AnnuaSberbankl Repor tBH 2016 d.d. Table of Contents About Sberbank...... 4 Message from the CEO...... 6 Address by the Chairman of the Supervisory Board Alexey Bogatov ...... 8 Macroeconomic environment...... 9 Key indicators...... 15 Business Analysis...... 16 Retail and Entrepreneurs ...... 16 Corporate Banking...... 20 Global Markets ...... 23 Custody and Depository Business ...... 25 Operations...... 26 Integrated Risk Management ...... 32 Marketing and Communications ...... 40 Human Resources...... 44 Sector for Banking Operations Support (GBS)...... 47 ANNUAL FINANCIAL STATEMENTS ...... 53 Management Board’s Report...... 54 Responsibilities of the Management Board and Supervisory Board for the preparation and approval of the annual financial statements...... 57 Impressum Independent auditor’s report to the shareholder of Sberbank BH d.d. Sarajevo...... 58 Statement of comprehensive income for the year ended 31 December ...... 60 Publisher: Sberbank BH, Fra Anđela Zvizdovića 1, Statement of financial position...... 61 71000 Sarajevo, Bosnia and Herzegovina; tel: +387 33 294 700; Statement of changes in equity ...... 62 web page: www.sberbank.ba Statement of cash flows ...... 63
Online version of the annual report is available at the following link: Notes to the financial statements (which form the part of the financial statements)...... 64 www.sberbank.ba Managing Bodies...... 145 Management...... 145 Disclaimer: This annual report has been prepared and the data checked with the greatest possible care. Branch network...... 146 Nonetheless, rounding and printing errors cannot be ruled out. This annual report was prepared in Bosnian. The annual report in English is a translation of the original Organizational chart of Sberbank BH...... 148 Bosnian report. The only authentic version is the Bosnian version. Sberbank Europe AG...... 150 sberbank bh · annual report 2016
About Sberbank Sberbank is among the most stable financial institutions in the world, with a business tradition spanning 175 years. It offers products and services based on the highest quality and state-of-the-art technologies. Sberbank BH is a member of Sberbank Europe AG, which is present in 10 markets in Central and Eastern Europe: Austria, Bosnia and Herzegovina (Sarajevo and Banja Luka), Czech Republic, Croatia, Hungary, Germany, Slovenia, Serbia and Ukraine. The Bank has more than 4,300 employees, it operates via 228 branches and services more than 670,000 clients (as of December 31, 2016.).
We are constantly working to improve our product offerings in order to provide superior service that is based on customer needs and is in line with the latest banking trends. Our challenge is to offer our clients optimal and diversified financial products, and we strive to meet this challenge in our dealings with each and every client.
Bank staff foster an individual approach to clients, providing them with a service tailored to their unique needs and expectations. Our goal is to build lasting and harmonious relations with our clients by paying attention to their needs. At Sberbank BH, we strive to be a bank that never ceases to develop itself and its business for the benefit of our clients.
During 2016, the value of the Sberbank brand at the global level increased by 33% to 9.1 billion US dollars. Sberbank enhanced its position among global banking brands according to the assessment of Brand Finance, which defines the value of business brands. Sberbank is the only Russian brand in the top 100 banking brands and the only Russian banking brand among the top 500 brands according to the ranking of Brand Finance Global. Based on this survey, Sberbank is the sixth most valuable banking brand in Europe. Sberbank is highest ranked among all the banking brands operating on the territory of the former Yugoslavia.
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Message from the CEO that through innovation, agility and creativity we Moreover, the Bank’s clients will be able to send been on children and educational institutions. have remained on the right track. Our approach prepaid credit to any prepaid BH Telecom number I would also like to point out that we have paid a has yielded positive results because the market from their current accounts in a simpler and more great deal of attention to digital communication. recognized the value and quality of our brand. We expeditious manner, as a part of the TopUp This has included the redesign of our website, are delighted by the rising trust in the Bank, which service. Both of these services are a novelty in this Sberbank.ba, which is now more modern and was confirmed by growth in retail deposits of market, not currently offered by any other bank or more efficient and is available to our clients on all almost 23%. When it comes to managing services telecom operator. relevant devices. We have also launched a new and products, I must emphasize that we have intranet platform that facilitates internal After introducing quick loan with money made sure that our clients obtain added value, communication with employees. disbursement within three hours in 2015, we that they experience speed of delivery and that worked on an even faster solution and offered People make a brand and that’s why we have they have a bank that is accessible. money disbursement within two hours. In 2016 launched the Sberbank Academy. The primary I would like to illustrate this with some concrete we created a quick cash loan, with money mission of the Academy is to provide employees examples. disbursement within just 55 minutes. We are with possibilities for further education, enabling By joining the largest loyalty program in Bosnia particularly proud of the term of loan approval, them to improve themselves, to become more and Herzegovina – the Pika Card program – we which is unmatched in this market in terms of successful and to deal with changes in their have taken a significant step forward for the processing speed. Although it sounds simple, the operating environment in an optimal way. The banking sector in this country. For the first time in the BH market, a bank is an active member of a process of loan approval involves considerable Bank is building its market position principally loyalty program. We have made it possible for our engagement, flexibility and agility on the part of through innovation and service quality while the Sberbank BH CEO our staff. continuous education of employees is perceived Edin Karabeg clients and for all Pika Card users to enjoy added as an essential part of its business strategy. value. SMEs, as the primary employment and growth This is primarily reflected in theSberbank generators, have a key role in the economy of I would like to conclude by thanking our The past year has witnessed a stagnant payment Pika Card, a specially designed Bosnia and Herzegovina. Being aware of their employees for their great dedication. This is crucial economy in Bosnia and Herzegovina and limited international payment card launched in the importance, we have continued in the last year to for Sberbank’s success. I would also like to thank development in an unfavourable environment middle of 2016. Based on its characteristics and support them because we know they represent our partners and shareholders for their support marked by numerous internal problems. This advantages Sberbank’s payment Pika Card has the heart of the BH economy. and trust. affected the situation and perspectives of the taken the place of all other cards. With this new In accordance with the operating strategy, we And we owe particular gratitude to our loyal banking sector. However, despite these challenges card in our offer we realized growth in card have proceeded with the expansion of our business clients, who see us as a reliable partner. We will our Bank registered positive business trends, from operations of 23% during 2016. network in Bosnia and Herzegovina by opening continue to work and to build a Bank that will which we can derive considerable satisfaction. By taking into account the trends in banking and new branch offices in Travnik and Sanski Most. respond efficiently to the needs and requirements We saw yet another record year. The Bank ended telecommunications, together with our strategic We believe that the expansion of our business of our clients. the year with a net profit growth of 31,9%. At partner BH Telecom we have created services for network and expansion into new markets in a the same time, net fee income grew by 29,8%. The the new era. This cooperation resulted in a more period when some other banks are shrinking their Sincerely, Bank’s assets increased by 60 million BAM, advanced, a safer and a considerably faster and networks is a courageous move. Edin Karabeg representing a 5,7% growth compared to 2015. cheaper way of paying monthly bills than previous We achieved substantial loan growth of 4,8%, models. The Click Pay service enables payment We have continued to support the local which is twice as high as the loan growth of the of BH Telecom bills with just one click, via Sberbank communities in which we operate. The emphasis market as a whole. The achieved results show BH’s mobile and internet banking. when it comes to socially beneficial projects has
6 7 sberbank bh · annual report 2016
Address by the Chairman of the Supervisory Board Macroeconomic Alexey Bogatov environment Sberbank BH’s management and its employees In 2016, the economy of Bosnia and Herzegovina (BiH) failed to repeat the have shown that they see challenges as economic growth of 3.03% registered in 2015. opportunities. They have displayed an inspiring Despite optimistic forecasts, GDP growth was more modest than expected degree of optimism, dedication and business skills, (2.0% according to the assessment of the BiH Statistics Agency), which was and this has made it possible to navigate turbulent caused by political instability and lack of investment in the energy sector waters. The Managing Board has demonstrated and highway construction, as well as the delay in reaching a credit the skills and leadership needed to take the bank to arrangement with the International Monetary Fund following the approval a new level. of the first tranche. I would like to convey my appreciation to the At the same time, the reforms undertaken by the entity authorities were Board and to all employees of Sberbank BH for their not significantly felt given that a longer period of time is needed to show contribution to the bank’s strong results. the effects of these measures. Thanks to their expertise and energy to meet all client’s needs, Sberbank is perceived as one of the According to the analysis of the Directorate for Economic Planning, the BiH most attractive financial partners on the BiH economy grew at a slower pace than the 2015 rate of 3%. market. The estimates of international organizations are also more modest Last but not least, let me express my gratitude to compared to 2015. The World Bank, which forecast growth of 2.8%, was our clients. Their confidence in our services more optimistic than the IMF, which forecast growth of 2.6%, based on the and products has made it possible for us to latest statements of the mission’s staff in BiH. continuoulsy improve. Some banks have lowered growth projections to 2.0%, revising earlier The growth we have experienced over the years is estimates by 50 basis points. a direct result of the support we have had and Chairman of the Supervisory Board Modest growth was recorded in the first half of the year with annual rates Alexey Bogatov continue to have from our customers. of 1.8% in the first and 1.2% in the second quarter (data from the BiH Statistics We appreciate their trust, and we will do everything Agency). Although some progress was achieved in the third and fourth in our power to continue providing our customers quarters with an annual rate of 2.4% and 2.6% respectively, this was not Sberbank BH has had a successful year, with all with the very best financial service. enough to compensate for the modest growth in the first part of the year. business lines positively contributing to the overall result. Net profit increased significantly by 31.9% The main driver of economic growth in 2016 was the economic recovery in Sincerely, compared to the previous year. At the same time, the European Union, which generated positive momentum in the export- Alexey Bogatov assets grew 5.7%, supported by a substantial oriented sectors of the BiH economy. In addition to strengthening business increase in loan volume of 4.8%, which is double activity with main trading partners, key determinants in the development the market growth rate. of BiH foreign trade in goods for 2016 were growth in domestic demand and low world prices for some BiH export products. New business alliances were established and new- to-market products were launched. All of this was The nominal growth of total exports by 5.58% in comparison with 2015 is achieved in a challenging time. indicative of export growth demand, with exports to the European Union increasing by 5.76%. Considerable export growth of 7.59% was registered in trade with Croatia, which has also enjoyed a measure of economic recovery.
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Foreign Investments Movement of salaries 6 2011-2016. 2016 and employment 5 2015 Employment 4 Average salary 2014 3
2013 2
2012 1
2011 0
-1 0 200 400 600 800 2011 2012 2013 2014 2015 2016
Export growth was facilitated by an increase in industrial production of The average salary rose in 2016 by 1.3% to 853 KM and growth was more 4.3%. In the first half of the year, industrial production grew as a result of marked in the second half of the year, which may be attributed to the entry increased production in the manufacturing industry (growth amounted to into force of new labour regulations and collective agreements, resulting 3.1% annually), while in the second half, when it slightly weakened, the in an increase in the minimum wage. A slight increase in remittances from energy sector compensated for losses. abroad by 0.5% to 3.57 billion KM, as well as social transfers through pensions as a result of an increase in the number of retirees of 2.5% and a Imports of goods into Bosnia and Herzegovina in 2016 were nominally up rise in the average pension of 1.4%, contributed to the growth in available 1.8%, with an increase in imports of consumer goods of about 3.5%. income. In this respect it is important to note consumer-price deflation of Growth in VAT revenues of 4.4%, increase in imports of consumer goods, 1.1% on average at an annual rate, which increased the real purchasing and increase in imports of capital goods by 2.4% all indicate a degree of power of salaries and pensions. recovery in domestic demand. The role of fiscal policy was modest given Constraints on consumption and new investment are confirmed by the large obligations in servicing the external debt, especially in the second modest credit growth amounting to 1.8% at the end of the year with total half of the year. Remittances 3.9 The available income of citizens rose primarily due to a 4.8% increase in the from abroad number of people in work as a result of economic growth, along with 3.8 measures taken by the authorities which included employment incentives 3.7
and intensified inspections to combat undeclared work. With 737,954 3.6 registered employed persons at the end of 2016, BiH surpassed for the first 3.5 time the number of people in work prior to the economic crisis (in January 3.4 2009 it registered a record 729,207 people in work). However, when it comes to unemployment, there were 510,022 people out of work as of 3.3 December 31, 2016, which is higher than the 488,496 people who were 3.2 2016 officially registered as unemployed in January 2009. 2011 2012 2013 2014 2015
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disbursed loans in the amount of 17.2 billion KM. Private individuals were the largest contributors to credit growth, with granted loans 3.2% higher per annum.
Tourism was one of the rare sectors that made a substantial contribution to GDP growth in 2016. Arrivals grew by 11.6% overall. The number of arrivals of foreign tourists rose by 15.1% compared to 2015, and the total number of tourist visits reached 1,148,530.
In 2016, there was no investment momentum due to the complete halt in work on Corridor Vc owing to the exhausted credit potential of highway companies and the delay in reaching political agreement at the state level to increase excise taxes on oil products for the purpose of financing further work on the road infrastructure. There was no construction of new energy projects save for small projects related to HPP Dabar and HPP Vranduk.
After six negative quarters, there was a slight recovery in the construction industry in the third quarter of 2016, but nevertheless gross added value dropped on a yearly level in this sector. Some progress was achieved in housing construction, where 35.8% growth was registered compared to 2015 and the 2,543 apartment units built amounted to the highest figure for four years. While TPP Stanari was responsible for growth in foreign investments in previous years, there was a slight decline in 2016. According to preliminary data, 460.6 million KM was invested in 2016, which represents a decrease of 3.4% compared to the previous year. The poor political situation and the negative rhetoric of political leaders undoubtedly contributed to the relatively weak inflow of foreign investment.
When we add the fact that BiH did not draw more than one initial tranche from the IMF arrangement due to political disagreements in meeting the IMF’s conditions, it is clear that more robust economic growth in 2016 did not materialize. It should be noted that in 2016 the authorities implemented a significant portion of the measures stipulated in the Reform Agenda, which mostly focused on reforms in the fiscal, financial sphere and the business environment. However, it is too early to discuss the possible positive effects in 2016 given that the impact of these activities cannot be measured in a short period of time.
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Key indicators thousands BAM 2016 2015 2014 2013 2012
Total loans 927.120 879.400 808.810 668.552 552.530
Total deposits 767.706 674.884 519.669 451.428 324.399
Total assets 1.161.638 1.101.537 1.006.003 861.883 679.115
Profit before taxing 9.511 6.919 5.154 3.087 700
Profit after taxing 8.192 6.207 4.622 2.725 163
Capital 168.186 159.994 153.787 119.828 117.103
CIR (%) 67,60 67,1% 69% 73% 71%
Total loans Total deposits 767.706 thousands BAM thousands BAM 927.120 674.884 879.400 519.669 808.810 451.428 668.552 552.530 324.399
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
Total assets Capital 168.186 thousands BAM thousands BAM 1.161.638 159.994 153.787 1.006.003 1.101.537 119.828 861.883 117.103
679.115
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
14 15 sberbank bh · annual report 2016
Business Analysis Retail and Entrepreneurs Savings Operations Service quality, product attractiveness and client satisfaction were the focus In the savings segment, the year was marked of the Bank when it comes to operations with private individuals and by the implementation of children’s savings entrepreneurs. Through continuous staff training, we worked on upgrading launched on July 1 under the slogan “Save money service quality while taking care of service efficiency and product updates in with Sberbank”. This is designed to promote line with modern banking trends. By means of quality management, saving among the youngest client segment. The accompanied by advertising campaigns, we made the key products of the main character motif is Zmajzi, a cute dragon, Bank more appealing and we attracted new clients. In preparing surveys, we who explains to children and young people paid attention to the actual needs of our clients and measured their satisfaction how to save money and realize their dreams. levels. The satisfaction index among private individuals and entrepreneurs is Sberbank BH rewards youngsters who contract over 81% and the confidence level is over 83%. The Bank can only go forward. Zmajzi saving with an attractive interest rate, In the segment of loans and transactions, we successfully introduced the exceeding the market offer. The vista children’s automatic current account overdraft proposal and developed new procedures saving and Open children’s saving are intended for account bundle products. for children and young people up to the age of 15 Card Operations or 18, depending on the type of savings selected. Furthermore, we introduced fees for the prolongation of allowed overdraft The year was marked by the launch of a new card and optimized outbound documentation for clients. We increased the In terms of other activities in the savings area, product. The Sberbank payment Pika Card is the maximum amount under replacement loans to KM 70,000 for clients with we redesigned term savings, introduced free- result of entry into the largest Pika Card program. income amounting to 2,000 KM. We redesigned the lombard loan and of-charge sets of products for depositors and This business cooperation brought a new and introduced the new “monthly regular” loan insurance model for non-purpose cancelled non-profitable products. In line with significantly different approach to BiH citizens and cash loans. client requests, during the year we installed their needs, in terms of more attractive products safety boxes in the Sanski Most branch. and services in the financial and retail segment. Users of Sberbank payment Pika Card now have at their disposal numerous benefits within the network of companies participating in the loyalty program, consisting of Konzum, Gazprom and NIS Petrol stations, Intersport, Modiana and Beautique, as well as Kompas.
The Sberbank payment Pika Card is simultaneously a revolving card, an instalment purchase card and a loyalty card. This makes it a unique product in Bosnia and Herzegovina.
The launch of the Sberbank payment Pika Card is also the first project of two sister banks, Sberbank BH d.d. and Sberbank a.d. Banja Luka. The project brought the two banks closer and demonstrated
16 17 sberbank bh · annual report 2016
the great potential for further joint projects within the Sberbank Group in Bankassurance Bosnia and Herzegovina. Merkur BH osiguranje remained our strategic partner in the domain of bank In the segment of card operations, it is important to underline the fact that we assurance in 2016. The results of this partnership and cooperation, subject have introduced a new product, the Contactless Debit MasterCard, which, in to the mediation of our broker Fortius BH, are: addition to all the benefits, is characterized by transactions in a few seconds • 4,825 loan beneficiary insurance policies concluded using contactless payment technology. Contactless functionality was also • 269 life insurance policies concluded introduced for the existing Debit MasterCard Gold. • 4,192 insurance covers for cards We also introduced the 3D Secure security standard used during online During the year, we simplified the process of processing and work with credit purchases with traders who support this security standard. The 3D Secure insurance, which enhanced the efficiency and quality of work in the front standard is distinguished by additional security during online payment, simple office and affected cooperation with the insurance company and insurance use and simple activation of service. All Sberbank BH payment cards may agent in a positive way, as well as raising service quality for clients. activate the 3D Secure security standard. We are the first Bank in the FBiH market to introduce credit insurance with Understanding the necessity of environmental protection, reduction in use of monthly premium payments. This offers the client lower initial costs upon printing material and availability and archiving of e-mails, we introduced loan disbursement. Premium payment is carried out along with the delivery of credit card statements via email. In contact with our clients, we instalment and the client obtains the entire requested loan amount in his or continue to promote this manner of sending statements. her account.
The concept of CPI is implemented for Sberbank payment Pika Cards covering death, disability exceeding 50%, unemployment and sick leave subject to premium payment accrued on a monthly basis on the used amount of the granted limit.
By creating insurance products together with partner insurance companies the Bank wishes to introduce new and modern products for its clients, facilitate the use of products and make the premium calculation more favourable for the client.
The aim of linking bank products and insurance is to create a single product for clients, which is exclusively available in Sberbank BH and provides a full financial service in one place.
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Corporate Banking supporting the economic development of BiH and that the state and state- owned companies may rely on us as a trusted partner. In the Corporate Banking sector, 2016 was a truly challenging year. However, despite aggravating circumstances in the market, severe competition from This was supported by colleagues from Corporate, Retail and Risk, confirming other banks and other challenges, the Corporate segment achieved notable that teamwork is a central pillar of our activities. results in all areas. Market share increase, introduction of innovative products SME/Corporate, in cooperation with colleagues from the Trade Finance team and acceleration of transactions are just a few of the things that were from Vienna, worked on the approval and issue of two performance accomplished during 2016. guarantees to the client EUROASFALT d.o.o. Sarajevo in the total amount of Apart from introducing innovative products, we improved the electronic 22 million Euros for a period of 57 months. The guarantees were issued to the banking service and upgraded existing products. We optimized processes client directly from Vienna with Sberbank BH as the Agent and Arranging allowing our clients to obtain the Bank’s services faster and in a more favourable Party of the overall transaction. Payment transactions pursuant to this deal manner, thereby substantially contributing to the Bank’s increased will be carried out via Sberbank BH in the next three years. With this transaction, competitiveness in the market. The Bank@Work concept, which we are Sberbank Group demonstrated great confidence in the client by issuing the implementing together with our colleagues from Retail, is well accepted by largest guarantee provided independently to this client in its history. At the our clients. Our Bank was the most successful according to Bank@Work same time, our SME/Corporate team acquired unique experience and created results at the Group level in 2016. Focusing on our clients and on products that conditions for cooperation at the Group level to expand. will satisfy their needs in the best possible way, we worked on process The confidence of such important companies resulted in the attainment of improvement, introduction of new products and cross selling. substantial results in the SME/Corporate segment in 2016. Significant In the middle of December, the annual SME workshop was held, in which all engagement and participation of Sberbank BH in the public sector through members of Sberbank Europe Group participated. Results and successes in tenders has contributed in a major way to the achievement of significant 2016 were presented and the most successful banks in three categories results and an increased market share of the Bank in this field. received awards. Sberbank BH was selected as the best SME Bank, which mn BAM Loans justified all our activities and efforts during the year, and also confirmed that 500
success in 2015, when the Bank was also 450
ranked first, was not a coincidence. Innovation 400
and focus on the needs of our clients have set 350
us apart as a Bank that participates as a 300
significant market player in several important 250
projects run by the largest companies in Bosnia 200 and Herzegovina. 150
Sberbank Europe cordially congratulates Sberbank BH recognized the potential of 100 Bosnia and Herzegovina establishing business cooperation between 50 on the best SFE performance among Jan. 2012 Dec. 2012 Dec. 2013 Dec. 2014 Dec. 2015 Dec. 2016 Sberbank Europe countries Aluminij and JP Elektroprivreda BiH, and found a way of supporting this through the issue of a payment guarantee towards Elektroprivreda BiH. This opens the door for much broader cooperation and the Bank once again demonstrated that it is
20 21 sberbank bh · annual report 2016
The growth of the loan portfolio compared to 2015 amounted to 38.79 million This generates additional goals of improving transaction processes and BAM, or 9.79%, thereby strengthening our market position. Our goal to introducing new products and services, which clients will be able to recognize. expand the quality and scope of our services has been recognized by our The aim of the Corporate Banking section is to become one of the most clients and resulted in a considerable growth of guarantees in the amount important leaders in the market and the most desirable business partner, of 20.85 million BAM, or 36.42% in during the year. and all this was justified by results achieved during the year. The slogans “Everything for the client”, “We are a team” and “I am a leader” will be the The trust of clients in our Bank and business security grew substantially, as guiding principle of our employees in 2016. is evident in the confidence shown by clients who have entrusted us with their deposits. Term deposits registered sustained growth and amounted to 147.28 million BAM between 2012 and 2016. Global Markets
Guarantees The year 2016 was marked and strongly influenced by the first interest rate mn BAM 80 rise of the Fed in December 2015, providing an early indication of recovery in the American economy after the world economic crisis of 2008. The Fed 70 then started a quantitative easing program aimed at speeding up the 60 recovery by means of the purchase of state bonds and interest rate cuts. The 50 first interest rate rise by the Fed resulted in a strengthening of the US dollar, 40 which reached its highest levels at the end of 2015. At the same time, following 30 three consecutive interest rate cuts by the ECB in 2015 the same trend was 20 maintained and the ECB cut the interest rate by an additional 10 basis points 10 Jan. 2012 Dec. 2012 Dec. 2013 Dec. 2014 Dec. 2015 Dec. 2016 in March 2016 i.e. to -0.40%. Despite negative indications and possible negative consequences of the scheduled referendum in the United Kingdom on leaving the European Union, the Euro managed to recover by 5% during Goals for 2017 are also ambitious. The market has already acknowledged the the first quarter of 2016. quality and image of Sberbank BH as a bank that offers innovative products and services to legal entities in a very short period of time along with a high At the beginning of 2016 the pound was one of the least desirable currencies degree of staff professionalism and expertise. due to the announced referendum, which created the possibility of the United Kingdom leaving the European Union. A vote to leave the EU was Time deposit expected to have a negative effect on both the UK and the EU. Additionally, mn BAM 220 it was thought that it might create a trend in which other countries would 200 leave the EU. On the other hand, since December 2015 the Bank of England 180 has been cutting its planned ranges of interest rate hikes. All of these factors 160 resulted in a significant fall in the value of the pound against major currencies. 140 The events by which 2016 will surely be remembered were the victory of 120 Republican Party candidate Donald Trump in the US presidential election, 100 and the outcome of the UK referendum of June 23. 80
60 The Trump victory stunned the world, particularly in view of the campaign
40 he had run. There was, likewise, considerable shock at the outcome of the Dec. 2012 Dec. 2013 Dec. 2014 Dec. 2015 Dec. 2016 22 23 sberbank bh · annual report 2016
UK referendum since opinion polls had suggested that most voters would Custody and opt to remain in the EU. After the results of the referendum were announced, Depository Business there was chaos on the financial markets and the pound tumbled to its lowest level in 30 years. Following these events, the ECB hinted at abandoning opening of custody accounts continued, both to its aggressive interest rate cutting policy. The Fed, for its part, delayed As an authorized participant in the FBiH securities legal entities and private individuals. Total announced interest rate increases. This stabilized the financial markets. market, the Bank continued successfully to provide custody and depository services in 2016. securities portfolio on custody accounts held with The foreign currency position of Sberbank BH during 2016 was maintained Clients recognized the Bank as a trusted partner in the Bank amounted to more than 500 million in line with the limits designated by the Banking Agency of FBiH, for each securities issue transactions. Thus in 2016 the KM in nominal value. With its long-term successful currency individually and in terms of the overall foreign currency position. Bank successfully realized via the Custody and experience in operations on the securities market, Internal limits stipulated by the Sberbank Group were also maintained. Depository Affairs group two securities issues, the Bank continued to provide services in the area Despite the high volatility of financial markets during the year, the Global namely initial securities (shares) issues upon the of depository operations in transactions with Markets Department continued to grow in terms of number of clients, establishment of an investment fund, and securities. Transactions exceeding 100 million KM volume and profit, thanks to new corporate and other clients of the Customer securities (shares) issues during the capital were carried out during the year via the brokerage Desk/Bank, and owing to the optimal management of the Bank’s open increase. Investment funds and fund account of the professional intermediary to foreign currency position by staff in the Global Markets Department. Services management companies, as institutional whom the Bank provides depository services. provided through the Customer Desk mainly related to foreign currency investors, have shown long-term confidence in The services of the Bank as an authorized trade and the primary goal was to attain and retain the trust and satisfaction the Bank so that the Bank is their depository/ participant in the FBiH securities market are of clients through offered prices and exchange rates, which were competitive custodian over assets held in the form of securities, constantly monitored and controlled by the FBiH and realistic given market developments. and this continued in 2016. Securities Commission, which affirms the The Bank became the depository/custodian to professional and quality provision of depository the first Open investment fund that closed offer and custody services through annual renewal of on the FBiH market. In 2016, the Bank increased the Bank’s licenses. the portfolio of investment funds to which it offers depository/custody services and at the end of the year the Bank offered services to 38% of investment funds from FBiH. The positive trend concerning the
24 25 sberbank bh · annual report 2016
Operations • Increase in interest income: Changes in methods of active interest rate calculation – a project run by the Organization Department. Key The Operations section is within the competences of the Executive activities were performed or managed by the Loan Administration Director for Retail/COO, as one of the key sectors that supports the Bank’s (application of changes to standard contracts on placements to legal operations and in which administrative and operational functions are entities, changes in the parameterization system for all loans and credit unified and centralized, including back office operations. In accordance cards of private individuals, changes in the parameterization system with the set goals for 2016, the practice of improving the efficiency and for placements to legal entities). All activities were successfully quality of service, as well as reducing operating costs, continued in 2016 in implemented within short deadlines. the Operations section. • Increase in interest income: Changes in system settings for default interest calculation in the legal entities segment – reduction in the number of bonus days. The activity was run by the Organization Department. Loan Administration made the necessary parameterization and changes in the information system of the Bank in accordance with the deadlines and the activity performance plan.
• Savings in resources and optimization of processes: Develop- ment of the functionality for default interest calculation in batch processing. The functionality was applied to production at the beginning of 2017. The result was a significant shortening of the Monthly booking process.
• Program automatization: Application of a new system module. Automatic collection of credit obligations for private individuals and legal entities.
The key developments registered in the Departments were as follows: • Cost savings: Changes in settings and methodologies for creation and distribution of warning letters regarding delays in payment of LOAN ADMINISTRATION DEPARTMENT loans by private individuals and legal entities. Changes to the process With regard to significant changes, projects and updates in 2016 that were and information system settings for warning letters enabled savings in initiated by, or in which the Loan Administration Department participated postal service costs in excess of 1,000 KM a month. the following should be highlighted:
• New product of the Bank: Implementation of the Sberbank payment PAYMENT SYSTEMS AND DOCUMENTARY AFFAIRS DEPARTMENT Pika Card, a project managed by the Retail sector. Loan Administration Payment systems and documentary affairs support the processing of executed a substantial part of the work in the implementation of the customer requests in three segments of the Bank’s operations: functionalities in the Bank’s information system within very short 1. Domestic payment transactions deadlines, and contributed analysis and technical alignments with the 2. Foreign payment transactions system, in line with the requirements of the Bank. 3. Documentary affairs
26 27 sberbank bh · annual report 2016
Domestic Payment Transactions This growth in credit and debit cards in 2016 was a result of:
All segments of domestic payment transactions grew in 2016. The number of • Introduction of a new co-branded product, the Sberbank payment Pika domestic and foreign payment transactions rose, as well as the share of Card, whose functionalities/benefits make it additionally attractive to electronic orders. clients due to the possibility of payment in instalments without fees or interest (with certain traders), as well as the opportunity to collect INTERBANK loyalty points. The Sberbank payment Pika Card is the first co-branded Inflows - Volume PAYMENTS - Number of on CB in BiH Paid fees card on the market through which the client receives both a payment NUMBER OF transactions (in 000) TRANSACTIONS card and a point collection card.
2015 1,187,681 562,390 6,580,234 1,916,569 • Introduction of a new card product, MasterCard debit contactless, and the upgrade of the existing card product for Premium clients, the 2016 1,499,684 671,505 6,783,696 2,385,824 MasterCard Gold debit card with contactless functionality.
The number of interbank payments realized by the Bank’s clients recorded a The 3D Secure security standard used in online purchases with traders who growth of 24.06% in 2016 compared to 2015. The number of inbound interbank support this standard was successfully implemented in 2016. Thus, the transactions for the Bank’s clients rose 19.40% in 2016 compared to 2015. Bank protected its card users against potential misuse online. Sberbank BH Collected fees for domestic payment transactions were 24.48% higher in 2016 is one of the first banks in the country to implement the 3D security compared to 2015. standard. As of 31 December 2016, the Bank’s network consisted of: Foreign payment transactions • 59 ATMs, including 5 multifunctional ATMs (cash in and money exchange) Foreign payment transactions also saw a growth trend across all • 7 info terminals segments. • 32 POS cash terminals
Re- Inflow Payments Unpaid fees The results of the network in 2016 in BiH are as follows: Transfers • 174 million KM in ATM turnover with cards owned by Sberbank BH25 2015 27,574 19,798 6,500 1,710,438 million KM (ca 86,000 transactions) with foreign cards at ATMs of 2016 29,452 26,404 6,711 1,905,225 Sberbank BH • 51 million KM in turnover via POS owned by Sberbank BH
CARDS DEPARTMENT In this segment, turnover with SBBH cards was 19% higher in 2016 compared to 2015. The year 2016 was exceptionally dynamic for the Card Operation Department. The number of issued cards as of 31 December 2016 was 57,196 (44,378 debit • Average amount per credit card transaction in 2016 was 88 KM and 12,818 credit cards), representing growth of 23% compared to 31 • Average amount per debit card transaction in 2016 was 113 KM December 2015. • Market share of SBBH MasterCard cards was 4% in 2016 • Market share of SBBH Visa cards was 3% in 2016
28 29 sberbank bh · annual report 2016
The retention of existing clients and the During 2016 and in comparison with 2015, there acquisition of new clients is considerably was a slight decrease in the number of accounts influenced by the quality of service provided by opened for legal entities. the Bank. A high level of service may be one of Number of opened accounts: the reasons that clients of other banks have • 2015 – 1,895 accounts opted for a card product from our Bank. In light of • 2016 – 1,798 accounts this, service quality in the card operations section is not simply an end in itself but a means to realize In line with the general economic situation in the competitive advantage. market, there was an increase during 2016 in the number of blocked accounts as compared to 2015. In order to improve service quality and achieve Thus, there were 4,188 blocked accounts in 2016 quality differentiation from the competition, the whereas that number amounted to 2,533 in 2015. Bank continuously works on expanding the range of services and products, process Through Lean projects and initiatives initiated at acceleration, digitalization and continuous the Group level and in cooperation with the training of employees, along with regularly Organization Department, the Account conducting a client satisfaction survey. Administration Department also implemented the 5S project, whereby working space, work environment and work processes were enhanced ACCOUNT ADMINISTRATION DEPARTMENT and operational costs were reduced. The Account Administration Department covers Apart from this, an electronic archive was four segments of operations: introduced for all documentation. This significantly • Administration of legal entity accounts in the enhanced the process and shortened the time area of opening and closing accounts, and needed to process requests and search for activation of transaction accounts and product documentation. sets, including the calculation of interest and fees in connection therewith; • Forced collection from accounts belonging to legal entities or private individuals; • Administration of private individuals’ accounts, including closure of accounts, early termination of contracts and special conditions for term deposits, as well as calculation of interest rates and related fees; and • Complaints management.
30 31 sberbank bh · annual report 2016
Integrated Risk Management Project management The Credit Risk section played a leading role in 2016 in the implementation Rating distribution per segment CREDIT RISK (CORPORATE&RETAIL) of the Group’s Forbearance project. The aim was to create a process that as of 30.11.2016 An adequate risk management system is a key enables the inclusion of forbearance records in the regular application credit element in securing the stability of the Bank’s process, along with a clear diversification of approach for various segments. High risk; 11.49% operations. The Credit Risk sector guides the A centralized forbearance tool has been established which enables easier Micro 57,60% Bank and sets clear guidelines for risk identification, management and monitoring of contracts subject to Corp/SME 8,52% PI 33,88% management, through clear procedures, policies, forbearance measures, all in order to identify transactions whose profile could be covered by contractual changes performed by the Bank for the Default, 5,10% methodologies and strategies. In terms of Micro 10,80% developing and optimizing the process of purpose of preventing default. Corp/SME 46,31% identification, assessment, monitoring and PI 42,89% The section’s expert team played an active role in conducting changes control of credit risk, 2016 was a challenging related to the implementation of a new group process for certain clients and Low risk, 10,11% year for the Credit Risk section. groups of related parties. Implementation enables easier monitoring of the Micro 0,oo% Corp/SME 14,01% The Bank ended the year with the following single exposure of clients or a group of related parties at the Group level. The PI 85,99% positive risk indicators: introduction of changes and new tools will enable a centralized approach to client’s financial data and the timely monitoring of methodological settings Stable rating distribution, with 83% of the to which they apply. It is expected that implementation will reduce the time portfolio in the low and moderate risk group. of loan application processing for credit analysts and UW with a single input With a comprehensive application of the point for financial reports and improved credit risk reporting. The section methodology in the area of value adjustment also responded adequately to tasks in the domain of aligning credit policies calculation, a stable NPL ratio of 6.63% was for all segments. maintained, which adequately follows the portfolio growth and the LLP coverage ratio of Preparatory project activities in the application of the new accounting 48.87% and the IBNR coverage ratio of 0.82%. standard IFRS 9 relating to changes in the provisioning process (Impairment stream), PD application, LGD parameters and analysis of the impact of the Average PD of the performing portfolio was changes have been successfully completed. The implementation of project 4.28%, corresponding to rating 17. This activities, and collection of data for modelling the basic parameters of PD Not demonstrated stability in 2016 with no relevant, 0,18% and LGD risks, as well as enabling periodical data exchange and systemic oscillations in interval changes of PD values. Micro 75,21% implementation of calculated results, are planned for 2017. Corp/SME 0,00% PI 24,79% In accordance with the activities of the entities’ banking agencies on preparing the implementation of the Strategy for introduction of Basel III, a Moderate risk, 73,11% Quantitative Impact Study (QIS) was carried out regarding new requirements Micro 2,58% Corp/SME 65,81% for regulatory capital i.e. calculation of capital requirements, among other PI 31,61% things, for credit risk.
32 33 sberbank bh · annual report 2016
1MOB – Month on Adequate Portfolio Management 90+ Vintage booked /*Period 1,60% @6 @12 @18 elapsed from booking The aim of the loan portfolio quality review is to allow the Bank to assess date until reporting potential losses from assumed risks and to take possible corrective actions. 1,40% date. Portfolio quality is sustainably managed through regular monthly controls
of the Retail portfolio in the form of Portfolio Quality Reporting (PQR) and 1,20% Vintage analyses, accompanied by the creation of adequate measures to
prevent deterioration. Reports are aimed at early identification of loans 1,00% approved within a certain time period, which appear 30+ or 90+ DPD on a reporting date depending on the date of approval. Vintage reports provide 0,80% basic indicators in terms of loan approval quality and the operations of receivables collection. Another important function of the Vintage report is the recognition of possible fraud, which might be identified through these 0,60% two types of reports i.e. Vintage 30+ and Vintage 90+. These report could be the basis for identification of early signs of fraud. By means of regular 0,40% analyses and portfolio quality management the Bank has attained significant Quality Portfolio Review average indicators in the last 12 months, namely: 0,20% - Vintage Analysis per month of booking Vintage 30+@4 MOB1 of 0.66% and Vintage 30+@6 MOB 0.94%, whereas Vintage 90+ @12 MOB is 0.47%, which shows very good portfolio quality 0,00% management.
30+ Vintage 2,50% 1,60% 90+ Vintage
2,00% 1,40%
1,20% 1,50% 1,00%
1,00% 0,80%
0,60% 0,50% 0,40%
0,00% 0,20%
0,00%
34 35 sberbank bh · annual report 2016
A big step forward was taken in the support and development of a strategy The automatic rating and credit product’s PD calculation is expected to for the implementation of a new product and definition of criteria for limit result in considerable time savings for bank staff and UW along with a calculation concerning the new co-branded credit card, the PIKA card. Credit shortening of the processing time by 8 minutes and a saving of at least 1.4 Risk also demonstrated its capabilities, knowledge, experience and potential FTE annually. In the course of implementation, significant improvements in risk profile creation activities, including the system setting of credit risk in the quality of data on clients and employers, as well as up-to-date data parameters for the purpose of automatic decision-making on applications on client rating have been evident. Towards the end of 2016, a pilot project for PIKA credit cards. Automatization of creditworthiness calculation and was activated throughout the network, analyses of which produced very know-how on approaches to automatic approval will be implemented in positive results and full integration and application in the credit process is 2017 for other credit products as well. Establishing a new credit process for expected in 2017. unsecured loans, automatization of the decision-making process for PIKA A rating application for non-retail clients was successfully implemented cards, and adequate monitoring and measuring of Time to Decision (TTD) enabling centralized access to client ratings and balance sheet position and resulted in 2016 in a significant speeding up of process steps, which in turn qualitative information, which will be used for back testing analyses, rating led to an increase in user and client satisfaction. model calibration and for adequate monitoring, decision-making, and The Credit Risk team (Corporate & Retail) initiated the implementation of identification of early warning signs for non-retail clients. the integration of the internal rating model for private individuals in the application process.
Time to Decision
24:00:00 22:26:32 21:36:00
19:12:00 11:42:13 16:48:00 Average Time 14:24:00
12:00:00
9:36:00 Median
7:12:00
4:48:00
2:24:00
0:00:00 April May June July August September Oktober November
36 37 sberbank bh · annual report 2016
Collateral Management content of real estate assessment and the quality thereof by the Bank, and by emphasizing the importance of adequate real estate assessment The Bank actively uses collateral instruments as a technique to reduce reflected in adequate risk allocation in the contract for which it is collateral. credit risk, aligned with regulations of the local regulator and Basel III rules. The system allows the recording, allocation and monitoring of collateral A continuous process of collateral monitoring for mortgage loans, in terms value utilization at the level of a single or more collaterals, and it provides of monitoring the term of insurance policy validity, verifying the information at any given moment about type of placement, type of establishment of mortgage in land registers and monitoring the regular The process of re-assessments of pledged real estate in the course of 2016, delivered collateral, order of collection, Basel III alignment, market value haircut, and monitoring collateral discounted value etc. significant results and improvements in collateral portfolio quality. for mortgages
Significant improvement was achieved in the area of collateral re-evaluation
whereby improved collateral monitoring was realized i.e. credit risk was 2,50% 60 better assessed and managed. Re-evaluation of real estate is assessed by 8,58% Mortgage 49 50 the Bank’s architectural associates and this provides timely expert 2,00% insurance policy % assessment of possible changes in the quality and value of collateral. For 40 certain loans and collateral values, the internal evaluation of real estate 1,50% 5,29% Outdated provided as collateral is part of the acquisition. 3,76% 30 4,04% 4,18% appraislas % 1,00% This allows the Bank to measure and assess potential risk in the early stage 3,05% 20 2,66% of assuming risk, for potentially larger exposure and collateral values. In 2,37% 1,95% 0,50% 1,61% 1,69% 1,62% Missing LR 2016, cooperation with external assessors who are actively working with 10 7 clients and the Bank was intensified. Cooperation took place in several 7 3 statements % % 6 4 regions in BiH in the form of presenting the minimum requirements of the 0,00% 0
38 39 sberbank bh · annual report 2016
Marketing and Communications By introducing a co-branded credit card that simultaneously collects points as part of a loyalty program, we have directly offered added value to program The primary goal of the Marketing and Communications Department is to users. Promotional stands were set up in the largest Konzum stores where improve brand recognition, provide information about new products and interested consumers could apply directly for the Sberbank payment Pika services and, in line with this, increase client satisfaction by promoting Card. “Svuda plaća, još više vraća” (“It pays everywhere and returns even simplicity and ease of doing business with Sberbank. Throughout the year, we more”) was the slogan of the advertising campaign that marked the second used traditional communications channels, such as advertising on electronic, half of the year. print and digital media, but also two-way channels, such as social networks, in order to develop understanding and raise confidence among existing and Two sporting events attracted great media attention in 2016, namely the potential buyers. European Football Championship and the Summer Olympics. During these events, we promoted the special offer of replacement and non-purpose loans. Advertising Social networks In our advertising campaigns, we mostly emphasized replacement and non-purpose loans, quick cash loans, credit cards, savings products and During the year, we continued to strengthen our relationship with Sberbank’s exchange services. Facebook fans. The speed of responding to Facebook queries is at an enviable level, as is the number of new followers. We are approaching 20,000 fans. The beginning of the year was marked by the formal signing of the official The year was marked by a partnership with BH Telecom through which we entry of Sberbank into the largest loyalty program in Bosnia and presented and promoted two new innovative services: ClickPay and TopUp. Herzegovina. Cooperation with the Pika Card program was additionally Through appropriate video clips we clarified the use of these services and promoted through an advertising campaign via electronic, print, digital illustrated a modern approach to addressing the daily challenges faced by and OOH (out of home) media. clients.
40 41 sberbank bh · annual report 2016
Sponsorships and Donations Market Research
When determining projects to be financially supported, we took into We pay great attention to upgrading banking services. By analysing account the effects on the local community. Building trust between clients consumer habits, and organizing different focus groups, and loyalty and and the Bank is also achieved by sponsoring socially useful projects, and client satisfaction surveys, we gather relevant data that helps us respond through donations that help the development of the local community. We to the actual needs of our clients. The Marketing and Communications made our contribution in supporting culture by sponsoring the 20th Jazz Department plays a significant role in establishing and promoting Festival, in the course of which we emphasized the stability of the Bank and educational content tailored to the Bank’s employees. The Sberbank the security of its business. Academy was a focus of attention in 2016 and through our active participation we contributed to greater understanding of client needs.
Internal Communications
We paid particular attention to internal communication and informed staff about topical issues through our new intranet page. Each of the activities carried out was aimed at strengthening the Sberbank brand.
42 43 sberbank bh · annual report 2016
Human Resources In the field of human resources management, 2016 was a dynamic year. It was marked by organizational changes that were implemented in order to react in the best way to the strategic goals that had been set. At the end of December 2015, Sberbank BH d.d. had 425 employees, of whom 66.35% possessed an undergraduate or master’s degree. The average length of service in Sberbank BH d.d. is 6.9 years, which indicates a high level of satisfaction and staff commitment to the Bank’s long-term development. opportunity to undergo practical training that During the year, we also paid particular Understanding the importance of continuous would allow them to complement their attention to our visual identity and our 10 12 employee training and development, Sberbank theoretical knowledge with practical presence on social networks such as LinkedIn Gender knowledge about banking. During the year, we and Facebook. structure of BH d.d. founded the Sberbank Academy. All developed and implemented a corporate culture the Bank's Top employees are provided with a diverse range of As a socially responsible company, we Management that promotes the Bank’s values: “All of us for education and training opportunities in areas supported various humanitarian activities and the client. We are a team. I am a leader.” We that are relevant to their professional our employees have always been happy to join organized events that helped staff to get to development. The Bank strives to be an us in these efforts. We continue actively to know one another better, to improve Sberbank BH d.d. has a positive organizational organization in which employees may learn and improve the human resources and management communication and develop team spirit. The culture that appreciates and nurtures creativity apply their skills and where they can develop system. We wish to be recognized in the labour creation of a working environment that and innovation and an environment in which together with their employer. market as an employer that supports social nurtures continuous feedback in the fulfilment corporate responsibility. This was recognized in there is an opportunity for growth and Sberbank encourages learning during work, of clearly set goals, and the development of a 2016 when Sberbank was designated “Most development. Moreover, in 2016 we worked learning from colleagues, and exchange of desired level of competence and career Wanted Employer” in the financial sector by intensively on career development and knowledge and experience for the purpose of development, was our focus during 2016. By visitors to the Posao.ba portal. encouraged employees to prove their abilities in maintaining competence and increasing the building a culture of providing feedback, we new posts. The Bank has a policy of hiring performances of individuals. The focus in 2016 strive to fulfil our ambition to be a results- educated and motivated people who want was on sharing existing knowledge while oriented company. professional challenges and are willing to take providing quality training programs aimed at The plan for the coming period is to improve enhancing quality of work and possibilities for the initiative, and who are also prepared to work employee efficiency and to develop internal advancement within the Bank. A series of in a team. In the hiring process in 2016, we placed training further so as to enable maximum internal training courses were organized in emphasis on employees with proven results and sharing of knowledge within the Bank. Internal various sections of the Bank. work experience in the local market, so that training and education programs on business they could use their knowledge to contribute to Acting in accordance with its needs, the Bank operations are important elements of our the fulfilment of the Bank’s goals. provided ambitious students with the strategy.
44 45 sberbank bh · annual report 2016
Sector for Banking Operations Support (GBS) In October 2016, the Bank reorganized and established the Sector for Banking Operations Support (GBS), bringing together the activities of Account Cost the existing Organization, Process and Project Administration Monitoring Management, Facility Management and Procurement and Security departments.
The Department of Organization, Process and 3D Secure Sberbank Project Management made the necessary code PIKA Card
adjustments to the business processes and Optimization procedures of the Bank based on the new of processes of introduction/upgrade of organizational model within the designated functionalities in business applications, and Electronic deadlines. This organizational unit managed the archive of private individuals’ credit files. project portfolio of the Bank consisting of projects whereby new products and functionalities were implemented, processes optimized, savings made and the Bank’s overall business improved.
The following projects were implemented during the year: 5S, Account Administration, Cost Monitoring, PIKA Card, 3D Secure code, Optimization of processes of introduction/ upgrade of functionalities in business applications, and Electronic archive of private individuals’ credit files. Optimization projects were managed directly by the Organization, Process and Project Management department.
With the 5S project – Optimization of space in OU Account Administration, recognized as best practice in SBEU – direct and indirect benefits were achieved (less printing, less risk of penalty due to incomplete documentation, release of working space, and work hours savings). Employee efficiency rose by 6%.
46 47 sberbank bh · annual report 2016
The Optimization of outgoing written documentation introduced numerous launched. The aim of the project is to introduce an end-to-end system solutions and improvements resulting in cost savings of 10%, which will have measurement process for the issue of PIKA credit cards for all sales channels. a considerable impact on costs in 2017. At the beginning of the year, the Facility Management and Procurement Department started implementation of Open Space in most organisational Mail costs units located in Head Office. Today, the working conditions in these Open 14,000.00 EUR Space units have been improved, the premises have been fully refurbished, 12,000.00 EUR new furniture has been acquired, meeting rooms have been established along with all necessary equipment, and the premises have been redecorated. 10,000.00 EUR Thanks to this new concept, the Bank managed to reduce rental costs in the 8,000.00 EUR Head Office by 16% per annum.
6,000.00 EUR February was marked by the opening of a new branch office in Travnik in a very attractive location. The Sanski Most branch office was relocated to a 4,000.00 EUR newly constructed building in the centre of town, considerably improving 2,000.00 EUR conditions for employees and clients.
0.00 EUR The end of the year saw the beginning of work on relocating the regional January February March April May June July August September October November December centre in Mostar. An attractive location, motivated employees and lower rental costs were the impetus for the decision to furnish this branch in record A new web service using the database of records held in the BiH Agency for time and start operations immediately after the New Year holidays. Identification Documents, Registers and Data Exchange was introduced The summer period was used for refurbishment of old branch offices in through this project. Clients now have the opportunity to obtain a legally Banovići, Živinice, Gradačac, Grbavica, Kraševo and Tuzla 2. The refurbishment mandatory document i.e. residence registration, directly in the Bank. included painting walls, replacing carpets and window shutters and installing Furthermore, an electronic protocol module was introduced, digitalizing mail new air conditioners. processing. The module provides a single record of all cases and documents, Following determined negotiations, rental fees for the branch offices in Tuzla even if organizational units and case processors are not connected. 1, Brčko, Kakanj, Centar, Zenica and Vitez were successfully reduced. New five- The project of process optimization by introducing/upgrading functionalities Rental costs in business applications contributed to solving the complex issue of linking IT 3,600,000.00 and business. The introduction of Redmine and CBS maps on Sharepoint enabled the easier structuring and collection of information, as well as 3,550,000.00
enhanced control of this process. The process has been shortened in terms of 3,500,000.00 elimination of unnecessary steps, signing and iterations, and better control of investments by the IT Management Committee of the Bank has been attained. 3,450,000.00
At the end of the year, the Organization Department introduced business 3,400,000.00
process management methodology and the first BPMS project nominated for 3,350,000.00 the PIKA Card issue process, as the best-selling card product of the Bank, was 2014 2015 2016
48 49 sberbank bh · annual report 2016
year contracts on rental fees were concluded with the lessors with savings of 1. 1. 2. 3.6% annually. Printer Rental costs 200000 160000 2. During 2016, a set of modules for automated management of invoices, 140000 Cleaning costs contracts, orders and central procurement was successfully developed. 150000 120000 100000 In addition to these modules and internal IT resources, the Ticket system was 80000 enhanced, as an application for procurement of office and printed materials 100000 60000 as well as an application for reservation of vehicles and meeting rooms. 50000 40000 The process of archiving, procurement and delivery of printed and office 20000
materials, including the outbound documentation management process, 0 0 was improved. Following considerable enhancement in the organization of 2014 2015 2016 2014 2015 2016 these processes, costs of express mail were reduced by 63%, office materials costs by 52%, and transport costs by 32%. These savings were not due to The Security Department underwent considerable change. Personnel reduced delivery but a result of sound organization and a systemic approach changes led to a new approach to challenges posed by new technologies in established in cooperation with Retail. the market and evolving security threats.
1. 1. 2. A signed outsourcing agreement in the field of technical protection provided Transport costs 300,000.00 100,000.00 a new dimension in regular business operations and cost budgeting. At the 2. same time, the costs of technical and physical security were reduced. 250,000.00 Office material 80,000.00 Given that cyber security was one of the top issues during the year, this costs 200,000.00 60, 000.00 organizational unit recognized the threats and worked to prevent them by 150, 000.00 switching to modern software protection technologies and organizing 40,000.00 100,000.00 training in cyber security.
20,000.00 50,000.00 Emphasis was placed on employee training in data protection and social engineering, and the presentation of real examples of fraud that occurred in 0.00 0.00 2014 2015 2016 2014 2015 2016 banks in the region. It is important to note that the Security Department did not register a single significant incident during the year.
More than 10 tenders were carried out in the year. Annual savings of 32% were realized in the tender procedure for printing services. In the tender procedure for cleaning services with a new supplier, the quality of cleaning services was improved and annual savings of 18% were achieved.
50 51 sberbank bh · annual report 2016
ANNUAL FINANCIAL STATEMENTS Sberbank BH d.d.
52 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Management Board’s Report
Dear Ladies and Gentlemen, The strategic orientation in the segment of operations has been to support the banking operations while ensuring the highest level of Economic growth in the EU countries has registered sporadic progress but operational efficiency, cost optimization and improvement in information it is generally still stagnating as a result of developments in the technology security. macroeconomic environment. Low economic growth, unfavourable political environment and underdeveloped real sector are all factors During the last year, Sberbank BH, as a socially responsible bank, positioned which hinder the business operations of the banking system. Despite the itself as the Most desirable employer in the financial sector (a research by unfavourable environment and owing to, most of all, the flexible business the web portal „posao.ba“). All of the aforementioned could not have strategy, Sberbank BH will remember the year 2016 by a remarkable been realized without the outstanding dedication of its employees, achieved result and successful partnerships. support and trust of its shareholders, business partners and loyal clients, for whom it exists and to whom it is grateful. The strategic contract with Agrokor Group has started to be implemented in practice at the beginning of the year when Sberbank payment Pika card was launched, a unique card product that is slowly but surely becoming indispensable in wallets of BH citizens.
During 2016 Sberbank BH has strengthened its partnership with BH Post and has also expanded its cooperation with the leading telecom operator in B&H, namely BH Telecom. New services have been introduced enabling savings for clients, safer payment collection for the telecom operator and additional revenue for the Bank.
In the retail segment, the growth continues in all aspects with a particular focus remaining on the “Bank@Work” project i.e. “Your bank at your workplace”, through which the Bank offered the clients a possibility to contract products and services at their workplace. Business network has been increased by one branch office, thus meeting the planned number of branches and achieving the optimal territorial coverage in accordance with the Bank’s business strategy.
The main focus in the corporate segment has been the continuation of cooperation with clients who are leaders in their field, whilst taking into account the profitability of business relationship, and the constant work on portfolio quality, risk diversification through „Trade Finance“ products, increase in the scope of neutral operations, as well as the management of deposit operations in order to improve the liquidity. Jasmin Spahić, Edin Karabeg, Jasmina Dobrača, In order to adequately respond to all business challenges, the Bank’s Executive Director CEO Executive Director organizational structure has been revised and adapted to modern market trends so as to make Sberbank BH a more flexible and faster bank.
54 55 sberbank bh · annual report 2016 godišnji izvještaj 2016
Bilješke uz finansijske izvještaje finansijski izvještaji za godinu koja je završila 31. decembra 2016.
Responsibilities of the Management Board and Supervisory Board for the preparation and approval of the annual financial statements
The Management Board is required to prepare financial statements for each financial year, which give a true and fair view of the financial position of the Bank and of the results of it’s operations and cash flows in accordance with applicable accounting standards, and is responsible for maintaining proper accounting records which enable the preparation of financial statements at any time. The Management Board has a general responsibility for taking such steps which are reasonably available to safeguard the assets of the Bank and to prevent and detect fraud and other irregularities.
The Management is responsible for selecting suitable accounting policies which conform to applicable legal requirements and apply them consistently; for making judgements and estimates which are reasonable and prudent; and for preparation of the financial statements on a going concern basis unless it is inappropriate to presume that the Bank will continue in business.
The Management Board is responsible for the submission of annual report to the Supervisory Board together with the annual financial statements, following which the Supervisory Board is required to approve the annual financial statements for submission to the General Assembly for adoption.
The financial statements set out on pages 60 to 144 were authorised by the Management Board on 10th of March 2017 for issuance to the Supervisory Board, and are signed below to signify this on behalf of the Bank:
For and on behalf of Sberbank BH d.d.:
Edin Karabeg, Jasmina Dobrača, Jasmin Spahić, Executive Director CEO Executive Director
56 57 sberbank bh · annual report 2016 godišnji izvještaj 2016
finansijski izvještaji za godinu koja je završila 31. decembra 2016.
Independent auditor’s report to the shareholder of Sberbank BH d.d. Sarajevo
We have audited the accompanying financial statements of Sberbank BH the financial statements in order to design audit procedures that are d.d. Sarajevo (hereinafter the “Bank”), which comprise the statement of appropriate in the circumstances, but not for the purpose of expressing an financial position as at 31 December 2016, and the statement of comprehensive opinion on the effectiveness of the entity’s internal control. An audit also income, statement of changes in equity and statement of cash flows for the includes evaluating the appropriateness of accounting policies used and the year then ended, and a summary of significant accounting policies and other reasonableness of accounting estimates made by management, as well as explanatory information (as set out on pages 4 to 79). evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and Management’s Responsibility for the Financial Statements appropriate to provide a basis for our audit opinion. Management is responsible for the preparation and fair presentation of these financial statements in accordance with Intenational Financial Reporting Opinion Standards and for such internal control as management determines is In our opinion, the financial statements present fairly, in all material necessary to enable the preparation of financial statements that are free from respects the financial position of the Bank as at 31 December 2016, and of material misstatement, whether due to fraud or error. its financial performance and its cash flows for the year then ended in accordance with Intenational Financial Reporting Standards. Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Standards on Auditing applicable in federation of Bosnia and Herzegovina. Those Zvonimir Madunić Maja Hafizović standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Procurator Certified Auditor financial statements are free from material misstatement. Ernst&Young d.o.o. Sarajevo
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers Sarajevo, 10th of March 2017 internal control relevant to the entity’s preparation and fair presentation of
58 59 sberbank bh · annual report 2016
Statement of comprehensive income Statement of For the year ended 31 December financial position
2016 2015 2016 2015 Note Note ’000 BAM ’000 BAM ’000 BAM ’000 BAM Assets
Interest income 7 60,985 58,739 Cash and cash equivalents 15 104,185 114,414 Obligatory reserve with the Central Bank 16 95,311 60,546 Interest expense 8 (19,294) (19,740) Loans and receivables from banks 17 - 10,926
Net interest income 41,691 38,999 Financial assets available for sale 18 988 988 Loans and receivables from customers 19 927,120 879,400 Fee and commission income 9 16,503 12,553 Accrued interest and other assets 20 16,267 14,461 Fee and commission expense (1,435) (1,274) Investment in associates 21 - 580 Investment property 22 1,543 1,832 Net fee and commission income 15,068 11,279 Property and equipment 23 11,891 13,066 Intangible assets 24 4,378 4,508 Dividend income 10a 400 57 Net gains and losses on financial instruments at fair value through Total assets 1,161,683 1,100,721 profit and loss and result from foreign exchange trading and transla- 10b 2,153 1,861 tion of monetary assets and liabilities Liabilities Current accounts and deposits from banks 25 135,921 162,490 Operating revenue 59,312 52,196 Current accounts and deposits from customers 26 767,706 674,884
Other income 10c 769 617 Borrowings and subordinated debt 27 59,853 78,073 Net impairment losses and provisions 11 (8,248) (8,476) Accrued interest and other liabilities 28 26,841 22,955 Personnel expenses 12 (17,999) (15.708) Provision for liabilities and charges 29 1,819 1,385 Depreciation and amortization (3,743) (3,750) Deferred tax liability 30 521 753 Other expenses 13 (20,580) (17,960) Liabilities for income taxes 836 187
Other Income and expenses (49,801) (45,277) Total liabilities 993,497 940,727
Equity Profit before tax 9,511 6,919 Share capital 31 76,337 76,337 Income tax expense 14 (1,319) (712) Share premium 32 27,773 27,773
Net profit for the year 8,192 6,207 Regulatory reserves for credit losses 24,815 24 815 Retained earnings 39,261 31,069 Other comprehensive income - - Total equity 168,186 159,994
Total comprehensive income for the year 8,192 6,207 Total liabilities and equity 1,161,683 1,100,721 The accounting policies and other notes on pages 64 to 144 form an integral The accounting policies and other notes on pages 64 to 144 form an integral part of these financial statements. part of these financial statements.
60 61 sberbank bh · annual report 2016
Statement of Statement of cash flows changes in equity
2016 2015 Regulatory For the year ended 31 December Note Share Share reserves Retained ’000 BAM ’000 BAM Total capital premium for credit earnings Cash flow from operating activities losses Profit before income tax 9.511 6.919 Adjustments for: 000‘ BAM 000‘ BAM 000‘ BAM 000‘ BAM 000‘ BAM Depreciation and amortization 22, 23, 24 3.743 3.750 Net impairment losses and provisions 19 5.597 5.865 Balance as at 1 January 2016 76.337 27.773 24.815 31.069 159.994 Other items (4.144) (5.224) - - - - - Cash flow changes in operating assets and liabilities Profit for the year - - - 8.192 8.192 Change in obligatory reserve with the Central Bank 16 (34.765) (10.815) Other comprehensive income - - - - - Change in loans and receivables from banks 17 10.926 25.919 Change in financial assets available for sale 18 - 3.000 Total comprehensive income for the year - - - 8.192 8.192 Change in loans and advances to customers 19 (47.721) (70.590) Change in accrued interest and other assets 20 (1.806) (3.216) Change in current accounts and deposits from banks 25 (26.569) (76.648) Balance as at 31 December 2016 76.337 27.773 24.815 39.261 168.186 Change in current accounts and deposits from customers 26 92.822 155.214 Change in accrued interest and other liabilities 28 3.885 5.486
Balance as at 1 January 2015 76.337 27.773 24.815 24.862 153.787 Net cash flow from operating activities before income tax 11.479 39.660
- - - - - Income taxes paid (901) (45)
Profit for the year - - - 6.207 6.207 Net cash flow used in operating activities 10.578 39.615 Other comprehensive income - - - - - Cash flow from investing activities Acquisition of property and equipment 23 (1.233) (738) Total comprehensive income for the year - - - 6.207 6.207 Acquisition of intangible assets 24 (1.354) (1.177) Net cash flow used in investing activities (2.587) (1.915)
Balance as at 31 December 2015 76.337 27.773 24.815 31.069 159.994 Cash flow from financing activities Increase/(repayment) of borrowings and subordinated debt 27 (18.220) 4.389 The accounting policies and other notes on pages 64 to 144 form an integral Increase in share capital part of these financial statements. Net cash flow generated from/(used in) financing activities (18.220) 4.389
Net increase/(decrease) in cash and cash equivalents (10.229) 42.089
Cash and cash equivalents at the beginning of the year 15 114.414 72.325 Cash and cash equivalents at the end of the year 15 104.185 114.414 Interest paid 16.713 18.315 Interest received 76.384 53.984 Dividends received - 57
The accounting policies and other notes on pages 64 to 144 form an integral part of these financial statements..
62 63 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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Notes to the financial statements (which form the part of the financial statements)
1 Reporting entity 2 Basis of preparation
Sberbank BH d.d. Sarajevo is a company founded in the Federation of Bosnia and Herzegovina. The address of the Bank’s registered head office is Fra a) Basis of preparation Anđela Zvizdovića 1, Sarajevo. The financial statements have been prepared in accordance with The bank was founded in The Cantonal Court in Sarajevo No. UF / I (3962/00 International Financial Reporting Standards (“IFRS”) as issued by dated on 10.05.2000 under the name “Volksbank BH d.d. Sarajevo”. Change International Accounting Standards Board (“IASB”). of the name Volksbank BH Plc. to Sberbank BH d.d. Sarajevo has been made The accounting regulation applicable in Federation of Bosnia and on 15 February 2013, by decision of the Municipal court in Sarajevo. Herzegovina (hereinafter „Federation“ or „FB&H“) are based on the provisions The Bank is licensed in the Federation of Bosnia and Herzegovina to perform of the Law on accounting and auditing (“Law”) (Official Gazette 83/09). banking operations related to corporate and retail lending, deposit taking Companies prepare and present their financial statements in accordance activities in the country and abroad and payment operations. In accordance with International Accounting Standards (“IAS”), their amendments and with the banking legislation in the Federation of Bosnia and Herzegovina, the interpretations (Standard Interpretations), International Financial Reporting Bank has to operate based on principles of liquidity, solvency and profitability. Standards (“IFRS”) and their amendments and interpretations (“International Financial Reporting Interpretations”) issued by IASB, as As of 31 December 2016, the Bank had it’s head office in Sarajevo and 31 translated and published by Association of accountants, auditors and branches located in the cities Sarajevo, Mostar, Zenica, Visoko, Kakanj, Tuzla, financial employees in FB&H (by the authorisation of Accounting Živinice, Gradačac, Gračanica, Banovići, Lukavac, Tešanj, Kraševo, Bihać, Commission of Bosnia and Herzegovina number 2-11/06). The decision on Cazin, Sanski Most, Brčko, Orašje, Široki Brijeg, Vitez i Travnik. publishing Standards number O-1/4-2010 dated 28 April 2010 is binding for On 15 February 2012, one of the most important financial institutions in the periods starting 1 January 2010. This decision includes IAS, IFRS and Europe, Sberbank, acquired 100% stake of the group Volksbank International interpretations published by IASB and endorsed by EFRAG until October AG (“VBI”) and became the sole owner of VBI. During the year 2012, VBI 2009. Any previously issued but subsequently EFRAG endorsed standards changed its name to Sberbank Europe AG. nor new or amended IFRS and IFRIC interpretations issued by the IASB subsequent to October 2009 have not yet been translated and published. Sberbank Russia is the largest banking group in Russia and one of the leading global financial institutions. Sberbank holds almost one-third of total assets In preparation of these IFRS financial statements for the year ended 31 of the Russian banking sector and is a key lender to the national economy December 2015 the Bank has considered whether application of standards and the largest depositary in Russia. The Central Bank of the Russian that have been issued by the IASB subsequent to and applicable for the Federation is the founder and major shareholder of Sberbank which owned current accounting period but which were not translated and published in 50% of the share capital of the Bank increased by one additional voting share, FB&H results in a material departure from relevant applicable local while the remaining ownership is held by domestic and foreign investors. accounting regulation. The Bank has concluded that this is not the case and Sberbank has more than 110 milion individual customers and one million therefore in the opinion of the management these IFRS financial statements corporate clients in 22 countries. Sberbank has the largest distribution also satisfy the Bank’s legal statutory requirement to publish financial network in Russia with more than 18,000 branches, and the international statements in accordance with relevant applicable local accounting business operations includes UK, U.S., Commonwealth of Independent regulations. States, Central and Eastern Europe, Turkey and other countries. b) Basiss of preparation and measurement basis
Sberbank Europe AG: These financial statements are separate standalone financial statements of Sberbank Europe Group (Sberbank Europe AG), headquartered in Vienna, the Bank. In current year the bank does not have any investment into Austria, is a banking group that is 100% owned by Sberbank Russia. Sberbank associate. The Bank is an indirect subsidiary of Sberbank of Russia (Russian Europe Group is present in nine markets in Central and Eastern Europe (CEE): Federation) which prepares financial statements in accordance with IFRS Austria, Bosnia and Herzegovina, Croatia, Czech Republic, Germany, and which are available for public use on the web site of Sberbank of Russia. Hungary, Slovenia, Serbia and Ukraine. In total, the bank has around 4,300 Investments in associates in these separate financial statements of the Bank employees, operates 232 branches and serves over 600,000 customers. are stated at cost less any impairment losses.
64 65 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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The financial statements have been prepared on a historical cost basis except 3 Significant accounting policies for financial assets and liabilities carried at fair value through profit and loss The accounting policies set out below have been consistently applied for all (loans and receivables are carried at amortized cost). years presented in these financial statements.
c) Functional and presentation currency a) Foreign currency transactions The financial statements are presented in convertible marks (“BAM”), which is the functional currency. Amounts are rounded to the nearest thousand Transactions in foreign currency are translated into the functional currency (unless otherwise noted). at the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions The Central Bank of Bosnia and Herzegovina (“Central Bank “or” CBBH”) has and from the translation of monetary assets and liabilities denominated in implemented a course based on “currency board” according to which BAM foreign currencies at year-end are recognised in the statement of is exchanged to EUR at 1:1.95583 ratio (this rate was used in 2016 and 2015). comprehensive income. Non-monetary assets and items measured at It is expected that this exchange rate will continue in the foreseeable future. historical cost in foreign currency are translated using the exchange rate at the date of the transaction and are not retranslated on the reporting date. d) Use of estimates and judgments b) Interest income and expense The preparation of financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect Interest income and expense are recognised in statement of comprehensive the application of accounting policies in use and the amounts of disclosed income as they accrue using the effective interest rate method. The effective assets, liabilities, income and expenses. Actual results may differ from these interest rate is the rate that discounts estimated future cash flows of financial estimates. assets or liabilities over the life of the financial instrument (or, if appropriate, over the shorter period) to its net carrying value. In the calculation of effective The estimates and underlying assumptions are reviewed regularly. Revisions interest rates the Bank estimates future cash flows considering all contractual to accounting estimates are recognized in the period in which the estimates terms, but not future credit losses. are changed and possibly in future periods if they are affected.
Information on areas with significant uncertainties in estimates, and Calculation of the effective interest rate includes all paid or received transaction information on critical judgments in application of accounting policies which costs, fees and other items which are an integral part of the effective interest have most significant effect on the amounts dislcosed in these financial rate. Transaction costs include all incremental costs incurred directly in statements of the Bank are presented in Note 6. connection with the issuance or acquisition of financial assets or financial liabilities.
Interest income and expense recognised in statement of comprehensive income includes interest on financial assets and financial liabilities that are measured at amortized cost calculated using the effective interest rate method.
c) Fee and commission income and expenses Fee and commission income and expenses which are an integral part of the effective interest rate applied to a financial asset or liability are included in the interest income and expense. Fee and commission income and expenses comprise mainly fees related to credit card transactions, the issuance of guarantees and letters of credit, domestic and foreign transactions and other services and are recognised in the statement of comprehensive income upon performance of the relevant service.
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d) Net gains and losses on financial instruments at fair value through it is probable that sufficient taxable future profits will be available against profit or loss, result from foreign exchange trading and translation which the deferred tax assets can be utilised. At each reporting date the of monetary assets and liabilities Bank reassesses unrecognised potential deferred tax assets and the carrying amount of deferred tax assets for indications of impairment. The position “Net gains and losses on financial instruments at fair value through profit or loss, result from foreign exchange trading and translation of monetary assets and liabilities” includes gains from foreign exchange h) Financial instruments trading, realised and unrealised gains and losses from derivative financial instruments and net gains and losses from the translation of foreign currency Classification denominated monetary assets and liabilities on the reporting date. The Bank classifies its financial instruments in the following categories: loans and receivables, financial assets available for sale, financial assets and financial e) Dividend income liabilities at fair value through profit or loss and other financial liabilities. The Dividend income is recognised in the statement of comprehensive income classification depends on the purpose for which the financial assets and when the rights to receive the dividend are realised. liabilities were acquired. Management determines the classification of financial assets and liabilities upon initial recognition and re-evaluates this classification at each reporting date. f) Lease payments
Operating lease expenses are recognised in statement of comprehensive (a) Loans and receivables income on a straight-line basis over the term of the lease. Loans and receivables are non-derivative financial assets with fixed or determined payments that are not quoted in an active market. Loans and g) Income taxes receivables are originated when the Bank provides funds to a debtor with no The income tax charge is based on taxable profit for the year and comprises intention of trading with these receivables and include placements with and current and deferred tax. Income tax is recognised in the income statement loans to other banks, loans and receivables from customers and balances with except to the extent that it relates to items recognised directly in other the Central Bank. comprehensive income, in which case it is recognised in other comprehensive income. Current tax is the expected tax payable on the taxable income for (b) Assets available for sale the year, using the tax rates enacted or substantially enacted on the balance Financial assets available for sale are non-derivative financial assets which are sheet date and any adjustments to tax payable in respect of previous years. either designated in this category or are not classified into any of the other The amount of deferred tax is calculated using the balance sheet liability categories. Financial assets classified as available for sale are intended to be method whilst taking into account the temporary differences between the held for an undefined time period, but may be sold in response to liquidity carrying amounts of assets and liabilities used for financial reporting needs or changes in interest rates, foreign exchange rates or equity prices. purposes and amounts used for income tax purposes. Deferred tax assets Financial assets available for sale include equity and debt securities. and liabilities are recognized using the tax rates that are expected to apply on taxable income in the period in which those temporary differences are (c) Financial assets and financial liabilities at fair value through profit or loss expected to be recovered or settled based on the tax rates enacted on the Financial assets and financial liabilities at fair value through profit or loss have reporting date. two sub-categories: financial instruments held for trading (including The measurement of deferred tax liabilities and deferred tax assets reflects derivatives) and those designated by management at fair value through profit the tax consequences that would follow from the manner in which the Bank or loss at inception. A financial instrument is classified in this category only if expects on the reporting date to recover or settle the carrying amount of its it is acquired or incurred principally for the purpose of selling or repurchasing assets and liabilities. Deferred tax assets and liabilities are not discounted it in the near term for the purpose of short-term profit taking or designated as and are classified as non-current assets or liabilities in the statement of such by management at initial recognition. The Bank designates financial financial position. Deferred tax assets are recognised only to the extent that assets and financial liabilities at fair value through profit or loss when:
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• the assets or liabilities are managed, measured and reported internally on Derecognition a fair value basis; The Bank derecognises financial assets (in full or partially) when the rights to • the designation eliminates or significantly reduces an accounting mismatch receive cash flows from the financial instrument have expired or when it loses which would otherwise have arisen; or control over the contractual rights on those financial assets. This occurs when the Bank transfers substantially all the risks and rewards of ownership to • the asset or liability contains an embedded derivative that significantly another business entity or when the rights are realised, surrendered or have modified cash flows that would otherwise be required under the contract. expired. Financial assets and financial liabilities at fair value through profit or loss The Bank derecognises financial liabilities only when the financial liability include derivative financial instruments classified as financial instruments ceases to exist, i.e. when it is discharged, cancelled or has expired. If the terms held for trading of a financial liability change, the Bank will cease recognising the liability and it will instantaneously recognise a new financial liability with new terms and (d) Other financial liabilities conditions.
Other financial liabilities comprise all financial liabilities which are not at fair The fair value of financial assets and liabilities at fair value through profit or loss value through profit and loss and include current accounts and deposits, is determined based on quoted market prices or on models which are based subordinated debt and borrowings on inputs which are obserevable on the market.
Recognition Identification and measurement of impairment of financial assets Loans and receivables and other financial liabilities are recognised when they are placed to customers or received from lenders (settlement date). (a) Financial assets carried at amortised cost The Bank recognises financial assets available for sale and financial assets The Bank reviews loans and receivables as well as other financial assets on and liabilities at fair value through the profit or loss on the trade date which each reporting date to determine whether there is objective evidence of is the date when the Bank commits to purchase or sell the instruments. impairment.
Initial and subsequent measurement If there is objective evidence of impairment of loans and receivables on an individual basis, the impairment loss is determined as the difference between Loans and receivables are initially recognised at fair value. After initial recognition, the carrying value of the assets and the present value of the expected future loans and receivables are measured at amortised cost using the effective interest cash flows discounted by the original effective interest rate of the financial rate method, less any impairment. assets. The carrying value of the assets is decreased using the impairment Financial assets available for sale are measured initially at their fair value plus allowance account, and the loss is recognized in the statement of transaction costs that are directly attributable to the acquisition or issuance of comprehensive income. If loans and receivables have a variable interest rate, the financial asset. Subsequent to initial recognition financial assets available for the discount rate for determining impairment allowance represents the sale are measured at fair value (changes in fair value are recorded within in current effective interest rate determined by an agreement in the moment available for sale reserve in equity), except for equity securities that do not have of impairment. a quoted market price in an active market and whose fair value cannot be reliably Financial assets for which no impairment was recognised on an individual measured, they are stated at cost less impairment. basis are grouped with other financial assets of similar characteristics, which Financial assets and liabilities at fair value through profit or loss are initially are then reviewed for impairment on a group basis. Group impairment also recognised at fair value. All transaction costs are immediately expensed. includes impairment on a portfolio basis (IBNR) in cases where the Bank (on Subsequent measurement is also at fair value. an individual or group basis) determined that there is no objective evidence of impairment. Other financial liabilities are initially measured at fair value including transaction costs. Subsequent to initial recognition the Bank measures other financial If a loan cannot be collected and all legal procedures have been completed liabilities at amortised cost using the effective interest rate. and the final amount of the loss is known, the loan is directly written off. In
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the subsequent period, if the amount of the impairment loss decreases and is significant) credited in the available for sale reserve until the investment is the decrease can be directly linked to an event that has occured after the derecognised, at which time the cumulative gain or loss is recognised in impairment (or write-off), the reduction in the impairment allowance (or other operating income, or the investment is determined to be impaired, collection per written-off assets) is then presented as income in profit or when the cumulative loss is reclassified from the available for sale reserve to loss. Write-off of uncollectible receivables is performed based on the decision the statement of profit or loss in finance costs. Interest earned whilst holding of the relevant Bank’s committee, and in accordance with court decisions, AFS financial assets is reported as interest income using the effective interest agreements between the interested parties and the Bank’s assessments. rate method.
The Bank also calculates impairment allowance in accordance with the relevant regulations of the Banking Agency of the Federation of Bosnia and Offsetting of financial instruments Herzegovina („the Agency“). Loans, placements and other financial assets of Financial assets and financial liabilities are offset and the net amount is the Bank are classified into categories as prescribed by the Agency according reported in the statement of financial position if there is a currently to the expected recoverability which is determined on the basis of the enforceable legal right to offset the recognised amounts and there is an number of days overdue, an assessment of the debtor’s financial position and intention to settle on a net basis, to realise the assets and settle the liabilities the quality of the collateral. The assessed amount of the reserve for potential simultaneously. losses is calculated by applying percentages prescribed by the Agency.
The impairment allowance calculated in accordance with the regulations of Specific financial instruments the Agency was higher than the impairment allowance calculated in accordance with IFRS, and the Bank presented the difference (an excess) as (a) Derivative financial instruments an appropriation within equity in accordance with local regulations. Until 31 Derivative financial instruments may include portfolio securities option December 2012 a transfer from retained earnings to non-distributable contracts and embedded derivatives. In accordance with its treasury policy, regulatory reserves in the amount of the difference in allowance for credit the Bank does not hold or issue derivative financial instruments for speculative losses has been performed. trading purposes. There are no derivatives which are accounted for as From 31 December 2012 the Bank was not obliged to allocate profits to cover hedging instruments. All derivatives are classified as financial instruments the excess of impairment allowance calculated per Agency rules. However, at fair value through profit or loss. if the impairment allowance calculated per Agency rules exceeds regulatory Derivative financial instruments are initially recognised in the statement of reserves, the difference is a deductible item for capital adequacy calculation financial position at fair value. Subsequent to initial recognition derivatives purposes. are measured at their fair value. Fair values are determined based on quoted prices. All derivatives are stated as assets when their fair value is positive and (b) Financial assets available for sale as liabilities if their fair value is negative. Financial assets available for sale which are carried at cost include equity Changes in the fair value of derivatives are included in net gains and losses securities classified as available for sale for which there is no reliable measure on foreign exchange trading which are included in other operating income. of fair value. The Bank assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is Some hybrid contracts might contain both a derivative and a non-derivative impaired. An impairment loss is calculated as the difference between the component. In such cases, the derivative component is referred to as an carrying amount of the financial asset and the present value of expected embedded derivative. When the economic characteristics and risks of future cash flows discounted by the current market interest rate for similar embedded derivatives are not closely related to those of the host contract financial assets. An impairment loss on such instruments is recognised in the and when the hybrid contract is not itself carried at fair value through profit statement of comprehensive income. or loss, the embedded derivative is treated as a separate derivative and classified at fair value through profit and loss with all unrealised gains and After initial measurement, debt securities available for sale financial assets losses recognised in the profit and loss. are subsequently measured at fair value with unrealised gains or losses recognised in other comprehsive income and (if the remeasurement result
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(b) Cash and cash equivalents Bank’s investment properties which are held either to earn rental income or for capital appreciation. Cash and cash equivalents for the purpose of cash flow comprise cash in hand, current account with Central Bank, current accounts with other banks All investment properties, other than assets under construction, are and items in the course of collection. depreciated on a straight line basis at prescribed rates which are determined as cost of the asset written off over their estimated life, as follows: (c) Placements with banks and obligatory reserve with the Central Bank 2016 2015 Placements with banks and obligatory reserve with the Central Bank are Buildings 50 years 50 years classified as loans and receivables and they are carried at amortised cost less impairment. Useful life is reviewed and adjusted if appropriate at each reporting date.
(d) Loans and receivables from customers (j) Property and equipment Loans to customers are presented at amortised cost net of impairment Property and equipment are measured at historical cost less accumulated allowances to reflect the estimated recoverable amounts. depreciation and impairment losses. The cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent cost is included (e) Equity and debt securities in net book value or it is accounted for as separate asset, depending on what is applicable, only if it is probable that the future economic benefits embodied Equity securities classified as available-for-sale are carried at fair value, unless within this asset will flow to the Bank and if the cost of the asset can be there is no reliable measure of the fair value in which case equity securities are measured reliably. Mintenance costs and usual costs of the day to day carried at cost. operations are recognised in profit and loss as incurred. Debt securities are classified as available-for-sale and are carried at fair value. Depreciation is charged for all property and equipment items (except for land and assets in the course of construction) on a straight-line basis at prescribed (f) Investment in associates rates designed to write off the cost over the estimated useful lives of the Investment in associates are accounted at cost less impairment. assets. The estimated useful lives are as follows:
Computers 5 years (g) Borrowings and subordinated debt Furniture and equipment 6.5 – 10 years Interest-bearing borrowings and subordinated debt are classified as other financial liabilities and are recognised initially at fair value, less attributable Motor vehicles 6.5 years transaction costs. Subsequent to initial recognition, these are carried at Leasehold improvements Shorter of 12 years or lease duration amortised cost with any difference between proceeds (net of transaction Business premises 50 years costs) and redemption value being recognised in the statement of comprehensive income throughout the period of the borrowing using the effective interest rate method. Depreciation method and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
(h) Current accounts and deposits from banks and customers Gains and losses on disposal are determined by comparing proceeds with the Current accounts and deposits are classified as other liabilities; they are carrying amount, and are included in statement of comprehensive income as initially measured at fair value plus transaction costs and subsequently other income or operating expense. measured at amortised cost using the effective interest method. (k) Intangible assets
(i) Investment property Intangible assets are stated at cost less accumulated amortisation and Investment properties are carried at cost less any accumulated depreciation impairment. Expenditures on development activities are capitalised if all of and any accumulated impairment losses. Investment properties include the features required by IAS 38 Intangible assets (IAS 38) are satisfied.
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Amortisation is calculated on all intangible assets (except assets in the Obligations for contributions to defined contribution pension plans are course of construction) on a straight line basis at prescribed rates designed recognised as an expense in profit or loss, as incurred. to write off the cost over the estimated useful lives of the assets. The estimated useful lives are as follows: Long-term employee benefits: retirement severance payments and early retirement bonuses Software 5 years The Bank pays retirement severance benefit upon retirement to its employees Amortisation method and useful lives are reviewed and adjusted if in the amount which represents three times the average salary in the appropriate at each reporting date. Federation of Bosnia and Herzegovina (as calculated by the Federal Bureau of Statistics in the period of last three months). (i) Impairment of non-financial assets The liabilities and costs of these benefits are determined using a projected The carrying amounts of the Bank’s non-financial assets are reviewed at each unit credit method. The projected unit credit method considers each period reporting date to determine whether there is any indication of impairment. If of service as giving rise to an additional unit of benefit entitlement and any such indication exists, the asset’s recoverable amount is estimated. An measures each unit separately to build up the final liability. The liability is impairment loss is recognised whenever the carrying amount of an asset or measured at the present value of estimated future cash flows using a discount its cash-generating unit exceeds its recoverable amount. Impairment losses rate that is similar to the estimated interest rate on government bonds. are recognised in the statement of comprehensive income. (n) Provisions The recoverable amount of other assets is the greater of their value in use and fair value less cost to sell. In assessing value in use, estimated future cash Provisions are recorded when the Bank has a present legal or constructive flows are discounted to their present value using a pre-tax discount rate that obligation as a result of past events for which it is probable that an outflow of reflects current market assessments of the time value of money and the risks resources embodying economic benefits will be required to settle the specific to the asset. For an asset that does not generate independent cash obligation and a reliable estimate of the amount of the obligation can be made, inflows, the recoverable amount is determined within the cash-generating or as required by law in the case of provisions for unidentified impairment of unit to which the asset belongs. off-balance-sheet credit risk exposures.
An impairment loss is reversed if there has been a change in the estimate Provisions for liabilities and charges are maintained at the level which the used to determine the recoverable amount. An impairment loss is reversed Bank’s management considers sufficient for coverage of incurred losses. The only to the extent that the asset’s carrying amount does not exceed the Management determines the sufficiency of provisions on the basis of insight carrying amount that would have been determined, net of depreciation or into specific matters, current economic circumstances, risk characteristics of amortisation, as if no impairment loss had been recognised. certain transaction categories as well as other relevant factors.
Provisions are utilised only for the expenditures in respect of which provisions (m) Employee benefits were initially recorded. If the outflow of economic benefits to settle the obligations is no longer probable, the provision is reversed. Short-term benefits
On behalf of its employees, the Bank pays pension and health insurance (o) Share capital which is calculated on the gross salary paid, as well as tax on salaries which are calculated on the net salary paid. The Bank pays these contributions into Issued share capital the state pension and health funds according to statutory rates during the Issued share capital comprises ordinary and preference shares and it is course of the year. In addition, meal allowances, transport allowances and stated in BAM at nominal value. vacation bonuses are paid in accordance with local legislation. These expenses are recorded in profit or loss in the period in which the benefit expense occurred.
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Share premium IAS 1: Disclosure Initiative (Amendment)
Share premium represents the accumulated positive difference between the nominal The amendments to IAS 1 Presentation of Financial Statements further value and the amount of issued shares encourage companies to apply professional judgment in determining what information to disclose and how to structure it in their financial statements. The reserve for credit losses formed from profit The amendments are effective for annual periods beginning on or after 1 The reserve for credit losses was formed from profit and it represents the excess January 2016. The narrow-focus amendments to IAS clarify, rather than of impairment losses calculated in accordance with the regulations of the Agency significantly change, existing IAS 1 requirements. The amendments relate compared to an allowance calculated according to the requirements of IFRS. to materiality, order of the notes, subtotals and disaggregation, accounting policies and presentation of items of other comprehensive income (OCI) Retained earnings arising from equity accounted Investments. Management has assessed that adoption of the new amendment do not have significant impact on the Profit for the year after distribution to owners is allocated to retained earnings. Bank’s financial statements and related disclosures.
Dividends IAS 16 Property, Plant & Equipment and IAS 38 Intangible assets Dividends on ordinary shares and preference shares are recognised as a (Amendment): Clarification of Acceptable Methods of Depreciation and liability in the period in which they are approved by the Bank’s shareholders. Amortization The amendment of IAS 16 and IAS 38 is effective for annual periods beginning (p) Off-balance sheet commitments and contingent liabilities on or after 1 January 2016. Management has assessed that adoption of the In the ordinary course of business, the Bank enters into credit related new amendment do not have significant impact on the Bank’s financial commitments which are recorded as off-balance sheet items and primarily statements for the year ended 31 December 2016 and related disclosures. comprise guarantees, letters of credit, undrawn loan commitments and credit card limits. Such financial commitments are recorded in the statement of IFRS 11 Joint arrangements (Amendment): Accounting for Acquisitions of financial position if and when they become payable. Interests in Joint Operations The amendment is effective for annual periods beginning on or after 1 January (q) Managed funds for and on behalf of third parties 2016. Management has assessed that adoption of the new amendment do The Bank manages funds for and on behalf of corporate and retail clients. not have significant impact on the Bank’s financial statements for the year These amounts do not represent Bank’s assets and are not included in the ended 31 December 2016 and related disclosures. statement of financial position of the Bank. For the services rendered the Bank The IASB has issued the Annual Improvements to IFRSs 2010 – 2012 charges a fee. Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1 February 2015. (r) New standards and interpretations, changes and amendments in existing standards Management has assessed that adoption of these amendments doesn’t have significant impact on the Bank’s financial reporting. Amended standards The accounting policies adopted are consistent with those of the previous are listed below: financial year except for the following amended IFRSs which have been adopted by the Bank as of 1 January 2016: • IFRS 2 Share-based Payment • IFRS 3 Business combinations When the adoption of the standard or interpretation is deemed to have an • IFRS 8 Operating Segments impact on the financial statements or performance of the Bank, its impact • IFRS 13 Fair Value Measurement is described below: • IAS 16 Property Plant & Equipment • IAS 24 Related Party Disclosures • IAS 38 Intangible Assets
78 79 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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The IASB has issued the Annual Improvements to IFRSs 2012 – 2014 Derivatives embedded in contracts where the host instrument is a financial Cycle, which is a collection of amendments to IFRSs. The amendments are asset in the scope of IFRS 9 are never bifurcated. Instead, the hybrid financial effective for annual periods beginning on or after 1 January 2016. Management instrument are as a whole assessed for classification. has assessed that adoption of these amendments doesn’t have significant impact on the Bank’s financial reporting. Amended standards are listed below: Impairment
• IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: The new expected credit losses model replaces the incurred loss impairment • IFRS 7 Financial Instruments: Disclosures model used in IAS 39. It has to be applied to both financial assets and off- • IAS 19 Employee Benefits: balance sheet credit risk bearing instruments (guarantees, credit • IAS 34 Interim Financial Reporting commitments). At initial recognition a loss allowance is recognised in the form of 12-month expected credit loss. After initial recognition lifetime Standards issued but not yet effective and not early adopted expected losses are to be recognised for all instruments whose credit risk increases subsequently. The measurement base is the lifetime expected IFRS 9 Financial Instruments: Classification and Measurement credit loss.
The standard is effective for annual periods beginning on or after 1 January Hedging 2018, with early application permitted. The final version of IFRS 9 Financial When applying IFRS 9, the Bank may choose to continue to apply the hedge Instruments reflects all phases of the financial instruments project and accounting requirements of IAS 39 instead of the requirements of IFRS 9. The replaces IAS 39 Financial Instruments: Recognition and Measurement and standard relaxes the requirements for hedge effectiveness by replacing the all previous versions of IFRS 9 bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ Classification and measurement to be the same as the one management actually use for risk management IFRS 9 retains the mixed measurement model and establishes three primary purposes. Contemporaneous documentation is still required but is different measurement categories for financial assets: amortized cost, fair value to that currently prepared under IAS 39. Only the prospective effectiveness through OCI and fair value through P&L. The basis of classification depends test is required. on the entity’ business model and the contractual cash flow characteristics of the financial asset. Financial assets are measured at amortised costs only Transition if both the following conditions are met: a) the contractual terms of the The Bank plans to use exemption allowing it not to restate comparative financial asset give rise on specified dates to cash flows that are solely information prior periods with respect to classification and measurement payments of principal and interest on the principal outstanding and b) the (including impairment) changes. Differences in the carrying amounts of asset is held within a business model whose objective is to hold assets in financial assets, financial liabilities and risk provisions resulting from the order to collect contractual cash flows. Measurement of a fair value through adoption of IFRS 9 will be recognized in retained earnings and reserves as at OCI is applicable when financial assets meet condition a) but the business 1st January 2018. model applied to them is focused both on holding the assets to collect contractual cash flows and selling the assets. All other financial assets are The Bank performed the assessment of application of IFRS 9. Project IFRS 9 measured at fair value. Investments in equity instruments are required to be started in 2016 and the prestudy covered preparation of business and measured at fair value though profit or loss with the irrevocable option at methodological concept, assessment of financial impact, business analysis inception to present changes in fair value in OCI not recycling. and preparation of implementation plan.
For financial liabilities there were no changes to classification and The Bank uses the most commonly “Hold to Collect” business model for loans measurement in comparison to IAS 39 except for the recognition of changes and other receivables and some portion of them is classified as “Hold and “Sell”. in own credit risk in other comprehensive income, for liabilities designated “Hold and Sell” business model is most often used for financial investments. at fair value through profit or loss. The remaining amount of change in the During SPPI assessment, SPPI critical features were identified on insignificant fair value is presented in profit or loss. part of portfolio and large portion of portfolio will be Benchmarktested. The
80 81 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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Bank has not designated any financial liabilities at fair value through profit or endorsed by the EU. Management is currently assessing the impact of the loss and the Bank doesn´t have intention to do so currently. new standatd on the Bank’s financial reporting and plans to adopt standard when it becomes effective. The Bank expects that impairment losses will increase and become more volatile in the scope of IFRS 9 impairment model. Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 IFRS 9 implementation started in January 2017 and it includes the preparation Investments in Associates and Joint Ventures: Sale or Contribution of of classification and measurement business concept, impairment business Assets between an Investor and its Associate or Joint Venture concept and all phases of their implementation in the Bank (analysis, design, In December 2015 the IASB postponed the effective date of this amendment build, testing, parallel runs and go live). indefinitely pending the outcome of its research project on the equity The standard is effective for accounting periods beginning on or after 1st method of accounting. The amendments have not yet been endorsed by the January 2018. EU. Management has assessed that adoption of the new amendment should not have significant impact on the Bank’s financial statements. IFRS 15 Revenue from Contracts with Customers IAS 12: Recognition of Deferred Tax Assets for Unrealized Losses The standard is effective for annual periods beginning on or after 1 January (Amendments) 2018. IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the The Amendments become effective for annual periods beginning on or after type of revenue transaction or the industry. The standard’s requirements will 1 January 2017 with earlier application permitted. These amendments have also apply to the recognition and measurement of gains and losses on the not yet been endorsed by the EU. Management has assessed that adoption sale of some non-financial assets that are not an output of the entity’s of the new amendment should not have significant impact on the Bank’s ordinary activities (e.g., sales of property, plant and equipment or intangibles). financial statements. Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract IAS 7: Disclosure Initiative (Amendments) asset and liability account balances between periods and key judgments and The Amendments are effective for annual periods beginning on or after 1 estimates. Management is currently assessing the impact of the new January 2017 with earlier application permitted. These Amendments have pronouncements on the Bank’s financial reporting and plans to adopt not yet been endorsed by the EU. Management is currently assessing the standard when it becomes effective. impact of the new pronouncements on the Bank’s financial reporting and plans to adopt standard when it becomes effective. IFRS 15: Revenue from Contracts with Customers (Clarifications)
The Clarifications apply for annual periods beginning on or after 1 January IFRS 2: Classification and Measurement of Share based Payment 2018 with earlier application permitted. These Clarifications have not yet Transactions (Amendments) been endorsed by the EU. Management is currently assessing the impact of The Amendments are effective for annual periods beginning on or after 1 the new clarifications on the Bank’s financial reporting and plans to adopt January 2018 with earlier application permitted. These Amendments have standard when it becomes effective. not yet been endorsed by the EU. Management has assessed that adoption of the new amendment should not have significant impact on the Bank’s IFRS 16: Leases financial statements. The standard is effective for annual periods beginning on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, IAS 40: Transfers to Investment Property (Amendments) presentation and disclosure of leases for both parties to a contract, i.e. the The Amendments are effective for annual periods beginning on or after 1 customer (‘lessee’) and the supplier (‘lessor’). The new standard requires January 2018 with earlier application permitted. These Amendments have lessees to recognize most leases on their financial statements. Lessees will not yet been endorsed by the EU. Management has assessed that adoption have a single accounting model for all leases, with certain exemptions. Lessor of the new amendment should not have significant impact on the Bank’s accounting is substantially unchanged. The standard has not been yet financial statements.
82 83 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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IFRIC INTERPETATION 22: Foreign Currency Transactions and Advance 5 Financial risk management Consideration 5.1 Credit risk The Interpretation is effective for annual periods beginning on or after 1 January 2018 with earlier application permitted. This Interpretation has not The Bank is exposed to credit risk, which is defined as a possibility that the yet been endorsed by the EU. Management is currently assessing the impact borrower will default on its obligations defined in lending agreements, which of the new pronouncements on the Bank’s financial reporting and plans to may result in a financial loss for the Bank. Such risks are monitored adopt standard when it becomes effective. continuously and are subject to a monthly review. The IASB has issued the Annual Improvements to IFRSs 2014 – 2016 Cycle, which is a collection of amendments to IFRSs. The amendments are effective 5.1.1. Risk limit control and mitigation policies for annual periods beginning on or after 1 January 2017 for IFRS 12 Disclosure of Credit risk is the most important risk in the Bank’s operations. The Interests in Other Entities and on or after 1 January 2018 for IFRS 1 First-time Management Board therefore carefully manages its exposure to credit risk. Adoption of International Financial Reporting Standards and for IAS 28 Credit exposures arise primarily from lending activities that lead to loans Investments in Associates and Joint Ventures. Earlier application is permitted for issuance. There is also credit risk in off-balance-sheet financial instruments, IAS 28 Investments in Associates and Joint Ventures. These annual improvements such as contingent liabilities related to loans. have not yet been endorsed by the EU. Management has assessed that adoption of the new amendment should not have significant impact on the Bank’s Credit risk management and control are placed within the Department for financial statements. Amended standards are listed below: Credit Risk (Corporate and Retail), Department for Integrated Risk Management, Risk Manager Department, and Department for collection and restructuring, • IFRS 1 First-time Adoption of International Financial Reporting Standards all under responsibility of the Executive Director for Risk management. • IAS 28 Investments in Associates and Joint Ventures • FRS 12 Disclosure of Interests in Other Entities Credit decision-making process is centralized at a Bank level without the possibility of making credit decisions without at least one decision maker from the “Risk Manager” Department and/or the Executive Director for Risk 4 Risk management management.
The Bank’s activities expose it to a variety of financial risks: credit risk, For Retails segement there is also in place Override process. In case that Risk liquidity risk, market risk and operating risk. Market risk includes currency representative has negative view over credit application, i.e. if the application risk, interest rate and other price risk. does not meet all criterial defined by the Credit Risk sector (Corporate & The Bank has established an integrated system of risk management by Retail), there is mecahnisam Override. Override mechanisam represents introducing a set of policies and procedures for analysis, evaluation, discretionary right of Retail sector that, in accordance with Override limtis, acceptance and risk management. Taking risk is core to the financial approve placement, nevertheless the negative view of Risk representative operations of the Bank and operational risks are an inevitable consequence defined by Credit risk sector (Corporate & Retail). of being in business. Department Sales support and Manager for support for enterprenuer The Management Board has overall responsibility for the establishment banking is checking if the Ovrride exception is aligned with the local regulation and oversight of Bank’s risk management framework. and with current limits of Override policy, and in case that application is aligned, request is approved by sales representative. Risk management is carried out by Bank’s senior risk director together with departments in charge for individual risks, in accordance with policies Monitoring and analysis of credit risk are primarily located in the Department approved by the Management Board and Supervisory Board. for Credit Risk and Department for Integrated Risk Management. Presentation of monitoring and analysis is done at least once a month at The key board for risk management on Bank’s level is RICO (Risk committee). RICO (Risk Committe). President of RICO is the executive director for risks. Collection and restructuring are centralized at the level of the Bank in all Risk steering and risk controlling processes are adjusted in a timely manner aspects in both early and in late stages. to reflect changes in the operating environment.
84 85 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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(a) Collateral 5.1.2 Credit risk management and policies for impairment and provisions With the aim to minimise the credit risk, the Bank has a Rulebook for security of loans and other placements. The Bank secures its credit exposures by The Bank manages counterparty risks arising from the loan portfolio by taking one or more of the following instruments: recording allowances for impaired loans. A financial asset or a group of financial • cash; assets is impaired and impairment losses are incurred if there is objective • bank and corporate guarantees; evidence of impairment as a result of one or more events that occurred after • mortgages over properties; the initial recognition of the asset (a “loss event”) and that loss event (or events) • pledge over business assets such as premises, inventory and accounts has an impact on the estimated future cash flows of the financial asset or receivable. group of financial assets and it can be reliably estimated. The Bank assesses at • securities. each reporting date whether there is objective evidence that a financial asset • Insurance policies or group of financial assets is impaired. The Bank has defined and adopted a document “Methodology for calculation (b) Loans-related contingencies of impairment losses for financial assets and off-balance sheet items” The primary purpose of these instruments is to ensure that funds are available (hereinafter: “the Methodology”) which defines methods and techniques used to a customer as required. Guarantees and standby letters of credit carry the by the Bank for calculation of impairment losses for balance sheet and off– same credit risk as loans and are secured with similar collateral as are loans. balance sheet items. The Methodology defines criteria for identification of receivables which are necessary to be assessed on an individual basis as well Maximum exposure to credit risk before collateral held or as criteria for evaluating receivables assessed under group impairment. other credit enhancement For the purpose of credit monitoring and the management of credit risk, the 2016 2015 Notes Bank divides its credit portfolio into the following groups: ‘000 BAM ‘000 BAM • Performing loans to customers – loans that are neither due nor impaired Statement of financial position • Past due but not impaired loans Current accounts with Central Bank • Non-performing loans (impaired loans). 15 65.529 87.988 and other banks An analysis of the loan portfolio according to the above mentioned categories Obligatory reserve with the Central Bank 16 95.311 60.546 is presented below. Loans and receivables from banks 17 - 10.926 For the purpose of determining impairment allowance for loans and Loans and receivables from customers 19 927.120 879.400 receivables, the Bank distinguishes the three approaches: Financial assets available for sale 18 988 988 • Loans and receivables assessed on an individual basis, Accrued interest and other assets 20 16.267 14.461 • Loans and receivables assessed on a group basis, Off-balance sheet exposure • Loans and receivables assessed on a portfolio basis. Undrawn lending commitments 33 69.260 61.237 Loans and receivables assessed on individual basis Financial guarantees and letters of credit 33 92.210 68.830 Loans assessed on an individual basis are all loans for which the objective Total 1.266.685 1.184.376 evidence of impairment exists. Objective evidence of impairment, i.e. factors that can influence the ability and willingness of debtors to fulfil their For items in the statement of financial position, the exposures set out above obligations to the Bank are: are based on net carrying amounts as reported in the statement of financial position. The above table represents maximum credit risk exposure of the • delinquencies in contractual payments of interest or principal, Bank as at 31 December 2016 and 31 December 2015 without taking into • breach of covenants or conditions, account any collateral held or other credit enhancements attached. • initiation of bankruptcy proceedings, • any specific information on the customer’s business (e.g. reflected by cient’s liquidity difficulties),
86 87 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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• changes in the customer’s market environment, The loans continue to be subject to an individual or collective impairment • general economic situation. assessment, calculated using the loan’s original EIR
The Bank’s policy requires the review of individual financial assets above Forbearance exposure determined materiality thresholds at least annually or more regularly when individual circumstances require. Impairment allowances on individually The Bank has marked certain loans with atrribute “forbearance,” which aim assessed exposures are determined by an evaluation of the incurred loss at is to identify the transactions whose risk profile could be hidden due to the reporting date on a case-by-case basis, and are applied to all individually contractual modifications executed by the bank in order to prevent default. significant accounts. Besides the overdue days of receivables, the assessment Forborne exposure can be identified as performing and non-performing normally encompasses collateral held (including re-confirmation of its portfolio as well, and according to the above such exposures continue to be enforceability) and the anticipated receipts for that individual account subject to the portfolio and individual value adjustment assessment. derived based on debotors’ financial statements and other available information. Write-off policy
The Bank writes off a loan when the Bank determines that the loan is Loans assessed on a group basis uncollectible. This determination is made after considering information such For assessing the impairment of loans which are not individually significant, as occurrence of significant changes in the borrower’s position such that loans are grouped on the basis of similar characteristics of credit risk, i.e. days borrower can no longer pay the obligation, or that proceeds from collateral of delay in repayment, internally specified individual limit significant and will not be sufficient to pay back the entire exposure. For loans that are not other similar characteristics based on which the Bank records impairment individually significant, write-off decisions generally are based on a product allowance. type and historical information.
Loans assessed on a portfolio basis Value of collateral
The Bank also recognises impairment for losses which are incurred but are The Bank holds collateral against loans and receivables to customers in the not reported “IBNR”. This impairment allowance is calculated on all form of mortgage and other securities over assets and guarantees. Collateral exposures for which there is no evidence of impairment. value estimates are based on value of collateral assessed by the chartered Exposures with similar characteristics are grouped into homogenous groups court surveyors at the time of loan approval, which is then haircuted by and for each group the Bank applies a certain percentage taking into certain fixed percentage, depending on internal valuation of the collateral. consideration the emergence period of identification of the losses. Collateral is in principle not negotiated in case of loans and placements to banks. Considering the impact of the global financial and economic crisis, Restructured loans and receivables there is a significant uncertainty in relation to value of collateral, including During the year the Bank has restructured certain loans to clients aiming at the time needed for their realisation, and this may have an impact on improvement of their final recoverability. Restructuring is mainly performed impairment allowance. as a response to deterioration of the clients’ financial position or for the prevention of further deterioration of the clients’ financial position. Where possible, the Bank seeks to restructure loans rather than to take possession of collateral (aldtough in certain cases the Bank’s position can be improved only by obtaining additional collaterals). This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, any impairment is measured using the original EIR as calculated before the modification of terms and the loan is no longer considered past due. Management continually reviews renegotiated loans to ensure that all criteria are met and that future payments are likely to occur.
88 89 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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The table below presents the amount of the impairment for each predefined loan risk category: The table below presents the analysis of gross and net (net of impairment allowance) loans to customers: 2016 2015 2016 2015 ‘000 BAM ‘000 BAM ‘000 BAM ‘000 BAM
Loans Impairment % Loans Impairment % Corporate Loans to customers that are neither past 462.298 416.820 Performing loans due nor impaired
Past due but not impaired loans 12.407 19.467 Corporate 474.705 (4.148) 0,87 436.287 (3.647) 0,84
Non-performing loans (impaired loans) 35.289 29.633
Retail 427.298 (2.688) 0,63 419.743 (2.651) 0,63 Gross exposure 509.994 465.920
902.003 (6.836) 0,76 856.030 (6.298) 0,74 Less: impairment allowance (18.460) (16.316)
Non-performing loans (provided) Net exposure 491.534 449.604
Corporate 35.289 (14.312) 40,56 29.633 (12.669) 42,75 Retail
Loans to customers that are neither past due Retail 28.084 (17.108) 60,92 27.625 (14.921) 54,01 396.062 390.879 nor impaired
63.373 (31.420) 49,58 57.258 (27.590) 48,19 Past due but not impaired loans 31.236 28.864 Non-performing loans (impaired loans) 28.084 27.625
Total Loans 965.376 (38.256) 3,96 913.288 (33.888) 3,71 Gross exposure 455.382 447.368 Provision coverage of non-performing provided loan portfolio amounts to 49,58 % (2015: 48,19%)
Less: impairment allowance (19.796) (17.572)
Net exposure 435.586 429.796
Total gross exposure 965.376 913.288
Portfolio impairment allowance (IBNR) (8.823) (7.730) Individual and group impairment allowance (29.433) (26.158)
Net exposure 927.120 879.400
90 91 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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a) Loans to customers that are neither past due nor impaired Corporate Loans The quality of the portfolio of loans to customers that are neither past due Medium 5.524 386.472 5.435 397.431 nor impaired can be assessed through the internal standard monitoring Micro - 13.192 51.675 64.867 system. Loans to customers are regularly monitored and systematically Total Corporate 5.524 399.664 57.110 462.298 reviewed in order to identify any irregularities or warning signals. These loans are subject to constant monitoring with the aim of taking timely action By the decision of the Board of SBAG 13.02.2015, the rating scale is regrouped based on improvement or deterioration of clients’ risk profile. in risk levels as follows: Overview of gross exposure of loans to customers that are neither past due nor impaired according to the type of loan is as follows: Level of risk Rating classification Low risk 1 - 12 2016 2015 Moderate risk 13 - 18 ’000 BAM ’000 BAM High risk 19 - 26 Retail Loans In order to assess the creditworthiness of the client, the rating is done at the Consumer Loans 323.633 319.047 time of the decision on the loan (or other placement). Since it is necessary to Housing Loans 52.745 53.932 comply with requirements that all clients must be the rated on an annual Credit card loans and overdrafts 15.244 13.375 basis, for individuals, the Bank performs regularly and automatically loading Craftsmen 4.440 4.525 of the Behavioral rating-a. This model is based on statistical data of behavior Total retail 396.062 390.879 of our clients - individuals. For SME / Corporate and Micro customers are regularly rerating based on annual financial indicators. Corporate Loans Below, overview of gross exposure of loans to customers for 2015 that are Medium 397.431 360.441 neither past due nor impaired according to rating classes. Micro 64.867 56.379 Total Corporate 462.298 416.820 Low risk Moderate High risk Total Below, overview of gross exposure of loans to customers for 2016 that are (1-12) risk(13-18) (19-26) 2015 neither past due nor impaired according to rating classes. ’000 BAM ’000 BAM ’000 BAM ’000 BAM Low risk Moderate High risk Total Retail Loans (1-12) risk (13-18) (19-26) 2016 Consumer Loans 104.728 184.075 30.244 319.047 ’000 BAM ’000 BAM ’000 BAM ’000 BAM Housing Loans 6.027 42.534 5.371 53.932 Retail Loans Credit card loans and 3.324 8.639 1.412 13.375 overdrafts Consumer Loans 91.756 204.245 27.631 323.633 Craftsmen 100 4.425 4.525 Housing Loans 5.551 42.953 4.241 52.745 Total retail 114.079 235.348 41.452 390.879 Credit card loans 3.621 10.370 1.254 15.244 Corporate Loans and overdrafts Medium 5.934 332.361 22.146 360.441 Craftsmen - 836 3.604 4.440 Micro 13.688 42.691 56.379 Total retail 100.928 258.404 36.730 396.062 Total Corporate 5.934 346.049 64.837 416.820
92 93 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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b) Past due but not impaired loans
Loans to and receivables from customers less than 90 days overdue are not considered as impaired, unless other information is available to indicate the contrary. The gross amount of loans and receivables from customers that were past due but not impaired were as follows: Past due 30 to days up Past due 30 – 60 days Past due 60 – 90 days Past due 90 – 360 days Past due 1 year to up TOTAL 2015 ‘000
Retail Loans
Consumer 21.014 2.454 809 - - 24.277 Loans Housing Loans 2.924 55 - - - 2.979
Credit card
2016 ‘000 Past due 30 to days up Past due 30 – 60 days Past due 60 – 90 days Past due 90 – 360 days Past due 1 year to up TOTAL loans and 1.137 343 56 - - 1.536 overdrafts
Retail Loans Craftsmen 71 1 - - - 72
Consumer Total retail 25.146 2.853 865 - - 28.864 22.941 2.259 990 - - 26.191 Loans
Housing Loans 2.479 205 88 - - 2.771 Corporate Loans
Credit card Medium 16.816 80 31 - - 16.927 loans and 1.426 173 92 - - 1.692 overdrafts Micro 2.331 181 28 - - 2.540 Total 19.147 261 59 - - 19.467 Craftsmen 535 48 - - - 582 Corporate
Total retail 27.381 2.685 1.170 - - 31.236
Corporate Loans
Medium 5.615 1.542 352 - - 7.509
Micro 4.465 207 226 - - 4.898
Total 10.080 1.749 578 - - 12.407 Corporate
94 95 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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c) Loans for which impairment has been recorded Non- Estimated Impaired loans to customers, along with the information on value of related 2015 performing Impairment Net value of collateral: ‘000 BAM Loans- collateral gross
Non- Estimated 2016 performing Impairment Net value of Retail Loans ‘000 BAM Loans-gross collateral Consumer Loans 22.756 (12.714) 10.042 6.513
Retail Loans Housing Loans 3.472 (1.197) 2.275 2.115
Consumer Loans 23.999 (14.961) 9.038 6.262 Credit card loans and 532 (439) 93 - overdrafts Housing Loans 2.995 (1.328) 1.667 1.911 Craftsmen 866 (571) 294 301 Credit card loans and 669 (568) 101 1 overdrafts
Craftsmen 421 (251) 170 197 Total retail 27.625 (14.921) 12.704 8.930
Total retail 28.084 (17.108) 10.976 8.371
Corporate Loans Corporate Loans
Medium 28.922 (10.959) 17.963 19.211 Medium 21.695 (8.688) 13.007 13.013
Micro 6.367 (3.353) 3.014 3.490 Micro 7.938 (3.981) 3.957 4.161
Total corporate 35.289 (14.312) 20.977 22.701 Total corporate 29.633 (12.669) 16.964 17.173
Estimated value of real estate used as collateral is defined as the value of the initial evaluation made by certified appraiser at the time of loan approval, or at any subsequent assessment. This value is weighted per all loans that are secured by the same collateral; also the appropriate haircut is used that is predefined for all types of collateral (and which can not be higher than the total value of loans is in use). Guarantees, co-guarantees and promissory notes are not valued in the table although they are usually required as collateral.
96 97 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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d) Restructured loans and receivables Geographic risk concentrations mainly relate to the region of Bosnia and Herzegovina. Geographic risk concentrations (gross amounts in balance Restructured loans as at 31 December 2016 amounted to a total of BAM sheet exposure) are as follows: 37.822 thousand (2015: BAM 37,418 thousand) OECD Non-OECD 2016 2015 B&H Total countries countries ‘000 BAM ‘000 BAM ‘000 BAM ‘000 BAM ‘000 BAM ‘000 BAM Loan portfolio 965.376 913.288 Restructured loans 37.822 37.418 Current accounts with Central Bank and other 96.236 7.265 684 104.185 Restructured loans recorded as % of loan portfolio 3,92% 4,10% banks (note 15)
Obligatory reserves 5.1.3 Concentration of credit risk per economic sectors and 95.311 - - 95.311 with the Central Bank geographic location Loans and receivables 455.382 - - 455.382 The Bank monitors concentrations of credit risk by economic sector and by from retail customers geographic location. Credit portfolio risk is limited by the Bank’s credit Loans and receivables strategy; in particular the focus is on micro and small loans and the broader from corporate 509.994 - - 509.994 geographical and economic sector diversification of the loan portfolio. The customers analysis of concentrations on the reporting date is presented below: Accrued interest and 16.267 - - 16.267 other assets Risk concentrations per sectors (gross amounts in balance sheet exposure) As at 31 are as follows: 1.173.190 7.265 684 1.181.139 December 2016 2016 2015 ‘000 BAM ‘000 BAM As at 31 1.028.022 35.093 16.632 1.079.747 Trade 224.153 212.605 December 2015 Mining 108.225 84.201 The structure of the loan portfolio is regularly reviewed within the Real estate 17.463 21.715 Department for Credit Risk and Department for risk controlling in order to Transport and communications 32.282 19.474 identify potential events which could have an impact on significant parts of the loan portfolio (common risk factors) and, if necessary, the exposure to Financial institutions 11.570 12.810 certain sectors of the economy is limited. Construction 22.362 19.487 Tourism 30.018 35.334 Power and gas 12.011 7.922 Agriculture, forestry and fisheries 16.141 11.319 Education and other public services 12.444 11.494 Other 23.325 29.559
Total corporate 509.994 465.920
Housing loans 58.511 60.383 Other loans to individuals 396.871 386.985 Total retail 455.382 447.368 Total loans (before impairment) 965.376 913.288
98 99 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Bilješke uz finansijske izvještaje Bilješke uz finansijske izvještaje
5.2. Market risk Concentration of currency risk of on- and off-balance sheet assets
The Bank is exposed to market risk which is the risk that the fair value or and liabilities future cash flows of a financial instrument will fluctuate because of the The domestic currency (BAM) is linked to EUR. The Bank had the following changes in market prices. Market risks arise from open positions in interest rate, foreign currency and equity investments, all of which are exposed to currency positions: general and specific market movements and changes in the level of volatility of market rates or prices such as interest rates, credit spreads, foreign EURO EURO Other As at 31 December 2016 EURO USD BAM Total exchange rates and equity prices. Related Total FX ’000 ’000 ’000 ’000 ’000 ’000 ’000 The Management Board and Sberbank Europe AG set limits and guidelines Assets BAM BAM BAM BAM BAM BAM BAM for monitoring and mitigating the market risks which is regularly monitored Cash and cash equivalents 20.862 - 20.862 1.181 4.558 77.584 104.185 by Risk Committees of the Bank. Obligatory reserves with the - - - - - 95.311 95.311 Central Bank 5.2.1. Foreign exchange risk Financial assets available for - - - - - 988 988 Exposure to currency risk arises from credit, deposit-taking and trading sale Loans and receivables from activities and is controlled on a daily basis in accordance with legal and 8.243 578.945 587.188 - - 339.932 927.120 customers internal limits for each currency as well as in total amounts for assets and Accrued interest and other liabilities denominated in or linked to foreign currencies. 623 638 1.261 8 11 14.987 16.267 assets The ALM department is responsible for the daily management of the Bank’s Investment property - - - - - 1.543 1.543 currency position in accordance with legal and internal regulations. Control Property and equipment - - - - - 11.891 11.891 of exposure limits on a daily basis is the responsibility of the Market risk Intangible assets - - - - - 4.378 4.378 group. Total assets 29.728 579.583 609.311 1.189 4.569 546.614 1.161.683 In order to manage foreign exchange rate risk more efficiently, the Bank monitors economic and other business changes in the environment in order Liabilities and equity to predict possible changes in foreign currency activities, exchange rates, Current accounts and 127.357 - 127.357 - - 8.564 135.921 and foreign currency risk deposits from banks Current accounts and The table below summarizes the Bank’s exposure to foreign currency 353.925 92.520 446.445 18.214 4.178 298.869 767.706 exchange rate risk at 31 December 2016. Included in the table are the Bank’s deposits from customers Borrowings and subordina- assets and liabilities at carrying amounts categorized by currency. The Bank 53.345 - 53.345 - - 6.508 59.853 ted debt has a number of agreements with foreign currency clauses. The BAM value Accrued interest and other of principal in such agreements is determined by the movement of foreign 9.749 - 9.749 112 1 16.979 26.841 liabilities exchange. The principal balance of the related foreign currency is included in Provision for liabilities and - - - - - 1.819 1.819 the table below in column “EURO linked”. charges Deferred tax liability - - - - - 521 521 Liabilities for income taxes - - - - - 836 836 Share capital and reserves - - - - - 168.186 168.186
Total liabilities and equity 544.376 92.520 636.896 18.326 4.179 502.282 1.161.683
Net foreign exchange (514.648) 487.063 (27.585) (17.137) 390 44.332 position
100 101 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Bilješke uz finansijske izvještaje Bilješke uz finansijske izvještaje
A result of a 10% decrease in currencies other than EUR against BAM (with EURO EURO Other As at 31 December 2015 EURO USD BAM Total other variables held constant) would not be significant and would result in a Related Total FX increase in profit before tax for the year of BAM 52 thousand (2015: an ’000 ’000 ’000 ’000 ’000 ’000 ’000 decrease of BAM 36 thousand). Assets BAM BAM BAM BAM BAM BAM BAM A result of a 10% increase in these currencies would not be significant and it Cash and cash equivalents 54.906 - 54.906 3.660 4.609 51.239 114.414 would result decrease in profit before tax for the year of BAM 52 thousand Obligatory reserves with (2015: an increase of BAM 36 thousand). - - - - - 60.546 60.546 the Central Bank Financial assets available 5.2.2. Interest rate risk - - - - 10.852 74 10.926 for sale The Bank’s activities are influenced by changes in interest rates, in the way Loans and receivables from - - - - - 988 988 customers that interest bearing assets and liabilities mature or their interest rates are changed at different times or in different amounts. Accrued interest and other 9.344 572.644 581.988 - - 297.412 879.400 assets The majority of loans and receivables to companies and individuals are Investment property 929 - 929 1 2 13.529 14.461 contracted at variable interest. A variable interest rate in which these loans were agreed has to be adjusted twice a year, following the movements of Property and equipment - - - - - 580 580 the four indicators which can influence changes in interest rates.
Intangible assets - - - - - 1.832 1.832 Property and equipment - - - - - 17.574 17.574 and intangible assets
Total assets 65.179 572.644 637.823 3.661 15.463 443.774 1.100.721
Liabilities and equity
Current accounts and 145.407 - 145.407 - - 17.083 162.490 deposits from banks Current accounts and 296.713 105.787 402.500 14.413 4.894 253.077 674.884 deposits from customers Borrowings and subordi- 66.202 - 66.202 - - 11.871 78.073 nated debt Accrued interest and other 7.175 - 7.175 14 8 15.758 22.955 liabilities Provision for liabilities and - - - - - 1.385 1.385 charges Deferred tax liability - - - - - 753 753
Liabilities for income taxes 187 187
Share capital and reserves - - - - - 159.994 159.994
Total liabilities 515.497 105.787 621.284 14.427 4.902 460.108 1.100.721 and equity
Net foreign exchange (450.318) 466.857 16.539 (10.766) 10.561 (16.334) - position
102 103 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Bilješke uz finansijske izvještaje Bilješke uz finansijske izvještaje
Interest rate sensitivity of assets and liabilities Current accounts The tables below summarize the Bank’s exposure to interest rate risk at year end. The Bank’s assets 8.792 - 127.129 - - - 135.921 - and deposits and liabilities are presented at carrying amounts categorized by the earlier of contractual maturity from banks dates or contracted changes in interest rates. Current accounts Amounts and deposits 221.645 65.336 31.279 140.404 300.446 8.596 767.706 546.145 As at 31 Non Up to 1 1 to 3 3 months 1 to 5 Over 5 subject from December interest Total month months to 1 year year years to fixed customers 2016 bearing rates Borrowings ’000 BAM ’000 BAM ’000 BAM ’000 BAM ’000 BAM ’000BAM ’000 BAM ’000 BAM and subordi- - - 45.710 14.143 - - 59.853 - Assets nated debt Cash and Accrued interest and cash 38.656 65.529 - - - - 104.185 - 26.841 - - - - - 26.841 - equivalents other liabilities Obligatory reserves Provision for - 95.311 - - - - 95.311 - with the liabilities and 1.819 - - - - - 1.819 - Central Bank charges Financial assets Deferred tax - 988 - - - - 988 - 521 - - - - - 521 - available for liability sale Loans and Liabilities for receivables 836 - - - - - 836 - - 24.008 98.011 573.983 107.606 123.512 927.120 101.111 income taxes from customers Share capital Accrued 168.186 - - - - - 168.186 - and reserves interest and 16.267 - - - - - 16.267 - other assets Total Investment liabilities 428.640 65.336 204.118 154.547 300.446 8.596 1.161.683 546.145 1.543 - - - - - 1.543 - property and equity Property and equipment Interest 16.269 - - - - - 16.269 - (355.905) 120.500 (106.107) 419.436 (192.840) 114.916 - (445.034) and intangi- rate gap ble assets
Total assets 72.735 185.836 98.011 573.983 107.606 123.512 1.161.683 101.111
104 105 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Bilješke uz finansijske izvještaje Bilješke uz finansijske izvještaje
Amounts Current As at 31 Non 3 Up to 1 1 to 3 1 to 5 Over 5 subject accounts and December interest months Total 759 12.279 143.952 5.500 - - 162.490 34.602 month months year years to fixed deposits from 2015 bearing to 1 year rates banks ’000 BAM ’000 BAM ’000 BAM ’000 BAM ’000 BAM ’000 BAM ’000 BAM ’000 BAM Current accounts and - 89.901 127.699 144.390 302.875 10.019 674.884 632.755 Assets deposits from customers
Cash and Borrowings cash equiva- 26.425 87.989 - - - - 114.414 - and subordi- - 45.547 19.183 13.170 173 - 78.073 - lents nated debt
Obligatory Accrued reserves with interest and - 60.546 - - - - 60.546 - 22.955 - - - - - 22.955 - the Central other Bank liabilities
Loans and Provision for receivables - 10.926 - - - - 10.926 - liabilities and 1.385 - - - - - 1.385 - from banks charges Financial assets Deferred tax - 988 - - - - 988 - 753 - - - - - 753 - available for liability sale Loans and receivables Liabilities for - 145.532 66.853 575.778 81.875 9.362 879.400 - 187 - - - - - 187 - from custo- income taxes mers
Accrued Share capital interest and 14.461 - - - - - 14.461 - 159.994 - - - - - 159.994 - and reserves other assets
Investments Total 580 - - - - - 580 - in associates liabilities 186.034 147.727 290.834 163.060 303.048 10.019 1.100.721 667.357 and equity
Investment 1.832 - - - - - 1.832 - Interest property (125.163) 158.252 (223.980) 412.719 (221.173) (657) - (667.357) rate gap Property and equipment 17.574 - - - - - 17.574 - and intangi- ble assets
Total assets 60.872 305.981 66.853 575.778 81.875 9.362 1.100.721 -
106 107 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Bilješke uz finansijske izvještaje Bilješke uz finansijske izvještaje
Sensitivity of Increase -decrease) in Sensitivity of Currency profit and loss The following table demonstrates the sensitivity to a reasonably possible basis points 2016 equity 2016 change in interest rates (all other variables held constant) of the Bank’s 2016 income statement and equity. thsd BAM thsd BAM
The sensitivity of the statement of comprehensive income is the effect of EUR 100/(100) (1.787) / 1.787 (5.242) / 5.242 the assumed changes in interest rates (+/- 100 and +/- 200 b.p.) on the profit BAM 100/(100) 5.126 / (5.126) 1.629 / (1.629) or loss for the year, based on the floating rate non–trading financial assets EUR 200/(200) (3.575) / 3.575 (10.485) / 10.485 and financial liabilities held at 31 December. BAM 200/(200) 10.254 / (10.254) 3.258 / (3.258) The sensitivity of equity is calculated by revaluing all interest sensitive positions at 31 December for the effects of the assumed changes in interest USD 100/(100) - (283) / 283 rates. The total sensitivity of equity is based on the assumption that there USD 200/(200) - (567) / 567 are parallel shifts in the yield curve - the floating interest positions are assigned to the next floater-fixing date, fixed rate positions are assigned as Sensitivity of Increase -decrease) in Sensitivity of the instruments are maturing, and the until-further-notice interest sensitive Currency profit and loss basis points 2016 equity 2015 positions are assigned based on inidividual assumptions for these positions 2015 which are based on historical experience. thsd BAM thsd BAM
EUR 100/(100) (1.914) / 1.914 (4.567) / 4.567
BAM 100/(100) 4.203 / (4.203) 1.521 / (1.521)
EUR 200/(200) (3.831) / 3.831 (9.134) / 9.134
BAM 200/(200) 8.406 / (8.406) 3.041 / (3.041)
USD 100/(100) - (225) / 225
USD 200/(200) - (450) / 450
108 109 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Bilješke uz finansijske izvještaje Bilješke uz finansijske izvještaje
5.3 Liquidity risk 3 mont- Up to 1 Up to 3 1 to 5 Over 5 hs to 1 Total Liquidity risk arises in the funding of the Bank’s activities and in the month months years years management of its positions. The Bank consolidates its operations in respect year of liquidity risk in accordance with applicable decrees and internal policies `000 `000 `000 `000 `000 31 December 2016 `000 BAM aimed at maintenance of liquidity reserves, harmonisation of assets and BAM BAM BAM BAM BAM liabilities with targeted liquidity indicators and liquidity limits. Assets The Bank has access to various funding sources, including different types of deposits from citizens and legal entities, borrowings and share capital. This Cash and cash equivalents 104.185 - - - - 104.185 increases the flexibility of funding sources, decreases dependence on one Obligatory reserve with the 95.311 - - - - 95.311 source and generally ensures better management of financing costs. Central Bank
The following tables show the remaining contractual maturities of the Financial assets available for sale 988 - - - - 988
Bank’s assets and liabilities as at 31 December 2016 and 31 December 2015. Loans and receivables from 86.733 66.474 190.483 388.700 194.731 927.120 Investments in associates and other items of assets and liabilities that have customers no contractual maturities determined are classified into their remaining Accrued interest and other assets 16.267 16.267 maturity over 5 years Investment property - - - - 1.543 1.543
Property equipment - - - - 11.891 11.891
Intangible assets - - - - 4.378 4.378
Total assets 303.484 66.474 190.483 388.700 212.543 1.161.683
Liabilities and equity
Current accounts and deposits 292 32.837 2.500 100.292 135.921 from banks Current accounts and deposits 291.296 29.527 138.415 299.635 8.833 767.706 from customers
Borrowings and subordinated debt 3.692 1.045 10.019 44.860 237 59.853
Accrued interest and other liabilities 17.572 1.380 3.940 3.945 4 26.841
Provision for liabilities and charges 1.819 1.819
Deferred tax liability 521 - - - - 521
Liabilities for income taxes 836 - - - - 836
Share capital and reserves - - - 168.186 168.186
Total liabilities and equity 314.209 64.789 154.874 450.551 177.260 1.161.683
Maturity gap (10.725) 1.685 35.609 (61.851) 35.283
110 111 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Bilješke uz finansijske izvještaje Bilješke uz finansijske izvještaje
Future cash flows for interest bearing liabilities 3 mont- Up to 1 Up to 3 1 to 5 Over 5 hs to 1 Total month months years years The table below shows the total expected outflow of financial obligations, year projected by the Bank and includes financial liabilities at 31 December 2016 and ’000 ’000 ’000 ’000 ’000 ’000 31 December 2015 31 December 2015, and the expected futre interest. BAM BAM BAM BAM BAM BAM Assets Carrying Total expected outflow value Cash and cash equivalents 114.414 - - - - 114.414 Less Obligatory reserve with the As at 31 December 1 to 3 3 m. to 1 1 to 5 Over 5 60.546 - - - - 60.546 than 1 Total Central Bank 2016 months year years years month Loans and receivables from banks 10.926 - - - - 10.926 ’000 ’000 ’000 ’000 ’000 ’000 ’000 BAM BAM BAM BAM BAM BAM BAM Financial assets available for sale 988 - - - - 988
Loans and receivables from Financial liabilities 60.226 51.446 199.803 360.899 207.026 879.400 customers Current accounts 293 33.125 3.391 101.003 - 137.812 135.921 Accrued interest and other assets 14.461 - - - - 14.461 and bank deposits
Investment in associates - - - 580 580 Current accounts and customer's 295.710 29.653 140.557 320.554 10.728 797.202 767.707 Investment property - - - - 1.832 1.832 deposits
Property equipment and Borrowings and - - - - 17.574 17.574 3.726 2.106 12.159 46.591 - 64.582 59.853 intangible assets subordinated debt
Total assets 261.561 51.446 199.803 360.899 227.012 1.100.721 Total expected 299.729 64.884 156.107 468.148 10.728 999.596 963.481 outflow Liabilities and equity
Current accounts and deposits Carrying 13.038 16.823 5.500 127.129 - 162.490 Total expected outflow from banks value
Current accounts and deposits Less 249.463 31.633 91.609 297.817 4.362 674.884 As at 31 December 1 to 3 3 m. to 1 1 to 5 Over 5 from customers than 1 Total 2015 months year years years month Borrowings and subordinated 3.692 1.118 10.213 60.324 2.726 78.073 debt ’000 ’000 ’000 ’000 ’000 ’000 ’000 BAM BAM BAM BAM BAM BAM BAM Accrued interest and other 16.030 1.470 2.608 2.845 2 22.955 liabilities Financial liabilities Provision for liabilities and Current accounts 1.385 - - - - 1.385 13.192 17.163 6.950 129.393 - 166.698 162.490 charges and bank deposits Deferred tax liability - - - 753 - 753 Current accounts Liabilities for income taxes 187 - - - - 187 and customer's 254.907 31.787 93.375 322.162 5.574 707.805 674.884 deposits Share capital and reserves - - - - 159.994 159.994 Borrowings and 3.746 1.370 12.926 65.783 2.786 86.611 78.073 Total liabilities and equity 283.795 51.044 109.930 488.868 167.084 1.100.721 subordinated debt Total expected 271.845 50.320 113.251 517.338 8.360 961.114 915.447 Maturity gap (22.234) 402 89.873 (127.969) 59.928 - outflow
112 113 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Bilješke uz finansijske izvještaje Bilješke uz finansijske izvještaje
5.4 Maturity of off-balance-sheet items 5.5 Operational risk
Operational risk represents the possibility of losses for the Bank and (a) Loan commitments negative effects on the Bank’s capital as a result of inadequate internal The maturity of the contractual amounts of the Bank’s off-balance-sheet systems, procedures, controls, and weaknesses in the execution in business activities, as well as illegal activities which could expose the Bank to losses. positions are summarized in the table below. Considering that the Bank is through its activities inherently exposed to (b) Financial guarantees and letters of credits risk, the Bank has set up a system for management of operational risk. The management of operational risk is performed in accordance with the Financial guarantees and letters of credits are also included in the table requirements of the Agency and the standards of Sberbank Group. These below based on the earliest contractual maturity date. policies and procedures of risk control have been adopted by the Supervisory Board and they represent the governing document with regards to the (c) Operating lease commitments management of operational risk.
Where the Bank is the lessee, the future minimum lease payments under Risk management and risk control include raising awareness with regards operating leases are summarized in the table below. to risk, the preparation of risk maps, implementation of risk assessments, planning systems of early warnings, as well as data collection. Some of the tools used are raising awareness with regards to risk, implementation of Not later Over 5 1-5 year Total self assessment of risk and controls (RCSA), planned early warning system than 1 year years (KRI), as well as collection of data with regards to events. ‘000 BAM ‘000BAM ‘000BAM ‘000BAM The collection and documentation of data regarding specific events which As at 31 December 2016 are considered to represent operational risk are done through a special database. Loan commitments 62.569 6.691 - 69.260 Supervisory Board, Management Board and the Bank`s risk management Financial guarantees 77.250 14.960 - 92.210 committee regularly take into consideration reports on operating risks to and letter of credits which the Bank is exposed. Operating lease 2.747 4.444 591 7.782 commitments With regards to the continuity of operations in case of a disaster, the Bank has adopted a Disaster Recovery Plan as well as a Business Continuity Plan, Total 142.566 26.095 591 169.252 whose main goal is to ensure continuing operations of the Bank in case of serious and unplanned events which are outside of the Bank’s control.
Not later Over 5 1-5 year Total than 1 year years 5.6 Fair values of financial assets and liabilities The fair value of a financial instrument is the amount for which an asset ‘000 KM ‘000 KM ‘000 KM ‘000 KM could be exchanged or a liability settled between knowledgeable willing As at 31 December 2015 parties in an arm’s-length transaction. When available, fair value is based on quoted market prices. However, no readily available market prices exist Loan commitments 55.370 5.867 - 61.237 for a significant portion of the Bank’s financial instruments. In circumstances where the quoted market prices are not readily available, Financial guarantees and 49.042 19.788 - 68.830 letter of credits the fair value is estimated using discounted cash flow models or other pricing techniques as appropriate. Changes in underlying assumptions, Operating lease commitments 3.383 6.702 912 10.997 including discount rates and estimated future cash flows, significantly affect the estimates. Therefore, the calculated fair market estimates may Total 107.795 32.357 912 141.064 not be realisable in a current sale of the financial instrument, in particular
114 115 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Bilješke uz finansijske izvještaje Bilješke uz finansijske izvještaje
considering in view of the impact of the global financial crisis and lack of The table below summarises carrying amounts and fair values of customer liquid market in Bosnia and Herzegovina. deposits:
Cash and cash equivalents and loans and receivables from Banks Carrying value Fair value
The carrying values of cash and balances with banks are generally deemed 31. 12. 2016 31. 12. 2015 31. 12. 2016 31. 12. 2015 to approximate their fair value due to short term maturity of these positions.
‘000 BAM ‘000 BAM ‘000 BAM ‘000 BAM Loans and receivables from customers
The fair value of loans and receivables with fixed interest rates is determined Current acounts by discounting of cash flows with current market interest rates on loans and deposits from 767.706 674.884 794.101 702.128 with similar characteristics. As the Bank has limited portfolio of loans with customers fixed interest rates and longer-term maturity, the Management considers that the fair value of loans and receivables is not significantly different from Borrowings and bank deposits their book carrying value. Fair values of loans and receivables with variable interest rates where rates are regularily aligned to market changes and The fair value of borrowings with variable interest rates which regularly where there are no significant changes in credit risk are generally very close change and with no significant change in credit risk generally approximates to their carrying values. Fair values for these loans and receivables are their carrying value. The fair value of borrowings at fixed interest rates is calculated by discounting of future cahs flows by application of base interest estimated using discounted cash flow analyses, using interest rates rates which are increased for credit risk margin (to recognise the impact of currently offered for loans with similar terms to borrowers of similar credit specific counterparty credit risk). quality. The fair value of borrowings is not significantly different from their carrying value. Customer deposits Carriying values of deposits from banks are close to their fair values due to For demand deposits and deposits with undefined maturities, the fair value short term maturity of these sources. is considered to be the amount payable on demand at the reporting date. Subordinated debt is concluded with variable interest rate, principal is due The estimated fair value of deposits with fixed maturity is based on entirety at maturity and fair valued of the debt is calculated by discounting discounted cash flows using the rates currently offered for deposits of future cash flows with EURIBOR reference rate. On the reporting date similar remaining maturities – this fair value is close to carrying value. The there are no significant differences between fair values and carrying values. value of long-term relationships with depositors is not taken into account in estimating fair value. Considering the average market interest rates of 1,35 on corporate and 1,66 on retail deposits (2015: corporate of 2,47% and retail of 2,68% and taking into account latest market developments, expected future cash flows from long-term corporate and retail deposits with fixed interest rates are discounted to their present value.
116 117 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
Bilješke uz finansijske izvještaje Bilješke uz finansijske izvještaje
Fair value of financial assets and financial liabilities of the Bank Capital adequacy and the balance of capital are monitored regularly by the which are not measured at fair value on recurring basis: Bank’s management, based on the relevant internal acts and regulations prescribed by the Federal Banking Agency. 31 December 2016 31 December 2015 As of 31 December 2016 the Bank has been in compliance with all regulatory Fair value Carrying Carrying capital requirements and according to the local regulations had a capital Fair value Fair value level value value adequacy ratio of 13.3% (31 December 2015: 13.8%).
Financial assets The Bank’s net capital for monitoring adequacy by Agency methodology Loans and receivables consists of: Level 3 - - 10.926 10.926 from banks • The Bank’s tier 1 capital: ordinary shares, share premium, retained profit Loans and receivables Level 3 927.121 927.121 879.400 879.400 and reserves arising from distribution of retained profit reduced by from customers intangible assets Other financial assets (accrued interest and Level 3 16.266 16.266 14.461 14.461 • The Bank’s tier 2 capital: general loan loss provision for performing other assets) assets, profit for the year audited and certified by external auditor and subordinated debt. Total 943.387 943.387 904.787 904.787 • deductible items in calculation (the amount of excess of provision for Financial liabilities credit losses formed per regulatory rules over provision for credit losses formed based on IFRS rules). Current accounts and Level 3 135.921 135.921 162.490 162.490 deposits from banks The bank was obliged to fully implement “Decision on minimum standards Current accounts and for bank capital and capital protection” as of 31.12.2016., according to which Level 3 767.707 794.101 674.884 702.128 deposits from customers the bank made the following alignment of supplementa capital
Borrowings and subor- • General reserves of the bank for coverage of loan losses of the bank’s Level 3 59.853 59.853 78.073 78.073 dinated debt assets evaluated as A category – Performing Assets in accordance with Accrued interest and Article 22 of the Decision on Minimum Standards for Credit Risk Nivo 3 26.840 26.840 22.959 22.959 other liabilities Management and Asset Classification of Banks (hereinafter: Decision on Asset Classification) up to 1.25% of total risk of assets starting from Total 990.321 1.016.715 938.406 965.650 31.12.2016 amount of subordinated debt which is included in the Tier 2 of the Bank, is reduced by 20% per year cumulatively for last five years 5.7. Capital management before the expiry of the agreed maturity. In the last year prior to the expiration date of subordinated debt not included in Tier 2. The Bank’s objectives for capital management (capital for this purpose is a The amount of subordinated debt, which is included in the Tier 2 of the broader concept than the shareholder’s equity presented in the statement Bank during the last five years to maturity is calculated by dividing the of financial position), are as follows: nominal amount of the instruments or subordinated loan on the first day • to comply with the capital requirements set by the regulators of the banking of entering into the last five-year period of their contractual maturity market in the local environment; with the number of calendar days in that period, and then multiplied by number of calendar days from the date of reporting to the agreed upon • to safeguard the Bank’s ability to continue its operations as a going concern maturity. so that it can continue to provide returns for shareholders and benefits for other stakeholders; and
• to maintain a strong capital position which could support the development of its business activities.
118 119 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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The table below presents the structure of net capital and capital ratios 6 Significant accounting estimates and judgments (information on the risk assets were not yet audited on the date of this The Management uses estimates and assumptions about uncertain events, report): including estimates and assumptions about the future. Such accounting 31.12.2016 31.12.2015 assumptions and estimates are regularly evaluated and are based on historical experience and other factors such as the expected flow of future ‘000 BAM ‘000 BAM events that can be rationally assumed in existing circumstances, but Tier 1 capital nevertheless necessarily represent sources of estimation uncertainty. The Share capital 76.337 76.337 estimation of impairment losses in the Bank’s credit risk portfolio represents Share premium 27.773 27.773 the major source of estimation uncertainty. This and other key sources of estimation uncertainty, which have a significant risk of causing a possible Reserves 31.069 24.862 material adjustment to the carrying amounts of assets and liabilities within Intangible assets (4.169) (9.382) the next financial year, are described below. Total tier 1 capital 131.010 119.590 (a) Impairment losses on loans and receivables Tier 2 capital General provision-FBA regulations 13.201 16.014 The Bank continuously monitors the creditworthiness of its customers on Audited profit for the year (not included in an ongoing basis. The need for impairment of the Bank’s on and off-balance - calculation) sheet exposure to credit risk is assessed on a monthly basis. Subordinated debt 14.818 19.719 Impairment losses are made primarily against the carrying value of loans to Total tier 2 capital 28.019 35.733 corporate and retail customers and as provisions for liabilities and charges arising from off-balance exposure to customers, mainly in the form of Regulatory reserve for credit losses for the year (18.318) (19.358) (Note 6 (a)) guarantees and letters of credit and accrued interest and other assets. Net capital 140.711 135.965 Impairment losses are also considered for credit risk exposures to banks and for other assets not carried at fair value, where the primary risk of impairment Risk Weighted Assets (2016 unaudited) 998.813 933.510 is not credit risk. Weighted Operational Risk (2016 unaudited) 57.277 51.963 The Bank assesses impairment on an individual basis for all exposures where Total weighted risk 1.056.090 985.473 there is objective evidence of impairment. Assets which are not significant
Capital adequacy (%) 13.3% 13,8% are assessed on a group (portfolio) basis for impairment.
Minimum capital adequacy ratio according to the regulations of the Agency is The Bank estimates impairment losses in cases where it estimates that the 12%. observable data indicates the likelihood of a measurable decrease in the estimated future cash flows of the asset or portfolio of assets. Evidence includes irregular repayment or other indications of financial difficulties of borrowers, unfavourable changes in economic conditions in which the borrowers operate, changes in the value or collectability of collateral instruments when these changes can be linked to the above-mentioned breach of terms.
120 121 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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At 31 December 2016 required cumulative excess of provisions calculated in 2016 2015 Impairment allowances Note accordance with regulations of the Banking Agency over provisions required ‘000 BAM ‘000 BAM under IFRS amounted to BAM 43.133 thousand (2015: BAM 44.172 thousand). Loans and receivables The difference between the opening and closing balance for 2016 amounted 5,19 38.256 33.888 from customers to BAM 18.318 thousand (2015: BAM 19.358 thousand).
Accrued interest and The Bank takes into consideration the combined effect of several events 20 924 867 other assets when assessing impairment and uses its experience in making judgments in Provisions for off- cases where the observable data is required to estimate impairment is 29 1.328 943 balance-sheet limited.
40.508 35.698 At year end, the gross value of specifically impaired loans and receivables (non-performing loans - NPL) and the rate of impairment loss recognised In addition to the impairment calculated and recognized in accordance with were as follows: IFRS, the Bank also calculates impairment losses in accordance with the 2016 2015 regulations of the Agency. The excess of provisions which are calculated in ’000 BAM ’000 BAM accordance with regulations of Agency compared to the allowance calculated in accordance with IFRS is used in the calculation of capital adequacy. The table below shows the impairment calculated in accordance with the requirements of the Agency: Corporate Retail Total Corporate Retail Total 2016 2015 Summary of impairment allowances ‘000 BAM ‘000 BAM Gros exposure 35.289 28.084 62.373 29.633 27.625 57.258
Loans and receivables from customers 77.388 74.834 Impairment (14.312) (17.108) (31.420) (12.669) (14.921) (27.590) allowance
Provisions for off-balance sheet 3.618 2.975 Impairment 40,56% 60,92% 50,37% 42,75% 54,01% 48,19% rate
81.006 77.809 (b) Taxation
The Bank recognises tax liabilities in accordance with the tax laws of Regulatory reserve for credit risk requirement as of 31 December: Federation of Bosnia and Herzegovina. Tax returns are subject to the approval
of the tax authorities which can carry out subsequent inspections of 2016 2015 taxpayers’ records. ‘000 BAM ‘000 BAM Impairment allowances under the Agency 81.006 77.809 (c) Regulatory requirements regulation Impairment allowances under IFRS 40.654 35.829 The Agency is entitled to carry out regulatory inspections of the Bank’s operations and to request changes to the carrying values of assets and Excess at period end 43.133 44.172 liabilities, in accordance with the underlying regulations. Excess at previous period 24.814 24.814
Change 18.318 19.358
122 123 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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7 Interest income 8 Interest expense
a) Analysis by source a) Analysis by recipient
Total interest income is generated from the following sources: Total interest expense presented per depositors is as follows:
2016 2015 2016 2015 ’000 BAM ’000 BAM ’000 BAM ’000 BAM Corporate clients 32.496 31.783 Retail clients 9.386 7.691 Corporate clients 5.472 6.107 Retail clients 28.483 26.932 Banks and other financial institutions 4.429 5.936 Banks and other financial institutions 6 24 Other 7 6 60.984 58.739 19.294 19.740 “Interest income from banks and other financial institutions” includes interest b) Analysis by product income from the obligatory reserve with the Central Bank. The total interest expense is analyzed as follows: b) Analysis by product 2016 2015 Interest income according to the bank’s business activities is as follows: ’000 BAM ’000 BAM Current accounts and deposits from 2016 2015 9.386 7.691 retail clients ’000 BAM ’000 BAM Current accounts and deposits from 5.472 6.107 Loans and receivables from customers 60.978 58.715 corporate clients Obligatory reserves with the Central Bank 5 18 Current accounts and deposits from banks 2.075 3.124
Placements with banks 1 6 Borrowings 2.354 2.812 Other 7 6 60.984 58.739 19.294 19.740
124 125 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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9 Fee and commission income 11 Net impairment losses and provisions
2016 2015 The charge to profit or loss in respect of impairment losses and provisions ’000 BAM ’000 BAM was as follows: Processing of international payment transactions 3.760 2.669 2016 2015 Other fee income 4.268 2.831 ’000 BAM ’000 BAM Processing of domestic payment transactions 2.325 1.886 Net impairment losses and provisions Guarantees and letters of credit 2.084 1.519 - for loans to customers (Note 19) 7.806 8.365 Maintenance of customers’ current accounts 2.659 2.168
Foreign exchange transactions 1.060 955 - for provisions for liabilities and charges (Note 29) 385 (26)
Customers’credit cards 347 525 - for accrued interest and other assets (Note 20) 57 137 16.503 12.553 8.248 8.476
10 12 Personnel expenses
a) Dividend income 2016 2015 ’000 BAM ’000 BAM 2016 2015 Net salaries 8.122 7.789
’000 BAM ’000 BAM Taxes and contributions 6.042 5.782
Dividends from available for sale equity securities 400 57 Other long term employee benefits 1.424 1.609
400 57 Meal and transport allowances 526 504
Other 1.885 24 b) Net gains and losses on financial instruments at fair value through profit and loss 17.999 15.708 and result from foreign exchange trading and translation of monetary assets and Personnel costs include BAM 2.939 thousand (2015: BAM 2.804 thousand) liabilities of defined pension contributions paid into the State pension plan. Contributions are calculated as percentage of the gross salary paid. The Bank 2016 2015 had 427 employees as at 31 December 2016 (31 December 2015: 424 ’000 BAM ’000 BAM employees). Neto dobici od kupoprodaje valuta 2.153 1.861 Personnel costs include BAM 1.260 thousand (2015: BAM 1.052 thousand) 2.153 1.861 of remuneration of the Management Board members. These costs also include BAM 261 thousand contributions for pension insurance paid to c) Other income State pension plan (2015: BAM 219 thousand).
2016 2015 ’000 BAM ’000 BAM Other operating income 769 617
769 617
126 127 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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13 Other expenses b) Profit before tax
2016 2015 2016 2015 ’000 BAM ’000 BAM ’000 KM ’000 KM Administration and marketing costs 8.247 7.153 Profit before tax 9.511 6.919 Rent 3.376 3.531 Tax calculated at rate of 10% 951 692 Non-deductible expenses 281 12 Administrative and consultancy fees 2.364 2.725 Non-deductible provisions and write offs 93 14 Savings deposit insurance 1.703 1.290 Non-taxable income (6) (6) Court and administrative fees 164 186 Income tax expense 1.319 712 Compensations for temporary jobs 34 130 Average effective income tax rate 13,86% 10% Donations 2 2 Write-off / sale of receivables 1.376 707 15 Cash and cash equivalents Write-off / sale of fixed assets 428 300 Other taxes 309 118 2016 2015 Other expenses 2.577 1.818 ’000 KM ’000 KM Current accounts with other banks 12.631 53.721 20.580 17.960 Current account with Central Bank 52.897 34.267 Cash in hand 38.655 26.424 14 Income tax expense Items in the course of collection 2 2 Income tax recognized in the income statement includes current and 104.185 114.414 deferred tax. The current rate of income tax amounts 10% (2015: 10%). The amount of cash reserves also represents cash and cash equivalents for a) Income tax expense recognised in the income statement the purpose of the preparation of the statement of cash flows.
2016 2015 ’000 BAM ’000 BAM Current tax 1.551 704 Deferred tax (Note 30) (232) 8 Income tax charge for the year 1.319 712
128 129 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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16 Obligatory reserve with the Central Bank 17 Loans and receivables from banks
The obligatory reserve represents amounts required to be deposited with 31.12.2016 31.12.2015 the Central Bank BH -“Central Bank”). Obligatory reserve is calculated on the basis of deposits and borrowings taken regardless of the currency the funds ’000 BAM ’000 BAM are denominated in. Placements with maturity up to 1 month - 10.926 Period of obligatory reserves amount maintenantce: od 21.12.2016 til 31.12.2016 - 10.926 No of working days in period: 8
in BAM 18 Financial asset available-for-sale 1 Deposit base for the obligatory reserve requirement 953.111.376,22 31.12.2016 31.12.2015 2 The rate of the obligatory reserves in % 10 ’000 BAM ’000 BAM
3 The average obligatory reserve 95.311.137,65 Equity securities 988 988
average deposited with the Central Bank 124.818.257,37 988 988
The amount more than the obligatory reserves 29.507.119,75 Financial assets available for sale include the Bank’s equity investments into The amount is less than the obligatory reserve - Sberbank a.d. Banja Luka (0.36% share) and Registry of securities (0.69% share). These equity investments are not quoted on an active market and Obligatory reserve requirement druign 2015 and up to 30 June 2016 was as are valued at cost as at 31 December 2016 in the total amount of BAM 988 follow: thousand (as at 31 December 2015 the total amount was BAM 988 thousand). For these investements there is no active market. • 10% on deposits and borrowings with maturity of up to one year (short- term deposits and borrowings) The Bank uses the following fair value hierarchy for financial instruments: • 7% on deposits and borrowings with maturity over one year (long-term Level 1: quoted (unadjusted) prices in active markets for identical assets deposits and borrowings). or liabilities On 31.03.2016 Central Bank has issued a new decision on establishing and maintaining mandatory reserves and determination of the remuneration to Level 2: other techniques for which all inputs which have a significant the amount of reserves to the application of 07.01.2016, as follows: 10% on effect on the recorded fair value are observable, either directly or indirectly deposits and borrowed funds. Level 3: techniques which use inputs that have a significant effect on the Central Bank calculates fees for funds on reserve accounts as follows: recorded fair value that are not based on observable market data
• on the amount of the obligatory reserve at a rate determined on the average interest rate realised by the Central Bank over the same period on overnight deposits market;
• on the amount of excess funds on obligatory reserve at a rate determined on the average interest rate realised by the Central Bank over the same period on deposits invested up to a month.
130 131 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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19 Loans and receivables from customers 20 Accrued interest and other assets
a) Analysis by product 31.12.2016 31.12.2015 ’000 BAM ’000 BAM 31.12.2016 31.12.2015 Repossesed assets 6.897 5.713 ’000 BAM ’000 BAM Accrued due interest 2.031 2.214 Corporate Accrued interest not due 2.253 2.228 - in BAM and BAM linked to foreign currencies 501.260 456.099 Accrued fee 396 477 - in foreign currency 8.734 9.821 Prepaid expenses 397 327 Total corporate loans 509.994 465.920 Inventory 257 147 Other assets 4.960 4.222 Retail 17.191 15.328 - in BAM and BAM linked to foreign currencies 455.382 447.368 Impairment (924) (867) Total retail loans 455.382 447.368 Total 16.267 14.461
Total gross loans 965.376 913.288 The Bank’s intention is to sell repossessed assets in the apporpiate commercial Less impairment allowance (38.256) (33.888) moment (these assets were taken over with respect to non performing loans). Total net loans 927.120 879.400 Changes in allowances for impairment losses on interest calculated and other assets, recognized in the income statement are as follows: Impairment allowance as a percentage of 3,96% 3,71% gross lending to customers 31.12.2016 31.12.2015 ’000 BAM ’000 BAM b) Movement in impairment allowance of loans and receivables As at 1 January 867 730 The movement in impairment allowance on loans to customers, recognised Net charge/(release) in income statement 57 137 in the income statement, is as follows: (Note 11)
31.12.2016 31.12.2015 As at 31 December 924 867 ’000 BAM ’000 BAM As at 1 January 33.888 29.776 21 Investment in associate Unwinding of discount (2.209) (2.500) The Bank’s investment in associate as at 31 December 2015 related to Net charge to profit or loss (Note 11) 7.806 8.365 investment in Bamcard d.d. Sarajevo. Increase in provisions 13.283 14.640 Ownership Investment (at cost less Decrease in provisions (5.477) (6.275) Business % impairment) ‘000 KM Sale of fully written-off receivables (832) (456) Decrease in provision for loans per which the (397) (1.297) 31.12.2016 - - - Bank took over the collateral Other related As at 31 December 38.256 33.888 31.12.2015 20.03% computer 580 businesses
132 133 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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22 Investment property 23 Property and equipment
31.12.2016 31.12.2015 Office Sredstva furniture Leashold Asets in the ’000 BAM ’000 BAM Buildings Computers and improve- course of Total motor ments constructio- Cost vehicles nmi
At 1 January 2.094 2.094 ’000 BAM ’000 BAM ’000 BAM ’000 BAM ’000 BAM ‘000 BAM
Disposal and impairment (247) Cost At 1 January 2016 2.163 8.829 10.388 9.088 - 30.468 At 31 December 1.847 2.094 Additions 1.354 1.354
Transfers 608 407 339 (1.354) - Accumulated depreciation and impairment allowance Disposal and write offs (668) (737) 1.405 At 1 January 262 221 At 31 December 2016 2.163 8.769 10.058 9.427 30.417
Charge for the year 42 41 At 1 January 2015 2.163 10.533 10.332 8.993 - 32.021 Additions - - - - 738 738 At 31 December 304 262 Transfers - 476 167 95 (738) - Disposal and write offs - (2.180) (111) - - (2.291) Net book value At 31 Decembar 2015 2.163 8.829 10.388 9.088 - 30.468
At 1 January 1.832 1.873 Depreciation At 1 January 2016 248 5.695 7.434 4.025 17.402 At 31 December 1.543 1.832 Charge for the year 43 1.003 665 627 2.338 Disposal and write offs (668) (547) (1.215) Management believes that the fair value of investment properties is not At 31 Decembar 2016 291 6.030 7.552 4.652 18.525 significantly different from the carrying value based on current prices for similar properties in the similar locations. At 1 January 2015 208 5.910 6.895 3.382 - 16.395 Charge for the year 40 1.211 650 643 - 2.544 Disposal and write offs - (1.426) (111) - - (1.537) At 31 Decembar 2015 248 5.695 7.434 4.025 - 17.402
Net book value
At 1 January 2016 1.915 3.134 2.954 5.063 13.066
At 31 December 2016 1.872 2.739 2.506 4.775 11.891
The cost of fully depreciated assets still in use was BAM 16,157 thousand as at 31 December 2016. On 31 December 2015 the value of assets in use and which is depreciated untill 31 December 2015 was BAM 20,549 thousand.
134 135 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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24 Intangible assets 25 Current accounts and deposits from banks
Asets in the 2016 2015 Software Total course of construction ’000 BAM ’000 BAM
’000 BAM ’000 BAM ’000 BAM Demand deposits
Cost - in BAM 228 676 At January 2016 11.121 190 11.311 - in foreign currency 64 83
Additions 930 303 1.233 Term deposits - in BAM 127.129 144.731 - in foreign currency 8.500 17.000 At December 2016 12.051 493 12.544 135.921 162.490
At January 2015 9.230 917 10.147
Additions 1.891 (727) 1.164 26 Current accounts and deposits from customers
2016 2015 ’000 BAM ’000 BAM At December 2015 11.121 190 11.311 Corporate clients Demand deposits Amortization - in BAM and BAM linked to foreign currencies 116.062 115.490
At 1 January 2016 6.803 6.803 - in foreign currency 25.131 21.242
Charge for the year 1.363 - 1.363 Term deposits - in BAM 110.022 118.813
- in foreign currency 77.257 61.917 At 31December 2016 8.166 8.1667 Total Corporate clients 328.472 317.462
At 1 January 2015 5.639 - 5.639 Retail clients
Charge for the year 1.164 - 1.164 Demand deposits - in BAM and BAM linked to foreign currencies 77.216 55.459 - in foreign currency 51.492 42.838 At 31 December 2015 6.803 - 6.803 Term deposits - in BAM and BAM linked to foreign currencies - in foreign currency 88.279 69.101 Net book value - u stranoj valuti 222.247 190.024 At 1 January 2016 4.318 190 4.508 Total Retail clients 439.234 357.422 At 31 December 2016 3.885 493 4.378
Total 767.706 674.884
136 137 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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27 Borrowings and subordinated debt Subordinated debt is included in additional Bank’s capital at adequacy calculation in accordance with the regulations. Repayment of subordinated Interest debt is subordinated to all other liabilities of the Bank. Borrowings Maturity 2016 2015 rate
’000 BAM ’000 BAM 28 Accrued interest and other liabilities Federal Ministry of Fixed 2017. 173 173 Finance Interest rate 2016 2015 ’000 BAM ’000 BAM 3M European Investment EURIBOR + 2018. 6.018 9.027 Bank (“EIB“) Accrued interest – not due 10.675 8.163 margin Loan collected in advance 4.150 4.406 European Bank for 6M Reconstruction and EURIBOR + 2019. 13.970 19.558 Deferred income 3.226 3.353 Development (“EBRD”) margin Accrued interest – due 7 1 European Fund for 6M South East Europe EURIBOR + 2021. 8.909 13.169 Other liabilities 8.783 7.032 (EFSE) margin 26.841 22.955 Federal Ministry of 6M LIBOR + 2023. 6.335 11.698 Finance/reflection margin
Total borrowings 35.405 53.625
Subordinated debt
3M Sberbank Europe AG EURIBOR + 2020. 24.448 24.448 margin
Total subordinated debt 24.448 24.448
Total borrowings and 59.853 78.073 subordinated debt
Before the end of 2013, a new contract on subordinated debt was signed with Sberbank Europe AG in the amount of EUR 12,5 million, for a period of six years, of which the first part in the amount of EUR 7,5 million was withdrawn in 2013, while the remaining amount was drawn in 2014. Margins for subordinated funds are higher than margins on credit lines and range from 3.8% to 5.2%.
138 139 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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29 Provision for liabilities and charges 30 Deferred tax liability
In accordance with the Law on corporate profit tax (“CPT”) of Federation of Provisions Provisions Provision Bosnia and Herzegovina cost of hardware and software purchases can be Vacation for off-ba- for severan- for passive Total accruals lance-sheet deducted in full in the year of purchase for tax purposes. The Bank recognizes ce payment ligitation items deferred tax liability based on temporary differences between the tax value and carrying value of hardware and software. ’000 BAM ’000 BAM ’000 BAM ’000 BAM ’000 BAM
As at 1 January 2016 18 293 940 134 1.385 2016 2015
Net charge/(release) to state- ’000 BAM ’000 BAM 6 28 385 15 434 ment of comprehensive income Deferred tax liability 521 753 Increase of provisions 6 28 3.256 16 3.306
Decrease of provisions - - (2.871) (1) (2.872) Movement of deferred tax liabilities is presented in the table below: As at 31 December 2016 24 321 1.325 149 1.819 Deferred tax liability Provisions Provisions Provision Vacation for off-ba- BAM’000 for severan- for passive Total accruals lance-sheet ce payment ligitation As at 1 January 2015 745 items Increase in liabilities recognised in the statement of ’000 BAM ’000 BAM ’000 BAM ’000 BAM ’000 BAM 8 comprehensive income (Note 14) As at 1 January 2015 26 383 969 129 1.507 As at 31 December 2015 753 Net charge/(release) to state- (8) (90) (29) 5 (122) ment of comprehensive income As at 1 January 2016 753 Increase of provisions - 29 2.819 18 2.866 Increase in liabilities recognised in the statement of (232) comprehensive income (Note 14) Decrease of provisions (8) (119) (2.848) (13) (2.988) As at 31 December 2016 521 As at 31 December 2015 18 293 940 134 1.385
140 141 finansijski izvještaji za godinu sberbank bh · annual report 2016 koja je završila 31. decembra 2016.
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31 Share capital 34 Related party transactions
Class A The Bank has an immediate related party relationship with its key Authorised and issued Ordinary shareholders and their subsidiaries, affiliated legal entities, members of the Total shares Supervisory Board and Management Board members (together “key BAM’000 BAM’000 management personnel”), family members of key management personnel and entities that are controlled or significantly influenced by key management As at 1 January 2016 76.337 76.337 personnel and members of their immediate families.
As at 31 December 2016 76.337 76.337 Related party transactions are part of the Bank’s regular operations.
Nominal value (BAM) 1.000 - The overview of related party transactions at 31 December 2016 and for the year then ended is presented below: Number of shares 76.337 76.337 Receivables Liabilities Income Expense The shareholder structure of the Bank as at 31 December 2016 and as at 31 ‘000 BAM ‘000 BAM ‘000 BAM ‘000 BAM December 2015 is as follows: SBERBANK EUROPE AG 100% 31 December 2016
1. Ultimate parent company 32 Share premium Sberbank – Russia 259 127.176 - 1.876 The share premium reserve represents the accumulated positive difference 2. Parent company between the nominal value and amount received upon issue of share capital. Sberbank Europe AG 20 25.229 - 2.193 33 Commitments and contingent liabilities 3. Associate Sberbank a.d. Banja Luka The total amount of guarantees, letters of credit and undrawn loan 900 452 140 17 4. Other members of Sberbank commitments at the end of the year were: 3.650 24 14 88 group 2016 2015 Total Sberbank group 4.829 152.881 154 4.174 ’000 BAM ’000 BAM
Payment guarantees Management Board and other key 30 - - - - in BAM 23.525 17.057 management personal - in foreign currency 22.494 17.268 Total related parties 4.859 152.911 154 4.174 Performance guarantees - in BAM 35.664 23.958 Framework agreement with Sberbank Russia was signed on 20 Decemeber - in foreign currency 9.961 8.371 2012 and the available limit for Sberbank Russia placements in Sberbank BH d.d. Sarajevo was EUR 140 million. Letters of credit At the end of 2016, of the maximum amount used is 65 million BAM. - in foreign currency 565 2.176 Compensation of the Management Board is disclosed in Note 12. The Bank Undrawn lending commitments in BAM did not make payments to members of the Supervisory Board. - approved unsued loans 69.260 61.237 - framework loan commitments 96.802 56.334
258.271 186.402
142 143 sberbank bh · annual report 2016
Receivables Liabilities Income Expense Managing Bodies
‘000 KM ‘000 KM ‘000 KM ‘000 KM
31 December 2015 Audit Management Supervisory Board 1. Ultimate parent company Committee Edin Karabeg, CEO Alexey Bogatov, President Reinhard Kaufmann Sberbank – Rusija 360 127.533 - 2.100 Jasmin Spahić, Executive Director Duško Kantar, Vice President Jovo Vilendečić
2. Parent company Senad Tupković, Executive Director Kornél Halmos, Member Petar Grujić (until 01.10.2016.) Irene Eckart, Member David Krepelka Sberbank Europe AG - 35.732 15 2.709 Denis Hasanić, Executive Director Elena Viklova, Member Martina Vučković (until 01.10.2016.) 3. Associate Jasmina Dobrača, Executive Director (from 02.10.2016.) Sberbank a.d. Banja Luka 4.406 9.840 151 27
4. Other members of Sberbank 30.173 7.933 - 952 group
Total Sberbank group 34.939 181.037 166 5.788
Management Board and other key 41 - - - management personal
Total related parties 34.980 181.037 166 5.788
35 Events after the balance sheet date
After 31 December 2016 till the date of these financial statements, there were no subsequent events that would have a significant impact on the financial statements for 2016 or are of such significance for the Bank to requiring disclosure in the notes to the financial statements for 2016.
144 145 sberbank bh · annual report 2016
Branch Dobrinja Banovići Visoko Sanski Most Dobrinjske bolnice br. 9 Branch Banovići Branch Visoko Branch On 31. December 2016. Branch network 71000 Sarajevo Alije Izetbegovića 31 Hazima Dedića 1 Sanski Most 033/294-941 75290 Banovići 71300 Visoko Muse Ćazima 035/871-415 032/730-370 Ćatića b.b. Mostar 79260 Sanski Most Branch Mostar 1 Gradačac Tešanj 037/688-506 Kardinala Alojzija Branch Gradačac Branch Tešanj Stepinca bb Huseina Kapetana Maršala Tita b.b. Travnik 88000 Mostar Gradaščevića b.b. 74260 Tešanj Branch 036/334-014 76250 Gradačac 032/665-170 Bosanska broj 70., 035/822-780 Travnik Branch Mostar 2 Branch Kraševo 030 540 721 Fejićeva b.b. Lukavac TC VF Komerc 88000 Mostar Branch Lukavac 74260 Tešanj 036/501-672 Mehmedalije Maka 032/699-671 Dizdara b.b. Branch Mostar 3 Kakanj 75300 Lukavac Petra Krešimira IV b.b. Branch Kakanj 035/550-680 88000 Mostar Alije Izetbegovića 157 036/333-227 Gračanica 72240 Kakanj Branch Gračanica 032/552-760 Široki Brijeg Ul. Hajdarovac b.b. Branch Široki Brijeg Vitez 75320 Gračanica Trg Ante Starčevića 6 Branch Vitez 035/708-741 88220 Široki Brijeg PC 96 039/700-137 Orašje 72250 Vitez Branch Orašje 030/547-174 Tuzla XIV ulica 97 Branch Tuzla 1 Bihać 76270 Orašje Maršala Tita 2a-2b Branch Bihać 031/719-442 Headquarters Branch Branch 75000 Tuzla V korpusa 3 Stari Grad Alipašino Polje Fra Anđela 035/300-900 Brčko 77000 Bihać Štrosmajerova 3 Trg solidarnosti 2a Branch Brčko 037/329-100 Zvizdovića 1 Branch Tuzla 2 71000 Sarajevo 71000 Sarajevo Bulevar mira 3 71000 Sarajevo Univerzitetska b.b. Cazin 033/250-000 033/775-280 76100 Brčko 033/954-700 75000 Tuzla Branch Cazin 049/235-853 Branch Center Branch 035/310-380 Lojićka b.b., Danijela Ozme 18 Novo Sarajevo Zenica 77220 Cazin Živinice Business units 71000 Sarajevo Kolodvorska 11 Branch Zenica 037/539-246 Branch Živinice 033/564-672 71000 Sarajevo Trg Alije Izetbegovića Sarajevo Alije Izetbegovića 4 033/954-917 69 72000 Zenica Branch Ilidža 75270 Živinice Branch 032/448-162 Butmirska cesta 14 Branch Grbavica Marijin Dvor 035/740-990 71210 Ilidža Hasana Brkića b.b. Fra Anđela Zvizdovića 033/776-250 71000 Sarajevo 1 71000 Sarajevo 033/722-730 033/954-732
146 147 sberbank bh · annual report 2016
Organizational chart of Sberbank BH
GENERAL ASSEMBLY
Audit Committee Supervisory Board Internal Audit
Management Board Secretary
RETAIL / COO CEO CRO / CFO
Retail Sales Operations Board Aairs SME / Corporate Credit Risk (Corporate & Retail) Finance
Payment Sales Support IT Regional Centre Methodology &Reserves Accounting Services & Sarajevo Trade Finance Central Vault Human Resources Regional Centre Portfolio Analysis & Limits Planning & Controlling Cards Tuzla Branch Network Loan AML & Regional Centre Risk Technologies Asset & Liability Administration Compliance Mostar Management Product Management Integrated Risk Management & Development Private Regional Centre Individuals Loan Legal Aairs International & Administration Partnerships & Large Clients Methodology & Process Multichannel Legal Entities Loan Administration GBS Product Development Call Centre Portfolio Analysis Global Markets Global Markets - Back Oce Organisation, Process & Marketing & Project Management Operational Risk Communications Account Custody & Administration Depositary Business Facility Management Market Risk & Procurement
Security Restructuring & Workout DIVISION
Restructuring & Workout (SME & Corporate) DEPARTMENT
Retail Collection GROUP
BRANCH NETWORK Underwritting REGIONAL CENTRE
148 149 sberbank bh · annual report 2016
Sberbank Europe AG
Austria Czech Republic Germany Ukraine Sberbank Europe AG Sberbank CZ, a.s. Sberbank Direct PJSC VS Bank Schwarzenbergplatz 3, U Trezorky 921/2 P.O. Box 620 Hrabovskoho str. 11, 45956 Gladbeck 1010 Vienna 158 00 Praha 5 79000 Lviv T +496 966 777 54 777 T +43 (0) 1227320 T +42 (0)800 133 444 T +380 (0)32 297 13 82 F +42 (0)221 969 951 F +496 966 777 45 799 F +380 (0)32 297 05 83 [email protected] kundenbetreuung@ [email protected] [email protected] www.sberbank.at sberbankdirect.de. www.sberbankcz.cz www.vsbank.com.ua www.sberbankdirect.de
Croatia Slovenia Hungary Serbia Sberbank d.d. Sberbank banka d.d. Sberbank Sberbank Srbija a.d. Varšavska 9, Dunajska 128a, Magyarorszag Zrt. Beograd 10000 Zagreb 1000 Ljubljana Rákóczi út 7, Bulevar Mihaila T +385 (0)1 4801 300 T +386 (0)1 53 07 400 1088 Budapest Pupina 165g, F +385 (0)1 4801 365 F +386 (0)1 53 07 555 T +36 (0)1 328 66 66 11070 Beograd [email protected] T +381 (0)11 225 74 98 [email protected] F +36 (0)1 328 66 60 www.sberbank.si F +381 (0)11 201 32 70 www.sberbank.hr [email protected] [email protected] www.sberbank.hu www.sberbank.rs
Bosnia & Sberbank a.d. Herzegovina Banja Luka Sberbank BH d.d. Jevrejska 71, Sarajevo 78 000 Banja Luka Fra Anđela T +387 (0)51 241 100 Zvizdovića 1, F +387 (0)51 213 391 71000 Sarajevo [email protected] T +387 (0)33 954 700 www.sberbankbl.ba F +387 (0)33 26 38 32 [email protected] www.sberbank.ba
150 ANNUALSberbank BHREPORT d.d. 2016