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Report 2007 Worldreginfo - D8b35ff3-6Aed-4D8b-8345-B6e77d988b88 Table of Contents Annual Report 2007 WorldReginfo - d8b35ff3-6aed-4d8b-8345-b6e77d988b88 Table of Contents Message from the Managing Board .................................2 Distribution Channels ...............................................36 Branch Network .................................................36 Macroeconomic Development .........................................5 Call Centre - 0800 11 011 ..................................37 The Banking System .........................................................8 Sales ..................................................................37 Virtual Branch .....................................................37 Mission Statement .........................................................10 Information Technology ............................................38 Among the Best Again! ..................................................11 Human Capital ..........................................................38 Charity ......................................................................39 Bank Profile ....................................................................12 Corporate Governance .............................................40 Corporate Status ......................................................12 Business Structure ...................................................41 Participation and Memberships ................................12 Supervisory Board ....................................................42 Subsidiaries ..............................................................12 Managing Board .......................................................42 Market Position ........................................................13 Market Share ............................................................13 Business Overview .........................................................43 Correspondent Relations ..........................................13 Retail Banking ..........................................................43 Branch Network .......................................................13 Deposits .............................................................43 Loans .................................................................44 Awards 2007 ............................................................13 Card Payments...................................................45 First Investment Bank: Dates and Facts .........................14 Gold and Commemorative Coins .......................46 EGO Club ...........................................................46 2007 - Highlights .............................................................16 Corporate Banking ....................................................47 Corporate Development .................................................20 Deposits .............................................................47 Financial Results ......................................................22 Loans .................................................................47 Balance Sheet ..........................................................23 International Payments .............................................50 Loan Portfolio ...........................................................25 Capital Markets ........................................................50 Loans .................................................................25 Consolidated Financial Statements Related Party Transactions .................................27 As at 31 December 2007 Commitments and contingent liabilities .............28 With Independent Auditor’s Report Thereon .................51 Attracted funds .........................................................29 Post balance-sheet events ............................................100 Capital ......................................................................30 Risk Management Disclosures ................................33 Strategic Goals for 2008 ...............................................101 Collective risk management bodies ..................33 Other Information .........................................................103 Credit Risk .........................................................33 Interest Rate Risk ..............................................34 Members of the Supervisory Board .......................103 Currency Risk .....................................................35 Members of the Managing Board ..........................105 Liquidity Risk ......................................................35 Contacts .......................................................................108 Operational Risk .................................................35 WorldReginfo - d8b35ff3-6aed-4d8b-8345-b6e77d988b88 Message from the Managing Board Annual Report 2007 WorldReginfo - d8b35ff3-6aed-4d8b-8345-b6e77d988b88 I 2 I Dear shareholders, clients and colleagues, risk. Liquidity stands at 29.92% (2006: 34.61%). Interest income continues to dominate total income at 67.94% of To us 2007 was a year of pivotal projects and major total net income from banking operations (2006: 64.53%). challenges related to the integration of the Bulgarian Good key performance ratios, together with the expansion banking sector into the common European financial market of the Bank’s business – an increase in the Bank’s assets and to the strengthening of First Investment Bank’s leading of 33.5% to BGN 4.2 billion (ranking 6th among banks in position among Bulgaria’s credit institutions. Against Bulgaria), an increase in deposits (from private individuals the backdrop of banking sector integration and intense and non-financial institutions) to BGN 2.5 billion (ranking competition First Investment Bank achieved excellent 6th), an expansion of the loan portfolio by BGN 2.8 billion financial results, asserted its reputation as a modern and (ranking 5th) – are major indicators of First Investment flexible bank and invested energy and resources in new Bank’s growing importance and capacity. technological projects, thus laying a solid foundation for its future growth. These upward trends in the development of FIBank were taken into account by the international rating agencies: in We are proud that in 2007 First Investment Bank performed 2007 Moody’s upgraded the Bank’s outlook from stable to the largest initial public offering (IPO) of a bank at the positive and confirmed the long-term rating of the Bank to Bulgarian Stock Exchange. The oversubscription was Ва1; in December Fitch Ratings confirmed its BB- rating with 5.97 times and FIBank raised BGN 107 million of share a positive outlook. Moreover, this upgrade came at times capital. This confirmed First Investment Bank’s excellent when the ratings of several countries were downgraded reputation and the trust of the investor community. The due to apprehension that they might be adversely affected increased capital base facilitated FIBank’s expansion and by the current global economic crisis. Our foreign partners its opportunities for further development. After the IPO also confirmed their confidence in FIBank. Regardless FIBank became a public company with more than 3000 of the stagnation in the international financial markets, shareholders holding 15% of the Bank’s registered capital 23 first-class banks extended to First Investment Bank a – free-floating on the Bulgarian Stock Exchange. The capital syndicated loan under terms and conditions better than in base is one of the vital pillars for the Bank’s future growth. previous years. Plans for its increase include the issue of additional hybrid instruments which will be facilitated by our know-how and The development of the Bank’s business in 2007 was the extensive experience in international markets built up accompanied by numerous changes in the legal framework in recent years. prompted by Bulgaria’s accession to the European Union, as well as by measures undertaken by the Bulgarian In 2007 we reported very good financial results and National Bank with a view to controlling key economic affirmed the Bank’s position among the leading banks in indicators such as the current account deficit and lending Bulgaria. Thanks to excellent customer service, the diverse growth. FIBank adapted swiftly and successfully to these services we offer and the improved efficiency of banking changes. operations FIBank increased its net profit by 77.4% to BGN 51 million, and moved to 7th in the ranking of the 29 In 2007 we implemented numerous strategic projects banks operating in Bulgaria. The return on equity (after tax) related to our card business. As one of the leaders in bank rose to 20.54% (2006: 19.23%) and the return on assets card payments and in order to provide further security to to 1.50% (2006: 1.12%). As a result of the Bank’s policy our clients, we introduced EMV-compliant chip bank cards on effective cost management, the cost/income ratio and began integrating a new card processing system. To improved to 54.98 % (2006: 62.58%). Capital adequacy optimise costs we migrated to a new card processing remained high at 12.98% (2006: 15.81%), this despite the centre. The completion of these important projects will Basel II requirements introduced since the beginning of serve as a stable foundation for the future development of 2007 and the need to set aside provisions for operational our card business. Annual Report 2007 WorldReginfo - d8b35ff3-6aed-4d8b-8345-b6e77d988b88 I 3 I FIBank has a well-structured network of branches and Area (SEPA) in January 2008. This enabled its clients to offices throughout the country. Its expansion continued
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