Տարեկան հաշվետվություն. Harmony of numbers

Transcription

1 213 Տարեկան հաշվետվություն Harmony of numbers 1

2 ANNUAL REPORT 213 Customers are our focus, and our intention is to offer up-to-date and technologically-advanced services... 2

3 Management Message We offer more than a standard package of banking products and services. Once we start to work with our customers we become their companion in the financial world. This is a sustainable relationship because we understand the needs, problems and expectations of our customers. We have come a long way together, so not only can we perform financial transactions together, but also implement joint charity projects. In 213, we focused our corporate social responsibility policy on the education and the bright future of our children. Together with our customers, we are willing to build a new and brighter future. Based on various projects in 213, the bank-customer relationship is stronger than ever. Our steady financial growth is the best evidence of our customers trust toward Converse Bank. In 213, our profit grew by 45% to AMD 471M. This growth will continue in the upcoming year, our expectations and projects for 214 are ambitious and progressive. Our activities and stability are highly appreciated by our partners as well, evidenced by their continuing cooperation with the Bank. This year we received the first tranche of an AMD credit equivalent of USD 2.5M from the European Bank for Reconstruction and Development (EBRD). This significant step indicates a positive reception of our recent results, and is yet another incentive for future productive performance. The banking system is a continuously developing sector, and leading commercial banks throughout the world have implemented innovative information technology solutions to keep up with this change. With mass smart-phone adoption and global internet access, it is no longer possible to create practical and relevant products and offer quality services without relying on the latest technologies. Converse Bank has always stood apart based on innovative approaches, and we will therefore continue down the path of global digitalization next year. This path is particularly important for the Bank since retail banking is our main focus, and customer satisfaction is the pillar of our work. Customer confidence, our professional team and strong relations are key elements of our success. With best regards, Armen Ter-Tachatyan Chairman of the Board Converse Bank 3

4 Management Message Converse Bank has always adhered to the principle of offering the best banking products and services to our customers. Year after year not only have we improved the quality of our services but also created a range of competent and relevant products. Nonetheless, we place the highest priority and most appreciate the trust of our customers toward the Bank. The year 213 demonstrated that we took steady steps toward our goals. The total amount of deposits increased by 39%, and net profit grew by 45%. We were inspired by this demonstration of the continued trust of our customers. This year we further expanded our branch network to improve convenience for our customers. New branches were opened in Dilijan, Ashtarak and in the Davtashen district of Yerevan, and we renovated our Charentsavan and Sevan branches. In 213, we introduced several new products and services. The Bank launched an exclusive Healthy Lifestyle credit card, issued smart cards, and initiated the online sale of payment cards through the Bank s website and Facebook page, as well as a new and improved e-banking service. The banking services are now closer and more accessible to each of our customers, and money management is more secure and convenient. These novel products convinced us that any good project would no longer be feasible without the application of new technologies. As a result, we made another important decision in 213: take the road of high tech development and introduction of novel products. This year e-commerce is the core focus for Converse Bank, and we are positive that its expansion will help drive the overall economic development in Armenia. This year we remained faithful to our policy of support to children. In 213, Converse Bank implemented a broad charity program together with the Aram Khachaturian Trio and Classical Music Development Fund. Due to our support, master classes were held and classes for less-popular musical instruments were opened not only in Yerevan but also in the regions. Furthermore, we supported the ReAnimania festival, helped the children of frontier villages within the scope of Become a Santa Claus project, and organized an open chess tournament at TUMO Center for Creative Technologies We do believe that corporate social responsibility projects help us share the same values with our customers and jointly build the best future. Our expectations are numerous and our plans for 214 are ambitious. Good luck and best wishes, Tigran Davtyan Chairman of Management Board Chief Executive Officer Converse Bank CJSC 4

5 FINANCIAL RATIOS Increase of assets, AMD mln 121, , Converse Bank is a dynamically developing bank and one of the leading banks in Armenia. During its 2-year history, while passing various stages of development, the Bank shaped its vision and approaches. We have made this journey together with our customers. Our audited financials show the Bank s after-tax profit reached AMD 471M as of December 31, 213, recording 45% growth vs. the previous year. In 213, the Bank s gross financial result amounted to AMD 2,441M % Increase of liabilities, AMD mln 1 12,438 99, % 212 Increase of revenue, AMD mln Increase of securities portfolio, AMD mln , % 212 5, %

6 LOAN PORTFOLIO Increase of loan portfolio, AMD mln We achieved significant growth of our loan portfolio in the reporting period. The Bank s total net loan portfolio increased by 34% and reached AMD 79.9B. The main sectors for investment in 213 were mortgage (2%), construction (12%) and trade (1%). 1 79, , % 212 Վարկային ներդրումներն ըստ տնտեսության ճյուղերի, թ. Other sectors 5% Service sector 2% Industry 7% Construction 12% Commerce 1% Agriculture 3% Transport and communication 9% Mortgage 2% Consumer loans 32% 6 213

7 RETAIL BANKING SERVICES Customers number dynamics Since 21, retail banking services, and specifically consumers, have been the main focus of our retail banking business. The enhancement of retail banking services resulted in the substantial growth (33%) in the number of individual customers. To offer the best service to our customers, we consistently improved the branch network. In 213, 3 new branches were opened and 2 branches were renovated. We laid the foundation for cooperation with Haypost, the official national postal operator of the Republic of Armenia, within the scopes of the joint Postbank project. 93, , % Increase in retail loan portfolio, AMD mln In 213, the aggregate retail loan portfolio grew by 24% and amounted to AMD 44.1B. Specifically, in the reporting period mortgage loans (37%) and credit cards (32%) had a major share in the retail loan portfolio ,636 44, %

8 A number of new products were launched, such as a new updated Internet Banking service, the exclusive Healthy Lifestyle card loan co-branded with top Armenian medical centers, All-in-One loan package, CMTPL crediting, and the Loyal Customer loan. The Bank actively cooperated with government programs: e.g. in the period of January-December 213, the number of new accounts opened under social packages reached 9,5; in addition, 36 local treasuries of the RA Ministry of Finance were serviced through our branches. Our customers trust grows year by year, the brightest demonstration of which was the increasing number of deposits in 213. In the reporting period, 8,22 term deposits totaling AMD 45.6B were attracted from individuals. One of the main directions of the Bank was the deployment of modern and quality remittance systems. We launched clearing services with the Tandem payment system. However, our biggest achievement was the Converse Transfer fast transfer system. It was licensed by the Central Bank of Armenia, the software was installed in all branches, and the first transfers were made during this year. Retail Loan Portfolio Structure Other consumer loans 15% Car loans 3% Credit cards 32% Gold-based loans 13% Mortgage loans 37% 8

9 Individuals demand deposits dynamics, AMD mln Payment cards are another essential part of our retail business. Here again our main focus was the customer. In 213, we launched a convenient online application process for payment cards through our website ( and our Facebook page. We also started the issuance of smart cards based on international security standards. Our partnership with Visa and MasterCard payment systems has intensified, and in 213, we implemented a series of loyalty projects. All of these efforts caused 33.2% growth in the number of cards in 213 vs , % 9, Individuals time deposits dynamics, AMD mln 4 35, , % Plastic cards dynamics ARCA Increase of general payment cards 33% growth 68% growth 8% growth 34% VISA MASTERCARD

10 CORPORATE BANKING SERVICES Corporate customers dynamics Corporate banking services constitute another essential strategic direction of Converse Bank. Our customers value the professional approach and flexibility of the Bank. The total number of corporate customers grew by 45% in the reporting period ,15 4, % The corporate loan portfolio grew as well, by 33% and amounted to AMD 39.B. Specifically, the corporate loans (76%) and SME loans (2%) took the major share in the business loan portfolio. Increase of time deposits of legal entities, AMD mln , % 25,

11 Increase of corporate loan portfolio, AMD mln The total amount of corporate time deposits grew by 56% and reached AMD 25.8B ,74 29, % Our partners greatly appreciate the high professionalism of the Bank. In 213, we received the first tranche of an AMD credit (equivalent of USD 2.5M) from EBRD. It was completely used for SME lending. This is an essential achievement for us, since under the Bank s strategy SME lending will be one of our priorities in the coming years. Corporate Loan Portfolio Structure, 213 Agro loans 4% Corporate loans 76% SME 2% 11

12 CORPORATE SOCIAL RESPONSIBILITY In 213, our corporate social responsibility projects were focused on support programs for children. Our main theme and objective was The best education and future for our children. We strongly believe that programs supporting children build the foundation of a prosperous future. Today s child is tomorrow s teacher, scientist, businessman and musician. With the joint efforts of Aram Khachaturian Trio and Classical Music Development Fund, musical master classes were held in Yerevan and the regions. With our support new classes were opened at musical schools. We became the main sponsor of ReAnimania animation festival. We implemented the Become a Santa Claus project and made New Year presents for the children of frontier villages. We organized an open chess tournament at TUMO Center for Creative Technologies. 12

13 Independent auditor s report To the Shareholders and Board of Directors of Closed Joint Stock Company Converse Bank : We have audited the accompanying financial statements of Converse Bank CJSC (the Bank ), which comprise the statement of financial position as of December 31, 213, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank s internal control. An audit also includes estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of Converse Bank Closed Joint Stock Company as of December 31, 213, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Gagik Gyulbudaghyan Managing partner Armen Vanyan Auditor Grant Thornton CJSC 7 March, 214 Yerevan 13

14 Statement of profit or loss and other comprehensive income In thousand Armenian drams Year ended December 31, 213 Year ended December 31, 212 Interest and similar income 1,896,817 8,49,933 Interest and similar expense (5,757,518) (4,228,162) Net interest income 5,139,299 4,181,771 Fee and commission income 1,364,852 1,291,232 Fee and commission expense (516,962) (386,853) Net fee and commission income 847,89 94,379 Net trading income 861, ,533 Gains less losses on investments available for sale 43, Other income 766, ,854 Impairment charge for credit losses (3,139) (297,229) Foreign currency translation net loss of non-trading assets and liabilities (252,289) (199,78) Staff costs (2,958,244) (2,659,365) Depreciation of property plant and equipment (924,63) (793,484) Amortization of intangible assets (111,449) (44,673) Other expenses (2,349,26) (1,998,629) Profit before income tax 763, ,99 Income tax expense (292,457) (61,69) Profit for the year 47, ,3 Other comprehensive income: Items that will not be reclassified subsequently to profit or loss Revaluation of PPE 2,414,982 - Income tax relating to items that will not be reclassified (1,77,888) - Net income from items that will not be reclassified subsequently to profit or loss 1,337,94 - Items that will be reclassified subsequently to profit or loss Net unrealized gain from changes in fair value of available-forsale 839, ,527 instruments Net gain realized to net profit on disposal of available-for-sale (47,488) (6,11) instruments Income tax relating to items that will be reclassified (158,349) (55,285) Net income from items that will be reclassified subsequently to profit or loss 633,4 221,141 Other comprehensive income for the year, net of tax 1,97, ,141 Total comprehensive income for the year 2,441, ,441 TIGRAN DAVTYAN Executive Director GOHAR HARUTYUNYAN Chief accountant 14

15 Statement of financial position In thousand Armenian drams ASSETS As of December 31, 213 As of December 31, 212 Cash and cash equivalents 21,13,526 35,899,638 Trading securities 268,94 168,448 Amounts due from other financial institutions 2,883,839 5,966,433 Derivative financial assets - 2,135 Loans and advances to customers 79,957,34 59,732,98 Investments available for sale 7,594,49 5,387,527 Property, plant and equipment 7,313,542 4,811,39 Intangible assets 191, ,364 Repossessed assets 1,12,14 2,758,321 Prepaid income taxes 46,763 56,75 Other assets 998, ,527 TOTAL ASSETS 121,37, ,834,36 LIABILITIES AND EQUITY Liabilities Amounts due to CB of RA 4,43,242 4,492,89 Amounts due to other financial institutions 11,951,85 1,7,868 Amounts due to customers 84,422,4 83,833,92 Deferred income tax liabilities 1,533,878 27,519 Other liabilities 486, ,232 TOTAL LIABILITIES 12,437,733 99,54,8 Equity Share capital 4,86,33 4,86,33 Share premium 63,233 63,233 Statutory general reserve 78, ,55 Other reserves 4,873,554 3,16,131 Retained earnings 8,355,745 7,98,658 Total equity 18,932,93 16,779,56 TOTAL LIABILITIES AND EQUITY 121,37, ,834,36 TIGRAN DAVTYAN Executive Director GOHAR HARUTYUNYAN Chief accountant 15

16 Statement of changes in equity In thousand Armenian drams Share capital Share premium Statutory general reserve Revaluation reserve of securities available for sale Revaluation reserve of PPE Retained earnings Total Balance as of January 1, 212 4,86,33 63, ,55 (35,468) 3,295,797 7,578,452 16,477,552 Dividends to shareholders (243,433) (243,433) Transactions with owners (243,433) (243,433) Profit for the year ,3 324,3 Other comprehensive income: Adjustment to revaluation reserve on depreciation of PPE Net unrealized gain from changes in fair value (321,339) 321, , ,527 Net gains realized to profit or (6,11) - - (6,11) loss on disposal of availablefor-sale instruments Income tax relating to (55,285) - - (55,285) components of other comprehensive income Total comprehensive income for the year ,141 (321,339) 645, ,441 Balance as of December 31, 212 4,86,33 63, ,55 185,673 2,974,458 7,98,658 16,779,56 Dividends to shareholders (287,922) (287,922) Transfers to reserves , (64,86) - Transactions with owners , (352,782) (287,922) Profit for the year ,798 47,798 Other comprehensive income: Adjustment to revaluation (257,71) 257,71 - reserve on depreciation of PPE Revaluation of PPE ,414,982-2,414,982 Net unrealized gain from changes in fair value Net gains realized to profit or loss and other comprehensive income on disposal of available-for-sale instruments Income tax relating to components of other comprehensive income Total comprehensive income for the year Balance as of December 31, , , (47,488) - - (47,488) (158,349) (1,77,888) - (1,236,237) ,4 1,8,23 727,869 2,441,292 4,86,33 63,233 78, ,73 4,54,481 8,355,745 18,932,93 TIGRAN DAVTYAN Executive Director GOHAR HARUTYUNYAN Chief accountant 16

17 Statement of cash flows In thousand Armenian drams Cash flows from operating activities Year ended December 31,213 Year ended December 31,212 Interest received 1,35,18 7,827,32 Interest paid (5,72,495) (4,488,48) Fees and commissions received 1,589,365 1,472,775 Fees and commissions paid (516,962) (386,853) Gains less losses on trading of trading assets 766 4,66 Realised gains from dealing in foreign currencies 813, ,663 Other income received 91, ,42 Fair value gain on financial assets recognised in profit and loss 47,923 23,96 Recovery of previously written off loans 988,494 1,95,44 Salaries and benefits paid (2,918,474) (2,632,63) Other operating expenses paid (2,261,679) (1,958,215) Cash flows from operating activities before changes in operating assets and liabilities Net (increase)/decrease in operating assets 3,921,344 2,287,88 Deposited funds in the CBA (1,) 14,469 Amounts due from other financial institutions 3,14,263 3,97,584 Loans and advances to customers (19,349,997) (17,479,287) Other assets 1,345,743 (37,767) Increase/(decrease) in operating liabilities Amounts due to financial institutions 3,416,65 (3,266,836) Amounts due to customers (1,246,276) (2,252,151) Other liabilities (277,35) (13,817) Net cash used in operating activities before income tax (9,15,163) (34,839,925) Income tax paid (192,348) (112,) Net cash used in operating activities (9,342,511) (34,951,925) Cash flows from investing activities Purchase of investment securities (1,99,735) (1,67,924) Dividends received 2,317 2,454 Purchase of property, equipment and intangible assets (893,655) (813,228) Proceeds from sale of property, equipment and intangible assets 29,378 1,748 Net cash used in investing activities (2,771,695) (2,47,95) Cash flow from financing activities Amounts due to CB of RA (439,315) 1,43,97 Amounts due to financial institutions (2,531,718) (44,225) Dividends paid to shareholders (287,922) (243,433) Net cash from/(used in) financing activities (3,258,955) 359,439 Net decrease in cash and cash equivalents (15,373,161) (37,,436) Cash and cash equivalents at the beginning of the year 35,899,638 72,41,755 Effect of exchange rate changes on cash and cash equivalents 577,49 498,319 Cash and cash equivalents at the end of the year 21,13,526 35,899,638 TIGRAN DAVTYAN Executive Director GOHAR HARUTYUNYAN Chief accountant 17