ANNUAL REPORT 2006 ANNUAL REPORT 2006 General license of the Bank of Russia for banking operations №2225 issued January 26, 1998 Branch Network Of Bank Center-iNvEsT Contents Veshenskaya Message from the Board of Directors and Executive Board 5 Veshenskaya 2А, Lenina, t. 007 (86353) 24-1-73 Board of Directors and Executive Board of Bank Center-invest 6 Volgograd Kamyshin Millerovo 22, Raboche-Krestyanskaya St. 5, Karla Marksa St., t. 007 (86315) 3-04-50 Corporate Governance 8 Operational branches as of April 1, 2006 t.: 007 (8442) 90-10-90, 90-08-18 Volzhsky 73, Lenina St. Branches planned to be opened till 2009 t. 007 (8443) 41-36-50 Major Achievements and Financial Results of Oblivskaya 59, Lenin St., t. 007 (86396) 2-13-02 Bank Center-invest in 2006 10 Kamensk-Shakhtinsky 44a, Gagarina St., t. 007 (86365) 7-53-22 Morozovsk 198, Plamya Revolutsii St., t. 007 (86314) 5-08-85 Corporate and Retail Banking 14 Krasny Sulin Radionovo-Nesvetaiskay 13/9 Pobedi St./Lenina St., t. 007 (86367) 5-23-72 Surovikino Credit Policy 17 52, Moscovskay St, t. 007 (86340) 3-15-48Shakhty Tsimlyansk 99, Lenina St., t. 007 (86362) 2-71-62 Konstantinovsk 82 V, Moskovskay St., t. 007 (86391) 5-09-91 Pokrovskoye 46, Lenin St., t. 007 (86393) 2-21-14 Investment Policy and Leasing Activity 20 185, Lenina St. Novocherkassk Volgodonsk т. (86347) 2-11-63 44, Spusk Yermaka, t. 007 (86352) 2-34-87 143, Gorkogo St., t. 007 (86392) 7-81-91, 95, Budenovsky St, «Cheremushki», t. 007 (86352) 2-00-63 Semikarakorsk 115, Lenina St., t. 007 (863) 244-04-65 9, Gagarina St., t. 007 (86392) 5-64-70 Aksai Bolshaya Martynovka Stock Market Operations 21 Chaltyr 138, Budyonnogo St., t. 007 (86350) 5-94-00 60, Lenina St., t. 007 (86395) 2-12-64 18 a, 7th Line, t. 007 (86249) 2-14-56 31, Sadovay St, «Aksaisky», t. 007 (86350) 5-99-85 Bagaevskaya Taganrog Foreign Currency and Interbank Operations 22 5, Grecheskaya St., t. 007 (8634) 38-36-64 Bataisk Vesely 336 А, Chehova St, «Russkoe pole», t. 007 (8634) 38-00-58 84, M. Gorkogo St. 47, Komsomolsky St. Azov t. 007 (86354) 5-03-66 t. 007 (86356) 6-50-40 57/66 Tolstogo St./Leningradskaya St. Orlovsky Plastic Cards 25 t. 007 (86342) 4-12-27 Zernograd 34, Proletarskaya St., t. 007 (86375) 3-24-83 14, Krasnopolsky St. Kagalnitskaya t. 007 (86359) 3-53-09 Proletarsk 78, Kalinin St. 120 a, Lenina St., t. 007 (86374) 9-63-03 Staff Policy 26 t. 007 (86345) 9-69-03 Kuschevskaya Salsk Rostov-on-Don Yegorlikskaya 13, Svobodi St., t. 007 (86372) 3-14-35 130, Gritsik St. 302 Е, Svobodi St., t. 007 (86372) 5-85-00 Information Technology 28 62, Sokolova Ave. t. 007 (86370) 7-31-77 t. 007 (863) 267-68-65 Peschanokopskoe 1, Pionerskay St., t. 007(86373) 2-04-95 97 “C”, Budyonnovsky Ave. , t. 007 (863) 232-08-43 14, Malinovsky St., t. 007 (863) 297-16-04 Development of the Branch Network 29 7/19, Korolev Ave., t. 007 (863) 235-95-55 Timashevsk 3, Tselinogradskaya St., t. 007 (863) 244-26-57 155, Proletarskaya St., 6, Serzhantov St., t. 007 (863) 250-19-58 t. 007 (86130) 4-44-47 150, Dovatora St., t. 007 (863) 237-72-87 31, 339th Strelkovaya Diviziya St., 31, t. 007 (863) 255-87-12 Internal Control and Risk Management 36 27, Kommunistichesky Ave., t. 007 (863) 223-02-34 2/9, 18th Line St., t. 007 (863) 263-63-36 112 А, Taganrogskay St, t. 007 (863) 295-86-06 Kropotkin 3, Kommunalny St., t. 007 (86138) 6-82-78 Financial Statements 38 Stavropol Pyatigorsk 12, Sobornay St., Krasnodar t.: 007 (8793) 33-22-08 113/1, Sadovaya st., Anapa t. 007 (861) 274-56-05 Novorossyisk 13, Ordzhonikidze St., t. 007 (861) 267-13-60, 211-12-61 1, Karla Marksa St, t. 007 (8617) 67-62-83 38, Chekistov St, «Ybileiniy», t. 007 (861) 273-65-85 Sochi 9, Gagarina St, t. 007 (862) 254-66-57 Gelenzgik 37, Roz St Kislovodsk Adler The contents of the 2006 Annual Report was approved by the Board of Directors of OJSC CB “Center-invest”, protocol №2 of March 14, 2007 ThE Bank Center-iNvEsT Dear shareholders and Customers! mission In accordance with our strategic mission, in 2006 To better serve customers in the south of Russia TO provide ThE mAximUm Bank Center-invest ensured stable growth of customer region, Bank Center-invest opened new offices in rangE Of servicEs to business and the social and ecological environment, recreation areas of the Caucasian Mineral Waters corporate cUstomers, securing the position of Bank Center-invest in regional (Pyatigorsk) and the Black Sea Coast (Sochi). individual entrepreneurs markets and in the global economy. stable operations development was ensured by and ThE population stable development of customers business is a Bank Center-invest through the growth of our branch Of ThE South Of RUssiA cardinal priority at Bank Center-invest. To this end, network up to 97 sales offices (+19%) and growth in iN AccordancE wiTh Bank Center-invest increased its loan portfolio up the number of staff and their skills. The total number of international standards to RUR 18.9 billion (81.7%). Furthermore, 2006 employees at Bank Center-invest now equals to 1352 and modern bankiNg witnessed a high rate of growth of retail lending, (+36%). technologiEs lending to SMEs, lending for project financing and implementation of new technologies in construction Within the framework of technical assistance provided and building, agriculture, industry and services. by the European Bank for Reconstruction and Development (EBRD), the Bank enhanced its internal The stability of the social environment and its control procedures, risk management procedures and development was furthured by the Bank in 2006. chose a supplier for a new automated system SAP for The increased volume of loans to individuals, which banking through the terms of a tender. rose up to RUR 5.1 billion (+235%); deposits up to RUR 7.2 billion (+44%); plastic cards up to 87 000 stable growth in the global economy was cards (+7.3%); asset management up to RUR 206.4 ensured by Bank Center-invest by attracting funds for million (+260%), as well as scholarships to the best development of the South of Russia in international and students of higher educational establishments through Russian markets via the successful first rouble bonds the realisation of social programs – 155 students issue (RUR 1.5 billion) and additional share issue (+210%), free education on internet use basics for (RUR 1.35 billion). Bank Center-invest raised funds via children and the organisation of excursions for pupils syndicated loans from domestic (RUR 1 billion) and to theatres and museums are social contributions which international capital markets (USD 45 million) and remain at the core of Bank Center-invest’s corporate established credit and guarantee lines with foreign and responsibility. Russian banks. stability and development of ecological The stable development of Bank Center-invest is proven environment is also emphasised in Bank center- by the ratings assigned by rating agencies Moody’s invest activities. In cooperation with the International (B1), RusRating (BB), and the 10-year auditing in Finance Corporation (IFC), the Bank was first to initiate accordance with Russian (RAS) and international a program to stimulate investments into the energy- standards (IFRS). saving projects. As a result of these investments, carbon dioxide atmosphere emissions will be reduced by 250 The Board of Directors of Bank Center-invest approved tons a year. a new strategy for 2007-2011 “South of Russia+”, which provides for complex and stable expansion of In the sphere of agribusiness financing, Bank Center- the following strategic priority areas: invest encourages projects furthering ecologically sound production methods. • Branch network development in cities and regions in the South of Russia; • Products (retail banking, SMEs, agribusiness and Chairman of the Board of Directors, loans for energy-saving projects); Vasily V. Vysokov, Doctor of Economics • Services (plastic cards, ATM, payments and settlements, direct marketing); Chairman of the Executive Board, • Operations (procedures of standardisation, Anna A. Shtabnova, information technologies, internal auditing and Ph.D. (Economics) control, risk management and human resources). Board Of Directors Of ExEcutivE Board Of Bank Center-iNvEsT Bank Center-iNvEsT DR. VasiLy v. vysOkOv Anna A. Shtabnova Chairman of the Board of Directors chAiRman Chairman of the Strategic Planning Committee, Of ThE ManagEment Board Professor, Doctor of Economics Ph. D. (Economics) Tatiana N. vysOkOvA DR. VladimiR s. Zolotarev Aleksey N. Shipilov Vladimir V. Glushko Chairman of the Auditing Chairman of the Appointment and Deputy chAiRman Deputy chAiRman and Compliance Committee, Remuneration Committee, President Of ThE Board Of ThE Board Ph. D. (Economics) of Rostov State University of Economics, Ph. D. (Engineering Ph. D. (Engineering Professor, Doctor of Economics, Sciences) Sciences) Honored Scientist of the Russian Federation Alexander v. LOsEv DR. Andreas ZEisler Grigory O. Chorayan Svetlana V. Orlova Executive Director of OJSC The Head of Financial Institutions of Head Of Treasury Head Of Information “Volga-Don Shipping Deutsche Investitions und and financE Markets TEchnologiEs and Company” Entwicklungsgesellschaft mbH (DEG), Doctor of Economics Department CleariNg systems Ph. D. (Engineering Department Sciences), MSc in Economics and Finance Georgiy N. Orlov ErnsT WeltekE Grigory I. Zhukov Elena A. Kuzheleva Senior banker, financial Independent Director, ex-president Head Of RetaiL chiEf Accountant institutions department of Deutsche Bundesbank (Germany). BUsiness FIAB European Bank for Reconstruction and The position of Independent Department Development (EBRD) Director guarantees transparency of Bank Center-invest activities to the customers, personnel and shareholders and ensures an independent decision making process.