Lovćen Banka Ad, Podgorica
Total Page：16
File Type：pdf, Size：1020Kb
LOVĆEN BANKA AD, PODGORICA Financial Statements for the Year Ended 31 December 2017 And Independent Auditor’s Report LOVĆEN BANKA AD, PODGORICA CONTENTS Page INDEPENDENT AUDITOR’S REPORT 1-2 FINANCIAL STATEMENTS Income Statement Balance Sheet Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements 1-52 ANNUAL BUSINESS REPORT This is an English translation of Independent Auditor’s Report and 2017 Separate Financial Statements originally issued in the Montenegrin language This is an English translation of Independent Auditor’s Report originally issued in the Montenegrin language INDEPENDENT AUDITOR’S REPORT To the Shareholders of Lovćen banka a.d. Podgorica Report on Financial Statements We have audited the accompanying financial statements of Lovćen banka a.d. Podgorica (hereinafter the “Bank”), which comprise the balance sheet as of 31 December 2017 and the income statement, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the accounting regulations prevailing in Montenegro, based on the Law on Accounting (“Official Gazette of Montenegro”, no. 052/16) and the regulations of the Central Bank of Montenegro governing the financial reporting of banks, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance the Law on Accounting prevailing in Montenegro and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Bank as of 31 December 2017, and its financial performance and its cash flows for the year then ended in accordance with the accounting regulations prevailing in Montenegro and regulations of the Central Bank of Montenegro governing the financial reporting of banks. INDEPENDENT AUDITOR’S REPORT To the Shareholders of Lovćen banka a.d. Podgorica (Continued) Report on annual business report Management of the Bank is responsible for the preparation and fair presentation of the accompanying annual business report in accordance with the requirements of the Law on Accounting (“Official Gazette of Montenegro“, no. 052/16). Our responsibility is to express an opinion on the consistency of the Bank’s annual business report for the year ended 31 December 2017 with the audited separate financial statements for the same year. Our procedures in this regard were performed in accordance with the applicable Standard on Auditing 720 “The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements”, and are only limited to the assessment of the consistency of financial information disclosed in the annual business report with the audited separate financial statements. In our opinion, financial information disclosed in the Bank’s annual business report for the year ended 31 December 2017 is consistent, in all material respects, with the audited financial statements of the Bank for the year ended 31 December 2017 and prepared in accordance with the Law on Accounting. Podgorica, 8 May 2018 Milovan Popović Certified Auditor 2 LOVĆEN BANKA AD, PODGORICA FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 LOVĆEN BANKA AD, PODGORICA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 1. BANK'S FOUNDATION AND ACTIVITY Lovćen Banka AD, Podgorica (hereinafter: the "Bank") has been founded by changing the registered activity as well as the name of Microcredit Financial Institution (MFI) Kontakt into a bank that started with its operations on August 25, 2014. MFI Kontakt had operated since March 25, 2011, when it was registered in the Central Registry of the Commercial Court in Podgorica, under the registration number 4- 0009270/001. On December 3, 2013, on behalf of its founders, MFI Kontakt submitted a request to the Central Bank of Montenegro for issuing a banking license to Lovćen banka AD, Podgorica. The Council of the Central Bank of Montenegro adopted a decision to issue the banking license to the Bank at its session held on May 28, 2014. The Bank was registered with the Central Registry maintained by the Commercial Court under the registration number 4- 0009270/011 on June 27, 2014. The Bank was founded by residents and foreign natural persons with significant banking experience, by the domestic company “Zetagradnja” d.o.o., Podgorica, as well as the German state fund DEG (KfW Group). The Bank’s activities include universal banking products in accordance with the license, predominantly credit, deposit and guarantee activities, as well as foreign-exchange transactions, depot operations, safekeeping services, issuance, processing and recording of payment instruments. The activity of the Bank includes credit, deposit and guarantee activities, as well as foreign-exchange transactions, depot operations, safekeeping services, issuance, processing and recording of payment instruments The Bank is headquartered in Podgorica, at Bulevar Džordža Vašingtona Street, No. 56/I. As at December 31, 2017 the Bank consisted of its Head Office in Podgorica and 8 branches. As at December 31, 2017 the Bank had 95 employees (December 31, 2016: 82 employees and December 31, 2015: 79 employees). According to the Decision no. 4-0009270/026 issued by the Central Business Entities Register on January 12, 2017, the change of the Executive Director for Corporate Banking and Asset Management (Vinko Nikić) and the Executive Director for Retail Banking and Branch Offices (Draško Trninić) at business entity Lovcen banka AD Podgorica was recorded. In May 2017 the Board of Directors relieved the CEO Goran Knežević of duties, at his request, and appointed Vinko Nikić as the acting CEO and Nenad Radulović as the Liquidity Management Executive Director (Decision No. 4-0009270/028 issued by the Central Business Entities Register on June 7, 2017). In June 2017 the Board of Directors passed a Decision on appointing Vinko Nikic as the Bank's CEO (Decision No. 4-0009270/029 issued by the Central Business Entities Register on June 16, 2017). Bank's executive directors until June 2017: FIRST AND LAST NAME FUNCTION Function performed from: Goran Knežević, PhD CEO October 17, 2016 Executive Director of Corporate Banking and Asset Vinko Nikić, PhD Management August 25, 2014 Draško Trninić Executive Director for Retail Banking and Branch Offices January 12, 2017 Bank's executive directors since June 2017: FIRST AND LAST NAME FUNCTION Function performed since: Vinko Nikić, PhD CEO June 16, 2017 Draško Trninić Executive Director for Retail Banking and Branch Offices January 12, 2017 Executive Director for Risk, Finance, Accounting, IT and Nenad Radulović Liquidity Management June 7, 2017 1 LOVĆEN BANKA AD, PODGORICA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 2. BASIS OF PREPARATION AND PRESENTATION OF THE FINANCIAL STATEMENTS 2.1. Basis for Preparation and Presentation of Financial Statements The Bank prepares its financial statements (hereinafter "the financial statements") in conformity with the Law on Accounting of Montenegro ("Official Gazette of Montenegro", No. 52/16) which entails implementation of International Financial Reporting Standards and decisions of the Central Bank of Montenegro governing financial reporting of banks. The Bank's financial statements have been prepared in accordance with the Decision on the Content, Deadlines and Manner of Compiling and Submitting Financial Statements of Banks (Official Gazette of Montenegro, No. 15/12 and 18/13). In accordance with the Law on Accounting and Auditing of Montenegro, International Accounting Standards ("IAS") and International Financial Reporting Standards ("IFRS") published by the International Accounting Standards Board, should be adopted and published by a respective competent authority of Montenegro who got the right on translation and