Annual Report 2017 Table of Contents 2
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ANNUAL REPORT ’17 SBERBANK CZ, A.S. 1. TABLE OF CONTENTS 1. TABLE OF CONTENTS 000 2. SBERBANK CZ, A.S., PROFILE 001 3. INTRODUCTION BY THE MANAGEMENT BOARD 002 4. KEY FIGURES IN SUMMARY 003 5. MOST IMPORTANT EVENTS OF THE YEAR 004 6. SBERBANK GROUP 006 7. GOVERNING BODIES 008 8. ORGANISATION CHART 015 9. ECONOMIC CONDITIONS 016 10. REPORT OF THE MANAGEMENT BOARD 017 11. PRODUCTS AND SERVICES 026 12. RISK MANAGEMENT 028 13. CORPORATE GOVERNANCE 032 14. REMUNERATION 042 15. SOCIAL RESPONSIBILITY 044 16. ADDITIONAL INFORMATION 047 17. ALTERNATIVE PERFORMANCE INDICATORS 050 18. FINANCIAL STATEMENTS 052 19. QUANTITATIVE INDICES 136 20. CAPITAL REQUIREMENTS 137 21. REPORT ON RELATIONSHIP 138 22. AFFIDAVIT 148 23. INDEPENDENT AUDITOR’S REPORT 149 24. OUR NETWORK 154 This annual report of Sberbank CZ, a.s. provides a true and accurate picture of the financial position, business activities and profit and loss of the Bank for the previous fiscal period and of the outlook of the future financial situation, business activities and profit and loss. The data and information in this report are always reported as of 31 December 2017, unless otherwise stated. SBERBANK CZ | ANNUAL REPORT 2017 TABLE OF CONTENTS 2. SBERBANK CZ, A.S., PROFILE Corporate name Sberbank CZ, a.s. Company identification number 25083325 Tax identification number CZ25083325 Registered office U Trezorky 921/2, Jinonice, 158 00 Prague 5, Czech Republic Legal form Joint-stock company Registration Incorporated in the Commercial Register maintained by the Municipal Court in Prague, Section B, Insert 4353 Date of incorporation 31 October 1996 Subject of enterprise Banking transactions and financial services of all kinds in accordance with Sections 1 (1) a), 1 (1) b) and 1 (3) a) – o) of Act No. 21/1992 Coll., on Banks, as amended, which are listed in the banking licence issued under the above Act. Bank code 6800 BIC/SWIFT VBOECZ2XXXX Data box identifier f94gyc6 LEI 31570010000000029583 Phone +420 800 133 444 Fax +420 221 969 951 E-mail [email protected] Website www.sberbank.cz Banking supervisory authority Czech National Bank Law Czech Republic SBERBANK CZ | ANNUAL REPORT 2017 SBERBANK CZ, A.S., PROFILE 001 3. INTRODUCTION BY THE MANAGEMENT BOARD Ladies and gentlemen, As of 31 December 2017, the balance sheet total of dear clients, partners and shareholders, Sberbank CZ, a.s. had grown by 13% on a year-on-year basis and amounted to CZK 81.46 billion. The number The year 2017 was marked by record sales volumes and of active clients of Sberbank CZ increased by 4% significant year-on-year profit growth. to 113,000 last year. The total volume of client deposits grew by 15% on a year-on-year basis to CZK 64.13 billion. The Bank successfully continued to develop its business The total volume of client loans increased by 8.8% activities in all target customer segments. We emphasised to CZK 60.48 billion, mainly thanks to record sales friendly and top-quality service to our clients, as well of consumer and mortgage loans. as an attractive product offer, supplemented with new products and services. We achieved record results in credit Despite the growth in business results and investments volume growth, quality enhancement and credit portfolio in new services and modern infrastructure, we managed diversification, deposit stabilisation and strengthening to control administrative costs. Compared to the previous relationships with clients, as well as improving the year, they increased slightly by 4%, to CZK 1.454 billion. efficiency of internal processes and systems. Thanks to prudent risk management, the bank maintained Despite strong competition on the banking market, low a low share of non-performing loans (NPL) last year, interest rates and pressure on interest income, the Bank which decreased slightly to 5.43%. achieved a significant profit growth of 56% on a year- on-year basis. The profit after tax for 2017 amounts The capital adequacy ratio reached the level of 16.44% to CZK 424 million. The year-on-year growth of economic at the end of the year. The capital, which is well above results was mainly driven by record interest in mortgage the threshold required by the regulator, allows further loans and the consumer loan volumes also grew development of the Bank.1 significantly. In addition, we achieved excellent results in insurance and investment revenues, where the range In the past year, the bank maintained high liquidity of investment products has been expanded. In the stability and continues to meet the values prescribed segment of corporate customers, the result was by the LCR indicator. supported by the extraordinary volume of foreign exchange transactions before the termination of the We thank all our clients and trading partners for their Czech National Bank’s intervention scheme. We were trust and successful cooperation in the past year, and also involved in major syndicated loans and were active look forward to its continuation. in export, commercial and real estate financing. Net income from financial operations before the creation of reserves and loss provisions amounted to CZK 2.228 billion. Jiří Antoš Member of the Management Board 1 For details on the alternative performance indicators, see Chapter 17. SBERBANK CZ | ANNUAL REPORT 2017 002 INTRODUCTION BY THE MANAGEMENT BOARD 4. KEY FIGURES IN SUMMARY CZK million 2017 2016 2015 2014 2013 2012 2011 2010 Total assets 81,464 71,965 76,609 66,860 70,472 61,312 51,790 49,334 Capital adequacy 16.44% 16.55% 17.49% 16.18% 15.77% 11.78% 13.22% 14.20% Liabilities to clients, including debt securities in issue 66,043 59,049 61,537 50,417 57,408 48,135 36,816 34,779 Receivables from clients 60,483 55,613 50,781 54,147 51,421 45,944 41,611 39,147 Net income from financial operations 2,228 2,028 1,888 2,133 1,830 1,699 1,678 1,595 Operating expenses 1,454 1,398 1,379 1,274 1,088 930 890 847 Profit on ordinary activities before tax 531 336 37 481 286 270 443 345 Profit for the year 424 272 23 383 230 209 346 271 Number of clients 112,559 108,310 100,116 76,137 59,246 53,608 55,529 56,572 Number of employees* 924 851 846 825 719 668 637 622 Number of points of sale 28 28 29 26 22 24 24 45 NPL (non-performing loans) 5.43% 5.74% 5.19% 5.95% 7.94% 8.16% 10.31% 11.32% * registered number of employees, including employees on maternity leave TOTAL ASSETS NET INCOME FROM FINANCIAL OPERATIONS 81.5 CZK billion 76.6 CZK billion 70.5 72.0 66.9 61.3 2.23 2.13 2.03 49.3 51.8 1.83 1.89 1.60 1.68 1.70 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 NUMBER OF CLIENTS NPL DEVELOPMENT Thousands 108.3 112.6 Percent 100.1 11.32 10.31 76.1 8.16 7.94 56.6 55.5 59.2 53.6 5.95 5.19 5.74 5.43 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 SBERBANK CZ | ANNUAL REPORT 2017 KEY FIGURES IN SUMMARY 003 5. MOST IMPORTANT EVENTS OF THE YEAR In January... The Anděl branch in Prague was partially modernised, which brought a lot of pleasant changes for clients. On 9 January 2017, the Management Board re-elected Vladimír Šolc as Chairman of the Management Board of Sberbank CZ, a.s. In June… On 1 June 2017, we introduced contactless MasterCard At the end of the month, the annual New Year’s party Standard FAIR credit cards. Compared to the original was held for all the employees of the Bank, with the Visa Classic cards, this new product has the contactless theme of the League of Extraordinary Gentlemen. feature. In February... On 12 June 2017, Mr Béla Czigony became a new member of the Audit Committee. On 23 February 2017, the sole shareholder of Sberbank CZ, a.s. appointed Mr Gerhard Hans Randa a member On 14 June 2017, the term of office of a member of the of the Bank’s Supervisory Board, and Mr Randa Bank’s Supervisory Board, Mr Reinhard Kaufmann, was was subsequently elected as the Chairman of the renewed for another four years. Supervisory Board with effect from 3 March 2017. On 23 June 2017, the office of a member of the Bank’s We launched the Guaranteed Interest Rate Reduction Management Board, Mr Miroslav Lukáč, who was by 1% campaign for FAIR Loans and Consolidations. We in charge of corporate banking, was terminated. guaranteed that for all clients who received a better offer The section was taken over by the Chairman of the from our competitors during the repayment period Management Board, Mr Vladimír Šolc. of a FAIR Loan or FAIR Consolidation, the interest rate would be reduced to the offer’s level and then by On 27 June 2017, a general meeting of the Supervisory another 1%. Board of Sberbank CZ, a.s. was held, at which the term of office of a member of the Bank’s Management Board, In March… Mr Jindřich Horníček, was renewed. Mr Dusko Kantar resigned from his post as a member of the Bank’s Supervisory Board with effect as of In August… 13 March 2017, which was acknowledged by the Bank’s The Praha – Lazarská branch was modernised. After the Supervisory Board in its decision. reconstruction, one of the largest branches of Sberbank CZ now provides a new, comfortable and pleasant In April… environment for both clients and employees.