AUDITOR S REPORT and MEMORANDUM on the review of the annual financial statements of Hanwha Bank Magyarország ZRt. at 31 December 2006

Transcription

1 AUDITOR S REPORT and MEMORANDUM on the review of the annual financial statements of Hanwha Bank Magyarország ZRt. at 31 December 2006

2 Contents Audit Memorandum I.) Assignment 3 II.) Legal situation 4 III.) Annual Financial Statements 6 IV.) Bookkeeping 14 V.) Details on the Balance Sheet 15 Assets 15 Liabilities 22 VI.) Details on the Income Statement 26 VII.) Notes to the Annual Financial Statements 33 2

3 I.) Assignment Hanwha Bank Magyarország ZRt. engaged BDO Kontroll Könyvvizsgáló és Adótanácsadó Kft. for the purpose of the audit of the year end closing of the books. The audit was performed pursuant to Act C of 2000 on Accountancy (hereinafter Act), Government Decree No. 250/2000. (XII. 24.) on Specific Rules for the Annual Financial Statements and Book-Keeping of Credit Institutions and Financial Enterprises, and in accordance with the standards prescribed by the Hungarian Chamber of Auditors. The review commenced on 26th February All the necessary documents were made available by the company, the requested information and certificates were provided by the Company s legal representative and the employees. We asked for a signed letter of representation from the Company s management in which the Chef Excecutive Officer and Deputy Chef Excecutive Officer certify that the books include all the assets and liabilities. The audit included the matching of the accounting records with the account balances and their testing by random sampling. We did not perform a tax review, our work consisted only of matching the tax returns with the accounting records and account balances. 3

4 II.) Legal situation The Bank was founded in 1990 and was registered by the Metropolitan Court as Company Court under No. Cg Bank s full name: Hanwha Bank Magyarország Zárt Részvénytársaság Bank s registered domicile: 1088 Budapest, Rákóczi út 1-3. Scope of the Bank s major activities: Other financial activities Financial leasing Other financial intermediation not included elsewhere Securities broking and fund management Other complementary financial activites Business management consulting Bank s subcribed capital at the balance sheet date: Bank s ownership structure: Owner Subscribed capital () Subscribed capital () Ownership ratio Change () Hanwha First Investment Co. B.V ,0100% - Hanwha Securities Co. Ltd ,1989% - Fransaholding S. A ,6658% - Hanwha Bank Rt ,1253% - Total: ,00% 0 Bank s Chief Excecutive Officer and Deputy Chief Excecutive Officer: Baik Dae Wook Woo Young Jin 4

5 The Bank s Board of Directors: Baik Dae Wook Woo Young Jin Werner Riecke Dr. János Jákó Kim Chul Hoon Keum Choon Soo The Bank s Supervisory Board: Dr. Péter Kelemen Dr. Zoltán Pápista Lee Young Kyoung The Bank s permanent legal representative: Dr. György Köller 5

6 III.) Annual Financial Statements Balance Sheet - Assets Prior Year Current Year 1. Cash Government securities a) for trading purposes b) for investment purposes Receivables from credit institutions a) sight receivables - - b) receivables from financial services ba) with a maturity of less than one year of which: - receivables from related parties receivables from parties owning less than 20% receivables from Hungarian National Bank receivables from clearing houses - - bb) with a maturity of more than one year - - of which: - receivables from related parties receivables from parties owning less than 20% receivables from Hungarian National Bank receivables from clearing houses - - c) from investment services - - of which: - receivables from related parties receivables from parties owning less than 20% receivables from clearing houses Receivables from clients a) from financial services aa) with a maturity of less than one year of which: - receivables from related parties receivables from parties owning less than 20% - - ab) with a maturity of more than one year of which: - receivables from related parties receivables from parties owning less than 20% - - b) from investment services - - of which: - receivables from related parties receivables from parties owning less than 20% - - ba) receivables from investment service activities on the exchange - - bb) receivables from over-the-counter investment service activities - - bc) receivables from clients for investment service activities - - bd) receivables from clearing houses - - be) receivables from other investment service activities Other fixed rated securities - - a) issued by local government and other state organisations (except - - government securities) aa) for trading purposes - - ab) for investment purposes - - b) issued by other issuers - - ba) for trading purposes - - of which: - issued by related parties issued by parties owning less than 20% repurchased securities issued by the Bank - - ba) for investment purposes - - of which: - issued by related parties issued by parties owning less than 20% - - 6

7 6. Shares and other floating rated securities - - a) shares, participations for trading purposes - - of which: - issued by related parties issued by parties owning less than 20% - - b) floating rated securities - - ba) for trading purposes - - bb) for investment purposes Shares, participations for investment purposes a) shares, participations for investment purposes of which: - participations in credit institutions - - b) value adjustment of shares, participations for investment purposes - - of which: - participations in credit institutions Shares, participations in related enterprises a) shares, participations for investment purposes of which: - participations in credit institutions - - b) value adjustment of shares, participations for investment purposes - - of which: - participations in credit institutions Intangible assets a) intangible assets b) value adjustment of intangible assets Tangible assets a) tangible assets for financial and investment services aa) land and buildings ab) technical equipment, machinery and vehicles ac) construction ad) advances on construction - - b) tangible assets not directly related to financial and investment services - - aa) land and buildings - - ab) technical equipment, machinery and vehicles - - ac) construction - - ad) advances on construction - - c) value adjustment of tangible assets Own shares Other assets a) inventories - - b) other receivables Prepayments and accrued income a) accrued income b) prepayments c) deferred expenses - - TOTAL ASSETS

8 Balance Sheet - Liabilities Prior Year Current Year 1. Liabilities to credit institutions a) sight liabilities - - b) liabilities for a fixed period of time from financial activities ba) with a maturity of less than one year liabilities to Hungarian National Bank liabilities to clearing houses - - ba) with a maturity of more than one year liabilities to Hungarian National Bank liabilities to clearing houses - - c) liabilities from investment services liabilities to clearing houses Liabilities to clients a) savings deposits - - aa) sight - - ab) with a maturity of less than one year - - ac) with a maturity of more than one year - - b) other liabilities from financial services ba) sight of which: - liabilities to related parties bb) with a maturity of less than one year bc) with a maturity of more than one year c) liabilities from investment services - - ca) liabilities from exchange investment service activities - - cb) liabilities from over-the-counter investment service activities - - cc) liabilities to clients from investment service activities - - cd) liabilities to clearing house - - ce) liabilities from other investment service activities a) bonds issued - - aa) with a maturity of less than one year - - ab) with a maturity of more than one year - - b) other securities - - ba) with a maturity of less than one year - - bb) with a maturity of more than one year - - 8

9 c) documents considered as securities in accounting but not according to Act - - on Financial Institutions ca) with a maturity of less than one year - - cb) with a maturity of more than one year Other liabilities a) with a maturity of less than one year pecuniary contribution of members at credit institutions - - operating as credit cooperatives b) with a maturity of more than one year Accruals and deferred income a) deferred income b) accruals c) deferred extraordinary income Provisions a) provision for pension and severance-pay - - b) risk provisions for pending and future liabilities c) general risk provisions d) other provisions Subordinated liabilities a) subordinated loan capital b) pecuniary contribution of members at credit institutions operating as - - credit cooperatives c) other subordinated liabilities Share capital of which: - repurchased own shares at par value Share capital not paid up Capital reserve a) premium (from share issue) b) other General reserve Retained earnings (losses) brought forward Undistributable reserves Revaluation surplus Net profit (loss) for the year TOTAL EQUITIES AND LIABILITIES Off-Balance Sheet items Prior year Current year Pending liabilities Future liabilities - - Code number

10 Income Statement Prior year Current Year 1. Interest received and interest-type income a) interest received on fixed rated securities b) other interest received and interest-type income of which: - from related parties 2. Interest paid and interest-type expenses of which: - from related parties 165 INTEREST MARGIN (1-2) Income from securities a) income from shares and participations for trading purposes (dividend, - - participation) b) income from participations in related parties (dividend, participation) - - c) income from other participations (dividend, participation) Commission and fee income a) from other financial services of which: - from related parties b) from investment services (except trading activities) Commission and fee expenses a) from other financial services of which: - to related parties to parties owning less than 20% - - b) from investment services (except trading activities) - - of which: - to related parties to parties owning less than 20% Net result of financial activities a) from the income of other financial services b) from the expense of other financial services of which: - to related parties to parties owning less than 20% - - c) from the income of investment services (income of trading activities) write-back of value adjustment of securities for trading - - purposes - write-back of value adjustment of securities for trading - - purposes d) from the expense of investment services (expense of trading activities) - - of which: - to related parties to parties owning less than 20% value adjustment of securities for trading purposes

11 7. Other income from business activities a) income of non-financial and investment services - - b) other income write-back of value adjustment of inventories Costs of general activities a) salaries and personnel aa) salary cost ab) personnel cost of which:- social security cost costs relating to pension - - ac) social contribution of which:- social security cost costs relating to pension - - b) Other costs (material-type expenses) Depreciation Other expense from business activities a) expense of non-financial and investment services - - of which: - to related parties to parties owning less than 20% - - b) other expense of which: - to related parties value adjustment of inventories készletek értékvesztése Value adjustment for receivables and general risk reserve for pending and future liabilities a) value adjustment on receivables b) general risk reserve for pending and future liabilities Value adjustment write-back for receivables and use of general risk reserve for pending and future liabilities a) value adjustment write-back on receivables b) use of general risk reserve for pending and future liabilities Value adjustment for investment Value adjustment write-back for investment Result of ordinary business activities of which: - Result of financial and investment activities Result of non-financial and investment activities Extraordinary income Extraordinary expenses Extraordinary profit (loss) Profit before tax Tax liabilities Profit after tax Formation and utilization of general reserves Use of retained earnings for payment of dividend Dividend approved and paid - - of which: - to related parties to parties owning less than 20% RETAINED PROFIT FOR THE

12 IV.) Book-keeping Accounting work at the Bank is performed in accordance with the provisions of Act C of 2000 on Accountancy and Government Decree No. 250/2000. (XII. 24.) on Specific Rules for the Annual Financial Statements and Book-keeping of Credit Institutions and Financial Enterprises. The annual financial statements are based on the general ledger incorporating the changes between the balance sheet date of and the closing of the accounts and are prepared on the basis of the accounting records for 2006, the related account balances, and the underlying sub-ledgers. We ascertained the regularity of book-keeping and the documentation of the economic events by random sampling. The books were closed after we had completed our audit. 12

13 V.) Details on the Balance Sheet ASSETS Cash and cash equivalents, government securities PRIOR CURRENT CASH GOVERNMENT SECURITIES a) for trading purposes b) for investment purposes Cash and cash equivalents The cash and cash equivalents are supported by, and are matching with, the cash report. The cash in hand amounted to 36,389 on the balance sheet date, consisting of the following currencies: HUF 11,633,772, GBP 10,050, CHF 7,680, USD 29,273, EUR 56,138. The cash in hand was included in the balance sheet calculated at the exchange rates valid at the National Bank of Hungary on the balance sheet date. Nostro accounts BANK S NAME BALANCE AT () BALANCE AT (FC) MNB Unicredito EUR KBC Bank N.V EUR Union Bank of Switzerland CHF Bank of New York GBP Bank of New York USD Bank of Tokio JPY Wachovia USD Total Government securities Negotiable government securities The Company posted to this balance sheet line discount treasury note, the book value of the treasury notes is 382,

14 Investment in government securities The government securities purchased for investment purposes expired during the current period and no new government securities were purchased. The number and nominal value of the securities is as shown in the KELER certificate. Receivables from credit institutions PRIOR CURRENT RECEIVABLES FROM CREDIT INSTITUTIONS Sight receivables - - Receivables from financial services with a maturity of less than one year of which: - receivables from related parties receivables from parties owning less than 20% receivables from Hungarian National Bank receivables from clearing houses with a maturity of more than one year - - of which: - receivables from related parties receivables from parties owning less than 20% receivables from Hungarian National Bank receivables from clearing houses - - From financial services - - of which: - receivables from related parties receivables from parties owning less than 20% receivables from clearing houses - - Itemised other receivables fromcredit institutions from financial services, with a maturity less than one year: Deposits BANK S NAME BALANCE AT BALANCE AT MATURITY () (FX) HNB term deposit HNB term deposit West LB OTP Bank Zrt ,000,000 EUR ING Bank Zrt ,400,000 EUR TOTAL The receivables from credit institutions as shown in the balance sheet are supported by, and are matching with, certificates. 14

15 Receivables from clients PRIOR CURRENT RECEIVABLES FROM CLIENTS from financial services with a maturity of less than one year of which: - receivables from related parties receivables from parties owning less than 20% with a maturity of more than one year of which: - receivables from related parties receivables from parties owning less than 20% - - from investment services - - of which: - receivables from related parties receivables from parties owning less than 20% receivables from investment service activities on the exchange receivables from over-the-counter investment service activities receivables from clients for investment service activities receivables from clearing houses receivables from other investment service activities - - Shares, participations for investment purposes PRIOR CURRENT SHARES, PARTICIPATIONS FOR INVESTMENT PURPOSES shares, participations for investment purposes of which: - participations in credit institutions - - value adjustment of shares, participations for investment purposes - - of which: - participations in credit institutions - - Shares, participations for investment purposes The Bank shows the following investments on this balance sheet line. COMPANY NAME NUMBER OF SHARES (PCS) NOMINAL VALUE () PURCHASE PRICE () Giro Rt Hitelgarancia Rt Golf & Country Club TOTAL

16 Shares, participations in related enterprises PRIOR CURRENT SHARES, PARTICIPATIONS IN RELATED ENTERPRISES shares, participations for investment purposes of which: - participations in credit institutions - - value adjustment of shares, participations for investment purposes - - of which: - participations in credit institutions - - Shares, participations in related enterprises NAME OF THE RELATED PARTY PROPERTY SHARE NOMINAL VALUE VALUE ADJUSTMENT (ACCUMULATED) RELEASE OF VALUE ADJUSTMENT (ACCUMULATED) Pignus Kft. 100% Buda-Reál Invest Kft. 100% TOTAL The nominal value of the Bank s investments in related parties and the rate of the share did not change compared to the previous year. No additional value lossed was recognised in the current year which is justified by the data in the balance sheets of the companies. The Bank did not exceed the limits specified by the Act on Credit Institutions in respect of investments. Intangible assets PRIOR CURRENT INTANGIBLE ASSETS Intangible assets Value adjustment of intangible assets - - PRIOR CURRENT Rights of properties - - Intellectual products INTANGIBLE ASSETS Intangible fixed assets The gross value of intangible assets was increased by the Bank by purchasing various financial programs in the course of the current year. The value increased by 13,356. The value of intangible assets decreased by a gross amount of 49,355 during the current period (the net value of which is 0). These assets were posted to off balance sheet items. The value of depreciation recognised in the current year amounted to 103,359, of which unplanned 16

17 depreciation amounted to 841 due to the writing off of the obsolete telephone system. Recognition was made using the amortisation rates prescribed by the accounting policy. Tangible assets PRIOR CURRENT TANGIBLE ASSETS Tangible assets for financial and investment services land and buildings technical equipment, machinery and vehicles construction advances on construction - - tangible assets not directly related to financial and investment services land and buildings technical equipment, machinery and vehicles construction advances on construction - - Value adjustment of tangible assets - - Real estates The gross value of the real estates in the current year increased by 168. The value of the land and buildings decreased by a gross amount of 1,597, the amount of depreciation recognised in accordance with the accounting policy amounts to 1,908. Machinery, plant, equipment The following items have been posted by the Bank to Machinery, plant and equipment: computer devices, telecommunication and office equipment, and cars, the gross value of which amounts to The value of procurement in the current year amounted to 9,719, of which IT assets were purchased in the value of 5,416, telecommunication equipment in the value of 3,874, and other equipment in the value of 384. The gross value of assets written off in the current year amounts to (net value: 0). The changes in tangible fixed assets are supported by certificates. Depreciation recognised in respect of machinery in the current year in accordance with the accounting policy: 24,637. The value of written off as small-value purchases was 3,659. The Bank has no assets encumbered by mortgage. The Bank complies with the limits prescribed by credit institutions. No unplanned depreciation was performed in the current year. 17

18 Construction in progress The value of the construction in progress at the balance sheet date is 18,282, consisting of the following items: 16,887 was invested in software in relation to the development performed by LOXON. The date of capitalisation is yet uncertain, negotiations are being carried out. The IT asset investment balance equals to 1,395. PRIOR CURRENT Software Computer equipment CONSTRUCTION IN PROGRESS Own shares and other assets PRIOR CURRENT OWN SHARES OTHER ASSETS Inventories - - Other receivables The balance sheet line Own shares show shares repurchased from the Ministry of Education for 4 000, of a nominal value of We have verified the existence of the shares when performing the stocktaking. The ratio of property share of repurchased own shares within the share capital: %. Other receivables PRIOR CURRENT Receivables from corporate tax VAT receivables Receivables from the Customs and Excise Guard Cash technical account Default interest receivables Special bank tax receivables Advances on payments Advances from trade creditors Other receivables OTHER RECEIVABLES

19 Prepayments and accrued income PRIOR CURRENT PREPAYMENTS AND ACCRUED INCOME Accrued income Prepayments Deferred expenses - - Accrued income The amount of the interest due in respect of the current year but not yet received has been posted to this line in accordance with the legal provisions. Suspended interests were written off from under Prepayments and accrued income, the amount written off is on record at the Company as an off-balance sheet item. Prepayments The prepayments amounting to 7,274 consist of items to be invoiced in the next year, but to be debited to the current year in accordance with the laws. 19

20 LIABILITIES Liabilities to credit institutions PRIOR CURRENT LIABILITIES TO CREDIT INSTITUTIONS Sight liabilities - - Liabilities for a fixed period of time from financial activities with a maturity of less than one year liabilities to Hungarian National Bank liabilities to clearing houses with a maturity of more than one year liabilities to Hungarian National Bank liabilities to clearing houses - - Liabilities from investment services liabilities to clearing houses - - Liabilities to credit institutions with a maturity of less than one year BANK S NAME BALANCE BALANCE MATURITY () (FC) Raiffeisen Bank Rt EUR KDB Bank EUR KDB Bank EUR OTP Bank Rt EUR OTP Bank Rt EUR OTP Bank Rt EUR OTP Bank Rt USD TOTAL

21 Liabilities to clients PRIOR CURRENT LIABILITIES TO CLIENTS Savings deposits sight with a maturity of less than one year with a maturity of more than one year - - Other liabilities from financial services sight of which: - liabilities to related parties with a maturity of less than one year with a maturity of more than one year Liabilities from investment services liabilities from exchange investment service activities liabilities from over-the-counter investment service activities liabilities to clients from investment service activities liabilities to clearing house liabilities from other investment service activities - - The portfolio of deposits decreased by 46.44% compared to the previous year. More specifically, the value of demand liabilities decreased by 23.85%, the value of liabilities maturing in less a year by 79.31%, and the value of liabilities with a maturity of more than a year by 70.5%. Other liabilities PRIOR CURRENT OTHER LIABILITIES with a maturity of less than one year pecuniary contribution of members at credit institutions - - operating as credit cooperatives with a maturity of more than one year

22 Other liabilities with a maturity of less than one year PRIOR CURRENT Personal income tax and similar liabilities Liabilities to social security Business tax Other local tax payment obligation Research and innovation contribution HUF suspence account 3 - Items of different FX date Client accounts Interest tax Trade creditors Liabilities to private pension funds Transit accounts Other short-term liabilities OTHER LIABILITIES WITH A MATURITY OF LESS THAN ONE Accruals and deferred income PRIOR CURRENT ACCRUALS AND DEFERRED INCOME Deferred income Accruals Deferred extraordinary income - - Accruals and deferred income Under this item are included the interests payable in the current year in respect of deposits, in the value of , which has not yet been credited, and other deferred costs in the value of Provisions PRIOR CURRENT PROVISIONS Risk provisions for pending and future liabilities General risk provisions

23 Provisions OPENING PROVISIONING RELEASE CLOSING BALANCE BALANCE Risk provisions for pending and future liabilities General risk provisions TOTAL Subordinated liabilities PRIOR CURRENT SUBORDINATED LIABILITIES a) subordinated loan capital b) pecuniary contribution of members at credit institutions operating as credit - - cooperatives c) other subordinated liabilities - - Subordinated loan On 18 October 2006, 10 dematerialised bonds were issued, each of a value of EUR 1,000,000. The bonds were private placement bonds with a maturity of 18 October Shareholders equity PRIOR CURRENT SHAREHOLDERS EQUITY Share capital of which: - repurchased own shares at par value Share capital not paid up - - Capital reserve a) Premium b) Other General reserve Retained earnings (losses) brought forward Undistributable reserves - - Revaluation surplus - - Net profit (loss) for the year Shareholders equity On the balance sheet date, the Bank holds shares in the nominal value of 690, the balance sheet value of which is , which is equivalent to the capital registered at the Company Court. The value of the capital reserve did not change in the current year, its value amounted to

24 The retained profit for the previous year has been transferred to retained earnings brought forward, value as of the balance sheet date: The accounts and the statements are accurate. The balance sheet profit of the current year was properly stated, 10% of the after tax profit was included in the shareholders equity as general reserve. 24

25 VI.) DETAILS ON THE INCOME STATEMENT Interest margin PRIOR CURRENT Interest received and interest-type income Interest paid and interest-type expenses INTEREST MARGIN Interest received and interest-type income PRIOR CURRENT INTEREST RECEIVED AND INTEREST-TYPE INCOME a) interest received on fixed rated securities Other interest received and interest-type income Composition of interest received and interest-type income PRIOR CURRENT Interest from government securities Interest from financial institutions Interest on current accounts Interest on housing loans and mortgage loans Interest on other short-term loans Interest on other long-term loans Interest on refinancng loans Interest on securities purchase from clients - - Interest on employee loans - - Interest on purchased claims - - Default interest COMPOSITION OF INTEREST RECEIVED AND INTEREST-TYPE INCOME The interest received and similar income at the Bank in the current year increased by 4.91% compared to the previous year. 25

26 Interest paid and interest-type expenses PRIOR CURRENT INTEREST PAID AND INTEREST-TYPE EXPENSES Composition of interest paid and interest-type expenses PRIOR CURRENT Interests paid to financial institutions Interest paid on current account deposit Interest paid on sight deposit Interest paid on short-term deposits Interest paid on subordinate loan capital Interest paid on housing deposit INTEREST PAID AND INTEREST-TYPE EXPENSES The amount of Interests and interest-type expenses increased by 38.36% compared to the previous year. The structure and the amount of interest expense are matching with the changes in the stock of deposits and the interest rates, however, the composition of the interests paid changed. Income from securities PRIOR CURRENT INCOME FROM SECURITIES Income from shares and participations for trading purposes (dividend, participation) - - Income from participations in related parties (dividend, participation) - - Income from other participations (dividend, participation) The dividend paid on the Giro Rt. shares, credited at the Bank. Commission and fee income PRIOR CURRENT COMMISSION AND FEE INCOME From other financial services from investment services (except trading activities)

27 Composition of commission and fee income from the income from other financial services PRIOR CURRENT Commission from cash flow Commission from cash withdrawal Home banking commission Availability fee Collection commission L/C commission Other commission Guarantee fee Loan utilisation fee Prepayment fee Account management fee Monthly handling charges Other fees COMMISSION AND FEE INCOME The amount of the Commission and fee income received increased by % compared to the previous year. Commission and fee expenses PRIOR CURRENT COMMISSION AND FEE EXPENSES from other financial services of which: - to related parties to parties owning less than 20% - - from investment services (except trading activities) - - of which: - to related parties to parties owning less than 20% - - Composition of commission and fee expense related to other financial services PRIOR CURRENT Paid cash flow commission Paid cash withdrawal commission - 6 Agency commission Commission fee Paid costs PAID (PAYABLE) COMMISSION AND FEE EXPENSES

28 The amount of Commission and fee expenditure paid (payable) increased by 55.81% compared to the previous year. Net result of financial activities PRIOR CURRENT NET RESULT OF FINANCIAL ACTIVITIES From the income of other financial services From the expense of other financial services From the income of investment services (income of trading activities) write-back of value adjustment of securities for trading - - purposes From the expense of investment services (expense of trading activities) - - of which: - to related parties to parties owning less than 20% value adjustment of securities for trading purposes - - Other income from business activities PRIOR CURRENT OTHER INCOME FROM BUSINESS ACTIVITIES Income of non-financial and investment services - - Other income write-back of value adjustment of inventories - - Other operating income PRIOR CURRENT Income from assets sold Receivables sold Exchange gain Income from other sales Prepaid legal costs Other income OTHER INCOME

29 Costs of general activities PRIOR CURRENT COSTS OF GENERAL ACTIVITIES Salaries and personnel aa) salary cost ab) personnel cost of which:- social security cost costs relating to pension - - ac) social contribution k of which:- social security cost costs relating to pension - - Other costs (material-type expenses) Material-type expenses PRIOR CURRENT Material-type expenses Value of services used Official fees, duties, insurance fees MATERIAL-TYPE EXPENSES Staff costs at the Bank increased by 15.17%, the material costs decreased by 6.78% compared to the previous year. Value adjustment and other expenses from business activities PRIOR CURRENT DEPRECIATION OTHER EXPENSESS FROM BUSINESS ACTIVITIES Result of non-financial and investment activities - - Other expenses value adjustment of inventories

30 Composition of other operating expenses PRIOR CURRENT Net value of tangible fixed assets sold Receivables sold Paid default interest, penalty, fine Local business tax Other local taxes 24 - VAT Lending losses Scrapping Prepaid costs Research and innovation tax Other expenses OTHER EXPENSES The value of other expenses increased by % compared to the previous year. Value adjustment and write-back PRIOR CURRENT Value adjustment for receivables and general risk reserve for pending and future liabilities a) value adjustment on receivables b) general risk reserve for pending and future liabilities Value adjustment write-back for receivables and use of general risk reserve for pending and future liabilities a) value adjustment write-back on receivables b) use of general risk reserve for pending and future liabilities Value adjustment for investment 81 - Value adjustment write-back for investment Extraordinary profit PRIOR CURRENT EXTRAORDINARY PROFIT Extraordinary income Extraordinary expense

31 Calculation of the Retained profit for the year The Bank s tax liability was calculated in accordance with Act LXXXI of 1996 as follows: CURRENT Amortisation recognised in accordance with the Accountancy Act Fine Provisioning Donation 500 ITEMS INCREASING THE TAX BASE CURRENT Amortisation accoting to the tax law Dividend received Provisions in the prior year, exceeding the recognised measure Tax penalty, late payment interest repayment Foundation support, donation % of local tax ITEMS TO BE DEDUCTED FROM THE TAX BASE CURRENT Profit before tax Items increasing the tax liability Items decreasing the tax liability Tax base Corporate tax (16%) Tax allowance - PAYABLE CORPORATE TAX CURRENT Profit before tax Payable corporate tax Additional Profit after tax General provisioning and use Use of profit reserbe for dividend and participation - Paid (approved) dividend, participation - RETAINED PROFIT FOR THE

32 VII.) Supplementary Notes The Supplementary Notes to the financial statements include the information required by the Act on Accounting hereby fulfilling the shareholders' and market participants' information needs. The notes incorporate all information in addition to the statutory inclusions which is necessary for meeting with the accounting principles and the presentation of a true and fair view in the Balance Sheet and the Income Statement. 32

33 VIII.) Summary We have performed the audit of the Company's financial statements (Balance Sheet, Income Statement and Supplementary Notes). The Balance Sheet and Income Statement items were measured in accordance with the accounting principles and relevant legislation. The Company's accounting system is appropriate, we did not identify fundamental deficiencies during the course of our audit. Budapest, 17th March, 2007 BDO Kontroll Auditing and Tax Consulting Ltd. József Kosztovics Managing Director Ferenc Baumgartner Chartered Accountant 33