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SEB Annual Report 2013
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Annual Report
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AB SEB bankas Independent auditor's report Annual report and Financial statements for the year ended 31 December 2013
14 March 2014
TABLE OF CONTENTS
| PAGES | |
|---|---|
| INDEPENDENT AUDITOR'S REPORT | 3 - 4 |
| CONSOLIDATED ANNUAL REPORT | 5 - 22 |
| FINANCIAL STATEMENTS | |
| INCOME STATEMENT | 23 |
| STATEMENT OF COMPREHENSIVE INCOME | 24 |
| STATEMENT OF FINANCIAL POSITION | 25 |
| STATEMENT OF CHANGES IN EQUITY | 26-27 |
| STATEMENT OF CASH FLOWS | 28-29 |
| NOTES TO THE FINANCIAL STATEMENTS | 30-104 |
| APPENDIX 1 | 105 -131 |
| MERGED SUBSIDIARY AB "SEB LIZINGAS" FINANCIAL STATEMENTS AS OF NOVEMBER 23, 2013 |
Translation note
Financial statements have been prepared in Lithuanian and English languages. In all matters of interpretation of information, views or opinions, the Lithuanian language version of the financial statements takes precedence over the English language version.
THE YEAR 2013 CONSOLIDATED ANNUAL REPORT (all amounts in LTL thousand, unless indicated otherwise)
CONSOLIDATED ANNUAL REPORT OF AB SEB BANKAS FOR THE YEAR 2013
1. Reporting period covered by the Consolidated Annual Report
This Consolidated Annual Report (hereinafter the Report) has been prepared for the year ended 31 December 2013. All numbers presented are as of 31 December 2013 or for the year then ended, unless specified otherwise.
2. Issuer Group companies, contact details and types of their core activities.
| Issuer's name | AB SEB bankas |
|---|---|
| Authorised capital | LTL 1,034,575,341 |
| Legal address | Gedimino ave.12, LT-01103 Vilnius |
| Telephone | (8 5) 2682 800 |
| Facsimile | (8 5) 2682 333 |
| E-mail address | [email protected] |
| Legal form | Public limited company |
| Registration date and place | 29 November 1990, the Bank of Lithuania |
| Company code | 112021238 |
| Company registration number | AB90-4 |
| Website address | www.seb.lt |
AB SEB bankas (hereinafter the 'Bank'), a public limited company, is a credit institution operating on share capital basis and is licensed to engage in such types of activities as acceptance of deposits and other refundable means from non-professional market participants and funds lending, also it is entitled to engage in offering other financial services and assumes relevant related risks and liability.
At the close of the reporting period, the AB SEB bankas Group in Lithuania (hereinafter the 'Group') consisted of AB SEB bankas and two subsidiary companies: UAB "SEB investicijų valdymas",and UAB "SEB Venture Capital".
On 23 November 2013, AB "SEB lizingas", wholly owned by AB SEB bankas, was merged to AB SEB bankas in a manner established under Item 3 of Article 2.97 of the Civil Code of the Republic of Lithuania and under Item 1 of Article 70 of the Company Law of the Republic of Lithuania. AB "SEB lizingas" as a legal entity was deregistered from the Register of Legal Persons of the Republic of Lithuania on 28 November 2013 (the last financial statements of AB "SEB lizingas" is provided alongside with the present reporting).
| Name | UAB "SEB Venture Capital" |
|---|---|
| Type of core activities | Own asset investment into other companies' equity and asset management on trust |
| basis | |
| Legal form | Private limited company |
| Registration date and place | 16 October 1997, Vilnius |
| Company code | 124186219 |
| Domicile address | Gedimino ave. 12, LT-01103 Vilnius |
| Office address | Jogailos str. 10, LT-01116 Vilnius |
| Telephone | (8 5) 2682 407 |
| Fax | (8 5) 2682 402 |
| E-mail address | [email protected] |
| Website address | www.seb.lt |
| Name | UAB "SEB investicijų valdymas" |
| Type of core activities | Various investment management services, consultancy services |
| Legal / organisational form | Private limited company |
| Registration date and place | 3 May 2000, Vilnius |
| Company code | 125277981 |
| Domicile address | Gedimino ave. 12, LT-01103 Vilnius |
| Office address | Olimpiečių str. 1, LT-09235 Vilnius |
| Telephone | (8 5) 2681 594 |
| Fax | (8 5) 2681 575 |
| E-mail address | [email protected] |
| Website address | www.seb.lt |
(all amounts in LTL thousand, unless indicated otherwise)
3. Agreements between the Issuer and securities' public offering agents
The Bank, in the process of a public issue of bonds, must execute an agreement with the selected public offering agent for the protection of interests of the owners of any relevant issue of bonds.
As of 31 December 2013, AB SEB bankas had 59 agreements with AB bankas "Finasta" (legal entity code 301502699, address Maironio str. 11, LT-01124 Vilnius).
4. Data on trade in securities of the Issuer Group companies in the regulated markets
Shares of AB SEB bankas are not included in either the main or secondary list of "NASDAQ OMX Vilnius" exchange or in trading lists of other regulated markets and their listing is not planned in the nearest future.
As of 31 December 2013, five non-equity securities issues of AB SEB bankas were included in the trading list of the debt securities list of "NASDAQ OMX Vilnius" exchange:
| Parameters | Issue |
|---|---|
| ISIN code | LT0000431025 |
| Number of securities issued (units) | 31,850 |
| Nominal value per unit (LTL) | 100.00 |
| Total nominal value (LTL) | 3,185,000.00 |
| Effective date of the issue | 21 December 2010 |
| Redemption date | 23 January 2014 |
| Parameters | Issue |
|---|---|
| ISIN code | LT0000431157 |
| Number of securities issued (units) | 37,257 |
| Nominal value per unit (LTL) | 100.00 |
| Total nominal value (LTL) | 3,725,700.00 |
| Effective date of the issue | 21 December 2010 |
| Redemption date | 23 January 2014 |
| Parameters | Issue |
|---|---|
| ISIN code | LT0000405060 |
| Number of securities issued (units) | 46,575 |
| Nominal value per unit (LTL) | 100.00 |
| Total nominal value (LTL) | 4,657,500.00 |
| Effective date of the issue | 17 May 2011 |
| Redemption date | 13 June 2016 |
| Parameters | Issue |
|---|---|
| ISIN code | LT0000405078 |
| Number of securities issued (units) | 38,857 |
| Nominal value per unit (LTL) | 100.00 |
| Total nominal value (LTL) | 3,885,700.00 |
| Effective date of the issue | 21 December 2011 |
| Redemption date | 9 January 2017 |
| Parameters | Issue |
|---|---|
| ISIN code | LT0000405086 |
| Number of securities issued (units) | 47,032 |
| Nominal value per unit (LTL) | 100.00 |
| Total nominal value (LTL) | 4,703,200.00 |
| Effective date of the issue | 30 May 2012 |
| Redemption date | 13 June 2017 |
Securities of the Bank subsidiary companies are not traded in the regulated markets.
(all amounts in LTL thousand, unless indicated otherwise)
5. Objective overview of the issuer group status, activities and development
In 2013, AB SEB bankas Group in Lithuania was providing a full range of banking services to private individual and corporate customers as well as to financial institutions. At the end of 2013 the Group in Lithuania consisted of AB SEB bankas and its two companies: UAB "SEB investicijų valdymas", and UAB "SEB VentureCapital"(on 23 of November 2013, AB "SEB lizingas" was merged to AB SEB bankas).
The year 2013 saw an improvement in Lithuania's economy. The domestic market was recovering, there were more opportunities to finance companies and private individuals. All this enabled the country's entire banking sector to gain strength. Audited net profit earned by AB SEB bankas in 2013 was LTL 212.3 million (EUR 61.5 million), and that earned by AB SEB bankas Group was LTL 212.3 million (EUR 61.5 million). The result has been calculated based on the requirements established by legal acts of the Bank of Lithuania and the Republic of Lithuania.
In 2012, audited net profit earned by AB SEB bankas was LTL 87.6 million (EUR 25.4 million), and that earned by the entire AB SEB bankas Group was LTL 84.9 million (EUR 24.6 million). The bank's year-on-year 2012 data after the merger of AB "SEB lizingas" to AB SEB bankas in November 2013 are reflected including the data of AB "SEB lizingas", unless indicated otherwise.
In 2013, the bank group's operation was positive: its net profit and assets as well as deposit portfolio increased, its income grew, and its cost/income ratio improved. There was further growth in customer activity using various services of SEB Bank contributing to an 8 per cent increase in the bank group's income. In 2013, the amount issued in new loans by the SEB Group to corporate and private individual customers was LTL 4.6 billion, which is a 12 per cent increase as compared to a relevant period in 2012. AB SEB bankas Group was committed to responsible issuance of loans to private individual customers and businesses, to financing promising business projects.
In 2013, AB SEB bankas Group had special focus on the improvement of daily banking services that can be used by the population on their own and at a lower fee compared to that at the bank's sub-branches. Taking into account the changing customer behaviour, in 2013 AB SEB bankas expanded its ATM network installing a larger number of cash-in ATMs and 7/24 self-service areas, developed its services via the Internet, mobile phone, settlement services by payment cards.
As of 31 December 2013, AB SEB bankas Group's equity was worth LTL 2.6 billion (as of 31 December 2012, it was LTL 2.4 billion), which is a 9 per cent increase.
As of 31 December 2013, AB SEB bankas Group's assets were LTL 23.6 billion (in 2012 they were LTL 23.1 billion), which is a 2 per cent increase. Over the year 2013, an increase in AB SEB bankas deposit portfolio was from LTL 12.8 billion to LTL 13.2 billion, i. e. 3 per cent.
As of 31 December 2013, net worth of AB SEB bankas Group's loan and leasing portfolio was LTL 16.6 billion (in 2012, it was LTL 17.1 billion), which is a 3 per cent decrease.
AB SEB bankas Group year 2013 income was LTL 586 million (its year 2012 income was LTL 539 million).
As at the close of 2013, AB SEB bankas Group's liquidity ratio was 38.8 per cent (standard requirement being 30 per cent).
Over a year, the number of registered users SEB Bank's Internet banking system increased by 46 thousand and at the close of the year 2013 it was 1.1 million, which is a 4.3 per cent as compared to the end-of-the-year data in 2012.
Over a year, the number of users of the Bank's services via mobile phone increased by 54 thousand and at the close of the year 2013 it was 556 thousand, which is a 10.7 per cent increase as against relevant data as at the close of 2012.
Over a relevant period, the number of payment transactions executed via the Internet increased by 5 per cent, turnover in payment card accounts went up by 2.9 per cent, and the number of POS terminals increased by 2.2 per cent.
At the close of the year 2013, AB SEB bankas had 46 customer service sub-branches all over Lithuania. SEB Bank customers can use the largest ATM network in Lithuania that includes ATMs of SEB and DNB banks, i. e. 536 ATMs in 82 towns, large and small.
As at 31 December 2013, the number of employees actually working within AB SEB bankas Group (excluding employees on paternity leave) was 1,522, i. e. by 2.7 per cent less than as of 31 December 2012, when the actual number of the Group employees was 1,564.
In 2013, AB SEB bankas pursued with the implementation of its strategy to be the home bank for its customers. AB SEB bankas, being a longterm customer relationship bank, offered modern universal banking services, provided them in a professional and convenient way, taking into consideration each customer's needs and expectations.
In 2013, AB SEB bankas Group continued the implementation of SEB's corporate sustainability strategy, which includes eight corporate sustainability priorities by key responsibility areas (management responsibility, environmental responsibility and corporate social responsibility): responsible selling and marketing, tackling financial crime, responsible ownership, reducing our footprint, sustainable finance and investing, a great place to work, access to financial services and investing in communities.
In 2013, AB SEB bankas Group launched new services and improved the existing ones. AB SEB bankas has fully integrated its leasing services with its banking activities. In the process of the pension system reform, AB SEB bankas Group provided its customers with detailed information with the aim to help them decide which further pension saving method to select, also, the Group rolled out a small and medium enterprise advisory campaign. AB SEB bankas upgraded its mobile banking services via the Internet website, offered its customers a possibility to call the bank via Skype. The bank installed cash-in ATMs at each of the 46 customer service sub-branches of the bank, expanded its network of selfservice areas by opening five new areas, their total number all over Lithuania now being fifteen. AB SEB bankas launched its free-of-charge reminder system for its customers by SMS, e-mail and by its Internet Banking System. In 2013, AB SEB bankas joined such global security programmes as MasterCard Secure Code and Verified by Visa as their member. The bank offered its customers an overdraft service, and for its customers who have already obtained or intend to obtain a mortgage loan it launched a new insurance service Secure Mortgage. Furthermore, the bank offered its customers detailed remote financial advisory service that is provided taking into account relevant customer needs, and launched SEB Bank's software specially adapted for smart Windows Phones.
In 2013, AB SEB bankas Group was taking efforts to provide customers with valuable information that may serve in creating added value for them. AB SEB bankas organised presentation of Lithuanian Macroeconomic Reviews to its customers, together with the Lithuanian national television carried out Lithuania Will Do It! project aimed at encouraging pro-active people to go into business in regions and create new jobs. AB SEB bankas arranged customer presentations of such publications as the Baltic Household Outlook, and the Household Savings Barometer. Together with other market players, AB SEB bankas established the Lithuanian Financial Markets Institute (LFMI), supported the EUROFI financial forum in Vilnius, started the Saving and Investment publication, kept its customers informed about financial markets and the macroeconomic environment.
THE YEAR 2013 CONSOLIDATED ANNUAL REPORT
(all amounts in LTL thousand, unless indicated otherwise)
AB SEB bankas Group regularly took part in the implementation of important sustainable activity projects – together with TV3 television implemented their eleventh campaign Dreams Come 2013, for the eighth year in a row awarded top-achieving secondary school graduates, and continued its participation in the activities of Mentor Lietuva Association.
In 2013, AB SEB bankas Group won significant global and local awards: SEB Bank received the award of the Best Bank in Lithuania (Euromoney), the Best FX Bank in Lithuania (Global Finance), for the fifth year in a row it was recognised to be the Most Attractive Employee in Lithuania ("Verslo Žinios" and "CV.lt") and for the second year in a row – the Most Desirable Employer in Lithuania ("CV Market").
6. Description of the main risk types and uncertainties
Issuer risk. The Bank's obligations against investors are not additionally secured by any guarantee and/or in any other manner, the Bank's obligation to redeem non-equity securities is not insured by state enterprise Indėlių ir Investicijų Draudimas, therefore, the investor assumes banking (operational) risk related to political, economic, technical and technological as well as social factors. In the event of the Bank's bankruptcy, claims of holders of non-equity securities would be satisfied according to the procedure and order of priority established by legal acts of the Republic of Lithuania.
Credit risk. The Group assumes credit risk, i.e., the risk of another counterparty being unable to duly meet its obligations against the Bank. Counterparty risk is assessed based on credit equivalents calculated depending on the type of a financial deal. The Group Credit Policy is applied adhering to the principle that any lending transaction may be executed only subject to credit analysis. Taking into account the complexity of the deal and customer's creditworthiness, various credit risk management measures are applied.
The Group loans are assessed individually as well as in total, taking into account its total portfolio. Assessment of the portfolio of homogeneous loan groups with similar risk characteristics, i.e. natural persons' mortgage loans, consumer loans, payment card account overdraft limits, also, loans to small enterprises, is performed. Special provisions for homogenous loans are formed by applying statistical methodology based on historical data on any defaults of the borrowers and sustained losses within the corresponding homogeneous loan group. Individually assessed borrowers are assigned to a relevant risk class, based on which special provisions requirement is established. The Group classifies its individually assessed borrowers based on 16 risk classes.
Risks are managed by carrying out regular analysis of the borrower's ability to meet its obligations: to repay the loan and pay interest. The Group establishes credit risk limits per single borrower, a group of borrowers or per economic activities. Borrower credit risk, taking into consideration the risk class assigned to the borrower, is revised on a regular basis, no less than once a year. Analysis of the borrower, borrower group and industry sector risks is also performed on regular basis.
Applied credit portfolio concentration risk limits are as follows:
- maximum exposure per single borrower must not exceed 25 per cent of the Bank's/ Group's equity, and the total amount of large exposures may not exceed 800 per cent of the Bank's/ Group's equity;
- total loans issued by the Bank to other subsidiary companies of the parent company or the Bank's subsidiary companies per single borrower may not exceed 75 per cent of the Bank's equity, if the Bank of Lithuania performs consolidated supervision of the entire financial group. If the Bank of Lithuania does not perform any consolidated supervision of the entire financial group, the maximum exposure per each Group company may not exceed 20 per cent of the Bank's equity.
Presented below is the information on the Bank's individually assessed client's credit losses, on changes in the total value and the ratio to the credit portfolio over periods of historic financial information.
| 31-12-2011* | 31-12-2012* | 31-12-2013* | |
|---|---|---|---|
| Individually assessed client credits, which value has impaired, gross amount (impaired loans), in LTL'000 |
2,178,332 | 1,773,698 | 1,101,427 |
| Client credit portfolio (without special provisions), in LTL'000 | 16,875,342 | 16,679,036 | 15,900,735 |
| Ratio (in per cent) | 12.91 per cent | 10.63 per cent | 6.93 per cent |
* According to Official Letter of the Credit Institutions Supervision Department of the Bank of Lithuania No. 1203-310, dated 10 June 2008.
The Bank's Impairment losses on loan portfolio (LTL'000) according to the International Financial Reporting Standards (IFRS):
| 31-12-2011 | 31-12-2012 | 31-12-2013 | |
|---|---|---|---|
| Impairment losses on loans to customers (special provisions) | 1,207,686 | 1,022,564 | 708,950 |
| Impairment losses on loans to credit institutions as of year end (special provisions) |
31 | 0 | 2 |
| Balance of impairment losses as of year end (special provisions) | 1,207,717 | 1,022,564 | 708,952 |
| Special provisions to loan portfolio ratio | 6.98 per cent | 6.13 per cent | 4.43 per cent |
Market risk. It is the risk of losses or of a loss of future net income due to changes in interest rates, credit spreads, foreign exchange rates and share prices (including the price risk in case of sales of assets or closing of positions).
Interest rate risk is managed by forecasting market interest rates and making relevant adjustments so that there is no mismatch in the assets and liabilities within the revaluation periods. The Bank applies interest rate risk management methodologies that help to measure the Group's sensitivity to interest rate changes by computing the impact to the net effect on the market value of shareholders equity (delta 1%) in case of a parallel shift by one percentage point in the yield curve.
(all amounts in LTL thousand, unless indicated otherwise)
Credit margin risk is defined as the risk that the value of debt securities will decrease as a result of a change in the issuer's credit risk. This type of risk is managed by establishing limits on investments in debt securities.
Foreign exchange risk exposure is defined by two measures: the single open foreign currency position and the aggregate open currency position - the larger one of all summed-up long and short open currency positions. Foreign exchange risk measures include net exposure of spot and forward positions, FX futures, including gold, the delta equivalent position of FX options and other balance sheet items. The currency risk control is ensured by monitoring the risk exposure against the limits established for single open currency position. The Bank adheres to the open currency position limits established by the Bank of Lithuania: 1) maximum open position in one currency (other than the Euro) must be no more than 15 per cent of the bank's equity; 2) maximum total (other than the Euro) open position must be no more than 25 per cent of the bank's equity.
Changes in the Group's s maximum open single currency position as a percent of the Group's total equity during the recent years is shown in the table below (the data provided in the Table have been calculated including also the EUR position).
| The Group | 31-12-2011 | 31-12-2012 | 31-12-2013 |
|---|---|---|---|
| Maximum open single currency position | 105.63 per cent | 133.48 per cent | 75.57 per cent |
| Maximum aggregate open currency position | 0.34 per cent | 0.22 per cent | 0.33 per cent |
Share price risk is managed by establishing limits that describe acceptable share price risk, taking into consideration any possible losses related to market price volatility, by establishing the structure of the share portfolio.
Liquidity risk. Liquidity risk is the risk that the bank may be unable to timely meet its financial obligations and/or, aiming to meet them, it may have to sell its financial assets and/or close positions and will sustain losses due to a lack of liquidity in the market.
The Group adheres to conservative liquidity risk management policy that ensures adequate fulfilment of its current financial obligations, the level of obligatory reserves with the Bank of Lithuania, liquidity ratio higher than that established by the Bank of Lithuania and solvency capacity under unforeseen unfavourable circumstances. The liquidity risk management system is based on the analysis of actual and forecasted cash flows.
Changes in the Bank's and the Group's liquidity ratio over recent years are shown in the table below.
| The Group | Ratio | The Bank | ||||
|---|---|---|---|---|---|---|
| 31-12-2011 | 31-12-2012 | 31-12-2013 | 31-12-2011* | 31-12-2012 | 31-12-2013 | |
| 46.80 per cent | 35.76 per cent | 38.85 per cent | Liquidity ratio (at least 30%) | 46.12 per cent | 35.69 per cent | 38.81 per cent |
* The ratio as of 31-12-2011 is calculated not taking into account AB "SEB lizingas" merger
Operational risk. Operational risk is defined as the risk of loss due to external events (natural disasters, external crime, etc) or internal factors (e.g. breakdown of IT systems, mistakes, fraud, non-compliance with external and internal rules, other deficiencies in internal controls).
On 1 January 2008, the regulators issued a permission to the Bank to use the AMA (Advanced Measurement Approach) model in the operational risk assessment process for the calculation of regulatory capital for the operational risk.
The Bank has developed and continuously upgrades and improves its operational risk management tools: operational risk policy, ORSA (Operational Risk Self Assessment) and RTSA (Rogue Trading Self Assessment) methodologies, activities continuity planning requirements and continuity plans, new product and services approval process, etc..
Bank has launched and continuously uses its operation risk management system ORMIS (Operational Risk Management Information Sysytem), which is a Group wide IT solution. The operational risk management system enables each employee of the Group to register all operational risk incidents and the management at all levels – to assess, monitor and control risks and compile various reports. With the aim to achieve as detailed as possible assessment of the operational risk, ORSA and RTSA methodologies are applied, internal controls are undertaken, regular assessment of subdivision and process risks is performed.
Another two systems related to operational risk management are used for the development of new products and/or services NAMIS (New Activity Management Information System) and for the formation of activity continuity plans for subdivisions LDRPS (Living Disaster Recovery Planing System).
The Bank has the Operational Risk Committee, which is aimed at improving the operational risk management and ensure appropriate cooperation between risk managers and control units. The management board is provided with quarterly operational risk reports, which contain a review of new operational risk cases, efficiency of the application of the operational risk management measures as well as other risks.
Business risk. It is the risk of a decrease in income due to any unforeseen shortage of regular income that is usually determined by a drop in business volumes, price pressure or competition. Business risk also includes reputation risk, which is a risk of a decrease in income from ordinary activities and which may arise due to any adverse rumours about the bank or about the banking sector generally.
(all amounts in LTL thousand, unless indicated otherwise)
Strategy risk. It is the risk caused by unfavourable or erroneous business solutions, improper implementation of decisions or insufficient response to any political changes or changes in the regulatory acts or the banking sector. Business and strategy risk management at the Bank is delegated to relevant responsible units, which based on business plans and their implementation control, identify such risks and manage/mitigate them. Said units continuously monitor the set ratios. In case any decline is found, relevant information is provided to the management board and/or other responsible persons. Also, the Bank has approved activity continuity plans.
Capital adequacy. Lithuanian banks are required to maintain capital adequacy ratio, which is calculated as the capital base to riskweighted assets ratio. During the internal capital adequacy assessment process for 2013 the target capital adequacy ratio was set at higher than 12 per cent. In the first quarter of 2013, at the shareholder's decision the capital and at the same time capital adequacy was strengthened by profit earned in 2012 (no dividends were paid).
In April 2013, the Management Board of the Bank of Lithuania gave its permission to the bank to repay its open-ended subordinated loan (to redeem an open-ended security) (obtained based on a subordinated loan agreement with Skandinaviska Enskilda Banken AB (publ), dated 18 February 2010) worth EUR 100,000,000 (LTL 345,280,000). The Bank has availed of a possibility to terminate said agreement (to redeem the security) with the aim to decrease the bank's borrowing costs, maintaining an appropriate capital adequacy level.
Merger of AB "SEB lizingas" to AB SEB bankas had a significant positive impact on the Bank's capital adequacy ratio. After the repayment of the subordinated loan and after the merger of AB "SEB lizingas", at the close of 2013 the Bank's and the Group's capital adequacy ratios were, respectively, 15.51 per cent and 15.59 per cent
Changes in the Bank and the Group capital adequacy ratios during recent years are presented in the table below.
| The Group | Ratio | The Bank | ||||
|---|---|---|---|---|---|---|
| 31-12-2011 | 31-12-2012 | 31-12-2013 | 31-12-2011* | 31-12-2012* | 31-12-2013 | |
| 13.59 per cent | 15.17 per cent | 15.59 per cent | Capital adequacy ratio | 12.94 per cent | 13.37 per cent | 15.51 per cent |
* The ratio is calculated not taking into account AB "SEB lizingas" merger
7. Analysis of the Issuer Group's financial and non-financial activity results
Volume and changes of the Group's activities are partially reflected by the below data of the balance sheet and profit and loss statements drafted in accordance with the International Financial Reporting Standards (IFRS):
| LTL million | 31-12-2011 | 13-12-2012 | 13-12-2013 |
|---|---|---|---|
| Loans | 15,651 | 15,637 | 15,251 |
| Investment | 1,726 | 1,113 | 1,219 |
| Lease receivables | 1,673 | 1,503 | 1,428 |
| Deposits | 12,357 | 12,797 | 13,225 |
| Amounts owed to credit institutions | 9,932 | 6,789 | 7,178 |
| Equity | 2,321 | 2,386 | 2,602 |
| Assets | 26,633 | 23,122 | 23,591 |
The Group's income structure during recent years was as follows:
| LTL million | 2011 | 2012 | 2013 |
|---|---|---|---|
| Net interest income (loss) after impairment losses |
682.0 | 262.7 | 246.0 |
| Other income before operating expenses, net |
188.8 | 251.0 | 297.0 |
| Result before operating expenses | 873.5 | 513.7 | 543.0 |
| Operating expenses | (343.7) | (347.8) | (299.5) |
| Intangible asset write off | - | (58.5) | - |
| Profit (loss) before profit tax from | |||
| continues activities | 527.1 | 107.4 | 243.5 |
| Net profit (loss) from continued activities |
467.4 | 84.9 | 212.3 |
THE YEAR 2013 CONSOLIDATED ANNUAL REPORT
(all amounts in LTL thousand, unless indicated otherwise)
| Key ratios of the Group and the Bank activities are included in the table below: | |||
|---|---|---|---|
| The Group | Ratio | The Bank | ||||||
|---|---|---|---|---|---|---|---|---|
| 2011 | 2012 | 2013 | 2011 | 2012 | 2013 | |||
| 13.59 per cent | 15.17 per cent 15.59 per cent | Capital adequacy ratio | 12.94 per cent 13.37 per cent | 15.51 per cent | ||||
| 1.98 per cent | 0.34 per cent | 0.91 per cent | Return on Assets | 1.71 per cent* | 0.53 per cent* | 0.92 per cent | ||
| 21.85 per cent | 3.55 per cent | 8.50 per cent | Return on Equity | 19.47 per cent* | 5.69 per cent* | 8.93 per cent | ||
| 46.80 per cent | 35.76 per cent | 38.85 per cent | Liquidity ratio | 46.12 per cent 35.69 per cent | 38.81 per cent | |||
| 30.27 | 5.50 | 13.75 | Earnings per share, LTL | 24.45* | 5.67* | 13.75 | ||
| 150.32 | 154.52 | 168.48 | Book value per share, LTL | 138.08* | 154.44* | 168.39 | ||
* The ratio is calculated not taking into account AB "SEB lizingas" merger
8. References and additional comments on data included in the consolidated financial statements
All key financial data are included in the consolidated financial statements of the Group.
The Group must ensure the implementation of appropriate organisational measures, procedures and business process support IT systems, the entirety of which would ensure the implementation of adequate internal control system, which, in its turn, would enable providing reliable financial reporting data. The following key elements of the Group's internal control should be mentioned: checking the data on transactions executed in primary systems against transaction data in the accounting system; clear organisational structure and proper segregation of functions, daily accounting of the Group's transactions and relevant reports, based on actual market data, established risk restricting limits and regular control of whether the risk is in line with such limits, internal control elements integrated in business and business support processes as well as other control measures.
9. Major events since the end of financial year
On 5 February 2014, the Bank announced that according to preliminary data, unaudited net profit earned by AB SEB bankas in 2013 was LTL 212.3 million (EUR 61.5 million), and that of the AB SEB bankas Group was LTL 212.3 million (EUR 61.5). The result has been calculated in accordance with the requirements set by the acts of the Bank of Lithuania and legal acts of the Republic of Lithuania. Over the year 2012, audited net profit earned by the Bank totalled LTL 87.6 million (EUR 25.4 million) and that by the Bank Group – LTL 84.9 million (EUR 24.6 million). In November 2013 AB "SEB lizingas" was merged with AB SEB bankas therefore AB SEB bankas results of the year 2012 are presented including the result of AB "SEB lizingas".
10. Issuer Group's activity plans and forecasts
The AB SEB bankas Group in Lithuania aims at long-term and mutually beneficial relations with all customers of the Group. For this purpose, the Bank implements its strategy to be the Home Bank for its customers, where their daily financial matters are managed. As a relationship bank, AB SEB bankas offers modern and universal banking services and provides them in a professional and convenient way with in-depth understanding of each customer's needs and expectations.
The Group, seeking to implement its said strategy and aiming to maintain long-term relations with its customers, also, taking into account the objectives of the SEB Group, envisages the following key trends of activities:
• Customer loyalty strengthening. Aiming to become the Home Bank for its customers, the Bank plans to retain the existing customers and to attract new ones:
- o by creating new attractive services and products for customers successfully developing their business, so that they would feel the Bank's steady attention;
- o by ensuring a possibility for its customers to be serviced by the Bank in a convenient, fast and safe way using various modern means (the Internet, mobile phone, self-service areas, etc.);
- Increasing the operational efficiency. Seeking to retain operational efficiency and competitive edge, the Bank plans to:
- o increase income by applying target marketing: to clearly define competitive advantages in various client segments and, based on it, develop new growth plans;
- o duly assess the demand for costs aiming at achievement of the selected goals;
- o objectively assess business capital requirements and risks taken in order to ensure the planned Bank's profitability
• The best employer image retention. The Group will further aim at creating both the atmosphere of trust and respect, in which employees may work and develop, and environment, which would help to attract and develop competent specialists and encourage employees to aim at the achievement of top results.
11. Financial risk management objectives
The Group manages its financial risks as described in the consolidated annual financial statements. Financial risk management objectives, transaction risk hedging measures, the Group credit risk and market risk volume are also described in the above-mentioned document.
(all amounts in LTL thousand, unless indicated otherwise)
12. Data on the Issuer's acquisition/assignment of own shares, powers of the Issuer's bodies to issue and buy up the Issuer's shares.
The Bank has none and during the year 2013 did not acquire its own shares. Also, the Bank's subsidiary companies have not acquired the Bank's shares. During the reporting period, the Bank and its subsidiary companies did not buy or sell their own shares.
The general meeting of the Bank's shareholders has the exclusive right to set the class, number, nominal value and minimum issue price of shares issued by the company and take a decision for the Bank to acquire its own shares.
13. Information on the Issuer's branches and representative offices
As of 31 December 2013, the Bank had 3 branches: AB SEB bankas Eastern Region (code 112053613, address: Savanorių str. 1, LT-03116 Vilnius), AB SEB bankas Middle Region (code 112052511, address: Laisvės ave. 82/ Maironio str. 17, LT-44250 Kaunas), and AB SEB bankas Western Region (code 112052479, address: Taikos ave. 32, LT-91246 Klaipėda).
The branches consisted of a network of 46 customer service units (7 branches and 39 sub-branches) all over Lithuania.
14. The Issuer's authorised capital
The Bank's authorised capital registered with the Register of Legal Entities (amount, structure by share type and class, total nominal value) is as follows:
| Type of shares | ISIN code | Number of shares | Nominal value (LTL) |
Total nominal value | Share within authorized capital (in %) |
|---|---|---|---|---|---|
| Ordinary registered shares |
LT0000101347 | 15,441,423 | 67 | 1,034,575,341 | 100.00 |
| In total | - | 15,441,423 | - | 1,034,575,341 | 100.00 |
All shares of the Bank are paid up and are not subject to any restrictions in terms of securities assignment.
15. Shareholders
On 19 November 2010, the squeeze-out procedure of AB SEB bankas shares was finalized. A 100 % stake in AB SEB bankas represented by its 15,441,423 ordinary registered shares is owned by bank Skandinaviska Enskilda Banken AB (publ) registered with the Enterprise Register of Sweden, its legal form: a public limited company, legal entity number: 502032-9081, domicile address: Kungsträdgårdsgatan 8, Stockholm, the Kingdom of Sweden.
16. Major investments made over the reporting period
The Group's investments over the year 2013 into fixed tangible and intangible assets did not make more than 10 per cent of the authorised capital.
17. Information about significant directly or indirectly held blocks of shares
| Name | Company code | Address | Type of core activity |
|---|---|---|---|
| UAB "Cgates" | 120622256 | Ukmerg÷s str. 120, Vilnius | Internet, telecommunications, means of communications, TV and radio |
| UAB "Duonos centras" | 302638225 | Lvovo str. 25 Vilnius | Bakery, supply |
18. Employees
As of 31 December 2013, the AB SEB bankas Group in Lithuania (AB SEB bankas, UAB "SEB investicijų valdymas and UAB "SEB Venture Capital") had 1,741 employees (working under labour contracts with and without a fixed term, including those on maternity/paternity leave), i.e. by 4.5 per cent less compared to the end of 2012, when the Group had 1,823 employees. As of 31 December 2013, the number of actually working employees (excluding those on maternity/paternity leave) was 1,522, i.e. 2.7 per cent less than at the end of 2012, when the actual number of the Group's employees was 1,564. A decrease in the number of employees was determined by the fact that the Group implemented operational efficiency enhancement measures.
During the year 2013, the number of employees of the Bank alone (working under labour contracts with and without a fixed term, including those on maternity/paternity leave) dropped by 4.3 per cent – from 1,808 to 1,731, and the number of the Bank's actually employed employees (excluding those on maternity/paternity leave) was 1,512, i.e. 2.5 per cent less than at the end of 2012, when their number was 1,550.
THE YEAR 2013 CONSOLIDATED ANNUAL REPORT
(all amounts in LTL thousand, unless indicated otherwise)
In 2013, the average actual number (excluding the number of employees on maternity/paternity leave) was 1,519 employees (in 2012, it was 1,626 employees).
In November 2013 AB "SEB lizingas" was merged with AB SEB bankas therefore AB SEB bankas results of the year 2012 are presented including the result of AB "SEB lizingas" unless indicated otherwise.
| The Bank | The Group | |||||
|---|---|---|---|---|---|---|
| 31-12-2011 | 31-12-2012 | 31-12-2013 | 31 12 2011 | 31-12-2012 | 31-12-2013 | |
| Regular employees (working under labour contracts with and without a fixed term, including those on maternity/paternity leave) |
2,008 | 1,808 | 1,731 | 2,023 | 1,823 | 1,741 |
| Actually number of employees (excluding those on maternity/paternity leave) |
1,717 | 1,550 | 1,512 | 1,731 | 1,564 | 1,522 |
Tables below contain information on the Bank's employees' educational background and average monthly wages (before taxes). Labour contracts or collective bargaining agreements do not provide for any special rights or duties of the issuer's employees or of some of them.
| Number of employees | Average monthly wages (in LTL) | |||||
|---|---|---|---|---|---|---|
| 31-12-2011 | 31-12-2012 | 31-12-2013 | 31-12-2011 | 31-12-2012 | 31-12-2013 | |
| Senior management staff | 263 | 214 | 200 | 10,767 | 11,080 | 11,468 |
| Specialists | 1,736 | 1,574 | 1,510 | 3,460 | 3,667 | 3,740 |
| Service staff | 9 | 20 | 21 | 2,119 | 2,180 | 2,212 |
| In total | 2,008 | 1,808 | 1,731 | - | - | - |
| Number of employees |
University education | College education | Secondary education | ||||
|---|---|---|---|---|---|---|---|
| number | per cent | number | per cent | number | per cent | ||
| Senior management staff | 200 | 192 | 96.0 | 5 | 2.5 | 3 | 1.5 |
| Specialists | 1,510 | 1,201 | 79.5 | 96 | 6.4 | 213 | 14.1 |
| Service staff | 21 | 11 | 52.4 | 5 | 23.8 | 5 | 23.8 |
| In total | 1,731 | 1,404 | 81.1 | 106 | 6.1 | 221 | 12.8 |
19. The Group's information on the remuneration policy and its implementation
The information has been drawn up and announced implementing the requirements of Item 25 of Resolution of the Board of the Bank of Lithuania 'Regarding an amendment to the Board of the Bank of Lithuania Resolution 'Regarding minimum requirements for policies of remuneration to credit institution employees' No. 228, dated 10 December 2009', No. 03-175, dated 23 December 2010, also, Resolution of the Board of the Bank of Lithuania 'The requirements for remuneration policies of financial brokerage companies, management companies and investment companies' No. 03-166, dated 12 July 2012.
The Group has its approved remuneration policy, which aligned with the remuneration policy of SEB, the Bank's shareholder. Also, the remuneration policy implements legal acts of the Board of the Bank of Lithuania regulating the requirements for the remuneration policy.
The Group's remuneration policy creates and promotes an internal culture that long-term steers in the benefit of the customers and thus over time will give its shareholders the best return. The competence and commitment of the Group's employees are crucial to the Group's development. The Group encourages to aim at the achievement of top results, adhere to the core values and assume well weighted and balanced risk in line with the expectations of customers and shareholders. Also, the Group aims that the remuneration to its employees is competitive in the markets and segments where the Group operates in order to motivate high performing employees.
• Information on the remuneration policy decision-taking process in establishing and revising the remuneration policy principles, including information on the remuneration committee (composition and powers), external advisers, if their services were resorted to when developing the policy
The Group abides by the remuneration policy that was approved by the Bank's supervisory council on 22 March 2013. All of the Group companies have implemented the remuneration policy requirements. When developing said remuneration policy, no services of external advisers were resorted to.
The Bank's Human Resources Department together with the Compliance Unit, annually reviews the Group's remuneration policy and submits proposals on the policy changes. The remuneration policy is approved by the Bank's supervisory council, upon approval of the Group's remuneration committee. The management board of the Bank is responsible for the implementation of the remuneration policy.
In 2011, the Group's remuneration committee was established, consisting of:
- Chairman of the committee Head of SEB Business Support (Knut Jonas Martin Johansson);
- Member of the committee Head of Finance of SEB Baltic Division (Mark Barry Payne);
- Member of the committee Head of Procurement and Vendor Management of SEB Business Support Division (Ted Tony Kylberg);
(all amounts in LTL thousand, unless indicated otherwise)
- Member of the committee – Head of Human Relations of SEB Baltic Division (Anna Maria Erika Hamstedt).
Candidates to members of the remuneration committee are approved by the supervisory council of the Bank. Persons related to the Bank or its subsidiary companies by labour relations as well as members of the Bank's management board may not be elected chairman or members of the remuneration committee. None of the members of the remuneration committee has shares in the Bank.
The competence of the remuneration committee and its rules of procedure are established by the remuneration committee regulations approved by the supervisory council of the Bank.
The remuneration committee, at the proposal of the president of the Bank, takes decisions on:
- Establishing individual remuneration by position (including pension saving plans) to senior managers, other than members of the board, directly reporting to the president of the Bank;
- allocation of short-term incentive programmes to certain employee groups;
- allocation of the amount of the short-term incentive programme.
The remuneration committee drafts and submits to the Bank's supervisory council for approval:
- the Bank's remuneration policy, any amendments thereto and a list of risk-takers and any amendments thereto
- remuneration by position to the president, board members of the Bank, heads of the Internal Audit Department, Compliance Unit and Risk Control Unit;
- long-term incentive programmes applied to the group employees;
- pension saving plans applied to the president and board members of the Bank;
- proposals regarding employee individual remuneration by position, if their amount is equal or exceeds the minimum amount of individual remuneration by position of a board member.
Also, the remuneration committee performs other functions delegated to it by the Bank's supervisory and provided for by the remuneration committee regulations and relevant legal acts.
• Information on the relation between the remuneration and performance results
Principles of establishing remuneration are related to the Group employees' performance appraisal results. It means that when establishing remuneration, the appraisal of an employee's performance is taken into account
The Group employees' remuneration consist of the following three elements:
- remuneration by position (or hourly rate);
- variable remuneration, which may be allocated according to the following programmes:
- o All Employee Programme SEB's profit allocation programme for all employees of the Group;
- o individual programme, which is participated by a targeted group of employees and includes variable salary, which may consist of two parts: salary in cash and salary in shares or in any other financial instruments paid out after a certain set period of time;;
- additional benefits.
Remuneration by position (or hourly rate) – it is the wages (base pay) established in an employee's labour contract.
Variable remuneration – it is a variable portion of remuneration, which may be paid to employees as an extra to the remuneration by position – in bonuses, pension saving contributions, rights to the Bank's shares, equity-linked financial instruments, other financial or noncash instruments, and the amount of which depends on an individual employee's input to the performance of his/her subdivision or of the Group.
Variable remuneration is established so that it would encourage the achievement of not only short-term, but also long-term results of the Group's continued activities, and would encourage to search for long-term strategic solutions that would ensure sustainability of the Group's business development. The whole amount of the variable remuneration paid for a certain period of time is established taking into account the performance during several years and must not threaten the Group's ability to achieve the Group's total positive result over the entire business cycle.
SEB's All Employee Programme is aimed at the formation of a profit allocation plan applicable at the entire group level that would encourage towards achievement of strong and long-term customer relations. It is a collective profit allocation programme meant for all SEB employees. The amount of a bonus depends on factors indicated in the business plan of Skandinaviska Enskilda Banken AB (publ). 50 per cent of a bonus is disbursed in cash, another 50 per cent share is held for a tree-year period and will be disbursed in cash calculating based on the total return of A class shares (TSR) of Skandinaviska Enskilda Banken AB (publ), i.e. based on a change in the price of a share as well as on the allocation of reinvested dividends for SEB shares.
Additional benefit – it includes additional health insurance, saving endowment insurance, additional annual vacation, additional paid vacation to students.
(all amounts in LTL thousand, unless indicated otherwise)
• The main remuneration policy structure elements, including information on the criteria used for performance appraisal and for risk assessment, risk-based remuneration adjustment, remuneration allocation criteria and deferral principles
The remuneration policy structure consists of:
- remuneration concept and remuneration package elements;
- remuneration by position;
- variable remuneration;
- additional benefit;
- remuneration policy management and control;
- information disclosure;
- description of the Group's risk-takers and their attribution to said category.
The remuneration policy establishes that principles for the determination and payment of variable remuneration to risk-takers must be in line with the Group's long-term continued activities interests, business strategy, objectives, values, and would encourage reliable and effective risk management, and employees would not be encouraged to take risk that is excessive and unacceptable to the Group.
At the beginning of each year, annual activity objectives are established for the Group, subdivision and an employee, based on which the performance over a relevant year is appraised. SEB applies a uniform group-wide process for the appraisal and documentation of an employee's performance and behaviour, where the achievement of individual qualitative and quantitative objectives serves for the determination of a relevant remuneration.
Remuneration is related to performance, therefore, the whole amount of the remuneration is based on the overall appraisal of performance of an individual, a subdivision and the Group. The appraisal of each employee's personal input includes not only the employee's input towards the achievement of financial results (quantitative objectives), but also non-financial (qualitative) criteria (for instance, observance of internal rules and procedures as well as standards of the relations with customers and investors).
Variable remuneration to the Group's employees whose professional activities and/or decisions taken may have a significant impact on the risks assumed by the Group is established according to the impact of their decisions on risk. An employee is considered to be able to take decisions that have a significant impact on the risk assumed by the Group (i.e. a risk-taker), if the employee meets at least one of the following criteria:
- employees with leading strategic positions in the Group;
- employees with risk control functions;
- employees empowered to take decisions, which may have a material impact on the Group's performance;
- employees whose remuneration is equal or exceeds the remuneration of the Group's employees in leading strategic positions.
Variable remuneration for said employees is calculated based on the appraisal of a relevant employee's performance over no less than three to five years, and the actual variable remuneration is paid in portions – over a period that matches the Group's operation cycle and operational risk. No less than 50 per cent of the remuneration to such employees must consist of shares or any other financial instruments.
The deferred variable remuneration portion is allocated proportionately over the entire deferral period, and its payment is started no earlier than after one year since the end of a relevant employee's performance appraisal and shall be effected no more than once a year.
In case of financial instruments that constitute a portion of the variable remuneration, a no less than 12 months' deferral period is applied. Such period is reckoned since the time of granting the rights to the financial instruments. This provision applies both to the deferred variable remuneration portion and to the variable remuneration portion that is not subject to deferral.
• Performance appraisal criteria, which are the basis for the right to the Bank's shares, equity-linked financial instruments and to other composite parts of the variable remuneration
Variable remuneration to risk-takers may be disbursed taking into account the following terms:
- sustainability of the Bank's and/or the Group's financial standing;
- implemented annual objectives of an employee, also, adherence to the requirements of the internal legal acts.
Prior to the disbursement of each deferred portion of the variable remuneration and in each case related to its disbursement the aboveindicated terms are assessed.
• General quantitative information on remuneration by business areas
THE YEAR 2013 CONSOLIDATED ANNUAL REPORT
(all amounts in LTL thousand, unless indicated otherwise)
The tables below contain information on amount before taxes. The information is provided for the year 2013 according to the data as of 20 February 2014.
| The Group companies | Base remuneration (LTL '000) |
Variable remuneration (LTL '000) |
Number of employees |
|---|---|---|---|
| AB SEB bankas | 93,202 | 1,371 | 1,731 |
| UAB "SEB investicijų valdymas" | 945 | 50 | 9 |
| UAB "SEB Venture Capital" | 330 | 0 | 1 |
| In total | 94,477 | 1,421 | 1,741 |
* Variable salary planned for the year 2013 based on an individual programme is provided
• General quantitative information on remuneration to employees, excluding the senior management of the Bank:
o financial year annual wage amounts, split into base and variable remuneration portion and the number of individuals thus remunerated:
| The Bank | Base remuneration (LTL '000) |
Variable remuneration (LTL '000) |
Number of individuals thus remunerated |
|---|---|---|---|
| The management board | 2,699 | 544 | 5 |
| Risk-takers of the Group, excluding members of the management board |
6,759 | 331 | 37 |
| Employees | 83,744 | 496 | 1,689 |
| In total | 93,202 | 1,371 | 1,731 |
| The Group | Base remuneration (LTL '000) |
Variable remuneration (LTL '000) |
Number of individuals thus remunerated |
|---|---|---|---|
| The management board | 3,363 | 593 | 9 |
| The Group's risk-takers, excluding members of the management board |
6,945 | 331 | 39 |
| Employees | 84,169 | 497 | 1,693 |
| In total | 94,477 | 1,421 | 1,741 |
* Variable salary planned for the year 2013 based on an individual programme is provided
o amounts of the variable remuneration split into payment in cash, pension contributions, shares of the Bank, equity-linked financial instruments and other financial or non-cash instruments:
| The Bank | Variable remuneration paid in cash (LTL '000) |
Pension contributions (LTL '000) |
Shares of the Bank (LTL '000) |
Equity-linked financial instruments (LTL '000) |
|---|---|---|---|---|
| The management board | 0 | 0 | 0 | 544 |
| The Group's risk-takers, excluding members of the management board |
0 | 0 | 0 | 331 |
| Employees | 0 | 0 | 0 | 496 |
| In total | 0 | 0 | 0 | 1,371 |
| The Group | Variable remuneration paid in cash (LTL '000) |
Pension contributions (LTL '000) |
Shares of the Bank (LTL '000) |
Equity-linked financial instruments (LTL '000) |
|---|---|---|---|---|
| The management board | 2 | 0 | 0 | 591 |
| The Group's risk-takers, excluding members of the management board |
0 | 0 | 0 | 331 |
| Employees | 1 | 0 | 0 | 496 |
| In total | 3 | 0 | 0 | 1,418 |
(all amounts in LTL thousand, unless indicated otherwise)
o amounts of the outstanding deferred remuneration for 2013 split into allocated and non-allocated portions:
| The Bank | Deferred variable remuneration (LTL '000) |
Allocated deferred variable remuneration (LTL '000) |
Non-allocated deferred variable remuneration (LTL '000) |
|---|---|---|---|
| The management board | 544 | 0 | 544 |
| The Group's risk-takers, excluding members of the | |||
| management board | 331 | 0 | 331 |
| Employees | 496 | 0 | 496 |
| In total | 1,371 | 0 | 1,371 |
| The Group | Deferred variable remuneration (LTL '000) |
Allocated deferred variable remuneration (LTL '000) |
Non-allocated deferred variable remuneration (LTL '000) |
|---|---|---|---|
| The management board | 591 | 0 | 591 |
| The Group's risk-takers, excluding members of the | |||
| management board | 331 | 0 | 331 |
| Employees | 496 | 0 | 496 |
| In total | 1,418 | 0 | 1,418 |
o amounts of the deferred variable remuneration, allocated over a financial year, paid and adjusted taking into account the performance results:
In 2013 the Bank and the Group paid variable remuneration granted in 2011 and 2012
| The Bank | Deferred paid in cash variable remuneration in 2011 and 2012 (LTL '000) |
Equity-linked financial instruments (LTL '000)* |
|---|---|---|
| The management board | 2 | 229 |
| The Group's risk-takers, excluding members of the management board |
45 | 227 |
| Employees | 0 | 0 |
| In total | 47 | 456 |
| The Group | Deferred paid in cash variable remuneration in 2011 (LTL '000) |
Equity-linked financial instruments (LTL '000)* |
|---|---|---|
| The management board | 2 | 242 |
| The Group's risk-takers, excluding members of the management board |
45 | 227 |
| Employees | 0 | 0 |
| In total | 47 | 469 |
* SEB share price (A class) has been calculated according to the rate of exchange as of 20 February 2014 of the Stockholm Exchange
o amount of the guaranteed variable remuneration envisaged under new agreements and the number of individuals thus remunerated:
In 2013, there were no such amounts in the Bank and the Group.
o amounts related to termination of labour relations allocated over the financial year, the number of individuals thus remunerated and maximum amount allocated to a single individual:
| The Bank | Number of individuals paid the severance pay |
Total amount of severance pays paid upon termination of labour contracts* (LTL '000) |
Maximum amount allocated per single individual (LTL '000)* |
|---|---|---|---|
| 305 | 4,308 | 208 | |
* including pays for unused vacation, taxes.
(all amounts in LTL thousand, unless indicated otherwise)
| The Group | Number of individuals paid the severance pay |
Total amount of severance pays paid upon termination of labour contracts* (LTL '000) |
Maximum amount allocated per single individual (LTL '000)* |
|---|---|---|---|
| 313 | 4,767 | 420 |
* including pays for unused vacation, taxes.
• Reasons and criteria for allocation of the variable remuneration portions and all other non-cash benefits
For employees of the Group only the base remuneration – remuneration by position – is established in advance.
Remuneration establishment principles are related to the results of employee performance results. It means that individual remunerations by positions and variable remuneration is established taking into account the employees' performance appraisal.
The Group aims that remuneration for its employees would be competitive in the banking market by establishing an appropriate proportion: (a) between the remuneration by position and variable remuneration, and (b) between long-term and short-term reward. The Group also aims that the total remuneration would reflect the integrity of the employee activities, commitment and leadership qualities required for any definite position, also that it would be established taking into account the appraisal of an individual employee's activities.
20. Procedure for amending the Issuer's articles of association, rules regulating the election of members to the management board
The Bank's articles of association are amended according to the procedure established by the Company Law of the Republic of Lithuania and by the Law on the Republic of Lithuania on Banks. The Company Law of the Republic of Lithuania establishes, with certain exceptions, that amendment of the articles of association is an exclusive right of the general meeting of shareholders. When taking a decision on amending the articles of association, a 2/3 qualified majority of votes of general meeting of shareholders present at the general meeting of shareholders is required.
The Law on the Republic of Lithuania on Banks establishes that amended articles of association, in case of amending the provisions of the articles of association regarding 1) the name of the Bank; 2) the amount of the Bank's authorised (paid-in) capital; 3) the number of shares, also, their number by classes, their nominal value as well as the rights vested; 4) the competence of the Bank's management bodies, the procedure for the election and revocation of their members, may registered with the Register of Legal Entities only subject to a relevant permission of the supervisory authority, i.e. the Bank of Lithuania.
The Bank's management board is elected by the Bank's supervisory council for a 4 year tenure. If individual members of the board are elected, they are elected only until expiry of the tenure of the existing management board. A decision of the supervisory council to revoke any member from the management board may be adopted, if no less than 2/3 of the supervisory council members present at the meeting vote for it. The number of tenures of a management board member is unlimited. The chairman of the board is elected by the management board from among its members.
21. The Issuer's bodies
The articles of association of AB SEB bankas establish that the bodies of the Bank are as follows:
- The General Meeting of Shareholders of the Bank (hereinafter the 'Meeting')
- The Supervisory Council of the Bank (hereinafter the 'Council')
- The Management Board of the Bank (hereinafter the 'Management Board')
- Head of the Bank's administration (president) (hereinafter the 'President').
The competence of the General Meeting of Shareholders and shareholders' rights and their exercising are provided for by the laws of the Republic of Lithuania.
The Management Board and the President are the Bank's management bodies.
The Council is a collegiate supervisory body carrying out the function of supervision over the Bank's activities. The Council consisting of 5 members is elected by the Meeting. The Council elects the Management Board members and revokes them from their positions, supervises over the activities of the Management Board and the President and has other rights and duties attributed to its competence by acts of law of the Republic of Lithuania and the articles of association of the Bank.
The Management Board is a collegiate management body of the Bank, consisting of 5 members and is elected by the Council. The Management Board manages the Bank, handles its daily matters, represents the Bank's interests and is liable for the financial services of the Bank as prescribed by law. The Management Board elects (appoints) and revokes the President and his deputies and has other rights and duties attributed to its competence by acts of law of the Republic of Lithuania and the articles of association of the Bank. Individual members of the Management Board have no powers granted to them as members of the Management Board, they act jointly as a collegiate body and separately as directors of relevant divisions of AB SEB bankas.
The President acts in the name of the Bank, organizes the Bank's day-to-day activities and has other functions attributed to his competence by laws of the Republic of Lithuania and the articles of association of the Bank.
(all amounts in LTL thousand, unless indicated otherwise)
- Information on the composition of the management and supervisory bodies and of their committees, their areas of activities as well as those of the head of the company and on the Chief Financial Officer
THE SUPERVISORY COUNCIL OF THE BANK (31 December 2013)
KNUT JONAS MARTIN JOHANSSON
Head of Business Support Division of Swedish bank SEB. Education: university degree, specialisation – economics. No shares of the Bank are held by the Member.
Member of the Supervisory Council elected by an extraordinary meeting of shareholders of SEB Bank held on 29 October 2009, Chairman of the Supervisory Council since 13 November 2009.
An extraordinary meeting of shareholders held on 29 October 2013 re-elected him for a new tenure. On 13 November 2009 he was elected Chairman of the Supervisory Council, on 14 November 2013 he was re-elected Chairman of the Supervisory Council.
MARK BARRY PAYNE
Head of Finance of SEB Baltic Division. Education: university degree, specialisation – economics. No shares of the Bank are held by the Member.
Member of the Supervisory Council elected by an extraordinary meeting of shareholders of SEB Bank held on 29 October 2009. An extraordinary meeting of shareholders held on 29 October 2013 re-elected him for a new tenure.
DAVID BAMFORTH TEARE
Head of Baltic Division. Education: university degree, specialisation – economics. No shares of the Bank are held by the Member.
Member of the Supervisory Council elected by an extraordinary meeting of shareholders of SEB Bank held on 29 October 2013.
STEFAN STIGNÄS
Head of Retail Banking, SEB Baltic Division. Education: university degree, specialisation – economics. No shares of the Bank are held by the Member.
Member of the Supervisory Council elected by an extraordinary meeting of shareholders of SEB Bank held on 29 October 2009. An extraordinary meeting of shareholders held on 29 October 2013 re-elected him for a new tenure.
TED TONY KYLBERG
Head of Procurement and Vendor Management of SEB Business Support Division. Education: university degree, specialisation – law. No shares of the Bank are held by the Member.
Member of the Supervisory Council elected by an annual general meeting of shareholders of SEB Bank held on 25 March 2010. An extraordinary meeting of shareholders held on 29 October 2013 re-elected him for a new tenure.
The tenure of all members of the Supervisory Council expires on 29 October 2017.
THE MANAGEMENT BOARD OF THE BANK (31 December 2013)
RAIMONDAS KVEDARAS
Chairman of the Management Board and President of AB SEB bankas since 19 October 2009. Elected to the Management Board as its Member of on 4 February 2004. Education: higher, specialisation – international finance. No shares of the Bank are held by the Member.
AIVARAS ČIČELIS
Vice President and Head of Corporate Banking Division of AB SEB bankas. Member of the Management Board since 19 October 2009. Education: higher, specialisation – economics. No shares of the Bank are held by the Member.
ROBERTS BERNIS
Vice President and Head of Credit and Risk Management Division of AB SEB bankas. Member of the Management Board since 19 October 2009. Education: higher, specialisation – engineering. No shares of the Bank are held by the Member.
VIRGINIJUS DOVEIKA
Vice President and Head of Retail Banking Division of AB SEB bankas. Elected to the Management Board as its member on 14 June 2010. Education: higher, specialisation – business administration and management. No shares of the Bank are held by the Member.
JONAS IRŽIKEVIČIUS
Vice President and Head of Business Support Division and Chief Financial Officer of AB SEB bankas. Member of the Management Board since 11 April 2011. Education: higher, specialisation – business administration. No shares of the Bank are held by the Member.
The tenure of all members of the Management Board expires on 7 February 2016 (on 8 February 2012, the Supervisory Council of the Bank took a decision to re-elect the Management Board of the Bank for a new four-year tenure).
(all amounts in LTL thousand, unless indicated otherwise)
CHIEF EXECUTIVE OFFICER
RAIMONDAS KVEDARAS – Chairman of the Management Board and President of AB SEB bankas since 19 October 2009. Elected to the Management Board as its member on 4 February 2004.
CHIEF FINANCIAL OFFICER
JONAS IRŽIKEVIČIUS – Vice President and Head of Business Support Division and Chief Financial Officer of AB SEB bankas. Member of the Management Board and Chief Financial Officer since 11 April 2011.
Over the reporting period, there were no disbursements to members of the Supervisory Council of the Bank.
Information on disbursements over the reporting period to the Management Board members holding also other positions in the Bank is provided in the table below. Variable remuneration portion to members of the Management Board over the year 2011 and 2012 has been allocated in 2013 – relevant information is provided under Article 19 of the present Report.
| Amounts in connection with labour relations |
Property assigned gratis |
Guarantees issued in the name of the company |
|
|---|---|---|---|
| In total to all members of the Management Board (LTL '000) before taxes, of which: |
3,812 | - | - |
| amounts based on a labour contract (LTL'000) | 2,923 | - | - |
| employer's social security contributions (LTL'000) |
889 | - | - |
| Other disbursements, including the employer's social security contributions (LTL'000)**: |
564 | - | - |
| Per member of the Management Board on average (LTL'000) before taxes: * |
762 | - | - |
| amounts based on a labour contract (LTL'000) | 584 | - | - |
| employer's social security contributions (LTL'000) |
178 | - | - |
| During the year 2013 calculated amounts to the Company's Chief Executive Officer and Chief Financial Officer (LTL'000) before taxes: |
|||
| amounts calculated to the Company's Chief Executive Officer during the year 2013 based on labour contract (LTL'000) |
913 | - | - |
| amounts calculated to the Company's Chief Financial Officer during the year 2013 based on labour contract (LTL'000) |
533 | - | - |
* The Management Board consists of 5 members.
** Bonus, daily allowances exceeded the set standard.
The Audit and compliance committee is an advisory body to the Bank's supervisory council / management board in of accounting, compliance, audit, risk management, internal audit and control as well as in other areas of the audit committee competence as provided for by relevant existing documents.
The purpose and activities of the committee are to monitor, supervise and to provide recommendations and proposals to the supervisory council / management board regarding:
- efficiency of the Bank's internal audit, risk management and its internal audit systems;
- drafting of financial reports;
• implementation of audit and internal audit processes, independence and effectiveness of the internal audit, information provided by the internal audit on the reviews carried out, on the elimination of any drawbacks found and on the implementation of internal audit plans;
- appointing, repeated appointing and dismissal of the head of internal audit;
- audit of annual reports and consolidated annual reports;
- comprehensiveness of data of financial statements;
- appointing, repeated appointing and dismissal of the Bank's external auditor;
- establishing terms and remuneration to an external auditor;
• observance of the principles of independence and fairness by an auditor and an audit company performing an audit, annual assessment of their qualifications, experience, resources and efficiency;
• formation of policy related to non-audit services provided by an external auditor with the aim to ensure that rendering of said services would have no impact on the independence of such external auditor;
(all amounts in LTL thousand, unless indicated otherwise)
• internal audit regulations, current-year plan of the internal audit, lists of persons to whom any audit report or its summary version is provided and rules for providing a report;
• ensuring the resources allocated for the internal audit required for the implementation of set objectives and due qualifications of the internal audit employees for the fulfilment of their functions;
• enhancing the efficiency of the Bank's processes;
• meeting the requirements of legal acts and implementation of the principles of good practice of professional activities, initiation of periodical reviews with the aim to assess whether the Bank's activities are in line with the requirements of national laws, legal acts of supervisory authorities as well as any other legal acts or with the provisions of the Bank's the statute (articles of association) and of the Bank's activities strategy;
• approving the general audit plan of the work of the Bank's internal audit subdivision;
• other issues that fall within the competence of the committee according to the requirements of laws and legal acts as well as according to the policy and instructions of the Bank and/or the entire Group.
AUDIT AND COMPLIANCE COMMITTEE (31 December 2013)
MARK BARRY PAYNE
Chairman of the Committee. Employer: Skandinaviska Enskilda Banken AB (publ). No shares of the Bank held.
GÖRAN RASPE
External auditor. No shares of the Bank are held by the external auditor.
AUŠRA MATUSEVIČIENĖ
Employer: Skandinaviska Enskilda Banken AB (publ). No shares of the Bank held.
BEN WILSON
Employer: Skandinaviska Enskilda Banken AB (publ). No shares of the Bank held.
ARNOLDS ČULKSTENS
Employer: Skandinaviska Enskilda Banken AB (publ). No shares of the Bank held.
JONAS GUDMUNDSSON
Employer: Skandinaviska Enskilda Banken AB (publ). No shares of the Bank held.
On 16 November 2011, the Supervisory Council of the Bank approved a new composition of the Bank's Remuneration Committee. Information on its composition and areas of activities is provided under Article 19 of the present Report.
23. Significant arrangements, the Issuer being a party thereto, which in case of any changes in the Issuer's controlling stake would take effect, change or discontinue
Such significant arrangements are envisaged under the Bank's loan agreements, however, parties thereto and relevant terms and conditions contained therein are deemed to be confidential information with regard to both the Bank and other parties, therefore, their disclosure could render major damage to the Bank.
24. Arrangements between the Issuer and members of its bodies or employees
On 27 January 2014, the administration of the Bank and representatives of the Bank employees signed an updated collective bargaining agreement at a two-year effective period. The present Agreement superseded the Bank's collective bargaining agreement that was effective since 10 February 2012. The collective bargaining agreement regulates labour relations as well as terms and conditions, defines mutual obligations of the employer and the employees, additional incentive measures for the employees as well as other labour relations terms and conditions on which the employees and the employer have mutually agreed, for instance, on a sum-total working hours time, calculation of the employment record, additional vacations, etc. The collective bargaining agreement has been signed by and between the administration of SEB Bank and representatives of the labour council. The labour council of the Bank consists of 15 employees of the Bank elected by secret vote holding different positions at the Bank. The collective bargaining agreement includes the terms and conditions of work and the aspects on which it may be directly agreed with the employer.
Consultations with the Bank's administration is one of the main areas activities of the labour council. The labour council periodically meets with the president of the Bank. At such meetings, implementation of the provisions of the collective bargaining agreement, future changes, also questions as well as observations from employees to members of the labour council are discussed.
There are no separate arrangements regarding severance pays executed with the Issuer's bodies, members of committees or employees, should they resign or be dismissed without a motivated reason.
| The Group | The Bank | ||||
|---|---|---|---|---|---|
| 2013 | 2012 (restated) | Note | 2013 | 2012 (restated) | |
| 470,985 | 623.735 | interest income | 470.505 | 623.745 | |
| (182.245) | (335, 802) | Interest expenses | (182, 262) | (335, 879) | |
| 288,740 | 287,933 | Net interest income | 6 | 288,243 | 287,866 |
| (80, 673) | (55,031) | Impairment (losses)/ reversals on loans | 7 | (80, 673) | (55,031) |
| 33,415 | 27,412 | Impairment reversals on lease portfolio Provisions, reversals for guarantees and other off |
$\overline{7}$ | 33.415 | 27,412 |
| 4,567 | 2.380 | balance sheet Items | 4,567 | 2.380 | |
| (42, 691) | (25, 239) | Total impairment (losses), reversals | (42, 691) | (25, 239) | |
| 246,049 | 262,694 | Net interest income after impairment losses | 245,552 | 262,627 | |
| 264,799 | 251,454 | Fee and commission income | 8 | 251,656 | 238,579 |
| (67, 653) | (66, 806) | Fee and commission expenses | 8 | (66, 855) | (66,271) |
| 197,146 | 184,648 | Net fee and commission income | 184,801 | 172,308 | |
| Net gains (loss) on operations with debt securities | |||||
| 23.406 | (7.152) | and derivative financial instruments | 10 | 23,183 | (7.031) |
| (1,073) | (859) | Net loss on investment securities | (1,073) | (859) | |
| Dividend Income from subsidiaries | 9 | 7,351 | 8.344 | ||
| 71.303 | 67,833 | Net foreign exchange gain | 11 | 71.357 | 67,836 |
| 6,171 | 6,492 | Other income, net | 6.666 | 7.197 | |
| 99,807 | 66.314 | Net investment activities | 107,484 | 75,487 | |
| (129, 141) | (141, 720) | Staff costs | 12 | (126, 813) | (139, 477) |
| (170, 332) | (264, 563) | Other administrative expenses | 13 | (168, B79) | (263, 083) |
| 243,529 | 107,373 | Operating profit | 242,145 | 107,862 | |
| 243,529 | 107,373 | Profit before income tax | 242,145 | 107,862 | |
| (31, 220) | (22, 514) | Income tax expenses | 14 | (29, 834) | (20, 285) |
| 212,309 | 84,859 | Net profit for the year | 212,311 | 87,577 | |
| 212.309 | 84.859 | Attributable to: Owners of the Bank |
212,311 | 87.577 | |
| 212,309 | 84,859 | Non controlling interest | |||
| 212.311 | 87,577 |
| The Group | The Bank | ||||
|---|---|---|---|---|---|
| 2013 | 2012 (restated) | Note | 2013 | 2012 (restated) | |
| 212,309 | 84,859 Net profit for the year | 212,311 | 87,577 | ||
| items that may subsequently be reclassified to the income statement: | |||||
| 1,565 | 5,184 Net gain on available for sale assets | 34 | 1.565 | 5,184 | |
| Amortisation of financial assets revaluation reserve | |||||
| 256 | 1.450 | of reclassified financial assets | 34 | 256 | 1,450 |
| Income tax relating to the components of other | |||||
| (273) | (995) | comprehensive income | 14 | (273) | (995) |
| Items that will not be reclassified to the income statement: | |||||
| 1,548 | 5,639 | Total other comprehensive income | 1,548 | 5,639 | |
| 213,857 | 90,498 Total comprehensive income | 213,859 | 93,216 | ||
| Attributable to: | |||||
| 213,857 | 90.498 | Owners of the Bank | 213,859 | 93,216 | |
| Non controlling Interest | |||||
| 213,857 | 90,498 | 213,859 | 93,216 |
| The Group | The Bank | ||||
|---|---|---|---|---|---|
| 2013 | 2012 (restated) | Note | 2013 | 2012 (restated) | |
| 418.136 | 443.393 | Assets Cash on hand |
|||
| 935,323 | 1,002,933 | Balances with the Central Bank | 418,136 | 443,393 | |
| 3,691,046 | 2,666,929 | Due from banks | 16 | 935.323 | 1,002.933 |
| 59.895 | 60,900 | Government securities available for sale | 17 | 3,691,046 | 2,666,929 |
| Financial assets at fair value through | 18 | 59,228 | 60,234 | ||
| 953,982 | 651,603 | profit and loss | 19 | 909.613 | |
| 259,288 | 326,230 | Derivative financial instruments | 20.46 | 259,288 | 608,544 |
| 86,077 | 6.242 | Loans to creditinstitutions | 21.46 | 86,077 | 326,230 |
| 15,164,544 | 15,630,514 | Loans to customers | 7, 22, 46 | 15,191,785 | 6,242 15,656,472 |
| 1,428,253 | 1,502,759 | Finance lease receivables | 23 | 1,428,394 | 1,502,919 |
| Investment securities: | |||||
| 191,126 | 386,010 | - loans and receivables | 24 | ||
| 200 | 200 | - available for sale | 24 | 191,126 | 386,010 |
| 13.302 | 13.812 | - held to maturity | 200 | 200 | |
| Investments in subsidiaries | 24 | 13,302 | 13,812 | ||
| 48,239 | 58.260 | Intangible fixed assets | 25 | 34.900 | 34,900 |
| 24,643 | 22,645 | 26 | 48,239 | 58,260 | |
| 375 | Property, plant and equipment | 27 | 24,469 | 22,451 | |
| 3,924 | 23,686 | Assets under operating lease | ä. | 375 | |
| 14,047 | 14,232 | Non-current assets held for sale | 42 | 3.924 | 23.686 |
| Investment property Deferred tax asset |
28 | 14,047 | 14,232 | ||
| 167,633 | 197,753 | Other assets | 14.46 | 167,600 | 197,706 |
| 131,288 | 113,842 | 29 | 130,295 | 112,083 | |
| 23,590,946 | 23,122,318 | Total assets | 23,606,992 | 23,137,611 | |
| Liabilities | |||||
| 33 | 37 | Due to the Central Bank | 33 | 37 | |
| 7,177,824 | 6,789,296 | Due to credit institutions | 30 | 7,177,824 | 6,789,296 |
| 270,943 | 380,892 | Derivative financial instruments | 20.46 | 270,943 | 380,892 |
| 13,224,857 | 12,797,100 | Deposits from public | 31 | 13,245,685 | 12,816,617 |
| 51,822 | 61,181 | Accrued expenses and deferred income | 33 | 50,778 | 59,964 |
| 2,135 | 1,316 | income tax payable | |||
| 117.556 | 561,016 | Debt securities in Issue | 32 | 117.556 | 561,016 |
| 144,249 | 145,409 | Other liabilities and provisions | 33 | 143.996 | 145,070 |
| 20,989,419 | 20,736,247 | Total liabilities | 21,006,815 | 20,752,892 | |
| Equity | |||||
| Equity attributable to owners of the Bank | 34 | ||||
| 1.034.575 | 1,034,575 | Share capital | 1,034,575 | 1,034,575 | |
| 2,200 | 2,200 | Reserve capital | 2,200 | 2.200 | |
| (2,550) | (4,098) | Financial assets revaluation reserve | (2,550) | (4,098) | |
| 239.612 | Legal reserve | 287,327 | 237,737 | ||
| 289,202 | 14,132 | General and other reserves | 15,731 | 14,132 | |
| 15,731 | |||||
| 1,262,369 | 1,099,650 | Retained earnings | 46 | 1,262,894 | 1,100,173 |
| 2,601,527 | 2,386,071 | 2,600,177 | 2,384,719 | ||
| Non controlling interest in equity | |||||
| 2,601,527 | 2,386,071 | Total equity | 2,600,177 | 2,384,719 |
| Retained earning | Legal reserv | 鼻 | |||||
|---|---|---|---|---|---|---|---|
| g∃ § |
General and other reserves |
Financial asset revaluation eserve (deficit) |
Reserve capital |
Share and B |
|||
| å |
| he Group | Note | capital Share |
Reserve capital |
reserve (deficit) revaluation |
Legal reserve | General and | other reserves Retained earnings | noncontroling interest |
controling Interest |
Total Equity |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 December 2011 | 1,034,575 | 2,200 | (9,737) | 194,708 | 12,497 | 1,096,516 | 2,330,759 | 2,330,759 | ||
| npairment of hornogenious loans | \$ | ı | (9.599) | (9,599) | (9.599) | |||||
| djusted balance as of 31 December 2011 | 1,034,575 | 2,200 | (9,757) | 194,708 | 12,497 | CDS, 380, | 2,321,160 | 2,321,160 | ||
| et change in available for sale investments, net of deferred tax |
||||||||||
| mortisation of financial assets revaluation | 4,189 | 4,189 | 4,189 | |||||||
| reserve of reclassified financial assets | 1450 | 1,450 | 1,450 | |||||||
| et profit for the year | í. | 84,859 | 84,859 | 84,859 | ||||||
| otal comprehensive income | 5,639 | 84,859 | 90,498 | 90,498 | ||||||
| ther movements | Ē | R | ||||||||
| hare-based compensation | 1,635 | 1 | . អូឡ |
. អូន |
||||||
| ransfers to reserves | 45,615 | J, | (45,615) | $\cdot$ | ||||||
| 1December 2012 | 1,034,575 | 2,200 | (4,098) | 239,612 | 14,132 | 1,126,872 | 2,413,293 | 2,413,293 | ||
| hange in fair value measurement of financial assets | ¥ | 1 | $\blacksquare$ | $\cdot$ | (27, 722) | (27,222) | (27,222) | |||
| djusted balance as of 31 December 2012 | 1,034,575 | 2,200 | (4,098) | 239,612 | 14132 | 1,099,650 | 2,386,071 | 2,386,071 | ||
| et change in available for sale investments, | ||||||||||
| mortisation of financial assets revaluation et of deferred tax |
z | 1,292 | 1292 | 1292 | ||||||
| eserve of reclassified financial assets | ž | 256 | 256 | 256 | ||||||
| et profit for the year | 212,309 | 212,309 | 212,309 | |||||||
| otal comprehensive income | 1,548 | 212,309 | 213,857 | 213,857 | ||||||
| ther movements | ||||||||||
| nare-based compensation | 1599 | 1599 | 1599 | |||||||
| ransfers to reserves | 49,590 | (49,590) | ||||||||
| CIVIC modesman P |
| Financial assets | |||||||
|---|---|---|---|---|---|---|---|
| Note | capital Share |
Reserve capital reserve (deficit) revaluation |
Legal reserve | other reserves Retained earnings General and |
Total Equity | ||
| 1,034,575 | 2200 | (9,737) | 191,184 | 12,497 | 911,059 | 2,141,778 | |
| 184,911 | |||||||
| $\cdot$ | (9.599) | (9,599) | |||||
| 1,034,575 | 2,200 | (9,737) | 192,184 | 12,497 | 1,085,371 | 2,317,090 | |
| 4,189 | 4,189 | ||||||
| 1,450 | 1,450 | ||||||
| $\cdot$ | 87,577 | ||||||
| 5,639 | 87,577 | 93,216 | |||||
| 1,635 | |||||||
| , | 45,553 | $\cdot$ | (45,553) | ||||
| 1,034,575 | 2,200 | (4,098) | 237,737 | 14.132 | 1,127,395 | 2,411,941 | |
| \$ | , | , | , | ı | (27, 22) | (27, 222) | |
| 1,034,575 | 2,200 | (4,098) | 237,737 | 14.132 | 1,100,173 | 2,384,719 | |
| z | ī | 1,292 | |||||
| z | 256 | ł | 256 | ||||
| 212,311 | 212,311 | ||||||
| 1,548 | 212,311 | 213,859 | |||||
| ı | 1,599 | 1,599 | |||||
| 49,590 | $\cdot$ | (49,590) | |||||
| 1,034,575 | 2,200 | (2,550) | 287,327 | 15,731 | 1,262,894 | 2,600,177 | |
| 28 4 | 1292 | 1,000 | 1,635 | 87,577 183,911 |
| The Group | The Bank | ||||
|---|---|---|---|---|---|
| 2013 | 2012 (restated) | Note | 2013 | 2012 (restated) | |
| Cash from operating activities | |||||
| 468,520 | 593.967 | Interest income received | 469.058 | 595,452 | |
| (201, 306) | (354.301) | Interest expenses paid | (201, 323) | (354.378) | |
| 57,393 | 54.048 | Net foreign currency exchange gain | 57,398 | 54,052 | |
| (2,380) | (6,665) | Net loss in securities trading and financial instruments |
(2,380) | (6,665) | |
| (5,857) | (14.111) | Net loss in derivatives trading | (5,857) | (14,111) | |
| 203,749 | 190,721 | Net commission and service income | 191,899 | 179.086 | |
| (133.962) | (141.182) | Staff costs | (131, 455) | (139, 393) | |
| (141, 317) | (109, 548) | Other payments | (139, 848) | (107, 672) | |
| 244,840 | 212,929 | Net cash from operating activities before change in operating assets and liabilities |
237,492 | 206,371 | |
| Changes in operating assets | |||||
| 92,210 | 674,850 | Decrease (increase) in compulsory balances with the Central Bank |
92.210 | 674,850 | |
| (2,767,194) | 1,731,851 | Decrease (increase) in due from banks and loans to credit institutions |
(2,767,193) | 1,731,852 | |
| 365.538 | (61.341) | (increase) decrease in loans to customers | 363.268 | (61,028) | |
| 119,156 | 195.638 | Decrease of finance lease receivable | 119.175 | 195,712 | |
| (19.304) | 34,798 | Decrease (increase) in other current assets | (18,698) | 36,359 | |
| (2,209,594) | 2,575,796 | Net change in operating assets | (2,211,238) | 2,577,745 | |
| Changes in operating liabilities | |||||
| 441,136 | 438,960 | Increase in deposits from public | 442,447 | 434,137 | |
| (Decrease) increase in accrued expenses. | |||||
| 4,161 | (787,786) | deferred income and other liabilities | 3,327 | (788.068) | |
| 445,297 | (348, 826) | Net change in operating liabilities | 445,774 | (353, 931) | |
| (1,519,457) | 2,439,899 | Net cash from operating activities before income tax |
(1,527,972) | 2,430,185 | |
| ٠ | Income tax paid | ||||
| (1,519,457) | 2,439,899 | Net cash from operating activities after Income tax |
(1,527,972) | 2,430,185 |
| The Group | The Bank | ||||
|---|---|---|---|---|---|
| 2013 | 2012 (restated) | Note | 2013 | 2012 (restated) | |
| Cash flow from investing activities | |||||
| (6,866) | (6,958) | Acquisition of tangible and intangible fixed | (6,759) | (6,954) | |
| (138,763) | assets, net Acquisition of Government securities |
(138,763) | |||
| available for sale | |||||
| 2,542 | 141.734 | Sale of Government securities | 2.512 | 141.423 | |
| available for sale | |||||
| Dividends received from subsidiaries | 9 | 7.351 | 8.344 | ||
| (1,376,233) | (2,808,042) | Acquisition of investment in other securities |
(1,375,146) | (2,806,367) | |
| 1,281,169 | 3,475,679 | Sale of investment in other | 1,281,169 | 3,475,679 | |
| securities | |||||
| (99, 388) | 663,650 | Cash generated from investing activities | (90, 873) | 673,362 | |
| Cash flow from (used in) financing activities | |||||
| (4) | 5 Increase (decrease) in amounts owed to the | (4) | 5 | ||
| Central Bank | |||||
| 407,310 | (3,089,843) | (Decrease) increase In amounts owed to credit Institutions |
407.310 | (3,089,842) | |
| (241, 696) | (Decrease) in subordinated loans | (241, 696) | |||
| (6,308) | Interest paid on subordinated loans | (6,308) | |||
| 36.815 | 56,738 | Proceeds from own issued debt securities | 36,815 | 56,738 | |
| (472, 031) | (76, 876) | Repurchased own issued debt securities | (472, 031) | (76, 876) | |
| (17, 144) | (23.197) | Interest paid for own issued debt securities | (17, 144) | (23, 196) | |
| (45,054) | (3, 381, 177) | Cash used in financing activities |
(45,054) | (3, 381, 175) | |
| (1,663,899) | (277, 628) | Net increase (decrease) in cash/cash equivalents | (1,663,899) | (277, 628) | |
| 3,118,790 | 3,396,418 | Cash/cash equivalents 1 January | 3,118,790 | 3,396,418 | |
| 1,454,891 | 3,118,790 | Cash/cash equivalents 31 December | 1,454,891 | 3,118,790 | |
| Specified as follows: | |||||
| 448,769 | 424.169 | Balance available for withdrawal with the | 448.769 | 424.169 | |
| Central Bank | 16 | ||||
| 385,235 | 42,550 | Overnight deposits | 17 | 385.235 | 42.550 |
| 418,136 | 443.393 | Cash on hand | 418,136 | 443,393 | |
| 202,751 | 2,208,678 | Current accounts with other banks | 17 | 202,751 | 2,208,678 |
| 1,454,891 | 3,118,790 | 1,454,891 | 3.118.790 | ||
| (Concluded |
(All amounts in LTL thousand unless otherwise stated)
NOTE 1 GENERAL INFORMATION
AB SEB bankas (hereinafter - the Bank) was registered as a public company in the Enterprise Register of the Republic of Lithuania on 2 March 1990. The Bank is licensed by the Bank of Lithuania to perform all banking operations provided for in the Law on Banks of the Republic of Lithuania and the Statutes of the Bank.
The Head Office of the Bank is located at Gedimino ave. 12, Vilnius. As of 31 December 2013 the Bank had 46 customer service branches (as of 31 December 2012 – 46).
As of 31 December 2013 AB SEB bankas had 2 subsidiaries (as of 31 December 2012 – 3). On November 23rd AB "SEB lizingas" has been merged to AB SEB bankas.The Bank and its subsidiaries thereafter are referred to as the Group.
The Bank accepts deposits, issues loans, makes money transfers and documentary settlements, exchanges currencies for its clients, issues and processes debit and credit cards, is engaged in trade finance and leasing activities, is investing and trading in securities as well as performs other activities set in the Law on Banks (except for operations with precious metals). Activities of subsidiaries are explained in note 25.
The Bank's shares are not included in the main or secondary listings of the NASDAQ OMX Vilnius. As it is further disclosed in Note 34, the only shareholder and ultimate parent is Skandinaviska Enskilda Banken AB (publ), owning 100 percent of the Bank's shares.
These consolidated and stand-alone financial statements have been approved by the Board of the Bank on 14 March 2014. Neither the Bank's shareholders nor others have the power to amend the financial statements after issue.
NOTE 2 ADOPTION OF NEW AND REVISED STANDARDS
a) Amendments to existing standards and interpretations effective in 2013
IFRS 13, Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013) aims to improve consistency and reduce complexity by providing a revised definition of fair value, and a single source of fair value measurement and disclosure requirements for use across IFRSs. Adoption of the standard had an impact on the measurement of liabilities, related to derivative financial instruments and disclosure of fair values of the financial assets and liabilities. A more detail description is provided in note 3 "Summary of Significant Accounting Policies, Financial risk management and Fair Value Disclosures", "l) Derivative Financial Instruments".
Presentation of Items of Other Comprehensive Income, amendments to IAS 1 (effective for annual periods beginning on or after 1 July 2012). The amendments require entities to separate items presented in other comprehensive income into two groups, based on whether or not they may be reclassified to profit or loss in the future. The suggested title used by IAS 1 has changed to 'statement of profit or loss and other comprehensive income'. The amended standard resulted in changed presentation of financial statements of the Bank and the Group, but did not have any impact on measurement of transactions and balances.
Amended IAS 19, Employee Benefits (effective for annual periods beginning on or after 1 January 2013) makes significant changes (i) to the recognition and measurement of defined benefit pension expense and termination benefits, and (ii) to the disclosures for all employee benefits. The standard requires recognition of all changes in the net defined benefit liability (asset) when they occur, as follows: (i) service cost and net interest in profit or loss; and (ii) remeasurements in other comprehensive income. The amendment did not have an impact on the Bank's and the Group's financial statements.
Disclosures – Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7 (effective for annual periods beginning on or after 1 January 2013). The amendment requires disclosures that will enable users of an entity's financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off. The amendment had an impact on disclosures but had no effect on measurement and recognition of financial instruments.
b) Standards and amendments to existing standards that are not yet effective and have not been early adopted by the Bank and the Group
IFRS 10, Consolidated Financial Statements. Replaces all of the guidance on control and consolidation in IAS 27 "Consolidated and separate financial statements" and SIC-12 "Consolidation - special purpose entities" (effective for annual periods beginning on or after 1 January 2014). IFRS 10 changes the definition of control so that the same criteria are applied to all entities to determine control. This definition is supported by extensive application guidance. The Group is currently assessing the impact of the standard on its financial statements.
IAS 27 (revised 2011), Separate Financial Statements (effective for annual periods beginning on or after 1 January 2014). The objective of the revised standard is to prescribe the accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. The guidance on control and consolidated financial statements was replaced by IFRS 10, Consolidated Financial Statements. The Bank is currently assessing the impact of the amended standard on its financial statements.
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 2 ADOPTION OF NEW AND REVISED STANDARDS (CONTINUED)
Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 (effective for annual periods beginning on or after 1 January 2014). The amendment added application guidance to IAS 32 to address inconsistencies identified in applying some of the offsetting criteria. This includes clarifying the meaning of 'currently has a legally enforceable right of set-off' and that some gross settlement systems may be considered equivalent to net settlement. The Bank and the Group are currently assessing the impact of the amendments on the Group and the timing of its adoption by the Group.
IFRS 12, Disclosure of Interest in Other Entities, (issued in May 2011 and effective for annual periods beginning on or after 1 January 2014), applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity. IFRS 12 sets out the required disclosures for entities reporting under the two new standards: IFRS 10, Consolidated financial statements, and IFRS 11, Joint arrangements, and replaces the disclosure requirements currently found in IAS 28, Investments in associates. IFRS 12 requires entities to disclose information that helps financial statement readers to evaluate the nature, risks and financial effects associated with the entity's interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. To meet these objectives, the new standard requires disclosures in a number of areas, including significant judgments and assumptions made in determining whether an entity controls, jointly controls, or significantly influences its interests in other entities, extended disclosures on share of non-controlling interests in group activities and cash flows, summarised financial information of subsidiaries with material non-controlling interests, and detailed disclosures of interests in unconsolidated structured entities. The Group is currently assessing the impact of the new standard on its financial statements.
Amendments to IAS 39 - Novation of Derivatives and Continuation of Hedge Accounting (issued on 27 June 2013 and effective for annual periods beginning 1 January 2014).The amendments will allow hedge accounting to continue in a situation where a derivative, which has been designated as a hedging instrument, is novated (i.e parties have agreed to replace their original counterparty with a new one) to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met. The Bank and the Group are currently assessing the impact of the amendments on the financial statements.
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES
a) Basis of Presentation
These financial statements are presented in national currency of Lithuania, Litas (LTL). Amounts are presented in thousand LTL, unless otherwise stated. Since 2 February 2002 the exchange rate of the Litas was pegged to Euro at a rate of 3.4528 LTL = 1 EUR.
The books and records of the Group companies and the Bank are maintained in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union (EU).
The financial statements are prepared under the historical cost convention as modified by the revaluation of available for sale financial assets, financial assets and liabilities designated at fair value, held for trading and all derivative contracts.
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current event and actions, actual results ultimately may differ from those estimates.
b) Basis of Accounting
The financial statements have been prepared in accordance with and comply with IFRS, adopted in the EU. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
c) Consolidated Subsidiaries and Associates
Subsidiaries are all entities, over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Investments in subsidiaries in the Bank's stand alone financial statements are accounted for using the cost method less impairment and are initially recognized at cost.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
c) Consolidated Subsidiaries and Associates (continued)
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Common control business is excluded from the acquisition accounting rules described above. SEB group applies the pooling of interests method (Predecessor accounting), in accounting for business combinations involving entities or businesses under common control. This implies that no assets or liabilities of the combining entities are restated at fair value - carrying amounts at the highest consolidated level are used. No new goodwill is created. The income statement reflects the results of the combining entities for the full year irrespective of when the combination took place.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Associates. Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Investments that are held as part of the Group's investment portfolio are carried in the balance sheet at fair value even though the Group may have significant influence over those companies. This treatment is permitted by IAS 28 Investment in Associates, which requires investments held by venture capital organisations to be excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss and accounted for in accordance with IAS 39, with changes in fair value recognised in the income statement in the period of the change. The Group has no interests in associates through which it carries on its business.
d) Foreign Currency Translation
Items included in the financial statements of each of the Group's and the Bank's entities are measured using the currency of the primary economic environment in which the entity operates. The consolidated financial statements are presented in Litas, which is the Bank's functional and presentation currency.
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 recognised in the income statement.
e) Income Recognition
Interest income and expense are recognised for all interest bearing instruments on an accrual basis using the effective interest rate method. 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.
Commission and other income is recognised at the time of the related transaction. Commissions incurred in respect of long-term funding provided by financial institutions are deferred and recognised as an adjustment to the effective yield on the loan. All fees that are an integral part of the effective interest rate are amortised using effective interest rate.
Asset management fees related to investment funds are recognised as commissions, i.e. at the time of the related transaction or on pro-rata basis over the period the service is provided, depending on fees' substance. The pro-rata principle is applied for custody services that are continuously provided over an extended period of time.
f) Taxation
Income tax payable on profits, based on the applicable tax law in each jurisdiction, is recognised as an expense in the period in which profits arise. The tax effects of income tax losses available for carry forward are recognised as an asset when it is probable that future taxable profits will be available against which these losses can be utilised.
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 consolidated and stand-alone 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 realised or the deferred income tax liability is settled.
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
f) Taxation (continued)
Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred tax related to fair value re-measurement of available for sale investments, which are charged directly to equity, is also charged directly to other comprehensive income and is subsequently recognised in the income statement together with the deferred gain or loss.
Deferred tax assets and liabilities are offset only if the Bank and the Group has a legally enforceable right to set off current tax assets against current tax liabilities and only if the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.
g) Share-based Payments
Group company employees receive compensation through share-based incentive programmes. The compensation consists of employee stock options (equity instruments), entitling the holder to subscribe for shares in the parent company at a future date and at a predetermined price. The total value of issued stock options is amortised over the vesting period. The vesting period is comprised of the period from the date on which the options are issued until the stipulated vesting conditions are satisfied. The total value of issued stock options equals the fair value per option, multiplied by the number of options that are expected to become exercisable, taking the vesting conditions into consideration. The allocation of this amount implies that profit and loss are impacted at the same time as the corresponding increase in equity is recognised. At each balance sheet date an assessment is made to determine if the vesting conditions will be fulfilled and the extent to which they will be fulfilled. If the conclusion of this assessment is that a lower number of options are expected to be vested during the vesting period, then the previously expensed amounts are reversed through profit or loss. This implies that in cases in which the vesting conditions are not fulfilled, no costs will be reported in profit or loss, seen over the entire vesting period.
h) Dividend Income
Dividends are recognised in the income statement when the Group's and the Bank's right to receive payment is established.
i) Cash
Cash, overnight deposits, correspondent accounts with the Central Banks and correspondent accounts with other banks, due to their high liquidity are accounted for as cash/cash equivalents in the statement of cash flows.
j) Financial Assets
The Group and 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. Management determines the classification of its investments at initial recognition.
Financial assets at fair value through profit or loss represents two sub-categories: financial assets held for trading and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if it is acquired principally for selling or repurchasing in the near term. Derivatives are also categorised as held for trading unless they are designated as hedges. Financial assets are designated at fair value through profit or loss when certain investments, that are managed and evaluated on a fair value basis in accordance with a documented risk strategy management and reported to key management on that basis, are designated at fair value through profit or loss. Interest income on these financial assets is reflected in 'Interest income'.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group and the Bank provides money, goods or services directly to a debtor with no intention of trading the receivable.
Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's and the Bank's management has the positive intention and ability to hold to maturity. Were the Group and the Bank to sell other than an insignificant amount of held-to-maturity assets, the entire category would be tainted and reclassified as available for sale.
Available-for-sale investments are those 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.
All regular way purchases and sales of financial assets are recognised at settlement date, which is the date that an asset is delivered to or by the Group and the Bank. Otherwise such transactions are treated as derivatives until settlement occurs. Loans are recognised when cash is advanced to the borrowers. Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where the Group and the Bank has transferred substantially all risks and rewards of ownership.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
j) Financial Assets (continued)
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 amortised 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 income statement in the period in which they arise. Gains and losses arising from changes in the fair value of available for sale financial assets are recognised in other comprehensive income, until the financial asset is derecognised or impaired at which time the cumulative gain or loss previously recognised in equity should be recognised in profit or loss. However, interest calculated using the effective interest method is recognised in the income statement. Dividends on available for sale equity instruments are recognised in the income statement when the entity's right to receive payment is established.
The fair values of quoted investments in active markets are based on current bid prices.
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 recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
k) Recognition of Deferred Day One Profit and Loss
The best evidence of fair value at initial recognition is the transaction price, unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable markets.
The Group and the Bank has entered into transactions, some of which will mature after more than one year, where fair value is determined using valuation models for which not all inputs are market observable prices or rates. Such a financial instrument is initially recognised at the transaction price, which is the best indicator of fair value, although the value obtained from the relevant valuation model may differ. The difference between the transaction price and the model value, commonly referred to as 'day one profit and loss', is recognised immediately in income statement.
l) Derivative Financial Instruments
Derivative financial instruments including foreign exchange contracts, currency swaps and other derivative financial instruments are initially recognised in the statement of financial position at fair value. Any transaction costs are recognised in Profit and loss immediately. Fair values are obtained from quoted market prices or discounted cash flow models as appropriate (except for pricing options). All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.
The fair-value pricing of an OTC derivative depends on market variables (ie interest rates, exchange rates, etc) and the creditworthiness of both counterparties entering into the contract. In this context, a credit valuation adjustment (CVA) is typically defined as the difference between the value of a derivative assumming the counterparty is default-risk free and the value reflecting default risk of the counterparty. Similarly, a debit valuation adjustment (DVA) is typically defined as the difference between the value of the derivative assuming the bank is default-risk free and the value reflecting default risk of the bank. Changes in a bank's own credit risk therefore result in changes in the DVA component of the valuation of the bank's derivatives.
Changes in the fair value of derivatives held for trading are included in 'net gains (losses) on operations with debt securities and derivative financial instruments'.
The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group and the Bank designates certain derivatives as hedges of the fair value of recognised assets (fair value hedge).
Hedge accounting is used for derivatives designated in this way provided certain criteria are met. The Group and the Bank documents, at the inception of the transaction, the relationship between hedged items and hedging instruments, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group and the Bank also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The Bank has fair value hedge relationship where hedging instrument is interest rate swap (see note 20) and hedged item Lithuanian Government Eurobonds (accounted for as available for sale investments until 1 July 2008 and vast majority being reclassified to loans and receivables category starting from 1 July 2008). Hedged risk is the change in fair value of the bonds due to market interest rate volatility. After the reclassification to loans and receivables category fair value hedge relationships were continued.
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
l) Derivative Financial Instruments (continued)
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset that are attributable to the hedged risk (see note 10).
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.
m) Impairment of Financial Assets
Assets carried at amortised cost: the Group and the Bank assesses at each financial position 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 if, and 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 Group and 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 Group and 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 recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on loans and receivables or held to maturity investments carried at amortised cost has been incurred, 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 and the amount of the loss is recognised in the income statement.
The calculation of the present value of the estimated future cash flows of a collateralised 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. Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors' 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 group of the assets and historical loss experience for assets with credit risk characteristics similar to those of the group. 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 on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently.
When a loan is uncollectible, it is written off against the related provision for loan impairment. Subsequent recoveries of amounts previously written off decrease the amount of the provision for loan impairment in the income statement.
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 recognised, the previously recognised impairment loss is reversed. The amount of the reversal is recognised in the income statement.
Provision rates for homogeneous credit groups are set not only by applying statistical methods based on historical data, but also using expert judgement adjustments. Probability of default (PD) and loss given default (LGD) parameters are set once per year. Expert judgement parameters can be updated more frequently depending on objective evidences of portfolio quality development and other particularities of credit portfolio, that are not taken into consideration by quantitative assessment of risk parameters based on historical data.
Assets carried at fair value: The Group and the Bank assesses 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 any 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 recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. 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 recognised in profit or loss, the impairment loss is reversed through the income statement.
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
n) Finance Lease Receivable
Fixed assets under finance lease are recorded as finance lease receivables at the amount that is equal to the present value of the minimum lease payments. The difference between the gross receivables and the present value of the receivable is recognised as unearned lease income.
The rights and obligations arising from finance leases are recognised at the date of transfer of the asset to the lessee. Until that day, the payment from the prospective lessee is considered as a prepayment. The lease receivable is the amount financed in respect of the leased property less the amount of the prepaid first instalment.
n) Finance Lease Receivable (continued)
Interest income from leasing activities is recognised based on contractual lease terms commencing from the date of delivery of the leased assets and is based on a pattern reflecting a constant periodic rate of return on the net investment outstanding. Revenues from administration fees are recognised during the contract period.
o) Operating Lease – the Group/the Bank as a Lessor
Assets leased out under operating lease are depreciated over their expected useful lives using straight-line method on the basis consistent with similar owned tangible fixed assets.
When the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.
p) Operating Lease – the Group/the Bank as a Lessee
To date, the leases entered by the Group and the Bank are operating leases. The total payments made under operating leases are charged to the income statement on straight-line basis over the period of the lease.
q) Fixed Assets
In the balance sheet fixed assets are recorded at cost less accumulated depreciation and any accumulated impairment losses. Property, plant and equipment with a value less than the equivalent of LTL 900 and intangible fixed assets with a value less than the equivalent of LTL 5,000 are expensed.
Gains and losses on disposal of fixed assets are determined by reference to their carrying amount and are taken into account in determining result before income tax. Repairs are charged to the income statement when the expenditure is incurred.
Depreciation and amortisation is calculated using the straight-line method of depreciation based on the estimated useful life of the asset. All amortisation and depreciation charges for the year are included in other administrative expenses. Useful lives of assets and their residual values are reviewed at each balance sheet date.
The following amortisation and depreciation rates are applied in the Group and the Bank for the respective asset category:
| Asset category | Depreciation/ amortisation period (years) |
|---|---|
| Software | 3-8 |
| Other intangible fixed assets | 3 |
| Buildings | 8-25 |
| Vehicles | 5 |
| Computer hardware and cash counting equipment | 3-8 |
| Office equipment | 5 |
| Other property, plant and equipment | 5 |
r) Investment Property
Investments in properties held in order to receive rental income and/or for capital appreciation are reported as investment properties. Investment property is initially measured at its cost, including transaction costs. Subsequent to initial recognition, investment property is measured at historical cost less accumulated depreciation and impairment losses. Expected useful lives of the investment property groups:
| Asset category | Depreciation period (years) |
|---|---|
| Buildings | 25-50 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
s) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's the Bank's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in 'intangible assets'. Useful life of goodwill is indefinite. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing.
t) Non-Current Assets Held for Sale
The Group classifies a non-current asset (or disposal group) as held for sale when assets carrying amount will be recovered principally through a sale transaction, the management is committed to sell the asset and an active programme to locate a buyer have been initiated, the asset (or disposal group) is actively marketed for sale at a price that is reasonable in relation to its current fair value and it is expected to complete sale within one year from the date of classification. Assets that meet the criteria to be classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets is ceased.
u) Impairment of Non-Financial Assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised 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. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
v) Borrowings
Borrowings are recognised initially at fair value, being their issue proceeds net of transaction costs incurred. Subsequently borrowings are stated at amortised cost and any difference between net proceeds and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest rate method.
Securities borrowing and lending transactions are entered into on a collateralised basis. Fair value of securities received or delivered is monitored on a daily basis to require or provide additional collateral. Cash collateral delivered is derecognised with a corresponding receivable and cash collateral received is recognized with a corresponding obligation to return it. Securities lent remain on the balance sheet and are reported as pledged assets. Borrowed securities are not recognised as assets. When borrowed securities are sold (short position), an amount corresponding to the fair value of the securities is entered as a liability.
w) Provisions
Provisions are measured at the present value of expenditures expected to be required to settle the obligation using pre-tax rate that reflects current market assessments of the time value of money and the risks specified to the obligation.
x) Debt Securities in Issue
Issued debt securities are classified as financial liabilities, which are repurchased as one amount or in instalments under a certain repayment schedule. Issued debt securities are recognized initially at fair value, being their issue proceeds net of transaction costs incurred. They are measured at amortized cost using the effective interest rate approach. Some hybrid instruments are measured at fair value through profit (loss) in order to reduce inconsistency that would otherwise arise from using different measurement basis.
Debt securities placed prior to specified issue date are accounted as other liabilities.
If the Group and the Bank purchases its own debt, it is removed from the balance sheet, and the difference between the carrying amount of a liability and the consideration paid is included in net trading income.
y) Employee Benefits
Termination benefits are payable whenever an employee's employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group and the Bank recognizes termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
y) Employee Benefits (continued)
Social security contributions are paid by the Group and the Bank to the state Social Security Fund (the Fund) on behalf of its employees based on the defined contribution plan in accordance with the local legal requirements. A defined contribution plan is a plan under which the Group and the Bank pays fixed contributions into the Fund and will have no legal obligations to pay further contributions if the Fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior period. The social security contributions are recognized as an expense on an accrual basis and are included within staff costs.
z) Fiduciary Activities
The Group and the Bank commonly acts as trustees and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These assets and income arising thereon are excluded from these financial statements, as they are not assets of the Group.
aa) Financial Guarantees Contracts
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.
Financial guarantees are initially recognised in the financial statements at fair value on the date the guarantee was given. Subsequent to initial recognition, the Bank's and the Group's liabilities under such guarantees are measured at the higher of the initial measurement, less amortisation calculated to recognise in the income statement the fee income earned on a straight line basis over the life of the guarantee and the best estimate of the expenditure required to settle any financial obligation arising at the balance sheet date. These estimates are determined based on experience of similar transactions and history of past losses, supplemented by the judgment of Management.
Any increase in the liability relating to guarantees is taken to the income statement under 'provisions for guarantees'. Income from financial guarantees is recognised in income statement as fee and commission income.
bb) Comparative information
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. Changes in comparative figures are related to:
- Credit value adjustment calculated: counterparty credit risk directly incorporated into the valuation of a derivative portfolio with positive fair value (see Note 46)
- AB SEB bankas subsidiary AB "SEB lizingas" merger with the Bank (see Note 25)
- Impairment of overdue interest of homogenious loans (see Note 46)
- Financial institutions balances have been moved from the line 'Loans to credit and financial institutions' to the line 'Loans to customers' and from the line 'Due to credit and financial institutions' to the line 'Deposits from public' in the Statement of Financial Position (see Note 46)
cc) Change in accounting policies and errors
Except where is impracticable, a material prior period error should be corrected by retrospective restatement in the first financial statements issued following the discovery of the error.
The Bank and the Group shall correct material prior period errors retrospectively in the first set of the financial statements authorised for issue after their discovery by:
- restating the comparative amounts for the prior period(s) presented in which the error occurred; or
- If the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and equity for the earliest prior period presented.
A prior period error does not need to be corrected by retrospective restatement when it is impracticable to determine either the period specific effects or cumulative effect of the error.
When it is impracticable to determine the period - specific effects of the error on comparative information for one or more prior periods presented, the Bank and the Group shall restate the opening balances of assets, liabilities and equity for the earliest period for which retrospective restatement is practicable (which may be the current period).
dd) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors of the Bank. The Board of Directors is responsible for resources allocation and performance assessment of the operating segments and has been identified as the chief operating decision maker.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
ee) Critical Accounting Estimates and Judgements in Applying Accounting Policies
Impairment Losses on Loans and Receivables
The Bank and the Group review their loan portfolios to assess impairment at least on a quarterly basis. In determining whether an impairment loss should be recorded in the income statement, the Group and the Bank make judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on assets in the group. 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. For individually impaired loans if the collateral value differs by +/-5% while other factors are unchanged, the provision for the Bank and the Group would be estimated higher or lower on an average by LTL 23,599 thousand (2012: LTL 38,679 thousand), If the net present value of estimated cash flows differs by +/-5% while other factors are unchanged the provision for the Bank would be estimated higher or lower by LTL 6,364 thousand (2012: LTL 8,882 thousand) of which LTL 4,799 thousand (2012: 4,799 LTL thousand) coming from loans and receivables assessed individually and LTL 1,565 thousand (2012: LTL 4,083 thousand) from loans and receivables assessed on a pool basis. Renegotiated loans are no longer considered to be past due.
Initial Recognition of Related Party Transactions
In the normal course of business the Group and the Bank enters into transactions with its related parties. IAS 39 requires initial recognition of financial instruments based on their fair values. Judgment is applied in determining if transactions are priced at market or non-market interest rates, where there is no active market for such transactions. The basis for judgment is pricing for similar types of transactions with unrelated parties and effective interest rate analysis.
Finance Leases and Derecognition of Financial Assets
Management applies judgment to determine if substantially all the significant risks and rewards of ownership of financial assets and lease assets are transferred to counterparties, in particular which risks and rewards are the most significant and what constitutes substantially all risks and rewards. The Group considers that risks and rewards are substantially transferred if present value of minimal lease payments amounts to at least substantially all of acquisition value of the asset leased at the inception of the lease; the leasor transfers ownership of the asset to the lessee by the end of the lease term; the lessee has the option to purchase the asset at a price that is expected to be substantially lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised; the lease term is for the major part of the economic life of the asset even if title is not transferred; or the leased assets are of such a specialized nature that only the lessee can use them without major modifications.
Fair Value of Derivatives
The fair values of financial derivatives that are not quoted in active markets are determined by using valuation techniques. All such not quoted derivative financial transactions are entered with third parties and mirror transactions are entered with SEB group. 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. All models are certified before they are used, and models are calibrated to ensure that outputs reflect actual data and comparative market prices. For pricing of options Black-Scholes model is used, with only observable market data (eg. historical volatility, market interest rates, market prices).
Tax and deferred tax
The Tax Authorities may at any time during 5 successive years after the end of the reporting tax year carry out an inspection of the Bank's and Group's books and accounting records and impose additional taxes or fines.
At the end of 2013 after finalization of tax investigation the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania started a tax inspection of the Bank.
The deferred tax assets recognised at 31 December 2013 have been based on future profitability assumptions of the Bank and the Group over a five year horizon. In the event of changes to these profitability assumptions, the tax assets recognised may be adjusted.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Fair Values
The table below summarises the carrying amounts and fair values of those financial assets and liabilities presented on the Group's statement of financial position at amortized cost:
| 2013 | 2012 | |||
|---|---|---|---|---|
| Book value | Fair value | Book value | Fair value | |
| Balances with the Central Bank | 935,323 | 935,319 | 1,002,933 | 1,002,783 |
| Due from banks | 3,691,046 | 3,688,435 | 2,666,929 | 2,665,395 |
| Loans to credit institutions | 86,077 | 86,111 | 6,242 | 6,248 |
| Loans to customers | ||||
| Public sector | 409,035 | 405,586 | 443,240 | 425,012 |
| Corporate | 8,151,154 | 8,081,712 | 8,392,305 | 8,338,102 |
| Private individuals | 6,603,945 | 6,142,628 | 6,794,409 | 6,154,310 |
| Loans to financial institutions | 410 | 414 | 560 | 564 |
| Investment securities - loans and receivables | 191,126 | 194,854 | 386,010 | 389,545 |
| Finance lease receivable | 1,428,253 | 1,423,330 | 1,502,759 | 1,517,772 |
| Investment securities – held to maturity | 13,302 | 13,240 | 13,812 | 13,438 |
| Total financial assets valued at amortised cost | 21,509,671 | 20,971,629 | 21,209,199 | 20,513,169 |
| Due to the Central Bank | 33 | 33 | 37 | 37 |
| Due to credit institutions | 7,177,824 | 7,285,084 | 6,789,296 | 6,908,481 |
| Current and demand deposits | 9,601,360 | 9,599,479 | 8,889,387 | 8,889,387 |
| Term deposits from the public | 3,623,497 | 3,617,644 | 3,907,713 | 3,887,241 |
| Debt securities in issue | 110,247 | 111,426 | 554,026 | 556,923 |
| Total financial liabilities valued at amortised cost | 20,512,961 | 20,613,666 | 20,140,459 | 20,242,069 |
The table below summarises the carrying amounts and fair values of those financial assets and liabilities presented on the Bank's statement of financial position at amortized cost:
| 2013 | 2012 | |||
|---|---|---|---|---|
| Book value | Fair value | Book value | Fair value | |
| Balances with the Central Bank | 935,323 | 935,319 | 1,002,933 | 1,002,783 |
| Due from banks | 3,691,046 | 3,688,435 | 2,666,929 | 2,665,395 |
| Loans to credit institutions | 86,077 | 86,110 | 6,242 | 6,248 |
| Loans to customers | ||||
| Public sector | 409,035 | 405,586 | 443,240 | 425,012 |
| Corporate | 8,178,395 | 8,108,924 | 8,418,263 | 8,363,911 |
| Private individuals | 6,603,945 | 6,142,628 | 6,794,409 | 6,154,310 |
| Loans to financial institutions | 410 | 414 | 560 | 564 |
| Investment securities - loans and receivables | 191,126 | 194,854 | 386,010 | 389,545 |
| Finance lease receivable | 1,428,394 | 1,423,474 | 1,502,919 | 1,517,933 |
| Investment securities – held to maturity | 13,302 | 13,240 | 13,812 | 13,438 |
| Total financial assets valued at amortised cost | 21,537,053 | 20,998,985 | 21,235,317 | 20,539,139 |
| Due to the Central Bank | 33 | 33 | 37 | 37 |
| Due to credit institutions | 7,177,824 | 7,285,084 | 6,789,296 | 6,908,481 |
| Current and demand deposits | 9,607,282 | 9,605,402 | 8,897,225 | 8,897,225 |
| Term deposits from the public | 3,638,403 | 3,632,550 | 3,919,392 | 3,898,876 |
| Debt securities in issue | 110,247 | 111,426 | 554,026 | 556,923 |
| Total financial liabilities valued at amortised cost | 20,533,789 | 20,634,495 | 20,159,976 | 20,261,542 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Fair Values (continued)
Loans to credit and financial institutions, balances with the Central Bank and other due from banks. The fair value of floating rate placements and overnight deposits is their carrying amount. The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using prevailing money-market interest rates for debts with similar credit risk and remaining maturity.
Loans to customers and finance lease receivable are net of provisions for impairment. The estimated fair value of loans and receivables represents the discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted using interest rate s for newly issued loans with the similar maturity date.
Investment securities include only interest-bearing assets held to maturity; assets classified as available for sale are measured at fair value.
Due to the Central Bank and credit institutions The estimated fair value of deposits with no stated maturity, which includes non-interestbearing deposits, is the amount repayable on demand.
Deposits from public The estimated fair value of fixed interest-bearing deposits and other borrowings not quoted in an active market is based on discounted cash flows using interest rates for new debts with similar remaining maturity.
Subordinated loans, debt securities in issue The discounted cash flow model is used using current market rates.
Financial assets and liabilities presented on the Group's and the Bank's statement of financial position at amortized cost for the year 2013 and 2012 for which fair value is disclosed in the tables above are of level 3 within fair value hierarchy except of Investment securities – loans and receivables (Book value at the end of 2013 LTL 191,126 thousand, at the end of 2012 – LTL 386,010 thousand) that are of level 1.
The table below summarises the hierarchy of fair value measurement of asset and liabilities presented on the Group's statement of financial position at fair value:
| Fair value measurement at the end of reporting period based on: | |||
|---|---|---|---|
| 31 December 2013 | Quoted price in active markets for the same instrument |
Valuation techniques for which all significant inputs are based on observable market data |
Valuation techniques for which any significant input is not based on observable market data |
| Government securities available | |||
| for sale | 59,895 | - | - |
| Financial assets at fair value through | |||
| profit and loss | 910,923 | - | 43,059 |
| Derivative financial instruments | |||
| (assets) | 132 | 259,141 | 15 |
| Investment securities – available | |||
| for sale | - | - | 200 |
| Derivative financial instruments | |||
| (liabilities) | (33) | (270,895) | (15) |
| Debt securities in issue | - | (7,309) | - |
| Total | 970,917 | (19,06 3) |
43,2 59 |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Fair Values (continued)
| Fair value measurement at the end of reporting period based on: | |||
|---|---|---|---|
| Valuation techniques for which | Valuation techniques | ||
| Quoted price in active | all | for which any significant | |
| markets for the same | significant inputs are based on | input is not based on | |
| 31 December 2012 | instrument | observable market data | observable market data |
| Government securities available | |||
| for sale | 60,900 | - | - |
| Financial assets at fair value through | |||
| profit and loss | 608,544 | - | 43,059 |
| Derivative financial instruments | |||
| (assets) | 1,255 | 324,975 | - |
| Investment securities – available | |||
| for sale | - | - | 200 |
| Derivative financial instruments | |||
| (liabilities) | (5,336) | (373,579) | (1,977) |
| Debt securities in issue | - | (6,990) | - |
| Total | 665,363 | (55,59 4) |
41,2 82 |
The table below summarises the hierarchy of fair value measurement of asset and liabilities presented on the Bank's statement of financial position at fair value:
| Fair value measurement at the end of reporting period based on: | |||
|---|---|---|---|
| 31 December 2013 | Quoted price in active markets for the same instrument |
Valuation techniques for which all significant inputs are based on observable market data |
Valuation techniques for which any significant input is not based on observable market data |
| Government securities available for sale |
59,228 | - | - |
| Financial assets at fair value through profit and loss |
909,613 | - | - |
| Derivative financial instruments (assets) Investment securities – available |
132 | 259,141 | 15 |
| for sale Derivative financial instruments |
- | - | 200 |
| (liabilities) Debt securities in issue |
(33) - |
(270,895) (7,309) |
(15) - |
| Total | 968,940 | (19,063) | 200 |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Fair Values (continued)
| Fair value measurement at the end of reporting period based on: | ||||||||
|---|---|---|---|---|---|---|---|---|
| Quoted price in active | Valuation techniques for which all |
Valuation techniques for which any significant |
||||||
| 31 December 2012 | markets for the same instrument |
significant inputs are based on observable market data |
input is not based on observable market data |
|||||
| Government securities available | ||||||||
| for sale Financial assets at fair value through |
60,234 | - | - | |||||
| profit and loss | 608,544 | - | - | |||||
| Derivative financial instruments | ||||||||
| (assets) Investment securities – available |
1,255 | 324,975 | - | |||||
| for sale | - | - | 200 | |||||
| Derivative financial instruments (liabilities) |
(5,336) | (373,579) | (1,977) | |||||
| Debt securities in issue | - | (6,990) | - | |||||
| Total | 664,697 | (55,594) | (1,777) |
Financial Risk Management Policy
Definition of Risk
AB SEB bankas Group defines the risk as the possibility of a negative deviation from an expected financial outcome. One consequence of risktaking is the occurrence of losses, which can be broken into expected and unexpected losses. The "normal level" of losses (measured as expected losses) is considered as a cost of doing business from a risk point of view, and is covered through transaction pricing and risk reserves. The Group and the Bank shall make appropriate efforts to minimise expected losses through ensuring sound internal practices and good internal controls. The unusual, large and unexpected losses are not foreseen to be completely absorbed by day to day transaction profits. The primary protections against such losses are sound internal practices, good internal controls, insurance policies and earnings. The last lossabsorbing resource for unexpected losses is the capital of the Bank.
Credit Risk
The Group and the Bank takes on exposure to credit risk which is the risk that a counterpart will be unable to pay amounts in full when due. The definition of credit risk also encompasses so called counterparty's country risk which arises due to the risk of settlements between parties according to trading operations.
The Group's and the Bank's credit policy is based on the principle that any lending transaction must be based on credit analysis. Various credit security instruments are applied depending on the complexity of a transaction and trustworthiness of a customer.
Credit Risk Classification
The Bank has got the permission from the regulators to use an IRB (Internal Ratings Based Approach, according to Basel II methodology) models in credit risk assessment process and for the regulatory capital calculation starting from the beginning of 2008 to be applied for the main credit portfolio segments: Corporate (Non-retail), Financial Institutions (Non-retail), Small Corporate (Retail) and Private Individuals (Retail). The Group uses different risk classification systems applicable for particular portfolio segment. The same expert judgment based risk classification systems are used for credit risk assessment of Non-retail credit exposures in all parts of SEB Group. Credits that exceed 1 million LTL and/or entities's turnover exceed 10 million EUR are classified as Non-retail positions. The Bank uses the master scale of 16 risk classes classifying the credit risk of Non-Retail borrowers with 1 representing the lowest default probability and 16 representing the default. Risk classes 1-7 are considered investment grade. The borrowers falling into the range of risk class 1-10 are treated as normal business loans. The borrowers of risk class 11 and 12 are defined as 'restricted business' and 'special observation' respectively, while the borrowers in risk classes 13-16 are classified as 'watch list'. Risk classes are used as important parameters in the credit policy, the credit approval process, credit risk measurement and management, monitoring and reporting of credit risk. The credit risk assessment is based on analysis of Non-retail borrower's ability to meet interest and principal amount repayment obligations, covering business and financial risk. Financial ratios and peer group comparison are used in the risk assessment. The credit risk of the Non-retail borrowers is reviewed on regular basis at least once per year depending on the risk class assigned to the borrower. High-risk exposures are subject to more frequent reviews. The objective is to identify at an early stage, credit exposures with increased risk for loss, and work together with the customer towards a constructive solution that enables the Group and the Bank to reduce or avoid credit losses as well as maintain long term relationship with the customer.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Financial Risk Management Policy (continued)
Credit Risk Classification (Continued)
Scoring models are used in credit risk assessment process of Retail exposures, i.e small enterprises and private individuals. The application scoring models are used for the assessment of counterparty risk (Probability of Default) and transaction risk (Loss Given Default) during customer credit application phase. Due to the fact that credit worthiness of the clients changes over time the Retail exposures are re-scored quarterly by using the behavioural scoring models. The Bank uses the scale from A to E for classification of Retail borrowers credit risk with A representing the lowest default probability and E representing the default.
The information on distribution of individually appraised loans and leasing portfolio (in LTL million) by risk class is as follows:
*SC – small corporates
The analysis in the table above did not include private individuals LTL 6,980 million (2012: LTL 7,186 million), accrued interest LTL 14 million (2012: LTL 14 million) and provisions for impairment losses LTL 793 million (2012: LTL 1,158 million).
Impairment Losses on Loans and Receivables
The Group, aiming at fair and timely assessment of credit impairment, performs regular credit revision: corporate loans within risk class 8 and higher are revised no less than once a year; revisions of 9—10 risk class corporate loans are performed no less than once a half-year; corporate loans within risk class 11—16, no less than once a quarter; revisions within homogeneous groups (loans to small enterprises, mortgage loans, consumer loans, debts to credit institution) are performed automatically on quarterly basis. Revisions in case of corporate loans within the Bank's established increased risk economy sectors, irrespective of the established borrower risk class, are performed not less than once a quarter. After loan assessment at the established frequency, relevant loss events are identified and relevant loan impairment is assessed. When assessing whether a loss due to impairment must be included in the profit (loss) account, the Group assesses, whether before the determination of the loan impairment there exist any data in proof that it is possible to establish a decrease in forecasted future cash flows of a company within the credit portfolio. The following data are assessed: whether there has or has not been a material deterioration in the borrower's financial standing as well as information related to the assessment of business perspective. A borrower's cash flows are forecasted using a conservative approach, and loan security measures are taken into account – probable adverse change in the assets value, previously sustained losses as well as objective evidence of impairment of the loans within the portfolio.
Methodology and presumptions used in the forecast of future cash flows and time with the aim to reduce a mismatch between forecasted and actual losses are revised on regular basis.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Financial Risk Management Policy (continued)
The criteria that the Group and the Bank uses to determine that there is objective evidence of an impairment loss include:
- Downgrading to internal risk class 16;
- Proceeds of the loan without a prior consent of the bank are used for the purposes other that stipulated in the loan agreement ant this event has a negative impact on the credit risk of the borrower;
- Breach of investment project covenants having a negative impact on the credit risk of the borrower;
- Related parties of the borrower are in default and this is having impact on the credit risk of the borrower;
- Deterioration of active market for debt securities due to financial distress;
- Deterioration in value of collateral, in cases where repayment conditions are directly related to the value of collateral and earnings method was applied for establishing such collateral value;
- Suspension or withdrawal of license for the borrowers that carry licensed activities (for example trade of oil products, utilities, etc.) and this event has a negative impact on the credit risk of the borrower.
- Declaration of bankruptcy.
The Credit Committee has to carry out an extraordinary credit revision, if the borrower is more than 14 days in delay to repay the loan or pay interest or in case at least one of the above-referred criteria indicating a possible decrease in the loan value is applicable to the borrower/loan. In case loan impairment is found, individual provisions must be formed for a potential credit loss. A loan is classified as an impaired loan, if there is objective evidence that one or more loss events have occurred, and if, as an effect of such events, there has been a change in the estimated future cash flows, for instance, the customer has significant financial problems, fails to pay interest or the principal when due. Loans are not classified as impaired loans, if the collateral value covers the loan and interest.
Provisions for portfolio corporate loans are formed for loans, in case of which no individual impairment has been found, however, a probability exists that impairment will occur, but no such fact has been found yet. Loans with similar risk characteristics are classified taking into account the main factors that have an impact on a borrower's – legal entity's – credit risk, and impairment provisions for them are formed taking into account the default probability within relevant classes.
The portfolio based assessment is applied to the following homogeneous credit groups having the similar risk characteristics: mortgage loans, consumer loans, credit cards, small corporate loans. The collective provisions for the homogeneous credit groups are formed by applying statistical methods based on historical data about the observed default frequencies of the borrowers (PD) and the suffered losses (LGD) within the corresponding homogeneous credit group and expert judgment adjustments considering historical experience of adequacy of provisioning levels, objective evidences of portfolio quality development, adequacy of security of particular portfolio and other particularities of credit portfolio, that are not taken into consideration by quantitative assessment.
An impairment loss is reported as a write off, if it is deemed impossible to collect the contractual amounts due that have not been paid and/or are expected to remain unpaid, or if it is deemed impossible to recover the carrying amount by selling any collateral provided. In other cases, a specific provision is recorded in an allowance account. As soon as the non-collectible amount can be determined and the asset is written off, the amount reported in the allowance account is dissolved. Similarly, the provision in the allowance account is reversed if the estimated recovery value exceeds the carrying amount.
Credit Risk Limits and Monitoring
The Group and the Bank structures the levels of credit portfolio risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers, and industry segments. The credit risk exposure to a single borrower or borrowers' groups and the industries are monitored on a regular basis. Credit concentration exposure limits are established by Assets and liability management committee (ALCO) and regularly monitored by risk control function. As of 31 December 2013, credit exposures are in compliance with limits set by ALCO. The table below represents the development of credit exposures within particular industries.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Financial Risk Management Policy (continued)
Credit Risk Limits and Monitoring (continued)
Maximum Exposure to Credit Risk Before Collateral Held or Other Credit Enhancements
The below table represents a worse case scenario of credit risk exposure to the Group and the Bank as of 31 December 2013 and 2012, without taking account of any collateral held or other credit enhancements attached. For on-balance-sheet assets, the exposures set out below are based on net carrying amounts as reported in the balance sheet.
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 935,323 | 1,002,933 | Balances with the Central Bank | 935,323 | 1,002,933 |
| 3,691,046 | 2,666,929 | Due from banks | 3,691,046 | 2,666,929 |
| 59,895 | 60,900 | Government securities available for sale | 59,228 | 60,234 |
| 909,613 | 608,544 | Financial assets at fair value through profit and loss | 909,613 | 608,544 |
| 259,288 | 326,230 | Derivative financial instruments | 259,288 | 326,230 |
| 86,077 | 6,242 | Loans to credit institutions | 86,077 | 6,242 |
| Loans to customers | ||||
| 2,484,660 | 2,722,185 | Property management | 2,484,660 | 2,722,185 |
| 5,666,902 | 5,670,680 | Other corporate | 5,694,143 | 5,696,638 |
| 409,035 | 443,240 | Public | 409,035 | 443,240 |
| 5,875,230 | 5,967,934 | Mortgage loans | 5,875,230 | 5,967,934 |
| 728,717 | 826,475 | Other private individuals | 728,717 | 826,475 |
| Finance lease receivable | ||||
| 1,369,514 | 1,435,693 | Corporate | 1,369,655 | 1,435,853 |
| 49,664 | 53,607 | Private individuals | 49,664 | 53,607 |
| 9,075 | 13,459 | Other | 9,075 | 13,459 |
| Investment securities: | ||||
| 191,126 | 386,010 | - loans and receivables | 191,126 | 386,010 |
| 13,302 | 13,812 | - held to maturity | 13,302 | 13,812 |
| 104,168 | 83,844 | Other financial assets | 105,823 | 85,012 |
| Credit risk exposures relating to off-balance | ||||
| 3,697,707 | 3,311,622 | sheet items | 3,702,906 | 3,319,094 |
| 26,540,342 | 25,600,339 | Total as of 31 December | 26,573,911 | 25,634,431 |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Financial Risk Management Policy (continued)
Maximum Exposure to Credit Risk Before Collateral Held or Other Credit Enhancements (Continued)
Management is confident in its ability to continue to control and sustain minimal exposure of credit risk to the Group and the Bank resulting from both its loan and receivables portfolio and debt securities. For information on loan ratings see Credit risk management note information above. 100% of investments in Government securities compose of Government debt securities that have an investing rating.
Market Risk
Market risk is defined as the risk of a loss or reduction of future net income following changes in interest rates, credit spreads, foreign exchange and equity prices, including price risk in connection with the sale of assets or closing of positions.
According to the type of financial risk, market risk is classified into trading risk (Trading Book risk) and structural risk of a mismatch between assets and liabilities (Banking Book risk), which has an impact on the positions of the group's interest rate sensitive assets and liabilities as well as off-balance sheet items and is defined as the risk of a loss of the group's net interest income and a decrease in the market value of liabilities.
The overall market risk exposure (trading and non-trading) is measured using Value-at-Risk (VaR) model based on historical simulation method that express the maximum potential loss that can arise at a chosen level of probability during a certain period of time. Trading risk is measured on daily basis using 99 percent probability level and 10 days time horizon. VaR exposure for non-trading positions is calculated on a daily basis using 1 day's assessment evaluation period and 99 percent probability level. Historical data are based on 250 days for estimation of volatility and correlation. Additionally the Bank uses the sensitivity measures applied for risk assessment of specific market risk type/portfolio/position: delta 1 p.p. is applied for interest rate sensitive portfolios/positions, delta/gama/vega measures – for options, etc. Value at Risk assessment results on the total portfolio positions are shown in Note 39.
Currency Risk
Foreign Exchange Risk exposure is defined by two measures: single open currency position against LTL and aggregated general open currency - the bigger one of summarized long and short open currency positions. The foreign exchange risk measure contains the net exposure of spot and forward positions, FX futures including gold, the delta equivalent position of FX options plus other balance sheet items. The currency risk control is ensured by monitoring the risk exposure against the limits established for single open currency position.
The net positions of assets and liabilities denominated in foreign currencies as of 31 December 2013 and 2012 are presented in Note 39.
Interest Rate Risk
Interest rate risk is managed by forecasting the market interest rates and managing the mismatches between assets and liabilities by re-pricing maturities. The Bank applies the interest rate risk management methods allowing to measure the Group's sensitivity to interest rate changes by computing the impact to the net effect to the market value of shareholders equity (called delta 1%) in case of parallel shift by percentage point in the yield curve.
The interest rate risk management as of 31 December 2013 and 2012 is presented in Note 39.
Credit risk margin risk is defined as a risk that the value of debt securities will decrease as a result of a change in the issuer's credit risk. This type of risk is calculated using the VaR (Value-at-Risk) model. Risk is managed by setting limits for investments in debt securities.
The credit risk margin risk management as of 31 December 2013 and 2012 is presented in Note 39.
Liquidity Risk
Liquidity risk is the risk that the Group and the Bank may be unable to timely fulfil its payment obligations or to finance or realize its assets over the certain period at an acceptable price. The Group and the Bank adheres to a conservative liquidity risk management policy that ensures adequate fulfilment of current financial obligations, the level of obligatory reserves with the Central Bank, liquidity ratio higher than that established by the Bank of Lithuania and payment capacity under unforeseen unfavourable circumstances. The liquidity risk management system is based on the analysis of actual cash flows.
The table below presents the cash flows payable by the Group and the Bank under financial liabilities by remaining contractual maturities at the balance sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows, whereas the Group and the Bank manages the inherent liquidity risk based on expected undiscounted cash inflows.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Financial Risk Management Policy (continued)
Liquidity Risk (continued)
The Group's undiscounted non-derivative financial liability analysis as of 31 December 2013:
| Maturity | Up to 3 month |
3–6 months |
6-12 months |
1-3 years |
Over 3 years | Total |
|---|---|---|---|---|---|---|
| Amounts owed to credit institutions | 1,887,274 | 419,809 | 1,117,728 | 2,998,569 | 883,460 | 7,306,840 |
| Deposits from public | 11,382,963 | 769,752 | 933,512 | 125,296 | 14,749 | 13,226,271 |
| Debt securities in issue and subordinated loans Other financial liabilities |
25,653 83,653 |
17,239 9,538 |
19,525 13,438 |
43,948 820 |
14,804 4,085 |
121,169 111,534 |
| Total undiscounted non- derivative financial liabilities |
13,379,543 | 1,216,338 | 2,084,203 | 3,168,632 | 917,097 | 20,765,813 |
| Off balance sheet commitments related to lending |
3,208,791 | 214,316 | 158,048 | 50,816 | 25,938 | 3,657,909 |
| Rental off balance sheet commitments |
7,872 | 7,736 | 14,464 | 67,939 | 34,688 | 132,699 |
| Commitments related to leasing | 39,313 | 485 | - | - | - | 39,798 |
Rental off balance sheet commitments for the period 1 – 5 years are LTL 80,734 thousand; for the period over 5 years LTL 21,893 thousand.
The Group's undiscounted non-derivative financial liability analysis as of 31 December 2012:
| Up to | 3–6 | 6-12 | 1-3 | |||
|---|---|---|---|---|---|---|
| Maturity | 3 month | months | months | years | Over 3 years | Total |
| Amounts owed to credit institutions | 1,375,493 | 328,733 | 402,941 | 2,966,072 | 1,977,135 | 7,050,374 |
| Deposits from public | 10,724,105 | 848,457 | 1,133,156 | 84,053 | 17,640 | 12,807,410 |
| Debt securities in issue and | ||||||
| subordinated loans | 74,752 | 22,818 | 33,082 | 70,312 | 558,370 | 759,333 |
| Other financial liabilities | 86,312 | 13,732 | 2,863 | 2,924 | 3,171 | 109,002 |
| Total undiscounted non- derivative financial |
||||||
| liabilities | 12,260,662 | 1,213,740 | 1,572,041 | 3,123,361 | 2,556,315 | 20,726,120 |
| Off balance sheet commitments related to |
||||||
| lending | 2,996,452 | 147,364 | 89,703 | 29,310 | 16,112 | 3,278,941 |
| Rental off balance sheet | ||||||
| commitments | 7,741 | 7,513 | 13,729 | 64,528 | 43,405 | 136,916 |
| Commitments related to leasing | 31,898 | 703 | - | - | - | 32,601 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Financial Risk Management Policy (continued)
Liquidity Risk (continued)
The Bank's undiscounted non-derivative financial liability analysis as of 31 December 2013:
| Maturity | Up to 3 month |
3–6 months |
6-12 months |
1-3 years |
Over 3 years | Total |
|---|---|---|---|---|---|---|
| Amounts owed to credit institutions | 1,887,274 | 419,809 | 1,117,728 | 2,998,569 | 883,460 | 7,306,840 |
| Deposits from public | 11,403,792 | 769,752 | 933,512 | 125,296 | 14,749 | 13,247,100 |
| Debt securities in issue and | ||||||
| subordinated loans | 25,653 | 17,239 | 19,525 | 43,948 | 14,804 | 121,169 |
| Other financial liabilities | 83,653 | 9,538 | 13,438 | 820 | 4,085 | 111,534 |
| Total undiscounted non- derivative financial liabilities |
13,400,372 | 1,216,338 | 2,084,203 | 3,168,632 | 917,097 | 20,786,642 |
| Off balance sheet commitments related to |
||||||
| lending Rental off balance sheet |
3,213,990 | 214,316 | 158,048 | 50,816 | 25,938 | 3,663,108 |
| commitments Commitments related to leasing |
7,872 39,313 |
7,736 485 |
14,464 - |
67,939 - |
34,688 - |
132,699 39,798 |
Rental off balance sheet commitments for the period 1 – 5 years are LTL 80,734 thousand; for the period over 5 years LTL 21,893 thousand.
The Bank's undiscounted non-derivative financial liability analysis as of 31 December 2012:
| Maturity | Up to 3 month |
3–6 months |
6-12 months |
1-3 years |
Over 3 years | Total |
|---|---|---|---|---|---|---|
| Amounts owed to creditinstitutions | 1,375,493 | 328,733 | 402,941 | 2,966,072 | 1,977,135 | 7,050,374 |
| Deposits from public | 10,743,626 | 848,457 | 1,133,156 | 84,053 | 17,640 | 12,826,931 |
| Debt securities in issue and subordinated loans Other financial liabilities |
74,752 86,312 |
22,818 13,732 |
33,082 2,863 |
70,312 2,924 |
558,370 3,171 |
759,333 109,002 |
| Total undiscounted non- derivative financial liabilities |
12,280,183 | 1,213,740 | 1,572,041 | 3,123,361 | 2,556,315 | 20,745,641 |
| Off balance sheet commitments related to lending |
3,003,924 | 147,364 | 89,703 | 29,310 | 16,112 | 3,286,413 |
| Rental off balance sheet commitments |
7,741 | 7,513 | 13,729 | 64,528 | 43,405 | 136,916 |
| Commitments related to leasing | 31,898 | 703 | 0 | - | - | 32,601 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Financial Risk Management Policy (continued)
Liquidity Risk (continued)
Undiscounted derivative instruments analysis for the Group and the Bank as of 31 December 2013:
| Up to | 3–6 | 6-12 | 1-3 | |||
|---|---|---|---|---|---|---|
| Maturity | 3 month | months | months | years | Over 3 years | Total |
| Outflows: | ||||||
| IRS | 157,482 | 9,165 | 156,282 | 2,165,354 | 2,871,751 | 5,360,035 |
| FX forwards | 46,965 | 7,453 | 3,655 | - | - | 58,073 |
| FX swaps | 63,915 | - | 41,434 | - | 105,349 | |
| Equity options | 117 | 698 | 791 | 1,932 | 149 | 3,687 |
| Interest rate options | - | - | - | 1 | 9 | 10 |
| Currency options | 2,986 | 2,103 | 1,264 | - | - | 6,353 |
| Total outflows | 271,465 | 19,420 | 203,425 | 2,167,288 | 2,871,909 | 5,533,506 |
| Inflows: | ||||||
| IRS | 150,985 | 8,966 | 158,992 | 2,155,303 | 2,877,502 | 5,351,748 |
| FX forwards | 46,336 | 7,564 | 3,520 | - | - | 57,420 |
| FX swaps | 64,184 | - | 41,764 | - | - | 105,948 |
| Equity options | 117 | 698 | 791 | 1,932 | 149 | 3,687 |
| Interest rate options | - | - | - | 1 | 9 | 10 |
| Currency options | 2,986 | 2,104 | 1,264 | - | - | 6,353 |
| Total inflows | 264,607 | 19,332 | 206,331 | 2,157,236 | 2,877,660 | 5,525,166 |
Undiscounted derivative instruments analysis for the Group and the Bank as of 31 December 2012:
| Up to | 3–6 | 6-12 | 1-3 | |||
|---|---|---|---|---|---|---|
| Maturity | 3 month | months | months | years | Over 3 years | Total |
| Outflows: | ||||||
| IRS | 169,814 | 11,449 | 163,429 | 2,333,161 | 3,128,326 | 5,806,178 |
| FX forwards | 26,422 | 6,837 | 2,172 | - | - | 35,431 |
| FX swaps | 813,405 | 401 | 342 | 41,434 | - | 855,581 |
| Equity options | 1,152 | 2,124 | 11 | 1,485 | 724 | 5,496 |
| Interest rate options | 510 | 32 | 531 | - | 35 | 1,108 |
| Currency options | 1,303 | 245 | - | - | - | 1,548 |
| Total outflows | 1,012,606 | 21,088 | 166,484 | 2,376,080 | 3,129,085 | 6,705,343 |
| Inflows: | ||||||
| IRS | 156,627 | 14,432 | 166,161 | 2,324,754 | 3,128,555 | 5,790,529 |
| FX forwards | 24,924 | 5,379 | 1,863 | - | - | 32,166 |
| FX swaps | 812,221 | 410 | 374 | 41,764 | - | 854,768 |
| Equity options | 1,152 | 2,124 | 11 | 1,485 | 724 | 5,496 |
| Interest rate options | 510 | 32 | 531 | - | 35 | 1,108 |
| Currency options | 1,303 | 245 | - | - | - | 1,548 |
| Total inflows | 996,736 | 22,623 | 168,939 | 2,368,003 | 3,129,314 | 6,685,615 |
In the tables above net-settled derivatives are included in the analysis only if they have a negative fair value at the balance sheet date (if they are liabilities at that date). However all gross-settled derivatives are included in the analysis whether their fair value is negative or positive at balance sheet date. Pay leg of such derivatives is presented as outflow and receive leg as inflow. The maturity of the Group's and Bank's assets and liabilities is presented in Note 36 and shows the remaining period from the balance sheet date to the contractual maturity.
The maturity of the leasing portfolio is presented in Note 36 and shows the remaining period from the balance sheet date to the contractual maturity.
Capital Adequacy
Capital adequacy is assessed by capital adequacy ratio – capital base compared to risk weighted assets.
General Regulations for the Internal Capital Adequacy Assessment Process (ICAAP) came into effect as from 1 January 2007. In accordance to these regulations, banks' should identify all risks, not only the ones assessed in capital adequacy calculation, to select risk assessment models, estimate it, choose tools for risks management, and to set a goal for limits. Accordingly, the Bank set a goal to achieve ICAAP result and continuously have had capital adequacy higher than 12 per cent during 2013.
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Financial Risk Management Policy (continued)
Capital Adequacy (continued)
The Bank's and the Financial Group's capital adequacy ratios during 2013 were as follows:
| 31 March 2013 | 30 June 2013 | 30 September 2013 | 31 December 2013 | |
|---|---|---|---|---|
| The Bank | 14.21% * | 13.85% * | 13.80% * | 15.51% |
| The Financial Group | 15.86% | 15.84% | 15.77% | 15.59% |
*- the ratio is calculated without taking into consideration leasing merger
For further information see Note 37.
Maximum exposure per single borrower and Large exposure requirements
Maximum exposure per single borrower - the amount of loans per single borrower may not exceed 25 per cent of the Bank's equity. The amount of loans issued to the parent company, to other parent companies of such parent company or to its own subsidiary companies per single borrower may not exceed 75 per cent of the Bank's equity, if the Bank of Lithuania performs consolidated supervision of the entire financial group. If the Bank of Lithuania does not perform any consolidated supervision of the entire financial group, the maximum exposure per each SEB Group company may not exceed 20 per cent of the Bank's equity.
Large exposure requirement - the total amount of large loans issued by the bank may not exceed 800 per cent of the bank's total equity."
The Bank met these requirements at the end of the reporting period as well as during reporting period
Operational Risk
Operating risk is defined as the risk of loss due to external events (natural disasters, external crime, etc) or internal factors (e.g. breakdown of IT systems, mistakes, fraud, non-compliance with external and internal rules, other deficiencies in internal controls).
Since 2008 Bank has got the permission from regulators to use AMA (Advanced Measurement Approach) model for operational risk assessment and operational risk regulatory capital calculation.
The Bank has developed several operational risk management tools: Operational risk policy, ORSA (Operational Risk Self Assessment) and RTSA (Rogue Trading Self Assessment) processes, requirements for Business Contingency management, New or amended product/process approval process and etc.
The Bank has launched and continuously uses SEB Group-wide operational risk management system ORMIS, NAMIS & LDRPS. In the Operational Risk Management Information System (ORMIS) all employees can register operational risk events and managers in all levels can assess, monitor and manage risks as well as produce various reports. Other two systems are used for development of new products and/or services (NAMIS) and business contingency planning (LDRPS).
In order to achieve the most comprehensive operational risk assessment ORSA and RTSA methodologies are applied as well as different internal control processes performed on regular basis. Operational risk committee is established in the Bank in order to ensure proper operational risk management and adequate cooperation between risk management and risk control functions.
The Bank's management board is provided with quarterly operational risk reports covering an overview of new operational risk cases found, efficiency of the operational risk management instruments used as well as other identified risks.
Stress Testing
Stress tests and scenario analysis are widely used to identify high-risk areas and relationships including concentration risks, its risk drivers and to evaluate the combined effect of shocks in the market. Stress tests provide an indication of the potential size of losses that could arise in extreme conditions. The stress tests carried out by Risk Control include the risk factor stress testing, where stress movements are applied to each risk category: market, credit, liquidity and operational risk. The ultimate goal of the analysis is to estimate net effect of the stress scenarios to the capital of the Bank and the Group and prepare the action plan ensuring that the business operations shall be secured in case the worst case scenario occurs. The comprehensive scenario based stress testing covering all appropriate risk types is conducted at least annually and reported to the Asset Liability Management Committee (ALCO). The stress testing of the Group is part of Internal Capital Assessment Process (ICAAP).
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL RISK MANAGEMENT AND FAIR VALUE DISCLOSURES (CONTINUED)
Financial Risk Management Policy (continued)
Internal Control
Management of the Bank and heads of subsidiaries has a responsibility to ensure that the appropriate organisation, procedures and support systems are implemented to ensure that a sufficient system of internal controls, such as reconciliation to position of the systems and accounting ledgers, segregation of duties, confirmations, daily bookkeeping, market valuations, limits and limit follow-up, etc., is implemented. Limits shall be one way to manage risks where applicable and possible. A system for limiting and following up the amount of risk to be taken is implemented. The Board of Directors of SEB sets the overall limits in terms of risk in SEB. SEB Group ALCO sets the overall limits to AB SEB bankas at the proposal of ALCO of AB SEB bankas. Decisions on the limits must be documented in written form. The compliance with the risk limits applicable for the Bank and/or the Group are controlled by Risk Control function of the Bank.
Recent Volatility in Economic Situation
The global economy is gradually reaching firmer ground. Developments in affluent industrialised countries have, in various ways, moved in the right direction. The euro zone still faces major political and economic problems but now seems to have left its recession behind. The actions of the European Central Bank have also greatly reduced the risk premiums for crisis – hit countries. According to the latest macroeconomic assessments of the SEB Economic Research unit economic growth in the Baltic countries will accelerate a bit, inflation will remain low. Business investment appetite is still low, however, and will only increase slowly in the next couple of years.
Lithuania is very likely to become to qualify for the euro zone, joining in 2015.
Management believes it is taking all the necessary measures to support the sustainability and growth of the Group's and the Bank's business in the current circumstances.
NOTE 4 GROUP'S STRUCTURE AND OPERATIONS
At the end of the year 2013 AB SEB bankas Group in Lithuania consisted of AB SEB bankas and two subsidiary companies: UAB "SEB investicijų valdymas", and UAB "SEB Venture Capital".
Organization structure of AB SEB bankas Group as of 31 December 2013 was as follows:
For more information see note 25.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 5 SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors of the Bank. The Board of Directors is responsible for resources allocation and performance assessment of the operating segments and has been identified as the chief operating decision maker.
Chief operating decision maker analyses the Group's profit (loss), total assets and total liabilities using the same measures as presented for the financial reporting purposes.
Eliminations from total segments' assets and liabilities amounting to LTL 1,987,314 thousand relate to elimination of intra-segment financing amounts.
All transactions between business segments are conducted on an arm's length basis, with intra-segment revenue and costs being eliminated. Income and expenses directly associated with each segment are included in determining business segment performance.
Information about revenues from external customers for each product and service delivered by the Bank and the Group is not disclosed as such information is not analysed on the Group level and therefore it is not available and the cost to develop it would be excessive.
For management and reporting purposes, the Group is organised into the following business groupings:
Baltic Division has overall responsibility for providing retail services to all types of companies and individuals. Baltic division offers its clients solutions in the areas of:
- Lending;
- Leasing and factoring products;
- Liquidity management and payment services;
- Private Banking which serves the higher end of the private individual segment with wealth management services and advisory services.
All depreciation and amortization expenses (except for Asset Management) are attributed to this segment.
The Merchant Banking division has overall responsibility for servicing large and medium-sized companies, financial institutions, banks, and commercial real estate clients. Merchant Banking offers its clients integrated investment and corporate banking solutions, including the investment banking activities. Merchant Banking's main areas of activity include:
- Lending and debt capital markets;
- Trading in equities, currencies, fixed income, derivatives and futures;
- Advisory services, brokerage, research and trading strategies within equity, fixed income and foreign exchange markets;
- Cash management;
- Custody and fund services;
- Venture capital.
The Asset Management division's main business area is Institutional Clients– which provides asset management services to institutions, foundations and life insurance companies and is responsible for the investment management, marketing and sales of SEB's mutual funds.
The division offers a full spectrum of asset management and advisory services and its product range includes equity and fixed income, private equity, real estate and hedge fund management.
The Treasury division is overall responsible for cash management, liquidity management and internal financing between the Group divisions.
Operations and IT divisions are the Group's internal segments responsible for providing operations support and processing, as well as information technologies services for all Group's divisions. In addition, Operations divisions handles bookings, confirmations, payments and reconciliations, and customer service and support.
Staff Functions division has dedicated responsibilities in order to support the business units within own area of expertise: HR, finance, marketing and communication, credits and risk control, security, procurement and real estate, compliance, internal audit.
The geographical areas are not defined by the Group. All activities of the Group are performed on the territory of Republic of Lithuania. Revenues and expenses for services related to major non resident customers are immaterial for the purpose of these financial statements and are not presented to the chief operating decision maker.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 5 SEGMENT INFORMATION (CONTINUED)
Business segments of the Group for the year ended 31 December 2013 were as follows:
| ltic Ba |
rch Me t an |
As set |
ff Sta |
Inf ati orm on |
|||||
|---|---|---|---|---|---|---|---|---|---|
| Div isio n |
nk Ba ing |
Ma ge nt na me |
Tre asu ry |
Op tio era ns |
Fu ion nct s |
ch log Te ies no |
Elim ina tio ns |
tal To Gr ou p |
|
| Int st i ere nco me |
06 45 5, 4 |
02 0 1, |
43 | 20 2, 115 |
- | - | - | ( 185 88 1) , |
472 36 1 , |
| al Int ern - |
13, 650 |
- | 13 | 172 218 , |
- | - | - | ( 185 88 1) , |
- |
| Ext al ern - |
44 1, 414 |
1, 02 0 |
30 | 29 89 7 , |
- | - | - | - | 472 36 1 , |
| Int st e ere xpe nce |
( ) 191 683 , |
( 6) 56 |
( 3) |
( ) 185 104 , |
- | - | - | 185 88 1 , |
( ) 191 475 , |
| al Int ern - |
( ) 171 655 , |
( 6) 56 |
( 3) |
( ) 13, 657 |
- | - | - | 185 88 1 , |
- |
| al Ext ern - |
( 20 028 ) , |
- | - | ( 7) 171 44 , |
- | - | - | - | ( 191 ) 475 , |
| Ne issi inc t co mm on om e |
874 183 , |
26 2 |
12, 08 4 |
( 46 9) |
- | - | - | - | 195 751 , |
| al Int ern - |
9, 153 |
- | ( ) 8, 684 |
( 9) 46 |
- | - | - | - | - |
| al Ext ern - |
174 721 , |
262 | 768 20 , |
- | - | - | - | - | 195 751 , |
| fin ial e/ (ex se) Ne inc t anc om pen |
455 103 , |
219 | ( 53) |
( ) 673 |
- | - | - | - | 102 94 8 , |
| her e/ (ex se) Ne inc t ot om pen |
( ) 1, 671 |
- | - | 254 | ( 6) |
( 11) |
- | - | ( ) 1, 434 |
| / Ne ing in (ex s) t o rat pe co me pe nse |
039 54 9, |
935 | 071 12, |
123 16, |
( 6) |
( 11) |
- | - | 578 151 , |
| tal ff c nd oth To sta ost s a er |
|||||||||
| ad min istr ativ e e xpe nse s |
( 4) 26 9, 69 |
( ) 1, 055 |
( ) 3, 185 |
( 6) 58 |
126 | 1, 26 0 |
2, 40 8 |
- | ( ) 270 726 , |
| n/a n/w ff De cia tio rtis atio rite pre mo o |
( ) 16, 823 |
( 39) |
( 31) |
( 2) |
( ) 253 |
( 6) 1, 89 |
( ) 2, 187 |
- | ( 1) 21, 23 |
| Ca ital in/ ( los ) ga p ses |
18 | - | - | - | - | 8 | - | - | 26 |
| tal nt l To imp air me oss es |
( 1) 42 69 , |
- | - | - | - | - | - | - | ( 1) 42 69 , |
| fit los be for Pro ( s) e in ta co me x |
219 84 9 , |
( 159 ) |
8, 85 5 |
535 15, |
( 133 ) |
( 639 ) |
22 1 |
- | 24 3, 52 9 |
| Inc x (e s) e ta om xpe nse |
( 29 834 ) , |
( 8) |
( 1, 378 ) |
- | - | - | - | - | ( 31, 22 0) |
| fit los for th Ne ( s) t p ro e y ea r |
190 015 , |
( 167 ) |
7, 477 |
15, 535 |
( 133 ) |
( 639 ) |
22 1 |
- | 212 30 9 , |
| tal To As set s |
17, 88 2, 94 1 |
57, 03 1 |
176 24 , |
7, 612 38 0 , |
- | - | 732 1, |
( ) 1, 98 7, 314 |
23 59 0, 94 6 , |
| tal bil To Lia itie s |
15, 30 2, 148 |
57, 198 |
709 15, |
7, 59 9, 39 5 |
133 | 639 | 511 1, |
( 1, 98 7, 314 ) |
20 98 9, 419 , |
| f in ible Ac isit ion tan o qu g nd ts a ty, a sse pro per |
|||||||||
| lan d e ipm t an ent p qu |
6, 80 7 |
- | 106 | - | - | - | - | - | 6, 913 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 5 SEGMENT INFORMATION (CONTINUED)
For the year ended, 31 December 2013 reconciliation between Group's Segment reporting and financial statements is presented below:
| Elim ina tio ns |
||||
|---|---|---|---|---|
| Se t gm en Re rtin g po |
In in ter est co me fro He dg d m e L& R |
he Ot r ci lin g rec on trie en s |
Fin cia l an Sta tem ts en |
|
| Int st i ere nco me |
472 36 1 , |
( ) 1, 376 |
470 98 5 , |
|
| Int st e ere xpe nce |
( 191 475 ) , |
9, 20 0 |
30 | ( 182 24 5) , |
| Ne iss ion inc t co mm om e |
751 195 , |
- | 1, 39 5 |
197 146 , |
| fin l in Ne ia t anc com e |
102 94 8 , |
( 0) 9, 20 |
26 7 |
94 015 , |
| her Ne inc t o t om e |
( 43 4) 1, |
- | 22 6 7, |
792 5, |
| Ne ing in t o rat pe co me |
151 57 8, |
- | 7, 54 2 |
58 5, 69 3 |
| l st f f co d o her To ta sts t a an |
||||
| dm inis tive tra a ex pen ses |
( 270 726 , |
) - |
( ) 7, 517 |
( 278 24 3) , |
| f f De cia tio n/a rtis atio n/w rite pre mo o |
( ) 21, 231 |
( 25) |
( 6) 21, 25 |
|
| l lo Ca ita p sse s |
26 | - | - | 26 |
| l im los To irm ta ent pa ses |
( 1) 42 69 , |
- | - | ( 1) 42 69 , |
| fit for Pro be e in ta co me x |
24 3, 52 9 |
- | - | 24 3, 52 9 |
| Inc x (e s) e ta om xpe nse |
( 31, 22 0) |
- | - | ( 31, 22 0) |
| fit for he Ne t p t ro ye ar |
212 30 9 , |
- | - | 212 30 9 , |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 5 SEGMENT INFORMATION (CONTINUED)
Business segments of the Group for the year ended 31 December 2012 were as follows:
| ltic Ba |
ha Me nt rc |
As set |
f f Sta |
for tio In ma n |
|||||
|---|---|---|---|---|---|---|---|---|---|
| Div isio n |
nk Ba ing |
Ma nt ge na me |
Tre as ury |
Op tio era ns |
Fu ion nct s |
hn log Te ies c o |
Elim ina tio ns |
l G To ta rou p |
|
| Int st i ere nco me |
654 02 5 , |
1, 02 4 |
104 | 36 0, 94 4 |
- | - | - | ( ) 38 8, 758 |
62 7, 33 9 |
| l Int ern a - |
95 152 , |
1 | 71 | 534 293 , |
- | - | - | ( 38 8, 758 ) |
- |
| Ext l ern a - |
558 873 , |
1, 02 3 |
33 | 410 67, |
- | - | - | - | 62 7, 33 9 |
| Int st e ere xpe nce |
( 36 9, 70 6) |
( 1, 06 3) |
( 3) |
( 376 55 1) , |
- | - | - | 38 8, 758 |
( 35 8, 56 5) |
| l Int ern a - |
( 29 3, 60 6) |
( 06 3) 1, |
( 3) |
( 94 08 6) , |
- | - | - | 38 8, 758 |
- |
| Ext l ern a - |
( ) 76 100 , |
- | - | ( 5) 28 2, 46 |
- | - | - | - | ( 5) 35 8, 56 |
| Ne iss ion inc t co mm om e |
181 170 , |
276 | 12, 06 4 |
( 1, 214 ) |
- | - | - | - | 181 30 7 , |
| l Int ern a - |
8, 96 3 |
- | ( 837 ) 7, |
( 126 ) 1, |
- | - | - | - | - |
| l Ext ern a - |
161 218 , |
276 | 19, 90 1 |
( ) 88 |
- | - | - | - | 181 30 7 , |
| fin l in / Ne ia (ex se) t anc com e pen |
750 82 , |
( 121 ) |
( 3) |
( 174 ) |
- | - | - | - | 82 45 2 , |
| her / Ne inc (ex se) t o t om e pen |
( 60 4) 1, |
- | 1 | 43 8 1, |
( 60 ) |
( 16) |
- | - | ( 24 1) |
| ing in / (ex s) Ne t o rat pe co me pe nse |
53 5, 64 6 |
116 | 163 12, |
( 7) 15, 55 |
( ) 60 |
( 16) |
- | - | 53 2, 29 2 |
| l st f f co d o her To ta sts t a an |
|||||||||
| dm inis tive tra a ex pen ses |
( 30 7, 99 7) |
( 90 8) |
( 3, 44 8) |
( 48 5) |
92 8 |
613 2, |
760 3, |
- | ( 30 5, 53 7) |
| n/a n/w f f De cia tio rtis atio rite pre mo o |
( 87 053 ) , |
( 53) |
( 56 ) |
( 2) |
( 758 ) |
( 878 ) |
( 3, 433 ) |
- | ( 92 23 3) , |
| l ( los Ca ita ) p ses |
( ) 214 |
- | - | - | ( 21) |
41 | - | - | ( ) 194 |
| l im ls To irm ta ent pa re ver sa |
( 25 239 ) , |
- | - | - | - | - | - | - | ( 25 23 9) , |
| fit los be for Pro ( s) e in ta co me x |
143 115 , |
( 84 5) |
8, 65 9 |
( 16, 04 4) |
89 | 76 0 1, |
32 7 |
- | 109 08 9 , |
| x b fit Inc (ex ) e ta om ene pen ses |
( 2) 20 54 , |
( 1) 92 |
( 8) 1, 30 |
- | - | - | - | - | ( ) 22 771 , |
| fit los for he Ne ( s) t p t ro ye ar |
94 60 1 , |
( 6) 1, 76 |
7, 35 1 |
( 4) 16, 04 |
89 | 1, 76 0 |
32 7 |
- | 86 318 , |
| l A To ta ts sse |
18, 543 538 , |
54 979 , |
22 95 9 , |
018 7, 69 2, |
89 | 760 1, |
32 7 |
( 3, 193 352 ) , |
23 122 318 , , |
| l Li bi liti To ta a es |
16, 146 076 , |
56 745 , |
618 14, |
160 712 7, , |
- | - | - | ( 3, 193 352 ) , |
20 736 24 7 , , |
| f in ib le Ac isit ion tan qu o g nd ts a ty, a sse pro per lan d e ipm t an ent p qu |
6, 793 |
- | - | - | - | - | - | - | 12, 336 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 5 SEGMENT INFORMATION (CONTINUED)
For the year ended, 31 December 2012 reconciliation between Group's Segment reporting and financial statements is presented below:
| Se gm t en Re rtin g po |
In in ter est co me fro dg d He m e L& R |
he Ot r ci lin g rec on trie en s |
Fin cia l an Sta tem ts en |
|
|---|---|---|---|---|
| Int st i ere nco me |
339 627 , |
- | ( 1, 88 8) |
62 5, 45 1 |
| Int st e ere xpe nce |
( 358 56 5) , |
162 22 , |
60 1 |
( 335 80 2) , |
| Ne iss ion inc t co mm om e |
181 30 7 , |
- | 3, 34 1 |
184 64 8 , |
| fin l in Ne ia t anc com e |
82 45 2 , |
( 22 162 ) , |
( 1, 753 ) |
58 537 , |
| her Ne inc t o t om e |
( 24 1) |
- | 018 8, |
7, 777 |
| Ne ing in t o rat pe co me |
53 2, 29 2 |
- | 319 8, |
54 0, 611 |
| l st f f co d o her To ta sts t a an |
||||
| dm inis tive tra a ex pen ses |
( 30 537 5, |
) - |
( 722 ) 7, |
( 313 25 9) , |
| f f De cia tio n/a rtis atio n/w rite pre mo o |
( ) 92 233 , |
( 7) 59 |
( ) 92 830 , |
|
| l lo Ca ita p sse s |
( 194 |
) - |
- | ( 194 ) |
| l im dit To irm ta ent pa cre s |
( ) 25 239 , |
- | - | ( ) 25 239 , |
| be for e in Los ta s co me x |
109 08 9 , |
- | - | 109 08 9 , |
| Inc x (e s) e ta om xpe nse |
( 22 ) 771 , |
- | - | ( 22 ) 771 , |
| fit for he Ne t p t ro ye ar |
86 318 , |
- | - | 86 318 , |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 6 NET INTEREST INCOME
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 470,985 | 623,735 | Interest income: | 470,505 | 623,745 |
| 83 | 1,700 | on balances with Central Banks | 83 | 1,700 |
| 10,999 | 23,077 | on loans and advances to credit institutions | 11,562 | 24,135 |
| 396,711 | 497,167 | on loans and advances to customers | 395,692 | 496,144 |
| 11,159 | 33,047 | on government securities - loans and receivables | 11,159 | 33,047 |
| 40,053 | 57,376 | on finance leasing portfolio | 40,059 | 57,384 |
| 2,252 | 2,332 | on debt securities available for sale | 2,222 | 2,299 |
| 9,728 | 9,036 | on debt securities, designated at fair value | 9,728 | 9,036 |
| (182,245) | (335,802) | Interest expenses: | (182,262) | (335,879) |
| (100,666) | (191,094) | on amounts owed to credit institutions | (100,683) | (191,171) |
| (14,914) | (57,125) | on deposits from the public | (14,914) | (57,125) |
| (8,785) | (28,501) | on debt securities | (8,785) | (28,501) |
| - | (3,786) | on subordinated loans | - | (3,786) |
| (57,880) | (55,296) | deposits insurance expenses | (57,880) | (55,296) |
| 288,740 | 287,933 Total net interest income | 288,243 | 287,866 |
NOTE 7 IMPAIRMENT LOSSES ON LOANS, FINANCE LEASING RECEIVABLE AND OTHER ASSETS
| The Group | The Bank | ||||
|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | ||
| Impairment losses on loans to credit institutions | |||||
| 2 | - | charge for the year, net | 2 | - | |
| Impairment losses of impairment losses on loans to customers, | |||||
| 83,780 | 55,551 | net | 83,780 | 55,551 | |
| (3,109) | (520) | Recovered written off loans | (3,109) | (520) | |
| 80,673 | 55,031 Impairment (losses)/reversals of impairment losses on loans, net | 80,673 | 55,031 |
Changes in impairment losses during the year 2013 and 2012 were as follows:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Impairment losses on loans as of 1 January | ||||
| 1,022,564 | 1,209,217 | (note 22) | 1,022,564 | 1,207,717 |
| Impairment charged (credited) to income statement by | ||||
| 83,780 | 55,551 | customer category, net: | 83,780 | 55,551 |
| 18,361 | 14,801 | Other corporate | 18,361 | 14,801 |
| 46,106 | 21,515 | Property management | 46,106 | 21,515 |
| 10,633 | 21,888 | Mortgage | 10,633 | 21,888 |
| 8,680 | (2,653) | Other private individuals | 8,680 | (2,653) |
| (396,923) | (241,927) | Loans written off: | (396,923) | (240,427) |
| (61,038) | (83,297) | Other corporate | (61,038) | (81,797) |
| (305,037) | (158,192) | Property management | (305,037) | (158,192) |
| (30,848) | (438) | Private individuals | (30,848) | (438) |
| (471) | (277) | Effect of change in exchange rate | (471) | (277) |
| Impairment losses on loans as of | ||||
| 708,950 | 1,022,564 | 31 December | 708,950 | 1,022,564 |
Impairment losses on loans relate to loans to customers and are specified in Note 22.
As of 31 December 2013 the Bank had LTL 1,101,443 thousand of individually impaired loans, gross of impairment losses (2012: LTL 1,773,081thousand). As of 31 December 2013 accrued interest on these loans amounted to LTL 403 thousand (2012: LTL 1,032 thousand). Deferred administration fee amounted to LTL 418 thousand for individually impaired loans to customers (2012: LTL 415 thousand).
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 7 IMPAIRMENT LOSSES ON LOANS, FINANCE LEASING RECEIVABLE AND OTHER ASSETS (CONTINUED)
Interest income on these loans for the year ended 31 December 2013 amounted to LTL 15,495 thousand (2012: LTL 26,338 thousand). Impaired loans referred to above are identified in accordance with the Bank's Credit Loss Instructions.
The Group and the Bank accounted for the following impairment losses for finance lease portfolio and other assets:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 83,930 | 133,865 | Impairment losses on finance lease portfolio | 83,930 | 133,865 |
| 1,285 | 1,874 | Impairment losses on other assets | 1,285 | 1,874 |
| Impairment losses on finance lease portfolio | ||||
| 85,215 | 135,739 | and other assets as of 31 December | 85,215 | 135,739 |
Changes in impairment losses for finance lease portfolio and other assets related to lease portfolio for the year ended 31 December 2013 and 2012 were as follows:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Impairment reversal on finance lease portfolio credited to | ||||
| (34,191) | (28,389) | income statement | (34,191) | (28,389) |
| 1,160 | 1,443 | Investment property impairment loss (reversal) | 1,160 | 1,443 |
| 2,700 | 264 | Impairment losses on foreclosed assets | 2,700 | 264 |
| Result from sales of foreclosed assets according to | ||||
| (3,084) | (730) | terminated lease portfolio agreements | (3,084) | (730) |
| (33,415) | (27,412) | Impairment reversal on finance lease portfolio and other assets related to lease portfolio, net |
(33,415) | (27,412) |
| The Group | The Bank | ||
|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 |
| Impairment losses on finance lease portfolio as of | |||
| 133,865 | 170,216 1 January (note 23) |
133,865 | 170,216 |
| Impairment reversal credited to income statement, | |||
| (34,191) | (28,389) net: |
(34,191) | (28,389) |
| (34,808) | (28,305) Corporate |
(34,808) | (28,305) |
| 587 | (84) Private individuals |
587 | (84) |
| 30 | - Other |
30 | - |
| (15,619) | (7,962) Finance leasing receivable written off |
(15,619) | (7,962) |
| (15,590) | (7,883) Corporate |
(15,590) | (7,883) |
| (29) | (79) Private individuals |
(29) | (79) |
| (125) | - Effect of change in exchange rate |
(125) | - |
| Impairment losses on finance lease portfolio | |||
| 83,930 | as of 31 December 133,865 |
83,930 | 133,865 |
Impairment losses on finance lease receivable are specified in Note 23.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 8 NET FEE AND COMMISSION INCOME
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 77 581 | 74 798 | For money transfer operations | 77 581 | 74 798 |
| 101 699 | 98 220 | For payment cards services | 101 699 | 98 220 |
| 10 779 | 9 306 | For operations with securities | 10 779 | 9 306 |
| 74 740 | 69 130 | Other income on services and commissions | 61 597 | 56 255 |
| 264 799 | 251 454 Income on services and commissions | 251 656 | 238 579 | |
| (2 187) | (2 108) | For money transfer operations | (2 187) | (2 108) |
| (50 971) | (49 116) | For payment cards services | (50 971) | (49 116) |
| (2 405) | (2 599) | For operations with securities | (2 405) | (2 599) |
| (12 090) | (12 983) | Other expenses on services and commissions | (11 292) | (12 448) |
| (67 653) | (66 806) Expenses on services and commissions | (66 855) | (66 271) |
NOTE 9 DIVIDEND INCOME FROM SUBSIDIARIES
The table below presents dividends received by the Bank from it's subsidiaries:
| 2013 | 2012 | |
|---|---|---|
| UAB "SEB investicijų valdymas" | 7,351 | 8,344 |
| Total dividend income | 7,351 | 8,344 |
NOTE 10 NET GAIN (LOSS) ON OPERATIONS WITH DEBT SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Realised result from operations with debt securities | ||||
| 3,589 | 12,783 | in trading portfolio | 3,589 | 12,783 |
| Unrealised result from operations with debt securities | ||||
| (1,225) | 1,632 | in trading portfolio | (1,225) | 1,632 |
| Result of available for sale portfolio designated for | ||||
| (2,281) | 3,840 | fair value hedge | (2,281) | 3,840 |
| Government securities - loans and receivables, | ||||
| (7,093) | (11,656) | designated for fair value hedge | (7,093) | (11,656) |
| Result of Government securities designated at fair value through profit | ||||
| (988) | 1,844 | (loss) | (988) | 1,844 |
| Result of other financial assets designated at fair | ||||
| 223 | (121) | value through profit (loss) | - | - |
| Result of interest rate swap designated as hedging | ||||
| 418 | (13,147) | instrument | 418 | (13,147) |
| 26,129 | (6,496) | Result of other derivatives | 26,129 | (6,496) |
| 4,634 | 4,169 | Result from other trading securities | 4,634 | 4,169 |
| Net gains (losses) on financial assets and derivative | ||||
| 23,406 | (7,152) | instruments accounted for at fair value | 23,183 | (7,031) |
NOTE 11 NET FOREIGN EXCHANGE GAIN
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 56,883 54,048 |
Gain from foreign exchange trading | 56,888 | 54,049 | |
| 14,420 13,785 |
Unrealised translation gain | 14,469 | 13,787 | |
| 71,303 | 67,833 Net gain on foreign exchange | 71,357 | 67,836 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 12 STAFF COSTS
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 96,546 | 106,007 | Salaries and wages Social security expenses (defined contribution plan |
94,793 | 104,336 |
| 32,595 | 35,713 | cost) | 32,020 | 35,141 |
| 129,141 | 141,720 Total staff costs | 126,813 | 139,477 |
The following numbers of full-time personnel were employed by the Group's companies as of 31 December 2013 and 2012:
| 2013 | 2012 | |
|---|---|---|
| AB SEB bankas | 1,731 | 1,808 |
| UAB "SEB investicijų valdymas" | 9 | 13 |
| UAB "SEB Venture Capital" | 1 | 2 |
| Total employees | 1,741 | 1,823 |
Several employees of the Bank are also employed by subsidiary companies and vice versa.
NOTE 13 OTHER ADMINISTRATIVE EXPENSES
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 43,492 | 41,010 | Rent and maintenance of premises | 43,223 | 40,634 |
| 9,317 | 12,316 | Depreciation property, plant and equipment | 9,246 | 12,208 |
| 406 | 775 | Depreciation of investment property | 406 | 775 |
| 10,873 | 22,614 | Audit and consulting expenses | 10,733 | 22,482 |
| 47,485 | 32,139 | Office equipment maintenance | 47,485 | 32,139 |
| 7,596 | 10,085 | Communication expenses | 7,352 | 9,849 |
| 7,877 | 9,365 | Payments for servicing organizations | 7,812 | 9,266 |
| 5,740 | 6,609 | Transport expenses | 5,640 | 6,510 |
| 6,703 | 6,398 | Advertising and promotion expenses | 6,450 | 6,343 |
| 10,543 | 20,573 | Amortisation of intangible assets | 10,543 | 20,572 |
| 4,134 | 3,810 | Other than income taxes | 4,130 | 3,694 |
| 25 | 596 | Depreciation of assets under operating lease | 25 | 596 |
| 1,276 | 1,090 | Employees training expenses | 1,264 | 1,064 |
| 1,998 | 2,168 | Insurance of banking operations | 1,998 | 2,168 |
| 474 | 359 | Charity and sponsorship | 474 | 359 |
| - | 58,539 | Intangible assets write off | - | 58,539 |
| 12,393 | 36,117 | Other expenses | 12,098 | 35,885 |
| 170,332 | 264,563 Total other administrative expenses | 168,879 | 263,083 |
More information related the line 'Intangible assets write off' is provided in the Note 26, Intangible fixed assets.
The balance in the line 'Other expenses' for the year ended 2012 includes provision for the fine amounting to LTL 24,808 thousand that Competition Council imposed on the Bank (for more information see Note 44, Legal proceedings).
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 14 INCOME TAX EXPENSE
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 1,371 | 1,317 | Current year tax charge | - | - |
| (149) Previous years related tax charge | - | (149) | ||
| 29,849 | 21,346 | Change in deferred tax assset and liability balance | 29,834 | 20,434 |
| 31,220 | 22,514 Total income tax charge | 29,834 | 20,285 |
Previous years related tax charge accounted for in 2012 LTL (149) thousand for the Group and the Bank represents adjustment updating profit tax payable figure estimated at year end.
The tax on the Group's and the Bank's profit before tax differs from the theoretical amount that would arise using the basic tax rate as follows:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 243,529 | 107,373 | Profit before tax | 242,145 | 107,862 |
| 36,529 | 16,106 | Tax calculated at a tax rate of 15% | 36,322 | 16,179 |
| (33,980) | (22,364) | Income not subject for tax | (36,228) | (23,745) |
| 28,671 | 28,921 | Expenses not deductible for tax purposes | 29,740 | 28,000 |
| - | (149) | Correction of previous period income tax | - | (149) |
| 31,220 | 22,514 Total income tax charge | 29,834 | 20,285 |
Starting from the year 2010 income tax rate in Lithuania is 15 percent.
Deferred tax
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 197,753 | 215,290 | Assets at 1 January | 197,706 | 214,331 |
| (29,849) | (21,346) | Income statement charge | (29,834) | (20,434) |
| - | 4,804 | Deferred tax on change in value measurement of financial assets | - | 4,804 |
| (273) | (995) | Other comprehensive income | (273) | (995) |
| 167,632 | 197,753 Asset (liablity) at 31 December | 167,600 | 197,706 |
As of 31 December 2013 and 2012 deferred income tax was calculated using 15 percent income tax rate.
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Deferred tax assets | ||||
| Revaluation of available for sales securities through | ||||
| 450 | 723 | equity | 450 | 723 |
| - | - | Revaluation of securities | - | - |
| - | 1,133 | Revaluation of derivatives | - | 1,133 |
| 5,998 | 17,017 | Amortisation and depreciation | 5,998 | 17,016 |
| 8,344 | 7,881 | Accrued expense | 8,311 | 7,835 |
| 17,323 | 23,270 | Impairment losses | 17,323 | 23,270 |
| 141,158 | 152,416 | Tax loss carried forward | 141,158 | 152,416 |
| 173,273 | 202,440 Deferred tax assets, net | 173,240 | 202,393 | |
| Deferred tax liability | ||||
| Revaluation of available for sale securities through | ||||
| 2,718 | 4,124 | income statement | 2,718 | 4,124 |
| 235 | 563 | Revaluation of trade securities | 235 | 563 |
| 2,687 | - | Revaluation of derivatives | 2,687 | - |
| 5,640 | 4,687 Deferred tax liability, net | 5,640 | 4,687 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 14 INCOME TAX EXPENSE (CONTINUED)
As of 31 December 2013 the deferred tax asset related to tax losses recognised by the Bank is LTL 141,158 thousand of which LTL 1,623 thousand related to taxable losses from transactions with securities and derivatives. Tax losses could be offset with taxable profits for unlimited time. However not more than 70 per cent of yearly taxable profit could be offset with accumulated taxable loss starting from January 1, 2014.
In the Management opinion the Bank will utilize LTL 30 million of deferred tax asset within 12 month period from the date of these financial statements, respectively LTL 138 million after more then 12 months from the date of these financial statements
The amount of unused tax losses carried forward for the Group and the Bank is as follows:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Unused tax losses | ||||
| 941,052 | 1,016,111 | Tax loss carried forward, unlimited use | 941,052 | 1,016,111 |
| 941,052 | 1,016,111 Total unused tax losses | 941,052 | 1,016,111 |
As of 31 December 2013 and 2012 income tax effect relating to components of other comprehensive income was as follows:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Fair value gains (losses) on available for sale | ||||
| 1,565 | 5,184 | investment securities before tax amount | 1,565 | 5,184 |
| (273) | (995) | Tax (expenses) benefit | (273) | (995) |
| 1,292 | 4,189 | Fair value gains on available for sale investment securities, net of tax amount |
1,292 | 4,189 |
NOTE 15 EARNINGS PER SHARE
| The Group | ||
|---|---|---|
| 2013 | 2012 | |
| Net profit from continuing operations | ||
| attributable to the shareholders | 212,309 | 84,859 |
| Weighted average number of shares (000s) | 15,441 | 15,441 |
| Basic and diluted earnings per share (LTL) | 13.75 | 5.50 |
NOTE 15 EARNINGS PER SHARE(CONTINUED)
Basic earnings per ordinary share is calculated by dividing net income attributable to equity holders by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share is calculated by dividing net income by the weighted average number of ordinary shares in issue during the year to assume conversion of all dilutive potential ordinary shares. The Group has no dilutive potential ordinary shares.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 16 BALANCES WITH THE CENTRAL BANK
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 438,591 | 514,015 | Obligatory reserves | 438,591 | 514,015 |
| 47,963 | 64,749 | Target deposits | 47,963 | 64,749 |
| 448,769 | 424,169 | Balance available for withdrawal | 448,769 | 424,169 |
| 935,323 | 1,002,933 Total balances with the Central Bank | 935,323 | 1,002,933 |
Obligatory reserves comprise 3 per cent (4 percent in 2012) of balance of public deposits with tenors not longer than 2 years calculated using data from the last day of the previous month. Central bank pays remuneration for reserves holding in central bank based on ECB deposit facility rate (0,00 % from 11 July 2012).
The line 'Target deposits' represents Bank's balance of funds that have been transferred by state enterprise Indėlių ir Investicijų Draudimas ('Deposit and Investment Insurance Fund') for payment of insurance compensations to Bank Snoras depositors (private individuals and companies within Vilnius County) when operation of Bank Snoras was suspended.
NOTE 17 DUE FROM BANKS
| The Group | The Bank | ||||
|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | ||
| 202,751 | 2,208,678 | Current accounts | 202,751 | 2,208,678 | |
| 385,235 | 42,550 | Overnight deposits | 385,235 | 42,550 | |
| 3,103,060 | 415,701 | Term deposits | 3,103,060 | 415,701 | |
| 3,691,046 | 2,666,929 Total | 3,691,046 | 2,666,929 |
Amounts due from Banks at 31 December 2013 have been due from counterparties with the rating not less than BBB- based on rating agency Standard & Poor's ratings except for LTL 153 million. that are due from the counterparties which are not rated and LTL 1 mln. from counterparty's that are under non - investment grade.
NOTE 18 GOVERNMENT SECURITIES AVAILABLE FOR SALE
| The Group | The Bank | |
|---|---|---|
| 52,911 As of 1 January 2012 | 51,921 | |
| 54,114 | Additions | 54,114 |
| (57,063) | Disposals | (56,706) |
| 2,332 | Interest income | 2,299 |
| Result of available for sale portfolio designated for | ||
| 3,840 | fair value hedge | 3,840 |
| 4,766 | Change in revaluation reserve in equity | 4,766 |
| 60,900 As of 1 January 2013 | 60,234 | |
| Additions | ||
| (2,542) | Disposals | (2,512) |
| 2,252 | Interest income | 2,222 |
| Result of available for sale portfolio designated for | ||
| (2,281) | fair value hedge | (2,281) |
| 1,565 | Change in revaluation reserve in equity | 1,565 |
| 59,895 As of 31 December 2013 | 59,228 |
Vast majority of government securities are debt securities issued by the Government of the Republic of Lithuania for the term of four years.
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 19 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
| The Group | The Bank | ||||
|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | ||
| - | 1,260 | Financial assets held for trading - equity instruments Financial assets held for trading - securities of |
- | 1,260 | |
| 79,161 | 143,050 | Government of Republic of Lithuania Financial assets designated at fair value (at initial |
79,161 | 143,050 | |
| 874,821 | 507,293 | recognition) | 830,452 | 464,234 | |
| 953,982 | 651,603 Total financial assets designated at fair value | 909,613 | 608,544 |
Financial assets designated at fair value (at initial recognition) represent AB SEB bankas subsidiary's UAB "SEB Venture Capital" investments in associates and the Bank's investment in Lithuanian Government securities. Upon initial recognition it is designated as at fair value through profit or loss because this investment is managed and it's performance is evaluated on a fair value basis in accordance with investment strategy. UAB "SEB Venture Capital" business is oriented to short and middle term profit from increase in fair value of investments.
The table below presents movement of financial assets designated at fair value.
| The Group | The Bank | |
|---|---|---|
| 41,505 As of 1 January 2012 | - | |
| 462,429 | Additions | 460,754 |
| - | Disposals | - |
| 3,359 | Revaluation | 3,480 |
| 507,293 As of 1 January 2013 | 464,234 | |
| 813,730 | Additions | 812,643 |
| (453,154) | Disposals | (453,154) |
| 6,952 | Revaluation | 6,729 |
| 874,821 As of 31 December 2013 | 830,452 |
The revaluation result on designated at fair value financial assets is accounted in income statement under net gain (loss) on operations with debt securities and derivative financial instruments.
The table below presents an analysis of Bank's trading debt securities and financial assets designated at fair value (at initial recognition) by rating agency designation at 31 December 2013 and 2012, based on Standard & Poor's ratings or their equivalent:
| Securities of Government of Republic of Lithuania |
||
|---|---|---|
| 2013 | 2012 | |
| BBB | 909,613 | 607,284 |
| Total | 909,613 | 607,284 |
The residual amount of the Group balance consists of UAB "SEB Venture Capital" investments in associates that are not rated.
NOTE 20 DERIVATIVE FINANCIAL INSTRUMENTS
The Bank utilises the following derivative instruments for both hedging and non-hedging purposes. Hedging relationship is properly documented. The hedging practices and accounting treatment is described in note 3 (l).
Receivable for interest rate and currency interest rate swaps amounting to LTL 184,911 thousand are due from the counterparties with internal risk classes that fall under the range from 6 till 11. Receivable for currency interest rate swaps amounting to LTL 68,667 thousand are due from the Parent company with internal risk class 3.
Interest rate derivatives
Equity derivatives
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 20 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
| Notional amount | ||||
|---|---|---|---|---|
| 31 December 2013 | Purchase | Sale | Fair value Assets |
Liabilities |
| Foreign exchange derivatives | ||||
| Currency forwards | 192,555 | 192,609 | 1,867 | 1,907 |
| Put options | 14,048 | 14,048 | 90 | 90 |
| Interest rate derivatives | ||||
| Futures | - | - | ||
| Interest rate swaps | 3,098,429 | 3,098,429 | 120,293 | 124,221 |
| Interest rate swaps for hedging purposes | 231,338 | 231,338 | - | 27,109 |
| Currency interest rate swaps | 3,986,090 | 3,986,090 | 133,286 | 113,914 |
| Interest rate options | 27,291 | 27,291 | 15 | 15 |
| Equity derivatives | ||||
| Index linked debt securities option | 70,217 | 70,217 | 3,635 | 3,632 |
| Derivative part of index linked deposit | - | - | 47 | - |
| Other derivatives | ||||
| Commodity options | 20,578 | 20,578 | 55 | 55 |
| Total derivatives assets/liabilities | 7,640,546 | 7,640,600 | 259,288 | 270,943 |
| Notional amount | Fair value | |||
| 31 December 2012 | Purchase | Sale | Assets | Liabilities |
| Foreign exchange derivatives | ||||
| Currency forwards | 126,386 | 130,338 | 757 | 3,929 |
| Currency swaps | 854,768 | 854,768 | 498 | 1,405 |
| Put options | 3,122 | 3,122 | 35 | 35 |
| Total derivatives assets/liabilities | 9,831,100 | 9,829,873 | 326,230 | 380,892 |
|---|---|---|---|---|
| Commodity options | 27,919 | 27,919 | 953 | 949 |
| Other derivatives |
Index linked debt securities option 157,966 157,966 5,790 5,786 Derivative part of index linked deposit - - 53 -
Futures 5,179 - - 2 Interest rate swaps 3,855,786 3,855,786 179,271 188,683 Interest rate swaps for hedging purposes 403,978 403,978 - 42,093 Currency interest rate swaps 4,063,339 4,063,339 136,889 136,026 Interest rate options 332,657 332,657 1,984 1,984
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 21 LOANS TO CREDIT INSTITUTIONS
The table below presents loans to credit institutions split by counterparty country.
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 44,169 | 1,617 | Sweden | 44,169 | 1,617 |
| 20,477 | - | Turkey | 20,477 | - |
| 13,829 | 2,726 | Russian Federation | 13,829 | 2,726 |
| 4,007 | - | Latvia | 4,007 | - |
| 1,434 | 13 | United States | 1,434 | 13 |
| 1,013 | - | Viet Nam | 1,013 | - |
| 790 | - | China | 790 | - |
| 321 | 1,105 | Belarus | 321 | 1,105 |
| 31 | - | Netherlands | 31 | - |
| 5 | 119 | Germany | 5 | 119 |
| 2 | - | Ireland | 2 | - |
| 1 | - | United Kingdom | 1 | - |
| - | 406 | UAE | - | 406 |
| - | - | Lithuania | - | |
| - | 256 | France | - | 256 |
| 86,079 | 6,242 Total loans to credit institutions | 86,079 | 6,242 | |
| (2) | - | Less impairment losses on loans | (2) | - |
| 86,077 | 6,242 Loans to credit institutions, net | 86,077 | 6,242 |
Vast majority of loans to credit institutions are not secured by any collateral.
As of 31 December 2013 LTL 1 thousands of loans to credit institutions were past due more than 60 days. As of 31 December 2012 LTL 3 thousand were past due 8-30 days.
The table below presents an analysis of loans to credit institutions by rating agency designation at 31 December 2013 and 31 December 2012, based on Standard & Poor's ratings or their equivalent:
| 2013 | 2012 | |
|---|---|---|
| AA- | 2 | - |
| A+ | 45,627 | 1,736 |
| A | 801 | 259 |
| BBB | - | 1 |
| BBB- | 11,902 | - |
| BB+ | 20,897 | 1,093 |
| BB | 1,507 | 1,632 |
| B- | 200 | 1,105 |
| CCC+ | 121 | - |
| Not available | 5,020 | 416 |
| 86,077 | 6,242 |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 22 LOANS TO CUSTOMERS
The Group employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of collateral for loans granted, which is common practice. The Group implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans and receivables are presented below.
As of 31 December 2013 and 2012 the Bank's loans to customers against collateral type were as follows:
| Property | Other private | |||||
|---|---|---|---|---|---|---|
| 31 December 2013 | Public | management | Other corporate | Mortgage loans | individuals | Total |
| Loans secured by mortgage, real property | 146 | 1,514,187 | 1,233,333 | 5,398,778 | 519,397 | 8,665,841 |
| Loans secured by deposits and securities | 284 | 85,566 | 86,709 | 8,861 | 9,107 | 190,527 |
| Loans secured by guarantees of government | ||||||
| and banks | - | 32,873 | 67,089 | - | - | 99,962 |
| Accounts receivable and debtors | 4,149 | 512,878 | 1,111,124 | 3,727 | 1,163 | 1,633,041 |
| Inventories and equipment | 282 | 4,402 | 750,650 | 10 | 9 | 755,353 |
| Other collateral | 433 | 504,169 | 1,481,486 | 636,094 | 35,604 | 2,657,786 |
| Unsecured loans | 403,741 | 41,767 | 1,138,503 | 57,287 | 256,927 | 1,898,225 |
| Total loans to customers | 409,035 | 2,695,842 | 5,868,894 | 6,104,757 | 822,207 | 15,900,735 |
| 31 December 2012 | ||||||
| Loans secured by mortgage, real property | - | 1,885,238 | 1,257,194 | 5,430,724 | 590,104 | 9,163,260 |
| Loans secured by deposits and securities | 205 | 85,113 | 93,591 | 11,148 | 19,366 | 209,423 |
| Loans secured by guarantees of government | ||||||
| and banks | - | 2,347 | 73,115 | 80 | - | 75,542 |
| Accounts receivable and debtors | 6,391 | 739,820 | 1,199,977 | 4,230 | 1,718 | 1,952,136 |
| Inventories and equipment | 354 | 5,955 | 685,146 | 6 | 9 | 691,470 |
| Other collateral | 193 | 421,434 | 1,024,416 | 709,850 | 39,853 | 2,195,746 |
| Unsecured loans | 436,097 | 52,646 | 1,580,838 | 62,278 | 272,608 | 2,404,467 |
| Total loans to customers | 443,240 | 3,192,553 | 5,914,277 | 6,218,316 | 923,658 | 16,692,044 |
Loan's amount was split proportionally to collateral value, if there were several types of collateral pledged for the same loan.
As of 31 December 2013 loans with floating interest rate made 74.66 percent of the Bank's total loan portfolio (2012: 72.12 percent). As of 31 December 2013 included in the above amounts of loans secured by deposits and securities is reversed repo transactions equal to LTL 794 thousand (of which LTL 10 thousand is accrued interest) with securities in amount of LTL 1,817 thousand (2012: LTL 6,157 thousand and LTL 10,236 thousand respectively), which includes: equity (LTL 776 thousand), funds (LTL 236 thousand), bonds (LTL 693 thousand) and equity linked debt securities (LTL 112 thousand).
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 22 LOANS TO CUSTOMERS (CONTINUED)
As of 31 December 2013 and 2012 the Bank's loans to customers by customer category were as follows:
| 2013 | 2012 | |
|---|---|---|
| Neither past due nor impaired: | ||
| Property management | 1,839,633 | 1,703,192 |
| Other corporate | 5,240,252 | 5,232,199 |
| Public | 405,892 | 440,894 |
| Mortgage loans | 5,531,136 | 5,537,161 |
| Other private individuals | 636,752 | 704,829 |
| Total neither past due nor impaired | 13,653,665 | 13,618,275 |
| Past due but not impaired: | ||
| Property management | 175,704 | 223,641 |
| Other corporate | 246,832 | 217,318 |
| Public | 3,143 | 2,346 |
| Mortgage loans | 559,906 | 656,305 |
| Other private individuals | 160,058 | 187,453 |
| Total past due but not impaired | 1,145,643 | 1,287,063 |
| Impaired individually assesed loans: | ||
| Property management | 680,505 | 1,265,720 |
| Other corporate | 381,810 | 464,760 |
| Public | - | - |
| Mortgage loans | 13,715 | 16,095 |
| Other private individuals | 25,397 | 27,123 |
| Total impaired individually assesed loans | 1,101,427 | 1,773,698 |
| Total loans by customer category: | ||
| Property management | 2,695,842 | 3,192,553 |
| Other corporate | 5,868,894 | 5,914,277 |
| Public | 409,035 | 443,240 |
| Mortgage loans | 6,104,757 | 6,209,561 |
| Other private individuals | 822,207 | 919,405 |
| Total loans by customer category | 15,900,735 | 16,679,036 |
| Less impairment losses on loans: | ||
| Property management | (211,182) | (470,368) |
| Other corporate | (174,751) | (217,639) |
| Public | - | - |
| Mortgage loans | (229,527) | (241,627) |
| Other private individuals | (93,490) | (92,930) |
| Total impairment losses on loans | (708,950) | (1,022,564) |
| Loans to customers, net | 15,191,785 | 15,656,472 |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 22 LOANS TO CUSTOMERS (CONTINUED)
The table below presents analysis of impaired individually assessed loans as of 31 December 2013 and 2012:
| 2013 | 2012 | |
|---|---|---|
| Impaired individually assesed loans: | ||
| Property management | 680,504 | 1,265,720 |
| Other corporate | 381,811 | 464,760 |
| Public | - | - |
| Mortgage loans | 13,715 | 16,095 |
| Other private individuals | 25,397 | 27,123 |
| Total impaired individually assesed loans | 1,101,427 | 1,773,698 |
| Less impairment losses on individually assesed loans: | ||
| Property management | (183,937) | (444,963) |
| Other corporate | (131,480) | (188,361) |
| Public | - | - |
| Mortgage loans | (10,442) | (12,177) |
| Other private individuals | (20,069) | (11,309) |
| Total impairment losses on individually assesed loans | (345,928) | (656,810) |
The credit quality of the portfolio of loans to customers that were neither past due nor impaired can be assessed by reference to the internal rating system adopted by the Group. The analysis of the Bank's loans to customers by classes is as follows:
| Property | Other private | |||||
|---|---|---|---|---|---|---|
| Public | management | Other corporate | Mortgage loans | individuals | Total | |
| 31 December 2013 | ||||||
| 3 – 7 risk classes | 116,518 | 130,417 | 832,960 | - | - | 1,079,895 |
| 8 risk class | 140,410 | 68,615 | 497,989 | - | - | 707,014 |
| 9 risk class | 43,581 | 580,433 | 1,525,325 | - | - | 2,149,339 |
| 10 risk class | 14,144 | 447,681 | 1,390,793 | - | - | 1,852,618 |
| 11 risk class | - | 274,724 | 317,465 | - | - | 592,189 |
| 12 risk class | - | 180,121 | 242,761 | - | - | 422,882 |
| 13 – 16 risk class | 91,239 | 152,477 | 229,120 | - | - | 472,836 |
| Homogeneous credits groups | - | 5,165 | 203,839 | 5,531,136 | 636,752 | 6,376,892 |
| Total neither past due nor | ||||||
| impaired | 405,892 | 1,839,633 | 5,240,252 | 5,531,136 | 636,752 | 13,653,665 |
| 31 December 2012 | ||||||
| 3 – 7 risk classes | 2,729 | 31,196 | 643,281 | - | - | 677,206 |
| 8 risk class | 152,341 | 148,042 | 874,913 | - | - | 1,175,296 |
| 9 risk class | 148,439 | 198,162 | 1,352,119 | - | - | 1,698,720 |
| 10 risk class | 26,089 | 501,923 | 1,154,481 | - | - | 1,682,493 |
| 11 risk class | 590 | 252,875 | 456,450 | - | - | 709,915 |
| 12 risk class | 110,706 | 339,856 | 193,668 | - | - | 644,230 |
| 13 – 16 risk class | - | 227,025 | 395,171 | - | - | 622,196 |
| Homogeneous credits groups | - | 4,113 | 162,116 | 5,537,161 | 704,829 | 6,408,219 |
| Total neither past due nor | ||||||
| impaired | 440,894 | 1,703,192 | 5,232,199 | 5,537,161 | 704,829 | 13,618,275 |
The table below presents assessment of Homogeneous credits groups by internal rating categories:
| 2013 | 2012 | |
|---|---|---|
| A | 4,913,431 | 4,852,071 |
| B | 504,316 | 522,964 |
| C | 207,409 | 226,937 |
| D | 501,328 | 520,745 |
| E | 247,090 | 281,776 |
| Not rated | 3,318 | |
| 6,376,892 | 6,408,219 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 22 LOANS TO CUSTOMERS (CONTINUED)
The Group's loans differ from the Bank's loans to customers by loans granted by venture capital subsidiary and the loan granted to this subsidiary. Loans granted by UAB "SEB Venture capital" as of 31 December 2013 amounted to LTL 12,662 thousand (2012: LTL 11,642 thousand). Loans granted by venture capital subsidiary are classified as neither past due nor impaired loans granted to other corporate and these are not secured.
There are the following homogeneous groups used by the Group: mortgage loans, consumer loans, small corporate loans and credit cards. Loans to private individuals (consumer and mortgage backed loans) and small corporate are assessed using scoring methods at the moment loan is granted. Afterwards they are monitored according to their overdue status. Therefore, for credit risk management purposes, loans to private individuals neither past due nor impaired are viewed as standard loans.
As of 31 December 2013 and 2012 loans to customers past due but not impaired and fair value of collateral were as follows:
| Public | Property management |
Other corporate | Mortgage loans | Other private individuals |
Total | |
|---|---|---|---|---|---|---|
| 31 December 2013 | ||||||
| Loans past due but not impaired: | ||||||
| past due up to 7 days | 2,806 | 14,287 | 59,194 | 89,569 | 9,253 | 175,109 |
| past due 8-30 days | 337 | 3,194 | 126,219 | 100,635 | 14,350 | 244,735 |
| past due 31 - 60 days | - | 1,539 | 12,995 | 55,835 | 10,975 | 81,344 |
| past due over 60 days | - | 156,684 | 48,424 | 313,867 | 125,480 | 644,455 |
| Total past due but not impaired | 3,143 | 175,704 | 246,832 | 559,906 | 160,058 | 1,145,643 |
| Fair value of collateral pledged | - | 167,326 | 107,230 | 466,760 | 79,778 | 821,094 |
| 31 December 2012 | ||||||
| Loans past due but not impaired: | ||||||
| past due up to 7 days | 854 | 23,923 | 65,840 | 98,309 | 14,163 | 203,089 |
| past due 8-30 days | 1,492 | 29,921 | 51,579 | 119,734 | 18,683 | 221,409 |
| past due 31-60 days | - | 35,006 | 40,175 | 65,033 | 8,608 | 148,822 |
| past due over 60 days | - | 134,791 | 59,724 | 381,984 | 150,252 | 726,751 |
| Total past due but not impaired | 2,346 | 223,641 | 217,318 | 665,060 | 191,706 | 1,300,071 |
| Fair value of collateral pledged | - | 218,464 | 117,364 | 578,304 | 108,408 | 1,022,540 |
The major part of loans past due up to 7 days are past due because of technical reasons and do not indicate difficulties to fulfil financial obligations to the Bank. Loans, that as at 31 December 2013 were past due up to 7 days and instalments were paid during January 2014, amount LTL 148,270 thousand (2012: LTL 173,170 thousand), of which: public sector – the whole amount for year 2013 and 2012, property management – the whole amount for year 2013 and 2012, other corporate – LTL 46,431 thousand (2012: LTL 57,314 thousand), mortgage loans – LTL 76,735 thousand (2012: LTL 79,174 thousand), other private individuals – LTL 8,011 thousand (2012: LTL 11,905 thousand).
As of 31 December 2013 and 2012 impaired loans to customers and fair value of collateral were as follows:
| Public | Property management |
Other corporate | Mortgage loans | Other private individuals |
Total | |
|---|---|---|---|---|---|---|
| 31 December 2013 | ||||||
| Impaired individually assesed loans | - | 680,505 | 381,810 | 13,715 | 25,397 | 1,101,427 |
| Fair value of collateral pledged | - | 469,684 | 203,821 | 3,595 | 6,016 | 683,116 |
| 31 December 2012 | ||||||
| Impaired individually assesed loans | - | 1,265,720 | 464,760 | 16,095 | 27,123 | 1,773,698 |
| Fair value of collateral pledged | - | 765,875 | 225,692 | 3,917 | 12,745 | 1,008,229 |
The Bank considers a loan in a homogeneous group to which impairment has been allocated on a collective basis as not being impaired for the purposes of IFRS 7 disclosures until the loss can be specifically identified with the loan.
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 23 FINANCE LEASE RECEIVABLE
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Gross finance lease receivable | ||||
| 567,436 | 528,339 | -Falling due within one year | 567,473 | 528,396 |
| 908,342 | 969,659 | -Falling due from one to five years | 908,446 | 969,762 |
| 105,213 | 236,471 | -Falling due after five years | 105,213 | 236,471 |
| 1,580,991 | 1,734,469 | Total gross finance lease receivable | 1,581,132 | 1,734,629 |
| Unearned finance income | ||||
| (27,873) | (35,267) | -Falling due within one year | (27,873) | (35,267) |
| (35,790) | (53,055) | -Falling due from one to five years | (35,790) | (53,055) |
| (5,145) | (9,523) | -Falling due after five years | (5,145) | (9,523) |
| (68,808) | (97,845) | Total unearned finance income | (68,808) | (97,845) |
| (83,930) | (133,865) | Less impairment losses on finance lease receivable | (83,930) | (133,865) |
| 1,428,253 | 1,502,759 Total finance lease receivable, net | 1,428,394 | 1,502,919 |
As of 31 December 2013 there were no unguaranteed residual values (2012: LTL 119 thousand).
As of 31 December 2013 finance lease contracts with floating interest rate reached 87.87 percent of leasing portfolio (2012: 88.49 percent).
As of 31 December 2013 and 2012 finance lease receivable by customer category were as follows:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Neither past due nor impaired: | ||||
| 1,141,360 | 1,152,210 | Corporate | 1,141,501 | 1,152,370 |
| 46,593 | 49,354 | Private individuals | 46,593 | 49,354 |
| 8,407 | 13,448 | Other | 8,407 | 13,448 |
| 1,196,360 | 1,215,012 Total neither past due nor impaired | 1,196,501 | 1,215,172 | |
| Past due but not impaired: | ||||
| 81,584 | 136,465 | Corporate | 81,584 | 136,465 |
| 4,148 | 4,767 | Private individuals | 4,148 | 4,767 |
| 585 | 11 | Other | 585 | 11 |
| 86,317 | 141,243 Total past due but not impaired | 86,317 | 141,243 | |
| Impaired finance lease receivable: | ||||
| 226,893 | 277,864 | Corporate | 226,893 | 277,864 |
| 2,500 | 2,505 | Private individuals | 2,500 | 2,505 |
| 113 | - | Other | 113 | - |
| 229,506 | 280,369 Total impaired finance lease receivable | 229,506 | 280,369 | |
| Total finance lease receivable by customer category: | ||||
| 1,449,837 | 1,566,539 | Corporate | 1,449,978 | 1,566,699 |
| 53,241 | 56,626 | Private individuals | 53,241 | 56,626 |
| 9,105 | 13,459 | Other | 9,105 | 13,459 |
| 1,512,183 | 1,636,624 Total finance lease receivable by customer category | 1,512,324 | 1,636,784 | |
| Less impairment losses on finance lease receivable: | ||||
| (80,323) | (130,846) | Corporate | (80,323) | (130,846) |
| (3,577) | (3,019) | Private individuals | (3,577) | (3,019) |
| (30) | - | Other | (30) | - |
| (83,930) | (133,865) Total impairment losses on finance lease receivable by customer | (83,930) | (133,865) | |
| 1,428,253 | 1,502,759 Finance lease receivable, net | 1,428,394 | 1,502,919 |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 23 FINANCE LEASE RECEIVABLE (CONTINUED)
The credit quality of the Bank's finance lease receivable portfolio that were neither past due nor impaired can be assessed by reference to the internal rating system adopted by the Group.
| Private | ||||
|---|---|---|---|---|
| Corporate | individuals | Other | Total | |
| 31 December 2013 | ||||
| 4 – 7 risk classes | 20,032 | - | 4,931 | 24,963 |
| 8 risk class | 33,876 | - | 86 | 33,962 |
| 9 risk class | 222,155 | - | 668 | 222,823 |
| 10 risk class | 517,277 | - | 203 | 517,480 |
| 11 risk class | 117,479 | - | 282 | 117,761 |
| 12 risk class | 43,410 | - | - | 43,410 |
| 13-16 risk class | 65,992 | - | 114 | 66,106 |
| Homogeneous credits groups | 121,280 | 46,593 | 2,123 | 169,996 |
| Total neither past due nor impaired | 1,141,501 | 46,593 | 8,407 | 1,196,501 |
| 31 December 2012 | ||||
| 4 – 7 risk classes | 10,932 | - | 10,670 | 21,442 |
| 8 risk class | 54,904 | - | 1,164 | 56,068 |
| 9 risk class | 224,646 | - | - | 224,646 |
| 10 risk class | 416,249 | - | 575 | 416,824 |
| 11 risk class | 193,646 | - | 609 | 194,255 |
| 12 risk class | 71,196 | - | 200 | 71,396 |
| 13-16 risk class | 67,382 | - | 213 | 67,595 |
| Homogeneous credits groups | 113,415 | 49,354 | 17 | 162,786 |
| Total neither past due nor impaired | 1,152,370 | 49,354 | 13,448 | 1,215,172 |
As of 31 December 2013 and 2012 finance lease receivable past due but not impaired and fair value of collateral were as follows:
| Corporate | Private | Other | Total | |
|---|---|---|---|---|
| 31 December 2013 | ||||
| Loans past due but not impaired: | ||||
| past due up to 30 days | 68,385 | 2,124 | 548 | 71,057 |
| past due 31 - 60 days | 2,721 | 1,597 | - | 4,318 |
| past due over 60 days | 10,478 | 427 | 37 | 10,942 |
| Total past due but not impaired | 81,584 | 4,148 | 585 | 86,317 |
| Fair value of collateral pledged | 73,655 | 2,878 | 229 | 76,762 |
| 31 December 2012 | ||||
| Loans past due but not impaired: | ||||
| past due up to 30 days | 72,694 | 3,067 | 11 | 75,772 |
| past due 31 - 60 days | 47,959 | 885 | - | 48,844 |
| past due over 60 days | 15,812 | 815 | - | 16,627 |
| Total past due but not impaired | 136,465 | 4,767 | 11 | 141,243 |
| Fair value of collateral pledged | 87,447 | 5,693 | - | 93,140 |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 23 FINANCE LEASE RECEIVABLE (CONTINUED)
Impaired finance leases receivable amounts and fair value of collateral as of 31 December 2013 and 2012:
| Corporate | Private | Other | Total | |
|---|---|---|---|---|
| 31 December 2013 | ||||
| Impaired loans | 226,893 | 2,500 | 113 | 229,506 |
| Fair value of collateral pledged | 113,137 | - | 62 | 113,199 |
| 31 December 2012 | ||||
| Impaired loans | 277,864 | 2,505 | - | 280,369 |
| Fair value of collateral pledged | 249,870 | - | 16 | 252,916 |
Finance lease receivable concentration exposure by type of collateralised leased assets per financial class category is presented in the table below:
| Corporate | Private | Other | Total | |
|---|---|---|---|---|
| 31 December 2013 | ||||
| Trucks and other vehicles | 443,288 | - | 103 | 443,391 |
| Real estate | 403,636 | 4,683 | 113 | 408,432 |
| Cars and mini-vans | 284,018 | 48,533 | 8,492 | 341,043 |
| Manufacturing equipment | 206,668 | - | - | 206,668 |
| Shop equipment | 1,660 | - | - | 1,660 |
| Construction equipment | 38,164 | - | - | 38,164 |
| Agricultural equipment | 31,101 | - | 32 | 31,133 |
| Office equipment | 5,825 | - | 1 | 5,826 |
| Medical equipment | 1,821 | 25 | 364 | 2,210 |
| Railway wagons and containers | 32,244 | - | - | 32,244 |
| Water transport means | 64 | - | - | 64 |
| Other assets | 1,490 | - | - | 1,490 |
| Total finance lease receivable by type of collateral | 1,449,978 | 53,241 | 9,105 | 1,512,324 |
| 31 December 2012 | ||||
| Trucks and other vehicles | 458,724 | 30 | 202 | 458,956 |
| Real estate | 514,859 | 5,055 | 188 | 520,102 |
| Cars and mini-vans | 250,345 | 51,437 | 13,069 | 314,851 |
| Manufacturing equipment | 237,680 | - | - | 237,680 |
| Shop equipment | 2,666 | - | - | 2,666 |
| Construction equipment | 40,001 | 1 | - | 40,002 |
| Agricultural equipment | 16,644 | 36 | - | 16,680 |
| Office equipment | 4,390 | - | - | 4,390 |
| Medical equipment | 1,535 | 67 | - | 1,602 |
| Railway wagons and containers | 37,476 | - | - | 37,476 |
| Water transport means | 99 | - | - | 99 |
| Other assets | 2,280 | - | - | 2,280 |
| Total finance lease receivable by type of collateral | 1,566,699 | 56,626 | 13,459 | 1,636,784 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 24 INVESTMENT SECURITIES
Loans and Receivables Reclassification
On 31 October 2008, the management of the Bank, based on amendments of IAS 39 and IFRS 7, decided to reclassify fixed interest income securities into loans and receivables category. Carrying value of the securities as of 31 Dec 2013 amounted to LTL 191,126 thousand (2012: LTL 386,010 thousand), fair value is disclosed in table in Accounting policies part Fair values.
As of 31 December 2013 and for the year ended 31 December 2013 if the Group and the Bank had not reclassified financial assets to loans and receivables, revaluation reserve (deficit) of financial assets in equity would have been lower by LTL 3,2 million (2012: LTL 5,6 million), and result from revaluation of securities in income statement would have been lower by LTL 8,0 million (2012: LTL 2,5 million) respectively.
Available for Sale, Held to Maturity and Loans and Receivables
The breakdown of the investment securities – available for sale, held to maturity and loans and receivables may be summarised as follows:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Securities available for sale: | ||||
| 200 | 200 | AB Panevezio Energija | 200 | 200 |
| 200 | 200 Total investment securities available for sale | 200 | 200 |
The above securities are not rated.
The changes in investment securities for the year 2013 were as follows:
| The Group | The Bank | |||||
|---|---|---|---|---|---|---|
| Available-for | Held to | Loans and | Available-for | Held to | Loans and | |
| sale | maturity | receivables | sale | maturity | receivables | |
| 376 | 14,148 | 1,588,260 | January 1, 2012 | 376 | 14,148 | 1,588,260 |
| (17) | (336) | - | Foreign exchange differences on monetary assets | (17) | (336) | - |
| - | - | - | Additions | - | - | - |
| (425) | - | (1,221,029) | Disposal | (425) | - | (1,221,029) |
| - | - | 35,098 | Interest income | - | - | 35,098 |
| (153) | - | (16,319) | Recognised result in income statement | (153) | - | (16,319) |
| 419 | - | - | Change in revaluation reserve in equity | 419 | - | - |
| 200 | 13,812 | 386,010 | January 1, 2013 | 200 | 13,812 | 386,010 |
| - | (510) | - | Foreign exchange differences on monetary assets | - | (510) | - |
| - | - | - | Additions | - | - | - |
| - | - | (198,950) | Disposal | - | - | (198,950) |
| - | - | 11,159 | Interest income | - | - | 11,159 |
| - | - | (7,093) | Recognised result in income statement | - | - | (7,093) |
| 200 | 13,302 | 191,126 December 31, 2013 | 200 | 13,302 | 191,126 |
All loans and receivables presented in the table above are subject to fair value hedge as described in note 3(l). Recognised result in income statement amounting to LTL 7,093 thousand (2012: LTL 16,319 thousand) relates to fair value hedge impact accounted through income statement.
The tables below present an analysis of credit quality of Bank's investment securities accounted as Held-to-maturity and loans and receivables based on Standard & Poor's ratings or their equivalent.
Ratings at 31 December 2013
| Held to maturity |
Loans and receivables |
|
|---|---|---|
| A | 13,302 | - |
| BBB | - | 191,126 |
| 13,302 | 191,126 |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 24 INVESTMENT SECURITIES (CONTINUED)
Ratings at 31 December 2012
| 2012 | ||
|---|---|---|
| Held to | Loans and | |
| maturity | receivables | |
| A | 13,812 | - |
| BBB | - | 386,010 |
| 13,812 | 386,010 |
NOTE 25 INVESTMENTS IN SUBSIDIARIES
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Securities accounted for under cost method: | ||||
| - | - | UAB "SEB Venture Capital" | 25,000 | 25,000 |
| - | - | UAB "SEB investicijų valdymas" | 9,900 | 9,900 |
| - | - | Total investments in subsidiaries | 34,900 | 34,900 |
On November 23, 2013 the Bank's subsidiary AB "SEB lizigas" has been merged to AB SEB bankas. The reorganisation model is in line with that described under paragraph 3 of Item 2 of Article 41 of the Law on Profit, i. e. "the entire assets, rights and obligations of an entity that ceases its activities without applying a winding-up procedure get vested in the entity that has a 100 per cent stake in its authorised capital (100 per cent of shares reflecting its capital)"
According to the accounting policy such merger is accounted using pooling of interest method (Predecessor accounting) which implies that when merging carrying amounts at the highest consolidated level are used. The income statement reflects the results of the entities for the full year irrespective of when the combination took place (see Note 3 c).
Comparative information for the Bank is presented also including AB "SEB lizingas" balances (i.e. if the combination already happened) unless otherwise stated.
UAB "SEB Venture Capital" is a fully owned subsidiary involved in venture capital activities.
UAB "SEB investicijų valdymas" is a fully owned subsidiary of the Bank, engaged in provision of investments' management services. The audited financial statements of subsidiaries are available at the Bank and the respective subsidiary.
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 26 INTANGIBLE FIXED ASSETS
As of 31 December 2013 and 2012 intangible assets of the Group and the Bank consisted of the following:
| The Group | The Bank | |
|---|---|---|
| Software and other | Software and other | |
| intangible fixed assets | intangible fixed assets | |
| Cost | ||
| 279,045 | 31 December 2011 | 278,799 |
| 4,432 | Additions | 4,432 |
| (122,601) | Write off/Disposals | (122,535) |
| 160,876 | 31 December 2012 | 160,696 |
| Accumulated amortisation | ||
| and impairment | ||
| 146,075 | 31 December 2011 | 145,830 |
| 20,573 | Charge for the year | 20,572 |
| (64,032) | Amorisation of write off/disposals | (63,966) |
| 102,616 | Transfer to disposable group classified as 31 December 2012 |
102,436 |
| 160,876 | Costs 31 December 2012 |
160,696 |
| 522 | Additions | 522 |
| (10,167) | Write off/Disposals | (10,167) |
| 151,231 | 31 December 2013 | 151,051 |
| Accumulated amortisation | ||
| and impairment | ||
| 102,616 | 31 December 2012 | 102,436 |
| 10,543 | Charge for the year | 10,543 |
| (10,167) | Amorisation of write off/disposals | (10,167) |
| 102,992 | 31 December 2013 | 102,812 |
| Net book value | ||
| 58,260 | 31 December 2012 | 58,260 |
| 48,239 | 31 December 2013 | 48,239 |
The new core banking platform was introduced in 2010 at cost of LTL 219,638 thousand. Estimated amortisation period for the asset was 8 years.
Annual inventorisation held at the end of 2012 indicated that part of core banking system is unused due to the optimisation/replacement of some of it's parts. Therefore decision has been taken to write off not used part of core banking system amounting to net book value of LTL 58,5 million. Amortisation period has not been revised. After partial write off this system's net book value at 31 December 2013 was LTL 39,627 thousand (LTL 47,941 thousand at 31 December 2012). Annual inventorisation at the end of 2013 did not revealed any impairment indications.
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 27 PROPERTY, PLANT AND EQUIPMENT
As of 31 December 2013 and 2012 property, plant and equipment of the Group consisted of the following:
| The Group | |||||
|---|---|---|---|---|---|
| Buildings and other real estate |
Computer equipment |
Office equipment and other PPE |
Total property, plant and equipment |
||
| Cost | |||||
| 31 December 2011 | 11,636 | 96,891 | 51,453 | 159,980 | |
| Additions | - | 2,002 | 359 | 2,361 | |
| Disposals, write-offs and reclassifications | (3,597) | (6,284) | (8,650) | (18,531) | |
| 31 December 2012 | 8,039 | 92,609 | 43,162 | 143,810 | |
| Accumulated depreciation | |||||
| 31 December 2011 | 7,636 | 75,959 | 43,264 | 126,859 | |
| Charge for the year | 1,172 | 7,653 | 3,491 | 12,316 | |
| Depreciation of disposals, write-offs and | |||||
| reclassifications | (3,520) | (6,263) | (8,227) | (18,010) | |
| 31 December 2012 | 5,288 | 77,349 | 38,528 | 121,165 | |
| Cost | |||||
| 31 December 2012 | 8,039 | 92,609 | 43,162 | 143,810 | |
| Additions | - | 4,902 | 6,914 | 11,816 | |
| Disposals, write-offs and reclassifications | (1,276) | (19,189) | (3,388) | (23,853) | |
| 31 December 2013 | 6,763 | 78,322 | 46,688 | 131,773 | |
| Accumulated depreciation | |||||
| 31 December 2012 | 5,288 | 77,349 | 38,528 | 121,165 | |
| Charge for the year | 853 | 5,873 | 2,591 | 9,317 | |
| Depreciation of disposals, write-offs and | |||||
| reclassifications | (939) | (19,189) | (3,224) | (23,352) | |
| 31 December 2013 | 5,202 | 64,033 | 37,895 | 107,130 | |
| Net book value | |||||
| 31 December 2012 | 2,751 | 15,260 | 4,634 | 22,645 | |
| 31 December 2013 | 1,561 | 14,289 | 8,793 | 24,643 |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 27 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
As of 31 December 2013 and 2012 property, plant and equipment of the Bank consisted of the following:
| The Bank | |||||
|---|---|---|---|---|---|
| Buildings and other real estate |
Computer equipment |
Office equipment and other PPE |
Total property, plant and equipment |
||
| Cost | |||||
| 31 December 2011 | 11,636 | 96,779 | 51,005 | 159,420 | |
| Additions | - | 2,000 | 348 | 2,348 | |
| Disposals, write-offs and reclassifications | (3,597) | (6,273) | (8,593) | (18,463) | |
| 31 December 2012 | 8,039 | 92,506 | 42,760 | 143,305 | |
| Accumulated depreciation | |||||
| 31 December 2011 | 7,636 | 75,859 | 43,103 | 126,598 | |
| Charge for the year | 1,172 | 7,646 | 3,390 | 12,208 | |
| Depreciation of disposals, write-offs and | |||||
| reclassifications | (3,520) | (6,253) | (8,179) | (17,952) | |
| 31 December 2012 | 5,288 | 77,252 | 38,314 | 120,854 | |
| Cost | |||||
| 31 December 2012 | 8,039 | 92,506 | 42,760 | 143,305 | |
| Additions | - | 4,884 | 6,826 | 11,710 | |
| Disposals, write-offs and reclassifications | (1,276) | (19,148) | (3,280) | (23,704) | |
| 31 December 2013 | 6,763 | 78,242 | 46,306 | 131,311 | |
| Accumulated depreciation | |||||
| 31 December 2012 | 5,288 | 77,252 | 38,314 | 120,854 | |
| Charge for the year | 853 | 5,868 | 2,525 | 9,246 | |
| Depreciation of disposals, write-offs and | |||||
| reclassifications | (939) | (19,148) | (3,171) | (23,258) | |
| 31 December 2013 | 5,202 | 63,972 | 37,668 | 106,842 | |
| Net book value | |||||
| 31 December 2012 | 2,751 | 15,254 | 4,446 | 22,451 | |
| 31 December 2013 | 1,561 | 14,270 | 8,638 | 24,469 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 28 INVESTMENT PROPERTY
As of 31 December 2013 and 2012 investment property of the Group and the Bank consisted of the following:
| The Group | The Bank | |
|---|---|---|
| Costs | ||
| 63,723 | 31 December 2011 | 63,723 |
| 2,256 | Taken over/Additions | 2,256 |
| (40,593) | Disposals | (40,593) |
| 25,386 31 December 2012 | 25,386 | |
| Accumulated depreciation and impairment | ||
| 1,231 | 31 December 2011 | 1,231 |
| 775 | Depreciation for the year | 775 |
| (1,141) | Disposals | (1,141) |
| 865 31 December 2012 | 865 | |
| Impairment loss | ||
| 21,790 | 31 December 2011 | 21,790 |
| (14,071) | Reversal of impairment loss attributable to disposed assets | (14,071) |
| 2,570 | Impairment loss on assets taken over | 2,570 |
| 10,289 31 December 2012 | 10,289 | |
| Costs | ||
| 25,386 | 31 December 2012 | 25,386 |
| 9,904 | Taken over/Additions | 9,904 |
| (17,952) | Disposals | (17,952) |
| 17,338 31 December 2013 | 17,338 | |
| Accumulated depreciation and impairment | ||
| 865 | 31 December 2012 | 865 |
| 406 | Depreciation for the year | 406 |
| (155) | Disposals | (155) |
| 1,116 31 December 2013 | 1,116 | |
| Impairment loss | ||
| 10,289 | 31 December 2012 | 10,289 |
| (9,909) | Reversal of impairment loss attributable to disposed assets | (9,909) |
| 1,795 | Impairment loss on assets taken over | 1,795 |
| 2,175 31 December 2013 | 2,175 | |
| Net book value | ||
| 14,232 31 December 2012 | 14,232 | |
| 14,047 31 December 2013 | 14,047 |
The fair value of investment property was established in compliance with the procedures adopted within the SEB group. The valuation of real estate was carried out by AB SEB bankas authorised employees, based on discounted cash flow model created by Corporate Customers and Industry Analysis Department (ICA) and approved within SEB. The fair value of investment property does not differ materially from its book value as at 31 December 2013 and 31 December 2012.
The major amount of investment property are foreclosed leased assets (land and buildings) taken over from the clients.
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 29 OTHER ASSETS, NET
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Financial other assets | ||||
| 673 | 1,164 | Advances paid for assets to be leased | 673 | 1,164 |
| 8,406 | - | Amounts receivable for cash exported | 8,406 | - |
| Amounts of executed bank transfers not yet settled against customers' | ||||
| 86,208 | 76,377 | accounts | 86,208 | 76,377 |
| 70 | 407 | Amounts outstanding for clearance | 70 | 407 |
| 4,471 | 4,862 | Accrued income | 6,126 | 6,030 |
| 178 | 226 | Current lease receivable | 178 | 226 |
| 4,162 | 808 | Other financial assets | 4,162 | 808 |
| 104,168 | 83,844 | Total other financial assets | 105,823 | 85,012 |
| Non financial other assets | ||||
| 934 | 2,285 | Assets not yet leased | 934 | 2,285 |
| 15,946 | 15,755 | Deferred expenses | 15,932 | 15,737 |
| 821 | 649 | Tax receivables | 296 | 10 |
| 9,419 | 11,309 | Other assets, net of impairment allowances | 7,310 | 9,039 |
| 27,120 | 29,998 | Total non financial other assets | 24,472 | 27,071 |
| 131,288 | 113,842 Total other assets, net | 130,295 | 112,083 |
NOTE 30 DUE TO CREDIT INSTITUTIONS
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 3,411,920 | 2,098,200 | Falling due within one year | 3,411,920 | 2,098,200 |
| 3,765,904 | 4,691,096 | Falling due after one year | 3,765,904 | 4,691,096 |
| 7,177,824 | 6,789,296 Total amounts due to credit institutions |
7,177,824 | 6,789,296 |
NOTE 31 DEPOSITS FROM THE PUBLIC
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 9,601,359 | 8,889,388 | Current and demand deposits | 9,607,282 | 8,897,226 |
| 3,483,762 | 3,807,718 | Term deposits falling due within one year | 3,498,667 | 3,819,397 |
| 139,736 | 99,994 | Term deposits falling due after one year | 139,736 | 99,994 |
| 13,224,857 | 12,797,100 Total deposits from the public | 13,245,685 | 12,816,617 |
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 5,394,751 | 5,290,893 | Corporate customers' deposits and accounts | 5,415,579 | 5,310,410 |
| 7,830,106 | 7,506,207 | Individual customers' deposits and accounts | 7,830,106 | 7,506,207 |
| 13,224,857 | 12,797,100 Total deposits from the public | 13,245,685 | 12,816,617 |
According to current requirement of Deposit Insurance Fund all banks in Lithuania have to make annual deposit insurance fund payments of 0.45 percent for deposits of private individuals and corporate customers nominated in LTL, USD, EUR and other European Union countries' currencies.
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 32 DEBT SECURITIES IN ISSUE
| The Group | Interest rate % | The Bank | ||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |
| Debt securities in issue: | ||||||
| Debt securities issued in 2009: | ||||||
| - | 20,997 | index linked debt securities due 2013 | - | - | - | 20,997 |
| Debt securities issued in 2010: | ||||||
| - | 80,614 | index linked debt securities due 2013 | - | - | - | 80,614 |
| 21,108 | 20,753 | index linked debt securities due 2014 | - | - | 21,108 | 20,753 |
| - | 347,170 | undated subordinated notes | - | 4.691 | - | 347,170 |
| Debt securities issued in 2011 | ||||||
| - | 10,482 | index linked debt securities due 2013 | - | - | - | 10,482 |
| 30,649 | 29,765 | index linked debt securities due 2014 | - | - | 30,649 | 29,765 |
| 1,441 | 1,396 | index linked debt securities due 2015 | - | - | 1,441 | 1,396 |
| 4,249 | 4,091 | index linked debt securities due 2016 | - | - | 4,249 | 4,091 |
| 3,767 | 3,657 | index linked debt securities due 2017 | - | - | 3,767 | 3,657 |
| Debt securities issued in 2012 | ||||||
| - | 16,828 | index linked debt securities due 2013 | - | - | - | 16,828 |
| 1,902 | 1,872 | index linked debt securities due 2014 | - | - | 1,902 | 1,872 |
| 11,122 | 10,889 | index linked debt securities due 2015 | - | - | 11,122 | 10,889 |
| 5,788 | 5,633 | index linked debt securities due 2016 | - | - | 5,788 | 5,633 |
| 7,182 | 6,869 | index linked debt securities due 2017 | - | - | 7,182 | 6,869 |
| Debt securities issued in 2013 | ||||||
| 8,260 | - | index linked debt securities due 2014 | - | - | 8,260 | - |
| 19,464 | - | index linked debt securities due 2016 | - | - | 19,464 | - |
| 2,624 | - | index linked debt securities due 2017 | - | - | 2,624 | - |
| 117,556 | 561,016 Total debt securities in issue | 117,556 | 561,016 |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 33 ACCRUED EXPENSES, DEFERRED INCOME, OTHER LIABILITIES AND PROVISIONS
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Other financial liabilities | ||||
| 15,085 | 9,398 | Amounts outstanding for clearance | 15,085 | 9,398 |
| 47,963 | 64,749 | Deposit Insurance Fund amounts owed to Snoras depositors | 47,963 | 64,749 |
| 4,750 | 4,544 | Prepayments for finance lease | 4,750 | 4,544 |
| Accounts payable for assets purchased under finance | ||||
| 2,041 | 5,466 | lease | 2,041 | 5,466 |
| 1,583 | 6,154 | Provisions for off balance sheet items | 1,583 | 6,154 |
| 31,735 | 16,880 | Factoring payables | 31,735 | 16,880 |
| 8,377 | 1,811 | Other financial liabilities | 8,377 | 1,811 |
| 111,534 | 109,002 | Total other financial liabilities | 111,534 | 109,002 |
| Non financial liabilities | ||||
| 962 | 2,424 | Accrued taxes | 934 | 2,403 |
| 18,917 | 19,005 | Vacation reserve accrual | 18,736 | 18,724 |
| 8,488 | 8,138 | Prepayments for operating lease | 8,488 | 8,138 |
| 4,348 | 6,840 | Other liabilities | 4,304 | 6,803 |
| 32,715 | 36,407 | Total other non financial liabilities | 32,462 | 36,068 |
| 144,249 | 145,409 Total other liabilities and provisions | 143,996 | 145,070 |
After the collapse of Bank Snoras in the fourth quarter of 2011 the state enterprise Indėlių ir Investicijų Draudimas ('Deposit and Investment Insurance Fund') selected AB SEB bankas for payment of insurance compensations to the depositors (private individuals and Vilnius region enterprises) of Bank Snoras. Amount of LTL 47,963 thousand (2012: LTL 64,749 thousand) represent funds received from the state enterprise Indėlių ir Investicijų Draudimas but not yet distributed to the Bank Snoras depositors.
Provisions for off balance sheet items have been made in respect of costs arising from contingent liabilities and contractual commitments, including guarantees and credit commitments. Change in the provisions are reflected in income statement.
| The Group | The Bank | ||||
|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | ||
| Accrued financial liabilities | |||||
| 49,695 | 59,730 | Accrued expenses | 48,651 | 58,513 | |
| Deferred non financial liabilities | |||||
| 2,127 | 1,451 | Deferred income | 2,127 | 1,451 | |
| 51,822 | 61,181 Total accrued expenses and deferred income | 50,778 | 59,964 |
NOTE 34 SHAREHOLDERS' EQUITY
As of 31 December 2013 the share capital of the Bank consisted of 15,441,423 ordinary shares with par value LTL 67 each (2012: LTL 67). All issued shares are fully paid. 100 percent of shares of the Bank is owned by company Skandinaviska Enskilda Banken AB (publ), registered in the Kingdom of Sweden.
Reserve capital, which as of 31 December 2013 amounted to LTL 2,200 thousand (2012: LTL 2,200 thousand) for the Bank and LTL 2,200 thousand (2012: LTL 2,200 thousand) for the Group, in accordance with the legislation for banks operating in Lithuania can only be offset with the future losses or used for the increase of share capital.
As of 31 December 2013 legal reserve was LTL 287,327 thousand (2012: LTL 237,737 thousand) for the Bank and LTL 289,202 thousand (2012: LTL 239,612 thousand) for the Group, in accordance with the legislation for banks operating in Lithuania can only be offset with the future losses.
Legal reserve for the Bank includes merged subsidiary's AB 'SEB lizingas" legal reserve amounting to LTL 1,000 thousand.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 34 SHAREHOLDERS' EQUITY (CONTINUED)
Financial assets revaluation reserve (deficit) represents available for sale securities revaluation gain (loss). The financial assets reserve movement in 2013 amount consists of the following:
| The Group | The Bank | |
|---|---|---|
| Government securities – change in revaluation | ||
| reserve (note 18) | 1,565 | 1,565 |
| Government securities - amortization of revaluation | ||
| reserve to income statement | 256 | 256 |
| Tax recognised in equity (note 14) | (273) | (273) |
| Net change in available for sale investments, net of deferred tax | 1,548 | 1,548 |
As of 31 December 2013 general and other reserves represent general reserve for possible losses in amount of LTL 9,338 thousand (2012: LTL 9,338 thousand), that can only be offset with the current losses and share based compensation reserve in amount of LTL 6,393 thousand (2012: LTL 4,794 thousand), that will be paid in the share capital equivalent of Skandinaviska Enskilda Banken AB (publ) Class A shares to employees participating in the share based premium program.
The Share Savings Programme concerns all employees of the Group and the Bank and is designed to support "One SEB" and create a long-term commitment to SEB. The employees have been offered to purchase Class A-shares for an amount corresponding to five per cent of their gross base salary and for the amount, at current stock exchange rate. Purchases are made during four periods, following the publication of the Bank's quarterly reports. If the shares are retained by the employee for three years from the investment date and the participant remains with SEB during this time, the Bank will give the employee one SEB share (Class A-share) for each retained share.
The Group also offers special long-term equity based programmes to selected key employees with allotment based on individual performance. The purpose of the programmes is to reward senior managers and other key employees and stimulate them to become shareholders and thereby aligning their interests and perspectives with those of the shareholders. All long - term equity based compensation is based on own investment or on shareholding requirement.
The costs of Share Savings Programme incurred by the Group during the year 2013 were LTL 1,599 thousand (2012: LTL 1,635 thousand) accounted in other administrative expenses in the income statement. Related social security costs were LTL 496 thousand for the year 2013 and (2012: LTL 505 thousand) accounted in staff cost in the income statement.
The above described share-based payments are treated as equity-settled because the Group has no obligation to settle the transactions related to the Share Savings Programme.
As of 31 December 2013 the single shareholder is as follows:
| Name of shareholder | Number of shares held |
Percentage in total |
|---|---|---|
| Skandinaviska Enskilda Banken AB (publ) | 15,441,423 | 100.00 |
| Total | 15,441,423 | 100.00 |
NOTE 35 ASSETS UNDER MANAGEMENT
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 2012 |
2013 | 2012 | ||
| 86,181 39,770 |
Customers funds | - | - | |
| 757,743 767,647 |
Financial instruments acquired at customer account | - | - | |
| 1,842,752 1,703,602 |
Accounts receivable from customer assets managed on trust basis | - | - | |
| 2,686,676 | 2,511,019 Total assets under management | - | - |
All assets management services are performed by UAB "SEB investicijų valdymas". For the year ended 31 December 2013 the management fee for funds management amounted to LTL 15,827 thousand (2012: LTL 15,148 thousand) and it is included in 'Net fee and commission income' line in the income statement.
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 36 ASSETS AND LIABILITIES STRUCTURE BY TERM TO MATURITY
The relationship between the maturity of assets and liabilities is indicative of liquidity risk and the extent to which it may be necessary to raise funds to meet outstanding obligations. The table below allocates assets and liabilities to maturity groups based on the time remaining from the balance sheet date to the contractual maturity or actual maturity, if known earlier. The Bank's liquidity analysis as of 31 December 2013:
| 3 – 6 | 1 – 3 | Over | |||||
|---|---|---|---|---|---|---|---|
| Maturity | Up to 3 months | months | 6 – 12 months | years | 3 years | Unclear maturity | Total |
| Assets | |||||||
| Cash in hand | 418,136 | - | - | - | - | - | 418,136 |
| Balances with the Central Banks Financial instruments – available for sale, designated at fair value, |
935,323 | - | - | - | - | - | 935,323 |
| loans and receivables | 110,267 | 343,810 | 20,560 | 607,049 | 78,281 | - | 1,159,967 |
| Derivative financial instruments Loans to credit institutions and due from |
1,685 | 958 | 3,448 | 74,855 | 178,342 | - | 259,288 |
| banks, net | 3,743,664 | 33,138 | 321 | - | - | - | 3,777,123 |
| Loans to customers, net Financial lease receivables, net of |
1,123,318 | 1,377,114 | 2,071,579 | 3,271,054 | 6,737,391 | 611,329 | 15,191,785 |
| impairment losses Investment securities – available for sale |
131,815 | 109,547 | 222,667 | 615,165 | 330,308 | 18,892 | 1,428,394 |
| Investment securities – held to | - | - | - | - | - | 200 | 200 |
| maturity | - | - | - | 13,302 | - | - | 13,302 |
| Investments in subsidiaries | - | - | - | - | - | 34,900 | 34,900 |
| Intangible fixed assets | - | - | - | - | - | 48,239 | 48,239 |
| Property, plant and equipment | - | - | - | - | - | 24,469 | 24,469 |
| Investment property | - | - | - | - | - | 14,047 | 14,047 |
| Other assets, net | 8,686 | 331 | 53 | 96 | 3,677 | 288,976 | 301,819 |
| Total assets | 6,472,894 | 1,864,898 | 2,318,628 | 4,581,521 | 7,327,999 | 1,041,052 | 23,606,992 |
| Liabilities and shareholders' equity |
|||||||
| Amounts owed to the Central Banks |
33 | - | - | - | - | - | 33 |
| Amounts owed to credit institutions | 1,886,232 | 417,956 | 1,107,732 | 2,926,874 | 839,030 | - | 7,177,824 |
| Derivative financial instruments | 1,997 | 881 | 3,257 | 90,573 | 174,235 | - | 270,943 |
| Deposits from the public | 11,403,662 | 769,477 | 932,810 | 125,046 | 14,690 | - | 13,245,685 |
| Debt securities in issue | 25,606 | 17,105 | 19,208 | 42,065 | 13,572 | - | 117,556 |
| Other liabilities and provisions | 166,443 | 9,651 | 13,771 | 824 | 33 | 4,052 | 194,774 |
| Equity | - | - | - | - | - | 2,600,177 | 2,600,177 |
| Total liabilities and shareholders' equity Net assets (liabilities) before |
13,483,973 | 1,215,070 | 2,076,778 | 3,185,382 | 1,041,560 | 2,604,229 | 23,606,992 |
| off balance sheet items | (7,011,079) | 649,828 | 241,850 | 1,396,139 | 6,286,439 | (1,563,177) | - |
| Off balance sheet items (net) | (2,642,804) | (214,801) | (156,902) | (52,519) | (5,862) | (20,076) | (3,092,964) |
| Net assets (liabilities) | (9,653,883) | 435,027 | 84,948 | 1,343,620 | 6,280,577 | (1,583,253) | (3,092,964) |
The Bank's liquidity analysis as of 31 December 2012:
| 3 – 6 | 1 – 3 | Over | |||||
|---|---|---|---|---|---|---|---|
| Maturity | Up to 3 months | months | 6 – 12 months | years | 3 years | Unclear maturity | Total |
| Total assets | 5,715,610 | 1,509,149 | 2,553,579 | 4,000,624 | 7,979,332 | 1,379,317 | 23,137,611 |
| Total liabilities and shareholders' | |||||||
| equity | 12,378,368 | 1,214,305 | 1,572,258 | 3,136,440 | 2,103,426 | 2,732,814 | 23,137,611 |
| Off balance sheet items (net) | (2,481,034) | (148,076) | (88,926) | (39,010) | (8,607) | (7,505) | (2,773,158) |
| Net assets (liabilities) | (9,143,792) | 146,768 | 892,395 | 825,174 | 5,867,299 | (1,361,002) | (2,773,158) |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 36 ASSETS AND LIABILITIES STRUCTURE BY TERM TO MATURITY (CONTINUED)
The Group's liquidity analysis as of 31 December 2013:
| 3 – 6 | 1 – 3 | Over | |||||
|---|---|---|---|---|---|---|---|
| Maturity | Up to 3 months | months | 6 – 12 months | years | 3 years | Unclear maturity | Total |
| Assets | |||||||
| Cash in hand | 418,136 | - | - | - | - | - | 418,136 |
| Balances with the Central Banks Financial instruments – available for sale, designated at fair value, |
935,323 | - | - | - | - | - | 935,323 |
| loans and receivables | 110,267 | 343,810 | 20,895 | 607,381 | 78,281 | 44,369 | 1,205,003 |
| Derivative financial instruments Loans to credit institutions and due from |
1,685 | 958 | 3,448 | 74,855 | 178,342 | - | 259,288 |
| banks, net | 3,743,664 | 33,138 | 321 | - | - | - | 3,777,123 |
| Loans to customers, net Financial lease receivables, net of impairment losses |
1,123,320 131,805 |
1,377,114 109,538 |
2,031,708 222,649 |
3,283,715 615,061 |
6,737,391 330,308 |
611,296 18,892 |
15,164,544 1,428,253 |
| Investment securities – available for sale |
- | - | - | - | - | 200 | 200 |
| Investment securities – held to maturity |
- | - | - | 13,302 | - | - | 13,302 |
| Intangible fixed assets | - | - | - | - | - | 48,239 | 48,239 |
| Property, plant and equipment | - | - | - | - | - | 24,643 | 24,643 |
| Investment property | - | - | - | - | - | 14,047 | 14,047 |
| Other assets, net | 11,423 | 360 | 552 | 96 | 3,677 | 286,737 | 302,845 |
| Total assets | 6,475,623 | 1,864,918 | 2,279,573 | 4,594,410 | 7,327,999 | 1,048,423 | 23,590,946 |
| Liabilities and shareholders' equity Amounts owed to the Central Banks |
33 | - | - | - | - | - | 33 |
| Amounts owed to credit institutions | 1,886,232 | 417,956 | 1,107,732 | 2,926,874 | 839,030 | - | 7,177,824 |
| Derivative financial instruments | 1,997 | 881 | 3,257 | 90,573 | 174,235 | - | 270,943 |
| Deposits from the public | 11,382,834 | 769,477 | 932,810 | 125,046 | 14,690 | - | 13,224,857 |
| Debt securities in issue | 25,606 | 17,105 | 19,208 | 42,065 | 13,572 | - | 117,556 |
| Other liabilities and provisions | 167,485 | 11,897 | 13,674 | 849 | 33 | 4,268 | 198,206 |
| Equity | - | - | - | - | - | 2,601,527 | 2,601,527 |
| Total liabilities and shareholders' equity Net assets (liabilities) before off balance sheet items |
13,464,187 (6,988,564) |
1,217,316 647,602 |
2,076,681 202,892 |
3,185,407 1,409,003 |
1,041,560 6,286,439 |
2,605,795 (1,557,372) |
23,590,946 - |
| Off balance sheet items (net) | (2,637,605) | (214,801) | (156,902) | (52,519) | (5,862) | (20,076) | (3,087,765) |
| Net assets (liabilities) | (9,626,169) | 432,801 | 45,990 | 1,356,484 | 6,280,577 | (1,577,448) | (3,087,765) |
The Group's liquidity analysis as of 31 December 2012:
| 1 – 3 | Over | ||||||
|---|---|---|---|---|---|---|---|
| Maturity | Up to 3 months | 3 – 6 months | 6 – 12 months | years | 3 years | Unclear maturity | Total |
| Total assets | 5,718,698 | 1,509,777 | 2,515,964 | 4,001,221 | 7,990,939 | 1,385,719 | 23,122,318 |
| Total liabilities and shareholders' | |||||||
| equity | 12,360,057 | 1,215,622 | 1,572,291 | 3,136,440 | 2,103,426 | 2,734,482 | 23,122,318 |
| Off balance sheet items (net) | (2,473,565) | (148,076) | (88,926) | (39,010) | (8,607) | (7,505) | (2,765,689) |
| Net assets (liabilities) | (9,114,924) | 146,079 | 854,747 | 825,771 | 5,878,906 | (1,356,268) | (2,765,689) |
| The Group | The Bank | ||||||
| 2013 | 2012 | 2013 | 2012 | ||||
| Liquidity ratio | 38.85% | 35.76% | 38.81% | 35.69% |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 36 ASSETS AND LIABILITIES STRUCTURE BY TERM TO MATURITY (CONTINUED)
Liquidity ratio is calculated according to requirements of the Central Bank of Lithuania.
As of 31 December 2013 and 2012 and during these years the Group's and the Bank's liquidity ratio exceeded the statutory minimum required by the Bank of Lithuania (30 percent).
Tables above show assets and liabilities structure by contractual/actual maturities. When managing liquidity, Assets and liability management committee is using expected maturities, which are based on historical evidence (e.g. in respect of current deposits from public portfolio staying on balance sheet much longer than 3 months). Based on this data and also taking into account credit line facility from the Parent as available liquidity reserve, liquidity is manageable within the 12 months from the balance sheet date.
NOTE 37 CAPITAL ADEQUACY
The Group's regulatory capital as managed by its central Group Treasury is divided into two tiers:
- Tier 1 capital: share capital (net of any book values of the treasury shares), reserve capital, retained earnings;
- Tier 2 capital: qualifying subordinated loan capital, general and other reserves, qualifying current year profit;
- Deductible amounts: the book value of intangible assets; investments in credit and financial institutions above 10 percent of their equity; and IRB provision shortfall.
The risk-weighted assets are measured by using two methods – Standardized and Internal Ratings Based Approach (IRB). According to Standardized method assets are divided into 16 asset classes, IRB – 7. Considering the method used asset class, eligible collateral or guarantees, risk classes, scoring pools, country of the counterparty and other factors risk weight to every exposure is assigned.
The table below summarises the components of capital adequacy calculation and the ratios of the Group and the Bank for the years ended 31 December 2013:
| The Group | The Bank | |
|---|---|---|
| Tier 1 capital (less intangible assets) | 2,341,575 | 2,333,235 |
| Tier 2 capital | 69,979 | 69,979 |
| of which IRB provision excess | 69,979 | 69,979 |
| Less deductible investments | - | (8,064) |
| Less IRB provision shortfall | - | - |
| Risk weighted assets | 15,470,588 | 15,440,588 |
| of which risk weighted assets due to transitional capital requirements | - | - |
| Capital adequacy ratio before adjustment of capital | ||
| requirements according to Basel II requirements | ||
| as of 31 December 2013 | 15.59% | 15.51% |
| Capital adequacy ratio according to Basel II | ||
| requirements as of 31 December 2013 | 15.59% | 15.51% |
The table below summarises the components of capital adequacy calculation and the ratios of the Group and the Bank for the years ended 31 December 2012 (information does not include merged subsidiary AB "SEB lizingas" data):
| The Group | The Bank | |
|---|---|---|
| Tier 1 capital (less intangible assets) | 2,280,242 | 2,086,431 |
| Tier 2 capital | 418,934 | 386,885 |
| of which IRB provision excess | 73,654 | 41,605 |
| Less deductible investments | - | (243,520) |
| Less IRB provision shortfall | - | - |
| Risk weighted assets | 17,795,925 | 16,678,463 |
| of which risk weighted assets due to transitional capital requirements | - | - |
| Capital adequacy ratio before adjustment of capital requirements according to Basel II requirements |
||
| as of 31 December 2012 | 15.17% | 13.37% |
| Capital adequacy ratio according to Basel II | ||
| requirements as of 31 December 2012 | 15.17% | 13.37% |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 38 NET FOREIGN CURRENCY POSITION
The following table presents the equivalent amount in thousands of LTL of the net position of assets and liabilities denominated in currencies other than LTL as of 31 December 2013:
| The Group | The Bank | |||||
|---|---|---|---|---|---|---|
| Percentage of | Percentage of | |||||
| Position | capital | Currency | Rates | Position | capital | |
| 1,822,457 | 75.57 | EUR | 3.4528 | 1,808,547 | 75.51 | |
| (1,222) | (0.05) | U.S. Dollars (USD) | 2.5098 | (1,158) | (0.05) | |
| 27 | - | Canadian Dollars (CAD) | 2.3429 | 27 | - | |
| 574 | 0.02 | Russian Rubles (RUB) | 0.07673 | 574 | 0.02 | |
| 7,303 | 0.30 | The remaining long positions | N/A | 6,769 | 0.29 | |
| (451) | (0.02) | The remaining short positions | N/A | (451) | (0.02) | |
| 7,904 | 0.33 Open long position | N/A | 7,370 | 0.31 |
As of 31 December 2012:
| The Group | The Bank | |||||
|---|---|---|---|---|---|---|
| Percentage of | Percentage of | |||||
| Position | capital | Currency | Rates | Position | capital | |
| 3,602,905 | 133.48 | EUR | 3.4528 | 3,595,550 | 161.25 | |
| (3,425) | 0.13 | U.S. Dollars (USD) | 2.606 | (3,387) | (0.15) | |
| 4 | - | Canadian Dollars (CAD) | 2.6204 | 4 | - | |
| 451 | 0.02 | Russian Rubles (RUB) | 0.08588 | 451 | 0.02 | |
| 845 | 0.03 | The remaining long positions | N/A | 798 | 0.04 | |
| (2,529) | (0.09) | The remaining short positions | N/A | (3,049) | (0.14) | |
| 5,954 | 0.22 Open long position | N/A | 6,436 | 0.29 |
Based on requirements of the Bank of Lithuania, starting from 1 December 2004 EUR currency position was not included when calculating foreign currency open position.
As of 31 December 2013 and 2012 the Group complied with the foreign currency open position requirements set forth by the Bank of Lithuania.
Foreign exchange risk has also been measured by using Value at Risk model, see note 39.
NOTE 39 INTEREST RATE RISK MANAGEMENT
The Group's interest rate sensitivity in case of parallel shift by 1 p.p. in the yield curve, in LTL million is presented in the table below:
| Interest rate sensitivity | 2013 | 2012 |
|---|---|---|
| Effect to the market value of shareholders equity (delta 1%) | 50.9 | 53.1 |
| Off balance sheet credit commitments sensitivity to interest rate | ||
| changes (delta 1%) (the Bank) | 2.4 | 2.1 |
| Off balance sheet credit commitments sensitivity to interest rate | ||
| changes (delta 1%) (the Group) | 2.4 | 2 |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 39 INTEREST RATE RISK MANAGEMENT (CONTINUED)
Value at Risk assessment results on total portfolios positions, in LTL thousand:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 14,987 | 20,452 | Interest rate risk (stand-alone) | 14,987 | 20,452 |
| 895 | 4,316 | Credit spread risk (stand-alone) | 895 | 4,316 |
| 37 | 18 | Foreign exchange risk (stand-alone) | 37 | 18 |
| 6 | 120 | Equity price risk (stand-alone) | 6 | 120 |
| (488) | (148) | Diversification effect | (488) | (148) |
| 15,437 | 24,758 Total | 15,437 | 24,758 |
VaR figures in table above include both banking and trading books.
In 2013, the market VaR decreased as compared with 2012 as a result of a change in the market situation. Higher financial market stability and lower fluctuations in financial instruments are factors that determine lower market risk.
The table below provides the Group's interest rate gap analysis as of 31 December 2013:
| Maturity | Up to 1 year | 1 - 3 year | Over 3 years | Total |
|---|---|---|---|---|
| Assets | ||||
| Net loans | 12,534,430 | 421,028 | 2,284,473 | 15,239,931 |
| Finance lease receivable, net | 1,379,103 | 48,290 | 9,962 | 1,437,355 |
| Debt securities | 474,970 | 620,685 | 78,282 | 1,173,937 |
| Interbank deposits and net loans | 3,574,243 | - | - | 3,574,243 |
| Off balance sheet assets | 1,984,138 | 2,024,966 | 3,334,043 | 7,343,147 |
| Total interest rate sensitive assets | 19,946,884 | 3,114,969 | 5,706,760 | 28,768,613 |
| Liabilities | ||||
| Term deposits | 3,471,082 | 123,463 | 14,019 | 3,608,564 |
| Interbank deposits and loans | 3,073,408 | 2,926,874 | 735,446 | 6,735,728 |
| Other liabilities | 58,742 | 40,808 | 12,649 | 112,199 |
| Off balance sheet liabilities | 1,738,990 | 2,207,964 | 3,396,194 | 7,343,148 |
| Total interest rate sensitive liabilities | 8,342,222 | 5,299,109 | 4,158,308 | 17,799,639 |
| Gap | 11,604,662 | (2,184,140) | 1,548,452 | 10,968,974 |
| Assets, non sensitive to interest rate Liabilities and equity, non sensitive to interest |
2,165,480 |
rate 13,134,455
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 39 INTEREST RATE RISK MANAGEMENT (CONTINUED)
The table below provides the Group's interest rate gap analysis as of 31 December 2012:
| Maturity | Up to 1 year | 1 - 3 year | Over 3 years | Total |
|---|---|---|---|---|
| Assets | ||||
| Net loans | 12,828,730 | 484,116 | 2,334,506 | 15,647,352 |
| Finance lease receivable, net | 1,440,390 | 48,300 | 14,069 | 1,502,759 |
| Debt securities | 515,792 | 254,528 | 297,686 | 1,068,006 |
| Interbank deposits and net loans | 464,359 | - | - | 464,359 |
| Off balance sheet assets | 8,629,093 | - | 31,846 | 8,660,939 |
| Total interest rate sensitive assets | 23,878,364 | 786,944 | 2,678,107 | 27,343,414 |
| Liabilities | ||||
| Term deposits | 3,782,082 | 81,286 | 16,041 | 3,879,409 |
| Interbank deposits and loans | 2,615,942 | 2,790,121 | 934,191 | 6,754,591 |
| Other liabilities | 465,363 | 62,298 | 19,675 | 547,336 |
| Off balance sheet liabilities | 8,623,914 | 31,846 | 8,655,759 | |
| Total interest rate sensitive liabilities | 15,487,301 | 2,933,705 | 1,001,753 | 19,837,095 |
| Gap | 8,391,062 | (2,146,761) | 1,676,354 | 7,506,319 |
| Assets, non sensitive to interest rate | 4,450,899 |
Liabilities and equity, non sensitive to interest rate 11,952,038
The table below provides the Bank's interest rate gap analysis as of 31 December 2013:
| Maturity | Up to 1 year | 1 - 3 year | Over 3 years | Total |
|---|---|---|---|---|
| Assets | ||||
| Net loans | 12,574,300 | 421,028 | 2,274,273 | 15,269,601 |
| Finance lease receivable, net | 1,379,193 | 48,341 | 9,962 | 1,437,496 |
| Debt securities | 474,636 | 620,352 | 78,282 | 1,173,270 |
| Interbank deposits and net loans | 3,574,243 | - | - | 3,574,243 |
| Off balance sheet assets | 1,984,138 | 2,024,966 | 3,334,043 | 7,343,147 |
| Total interest rate sensitive assets | 19,986,510 | 3,114,687 | 5,696,560 | 28,797,757 |
| Liabilities | ||||
| Term deposits | 3,485,985 | 123,463 | 14,019 | 3,623,467 |
| Interbank deposits and loans | 3,073,408 | 2,926,874 | 735,446 | 6,735,728 |
| Other liabilities | 58,742 | 40,808 | 12,649 | 112,199 |
| Off balance sheet liabilities | 1,738,990 | 2,207,964 | 3,396,194 | 7,343,148 |
| Total interest rate sensitive liabilities | 8,357,125 | 5,299,109 | 4,158,308 | 17,814,542 |
| Gap | 11,629,385 | (2,184,422) | 1,538,252 | 10,983,215 |
| Assets, non sensitive to interest rate | 2,152,382 | |||
| Liabilities and equity, non sensitive to interest | ||||
| rate | 13,135,598 |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 39 INTEREST RATE RISK MANAGEMENT (CONTINUED)
The table below provides the Bank's interest rate gap analysis as of 31 December 2012:
| Maturity | Up to 1 year | 1 - 3 year | Over 3 years | Total |
|---|---|---|---|---|
| Assets | ||||
| Net loans | 12,866,330 | 484,116 | 2,324,306 | 15,674,752 |
| Finance lease receivable, net | 1,440,416 | 48,353 | 14,151 | 1,502,920 |
| Debt securities | 515,126 | 254,528 | 297,686 | 1,067,340 |
| Interbank deposits and net loans | 464,359 | - | - | 464,359 |
| Off balance sheet assets | 8,629,093 | - | 31,846 | 8,660,939 |
| Total interest rate sensitive assets | 23,915,324 | 786,997 | 2,667,989 | 27,370,311 |
| Liabilities | ||||
| Term deposits | 3,793,761 | 81,286 | 16,041 | 3,891,088 |
| Interbank deposits and loans | 2,615,942 | 2,790,121 | 934,191 | 6,340,254 |
| Other liabilities | 465,363 | 62,298 | 19,675 | 547,336 |
| Off balance sheet liabilities | 6,531,295 | 919,918 | 1,204,546 | 8,655,759 |
| Total interest rate sensitive liabilities | 13,406,361 | 3,853,623 | 2,174,453 | 19,434,437 |
| Gap | 10,508,963 | (3,066,626) | 493,536 | 7,935,874 |
| Assets, non sensitive to interest rate Liabilities and equity, non sensitive to interest |
4,439,297 |
In order to comply with the Lithuanian Central bank's requirements the new algorithm have been applied in 2013 influencing the interest rate swap maturity calculation in the rows 'Off balace sheet assets' and 'Off balance sheet liabilities'. Comparative information for 2012 have not recalculated due to inability of applying the new algorithm retrospectively.
rate 12,369,991
The algorithm used in the year 2012 can be specified as follows: interest rate swap amounts by terms have been split based on the coupon reprising date.
The algorithm used for the year 2013 can be specified as follows: identification of rate types (fixed/floating). For the fixed rate type contract maturity date was used, for the floating - the nearest reprising date.
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 40 COMPLIANCE WITH REGULATORY REQUIREMENTS
As of 31 December 2013 both the Group and the Bank were in compliance with the maximum lending to one customer, large exposure, related party lending, investment and open foreign currency position limits established by the Central Banks. During the year neither the Group nor the Bank received any sanctions from the Bank of Lithuania.
The local legislation require banks to prepare consolidated accounts for group entities engaged in financial services activities without consolidation of entities involved in other activities. To comply with this requirement the Bank consolidated all its subsidiaries except for UAB "SEB Venture Capital", venture capital company, and presents this information in this note.
Income Statement of the Group excluding UAB "SEB Venture Capital" entity for the year ended 31 December 2013
| 2013 | 2012 | |
|---|---|---|
| Interest income | 470,532 | 623,775 |
| Interest expenses | (182,249) | (335,808) |
| Net interest income | 288,283 | 287,967 |
| Impairment loss on loans | (80,673) | (55,031) |
| Impairment reversals on lease portfolio | 33,415 | 27,412 |
| Provisions for guarantees and other off balance sheet items | 4,567 | 2,380 |
| Total impairment (losses)/reversals | (42,691) | (25,239) |
| Net interest income after provisions | 245,592 | 262,728 |
| Net service charges and other income | 203,057 | 190,865 |
| Net gain on equity investments | (1,073) | (858) |
| Net loss on operations with debt securities and financial instruments | 23,182 | (7,031) |
| Net foreign exchange gain | 71,306 | 67,833 |
| Staff costs | (128,285) | (141,044) |
| Other administrative expenses | (170,130) | (264,315) |
| Profit before income tax | 243,649 | 108,178 |
| Income tax | (31,212) | (21,593) |
| Net profit for the year | 212,437 | 86,585 |
| Attributable to: | ||
| Owners of the Bank | 212,437 | 86,585 |
| Non controling interest | - | - |
| 212,437 | 86,585 |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 40 COMPLIANCE WITH REGULATORY REQUIREMENTS (CONTINUED)
Statement of Comprehensive Income for the Group excluding UAB "SEB Venture Capital" entitys for the year ended 31 December 2013
| 2013 | 2012 | |
|---|---|---|
| Net profit for the year | 212,437 | 86,585 |
| Items that may subsequently be reclassified to the income statement | ||
| Net gain on available for sale assets | 1,565 | 5,184 |
| Amortisation of financial assets revaluation reserve | ||
| of reclassified financial assets | 256 | 1,450 |
| Income tax relating to the components of other | ||
| comprehensive income | (273) | (995) |
| Items that will not be reclassified to the income statement | - | - |
| Total other comprehensive income/ (loss) | 1,548 | 5,639 |
| Total comprehensive income | 213,985 | 92,224 |
| Attributable to: | ||
| Owners of the Bank | 213,985 | 92,224 |
| Non controlling interest | - | - |
| 213,985 | 92,224 |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 40 COMPLIANCE WITH REGULATORY REQUIREMENTS (CONTINUED)
Statement of Financial Position of the Group excluding UAB "SEB Venture Capital" entity
as of 31 December 2013
| 2013 | 2012 | |
|---|---|---|
| Assets | ||
| Cash in hand | 418,136 | 443,393 |
| Balances with the Central Banks | 935,323 | 1,002,933 |
| Due from banks, net | 3,691,046 | 2,666,929 |
| Government securities available for sale | 59,895 | 60,900 |
| Financial assets at fair value through | ||
| profit and loss | 909,613 | 608,544 |
| Derivative financial instruments | 259,288 | 326,230 |
| Loans to credit institutions | 86,077 | 6,242 |
| Loans to customers | 15,191,785 | 15,656,471 |
| Finance lease receivable | 1,428,320 | 1,502,861 |
| Investment securities: | ||
| - loans and receivables | 191,126 | 386,010 |
| – available for sale | 200 | 200 |
| – held to maturity | 13,302 | 13,812 |
| Investments in subsidiaries | 25,000 | 25,000 |
| Intangible fixed assets | 48,239 | 58,260 |
| Property, plant and equipment | 24,575 | 22,537 |
| Assets under operating lease | - | 375 |
| Non-current assets held for sale | 3,924 | 23,686 |
| Investment property | 14,047 | 14,232 |
| Deferred tax asset | 167,628 | 197,741 |
| Other assets, net | 130,760 | 112,910 |
| Total assets | 23,598,284 | 23,129,266 |
| Liabilities | ||
| Amounts owed to the Central Banks | 33 | 37 |
| Amounts owed to credit institutions | 7,177,824 | 6,789,296 |
| Derivative financial instruments | 270,943 | 380,892 |
| Deposits from the public | 13,225,129 | 12,797,238 |
| Accrued expenses and deferred income | 51,802 | 61,086 |
| Income tax payable | 2,135 | 1,316 |
| Debt securities in issue | 117,556 | 561,016 |
| Other liabilities and provisions | 144,218 | 145,326 |
| Total liabilities | 20,989,640 | 20,736,207 |
| Equity | ||
| Equity attributable to equity holder of the parent | ||
| Paid in capital | 1,034,575 | 1,034,575 |
| Reserve capital | 2,200 | 2,200 |
| Financial assets revaluation reserve | (2,550) | (4,098) |
| Legal reserves | 288,317 | 238,727 |
| General and other reserves | 15,731 | 14,132 |
| Net income for the period and retained earnings | 1,270,371 | 1,107,523 |
| 2,608,644 | 2,393,059 | |
| Non controlling interest | - | - |
| Total equity | 2,608,644 | 2,393,059 |
| Total liabilities and equity | 23,598,284 | 23,129,266 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 40 COMPLIANCE WITH REGULATORY REQUIREMENTS (CONTINUED)
Statement of Changes in Equity of the Group excluding UAB "SEB Venture Capital" entity for the year ended 31 December 2013
| ribu tab le t o th of the nk Equ ity Ba att e o wn ers |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Sha api tal re c |
Res erv e ital cap |
ial a Fin ts anc sse a-lu atio rev n e (d efic it) res erv |
Leg al res erv e |
l Gen era and oth er res erv es |
Ret ain ed nin gs ear |
al b efo Tot re n on ling tro con inte t res |
Non llin tro g con inte t res |
al Tot |
|
| 31 D mb er 2 011 ece |
1,03 4,5 75 |
2,2 00 |
(9,7 37) |
193 ,82 2 |
12,4 97 |
1,10 2,6 65 |
2,3 36, 022 |
- | 2,3 36, 022 |
| of h loan Imp airm ious ent gen omo s |
- | - | - | - | - | (9,5 99) |
(9,5 99) |
- | (9,5 99) |
| Adj ed bal of mb 31 D er 2 011 ust anc e as ece |
1,03 4,5 75 |
2,2 00 |
(9,7 37) |
193 ,82 2 |
12,4 97 |
1,09 3,0 66 |
2,3 26, 423 |
- | 2,3 26, 423 |
| cha vail able for sal Net in a e in tme nts, nge ves t of def fere d ta ne x |
- - |
4,18 9 |
- | - | - | 9 4,18 |
- | 4,18 9 |
|
| f fin ial a luat Am orti sati ion ts r on o anc sse eva of ified fin recl ial a ts res erve ass anc sse Net los s fo r th riod e pe e (lo ed d tly Net inc ss) gniz irec om reco |
- | - - - |
1,45 0 - |
- - |
- - |
- 86, 585 |
0 1,45 86, 585 |
- | 1,45 0 86, 585 |
| in ity equ |
- | - | 5,63 9 |
- | - | 86, 585 |
92,2 24 |
- | 92,2 24 |
| Oth nts er m ove me Sha re-b d co atio ase mp ens n nsfe Tra r to res erve s |
- - - |
- - - |
- - - |
(711 ) - 615 45, |
- 1,63 5 - |
711 - (45 ,615 ) |
- 1,63 5 - |
- - - |
- 1,63 5 - |
| 31 D mb er 2 012 ece |
1,03 4,5 75 |
2,2 00 |
(4,0 98) |
238 ,72 7 |
14,1 32 |
1,13 4,7 46 |
2,4 20, 282 |
- | 2,4 20, 282 |
| Cha in fa lue m of fi ial a ir va nge ent sset easu rem nanc s |
- - |
- | - | - | ) (27 ,222 |
(27 ) ,222 |
- | (27 ) ,222 |
|
| Adj ed bal of mb 31 D er 2 012 ust anc e as ece |
1,03 4,5 75 |
2,2 00 |
(4,0 98) |
238 ,72 7 |
14,1 32 |
1,10 7,5 23 |
2,3 93, 059 |
- | 2,3 93, 059 |
| cha vail able for sal Net in a e in tme nts, nge ves t of def fere d ta ne x f fin ial a luat Am orti sati ion ts r on o anc sse eva |
- - |
1,29 2 |
- | - | - | 2 1,29 |
- | 1,29 2 |
|
| of recl ified fin ial a ts res erve ass anc sse |
- - |
256 | - | - | - | 256 | - | 256 | |
| e fo Net inc r th riod om e pe d di ly Net inc nize rect om e re cog |
- | - | - | - | - | 212 ,437 |
212 ,437 |
212 ,437 |
|
| in ity equ |
- | - | 8 1,54 |
- | - | 212 ,437 |
213 ,985 |
- | 213 ,985 |
| Sha re-b d co atio ase mp ens n |
- | - | - | - | 1,59 9 |
- | 1,59 9 |
- | 1,59 9 |
| nsfe Tra r to res erve s |
- | - | - | 49, 590 |
- | (49 ,590 ) |
- | - | - |
| mb 31 D er 2 013 ece |
1,03 4,5 75 |
2,2 00 |
(2,5 50) |
288 ,317 |
15,7 31 |
1,27 0,3 71 |
2,6 08, 644 |
- | 2,6 08, 644 |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 40 COMPLIANCE WITH REGULATORY REQUIREMENTS (CONTINUED)
Statement of Cash Flows of the Group excluding UAB "SEB Venture Capital" entity
for the year ended 31 December 2013
| 2013 | 2012 | |
|---|---|---|
| Cash from operating activities | ||
| Interest income received | 469,055 | 594,956 |
| Interest expenses paid | (201,310) | (354,307) |
| Unrealised translation gain | - | - |
| Net gain in securities trading and financial instruments | (2,381) | (6,665) |
| Net (loss) gain in derivatives trading | (5,857) | (14,111) |
| Net commission and service income | 203,488 | 190,446 |
| Staff costs | (132,973) | (140,514) |
| Other payments | (141,160) | (107,754) |
| Net cash from operating activities before change in operating assets | 246,260 | 216,098 |
| Changes in operating assets | ||
| (Decrease) increase in compulsory balances with the Central Bank | 92,210 | 674,850 |
| Decrease (increase) in due from banks and loans to credit and financial institutions | (2,767,194) | 1,731,851 |
| (Increase) decrease in loans to customers | 363,267 | (60,534) |
| Decrease of finance lease receivable | 119,191 | 195,682 |
| Decrease (increase) in other current assets | (19,707) | 34,958 |
| Net change in operating assets | (2,212,233) | 2,576,807 |
| Changes in operating liabilities | ||
| Increase in deposits from public | 441,270 | 433,103 |
| (Decrease) increasein accrued expenses, deferred income and other liabilities | 4,160 | (787,785) |
| Net change in operating liabilities | 445,430 | (354,682) |
| Net cash from operating activities before income tax | (1,520,543) | 2,438,223 |
| Income tax paid | - | - |
| Net cash from operating activities after income tax | (1,520,543) | 2,438,223 |
| Cash flow from investing activities | ||
| Acquisition of tangible and intangible fixed assets, net | (6,867) | (6,958) |
| Acquisition of Government securities available for sale | - | (138,763) |
| Sale of Government securities available for sale | 2,542 | 141,734 |
| Acquisition of other investment securities | (1,375,146) | (2,806,368) |
| Sale of other investment securities | 1,281,169 | 3,475,679 |
| Cash flow from investing activities | (98,302) | 665,324 |
| Cash flow from financing activities | ||
| Increase (decrease) in amounts owed to the Central Banks | (4) | 5 |
| (Decrease) increase in amounts owed to credit and financial institutions | 407,310 | (3,089,841) |
| Decrease in subordinated loans | - | (241,696) |
| Interest paid on subordinated loans | - | (6,308) |
| Proceeds from own issued debt securities | 36,815 | 56,738 |
| Repurchased own issued debt securities | (472,031) | (76,876) |
| Interest paid for own issued debt securities | (17,144) | (23,197) |
| Cash received (used in) financing activities | (45,054) | (3,381,175) |
| Net increase (decrease) in cash/cash equivalents | (1,663,899) | (277,628) |
| Cash/cash equivalents 1 January | 3,118,790 | 3,396,418 |
| Cash/cash equivalents 31 December | 1,454,891 | 3,118,790 |
| Specified as follows: | ||
| Balance available for withdrawal with the Central Banks | 448,769 | 424,169 |
| Overnight deposits | 385,235 | 42,550 |
| Cash on hand | 418,136 | 443,393 |
| Current accounts with other banks | 202,751 | 2,208,678 |
| 1,454,891 | 3,118,790 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 41 RELATED PARTIES
A number of banking transactions are entered into with related parties in the normal course of business. The transactions with the parent bank include loans, deposits and debt instrument transactions. Transactions within Skandinaviska Enskilda Banken AB (publ) group (excluding the parent bank) during the year can be specified as follows:
| The Group | Interest rate | The Bank | ||
|---|---|---|---|---|
| 2013 2012 |
% | 2013 | 2012 | |
| Outstanding loan amount | 0.05-3.50 | |||
| 122,526 29,312 |
at the year end | 122,526 | 29,312 | |
| 3,207 3,105 |
Other assets at the year end | - | 2,667 | 2,252 |
| Outstanding deposit amount | ||||
| 77,437 71,472 |
at the year end | 0.10-5.49 | 77,437 | 71,472 |
| 12,723 13,001 |
Other liabilities at year end | 12,365 | 12,649 | |
| 17 52 |
Unused granted overdraft facilities | 17 | 52 | |
| 5,726 9,600 |
Guarantees received at the year end | 5,726 | 9,600 | |
| 506 707 |
Interest income | 506 | 707 | |
| (53) (234) |
Interest expense | (53) | (234) | |
| Other services received and cost | ||||
| (5,760) (4,083) |
incurred from SEB group, net | (6,595) | (4,940) |
Transactions with parent bank during the year can be specified as follows:
| The Group | Interest rate | The Bank | ||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | % | 2013 | 2012 | ||
| Outstanding loan amount | ||||||
| 3,521,798 | 2,536,274 | at the year end | 0.05-0.70 | 3,521,798 | 2,536,274 | |
| Derivative financial instruments | - | |||||
| 72,919 | 166,964 | at the year ended | 72,919 | 166,964 | ||
| 62 | 23 | Other assets at the year end | - | 62 | 23 | |
| Outstanding deposit amount | ||||||
| 6,679,239 | 6,309,920 | at the year end | 0.12-5.49 | 6,679,239 | 6,309,920 | |
| 204,251 | 593,106 | Other liabilities at year end | - | 204,251 | 593,106 | |
| 59,352 | 48,402 Unused granted overdraft facilities | - | 59,352 | 48,402 | ||
| 200 Guarantees issued at the year end | - | 200 | ||||
| 390,446 | 4,545 Guarantees received at the year end | - | 390,446 | 4,545 | ||
| 10,736 | 29,503 | Interest income | - | 10,736 | 29,503 | |
| (113,943) | (232,537) | Interest expense | - | (113,943) | (232,537) | |
| Other services received and cost | ||||||
| (261) | (9,502) | incurred from SEB group, net | - | (6,195) | (15,284) |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 41 RELATED PARTIES (CONTINUED)
Transactions between the Bank and its subsidiaries during the year can be specified as follows:
| The Bank | |||
|---|---|---|---|
| Interest rate % | 2013 | 2012 | |
| Off-balance sheet commitments as of 31 December: Agreements to grant loans Guarantees issued |
- - |
5,199 | 7,469 4 |
| Outstanding loan amounts at year end: UAB "SEB Venture Capital" |
1.42-3.50 | 39,970 | 37,600 |
| UAB "SEB investicijų valdymas" | 3.5 | 74 | |
| Outstanding deposit amounts at year end: UAB "SEB Venture Capital" UAB "SEB investicijų valdymas" |
0.16 | 271 20,557 |
138 19,379 |
| Other assets at year end | - - |
2,241 | 1,363 |
| Interest income Interest expense Dividend income |
- - - |
5,379 (13) 7,351 |
5,094 (617) 8,344 11,176 |
| Other services received and cost incurred from subsidiaries, net | - | 9,871 |
Transactions with venture capital associates during the year can be specified as follows:
| The Group | Interest rate | The Bank | ||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | % | 2013 | 2012 | ||
| Outstanding loan amount | ||||||
| 37,467 | 48,065 | at the year end | 2.30-2.90 | 37,467 | 36,423 | |
| Outstanding deposit amount | ||||||
| 8,533 | 995 | at the year end | 2.27 | 8,533 | 995 | |
| Agreements to grant loans and other off | ||||||
| 1,500 | 600 | balance commitments | 1,500 | 600 | ||
| 1,463 | 2,545 | Interest income | - | 1,463 | 1,522 | |
| (2) | - | Interest expense | - | (2) | - | |
| Other services received and cost | ||||||
| 196 | 147 | incurred, net | - | 196 | 147 |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 41 RELATED PARTIES (CONTINUED)
The loans issued to directors and other key management personnel (and close family members) are repayable on a regular basis over the period of loan. Transactions with key management (the Board members) during the year can be specified as follows:
| The Group | Interest rate | The Bank | ||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | % | 2013 | 2012 | ||
| Outstanding loan amount | ||||||
| 4,319 | 4,520 | at the year end | 2.56-3 | 4,319 | 4,520 | |
| 103 | Finance lease receivable | 1.78 | 103 | |||
| 1 | 5 | Other assets | - | 1 | 5 | |
| Outstanding deposit amount | ||||||
| 1,529 | 327 | at the year end | 0.05 | 1,529 | 327 | |
| 3,273 | 2,780 | Payroll | - | 3,273 | 2,780 | |
| 1,034 | 927 | Social security | - | 1,034 | 927 | |
| 134 | 140 | Interest income | - | 134 | 140 | |
| (2) Interest expense | - | (2) | ||||
| 144 | 11 | Other income, net | 144 | 11 |
NOTE 42 ASSETS CLASSIFIED AS HELD FOR SALE
As of 31 December 2013 and 2012 major amount of the Group's non-current assets held for sale comprise of leased and subsequently foreclosed assets held for sale (mainly trucks and other vehicles), that are expected to be sold in one year. These assets are classified as non-current assets held for sale as they have been accounted as finance lease portfolio before foreclosure and as of the balance sheet date these assets are ready for immediate sale and the Group's management is committed to a plan to sell these assets..
Assets foreclosed or returned after termination of lease agreements are presented in the table below:
| Asset group | Net value as of 31 December 2012 |
Foreclosed or returned |
Reclassified to investment property |
Decrease in value |
Sold | Net value as of 31 December 2013 |
|---|---|---|---|---|---|---|
| Cars and mini-vans | 266 | 20,583 | - | 33 | 20,721 | 95 |
| Trucks | 2,522 | 4,758 | - | (358) | 7,445 | 193 |
| Manufacturing equipment | 2,210 | 288 | - | 1,362 | 343 | 793 |
| Construction equipment | 1,193 | 379 | - | 475 | 1,096 | 1 |
| Agricultural equipment | - | - | - | - | - | - |
| Real estate | 16,534 | 694 | - | 1,113 | 13,662 | 2,453 |
| Other assets | 961 | 510 | - | 76 | 1,006 | 389 |
| 23,686 | 27,212 | - | 2,701 | 44,273 | 3,924 |
Gross book value and impairment of assets classified as held for sale are presented in the table below:
| The Group | The Bank | ||
|---|---|---|---|
| 2012 | 2013 | 2012 | |
| 86,049 | termination of agreements | 15,191 | 86,049 |
| (62,363) | Impairment losses | (11,267) | (62,363) |
| Foreclosed assets or assets returned after | 23,686 | ||
| (11,267) 23,686 |
Foreclosed assets or assets returned after termination of agreements, net |
3,924 |
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 43 APPROPRIATION OF PROFIT AND TRANSFERS OF RESERVES
The following Bank's profit appropriations and transfers of reserves will be proposed to annual shareholders meeting:
| Legal reserve | Net profit for the period |
Retained earnings | |
|---|---|---|---|
| 31 December 2013 | 287 327 | 212 311 | 1 050 583 |
| Profit appropriation to Legal reserve | 63 145 | - | (63 145) |
| Profit appropriation to Retained earnings | - | (212 311) | 212 311 |
| Dividend to shareholder | - | - | (103 584) |
| 31 December 2013 after appropriation of profit and transfers to reserves |
350 472 | - | 1 096 165 |
Profit (loss) appropriation of other Group companies will be approved during shareholders meetings of each subsidiary separately.
NOTE 44 CONTINGENCIES AND COMMITMENTS
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 2,915,536 | 2,544,274 | Agreements to grant loans | 2,920,735 | 2,551,743 |
| 610,245 | 554,414 | Guarantees issued | 610,245 | 554,417 |
| 132,090 | 180,215 | Letters of credit issued | 132,090 | 180,215 |
| 39,798 | 32,601 | Commitments to purchase assets | 39,798 | 32,601 |
| - | 80 | Other commitments | - | 80 |
| 38 | 38 | Customs guarantees collateralised by deposits | 38 | 38 |
Legal proceedings
There were several proceedings outstanding against the Group and the Bank at 31 December 2013 and 2012. No provision has been made as professional advice indicates that it is unlikely that any significant loss will arise.
At the end of 2013 after finalization of tax investigation the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania started a tax inspection of the Bank. According to the provisions of the Law on Tax Administration, information about the on-going tax dispute must be held confidential.
Over the reporting period Vilnius District Administrative Court on the appeal by the Bank and other entities handed down its decision reducing the fine imposed on the Bank from to LTL 24,808,200 to 9,923,280. The fine was imposed on the Bank and other entities in the year 2012 by the Competition Council for the arrangements that restricted competition in the markets of cash management and cash collection services. The Bank appealed against the decision of the Vilnius District Administrative Court to the Supreme Administrative Court. AB SEB bankas made a provision for the fine amounting to LTL 24,808,200 at the end of 2012 and paid it in 2013. No adjustments have been made in the year 2013 due to reduction of fine.
As of 31 December 2013 rental off balance sheet commitments of the Group and the Bank amounted to LTL 132,699 thousand (2012: LTL 136,916 thousand). All non-cancellable commitments fall into the period within ten years. Comparative information includes merged subsidiary's AB "SEB lizingas" data.
The table below presents operating lease amounts for the years 2013 and 2012 when the Group and the Bank is lessee:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| The total of future minimum lease payments under non-cancellable operating | ||||
| leases: | ||||
| 30,072 | 28,983 | up to 1 year | 30,072 | 28,983 |
| 80,734 | 81,751 | 1-5 years | 80,734 | 81,751 |
| 21,893 | 26,182 | Over 5 years | 21,893 | 26,182 |
| The total of future minimum sublease payments to be received under non | ||||
| (3,954) | (3,502) | cancellable subleases | (3,958) | (3,502) |
| Lease and sublease payments recognised in the income statement: | ||||
| 37,160 | 33,790 | minimum lease payments | 37,160 | 33,790 |
| - | - | contingent rents | - | - |
| (3,230) | (2,329) | sublease payments | (3,415) | (2,594) |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 44 CONTINGENCIES AND COMMITMENTS (CONTINUED)
During the year 2013 the Group incurred rent expense amounting to LTL 33,930 thousand while AB SEB bankas – LTL 33,745 thousand (for the year 2012 respectively: LTL 31,461 thousand and LTL 30,795 thousand).
The future lease rental payments receivable under non-cancellable operating lease can be specified as follows:
| The Group | The Bank | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| 2,203 | 3,476 | Short term deferred income (up to 1 year) | 2,207 | 3,484 |
| 1,751 | - | Long term deferred income (up to 5 years) | 1,751 | - |
| Total future lease and rental payments receivable under | ||||
| 3,954 | 3,476 | non-cancellable operating lease | 3,958 | 3,484 |
NOTE 45 POST BALANCE SHEET EVENTS
After the balance sheet date the Bank successfully completed 4 debt securities issues with the nominal value of LTL 1,523 thousand.
After the balance sheet date the Bank successfully redeemed 12 debt securities issues with the nominal value of LTL 20,989 thousand.
After the balance sheet date the Bank started placing 3 debt securities issues that should be completed on 17th of March
NOTE 46 CORRECTION OF ERRORS AND RECLASSIFICATION
a) During the year 2013 the Bank has made the following adjustments accounted as a prior period errors:
- CVA (Credit value adjustment)
- Impairment of accrued interest on homogeneous loans
b). During the year the Bank has made reclassification of financial institution other than credit institution balances from category "Credit and financial institutions" to category "Customers".
CVA (Credit value adjustment)
Since derivative financial assets held by the Bank are purchased/sold through the OTC transactions, credit risk should be specifically addressed in determining the fair value of these assets. The Bank has historically not taken into account the counterparty credit risk when measuring its derivative financial assets due to lack of comprehensive methodology. In order to address this limitation the parent bank has developed valuation methodology for incorporation of CVA in derivative financial instruments valuation which was implemented in the Bank in the 1st quarter of 2013.
CVA is defined as the cost it would take to close out the credit risk present in a derivative transaction. It should be calculated with reference to the expected future exposure, taking into account counterparty default probability and recovery rate.
Since CVA adjustment satisfied IAS requirements that were in place in prior periods and changed the measurement base of derivative financial assets, it is treated as a correction of prior periods' error.
As the future exposure is uncertain by nature, it has to be estimated through means of simulation. Determination of future exposure is done using Monte Carlo simulation by applying market volatility assumptions. Data needed for this simulation is hardly available for prior periods therefore the Bank has concluded that it is impracticable to determine CVA effect for periods prior 31/12/2012 and retrospective adjustment was done through retained earnings of 31/12/2012. The total adjustment amount related to 31/12/2012 (not considering deferred tax effect) is LTL 32,027 thousand.
Impairment of accrued interest on homogeneous loans
At the end of the year 2013 the Bank has reviewed the provisioning methodology for accrued interest on homogeneous loans and calculated impairment for accrued overdue interest. LTL 13,009 thousand of the impairment amount (not considering deferred tax effect) is related to prior periods, of which LTL 1,716 thousand effect year 2012 income statement.
The following tables present the affected lines and amounts of the financial statements.
FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 46 CORRECTION OF ERRORS AND RECLASSIFICATION (CONTINUED)
Affected lines of the Income statement for the year ended 31 December 2012:
| The Group | The Bank | ||||||
|---|---|---|---|---|---|---|---|
| Amount before correction for 2012 |
Impairment of homogeneous |
Amount after correction for |
Income statement line name | Amount before correction for 2012 |
Impairment of homogeneous loans |
Amount after correction for 2012 |
|
| loans interest | 2012 | interest | |||||
| 625,451 | -1,716 | 623,735 Interest income | 625,461 | -1,716 | 623,745 | ||
| 289,649 | -1,716 | 287,933 Net interest income | 289,582 | -1,716 | 287,866 | ||
| 264,410 | -1,716 | 262,694 Net interest income after impairment | 264,343 | -1,716 | 262,627 | ||
| losses | |||||||
| 109,089 | -1,716 | 107,373 Operating profit | 109,578 | -1,716 | 107,862 | ||
| 109,089 | -1,716 | 107,373 Profit before income tax | 109,578 | -1,716 | 107,862 | ||
| -22,771 | 257 | -22,514 Income tax expenses | -20,542 | 257 | -20,285 | ||
| 86,318 | -1,459 | 84,859 Net profit for the year | 89,036 | -1,459 | 87,577 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
(All amounts in LTL thousand unless otherwise stated)
NOTE 46 CORRECTION OF ERRORS AND RECLASSIFICATION (CONTINUED)
Affected lines of the Statement of financial position as of 31 December 2012:
| Th e G rou p |
Th e B k an |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| t b efo Am oun re and tio cor rec ns sifi of las ion cat rec as ber 31 De 20 12 cem |
Ch fai e in ang r val ue ent me asu rem of f al ina nci ets ass |
f Imp air nt o me hom oge neo us loa inte t ns res |
las sifi Rec ion cat |
fte Am nt a ou r and tio cor rec ns sifi las ion cat rec of 3 1 as ber De 20 12 cem |
of fin ial Sta itio tem ent anc pos n line na me |
t be for Am oun e and tio cor rec ns sifi las ion cat rec as of ber 31 De cem 201 2 |
Ch fai e in ang r val ue of ent me asu rem fin ial ets anc ass |
f Imp air nt o me hom oge neo us loa inte t ns res |
las sifi Rec ion cat |
fte Am nt a ou r and tio cor rec ns sifi las ion cat rec as of 3 mb 1 D ece er 201 2 |
| Ass ets |
||||||||||
| 355 ,20 1 |
-28 ,97 1 |
326 ,23 |
fina al in 0 Der ivat ive nci stru nts me |
355 ,20 |
1 -28 ,97 1 |
326 ,23 0 |
||||
| 6,8 02 |
-56 | 0 6,2 42 |
Loa dit ins titu tio to ns cre ns |
6,8 02 |
-56 0 |
6,2 42 |
||||
| 15, 642 ,96 2 |
-13 ,00 |
8 560 |
15, 630 ,514 |
Loa to tom ns cus ers |
15, 668 ,92 0 |
-13 ,00 8 |
560 | 15, 656 ,47 2 |
||
| 190 ,99 8 |
4,8 04 |
1,9 51 |
197 ,75 |
Def d ta 3 set erre x as |
190 ,95 |
4,8 04 1 |
1,9 51 |
197 ,70 6 |
||
| bili 0 Lia ties |
||||||||||
| 7,19 3,1 44 |
-40 3,8 48 |
6,7 89, 296 |
dit Due inst itut ion to cre s |
7,2 12, 523 |
-42 3,2 27 |
6,7 89, 296 |
||||
| 377 ,83 6 |
3,0 56 |
380 ,89 |
fina al in 2 Der ivat ive nci stru nts me |
377 ,83 6 |
3,0 56 |
380 ,89 2 |
||||
| 12,3 93, 252 |
403 ,84 |
8 12, 797 ,10 |
s fr blic 0 Dep osit om pu |
12, 393 ,39 0 |
423 ,22 7 |
12, 816 ,61 7 |
||||
| Equ ity |
||||||||||
| 1,13 7,9 30 |
-27 ,22 3 |
-11 ,05 |
7 | 0 1,0 99, 650 |
Ret ain ed nin gs ear |
1,13 8,4 53 |
-27 ,22 3 |
-11 ,05 7 |
0 | 1,10 0,1 73 |
Affected lines by reclassification of the Statement of financial position as of 31 December 2011:
| Th e G rou p |
Th e B k an |
|||||
|---|---|---|---|---|---|---|
| bef Am nt ou ore sif f 31 las ica tio rec n a s o De ber 20 11 cem |
cla fic Re ssi ati on |
fte Am nt a ou r sif f 31 las ica tio rec n a s o De ber 20 11 cem |
of fin ial Sta itio tem ent anc pos n line na me |
bef Am nt ou ore sif f las ica tio 31 rec n a s o De ber 20 11 cem |
cla fic Re ssi ati on |
fte Am nt a ou r sifi of las ion cat 31 rec as De ber 20 11 cem |
| As set s |
||||||
| 12, 706 |
-51 7 |
12, 189 |
Lo red it in stit utio s t an o c ns |
439 ,30 2 |
-51 7 |
438 ,78 5 |
| 15, 649 ,12 1 |
517 | 15, 649 ,63 8 |
Lo s t ust an o c om ers |
15, 678 ,43 2 |
517 | 15, 678 ,94 9 |
| 0 | bili Lia tie s |
|||||
| 10, 135 ,68 1 |
-20 4,1 17 |
9,9 31, 564 |
dit Du ins titu tion e to cre s |
9,1 76, 873 |
-22 2,4 61 |
8,9 54, 412 |
| 12, 152 ,99 9 |
204 ,117 |
12, 357 ,116 |
its f blic De pos rom pu |
12, 158 ,99 4 |
222 ,46 1 |
12, 381 ,45 5 |
FOR THE YEAR ENDED 31 DECEMBER 2013 (All amounts in LTL thousand unless otherwise stated)
NOTE 46 CORRECTION OF ERRORS AND RECLASSIFICATION (CONTINUED)
Effect on basic and diluted earnings per share for the Group for the year 2012:
| Before correction | After correction | |
|---|---|---|
| Net profit from continuing operations attributable | ||
| to the shareholders | 86,319 | 84,859 |
| Weighted average number of shares (000s) | 15,441 | 15,441 |
| Basic and dilluted earnings per share (LTL) | 5.59 | 5.50 |
The impairment adjustment and reclassification did not have a material effect on the opening balance sheet as of January 1, 2012, and therefore the opening balance sheet has not been presented.
*****
APPENDIX 1 TO CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2013 (All amounts in LTL thousands unless otherwise stated)
Disclosure form concerning the compliance with the Corporate Governance Code for the Companies Listed on NASDAQ OMX Vilnius
The public company AB SEB bankas, following Article 21 paragraph 3 of the Law on Securities of the Republic of Lithuania and item 24.5 of the Listing Rules of AB NASDAQ OMX Vilnius, discloses its compliance with the Corporate Governance Code for the Companies Listed on NASDAQ OMX Vilnius, and its specific provisions. In the event of non-compliance with the Code or with certain provisions thereof, it must be specified which provisions are not complied with and the reasons of non-compliance.
| PRINCIPLES/ RECOMMENDATIONS | YES/NO /NOT APPLICABLE |
COMMENTARY | |||
|---|---|---|---|---|---|
| Principle I: Basic Provisions | |||||
| The overriding objective of a company should be to operate in common interests of all the shareholders by optimizing over time shareholder value. |
|||||
| 1.1. A company should adopt and make public the company's development strategy and objectives by clearly declaring how the company intends to meet the interests of its shareholders and optimize shareholder value. |
YES | ||||
| 1.2. All management bodies of a company should act in furtherance of the declared strategic objectives in view of the need to optimize shareholder value. |
YES | ||||
| 1.3. A company's supervisory and management bodies should act in close co-operation in order to attain maximum benefit for the company and its shareholders. |
YES | ||||
| 1.4. A company's supervisory and management bodies should ensure that the rights and interests of persons other than the company's shareholders (e.g. employees, creditors, suppliers, clients, local community), participating in or connected with the company's operation, are duly respected. |
YES |
Principle II: The corporate governance framework
The corporate governance framework should ensure the strategic guidance of the company, the effective oversight of the company's management bodies, an appropriate balance and distribution of functions between the company's bodies, protection of the shareholders' interests.
APPENDIX 1 TO CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2013
| 2.1. Besides obligatory bodies provided for in the Law on Companies of the Republic of Lithuania – a general shareholders' meeting and the chief executive officer, it is recommended that a company should set up both a collegial supervisory body and a collegial management body. The setting up of collegial bodies for supervision and management facilitates clear separation of management and supervisory functions in the company, accountability and control on the part of the chief executive officer, which, in its turn, facilitate a more efficient and transparent management process. |
YES | |
|---|---|---|
| 2.2. A collegial management body is responsible for the strategic management of the company and performs other key functions of corporate governance. A collegial supervisory body is responsible for the effective supervision of the company's management bodies. |
YES | |
| 2.3. Where a company chooses to form only one collegial body, it is recommended that it should be a supervisory body, i.e. the supervisory board. In such a case, the supervisory board is responsible for the effective monitoring of the functions performed by the company's chief executive officer. |
NOT APPLICABLE | |
| 2.4. The collegial supervisory body to be elected by the general shareholders' meeting should be set up and should act in the manner defined in Principles III and IV. Where a company should decide not to set up a collegial supervisory body but rather a collegial management body, i.e. the board, Principles III and IV should apply to the board as long as that does not contradict the essence and purpose of this body.1 |
YES/ NO | Not all recommendations/ provisions of these principles are adhered to at full extent (comments at each recommendation/ provision). |
| 2.5. Company's management and supervisory bodies should comprise such number of board (executive directors) and supervisory (non-executive directors) board members that no individual or small group of individuals can dominate decision making on the part of these bodies.2 |
YES | The board (executives directors) consists of 5 (five) members. The supervisory council consists of 5 (five) members. |
1 Provisions of Principles III and IV are more applicable to those instances when the general shareholders' meeting elects the supervisory board, i.e. a body that is essentially formed to ensure oversight of the company's board and the chief executive officer and to represent the company's shareholders. However, in case the company does not form the supervisory board but rather the board, most of the recommendations set out in Principles III and IV become important and applicable to the board as well. Furthermore, it should be noted that certain recommendations, which are in their essence and nature applicable exclusively to the supervisory board (e.g. formation of the committees), should not be applied to the board, as the competence and functions of these bodies according to the Law on Companies of the Republic of Lithuania (Official Gazette, 2003, No 123-5574) are different. For instance, item 3.1 of the Code concerning oversight of the management bodies applies to the extent it concerns the oversight of the chief executive officer of the company, but not of the board itself; item 4.1 of the Code concerning recommendations to the management bodies applies to the extent it relates to the provision of recommendations to the company's chief executive officer; item 4.4 of the Code concerning independence of the collegial body elected by the general meeting from the company's management bodies is applied to the extent it concerns independence from the chief executive officer.
2 Definitions 'executive director' and 'non-executive director' are used in cases when a company has only one collegial body.
(All amounts in LTL thousands unless otherwise stated)
| 2.6. Non-executive directors or members of the supervisory board should be appointed for specified terms subject to individual re-election, at maximum intervals provided for in the Lithuanian legislation with a view to ensuring necessary development of professional experience and sufficiently frequent reconfirmation of their status. A possibility to remove them should also be stipulated however this procedure should not be easier than the removal procedure for an executive director or a member of the management board. |
YES | Members of the supervisory council are appointed for the four-year tenure. Abiding by the bank's Articles of Association and according to its practice, a member of the supervisory council may be re-elected for another tenure. The number of tenures for members of the supervisory council is unlimited. |
|---|---|---|
| 2.7. Chairman of the collegial body elected by the general shareholders' meeting may be a person whose current or past office constitutes no obstacle to conduct independent and impartial supervision. Where a company should decide not to set up a supervisory board but rather the board, it is recommended that the chairman of the board and chief executive officer of the company should be a different person. Former company's chief executive officer should not be immediately nominated as the chairman of the collegial body elected by the general shareholders' meeting. When a company chooses to departure from these recommendations, it should furnish information on the measures it has taken to ensure impartiality of the supervision. |
YES | Chairman of the bank's supervisory council has never been the chief executive of the bank. |
Principle III: The order of the formation of a collegial body to be elected by a general shareholders' meeting
The order of the formation a collegial body to be elected by a general shareholders' meeting should ensure representation of minority shareholders, accountability of this body to the shareholders and objective monitoring of the company's operation and its management bodies.3
| 3.1. The mechanism of the formation of a collegial body to be | YES | Provisions of the present recommendation are implemented |
|---|---|---|
| elected by a general shareholders' meeting (hereinafter in this | by disclosing information to shareholders on candidates to | |
| Principle referred to as the 'collegial body') should ensure | the Supervisory Council of the Bank, by filling out a detailed | |
| objective and fair monitoring of the company's management | questionnaire approved by the Bank of Lithuania on an | |
| bodies as well as representation of minority shareholders. | individual's qualifications, professional experience, as well as | |
| other data about candidate; candidates to the Supervisory | ||
| Council members have to fulfil the criteria of impeccable | ||
| reputation; statements of the candidates to the Supervisory | ||
| Council members on their current position with the Bank or | ||
| with its subsidiary companies group; prior to electing any | ||
| person to the Supervisory Council as its member, a permit of | ||
| the Bank of Lithuania is obtained, etc. |
3 Attention should be drawn to the fact that in the situation where the collegial body elected by the general shareholders' meeting is the board, it is natural that being a management body it should ensure oversight not of all management bodies of the company, but only of the single-person body of management, i.e. the company's chief executive officer. This note shall apply in respect of item 3.1 as well.
| 3.2. Names and surnames of the candidates to become members of a collegial body, information about their education, qualification, professional background, positions taken and potential conflicts of interest should be disclosed early enough before the general shareholders' meeting so that the shareholders would have sufficient time to make an informed voting decision. All factors affecting the candidate's independence, the sample list of which is set out in Recommendation 3.7, should be also disclosed. The collegial body should also be informed on any subsequent changes in the provided information. The collegial body should, on yearly basis, collect data provided in this item on its members and disclose this in the company's annual report. |
YES | Member of a collegial body, prior taking the office, declares his existing obligations, discloses information about potential conflicts of interest and commits to ensure that his professional or any other activities not related to the performance of the Bank will not negatively affect the fulfilment of the functions of a member of a collegial body. Additionally, member of collegial body undertakes to immediately notify the Bank about any changes in circumstances for which his statements or commitments would no longer be valid. |
|---|---|---|
| 3.3. Should a person be nominated for members of a collegial body, such nomination should be followed by the disclosure of information on candidate's particular competences relevant to his/her service on the collegial body. In order shareholders and investors are able to ascertain whether member's competence is further relevant, the collegial body should, in its annual report, disclose the information on its composition and particular competences of individual members which are relevant to their service on the collegial body. |
YES | |
| 3.4. In order to maintain a proper balance in terms of the current qualifications possessed by its members, the desired composition of the collegial body shall be determined with regard to the company's structure and activities, and have this periodically evaluated. The collegial body should ensure that it is composed of members who, as a whole, have the required diversity of knowledge, judgment and experience to complete their tasks properly. The members of the audit committee, collectively, should have a recent knowledge and relevant experience in the fields of finance, accounting and/or audit for the stock exchange listed companies. At least one of the members of the remuneration committee should have knowledge of and experience in the field of remuneration policy. |
NO | The Supervisory Council does not determine its desired composition and does not have it periodically evaluated, as it is elected by shareholders, and the candidates as well as their qualifications are approved by the Bank's supervisory authority, namely, the Bank of Lithuania, by issuing a permit to elect a person to the Supervisory Council as its member, therefore, in our opinion, this is sufficient in order to maintain a balance of qualifications of members of the collegiate body. Provisions number two, three and four are met. |
| 3.5. All new members of the collegial body should be offered a tailored program focused on introducing a member with his/her duties, corporate organization and activities. The collegial body should conduct an annual review to identify fields where its members need to update their skills and knowledge. |
NO | Candidates to the collegiate body as its members are approved by the Bank's supervisory authority, namely, the Bank of Lithuania, by issuing a permit to elect a person to the Supervisory Council as its member, also, the Bank of Lithuania is kept informed on changes in the data (including changes in qualifications) of the members, therefore, in our opinion, this is sufficient to ensure that that the bank's collegiate body would consist of only individuals with adequate qualifications, knowledge and skills. For these reasons, no individual programmes or annual reviews were conducted. |
APPENDIX 1 TO CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2013
| 3.6. In order to ensure that all material conflicts of interest related with a member of the collegial body are resolved properly, the collegial body should comprise a sufficient4 number of independent5 members. |
NOT APPLICABLE | The Bank has a single shareholder. |
|---|---|---|
| 3.7. A member of the collegial body should be considered to be independent only if he is free of any business, family or other relationship with the company, its controlling shareholder or the management of either, that creates a conflict of interest such as to impair his judgment. Since all cases when member of the collegial body is likely to become dependant are impossible to list, moreover, relationships and circumstances associated with the determination of independence may vary amongst companies and the best practices of solving this problem are yet to evolve in the course of time, assessment of independence of a member of the collegial body should be based on the contents of the relationship and circumstances rather than their form. The key criteria for identifying whether a member of the collegial body can be considered to be independent are the following: 1) He/she is not an executive director or member of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) of the company or any associated company and has not been such during the last five years; 2) He/she is not an employee of the company or some any company and has not been such during the last three years, except for cases when a member of the collegial body does not belong to the senior management and was elected to the collegial body as a representative of the employees; 3) He/she is not receiving or has been not receiving significant additional remuneration from the company or associated company other than remuneration for the office in the collegial body. Such additional remuneration includes participation in share options or some other performance based pay systems; it does not include compensation payments for the previous office in the company |
NOT APPLICABLE | The Bank has a single shareholder. |
| (provided that such payment is no way related with later position) as per pension plans (inclusive of deferred compensations); |
4 The Code does not provide for a concrete number of independent members to comprise a collegial body. Many codes in foreign countries fix a concrete number of independent members (e.g. at least 1/3 or 1/2 of the members of the collegial body) to comprise the collegial body. However, having regard to the novelty of the institution of independent members in Lithuania and potential problems in finding and electing a concrete number of independent members, the Code provides for a more flexible wording and allows the companies themselves to decide what number of independent members is sufficient. Of course, a larger number of independent members in a collegial body is encouraged and will constitute an example of more suitable corporate governance.
5 It is notable that in some companies all members of the collegial body may, due to a very small number of minority shareholders, be elected by the votes of the majority shareholder or a few major shareholders. But even a member of the collegial body elected by the majority shareholders may be considered independent if he/she meets the independence criteria set out in the Code.
APPENDIX 1 TO CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2013 (All amounts in LTL thousands unless otherwise stated)
| 4) He/she is not a controlling shareholder or representative of such shareholder (control as defined in the Council Directive 83/349/EEC Article 1 Part 1); |
||
|---|---|---|
| 5) He/she does not have and did not have any material business relations with the company or associated company within the past year directly or as a partner, shareholder, director or superior employee of the subject having such relationship. A subject is considered to have business relations when it is a major supplier or service provider (inclusive of financial, legal, counseling and consulting services), major client or organization receiving significant payments from the company or its group; |
||
| 6) He/she is not and has not been, during the last three years, partner or employee of the current or former external audit company of the company or associated company; |
||
| 7) He/she is not an executive director or member of the board in some other company where executive director of the company or member of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) is non-executive director or member of the supervisory board, he/she may not also have any other material relationships with executive directors of the company that arise from their participation in activities of other companies or bodies; |
||
| 8) He/she has not been in the position of a member of the collegial body for over than 12 years; |
||
| 9) He/she is not a close relative to an executive director or member of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) or to any person listed in above items 1 to 8. Close relative is considered to be a spouse (common law spouse), children and parents. |
||
| 3.8. The determination of what constitutes independence is fundamentally an issue for the collegial body itself to determine. The collegial body may decide that, despite a particular member meets all the criteria of independence laid down in this Code, he cannot be considered independent due to special personal or company-related circumstances. |
NOT APPLICABLE | Comment at 3.7. |
(All amounts in LTL thousands unless otherwise stated)
| 3.9. Necessary information on conclusions the collegial body has come to in its determination of whether a particular member of the body should be considered to be independent should be disclosed. When a person is nominated to become a member of the collegial body, the company should disclose whether it considers the person to be independent. When a particular member of the collegial body does not meet one or more criteria of independence set out in this Code, the company should disclose its reasons for nevertheless considering the member to be independent. In addition, the company should annually disclose which members of the collegial body it considers to be independent. |
NOT APPLICABLE | Comment at 3.7. |
|---|---|---|
| 3.10. When one or more criteria of independence set out in this Code has not been met throughout the year, the company should disclose its reasons for considering a particular member of the collegial body to be independent. To ensure accuracy of the information disclosed in relation with the independence of the members of the collegial body, the company should require independent members to have their independence periodically re-confirmed. |
NOT APPLICABLE | Comment at 3.7. |
| 3.11. In order to remunerate members of a collegial body for their work and participation in the meetings of the collegial body, they may be remunerated from the company's funds.6 The general shareholders' meeting should approve the amount of such remuneration. |
NOT APPLICABLE | Comment at 3.7. |
Principle IV: The duties and liabilities of a collegial body elected by the general shareholders' meeting
The corporate governance framework should ensure proper and effective functioning of the collegial body elected by the general shareholders' meeting, and the powers granted to the collegial body should ensure effective monitoring7 of the company's management bodies and protection of interests of all the company's shareholders.
| 4.1. The collegial body elected by the general shareholders' | YES | The Supervisory Council provides the general annual |
|---|---|---|
| meeting (hereinafter in this Principle referred to as the 'collegial | meeting of shareholders with comments and proposals | |
| body') should ensure integrity and transparency of the | regarding the strategy of the Bank's activities, its annual | |
| company's financial statements and the control system. The | consolidated financial statements, draft profit (loss) | |
| collegial body should issue recommendations to the company's | appropriation, the consolidated annual report of the Bank as | |
| management bodies and monitor and control the company's | well as the activities of the Management Board and | |
| management performance.8 | President of the Bank, also, it performs other functions of | |
| supervising the activities of the Bank and its managing | ||
| bodies attributed to the competence of the Supervisory | ||
| Council. |
6It is notable that currently it is not yet completely clear, in what form members of the supervisory board or the board may be remunerated for their work in these bodies. The Law on Companies of the Republic of Lithuania (Official Gazette, 2003, No 123- 5574) provides that members of the supervisory board or the board may be remunerated for their work in the supervisory board or the board by payment of annual bonuses (tantiems) in the manner prescribed by Article 59 of this Law, i.e. from the company's profit. The current wording, contrary to the wording effective before 1 January 2004, eliminates the exclusive requirement that annual bonuses (tantiems) should be the only form of the company's compensation to members of the supervisory board or the board. So it seems that the Law contains no prohibition to remunerate members of the supervisory board or the board for their work in other forms, besides bonuses, although this possibility is not expressly stated either.
7 See Footnote 3.
8 See Footnote 3. In the event the collegial body elected by the general shareholders' meeting is the board, it should provide recommendations to the company's single-person body of management, i.e. the company's chief executive officer.
APPENDIX 1 TO CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2013
| 4.2. Members of the collegial body should act in good faith, with care and responsibility for the benefit and in the interests of the company and its shareholders with due regard to the interests of employees and public welfare. Independent members of the collegial body should (a) under all circumstances maintain independence of their analysis, decision-making and actions (b) do not seek and accept any unjustified privileges that might compromise their independence, and (c) clearly express their objections should a member consider that decision of the collegial body is against the interests of the company. Should a collegial body have passed decisions independent member has serious doubts about, the member should make adequate conclusions. Should an independent member resign from his office, he should explain the reasons in a letter addressed to the collegial body or audit committee and, if necessary, respective company-not-pertaining body (institution). |
YES/ NO | According to the data available to the Bank, each member of the Supervisory Council acts in good faith with regard to the company, abiding by the interests of the company and not those of his/her own or any third party, aiming to maintain his/her independence. However, the provision regarding independent members of the Supervisory Council is not observed as there are no such independent members. |
|---|---|---|
| 4.3. Each member should devote sufficient time and attention to perform his duties as a member of the collegial body. Each member of the collegial body should limit other professional obligations of his (in particular any directorships held in other companies) in such a manner they do not interfere with proper performance of duties of a member of the collegial body. In the event a member of the collegial body should be present in less than a half9 of the meetings of the collegial body throughout the financial year of the company, shareholders of the company should be notified. |
YES | Each member of the Supervisory Council performs his/her duties in a proper manner: by actively participating in the meeting of the collegiate body and by devoting sufficient time of his/her own for the performance of his/her functions as a member of the collegiate body. |
| 4.4. Where decisions of a collegial body may have a different effect on the company's shareholders, the collegial body should treat all shareholders impartially and fairly. It should ensure that shareholders are properly informed on the company's affairs, strategies, risk management and resolution of conflicts of interest. The company should have a clearly established role of members of the collegial body when communicating with and committing to shareholders. |
YES |
9 It is notable that companies can make this requirement more stringent and provide that shareholders should be informed about failure to participate at the meetings of the collegial body if, for instance, a member of the collegial body participated at less than 2/3 or 3/4 of the meetings. Such measures, which ensure active participation in the meetings of the collegial body, are encouraged and will constitute an example of more suitable corporate governance.
APPENDIX 1 TO CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2013
| 4.5. It is recommended that transactions (except insignificant ones due to their low value or concluded when carrying out routine operations in the company under usual conditions), concluded between the company and its shareholders, members of the supervisory or managing bodies or other natural or legal persons that exert or may exert influence on the company's management should be subject to approval of the collegial body. The decision concerning approval of such transactions should be deemed adopted only provided the majority of the independent members of the collegial body voted for such a decision. |
YES/ NO | YES - the Supervisory Council approves the Requirements for internal lending and lending to persons related to the bank, establishes maximum limits for of such lending. However, the provision of the majority vote of independent members is not observed, because, as it has already been mentioned above, there are no independent members in the Supervisory Council. |
|---|---|---|
| 4.6. The collegial body should be independent in passing decisions that are significant for the company's operations and strategy. Taken separately, the collegial body should be independent of the company's management bodies10. Members of the collegial body should act and pass decisions without an outside influence from the persons who have elected it. Companies should ensure that the collegial body and its committees are provided with sufficient administrative and financial resources to discharge their duties, including the right to obtain, in particular from employees of the company, all the necessary information or to seek independent legal, accounting or any other advice on issues pertaining to the competence of the collegial body and its committees. When using the services of a consultant with a view to obtaining information on market standards for remuneration systems, the remuneration committee should ensure that the consultant concerned does not at the same time advice the human resources department, executive directors or collegial management organs of the company concerned. |
YES |
10 In the event the collegial body elected by the general shareholders' meeting is the board, the recommendation concerning its independence from the company's management bodies applies to the extent it relates to the independence from the company's chief executive officer.
APPENDIX 1 TO CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2013
| 4.7. Activities of the collegial body should be organized in a manner that independent members of the collegial body could have major influence in relevant areas where chances of occurrence of conflicts of interest are very high. Such areas to be considered as highly relevant are issues of nomination of company's directors, determination of directors' remuneration and control and assessment of company's audit. Therefore when the mentioned issues are attributable to the competence of the collegial body, it is recommended that the collegial body should establish nomination, remuneration, and audit committees11. Companies should ensure that the functions attributable to the nomination, remuneration, and audit committees are carried out. However they may decide to merge these functions and set up less than three committees. In such case a company should explain in detail reasons behind the selection of alternative approach and how the selected approach complies with the objectives set forth for the three different committees. Should the collegial body of the company comprise small number of members, the functions assigned to the three committees may be performed by the collegial body itself, provided that it meets composition requirements advocated for the committees and that adequate information is provided in this respect. In such case provisions of this Code relating to the committees of the collegial body (in particular with respect to their role, operation, and transparency) should apply, where relevant, to the collegial body as a whole. |
YES/ NO | There are no independent members. Only the Audit and Remuneration committees are formed in the Bank. There is one independent member in the Audit Committee. |
|---|---|---|
| 4.8. The key objective of the committees is to increase efficiency of the activities of the collegial body by ensuring that decisions are based on due consideration, and to help organize its work with a view to ensuring that the decisions it takes are free of material conflicts of interest. Committees should exercise independent judgement and integrity when exercising its functions as well as present the collegial body with recommendations concerning the decisions of the collegial body. Nevertheless the final decision shall be adopted by the collegial body. The recommendation on creation of committees is not intended, in principle, to constrict the competence of the collegial body or to remove the matters considered from the purview of the collegial body itself, which remains fully responsible for the decisions taken in its field of competence. |
YES | The recommendation applies to the Audit and Remuneration committees. |
| 4.9. Committees established by the collegial body should normally be composed of at least three members. In companies with small number of members of the collegial body, they could exceptionally be composed of two members. Majority of the members of each committee should be constituted from independent members of the collegial body. In cases when the company chooses not to set up a supervisory board, remuneration and audit committees should be entirely comprised of non-executive directors. Chairmanship and membership of the committees should be decided with due |
YES/ NO | The provision regarding the minimum number of committee members is met. The Audit and Remuneration committees are not composed of independent members of the Supervisory Council, as there are no such members in the Supervisory Council at all. There is one independent member in the Audit Committee, but he is not a member of the Supervisory Council. |
11The Law of the Republic of Lithuania on Audit (Official Gazette, 2008, No 82-53233) determines that an Audit Committee shall be formed in each public interest entity (including, but not limited to public companies whose securities are traded in the regulated market of the Republic of Lithuania and/or any other member state).
| regard to the need to ensure that committee membership is refreshed and that undue reliance is not placed on particular individuals. Chairmanship and membership of the committees should be decided with due regard to the need to ensure that committee membership is refreshed and that undue reliance is not placed on particular individuals. 4.10. Authority of each of the committees should be determined by the collegial body. Committees should perform their duties in line with authority delegated to them and inform the collegial body on their activities and performance on regular basis. Authority of every committee stipulating the role and rights and duties of the committee should be made public at least once a year (as part of the information disclosed by the company annually on its corporate governance structures and practices). Companies should also make public annually a statement by existing committees on their composition, number of meetings and attendance over the year, and their main activities. Audit committee should confirm that it is satisfied with the independence of the audit process and describe briefly the actions it has taken to reach this conclusion. |
YES/ NO | YES – the Audit and Remuneration committees function in accordance with the regulations approved by the Supervisory Council that establish the authority of the committees. The annual report includes information on composition of the committees and their main activities. NO – the annual report does not include information on the meetings of the committees. |
|---|---|---|
| 4.11. In order to ensure independence and impartiality of the committees, members of the collegial body that are not members of the committee should commonly have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or demand participation in the meeting of particular officers or experts. Chairman of each of the committees should have a possibility to maintain direct communication with the shareholders. Events when such are to be performed should be specified in the regulations for committee activities. |
YES/NO | The Instruction for Remuneration Committee and Instruction for Audit and Compliance Committee do not specify the events when the chairman of the abovementioned committee should maintain a direct communication with the shareholders. |
| 4.12. Nomination Committee. | NO | Nomination Committee does not exist. |
|---|---|---|
| 4.12.1. Key functions of the nomination committee should be | ||
| the following: | ||
| • Identify and recommend, for the approval of the collegial | ||
| body, candidates to fill board vacancies. The nomination | ||
| committee should evaluate the balance of skills, knowledge and | ||
| experience on the management body, prepare a description of | ||
| the roles and capabilities required to assume a particular office, | ||
| and assess the time commitment expected. Nomination | ||
| committee can also consider candidates to members of the | ||
| collegial body delegated by the shareholders of the company; | ||
| • Assess on regular basis the structure, size, composition and | ||
| performance of the supervisory and management bodies, and | ||
| make recommendations to the collegial body regarding the | ||
| means of achieving necessary changes; | ||
| • Assess on regular basis the skills, knowledge and experience | ||
| of individual directors and report on this to the collegial body; | ||
| • Properly consider issues related to succession planning; | ||
| • Review the policy of the management bodies for selection and | ||
| appointment of senior management. | ||
| 4.12.2. Nomination committee should consider proposals by | ||
| other parties, including management and shareholders. When | ||
| dealing with issues related to executive directors or members of | ||
| the board (if a collegial body elected by the general | ||
| shareholders' meeting is the supervisory board) and senior | ||
| management, chief executive officer of the company should be | ||
| consulted by, and entitled to submit proposals to the | ||
| nomination committee. | ||
| 4.13. Remuneration Committee. | YES | Yes – the Remuneration Committee acts according to the |
| 4.13.1. Key functions of the remuneration committee should be | Regulations of the Remuneration Committee approved by | |
| the following: | the Supervisory Council. | |
| • Make proposals, for the approval of the collegial body, on the | YES | Yes – the Remuneration Committee submits proposals to |
| remuneration policy for members of management bodies and | the Bank's Supervisory Council regarding the Remuneration | |
| executive directors. Such policy should address all forms of | Policy of the Bank's Group and amendments thereof, as well | |
| compensation, including the fixed remuneration, performance | as the list of employees accepting the risk of the Bank's | |
| based remuneration schemes, pension arrangements, and | Group and other related issues. The Remuneration Policy of | |
| termination payments. Proposals considering performance | the Bank's Group includes all forms of remuneration, | |
| based remuneration schemes should be accompanied with | including fixed pay and variable pay forms. The Remuneration Committee also submits proposals to the |
|
| recommendations on the related objectives and evaluation | Bank's Supervisory Council regarding the remuneration of | |
| criteria, with a view to properly aligning the pay of executive | the President and Vice-Presidents, members of the | |
| director and members of the management bodies with the | Management Board, heads of the Internal Audit, Compliance | |
| long-term interests of the shareholders and the objectives set | and Risk Control. | |
| by the collegial body; | ||
| • Make proposals to the collegial body on the individual | YES | Yes – the Remuneration Committee has all necessary |
| remuneration for executive directors and member of |
information and submits proposals to the Bank's Supervisory | |
| management bodies in order their remunerations are consistent | Council regarding the individual remuneration of the | |
| with company's remuneration policy and the evaluation of the | President and Vice-Presidents, members of the Management | |
| performance of these persons concerned. In doing so, the | Board, heads of the Internal Audit, Compliance and Risk | |
| committee should be properly informed on the total | Control. | |
| compensation obtained by executive directors and members of | ||
| the management bodies from the affiliated companies; | ||
| • Ensure that remuneration of individual executive directors or | YES | |
| members of management body is proportionate to the |
| remuneration of other executive directors or members of | ||
|---|---|---|
| management body and other staff members of the company; | ||
| • Periodically review the remuneration policy for executive | YES | |
| directors or members of management body, including the policy | ||
| regarding share-based remuneration, and its implementation; | ||
| • Make proposals to the collegial body on suitable forms of | YES | |
| contracts for executive directors and members of the | ||
| management bodies; | ||
| • Assist the collegial body in overseeing how the company | YES | |
| complies with applicable provisions regarding the |
||
| remuneration-related information disclosure (in particular the | ||
| remuneration policy applied and individual remuneration of | ||
| directors); | Yes – the Remuneration Committee considers and submits | |
| • Make general recommendations to the executive directors and | YES | recommendations on the individual remuneration (including |
| members of the management bodies on the level and structure | pension plans) of the heads of the Bank, which are directly | |
| of remuneration for senior management (as defined by the | subordinate to the President and the members of the | |
| collegial body) with regard to the respective information | Management Board of the Bank. | |
| provided by the executive directors and members of the | ||
| management bodies. | ||
| 4.13.2. With respect to stock options and other share-based | YES | Yes – the Remuneration Committee prepares long-term |
| incentives which may be granted to directors or other | employee incentive programs and submits thereof to the | |
| employees, the committee should: | Bank's Supervisory Council for approval. | |
| • Consider general policy regarding the granting of the above | ||
| mentioned schemes, in particular stock options, and make any | ||
| related proposals to the collegial body; | ||
| • Examine the related information that is given in the company's | ||
| annual report and documents intended for the use during the | ||
| shareholders meeting; | ||
| • Make proposals to the collegial body regarding the choice | ||
| between granting options to subscribe shares or granting | ||
| options to purchase shares, specifying the reasons for its choice | ||
| as well as the consequences that this choice has. | ||
| 4.13.3. Upon resolution of the issues attributable to the | YES | |
| competence of the remuneration committee, the committee | ||
| should at least address the chairman of the collegial body | ||
| and/or chief executive officer of the company for their opinion | ||
| on the remuneration of other executive directors or members of | ||
| the management bodies. | ||
| 4.13.4. The remuneration committee should report on the | NO | There is no such practice. The Remuneration Committee is |
| exercise of its functions to the shareholders and be present at | accountable to the Bank's Supervisory Council, members of | |
| the annual general meeting for this purpose. | which are the representatives of the sole shareholder of the | |
| Bank. | ||
| 4.14. Audit Committee. | ||
| 4.14.1. Key functions of the audit committee should be the | ||
| following: | ||
| • Observe the integrity of the financial information provided by | YES | The Audit Committee discusses, on regular basis, the |
| the company, in particular by reviewing the relevance and | external auditors' comments, including the consistency of | |
| consistency of the accounting methods used by the company | accounting methods. | |
| and its group (including the criteria for the consolidation of the | ||
| accounts of companies in the group); | ||
| • At least once a year review the systems of internal control and | YES | Once a quarter, the audit committee discusses the internal |
| risk management to ensure that the key risks (inclusive of the | audit and compliance reports that highlight the main | |
| risks in relation with compliance with existing laws and | drawbacks in the internal control and risk management, | |
| regulations) are properly identified, managed and reflected in | including risks related to the observance of the existing legal |
| the information provided; • Ensure the efficiency of the internal audit function, among other things, by making recommendations on the selection, appointment, reappointment and removal of the head of the internal audit department and on the budget of the department, and by monitoring the responsiveness of the management to its findings and recommendations. Should there be no internal audit authority in the company, the need for one should be reviewed at least annually; • Make recommendations to the collegial body related with selection, appointment, reappointment and removal of the external auditor (to be done by the general shareholders' |
YES YES |
acts. In the quarterly internal audit report the Audit Committee is provided with information on the status of implementation of the internal audit recommendations. During a meeting reasons are discussed due to which the recommendations have not been implemented in due time. The committee provides recommendations on the selection of the head of internal audit department. Audit company is selected at the SEB Group level. There were no situations leading the audit company to resign. |
|---|---|---|
| meeting) and with the terms and conditions of his engagement. The committee should investigate situations that lead to a resignation of the audit company or auditor and make recommendations on required actions in such situations; • Monitor independence and impartiality of the external auditor, in particular by reviewing the audit company's compliance with applicable guidance relating to the rotation of audit partners, |
YES | External auditors annually provide the committee with the independence confirmation. The SEB Group has a uniform SEB External Audit Policy, |
| the level of fees paid by the company, and similar issues. In order to prevent occurrence of material conflicts of interest, the committee, based on the auditor's disclosed inter alia data on all remunerations paid by the company to the auditor and network, should at all times monitor nature and extent of the non-audit services. Having regard to the principals and guidelines established in the 16 May 2002 Commission Recommendation 2002/590/EC, the committee should determine and apply a formal policy establishing types of non audit services that are (a) excluded, (b) permissible only after review by the committee, and (c) permissible without referral to the committee; |
approved by SEB's Audit and Compliance Committees defining the independence of external auditors, providing of services to the SEB Group companies and purchase of other than audit services from external audit. |
|
| • Review efficiency of the external audit process and responsiveness of management to recommendations made in the external auditor's management letter. |
YES | The Audit Committee discusses comments provided by external audit provided in a letter to the senior management as well as the comments of the Bank's senior management. Note: The Bank does not carry on activities in any off-shore |
| 4.14.2. All members of the committee should be furnished with complete information on particulars of accounting, financial and other operations of the company. Company's management should inform the audit committee of the methods used to account for significant and unusual transactions where the accounting treatment may be open to different approaches. In such case a special consideration should be given to company's operations in offshore centers and/or activities carried out through special purpose vehicles (organizations) and justification of such operations. |
YES | centres. |
| 4.14.3. The audit committee should decide whether participation of the chairman of the collegial body, chief executive officer of the company, chief financial officer (or superior employees in charge of finances, treasury and accounting), or internal and external auditors in the meetings of the committee is required (if required, when). The committee should be entitled, when needed, to meet with any relevant person without executive directors and members of the management bodies present. |
YES | The Audit Committee meetings are always participated by the President of the Bank and Head of the Internal Audit Department. External auditors are always invited to the meetings. |
(All amounts in LTL thousands unless otherwise stated)
| 4.14.4. Internal and external auditors should be secured with not only effective working relationship with management, but also with free access to the collegial body. For this purpose the audit committee should act as the principal contact person for the internal and external auditors. 4.14.5. The audit committee should be informed of the internal auditor's work program, and should be furnished with internal audit's reports or periodic summaries. The audit committee should also be informed of the work program of the external auditor and should be furnished with report disclosing all relationships between the independent auditor and the company and its group. The committee should be timely furnished information on all issues arising from the audit. |
YES YES |
The regulations of the Internal Audit Department and its work plans are approved by the Audit Committee. According to the regulations, the Internal Audit Department is directly reporting to the Chairman of the Supervisory Council, which fact ensures a possibility to directly turn to the Audit Committee and/or the Council. The Audit Committee is provided with quarterly internal audit set-format reports. The annual audit plan is also presented to the Audit Committee. External auditors inform the Audit Committee on regular basis about the audit plans and audit services provided under an agreement. |
|---|---|---|
| 4.14.6. The audit committee should examine whether the company is following applicable provisions regarding the possibility for employees to report alleged significant irregularities in the company, by way of complaints or through anonymous submissions (normally to an independent member of the collegial body), and should ensure that there is a procedure established for proportionate and independent investigation of these issues and for appropriate follow-up action. |
NO | There is no formal procedure set. |
| 4.14.7. The audit committee should report on its activities to the collegial body at least once in every six months, at the time the yearly and half-yearly statements are approved. |
YES | The Supervisory Council is provided for familiarisation with the entire documentation discussed by the Audit Committee. |
| 4.15. Every year the collegial body should conduct the assessment of its activities. The assessment should include evaluation of collegial body's structure, work organization and ability to act as a group, evaluation of each of the collegial body member's and committee's competence and work efficiency and assessment whether the collegial body has achieved its objectives. The collegial body should, at least once a year, make public (as part of the information the company annually discloses on its management structures and practices) respective information on its internal organization and working procedures, and specify what material changes were made as a result of the assessment of the collegial body of its own activities. |
NO | It is intended to implement this provision. |
Principle V: The working procedure of the company's collegial bodies
The working procedure of supervisory and management bodies established in the company should ensure efficient operation of these bodies and decision-making and encourage active co-operation between the company's bodies.
(All amounts in LTL thousands unless otherwise stated)
| 5.1. The company's supervisory and management bodies (hereinafter in this Principle the concept 'collegial bodies' covers both the collegial bodies of supervision and the collegial bodies of management) should be chaired by chairpersons of these bodies. The chairperson of a collegial body is responsible for proper convocation of the collegial body meetings. The chairperson should ensure that information about the meeting being convened and its agenda are communicated to all members of the body. The chairperson of a collegial body should ensure appropriate conducting of the meetings of the collegial body. The chairperson should ensure order and working atmosphere during the meeting. |
YES | The meetings of both the Board and the Supervisory Council are chaired, convened and appropriate conducting of the meetings is ensured, respectively, by the Chairman of the Supervisory Council and the Chairman of the Board. |
|---|---|---|
| 5.2. It is recommended that meetings of the company's collegial bodies should be carried out according to the schedule approved in advance at certain intervals of time. Each company is free to decide how often to convene meetings of the collegial bodies, but it is recommended that these meetings should be convened at such intervals, which would guarantee an interrupted resolution of the essential corporate governance issues. Meetings of the company's supervisory board should be convened at least once in a quarter, and the company's board should meet at least once a month12 |
YES | Based on the work regulations of the Supervisory Council of the Bank, the Supervisory Council meetings are convened no less than once a quarter (in practice, they are convened more often), and based on the wok regulations of the Board of the Bank, meetings are convened no less than once a month (in practice, they are convened once a week). |
| 5.3. Members of a collegial body should be notified about the meeting being convened in advance in order to allow sufficient time for proper preparation for the issues on the agenda of the meeting and to ensure fruitful discussion and adoption of appropriate decisions. Alongside with the notice about the meeting being convened, all the documents relevant to the issues on the agenda of the meeting should be submitted to the members of the collegial body. The agenda of the meeting should not be changed or supplemented during the meeting, unless all members of the collegial body are present or certain issues of great importance to the company require immediate resolution. |
YES | Members of the Board of the Bank are familiarised with the material no less than one banking day prior to the planned meeting of the board, except the extraordinary meetings, when terms could be reduced; members of the Bank's Supervisory Council – no later than 5 calendar days in advance, and in urgent cases – no later than 2 calendar days in advance. |
| 5.4. In order to co-ordinate operation of the company's collegial bodies and ensure effective decision-making process, chairpersons of the company's collegial bodies of supervision and management should closely co-operate by co-coordinating dates of the meetings, their agendas and resolving other issues of corporate governance. Members of the company's board should be free to attend meetings of the company's supervisory board, especially where issues concerning removal of the board members, their liability or remuneration are discussed. |
YES |
Principle VI: The equitable treatment of shareholders and shareholder rights
The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. The corporate governance framework should protect the rights of the shareholders.
12 The frequency of meetings of the collegial body provided for in the recommendation must be applied in those cases when both additional collegial bodies are formed at the company, the board and the supervisory board. In the event only one additional collegial body is formed in the company, the frequency of its meetings may be as established for the supervisory board, i.e. at least once in a quarter.
APPENDIX 1 TO CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2013
(All amounts in LTL thousands unless otherwise stated)
| 6.1. It is recommended that the company's capital should consist only of the shares that grant the same rights to voting, ownership, dividend and other rights to all their holders. |
YES | The Bank's authorised capital consists of ordinary registered shares granting equal voting rights to all holders of the Bank's shares. |
|---|---|---|
| 6.2. It is recommended that investors should have access to the information concerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares. |
NOT APPLICABLE | The Bank effects public placement of bonds only. |
| 6.3. Transactions that are important to the company and its shareholders, such as transfer, investment, and pledge of the company's assets or any other type of encumbrance should be subject to approval of the general shareholders' meeting.13 All shareholders should be furnished with equal opportunity to familiarize with and participate in the decision-making process when significant corporate issues, including approval of transactions referred to above, are discussed. |
NO | The Bank's Articles of Association do not establish criteria for major transactions based on which criteria transactions would be selected that require an approval of the general shareholders' meeting. |
| 6.4. Procedures of convening and conducting a general shareholders' meeting should ensure equal opportunities for the shareholders to effectively participate at the meetings and should not prejudice the rights and interests of the shareholders. The venue, date, and time of the shareholders' meeting should not hinder wide attendance of the shareholders. |
YES | General shareholders meetings are usually conducted at the Bank's domicile on the Bank's business days and ensuring, in a timely manner, equal opportunities for shareholders to attend the meeting, to lodge questions to members of the management bodies and receive answers to them. |
| 6.5. If is possible, in order to ensure shareholders living abroad the right to access to the information, it is recommended that documents on the course of the general shareholders' meeting should be placed on the publicly accessible website of the company not only in Lithuanian language, but in English and /or other foreign languages in advance. It is recommended that the minutes of the general shareholders' meeting after signing them and/or adopted resolutions should be also placed on the publicly accessible website of the company. Seeking to ensure the right of foreigners to familiarize with the information, whenever feasible, documents referred to in this recommendation should be published in Lithuanian, English and/or other foreign languages. Documents referred to in this recommendation may be published on the publicly accessible website of the company to the extent that publishing of these documents is not detrimental to the company or the company's commercial secrets are not revealed. |
NO | Documents of the general shareholders' meeting including the minutes, are not publicly accessible, they are, abiding by the laws of the Republic of Lithuania, provided to shareholders for familiarisation and respectively to other persons that have attended the meeting. |
13 The Law on Companies of the Republic of Lithuania (Official Gazette, 2003, No 123-5574) no longer assigns resolutions concerning the investment, transfer, lease, mortgage or acquisition of the long-terms assets accounting for more than 1/20 of the company's authorised capital to the competence of the general shareholders' meeting. However, transactions that are important and material for the company's activity should be considered and approved by the general shareholders' meeting. The Law on Companies contains no prohibition to this effect either. Yet, in order not to encumber the company's activity and escape an unreasonably frequent consideration of transactions at the meetings, companies are free to establish their own criteria of material transactions, which are subject to the approval of the meeting. While establishing these criteria of material transactions, companies may follow the criteria set out in items 3, 4, 5 and 6 of paragraph 4 of Article 34 of the Law on Companies or derogate from them in view of the specific nature of their operation and their attempt to ensure uninterrupted, efficient functioning of the company.
| 6.6. Shareholders should be furnished with the opportunity to vote in the general shareholders' meeting in person and in absentia. Shareholders should not be prevented from voting in writing in advance by completing the general voting ballot. |
YES | The Bank's shareholders may implement the right to attend the general shareholders' meeting both in person and via a proxy, if a person has a required authorisation or if a proxy agreement has been executed with such person pursuant to the procedure established by law, also, the Bank enables shareholders to vote by completing the general voting ballot, as provided for by the Company Law of the Republic of Lithuania. |
|---|---|---|
| 6.7. With a view to increasing the shareholders' opportunities to participate effectively at shareholders' meetings, the companies are recommended to expand use of modern technologies by allowing the shareholders to participate and vote in general meetings via electronic means of communication. In such cases security of transmitted information and a possibility to identify the identity of the participating and voting person should be guaranteed. Moreover, companies could furnish its shareholders, especially shareholders living abroad, with the opportunity to watch shareholder meetings by means of modern technologies. |
NO | The provision is not adhered to its full extent: so far, no necessity has occurred to use terminal equipment of telecommunications at the general shareholders' meetings. |
| Principle VII: The avoidance of conflicts of interest and their disclosure | ||
| The corporate governance framework should encourage members of the corporate bodies to avoid conflicts of interest and assure transparent and effective mechanism of disclosure of conflicts of interest regarding members of the corporate bodies. |
| 7.1. Any member of the company's supervisory and management body should avoid a situation, in which his/her personal interests are in conflict or may be in conflict with the company's interests. In case such a situation did occur, a member of the company's supervisory and management body should, within reasonable time, inform other members of the same collegial body or the company's body that has elected him/her, or to the company's shareholders about a situation of a conflict of interest, indicate the nature of the conflict and value, where possible. |
YES | Regarding recommendation 7.3: a decision on lending to a person related to the Bank is taken by the Board by no less than 2/3 of votes of the Board members attending the meeting. |
|---|---|---|
| 7.2. Any member of the company's supervisory and management body may not mix the company's assets, the use of which has not been mutually agreed upon, with his/her personal assets or use them or the information which he/she learns by virtue of his/her position as a member of a corporate body for his/her personal benefit or for the benefit of any third person without a prior agreement of the general shareholders' meeting or any other corporate body authorized by the meeting. |
YES |
(All amounts in LTL thousands unless otherwise stated)
| 7.3. Any member of the company's supervisory and | YES | |
|---|---|---|
| management body may conclude a transaction with the | ||
| company, a member of a corporate body of which he/she is. | ||
| Such a transaction (except insignificant ones due to their low | ||
| value or concluded when carrying out routine operations in the | ||
| company under usual conditions) must be immediately | ||
| reported in writing or orally, by recording this in the minutes of | ||
| the meeting, to other members of the same corporate body or | ||
| to the corporate body that has elected him/her or to the | ||
| company's shareholders. Transactions specified in this |
||
| recommendation are also subject to recommendation 4.5. | ||
| 7.4. Any member of the company's supervisory and | YES | When decisions are taken concerning transactions or other |
| management body should abstain from voting when decisions | issues of personal or business interest to a person, such | |
| concerning transactions or other issues of personal or business | person abstains from voting. | |
| interest are voted on. | ||
Principle VIII: Company's remuneration policy
Remuneration policy and procedure for approval, revision and disclosure of directors' remuneration established in the company should prevent potential conflicts of interest and abuse in determining remuneration of directors, in addition it should ensure publicity and transparency both of company's remuneration policy and remuneration of directors.
| 8.1. A company should make a public statement of the company's remuneration policy (hereinafter the remuneration statement) which should be clear and easily understandable. This remuneration statement should be published as a part of the company's annual statement as well as posted on the company's website. |
YES | The remuneration statement is made available to the public at least once a year together with the annual financial statements or by a separate notification and shall also be available on the Bank's website. |
|---|---|---|
| 8.2. Remuneration statement should mainly focus on directors' remuneration policy for the following year and, if appropriate, the subsequent years. The statement should contain a summary of the implementation of the remuneration policy in the previous financial year. Special attention should be given to any significant changes in company's remuneration policy as compared to the previous financial year. |
YES/ NO | NO – the remuneration statement does not focus on remuneration policy for the following year. YES - the Remuneration Policy of the Bank's Group establishes the remuneration principles not only to the directors, but also to all employees. The remuneration statement includes decision making process seeking to establish and revise the principles of remuneration policy, and general quantitative information on remuneration to employees by excluding the Bank's management. |
| 8.3. Remuneration statement should leastwise include the following information: • Explanation of the relative importance of the variable and non-variable components of directors' remuneration; • Sufficient information on performance criteria that entitles directors to share options, shares or variable components of remuneration; • An explanation how the choice of performance criteria contributes to the long-term interests of the company; • An explanation of the methods, applied in order to determine whether performance criteria have been fulfilled; • Sufficient information on deferment periods with regard to variable components of remuneration; • Sufficient information on the linkage between the remuneration and performance; |
YES | The remuneration statement, in compliance with the Bank's secret and personal data protection requirements, includes only information required by the legal acts, whereas other information, in Bank's opinion, is not to be placed in public domain from a commercial point of view. |
| • The main parameters and rationale for any annual bonus scheme and any other non-cash benefits; • Sufficient information on the policy regarding termination payments; • Sufficient information with regard to vesting periods for share-based remuneration, as referred to in point 8.13 of this Code; • Sufficient information on the policy regarding retention of shares after vesting, as referred to in point 8.15 of this Code; • Sufficient information on the composition of peer groups of companies the remuneration policy of which has been examined in relation to the establishment of the remuneration policy of the company concerned; • A description of the main characteristics of supplementary pension or early retirement schemes for directors; |
||
|---|---|---|
| • Remuneration statement should not include commercially | ||
| sensitive information. | ||
| 8.4. Remuneration statement should also summarize and explain company's policy regarding the terms of the contracts executed with executive directors and members of the management bodies. It should include, inter alia, information on the duration of contracts with executive directors and members of the management bodies, the applicable notice periods and details of provisions for termination payments linked to early termination under contracts for executive directors and members of the management bodies. |
YES/ NO | The remuneration statement, in compliance with the Bank's secret and personal data protection requirements, includes only information required by the legal acts, whereas other information, in Bank's opinion, is not to be placed in public domain from a commercial point of view. The remuneration statement includes the following general information on implementation of Remuneration Policy of the Bank's Group: allocation of redundancy payments in case of agreements' termination per financial year, number of beneficiaries and maximum amount per person; amount of guaranteed variable pay specified under the new agreements and redundancy payments in case of the agreements' termination per financial year and number of beneficiaries. |
| 8.5. Remuneration statement should also contain detailed | YES/ NO | The remuneration statement, in compliance with the bank's |
| information on the entire amount of remuneration, inclusive of | secret and personal data protection requirements, includes | |
| other benefits, that was paid to individual directors over the | only information required by the legal acts, whereas other | |
| relevant financial year. This document should list at least the | information, in Bank's opinion, is not to be placed in public | |
| information set out in items 8.5.1 to 8.5.4 for each person who has served as a director of the company at any time during the |
domain from a commercial point of view. | |
| relevant financial year. | The overall employees' incentive policy is placed in the | |
| 8.5.1. The following remuneration and/or emoluments-related | internal database only. | |
| information should be disclosed: | ||
| • The total amount of remuneration paid or due to the director | The remuneration statement includes the following general | |
| for services performed during the relevant financial year, | information on implementation of Remuneration Policy of | |
| inclusive of, where relevant, attendance fees fixed by the annual general shareholders meeting; |
the Bank's Group: | |
| • The remuneration and advantages received from any | 1. general quantitative information on employee |
|
| undertaking belonging to the same group; | remuneration (the Bank's top management and employees | |
| • The remuneration paid in the form of profit sharing and/or | accepting the risk of the Bank's Group excluded): | |
| bonus payments and the reasons why such bonus payments | ||
| and/or profit sharing were granted; | - total amount of fixed and variable pay and the number of | |
| • If permissible by the law, any significant additional | beneficiaries; | |
| remuneration paid to directors for special services outside the scope of the usual functions of a director; |
- amount of variable pay split into benefits in cash, pension | |
| • Compensation receivable or paid to each former executive | premiums, equities, equity-linked financial instruments, | |
| director or member of the management body as a result of his | other financial and non-financial instruments; |
(All amounts in LTL thousands unless otherwise stated)
| resignation from the office during the previous financial year; • Total estimated value of non-cash benefits considered as remuneration, other than the items covered in the above points. 8.5.2. As regards shares and/or rights to acquire share options and/or all other share-incentive schemes, the following information should be disclosed: • The number of share options offered or shares granted by the company during the relevant financial year and their conditions of application; • The number of shares options exercised during the relevant financial year and, for each of them, the number of shares involved and the exercise price or the value of the interest in the share incentive scheme at the end of the financial year; • The number of share options unexercised at the end of the financial year; their exercise price, the exercise date and the main conditions for the exercise of the rights; • All changes in the terms and conditions of existing share options occurring during the financial year. 8.5.3. The following supplementary pension schemes-related information should be disclosed: • When the pension scheme is a defined-benefit scheme, changes in the directors' accrued benefits under that scheme during the relevant financial year; • When the pension scheme is defined-contribution scheme, detailed information on contributions paid or payable by the company in respect of that director during the relevant financial year. 8.5.4. The statement should also state amounts that the company or any subsidiary company or entity included in the consolidated annual financial report of the company has paid to each person who has served as a director in the company at any time during the relevant financial year in the form of loans, |
- amounts of non-disbursed deferred variable pay distributed into portions, allocated and non-allocated for employees; - amounts of disbursed and adjusted variable pay allocated in the specified financial year taking into consideration performance results; - amount of guarantied variable pay established under the new agreements and redundancy payments in case of agreements' termination per financial year and the number of beneficiaries; - allocation of redundancy payments in case of agreement termination per financial year, the number of beneficiaries and maximum amount per person; 2. variable pay portions and all other non-cash benefits' allocation reasons and criteria. |
|
|---|---|---|
| advance payments or guarantees, including the amount outstanding and the interest rate. |
||
| 8.6. Where the remuneration policy includes variable components of remuneration, companies should set limits on the variable component(s). The non-variable component of remuneration should be sufficient to allow the company to withhold variable components of remuneration when performance criteria are not met. |
YES | |
| 8.7. Award of variable components of remuneration should be subject to predetermined and measurable performance criteria. |
YES | Variable pay is linked with performance results, the total remuneration amount shall be based on the overall assessment of the individual, business unit and the Bank's Group results. In order to assess the input of each employee the achieved financial results as well as non-financial criteria shall be taken into account. |
| 8.8. Where a variable component of remuneration is awarded, a major part of the variable component should be deferred for a minimum period of time. The part of the variable component subject to deferment should be determined in relation to the relative weight of the variable component compared to the non-variable component of remuneration. |
YES/ NO | The general provision of deferral does not apply to all employees, it applies only to the employees accepting the risk of the Bank's Group |
|---|---|---|
| 8.9. Contractual arrangements with executive or managing directors should include provisions that permit the company to reclaim variable components of remuneration that were awarded on the basis of data which subsequently proved to be manifestly misstated. |
NO | It is not possible for the Bank to reclaim amounts that were awarded, while amounts that were deferred may be reduced or not awarded at all. o tai, kas atidėta gali būti sumažinta arba iš viso neišmokama. |
| 8.10. Termination payments should not exceed a fixed amount or fixed number of years of annual remuneration, which should, in general, not be higher than two years of the non-variable component of remuneration or the equivalent thereof. |
YES | Payments related to termination of the employment contract are established according to the existing acts of law. |
| 8.11. Termination payments should not be paid if the termination is due to inadequate performance. |
YES | Payments related to termination of the employment contract shall be established taking into account the employee's performance results within the recent one-year period of employment at the Bank's Group and also that no reward is paid to employee (no reward for failure) if his/her activity resulted in losses of the Bank's Group, except mandatory payments approved according to the existing acts of law. |
| 8.12. The information on preparatory and decision-making processes, during which a policy of remuneration of directors is being established, should also be disclosed. Information should include data, if applicable, on authorities and composition of the remuneration committee, names and surnames of external consultants whose services have been used in determination of the remuneration policy as well as the role of shareholders' annual general meeting. |
YES | The remuneration statement includes information on the decision-making process to identify and review principles of the Remuneration Policy of the Bank's Group, including information on activities of the Remuneration Committee, external consultants, if the latter provided the policy drafting services. |
| 8.13. Shares should not vest for at least three years after their award. |
YES | |
| 8.14. Share options or any other right to acquire shares or to be remunerated on the basis of share price movements should not be exercisable for at least three years after their award. Vesting of shares and the right to exercise share options or any other right to acquire shares or to be remunerated on the basis of share price movements, should be subject to predetermined and measurable performance criteria. |
YES | |
| 8.15. After vesting, directors should retain a number of shares, until the end of their mandate, subject to the need to finance any costs related to acquisition of the shares. The number of shares to be retained should be fixed, for example, twice the value of total annual remuneration (the non-variable plus the variable components). |
YES |
| 8.16. Remuneration of non-executive or supervisory directors should not include share options. |
NOT APPLICABLE | The Bank didn't pay any compensation for the Members of the Supervisory Council for 2013. |
|---|---|---|
| 8.17. Shareholders, in particular institutional shareholders, should be encouraged to attend general meetings where appropriate and make considered use of their votes regarding directors' remuneration. |
NOT APPLICABLE | |
| 8.18. Without prejudice to the role and organization of the relevant bodies responsible for setting directors' remunerations, the remuneration policy or any other significant change in remuneration policy should be included into the agenda of the shareholders' annual general meeting. Remuneration statement should be put for voting in shareholders' annual general meeting. The vote may be either mandatory or advisory. |
NO | There is no such practice. |
| 8.19. Schemes anticipating remuneration of directors in shares, share options or any other right to purchase shares or be remunerated on the basis of share price movements should be subject to the prior approval of shareholders' annual general meeting by way of a resolution prior to their adoption. The approval of scheme should be related with the scheme itself and not to the grant of such share-based benefits under that scheme to individual directors. All significant changes in scheme provisions should also be subject to shareholders' approval prior to their adoption; the approval decision should be made in shareholders' annual general meeting. In such case shareholders should be notified on all terms of suggested changes and get an explanation on the impact of the suggested changes. |
NOT APPLICABLE | |
| 8.20. The following issues should be subject to approval by the shareholders' annual general meeting: • Grant of share-based schemes, including share options, to directors; • Determination of maximum number of shares and main conditions of share granting; • The term within which options can be exercised; • The conditions for any subsequent change in the exercise of the options, if permissible by law; • All other long-term incentive schemes for which directors are eligible and which are not available to other employees of the company under similar terms. Annual general meeting should also set the deadline within which the body responsible for remuneration of directors may award compensations listed in this article to individual directors. |
NO | There is no such practice. |
(All amounts in LTL thousands unless otherwise stated)
| 8.21. Should national law or company's Articles of Association allow, any discounted option arrangement under which any rights are granted to subscribe to shares at a price lower than the market value of the share prevailing on the day of the price determination, or the average of the market values over a number of days preceding the date when the exercise price is determined, should also be subject to the shareholders' approval. |
NO | There is no such practice. |
|---|---|---|
| 8.22. Provisions of Articles 8.19 and 8.20 should not be applicable to schemes allowing for participation under similar conditions to company's employees or employees of any subsidiary company whose employees are eligible to participate in the scheme and which has been approved in the shareholders' annual general meeting. |
NO | There is no such practice. |
| 8.23. Prior to the annual general meeting that is intended to consider decision stipulated in Article 8.19, the shareholders must be provided an opportunity to familiarize with draft resolution and project-related notice (the documents should be posted on the company's website). The notice should contain the full text of the share-based remuneration schemes or a description of their key terms, as well as full names of the participants in the schemes. Notice should also specify the relationship of the schemes and the overall remuneration policy of the directors. Draft resolution must have a clear reference to the scheme itself or to the summary of its key terms. Shareholders must also be presented with information on how the company intends to provide for the shares required to meet its obligations under incentive schemes. It should be clearly stated whether the company intends to buy shares in the market, hold the shares in reserve or issue new ones. There should also be a summary on scheme-related expenses the company will suffer due to the anticipated application of the scheme. All information given in this article must be posted on the company's website. |
NO | There is no such practice. |
Principle IX: The role of stakeholders in corporate governance
The corporate governance framework should recognize the rights of stakeholders as established by law and encourage active cooperation between companies and stakeholders in creating the company value, jobs and financial sustainability. For the purposes of this Principle, the concept "stakeholders" includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interest in the company concerned.
| 9.1. The corporate governance framework should assure that | YES | |
|---|---|---|
| the rights of stakeholders that are protected by law are | ||
| respected. |
(All amounts in LTL thousands unless otherwise stated)
| 9.2. The corporate governance framework should create | |
|---|---|
| conditions for the stakeholders to participate in corporate | |
| governance in the manner prescribed by law. Examples of | |
| mechanisms of stakeholder participation in corporate |
|
| governance include: employee participation in adoption of | |
| certain key decisions for the company; consulting the | |
| employees on corporate governance and other important | |
| issues; employee participation in the company's share capital; | |
| creditor involvement in governance in the context of the | |
| company's insolvency, etc. | |
| 9.3. Where stakeholders participate in the corporate |
|
| governance process, they should have access to relevant | |
| information. |
Principle X: Information disclosure and transparency
The corporate governance framework should ensure that timely and accurate disclosure is made on all material information regarding the company, including the financial situation, performance and governance of the company.
| 10.1. The company should disclose information on: • The financial and operating results of the company; • Company objectives; • Persons holding by the right of ownership or in control of a block of shares in the company; • Members of the company's supervisory and management bodies, chief executive officer of the company and their remuneration; • Material foreseeable risk factors; • Transactions between the company and connected persons, as well as transactions concluded outside the course of the company's regular operations; • Material issues regarding employees and other stakeholders; • Governance structures and strategy. This list should be deemed as a minimum recommendation, |
YES/ NO | The Bank does not adhere to provision 6 under recommendation 10.1 because it is not required by the legal acts and is not important for the Bank. All other information is announced by the Bank in its annual and interim reports as required, as well as via different communication channels: on its website, notifications on material events, press releases, press conferences. |
|---|---|---|
| while the companies are encouraged not to limit themselves to disclosure of the information specified in this list. |
||
| 10.2. It is recommended to the company, which is the parent of other companies, that consolidated results of the whole group to which the company belongs should be disclosed when information specified in item 1 of Recommendation 10.1 is under disclosure. |
YES |
| 10.3. It is recommended that information on the professional background, qualifications of the members of supervisory and management bodies, chief executive officer of the company should be disclosed as well as potential conflicts of interest that may have an effect on their decisions when information specified in item 4 of Recommendation 10.1 about the members of the company's supervisory and management bodies is under disclosure. It is also recommended that information about the amount of remuneration received from the company and other income should be disclosed with regard to members of the company's supervisory and management bodies and chief executive officer as per Principle VIII. |
YES/ NO | The Bank discloses this kind of information according to the requirements of laws. General quantitative information on remuneration of the members of the Management Board of the Bank is provided. In addition, yearly amounts calculated to the President of the Bank and the Chief Financial Officer of the Bank are provided separately. |
|---|---|---|
| 10.4. It is recommended that information about the links between the company and its stakeholders, including employees, creditors, suppliers, local community, as well as the company's policy with regard to human resources, employee participation schemes in the company's share capital, etc. should be disclosed when information specified in item 7 of Recommendation 10.1 is under disclosure. |
YES/ NO | To a certain extent the Bank does not adhere to recommendations 10.4, as in the Bank's opinion the information on the relations between the Bank and persons with an interest in it, such as employees, creditors, suppliers, local community, including the Bank's policy regarding human resources, programmes for employee participation in the Bank's equity, etc. is information not to be placed in public domain, except the information which must be disclosed by the legal acts. |
| 10.5. Information should be disclosed in such a way that neither shareholders nor investors are discriminated with regard to the manner or scope of access to information. Information should be disclosed to all simultaneously. It is recommended that notices about material events should be announced before or after a trading session on the Vilnius Stock Exchange, so that all the company's shareholders and investors should have equal access to the information and make informed investing decisions. |
YES | Notifications on material events are disclosed in such a way that everyone and at the same time would have equal possibilities to access and familiarize with information when such notifications are announced on stock exchange, website and via other channels – press releases, press conferences. |
| 10.6. Channels for disseminating information should provide for fair, timely and cost-efficient or in cases provided by the legal acts free of charge access to relevant information by users. It is recommended that information technologies should be employed for wider dissemination of information, for instance, by placing the information on the company's website. It is recommended that information should be published and placed on the company's website not only in Lithuanian, but also in English, and, whenever possible and necessary, in other languages as well. |
YES | Website, notifications on material events, press releases, press conferences are used as tools for wider dissemination of information. Information on services provided by the Bank is available at any branch of the Bank, other information that must be published is available at the Bank's website. Those willing to familiarise with relevant information are provided with such information by the Bank staff at branches or at the Bank at phone 1528 (private customers) or 19222 (corporate customers). Information is provided in Lithuanian and English. |
APPENDIX 1 TO CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2013
(All amounts in LTL thousands unless otherwise stated)
| 10.7. It is recommended that the company's annual reports and other periodical accounts prepared by the company should be placed on the company's website. It is recommended that the company should announce information about material events and changes in the price of the company's shares on the Stock Exchange on the company's website too. |
YES | Taking into account that the Bank is an issuer of listed debt securities, the said documents and information are published on the Bank's website (irrelevant – regarding changes in the price of the company's shares on the Stock Exchange). |
|---|---|---|
Principle XI: The selection of the company's auditor
The mechanism of the selection of the company's auditor should ensure independence of the firm of auditor's conclusion and opinion.
| 11.1. An annual audit of the company's financial reports and interim reports should be conducted by an independent firm of auditors in order to provide an external and objective opinion on the company's financial statements. |
YES | |
|---|---|---|
| 11.2. It is recommended that the company's supervisory board and, where it is not set up, the company's board should propose a candidate firm of auditors to the general shareholders' meeting. |
NO | A candidate firm of auditors is proposed to the general shareholders' meeting by the Board of the Bank. |
| 11.3. It is recommended that the company should disclose to its shareholders the level of fees paid to the firm of auditors for non-audit services rendered to the company. This information should be also known to the company's supervisory board and, where it is not formed, the company's board upon their consideration which firm of auditors to propose for the general shareholders' meeting. |
NOT APPLICABLE | The audit company has not rendered any significant non audit services to the Bank. |
| All amounts in LTL thousand | ||||||
|---|---|---|---|---|---|---|
| No | Item | Note No | Financial year 01.01.2013- 22.11.2013 |
Previous financial year 01.01.2012- 31.12.2012 |
||
| $\mathbf{1}$ | 1. | SALES REVENUE | 36,567 | 58,091 | ||
| $\overline{\mathbf{2}}$ | Π. | COST OF SALES | $-8,089$ | $-22,098$ | ||
| 3 | Ш. | GROSS PROFIT (LOSS) | $(1+2)$ | 28,478 | 35,993 | |
| 4 | IV. | OTHER OPERATING INCOME | 1,320 | 29,539 | ||
| 5 | V. | OPERATING EXPENSES | $(6+7)$ | $-7930$ | $-10404$ | |
| 6 | V.1. | Selling | ||||
| $\overline{7}$ | V.2. | General and administrative | $-7,930$ | $-10,404$ | ||
| 8 | VI. | OTHER OPERATING EXPENSES | 2645 | 2189 | ||
| 9 | VII. | FINANCING AND INVESTING ACTIVITIES |
$(10+11)$ | -50 | $-28$ | |
| 10 | VII.1. | Income | ||||
| 11 | VII.2. | Expenses | -50 | $-28$ | ||
| 12 | VIII. | PROFIT (LOSS) BEFORE TAX | $(3+4+5-8+9)$ | 19,173 | 52,911 | |
| 13 | IX. | INCOME TAX | $(14+15)$ | 0 | 558 | |
| 14 | IX.1. | Current year tax expenses | ||||
| 15 | IX.2. | Deferred tax expense (income) | 0 | 558 | ||
| 16 | Χ. | PROFIT (LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS |
$(12+13)$ | 19,173 | 53,469 | |
| 17 | XI. | PROFIT (LOSS) FOR THE YEAR FROM DISCONTINUED OPERATIONS |
||||
| 18 | XII. | PROFIT (LOSS) FOR THE PERIOD | $(16+17)$ | 19,173 | 53,469 | |
| 19 | XIII. | OTHER COMPREHENSIVE INCOME | $(20 + + 24)$ | 0 | 01 | |
| 20 | XIII.1. | Gain (loss) arising on revaluation of financial assets available for sale |
||||
| 21 | XIII.2. | Cash flow hedges | ||||
| 22 | XIII.3. | Gains on property revaluation | ||||
| 23 | XIII.4. | Actuarial gains (losses) on defined benefit pension plans | ||||
| 24 | XIII.5. | Share of other comprehensive income of associates | ||||
| 25 | XIV. | INCOME TAX RELATING TO COMPONENTS OF OTHER COMPREHENSIVE INCOME |
||||
| 26 | XV. | OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX |
$(19+25)$ | 0 | ||
| 27 | XVI. | TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
$(18+26)$ | 19,173 | 53,469 | |
| 28 | XVII. | EARNINGS PER SHARE |
| All arrivance in Life diguisand | |||||||
|---|---|---|---|---|---|---|---|
| No | Note No | Financial year ended 22.11.2013 |
Previous financial year ended 31.12.2012 |
||||
| 1 | А. | NON-CURRENT ASSETS | $(2+8+19+27)$ | 956,751 | 1,037,305 | ||
| 2 | I. | INTANGIBLE ASSETS | $(3 + + 7)$ | 525 | 433 | ||
| 3 | I.1. | Development work | |||||
| 4 | I.2. | Goodwill | |||||
| 5 | 1.3. | Licences and patents | |||||
| 6 | I.4. | Computer software | 525 | 433 | |||
| 7 | 1.5. | Other intangible assets | |||||
| 8 | II. | TANGIBLE ASSETS | $(9 + + 16)$ | 14,871 | 13,599 | ||
| 9 | II.1. | Land | |||||
| 10 | II.2. | Buildings and construction | |||||
| 11 | II.3. | Plant and machinery | |||||
| 12 | II.4. | Vehicles | 193 | 264 | |||
| $\sqrt{13}$ | II.5. | Equipment | 43 | 60 | |||
| $\sqrt{14}$ | II.6. | Construction in progress | |||||
| 15 | II.7. | Other tangible assets | 0 | 375 | |||
| 16 | II.8. | Investment property | $(17+18)$ | 14,635 | 12,900 | ||
| 17 | II.8.1. Land | ||||||
| 18 | II.8.2. Buildings | 14,635 | 12,900 | ||||
| 19 | III. | FINANCIAL ASSETS | $(20 + + 26)$ | 936,801 | 1,018,205 | ||
| 20 | III.1. | Investments in subsidiaries and associates | |||||
| 21 | III.2. | Other long-term investment | |||||
| 22 | III.3. | Loans to subsidairies, associates | |||||
| 23 | III.4. | Amounts receivable after one year | 933,983 | 1,017,041 | |||
| 24 | III.5. | Available-for-sale financial asset | |||||
| 25 | III.6. | Derivative financial instruments | |||||
| 26 | III.7. | Other financial assets | 2,818 | 1,164 | |||
| 27 | Iv. | OTHER NON-CURRENT ASSETS | $(28+29)$ | 4,554 | 5,068 | ||
| 28 | IV.1. | Deferred tax asset | 2,783 | 2,783 | |||
| 29 | IV.2. | Other non-current assets | 1,771 | 2,285 | |||
| 30 | В. | BIOLOGICAL ASSET | $(31+32+33)$ | 0 | |||
| 31 | I. | PERENNIAL SEEDLINGS | |||||
| 32 | II. | LIVESTOCK AND OTHER ANIMALS | |||||
| 33 | Ш. | CROPS | |||||
| 34 | C. | CURRENT ASSETS | $(35+43+48+55)$ | 530,000 | 530,268 | ||
| 35 | I. | INVENTORIES, PREPAYMENTS AND CONTRACTS IN PROGRESS |
$(36+41+42)$ | 0 | |||
| 36 | I.1. | Inventories | $(37 + 140)$ |
| 37 | 1.1.1. | Raw materials and components | |||
|---|---|---|---|---|---|
| 38 | 1.1.2. | Work in progress | |||
| 39 | 1.1.3. | Finished products | |||
| 40 | I.1.4. | Goods for resale | |||
| 41 | I.2. | Prepayments | |||
| 42 | 1.3. | Contracts in progress | |||
| 43 | Π. | AMOUNTS RECEIVABLE WITHIN ONE YEAR | $(44 + + 47)$ | 524,474 | 516,778 |
| 44 | II.1. | Trade debtors | 781 | 918 | |
| 45 | II.2. | Amounts receivable from subsidiariers and associates |
|||
| 46 | II.3. | Current portion of long-term loans and short term loans |
|||
| 47 | II.4. | Other amounts receivable | 523,693 | 515,860 | |
| 48 | Ш. | OTHER CURRENT ASSETS | $(49 + + 54)$ | 4,342 | 13,308 |
| 49 | III.1. | Current investments | |||
| 50 | III.2. | Time deposits | |||
| 51 | III.3. | Available-for-sale financial asset | |||
| 52 | III.4. | Derivative financial instruments | |||
| 53 | III.5. | Profit tax advance | |||
| 54 | III.6. | Other current assets | 4,342 | 13,308 | |
| 55 | IV. | CASH AND CASH EQUIVALENTS | 1,184 | 182 | |
| 56 | D. | NON-CURRENT ASSETS HELD FOR SALE | |||
| 57 | TOTAL ASSETS: | $(1+30+34+56)$ | 1,486,751 | 1,567,573 | |
| 58 | E. | EQUITY | -59 | 394,729 | 375,556 |
| 59 | I. | EQUITY | $(60+63+64+65+69+7)$ 3) |
394,729 | 375,556 |
| 60 | I.1. | Capital | $(61+62)$ | 10,000 | 10,000 |
| 61 | 1.1.1. | Authorised (subscribed) | 10,000 | 10,000 | |
| 62 | 1.1.2. | Subscribed uncalled authorised capital (-) | |||
| 63 | I.2. | Share premium | |||
| 64 | I.3. | Own shares (-) | |||
| 65 | I.4. | Revaluation reserve (results) | $(66+67+68)$ | n | |
| 66 | I.4.1. | Intangible assets revaluation reserve | |||
| 67 | I.4.2. | Fixed assets revaluation reserve | |||
| 68 | I.4.3. | Financial assets revaluation reserve | |||
| 69 | I.5. | Reserves | $(70+71+72)$ | 1,000 | 1,000 |
| 70 | I.5.1. | Legal reserve | 1,000 | 1,000 | |
| 71 | I.5.2. | Reserve for acquiring own shares | |||
| 72 | I.5.3. | Other reserves | |||
| $\overline{73}$ | 1.6. | Retained earnings (losses) | $(74+75)$ | 383,729 | 364,556 |
| 74 | I.6.1. | Profit (loss) of the reporting year | 364,556 | ||
| $\overline{75}$ | I.6.2. | Profit (loss) of the previous year | 19,173 | 364,556 | |
| 76 | F. | LIABILITTES | $(77+93)$ | 1,092,022 | |
| 77 | Ι. | NON-CURRENT AMOUNTS PAYABLE AND LIABILITIES |
$(78+83+84+85+86+9)$ | 542,420 | 1,192,017 718,006 |
| 78 | I.1. | Financial debts | $0+91+92)$ $(79 + + 82)$ |
537,483 | |
| 79 | I.1.1. | Leases and similar liabilities | 713,322 | ||
| 80 | I.1.2. | To credit institutions | 537,483 | ||
| 81 | I.1.3. | To subsidiaries and associates | 713,322 | ||
| 82 | I.1.4. | Other financial liabilities | |||
| 83 | $\vert$ I.2. | Trade amounts payable | |||
| Kopija fikra |
| 84 | I.3. | Received prepayments | 4,937 | 4,684 | |
|---|---|---|---|---|---|
| 85 | I.4. | Derivative financial instruments | |||
| 86 | I.5. | Provisions | $(87 + 88 + 89)$ | O | 0 |
| 87 | I.5.1. | For covering liabilities and claims | |||
| 88 | I.5.2. | For pensions and similar obligations | |||
| 89 | I.5.3. | Other provisions | |||
| 90 | 1.6. | Deferred tax liabilities | |||
| 91 | I.7. | Other non-current term liabilities | |||
| 92 | I.8. | Grants and subsidies | |||
| 93 | II. | CURRENT LIABILITIES | $(94+95+99++105)$ | 549,602 | 474,011 |
| 94 | II.1. | Current portion of long-term debts | 507,083 | 439,032 | |
| 95 | II.2. | Financial debts | $(96+97+98)$ | 2,315 | 5,464 |
| 96 | II.2.1. To credit institutions | ||||
| 97 | II.2.2. To subsidiaries and associates | ||||
| 98 | II.2.3. Other financial debts | 2,315 | 5,464 | ||
| 99 | П.З. | Trade amounts payable | |||
| 100 | II.4. | Received prepayments | 10,301 | 7,998 | |
| 101 | II.5. | Income tax liabilities | |||
| 102 | II.6. | Liabilities related to employment relations | |||
| 103 | II.7. | Derivative financial instruments | |||
| 104 | II.8. | Provisions | |||
| 105 | II.9. | Other current liabilities | 29,903 | 21,517 | |
| 106 | G. | LIABILITIES RELATED TO NON-CURRENT ASSETS HELD FOR SALE |
|||
| 107 | TOTAL EQUITY AND LIABILITIES | $(59+76+106)$ | 1,486,751 | 1,567,573 |
| All amounts in LTL thousand | |||||||
|---|---|---|---|---|---|---|---|
| No | Note No | Financial year 01.01.2013- 22.11.2013 |
Previous financial year 01.01.2012- 31.12.2012 |
||||
| 1 | 1. | Cash flows from operating activities | |||||
| 2 | I.1. | Net profit (loss) before tax | $(3+4)$ | 19,173 | 53,469 | ||
| 3 | I.1.1. | Profit (loss) from continuing operations | 19,173 | 53,469 | |||
| 4 | I.1.2. | Profit (loss) from discontinued operations | |||||
| 5 | I.2. | $(6+7+8+14+$ Adjustments re: |
+30) | 41,727 | 122,969 | ||
| 6 | 1.2.1. | Depreciation, amortization, impairment | 474 | 1,509 | |||
| 7 | 1.2.2. | Disposal of tangible and intangible assets | |||||
| 8 | I.2.3. | Elimination of results of financing and investing $(9 + + 13)$ activities |
0 | O | |||
| 9 | I.2.3.1. | Interest income | |||||
| 10 | 1.2.3.2. | Dividends | |||||
| 11 | 1.2.3.3. | Decrease (increase) of investments | |||||
| 12 | I.2.3.4. | Interest expense | |||||
| 13 | I.2.3.5. | Other | |||||
| 14 | I.2.4. | Decrease (increase) in amounts receivable after one year |
|||||
| 15 | I.2.5. | Decrease (increase) in inventories | |||||
| 16 | I.2.6. | Decrease (increase) in prepayments | $-894$ | $-759$ | |||
| 17 | I.2.7. | Decrease (increase) in contracts in progress | |||||
| 18 | I.2.8. | Decrease (increase) in trade debtors | $-137$ | 337 | |||
| 19 | I.2.9. | Decrease (increase) in amounts receivable from subsidiaries |
|||||
| 20 | I.2.10. | Decrease (increase) in amounts receivable from associates |
|||||
| 21 | I.2.11. | Decrease (increase) in other amounts receivable | 38,254 | 157,670 | |||
| 22 | 1.2.12. | Decrease (increase) in other current assets | 244 | $-126$ | |||
| 23 | I.2.13. | Increase (decrease) in non-current trade amounts payable and received prepayments |
|||||
| 24 I.2.14. | Increase (decrease) in current trade amounts payable and received prepayments |
7,645 | $-1,530$ | ||||
| 25 1.2.15. | Increase (decrease) in income tax liabilities | ||||||
| 26 | I.2.16. | Increase (decrease) in deferred tax | |||||
| 27 I.2.17. | Increase (decrease) in liabilities related to employment relations |
||||||
| 28 | I.2.18. | Increase (decrease) in provisions | $-3,045$ | 26,788 | |||
| 29 I.2.19. | Increase (decrease) in other amounts payable and liabilities |
$-864$ | $-60,948$ | ||||
| 30 | I.2.20. | Elimination of other non-cash items | 50 | 28 | |||
| 31 I.3. | Cash flows from operating activities | Kodija tikra |
| 32 | I.4. | Interest paid | ||
|---|---|---|---|---|
| 33 | I.5. | Income tax paid | 149 | |
| 34 | $(2+5+31+32)$ Net cash flows from operating activities $+33)$ |
60,900 | 176,587 | |
| 35 | II. | Cash flows from investing activities | ||
| 36 | II.1. | Acquisition of non-current assets (excluding investments) |
$-133$ | $-260$ |
| 37 II.2. | Disposal of non-current assets (excluding investments) |
41,528 | 68,239 | |
| 38 | II.3. | Acquisition of non-current investment (excluding investments in subsidiaries) |
||
| 39 | II.4. | Disposal of non-current investment (excluding investments in subsidiaries) |
||
| 40 | II.5. | Acquisition of subsidiaries excluding cash and cash equivalents acquired |
||
| 41 | II.6. | Disposal of subsidiaries excluding cash and cash | ||
| 42 | II.7. | equivalents sold Loans granted $(43 + + 46)$ |
O | 0 |
| 43 | II.7.1. | To subsidiaries | ||
| 44 | II.7.2. | To associates | ||
| 45 | II.7.3. | To emplyees | ||
| 46 | II.7.4. | Other loans granted | ||
| 47 | II.8. | Loans recovered $(48 + + 51)$ |
0 | 0 |
| 48 | II.8.1. | From subsidiaries | ||
| 49 | II.8.2. | From associates | ||
| 50 | II.8.3. | From emplyees | ||
| 51 | II.8.4. | Other loans recovered | ||
| 52 | II.9. | Dividends received $(53+54)$ |
0 | ۵ |
| 53 | II.9.1. | From subsidiaries | ||
| 54 | II.9.2. | From others | ||
| 55 | II.10. | Interest received | ||
| 56 | II.11. | Other increases in cash flows from investing activities |
||
| 57 | II.12. | Other decreases in cash flows from investing activities |
||
| 58 | $(36 + + 42 + )$ Net cash flows from investing activities $47 + 52 + 55 + 5$ $6 + 57$ |
41,395 | 67,979 | |
| 59 | III. | Cash flows from financing activities | ||
| 60 | III.1. | Cash flows related to entity owners $(61 + + 66)$ |
0 | Ol |
| 61 | III.1.1. | Issue of shares | ||
| 62 | III.1.2. | Owner's contributions against losses | ||
| 63 | III.1.3. | Purchase of own shares | ||
| 64 | III.1.4. | Sale of own shares | ||
| 65 | III.1.5. | Dividends paid | ||
| 66 | III.1.6. | Other payments related to share capital | ||
| 67 | III.2. | Cash fows arising from other financing sources $(68+73)$ |
$-101,243$ | $-420,541$ |
| 68 | III.2.1. | Increase in financial debts $(69 + + 72)$ |
313,093 | 552,448 |
| 69 | III.2.1.1. | Loans received | 313,093 | 552,448 |
| 70 | III.2.1.2. | Issue of bonds | ||
| 71 | III.2.1.3. | Increase in bill debts excluding repayments | ||
| 72 | III.2.1.4. | Finance lease | ||
| 73 | III.2.2. | Decrease in financial debts $(74 + + 78)$ |
$-414,336$ | $-972,989$ |
| 74 | III.2.2.1. | Loans repaid | $-44$ $\sigma$ $\sigma$ $\sigma$ | tikle#2,989 |
| 75 | III.2.2.2. | Redemption of bonds | |||
|---|---|---|---|---|---|
| 76 | III.2.2.3. | Interest pald | |||
| 77 | III.2.2.4. | Payments of liabilities arising from finance leases |
|||
| 78 | III.2.2.5. | Dividends paid | |||
| 79 | III.3. | Changes in paid up authorised capital | |||
| 80 | III.4. | Grants and subsidies received | |||
| 81 | III.5. | Increase in other liabilities | |||
| 82 | III.6. | Decrease in other liabilities | |||
| 83 | III.7. | Other inceases in cash flows from financial activities |
|||
| 84 | III.8. | Other deceases in cash flows from financial activities |
|||
| 85 | Net cash flows from financing activities | $(60+67+79+)$ $+84)$ |
$-101,243$ | $-420,541$ | |
| 86 | IV. | Effect of changes in exchange rates on the balance of cash and cash equivalents |
-50 | $-28$ | |
| 87 | v. | Net increase (decrease) in cash flows | $(34+58+85+)$ 86) |
1,002 | $-176,003$ |
| 88 | И. | Cash and cash equivalents at the beginning of the period |
182 | 176,185 | |
| 89 | VII. | Cash and cash equivalents at the end of the period |
$(87+88)$ | 1,184 | 182 |