Annual Report 2011 1 2 Annual Report 2011

Annual Report 2011 1 2 Annual Report 2011 Sparkasse Bank dd Tran. account: 1990000000000023 Founded in: 1999. IB.: 4200128200006 SWIFT: ABSBBA 22 Figures 2011: Owner: Steiermaerkische Sparkasse Austrija Head office Number of employees: 432 Zmaja od Bosne 7 Number of affiliates: 45 71000 Sarajevo, BiH Number of clients: app. 180.000 Tel: +387 (0)33 28 03 00 Fax: +387 (0)33 28 02 31 E-mail: [email protected] www.sparkasse.ba Key bodies MANAGEMENT BOARD SUPERVISORY BOARD AUDITING BOARD CEO Chairman Chairman Sanel Kusturica, MBA Sava Dalbokov, MBA Samir Omerhodžić Executive director Members Members Zahida Karić, MBA Mag. Franz Kerber Walburga Seidl Hamdija Alagić Guenter Schneider Executive director Mag. Renate Ferlitz Aleksandar Klemenčić (until 01.11.2011.) Nedim Alihodžić Dr. Georg Bucher Slaviša Kojić Manfred Lackner (from 01.11.2011.) Executive director Amir Softić 2.98% Ownership structure Steiermärkische Sparkasse Others 97.02% Annual Report 2011 3 Annual Report 2011 Management on 2011 5 Economy & Banking sector in 2011 8 2011 in numbers 12 Companies of the “S” brand in BiH 14 The most socially responsible company in BiH in 2011 17 Our clients 20 - 26 Financial Statements 27 4 Annual Report 2011 Annual Report 2011 5 Management on 2011 To our shareholders, business partners, clients and employees Sanel Kusturica, Director Retail and Corporate, Legal operations, Human resources It is my great pleasure to have the opportunity to give you a short over- view of the achievements of the Sparkasse Bank in Bosnia and Herze- govina in 2011, which I believe have brought us another step closer to our long-term development strategy and reaching the top of the banking market in Bosnia and Herzegovina. Thanks to its forceful market activities and increased revenues, streamlining of the expenditures, and the overall increased business efficiency in 2011, the Sparkasse Bank achieved a positive financial result of 6.4 million KM. The very difficult macro-economic conditions in Bosnia and Herzegovina, slight growth of the banking sector in terms of credit activities, as well as the stagnation in the field of savings and deposits, make our results even more notable. However, the Sparkasse Bank, empowered by its experi- ence of running business in the times of crisis, has managed to take necessary streamlining actions and used opportunities that appeared on the market. Continued positive growth trend in all segments In 2011 we continued a positive trend of significant growth in all segments of the market, which has been one of the characteristics of the Sparkasse Bank ever since 2007. Good liquidity and capital basis made it possible for us to keep our position of one of the fastest growing and most active banks in the credit market. It can be said that this momentum introduced to Bosnia and Herzegovina by the Sparkasse Bank, has become our distinguishing mark and one of the main ele- ments that make us stand out on the market. This active sales approach, along with the continuous improvement of quality, has certainly been a factor that contributed to the trust in the name of Sparkasse, as we can see from the continuous and significant growth of active clients of the bank. Strengthening and intensification of operations with businesses Growth rates and achievement of goals set in the past several years, confirm that the Sparkasse bank has managed to build up a sovereign position in the population segment that we can built our competitive advantage on. The growth of the credit portfolio in this segment was over 20% for this period, and what we are particularly proud of is the great trust of clients in our savings services, which increased our savings portfolio by more than 25%, which is a very important result for us, but also a motive to preserve and strengthen that trust. Moreover, we can proudly say that in 2011 we have managed to intensify and develop our operations with legal entities and, when it was the most needed, enforce our business credit activities with a growth rate of about 24%. In this segment we have focused on the support to small and medium business, where we see significant, yet unused, potential for the Bosnian economy. The results followed – about 1,000 new small and medium entrepreneurs chose us to be their business bank, and SME crediting has grown by more than 17% compared to 2010. In this way we fulfilled our plan, as well as our duty, to give the necessary contribution and support to the economic recovery of the country. Grounds for a sustainable grown on the long run The results achieved in 2011 are a confirmation that the Sparkasse Bank has successfully completed on phase of putting up cornerstones for a long-term sustainable business, and has confidently stepped into a stage of healthy growth and development. The key force in this have been and will remain our employees, whose extraordinary individual engagement and teamwork in a very demanding business environment has been the reason for the success, and it is for that I wish to compliment and thank each individual team member. It is with such an empowered and loyal team as ours, this business model and organization system, infrastructure and, eventually, capital and structural support of our majority owner, Steiermaerkische Sparkasse, that I am convinced that we can respond to all upcoming challenges, but also ensure the growth of the Sparkasse Bank on the long run. 6 Annual Report 2011 Amir Softić, executive director Risk management, Risk controlling and monitoring Systematic reconciliation of growth and risk management In the times of turbulent recession and a business environment as the one that we have had in the past three years, the Sparkasse Bank’s strong growth strategy had to be accompanied by the development of a strong risk management system. In 2011 it includes setting up of a new credit portfolio monitoring with a de- veloped system for early recognition and prevention of negative effects on the portfolio quality. On one hand, this approach contributed to the preservation of the Bank’s financial health, and on the other it lead to improved quality of support to our clients in their daily business struggles. Immediate results of this approach have been seen through improvement of risk indicators in 2011, primarily through the reduced portion of low-quality credits, where the Sparkasse Bank is not only way below the sector average, but even lower than in 2010. Furthermore, Sparkasse Bank provided high degree coverage of poor quality assets by credit loss reserves. More impor- tantly, there has been a huge progress in building up a business culture, where growth and risk management are systematically integrated, which is the foundation for a long-term stability and sustainability of the banking business. Nedim Alihodžić, executive director Operations, IT and organization, Internal audit, Property and security, Marketing and PR The most socially responsible company in Bosnia and Herzegovina in 2011 The dynamics on the market and the growth of the Sparkasse Bank in 2011, as well as in the preceding years, had to be followed and supported by the support functions, where large efforts were invested in the improved internal service quality. Obviously only in this way we could create a syn- chronized and streamlined process chain within the Bank that would result in a better quality of services and products for our clients. The migration of the Bank to a new process center has significantly contributed to the performances of bank card services, while in the meantime premises of our business network have been almost completely adjusted to the standards of the Group and can offer a pleasant environment to our clients. We are especially proud that we have managed to use numerous activities and integrate social responsibility model in all business segments to strengthen our internal culture and raise awareness of the importance of contribution to the community. We are very happy to say that the public has recognized our efforts and that the Sparkasse Bank has been given the award “Dobro11” of the Mozaik Foundation as the most socially responsible company in Bosnia and Herzegovina in 2011. Annual Report 2011 7 Zahida Karić, executive director Accounting and controlling, Treasury, AML Good and sturdy liquidity throughout the period As a precondition for a dynamic crediting policy in 2011, an adequate assets management policy of the Bank, along with keeping to all coefficients prescribed by the law helped us maintain a good, sturdy and safe liquidity through out the period, observing all limits defined by laws and internal documents. In 2011 we paid special attention to internal efficacy through further development of the existing system of monitoring and reporting, enhanced range of sources through new credit external lines, as well as the reconciliation of reports according to the Basel III standards, which brings us a step loser to the changes of legislation which are ahead of us. Invest- ment banking operations have been enhanced through a new service of securities brokerage, and it is our objective to become profiled as an active participant on the market, which will certainly help us be in the position to support the development of local communities through our services. In unfavorable market conditions such as ones brought upon us in 2011, adequate and timely reporting was one of the primary activities of the controlling department, while in the acconting we focused our efforts on ad- justing to new regulatory demands of the IAS 39 standard. Increased volume of business activities of the bank, as well as the growing client base demanded intense activities in the money laundry prevention segment, especially in terms of increasing internal capacities and efficacy.

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