NLB Banka AD Skopje Independent Auditor's Report and Financial

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NLB Banka AD Skopje Independent Auditor's Report and Financial NLB Banka AD Skopje Independent Auditor's Report and Financial statements for the year ended 31 December 2020 Content Page Independent auditor’s report 1 Income statement 3 Other comprehensive income 4 Balance sheet 5-6 Statement of changes in equity and reserves 7-8 Statement of cash flows 9-10 Notes to the financial statements 11 INDEPENDENT AUDITORS’ REPORT To shareholders of NLB Banka AD Skopje Report on the financial statements We have audited the accompanying financial statements of NLB Banka AD Skopje (“the Bank”) which comprise the Statement of financial position as at 31 December 2020 and the Income Statement, Statement of comprehensive income, Statement of the Changes in Equity and Statement of Cash Flow 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 regulation of National Bank of Republic of North Macedonia, 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. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing accepted in the Republic of North Macedonia and published in the Official Gazette no. 79 dated 11 June 2010. 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 at 31 December 2020, and its financial performance and cash flows for the year then ended in accordance with regulation of the National Bank of Republic of North Macedonia. Report on Other Legal and Regulatory Matters Management is also responsible for preparation of the annual report in accordance with article 384 of the Macedonian Company Law. Our responsibility in accordance with the Audit Law is to report whether the annual report is consistent with the annual account and audited financial statements of the Bank for the year ended 31 December 2020. Our work regarding the annual report is performed in accordance with ISA 720 accepted in the Republic of North Macedonia and published in the Official Gazette no. 79 dated 11 June 2010 and limited to assessing whether the historical financial information of the annual report is consistent with the annual account and the audited financial statements of the Bank. The annual report is consistent, in all material respects, with the annual account and the audited financial statements of the Bank for the year ended 31 December 2020. Vladimir Sokolovski Vladimir Sokolovski Administrator Certified Auditor Ernst & Young Certified Auditors DOO, Skopje Skopje, _______ 2021 NLB BANKA AD SKOPJE Financial statements for the year ended 31 December 2020 (all amounts in MKD thousands unless otherwise stated) Income statement for the period 01.01.2020 to 31.12.2020 in MKD thousands current year previous year Note 2020 2019 Interest income 3,329,534 3,481,088 Interest expenses (416,348) (519,601) Net interest income/(expenses) 6 2,913,186 2,961,487 Fee and commission income 1,737,147 1,723,497 Fee and commission expenses (614,255) (619,422) Net fee and commission income/(expenses) 7 1,122,892 1,104,075 Net trading income 8 (45,819) (19,656) Net income from other financial instruments at fair value 9 460 (666) Net income/(expenses) from exchange differences 10 239,538 188,526 Other operating income 11 275,436 185,786 Share of profit of associated companies 24 - - Impairment on financial assets and provisions for off-balance, net 12 (673,070) (427,431) Impairment of non-financial assets, net 13 (47,426) (4,473) Personnel expenses 14 (845,588) (850,550) Depreciation 15 (195,992) (167,306) Other operating expenses 16 (886,283) (922,634) Share of loss of associated companies 24 - - Profit/(loss) before tax 1,857,334 2,047,158 Income tax expenses 17 (153,063) (197,240) Profit/(loss) for the financial year from continuous operations 1,704,271 1,849,918 Profit/(loss) from a group of assets and liabilities held for sale * - - Profit/(loss) for the financial year 1,704,271 1,849,918 Profit/(loss) for the financial year, attributable to*: the shareholders of the bank - - non-controlling interest - - Earnings per share 41 basic earnings per share (in MKD) 1,995 2,166 diluted earnings per share (in MKD) 1,995 2,166 * only for consolidated financial statements Skopje, 04.03.2021 Signed on behalf of NLB Banka AD Skopje by: Igor Davchevski Günter Friedl Peter Zelen Antonio Argir Member of the Member of the Member of the President of the Management board Management board Management board Management board _______________________________________________________________________________________________________ Translation of the Independent auditor’s report and Financial statements published in Macedonian 3 NLB BANKA AD SKOPJE Financial statements for the year ended 31 December 2020 (all amounts in MKD thousands unless otherwise stated) Statement of comprehensive income for the period from 01.01.2020 to 31.12.2020 in MKD thousands current year previous Note 2020 year 2019 Profit/(loss) for the financial year 1,704,271 1,849,918 Other gains/(losses) in the period (before tax) Other gains/(losses) in the period, not recognozed in the Income statement (before tax) Revaluation reserve for equity assets available for sale - unrealized net changes in the fair value of equity assets available for sale 2 - - realized net gains/(losses) from equity assets available for sale, reclassified to Other reserves - - Changes in the bank's creditworthiness, for financial liabilities that are measured at fair value - - Income tax on other gains/(losses) that are not shown in the Income statement 17 - - Total other gains/(losses) in the period that are not shown in the Income statement 2 - Other gains/(losses) in the period that are or can be reclassified in the Income statement (before tax) Revaluation reserve for debt securities available for sale - unrealized net changes in the fair value of debt securities available for sale 69,002 6,706 - realized net gains/(losses) from debt securities available for sale, reclassified in the Income statement - - - additional impairment of debt securities available for sale - - - release of impairment of debt securities available for sale - - Revaluation reserve for foreclosed assets - revaluation reserve recognized during the year - 175,272 - reduction of the revaluation reserve, reclassified in the Income statement (3,365) - Reserve for instruments for cash flow risk protection - unrealized net changes in the fair value of the instruments for cash flow risk protection - - - realized net profits/(losses) of the instruments for cash flow risk protection, reclassified in the Income statement - - Reserve for instruments for risk protection of net-investing in foreign operations - - Foreign exchange reserve of investment in foreign operations - - Share in other gains/(losses) of associates not recognized in the Income statement 24 - - Other gains/(losses) not recognozed in the Income statement (253) (807) Income tax on other gains/(losses) that are or can be reclassified in the Income statement 17 - - Total other gains/(losses) in the period that are or can be reclassified in the Income statement 65,384 181,171 Total other gains/(losses) in the period 65,386 181,171 Comprehensive income/(loss) for the financial year 1,769,657 2,031,089 Comprehensive income/(loss) for the financial year, attributable to*: the shareholders of the bank - - non-controlling interest - - * only for consolidated financial statements Skopje, 04.03.2021 Signed on behalf of NLB Banka AD Skopje by: Igor Davchevski Günter Friedl Peter Zelen Antonio Argir Member of the Member of the Member of the President of the Management board Management board Management board Management board _______________________________________________________________________________________________________ Translation of the Independent auditor’s report and Financial statements published in Macedonian 4 NLB BANKA AD SKOPJE Financial statements for the year ended 31 December 2020 (all amounts in MKD thousands
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