02 - Komercijalna bankanewdev.kombank.com/pdf/godisnji_2010e.pdf · 02 komercijalna banka ad beograd table of content 1. review of key business indicators of the bank through periods

02 Komercijalna banka AD Beograd

TABLE OF CONTENT

1. REVIEW OF KEY BUSINESS INDICATORS OF THE BANK THROUGH PERIODS ___________ 5

2. KEY OPERATING INDICATORS OF THE BANK ___________________________________ 6

3. MACROECONOMIC BACKGROUND ____________________________________________ 13

4. KOMERCIJALNA BANKA AD BEOGRAD ________________________________________ 15

5. 2010 BALANCE SHEET _____________________________________________________ 22

6. INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2010 _______________ 26

7. STATUTORY REQUIREMENTS IN 2010 _________________________________________ 30

8. GENERAL INFORMATION ON 2010 BUSINESS PLAN REALIZATION

9. PROPOSAL FOR DISTRIBUTION OF PROFIT FROM 2010 AND RETAINED EARNINGS FROM PREVIOUS YEARS

10. EXTERNAL AUDITOR’S OPINION FOR 2010

11. FINANCIAL STATEMENTS OF THE BANK

Balance Sheet for the year ended 31/12/2010

Income Statement for the period of 1st January through 31st December 2010

Cash Flow Statement for the period of 1st January through 31st December 2010

Statement of Changes in Equity for the period of 1st January through 31st December 2010

Statistical Annex for 2010

NOTES TO THE FINANCIAL STATEMENTS FOR 2010


Dear Customers and Partners, When the year starts in a way 2010 started for Komercijalna Banka, especially as a 40 anniversary of our business, all your visions and expectations must inevitably shift. And it all began with 120 million Euros capital increase by a group of international professional investors and reaching the first billion Euros retail savings, the dream unfeasible to most of the banks in this market and region. All together it confirms the quality of past accomplishments and confidence in future prospects for Komercijalna Banka.

So, the whole anniversary year we operated with a fulfilling notion that we enjoy the trust of both our customers and shareholders, old and new. At the same time, we had a strong sense of responsibility on how to utilize these resources that were entrusted to our management, and at the same time to provide tranquility to our investors, despite all the difficulties that surrounded us both locally and on a much broader level. The new market axiom that has been confirmed a number of times in this new era is that the situation is not the easiest for the strongest, richest or smartest, but for those who are capable of adapting to the new circumstances, in the best and most sustainable way.

In this sense, we consider the performance of banks in Serbia in 2010 more tactical than strategic in character, with a focus on the high level of flexibility and adaptability to a number of challenges that certainly lie ahead, and preparing for 2011, when we hope for the more predictable business environment. Dependency on macroeconomic conditions is greater than ever and exposure to a large number of economies that are undergoing various stages of recovery is increasingly becoming one of the key factors in strategic planning as well as in assessing the performance of the banks.

On the one hand, the Bank’s strategy in the past, above all focus on clients and traditional banking, has produced positive effects, most obviously in the form of market share growth. On the other hand, the biggest challenge has been where to invest and achieve a desired return with an acceptable and controllable risk.

In a few words we can sum up what careful and analytical readers of this Report will be able to look at in detail and decide on their own, by saying: It has been a successful year.

Thanks to the growth of FX retail savings of 155 million Euros and equity twice higher, the Bank’s assets grew in 2010 twice as fast as the banking sector average, so we continued to increase market share of the Bank, which has been increasing steadily since 2006, (when it was 8.7%). Holding 10.5% of total assets of all Serbian banks, we are the second largest bank in the region. This enabled the Bank to optimize the structure and price of its funding, on the one hand, and to conservatively „build up” its customer portfolio, on the other, with the main goal of preserving the quality, which proved to be the critical issue for so many banks in the last couple of years. The result is that we lowered our NPL to 11.1% (11.7% in 2009), which is 30% lower that the average of the banking sector, despite extremely difficult market conditions in 2010, compared to 2009.

One of the biggest challenges in 2010, with all its unpredictability and volatility, was certainly to resist the challenges of achieving short-term positive effects at the expense of long-term focus on business and on sustainability and quality of relations to clients. Entirely different market conditions lead to the conclusion that the race had only just begun and that winning a good


starting position was a priority in 2010. Our portfolio is an accurate reflection of such strategy: high-quality corporate clients, long-term sustainable products and services to retail customers and sufficient liquid funds ready to support development projects that we expect to come. In this sense, we are satisfied with the achieved profit of 2.5 billion Dinars or 27 million Euros, an increase of 35% year on year. Capital adequacy ratio increased significantly, and more balanced FX position is noteworthy.

A five-year Institution Building Plan of the Bank (IBP) was largely completed in 2010, including modernization of the Bank’s infrastructure in line with modern banking practices, characterized by in-house development and learning from experience and mistakes of others. During all this time, the process of completing and improving the operating procedures and processes continued, along with the process of network and staff optimization, and the Bank has made an outstanding contribution to socially responsible projects.

The quality of business considerably improved as a result of dedicated teamwork and active and professional engagement of the members of the Board of Directors who were joined by exceptional reinforcements during the year.

When we look back at the past year, we are particularly pleased with the top recognition of Komercijalna Banka brand, the perception of familiarity and quality of the Bank’s business, which we maintain not only in the eyes of our regular customers, but also the general public. More official acknowledgements came from some of the most authoritative partners in international cooperation such as Deutschebank and Commerzbank, as well as many other professional evaluations of quality.

When we look at the results achieved and plans for the future, we must bear in mind the fact that business of all the banks, including ours, depend largely on macroeconomic conditions – which today can be described in short as unstable and unpredictable. However, considering that we have so far successfully steered our business, we can say we are optimistic.

With all the macro challenges, the Bank will continue in the direction defined in 2006, with the strategic goal to reacht the top of the banking sector in Serbia by market share and profitability. To achieve this, flexibility will be crucial, i.e. capability to adapt to the circumstances that have never changed more intensively. Despite all uncertainties that the period ahead of us is carrying, we believe that we will successfully achieve set targets and plans by further developing the Bank towards a modern financial institution, managing all Bank’s resources and optimizing them, maintaining an unchanging orientation towards customers while carefully listening to their needs and prioritizing them.

Even though we can now say with certainty that 2010 was much easier than 2011 will be, we are ready and committed to taking on new challenges and opening new areas for growth and development using our ideas, and protecting the Bank from all major risks. These tasks will be easy to accomplish with your invaluable trust and support, for which we thank you in advance.

Respectfully,

The Executive Board


1.

DESCRIPTION 2010 2009 2008 2007 2006

(000 RSD)

255,868,309

150,566,311

45,372,699

105,193,612

43,615,232

199,090,740

130,964,790

68,125,950

205,257,221

115,106,246

38,831,745

76,274,501

46,651,225

167,210,761

104,438,978

62,771,783

170,861,369

106,231,447

34,827,292

71,404,155

44,362,316

132,903,416

76,933,266

55,970,150

147,203,203

89,743,089

23,785,675

65,957,414

35,413,826

121,642,181

68,029,296

53,612,885

102,143,501

50,077,112

14,713,893

35,363,219

33,371,741

79,425,695

50,784,956

28,640,739

BALANCE SHEET ASSETS

LOANS AND ADVANCES TO CUSTOMERS

Loans and advances to retail customers *Loans and advances to corporate customers and banks

CALLABLE DEPOSITS AND LOANS

CUSTOMER DEPOSITS

Retail deposits

Corporate deposits

2,520,054

1.15

6.98

1,866,676

1.06

7.78

2,784,857

1.76

11.90

2,947,856

2.50

16.73

838,986

0.97

6.51

PROFIT

PROFITABILITY INDICATORS:

ROA -

ROE -

3,101

82,512

782

8,462,471

3,155

65,058

678

7,940,766

3,209

53,244

601

7,363,183

3,053

48,216

609

6,604,818

2,984

34,230

433

5,564,707

NUMBER OF EMPLOYEES

Assets per employee in 000 RSD

Assets per employee in 000 EUR

OPERATING EXPENSES

2,791,964

157,343

16,697

-131,264

2,055,495

111,951

8,139

-85,007

2,815,222

-

-

-30,365

2,916,093

-

34,501

-2,738

785,122

-

68,151

-14,287

PROFIT BEFORE TAX

Pro�t tax Pro�t from deferred tax assets and decrease in deferred tax liabilities

Loss from deferred tax assets and deferred tax liabilities

7,437,483

3,892,459

6,334,099

3,531,165

6,300,214

2,767,714

4,953,572

2,825,491

4,488,724

2,371,613

INTEREST INCOME

FEE AND COMMISSION INCOME

17.14

7.19

2.45

3,784,821

14.82

18.12

2.71

2,571,081

13.60

18.99

2.93

2,484,094

13.56

14.30

3.94

2,357,247

17.29

24.30

3.73

1,888,155

CAPITAL ADEQUACY

FX RISK RATIO

LIQUIDITY RATIO

CASH FLOW (000 RSD)

* Since 2009, micro client loans have been booked within Retail Division

pro�t before tax /average balance sheet assets pro�t before tax /average total equity

SUMMARY OF THE BANK’SKEY PERFORMANCE INDICATORS


DESCRIPTION 2010. 2009. 2008. 2007. 2006.

(000 RSD)

255,868,309

150,566,311

45,372,699

105,193,612

43,615,232

199,090,740

130,964,790

68,125,950

205,257,221

115,106,246

38,831,745

76,274,501

46,651,225

167,210,761

104,438,978

62,771,783

170,861,369

106,231,447

34,827,292

71,404,155

44,362,316

132,903,416

76,933,266

55,970,150

147,203,202

89,743,089

23,785,675

65,957,414

35,413,826

121,642,181

68,029,296

53,612,885

102,143,501

50,077,112

14,713,893

35,363,219

33,371,741

79,425,695

50,784,956

28,640,739


LOANS AND ADVANCES TO CUSTOMERS

Loans and advances to retail customers*Loans and advances to corporate customers and banks

CALLABLE DEPOSITS AND LOANS

CUSTOMER DEPOSITS

Retail deposits

Corporate deposits

* Since 2009, micro client loans have been booked within Retail Division


300.000.000

240.000.000

180.000.000

60.000.000

120.000.000

0

2006 2007 2008 2009 2010

TOTAL LOANS TO CUSTOMERS

160.000.000

120.000.000

80.000.000

40.000.000

2010

0

MARKET SHARE

12

9

6

3

30.09.10.

0

(%)

10.58.7 9.4 9.4 9.5

TOTAL CUSTOMER DEPOSITS

200.000.000

150.000.000

100.000.000

50.000.000

2010

0

KEY PERFORMANCEINDICATORS OF THE BANK

2.


2,791,964

1.15

6.98

7,437,483

3,892,459

2,055,495

1.06

7.78

6,334,099

3,531,165

2,815,222

1.76

11.90

6,300,214

2,767,714

2,916,093

2.50

16.73

4,953,572

2,825,491

785,122

0.97

6.51

4,488,724

2,371,613

DESCRIPTION 2010. 2009. 2008. 2007. 2006.

PROFIT BEFORE TAX

PROFITABILITY INDICATORS:

ROA -

ROE -

INTEREST INCOME


(000 RSD)

pro t before tax / average balance sheet assetspro t before tax / average total equity

OPERATING PROFIT

3.000.000

2.250.000

1.500.000

750.000

2010

0

20

16

%

12

8

4

2010

0

PROFITABILITY INDICATORS

6.51

16.73

11.90

7.78 6.98

0.972.50

1.76 1.06 1.15

INTEREST INCOME

7.500.000

6.000.000

4.500.000

3.000.000

1.500.000

2010

0


4.000.000

3.000.000

2.000.000

1.000.000

2010

0

ROA - profit before tax / average BS assets

ROE - profit before tax / average total equity


DESCRIPTION 2010. 2009. 2008. 2007. 2006.

3,101

82,512

782

8,462,471

3,155

65,058

678

7,940,766

3,209

53,244

601

7,363,183

3,053

48,216

609

6,604,818

2,984

34,230

434

5,564,707

NUMBER OF EMPLOYEES

Assets per employee in RSD 000

Assets per employee in EUR 000

Total operating expenses

TOTAL NUMBER OF EMPLOYEES

4.000

2,984 3,0533,209 3,155

Number of employees

3.000

2.000

1.000

2010

0

3,101

ASSETS PER EMPLOYEE

90.000

60.000

30.000

2010

0

34,320

48,21653,224

65,058

82,512

ASSETS PER EMPLOYEE

1000

(000 EUR)

400

600

800

200

2010

0

434

609 601678

782

OPERATING EXPENSES

10.000.000

8.000.000

6.000.000

4.000.000

2.000.000

2010

0


DESCRIPTION 2010. 2009. 2008. 2007. 2006.

17.14

7.19

2.45

3,784,821

14.82

18.12

2.71

2,571,081

13.60

18.99

2.93

2,484,094

13.56

14.30

3.94

2,357,247

17.29

24.30

3.73

1,888,155

CAPITAL ADEQUACY

FX RISK RATIO

LIQUIDITY RATIO

CASH FLOW (RSD 000)

CAPITAL ADEQUACY

20

16

12

8

4

2010

0

(%)

17.29

12 12 12 12

13.56 13.6014.82

17.14

12

24

30%

18

12

2010

6

FX RISK RATIO

14.30

24.30

18.99 18.12

7.19

CASH FLOW

4.000.000

3.000.000

2.000.000

1.000.000

2010

0

(000 RSD)

In 2010, operating cash flows continued

a strong rising tendency. The cash flow

increased compared to the achievement

realized in the year before because of the

higher net inflow than outflow of cash

from loan interest income and securities

investments.

FX RISK RATIO

CAPITAL ADEQUACY - regulatory capital/risksREQUIRED BY LAW (12%)


BALANCE AND OFF-BALANCE SHEET ASSETS

450.000.000

300.000.000

150.000.000

20100

152.876.494

102.143.501

50.732.993

211.224.944

147.203.203

64.021.741

230.226.626

170.861.369

59.365.257

271.505.703

205.257.221

66.248.482

401.048.835

255.868.309

145.180.526

Total

Balance

O-balance

%

60

40

20

2010

0

GROWTH OF THE BANK VS. GROWTH OF THE BANKING SECTOR

36.7

44.1

16.120.1

23.7

8.7 9.4 9.5 10.59.6

50.8

33.6

13.8

21.6

11.6

BANK’S MARKET SHARE

BANKING SECTOR’S GROWTH

BANK’S GROWTH

Off-balance Balance Total

On December 31st 2010, the Bank’s balance

sheet assets totaled 255,868.3 million RSD –

an increase of RSD 50,611.1 million or 24.7%

year-on-year.

Off-balance sheet assets increased by

119.1% and totaled RSD 145,180.5 million.

Our total business volume increased by a

factor of 2.6 over the last four years.

In the first nine months of 2010, the Bank’s

balance sheet assets increased by 23.7%, an

increase that exceeded the growth rate of

the entire banking sector, so the Bank raised

its market share to 10.5%.


In order to improve its capital adequacy ratio and increase operating stability and long-term compliance of the Bank’s operations with the Banking Law on the one hand, and ensure the implementation of its development plans and allow for further growth of credit activity on the other, in January 2010 the Bank increased its capital in the total amount of RSD 11.4 billion, which led to the improvement of capital adequacy ratios in 2010.

STATUTORY OPERATING RATIOS

Given its reputation in the market, the

Bank maintained and strengthened its

position as the bank with the highest retail FX

savings in Serbia. In January 2010, FX savings

surpassed the threshold of EUR 1 billion.

Compared to the beginning of the year,

retail FX savings increased by EUR 155.0

million or 15.7%, achieving a total of EUR

1,145.4 million.

FOREIGN EXCHANGE SAVINGS

800.000

1.200.000

1.000.000

600.000

400.000

200.000

20100

FXsavings 614.955 805.508 784.586 990.351 1.145.393

(000 EUR)

S/N

1.

2.

3.

4.

5.

DESCRIPTION REQUIRED 31.12.2010 31.12.2009 31.12.2008 31.12.2007 31.12.2006

MIN. 12%

MAX. 60%

MAX. 400%

MAX. 20%

MIN. 1%

17.14%

21.70%

82.51%

7.19%

2.45%

14.82%

32.47%

114.30%

18.12%

2.71%

13.60%

37.06%

88.69%

18.99%

2.09%

13.56%

38.92%

115.46%

14.30%

4.05%

17.29%

33.95%

27.31%

24.30%

3.73%

CAPITAL ADEQUACY RATIO (NET EQUITY / NET RISK-WEIGHTED ASSETS + OPEN FX POSITION)

INVESTMENT IN ENTITIES OUTSIDE FINANCIAL SECTOR AND IN FIXED ASSETS RATIO

LARGE EXPOSURE RATIO

FOREIGN EXCHANGE RISK RATIO

LIQUIDITY RATIO


CHANGES IN EQUITY Komercijalna Banka was established as an open joint stock company. The share capital was formed through twenty-one successfully completed share issues, over the period of 1990 through 2010. XXI share issue was realized in January 2010, through which the share capital was increased by RSD 11.4 billion. The issue in question was realized by issuing priority convertible shares for known buyers. IFC - Capitalization Fund, DEG – Deutsche Investitions und Entwick-lungsgesellschaft m.b.h and Swedfund Inter-national Aktiebo also became shareholders of the Bank in addition to the EBRD.

The Bank’s shares are traded on the Belgrade Stock Exchange. Since 2010, the Bank’s shares have been traded on the Standard market.In the past five years number of sharehold-ers holding common (controlling) shares siginficantly increased. At the end of 2010, common shares of the Bank were held by 1,177 shareholders, which is an almost two-fold increase compared to the year 2006.

SHARE CAPITAL

30.000.000

24.000.000

18.000.000

12.000.000

6.000.000

2010

0

373.510

8.483.120

3.797.110

373.510

8.362.520

4.442.456

373.510

8.709.310

7.979.714

373.510

8.709.310

7.979.714

4.798.190

373.510

8.709.310

14.581.543

Preferred shares

Priority shares

Common shares

Issue premium

12.653.740 13.178.486 17.062.534 17.062.534 28.462.553TOTAL

CHANGES IN BANK'S EQUITY

45.000.000

35.000.000

40.000.000

30.000.000

25.000.000

20.000.000

15.000.000

5.000.000

10.000.000

31.12.2006 31.12.2007 31.12.2008 31.12.2009 31.12.2010

0

1.294.088

769.267

1.193.290

12.662.890

3.172.793

832.042

1.976.290

13.187.635

3.036.790

648.379

4.685.440

17.062.534

2.134.290

694.117

7.385.440

17.062.534

2.709.309

647.126

9.235.440

28.462.553

Pro�t

Revaluationreserves

Reserves from pro�t

Share capital

15,919,535 19,168,760 25,433,143 27,276,381 41,054,428TOTAL

1500

1200

900

600

300

2010

0

NUMBER OF SHAREHOLDERS

492

577

1,069

554

1.097

1,651

555

1.178

1,733

602

1.262

1,864

626

1.177

1,803

Priority and convertible shares

Common shares

TOTAL

Priority shares

Common shares

common sharesissue premium pre�ered sharespreferred and convertible shares

STRUCTURE OF SHARE CAPITAL AS AT 31st DECEMBER 2010

1.3%

16.9%

30.6%

51.2%


Past year is distinctive for the following reasons: - Inflation exceeding projections (retail price index 11.5%, consumer price index 10.3%),- Dinar to Euro depreciation 9.1%, and Dinar to CHF 23.7%,- NBS key policy rate increase from 9.5% to 11.5%,- Stagnation of industrial production and low turnover in retail trading, - Low GDP growth (estimates at 1.5%),- High unemployment rate (more than 19%), declining standard of living and consumption, - Deficit in the balance of payments current account (7% of gross domestic product),- Public debt totaling EUR 12.2 billion, and total foreign debt amounting to EUR 23.7 billion, - Financing of state budget deficit by issuing T-bills (RSD 178.2 billion),- Total of EUR 1.7 billion approved from the Government of the Republic of Serbia Stabilization

Program to corporate and individual beneficiaries, - Growth of retail FX savings, - Low inflow of foreign capital and decline of NBS FOREX reserves.

Inflation rate (retail price index) fluctuated from 6.6% in 2006 to 11.5% in 2010. During 2010, the inflation reached level that exceeded projections. Rise in the prices of food was the key cause of high inflation in the second half of the year.

The National Bank of Serbia played an active role on the inter-bank FOREX market. During 2010, NBS intervened by selling foreign cur-rency to the amount of circa EUR 3 billion.

%

5

2010

10

15

20

0

INFLATION RATE MOVEMENT

6.610.1

6.8

11.08.6 10.4

11.5

6.610.3

Retail price INDEX Consumer price INDEX

(RSD)

40

80

120

0

RSD - EUR EXCHANGE RATE

79.0 79.2 88.6 95.9

2006 2007 2008 2009

105.5

2010

NBS’S MIDDLE EXCHANGE RATE OF DINAR

MACROECONOMICBACKGROUND

3.


Implementation of restrictive monetary policy by the NBS in the second half of 2010 was necessary in order to achieve targeted inflation and to reduce pressure on the value of national currency.

GDP growth in 2010 by circa 1.5% came pri-marily as a result of the growing physical vol-ume of processing industry, mining and the financial sector, followed by recovered exter-nal demand and lower foreign trade deficit. Contribution of the final consumption to the gross domestic product was negative in 2010.

In 2010, the banking sector retained public confidence, which had been restored in 2009, as evidenced by further increase of retail foreign currency savings amounting to EUR 1.1 billion.

One of the main features that contribute to the stability of the Serbian banking sector is its high capitalization and cov-erage of non-performing loans by provi-sions and reserves from profit.

(%)

-6

-3

3

9

6

0

GROSS DOMESTIC PRODUCT

5.26.9

5.5

1.5

-3.1

2006 2007 2008 2009 2010

%

20

30.09.2010

40

60

0

GROWTH OF THE BANKING SECTOR

50.8

33.6

9.7

21.6

11.6

GROWTH OF THE BANKING SECTOR

%

6

12

18

24

0

KEY POLICY RATE OF NBS

14.0010.00

17.75

9.5011.50

2006 2007 2008 2009 2010

KEY POLICY RATE OF NBS

NOTE: Growth of the banking sector in the first nine months of 2010


4. KOMERCIJALNA BANKA AD BEOGRAD

NAME TITLE

Republic of Serbia

Republic of Serbia

Republic of Serbia

EBRD

EBRD

IFC

Independent member

Independent member

Independent member

Chairperson

Member

Member

Member

Member

Member

Member

Member

Member

Vesna Džinić

Dejan Erić, Ph.D.

Vladimir Šarić

Dr Franz Leitner

Dragica Pilipović – Cha�ey

Khosrow Zamani

Miroslav Todorović, Ph.D.

Marija Pantelić, M.Sc.

Mats Kjaer

SHAREHOLDERS / INDEPENDENT MEMBER NAME TITLE

President

Deputy President

Member

Member

Member

Ivica Smolić

Dragan Santovac

Slavica Đorđević

Andrijana Milanović

Lidija Sklopić

Accounting

Plan andanalysis

Subsidiaries

Credit risks

Financial risks

Operating risks

Work out

Informationtechnology

PaymentOperations

Procurement

Fixed AssetsManagement

Administration

Treasury

Assets andLiabilities

FinancialInstitutions

Investmentbanking

CashManagement

CorporateCustomerRelations

(Front O�ce)

Credit Analysisand Monitoring

(Middle O�ce)

Loan and DepositAdministrationand monitoring

(Back O�ce)

DocumentaryOperations

CorporateFinance

HumanResources

Marketing

Branch NetworkCoordination

Legal A�airs

Executive BoardSupport Unit

QualityManagement

/ISO

CustomerRelations

(personal and privatebanking,safe boxes)

AlternativeDistribution

Channels

MicroCustomers

Call-Centre

The executive board

The Board of Directors

Finance andaccounting

Riskmanagement

Operativefunctions

Assets andliability

management and investment banking

Retail banking Corporatebanking

Assets and liabilitymanagement

committee

Creditcommittee

Internal audit

Compliance andoperations

control

Projectmanagement

Audit committee Compensation committee

Security

4.1. The Board of Directors The Executive Board

4.2. Organizational Structure of the Bank


By the end of 2009, the Bank had a total of 249 sub-

branches, organizationally linked to 25 branches

located regionally.

ADDRESS 14 Svetog Save St. 42-44 Svetogorska St. 19-21 Kralja Petra St. 29 Makedonska St.

+381-11- 30-80-100

12133 COMBANK YU

+381-11- 3442-372

KOBBRSBG

KOMB

www.kombank.com

[email protected]

+381-11-32-40-911

12133 COMBANK YU

+381-11- 32-36-160

KOBBRSBG

KOMB

www.kombank.com

[email protected]

+381-11-33-08-002

12133 COMBANK YU

+381-11- 32-82-732

KOBBRSBG

KOMB

www.kombank.com

[email protected]

+381-11-33-39-001

12133 COMBANK YU

+381-11- 33-39-196

KOBBRSBG

KOMB

www.kombank.com

[email protected]

TELEPHONE

TELEX

FAX

S.W.I.F.T. code

REUTERS dealing code

WEBSITE

E-mail

BRANCH ADDRESS

Trg oktobarske revolucije 1

Episkopska 32

Trg Slobode 5

Železnička bb

Trg S. Ratnika bb

Njegoševa 1

Meše Selimovića 1

Trg slobode 4

D. Tucovića 151

Stefana Prvovenčanog 58

Gradski Trg bb

Korzo 10

Gospodar Jevremova 2

Kneza Miloša 3

Karađorđeva 28

Moše Pijade 2

Kneginje Milice 24

Gimnazijska 1

Kralja Petra I 5-7

Nikole Pašića 25

Kralja Petra I 39

Staparski Put 14

Trg Save Kovačevića 2

Svetogorska 42 - 44

Kralja Petra I 23

1. Kruševac

2. Niš

3. Zrenjanin

4. Čačak

5. Kraljevo

6. Novi Pazar

7. Priboj

8. Novi Sad

9. Užice

10. Vranje

11. Valjevo

12. Subotica

13. Šabac

14. Kragujevac

15. Smederevo

16. Požarevac

17. Jagodina

18. Loznica

19. S. Mitrovica

20. Zaječar

21. Kikinda

22. Sombor

23. Vršac

24. Beograd

25. K. Mitrovica

4.3. Head Office Locations in Belgrade

4.4. Branches by Regions


Business unit of the Bank in Germany performs the following operations:- conducts money transfers from Germany,- establishes business cooperation with banks and companies and organizes meetings between

representatives of the Bank’s customers and potential business partners abroad,- provides and acquires information on potential business activities of foreign entities in the Re-

public of Serbia and of Serbian business people abroad,- acts as an intermediary in contacting and concluding business arrangements for and on behalf

of the Bank and its customers, - monitors and analyzes money markets and capital markets.

The number of staff is directly related to the increasing volume of operations, the introduction of new products and services, rapid expansion of the Bank’s branch network in Serbia and imple-mented measures aimed at rationalizing and optimizing the number of employees.

During 2010, the number of employees decreased by 54 or 1.7% in accordance with the Bank’s optimization program.

At the end of 2010, the Bank had 3.101 employees with the following education background:

- 1,700 or 54.5% with university education,- 1,322 or 42.6% with secondary education,- 79 or 2.5% holding other degrees or diplomas.

The Bank invests heavily in training and development of its staff. Development includes professional trainings in areas such as internal audit, international ac-counting standards, risk management, corporate operations, retail operations, payment operations, technical trainings aimed at improving the skills required for quicker and more efficient performance, skills trainings aimed at improvement of staff capabilities.

The Bank has been implementing per-formance appraisal of employees for a long time, which is the basis for advancement of employ-ees, their rewarding and understanding their training needs, improvement of staff capabilities and career building. The Bank places particular emphasis on career building of key personnel, their professional improvement, identification of successors and their adequate training.

UNIVERSITY EDUCATION

SECONDARYEDUCATION

OTHERDEGREES

OR DIPLOMAS

STAFF STRUCTURE

54.8% 2.5% 42.6%

4.5. International Business Unit of the Bank

4.6. Human Resources


Apart from the important information on positioning, the results of quantitative and qualitative market research, on which we insist, were used to improve the quality of business and to design a good strategy of marketing activities based on the Bank’s business plans and its key business sectors.

At the same time, alongside marketing activities, we also implemented a number of corporate social responsibility projects throughout the country. We sponsored the events and communi-ties that had wider social reputation and produced additional, most positive effects of media coverage and increased trust in the Bank and the Bank’s recognition. The most ambitious of all CSR projects was the one dedicated to the anniversary, entitled „40 good things“.

Within this program, we contributed to direct and indirect employment, primarily of women, through health food production projects and the projects of distributing such food to school kitchens. We donated laptops to the most successful students of schools of economics in Serbia, took part in renovating the towns, provided computers, monitors and color printers to pupils of elementary schools located in the least developed municipalities of Serbia....

Our branches were involved more than ever in CSR activities on the local level. They competed for the most creative and best-organized local CSR project, in line with their own ideas and local requirements.

This CSR project also got the UEPS recognition for originality, as the best one in Serbia in 2010.

In 2009, the Bank established corporate PMO (Project Management Office) which enables the Bank to achieve 2 crucial aims by imple-menting the concept of project portfolio management. The aims are: implementation of the adopted strategy of the Bank, i.e. intro-ducing changes in the Bank by selecting the right project initiatives and implementing the selected project initiatives in the best manner possible with an optimal allocation of resourc-es.

No.

6

6

19

7

9

47

Category

Strategic projects

Regulatory requirements

Optimization and improvement of operations

Other projects

New products

Total

4.8. Project and Project Portfolio Management


In 2010, with the budget of EUR 1.6 million, 19 projects were successfully implemented, while 47 projects still remain in implementation phase:

The most important active strategic projects in 2010 that are underway: • Basel II standards implementation – In order to institute a modern risk management, and

comply with the regulatory requirements arising from the Strategy and Operational Plan of the National Bank of Serbia;

• Document Management System – Objectives of this project are to increase efficiency of the bank’s operations, use resources more effectively, cut operating costs, manage customer re-quirements more efficiently and thus increase customer satisfaction, increase data security, al-low easier access to data, decrease the number of errors, achieve consistency of business proc-esses;

• Back Office Centralization – Objectives of this project are to increase efficiency, cut operating costs and rationalize resources, decrease operating risks and improve internal control system, unify approach and processes on the level of the Bank, increase the number of transactions per employee and increase collection rate;

• Disaster Recovery Plan – Main objective of a recovery plan of ICT services in case of disastrous events is to enable the Bank to „survive“ extraordinary circumstances and continue with regular business activities. One of the main tasks in the process of providing continuity of business is to build a comprehensive system of quick recovery of ICT services in case of catastrophic damage done to key IT resources (Disaster Recovery).

2010 ACTIVE PROJECT

15%

15%

47%

18%5%

StrategicprojectsRegulatoryprojectsOptimizationof operationsOther projectsNew products


In addition to the parent bank Komercijalna Banka AD Beograd, the Group consists of:1. Komercijalna Banka AD Budva in The Republic of Montenegro,2. Komercijalna Banka AD Banja Luka in Bosnia and Herzegovina, and1. KomBank INVEST AD Beograd.

Republic of Montenegro Bosnia and HerzegovinaKomercijalna banka AD Budva Komercijalna banka AD Banja Luka

BUDVA BANJA LUKAINVESTMENT FUNDS

MANAGEMENT COMPANY

bb Potkošljun St.

+382-86-426-300

6 Veselina Masleše St.

+387-51-244-700

29 Makedonska St.

+381-11-330-8310

ADDRESS

TELEPHONE

Komercijalna Banka AD Budva has:

- 110 employees,

- 15 organizational units.

Business report of Komercijalna Banka AD Beograd Group is disclosed in consolidated financial

statements.

Komercijalna Banka AD Banja Luka has:

- 126 employees,

- 16 organizational units.

4.9. Komercijalna Banka AD Beograd Group


5. BALANCE SHEET FOR 2010

20,724,645

43,615,232

1,185,242

150,566,311

18,267,497

5,826,005

2,308,011

467,547

6,820,704

735,432

0

5,351,683

255,868,309

27,387,157

46,651,225

936,866

115,106,246

566,509

2,703,423

2,272,876

326,526

7,057,487

104,898

109,217

2,034,792

205,257,221

75.7

93.5

126.5

130.8

3.224.6

215.5

101.5

143.2

96.6

701.1

0.0

263.0

124.7

8.1

17.0

0.5

58.8

7.1

2.3

0.9

0.2

2.7

0.3

0.0

2.1

100.0

Cash and cash equivalents

Callable deposits and loans

Interest, fees and sale receivables

Loans and advances

Securities (other than own)

Equity investments

Other investments

Intangible assets

Fixed assets and investment property Non-current assets held for sale and discontinuing operations

Deferred tax assets

Other assets

TOTAL ASSETS (1 to 12 )

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

ITEM DESCRIPTION(ASSETS) 31.12.2010 31.12.2009 INDICES % STAKE AT

31.12.2010

(000 RSD)

1 2 3 4 5=(3:4) 6

In 2010, the balance sheet assets of the Bank increased by RSD 50,611.1 million or 24.7% year on year. Loans and advances to customers increased by RSD 35,460.1 million, or 30.8%. As at 31/12/2010, total loans and advances (corporate, retail, banks and financial institutions) totalled RSD 150,566.3 million, which accounted for 58.8% of total balance sheet assets.

In 2010, cash and cash equivalents recorded 24.3% decrease due to changed NBS regulations on the banks’ required reserve.

The most noteworthy increase in the past year was in securities investments. At the end of year the total amount of funds invested in T-bills totalled RSD 18.0 billion.

The capital of the subsidiaries was increased by EUR 30 million in 2010 (Komercijalna Banka Budva EUR 10 million and Komercijalna Banka Banja Luka EUR 20 million).

5.1. Assets as at 31st December, 2010


29,662,069

169,428,671

923,106

-

227,933

877,386

13,993

71,256

-

5,351

13,604,117

214,813,881

28,462,553

9,235,440

663,008

-15,882

2,709,309

41,054,428

255,868,309

32,373,202

134,837,559

145,319

-

168,097

926,337

12,844

46,905

-

-

9,470,577

177,980,840

17,062,534

7,385,440

717,441

-23,324

2,134,290

27,276,381

205,257,221

91.6

125.7

635.2

-

135.6

94.7

108.9

151.9

-

-

143.6

120.7

166.8

125.0

92.4

68.1

126.9

150.5

124.7

11.6

66.2

0.4

-

0.1

0.3

0.0

0.0

-

-

5.3

84.0

11.1

3.6

0.3

0.0

1.1

16.0

100.0

Transaction deposits

Other deposits

Borrowings

Liabilities related to securities

Interest and fee liabilities

Provisions and tax liabilities

Tax liabilities

Liabilities relating to pro�t Liabilities based on assets of discontinued operations

Deferred tax liabilities

Other liabilities

TOTAL LIABILITIES (1 to 11) )

EQUITY

Share capital and issue premium

Reserves from pro�t

Revaluation reserves

Unrealized losses on securities available for sale

Pro�t

TOTAL EQUTY (13 to 17)

TOTAL LIABILITIES (12+18)

LIABILITIESI

1.

2.

3.

4,

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

ITEM DESCRIPTION 31.12.2010 31.12.2009 INDICES % STAKE AT 31.12.2010

1 2 3 4 5=(3:4) 6

In the structure of balance sheet liabilities customer deposits (transaction and other deposits) totalled RSD 199,090.7 million, or 77.8% of total balance sheet liabilities, which is an increase of RSD 31,879.9 million or 19.1%.

At the end of 2010, transaction deposits totalled RSD 29,662.1 million, a reduction of 9.4% year on year, primarily due to decrease in FX transaction deposits.

In 2010, other deposits increased by RSD 34,591.1 million or 25.7%. At the end of 2010 other de-posits totaled RSD 169,428.7 million, which accounted for 66.2% of total balance sheet liabilities. Growth of other deposits resulted from the increase in retail f/x savings, f/x deposits from the public sector and companies and increase in Euro exchange rate.

5.2. Liabilities as at 31st December 2010


150,566,311

90,244,925

45,372,699

14,948,687

199,090,740

61,540,409

130,964,790

6,585,540

115,106,246

75,091,060

38,831,745

1,183,441

167,210,761

57,966,269

104,438,978

4,805,514

130.8

120.2

116.8

1,263.2

119.1

106.2

125.4

137.0

LOANS TO CUSTOMERS (I + II + III)

Corporate

Retail

Banks and �nancial organizations

CUSTOMER DEPOSITS (I + II + III)

Corporate

Retail

Banks and �nancial organizations

I

1.

2.

3.

II

1.

2.

3.

DESCRIPTION AS AT 31/12/2010 AS AT 31/12/2009Index

(2:3)*1001 2 3 4

(000 RSD)

NOTE: Deposits include Transaction Deposits.

Out of RSD 199,090.7 million of deposits 75.6% or RSD 150,566.3 million was invested in loans and advances to customers.

As at 31/12/2010, total loans and advances to Bank’s customers amounted to RSD 150,566.3 million and, compared to the end of the previous year, increased by RSD 35,460.1 million or 30.8%. The level of loans and deposits to customers at the end of 2010 was under a lot of influence from loans and ad-vances to banks and financial organizations which amounted to RSD 14.9 billion at the end of the year.

Despite unstable macroeconomic business condi-tions, in 2010 the Bank managed to maintain the share of NPL in total gross loans and advances be-low sector average (at approximately 17%).

Additional activities aimed at collection of bad debts were carried out in the last quarter of 2010, which resulted in 0,6 pp lower share of NPLs at the end of 2010, year on year.

CUSTOMER DEPOSITS IN 2010

65.8%

30.9%

3.3%

Corporate

Retail

Banks and �nancial organisations

LOANS TO CUSTOMERS IN 2010

Corporate

Retail

Banks and �nancialorganisations

30.1%

9.9%

59.9%

NPL SHARE IN TOTAL GROSS LOANS AND ADVANCES

15.7 16.5 17.5 17.8 17.8

12.113.7

11.1

11.714.1

0

5

10

15

20

31.12.09. 30.06.10. 31.12.10.

%

Bank's NPL Banking sector NPL

5.3. Loans to Customers and Customer Deposits as at 31/12/2010


4,230,755

28,011,714

8,745,663

4,689,980

216,889

12,233,660

1,074,214

1,051,309

112,938,057

8,415,111

219,135

97,853,942

6,449,869

145,180,526

3,980,859

22,516,957

7,099,296

3,490,290

304,535

9,979,430

986,716

656,689

39,750,666

7,486,958

11,519,205

15,324,054

5,420,449

66,248,482

106.3

124.4

123.2

134.4

71.2

122.6

108.9

160.1

284.1

112.4

1.9

638.6

119.0

219.1

OPERATIONS FOR AND ON BEHALF OF CUSTOMERS (Commission operations)

CONTINGENT LILABILITIES *

Payment guarantees

Performance guarantees

Bill guarantees and acceptances

Undrawn commitments

Other o�-balance sheet items that may lead to payment

Uncovered L/Cs

OTHER OFF-BALANCE SHEET ITEMS

Forex savings bonds

Securities in custody

Equity securities

Other o�-balance sheet items

TOTAL (I +II+III)

I

II

1.

2.

3.

4.

5.

6.

III

1.

2.

3.

4.

DESCRIPTION AS AT31/12/2010

AS AT31/12/2009

Index(2:3)*100

1 2 3 4

*Note: According to NBS methodology

As at 31/12/2010 contingent liabilities totaled RSD 28,011.7 million – an increase of RSD 5,494.8 million or 24.4% compared with the end of the previous year, mainly due to the increase in issued guaranties and unused overall credits.

The increase in equity securities in 2010 was mainly due to securities portfolio related to custody operations which the Bank conducts on behalf of the Shareholders fund (contract concluded in 2010) and due to the portfolio of securities acquired from three brokerage firms that ceased their operations in 2010.

CONTINGENT LIABILITIES STRUCTURE

43%

4%

31%

17%

1% 4%

UNDRAWN UNDERTAKEN COMMITTMENTS

PAYMENT GUARANTEES

PERFORMANCE GUARANTEES

OTHER CONTINGENT LIABILITIES

UNCOVERED L/Cs

BILL GUARANTEES AND ACCEPTANCESUnclassi�ed o�-balance sheet items

Contingent liabilities

OFF-BALANCE SHEET ITEMS BY EXPOSURES

80.7%

19.3%

5.4. Commission Operations and Off-Balance Sheet Items


6.

15,520,261

-8,082,778

7,437,483

4,423,483

-531,024

3,892,459

11,499

53,720

-

393

1,141,520

2,951

158,480

-1,416,354

-3,647,396

-596,057

-4,246,734

2,791,964

-157,343

16,697

-131,264

2,520,054

14,713,932

-8,379,834

6,334,098

4,027,010

-495,845

3,531,165

37,834

-

-

-5,132

1,245,486

6,469

228,540

-1,365,223

-3,450,060

-534,465

-3,973,217

2,055,495

-111,951

8,139

-85,007

1,866,676

105.5

96.5

117.4

109.8

107.1

110.2

30.4

-

-

-

91.7

45.6

69.3

103.7

105.7

111.5

106.9

135.8

140.5

205.1

154.4

135.0

Interest income

Interest expenses

Net Interest income

Fee and commission income

Fee and commission expenses

Net Fee and commission income

Net gains on sale of securities

Net gains on sale of securities available for sale

Net gains on sale of equity (shares)

Net gains-loss on sale of other loans and advancesNet foreign exchange gains/losses and valuation adjustments of assets and liabilities

Dividends and other income from equity investments

Other operating income

Net expenses for debt impairment and other provisions

Salaries, bene�ts and other personnel expenses

Depreciation expenses

Other operating expenses

OPERATING PROFIT BEFORE TAX ( 1 to 13)

Income tax

Pro�t from increased deferred tax assets and the decreased deferred liabilitiesLosses from increased deferred tax assets and the decreased deferred liabilities

RESULT FOR THE YEAR (14 to 17)

INCOME AND EXPENSES FROM REGULAR OPERATIONS

1.1.

1.2.

1.

2.1.

2.2.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

ITEM DESCRIPTION 31/12/2010 31/12/2009 INDICES(2:3)

1 2 3 4

INCOME STATEMENT FOR THE YEARENDED 31st DECEMBER, 2010


(000 RSD)

Net interest income amounted to RSD 7,437.5 million, a year-on-year increase of 17.4%.

Compared to the last year, interest income increased by RSD 806.3 mil-lion or 5.5%, and interest expenses decreased by RSD 297.1 million or 3.5%. Despite a rise in deposits, the decrease in interest expenses came as a result of deposits collected un-der more favourable market condi-tions.

In 2010 the Bank optimized the de-posit structure in terms of price and maturity.

The largest portion of interest income is the interest income from loans to corporate custom-ers (RSD 8,073.2 million or 53.0%), whilst the highest portion of interest expenses is made up of interest on retail customer deposits (RSD 5,298.9 million or 65.6%), primarily foreign exchange personal savings deposits.

16.000.000

12.000.000

8.000.000

4.000.000

20100

14.713.932

8.379.834

6.334.099

15.520.261

8.082.778

7.437.483

INTEREST INCOME

INTEREST EXPENSES

NET INTEREST INCOME

INTEREST INCOME IN 2010 BY SECTORS

3% 1%13%

53%

0%

30%

Retail

Corporate

Public sector

Banks and securities

Foreign customers

Other

INTEREST EXPENSES IN 2010 BY SECTORS

66%

2% 7%

18%

7%

Retail

Corporate

Public sector

Banks and securities

Foreign customers

Other


According to NBS methodology:- Average interest receivable pertains to all ex-

tended loans disregarding deposits held with the NBS and legally pursued and disputed loans;

- Average interest payable refers to deposits (from transactional deposits and demand deposits to time deposits) and all borrowings with or with-out interest.

Net fee and commission income in 2010 totaled RSD 3,892.5 million and was 10.2% higher than in the previous year.

Compared to the previous year, the fee and com-mission income increased by RSD 396.5 million or 9.8%, whereas fee and commission expenses increased by RSD 35.2 million or 7.1%.

During the reporting period overall net foreign exchange gains/losses and valuation adjustments of assets and liabilities indexed in foreign currency amounted to RSD 1,141.5 million.RSD-EUR exchange rate had the following valua-tion:- 31/12/2008: 1 EUR = 88.6 RSD (11.8%)- 31/12/2009: 1 EUR = 95.9 RSD (7.6%)- 31/12/2010: 1 EUR = 104.6 RSD (10.0%)

During 2010 a large amount of net foreign exchange gains came from the assets tied to the trends in CHF. At the end of 2010 the exchange rate was 84.4 RSD to the CHF, which was an increase of 30.9% from the start of the year.Note: Net foreign exchange gains include gains/losses from transactions conducted in foreign currency during the year and gains/losses from the revaluation of balance sheet positions (item 7 in the Balance Sheet, page 26) ex-pressed and indexed in foreign currencies at the official middle rate at the end of each month within the year.

12,0

(%)

8,0

4,0

20100,0

10,3

4,9

8,6

3,7

Average interest receivable

Average interest payable

4,9%5,4%

INTEREST MARGIN (NBS methodology)

4.800.000

3.600.000

2.400.000

1.200.000

20100

4.027.010

495.845

4.423.483

531.024

Fee and commission income

Fee and commission expenses

1.500.000

1.000.000

500.000

20100

1.245.486 1.141.520Net foreign exchange gains

6.3. Net Foreign Exchange Gains/Losses and Valuation Adjustments of Assets and Liabilities

6.2. Fee and Commission Income and Expenses


In 2010, total expenses for debt impairment re-garding balance sheet adjustments and provi-sions for contingent liabilities amounted to RSD 1,416.4 million.

From 2007 onwards the Bank has consistently applied the valuation for impairment and provi-sions based on the methodology of IFRS 39 and IFRS 37.

Operating and other expenses in 2010 amounted to RSD 8,490.2 million, a year on year increase of RSD 521.5 million or 6.5%. The implemented poli-cy of rationalization of expenses, especially wages and other personnel expenses, allowed for the growth rate of operating expenses to be much lower than the inflation rate (11.5% in 2010) and 10.0% and 30.9% lower than the growth of EUR/RSD and CHF/RSD exchange rate respectively.NOTE: Operating and other expenses include: salaries, ben-efits and other personnel expenses, depreciation expenses, other operating expenses and net loss on sale of other loans.

Against the background of unstable and unpre-dictable macroeconomic conditions and reces-sion in both global and domestic economy, in 2010, the Bank managed to turn an operating profit of RSD 2,792.0 million. This is an increase of 35.8% from the previous year.

2.000.000

1.500.000

1.000.000

500.000

20100

1.365.223 1.416.354Net foreign exchange gains

8.800.000

6.600.000

4.400.000

2.200.000

20100

7.968.680 8.490.202Other operatingexpenses

3.000.000

2.000.000

1.000.000

20100

2.055.495 2.791.964Operatingpro�t

6.6. Operating Profit

6.5. Operating and Other Expenses

6.4. Expenses for Debt Impairment and Provisions for Contingent Liabilities


KEY INDICATORS AS AT 31ST DECEMBER, 2010

In 2010 the Bank met all the parameters and business indicators prescribed by the Law on Banks.

Min. 12%

Max. 60%

Max. 20%

Max. 400%

Max. 20%

17.14

21.70

1.90

82.51

7.19

38,730,446

31,522,394

183,957,661

181,691,049

2,266,612

6,839,348

18,644

6,820,704

26,008,638

25,411,189

597,449

24,121,448

21,799,886

147,112,475

143,163,118

3,949,357

7,079,065

21,578

7,057,487

24,918,103

21,245,195

3,672,908

14.82

32.47

16.84

114.30

18.12

Capital adequacy ratio Investments in entities outside the �nancial sector and in �xed asses

Exposure to related parties

Sum of large exposures

Foreign exchange risk ratio

Capital stock

Regulatory capital

Total risk-weighted assets and other risks

Credit risk-weighted assets

Total open foreign exchange position

Investments in entities outside �nancial sector and in �xed assets

Equity investments in entities outside �nancial sector

Fixed assets and investment properties

Sum of large exposures

Exposures in excess of 10% of Bank’s capital to a singleparty or to a group of related parties

Exposure to related parties

1.

2.

3.

4.

5.

1.

2.

3.

3.1.

3.2.

4.

4.1.

4.2.

5.

5.1.

5.2.

DESCRIPTION Required by law 31.12.2010 31.12.2009

1 2 43

7. STATUTORY REQUIREMENTS IN 2010

Documents

02 - Komercijalna bankanewdev.kombank.com/pdf/godisnji_2010e.pdf · 02 komercijalna banka ad beograd table of content 1. review of key business indicators of the bank through periods