annual REPORT - UAB Barcelona · Normalized profit on Holding portfolio4 (in thousands of EUR) 15 478 23 226 18 884 Normalized net profit 8 (in thousands of EUR) 86 884 83 625 83

12annual REPORT

Bank Degroof is Belgium’s premier independent private and investment bank,

with an excellent reputation in each of its fields of activity.

For more than 140 years it has offered its private and institutional clients, along with

business enterprises, a complete range of tailored solutions and services: asset man-

agement, financial markets, corporate finance, credit and structured finance, setup

and administration of investment funds, real estate activities and financial analysis.

The Bank has a thousand employees managing their customers’ future from offices in

seven countries.

Contents

annual REPORT 04 STaTEMEnT FROM

THE BOaRD OF DIRECTORS

07 KEy FIguRES

11 HIgHlIgHTS

15 CORPORaTE gOvERnanCE

23 ManagEMEnT REPORT

33 COnSO lIDaTED FInanCIal STaTEMEnTS

117 aBRIDgED COMPany FInanCIal STaTEMEnTS

126 COnTaCTS

STaTEMEnT FROM THE BOaRD OF DIRECTORS

Against an economic background marked by significant uncertainty that encouraged investors to be prudent, Bank Degroof achieved satisfactory results.

Net current profit amounted to EUR 71.4 million compared to EUR 60.4 million for the previous year and the net published result to EUR 55.5 million. The total comprehensive result amounted to EUR 87.7 million compared to EUR 45.5 million in 2011. The total comprehensive result is the figure that, as recommended by the International Financial Reporting Standards, best reflects the economic result for the period since it includes variations in latent capital gains and losses, of whatever type, whether recorded through profit or loss or through equity.

Assets under management totalled EUR 26.2 billion at the end of the financial year compared to EUR 24.2 billion at the previous year-end, representing an increase of 8.4%.

The Bank’s income increased compared to the preceding financial year due primarily to the transformation activity, which was able to benefit from the drop in rates and credit spreads on sovereign risk, whilst maintaining a strict control of risks. In spite of the increase in assets, income from the private and institutional asset management business declined due to a more cautious asset allocation.

Improved results were achieved in all of the Bank’s other activities, namely corporate finance, credit activities, administration of funds and advice to institutional clients.

At 30 September 2012, the Bank’s accounting equity stood at EUR 573.9 million after the dividend for the financial year. Its solvency ratio (CRD ratio), after the dividend, was 15.66% and its Tier 1 ratio was 12.62%. Both figures largerly exceed regulatory requirements.

04 Annual report 2012

regnier Haegelsteen Chairman of the executive committee

alain siaens Chairman of the board of directors

The beginning of the 2012-13 financial year remains marked by an uncertain environment, albeit a noticeably better one than in the previous year owing to the dissipation, though not the resolution, of certain uncertainties. Interest rates should remain weak, which will have a negative effect on our transformation income, al though an improved market performance, if confirmed, together with our sales efforts should permit an increase in our assets under management and, therefore, in the return from the asset management business.

We are hopeful that the start of 2013 will see the implementation of our plans for the merger of Degroof Banque Privée in Switzerland with Landolt & Cie, a private bank founded in 1780, and for Banque Degroof France and Aforge to be brought together into one single entity, Compagnie Financière Degroof.

This year, we again want to thank our clients for their loyalty and for the confidence they have placed in us, and to thank our personnel who have worked with professionalism and enthusiasm in the best interests of clients and the Bank alike.

Bank Degroof 05

Key figures

(in million EUR)

Breakdown of operating income 30.09.2012 30.09.2011 30.09.2010Asset management 180.1 197.4 181.2

Corporate Finance and Credit & Structured Finance 37.3 34.1 32.6

Market activities 71.6 24.0 37.2

Normalized return on proprietary equity portfolio 15.5 23.2 18.9

Total 304.5 278.7 269.9

Consolidated key figures (IFRS) 30.09.2012 30.09.2011 30.09.2010

GRoUP SHAREStated profit (in thousands of EUR) 55 558 68 074 67 779

Provisions and exceptional items (in thousands of EUR) 8 463 9 149 7 295

Amortization of goodwill (in thousands of EUR) 1 784 2 657 1 842

Economic revaluation of interest rate positions 2 (in thousands of EUR) 10 988 (14 566) 1 731

Accounting profit in the Holding portfolio 3 (in thousands of EUR) (5 387) (4 915) (14 029)

Net current profit 8 (in thousands of EUR) 71 406 60 399 64 618Normalized profit on Holding portfolio 4 (in thousands of EUR) 15 478 23 226 18 884

Normalized net profit 8 (in thousands of EUR) 86 884 83 625 83 502Number of shares 8 019 131 8 019 131 8 019 131

Number of shares adjusted for usage rights 8 019 131 8 019 131 7 989 364

Normalized net profit per share (in EUR) 10.83 10.43 10.45

Gross dividend per share 5 (in EUR) 5.50 5.25 5.25

Normalized RoE 6 (in %) 15.51 15.38 15.91

CRD ratio (in %) 15.66 15.57 16.39

Cost/income ratio 7 (in %) 71.13 63.42 67.81

1 100% of assets managed by group companies.2 Net revaluation (unrecorded) relating to treasury balance sheet components for which there is a global hedge.3 This amounts corresponds to the sum of the IFRS accounting results for the group Holding securities portfolio consisting of shares and other variable income securi-ties after deducting administrative costs for the management of the portfolio in question.4 For the 2010 and 2011 financial years, the normalised return on the Holding Portfolio amounted to 8.5% of the estimated average annual value of the portfolio. For the 2012 financial year, the return was decreased to 6%.

Managed undertakings for collective investment (in billion EUR)

30.09.2012 18.1

30.09.2011 15.7

30.09.2010 16.6

(in billion EUR)

Assets under management1 30.09.2012 30.09.2011 30.09.2010Private customers 20.0 18.3 19.1

Institutional customers 3.8 3.6 3.6

Third-party undertakings for collective investment holders 2.4 2.2 2.1

Total 26.2 24.2 24.8


BEFoRE ExERCISE oF SToCk oPTIoNS

AFTER ExERCISE oF SToCk oPTIoNS

1. Acting in concert

Guimard Finance SA/NV, Cobepa SA/NV, CLdN Finance SA and the Philippson, Siaens, Schockert and Haegelsteen families 64.94 64.24

2. Management and staff

other than heading 1 9.29 10.28

Total headings 1 and 2 74.23 74.52

3. Financial partners

Parmafin SA/NV (Theo Maes family) 3.51 3.47

Marinvest SA/NV (Luc Waucquez family) 3.16 3.13

Levifin SA/NV 4.45 4.40

other 9.29 9.18

Total heading 3 20.41 20.18

4. Own shares 5.36 5.30

Total headings 1, 2, 3 and 4 100.00 100.00

Total number of shares 8 019 131 8 116 936

(in %) CaPITal STRuCTuRE

5 Dividend at 30.09.2012: subject to the approval of the shareholders’ meeting of 25.02.2013.6 Normalized group net profit divided by annual average recognized shareholders’ equity (and including AFS reserves).7 Cost/income ratio calculated on the basis of normalized net income, i. e. including the normalized return on the Holding portfolio. The cost/income ratio calculated on the accounting result of the portfolio Holding was 68.88% in 2010, 67.27% in 2011 and 73.29% in 2012.8 For the first time, the estimation of net current profit and net normalized profit takes into account a normalization of credit risks with retroactive effect on the comparative financial years 2011 and 2010.

NeT iNcome EUR 307.4 million (+7%)

NeT curreNT profiT 8 EUR 71.4 million (+18.2%)

Normalized NeT profiT 8 EUR 86.9 million (+3.9%)

asseTs uNder maNagemeNT 1 EUR 26.2 billion (+8.4%)

asseTs iN opeN cusTody EUR 49.9 billion (+15%)

sTaff couNT 1 081 persons (+4.9%)

2012 2011 2010

billion EUR

2012 2011 2010

billion EUR

2012 2011 2010

million EUR

2012 2011 2010

million EUR

400

300

200

100

80

60

40

20

100

80

60

40

20

2012 2011 2010

million EUR

2012 2011 2010

persons

28

21

14

7

60

45

30

15

1250

1000

750

500

Bank Degroof 09

HigHligHts

setup anD aDMInIstratIon oF sICaVs

– EUR 21.9 billion of assets under administration at 30 September 2012, an increase of 15.80%.

– Number of compartments administered up 8.96%.

– Continued development in Asia.– Clients in 12 countries.

sICaV ManaGeMent

– Creation of Degroof Global Isis Medium Low, which completed the range of Isis mixed assets funds, now subdivided into two defensive compartments (Isis Low and Isis Medium Low) and two growth compartments (Isis Medium and Isis High).

– New capital for range of bond funds, which have recorded excellent performances.

– Resurgence of interest in indexed funds due to good stock market performance.

HIgHlIgHTS

prIVate asset ManaGeMent

– Excellent management performance, allowing a medium-risk portfolio to grow by approximately 12%.

– Introduction of an asymmetrical and a third-party management portion into the most defensive portfolios in order to better control their downside risk.

– Raising of new capital which has largely offset consumption and the appeal of real estate.

– Investment offerings in unlisted assets (private bonds, real estate, etc.) for portfolios that can afford this type of risk.

DeGrooF Corporate FInanCe

– Sustained activity level with 46 missions successfully completed.

– Excellent activity level in private placements (mainly bonds and real estate).

– Study and advice assignments at similar levels to earlier years.

– Slowing M&A and primary stock market transactions.

– Encouraging outlook for 2012-13.

InstItutIonal portFolIo ManaGeMent

– Strong asset management performance in 2012, particularly in respect of bond management.

– Substantial increase in assets under management and in risk management activities.

– Strong growth in the provision of asset management services to promoters, managers and third party consultants.

– Regulatory changes that should encourage the development of risk management activities.


real estate aCtIVItIes

– 11 very diverse missions completed successfully.– Launch of the ‘Bassem’ real estate certificate to finance

the construction of a 108-flat serviced residence, for an amount of EUR 41 million.

– Several missions in progress and an encouraging outlook for 2012-13.

Corporate soCIal responsIBIlItY

– Creation of the Pulse Foundation on the initiative of the Bank Degroof Foundation in order to promote an entrepreneurial culture and the creation of jobs in Belgium.

– Structuring the philanthropic activities of all the members of a large European family through the philanthropy advisory service.

– Creation by the Bank Degroof Foundation of ‘Generation Next’: a community of 35 sponsors in the education sector.

– Development of impact investing partnerships to enhance the offering to the Bank’s clients.

– organisation of two ‘classic’ philanthropy forums and one forum for the younger generations.

CreDIt & struCtureD FInanCe

– Stability of the credit portfolio thanks to the asset-secured loan business.

– Rigorous control of the quality of the loan portfolio, in terms of both the monitoring and the granting of new loans.

– Raising of an additional EUR 6 million by the Green Fund II, which has made its first investment.

– Significant capital gain recorded by the Green Fund I on the disposal of its holding in the Ciney wind farm.

FInanCIal analYsIs

– Tenth anniversary of European Securities Network, of which Bank Degroof is a founder member.

– Increased participation in company and analysts’ conferences and roadshows in London, Frankfurt, Geneva and Paris.

– Extension of the real estate securities covered to France and the Netherlands.

– Greater presence of financial analysts in the media and in several organisations (CFA Institute, ABAF, Vlerick School, UCL, Ichec).

FInanCIal MarKets

– Acceleration of institutional activities in France and Switzerland.

– Participation in a record number of private placements and bond issues.

– Sole manager for the EUR 350 million oRES bond issue.

– Growth of our institutional activity in Belgium. – Numerous asset and liability management (ALM)

advisory assignments for our institutional clients in the context of Solvency II.

Bank Degroof 13

Corporate governanCe

CoMposItIon oF tHe BoarD oF

DIreCtors

Bank Degroof’s board of directors comprises the directors on the Bank’s executive committee and of the non-executive directors.The composition of the board of directors is based on the following rules:

− the composition of the board as a whole must enable it to function effectively and efficiently, in the best interests of the company; it must have the necessary diversity and complementarity of experience and expertise; the directors entrusted with oversight duties must also individually com-ply with certain requirements in terms of expertise and financial experience subject to oversight by the National Bank of Belgium;

− no group of directors or individual member should be able to dominate the board’s decision-making; − the majority of directors should be non-executive; − a legal person appointed as non-executive director appoints a natural person as its permanent rep-

resentative, who shall be responsible for fulfilling the mandate in the name of and for the account of the director-legal person. This permanent representative may not be an executive director of the Bank at the same time.

The role of the appointments and remuneration committee is to make recommendations to the board of directors concerning the size and composition of the board on a periodic basis and, in particular, when mandates are renewed.

In making recommendations to the general meeting of shareholders for the appointment as directors, the appointments and remuneration committee shall pay particular attention to ensuring compliance with the following principles: − the executive committee may not form a majority on the board; − the chairman of the board of directors does not occupy any active office within the group; − the board ensures that there shall be sufficient independent directors alongside the directors rep-

resenting shareholders.

The following changes to the composition of the board of directors and the executive committee occurred during the financial year:

At the ordinary general meeting of 27 February 2012, Mr Jacques-Martin Philippson and Mr Etienne de Callataÿ were appointed as directors of the company. The board of directors also appointed Mr Etienne de Callataÿ as a managing director and a member of the executive committee.

At the same general meeting, the following mandates were renewed: − the mandates of Messrs Alain Philippson and Alain Siaens were renewed for a three-year term; − the mandate of Mr Jean-Pierre de Buck van overstraeten was renewed for a one-year term;

and the appointment of SPRL Christian Jacobs was confirmed until the end of the ordinary general meet-ing to be held in 2015.

CORPORaTE gOvERnanCE


The composition of the board of directors as at 30 September 2012 was as follows:

MANDATE ExPIRES

Chairman of the board of directors 1

Alain Siaens 2 02/2015

Chairman of the executive committee – managing directorRegnier Haegelsteen 2 02/2013

Directors who are members of the executive committee – managing directorsAlain Schockert 2 02/2013

Pierre Paul De Schrevel 02/2013

Patrick Keusters 02/2013

Gautier Bataille de Longprey 02/2013

Jan Longeval 02/2013

Etienne de Callataÿ 02/2016

DirectorsBaron Philippson 2 Company director 02/2015

Damien Bachelot Company director 02/2015

Christian Jacobs 3 SPRL/BVBA (perma-nent representative: Christian Jacobs)

Company director 02/2015

Theo Maes Company director 02/2013

Luc Missorten 3 Company director Corelio SA/NV 02/2015

W. Invest SA/NV (permanentrepresentative: Gaëtan Waucquez)

Company director Floridienne SA/NV 02/2013

Jean-Pierre de Buck van Overstraeten Company director 02/2013

Jean-Marie Laurent Josi Company director Cobepa SA/NV 2 02/2013

Frank van Bellingen Company director CLdN Finance SA 2 02/2015

Jacques-Martin Philippson Company director 02/2016

The board of directors considers those of its members who meet the criteria outlined in article 526 ter of the Belgian Companies Code to be independent directors. The following persons should be considered as independent directors: Messrs Luc Missorten and Christian Jacobs.

1 on 1 october 2012, Baron Philippson replaced Mr Alain Siaens as chairman of the board of directors.2 Directors and companies declaring that they act in concert.3 Independent directors. »

Bank Degroof 17

on the basis of advice from the appointments and remuneration committee, the board of directors has decided to propose to the ordinary general meeting of 25 February 2013 the renewal of the following mandates:

MANDATE ExPIRESRegnier Haegelsteen 02/2016

Alain Schockert 02/2016

Pierre Paul De Schrevel 02/2016

Patrick Keusters 02/2016

Gautier Bataille de Longprey 02/2016

Jan Longeval 02/2016

W.Invest SA/NV 02/2016

Jean-Pierre de Buck van Overstraeten 02/2016

Jean-Marie Laurent Josi 02/2016

A proposal will also be made to this ordinary general assembly to appoint Ms Marina Maes as an inde-pendent director for a six-year term. Finally, on the basis of a proposal from the audit committee, the board of directors will also propose the renewal of the mandate of the audit firm of klynveld Peat Marwick Goerdeler as auditor, for a three-year term.

In accordance with applicable legal provisions, these proposals have been submitted to the National Bank of Belgium in advance for approval.

operatIon oF tHe BoarD oF

DIreCtors

The board of directors defines the strategy and general policies of the Bank. It ensures that they are implemented by the executive committee and, based on pro-posals from the executive committee, decides upon the resources needed to this end. It determines the competence and composition of the executive committee and

supervises its activities. It makes sure that sufficient resources exist to ensure the long-term future of the company.

The board of directors deliberates on all issues and matters within its responsibilities, such as the compil-ing of the annual accounts and management reports and the convening of general meetings. At each quarterly meeting, it receives adequate information about the performance of the business and the key figures, both for the parent company and for its main subsidiaries. It also receives the annual budget.

The board of directors meets at least four times a year. It met five times during the 2011-2012 financial year.

At the end of each quarter, the board of directors examined the results of the group and issued its opinion in a respect of the following matters: − a global strategic review; − the progressive implementation of organisational changes by the subsidiaries in France, Spain and

Switzerland; − analysis of the Bank’s risk profile; − a stock option plan using existing shares.


The board’s deliberations are valid only if at least half of its members are present or represented. No director may represent more than two fellow directors. Resolutions are passed by simple majority. In the event of a tie vote, the proposal is rejected.

The total remuneration allotted to board members is indicated in the notes to the company’s annual accounts (note xxIx, sub-heading A4). The full version of the company’s annual accounts is available at the company’s registered office.

DaY-to-DaY ManaGeMent oF tHe Group – tHe

eXeCutIVe CoMMIttee

The board of directors, in accordance with article 17 of its articles of association, has established an executive committee within its ranks.The executive committee is competent to manage the activities of the credit institu-tion within the framework of the general policies defined by the board of directors.

To this end, the executive committee is empowered by the board of directors to take decisions and to represent the company in its dealings with personnel, clients, other credit institutions, the wider economic and social environment and public authorities, and also to take decisions in respect of the representation of the company within its subsidiaries and within those companies in which it holds equity investments.

The composition of the executive committee is determined on the basis of the following principles: − the moral, deontological and ethical criteria applicable within the group; − the need to achieve a suitable age pyramid within the executive committee; − the changing requirements and the need to ensure the proper distribution of responsibilities

between executive committee members in order to create a balance between commercial, organi-sational and risk management requirements.

In principle, the executive committee meets four times a month. It met 47 times during the past financial year.

CoMMIttees estaBlIsHeD BY

tHe BoarD oF DIreCtors

Audit committeeThe audit committee assists the board of directors in the performance of its super-visory role, particularly with respect to:

− financial information destined for shareholders and third parties; − the audit process; − the functioning of the system of internal control and managing the risks to which

the Bank is exposed.

Members as at 30 September 2012Christian Jacobs (chairman)

Baron Philippson 1

Jean-Marie Laurent Josi

Frank van Bellingen

All of the above are directors but are not members of the executive committee. Mr Christian Jacobs sits in the board as an independent director. He meets all of the criteria set down in article 526ter of the Belgian Companies Code.

»1 on 1 october 2012, Mr Alain Siaens replaced Baron Philippson as a member of the audit committee.

Bank Degroof 19

The head of the group audit and the chairman of the executive committee, who is the director in charge of auditing, as well as those responsible for risk management and internal audit of Banque Degroof Luxembourg SA are invited to meetings without being members. The company’s external auditor participates at those meetings that deal with the examination of half-yearly and annual accounts.

The audit committee met five times during the past financial year, reporting systematically on its activities to the board of directors. These activities consisted mainly of examining the reports on the activities of the group audit and on the audits of Banque Degroof Luxembourg SA, Banque Degroof France SA, and PrivatBank Degroof SAU, the planning of audits, and examining half-yearly and annual accounts. The audit committee paid particular attention to the monitoring activities of risk management. The committee reviewed the reports on the activities of the compliance officer and of the inspection department, the funds per-formance table, the evaluation report of the executive committee on the system of internal control and the supervision of the implementation of the recommendations of the group audit. The audit committee also examined the inspection assignments initiated by the regulators in Belgium and abroad, the credit activity of subsidiaries and the selection criteria used for stock picking within the group.A special session was also devoted to the 2012 liquidity window.

Appointments and remuneration committee The appointments and remuneration committee is consulted on issues concerning: − the general remuneration policy; − the total amount of variable remuneration; − the remuneration of directors who are members of the executive committee; − the profit-sharing plans for Bank employees; − the composition and the size of the board of directors and the executive committee; − the definition of the profile of board and executive committee members and the selection process; − proposals for appointing and re-electing directors and members of the executive committee; − the appointment and re-election process.

MembersBaron Philippson (chairman)

Alain Siaens

Theo Maes

Gaëtan Waucquez (permanent representative of W. Invest SA/NV)

Christian Jacobs (permanent representative of Christian Jacobs SPRL/BVBA)

All of the above are directors but are not members of the executive committee. Mr Christian Jacobs sits on the board as an independent director. He meets the criteria set down in article 526ter of the Companies Code.

The chairman of the executive committee is invited to attend the meetings of the appointments and remuneration committee without being a member, except for discussions relating to his own remu-neration.


The appointments and remuneration committee met once during the past financial year. During that meeting, it examined: − the Bank’s general remuneration policy; − the appointment of new directors; − the renewal of directorships; − the total amount of variable remuneration; − the variable remuneration component paid to executive committee members; − the granting of stock options.

CoMMIttees reportInG to tHe

eXeCutIVe CoMMIttee

Specific committees assist the executive committee with: − day-to-day management of the parent company Bank Degroof SA/NV; − human resources policy; − managing the proprietary equity portfolio; − defining the asset management strategy; − commitments towards banking counterparties; − client loans and commitments; − assets & liabilities management; − implementation of the risk management policy at subsidiaries; − coordination of the compliance function.

proFIt approprIatIon

polICY

Dividends are set by reference to the level of consolidated net profit and retained earnings as well as the strategy of the group.

Bank Degroof has drawn up a governance memorandum assessing the basic features of its management structure with respect to:

− the personal integrity and financial soundness of major shareholders; − a transparent management structure promoting sound and prudent management; − the definition of the expertise and responsibilities of each segment of the organisation; − the collegial nature of effective executive management; − the independent supervisory functions; − suitable profiles and qualities of its senior managers; − remuneration policy for senior managers; − the Bank’s setting of its strategic objectives and values; − senior management’s familiarity with the Bank’s operating structure and its activities; − adequate communication on management and supervision with the various parties concerned.

This information is submitted to the National Bank of Belgium and periodically updated.

GoVernanCe MeMoranDuM

Bank Degroof 21

ManageMent report

The consolidated accounts have been prepared in accordance with IFRS.

1. CoMMents on tHe aCCounts

For the past financial year, Bank Degroof SA/NV recorded a non-consolidated net profit of EUR 58 806 862.

The consolidated net profit (group share) amounted to EUR 55 557 590 compared to EUR 68 074 118 for the previous financial year. Total consolidated comprehensive income (group share), which includes the annual movements on AFS reserves, amounted to EUR 87 711 581 compared to EUR 45 531 416 in the previous financial year.

During the past financial year, the net interest margin on all activities continued to increase strongly compared to the results for the previous financial year, despite a slowdown during the last quarter as a result of a sharp drop in rates.

For the 2012 financial year, the accounting results from the revaluation and disposal of FVo financial instruments as part of the interest rate transformation activity improved compared to the preceding year and, in spite of the sharp deterioration in market conditions during the first quarter of 2012, the overall movement in credit spreads (relating to sovereign risks) during the period under review con-tributed favourably to the final result from treasury activities.

In order to better apprehend the progressive development of the ALM management-related balance sheet items, all hedging futures forming part of the treasury macro-hedging activity were gradually closed during the first quarter of the 2012 financial year, with a limited impact on the income statement. The unrecorded Mark to Market revaluations for the related balance sheet items rose very sharply at the end of the 2012 financial year further to the gradual downward trend in the interest rate curve.

In respect of other ‘market’ activities, earnings from the bonds desk progressed well compared to the previous year; by contrast, the weak result for the year for the equities desk reflected the closure of the principal arbitrage activities in Brussels at the beginning of the financial year. In addition, the less attractive market conditions meant that income from intermediation in structured products declined compared to 2011. Margins earned by the foreign exchange desk continued to represent a significant share of the results of the overall ‘Markets’ business in 2012.

Net income from commissions was down overall by approximately 8% compared to the preceding year (measured on a consistent basis). The decline in the result relates mainly to commissions on UCI activ-

ManagEMEnT REPORT


ities within the group and to securities brokerage fees, reflecting lower transaction volumes. Against this, securities placement commissions more than kept pace with the previous year’s results, mainly due to significant issues of private bonds and real-estate certificates.

on the basis of a constant consolidation scope, total overheads for the 2012 financial year rose mod-erately compared to 2011, reflecting the combined impact of an increase in personnel costs, largely offset by a drop in other general expenses (including depreciation). The rise in personnel costs mainly related to the increase in salary costs, pension contributions and end-of-year provisions. Against this, the IFRS cost of profit-sharing plans fell noticeably.

other general expenses were lower than in 2011, in particular for two specific components: first, the bank deposit protection levy, which was lower in 2012 than in the preceding year and, second, certain accruals for expenditure recorded at consolidated level in 2011, for which there was no equivalent in 2012.

Annual depreciation and other impairment charges on tangible and intangible fixed assets were also lower in 2012.

overall, the consolidated accounting earnings of the AFS equity portfolios (essentially the Bank’s holding activity) were relatively close to the previous year’s level; although income declined, earnings from sales progressed well during the 2012 financial year, although the latter were to a large extent offset by the additional impairment charges that were recognised at the balance sheet date as a result of applying the accounting principles laid down by the regulator. Nevertheless, if the annual move-ments in the results from the revaluation of AFS financial instruments (which are recorded in equity) are included in order to arrive at consolidated total comprehensive income, there was a significant improvement in the relevant results compared to the previous year.

The estimated tax charge as at the balance sheet date was higher overall than for the previous year. This increase relates primarily to the current taxation of Bank Degroof and Banque Degroof Luxembourg.

1.1. appropriation of profit

We propose to the shareholders’ meeting that the non-consolidated statutory profit of Bank Degroof SA/NV for the current financial year be appropriated as follows:

(in EUR)

Profit for the financial year 58 806 862

+ Profit brought forward 130 535 925

= Profit to be appropriated 189 342 787

- Allocation to the legal reserve 0

- Directors’ fees 345 000

- Dividends 44 105 221

= profit to be carried forward 144 892 566

The gross dividend that is proposed to the shareholder’s meeting amounts to EUR 5.50 per share. »

Bank Degroof 25

1.2. Consolidated equity

Consolidated equity, including minority interests, amounted to EUR 615.7 million at the end of the 2012 financial year, which is EUR 28.1 million higher than at the previous year-end.

This change mainly reflects the combined effects of the dividend distribution in respect of the previous year (- EUR 39.8 million), the revaluation of financial assets at fair value (+ EUR 31.4 million), treasury share transactions (- EUR 21 million), and the profit (group share) for the year (+ EUR 55.6 million).

At EUR 476.4 million, the eligible capital used for calculating the Basel II regulatory coefficients is well in excess of that required by prudential standards. Tier 1 (core equity capital) and Tier 2 (broad equity capital) solvency ratios were 12.62% and 15.66% respectively as at 30 September 2012.

1.3. assets under custody

on a consolidated basis, total assets under custody amounted to EUR 49.9 billion at the end of the 2012 financial year, compared to EUR 43.4 billion at the previous year-end.

2. CHanGes In CapItal

There were no changes in capital during the past financial year.

As at 30 September 2012, share capital was set at EUR 47 491 186, represented by 8 019 131 shares without par value. All shares are fully subscribed and paid-up.

The unused portion of the authorised share capital amounted to EUR 6 624 994 at 30 September 2012.

3. treasurY sHares (art. 624 oF tHe BelGIan CoMpanIes CoDe)

Bank Degroof SA/NV does not hold treasury shares.

As at 30 September 2012, the following subsidiaries of the Bank, BD Square Invest SA/NV and Cobimmo SA/NV, held a total of 430 167 Bank Degroof SA/NV shares, representing 5.36% of the subscribed share capital.

The average par value per share is EUR 5.922. The book value of all treasury shares held by subsidiar-ies amounted to EUR 68 232 433 at 30 September 2012.

Treasury shares held by the group are intended to cover employee profit-sharing plans.

During the past financial year, the total number of treasury shares increased by 138 334 units.


4. sIGnIFICant post BalanCe sHeet eVents

At group level outside Belgium, the Bank is progressively implementing the organisational decisions taken during the financial year.

Thus, the group is working on bringing together its two French subsidiaries, Banque Degroof France SA and Aforge SA, under a new holding company (Compagnie Financière Degroof), which will be majority owned by Bank Degroof SA/NV. This holding company will have three main shareholdings: Banque Degroof France, Degroof Aforge Family office and Degroof Aforge Corporate Finance.Subject to regulatory approval, the transaction will be completed at the beginning of 2013 and will enable the Bank to further structure its business in France and to provide it with new impetus.

The group is also working on the merger in Switzerland of Degroof Banque Privée with Landolt & Cie. This merger should also be finalised by the start of 2013. The Bank will then hold a minority share-holding in a Swiss bank, which will enable it to establish a permanent presence and to intensity its activities in Switzerland thanks to the complementary nature of the activities of the two institutions. This will also increase the Bank’s critical mass in Switzerland and de facto create further possible syn-ergies with the rest of the group.

5. CIrCuMstanCes tHat CoulD sIGnIFICantlY InFluenCe tHe Group’s DeVelopMent

The growth and profitability of the group are influenced by: − the ongoing search for synergies and the streamlining of the activities of the various group entities; − the continuing effort to grow the business as and when opportunities arise, as demonstrated by

past acquisitions and commercial investments; − changes in assets under management and stock markets; − corporate finance assignments; − investments to equip the group with cutting-edge technology; − the macro-economic environment.

6. researCH anD DeVelopMent aCtIVItIes

The group has undertaken no further direct research and development activities since the sale of its IT subsidiary Finance Technology Systems SA/NV in 2005.

»

Bank Degroof 27

7. reMuneratIon polICY

In accordance with the recommendation of the Banking, Finance and Insurance Commission, the Bank has filed details of its remuneration policy with the National Bank of Belgium. This policy constitutes an integral part of the good governance memorandum and was established by the human resources committee in consultation with the board of directors, the appointments and remuneration commit-tee, and the executive committee.

This remuneration policy promotes the sound and efficient management of risks. Employees and executive committee members do not have, under any circumstances, an acquired right to variable remuneration. The fixing of this variable remuneration is independent of the profitability of the Bank, of any one particular activity, and/or portfolio of clients.

As the profitability of any particular client is not a factor in the determination of remuneration, the policy complies with the principles governing the protection of clients.

By allowing for the granting of stock options to employees and executive committee members, the policy is also aligned with the Bank’s corporate strategy and long-term interests, by encouraging these persons to take equity interests in the share capital of the Bank.

Finally, the board of directors reserves the possibility to defer a portion of the variable remuneration of the executive committee members and key managers based on various elements of assessment set out by the risk management manager.

8. MaIn rIsKs to WHICH tHe BanK Is eXposeD

By the nature of its activities, Bank Degroof is exposed to a certain number of risks.

The main risks are: − market risks, essentially linked to investment activities in securities portfolios (equities, bonds) and

to its interest rate transformation activity (ALM); − liquidity risk, resulting from differences in maturities between financing resources (generally short-

term) and the use thereof; − credit risk, linked to its credit activities (a risk largely covered by the use of securities portfolios as

collateral) and intermediation operations in derivative instruments; − asset management risk, (risk of legal action by clients if mandates are not respected, commercial

risk of loss of dissatisfied customers, and related reputational risks); − operational risk.


9. polICY ConCernInG tHe use oF FInanCIal InstruMents

Group companies use derivatives for their own account as follows:

In the context of asset and liability management (ALM), interest rate derivatives (mainly futures and interest rate swaps) are used in order to cover the group’s long-term interest rate risk. Interest rate swaps are used to cover a portfolio of short term (less than three years) sovereign and state-guaranteed bank bonds from a micro-hedging perspective (the portfolio is recognised as fair value through P&L, but the hedges are undertaken position by position). The use of derivatives is supervised by the almac committee.

In the same way, the Bank’s treasury department (interest rate risks of less than two years) uses inter-est rate derivatives and treasury swaps to manage the group’s interest rate and treasury risk. Managing the group’s foreign exchange position also involves the use of derivatives (future foreign exchange contracts and swaps) to cover both commitments towards clients and the financing of sub-sidiaries in their operating currencies.

Derivatives (purchase of put options with sale of call options) are used to hedge certain investment portfolio positions and to channel their profits. The almac committee also manages a position in struc-tured products, which constitutes an alternative to investments in interest rate products.

Economic hedging operations using derivatives in respect of equity positions are recognised as finan-cial assets designated at fair value through profit or loss.

10. auDIt CoMMIttee

Pursuant to the law of 17 December 2008 on audit committees in financial enterprises, the board of directors is required to justify in its annual report the individual and collective expertise of the mem-bers of the audit committee.

As at 30 September 2012, the audit committee comprised the following persons:Chairman Mr Christian Jacobs Members Baron Philippson 1

Mr Jean-Marie Laurent Josi Mr Frank van Bellingen

of these: − all are non-executive members of the board of directors; − two of the audit committee members have professional experience in other credit institutions; − one independent director is a member and chairman of the audit committee; − all of the audit committee members have professional accounting or auditing experience; − all of the audit committee members have professional experience as directors exercising executive

functions; − all of the audit committee members have complementary professional experience in a variety of sectors. »

1 on 1 october 2012, Mr Alain Siaens replaced Baron Philippson as a member of the audit committee.

Bank Degroof 29

The board therefore considers that the members of the audit committee possess the required exper-tise to fulfil their responsibilities.

Those directors who meet all of the criteria set forth in article 526ter of the Belgian Companies Code are considered to be independent.on this basis, the board considers the audit committee member Mr Christian Jacobs to be an inde-pendent director.

11. appoIntMents anD reMuneratIon CoMMIttee

Pursuant to the law of 22 July 2011 transposing various directives relative to oversight of the financial sector and introducing miscellaneous provisions, the board of directors is required to justify in its annual report the individual and collective expertise of the members of the appointments and remuneration committee.

As at 30 September 2012, the appointments and remuneration committee comprised the following persons:Chairman Baron Philippson Members Mr Alain Siaens Mr Theo Maes Mr Gaëtan Waucquez (permanent representative of W. Invest SA/NV) Mr Christian Jacobs (permanent representative of Christian Jacobs SPRL/BVBA)

of these: − all are non-executive members of the board of directors; − two of the appointments and remuneration committee members are also audit committee members; − three of the committee members have professional experience on other appointments and remu-

neration committees; − two of the committee members have professional experience in other credit institutions; − one member of the appointments and remuneration committee is an independent director; − all of the committee members have professional accounting or auditing experience; − all of the committee members have professional experience as directors exercising executive functions; − the members of the appointments and remuneration committee have complementary professional

experience in a variety of sectors

The board therefore considers that the members of the appointments and remuneration committee have the required expertise for the purposes of exercising competent, independent judgement on the remu-neration policies and incentives created for the management of risks, equity and liquidity.

Those directors who meet all criteria set forth in article 526ter of the Belgian Companies Code are con-sidered to be independent. on this basis, the board considers the appointments and remuneration committee member Mr Christian Jacobs to be an independent director.


12. DIsCHarGe oF DIreCtors anD auDItors

Pursuant to the law and the articles of association, the shareholder’s meeting is requested to grant discharge to the directors and the auditor of Bank Degroof SA/NV with respect to the performance of their mandates during the past financial year.

13. reneWal oF ManDates – appoIntMents

We propose that you renew for a three (3) year term, the mandates of Messrs Regnier Haegelsteen, Alain Schockert, Pierre Paul De Schrevel, Patrick keusters, Gautier Bataille de Longprey, Jan Longeval, Jean-Pierre de Buck van overstraeten, Jean-Marie Laurent Josi and W. Invest SA/NV represented by Mr Gaëtan Waucquez.

We also invite you to vote on the appointment of a new independent director for a six (6) year term, namely Ms Marina Maes, residing at Potaardestraat 71, 9250 Waasmunster.

Finally, we propose to renew the mandate of our auditors, klynveld Peat Marwick Goerdeler société civile, Prins Boudewijnlaan, 24d, 2550 kontich, represented by Mr Peter Coox, company auditor, for a term of three (3) years.

In accordance with the applicable legal provisions, these proposals have been submitted to the National Bank of Belgium in advance for approval.

14. applICatIon oF tHe laW oF 3 MaY 2002 aMenDInG tHe rules on tHe InCoMpatIBIlItY oF ManDates applICaBle to DIreCtors oF CreDIt InstItutIons anD InVestMent CoMpanIes anD tHe BanKInG, FInanCe anD InsuranCe CoMMIssIon reGulatIon oF 9 JulY 2002 IMpleMentInG tHIs laW

The list of external mandates held by senior managers of Bank Degroof and which are subject to pub-lication, is available at www.degroof.be.

Brussels, 13 December 2012.

Bank Degroof 31

consoli-datedfinancialstatements

COnSO lIDaTED FInanCIal STaTEMEnTS

36 consolidatedbalancesheet38 consolidatedstatementofcomprehensiveincome40 consolidatedstatementofchangesinequity42 consolidatedcashflowstatement44 notestotheconsolidatedfinancialstatements44 1.Generalinformation44 2.Changesinaccountingpoliciesandmethods46 3.Summaryofaccountingpoliciesandmethods46 3.1Consolidationprinciples47 3.2Translationofforeigncurrencies48 3.3Financialinstruments52 3.4Hedgeaccounting53 3.5Leasingcontracts53 3.6Propertyandequipment(includinginvestmentproperty)54 3.7Intangibleassets55 3.8Otherassets55 3.9Impairments57 3.10Provisions57 3.11Tax58 3.12Employeebenefits59 3.13Otherliabilities59 3.14Shareholders’equity59 3.15Interestincomeandcharges60 3.16Dividends60 3.17Feesandcommissions60 3.18Resultontherevaluationordisposaloffinancialinstruments60 3.19Cashandcashequivalents61 4.Useofjudgementandestimatesinpreparingthefinancialstatements61 5.Riskmanagement61 5.1Generalprinciples62 5.2Liquidityrisk65 5.3Marketrisk67 5.4Creditrisk70 5.5Assetmanagementrisk70 5.6Capitalmanagement72 6.Consolidationscope72 6.1ListoftheprincipalsubsidiariesofBankDegroof72 6.2Significantchangesintheconsolidationscopeduringthecurrentfinancialyear73 6.3Non-consolidatedrealestateaffiliates73 7.Notestotheconsolidatedbalancesheet73 7.1Cashandbalanceswithcentralbanks74 7.2Financialassetsheldfortrading74 7.3Financialassetsdesignatedatfairvaluethroughprofitorloss75 7.4Available-for-salefinancialassets

34 Annualreport2012

76 7.5Loansandadvancestocreditinstitutions77 7.6Loansandadvancestocustomers78 7.7Financialassetsheldtomaturity79 7.8Propertyandequipmentandinvestmentproperty81 7.9Goodwillandotherintangibleassets83 7.10Investmentsinentitiesaccountedforundertheequitymethod83 7.11Otherassets84 7.12.aFinancialliabilitiesheldfortrading84 7.12.bDerivativesforhedgingpurposes84 7.13Depositsfromcreditinstitutions85 7.14Depositsfromcustomers85 7.15Debtsecurities85 7.16Subordinateddebt85 7.17Provisions86 7.18Otherliabilities86 7.19Tax88 7.20Shareholders’equity89 7.21Fairvaluesoffinancialinstruments93 8.Notestotheconsolidatedincomestatement93 8.1Interestincomeandexpense93 8.2Dividendincome94 8.3Feeandcommissionincomeandexpense94 8.4Netresultonfinancialinstrumentsheldfortrading95 8.5Netresultonfinancialinstrumentsdesignatedatfairvaluethroughprofitorloss95 8.6Netresultonfinancialinstrumentsnotdesignatedatfairvaluethroughprofitorloss96 8.7Netresultonhedgeaccounting96 8.8Othernetoperatingresults96 8.9Personnelexpenses97 8.10Generalandadministrativeexpenses97 8.11Depreciationofpropertyandequipmentandamortizationofintangibleassets98 8.12Impairments98 8.13Incometaxexpenses100 8.14Componentsofothercomprehensiveincome100 9.Rightsandcommitments100 9.1Assetsinopencustody100 9.2Creditrelatedrightsandcommitments101 9.3Guaranteesgivenandreceived101 10.Employeebenefitsandotherremuneration101 10.1Post-employmentbenefits106 10.2Share-basedpayments109 11.Relatedparties112 12.Postbalancesheetevents

114 auditor’sfees115 statutoryauditor’sreport

contents

Bankdegroof 35

(inthousandsofEUR)

ASSETS Notes 30.09.2012 30.09.2011 30.09.2010

Cashandbalanceswithcentralbanks 7.1 183300 833099 284963

Financialassetsheldfortrading 7.2 89584 117299 108459

Financialassetsdesignatedatfairvaluethroughprofitorloss 7.3 1138872 1205494 1046951

Available-for-salefinancialassets 7.4 1258552 841697 973035

Loansandadvancestocreditinstitutions 7.5 206597 193850 176440

Loansandadvancestocustomers 7.6 1955301 1880749 1870790

Financialassetsheldtomaturity 7.7 249738 62401 136392

Propertyandequipment 7.8 65506 66569 70046

Goodwillandotherintangibleassets 7.9 101036 60137 62793

Investmentsinentitiesaccountedforusingtheequitymethod 7.10 0 31200 40624

Currenttaxassets 3952 4495 1930

Deferredtaxassets 7.19 9952 13408 9998

Otherassets 7.11 74616 70780 71884

Totalassets 5337006 5381178 4854305

consolidatedbalancesheet

36 Annualreport2012

(inthousandsofEUR)

LIABILITIESANDEqUITy Notes 30.09.2012 30.09.2011 30.09.2010

Liabilities 4 721 320 4 793 554 4 272 639

Financialliabilitiesheldfortrading 7.12.a 117228 125629 177924

Derivativesheldforhedgingpurposes 7.12.b 0 1990 0

Depositsfromcreditinstitutions 7.13 171081 143134 268669

Depositsfromcustomers 7.14 4247396 4316660 3625874

Debtsecurities 7.15 13007 13009 13005

Subordinatedliabilities 7.16 46497 50531 50531

Provisions 7.17 4904 4054 3537

Currenttaxliabilities 22371 45313 47135

Deferredtaxliabilities 7.19 10926 9690 10997

Otherliabilities 7.18 87910 83544 74967

equity 615 686 587 624 581 666

Issuedcapital 7.20 47491 47491 47491

Sharepremiums 7.20 182877 181575 180517

Reservesandretainedearnings 7.20 321458 293225 265905

Revaluationreserves 7.20 76121 43968 66511

Treasuryshares(-) 7.20 (68232) (47232) (47091)

Netprofitfortheperiod 7.20 55558 68074 67779

Minorityinterests 413 523 554

Totalliabilitiesandequity 5337006 5381178 4854305

Bankdegroof 37

(inthousandsofEUR)

Notes 30.09.2012 30.09.2011 30.09.2010

Interestincome 8.1 97749 95378 86764

Interestexpenses 8.1 (25078) (26729) (22115)

Dividendincome 8.2 9070 10664 11361

Feeandcommissionincome 8.3 312383 309648 260593

Feeandcommissionexpense 8.3 (118813) (116269) (84787)

Netresultonfinancialinstrumentsheldfortrading 8.4 (10408) 9493 (17225)

Netresultonfinancialinstrumentsdesignatedatfairvaluethroughprofitorloss 8.5 23282 (8528) 886

Netresultonfinancialinstrumentsnotdesignatedatfairvaluethroughprofitorloss 8.6 11857 9570 8862

Netresultonhedgeaccounting 8.7 0 (51) 0

Othernetoperatingresults 8.8 7352 6530 4381

Shareintheresultsfromentitiesaccountedforusingtheequitymethod 0 (2471) (1484)

Net income 307 394 287 235 247 236

Personnelexpenses 8.9 (132881) (117765) (113667)

Generalandadministrativeexpenses 8.10 (59914) (54824) (45404)

Depreciationandamortization 8.11 (8812) (8886) (9248)

Impairments 8.12 (27540) (21852) (2687)

Profit before tax 78 247 83 908 76 230

Incometaxexpense 8.13 (23196) (15812) (8419)

Netprofit 55051 68096 67811

Fairvalueadjustments-Available-for-salefinancialassets 8.14 31377 (24746) 19540

Currencytranslationdifferences 8.14 881 2205 3236

Shareofothercomprehensiveincomeofcompaniesaccountedforusingtheequitymethod

8.14 0 0 0

Totalothercomprehensiveincome1 32258 (22541) 22776

Totalcomprehensiveincome 87309 45555 90587

consolidatedstatementofcomprehensiveincome

1Unrealisedprofitsandlossesrecordeddirectlyinshareholders’equity,netoftaxes.

38 Annualreport2012

(inthousandsofEUR)

Notes 30.09.2012 30.09.2011 30.09.2010

Netprofitattributableto 55051 68096 67811

shareholdersoftheparentcompany 55558 68074 67779

minorityinterests (507) 22 32

Totalcomprehensiveincomeattributableto 87309 45555 90587

shareholdersoftheparentcompany 87711 45531 90580

minorityinterests (402) 24 7

Bankdegroof 39

(inthousandsofEUR)

CAPITALSHARE

PREMIUMS

RESERvESANDRETAINEDEARNINGS

REvALUATIONRESERvES

CURRENCyTRANSLATIONDIFFERENCES

TREASURySHARES

NETPROFITFORTHEPERIOD

EqUITyGROUP’SSHARE

MINORITyINTERESTS TOTAL

Balanceat30.09.2009 47051 173474 286243 43988 (278) (20946) 18583 548115 (152) 547963

Capitalincrease 440 6579 0 0 0 0 0 7019 0 7019

Shareoptionplans 0 1040 0 0 0 0 0 1040 0 1040

Treasurysharestransactions 0 (567) 0 0 0 (26145) 0 (26712) 0 (26712)

Dividends 0 0 (38910) 0 0 0 0 (38910) (64) (38974)

Changeinminorityinterests 0 0 (11) 0 0 0 0 (11) 763 752

Priorperiodresults 0 0 18583 0 0 0 (18583) 0 0 0

Netprofitfortheperiod 0 0 0 0 0 0 67779 67779 32 67811

Fairvalueadjustments 0 0 0 19573 0 0 0 19573 (33) 19540

Currencytranslationdifferences 0 0 0 0 3228 0 0 3228 8 3236

Othervariations 0 (9) 0 0 0 0 0 (9) 0 (9)

Balanceat30.09.2010 47491 180517 265905 63561 2950 (47091) 67779 581112 554 581666



Treasurysharestransactions 0 1 0 0 0 (141) 0 (140) 0 (140)

Dividends 0 0 (40450) 0 0 0 0 (40450) (16) (40466)

Changeinminorityinterests 0 0 (9) 0 0 0 0 (9) (40) (49)



Fairvalueadjustments 0 0 0 (24744) 0 0 0 (24744) (2) (24746)


Othervariations 0 0 0 0 0 0 0 0 1 1

Balanceat30.09.2011 47491 181575 293225 38817 5151 (47232) 68074 587101 523 587624




Dividends 0 0 (39841) 0 0 0 0 (39841) (21) (39862)

Changeinminorityinterests 0 0 0 0 0 0 0 0 313 313


Netprofitfortheperiod 0 0 0 0 0 0 55558 55558 (507) 55051

Fairvalueadjustments 0 0 0 31376 0 0 0 31376 1 31377



Balanceat30.09.2012 47491 182877 321458 70193 5928 (68232) 55558 615273 413 615686

consolidatedstatementofchangesinequity

40 Annualreport2012

(inthousandsofEUR)

CAPITALSHARE

PREMIUMS

RESERvESANDRETAINEDEARNINGS

REvALUATIONRESERvES

CURRENCyTRANSLATIONDIFFERENCES

TREASURySHARES

NETPROFITFORTHEPERIOD

EqUITyGROUP’SSHARE

MINORITyINTERESTS TOTAL

Balanceat30.09.2009 47051 173474 286243 43988 (278) (20946) 18583 548115 (152) 547963



Treasurysharestransactions 0 (567) 0 0 0 (26145) 0 (26712) 0 (26712)

Dividends 0 0 (38910) 0 0 0 0 (38910) (64) (38974)

Changeinminorityinterests 0 0 (11) 0 0 0 0 (11) 763 752



Fairvalueadjustments 0 0 0 19573 0 0 0 19573 (33) 19540


Othervariations 0 (9) 0 0 0 0 0 (9) 0 (9)

Balanceat30.09.2010 47491 180517 265905 63561 2950 (47091) 67779 581112 554 581666




Dividends 0 0 (40450) 0 0 0 0 (40450) (16) (40466)

Changeinminorityinterests 0 0 (9) 0 0 0 0 (9) (40) (49)



Fairvalueadjustments 0 0 0 (24744) 0 0 0 (24744) (2) (24746)



Balanceat30.09.2011 47491 181575 293225 38817 5151 (47232) 68074 587101 523 587624




Dividends 0 0 (39841) 0 0 0 0 (39841) (21) (39862)

Changeinminorityinterests 0 0 0 0 0 0 0 0 313 313


Netprofitfortheperiod 0 0 0 0 0 0 55558 55558 (507) 55051

Fairvalueadjustments 0 0 0 31376 0 0 0 31376 1 31377



Balanceat30.09.2012 47491 182877 321458 70193 5928 (68232) 55558 615273 413 615686

Bankdegroof 41

(inthousandsofEUR)

Notes 30.09.2012 30.09.2011 30.09.2010

Net profit 55 051 68 096 67 811

Non-monetary items included in the net profit and other adjustments 34 204 35 167 22 417

Taxesanddeferredtaxes 8.13 23196 15812 8419

Incomefromassociates,netofdividendsreceived 0 2471 1484

Share-basedpayments 1302 1057 1040

Unrealisedforeignexchangegainsorlossesandcurrencytranslationdifferences (91) (7) 0

Impairmentanddepreciation/amortizationof(in)tangibleassets 7.8/7.9 8873 16676 9504

Changesinprovision 7.17 850 517 532

Netlosses(profits)oninvestments 74 (1360) 196

Otheradjustments 0 1 1242

Change in assets and liabilities from operating activities (532 204) 341 627 61 296

Assetsheldfortradingordesignatedatfairvalue 94336 (167343) 69154

Loansandadvances (57673) (117552) 230083

Available-for-saleloansandsecurities (496576) 103037 (353491)

Otherassets (4482) 9694 (4379)

Liabilitiesheldfortrading (8401) (52331) 71182

Derivativesheldforhedgingpurposes (1990) 1990 0

Depositsfromcreditinstitutions 18531 (116340) (126449)

Depositsfromcustomers (364414) 633633 203264

Debentureloan (2) 4 0

Otherliabilities 288467 46835 (28068)

Income taxes paid (44 536) (21 473) (10 142)

Net cash flows from operating activities (A) (487 485) 423 417 141 382

Acquisitionofsubsidiaries,jointventuresandassociates,netofcashacquired(includingincreaseinpercentageinterestheld) 6 4110 0 0

Disposalofsubsidiaries,jointventuresandassociates,netofcashacquired(includingdecreaseinpercentageinterestheld) 6 0 0 0

Purchaseof(in)tangibleassets (5427) (4855) (2988)

Disposalof(in)tangibleassets 557 2914 335

Purchaseofheldtomaturityinvestments (69372) (18475) (12439)

Incomefromthedisposalorreimbursementofheldtomaturityinvestments 2062 91923 143898

Net cash flows from investing activities (B) (68 070) 71 507 128 806

Dividendspaid (39862) (40466) (38973)

Purchaseorsaleoftreasuryshares (21000) (140) (26712)

Proceedsfromissuanceorsaleofsubordinateddebt 7.16 (4000) 0 0

Proceedsfromissuanceofnewshares 0 0 7010

Otherfinancing 0 (49) (4)

Net cash flows from financing activities (C) (64 862) (40 655) (58 679)

effect of exchange rate changes on cash and cash equivalents (D) 51 381 484

consolidatedcashflowstatement

42 Annualreport2012

(inthousandsofEUR)

Notes 30.09.2012 30.09.2011 30.09.2010

Netincrease/decreaseofcashandcashequivalents(A+B+C+D) (620366) 454650 211993

Cashandcashequivalentsatthebeginningoftheperiod 810896 356246 144253

Cashandcashequivalentsattheendoftheperiod 190530 810896 356246

supplementary information

Interestreceived 137294 119965 101408

Dividendsreceived 9070 10664 11361

Interestpaid (78310) (71907) (38212)

Components of cash and cash equivalents 190 530 810 896 356 246

Cashandbalanceswithcentralbanks 7.1 2551 623710 183481

Currentaccountsandcallmoneyloanswithcreditinstitutions 7.5 180695 121140 133565

Loansandadvancestocreditinstitutions 7.5 7284 66046 39200

ofwhichnotavailable 0 0 0

Bankdegroof 43

TheRoyalDecreeof5December2004requiresquotedandunquotedcreditinstitutionsandinvestmentfirmstoprepareconsolidatedfinancialstatements inaccordancewith InternationalFinancialReportingStandards(IFRS),asadoptedbytheEuropeanUnion,forfinancialperiodsbeginningonorafter1January2006. For this reason, the consolidated financial statements of Bank Degroof have been prepared inaccordancewithIFRSinforceat30September2012,asadoptedbytheEuropeanUnion.AsBankDegroofhasnosecuritiesorborrowingsthataretraded,orareintheprocessofbeingoffered,onapublicsecuritiesmarket,IFRS8(‘Operatingsegments’)andIAS33(‘Earningspershare’)havenotbeenapplied.ItisforthisreasonthatBankDegroofdoesnotpubliclyannounceinterimresultsand,accordingly,hasonlyasinglereportingdate,namelytheannualyear-end.

Theconsolidatedfinancialstatementsarepresentedinthousandsofeuro,unlessspecificallystatedother-wise.

FollowingthedecisionoftheNationalBankofBelgiumtooptfortherecordingoffinancialinstrumentsattheirdirtyprice(i.e.includinginterest)inthebalancesheet,therequirementsforconsolidatedfinancialreportingdefinedbytheBelgiansupervisoryauthority(‘FINREP’)havebeenmodifiedaccordingly.Asaresult,accruedinterestthatisnotoverdueisrecordedonaproratabasisinthesamebalancesheetcaptionasthefinancialinstruments.

Accordingly,BankDegroofhasdecidedtoadoptthesameapproachfortheseconsolidatedfinancialstate-mentsandhas,thus,recordedfinancialinstrumentsinthismannerinthebalancesheet.Forthisreason,asfromthisfinancialyear,thenotestothebalancesheethavebeenmodifiedinthisrespect,witharetroactiveimpactforthecomparativefinancialdata,withtheresultthataccruedinterestthatisnotoverdueisnolongerrecordedinaseparateline.

2.changesinaccountingpoliciesandmethods

ThefollowingIFRSstandards(revisedoramended)andIFRIC interpretationsareapplicableforthefirsttimeduringthecurrentfinancialperiod:

− RevisedIAS24‘RelatedPartyDisclosures’;− variousamendments‘ImprovementstoIFRS(2008-2010)’;− AmendmenttoIFRIC14‘PrepaymentsofaMinimumFundingRequirement’;− AmendmentstoIFRS7‘FinancialInstrumentsDisclosures-TransfersofFinancialAssets’;− Amendments to IFRS 1 ‘Severe Hyperinflation and Removal of Fixed Dates for First-time

Adopters’.

Theapplicationofthesenewstandardshasnothadasignificantimpactontheresult,thefinancialposition,oronthepresentationofthefinancialstatementsofBankDegroof.TheamendmentstoIFRS1havenot,asyet,beenapprovedbytheEuropeanUnion,buttheydonothaveanimpactontheconsolidatedfinancialstatements.

critèresd’utilisation

Thestandards,amendmentsofstandards,and interpretationspublishedbythe IASB(InternationalAccountingStandardsBoard)asat30September2012whichbecomeeffectiveforfuturefinancialperiodsinclude:

− Amendments to IAS12 ‘Deferredtax:RecoveryofUnderlyingAssets’applicablefor financialperiodsbeginningonorafter1January2012;

− Amendments to IAS1 ‘Presentationof ItemsofOtherComprehensive Income’applicable forfinancialperiodsbeginningonorafter1July2012;

− AmendmentstoIAS19‘EmployeeBenefits’applicableforfinancialperiodsbeginningonorafter1January2013;

− IFRS9‘FinancialInstruments’applicableforfinancialperiodsbeginningonorafter1January2015;

− IFRS10‘ConsolidatedFinancialStatements’applicableforfinancialperiodsbeginningonorafter1January2013;

− IFRS11 ‘JointArrangements’applicablefor financialperiodsbeginningonorafter1January2013;

− IFRS12‘DisclosuresofInterestsinOtherEntities’applicableforfinancialperiodsbeginningonorafter1January2013;

− IAS27(revised)‘SeparateFinancialStatements’applicableforfinancialperiodsbeginningonorafter1January2013;

− IAS28(revised)‘InvestmentsinAssociatesandJointventures’applicableforfinancialperiodsbeginningonorafter1January2013;

− IFRS13‘FairvalueMeasurement’applicableforfinancialperiodsbeginningonorafter1January2013;

− IFRIC20‘StrippingCostsintheProductionPhaseofaSurfaceMine’applicableforfinancialperi-odsbeginningonorafter1January2013;

− Amendments to IFRS 7 ‘Financial Instruments Disclosures - Offsetting Financial Assets andFinancialLiabilities’applicableforfinancialperiodsbeginningonorafter1January2013;

− Amendments to IAS32 ‘Financial InstrumentsPresentation-OffsettingFinancialAssetsandFinancialLiabilities’applicableforfinancialperiodsbeginningonorafter1January2014;

− AmendmentstoIFRS1‘GovernmentLoans’applicableforfinancialperiodsbeginningonorafter1January2013;

− variousamendments‘ImprovementstoIFRS(2009-2011)’applicableforfinancialperiodsbegin-ningonorafter1January2013;

− AmendmentstoIFRS10,IFRS11,andIFRS12‘TransitionGuidance’applicableforfinancialperi-odsbeginningonorafter1January2013.

WiththeexceptionofIFRS9andtheamendmentstoIAS19,theBankwillapplythestandardsandinterpretationssetoutabovewhentheybecomeapplicableanddoesnotexpectthattheirapplicationwillgiverisetoasignificantimpact.


1.generalinformation

notestotheconsolidatedfinancialstatements

44 Annualreport2012

Thestandards,amendmentsofstandards,and interpretationspublishedbythe IASB(InternationalAccountingStandardsBoard)asat30September2012whichbecomeeffectiveforfuturefinancialperiodsinclude:

− Amendments to IAS12 ‘Deferredtax:RecoveryofUnderlyingAssets’applicablefor financialperiodsbeginningonorafter1January2012;

− Amendments to IAS1 ‘Presentationof ItemsofOtherComprehensive Income’applicable forfinancialperiodsbeginningonorafter1July2012;

− AmendmentstoIAS19‘EmployeeBenefits’applicableforfinancialperiodsbeginningonorafter1January2013;

− IFRS9‘FinancialInstruments’applicableforfinancialperiodsbeginningonorafter1January2015;

− IFRS10‘ConsolidatedFinancialStatements’applicableforfinancialperiodsbeginningonorafter1January2013;

− IFRS11 ‘JointArrangements’applicablefor financialperiodsbeginningonorafter1January2013;

− IFRS12‘DisclosuresofInterestsinOtherEntities’applicableforfinancialperiodsbeginningonorafter1January2013;

− IAS27(revised)‘SeparateFinancialStatements’applicableforfinancialperiodsbeginningonorafter1January2013;

− IAS28(revised)‘InvestmentsinAssociatesandJointventures’applicableforfinancialperiodsbeginningonorafter1January2013;

− IFRS13‘FairvalueMeasurement’applicableforfinancialperiodsbeginningonorafter1January2013;

− IFRIC20‘StrippingCostsintheProductionPhaseofaSurfaceMine’applicableforfinancialperi-odsbeginningonorafter1January2013;

− Amendments to IFRS 7 ‘Financial Instruments Disclosures - Offsetting Financial Assets andFinancialLiabilities’applicableforfinancialperiodsbeginningonorafter1January2013;

− Amendments to IAS32 ‘Financial InstrumentsPresentation-OffsettingFinancialAssetsandFinancialLiabilities’applicableforfinancialperiodsbeginningonorafter1January2014;

− AmendmentstoIFRS1‘GovernmentLoans’applicableforfinancialperiodsbeginningonorafter1January2013;

− variousamendments‘ImprovementstoIFRS(2009-2011)’applicableforfinancialperiodsbegin-ningonorafter1January2013;

− AmendmentstoIFRS10,IFRS11,andIFRS12‘TransitionGuidance’applicableforfinancialperi-odsbeginningonorafter1January2013.

WiththeexceptionofIFRS9andtheamendmentstoIAS19,theBankwillapplythestandardsandinterpretationssetoutabovewhentheybecomeapplicableanddoesnotexpectthattheirapplicationwillgiverisetoasignificantimpact.


Bankdegroof 45

AsregardsIFRS9whichintroducesnewrequirementsrelatedtotheclassificationandvaluationoffinancialassets,itsimplementationcouldgiverise,dependingonthechoicesmade,toachangeinthelocationwhereprofitsandlossesarerecorded(resultsorshareholders’equity).Otherfinancialimpactsshouldnotbesignificant.Nodecisionhasbeentakenastothedateonwhichthestandardwillbeadopted.InrespectoftheamendmentstoIAS19,theobjectiveofwhichistoremedycertainexistingprovi-sionsrelatingtodefinedbenefitplans,inviewoftheireffectivedate(BankDegroofwilladoptthemduringtheyearending30September2014),theanalysisoftheimpactoftheamendmentsontheresultandfinancialpositionofBankDegroofwillbeperformedatalaterdate.

WiththeexceptionoftheamendmentstoIAS1andIAS19,allothermodificationsorrevisionsofstandards,variousamendmentsorinterpretationshavenotbeenadoptedbytheEuropeanUniontodate.ItshouldbenotedthattheAccountingRegulatoryCommittee1(ARC)hasproposedthattheapplicabilitydatesforIFRS10,IFRS11,IFRS12,IAS27(revised)andIAS28(revised)bedeferreduntil1January2014.

3.summaryofaccountingpoliciesandmethods

Intheaccountingpoliciesandmethodssetoutbelow,theterm“gainsandlossesrecognizedinequity”relatestothosegainsandlossesthatshouldspecificallyberecordedinothercomprehensiveincomeinaccordancewithIFRS.

3.1consolidationprinciples

SCOPEOFCONSOLIDATIONTheconsolidatedfinancialstatementscomprisethefinancialstatementsoftheparentcompanyandthoseofitssubsidiariesthatexceedamaterialitythreshold.Subsidiariesareanyentitiesthatarecon-trolledbyBankDegroof(i.e.entitiesinwhichtheBankholds,directlyorindirectly,thepowertoman-agethefinancialandoperatingactivitiesinordertoobtainbenefitsfromtheseactivities).Themate-rialitythresholdisbasedonananalysisofvariouscriteria,includingthegroup’sshareofconsolidatedshareholders’equity,thegroup’sshareoftheconsolidatedresultandthegroup’sshareofthetotalconsolidatedassets.SubsidiariesarefullyconsolidatedasfromthedateonwhicheffectivecontrolpassestoBankDegroof.Theyarede-consolidatedfromthedatesuchcontrolceases.Theaccountsoftheparentcompanyanditssubsidiariesarepreparedasatthesamedateusingsimilaraccountingpolicies,withadjustmentsbeingrecordedifnecessary.Intra-groupbalances,transactions,incomeandchargesareeliminated.Minorityinterestsarepresentedseparatelyintheconsolidatedresultsandwithinshareholders’equityintheconsolidatedbalancesheet.

JOINTVENTURESJointventuresarethoseentitiesinwhichBankDegroofholdseitherdirectorindirectjointcontrol,i.e.nostrategic,financialandoperatingdecisioncanbetakenwithouttheunanimousagreementofthepartiessharingcontrol.

1TheroleoftheCommitteeistoprovideregulatoryadviceinrespectofproposalsoftheEuropeanCommissiononadoptinginternationalaccountingstandards.

46 Annualreport2012

Notes to the coNsolidated fiNaNcial statemeNts

Wheresuchjointventuresexceedthematerialitythreshold,theyareaccountedforundertheequitymethodas from thedateonwhich joint control commencesuntil thedateonwhich joint controlceases.Thematerialitythresholdisbasedonananalysisofvariouscriteria,includingthegroup’sshareofconsolidatedequity,thegroup’sshareoftheconsolidatedresultandthegroup’sshareofthetotalconsolidatedassets.Theaccountsofthejointventuresarepreparedasatthesamedateandusingsimilaraccountingpol-iciestothoseusedbytheparentcompanyofthegroup,withadjustmentsbeingrecordedifnecessary.

ASSOCIATESAssociatesarethoseentitiesoverwhichBankDegroofhassignificantinfluence(i.e.thepowertotakepartinfinancialandoperatingpolicydecisions,butnot(joint)controloverthesepolicies).Whereassociatesexceedthematerialitythreshold,theyareaccountedforundertheequitymethodasfromthedatethatsignificantinfluencecommencesuntilthedateonwhichsignificantinfluenceceases.Thematerialitythresholdisbasedonananalysisofvariouscriteria,includingthegroup’sshareoftheconsolidatedshareholders’equity,thegroup’sshareoftheconsolidatedresultandthegroup’sshareofthetotalconsolidatedassets.Thefinancialstatementsoftheassociatearepreparedasatthesamedateandusingsimilaraccountingpoliciesasappliedbytheparentcompanyofthegroup,withadjustmentsbeingrecordedifnecessary.

3.2translationofforeigncurrencies

CONVERSIONOFACCOUNTSINFOREIGNCURRENCIESOnconsolidation,thebalancesheetsofentitieshavingafunctionalcurrencydifferentfromthatofBankDegroof(EUR)aretranslatedattheexchangerateprevailingattheyear-end.Theincomestate-mentsandthecashflowstatementsforthesameentitiesaretranslatedattheaverageexchangeratefor the financial period. Exchange differences arising on translation are recorded in shareholders’equity.Goodwillandfairvalueadjustmentsarisingfromtheacquisitionofforeignentitiesareconsideredtobetheassetsandliabilitiesoftheacquiredentityandare,therefore,translatedattheexchangerateprevailingattheyear-end.Exchangedifferencesarisingontranslationarerecordedinshareholders’equity.Intheeventofthedisposalof theabove-mentionedentities, theexchangedifferencespreviouslyrecordedinshareholders’equityareincludedinthecalculationofthegainorlossarisingonthedis-posal,andarerecordedintheincomestatement.TRANSLATIONOFFOREIGNCURRENCYTRANSACTIONSTransactionsinforeigncurrenciesrecordedinthestand-alonefinancialstatementsofBankDegroofentitiesareaccountedforattheexchangerateprevailingonthetransactiondate.Monetaryassetsandliabilitiesaretranslatedattheexchangerateprevailingattheyear-end,givingrisetoatranslationdifferencethatisrecordedintheincomestatement.Non-monetaryitemsvaluedatfairvaluearetranslatedattheexchangerateprevailingattheyear-end.Exchangedifferencesarisingontranslationarerecordedeitherinshareholders’equityorintheincomestatementdependingontheaccountingtreatmentoftheiteminquestion.Othernon-monetaryitemsarevaluedathistoricexchangerates(i.e.theexchangerateprevailingonthetransactiondate).

Bankdegroof 47

3.3financialinstruments

3.3.1 Recognition date for financial instrumentsAllderivativesandallpurchasesandsalesofsecuritiesundercontractswhichrequirethedeliveryofthesecuritiesbyadeadlinedefinedbyregulationorbymarketconvention,arerecognizedonthetransactiondate.Receivablesanddepositsarerecognizedonthesettlementdate.

3.3.2 OffsettingFinancialassetsandliabilitiesareoffsetwhen,andonlywhen,BankDegroofhasalegallyenforceablerighttooffsettheamountsinquestion,andifitintendstosettleonanetbasisortorealizetheassetandtosettletheliabilitysimultaneously.

3.3.3 Financial assets and liabilities held for tradingFinancial assets or liabilities held for trading are financial assets or liabilities acquired or assumedmainlywithaviewtoasaleorrepurchaseintheshortterm,orwhichformpartofaportfoliooffinan-cial instrumentswhicharemanagedtogetherandwhichpresent indicationsofarecentshort-termprofit-takingprofile.Suchassetsand liabilitiesare initiallyrecognizedatfairvalue(excludingtransactioncoststhatarechargeddirectlyto income)andaresubsequentlymeasuredatfairvalue.Changes infairvaluearerecordedintheincomestatementunder‘netresultonfinancialinstrumentsheldfortrading’.Interestreceived or paid on non-derivative instruments is recorded under ‘interest income’ or ‘interestexpenses’.Dividendsreceivedarerecordedunder‘dividendincome’.Allderivativefinancialinstrumentshavingapositive(negative)replacementvalueareconsideredasfinancialassets(liabilities)heldfortrading,withtheexceptionofderivativesthatqualifyashedginginstruments.Derivativesheldfortradingareinitiallyrecognizedatfairvalue,andaresubsequentlymeasuredatfairvalue.Changesinfairvalue,includingaccruedinterest,arerecordedunder‘netresultonfinancialinstrumentsheldfortrading’.

3.3.4 Financial assets and liabilities designated at fair value through profit or lossThe designation of financial assets and liabilities at fair value through profit or loss (or fair valueoption)ismadeatthetimeoftheinitialrecognitionofthefinancialinstrument,withduerespectforthefollowingcriteria:

− thedesignationeliminates,orsignificantlyreduces,aninconsistencyinthemeasurementorrec-ognition(sometimesreferredtoas‘anaccountingmismatch’)thatwouldotherwiseariseifsuchadesignationhadnotbeenmade;or

− agroupoffinancialassets,financialliabilities,orbothismanaged,anditsperformanceisevalu-ated,onafairvaluebasisinaccordancewithanappropriatelydocumentedriskmanagementorinvestmentstrategy;or

− thefinancialinstrumentcontainsanembeddedderivativethatisnotcloselyrelatedtoit.

Thechoiceofthefairvalueoptioncannotbereversedoncetheassetorliabilityhasbeenrecognizedinthebalancesheet.Thesamemeasurementrulesapplytothiscategoryofassetsandliabilitiesasthosethatapplytothe‘financialassetsandliabilitiesheldfortrading’category.Financialassetsandliabilitiesdesignatedatfairvaluethroughprofitandlossarevaluedinthesamemanneras financialassetsand liabilitiesheld for trading.Thesameheadingsas thosedefined forfinancialassetsorliabilitiesheldfortradingareusedforrecordinginterestanddividends.Changesinfairvalueare,however,recordedunder‘netresultonfinancialinstrumentsdesignatedatfairvaluethroughprofitorloss’.


48 Annualreport2012


3.3.5 Loans and receivablesLoansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquoted inanactivemarket.Loansand receivablesare initially recognizedat fair value (includingtransactioncosts if theyare significant),andare subsequentlymeasuredatamortizedcostusing theeffectiveinterestmethodcorrectedforanyimpairmentlosses.Theeffectiveinterestrateistheratethatexactly discounts estimated future cash payments or receipts over the expected life of the financialinstrumentor,whenappropriate,ashorterperiodinordertoobtainthenetcarryingamountofthefinan-cialassetorfinancialliability.Theamortizedcostcalculatedusingtheeffectiveinterestmethodincludesallfeesandpointspaidorreceived,aswellascommissionsandtransactioncoststhatareanintegralpartoftheeffectiveinterestrate,iftheyaresignificant.Amortizationundertheeffectiveinterestmethodisrecordedintheincomestatement under ‘interest income’. Impairments are recorded in the income statement under ‘impair-ments’.Loansandreceivablesconsistprincipallyofinterbankandclientloansandreceivables.

3.3.6 Held-to-maturity investmentsHeld-to-maturityinvestmentsarenon-derivativefinancialassetswithfixedordeterminablepaymentsandfixedmaturitiesthatBankDegroofhasthepositiveintentandabilitytoholdtomaturity.Held-to-maturityfinancialassetsarerecognizedinitiallyatfairvalue(includingtransactioncostsiftheyaresignificant),andsubsequentlyatamortizedcostusingtheeffectiveinterestmethod,lessanyimpair-mentlosses.Amortizationundertheeffectiveinterestmethodisrecordedintheincomestatementunder‘interestincome’.Impairmentsarerecordedintheincomestatementunder‘impairments’.

3.3.7 Available-for-sale financial assetsAvailable-for-sale financial assets are those non-derivative financial assets that are designated asavailable-for-saleorarenotclassifiedinoneoftheabove-mentionedcategories.Theseassetsarerec-ognizedinitiallyatfairvalue(includingtransactioncostsiftheyaresignificant),andaresubsequentlymeasuredatfairvalue.Allfluctuationsinfairvaluearerecordedunderaspecificcaptioninsharehold-ers’equity.Uponthederecognitionoftheasset,ortherecognitionofanimpairmentloss,thecumu-lativegainorlosspreviouslyrecordedinshareholders’equityarerecordedintheincomestatementunder‘netresultonfinancialinstrumentsnotdesignatedatfairvaluethroughprofitorloss’,orinthecaseofimpairment,under‘impairments’.Income from interest-bearing instruments accounted for under the effective interest method, isrecordedunder‘interestincome’.Dividendsreceivedarerecordedunder‘dividendincome’.Theavailable-for-salefinancialassetscompriseprimarilyfixedincomeorvariable incomesecuritieswhicharenotpartoffinancialassetsheldfortradingdesignatedatfairvaluethroughprofitorloss,financialassetsheldtomaturity,orloansandreceivables.

Bankdegroof 49

3.3.8 Other financial liabilitiesOtherfinancialliabilitiescompriseallothersubordinatedandunsubordinatedfinancialdebts(exceptderivatives)thatarenotclassifiedasheldfortradingorasdesignatedatfairvaluethroughprofitorloss.Otherfinancialliabilitiesarerecognizedinitiallyatfairvalue(plustransactioncosts,ifsignificant),andsubsequentlyatamortizedcostusingtheeffectiveinterestmethod.Accruedinterest(includinganydifferencebetweentheredemptionamountandthenetamountreceived)arerecorded,usingtheeffectiveinterestmethod,intheincomestatementunder‘interestexpenses’.

3.3.9 Fair value of financial instrumentsThefairvalueistheamountforwhichanassetmaybeexchanged,oraliabilitysettled,betweenknowledgeable, willing parties in an arm’s length transaction. The fair value is determined byreferencetoquotedpricesonanactivemarket(quotationsestablishedbyastockexchange,bro-ker,oranyothersourcerecognizedbyinvestors).Wherenomarketexistsormarketpricesarenotavailable,valuationtechniquesareused.Suchtechniquesmakemaximumuseofmarketinputs,ofcurrentlyusedcalculationmethods,aswellasaseriesofotherfactorsincludingtimevalueandcredit and liquidity risk. The fair value estimated in this manner is affected by the data used.valuationtechniquesinclude,inparticular,discountedcashflowanalysis,referencetothecurrentfairvalueofanotherinstrumentthatissubstantiallythesame,optionpricingmodels,andotherappropriatevaluationmodels.Atthetimeofinitialrecognition,thevalueofafinancialinstrumentisthetransactionprice(i.e.thefairvalueoftheconsiderationgivenorreceived),unlessthefairvalueofthatinstrumentisevidencedbycomparisonwithotherobservablecurrentmarkettransactionsinthesameinstru-ment,orbasedonavaluationtechniquethevariablesofwhichonlyincludedatafromobservablemarkets.Intherarecaseswherethefairvaluecannotbereliablydetermined,thefinancialinstru-mentwillbevaluedatcost.

Indeterminingthefairvalueoffinancialinstruments,theBankusesmainlythefollowingvaluationtechniques:

ACTIVEMARKETThefinancialinstrumentsarevaluedatfairvaluebyreferencetothepricesquotedonanactivemarketifsuchpricesarereadilyavailable.quotedsecuritiesandderivativesonorganizedmarkets(futuresandoptions)arevaluedinthisway.Forover thecounterderivatives, interest rateswaps,optionsandforeignexchangecontracts, thevaluation is calculated using widely recognized models (discounted cash flow analysis, Black andScholesmodel,etc.)whichapplyobservablemarketdata.Forvaluationsusing‘mid-market’pricesasabasisforestablishingfairvalues,apriceadjustmentisapplied,byriskposition,tothenetopenpositionusingthebidoraskingpriceasappropriate.

ABSENCEOFACTIVEMARKETMostderivativesaretradedonactivemarkets.Wherethepriceofatransactiononaninactivemarketdoesnotcorrespondtothefairvalueofotherobservablecurrentmarkettransactions inthesameinstrumentorthevaluationobtainedusinganinternalmodelbasedonobservablemarketdata,thedifferenceisrecordeddirectlyintheincomestatement.Where,however,thisdifference(commonlyknownas‘Day1profitandloss’)isgeneratedbyavalu-ation model whose parameters are not all basedon observable market data, it is recorded in theincomestatementoverthelifeofthetransaction,ordeferreduntilthedateonwhichtheinstrumentisderecognized.Inallcases,anyunrecognizeddifferencesareimmediatelyrecordedintheincomestatementifparametersthatwerenotoriginallyobservablelaterbecomeso,orwherethefairvalue

canbedeterminedbyreferencetoapricequotedonanactivemarketinvolvingthesameinstrument.Foralltransactions,theappropriatemethodforrecordingthedifferenceintheincomestatementisdeterminedonacasebycasebasis.

ABSENCEOFACTIVEMARKET–EQUITYINSTRUMENTS(UNQUOTEDSHARES)Intheabsenceofanytradingpricerecentlyrealizedundernormalmarketconditions,thefairvalueoftheunquotedsharesisestimatedusingrecognizedvaluationtechniquessuchasdiscountedcashflowanalysis,applyingstockmarketmultiplesforcomparablecompanies,andthenetassetvaluemethod.Thecarryingamountofshorttermfinancialinstrumentscorrespondstoareasonableapproximationoftheirfairvalue.

3.3.10 Embedded derivativesAnembeddedderivativeisdefinedasacomponentofacomposite(hybrid)instrumentwhichincludesbothaderivativefinancialinstrumentandanon-derivativehostcontract.

Anembeddedderivativeshouldbeseparatedfromthehostcontractandaccountedforasaderivativewhen:

− the economic risks and characteristics of the embedded derivative are not closely related tothoseofthehostcontract;

− aseparateinstrumentwiththesametermsastheembeddedderivativewouldmeetthedefinitionofaderivative;

− thehybrid(composite)instrumentisnotheldfortrading.

This(embedded)derivativeisvaluedatfairvaluethroughprofitorlossinthesamemannerasastand-alonederivative.Thehostcontractisaccountedforandvaluedaccordingtotheprinciplesgoverningthecategorytowhichitbelongs.Insofarastheseparationoftheembeddedderivativeispermitted(seeabove),theentirehybridcon-tractcanbedesignatedasafinancialassetorliabilityatfairvaluethroughprofitorloss.If,however,itisnotpossibletoseparatelyvaluetheembeddedderivative,theentirehybridcontractmustbedes-ignatedasafinancialassetorliabilityatfairvaluethroughprofitorloss.

3.3.11 Derecognition of financial instrumentsAfinancialassetisderecognizedwhen:

− thecontractualrightstothecashflowsattachedtothefinancialassetexpire;or− theBankhastransferredalmostallrisksandrewardsattachedtotheownershipofthisfinancial

asset.IftheBankneithertransfersnorkeepssubstantiallyalltherisksandrewardsattachedtotheownershipofthefinancialasset,itisderecognizedwhencontrolofthefinancialassetisnotretained.Inthecontrarycase,theBankmaintainsthefinancialassetonthebalancesheettotheextentthatitcontinuestobeinvolvedwiththeasset.

Afinancialliabilityisderecognizediftheliabilityhasexpired,i.e.whentheobligationsetoutinthecontractiscancelledorexpires.

conditionsdedécomptabilisation


50 Annualreport2012


canbedeterminedbyreferencetoapricequotedonanactivemarketinvolvingthesameinstrument.Foralltransactions,theappropriatemethodforrecordingthedifferenceintheincomestatementisdeterminedonacasebycasebasis.

ABSENCEOFACTIVEMARKET–EQUITYINSTRUMENTS(UNQUOTEDSHARES)Intheabsenceofanytradingpricerecentlyrealizedundernormalmarketconditions,thefairvalueoftheunquotedsharesisestimatedusingrecognizedvaluationtechniquessuchasdiscountedcashflowanalysis,applyingstockmarketmultiplesforcomparablecompanies,andthenetassetvaluemethod.Thecarryingamountofshorttermfinancialinstrumentscorrespondstoareasonableapproximationoftheirfairvalue.

3.3.10 Embedded derivativesAnembeddedderivativeisdefinedasacomponentofacomposite(hybrid)instrumentwhichincludesbothaderivativefinancialinstrumentandanon-derivativehostcontract.

Anembeddedderivativeshouldbeseparatedfromthehostcontractandaccountedforasaderivativewhen:

− the economic risks and characteristics of the embedded derivative are not closely related tothoseofthehostcontract;

− aseparateinstrumentwiththesametermsastheembeddedderivativewouldmeetthedefinitionofaderivative;

− thehybrid(composite)instrumentisnotheldfortrading.

This(embedded)derivativeisvaluedatfairvaluethroughprofitorlossinthesamemannerasastand-alonederivative.Thehostcontractisaccountedforandvaluedaccordingtotheprinciplesgoverningthecategorytowhichitbelongs.Insofarastheseparationoftheembeddedderivativeispermitted(seeabove),theentirehybridcon-tractcanbedesignatedasafinancialassetorliabilityatfairvaluethroughprofitorloss.If,however,itisnotpossibletoseparatelyvaluetheembeddedderivative,theentirehybridcontractmustbedes-ignatedasafinancialassetorliabilityatfairvaluethroughprofitorloss.

3.3.11 Derecognition of financial instrumentsAfinancialassetisderecognizedwhen:

− thecontractualrightstothecashflowsattachedtothefinancialassetexpire;or− theBankhastransferredalmostallrisksandrewardsattachedtotheownershipofthisfinancial

asset.IftheBankneithertransfersnorkeepssubstantiallyalltherisksandrewardsattachedtotheownershipofthefinancialasset,itisderecognizedwhencontrolofthefinancialassetisnotretained.Inthecontrarycase,theBankmaintainsthefinancialassetonthebalancesheettotheextentthatitcontinuestobeinvolvedwiththeasset.

Afinancialliabilityisderecognizediftheliabilityhasexpired,i.e.whentheobligationsetoutinthecontractiscancelledorexpires.



Bankdegroof 51

3.4hedgeaccounting

Hedgingaimstoreduceoreliminateexposuretofluctuationsinexchangerates,interestratesorpricesthroughtheuseofderivativeornon-derivativefinancialinstruments.Foraninstrumenttoqualifyashedgeaccounting,andinordertoestablishtherelationshipbetweenthehedginginstrumentandthehedgeditem,thefollowingconditionsneedtobemet:

− formaldocumentationofthehedginginstrumentandthehedgeditemortransactiontobecov-ered,describingthehedgingrelationship,thestrategyandthenatureofthehedgedriskandhowtheeffectivenessofthehedgingrelationshipwillbeassessed;

− demonstratingthatthehedgewillbehighlyeffectiveinoffsettingthechangesinfairvalueorcashflowsattributabletothehedgedrisk,atinceptionandduringsubsequentperiods;

− theeffectivenessofthehedgecanbereliablymeasured;and− assessingtheeffectivenessofthehedgeonanon-goingbasis(retrospectiveandprospective

effectivenesstests)atleastateachfinancialyear-enduntilthematurityofthehedge.

Theaccountingtreatmentofhedginginstrumentsdependsonwhichofthefollowingcategoriestheyareclassifiedunder:

FAIRVALUEHEDGEChangesinthefairvalueofthederivativeorofthenon-derivativehedginginstrumentdesignatedandqualifyingasafairvaluehedgearerecordedintheincomestatementundertheheading‘netincomeofhedgeaccounting’togetherwiththechangesinfairvalueofthehedgedassetsorliabilitiesattributabletothehedgedrisk.Wherethehedgenolongersatisfiestheconditionsforhedgeaccounting,theaccu-mulatedadjustmentrecordedinthebalancesheetinrespectofthehedgeditem,inthecaseofaninter-est-bearingfinancialinstrument,isamortizedovertheresiduallifeofthehedgeditemintheformofanadjustmenttotheeffectiveinterestrate.Iftheinterestrateriskonaportfolioofinstrumentsishedged,theadjustmentisamortizedonastraight-linebasis.Inthecaseofanon-interestbearingfinancialinstru-ment,theaccumulatedadjustmentonthehedgeditemisrecordedintheincomestatementonlyuponmaturity(orderecognition)ofthehedgeditem.

CASHFLOWHEDGESTheeffectivepartofchanges inthefairvalueofderivativesdesignatedandqualifyingascashflowhedgesisdeferredinshareholders’equityunder‘revaluationreserves’.Theineffectivepartofchangesinthefairvalueisrecordeddirectlyintheincomestatement.Gainsandlossespreviouslyrecordedinequityaretransferredtotheincomestatementandrecognizedinincomeorexpenseovertheperioddur-ingwhichthehedgedinstrumentimpactstheresult.Ifthehedgingrelationshipisbrokenorifthehedgenolongermeetstheconditionsforhedgeaccounting,theaccumulatedamountsrecordedinsharehold-ers’equityaremaintainedinshareholders’equityuntiltheforecasttransactionimpactsontheincomestatement.Onceitisforeseenthattheforecasttransactionwillnolongertakeplace,theseamountsareimmediatelyrecordedintheincomestatement.

HEDGEOFANETINVESTMENTINAFOREIGNENTITYThehedgingof anet investment in a foreignentity is accounted in the samemanner as cash flowhedges.Gainsandlossesrecordedinshareholders’equityarerecordedintheincomestatementatthetimeofdisposalorliquidationoftheforeignentity.

conditionsàrespecter

52 Annualreport2012


3.5leasingcontracts

Aleasingcontractqualifiesasafinanceleasewhenthecontracttransferssubstantiallyalloftherisksandrewardsofownershipoftheasset.Anoperatingleaseisanyleasingcontractotherthanafinancelease.

AGROUPENTITYASTHELESSEEINALEASECONTRACTForoperatingleases,theleasedassetisnotrecognizedinthebalancesheetandtheleaserentalpay-mentsarerecordedintheincomestatementonastraight-linebasisoverthelifeoftheleasecontract.Forfinanceleases,theleasedassetiscapitalizedandaccountedforatthelowerofitsfairvalueorthepresent valueof theminimumcontractual leasepayments.Theasset isdepreciatedusing the samedepreciationratesasforassetsofasimilarnature,overtheshorterofthecontractperiodanditsusefullife.Therelateddebtisrecognizedinliabilitiesasafinancialdebt.Thefinancialexpenseisrecognizedintheincomestatementovertheperiodcoveredbytheleasecontractsoastoobtainaconstantperiodicinterestrateontheremainingbalanceoftheliability.

AGROUPENTITYASTHELESSORAssetsleasedunderanoperatingleasecontractareaccountedforinthebalancesheetasfixedassetsanddepreciatedusingthesamedepreciationratesasforassetsofasimilarnature.Theleaserevenuesarerecordedinincomeonastraight-linebasisoverthelifeoftheleasecontract.Forfinanceleases,thepresentvalueoftheminimumpaymentsplus,whereapplicable,theresidualvalueoftheasset,isrecognizedasareceivableandnotasafixedasset.Thefinancialincomefromthefinanceleaseisspreadoverthelifeofthecontractbasedonatablereflectingaconstantrateofreturnonthenet-investmentinthecontract.

3.6propertyandequipment(includinginvestmentproperty)

Propertyandequipmentarerecordedatacquisitioncost(includingdirectlyattributableexpenses)less accumulated depreciation and any impairment losses. Bank Degroof applies the componentmethodoffixedassetaccounting(mainlyforbuildings)andthedepreciableamountofanasset isdeterminedafterdeductionofitsresidualvalue.Depreciationiscalculatedonastraight-linebasis,accordingtotheusefullifesoftheassetsconcerned.

Theusefullifesappliedare:

NATUREOFTHEFIxEDASSETORCOMPONENT USEFULLIFE

Land Infinite

Buildings 40to50years

Technicalequipment 10years

Generalequipment 20years

Finishing 5to10years

IT/telecomequipment 4years

Miscellaneousequipment 5years

Officefurniture 10years

vehicles 4years

Bankdegroof 53

Landandworksofarthaveanindefiniteusefullifeandare,therefore,notdepreciated,butcanbesub-jecttoimpairmentlosses.Ateachfinancialyear-end,whereanindicationofanykindexiststhatatangibleassetmighthavesuf-feredimpairment,animpairmenttest(comparingthenetcarryingamountoftheassetwithitsrecover-ableamount)isperformed.Animpairmentlossisrecordedwhenthecarryingamountofthefixedassetishigherthanitsestimatedrecoverableamount.Theusefullifesandresidualamountsoftangiblefixedassetsarereviewedateachfinancialyear-end.Investmentpropertiesarepropertiesheldtoearnrentalsand/orforcapitalappreciation.Wherethepartofapropertyusedbythebankforitsownaccountcanbedisposedofseparatelyorleasedviaafinancelease,thispartisaccountedforasatangiblefixedasset.Otherwisethepropertyisregardedasaninvest-mentpropertyifthepartusedbythebankforitsownaccountrepresentsonlyaninsignificantpartofthetotalinvestment.

3.7intangibleassetsAn intangibleasset isan identifiablenon-monetaryasset thathasnophysical substance.Suchanassetisrecordedinitiallyatcostifitisdeemedthatitwillproducefutureeconomicbenefitsandiftheacquisitioncostofthisassetcanbereliablydetermined.Intangibleassetsconsistmainlyofsoftwareacquiredordevelopedinternallyaswellasbusinessactiv-ities(‘fondsdecommerce’)whichhavebeenpurchased,oracquiredinthecontextofbusinesscom-binations.Purchasedsoftwareisamortizedonastraight-linebasis,dependingonitsnature,overusefullifesofthreetofiveyears,asfromthetimeitbecomesusable.Softwaremaintenancecostsarechargedtotheincome statement as incurred.Expenditure to improve thequalityof the softwareorwhichhelpsextenditsusefullifeis,however,addedtotheinitialacquisitioncost.Developmentcostsofinternally-generated softwareareamortizedona straight-linebasisover theperiodduringwhich thegroupexpectstobenefitfromtheasset.Researchcostsareexpenseddirectlyasincurred.Businessactivities(‘fondsdecommerce’)areamortizedonastraight-linebasisovertheirexpecteduse-fullifes.Theseusefullifesgenerallydonotexceed20years.Ateachfinancialyear-end,wherethereisanindicationthatanintangibleassetmighthavesufferedimpairment,animpairmenttest(comparingthenetcarryingamountoftheassetwithitsrecoverableamount)isperformed.Animpairmentlossisrecognizedwhenthecarryingamountoftheassetishigherthanitsestimatedrecoverableamount.Intangibleassetsarerecordedatcostlessaccumulatedamortizationandimpairmentlosses.Theuse-fullifesandresidualvaluesofintangiblefixedassetsarereviewedateachfinancialyear-end.

GOODWILLGoodwillariseswhenasubsidiary,jointventureorassociateisacquired.Goodwillrepresentsthediffer-encebetweentheacquisitioncost(includingcostsdirectlyattributabletobusinesscombinations)andthe(IFRS-restated)equityoftheacquiredentities,i.e.afterrecognizingatfairvalue(viashareholders’equity)allidentifiableassetsandliabilitiesinaccordancewithIFRS.Wherethedifferenceispositive,itisrecordedinthebalancesheetasanintangibleasset.Whereitisnegative,itiscreditedtotheincomestatementafterverifyingthevaluationofallidentifiableassetsandliabilities.Subsequently,eachrecordedelementwillbevaluedusingthesameaccountingpoliciesappliedtoassetsofasimilarnature.Afterinitialrecognition,positivegoodwillisvaluedatcost,lessaccumulatedimpairmentlosses.Goodwillisnotamortized,butistestedannuallyforimpairment,ormoreoftenifeventsorchangesincircumstanceindicatethatitmayhavesufferedimpairment.Inordertotestforimpairment,andgiventhatgoodwilldoesnotgenerateindependentcashflows,theimpairmenttestisappliedtoeachcashgeneratingunitwhichexpectstobenefitfromthesynergiesresultingfromthebusinesscombination.Thecashgenerat-ingunitscanbealegalentityorasectorofactivity,determinedbasedongeographiccriteriaoramixtureofabove-mentionedelements.

Achangeinthepercentageholdinginasubsidiary(i.e.anentityalreadycontrolledbyBankDegroof)is,however,consideredasatransactionbetweenshareholders.Asaresult,ifthetransactiondoesnotresultinachangeinconsolidationmethod,noadjustmentisrecordedandthedifferencebetweentheacquisi-tionorsalespriceandthecarryingamountoftheequityacquiredordisposedisrecordeddirectlyinshare-holders’equity.Whenabusinesscombinationtakesplaceinstages,goodwilliscalculatedafterhavingrevaluedthesharespreviouslyheldintheacquiredcompanytotheirfairvalueatthedateoftheadditionalacquisition.Anyprofitorlossgeneratedbythisrevaluationisaccountedforintheincomestatement.

3.8otherassetsOtherassetscompriseprimarily incomereceivable(excluding interest),deferredchargesandotherdebtors.Alsoincludedinthisbalanceareamountsreceivablefromemployeesandanyexcessinthefairvalueofpensionplanassetsoverthecurrentvalueofthedefinedbenefitobligation(accountedforinaccordancewithIAS19).

3.9impairmentsAnimpairmentlossisrecordedwheneverthecarryingvalueofanasset(netofanydepreciation/amortiza-tion)ishigherthanitsrecoverableamount.Ateachfinancialyear-end,BankDegroofassesseswhetherthereisanyindication(i.e.aloss-generatingevent)thatanassetmayhavelostvalue.Wheresuchanindicationexists,animpairmenttestiscarriedoutand,whereappropriate,an impairment loss isrecordedthroughthe incomestatement.Evenwherenoobjectiveindicationexistsofimpairment,suchanexaminationiscarriedout,atleasteveryyearatthesamedate,inrespectofintangibleassetswithindefiniteusefullifesandofgoodwill.

FINANCIALASSETSImpairmentisrecordedonfinancialassetsorgroupsoffinancialassetswheneveranobjectiveevidenceexistsofmeasurableimpairmentresultingfromoneormoreeventsoccurringsincetheinitialrecordingoftheassetorgroupofassetsandwheneverthisloss-generatingeventhashadanimpactonthefutureestimatedcashflowsofthisassetorgroupofassets.Thefollowingindications,amongothers,areviewedasobjectiveevidenceofimpairment:

− significantfinancialdifficultiesoftheissuer;− breachofcontractsuchasadefaultordelayinthepaymentofinterestorprincipal;− thegrantingoffacilitiestotheborrowerforlegaloreconomicreasonslinkedtoitsfinancialdif-

ficulties-;− strongprobabilityofbankruptcyorfinancialrestructuring;− disappearanceofanactivemarketforthisparticularasset(asaresultoffinancialdifficulties);− otherobservabledatalinkedtoagroupofassets,suchasanunfavourablechangeintherepay-

mentbehaviourofborrowersinthegrouporanunfavourablechangeinasectorofactivitythataffectsthegroup’sborrowers;

− majororprolongeddeclineinthefairvalueofanequityinstrumentbelowitscost.

Theanalysisoftheexistenceofanyimpairmentisundertakenonanindividualbasis.Thecollectiveassessment(portfolioapproach)ofimpairmentisnotappropriatetoBankDegroof’screditactivities.Impairmentonfinancialassetsrecognizedatamortizedcostcorrespondstothedifferencebetweentheircarryingamountandthevalueofestimatedcashflows,discountedattheoriginaleffectiveinter-estrate.Wherethediscounteffectisnegligible,itisignored.Impairmentlossesarerecognizedinthe

signesdedépréciation

54 Annualreport2012


Achangeinthepercentageholdinginasubsidiary(i.e.anentityalreadycontrolledbyBankDegroof)is,however,consideredasatransactionbetweenshareholders.Asaresult,ifthetransactiondoesnotresultinachangeinconsolidationmethod,noadjustmentisrecordedandthedifferencebetweentheacquisi-tionorsalespriceandthecarryingamountoftheequityacquiredordisposedisrecordeddirectlyinshare-holders’equity.Whenabusinesscombinationtakesplaceinstages,goodwilliscalculatedafterhavingrevaluedthesharespreviouslyheldintheacquiredcompanytotheirfairvalueatthedateoftheadditionalacquisition.Anyprofitorlossgeneratedbythisrevaluationisaccountedforintheincomestatement.

3.8otherassetsOtherassetscompriseprimarily incomereceivable(excluding interest),deferredchargesandotherdebtors.Alsoincludedinthisbalanceareamountsreceivablefromemployeesandanyexcessinthefairvalueofpensionplanassetsoverthecurrentvalueofthedefinedbenefitobligation(accountedforinaccordancewithIAS19).

3.9impairmentsAnimpairmentlossisrecordedwheneverthecarryingvalueofanasset(netofanydepreciation/amortiza-tion)ishigherthanitsrecoverableamount.Ateachfinancialyear-end,BankDegroofassesseswhetherthereisanyindication(i.e.aloss-generatingevent)thatanassetmayhavelostvalue.Wheresuchanindicationexists,animpairmenttestiscarriedoutand,whereappropriate,an impairment loss isrecordedthroughthe incomestatement.Evenwherenoobjectiveindicationexistsofimpairment,suchanexaminationiscarriedout,atleasteveryyearatthesamedate,inrespectofintangibleassetswithindefiniteusefullifesandofgoodwill.

FINANCIALASSETSImpairmentisrecordedonfinancialassetsorgroupsoffinancialassetswheneveranobjectiveevidenceexistsofmeasurableimpairmentresultingfromoneormoreeventsoccurringsincetheinitialrecordingoftheassetorgroupofassetsandwheneverthisloss-generatingeventhashadanimpactonthefutureestimatedcashflowsofthisassetorgroupofassets.Thefollowingindications,amongothers,areviewedasobjectiveevidenceofimpairment:

− significantfinancialdifficultiesoftheissuer;− breachofcontractsuchasadefaultordelayinthepaymentofinterestorprincipal;− thegrantingoffacilitiestotheborrowerforlegaloreconomicreasonslinkedtoitsfinancialdif-

ficulties-;− strongprobabilityofbankruptcyorfinancialrestructuring;− disappearanceofanactivemarketforthisparticularasset(asaresultoffinancialdifficulties);− otherobservabledatalinkedtoagroupofassets,suchasanunfavourablechangeintherepay-

mentbehaviourofborrowersinthegrouporanunfavourablechangeinasectorofactivitythataffectsthegroup’sborrowers;

− majororprolongeddeclineinthefairvalueofanequityinstrumentbelowitscost.

Theanalysisoftheexistenceofanyimpairmentisundertakenonanindividualbasis.Thecollectiveassessment(portfolioapproach)ofimpairmentisnotappropriatetoBankDegroof’screditactivities.Impairmentonfinancialassetsrecognizedatamortizedcostcorrespondstothedifferencebetweentheircarryingamountandthevalueofestimatedcashflows,discountedattheoriginaleffectiveinter-estrate.Wherethediscounteffectisnegligible,itisignored.Impairmentlossesarerecognizedinthe

signesdedépréciation

Bankdegroof 55

incomestatementunder‘impairments’,withanoff-settingentrytoanallowanceaccount,inrespectofthecarryingamountoftheimpairedfinancialassets.Ifaneventsubsequenttotherecordingoftheimpairmentindicatesthattheimpairmentlossnolongerexists,oronlypartiallyexists,thepreviouslyrecordedimpairmentlossisreversedthroughthe‘impairments’headingoftheincomestatement.Onceanimpairmentlosshasbeenrecordedonanasset,interestincomeisrecognizedbasedontheinterestrateusedfordiscountingthefuturecashflows.The recoverableamountofavailable-for-sale financial assets isgenerallybasedonquotedmarketpricesor,wherethesearenotavailable,ontheexpectedcashflowsdiscountedatthecurrentmarketinterestrateforasimilarasset.Whenanobjectiveindicationofimpairmentexists,theaccumulatedlossrecordeddirectlyinshareholders’equityisremovedfromshareholders’equityandrecordedintheincomestatementunder‘impairments’.Wherethefairvalueofafixedincomesecurityonwhichanimpairmentlosshasbeenrecognizedlaterappreciatesastheresultofaneventsubsequenttotheimpairment,theimpairmentlossisreversedthroughtheincomestatementunder’impairments’.Anysubsequentrecoveryinthefairvalueofanequityinstrumentis,however,recordeddirectlyinshareholders’equity.

OTHERASSETSTherecoverableamountofanon-financialassetisthegreaterofitsfairvaluelesscoststosell,anditsvalueinuse.Thefairvaluelesscoststosellcorrespondstotheamountthatcanberealizedfromthesale of an asset under normal market conditions between informed and consenting parties, afterdeductionofthedisposalcosts.Thevalueinuseofanassetisthenetpresentvalueofthefuturecashflowsexpectedtobederivedfromthisasset.Whenitisnotpossibletoestimatetherecoverableamountofanindividualasset,theassetisattachedtoacashgeneratingunit(CGU)todetermineanyimpairmentlossesatthislevelofaggregation.

Animpairmentlossisrecordeddirectlyintheincomestatementunder‘impairments’.Whenanassethasbeenrevalued,theimpairmentlossisrecordedasareductionoftherevaluation.TheimpairmentlossofaCGUisallocatedsoastoreducethecarryingvalueoftheassetsofthisunitinthefollowingorder:

− firstly,tothegoodwillassociatedwiththeCGU;− subsequently, totheotherassetsoftheCGUproratatothecarryingamountofeachofthe

CGU’sassets.

Animpairmentlossrecognizedduringapreviousfinancialyearisreversedwhenevertherehasbeenafavorablechangeintheestimatesusedfordeterminingtherecoverableamountoftheassetsinceanimpairment losswas last recognized. In suchcases, thecarryingamountof theassetneeds tobeincreaseduptoitsrecoverableamount,withoutexceedingthecarryingamountoftheassetpriortotheimpairmentloss,i.e.aftertheapplicationofnormaldepreciation/amortizationrates.Animpairmentlossongoodwillcannotbesubsequentlyreversed.

conditionsàrespecter

56 Annualreport2012


3.10provisions

Aprovisionisrecordedwhen:

− BankDegroofhasapresentlegalorconstructiveobligationresultingfromapastevent;− itisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation;− theamountoftheobligationcanbereliablyestimated.

Whentheeffectofthetimevalueofmoneyismaterial,theprovisionisrecordedatitspresentvalue.

3.11tax

CURRENTTAXTaxassetsandliabilitiespayablecorrespondtotheamountsactuallypayableorrecoverable,deter-minedonthebasisoftheprevailingtaxregulationsandratesapplicableineachcountryinwhichthegrouphascompaniesatthefinancialyear-end,aswellastopriorperiodtaxadjustments.

DEFERREDTAXESDeferredtaxisrecognizedwheneveratemporarydifferenceexistsbetweenthefiscalvalueoftheassets and liabilities and their carrying amount. Deferred tax is recognized using the liabilitymethodwhichconsistsofcalculating,ateachfinancialyear-end,deferredtaxbasedonthecur-renttaxratesortheratesthatwillprevail(whereknown)atthetimethatthetemporarydiffer-encesreverse.

Deferredtaxliabilitiesarerecordedforalltaxabletemporarydifferences,withtheexceptionofthose:

− generatedbytheinitialrecognitionofgoodwill;− linkedtotheinitialrecognitionofanassetoraliabilityinatransactionthatisnotabusiness

combinationandthataffectsneithertheaccountingprofitnorthetaxableprofit;− associatedwithinvestmentsinsubsidiaries,associatesandjointventurestotheextentthat

thetimingofthereversalofthetemporarydifferencecanbecontrolledanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.

Deferred tax assets are recognized in respect of all tax-deductible temporary differences, taxlossescarriedforwardandunusedtaxcreditstotheextentthatitisprobablethatafuturetaxableprofitwillbeavailableagainstwhichthedifferencescanbeutilized,exceptwherethedeductibletemporarydifference:

− isgeneratedbytherecognitionofanassetoraliabilityinatransactionthatisnotabusinesscom-binationandthataffectsneithertheaccountingprofitnorthetaxableprofit;or

− relatestotheinvestmentsinsubsidiaries,associatesandjointventurestotheextentthatthisdif-ferencewillnotreverseintheforeseeablefuture.

Currenttaxpayableanddeferredtaxesarerecordedintheincomestatementastaxchargesorincome,exceptwheretheyarelinkedtoitemsrecordedinshareholders’equity(revaluationtofairvalueofavailable-for-saleassetsandderivativesdesignatedascashflowhedges),inwhichcasetheyarerecordedinshareholders’equityandsubsequentlyrecognizedinincomeproratawiththerealizedcapitalgainsorlosses.

conditionsdecomptabilisation

différencestemporelles

taxablesexceptées

différencestemporelles

taxablesexceptées

Bankdegroof 57

3.12employeebenefits

COMMITMENTSRELATEDTOPENSIONSCHEMESBankDegroofoffersvariouspensionschemes,bothdefinedcontributionanddefinedbenefit,whilerespectingnationalregulationsandpracticeinthesector.Forthedefinedcontributionschemes,wheretheBank’scommitmentconsistsofpayingthepremiums,thisamountisrecordedasanexpensefortheyear.DefinedbenefitschemesareplanswheretheBankisrequiredtopaysupplementarycontributionstotheschemesintheeventthatthelatterhaveinsufficientassetstomeetthecurrentandpastserviceobligationstoemployees.Fortheseschemes,thechargetotheincomestatementisdeterminedusingtheprojectedunitcreditmethodinsuchawayastospreadthecostofthefuturepensionovertheemployee’sexpectedworkinglife.AnyobligationoftheBankoverandabovetheassetsheldbytheschemesisrecordedasaliabilityonthebalancesheet.Allcalculationsareperformedbyanindepend-entactuary.TheBankusestheso-called‘corridor’approachtoaccountfortheactuarialgainsandlossesidentifiedduringsuchcalculations.ThisapproachallowstheBanktorecognizeasexpenseonlythatpartoftheactuarialgainsandlossesthatexceedsthe‘corridor’overtheresidualaverageperiodofserviceofitsemployees.Thepartthatexceedsthecorridorisdefinedasthehigherof10%ofthecurrentvalueofthegrossobligationand10%ofthefairvalueoftheschemeassets.

OTHERPOST-EMPLOYMENTCOMMITMENTSCertaingroupcompaniesoffertoassumeallorpartofthecostofa‘medicalcare’insurancepolicyforemployeesundercontracttothecompanyatthetimeoftheirretirement.Thegroup’sestimatedcom-mitmentisaccumulatedasaliabilityovertheemployees’yearsofserviceandisdeterminedinamannersimilartothatusedfordefinedbenefitpensionschemes.Therelevantcalculationsarealsoperformedbyanindependentactuary.

SHARE-BASEDPAYMENTTRANSACTIONSShareoptionsaregrantedtoseniormanagementandcertainemployees.Thecostofservicesrenderedisdeterminedbyreferencetothefairvalueoftheshareoptionsandisrecognizedprogressivelyoverthevestingperiodoftherightscorrespondingtotheperiodofservicesrendered.ThefairvalueofoptionsiscalculatedusingBlackandScholesvaluationtechniques.Inthecaseofequity-settledplans,thefairvalueusedisthatdefinedatthetimeoffinalacceptancebythebeneficiaries.Thenumberofoptionsis,however,updatedtoreflectonlythosethatwillprobablybeexercised.InaccordancewithIFRS2,onlyshareoptionplansmakingprovisionforsettlementinsharesissuedafter7November2002aretakenintoaccount.Theresultingchargeisrecordedintheincomestatementwithanoff-settingentrytoshareholders’equity.Forcash-settledplans,thefairvalueisrecalculatedateachfinancialyear-endinthelightofmarketdataandthenumberofoptionsexercisable.Thechargeresultingfromthisrevaluationisrecordedintheincomestatementwithanoff-settingentrytoliabilities.

58 Annualreport2012


3.13otherliabilities

Otherliabilitiesinclude,inparticular,shorttermemployeebenefits,amountsrecordedinrelationtopensionschemesandotherlongtermemployeebenefits.Thebalancealsoincludesdividendspaya-ble,chargespayable(excludinginterest),deferredincomeandotherdebts.

3.14shareholders’equityCAPITALISSUECOSTSThecostsofissuingnewsharesnotlinkedtoabusinesscombinationaredeductedfromshareholders’equity,netofanyrelatedtax.

DIVIDENDSDividendsonsharesfortheperiodarenotdeductedfromshareholders’equityatthefinancialyear-end.Detailsoftheamountofthedividendproposedtothegeneralmeetingareprovidedinthesectiononpostbalancesheetevents.

TREASURYSHARESWheneverBankDegrooforoneofitssubsidiariespurchasestreasuryshares,theacquisitionpriceisdeducteddirectlyfromshareholders’equity.Resultsgeneratedonthesaleoftreasurysharesarealsorecordeddirectlyinshareholders’equity.DividendsontreasurysharesheldbytheBankoritssubsidiariesareeliminatedandarethereforenotincludedinthetotalamountoftheproposeddistribution.

OTHERCOMPONENTSOtherelementsthatinfluenceequityincluding,amongothers,thetreatmentofoptionplansontreas-uryshares,therevaluationofcertainfinancialinstrumentstofairvalue,transactionsbetweenshare-holders, the impactof foreign currencies and consolidation entries, are explained aboveunder theappropriateheadings.

3.15interestincomeandchargesInterestincomeandchargesarerecordedintheincomestatementonall interest-bearinginstru-mentsusing theeffective interestmethod.Theeffective interest rate is the rate thatdiscountsestimatedfuturecashpaymentsorreceiptsovertheexpectedlifeofthefinancial instrumentor,whenappropriate,ashorterperiodtoobtainthenetcarryingamountofthefinancialassetorfinan-cialliability.Thecalculationofthisrateincludesallrelatedfeesandpointspaidorreceivedthatareanintegralpartoftheeffectiveinterestrate,transactioncostsandallotherpremiumsordiscounts.Transactioncostsareadditionalcostsdirectlylinkedtotheacquisition,issueorsaleofafinancialinstrument.Oncethevalueofafinancialassethasbeenreducedduetoanimpairmentloss,theinterestincomecontinuestoberecordedattheinterestrateusedfordiscountingfuturecashflowstodeterminetherecoverableamount.Interestchargesandincomefromderivativesheldfortradingarerecordedunderthesameheading(‘netresultonfinancialinstrumentsheldfortrading’)asmovementsinfairvalue.Accruedinterestisrecordedinthebalancesheetonthesameaccountasthecorrespondingfinan-cialassetorliability.

Bankdegroof 59

3.16dividends

Dividendsarerecordedoncetheshareholder‘srighttoreceivepaymentisestablished.

3.17feesandcommissionsBankDegroofrecognizesinincomefeesandcommissionsreceivedinrespectofthevariousservicesrenderedtoitsclients.Themethodofaccountingforthesefeesandcommissionsdependsonthenatureoftheservices.Commissionsforminganintegralpartoftheeffectiveinterestrateofafinancialinstrumentaregener-allytakenintoaccountwhendeterminingthisrate.Thisrelatesinparticulartocommissionsforthegrantingofloansandforopeninglinesofcredit.Commissionsforservicesprovidedoveraspecifiedperiodarerecognizedasandwhentheserviceisrendered,oronastraight-linebasisoverthedurationofthecommission-generatingtransaction.Thisappliestomanagement,administration,financialservicing,custodyandotherservicefees.Commitmentfeesoncreditlines,iftheyaresignificantandifthecustomerisexpectedtodrawdown,aredeferredandaccountedforasanadjustmenttotheeffectiveinterestrateontheloan.Otherwisetheyarerecognizedonaproratabasisoverthelifeofthecommitment.Feeslinkedtoamajorundertaking,suchasintermediaryservices,placement,performanceandbro-kerage,aredeferredandrecordedatthetimeofexecutionoftheundertaking.

3.18resultontherevaluationordisposaloffinancialinstruments

Resultsonoperationsfortradingpurposesincludeallgainsandlossesfromchangesinthefairvalueoffinancialassetsandliabilitiesheldfortrading,aswellasinterestincomeandchargesonderivativesnotqualifiedashedginginstrumentsandanyineffectivenessobservedinahedgingrelationship.(Un)realizedgainsandlosses(excludingaccruedinterestanddividends)onfinancialinstrumentsdes-ignatedatfairvaluethroughprofitor lossarerecordedintherevaluationresultsrelatingtotheseinstruments.Gainsandlossesonthesaleordisposaloffinancialinstrumentsthatarenotdesignatedatfairvaluethroughprofitorloss,orareheldfortrading,arerecordedunder‘netresultonfinancialinstrumentsnotmeasuredatfairvaluethroughprofitorloss’.

3.19cashandcashequivalentsThe term ‘cash and cash equivalents’ covers cash, balances available with central banks, currentaccountswithcreditinstitutionsandloansandadvancestocreditinstitutionsmaturingwithinthreemonthsoftheirdateofacquisition.BankDegroofpresentsthecashflowsfromitsoperatingactivitiesusingtheindirectmethod,underwhichthenetresultisadjustedfortheeffectofnon-cashtransactions,anydeferralsoraccrualsofpastor futureoperatingcash inflowsoroutflows, and incomeandexpense linked to investingorfinancingcashflows.Taxflows, interest receivedand interestpaidarepresentedtogetherwiththeoperatingactivities.Dividendsreceivedareclassifiedascashflowsfromoperatingactivities.Dividendspaidarerecordedascashflowsfromfinancingactivities.Equityinstrumentsincludedintheportfolioof‘available-for-salefinancialassets’areincludedinoperatingactivities.

4.useofJudgementandestimatesinpreparingthefinancialstatements

ThepreparationoffinancialstatementsinaccordancewithIFRSrequirestheuseofjudgementandestimates.Whilstmanagementbelievesthatithastakenintoaccountallavailableinformationinarriv-ingatthesejudgementsandestimates,therealitycanbedifferentandthesedifferencescanhaveanimpactonthefinancialstatements.

Theseestimatesandjudgementsrelateprimarilytothefollowingmatters:

− thedeterminationoffairvaluesofunquotedfinancialinstruments;− thedefinitionoftheusefullivesandresidualvaluesofintangibleandtangiblefixedassets;− theassumptionsmadeinrespectofthevaluationofcommitmentslinkedtopost-employment

benefits;− theestimationofrecoverableamountsofimpairedassets;− theassessmentofthecurrentobligationsarisingfrompasteventswhenrecordingprovisions.

5.risKmanagement

5.1generalprinciplesTheBank’sexecutivecommitteehasdefinedthegroup’sriskmanagementpolicyinaccordancewiththerisktolerancesdefinedintheBank’seconomiccapitalmodel(ICAAP1),whichhasbeenvalidatedbytheauditcommittee.

Theexecutivecommitteehasdelegatedcertainofitsresponsibilitiesforimplementingitsriskman-agementpolicytothefollowingcommittees:

− theportfoliocommitteeisresponsibleformanagingthemediumandlongtermsecuritiesport-folioforthegroupwithindefinedrisklimits;

− the almac committee is responsible for managing the group’s balance sheet and off-balancesheet assets and liabilities, inorder toprovidea stable andadequate financialmarginwithinacceptablerisklimits.Thiscommitteealsomanagestheconsolidatedliquidityrisk;

− thecreditcommitteeisresponsibleforgrantingnewcreditlinesandnewlimits(formarketoper-ations)tonon-bankingcounterparties.Italsoreviewsexistingcreditlinesandlimits;

− thelimitscommitteeisresponsibleforgrantingnewlimitsforallproductsforbankingandbro-keragecounterpartiesfortheentiregroup.Italsoreviewsexistinglimitsonaregularbasis.

Inaddition,daytodayriskmanagementandmonitoringoflimitsaremanagedbytheriskmanage-mentdepartment.Thisensuresthatmarket,liquidity,counterparty,wealthmanagementandopera-tionalrisksarefollowedup.

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60 Annualreport2012


4.useofJudgementandestimatesinpreparingthefinancialstatements

ThepreparationoffinancialstatementsinaccordancewithIFRSrequirestheuseofjudgementandestimates.Whilstmanagementbelievesthatithastakenintoaccountallavailableinformationinarriv-ingatthesejudgementsandestimates,therealitycanbedifferentandthesedifferencescanhaveanimpactonthefinancialstatements.

Theseestimatesandjudgementsrelateprimarilytothefollowingmatters:

− thedeterminationoffairvaluesofunquotedfinancialinstruments;− thedefinitionoftheusefullivesandresidualvaluesofintangibleandtangiblefixedassets;− theassumptionsmadeinrespectofthevaluationofcommitmentslinkedtopost-employment

benefits;− theestimationofrecoverableamountsofimpairedassets;− theassessmentofthecurrentobligationsarisingfrompasteventswhenrecordingprovisions.

5.risKmanagement

5.1generalprinciplesTheBank’sexecutivecommitteehasdefinedthegroup’sriskmanagementpolicyinaccordancewiththerisktolerancesdefinedintheBank’seconomiccapitalmodel(ICAAP1),whichhasbeenvalidatedbytheauditcommittee.

Theexecutivecommitteehasdelegatedcertainofitsresponsibilitiesforimplementingitsriskman-agementpolicytothefollowingcommittees:

− theportfoliocommitteeisresponsibleformanagingthemediumandlongtermsecuritiesport-folioforthegroupwithindefinedrisklimits;

− the almac committee is responsible for managing the group’s balance sheet and off-balancesheet assets and liabilities, inorder toprovidea stable andadequate financialmarginwithinacceptablerisklimits.Thiscommitteealsomanagestheconsolidatedliquidityrisk;

− thecreditcommitteeisresponsibleforgrantingnewcreditlinesandnewlimits(formarketoper-ations)tonon-bankingcounterparties.Italsoreviewsexistingcreditlinesandlimits;

− thelimitscommitteeisresponsibleforgrantingnewlimitsforallproductsforbankingandbro-keragecounterpartiesfortheentiregroup.Italsoreviewsexistinglimitsonaregularbasis.

Inaddition,daytodayriskmanagementandmonitoringoflimitsaremanagedbytheriskmanage-mentdepartment.Thisensuresthatmarket,liquidity,counterparty,wealthmanagementandopera-tionalrisksarefollowedup.



1 InternalCapitalAdequacyAssessmentProcess.

Bankdegroof 61

5.2liquidityriskLiquidityriskistheriskofBankDegroofbeingunabletomeetitsfinancialcommitmentsattheirduedatesatareasonablecost.

Theprincipalobjectiveofliquiditymanagementistoensurethatthegrouphassufficientfinancing,evenduringveryunfavorableconditions.Theliquiditystrategyismanagedataconsolidatedlevelbythealmaccommittee,onamonthlybasis,withday-to-daymanagementbeingdelegatedtothetreasurydepartmentsoftheBrusselsandLuxembourgdealingroomsunderthesupervisionofriskmanagement.

Risk management ensures that Bank Degroof is able to ensure its liquidity in all crisis scenarios,whetheritisaliquiditycrisisonthemarketoraliquiditycrisisspecifictoBankDegroof.Theassump-tionsunderlyingthesescenariosare reviewedregularly.Treasuryflowsmust remainpositiveundereachofthescenarios,whicharemonitoredonadailybasis.Theinternalstresstestscenariosaresup-plementedbytheregulatorystresstestsoftheBelgianNationalBank.

TheliquiditystrategyofBankDegroofcanbesummarizedasfollows:

− alargebaseofcustomerdeposits,sourcedfromseveralgroupentities;− acompleteindependencefrominterbankfunding:theBankdoesnotneedtohaverecourseto

inter-bankfundingtofinanceitself;− alow‘loantodepositratio’,whichindicatesthattheamountofcreditsgrantedissubstantially

lowerthanthetotalofcustomers’deposits;− portfolioswhichare liquidand rapidlyaccessible through repooperationswith theEuropean

CentralBank.

Thetablebelowsetsoutthematuritiesofourassetsandliabilities1.Theliquiditygapisbasedoncon-tractualmaturities.Thecalculationofthecorrectedliquiditygaptakesaccountoftheaccessibilityofthebondportfolios2:

(inthousandsofEUR)

30.09.2012 ONDEMANDUPTO

3MONTHS3MONTHSTO1yEAR 1TO5yEARS

OvER5yEARS

Financial assets

Loansandadvancestocreditinstitutions3 375142 7290 7466 0 0

Loansandadvancestocustomers 433042 352893 370678 579054 121955

Bondsandotherfixedincomesecurities 0 226843 689653 1418086 97752

Derivatives 0 4011812 869037 19523 2918

Interestratederivatives 0 43655 15799 19523 2918

IRS 0 3 545 15 706 19 505 2 918

Other interest rate derivatives 0 40 110 93 18 0

Exchangeratederivatives 0 3968157 853238 0 0

Totalassets 808184 4598838 1936834 2016663 222625


1 Thebalancesoffinancialassetsandliabilitiesincludeallmovements,includingfutureinterest.2 93%ofthenon-sovereignportfolioand100%ofthesovereignportfolioaredeemedtobereadilyaccessiblethroughrepo.3 Includescashandassetswithcentralbank.

62 Annualreport2012


Financial liabilities

Depositsfromcreditinstitutions 47411 88921 34638 0 0

Depositsfromcustomers 2828397 669714 370755 8840 17125

Subordinatedliabilities 0 0 1974 49960 13007

Derivatives 0 4024667 884991 43028 3127


IRS 0 3 605 31 327 42 965 3 127



Financialgaranteesissued 0 96859 0 0 0

Creditlinesconfirmed 0 266874 0 0 0

Totalliabilities 2875808 5147035 1292358 101828 33259

Liquiditygap (2067624) (548197) 644476 1914835 189366

Impactofrepocapacityofbondportfolio 2221410 (217220) (623306) (1292093) (88791)

Correctedliquiditygap 153786 (765417) 21170 622742 100575

(inthousandsofEUR)



OvER5yEARS

Financial assets




Derivatives 0 4188454 285946 170273 3285


IRS 0 8 839 32 682 39 833 3 285

Other interest rate derivatives 0 0 0 146 0


Totalassets 797180 5220876 802383 2253648 280530





Derivatives 0 4170800 291687 185599 3631


IRS 0 12 029 38 198 55 141 3 555

Other interest rate derivatives 0 133 0 156 76





Liquiditygap (1877162) (816667) 291335 1998130 245470


Correctedliquiditygap (91965) (939375) 164684 581766 125996

Bankdegroof 63

(inthousandsofEUR)



OvER5yEARS

Financial assets




Derivatives 0 2256587 450029 43609 0


IRS 0 6 223 16 680 43 239 0



Totalassets 615288 2780080 1068617 2229501 254182





Derivatives 0 2289721 463024 52491 72


IRS 0 16 366 28 452 52 256 0






Liquiditygap (2001451) (861748) 411008 2114768 227038


Correctedliquiditygap (38896) (948279) 13702 749148 113940

5.3marketrisk

5.3.1 PolicyMarketrisksaretherisksofunfavourabledevelopmentsinmarketfactors(interestrates,equityprices,exchangerates)whichimpactonthepositionsthattheBanktakesonitsownaccount.

Treasury,foreignexchangeandequityandoptiontradingactivitiesaremonitoredonadailybasisusingindicators such as value-at-Risk (vAR), interest rate sensitivity, scenario analyses, option sensitivity(delta,gamma,vega,etc.)and,moresimply,nominalvolumes.

Theseactivitiesarecomparedtolimitssetbytheexecutivecommittee.Openpositionsarecharacteristi-callylowcomparedtoourownfunds.

5.3.2 Trading5.3.2.1 Interest rate riskTheBank’smainmethodofmanagingshort-terminterestratesisbymanagingitstreasury.Interestrateproductsareonlytradedonaverylimitedscale.

Onadailybasis,riskmanagementmonitorstheinterestrateriskusingtwoindicators:

− theBasisPointvalue(‘BPv’)inrespectofthelimitsallottedtothetreasuryactivitybythealmaccommittee;

− historicalvAR.

5.3.2.2 Foreign exchange riskThismainlyinvolveshedgingtheforeignexchangeriskgeneratedbyalldepartmentsoftheBankand,toalesserextent,byitscurrencytradingactivities.

Theindicatorsusedtomonitorthedailyforeignexchangeriskare:

− limitssetintermsofnominalamounts;− historicalvAR.

5.3.2.3 Equity & options riskTheindicatorsusedtomonitorthedailyequityriskare:


Therisksattachedtooptionsaremonitoredusingvariousindicators,mainlyinvolvingsensitivitytomove-mentsofthemainunderlyingfactors(delta,gammaandvega)andvalue-at-Risk.

xxxxxxxxxxxx

indicateurs

indicateurs

1 Includescashandassetswithcentralbank.

64 Annualreport2012


5.3marketrisk

5.3.1 PolicyMarketrisksaretherisksofunfavourabledevelopmentsinmarketfactors(interestrates,equityprices,exchangerates)whichimpactonthepositionsthattheBanktakesonitsownaccount.

Treasury,foreignexchangeandequityandoptiontradingactivitiesaremonitoredonadailybasisusingindicators such as value-at-Risk (vAR), interest rate sensitivity, scenario analyses, option sensitivity(delta,gamma,vega,etc.)and,moresimply,nominalvolumes.

Theseactivitiesarecomparedtolimitssetbytheexecutivecommittee.Openpositionsarecharacteristi-callylowcomparedtoourownfunds.

5.3.2 Trading5.3.2.1 Interest rate riskTheBank’smainmethodofmanagingshort-terminterestratesisbymanagingitstreasury.Interestrateproductsareonlytradedonaverylimitedscale.

Onadailybasis,riskmanagementmonitorstheinterestrateriskusingtwoindicators:

− theBasisPointvalue(‘BPv’)inrespectofthelimitsallottedtothetreasuryactivitybythealmaccommittee;

− historicalvAR.

5.3.2.2 Foreign exchange riskThismainlyinvolveshedgingtheforeignexchangeriskgeneratedbyalldepartmentsoftheBankand,toalesserextent,byitscurrencytradingactivities.

Theindicatorsusedtomonitorthedailyforeignexchangeriskare:


5.3.2.3 Equity & options riskTheindicatorsusedtomonitorthedailyequityriskare:


Therisksattachedtooptionsaremonitoredusingvariousindicators,mainlyinvolvingsensitivitytomove-mentsofthemainunderlyingfactors(delta,gammaandvega)andvalue-at-Risk.

xxxxxxxxxxxx

indicateurs

indicateurs

Bankdegroof 65

Thefollowingtablesummarizesindicatorsofsensitivityoftradingactivities:(inthousandsofEUR)

2012

30.09.2012 AvERAGE MINIMUM MAxIMUM

Interestraterisk BPv (64.0) (58.2) (47.5) (71.8)

Foreignexchangerisk Nominal 762 2870 640 15930

vAR99% 16.05 54.80 6.50 174.40

Equityrisk Nominal 0 1 0 6

vAR99% 0.00 176.16 0.00 1074.79

Optionrisk Deltaequivalent 0 0 0 0

vAR99% 0.00 5.05 0.00 22.58

2011




vAR99% 51.10 72.21 9.75 396.70


vAR99% 345.29 976.58 345.29 1355.71


vAR99% 9.46 27.95 8.50 54.64

2010




vAR99% 62.24 105.98 21.04 334.79


vAR99% 36.84 1164.86 36.84 1826.57


vAR99% 54.64 37.90 7.45 191.90

5.3.3 Long term5.3.3.1 Interest rate riskThisisthefinancialriskcausedbytheimpactofachangeininterestratesontheinterestmarginandonthefairvaluesoftheinterestrateinstruments.

Thisriskismanagedonamonthlybasisbythealmaccommitteeusingastandarddefinedintermsofdurationgap.Thisstandardhasbeendevelopedbasedonthemaximumlossthat isdeemedtobeacceptableintheeventthatinterestratesriseby1%,asallocatedbytheexecutivecommitteetothegroup’s transformation activity. This includes all balance sheet items1 and, accordingly, also thetreasurypositions.

Furthermore, in accordance with Basel II, a stress test compares the loss which would have beenrecordedincaseofaparallelincreaseininterestratesof2%asaproportionoftheownfunds.Theresultofthistestwas7%ofownfundsat30September2012(thelevelatwhichabankisconsideredtohaveexcessiveinterestrateriskis20%2).

ThisanalysisissupplementedbyBasisPointvaluemonitoring,whichonlytakesaccountofitemsthataresensitivetointerestrates,allmaturitiescombined.

1Itemsforwhichthedurationcannotbecalculated,suchasshares,currentaccounts,etc.aresubjecttoassumptions.2Abankwhichexceedsthethresholdof20%isconsidereda‘outlier’bytheBelgianNationalBank.Thisstatusimpliestightercontrolsandcanleadtoanincreaseineconomiccapitalrequirements.

66 Annualreport2012


Thelossintheeventofa1%riseininterestratesamountedto:

(inthousandsofEUR)

2012 the loss in the event of a 1% rise in interest rates amounted to

On30.09.2012 16700

Averagefortheperiod 15900

Maximumfortheperiod 17800

Minimumfortheperiod 13700

2011

On30.09.2011 11350




2010

On30.09.2010 11100




5.3.3.2 Equity riskNon-tradingequityriskistheriskthatthevalueoftheBank’sownfundsdeclinesasaresultofafallinthepriceofthesharesincludedintheBank’sproprietaryshareportfolio.

Themarketvalueoftheproprietaryshareportfolio:(inthousandsofEUR)

Position

30.09.2012 270575

30.09.2011 280033

30.09.2010 248852

TheimpactontheBank’sownfundsofamovementinthepriceoftheequitiesheldbytheBankisasfollows(allotherthingsbeingequal):

(inthousandsofEUR)

Relevant indices 3

RELEvANTMARkETSORINDICES MOvEMENT IMPACTONOWNFUNDS

30.09.2012 30.09.2011 30.09.2010

Bel20 10% 1197 2895 2485

OtherBelgiansecurities 10% 20143 18444 18571

OtherEuropeansecurities 10% 3800 4561 2353

Therestoftheworld 10% 1918 2103 1475

5.4creditrisk

5.4.1Creditriskistheriskoflossresultingfroma(professional,institutional,corporate,private,etc.)counterpartyfailingtomeetitscontractualobligationsontime.Thisriskismonitoredonadailybasis.Inrespectofcounterpartylimits,exposuresarecalculatedasafunctionofchangesinmarketvalue,towhichacoefficient(‘add-on’)isaddedwhichreflectstheriskrepresentedbyfuturemovementsinthisexposure.Theseexposuresarethencomparedwiththelimitssetoutbythelimitscommitteeandcreditcommittee.

3Havinganimpactontheportfoliovalue.

Bankdegroof 67

5.4.2Purecreditriskismonitoredonanominalbasis.Thetablebelowsetsouttheexposures(expressedinnominalamounts,withoutdeductingguaranteesreceived),bytypeofcounterparty:

(inthousandsofEUR)

30.09.2012

COUNTERPARTyCARRyING

AMOUNTCREDIT

RISk GUARANTEES

Loansandadvancestocreditinstitutions a 206597 206597 6001

Loansandadvancestocustomers b 2101884 2101884 1331168

Bondsandotherfixed-incomesecurities 2418752 2418752 0

Public sector e 996 407 996 407 0

Other issuers – banks c+e 622 000 622 000 0

Other issuers – commercial companies d+e 800 344 800 344 18 968

Equities,sharesandothervariable-incomesecurities 363156 363156 0

Derivatives 75130 53818 9620

Financialguaranteesissued 96859 96859 58325

(inthousandsofEUR)

30.09.2011


AMOUNTCREDIT

RISk GUARANTEES




Public sector e 731 766 731 766 0


Other issuers – commercial companies d+e 413 328 413 328 10 656


Derivatives 104773 96179 3928


(inthousandsofEUR)

30.09.2010


AMOUNTCREDIT

RISk GUARANTEES




Public sector e 778 859 778 859 0


Other issuers – commercial companies d+e 321 501 321 501 0


Derivatives 101000 98778 6580


CreditrisktakesaccountofthepossibilityofcompensationforderivativepositionswithcounterpartiesthathavesignedISDAcontracts.

Theguaranteesreceivedarerecordedatmarketvalueandarelimitedtotheoutstandingamountoftherelatedloans.

Fiveseparatecreditcategoriescanbeidentifiedwithinthegroup:

a) Limits for banking counterpartiesThegrantingoflimits,inparticularforinterbankdeposits,iscentralizedatgrouplevelandisbasedonthegrantingandreviewoflimitsbythelimitscommittee,whichcomprisesseniormanagementfromBrusselsandLuxembourgandmeetsonamonthlybasis.At30September2012,loanstocreditinstitutionsareverylimitedandcompriseprincipallycurrentaccounts(EUR192million).

b) Credits to non-banking counterparties Thiscategoryconsistsprincipallyofguaranteedcredits.Approximately75%oftheBank’sconsoli-datedcreditbalancesoutstandingarecoveredbyrealguarantees(essentiallydiversifiedportfoliossubjecttofixedcoverageratioswhicharedefinedasafunctionofthecompositionofthepledgedportfolioand,toalesserextent,unlistedsecuritiesandrealestate).

c) Bank Degroof Luxembourg’s investment portfolioTheinvestmentportfolioofBankDegroofLuxembourghasbeensetuptorespondtoreinvestmentrequirementsandcorrespondstoapproximately10%ofthetreasuryfundsinLuxembourg.Thisportfolioconsistsexclusivelyofbonds,withanaverageratingofAA,issuedprimarilybybank-ingcounterparties inEuropeanUnioncountries.Thediversificationof issuers ishigh(morethan15differentissuers).Thescopeofinvestmenthasbeenextendedtocoveredbonds.d) Bank Degroof Brussels’ ‘Corporate Portfolio’Thiscategorycomprises

− a)a‘CorporatePortfolio’ofthecreditdepartment,whichisaportfoliooffloating-rateEuropeansecuritizationsusedtofulfiltreasurymanagementrequirements.Thisportfolioisbeingrun-off(theBankno longermakesnewpurchases) andamounted toapproximatelyEUR100million(averageratingofA).Theportfolioisdepreciatingrapidly,duebothtothearrivalatmaturityofaseriesofpositions,andtothedepreciablenatureofthelargemajorityofthesecuritiesincludedintheportfolio.

− b)Theinvestmentportfolio,startedintheSpringof2012,whichinvestsinshort-termcorporatebonds(mostlywiththreeyearterms)fromgoodqualityEuropeanissuers(averageratingofA+)andamountedtoalittlelessthanEUR300million.

e) Portfolio of sovereign and state-guaranteed bank debt ThiscategorycomprisesGovernmentdebt,governmentvehiclesandbankdebtbenefittingfromguaranteesbyEUgovernments,primarilythoseofBelgiumandofitsneighbouringcountries.

5.4.3 Geographic exposureOnageographic level,theBankhas limitedexposureto‘emerging’countriesandhasfocusseditsactivitiesontheEuropeanUnion.

indicateurs

68 Annualreport2012


Theguaranteesreceivedarerecordedatmarketvalueandarelimitedtotheoutstandingamountoftherelatedloans.

Fiveseparatecreditcategoriescanbeidentifiedwithinthegroup:

a) Limits for banking counterpartiesThegrantingoflimits,inparticularforinterbankdeposits,iscentralizedatgrouplevelandisbasedonthegrantingandreviewoflimitsbythelimitscommittee,whichcomprisesseniormanagementfromBrusselsandLuxembourgandmeetsonamonthlybasis.At30September2012,loanstocreditinstitutionsareverylimitedandcompriseprincipallycurrentaccounts(EUR192million).

b) Credits to non-banking counterparties Thiscategoryconsistsprincipallyofguaranteedcredits.Approximately75%oftheBank’sconsoli-datedcreditbalancesoutstandingarecoveredbyrealguarantees(essentiallydiversifiedportfoliossubjecttofixedcoverageratioswhicharedefinedasafunctionofthecompositionofthepledgedportfolioand,toalesserextent,unlistedsecuritiesandrealestate).

c) Bank Degroof Luxembourg’s investment portfolioTheinvestmentportfolioofBankDegroofLuxembourghasbeensetuptorespondtoreinvestmentrequirementsandcorrespondstoapproximately10%ofthetreasuryfundsinLuxembourg.Thisportfolioconsistsexclusivelyofbonds,withanaverageratingofAA,issuedprimarilybybank-ingcounterparties inEuropeanUnioncountries.Thediversificationof issuers ishigh(morethan15differentissuers).Thescopeofinvestmenthasbeenextendedtocoveredbonds.d) Bank Degroof Brussels’ ‘Corporate Portfolio’Thiscategorycomprises

− a)a‘CorporatePortfolio’ofthecreditdepartment,whichisaportfoliooffloating-rateEuropeansecuritizationsusedtofulfiltreasurymanagementrequirements.Thisportfolioisbeingrun-off(theBankno longermakesnewpurchases) andamounted toapproximatelyEUR100million(averageratingofA).Theportfolioisdepreciatingrapidly,duebothtothearrivalatmaturityofaseriesofpositions,andtothedepreciablenatureofthelargemajorityofthesecuritiesincludedintheportfolio.

− b)Theinvestmentportfolio,startedintheSpringof2012,whichinvestsinshort-termcorporatebonds(mostlywiththreeyearterms)fromgoodqualityEuropeanissuers(averageratingofA+)andamountedtoalittlelessthanEUR300million.

e) Portfolio of sovereign and state-guaranteed bank debt ThiscategorycomprisesGovernmentdebt,governmentvehiclesandbankdebtbenefittingfromguaranteesbyEUgovernments,primarilythoseofBelgiumandofitsneighbouringcountries.

5.4.3 Geographic exposureOnageographic level,theBankhas limitedexposureto‘emerging’countriesandhasfocusseditsactivitiesontheEuropeanUnion.

indicateurs

Bankdegroof 69

5.4.4 Doubtful receivablesThelossesincurredonthecreditportfolioarelow,asindicatedbythefollowingtable(whichshouldbereadcumulativelyoverthepasttenyearsforfilesthatremainopen):

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Doubtfulreceivables 22343 15894 14726

Impairments (17837) (12313) (11575)

Doubtfulreceivablesafterimpairements 4506 3580 3151

Averageageofdoubtfulreceivablesnotimpaired 9years 8years 7years

5.5assetmanagementriskAssetmanagementriskisthefinancialriskderivingfromapossiblelackofconsistencyorexcessiverisktakingintheassetmanagementstrategiespursuedbythegroupasawhole.

Thisriskismonitoredwithineachentitybytherespectivecontroldepartments,andalsoataconsoli-dated level usingaggregateddata.The checksperformed focuson compliancewithmanagementconstraintssetbyboththeclientandthegroup’sexecutivecommittee1,aswellasonmonitoringofperformance.Theriskmanagementofthegroupensuresthatthechecksandthemanagementprin-ciplesareconsistentfromonesubsidiarytoanother.

5.6capitalmanagementTheoverridingobjectivesofcapitalmanagementatBankDegroofaretoensurethattheBankmeetstheregulatoryrequirementsandthatitmaintainsalevelofcapitalizationconsistentwithitslevelofactivitiesandtherisksthatitincurs.

Themethodusedforcalculatingregulatorycapitaladequacyrequirementsunderpillar1ofBaselIIhasbeenusedsince31December2007.Asareminder,theBankhaschosenthefollowingoptions:

− thebasicapproachforevaluatingcapitaladequacyrequirementsforoperationalrisk;− thestandardapproachbasedonexternalratingsforcreditrisk;− thestandardapproachformarketrisk.

Regulatorycapital:(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Tier1ownfunds 383713 401594 366102

Tier2ownfunds 92677 48386 67438

Weightedriskvolume 3041444 2890481 2645254

CRD-ratio 15.66% 15.57% 16.39%

Tier1-ratio 12.62% 13.89% 13.84%

choixdelabanque

Themovementsinregulatorycapitalcomparedtothepreviousfinancialyeararecharacterizedbythefollowing

− theriskprofileoftheBankhasslightlyincreaseddueprimarilytothetransferofliquiditiesthatwerepreviouslydepositedwiththeEuropeanCentralBanktoaportfolioofgoodqualitysecuri-tiesissuedbycorporates.

− Tier1capitalhasdecreasedprimarilyasaresultoftheincreaseintreasuryshareswhichhasbeenpartiallyoffsetbytheappropriationoftheresultforthecurrentfinancialyearafterdeductionoftheestimateddividend.

− Tier2capitalhasincreasedasaresultofthegrowthinrevaluationreservesonequityinstru-mentsincludedinthe‘Available-for-sale’portfolio,andthedeclineinelementstobedeductedsuchascertainshareholdings;thispositivemovementhasbeenslightlyreducedbytheapplica-tionoftheruleofdegressiverecognitionofsubordinatedloans.

ThecombinationofthesefactorsleadstoaCRDratioof15.66%andaTier1ratioof12.62%,whichsubstantiallyexceedsregulatoryrequirements.Thisfiguretakesaccountoftheplanneddividenddis-tribution.

Inaccordancewithpillar2ofBaselII,thisadministrativecapitalmanagementiscomplementedbytheeconomicmanagementofcapitalbywayofanICAAP2model.Usingthismodel,theBankcheckstheadequacyofitscapitalcomparedtotherequirementsresultingfromtherisksgeneratedbyitsvariousactivities.Itensuresthatthecapitalremainsadequateforthecomingthreeyears,undervarioussce-narios,rangingfromachievingourbudgetstosignificantmarketcrises.Detailedinformationonthissubjectisavailableonourwebsitewww.degroof.be.

choixdelabanque

1Particularlywithrespecttodiversification,equityratioandauthorisedmanagementproducts.

70 Annualreport2012


Themovementsinregulatorycapitalcomparedtothepreviousfinancialyeararecharacterizedbythefollowing

− theriskprofileoftheBankhasslightlyincreaseddueprimarilytothetransferofliquiditiesthatwerepreviouslydepositedwiththeEuropeanCentralBanktoaportfolioofgoodqualitysecuri-tiesissuedbycorporates.

− Tier1capitalhasdecreasedprimarilyasaresultoftheincreaseintreasuryshareswhichhasbeenpartiallyoffsetbytheappropriationoftheresultforthecurrentfinancialyearafterdeductionoftheestimateddividend.

− Tier2capitalhasincreasedasaresultofthegrowthinrevaluationreservesonequityinstru-mentsincludedinthe‘Available-for-sale’portfolio,andthedeclineinelementstobedeductedsuchascertainshareholdings;thispositivemovementhasbeenslightlyreducedbytheapplica-tionoftheruleofdegressiverecognitionofsubordinatedloans.

ThecombinationofthesefactorsleadstoaCRDratioof15.66%andaTier1ratioof12.62%,whichsubstantiallyexceedsregulatoryrequirements.Thisfiguretakesaccountoftheplanneddividenddis-tribution.

Inaccordancewithpillar2ofBaselII,thisadministrativecapitalmanagementiscomplementedbytheeconomicmanagementofcapitalbywayofanICAAP2model.Usingthismodel,theBankcheckstheadequacyofitscapitalcomparedtotherequirementsresultingfromtherisksgeneratedbyitsvariousactivities.Itensuresthatthecapitalremainsadequateforthecomingthreeyears,undervarioussce-narios,rangingfromachievingourbudgetstosignificantmarketcrises.Detailedinformationonthissubjectisavailableonourwebsitewww.degroof.be.

choixdelabanque

2 InternalCapitalAdequacyAssessmentProcess.

Bankdegroof 71

6.consolidationscope

6.1listoftheprincipalsubsidiariesofbankdegroof

NAME REGISTEREDOFFICE

(in%)PERCENTAGE

OFCAPITALHELD ACTIvITy

AforgeFinanceHoldingSA 25,AvenuedeMessine–75008Paris 87.5 Investmentfirm

BanqueDegroofLuxembourgSA 12,RueEugèneRuppert–2453LuxembourgCloched’Or 99.96 Creditinstitution

BanqueDegroofFranceSA 1,Rond-PointdesChamps-Elysées75008Paris 100 Creditinstitution

DegroofBanquePrivéeSA 18,AvenueLouisCasaï–1209Genève 99.96 Creditinstitution

BearbullDegroofInternationalLtdPOBoxN-4287Unitn°2,OfficesOldFortBay,Nassau,Bahamas

99.96 Investmentfirm

BanqueDegroofSquareInvestSA/Nv RueGuimard18–1040Brussels 100 Otherundertaking

CobimmoSA/Nv RueGuimard18–1040Brussels 100 Otherundertaking

DegroofCorporateFinanceSA/Nv RueGuimard18–1040Brussels 100 Otherundertaking

DegroofFundManagementCompanySA/Nv RueGuimard18–1040Brussels 100 Investmentfirm

DegroofGestionInstitutionnelleLuxembourgSA

12,RueEugèneRuppert–2453LuxembourgCloched’Or 99.96 Investmentfirm

DegroofHoldingLuxembourgSA 12,RueEugèneRuppert–2453LuxembourgCloched’Or 100 Otherundertaking

DegroofInvestissementsSA/Nv RueGuimard18–1040Brussels 100 Otherundertaking

DegroofStructuredFinanceSA/Nv RueGuimard18–1040Brussels 100 Otherfinancialinstitution

DSLuxSA 12,RueEugèneRuppert–2453LuxembourgCloched’Or 99.96 Otherundertaking

SAFideuroNv RueGuimard18–1040Brussels 100 Otherundertaking

FitechSystemsSA/Nv RueGuimard18–1040Brussels 100 Otherundertaking

GuimardInvestissementsSA/Nv RueGuimard18–1040Brussels 100 Otherundertaking

ImofigSA/Nv RueGuimard18–1040Brussels 100 Otherundertaking

DegroofGestionSA 1,Rond-PointdesChamps-Elysées-75008Paris 99.99 Investmentfirm

MonceauMS.A. 25,AvenuedeMessine–75008Paris 100 Otherfinancialinstitution

PrivatBankDegroof,S.A.U. AvenidaDiagonal464–08006Barcelona 100 Creditinstitution

PrivatBankPatrimonio,S.A.U.,S.G.I.I.C

AvenidaDiagonal464–08006Barcelona 100 Investmentfirm

6.2significantchangesintheconsolidationscopeduringthecurrentfinancialyear

Duringthecurrentfinancialyear,theBankacquiredanadditionalshareholdingof37.5%inAforgeFinanceHoldingSA.Asaresultofthisacquisition,thiscompanyanditsaffiliatesarenowfullycon-solidatedinsteadofbeingaccountedforundertheequitymethodaswasthecaseinpreviousyears.TheprincipalimpactofthischangeintheconsolidationscopeisatransferfrominvestmentsinentitiesaccountedforundertheequitymethodtogoodwillandotherintangibleassetswiththerecognitionofadditionalgoodwillofEUR13.2million,whichrepresentstheexpectedfutureearningsoftheenti-tiesinvolved.

72 Annualreport2012


Astheaccountingvalueofthesharesheldpriortotheacquisitionoftheadditionalshareholdingwassimilar to thefairvaluepaid in thecontextof theacquisition, there isnoothersignificant impactexceptinrespectofthepresentationoftheincomestatementwhere,forthefirsttimeduringthe2012financialyear,allofthecaptionsoftheincomestatementsofthecompanyanditsaffiliatesareincluded.Theprincipal captionsaffectedby this change inpresentationarecommissions received(EUR14.8million),personnelcosts(EUR11.5million)andothergeneralcosts(EUR7.2million).

6.3non-consolidatedrealestateaffiliatesInthecontextofthediversificationofitsproductoffering,theBankhascreatedarealestatecentreofcompetencetheobjectiveofwhichistoinvestinrealestatefinancedprimarilybytheissuanceofrealestatecertificatestoprivateandinstitutionalclientsand,secondly,bywayofloansgrantedbyotherfinancialinstitutions.TheseoperationsweresetupbycreatingrealestatecompaniesinwhichtheBankiseitherthemajor-ityshareholder,orashareholderinthecontextofjointcontrol(fromalegalperspective).Thesecom-paniesare,accordingly,subsidiariesorjointventuresoftheBank,whichisrepresentedontheboardofdirectorsandonthemanagementcommittee;thesedecisionmakingbodiesarelargelyresponsiblefortheoperationalandadministrativemanagementofthecompanies.TheBankreceivesremunerationforprovidingtheseservicesthatiscontractuallyfixedandindepend-entoftheperformanceofthecompanies.Itistheholdersoftherealestatecertificateswho,duringmeetings,takethestrategicdecisionsrelat-ingtothemanagementoftherealestate,andwhoreceivetherevenuesgeneratedbytherentalandsubsequentsaleoftherealestate.Attheendofthefinancialperiod,theassetsofthesecompanieshadavalueofapproximatelyEUR150million.Asthedefinitionofcontrolisbasedontherighttovariablereturnsresultingfrominfluenceoverthemakingofstrategicdecisionsthatimpactonthesereturns,controloverthesecompaniesisexercisedexclusivelybytheholdersoftherealestatecertificates,andnotbytheBank.Asaresult,theseenti-tiesarenotconsolidatedbyBankDegroof.Attheendofthefinancialyear,thefinancialinvestmentoftheBankintheseentitiesamountedtoEUR0.3million.

7.notestotheconsolidatedbalancesheet

7.1cashandbalanceswithcentralbanksCashandbalanceswithcentralbankscomprisethefollowing:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Cash 2551 3691 3935

Balanceswithcentralbanks-Mandatoryreserves1 180749 209372 101481

Balanceswithcentralbanksotherthanmandatoryreserves 0 620036 179547

Total 183300 833099 284963

Bothcashandbalanceswithcentralbanksotherthanmandatoryreservesareincludedinourdefinitionofcashandcashequivalents.

1 Mandatoryreserves:minimumreservesheldbycreditinstitutionswiththeECBorothercentralbanks.

Bankdegroof 73

7.2financialassetsheldfortrading

Financialassetsheldfortradingcomprisethefollowingitems:(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

1. Financial assets held for trading 14 454 12 526 7 502Fixed-incomesecurities 13334 6760 6711

Treasury bills and government bonds 9 398 366 501

Bonds from other issuers 3 936 6 394 6 210

variable-incomesecurities 1120 5766 791

Equities 5 2 788 521

Other variable income securities 1 115 2 978 270

2. Derivative financial instruments 75 130 104 773 100 957

Foreignexchangederivatives 43633 65242 48201

Interestratederivatives 9437 15214 7663

Equityderivatives 21865 24195 44983

Creditderivatives 195 122 110

Totalassetsheldfortrading 89584 117299 108459

7.3financialassetsdesignatedatfairvaluethroughprofitorlossSecuritiesinvestmentsaredesignatedattheiracquisitiondateatfairvaluethroughprofitorloss(fairvalueoption)whentheyareassociatedwithderivatives,whensuchdesignationeliminatesorsignifi-cantlyreducesanaccountingmismatchwhichwouldotherwiseresult,andwhenariskexistsofnotmeetingtherequirements(ornotsatisfyingtheconditions)forhedgeaccounting.Morespecifically,thisdesignationisusedinordertopreventanyconsecutivedifferenceinthevalua-tionofcertainsovereignandbankdebtthatisalmostentirelyguaranteedbyEUgovernments(fairvaluerecognizeddirectlyinshareholders’equity),purchasedwiththeobjectiveofsupportingliquidityandlinked,inaccordancewiththeriskmanagementstrategy,tointerestrateswaps(fairvaluethroughprofitorloss).Thefairvalueoptionisalsoappliedtocertainpositionsinequitiesthatareeconomicallyhedgedusinganoptionstructure.

Thefinancialassetsdesignatedatfairvaluethroughprofitorlosscomprise:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Fixedincomesecurities 1096031 1174054 1015061

Treasury bills and government bonds 716 583 545 438 470 350



Equities 42 841 31 440 31 890

Totalfinancialassetsdesignatedatfairvaluethroughprofitorloss

1138872 1205494 1046951

Thefinancialassetsdesignatedatfairvaluethroughprofitorlossincludeasat30September2012anamount of EUR 769.8 million of which the residual life exceeds 12 months (30 September 2011:EUR1059.4million;30September2010:EUR963.2million).

74 Annualreport2012


7.4available-for-salefinancialassets

Available-for-salefinancialassetsrepresentinvestmentsinfixedorvariableincomesecurities,bothlistedandunlisted,andcomprisethefollowing:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Carrying amount before impairments 1 303 559 895 549 1 014 467




Other fixed income instruments 8 121 159 1 074


Equities 232 564 266 247 213 679

Other variable income securities 122 219 108 733 103 372

Impairments (45 007) (53 852) (41 432)

Totalavailable-for-salefinancialassets 1258552 841697 973035

Available-for-salefinancialassetsincludeasat30September2012anamountofEUR509.2milliontheresiduallifeofwhichexceeds12months(30September2011:EUR408.2million;30September2010:EUR373.6million).

Thetablebelowdetailsthemovementsrelatingtotheimpairmentofavailable-for-salefinancialassets:

(inthousandsofEUR)

FIxEDINCOME

SECURITIES

vARIABLEINCOME

SECURITIES TOTAL

Closingbalanceat30.09.2009 (8910) (41089) (49999)

Impairments 0 (1499) (1499)

Impairmentallowanceused 0 10315 10315

Currencytranslationdifferences (249) 0 (249)


Impairments (3265) (9485) (12750)




Impairments (57) (14414) (14471)



Other 0 (31) (31)


Bankdegroof 75

Thetablebelowdetailsthechangesinfairvaluesofavailable-for-salefinancialassets:

(inthousandsofEUR)

FIxEDINCOME

SECURITIES

vARIABLEINCOME

SECURITIES TOTAL

Closingbalanceat30.09.2009 (2199) 51443 49244

Increase(decrease)inunrealisedrevaluationgains1 1933 9410 11343

Decrease(increase)inunrealisedrevaluationlosses1 2164 5112 7276

Impairmentrecognizedintheincomestatement 0 85 85

Closingbalanceat30.09.2010 1898 66050 67948

Increase(decrease)inunrealisedrevaluationgains1 (4442) 2001 (2441)

Decrease(increase)inunrealisedrevaluationlosses1 (10746) (20722) (31468)


Closingbalanceat30.09.2011 (11957) 48990 37033

Increase(decrease)inunrealisedrevaluationgains1 7968 (143) 7825

Decrease(increase)inunrealisedrevaluationlosses1 9457 13139 22596


Closingbalanceat30.09.2012 5525 69942 75467

7.5loansandadvancestocreditinstitutionsInterbankloansandadvancesareasfollows:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Carrying amount before impairments 206 647 193 850 176 440

Currentaccounts 191891 121780 133717

Termloans 5904 28428 33075

Reverserepurchaseoperations 6001 41517 6384

Other 2851 2125 3264

Impairments (50) 0 0

Totalloansandadvancestocreditinstitutions 206597 193850 176440

CurrentaccountsforanamountofEUR180.7millionasat30September2012(at30September2011:EUR121.1million;at30September2010:EUR133.6million)andloanswithinitialtermsoflessthanthreemonthsforanamountofEUR7.3millionasat30September2012(at30September2011:EUR66.0million;at30September2010:EUR39.2million)areincludedinourdefinitionofcashandcashequivalentsintheconsolidatedcashflowstatement.

TheimpairmentofloansandadvancesincreasedbyEUR50000duetotherecordingofanadditionalimpairment.

1 Includingchangesinunrealisedgainsandlossestransferredfromequitytotheincomestatementastheresultofthederecognitionoftheseinvestments.

76 Annualreport2012


7.6loansandadvancestocustomers

Loansandadvancestocustomersandmovementsrelatingtoimpairmentsontheseloansandadvancesareasfollows:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Carrying amount before impairments 1 981 923 1 894 329 1 883 191

Overdrafts 447111 255722 209477

Tradebills 201 156 228

Consumercredits 0 2690 758

Mortgageloans 145335 115053 109459

Termloans 1166061 1248741 1212338

Financeleases 374 619 757

Reverserepurchaseagreements 53247 24051 52371

Debtinstruments 129126 186072 245988

Subordinatedloans 22308 39691 27707

Other 18160 21534 24108

Impairments (26 622) (13 580) (12 401)

Totalamountsloansandadvancestocustomers 1955301 1880749 1870790

Loansandadvancestocustomersincludeasat30September2012anamountofEUR148.7millionofwhichtheresiduallifeexceeds12months(30September2011:EUR379.1million;30September2010:EUR444.3million).

Thetablebelowdetailsthemovementsrelatingtotheimpairmentofloansandadvancestocustomers:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Openingbalance (13580) (12401) (11436)

Impairmentlossrecognized2 (12986) (1502) (1143)

Reversalofimpairment 28 190 211

Write-offsofnon-recoverableloansandadvances 35 228 24

Currencytranslationdifferences (22) (7) (4)

Other (97) (88) (53)

Closingbalance (26622) (13580) (12401)

Impairmentlossesareonlycalculatedonindividualvaluationsandnotonacollectivebasis(portfolioapproach)whichwouldnotbeappropriateinviewofthecreditactivitiesofBankDegroof.

2 IncludinganimpairmentofEUR7549thousandsondebtinstruments(at30September2011:440thousands;at30September2010:EUR826thousands).

Bankdegroof 77

Thetablebelowsetsoutsupplementaryinformationrelatingtoavailable-for-salefinancialassetsthathavebeenreclassifiedtoloansandadvances:

(inthousandsofEUR)

CARRyINGAMOUNT FAIRvALUE

REvALUATIONRESERvES

Closing balance at 30 september 2012 94 481 78 718 (509)

Closing balance at 30 september 2011 166 266 147 053 (2 279)

Closing balance at 30 september 2010 235 184 218 843 (4 725)

(inthousandsofEUR)

AMOUNTSRECOGNISEDINPROFITORLOSSORINEqUITy

PROFITORLOSS EqUITy

At 30 september 2012

Interestincome 1476

Impairment (7549)

Realisedgains(losses) 7

Amountstransferredfromrevaluationreservestoprofitorloss 1770


Interestincome 2481

Impairment (440)

Realisedgains(losses) (571)



Interestincome 2533

Impairment (826)

Realisedgains(losses) 14


Thefairvaluelossesorgainsthatwouldhavebeenrecognizedinequityafterthereclassificationdate,ifthereclassificationhadnotoccurred,amounttoanaggregatenetlossofEUR7.3million(at30September2011:netlossofEUR11.1million;at30September2010:netlossofEUR9.3million).

7.7financialassetsheldtomaturityFinancialassetsheldtomaturityrepresentinvestmentsinfixedincomesecurities,thesplitbynatureofwhichisasfollows:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Carrying amount before impairments 249 738 62 401 136 392




Impairments 0 0 0

Totalfinancialassetsheldtomaturity 249738 62401 136392

78 Annualreport2012


Financialassetsheldtomaturitywithamaturityinexcessof12monthsamounttoEUR146.2mil-lionat30September2012(30September2011:EUR59.7million;30September2010:EUR73.7million).

Duringthecurrentfinancialyear,theBankreclassified(from“Availableforsalefinancialassets”)certaindebtinstrumentswithavalueofEUR115.6millionto“Heldtomaturityinvestments”astheBankintends,andisable,toholdtheseinvestmentsuntilmaturity.

7.8propertyandequipmentandinvestmentpropertyPropertyandequipmentcomprisethefollowing:

(inthousandsofEUR)

LANDANDBUILDINGS ITEqUIPMENT

OFFICEEqUIPMENT

OTHEREqUIPMENT TOTAL

Net closing carrying amount at 30.09.2012 56 968 3 246 1 959 3 333 65 506 Acquisitioncost 95632 18665 8782 7735 130814

Accumulateddepreciationandimpairment (38664) (15419) (6823) (4402) (65308)





Bankdegroof 79

Thedevelopmentofthenetcarryingamountisexplainedasfollows:

(inthousandsofEUR)

LANDANDBUILDINGS ITEqUIPMENT

OFFICEEqUIPMENT

OTHEREqUIPMENT

Closingbalanceat30.09.2009 65804 2397 2039 3912

Acquisitions 313 840 111 845

Disposals 0 0 0 (531)

Depreciation (3457) (1225) (361) (758)

Impairmentlossrecognized (2) 0 0 (20)

Currencytranslationdifferences 93 24 8 14



Disposals (864) (2) (58) (511)

Depreciation (3462) (1147) (364) (653)

Impairmentlossrecognized 0 (9) 0 0




Changesinconsolidationscope 110 0 293 145

Disposals 0 0 (1) (317)

Depreciation (3378) (1023) (470) (767)

Impairmentlossrecognized 0 (12) (1) 0


Other 0 1 39 0


Theamountsdisclosedunder‘Other’relatemainlytotransfersbetweencategoriesofpropertyandequipment.

Withtheexceptionofvehicles(disclosedunder ‘Otherequipment’),theresidualvaluesareesti-matedatzero.Aspurchasedcarsaregenerallysoldafterfouryears,theiraverageresidualvaluehasbeenestimatedat40%ofthepurchaseprice,excludingvAT.

Theestimatedfairvalueofproperty(accountedforatamortizedcost)ofBankDegroofamountstoEUR117.4millionat30September2012(30September2011:EUR110.1million;30September2010:EUR111.1million).BankDegroofdoesnotholdinvestmentproperty.

BankDegroofhascommitments,initscapacityaslessee,inrespectofoperatingleasecontractsrelat-ingprincipallytorealestate,ITequipmentandvehicles.At30September2012,theminimumamountof futurepaymentsundernon-cancellableoperating leasecontractsamounted toEUR9.6million(EUR3.4millionofwhichisduewithinoneyear,EUR5.9millionduebetweenoneandfiveyears,andEUR0.3milliondueafterfiveyears).Theseamountsdonottakeintoaccountpossiblefutureindexa-tionofoperatingleasepaymentsforrealestate.Theoperatingleaseexpenserecordedintheprofitandlossaccountaresetoutinnote8.10.

80 Annualreport2012


7.9goodwillandotherintangibleassets

Goodwillandotherintangibleassetscomprisethefollowing:

(inthousandsofEUR)

GOODWILLBUSINESS

ACTIvITIES SOFTWAREOTHERINTAN-GIBLEASSETS TOTAL

Net closing carrying amount at 30.09.2012 70 189 28 297 2 550 0 101 036 Acquisitioncost 114633 50283 23732 0 188648

Accumulateddepreciationandimpairment (44444) (21986) (21182) 0 (87612)


Accumulateddepreciationandimpairment (2824) (8038) (19804) 0 (30666)



Thedevelopmentofthenetcarryingamountisexplainedasfollows:(inthousandsofEUR)

GOODWILLBUSINESS

ACTIvITIES1 SOFTWAREOTHERINTAN-GIBLEASSETS



Depreciation 0 (1904) (1542) (1)




Disposals 0 0 (64) 0

Depreciation 0 (1904) (1356) 0

Impairmentlossrecognized 0 (815) (7) 0


Other 0 0 5 (5)



Disposals 0 0 (33) 0

Changesinconsolidationscope 0 0 32 0

Depreciation 0 (1846) (1328) 0

Impairmentlossrecognized 0 0 (48) 0



1OfwhichEUR22.1millionat30September2012,tobeamortizedovertheremainingusefullifeof16years,ontheaccountofBanqueDegroofFrance

Bankdegroof 81

Inviewofthemarketconditions,whichtheBankconsideredasanobjectiveindicationoftheimpairmentofitsbusinessassets,theBankperformedanimpairmenttestonallofitsbusinessassetsasdescribedinthesummaryofaccountingpoliciesandmethods.Therecoverableamountisdeterminedasbeingthehigherofthefairvalueandthevalueinuse.Thesetwomethodsaredescribedbelow.Theresultsoftheseimpairmenttestsaresimilarorsuperiortotheaccountingvalueofthebusinessactivities.

In accordancewith the accountingpolicies andmethods, theBankperforms an impairment test ongoodwill,asaminimum,ateveryfinancialyear-end.Inordertodothis,theBankhasallocatedgoodwilltocashgeneratingunitswhicharecurrentlydefinedatthelevelofthelegalentities.Therecoverableamountofacashgeneratingunitisdeterminedasbeingthehigherofitsfairvalueanditsvalueinuse.

Thefairvalueisobtainedeitherbyapplyingmultiplestothenetoperatingresult,oronthebasisofanestimateoftherevaluednetassets.Themultipleappliedistheprice/earningsratioofasampleofcom-parablecompanieslistedonstockexchanges.Theestimateofrevaluednetassetscomprisesreviewingthevariousassetsandliabilitiesofthecompanyandcomparingtheirestimatedvalueswiththeiraccount-ingvalues,inordertoidentifypotentialgainsorlossescomparedtotheiraccountingvalues.

Thevalueinuseisdeterminedusingthediscounted(free)cashflowmethodwhichdiscountsallfuturecashflowsthatwillbegeneratedbytheentity’sactivities.Theprojectedcashflowsarebaseduponmediumtermplansdrawnupbymanagementofeachoftheentities,spreadoverperiodsofsustainablegrowthofuptotenyears.Thelengthoftheperiodwaschosensoastotakeintoaccounttheprogres-siveimpactofthereorganisationandintegrationoftheFrenchentities,aswellastheincreaseinincomeresultingfromthestrengtheningofthecommercialteams(givingrisetoincomelevelsaftertenyearsthatimplyanaverageannualincreaseof3%comparedtotheincomerecordedin2007,beforethefinan-cialcrisis).Growthaftertenyearscorrespondstothelong-terminflationrate.Theprojectedcashflowsarediscountedattheestimatedcostofcapitalbeforetaxesasat30September2012of16.4%.

Asensitivityanalysishasbeenperformedwhichnotablytestsascenariooflowergrowth(resultingincashflowsthatare12%lower),anditdoesnotgiverisetoarecoverablevaluethatislowerthantheaccountingvalue.

Goodwillisanalyzedbelow,bycashgeneratingunit:

(inthousandsofEUR)

CASHGENERATINGUNIT CARRyINGAMOUNT

METHODUSEDFORTHERECOvERABLE

AMOUNT

30.09.2012 30.09.2011 30.09.2010

BankDegroofBrusselsSA/Nv(ex–deBuckBankers) 9625 9625 9625 Fairvalue

BankDegroofBrusselsSA/Nv(ex–BearbullBelgium) 3700 3700 3700 Fairvalue

BanqueDegroofLuxembourgSA 2023 2023 2023 Fairvalue

DegroofBanquePrivéeSA 8458 8446 8278 Fairvalue

GroupeAforge 42865 0 0 valueinuse

PrivatBankDegroofS.A.U. 3518 3518 3518 Fairvalue

Total 70189 27312 27144

82 Annualreport2012


7.10investmentsinentitiesaccountedforundertheequitymethodInvestmentsinentitiesaccountedforundertheequitymethodaresummarizedinthetablebelow:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Associates

ThesaurusSA/Nv 0 0 0

GroupeAforge 0 31200 40624

Total 0 31200 40624

(inthousandsofEUR)TOTAL

ASSETSTOTAL

LIABILITIESTOTAL

INCOMETOTAL

ExPENSES

situation at 30.09.2011

GroupeAforge 13919 10684 16264 21109

ThesaurusSA/Nv 975 255 72 178

situation at 30.09.2010

GroupeAforge 18316 10332 16939 19834

ThesaurusSA/Nv 1024 115 105 197

7.11otherassetsOtherassetscomprisethefollowingitems:

(inthousandsofEUR)

Note 30.09.2012 30.09.2011 30.09.2010

Accruedincomeandprepaidexpenses 45559 44711 47004

Assetsofpensionschemes 10 155 187 88

Miscellaneousdebtors 9802 16285 18748

Otherassets 19100 9597 6044

Totalotherassets 74616 70780 71884

Miscellaneousdebtorscompriseinvoicesreceivableandadvancedtaxpaymentsorrecoverabletaxesdefinedinaccordancewithnationalregulations.

Bankdegroof 83

7.12.afinancialliabilitiesheldfortrading

Financialliabilitiesheldfortradingcomprisethefollowing:(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

1. Financial liabilites held for trading 405 188 8 088

Fixedincome 405 79 2936

variableincome 0 109 5152

2. Derivatives 116 823 125 441 169 836

Foreignexchangederivatives 48829 59524 74105

Interestratederivatives 49528 35974 43297

Equityderivatives 16501 17759 42541

Creditderivatives 1965 12184 9893

Totalfinancialliabilitesheldfortrading 117228 125629 177924

7.12.bderivativesforhedgingpurposesAtthebeginningofthefinancialyear,theBankdecidedtocancelthedesignationmadeforallhedges.Forthisreason,hedgeaccounting(atfairvalue)hasnotbeenappliedduringthecurrentfinancialyear.

Thefollowingtablesetsoutthefairvaluesofderivativesheldforhedging:(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Interestratederivative 0 1990 0

Totalderivativesheldforhedgingpurposes 0 1990 0

7.13depositsfromcreditinstitutionsInterbankdepositscomprisethefollowing:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Sightdeposits 47411 55570 67616

Termdeposits 86801 76603 191573

Repurchaseagreements 36698 10832 0

Otherdeposits 171 129 9480

Totaldepositsfromcreditinstitutions 171081 143134 268669

SecuritiestransferredinthecontextofrepotransactionshavenotbeenderecognisedinaccordancewithIAS39andhavebeenclassifiedasfinancialassetsdesignatedatfairvaluethroughprofitorloss.Their fairvalueamountedtoEUR36.1millionat30September2012.Thecounterpartiestothesetransactionsareabletoreusethecollateralreceived.

84 Annualreport2012


7.14depositsfromcustomers

Depositsfromcustomersareasfollows:(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Sightdeposits 2828397 2621413 2550976

Termdeposits 1060867 1622181 1048042

Repurchaseagreements 0 3586 5427

Otherdeposits 358132 69480 21429

Totaldepositsfromcustomers 4247396 4316660 3625874

Depositsfromcustomersincludeasat30September2012anamountofEUR24.9millionforwhichtheresiduallifeexceeds12months(30September2011:EUR24.1million;30September2010:EUR17.7million).

7.15debtsecurities(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Other 13007 13009 13005

Totaldebtsecurities 13007 13009 13005

7.16subordinateddebtThesubordinateddebtofBankDegrooftakestheformofanon-convertiblesubordinatedtermloan.TheloanwasissuedbyBankDegroofforanamountofEUR50million(ofwhichEUR4millionareheldbyagroupentity)maturingon1July2015withafixedannualinterestrateof4.245%.

7.17provisionsTheBank’sprovisionsconsistsolelyofprovisionsinrespectofpendinglitigationwithvariouscoun-terparties.Themovementsontheseprovisionsareasfollows:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Openingbalance 4054 3537 2993

Allowancesforprovisions 1222 1531 1946

Useofprovisions (347) (1000) (617)

Reversalofunusedprovisions (25) (13) (797)

Currencytranslationdifferences 0 0 12

Other 0 (1) 0

Closingbalance 4904 4054 3537

Duetothenatureofitsactivitiesandtothecurrenteconomiccrisis,theBankisinvolvedinalimitednumberoflegaldisputes.TheBankremainsconvincedthat,inthecasesconcerned,ithasactedincom-pleteaccordancewiththerequirementstowhichitissubject.Inviewoftheuncertaintiesinherentinanylegaldispute,theprocessofestimatingtherisksisinevitablyuncertain.Aprovisionthatcoversaproportionofcertainamountsclaimedhasbeenrecordedinthefinancialstatementsasat30September2012.

Bankdegroof 85

Inaddition,BankDegroofandseveralofitssubsidiariesarethesubjectofaclawbackprocedureintheUnitedStatesinitiatedbytheliquidatorofBernardL.MadoffInvestmentSecuritiesLLv(BLMIS).ThisprocedureistakingplaceinthecontextofhundredsoflegalcaseslaunchedbytheliquidatorofBLMIS(i)againstinvestmentfundsthatinvestedinBLMIS,inordertorecoverreimbursementsmadebyBLMISduringtheyearsprecedingthebankruptcyofBLMIS,and(ii)againstpersonsthatinvestedintheafore-mentionedinvestmentfunds,inordertorecovertheincomegeneratedbythesefundsasaresultofthereimbursementsoverthesameperiod.TheselegalcasesarebasedinpartontheprovisionsoftheUSSecuritiesInvestorProtectionActandtheUSBankruptcyCodewhich,undercertainconditions,allowthe liquidatorofabrokerage infinancialinstrumentstorecoveramountsreimbursedbythebrokeragebeforeitwasdeclaredbankrupt.ThecompaniesinvolveddisputethattheyowetheseamountsandarerepresentedinthecontextoftheUSlegalcasebyanAmericanlawyerwhoisoftheviewthatthecompaniesinvolvedhavestrongargu-mentstocontestthecharges.Asaresult,noprovisionhasbeenrecordedinthisrespectattheendofthefinancialyear.

7.18otherliabilitiesOtherliabilitiescomprisethefollowingitems:

(inthousandsofEUR)30.09.2012 30.09.2011 30.09.2010

Salariesandsocialcharges 45655 39338 38286

Accruedchargesanddeferredincome 21631 18569 16484

Miscellaneouscreditors 13391 16943 17129

Share-basedpaymentliability 439 4999 1339

Other 6794 3695 1729

Totalotherliabilities 87910 83544 74967

Miscellaneouscreditorsconsistprimarilyofinvoicespayableaswellastaxespayableotherthantaxescalculatedontheprofitfortheyear.

7.19taxThemovementsondeferredtaxesareexplainedby:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Openingbalance 3718 (999) (2898)

Income(expense)inincomestatement (230) 1324 3840

Itemsimputeddirectlytoequity (4503) 3566 (1775)

Impactofchangeinincometaxrate–incomestatement 0 (36) 0

Impactofchangeinincometaxrate–equity 0 (8) 0

Changesinconsolidationscope 50 0 0

Currencytranslationdifferences (9) (129) (166)

Closingbalance (974) 3718 (999)

86 Annualreport2012


Deferredtaxesarecalculatedonthefollowingtemporarydifferencesandarepresentedbyclassoftemporarydifference:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Deferred tax assets 14 130 14 852 13 680

Personnelbenefits 7004 5122 5582

Tangibleandintangibleassets 0 0 243

Derivatives 4071 5542 5516

Financialinstrumentsatfairvaluethroughprofitorloss 5 131 0

Available-for-salefinancialassets 2 2633 944

Losscarryforwards 2695 1087 1087

Other 353 337 308

Deferred tax liabilities 15 104 11 134 14 679

Tangibleandintangibleassets 4536 4620 4786

Provisionsforliabilitiesandcharges 593 576 570

Derivatives 0 0 29

Financialinstrumentsatfairvaluethroughprofitorloss 2656 773 2274

Available-for-salefinancialassets 1967 178 1384

Other 5352 4987 5636

Netdeferredtaxes (974) 3718 (999)

CertaindeferredtaxassetshavenotbeenrecognizedtotheextentthatcertaincompanieswithintheDegroofgrouparenotcertainthatfuturetaxableprofitswillbeavailablewithintherelevanttaxableentitiesagainstwhichthetaxlossescarriedforwardcanbeutilized.

Unrecogniseddeferredtaxassetsat30September2012amountedtoEUR14757000andrelatedpurelytorecoverabletaxlosseswithindefiniteexpirydates(30September2011:EUR12982000,30September2010:EUR11317000).

DeferredtaxesamountingtoEUR3.1million(30September2011:EUR3.2million;30September2010:EUR3.6million)havenotbeenrecognizedontimingdifferencesrelatingtothedistributablereservesofsubsidiaries,asthesedifferencesareunlikelytoreverseintheshortterm.

Bankdegroof 87

7.20shareholders’equity

Thetablebelowsetsoutthecomponentsofequityattributabletoshareholders:(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Issuedcapital 47491 47491 47491

Sharepremiums 182877 181575 180517

Legalreserve 4749 4749 4705

Untaxedreserve 22881 22881 22881

Reservesavailablefordistribution 50000 50000 50000

Otherreservesandretainedearnings 243828 215595 188319

Revaluationreserves 76121 43968 66511

Treasuryshares(-) (68232) (47232) (47091)

Netprofitfortheperiod 55558 68074 67779

Total 615273 587101 581112

ThesharecapitalofBankDegroofisrepresentedby8019131ordinaryshareswithoutparvalue.Allsharesarefullysubscribedandpaid.Movementsonsharecapitalaredetailedbelow:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

AMOUNTNUMBEROF

SHARES AMOUNTNUMBEROF

SHARES AMOUNTNUMBEROF

SHARES

Openingbalance 47491 8019131 47491 8019131 47051 7945796

Capitalincrease 0 0 0 0 240 40000

Shareoptionplansexercised 0 0 0 0 200 33335

Closingbalance 47491 8019131 47491 8019131 47491 8019131

IfalloptionsoutstandingonBankDegroofsharesat30September2012weretobeexercised,thenumberofshareswouldincreaseby97805,correspondingtoanamountofEUR586830.Theannualgeneralshareholders’meetingon11February2008resettheauthorizedsharecapitalforthefollowingfiveyearsatamaximumlevelofEUR8500000,excludingsharepremium.At30September2012,theunusedpartoftheauthorizedsharecapitalamountedtoEUR6624994,cor-respondingto1104165shareswithafractionalvalueofEUR6.ThereservesandretainedearningscomprisethereservesofBankDegroof,includingtheinitialimpactofthetransitiontointernationalfinancialreportingstandards(IFRS),theundistributedresultsofthegroup,aswellasthedifferencebetweentheacquisitionordisposalpriceandthecarryingvalueofshareholders’equityacquiredordisposedofinthecontextofachangeinthepercentageshareholdingofasubsidiarythatdidnotresultinachangeinthescopeofconsolidation.Revaluationreservesincludeunrealizedgainsandlossesonavailable-for-salefinancialassets(seenote7.4),unrealized gains and losses on debt securities reclassified from ‘Available-for-sale financial assets’, andtranslationdifferences resultingfromtheconsolidationof financialstatementsofentitiesprepared inafunctionalcurrencydifferentfromthatusedbyBankDegroof.At30September2012,theDegroofgroupheld430167sharesinBankDegroofSA,representing5.36%ofthesubscribedcapital.Thesetreasurysharesareused,asageneralrule,tocoverstaffincentiveplans.

7.21fairvaluesoffinancialinstruments

Thecarryingvaluesandfairvaluesofthefinancialinstrumentsaresetout,bycategoryoffinancialinstrument,inthetablebelow:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010CARRyING

AMOUNTFAIR

vALUECARRyING

AMOUNTFAIR

vALUECARRyINGAMOUNTE

FAIRvALUE

Financial assetsCashandbalanceswithcentralbanks 183300 183300 833099 833099 284963 284963

Loansandadvancestocreditinstitutions 206597 206610 193850 193863 176440 176438

Loansandadvancestocustomers 1955301 1955469 1880749 1873118 1870790 1876258

Financialassetsheldfortrading 89584 89584 117299 117299 108459 108459

Financialassetsdesignatedatfairvaluethroughprofitorloss 1138872 1138872 1205494 1205494 1046951 1046951

Available-for-salefinancialassets 1258552 1258552 841697 841697 973035 973035

Financialassetsheldtomaturity 249738 252376 62401 58594 136392 134731

Total 5081944 5084763 5134589 5123164 4597030 4600835

Financial liabilitiesFinancialliabilitiesheldfortrading 117228 117228 125629 125629 177924 177924

Derivativesheldforhedgingpurposes 0 0 1990 1990 0 0

Financialassetsatamortizedcost 4477981 4484916 4523334 4527698 3958079 3962903

Deposits from credit institutions 171 081 171 217 143 134 143 153 268 669 268 736

Deposits from customers 4 247 396 4 250 556 4 316 660 4 317 937 3 625 874 3 627 159

Subordinated liabilities 46 497 50 136 50 531 53 599 50 531 54 003

Debt securities 13 007 13 007 13 009 13 009 13 005 13 005

Total 4595209 4602144 4650953 4655317 4136003 4140827

Forthosefinancialinstrumentsthatarenotvaluedatfairvalueinthefinancialstatements,thefol-lowingmethodsandassumptionsareusedtodeterminetheirfairvalue:

− thecarryingvalueofshorttermfinancialinstrumentsandoffinancialinstrumentswithoutfixedmaturitiescorrespondstoareasonableapproximationoftheirfairvalue;

− otherloansandborrowingsarerevaluedonthebasisofthemostrecentlyobservedpriceorbydiscountingtheirfuturecashflowsbasedonthemarketinterestratetrendsattheyear-end.

méthodesethypothèsesutilisées

88 Annualreport2012


7.21fairvaluesoffinancialinstruments

Thecarryingvaluesandfairvaluesofthefinancialinstrumentsaresetout,bycategoryoffinancialinstrument,inthetablebelow:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010CARRyING

AMOUNTFAIR

vALUECARRyING

AMOUNTFAIR

vALUECARRyINGAMOUNTE

FAIRvALUE

Financial assetsCashandbalanceswithcentralbanks 183300 183300 833099 833099 284963 284963

Loansandadvancestocreditinstitutions 206597 206610 193850 193863 176440 176438

Loansandadvancestocustomers 1955301 1955469 1880749 1873118 1870790 1876258

Financialassetsheldfortrading 89584 89584 117299 117299 108459 108459

Financialassetsdesignatedatfairvaluethroughprofitorloss 1138872 1138872 1205494 1205494 1046951 1046951

Available-for-salefinancialassets 1258552 1258552 841697 841697 973035 973035

Financialassetsheldtomaturity 249738 252376 62401 58594 136392 134731

Total 5081944 5084763 5134589 5123164 4597030 4600835

Financial liabilitiesFinancialliabilitiesheldfortrading 117228 117228 125629 125629 177924 177924

Derivativesheldforhedgingpurposes 0 0 1990 1990 0 0

Financialassetsatamortizedcost 4477981 4484916 4523334 4527698 3958079 3962903

Deposits from credit institutions 171 081 171 217 143 134 143 153 268 669 268 736

Deposits from customers 4 247 396 4 250 556 4 316 660 4 317 937 3 625 874 3 627 159

Subordinated liabilities 46 497 50 136 50 531 53 599 50 531 54 003

Debt securities 13 007 13 007 13 009 13 009 13 005 13 005

Total 4595209 4602144 4650953 4655317 4136003 4140827

Forthosefinancialinstrumentsthatarenotvaluedatfairvalueinthefinancialstatements,thefol-lowingmethodsandassumptionsareusedtodeterminetheirfairvalue:

− thecarryingvalueofshorttermfinancialinstrumentsandoffinancialinstrumentswithoutfixedmaturitiescorrespondstoareasonableapproximationoftheirfairvalue;

− otherloansandborrowingsarerevaluedonthebasisofthemostrecentlyobservedpriceorbydiscountingtheirfuturecashflowsbasedonthemarketinterestratetrendsattheyear-end.

méthodesethypothèsesutilisées

Bankdegroof 89

BankDegroofusesahierarchyofthreelevelsoffairvalues,byreferencetothesourceofdatausedtodeterminethefairvalue:Level 1 – Published market value:thiscategorycomprisesfinancialinstrumentsforwhichthefairvalueisdeterminedbydirectreferencetopricesquotedonanactivemarket.Level 2 – Valuation technique based on observable market data:thiscategoryincludesfinan-cial instruments forwhich the fairvaluesaredeterminedby reference tovaluation techniques theparametersofwhicharederivedfromanactivemarketorwhichareobservable;Level 3 – Valuation technique based on non-observable market data:thiscategoryincludesfinancialinstrumentsforwhichasignificantpartoftheparametersusedforthedeterminationofthefairvaluearenotderivedfromobservablemarketdata.

Financialinstrumentsmarkedtofairvalue(excludingaccruedinterest)areanalyzedasfollows:

(inthousandsofEUR)

30.09.2012 LEvEL1 LEvEL2 LEvEL3 TOTAL

Financial assets

Derivatives 0 69898 0 69898

Financialassetsheldfortrading 13027 1135 0 14162

Financialassetsdesignatedatfairvaluethroughprofitorloss 1128450 0 0 1128450

Available-for-salefinancialassets1 972225 184869 91975 1249069

Total 2113702 255902 91975 2461579


Derivatives 0 104276 0 104276

Financialliabilitiesheldfortrading 391 0 0 391

Total 391 104276 0 104667

(inthousandsofEUR)


Financial assets

Derivatives 209 92086 0 92295




Total 1785992 253798 96122 2135912


Derivatives 6 104347 0 104353


Total 194 104347 0 104541

1Notincludingfinancialassetsmeasuredatcost.

90 Annualreport2012


(inthousandsofEUR)


Financial assets

Derivatives 275 94064 0 94339




Total 1810871 211769 84231 2106871


Derivatives 0 145350 0 145350


Total 7341 146051 0 153392

ThetablebelowsetsoutthemovementsrelatingtofinancialinstrumentsvaluedatfairvalueunderLevel3:

(inthousandsofEUR)

AvAILABLE-FOR-SALEFINANCIALASSETS

Closingbalanceat30.09.2009 70.139

Profitsandlossesrecognisedintheresultforthecurrentyear2 0

Profitsandlossesrecognisedinshareholders’equity 13512

Acquisitions 100

Issuances 480

Settlements 0

Transferstolevel3 0

Transfersfromlevel3 0

Changestothescopeofconsolidation 0

Other 0

Closingbalanceat30.09.2010 84231


Profitsandlossesrecognisedinshareholders’equity 3782

Acquisitions 5452

Issuances 252

Settlements 0

Transferstolevel3 2405



Other 0



Profitsandlossesrecognisedinshareholders’equity (2823)

Acquisitions 887

Issuances 75

Settlements (5221)

Transferstolevel3 0



Other 0


2Recordedunder“Netresultonfinancialinstrumentsnotdesignatedatfairvaluethroughprofitorloss”(note8.6).

Bankdegroof 91

NoprofitsorlossesresultingfromtheLevel3assetsincludedinthebalancesheethavebeenincludedintheresultforthecurrentfinancialyear.

ThefinancialinstrumentsvaluedusingaLevel3modelareprincipallyunquotedshares.Themethodthatisgenerallyusedusesstockmarketmultiplesforthemostrecentpublishedconsolidatedresultsofcomparablecompaniesthatarequoted.Adiscountforlackofliquidityissubsequentlyappliedtotheresultantvalues.Thevaluationsareperformedbyanindependentdepartmentofthefrontoffice.

Analternativevaluation,usinghypothesesthatarereasonablypossiblebutgenerallylessfavourable,wouldresultinthefollowingchangestothevaluationoftheportfolio:

(inthousandsofEUR)

vALUEALTERNATIvE

vALUEIMPACTON

RESULTSIMPACTON

EqUITy

30.09.2012Unquotedvariable-incomesecurities 91975 74604 0 (17371)



Thealternativehypothesesthatarereasonablypossiblethatwereusedinclude,dependingontheval-ues,theuseofhigherriskpremiumsfordiscounting(forthevaluescalculatedusingadiscountedcashflowmodel),theuseofanalternativecalculationbasedonstockmarketmultiplesofcomparablecom-panies,ortheuseofahigherdiscountforlackofliquidity.

92 Annualreport2012


8.notestotheconsolidatedincomestatement

8.1interestincomeandexpenseInterestincomeandexpense,byclassofinterest-bearingfinancialinstrument,isasfollows:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Interest income 97 749 95 378 86 764

Financial assets held for trading 222 1 471 268

Financial assets at fair value through profit or loss 29 520 27 651 28 561

Hedging derivatives 0 125 0

Interestincomeonassetsstatedatfairvalue 29742 29247 28829

Loans and advances to credit institutions 2 572 4 277 1 844

Loans and advances to customers 45 991 47 074 41 255

Available-for-sale securities 12 410 11 788 11 035

Held to maturity securities 6 919 2 442 3 251

Interest on impaired assets 112 547 544

Other 3 3 6

Interestincomeonassetsnotstatedatfairvalue 68007 66131 57935

Interest expenses (25 078) (26 729) (22 115)

Financial liabilities held for trading 0 (7) (16)

Hedging derivatives 0 (285) 0

Interestexpensesonassetsstatedatfairvalue 0 (292) (16)

Deposits from credit institutions (1 252) (2 898) (5 888)

Deposits from customers (21 554) (21 193) (13 934)

Debt securities (198) (175) (94)

Subordinated liabilities (2 037) (2 123) (2 157)

Other (37) (48) (26)

Interestexpensesonliabilitiesnotstatedatfairvalue (25078) (26437) (22099)

Netinterestincome 72671 68649 64649

8.2dividendincomeDividendincomeisdetailedbelow,bycategoryoffinancialasset:


Financialassetsheldfortrading 87 167 216

Financialassetsdesignatedatfairvaluethroughprofitorloss 2885 3465 2459

Available-for-salesecurities 6098 7032 8686

Total 9070 10664 11361

Bankdegroof 93

8.3feeandcommissionincomeandexpense

Feeandcommissionincomeandexpenseisdetailedbelow,bytypeofservice:


Fee and commission income 312 383 309 648 260 593

Assetmanagement 133303 144376 127041

Issuesandplacementssecurities 61553 41703 25386

Custodianservices 41009 41596 37789

Othersecuritiesservices 54235 66494 55285

Cashrelatedservices 8210 7211 4870

Financialengineering 11415 5405 8047

Derivatives 2658 2863 2175

Fee and commission expense (118 813) (116 269) (84 787)

Assetmanagement (44350) (51640) (39424)

Issuesandplacementssecurities (48368) (28768) (15651)

Custodianservices (6011) (5828) (4954)

Othersecuritiesservices (16953) (26069) (21409)

Cashrelatedservices (2737) (3400) (2820)

Derivatives (394) (564) (529)

Netcommissionincome 193570 193379 175806

8.4netresultonfinancialinstrumentsheldfortradingThetablebelowanalyzes,bytypeoffinancialinstrument,gainsandlossesonfinancialinstrumentsheldfortrading:


Realized and unrealized gains (losses) on financial instruments held for trading 16 771 24 718 24 510


variableincomesecurities 968 1564 4439

Exchangeactivities 9124 14497 11447

Other 167 125 227

Gains (losses) on derivatives (27 179) (15 225) (41 735)

Foreignexchangederivatives 3998 (568) 1687

Interestratederivatives (27225) (9255) (31796)

Equityderivatives (9025) 300 (5740)

Otherderivatives 5073 (5702) (5886)

Netresultonfinancialinstrumentsheldfortrading

(10408) 9493 (17225)

Withtheexceptionofderivatives,allinterestreceivedandpaidonfinancialinstrumentsisrecordedasinterestincome.Accordingly,theabove-mentionedgainsandlossesonderivativesrepresenttheimpactof their revaluation to fairvalue includingaccrued interest,while thegainsand lossesonotherfinancialinstrumentsrepresentonlythechangesintheirmarketvalues.

94 Annualreport2012


8.5netresultonfinancialinstrumentsdesignatedatfairvaluethroughprofitorlossThetablebelowanalyzes,bytypeoffinancialinstrument,gainsandlossesonfinancialinstrumentsdesignatedatfairvaluethroughprofitorloss:


Fixedincomesecurities 17735 (4226) (1510)

variableincomesecurities 5547 (4302) 2396

Netresultonfinancialinstrumentsdesignatedatfairvaluethroughprofitorloss

23282 (8528) 886

Allinterestreceivedandpaidonfinancialinstrumentsisrecordedasinterestincome.Accordingly,theabove-mentionedgainsandlossesrepresentonlythechangesinthemarketvaluesofthesefinancialinstruments.

8.6netresultonfinancialinstrumentsnotdesignatedatfairvaluethroughprofitorloss

Thetablebelowanalyzes,bycategoryandbytypeoffinancialinstrument,gainsandlossesonfinancialinstrumentsnotdesignatedatfairvaluethroughprofitorloss:


Gains (losses) on available-for-sale financial assets 11 799 9 588 8 709

Fixedincomesecurities–publicdebts (1701) 343 81

Fixedincomesecurities–otherdebts 14 (8) 0

variableincomesecurities 13486 9253 8628

Net result on sale of loans and advances 58 36 153

Gainsonsaleofloansandadvances 236 756 172

Lossesonsaleofloansandadvances (178) (720) (19)

Gains (losses) on held to maturity financial assets 0 (54) 0

Fixedincomesecurities–publicdebts 0 (54) 0

Netresultonfinancialinstrumentsnotdesignatedatfairvaluethroughprofitorloss

11857 9570 8862

Includedinthegainsandlossesontheabove-mentionedavailable-for-saleassetsaretheamountstransferredfromequityasaresultofthederecognitionoffinancialinstruments.

Bankdegroof 95

8.7netresultonhedgeaccountingResultonhedgeaccountingcomprisesthefollowing:


Fair value hedge

Changesinthefairvalueofthehedgeditems 0 1906 0

Changesinthefairvalueofthehedgingderivatives 0 (1957) 0

Netresultonhedgeaccounting 0 (51) 0

Accruedinterestonhedginginstrumentsisincludedintheinterestincomeandexpense.

8.8othernetoperatingresultsOthernetoperatingresultsareanalyzedbelow:


other operating income 9 048 8 713 6 761

Leaseincome 2419 2326 2148

Realizedcapitalgainsonsalesoftangibleandintangiblefixedassets 85 1703 43

Reversalsofprovisions 25 13 797

Supplyofservices 3581 2659 2006

Other 2938 2012 1767

other operating charges (1 696) (2 183) (2 380)Realizedcapitallossesonsalesoftangibleandintangiblefixedassets (159) (288) (239)

Increaseinprovisions (1222) (1531) (1946)

Other (315) (364) (195)

Othernetoperatingresults 7352 6530 4381

8.9personnelexpenses

Personnelexpensescomprisethefollowing:(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Wagesandsalaries (104932) (91843) (89762)

Socialsecurity,socialinsuranceandextra-legalinsurance (19116) (15494) (14760)

Pensioncosts (5534) (4511) (4000)

Share-basedcompensation (977) (3761) (3237)

Othercosts (2322) (2156) (1908)

Personnelexpenses (132881) (117765) (113667)

Note10providesdetailedinformationaboutpost-employmentbenefitsandshare-basedpayments.

96 Annualreport2012


Thenumbersofpersonnelemployed,expressedinfull-timeequivalents,are,bycategory:

(inunits)

FTEon 30.09.2012 30.09.2011 30.09.2010

Seniormanagement 263 253 245

Employees 810 770 776

Workers 8 8 9

Total 1081 1031 1030

8.10generalandadministrativeexpenses

Generalandadministrativeexpensesareanalyzedbelow:(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Marketing,advertisingandpublicrelations (3065) (2671) (1917)

Professionalfees (8666) (9221) (7507)

Operatingleases (8911) (6307) (5878)

ITandtelecommunicationscharges (8857) (8176) (7629)

Repairsandmaintenance (6145) (5472) (5294)

Operationaltaxes (6074) (5751) (5005)

Othergeneralandadministrativeexpenses (18196) (17226) (12174)

Generalandadministrativeexpenses (59914) (54824) (45404)

Operatingleaseexpensesrelateprimarilytovehiclesandbuildings.Theothergeneralandadministrativeexpensesrepresentprimarilyentertainmentandtravelexpenses,expenses foroffice supplies, trainingexpenses, subscriptions, and insurancepremiumsother thanthoserelatedtopersonnel.

8.11depreciationofpropertyandequipmentandamortizationofintangibleassets

Duringtheyearended30September2012,depreciationofpropertyandequipmentamountedtoEUR5.6million(30September2011:EUR5.6million;30September2010:EUR5.8million)andamortiza-tion of intangible assets amounted to EUR 3.2 million (30 September 2011: EUR 3.3 million;30September2010:EUR3.4million).Ananalysisofdepreciationandamortizationbycategoryofpropertyandequipmentandofintangibleassetisprovidedinnotes7.8and7.9.

Bankdegroof 97

8.12impairmentsMovementsinimpairments,bycategoryofasset,areasfollows:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Reversals of impairment losses 28 239 211

Loansandadvances 28 190 211

Investmentsinentitiesaccountedforusingtheequitymethod 0 49 0

Allowance for impairments (27 568) (22 091) (2 898)

Loansandadvances (13036) (1502) (1143)

Available-for-salefinancialassets (14471) (12750) (1499)

Tangibleassets (13) (9) (22)

Intangibleassets (48) (822) 0

Investmentsinentitiesaccountedforusingtheequitymethod 0 (7008) (234)

Netvariationofimpairmentlossesonassets (27540) (21852) (2687)

Detailsofthemovementsinimpairmentsoftangibleandintangiblefixedassetsareincludedinnotes7.8and7.9,bycategoryoftangibleandintangiblefixedasset.

8.13incometaxexpensesThenetincometaxexpenseisexplainedbythefollowingelements:


tax on current year result (19 140) (16 631) (8 946)

Incometaxfortheperiod (18911) (17919) (12786)

Deferredtax (229) 1288 3840

other tax expense (4 056) 819 527

Incometaxonprioryears (3934) 952 643

Otheritems (122) (133) (116)

Nettaxexpense (23196) (15812) (8419)

98 Annualreport2012


ThetablebelowreconcilesthenormaltaxrateinBelgium(33.99%)totheeffectivetaxrateofBankDegroof:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Profit before income tax 78 247 83 908 76 230

Income of entities accounted for using the equity method 0 2 471 1 484

Taxbase 78247 86379 77714

Taxrateapplicableatclosing 33.99% 33.99% 33.99%

Theoreticalincometaxexpense (26596) (29360) (26415)

Effectoftaxratedifferencesinotherjurisdictions 3151 3374 3103

Taximpactofnon-deductibleexpenses (8731) (10492) (6737)

Taximpactofnon-taxableincome 16904 16055 22589

Impactofchangeinincometaxrateonthetemporarydifferences 0 (36) 0

Permanentdifferences 509 3299 (1329)

Effectofotheritems 119 156 420

Unrecognizeddeferredtaxassets (4496) 373 (577)

Incometaxfortheperiod (19140) (16631) (8946)

Averageeffectivetaxrate 24.46% 19.25% 11.51%

Thefiscalimpactofnon-taxablerevenuesrelatesprincipallytorealizedgainsonsharesandnon-tax-abledividends.

Bankdegroof 99

8.14componentsofothercomprehensiveincome

Detailsofcomponentsofothercomprehensiveincomeareasfollows:(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Currency translation differences 881 2 205 3 236

Grossamount 881 2205 3236

Revaluation reserve - Available-for-sale-financial assets 31 377 (24 746) 19 540

Fixedincomesecurities 10598 (7750) 4957

Adjustmenttofairvalue,beforetaxes 10745 (14854) 4181

Transferfromthereservetoresults,beforetaxes 4775 3531 3064

Impairments 57 1 333 61

Losses (gains) on disposals 1 687 (335) (81)

Prorata of the reserve for the revaluation of available-for-sale financial assets following their reclassification 3 031 2 533 3 084

Taxesrecordeddirectlyinreserves (4922) 3573 (2288)

variableincomesecurities 20779 (16996) 14583

Adjustmenttofairvalue,beforetaxes 26482 (9468) 23151

Transferfromthereservetoresults,beforetaxes (5530) (7592) (8543)

Impairments 7 956 1 661 85

Losses (gains) on disposals (13 486) (9 253) (8 628)

Taxesrecordeddirectlyinreserves (173) 64 (25)

share of other comprehensive income of compa-nies accounted for using the equity method 0 0 0

Totalothercomprehensiveincome 32258 (22541) 22776

9.rightsandcommitments

9.1assetsinopencustodyAssetsinopencustodyareprimarilymarketablesecuritiesthathavebeenplacedincustodybyclients,regardlessofwhetherornotthecontrolovertheassetsbytheholderisrestricted,orwhetherornottheassetsaresubjecttoamanagementcontractwithBankDegroof.Theseassetsaremeasuredatfairvalue.AssetsinopencustodywiththeBankat30September2012,2011and2010amountedtoEUR49.9billion,EUR43.4billionandEUR47.9billionrespectively.

9.2creditrelatedrightsandcommitmentsBankDegroofhascommitmentsundercreditlinesgrantedtoclients,theunusedportionofwhichat30 September 2012 amounted to EUR 266.9 million (30 September 2011: EUR 222.7 million;30September2010:EUR193.2million).

100 Annualreport2012


9.3guaranteesgivenandreceived

BankDegroofhaspledged,foritsownaccountandforthoseofitsclients,financialinstrumentsamounting to EUR 97.0 million (30 September 2011: EUR 107.3 million; 30 September 2010:EUR85.7million).BankDegroofhasreceivedpledgesofassetsfromitsclientsamountingtoEUR2867.8millionat30September2012(30September2011:EUR3102.7million;30September2010:EUR2836.9mil-lion).Asageneralrule,thesepledgescannotbeusedbytheBank,intheabsenceofadefaultbythe owner of the pledge, except for those obtained in the context of repo operations, whichamounted to EUR 59.2 million at 30 September 2012 (30 September 2011: EUR 65.5 million;30September2010:EUR58.7million).Ofthepledgesobtainedthatcanbeused,nonehadbeengivenasaguaranteeforrepooperationsat30September2012(guaranteesobtainedandgivenasguaranteesat30September2011:EUR14.4million;30September2010:EUR5.4million).

10.employeebenefitsandotherremuneration

10.1post-employmentbenefitsPost-employmentbenefitscomprisepensionschemesandthepartialpaymentofmedicalcareinsur-ancepremiumsfollowingtheretirementofemployees.Thepensionschemesincludebothdefinedcontributionanddefinedbenefitplans.Thedefinedben-efitplanscompriseadefinedbenefitplanandadefinedcontributionplanwithreturnsthatareguar-anteedinaccordancewithlocalobligations.ThedefinedbenefitplanwasclosedinDecember2004.

Bankdegroof 101

ThechargeforthecurrentfinancialyearinrespectofthedefinedcontributionplanswasEUR0.8million(30September2011:EUR0.7million;30September2010:EUR1.7million).Fortheotherplans,thetablebelowdetailstheDegroofgroup’scommitmentsandtheprincipalactuarialassumptionsused:

(inthousandsofEUR)PENSIONPLANS OTHERBENEFITS

30.09.2012 30.09.2011 30.09.2010 30.09.2012 30.09.2011 30.09.2010

Present value of the funded obligations 46 129 34 899 33 183 0 0 0

Fair value of plan assets 27 902 23 059 24 677 0 0 0

Deficit(surplus)forfundedplans 18227 11840 8506 0 0 0

Presentvalueoftheunfundedobligations 0 0 0 13257 7828 6971

Unrecognizednetactuarialgain(loss) (17545) (11646) (8488) (7138) (2708) (2746)

Unrecognizedpastservice(cost)benefit 0 0 0 (96) (112) (128)

A. Net liability (asset) of post-employment benefits 682 194 18 6 023 5 008 4 097

B. Change in Defined Benefit obligation

Balanceatbeginningofyear 34899 33183 29187 7828 6971 4850

Currentservicecost 2383 2181 2059 570 550 385

Interestcost 1636 1285 1461 369 277 250

Actuarial(gain)loss 7948 (753) 2598 4575 115 1553

Benefitspaidfromplan/company (776) (1078) (2167) (85) (85) (67)

Nettransfer 39 81 45 0 0 0

Balanceatendofyear 46129 34899 33183 13257 7828 6971

C. Change in fair value of plan assets


Expectedreturnonplanassets 1161 1215 1271 0 0 0

Actuarialgain(loss)onplanassets 1461 (4284) 61 0 0 0

Employercontributions 2958 2448 2625 85 85 67


Acquisitions 39 81 45 0 0 0




ThechargeforthecurrentfinancialyearinrespectofthedefinedcontributionplanswasEUR0.8million(30September2011:EUR0.7million;30September2010:EUR1.7million).Fortheotherplans,thetablebelowdetailstheDegroofgroup’scommitmentsandtheprincipalactuarialassumptionsused:


30.09.2012 30.09.2011 30.09.2010 30.09.2012 30.09.2011 30.09.2010

Present value of the funded obligations 46 129 34 899 33 183 0 0 0

Fair value of plan assets 27 902 23 059 24 677 0 0 0

Deficit(surplus)forfundedplans 18227 11840 8506 0 0 0

Presentvalueoftheunfundedobligations 0 0 0 13257 7828 6971

Unrecognizednetactuarialgain(loss) (17545) (11646) (8488) (7138) (2708) (2746)

Unrecognizedpastservice(cost)benefit 0 0 0 (96) (112) (128)

A. Net liability (asset) of post-employment benefits 682 194 18 6 023 5 008 4 097

B. Change in Defined Benefit obligation



Interestcost 1636 1285 1461 369 277 250

Actuarial(gain)loss 7948 (753) 2598 4575 115 1553


Nettransfer 39 81 45 0 0 0


C. Change in fair value of plan assets


Expectedreturnonplanassets 1161 1215 1271 0 0 0

Actuarialgain(loss)onplanassets 1461 (4284) 61 0 0 0

Employercontributions 2958 2448 2625 85 85 67


Acquisitions 39 81 45 0 0 0


Bankdegroof 103


30.09.2012 30.09.2011 30.09.2010 30.09.2012 30.09.2011 30.09.2010

D. Components of cost


Interestcost 1636 1285 1461 369 277 250

Expectedreturnonplanassets (1161) (1215) (1271) 0 0 0

Recognitionofpastservicecost 0 0 0 16 16 16

Recognitionofnetloss(gain) 587 373 231 144 153 56

Netcostofpost-employmentbenefits 3445 2624 2480 1099 996 707

Actualreturnonplanassets 2622 (3069) 1332 0 0 0

e.1 Principal actuarial assumptions to determine the Defined Benefit obligations

Discountrate 2.90% 4.75% 4.00% 2.90% 4.75% 4.00%

Futuresalaryincrease 3.25% 3.25% 3.25% 0.00% 0.00% 0.00%

Inflationrate 2.25% 2.25% 2.25% 5.25% 5.25% 5.25%


Discountrate 4.75% 4.00% 5.20% 4.75% 4.00% 5.20%

Expectedrateofreturnonplanassets 4.86% 4.89% 5.51% 0.00% 0.00% 0.00%


Inflationrate 2.25% 2.25% 2.25% 5.25% 5.25% 5.25%

F. Plan assets

Equitysecurities 37.93% 50.40% 51.40% 0.00% 0.00% 0.00%

Debtsecurities 52.59% 40.06% 38.96% 0.00% 0.00% 0.00%

Realestate 9.48% 9.54% 9.64% 0.00% 0.00% 0.00%

G. History of gains and losses due to experience adjustments

Differencebetweentheexpectedandactualreturnonplanassets

Amount (1461) 4284 (61) 0 0 0

Percentage (5.24%) 18.58% (0.25%) 0.00% 0.00% 0.00%

Experience(gain)lossonplanliabilities

Amount 369 1859 (831) (431) 1685 (198)

Percentage 0.80% 5.33% (2.50%) (3.25%) 21.53% (2.84%)

Thetablebelowsetsoutthedataandasensitivitytestoftheimpactofa1%changeintheannualmedicalcosts:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Medical cost trend rates

Initialtrendrate 5.25% 5.25% 5.25%

Ultimatetrendrate 5.25% 5.25% 5.25%

year NA NA NA

sensitivity analysis to medical cost trend rates 1% (1%) 1% (1%) 1% (1%)

Effectontotalservicecostandinterestcost 309 (223) 290 (206) 204 (148)

Effectondefinedbenefitobligation 4340 (3114) 2196 (1624) 2094 (1527)




30.09.2012 30.09.2011 30.09.2010 30.09.2012 30.09.2011 30.09.2010

D. Components of cost


Interestcost 1636 1285 1461 369 277 250

Expectedreturnonplanassets (1161) (1215) (1271) 0 0 0

Recognitionofpastservicecost 0 0 0 16 16 16

Recognitionofnetloss(gain) 587 373 231 144 153 56

Netcostofpost-employmentbenefits 3445 2624 2480 1099 996 707

Actualreturnonplanassets 2622 (3069) 1332 0 0 0


Discountrate 2.90% 4.75% 4.00% 2.90% 4.75% 4.00%


Inflationrate 2.25% 2.25% 2.25% 5.25% 5.25% 5.25%


Discountrate 4.75% 4.00% 5.20% 4.75% 4.00% 5.20%

Expectedrateofreturnonplanassets 4.86% 4.89% 5.51% 0.00% 0.00% 0.00%


Inflationrate 2.25% 2.25% 2.25% 5.25% 5.25% 5.25%

F. Plan assets

Equitysecurities 37.93% 50.40% 51.40% 0.00% 0.00% 0.00%

Debtsecurities 52.59% 40.06% 38.96% 0.00% 0.00% 0.00%

Realestate 9.48% 9.54% 9.64% 0.00% 0.00% 0.00%

G. History of gains and losses due to experience adjustments

Differencebetweentheexpectedandactualreturnonplanassets

Amount (1461) 4284 (61) 0 0 0

Percentage (5.24%) 18.58% (0.25%) 0.00% 0.00% 0.00%

Experience(gain)lossonplanliabilities

Amount 369 1859 (831) (431) 1685 (198)

Percentage 0.80% 5.33% (2.50%) (3.25%) 21.53% (2.84%)

Thetablebelowsetsoutthedataandasensitivitytestoftheimpactofa1%changeintheannualmedicalcosts:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Medical cost trend rates

Initialtrendrate 5.25% 5.25% 5.25%

Ultimatetrendrate 5.25% 5.25% 5.25%

year NA NA NA

sensitivity analysis to medical cost trend rates 1% (1%) 1% (1%) 1% (1%)

Effectontotalservicecostandinterestcost 309 (223) 290 (206) 204 (148)

Effectondefinedbenefitobligation 4340 (3114) 2196 (1624) 2094 (1527)

Bankdegroof 105

10.2share-basedpaymentsBankDegroofhasissuedseveralshareoptionplansinrecentyearsforthebenefitofthedirectorsandseniormanagementwiththeobjectiveofensuringtheirloyaltyandaligningtheirpersonalinterestswiththoseoftheBank.Theseplanscomplywithlocallegalprovisions.

Theseoptionplansincludebothcash-settledplansandplansthataresettledinshares.Inbothcasesthereisgenerallyathreetofouryearvestingperiod.

Theshareoptionplanswhicharesettledbythedeliveryofsharesaresettledwitheithernewsharesorexistingsharesandcanbeexercisedeitherquarterlyorannuallyattheendofthevestingperiod.Theseoptionplansareanalyzedbelow,bymaturitydate,at30September2012:

(inunits;inEUR)

30.09.2012 30.09.2011 30.09.2010

FINALExPIRyDATE

NUMBEROFOUT-

STANDINGOPTIONS

WEIGHTEDAvERAGEExERCISE

PRICE

NUMBEROFOUT-

STANDINGOPTIONS


PRICE

NUMBEROFOUT-

STANDINGOPTIONS


PRICE

30.09.2015 97805 192.30 98005 192.30 102790 192.30

30.09.2017 103595 166.49 104045 166.49 0 0

30.09.2018 183986 149.42 104533 148.92 104903 148.92

385386 164.89 306583 168.75 207693 170.39



Themovementsonshareoptionsareasfollows:

(inunits;inEUR)

30.09.2012 30.09.2011 30.09.2010

NUMBEROFOUTS-TANDINGOPTIONS


PRICE



PRICE



PRICE

Openingbalance 306583 168.75 207693 170.39 139500 161.70

Optionsgranted 80026 150.08 104045 166.49 104903 148.92

Optionswithdrawn (1223) 162.48 (5155) 178.50 (2875) 174.95

Optionsexercised 0 0 0 0 (33335) 67.60

Optionsexpired 0 0 0 0 (500) 67.60

Closingbalance 385386 164.89 306583 168.75 207693 170.39ofwhichexercisable 97805 192.30 98005 192.30 0 0

In respect of the above-mentioned plans and in accordance with IFRS 2, the Bank has recorded anexpenseofEUR1.3millioninpersonnelexpensesduringthecurrentfinancialyear(30September2011:EUR1.1million;30September2010:EUR1.0million).Untilsuchtimeastheseoptionsareexercised,therecordingoftheexpensedoesnothaveanimpactonshareholders’equityasthisbalanceisincreasedbyan identicalamount.Oncetheoptionsareexercised,shareholders’equitywill increasebyanamountequaltothenumberofoptionsexercisedmultipliedbytheexerciseprice.

Inordertodeterminetheinitialcostoftheoptionstobeexpensed,theBankusesa‘BlackandScholes’modelwiththefollowingparametersatthegrantdate:

30.09.2012 30.09.2011 30.09.2010

options granted during the period at end of:

Grantdate 31May2012 30May2011 28May2010

Finalmaturity 31March2018 31March2017 31March2018

Spotmarketvalue(EUR) 150.08 166.49 148.92

Dividends(EUR) 37.50 37.50 50.14

Exercisedprice(EUR) 150.08 166.49 148.92

volatility 22.00% 18.00% 25.00%

Interestrate 1.24% 2.95% 2.84%

Fair value of options granted(eUR) 15.78 19.90 23.94

Inadditiontotheabove-mentionedplans,therearetwocash-settledoptionplansat30September2011.Thefairvalueoftheseoptionsiscalculatedannuallyonthebasisoftheunderlyingvalueoftheoptions.Thefirstplanwasestablishedin2009usingasubsidiary(PrivatBankDegroof),forthesolebenefitofthedirectorsofPrivatBankDegroof.Thenumberofoptionsgrantedat15April2009was434700ofwhich313950remainoutstandingat30September2012.Theseoptionshaveafinalexercisedateof15September2016andanexercisepriceofEUR14.58.Duringthecurrentfinancialyear,thisplanhasgeneratedapositiveresultofEUR0.3millionasaresultofareductioninthevalueoftheoptions.Thesecondplanwasalsoestablishedin2009usingasubsidiary(BDSquareInvest),thesoleactivityofwhichwastoholdsharesinBankDegroof,financedbyownfundsandborrowings.Thenumberofoptionsgrantedat10June2009was103190ofwhich8707remainoutstandingat30September2012and93222weresettledincashduringthecurrentfinancialyear.Theseoptionshaveafinal

Bankdegroof 107

exercisedateof15March2014andanexercisepriceofEUR60.60.AminorpositiveresultofafewthousandEuroswasrecordedinrespectofthisplanduringthecurrentfinancialyear.TheplanthatisoperatedthroughBDSquareInvest,isvaluedusinganinternalarbitragemodelthatgivestheissuertheoptionofcoveringitsposition.Thismodeltakesintoaccountthere-measurednetassetvalueofthesubsidiary,thefinancingcostfortheremaininglifeoftheoption,possibledividendspaidoutbythesubsidiary,thecostofhedgingthevalueofthesubsidiary’sassetsandtheoptionexerciseprice.Thismodelmakesitpossibletoestimatethefairvalueoftheoptionontheleveragedsubsidiary,thevolatilityofwhichistoohazardoustoestimate.

Thedataforthismodelissetoutinthetablebelow:

OPTIONFAIRvALUEASAT 30.09.2012 30.09.2011 30.09.2010

options BD square Invest

Revaluednetasset(EUR) 100.61 112.56 90.46

Financingcost(EUR) 0.76 3.37 3.38

Hedgecost(EUR) 4.20 3.70 10.08

Exerciseprice(EUR) 60.60 60.60 60.60

Fair value of options granted (eUR) 44.97 59.03 43.32

TheplanthatusesPrivatBankDegroof,whichisnotahighlyleveragedsubsidiaryforwhichestimatingvolatilitywouldbetoodifficult,hasbeenvaluedusinga‘BlackandScholes’modelwiththefollowingparametersatthevaluationdate:

OPTIONFAIRvALUEASAT 30.09.2012 30.09.2011 30.09.2010

option PrivatBank Degroof

Grantdate 15April2009 15April2009 15April2009

Finalmaturity 15Sept.2016 15Sept.2016 15Sept.2016

Spotmarketvalue(EUR) 10.23 13.54 14.18

Dividends(EUR) 1.69 2.87 2.87

Exercisedprice(EUR) 14.58 14.58 14.58

volatility 18.40% 22.00% 20.00%

Interestrate 0.68% 1.90% 2.06%

Fair value of options granted (eUR) 0.15 1.31 1.75



11.relatedparties

ForBankDegroof,relatedpartiesincludeassociates,jointventures,pensionfunds,themembersoftheboardofdirectorsandexecutivecommitteeofBankDegroofBrussels,aswellastheclosefamilymembersoftheabove-mentionedpersonsandanycompanycontrolledorsignificantlyinfluencedbyoneoftheabove-mentionedpersons.

Thetablesbelowsummarize,bytype,thetransactionsenteredintowithrelatedpartiesduringthepastthreeyears:

30.09.2012 (inthousandsofEUR)

ENTITIESWITHJOINTCONTROLORSIGNIFICANT

INFLUENCE ASSOCIATES

kEyMANAGE-

MENT

OTHERRELATEDPARTIES TOTAL

Balance sheet

Overdrafts 158 0 101 0 259

Termloans 16184 0 36337 0 52521

Otherloansandadvances 0 0 0 155 155

Totalassets 16342 0 36438 155 52935

Deposits 9401 0 10148 1026 20575

Other 0 0 0 836 836

Otherliabilities 0 0 77 1 78


Guaranteesreceivedbythegroup 25960 0 103184 0 129144

Commitments 150 0 1000 0 1150

(inunits)

share options:

Granted 2200 0 0 5500 7700

Exercised/sold 3848 0 0 8646 12494




kEyMANAGE-

MENT


Profit and loss

Interestexpenses 87 0 97 11 195

Personnelexpenses 0 0 0 3576 3576

Other 0 0 0 48 48

Totalexpenses 87 0 97 3635 3819

Interestincome 952 0 2293 0 3245

Profitonderivatives 0 0 1 14 15

Feeandcommission 66 0 60 0 126

Totalincome 1018 0 2354 14 3386

Bankdegroof 109




kEyMANAGE-

MENT


Balance sheet

Overdrafts 0 0 2 0 2

Termloans 22206 2500 39084 0 63790

Otherloansandadvances 0 0 0 187 187

variable-incomesecurities 0 0 14 0 14

Otherassets 0 0 59 2 61

Totalassets 22206 2500 39159 189 64054

Deposits 17694 1 9456 1147 28298

Other 0 0 0 381 381

Otherliabilities 0 0 1 0 1

Totalliabilities 17694 1 9457 1528 28680Guaranteesreceivedbythegroup 25981 0 97585 0 123566

Commitments 57 2500 1884 0 4441

(inunits)

share options:

Granted 2600 0 5200 0 7800




kEyMANAGE-

MENT


Profit and loss


Lossonderivatives 0 0 1 4 5


Other 0 11 0 53 64

Totalexpenses 583 11 277 2847 3718



Totalincome 1250 67 1959 0 3276






kEyMANAGE-

MENT


Balance sheet

Overdrafts 0 0 1125 0 1125

Termloans 16889 2500 1537 0 20926

Totalassets 16889 2500 2662 0 22051

Deposits 28958 0 8841 1386 39185

Other 0 0 0 3 3

Totalliabilities 28958 0 8841 1389 39188Guaranteesreceivedbythegroup 19965 0 16858 0 36823

Commitments 57 2500 833 0 3390

(inunits)

share options:

Granted 3000 0 6000 0 9000

Exercised/sold 3000 0 750 0 3750




kEyMANAGE-

MENT


Profit and loss



Totalexpenses 879 0 247 2666 3792


Profitonderivatives 0 0 0 12 12


Other 1 0 0 0 1

Totalincome 5340 75 1459 12 6886

Alltransactionswiththerelatedpartiessetoutinthetablesabovewereenteredintoundernormalmarketconditions.

Thecostsrelatedtoremunerationpaidtothemembersoftheexecutivecommittee,includingdirec-tors’feespaid,andcostsrelatedtothegrantingofoptionstothemembersoftheboardofdirectors,arepresentedbycategoryofbenefitgrantedtopersonnel,asdefinedinIAS19andIFRS2:

(inthousandsofEUR)

30.09.2012 30.09.2011 30.09.2010

Short-termbenefits 6298 5870 4345

Post-employmentbenefits 196 154 1090

Share-basedpayments 218 448 435

Total 6712 6472 5870

Bankdegroof 111

12.postbalancesheetevents

Themeetingoftheboardofdirectorson13December2012decidedtoproposetotheannualgeneralshareholdersmeetingthatagrossdividendofEUR5.50persharegivingrisetoadistributionoutsidethegroupofEUR41739302,andauthorizedthepublicationofthefinancialstatements.

Atgroup leveloutsideBelgium, theBank isprogressively implementing theorganisationaldecisionstakenduringthefinancialyear.

Thus,thegroupisworkingonbringingtogetheritstwoFrenchsubsidiaries,BanqueDegroofFranceSAandAforgeFinanceHoldingSA,underanewholdingcompany(CompagnieFinancièreDegroof),whichwillbemajorityownedbyBankDegroofSA/Nv.This holding company will have three main shareholdings: Banque Degroof France, Degroof AforgeFamilyOfficeandDegroofAforgeCorporateFinance.Subjecttoregulatoryapproval,thetransactionwillbecompletedatthebeginningof2013andwillena-bletheBanktofurtherstructureitsbusinessinFranceandtoprovideitwithnewimpetus.

ThegroupisalsoworkingonthemergerinSwitzerlandofDegroofBanquePrivéeSAwithLandolt&Cie.Thismergershouldalsobefinalisedatthebeginningof2013.TheBankwillthenholdaminorityshare-holdinginaSwissbank,whichwillenableittoestablishapermanentpresenceandtointensityitsactiv-itiesinSwitzerlandthankstothecomplementarynatureoftheactivitiesofthetwoinstitutions.ThiswillalsoincreasetheBank’scriticalmassinSwitzerlandanddefactocreatefurtherpossiblesynergieswiththerestofthegroup.



Bankdegroof 113

(inthousandsofEUR)

30.09.2012

Auditor’sfeesintheexerciceofhismandate 250

Feesforexceptionalservicesorspecialmissionsundertakenforthecompanybytheauditor 41

Otherattestationprojects 21

Othermissionsoutsidetheauditingmissions 20

Feespaidtopartieslinkedtotheauditorinrespectofanauditmandateundertakenatgrouplevel 485

Emolumentsforexceptionalservicesorspecificprojectscompletedwithinthecompanybypartiesrelatedtotheauditor 115

Otherattestationprojects 30

Taxconsultancymissions 66

Othermandatesinadditiontoauditingmandates 19

statutory auditor’s report to the general meeting of shareholders of Banque Degroof sA on the consolidated financial statements for the year ended 30 september 2012

Inaccordancewithlegalandstatutoryrequirements,wereporttoyouontheperformanceofourauditmandate.Thisreportincludesouropinionontheconsolidatedfinancialstatementstogetherwiththerequiredadditionalcomment.

UNQUALIFIEDAUDITOPINIONONTHECONSOLIDATEDFINANCIALSTATEMENTSWe have audited the consolidated financial statements of Banque Degroof SA (“the company”) and its subsidiaries (jointly “thegroup”),preparedinaccordancewithInternationalFinancialReportingStandards,asadoptedbytheEuropeanUnion,andwiththelegalandregulatoryrequirementsapplicableinBelgium.Theseconsolidatedaccountscomprisetheconsolidatedbalancesheetasat30September2012andtheconsolidatedstatementofcomprehensiveincome,changesinequityandcashflowsfortheyearthenended, and notes, comprising a summary of significant accounting policies and other explanatory information. The total of theconsolidatedbalancesheetamountstoEUR5.337.006(000)andtheconsolidatedstatementofcomprehensionincomeshowsaprofitfortheyear,groupshare,ofEUR55.558(000).

Board of directors Responsibility for the Consolidated Financial StatementsTheboardofdirectorsofthecompanyisresponsibleforthepreparationandfairpresentationoftheseconsolidatedfinancialstatementsinaccordance with International Financial Reporting Standards, as adopted by the European Union and with the legal and regulatoryrequirementsapplicableinBelgium,andforsuchinternalcontrolastheboardofdirectorsdeterminesisnecessarytoenablethepreparationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’s Responsibility Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditing,legalrequirementsandauditingstandardsapplicableinBelgium,asissuedbythe“InstitutdesRéviseursd’Entreprises/InstituutvandeBedrijfsrevisoren”.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassurancewhethertheconsolidatedfinancialstatementsarefreefrommaterialmisstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financialstatements.Theproceduresselecteddependonourjudgment,includingtheassessmentoftherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,weconsiderinternalcontrolrelevanttothegroup’spreparationandfairpresentationoftheconsolidatedfinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessofthegroup’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessoftheaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebytheboardofdirectorsaswellastheoverallpresentationoftheconsolidatedfinancialstatements.Finally,wehaveobtainedfrommanagementandresponsibleofficersofthecompanytheexplanationsandinformationnecessaryforouraudit.Webelievethattheauditevidencewehaveobtainedprovidesareasonablebasisforourauditopinion.

Opinion Inouropinion,theconsolidatedfinancialstatementsgiveatrueandfairviewofthegroup’snetequityandconsolidatedfinancialpositionasat30September2012andofitsconsolidatedfinancialperformanceanditsconsolidatedcashflowsfortheyearthenendedinaccordancewith International Financial Reporting Standards, as adopted by the European Union, and with the legal and regulatory requirementsapplicableinBelgium.

ADDITIONALCOMMENTThepreparationofthemanagementreportontheconsolidatedfinancialstatementsanditscontentaretheresponsibilityoftheboardofdirectors.Ourresponsibilityistosupplementourreportwiththefollowingadditionalcomment,whichdoesnotmodifyourauditopiniononthefinancialstatements:

− Themanagementreportontheconsolidatedfinancialstatementsincludestheinformationrequiredbylawandisconsistentwiththeconsolidatedfinancialstatements.Weare,however,unabletocommentonthedescriptionoftheprincipalrisksanduncertaintieswhichthegroupisfacing,andonitsfinancialsitua-tion,itsforeseeableevolutionorthesignificantinfluenceofcertainfactsonitsfuturedevelopment.Wecanneverthelessconfirmthatthemattersdiscloseddonotpresentanyobviousinconsistencieswiththeinformationthatwebecameawareofduringtheperformanceofourmandate.

kontich,January17,2013kPMG,StatutoryauditorrepresentedbyPeterCoox,Réviseurd’Entreprises/Bedrijfsrevisor

indicateurs

auditor’sfees


statutoryauditor’sreportstatutory auditor’s report to the general meeting of shareholders of Banque Degroof sA on the consolidated financial statements for the year ended 30 september 2012

Inaccordancewithlegalandstatutoryrequirements,wereporttoyouontheperformanceofourauditmandate.Thisreportincludesouropinionontheconsolidatedfinancialstatementstogetherwiththerequiredadditionalcomment.

UNQUALIFIEDAUDITOPINIONONTHECONSOLIDATEDFINANCIALSTATEMENTSWe have audited the consolidated financial statements of Banque Degroof SA (“the company”) and its subsidiaries (jointly “thegroup”),preparedinaccordancewithInternationalFinancialReportingStandards,asadoptedbytheEuropeanUnion,andwiththelegalandregulatoryrequirementsapplicableinBelgium.Theseconsolidatedaccountscomprisetheconsolidatedbalancesheetasat30September2012andtheconsolidatedstatementofcomprehensiveincome,changesinequityandcashflowsfortheyearthenended, and notes, comprising a summary of significant accounting policies and other explanatory information. The total of theconsolidatedbalancesheetamountstoEUR5.337.006(000)andtheconsolidatedstatementofcomprehensionincomeshowsaprofitfortheyear,groupshare,ofEUR55.558(000).

Board of directors Responsibility for the Consolidated Financial StatementsTheboardofdirectorsofthecompanyisresponsibleforthepreparationandfairpresentationoftheseconsolidatedfinancialstatementsinaccordance with International Financial Reporting Standards, as adopted by the European Union and with the legal and regulatoryrequirementsapplicableinBelgium,andforsuchinternalcontrolastheboardofdirectorsdeterminesisnecessarytoenablethepreparationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’s Responsibility Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditing,legalrequirementsandauditingstandardsapplicableinBelgium,asissuedbythe“InstitutdesRéviseursd’Entreprises/InstituutvandeBedrijfsrevisoren”.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassurancewhethertheconsolidatedfinancialstatementsarefreefrommaterialmisstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financialstatements.Theproceduresselecteddependonourjudgment,includingtheassessmentoftherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,weconsiderinternalcontrolrelevanttothegroup’spreparationandfairpresentationoftheconsolidatedfinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessofthegroup’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessoftheaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebytheboardofdirectorsaswellastheoverallpresentationoftheconsolidatedfinancialstatements.Finally,wehaveobtainedfrommanagementandresponsibleofficersofthecompanytheexplanationsandinformationnecessaryforouraudit.Webelievethattheauditevidencewehaveobtainedprovidesareasonablebasisforourauditopinion.

Opinion Inouropinion,theconsolidatedfinancialstatementsgiveatrueandfairviewofthegroup’snetequityandconsolidatedfinancialpositionasat30September2012andofitsconsolidatedfinancialperformanceanditsconsolidatedcashflowsfortheyearthenendedinaccordancewith International Financial Reporting Standards, as adopted by the European Union, and with the legal and regulatory requirementsapplicableinBelgium.

ADDITIONALCOMMENTThepreparationofthemanagementreportontheconsolidatedfinancialstatementsanditscontentaretheresponsibilityoftheboardofdirectors.Ourresponsibilityistosupplementourreportwiththefollowingadditionalcomment,whichdoesnotmodifyourauditopiniononthefinancialstatements:

− Themanagementreportontheconsolidatedfinancialstatementsincludestheinformationrequiredbylawandisconsistentwiththeconsolidatedfinancialstatements.Weare,however,unabletocommentonthedescriptionoftheprincipalrisksanduncertaintieswhichthegroupisfacing,andonitsfinancialsitua-tion,itsforeseeableevolutionorthesignificantinfluenceofcertainfactsonitsfuturedevelopment.Wecanneverthelessconfirmthatthemattersdiscloseddonotpresentanyobviousinconsistencieswiththeinformationthatwebecameawareofduringtheperformanceofourmandate.

kontich,January17,2013kPMG,StatutoryauditorrepresentedbyPeterCoox,Réviseurd’Entreprises/Bedrijfsrevisor

indicateurs

Bankdegroof 115

the abridged non-consolidated statutory financial statements setoutonthefollowingpagesarethoseofBankDegroofBrussels,whichhasitsregisteredofficeatruedel’Industrie44,1040Brussels.Thesefinancialstatementshavebeenpreparedinaccordancewithaccountingpoli-ciesgenerallyacceptedinBelgium.Allamountsarestatedinthousandsofeuros.Thestatutoryauditorhasissuedanunqualifiedopiniononthecompletenon-conso-lidatedstatutoryfinancialstatements,whichwillbefiledwiththeNationalBankofBelgiumwithintheprescribeddeadlines.

aBRidGedcomPanYfinancialstatements

balancesheetafterprofitappropriation

(inthousandsofEUR)

ASSETS 30.09.2012 30.09.2011 30.09.2010

I Cashinhand,balanceswithcentralbanksandpostofficebanks 63414 156566 73884

II Short-termgovernmentsecuritieseligibleforrefinancingatthecentralbank 24993 0 0

III Loansandadvancestocreditinstitutions 163414 335343 65696

A Repayableondemand 131235 32510 25182

B Otherloansandadvances(withagreedmaturitydatesorperiodsofnotice) 32179 302833 40514

IV Loansandadvancestocustomers 1470394 1231568 1241657

V Debtsecuritiesincludingfixed-incomesecurities 1215520 936250 1127206

A Issuedbypublicbodies 238934 352544 457792

B Issuedbyotherborrower 976586 583706 669414

VI Sharesandothervariable-yieldsecurities 61814 61540 44597

VII Financialfixedassets 281905 303697 340310

A Participatinginterestsinaffiliatedenterprises 255310 222588 245713

B Participatinginterestsinotherenterpriseslinkedbyparticipatinginterests 13933 44446 59000

C Otherfinancialfixedassets 3162 9163 8097

D Subordinatedreceivablesfromaffiliatedenterprisesandotherenterpriseslinkedbyparticipatinginterests

9500 27500 27500

VIII Formationexpensesandintangiblefixedassets 22561 26039 22757

IX Tangiblefixedassets 10591 10111 9659

XI Otherassets 16573 12297 6251

XII Deferredchargesandaccruedincome 46335 50935 42437

Totalassets 3377514 3124346 2974454


(inthousandsofEUR)

LIABILITIES 30.09.2012 30.09.2011 30.09.2010

Debts 2 933 342 2 694 510 2 536 958

I Amountsowedtocreditinstitutions 517949 502533 582239

A Repayableondemand 63153 52040 61482

C Otherdebts(withagreedmaturitydatesorperiodsofnotice) 454796 450493 520757

II Amountsowedtocustomers 2236130 2008800 1764527

B Otherdebts 2236130 2008800 1764527

1 Repayable on demand 1 738 253 1 219 176 1 236 272

2 With agreed maturity dates or periods of notice 497 877 789 624 528 255

III Debtsecurities 13000 13000 13000

A Bondsanddebenturesincirculation 13000 13000 13000

IV Otherliabilities 75456 77537 75678

V Accruedchargesanddeferredincome 29249 31046 38909

VI Provisionsanddeferredtaxes 1458 1494 2505

A Provisionsforliabilitiesandcharges 1170 1196 2196

3 Other liabilities and charges 1 170 1 196 2 196

B Deferredtaxes 288 298 309

VII Fundforgeneralbankingrisks 10100 10100 10100

VIII Subordinatedliabilities 50000 50000 50000

shareholders’ equity 444 172 429 836 437 496

IX Capital 47491 47491 47491

A Issuedcapital 47491 47491 47491

X Shareissuepremiums 173600 173600 173600

XII Reserves 78188 78209 78230

A Legalreserve 4749 4749 4749

C Untaxedreserves 23439 23460 23481

D Reservesavailablefordistribution 50000 50000 50000

XIII Profit(loss(-))broughtforward 144893 130536 138175

Totalliabilities 3377514 3124346 2974454

Bankdegroof 119

(inthousandsofEUR)OFF-BALANCESHEETCAPTIONS 30.09.2012 30.09.2011 30.09.2010

I Contingentliabilities 211572 248127 253967

B Guaranteesservingasdirectcreditsubstitutes 136389 166446 197138

C Otherguarantees 1480 1238 1317

e Assetschargedascollateralsecurityonbehalfofthirdparties 73703 80443 55512

II Commitmentswhichcouldgiverisetoacreditrisk 607341 267111 170046

A Firmcreditcommitments 14000 2030 2701

B Commitmentsasaresultofspotpurchasesoftransferableorothersecurities 376893 74439 27171

C Undrawnmarginonconfirmedcreditlines 216448 190642 140174

III Assetslodgedwiththecreditinstitution 23231276 19748817 22069679

B Safecustodyandequivalentitems 23231276 19748817 22069679


Bankdegroof 121

incomestatement

(inthousandsofEUR)

CHARGES 30.09.2012 30.09.2011 30.09.2010

II Interestpayableandsimilarcharges 22400 26362 34715

V Commissionspayable 8668 6955 4157

VI Lossonfinancialtransactions 0 593 4365

A Lossontradingofsecuritiesandotherfinancialinstruments 0 0 4365

B Lossondisposalofinvestmentsecurities 0 593 0

VII Generaladministrativeexpenses 92926 85002 76960

A Remuneration,socialsecuritycostsandpensions 65903 61039 58718

B Otheradministrativeexpenses 27023 23963 18242

VIII Depreciationandamountswrittenoffformationexpenses,intangibleandtangiblefixedassets 5774 5351 5003

IX Increaseinamountswrittenoffreceivablesandinprovisionsforoff-balance-sheetcaptions‘IContingentliabilities’and‘IICommitmentswhichcouldgiverisetoacreditrisk’

1355 109 44

X Amountswrittenoffontheinvestmentportfolioofdebtsecurities,sharesandotherfixed-incomeorvariable-yieldsecurities

7843 15670 794

XII Provisionsforliabilitiesandchargesotherthanthoseincludedintheoff-balance-sheetcaptions‘IContingentliabilities’and‘IICommitmentswhichcouldgiverisetoacreditrisk’

0 0 1000

XV Otheroperatingcharges 7003 7536 6104

XVIII Extraordinarycharges 667 25527 371

A Depreciationandamountswrittenoffformationexpenses,intangibleandtangiblefixedassets 57 12114 6

B Amountswrittenofffinancialfixedassets 300 13055 190

D Lossondisposaloffixedassets 8 14 32

e Otherextraordinarycharges 302 344 143

XX Incometaxes 8733 3555 4196

XXI Profitfortheperiod 58786 34755 45965

XXIII Profitfortheperiod,availableforappropriation 58807 34776 45986


(inthousandsofEUR)

INCOME 30.09.2012 30.09.2011 30.09.2010

I Interestreceivableandsimilarincome 58018 56578 58499

includingthatfromfixed-incomesecurities 23052 22036 27405

III Incomefromvariable-yieldsecurities 61437 49065 33524

A Fromsharesandothervariable-yieldsecurities 2195 1648 1908

B Participatinginterestsinaffiliatedenterprises 58827 46549 30874

C Fromparticipatinginterestsinotherenterpriseslinkedbyparticipatinginterests 280 328 428

D Fromothersharesheldasfinancialfixedassets 135 540 314

IV Commissionsreceivable 75607 86782 72326

A Brokerageandrelatedfees 21004 26834 21850

B Remunerationofassetmanagement,investmentadviceandsafekeepingservices 13936 14527 11835

C Otherfeesreceived 40667 45421 38641

VI Profitonfinancialtransactions 9236 12724 9457

AProfitontradingofsecuritiesandotherfinancialinstruments 7898 4256 0

B Profitondisposalofinvestmentsecurities 1338 8468 9457

XIV Otheroperatingincome 8592 4487 3638

XVII Extraordinaryincome 901 977 5643

B Adjustmentstoamountswrittenofffinancialfixedassets 586 0 618

C Adjustmentstoprovisionsforextraordinaryliabilitiesandcharges 25 0 0

D Gainondisposaloffixedassets 99 822 4796

e Otherextraordinaryincome 191 155 229

XIX Bis B Transfersfromdeferredincometaxes 11 11 11

XX B Adjustmentsofincometaxesandwrite-backoftaxprovisions 353 791 576

XXII Transfersfromuntaxedreserves 21 21 21

Bankdegroof 123

(inthousandsofEUR)

APPROPRIATIONACCOUNT 30.09.2012 30.09.2011 30.09.2010

A Profit(loss(-))tobeappropriated 189343 172951 180508

1 Profit(loss(-))fortheperiod,availableforappropriation 58807 34776 45986

2 Profit(loss(-))broughtforward 130536 138175 134522

C Appropriationtocapitalandreserves 0 0 (44)

2 Tothelegalreserve 0 0 (44)

D Profit(loss(-))tobecarriedforward 144893 130536 138175

F Distributionofprofit (44450) (42415) (42289)

1 Dividends (44105) (42100) (41944)

2 Directors’fees (345) (315) (345)


Bankdegroof 125

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General co-ordination: Bettina Helewaut

Responsible editor: Regnier Haegelsteen

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Documents

annual REPORT - UAB Barcelona · Normalized profit on Holding portfolio4 (in thousands of EUR) 15 478 23 226 18 884 Normalized net profit 8 (in thousands of EUR) 86 884 83 625 83