the same terms and conditions, including interest rates, as those prevailing at the same time for
comparable transactions with other customers, and did not involve more than the normal credit risk or present
other unfavorable features.
16
–
–
–
–
Due to customers includes the following position with related parties:
Other assets
21
–
–
–
–
Due to banks
22
1
–
793
794
Due to customers
23
–
15
–
15
Other liabilities
25
–
–
–
–
Guarantees granted and commitments given
29
47
5
38
90
Guarantees granted and commitments received
–
6
2,552
2,558
Assets under custody
–
11
2,005
2,016
As at 31 December 2012 and year then ended
(CZKm)
(CZKm)
31.12.2013
31.12.2012
VB Leasing CZ, spol. s r.o.
–
–
Management of the Bank
21
5
Members of Supervisory Board and Board of Directors
–
–
Other related parties (companies in the group)
–
–
Total receivables from related parties
21
5
Deposits from related parties
(CZKm)
31.12.2013
31.12.2012
Management of the Bank
9
10
Members of Supervisory Board and Board of Directors
3
5
12
15
31.12.2013
31.12.2012
24
1
2,124
–
43
793
2,191
794
Deposits from related parties
Due to banks includes the following position with related parties:
The ultimate parent company is Sberbank RU. The parent company Sberbank Europe AG (formerly Volksbank International AG) and companies within Sberbank Group other than the parent company are part of Other related parties.
Deposits from related parties
The Bank has a recorded promise for the refinancing of a loan from Sberbank Europe AG in the amount of CZK 2,514 million denominated in EUR (100 million).
Sberbank Moscow
Loans and advances to customers and individuals include the following receivables from related parties (Note 13):
(CZKm)
Volksbank AG
Other related parties (banks in the group)
Deposits from related parties
In the opinion of the management, deposits from related parties were accepted on substantially the same terms and
conditions, including interest rates, as those prevailing at the same time for comparable transactions with other
customers, and did not involve more than the normal interest rate and liquidity risk or present other unfavorable
features (Note 23).
116
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
117
Quantitative indices
Key management personnel salaries, benefits and contributions paid:
(CZKm)
CZK thousand
2013
2012
2011
2010
2009
Return on average assets (ROAA)
0.35%
0.37%
0.69%
0.56%
0.37%
Return on own average equity (ROAE)
4.48%
4.20%
6.97%
5.37%
3.68%
98,014
91,784
81,303
79,315
68,487
1,381
1,287
1,269
1,220
1,081
320
313
544
435
266
5,187,228
4,982,605
4,979,432
4,964,401
5,148,132
Paid-up share capital
2,005,380
2,005,380
2,005,380
2,005,380
2,005,380
Paid up share premium
2,694,628
2,694,628
2,694,628
2,694,628
2,694,628
Legal reserve funds
120,369
109,902
92,578
79,049
69,804
Retained earnings from previous years
481,523
282,636
299,914
308,188
498,122
2,229,653
150,840
206,400
250,600
264,650
(114,672)
(109,941)
(113,068)
(122,843)
(119,801)
(114,672)
(109,941)
(113,068)
(122,843)
(119,801)
7,416,880
5,133,445
5,185,832
5,215,001
5,412,782
Total capital requirements relating
to credit risk
3,545,617
3,277,445
2,920,592
2,725,622
2,611,068
Total capital requirements relating
to operational risk
216,979
210,067
217,539
212,567
190,368
Capital adequacy
15.77%
11.78%
13.22%
14.20%
15.46%
31.12.2013
31.12.2012
70
49
Post-employment benefits
–
–
Assets per employee
Other long-term benefits
–
–
Administrative costs per employee
Termination benefits
2
–
Net profit per employee
Share-based payments
–
–
Short-term employee benefits
Salaries and bonuses of senior management and Supervisory Board
members
Capital structure
Tier 1
72
49
Other personnel expenses are disclosed in Note 7.
38 Subsequent events
There were no other important events which have occurred subsequent to the year-end until the date of preparation of the financial statements and which would have a material impact on the financial statements of the Bank
as at 31 December 2013 or would have to be presented in the Notes to the financial statements of the Bank as at
31 December 2013.
Tier 2
Provisions for general risks
Deductible items
Intangible assets
Capital
Capital requirements
118
SBERBANK CZ | ANNUAL REPORT 2013 | NOTES TO THE FINANCIAL STATEMENTS
SBERBANK CZ | ANNUAL REPORT 2013 | QUANTITATIVE INDICES
119
Report on relations
Prepared in accordance with section 66a, paragraph 9 of the Commercial Code
As at the date of annual accounts (31 December 2013), Sberbank CZ, a.s. (“Sberbank CZ”) was a part of the international financial group Sberbank of Russia, 19 Vavilova St., 117997 Moscow, Russian Federation (“Sberbank of Russia”).
Sberbank CZ operates in the Czech market as an independent bank under Act No. 21/1992 Sb., the Banking Act.
As at the date of annual accounts, Sberbank CZ was a controlled entity under Act No. 513/1991 Sb., the Commercial
Code. As at the publication hereof, Sberbank CZ is a controlled entity under Section 74 of Act No. 90/2012 Sb.,
the Business Corporations Act effective as of 1 January 2014. Sberbank CZ is controlled by its controlling entity,
Sberbank of Russia, indirectly through Sberbank Europe AG, Schwarzenbergplatz 3, 1010 Vienna, Austria (“Sberbank
Europe”); Sberbank Europe AG is a direct controlling entity of Sberbank CZ.
In 2013, Sberbank CZ and Sberbank Europe entered into:
a subordinated loan agreement, under which Sberbank CZ was provided with long-term funds by Sberbank
Europe under standard market conditions. The agreement and loan utilization was approved by the Czech
National Bank. Sberbank CZ pays interest under standard market conditions;
an intra-group revolving loan facility agreement, under which Sberbank CZ can draw necessary funds under
standard market conditions to further develop Sberbank CZ business activities;
a master services agreement, under which Sberbank CZ provides credit risk evaluation services relating to loan
transactions with clients. Sberbank CZ provides these services also to companies directly controlled by Sberbank
Europe (Sberbank Croatia, Sberbank Hungary, Sberbank Slovakia and Sberbank Slovenia) under separate agreements entered into in the basis of the master services agreement. Sberbank CZ provides these services for
standard market fees;
a master participation agreement, under which Sberbank CZ and Sberbank Europe can enter into mutual relationships under standard market conditions in respect of consortium financing of corporate client transactions.
In 2013, Sberbank CZ and Sberbank Europe entered into several short-term loan agreements for refinancing purposes
of Sberbank Europe. The applicable interest rates and fees were agreed in the said agreements in compliance with
the standard market conditions.
In 2009, Sberbank CZ and Sberbank Europe entered into an agreement for the provision of services, under which
Sberbank CZ is provided with professional advisory services required by Sberbank CZ. For the provisions of these
services, Sberbank CZ pays standard market fees.
Sberbank CZ and Sberbank of Russia entered and/or continuously enter into additional relationships under standard
market conditions:
a) relationships regarding interbank deposits for which Sberbank CZ receives / pays interest under standard market
conditions;
b) relationships regarding current account maintenance for which Sberbank CZ receives / pays fees and receives /
pays interest under standard market conditions;
c) relationships regarding long-term export finance loans for which Sberbank CZ receives / pays interest under
standard market conditions; and
d) ISDA master agreement for trading in financial instruments under market conditions.
Sberbank CZ and Sberbank Europe entered and/or continuously enter into additional relationships under standard
market conditions:
a) relationships regarding interbank deposits for which Sberbank CZ receives / pays interest under standard market
conditions;
b) relationships regarding current account maintenance for which Sberbank CZ receives / pays fees and receives /
pays interest under standard market conditions; and
c) relationships regarding corporate finance loans for which Sberbank CZ receives / pays interest under standard
market conditions.
120
SBERBANK CZ | ANNUAL REPORT 2013 | REPORT ON RELATIONS
Sberbank CZ made no other legal acts or adopted other measures in the interest of, or initiated by, connected companies. Sberbank CZ suffered no damage or loss caused by business relations with the above connected companies
or the above mentioned legal acts made by Sberbank CZ in the name of connected companies or in relation to activities
made by Sberbank CZ in the name of, or initiated by, connected companies.
The business relations maintained with the controlling entities were assessed by Sberbank CZ board of directors
as with prevailing benefit to Sberbank CZ, which is primarily a result of Sberbank CZ incorporation to the Sberbank
European banking group. The business relations maintained with its controlling entities allow Sberbank CZ to provide
better banking services to clients and manage the business-related risks effectively and efficiently. By maintaining
these business relations, Sberbank CZ benefits from the opportunities offered by the financially strong controlling
entity. These relations are fully comparable to similar contractual relationships entered into by Sberbank CZ in the
area of interbank transactions and as such bear no specific or increased risks. Sberbank CZ incurred no damage
caused by the business relations maintained with its controlling entities.
In 2013, within the relations with the controlling entities, Sberbank CZ acted in the Czech market as a universal and
independent bank providing banking services in compliance with law and duly observed and complied with statutory
and regulatory requirements. Sberbank CZ confirms that the controlling entity’s influence was not misused in order
to force adoption of a measure or execution of a contract due to which financial loss could arise to Sberbank CZ
as a controlled entity and that the relations between Sberbank CZ and the controlling entities conformed to the
standard market conditions.
Relations with other controlled entities
Sberbank CZ also maintains business relationships with some commercial or financial companies:
indirectly controlled by Sberbank of Russia or directly by Sberbank Europe; namely with banks in Croatia, Hungary,
Slovakia and Slovenia, which at as the date of closing the accounts were controlled by Sberbank Europe.
directly controlled by Sberbank of Russia, namely with banks in Belarus, Kazakhstan, Turkey and Switzerland. With
the said banks, Sberbank CZ maintains standard banking relations and conducts standard banking transactions.
Sberbank CZ incurred no damage caused by its business relations with the above mentioned companies.
With the said companies, Sberbank CZ maintains standard banking relations and conducts standard banking transactions. Sberbank CZ incurred no damage caused by its business relations with the above mentioned companies.
Affidavit
Sberbank CZ with registered office at Na Pankráci 1724/129, 140 00 Praha 4 is responsible for the data in its 2013
Annual Report.
The undersigned hereby declare that, in exercising all due care, the data contained in the Annual Report of Sberbank CZ for 2013 is accurate and that no substantial facts that could change the meaningfulness of the Annual
Report of Sberbank CZ were concealed.
Vladimír Šolc
Jiří Antoš
Frank Guthan Martin Muránsky
Karel Soukeník
SBERBANK CZ | ANNUAL REPORT 2013 | REPORT ON RELATIONS
121
Independent auditor’s
report
To the Shareholder of Sberbank CZ, a.s.:
I. We have audited the financial statements of Sberbank CZ, a.s., (“the Company”) as at 31 December 2013 presented
in the annual report of the Company on pages 31–118 and our audit report dated 14 April 2014 stated the following:
II. We have also audited the consistency of the annual report with the financial statements described above.
The management of Sberbank CZ, a.s. is responsible for the accuracy of the annual report. Our responsibility is to
express, based on our audit, an opinion on the consistency of the annual report with the financial statements.
We conducted our audit in accordance with International Standards on Auditing and the related implementation
guidance issued by the Chamber of Auditors of the Czech Republic. Those standards require that we plan and
perform the audit to obtain reasonable assurance as to whether the information presented in the annual report
that describes the facts reflected in the financial statements is consistent, in all material respects, with the financial statements. We have checked that the accounting information presented in the annual report on pages
31–118 is consistent with that contained in the audited financial statements as at 31 December 2013. Our work
as auditors was confined to checking the annual report with the aforementioned scope and did not include
a review of any information other than that drawn from the audited accounting records of the Company. We
believe that our audit provides a reasonable basis for our opinion.
“We have audited the accompanying financial statements of Sberbank CZ, a.s., which comprise the statement of
financial position as at 31 December 2013, statement of comprehensive income for the year ended 31 December
2013, statement of changes in equity for the year ended 31 December 2013 and statement of cash flows for the year
then ended 31 December 2013, and a summary of significant accounting policies and other explanatory information. For details of Sberbank CZ, a.s., see Note 1 to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with International Financial Reporting Standards as adopted by the European Union, and for such internal control
as management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In our opinion, the accounting information presented in the annual report is consistent, in all material respects,
with the financial statements described above.
Auditor’s Responsibility
III. In addition, we have reviewed the accuracy of the information contained in the report on related parties of
Sberbank CZ, a.s., for the year ended 31 December 2013 presented in the annual report of the Company on pages
120–121. As described in Note 1 of report on related parties, the Company prepared this report in accordance with
section 66a, paragraph 9 of the Commercial Code. The management of Sberbank CZ, a.s., is responsible for the
preparation and accuracy of the report on related parties. Our responsibility is to issue a report based on our
review.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including an assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We conducted our review in accordance with the applicable International Standard on Review Engagements and
the related Czech standard No. 56 issued by the Chamber of Auditors of the Czech Republic. Those standards
require that we plan and perform the review to obtain moderate assurance as to whether the report on related
parties is free from material misstatement. The review is limited primarily to enquiries of company personnel, to
analytical procedures applied to financial data and to examining, on a test basis, the accuracy of information,
and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not
express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the report on related
parties of Sberbank CZ, a.s., for the year ended 31 December 2013 is materially misstated.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with the Act on Auditors and International Standards on Auditing as amended by implementation
guidance of the Chamber of Auditors of the Czech Republic. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements
are free from material misstatement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Sberbank CZ, a.s., as at 31 December 2013, and its financial performance and its cash flows for the year then ended
in accordance with International Financial Reporting Standards as adopted by the European Union.
Ernst & Young Audit, s.r.o.
License No. 401
Represented by partner
Michaela Kubýová
Auditor, License No. 1810
30 April 2014
Prague, Czech Republic
122
SBERBANK CZ | ANNUAL REPORT 2013 | INDEPENDENT AUDITOR’S REPORT
SBERBANK CZ | ANNUAL REPORT 2013 | INDEPENDENT AUDITOR’S REPORT
123
Report of the Supervisory
Board
In its two meetings held during the 2013 business year, on 23 April and 26 November 2013, the Supervisory Board
reviewed the correctness, appropriateness and economic efficiency of the management of Sberbank CZ. The Supervisory Board further acknowledged the ongoing reports of the Board of Directors and issued resolutions as
necessary for the 2013 business year.
At its 36th meeting, held on 29 April 2014, the Supervisory Board approved a resolution acknowledging the report
presented by the Board of Directors and approved the financial statements for 2013. These included the balance
sheet and off-balance sheet as at 31 December 2013, as well as the income statement for the year ended 31 December 2013. The Supervisory Board approved a proposal for profit distribution as well. The Board also reviewed the
Report on Relations in accordance with section 66a, paragraph 9 of the Commercial Code.
The closing financial statements for the year ended 31 December 2013 were examined by the audit company Ernst
& Young Audit, s.r.o. The auditor issued an unqualified opinion.
On the basis of the report of the Board of Directors, the Supervisory Board states its affirmative appraisal to the
Sole Shareholder at the general Shareholders’ Meeting and recommends that appropriate resolutions be approved.
The Supervisory Board would like to thank the Board of Directors and all of the Bank’s employees for their excellent
cooperation and the efforts that they made throughout 2013.
Mark Arnold
Chairman of the Supervisory Board
Prague, April 2014
124
SBERBANK CZ | ANNUAL REPORT 2013 | REPORT OF THE SUPERVISORY BOARD
125
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126
SBERBANK CZ | ANNUAL REPORT 2013 | OUR NETWORK
SBERBANK CZ | ANNUAL REPORT 2013 | OUR NETWORK
127
Sberbank CZ, a.s.
Na Pankráci 1724/129
140 00 Praha 4, Czech Republic
Tel.: +420 221 969 911, Fax: +420 221 969 951
[email protected], www.sberbankcz.cz
Sberbank Europe AG
Schwarzenbergplatz 3
1010 Vienna, Austria
Tel.: +43 1 22732-0
[email protected], www.sberbank.at
© 2014 Sberbank CZ, a.s.
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