ANNUAL REPORT DNB BANK POLSKA S.A.

Transcription

1 2017 ANNUAL REPORT DNB BANK POLSKA S.A.

2 Contents 1 ABOUT THE BANK AND THE DNB GROUP 3 2 BUSINESS REPORT FOR THE YEAR ENDED 31 DECEMBER General information Financial results of the bank in Operations of the bank in Risk management Planned development of the bank 12 3 DNB INDUSTRY EXPERTISE 13 4 FINANCIAL HIGHLIGHTS 16 5 OPINION OF THE AUDITORS 20

3 1 About the bank and the DNB Group About the bank and the DNB Group DNB in the world DNB Bank Polska S.A. has been operating in Poland since solutions for specific industries, but also expert advice in all The bank is a wholly-owned subsidiary of Norway s the markets in which it is present. biggest bank and financial group DNB Bank ASA. The Group serves more than a half of the inhabitants of the DNB Bank Polska S.A. is a specialized corporate bank, country and is the leader in corporate banking, insurance servicing large corporates and public sector entities. The and asset management. DNB operates in 16 countries on Bank is focused on financing and serving companies from 4 continents and has offices in the major financial centres selected industries, such as energy, including renewable of the world (including London, New York and Singapore) energy sources, TMT, commerce, packaging, food industry, and its shares are listed on the stock exchanges in Oslo manufacturing and automotive industries, services and and London. DNB is also one of the world s largest banks pharmaceuticals. financing international shipping companies and the energy sector. Apart from providing top quality banking services for corporate Customers, DNB Bank Polska also offers project DNB enjoys high long-term credit ratings (A+ by Standard finance and commercial lending, in particular short- and & Poor s and Aa2 by Moody s). medium-term financing as well as long-term structured financing. The bank is also an arranger of and participant Focused on the provision of services for selected sectors, in syndicated lending. It provides a comprehensive range DNB Group lays emphasis on the development of its industry of trade finance solutions, as well as factoring services and expertise through international teams of experts who hedging instruments against foreign exchange risk, interest analyse the situation in the strategic sectors globally on rate risk and commodity risk. Being part of a Nordic financial an ongoing basis. This has a bearing on the local markets group, the bank offers a single platform for serving Nordic the Group is able to offer not only tailor-made financial corporate Customers in Central and Eastern Europe. ANNUAL REPORT 3

4 1 About the bank and the DNB Group 10 facts about DNB Group DNB Bank Polska S.A. is part of DNB Group 1 One of the best capitalised banking group in the world 15 The common equity Tier 1 capital ratio on the level above % 2 The most resistant European banking Group Leader of EBA stress test 2016.The only European banking Group, which practically would not be affected by the crisis.* 4 Strong long term ratings A+ Aa2 3 Capital stability Strong financial indicators mln (calculated from NOK according to the rate of exchange from the end of 2016) Profit at the end of ,1% ROC in 2016 (return on capital). More than 4x bigger than the biggest Polish banking group** Norway's largest financial services group. One of the largest group in the Nordic region in terms of market capitalisation. 6Global partner for international companies international presence in 16 countries on 4 continents offices in the major financial centres of the world including London, New York and Singapore the leading trade finance banking Group: billions of active limits for financial institutions around the world including banks and export credit agencies the strongest trade finance offices in London, USA, India and Shanghai offer a whole range of trade finance solutions including the cooperation with 36 Export Credit Agencies in the world a leading foreign exchange banking Group ANNUAL REPORT 4

5 1 About the bank and the DNB Group 10 facts about DNB Group DNB Bank Polska S.A. is part of DNB Group 7Deep sector specialization a major player in selected industries a significant international player within energy financing. DNB Group financed construction of wind parks across the world worth more than EUR 15 mld and power 7,4 GW one of the world s leading shipping banking Group a significant international player within financing the healthcare sector strong track record in financing the biggest TMT (Telecommunication, Media, Technologies) transactions in the world established position in the world in the fisheries and seafood industry 8 Client oriented banking Group high Clients satisfaction score Level of satisfaction at the Large Corporates and International Customers. 81% 9 Very GW stable shareholder structure 34 % mld 10 Scandinavian culture responsible institution that people trust Without trust, DNB can no longer exercise its primary function, which is to raise, invest and distribute capital. in DNB Group shares belong to Norwegian Government / Ministry of Trade, Industry and Fisheries. Participation in a number of global initiatives in the field of sustainable growth and corporate social responsibility. * 2016 WIDE STRESS TEST, 29 July 2016 ** in terms of assets (assets of PKO BP and DNB ASA, ) ANNUAL REPORT 5

6 2.1 General information General information 1. On May 31th 2017, DNB Bank Polska S.A. ( the Company, the bank ) held their Ordinary General Meeting of Shareholders, which, among others: approved the Company s Business Report, balance sheet and profit and loss statement for the year ended 31 December 2016, and gave the Company s authorities a vote of acceptance in respect of the performance of their duties for the 2016, decided to allocate the bank s net profit for the 2016 amounted to PLN thousand as follows: the amount of PLN thousand for the supplementary capital, the amount of PLN thousand for the general risk fund, the amount of PLN thousand for the reserve capital. assessed the suitability of the Supervisory Council Members. 2. The bank s Supervisory Council comprised the following Members on January 1 st 2017: Mr. Vidar Andersen, Mr. Anders Laegreid, Mr. Peter Henry Carlsson, Mr. Tony Samuelsen, Mr. Leif René Hansen, Ms. Eldbjørg Sture, Ms. Eline Skramstad, Mr. Jan Nosowski. The bank s Supervisory Council comprised the following Members on December 31 st 2017: Mr. Vidar Andersen, Mr. Anders Laegreid, Mr. Tony Samuelsen, Mr. Leif René Hansen, Ms. Eldbjørg Sture, Ms. Eline Skramstad, Mr. Jan Nosowski. On December 21 st 2017, Peter Henry Carlsson resigned from the function of a Member of Supervisory Council effective from December 31 st The bank s Management Board comprised the following Members on January 1 st 2017: Mr. Artur Tomaszewski the President of the Management Board, Mr. Olof Stefan Seidel the Management Board Member, Mr. Krzysztof Miłachowski the Management Board Member, Mr. Marcin Prusak the Management Board Member. On March 21 st 2017, the Supervisory Council recalled Mr. Olof Stefan Seidel from the Management Board as from March 31 st 2017 and appointed Mr. Wojciech Dyk as the Management Board Member as from April 1 st As of December 31 st 2017, the bank s Management Board consisted of: Mr. Artur Tomaszewski the President of the Management Board, Mr. Krzysztof Miłachowski the Management Board Member, Mr. Marcin Prusak the Management Board Member, Mr. Wojciech Dyk the Management Board Member. 4. On June 6th 2017, the note about the submission of the bank s financial statement for the period from 1 January to 31 December 2016 along with the auditor s opinion, the resolution of the General Meeting of Shareholders about approving the financial statement and the bank s business report were entered in the Registry of Entrepreneurs of the National Court Register. ANNUAL REPORT 6

7 2.2 Financial results of the bank in 2017 Financial results of the bank in 2017 The bank ended last year with net financial result of MPLN 77.7 (vs. MPLN 58.9 in 2016), thus achieving MPLN gross profit. The bank s balance sheet total amounted to BPLN 10.9 and the return on equity (ROA) was 0.71%. In 2017 total incomes from the operational activity reached MPLN 228 (MPLN 242 in 2016). The net interest income constituted the most significant item in the bank s income (approximately 83% of total income). Subsequently other significant categories in the income structure included fee and commission income (7%), trading income (4%) and income on investment securities (1%). year to year, while bank recorded decrease in net investment securities, net trading income and other operating income respectively by 82%, 55% and 47% year to year. The most significant decrease related to net trading income and was due to one-off transaction of the sale of VISA Europe Limited shares in completed in 2016 that did not take place again in The total operating income decreased by 6% in 2017 compared to The net interest income increased by 9% THE STRUCTURE OF THE BANK S INCOME EARNED IN 2017 AND ITS GROWTH RATE COMPARED WITH 2016 YEAR ENDED (PLN 000) SHARE (%) YEAR ENDED (PLN 000) CHANGE 2017/2016 (%) Net interest income % % Net fee and commission income % % Net trading income % % Net investment securities income % % Other operating income % % Total operating income % % ANNUAL REPORT 7

8 2.2 Financial results of the bank in 2017 In 2017, the total operating expenses decreased by 7% compared to The table below presents the distribution of the bank s operating expenses in 2017 and the variance of individual expense lines compared to The costs related to the employee benefits were the most significant item (constituting 46% of all costs incurred by the bank). During 2017 the employee related costs increased compared to 2016 (by 7%) that resulted from the change in remuneration system and higher level of other employee related expenses. Other significant categories in the costs structure include IT expenses (14%), contribution and payments made to the Guarantee Bank Fund (11%) and depreciation expense and external services expenses (7% each). The expenses increase compared to the previous year was noted in the following categories: marketing costs, costs of services and taxes and fees. The most significant decrease in expenses was recorded in contribution and payment to the Bank Guarantee Fund and the variance resulted from the change of methodology of contribution calculation in accordance with the Bank Guarantee Fund Act. THE STRUCTURE OF THE BANK S EXPENSES IN 2017 AND THEIR GROWTH RATE COMPARED WITH 2016 YEAR ENDED (PLN 000) SHARE (%) YEAR ENDED (PLN 000) CHANGE 2017/2016 (%) Staff costs % % Depreciation % % Material costs % % Taxes and fees % % Contribution and payments to the Bank Guarantee Fund % % Contribution to the Company Social Benefit Fund 315 0% 301 5% IT costs % % Telecommunication costs % % Marketing costs % % Costs of services % % Premises costs % % Other administrative costs % % Other operating expenses 994 1% % Total other operating expenses % % ANNUAL REPORT 8

9 2.3 Operations of the bank in 2017 Operations of the bank in 2017 Since 2013 the bank is operating as specialized corporate bank with focus on the companies with at least MPLN 500 income. In 2017 the bank has successfully finalized a number of important deals in strategic industries. For the public sector Clients the bank realized structured products such as the revenue bonds or bonds issue for hospital and municipality companies (council flats) with the supporting agreements of the self-governments. Moreover, the bank increased its commitment in the largest Polish telecommunication companies and international clients from TMT sector. The bank has been strengthening its product competences. In the area of treasury products the bank intensified activities in the sale of commodity swaps. The offer received response from the companies whose operations are connected with the prices of metals. In 2017, apart from engaging in purely banking business, DNB originated and organized a number of industry meetings and events, during which matters of importance for different industries were discussed, analyses of trends, growth opportunities and project finance models were presented (among others, the Directions conference and a series of Meetings of Leaders of different industries lying within the sphere of the bank s specialization). DNB also participated in prestigious industry conferences organized by major business and local government organizations, and co-organized workshops for representatives of local government units. Together with Deloitte and PwC, the bank authored a number of opinion-forming reports on the most important areas of the Polish economy and its individual sectors. The bank decided to follow the strategy of standing out among other players on the banking market and sector specialization some industries were selected and for these sectors the bank wants to be the first-choice bank. DNB Bank Polska specializes in such industries as: energy sector (particularly oil, gas and renewable energy sources), TMT (telecommunication, media, technologies), retail trade, manufacturing especially packagings and automotive business, services and the public sector. DNB Bank Polska s ambition is to develop stable and profitable business: to double incomes generated on the corporate business by 2020 while at the same time improving the performance indicators and maintaining high quality of the credit portfolio. The bank intends to grant over BPLN 1 new funding yearly, to compete successfully with large banks in deals involving large tickets, as well as to strengthen its position as a reliable business partner and to share risk with the Clients for example in so called club deals or syndicated deals. DNB Bank Polska wants to grow in the M&A business, keeps track on all LBO transactions in its strategic industrial sectors. Since couple of years the bank is participating in all LBO deals in the TMT sector. The bank provides funding for the largest mobile phone providers, cable network operators, as well as the companies with telecommunication infrastructure. The bank has successfully finalized large LBO deals in such sectors as: trade, services and manufacturing business. ANNUAL REPORT 9

10 2.4 Risk management Risk management With respect to the type of conducted activity, the following kinds of risks, that require or may require internal capital coverage in the future, have been identified within the bank: credit and counterparty risk, operational risk, credit valuation adjustment (CVA) risk, interest rate risk in the banking and trading book, liquidity risk, business cycle risk, foreign-exchange risk, concentration risk, position risk, settlement and delivery risk, commodities price risk, foreign currency lending risk, strategic risk. The bank maintains on an ongoing basis, the level of internal capital which is sufficient to cover different types of risk, resulting in particular from changes in external environment taking into account expected level of risk. The bank applies the rule of the adequacy of internal capital assessment methodology to the scale of its activity. The amount of the internal capital is calculated as the sum of internal capital necessary to cover all types of risks taken into account in the capital adequacy calculation of material risks. The internal capital value related to settlement and delivery risk, commodities price risk and strategic risk amounted to zero. At least once a year the process of internal capital assessment is subject to review, verification and evaluation by an independent internal audit unit, whose employees have adequate qualifications, experience and skills to examine all types of risks included in the process of internal capital assessment. ANNUAL REPORT 10

11 2.4 Risk management INTERNAL CAPITAL ALLOCATION AS ON 31 DECEMBER 2017 AND 31 DECEMBER 2016 Equity as at Equity as at Credit risk Operational risk Credit valuation adjustment risk 2 5 Position risk Interest rate risk Liquidity risk Business cycle risk Foreign-exchange risk Concetration risk Foreign currency lending risk Capital add-on in accordance with capital target in Pillar II All types of risk in total Equity capitals Disposable capital ANNUAL REPORT 11

12 2.5 Planned development of the bank Planned development of the bank Corporate banking In 2018, the bank will focus on the following activities: Focus on strategic business areas, on the best Customers with low risk profile: active acquisition of customers from the strategic industry sectors (in accordance with prepared acquisition plans), strengthening of long term relationships with existing Customers, development of strategic business competences in all areas of the bank s activities. Execution of the strategy Originate & Distribute in order to improve own capital utilization: development the action model providing for wider distribution channels of selected loans and bonds on financial markets. Promotion of the bank as the business partner in strategic segments: organization of industry conferences, active participation in conferences and external events, continuation of the organization of crucial conference Direction, further increase of the bank s presence in key media. Further development of product offer allowing the increase in fee and commission income, the increase in stable deposit base and more effective utilization of own capital, among others by: implementation of new electronic banking platform, extending the functionalities in cash management. Further integration with DNB Group: extension of relationships with the Group Customers, further knowledge acquisition and exchange of experience with industry experts, personnel exchange program being continued, use of existing solutions available within DNB Group (in product, processes and organizational areas). ANNUAL REPORT 12

13 3 DNB industry expertise DNB industry expertise ENERGY AND FUEL DNB is a bank with a Norwegian roots, hence the energy and fuel industries are its natural habitat. Its track record to date makes DNB a major player in the financing of the energy industry primarily using oil and gas, as well as renewable energy sources. The bank provides financing for projects and operations as well as trade finance and risk hedging solutions. What marks it out is its know-how, experience and capacity DNB has experts specialising in the energy industry and cooperates with the offices of the DNB Group in Oslo, Aberdeen, Houston, London, New York, Santiago, Singapore and Stockholm. DNB is also an expert in financing renewable energy sources. TMT (Telecommunications, Media, Technology) Experience in serving and financing the largest corporations of the TMT sector means deep understanding of the industry and the Customers business. That is why DNB is a natural partner for companies developing in the area of new and modern technologies. Its many-year presence on the Polish and international markets has given the bank ample experience in financing even the most complex transactions today it prides itself on participating in some of the largest deals in the TMT sector completed in the past few years in Poland mainly in the M&A area. solutions as well as flexible transaction banking. The bank has a significant position in serving automotive companies it has strong relationships with a dozen or so major players in this industry. The Polish experts are provided support by the Automotive Desk in Stockholm, which has years of experience in doing business with the Nordic automotive industry. PUBLIC SECTOR For over 20 years (originally as BISE Bank), DNB has done business with public sector entities communes, districts and other local government units, as well as non-for-profit organizations helping them manage their finances. The bank also specializes in serving and financing public hospitals. DNB is now one of the leaders in financing local governments it has done over 1,500 projects. DNB also holds sway among the issuers of municipal bonds with more than 260 projects to its credit. DNB was the first bank in Poland to arrange an issue of income bonds in financing municipalities (public housing) and intracommunal unions (water and sewage infrastructure). Furthermore, it was among the first commercial banks in Poland to engage in financing the health care system, including the issuance of bonds for hospitals transformed into commercial companies, not requiring a letter of comfort from the founding body. All this makes DNB the best partner for public sector entities. PACKAGING AUTOMOTIVE INDUSTRY DNB specializes in serving aftermarket producers and distributors as well as car and utility vehicle makers. The bank offers automotive companies instruments for financing operating activity, trade finance instruments, FX or interest rate hedging DNB provides service for companies producing packaging, operating in Poland and with international presence, manufacturing paper packaging and wood products. This market in Poland is steadily growing and for this reason DNB treats the packaging industry as one of the strategic ones and offers the businesses operating there solutions facilitating their day-to-day ANNUAL REPORT 13

14 3 DNB industry expertise operations, investments and development. The range includes the financing of operations, capital investments or acquisitions and cash management. The DNB Group is one of few groups which have a global strategy for financing packaging sector companies. Offices with expertise and experience in this regard are located, among others, in Oslo, Stockholm, Helsinki, London and New York. In Poland, DNB leverages on the Group s expertise, offering companies a wide range of business opportunities. SERVICES retailing and wholesaling, as well as the global reach and exchange of international experience allow it to offer optimum trade finance solutions. DNB banks with the leaders of the retail and wholesale trade, supports companies and corporations carrying a wide assortment: food, medicines, dietary supplements, fabrics, beauty products, automotive parts, household appliances, consumer electronics, DIY and IT equipment. It offers credit and transaction products, trade finance instruments, FX and interest rate risk hedging instruments. The bank also supports the Customers in their international operations, including expansion into new markets. The bank provides service for the leaders of the transport, logistics, security, cleaning, maintenance of commercial buildings and hotels markets. It has solutions designed for recycling companies and those dealing with the processing, removal and treatment of waste and communal waste as well as corporations distributing and selling food and catering services to commercial establishments. DNB also offers solutions supporting cross-border business relations between companies and consolidation processes, such as financing operations, investment and acquisitions, trade finance instruments, specialised transaction products, FX or interest rate risk hedging instruments. The bank s industry experts are based both in the Oslo head office as well as in the Group s branches in the Nordic and Eastern European countries. TRADE DNB s vast experience in serving the trade sector, its knowledge of the realities and models used in FOOD DNB serves production companies of a significant market position, specialising, among others, in the seafood subsegment. It offers them the financing of operations, project finance, M&A financing and liquidity management. The Customers include producers from the dairy, meat processing, bakery, fruit and vegetable processing, cereals as well as sugar confections and beverage sectors. Owing to its Norwegian pedigree and a long-standing tradition in doing business with the seafood industry, DNB is an ideal partner for companies operating internationally the DNB Group has offices where the Customers from this sector have theirs, including Bergen, London, New York, Santiago de Chile and Singapore. This way, the group is able to provide solutions securing the settlement of accounts in international trade, follow the Customers wherever the sales or sourcing markets offer opportunities to sell or buy goods or whichever market the Customer wants to enter. ANNUAL REPORT 14

15 3 DNB industry expertise PHARMACEUTICALS DNB draws on the experience of the group, which is the biggest Nordic bank serving the pharmaceutical sector as well as being in the top 10 of banks financing this industry in the USA. DNB serves producers of medicines, including original and generic medicines, producers of medical equipment as well as distributors of pharmaceuticals. The bank offers long-term relationships, including financing, daily banking service, instruments supporting growth, including Mergers and Acquisitions. Among the factors differentiating the bank are experience and access to global markets. The list of the Customers of the DNB Group includes global pharmaceutical and biotechnology companies as well as producers of equipment, operating in Europe and in the USA. Customers are served by experienced local bankers supported by industry experts based in New York, Oslo and Stockholm. ANNUAL REPORT 15

16 4 Financial highlights Financial highlights Statement of financial position Year ended on Year ended on Assets Cash in hand and balances with the Central Bank Amounts receivable from banks Derivative financial instruments Loans and receivables to customers Investment securities: available-for-sale held-to-maturity Investments in subsidiaries Intangible assets Property, plant and equipment Investment properties Deferred income tax assets Other assets TOTAL ASSETS Liabilities Amounts payable to banks Derivative financial instruments Payables to customers Current income tax liabilities Other liabilities Provisions TOTAL LIABILITIES EQUITY Attributable to bank s shareholders: Share capital Other capital Retained earnings TOTAL EQUITY TOTAL EQUITY AND LIABILITIES ANNUAL REPORT 16

17 4 Financial highlights Income statement Year ended Year ended Interest income Interest expenses (76 506) (74 988) Profit (loss) from interest Income from commissions and fees Commission and fee expenses (1577) (1 555) Profit (loss) from commissions and fees Dividend income Net trading income Profit (loss) from investment securities Impairment losses and provisions for off-balance sheet liabilities 665 (23 493) General administration costs ( ) ( ) Other operating income Other operating expenses (994) (5 645) Profit (loss) from operating activities Gross profit (loss) Income tax (23 565) (16 874) Net profit (loss) Average weighted number of ordinary shares Profit/ loss per one ordinary share (PLN) 0,06 0,05 The bank does not calculate the diluted profit per one share due to the lack of certain types of equity causing the dilution. ANNUAL REPORT 17

18 4 Financial highlights Statement of changes in equity Share capital Retained profit (loss) Other capital Total Balance as at 1 January Comprehensive income for the period Appropriation of the financial results for the previous reporting periods 0 (58 967) Balance as at 31 December Share capital Retained profit (loss) Other capital Total Balance as at 1 January Comprehensive income for the period (9 227) Appropriation of the financial results for the previous reporting periods 0 (56 432) Balance as at 31 December ANNUAL REPORT 18

19 4 Financial highlights Statement of cash flows Year ended on Year ended on Cash flows from operating activities Gross income Total adjustments: Income tax paid (14 920) Depreciation Profit (loss) from investment activities (1 635) (11 452) Movement in loans and advances to banks (29 198) Movement in derivative financial instruments and assets held for trading Movement in loans and receivables to customers ( ) Movement in investment securities (26 767) (28 986) Movement in other assets (232) Movement in deposits from banks ( ) ( ) Movement in amounts due to clients Movement in provisions Movement in other liabilities Net cash flows from operating activities Cash flows from investment activities: Inflows from investment activities Proceeds from sale of intangible assets and property, plant and equipment Proceeds from sale and redemption of investement securities Sale of equity instruments Outflows from investment activities ( ) ( ) Purchase of intangible assets and property, plant and equipment (7 380) (11 821) Purchase of investment securities ( ) ( ) Net cash flows from investment activities ( ) ( ) Cash flows from financial activities: Inflows from financial activities Loans and advances received from banks Outflows from financial activities ( ) ( ) Repayment of loans and advances from banks ( ) ( ) Repayment of loans and advances from financial institutions other from banks (11 862) (12 064) Other financial outflows Net cash flows from financial activities ( ) ( ) Total net cash flows ( ) Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year, of which: with limited ability to dispose ANNUAL REPORT 19

20 5 Opinion of the Auditors Opinion of the Auditors ANNUAL REPORT 20

21 5 Opinion of the Auditors Opinion of the Auditors ANNUAL REPORT 21

22 5 Opinion of the Auditors Opinion of the Auditors ANNUAL REPORT 22

23 5 Opinion of the Auditors Opinion of the Auditors ANNUAL REPORT 23

24 5 Opinion of the Auditors Opinion of the Auditors ANNUAL REPORT 24

25 5 Opinion of the Auditors Opinion of the Auditors ANNUAL REPORT 25

26 DNB Bank Polska Spółka Akcyjna seated at Postępu 15C, Warsaw, Poland, registered in the District Court for the City of Warsaw, 13th Commercial Division of the National Court Register, entry no: KRS , NIP (tax ID): , REGON (statistical ID): , share capital PLN (paid up in full).