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Hrvatska Poštanska Banka d.d.

Annual / Quarterly Financial Statement Oct 31, 2017

2090_10-q_2017-10-31_e3af2b2e-1dd5-466c-93ed-42c4e9a1ecc4.pdf

Annual / Quarterly Financial Statement

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Consolidated quarterly financial statements for the period from Jan 01 to Sep 30 2017 Unaudited

Zagreb, October 31 2017

In accordance with Capital Markets Act, HPB p.l.c. (Bank) as the parent company of HPB Group (Group), publishes unaudited consolidated financial statements for the period from Jan 01 to Sep 30 2017.

This report includes:

  • Management report of HPB Group,
  • statement by persons accountable for compiling the report of Group,
  • unaudited set of consolidated financial statements (balance sheet, profit or loss statement, statement of changes in equity, cash flow statement), and
  • notes to financial statements.

Financial statements and notes were made in accordance with the TFI-KI reporting methodology by Croatian Financial Services Supervisory Agency. Items in the profit or loss statement are complied in accordance with IFRS.

Management Report of HPB Group

HPB Group is, apart from the parent company – HPB p.l.c., comprised of HPB Stambena štedionica (savings bank), HPB Invest (investment fund management) and HPB Nekretnine (real estate agency).

In the 2017 reporting period, Group has recorded a net profit of HRK 1,0M, as opposed to HRK 147,9M of net profit in the same period of prior year. Loss is a cosequence of deteriorated creditworthiness of Agrokor and group of related parties, i.e. is a result of impairment losses that the Bank recognized on these exposures (HRK 193,5M of impairments on exposures towards this group of economically and legally related parties as per Sep 30 2017).

In spite of 2017 reporting period being marked with adverse effects of Agrokor on profitability of the parent company, subisidiaries continue to improve their results and contribute to Group's results. HPB Stambena štedionica made an after-tax profit of HRK2,2M. HPB Invest made a net profit of HRK 1,5M, whilst HPB Nekretnine added a net profit of HRK 823K.

Apart from this, subisidiaries have contributed to the parent through a dividend payout from profits earned in 2016. HPB Stambena štedionica has for the first time in its history paid out a dividend amounting to HRK 400K. Meahwhile, after paying out HRK 3,5M in 2016, HPB Invest paid out a dividend amounting to HRK 1,8M in 2017.

Mladen Mrvelj Board member Domagoj Karadjole Board member

Statement by persons accountable for compiling the report of HPB Group

In accordance with the Capital Market Act, the Management Board of HPB p.l.c., the parent company of HPB Group, states that according to their best knowledge the set of consolidated unaudited financial statements for the period from Jan 01 to Sep 30 2017, compiled in accordance with the accounting regulation applicable to credit institutions in Croatia, presents complete and accurate view of assets and liabilities, losses and gains, financial position and results of HPB p.l.c., as well as companies included in consolidation as a whole.

Mladen Mrvelj Board member Domagoj Karadjole Board member

Tomislav Katić Executive director Finance Division

HPB GROUP
Appendix 3.
Reporting period:
Jan 01 to Sep 30 2017
Quarterly financial statements for credit institutions TFI-KI
Registration number (MB): 03777928
Registration number (MBS): 080010698
Personal identification
number (OIB):
87939104217
Company: HPB p.l.c.
Postal code and city 10000 ZAGREB
Address: JURIŠIĆEVA 4
E-mail address: [email protected]
Internet address: www.hpb.hr
City code and name: 133
ZAGREB
County code and name: 21
GRAD ZAGREB
# of employees: 1.152
Consolidated report: YES (as per reporting date)
Industry code:
6419
Consolidated companies (in accordance with IFRS): Headquarters: Registration number:
HPB Stambena Štedionica d.d. Savska 58, 10000 Zagreb 02068001
HPB Invest d.o.o. Strojarska 20, 10000 Zagreb 01972278
HPB Nekretnine d.o.o. Amruševa 8, 10000 Zagreb 01972260
Book-keeping service
provided by:
n/a n/a
Contact: Tomašek David
Phone: 014804900 Fax: 014804594
E-mail address: [email protected]
Surname and name: Karadjole Domagoj
Mrvelj Mladen
(persons authorized for representation)
Documentation to be made public:
  1. Financial reports (balance sheet, profit or loss statement, cash flow statement, statement on changes

in equity and notes to financial statements)

  1. Management report

  2. Statement by persons accountable for compiling the report

BALANCE SHEET

as per
Sep 30 2017
in HRK
Item AOP
label
Dec 31 2016 Sep 30 2017
1 2 3 4
ASSSETS
1. CASH AND DEPOSITS WITH THE CNB (002+003) 001 2.263.303.114 3.100.192.913
1.1.Cash 002 421.479.852 544.564.885
1.2.Deposits with the CNB 003 1.841.823.262 2.555.628.028
2. DEPOSITS WITH FINANCIAL INSTITUTIONS 004 774.135.009 436.698.700
3. SHORT-TERM TREASURY BILLS OF THE CROATIAN MINISTRY OF FINANCE 005 415.536.615 414.640.114
4. FINANCIAL ASSETS HELD FOR TRADING 006 696.314.398 598.546.487
5. FINANCIAL ASSETS AVAILABLE FOR SALE 007 2.630.574.528 2.388.859.389
6. FINANCIAL ASSETS HELD TO MATURITY 008 442.835.059 144.016.101
7. FINANCIAL ASSETS VALUED AT FAIR VALUE THROUGH PROFIT OR LOSS, 009 0 0
NOT ACTIVELY TRADED
8. DERIVATIVE FINANCIAL ASSETS 010 3.780.197 0
9. LOANS TO FINANCIAL INSTITUTIONS 011 81.579.680 77.624.352
10. LOANS TO OTHER CUSTOMERS 012 11.406.936.798 11.766.014.431
11. INVESTMENTS IN SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES 013 7.930.000 20.000.000
12. REPOSSESSED ASSETS 014 0 0
13. TANGIBLE ASSETS (LESS DEPRECIATION) 015 155.541.052 141.413.090
14. OTHER ASSETS 016 827.552.055 584.883.453
A) TOTAL ASSETS (001+004 to 016)
LIABILITIES
017 19.706.018.505 19.672.889.030
1. BORROWINGS FROM FINANCIAL INSTITUTIONS (019+020) 018 620.995.448 652.062.586
1.1. Short-term 019 0 0
1.2. Long-term 020 620.995.448 652.062.586
2. DEPOSITS (022 to 024) 021 14.781.982.934 14.813.806.613
2.1. Transactional and current accounts 022 3.981.010.898 4.283.905.555
2.2. Savings deposits (demand) 023 1.486.719.761 1.530.372.708
2.3. Term deposits 024 9.314.252.275 8.999.528.350
3. OTHER BORROWINGS (026+027) 025 88.426.108 5.247.981
3.1. Short-term 026 0 0
3.2. Long-term 027 88.426.108 5.247.981
4. DERIVATIVE AND OTHER FINANCIAL LIABILITIES HELD FOR TRADING 028 3.640.667 0
5. ISSUED SECURITIES (030+031) 029 0 0
5.1. Short-term 030 0 0
5.2. Long-term 031 0 0
6. SUBORDINATED DEBT ISSUED 032 0 0
7. HYBRID INSTRUMENTS 033 0 0
8. OTHER LIABILITIES 034 2.317.559.985 2.285.880.271
B) TOTAL LIABILITIES (018+021+025+028+029+032+033+034) 035 17.812.605.142 17.756.997.451
EQUITY
1. SHARE CAPITAL 036 1.214.298.000 1.214.298.000
2. PROFIT/(LOSS) FOR THE PERIOD 037 183.486.624 976.806
3. RETAINED EARNINGS 038 41.154.765 130.368.702
4. REGULATORY RESERVES 039 6.160.835 15.708.724
5. STATUTARY AND OTHER CAPITAL RESERVES 040 363.623.023 448.347.821
6. FAIR VALUE RESERVE 041 84.690.116 106.191.526
7. RESERVES ARISING FROM HEDGING TRANSACTIONS 042 0 0
C) TOTAL EQUITY (036 to 042) 043 1.893.413.363 1.915.891.579
D) TOTAL LIABILITIES AND EQUITY (035+043) 044 19.706.018.505 19.672.889.030
ADDENDUM TO THE BALANCE SHEET (filled-in by the banks submitting consolidated financial statement)
1. TOTAL EQUITY
2. Equity attributable to the shareholders of the parent company
045
046
1.893.413.363
1.893.413.363
1.915.891.579
1.915.891.579
3. Minority interest (045-046) 047 0 0

PROFIT OR LOSS STATEMENT

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Consolidated quarterly financial statements for the period from Jan 01 to Jun 30 2017 (unaudited)

CASH FLOW STATEMENT - INDIRECT METHOD

Jan 01 2017
Sep 30 2017
for the period from
to
in HRK
Item AOP
label
Jan 01 - Sep 30 2016 Jan 01 - Sep 30 2017
1 2 3 4
OPERATING ACTIVITIES
1. Cash flow from operating activities before changes in assets (002 to 007) 001 311.133.583 304.316.209
1.1. Profit/(loss) before tax 002 147.390.920 2.846.100
1.2. Impairment losses and provisions 003 151.719.362 276.288.015
1.3. Amortization and depreciation 004 33.658.590 33.227.519
1.4. Net unrealised gains less losses from financial assets valued at fair value through profit or
loss
005 (22.957.412) (7.376.887)
1.5. Gains / losses from sale of tangible assets 006 144.555 1.452.852
1.6. Other gains / losses 007 1.177.568 (2.121.390)
2. Net increase / decrease of operating assets (009 to 016) 008 (1.594.707.622) (532.984.954)
2.1. Deposits with the CNB 009 (94.697.304) (713.804.766)
2.2. Tresury bills of the Croatian Ministry of Finance 010 (111.685.601) 896.501
2.3. Deposits with and loans to financial institutions 011 27.771.602 337.436.309
2.4. Loans to other customers 012 (1.154.947.629) (358.882.367)
2.5. Financial assets held for trading 013 31.538.957 105.144.798
2.6. Financial assets available for sale 014 (224.504.767) 220.213.729
2.7. Financial assets valued at fair value through profit or loss, not actively traded 015 - -
2.8. Other operating assets 016 (68.182.880) (123.989.158)
3. Net increase / decrease of operating liabilities (018 to 021) 017 1.480.961.995 128.183.271
3.1. Transactional accounts 018 868.952.783 302.894.657
3.2. Savings and term deposits 019 968.866.496 (271.070.978)
3.3. Derivative financial liabilities and other liabilities actively traded 020 53.688 (3.640.667)
3.4. Ostale liabilities 021 (356.910.972) 100.000.259
4. Net cash flow from operating activities before taxation
(001+008+017) 022 197.387.956 (100.485.474)
5. Income tax paid 023 (199.988) (1.065.525)
6. Net cash inflow / outflow from operating activities (022+023) 024 197.187.968 (101.550.999)
INVESTING ACTIVITIES
7. Net cash flow from investing activities (026 to 030) 025 93.417.097 275.428.314
7.1. Purchase of tangible and intangible assets 026 (31.522.488) (24.225.656)
7.2. Investment in / disposal of subsidiaries, associated companies and joint ventures 027 - -
7.3. Investment in / disposal of financial assets held to maturity 028 124.145.400 298.818.958
7.4. Dividends received 029 794.185 835.012
7.5. Other inflows / outflows from investing activities 030 - -
FINANCIAL ACTIVITIES
8. Net cash flow from financial activities (032 to 037) 031 (252.221.125) (52.110.989)
8.1. Net increase / decrease of borrowings 032 (221.458.910) (52.110.989)
8.2. Net increase / decrease of issued debt securities 033 - -
8.3. Net increase / decrease of subordinated debt and hybrid instruments 034 - -
8.4. Share capital raised 035 - -
8.5. Dividends paid 036 (30.762.215) -
8.6. Other inflows / outflows from financial activities 037 - -
9. Net increase / decrease of cash and cash equivalents 038 38.383.940 121.766.326
(024+025+031)
10. Effect of foreign exchange differences on cash and cash equivalents 039 (50.809) 1.318.707
11. Net increase/(decrease) in cash and cash equivalents (038+039) 040 38.333.131 123.085.033
12. Cash and cash equivalents at the beginning of the year 041 412.197.218 421.479.852
13. Cash and cash equivalents as per reporting date (040+041) 042 450.530.349 544.564.885

8

for
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Jan 01
20
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Sep
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item
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ly
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)
2.9
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ains
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Net
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891
.57
9

STATEMENT OF CHANGES IN EQUITY

NOTES TO FINANCIAL STATEMENTS

A) PROFIT OR LOSS ACCOUNT

1) INTEREST INCOME
in HRK
Jan 01 - Sep 30 2016 Jan 01 - Sep 30 2017
Cumulative Quarterly Cumulative Quarterly
Loans 447.293.248 149.884.820 437.281.866 146.532.943
Deposits 1.246.756 333.541 (1.597.265) (327.405)
Securities 100.216.873 32.847.558 75.849.331 23.502.934
TOTAL 548.756.877 183.065.919 511.533.932 169.708.472
2) INTEREST EXPENSE
in HRK
Jan 01 - Sep 30 2016 Jan 01 - Sep 30 2017
Cumulative Quarterly Cumulative Quarterly
Borrowings 14.704.787 4.895.140 10.407.829 3.503.033
Deposits 153.665.755 47.029.273 97.261.717 30.140.384
TOTAL 168.370.542 51.924.413 107.669.546 33.643.417

3) FEE AND COMMISSION INCOME in HRK

Jan 01 - Sep 30 2016 Jan 01 - Sep 30 2017
Cumulative Quarterly Cumulative Quarterly
Cash payment operations - channels 215.613.935 73.314.012 209.680.812 70.711.662
Retail and card operations 111.738.124 47.424.857 144.588.009 71.725.253
Corporate operations 41.541.276 14.749.499 42.789.117 15.066.923
Other fee and commission income 13.138.222 4.588.507 15.748.360 5.836.164
TOTAL 382.031.557 140.076.875 412.806.298 163.340.002

4) FEE AND COMMISSION EXPENSE in HRK

Jan 01 - Sep 30 2016 Jan 01 - Sep 30 2017
Cumulative Quarterly Cumulative Quarterly
Payment operations 214.816.633 73.574.948 211.950.286 72.721.364
Other fee and commission expense 17.337.749 9.451.266 41.354.223 31.587.376
TOTAL 232.154.382 83.026.214 253.304.509 104.308.740
5) GAINS LESS LOSSES FROM TRADING ACTIVITIES
in HRK
Jan 01 - Sep 30 2016 Jan 01 - Sep 30 2017
Cumulative Quarterly Cumulative Quarterly
Securities and equity instruments 24.483.973 21.509.539 10.092.945 9.287.858
FX transactions 33.561.065 12.831.643 28.464.166 10.811.781
HRK cash transactions 367.955 178.850 486.695 277.150
Derivatives (1.538.775) (373.142) (38.685) (17.674)
TOTAL 56.874.218 34.146.890 39.005.121 20.359.115

6) OPERATING EXPENSES in HRK

Jan 01 - Sep 30 2016 Jan 01 - Sep 30 2017
Cumulative Quarterly Cumulative Quarterly
General and administrative expenses 258.761.090 88.623.835 259.871.176 85.457.264
Amortization and depreciation 33.658.590 11.744.223 33.227.519 10.781.555
Savings deposit insurance costs 26.930.680 9.389.885 26.403.185 8.599.644
Other costs 16.626.563 6.679.354 16.685.723 5.941.638
TOTAL 335.976.923 116.437.297 336.187.603 110.780.101
7) IMPAIRMENT LOSSES AND PROVISION EXPENSES
in HRK
Jan 01 - Sep 30 2016 Jan 01 - Sep 30 2017
Cumulative Quarterly Cumulative Quarterly
Individually identified impairment losses
(risk group B i C) 112.567.872 31.041.133 279.374.433 30.063.875
Portfolio based provisions for identified losses (risk group A) 13.091.364 7.578.475 (96.818) 204.656
Other provisions 26.060.126 9.085.087 (2.989.600) 8.985.491
TOTAL 151.719.362 47.704.695 276.288.015 39.254.022

B) BALANCE SHEET

8) CASH AND DEPOSITS WITH THE CNB in HRK

Dec 31 2016 Sep 30 2017
CASH 421.479.852 544.564.885
DEPOSITS WITH THE CNB 1.841.823.262 2.555.628.028
Mandatory reserve 1.300.796.321 1.272.024.572
Account for transaction settlement 541.026.941 1.283.603.456
MANDATORY TREASURY BILLS - -
Portfolio based impairment allowance for identified losses - -
TOTAL 2.263.303.114 3.100.192.913

9) DEPOSITS WITH FINANCIAL INSTITUTIONS in HRK

Dec 31 2016 Sep 30 2017
Deposits with foreign banking institutions 753.064.739 413.872.903
Deposits with domestic banking institutions 21.070.270 22.825.797
Portfolio based impairment allowance for identified losses - -
TOTAL 774.135.009 436.698.700
10) EQUITY INSTRUMENTS AND SECURITIES in HRK
--------------------------------------- --------
Dec 31 2016 Sep 30 2017
Short term Treasury bills of the Croatian Ministry of Finance 415.536.615 414.640.114
Financial assets held for trading 696.314.398 598.546.487
Financial assets available for sale 2.630.574.528 2.388.859.389
Financial assets held to maturity 450.105.787 144.810.000
Portfolio based impairment allowance for identified losses (6.771.524) (775.376)
Deferred front-end fee (499.204) (18.523)
TOTAL 4.185.260.600 3.546.062.091

11) LOANS TO CUSTOMERS in HRK

Dec 31 2016 Sep 30 2017
Gross loans
Loans to financial institutions 81.583.376 77.628.719
Loans to companies 3.831.863.830 4.249.562.673
Retail loans 4.966.265.650 5.238.267.053
therein: housing loans 1.608.068.882 1.814.108.539
Other loans 4.040.077.723 3.824.774.457
TOTAL GROSS LOANS 12.919.790.579 13.390.232.902
Impairment allowance (1.280.732.419) (1.389.557.868)
Portfolio based impairment allowance for identified losses (104.459.180) (113.076.502)
Deferred front-end fee (46.082.502) (43.959.749)
TOTAL 11.488.516.478 11.843.638.783

B) BALANCE SHEET (continued)

12) DEPOSITS in HRK
Dec 31 2016 Sep 30 2017
Financial institutions 1.153.448.334 974.976.468
Corporations 3.009.235.694 3.208.376.691
Retail 9.166.235.142 9.223.392.810
Other 1.453.063.764 1.407.060.644
TOTAL 14.781.982.934 14.813.806.613
in HRK
13) BORROWINGS
Dec 31 2016 Sep 30 2017
Borrowings from HBOR 624.696.401 656.194.033
Borrowings from domestic banking institutions - -
Borrowings from domestic non-banking institutions - -
Borrowings from foreign banking institutions 88.426.109 5.247.981
Deferred front-end fee (3.700.954) (4.131.447)
TOTAL 709.421.556 657.310.567
14) OTHER LIABILITIES in HRK
Dec 31 2016 Sep 30 2017
Restricted deposits 1.715.292.949 1.836.660.314
Interest and fees payable 58.731.565 53.846.505
Provisions for off-balance sheet exposure 22.291.290 40.954.420
Other 521.244.181 354.419.032
TOTAL 2.317.559.985 2.285.880.271

C) Investments in subsidiaries

The Group's subsidiaries are as follows:

Industry Country Ownership
as per Sep 30 2017 (%)
HPB Invest d.o.o. Investment Fund Management Croatia 100,00
Real Estate Agency and
HPB Nekretnine d.o.o. Construction Croatia 100,00
HPB-Stambena štedionica d.d. Savings Bank Croatia 100,00

Subsidiaries are consolidated in the Group's financial statements. HPB Invest d.o.o., HPB Nekretnine d.o.o., HPB-Stambena štedionica d.d. are fully consolidated.

D) Changes in accounting policies

There were no changes in accounting policies of the Group during the reporting period which might have impact on financial position or results of the Group.

E) Changes in presentation of financial reports

Group has carried out a correcton of prior period error with regard to certain items in financial statements. In line with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, prior period financial reports have been restated.

Correction is related to a deduction from retained earnings for erroneously booked income from FX translation differences arising from foreign payment operations for a foreign partner, over the course of the period from Jan 01 2011 to Dec 31 2015, as well as correction of 2016 net profit for erroneously booked FX translation differences arising from aforementioned operations.

Corrections with regard to prior periods have been carried out during the current reporting period, error in booking has been eliminated, and P&L presented in these reports reflects correct effects of these transactions.

Effects arising from correction are presented below:

Effects on statement on financial position as per Dec 31 2016(in HRK)

Ite
m
31
.12
.20
16
as
p
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Re
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en
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Ot
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(
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P 0
)
ts
16
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sse
87
9.4
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(
51
.89
2.0
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)
82
52
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7.5
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/
(
)
(
AO
)
Pro
fit
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for
th
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P 0
37
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190
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2.9
35
(
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6.6
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(
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41
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4.7
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t fo
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in
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:
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(
)
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Pro
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/lo
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4.2
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7.8
55
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9

F) Post balance sheet events

In October 2017, by the date these reports have been published, events occured and indications occured that have an adverse effects on creditworthiness of one debtor to settle his obligations towards the Bank. Exposure towards this debtor as per Sep 30 2017 is classified as non-performing (NPL), and equals HRK 14.490 thousand, with recognized impairment equalling 10 percent. New assessment of recovery rate is being made presently, and Bank estimates that it should result in additional impairments during Q4 2017 in amount of approximately HRK 9 million.

G) Ownership structure of the HPB Group parent company

Ownership structure of HPB p.l.c., the parent company of Group, as per Sep 30 2017 was as follows:

Shareholder Ownership stake
Republic of Croatia (Ministry of State Assets) 42,43%
HP Hrvatska pošta Plc 11,93%
State Agency for Deposit Insurance and Bank Resolution 8,98%
Croatian Pension Insurance Insitute (Ministry of State Assets) 8,76%
Prosperus Invest d.o.o., for Prosperus FGS 4,94%
PBZ CROATIA OSIGURANJE OMF (B category) 4,12%
ERSTE d.o.o. for ERSTE PLAVI OMF (B category) 3,90%
Allianz ZB d.o.o., for AZ OMF (B category) 2,88%
CROATIA osiguranje Plc 2,47%
Fund for Financing the Decommissioning of the Krško Nuclear Power Plant and the
Disposal of NEK Radioactive Waste and Spent Nuclear Fuel
2,36%
RAIFFEISEN D.D., for Raiffeisen OMF (B category) 2,20%
Minorities 4,99%
Own shares 0,04%

H) HPB STOCK

HPB's share is listed on the Official Market of ZSE. The last price per share at the end of the reporting period was HRK 515,00 (Sep 27 2017) representing a decrease of 31,4% when compared to the last traded price in 2016 (HRK 751,00 on Dec 30 2016).

Trading during the reporting period was as follows:

Consolidated quarterly financial statements for the period from Jan 01 to Sep 30 2017 (unaudited)

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