FINANCIAL STATEMENTS «EMPORIKI CREDICOM BANK S.A.» 31 DECEMBER In accordance with International Financial Reporting Standards

Transcription

1 FINANCIAL STATEMENTS «.» 31 DECEMBER 2007 In accordance with International Financial Reporting Standards ATHENS 4 APRIL 2008

2 Index to the Financial Statements Independent Auditor s Report... 3 Notes to the Financial Statements General Information Summary of significant accounting policies Basis of preparation Foreign currency translation Interest income and expense Fee and commission income Financial assets Loans and receivables Intangible assets Software Property, plant and equipment Cash and cash equivalents Provisions Employee benefits Deferred income tax Share capital and share premium Related-party transactions Comparatives Critical accounting estimates and judgements in applying accounting policies Financial risk Management Financial risk factors Credit risk Market risk Foreign currency risk Interest rate risk Liquidity risk Net Interest Income Fee & commission income Other operating income Staff costs Other operating expenses Cash and balances with central bank Due from other banks Loans and advances to customers Investments in subsidiaries/associates Intangible (software) assets and property, plant & equipment Other assets Due to other banks Other borrowed funds Other liabilities Deferred income tax Assets / (Liabilities) Share capital and share premium Cash and cash equivalents Related party transactions Capital adequacy Post balance sheet events (2) (26)

3 Independent Auditor s Report (translation from the original text in Greek) To the Shareholders of. Report on the Financial Statements We have audited the accompanying financial statements of Emporiki Credicom Bank S.A. (the Bank ), which comprise of the balance sheet as of 31 December 2007 and the related statement of income, changes in equity and cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes. 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 as adopted by the European Union. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. 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 Greek auditing standards, which conform with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting 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 accompanying financial statements present fairly, in all material respects, the financial position of the Bank as of 31 December 2007 and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union. Without qualifying our opinion, we draw attention to note 33 of the accompanying financial statements, which describes events following the adoption of Law 3371/2005 (Social Security Regulation of Banking Institutions) by the Bank and the uncertain final outcome of related litigation. Reference to Other Legal and Regulatory Requirements The Board of Directors Report contains all information required by articles 43a paragraph 3, 16 paragraph 9 of Law 2190/1920 and article 11a of Law 3371/2005, and is consistent with the financial statements referred to in the preceding paragraph. PricewaterhouseCoopers Certified Auditors - Accountants 268 Kifissias Avenue, Halandri SOEL Reg. No. 113 Athens, 4 April 2008 The Certified Auditor Accountant Constantinos Michalatos SOEL Reg. No (3) (26)

4 Income Statement Note Year ended 31 December Interest and similar income Interest expense and similar charges ( ) ( ) NET INTEREST INCOME Fee and commission income Other operating income NET OPERATING INCOME Staff costs 8 ( ) ( ) Depreciation & amortization 14 ( ) ( ) Impairment charge for credit losses 12 ( ) ( ) Other operating expenses 9 ( ) ( ) TOTAL OPERATING EXPENSES ( ) ( ) PROFIT BEFORE TAX Income tax expense 20 ( ) ( ) PROFIT AFTER TAX The notes on pages 8 to 26 are an integral part of these financial statements (4) (26)

5 Balance Sheet Note At 31 December ASSETS Cash and balances with Central Bank Due from other banks Loans and advances to customers* Investments in subsidiaries/ Associates Intangible assets Property, plant and equipment Deferred income tax assets* Other assets* Total assets LIABILITIES Due to other banks Due to customers Other borrowed funds Personnel leaving indemnities Deferred income tax liabilities* Other liabilities Total liabilities EQUITY Share Capital Share premium Retained earnings ( ) ( ) Results for the year Total equity Total equity and liabilities * The amounts of 2006 have been adjusted for comparison purposes The notes on pages 8 to 26 are an integral part of these financial statements (5) (26)

6 Statement of changes in equity Share capital Share premium Retained Earnings Total At 1 January ( ) Share capital increase Net profit At 31 December ( ) At 1 January ( ) Share capital increase Net profit At 31 December ( ) The notes on pages 8 to 26 are an integral part of these financial statements (6) (26)

7 Cash Flow Statement Year ended 31 December * Cash flows from operating activities Profit before tax Adjustments for non-cash movements: Depreciation and amortization Net increase in accrued expenditure and prepayments Impairment charge on credit losses Provision for personnel leaving indemnity ( ) Operating profit before working capital changes Net (increase) in loans and advances to customers ( ) ( ) Net (increase)/decrease in other assets ( ) Net decrease in due to customers Net decrease other liabilities Net cash from operating activities ( ) ( ) Cash flows from investing activities Purchase of property and equipment ( ) ( ) Purchase of software ( ) ( ) Acquisition of subsidiaries and associates ( ) ( ) Net cash used in investing activities ( ) ( ) Cash flows form financing activities Proceeds from share capital increase Tax paid on share capital increase (46.200) (19.800) Proceeds from interbank placements Proceeds from borrowed funds Net cash from financing activities Net Increase in cash and cash equivalents Cash and cash equivalents at the beginning of year (Note 22) Cash and cash equivalents at the end of year (Note 22) * The amounts of 2006 have been adjusted for comparison purposes The notes on pages 8 to 26 are an integral part of these financial statements (7) (26)

8 Notes to the Financial Statements 1. General Information Emporiki Credicom Bank S.A. (thereof «Company» or «Bank» or «Credicom») was established by Emporiki Bank of Greece S.A. (thereof «Emporiki Bank») and Sofinco, a subsidiary of Credit Agricole, with equal participation in the share capital of the Company. Credicom commenced its trading activities in the retail lending in September 2003 and provides consumer loans, open line of credit with or without credit card, consumer factoring and stock finance by utilising as points of sale branches which sell consumer goods. The Bank in incorporated and domiciled in Greece. The address of its registered office is in Athens, at 11 Sofocleous Str. and its registration number as Societe Anonym is 55026/06/B/03/15. The composition of the Board of Directors at 31 December 2007 is as follows: Members Leonidas Zonnios Chairman Christof Grav Vice Chairman irini Maragoudaki Chief Executive Officer Sebastian Plaisant Member Zack-Huber Roller Member Panayiotis Varelas Member Panayiotis Zafeiropoulos Member Amir Gorambzi Member These financial statements have been approved for issue by the Board of Directors on 4 the April Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. 2.1 Basis of preparation The Financial Statements as at 31 December 2007 have been prepared in accordance with International Financial Reporting Standards (IFRS), which have been adopted by the European Union, and those Standards and Interpretations approved by the International Accounting Standards Board. The accounting policies applied for all the periods that are presented in these financial statements, are disclosed separately below. Certain new standards, amendments to standards and interpretations have been issued that are mandatory for periods beginning during the current reporting period and subsequent reporting periods. The Bank s evaluation of the effect of these new standards, amendments to standards and interpretations is as follows: a) Standards and Interpretations effective after 1 January 2007 IFRS 7 - Financial Instruments: Disclosures and the complementary amendment to IAS 1 - Presentation of Financial Statements: Capital Disclosures: This standard and amendment introduces new disclosures relating to financial instruments. For the current year the applicable IFRS 7 disclosures have only been presented in respect of events and transactions related to financial instruments which are material to an understanding of the current year. IFRIC 7 - Applying the Restatement Approach under IAS 29: This interpretation provides guidance on how to apply requirements of IAS 29 in a reporting period in which a company identifies the existence of hyperinflation in the economy of its functional currency, when the economy was not hyperinflationary in the prior period. As the Bank does not operate in a hyperinflationary economy this interpretation does not apply to the Bank s financial statements. IFRIC 8 - Scope of IFRS 2: This interpretation considers transactions involving the issuance of equity instruments where the identifiable consideration received is less than the fair value of the equity instruments issued to establish whether or not they fall within the scope of IFRS 2. This interpretation will not apply to the Bank s financial statements. IFRIC 9 - Reassessment of Embedded Derivatives: This interpretation requires an entity to assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first becomes a party to the contract. The implementation of this interpretation doesn t have a material effect on the Bank s financial statements. (8) (26)

9 IFRIC 10 - Interim Financial Reporting and Impairment: This interpretation prohibits the impairment losses recognized in an interim period on goodwill, investments in equity instruments and investments in financial assets carried at cost to be reversed at a subsequent balance sheet date. The implementation of this interpretation does not have a material effect on the Bank s financial statements. b) Standards and Interpretations effective after 1 January 2008 IFRS 8 - Operating Segments: This standard is effective for annual periods beginning on or after 1 January 2009 and supersedes IAS 14, under which segments were identified and reported based on a risk and return analysis. Under IFRS 8 segments are components of an entity regularly reviewed by the entity s chief operating decision maker and are reported in the financial statements based on this internal component classification. The Bank will apply IFRS 8 from 1 January 2009, and its implementation is expecting to affect the presentation of the Bank s operations by business segment. IAS 23 Borrowing Costs: This standard is effective for annual periods beginning on or after 1 January 2009 and replaces the previous version of IAS 23. The main change is the removal of the option of immediately recognizing as an expense borrowing costs that relate to assets that need a substantial period of time to get ready for use or sale. Bank will apply IAS 23 from 1 January IFRIC 11 - IFRS 2: Group and Treasury share transactions: This interpretation is effective for annual periods beginning on or after 1 March 2007 and clarifies the treatment where employees of a subsidiary receive the shares of a parent. It also clarifies whether certain types of transactions are accounted for as equity-settled or cash-settled transactions. This interpretation is not expected to have any impact on the Bank s financial statements. IFRIC 12 Service Concession Arrangements: This interpretation is effective for annual periods beginning on or after 1 January 2008 and applies to companies that participate in service concession arrangements. This interpretation is not relevant to the Bank s operations. IFRIC 13 Customer Loyalty Programmes: This interpretation is effective for annual periods beginning on or after 1 July 2008 and clarifies the treatment of entities that grant loyalty award credits such as points and travel miles to customers who buy other goods or services. This interpretation is not relevant to the Bank s operations. IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction: This interpretation is effective for annual periods beginning on or after 1 January 2008 and applies to post-employment and other long-term employee defined benefit plans. The interpretation clarifies when refunds or reductions in future contributions should be regarded as available, how a minimum funding requirement might affect the availability of reductions in future contributions and when a minimum funding requirement might give rise to a liability. As the Bank does not operate any such benefit plans for its employees, this interpretation is not relevant to the Bank. The financial statements are presented in Euro, the Bank s functional currency, rounded to the nearest thousand unless otherwise indicated. The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. Its also requires management to exercise judgment in the process of applying the Bank's accounting policies. 2.2 Foreign currency translation (a) Functional and presentation currency The financial statements are presented in the functional and presentation currency of the Bank, the Euro. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Translation differences on monetary items, such as equities included in the trading portfolio are reported as part of the fair value gain or loss. Up to 31 December 2007 the bank did not engage in foreign currency transactions. (9) (26)

10 2.3 Interest income and expense Interest income and expense are recognized in the income statement for all instruments measured at amortized cost using the effective interest method, taking into account all fees and commissions paid or received between parties to the financial asset or expense over the points paid or received between parties to the contract. Interest and similar income includes interest income from loans and advances to customers, interest income from interbank placements. The Bank does not recognize interest income on non-performing loans. Interest income for these loans is recorded in off balance sheet accounts until these items are considered performing. 2.4 Fee and commission income Fees and commissions are generally recognized on an accrual basis when the service has been provided. Loan commitment fees for loans that are likely to be drawn down are deferred (together with all related direct costs) and recognized as an adjustment to the effective interest rate on the loans. 2.5 Financial assets Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Bank provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans include originated loans and do not include acquired loans. Loans and receivables are carried at amortized cost using the effective interest method less impairment losses. These assets are examined for impairment losses, which is when the present value of expected cash flows discounted at the effective rate is less than book value. 2.6 Intangible assets Software Capital expenditure for computer software licenses additions and improvements to the degree that future economic benefits will flow to the entity are capitalized on the basis of the costs incurred to acquire and bring to use. These costs are amortized on the basis of the expected useful lives (three to five years) using the straight line method. Costs associated with developing or maintaining computer software programs are recognized as an expense as incurred. 2.7 Property, plant and equipment Operating property, plant and equipment are stated at historical cost less depreciation and impairment loss. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset s carrying amount or are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows: Years Buildings owned by 3 rd parties 12 Computer Hardware 4 to 5 Furniture and equipment 5 to 7 Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. 2.8 Leases (The Bank as lessee) Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. 2.9 Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months' maturity from the date of acquisition, including: cash and non-restricted balances with the Bank of Greece and amounts due from other banks. (10) (26)

11 2.10 Provisions Provisions are recognized when: (1) The Bank has a present legal or constructive obligation as a result of past events; (2) It is more likely than not that an outflow of resources will be required to settle the obligation; and (3) The amount has been reliably estimated Employee benefits Monetary short-term employee benefits such as wages, salaries and social security contributions and nonmonetary benefits are recognised as an expense when employees render the related service. The Bank makes contributions to benefit plans during employee s service as well as post employment. These plans are distinguished between defined benefit and defined contribution plans. a) Defined benefit plan A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors, such as age, years of service and compensation. The liability recognised in the balance sheet is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets together with adjustments for unrecognised actuarial gains and losses and past service costs. The defined benefit is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds and with maturity approximating the terms of the related pension liability. b) Defined contribution plan A defined contribution plan is a pension plan under which the Bank pays fixed contributions into a separate entity. The Bank has no legal or constructive obligations to pay any further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense in the income statement when they are due Deferred income tax Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred income tax liability is settled. Deferred tax assets are recognized where it is probable that future taxable profit will be available against which the temporary difference can be utilized. Deferred taxes are not presented separately as assets and liabilities and are offset. Income tax payable on profits, based on the applicable tax law rate, is recognized as an expense in the period in which profits arise. The tax effects of income tax losses available for carry forward are recognized as an asset when it is probable that future taxable profits will be available against with these losses can be utilized Share capital and share premium Incremental costs directly attributable to the issue of new shares or options or to the acquisition of a business are shown in equity as a deduction, net of tax, from the proceeds. Directly attributable costs of issuing shares for the purpose of acquiring an entity are included in the cost of the acquired entity Related-party transactions Related parties include companies within the control of the Bank, companies for which the Bank exerts significant influence, Board of Directors members and their close family members. The bank enters into transactions with related parties in the usual course of its business Comparatives Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year. (11) (26)

12 3. Critical accounting estimates and judgements in applying accounting policies The Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factor, including expectations of future events that are believed to be reasonable under the circumstances. (a) Impairment on loans and advances The Bank reviews its loan portfolios to assess impairment at least on a quarterly basis. In determining whether an impairment loss should be recorded in the income statement, the Bank makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on assets in the group. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. (b) Income taxes The Bank recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. 4. Financial risk Management 4.1 Financial risk factors The Bank is exposed to various financial risks such as credit, liquidity, cash flow and fair value risk from the change in interest rates. The general risk management policy for the Bank is focused on confronting the uncertainties of financial markets and tries to minimize any negative effects in the financial performance of the Bank. Risk management apart from credit risk is carried out by a central treasury department reporting directly to Financial Division under policies approved by the Board of Directors. Credit risk management is governed by the Credit Committee that defines the credit risk strategy and monitors its implementation. Risk Management defines and estimates all financial risks in cooperation with the departments that are involved with these risks. The Management provides instructions and guidelines for central risk management and special instructions for special risks such as foreign exchange, interest and credit risk. 4.2 Credit risk Credit risk is the risk that counterparty will cause a financial loss for the Bank by failing to discharge an obligation. The bank has put in place credit risk assessment tools in order to evaluate risk on product loan portfolio basis. In addition, based on the cumulative experience gained from prior years loan portfolio evaluations, the Bank now defines procedures and provides guidelines to mitigate credit risk exposures. Specifically, credit risk analysis is conducted through the monitoring on a monthly basis of the exposure migrations between classes of delinquencies and collectability of those exposures that have been sent to litigation. The Bank has developed internally a tool of allocating the impairment in the entire portfolio which provides a statistical assessment of the expected loss based on historical performance data of the existing loans and is used to depict the quality of the portfolio. The current accumulated impairment balance covers the expected loss calculated by the credit risk assessment tool and provides the key driver for the Bank to incur losses through impairment testing. The Bank makes a continuous effort to develop internal risk rating facilities that identify borrower s creditworthiness and the specific characteristics per type of exposure. This effort is aligned with the requirements of the new Pillar II (Basel II) Regulatory Accord, regarding the capital adequacy obligations. (12) (26)

13 4.2.1 Maximum exposure to credit risk before collateral held or other credit enhancements The following table represents a worse case scenario of credit risk exposure to the Bank at 31 December 2007 and 2006, without taking into account of any collateral held or other credit enhancements attached. For on-balancesheet assets, the exposures set out below are based on net carrying amounts as reported in the balance sheet. Maximum exposure Credit risk exposure relating to on-balance sheet assets: Due from banks Loans and advances to customers: Loans to individuals: - Credit cards Consumer loans Other loans Loans to corporate entities: - Small and medium size enterprises (SMEs) Other Assets Credit risk exposure relating to off-balance sheet items: Future loan origination disbursement At 31 December (13) (26)

14 4.2.2 Loans and advances Loans and advances are summarized as follows: At 31 December 2007 Loans and advances to customers At 31 December 2006 Loans and advances to customers Neither past due nor impaired Past due but not impaired Impaired Gross Less: allowance for impairment Net (a) Loans and advances past due but not impaired 31 December 2007 Car loans Past due up to 30 days ( 1 installment in default) Past due days ( 2 installments in default) Past due days ( 3 installments in default) Total December 2007 Consumer loans Past due up to 30 days ( 1 installment in default) Past due days ( 2 installments in default) Past due days ( 3 installments in default) Total December 2006 Car Loans Past due up to 30 days ( 1 installment in default) Past due days ( 2 installments in default) Past due days ( 3 installments in default) Total December 2006 Consumer Loans Past due up to 30 days ( 1 installment in default) Past due days ( 2 installments in default) Past due days ( 3 installments in default) Total (14) (26)

15 (b) Loans and advances individually impaired 31 December 2007 Car loans Consumer loans Total Individually impaired loans December 2006 Car loans Consumer Loans Total Individually impaired loans Market risk The Bank takes on exposure to market risks, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk arise from open positions in interest rate, currency and equity products, all of which are exposed to general and specific market movements and changes in the level of volatility of market rates or prices such as interest rates, credit spreads, foreign exchange rates and equity prices. The Bank is exposed only in the risk arising from open position in interest rates, which is monitored closely and systematically through the use of specific indexes. Regular reports are submitted to the shareholders (Emporiki Bank and Sofinco) as well as to the Asset-Liability Committee (ALCO) Foreign currency risk The Bank is not exposed in the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows as there are no transactions in foreign currencies Interest rate risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate risk arises as a result of the deferral in the re-pricing of asset and liability items to interest rate changes. The Bank has established as a basic rule to receive interbank financing at a fixed rate and match it with fixed rate loan originations of the same maturity. The 40% of the loan portfolio is under floating rate and is financed with short term interbank lending with similar pricing and terms. Thus, the Bank has undertaken the strategy to match its loan originations under floating interest rate with funds financed also with floating interest rates (matching principle). The Bank sets limits on the level of mismatch of interest rate reprising that may be undertaken in order for the maximum potential loss to be restricted under acceptable levels. The table below summarises the Bank s exposure to interest rate risks. It includes the Bank s Assets and Liabilities at carrying amounts, categorised by the earlier of contractual pricing or maturity dates. (15) (26)

16 As at 31 December 2007 Up to 1 month 1-3 Months 3-12 months 1-5 years Noninterest bearing Cash and balances with Central Bank Due from other banks Loans and advances to customers* Intangible assets Property, plant and equipment Deferred income tax assets* Investments in subsidiaries/ Associates Other assets* Total assets Total Due to other banks Due to customers Other borrowed funds Personnel leaving indemnities Deferred income tax liabilities* Other liabilities Total liabilities Total interest reprising gap ( ) ( ) As at 31 December 2006 Total assets Total liabilities Total interest repricing gap* ( ) ( ) * The amounts of 2006 have been adjusted for comparison purposes (16) (26)

17 4.4 Liquidity risk Liquidity risk is the risk arising from the difference between the maturity of asset and liability items. Liquidity risk expresses the danger that the Bank cannot fulfil its obligations in the future due to these differences between financial instruments or transactions. The Bank measures this risk and controls it by using a developed liquidity management system that has various controls. The Bank adheres to liquidity restraints authorized by the regulatory authorities locally and abroad as well as to internal limits. The Bank controls and manages liquidity risk throughout the period by using the following: (a) (b) Minimum reserve balance as defined by the Bank of Greece. Liquidity indexes defined by the Bank of Greece and internally. The Bank s operations abroad adhere to liquidity rules defined by the Bank of Greece and local regulatory decisions. The following table summarize the financial assets and liabilities items of the Bank by remaining maturity as at the reporting date. As at 31 December 2007 Up to 1 month 1-3 Months 3-12 months 1-5 years Over 5 years Cash and balances with Central Bank Due from other banks Loans and advances to customers Intangible assets Property, plant and equipment Deferred income tax assets Investments in subsidiaries/ Associates Other assets Total assets (expected maturity dates) Total Due to other banks Due to customers Other borrowed funds Personnel leaving indemnities Deferred income tax liabilities* Other liabilities Total liabilities (contractual maturity dates) Net position ( ) ( ) As at 31 December 2006 Total assets (expected maturity dates) Total liabilities (contractual maturity dates) Net position* ( ) ( ) (17) (26)

18 * The amounts of 2006 have been adjusted for comparison purposes 5. Net Interest Income 1/1/07 31/12/07 1/1/06 31/12/06 Interest & similar income Interbank Placements Debenture loan to subsidiary Loans and advances to customers Interest expense & similar charges Interbank takings ( ) ( ) time deposits (18.761) (11.102) ( ) ( ) Net Interest Income Fee & commission income 1/1/07 31/12/07 1/1/06 31/12/06 Subscriptions and withdrawals of cash with credit cards Other commissions for loan originations Premium received from loans insurance Other operating income 1/1/07 31/12/07 1/1/06 31/12/06 Buildings rentals Other income Proceeds from collection facilities Staff costs 1/1/07-31/12/07 1/1/06-31/12/06 Salaries and wages Social security contributions Provision for termination cost Other benefits Total personnel of Emporiki Credicom Bank as at 31 December 2007 were 190 compared to 135 as at 31 December (18) (26)

19 9. Other operating expenses 1/1/07 31/12/07 1/1/06 31/12/06 Fees and third party expenses Rentals Leases Telecommunications & postage expenses Repairs and maintenance expenses Sundry third parties fees Taxes and duties Stationery Marketing expenses Other expenses Other Operating Expenses Cash and balances with central bank 31/12/07 31/12/06 Cash Deposits at Central Bank Total cash and balances with central bank (Note 22) Due from other banks 31/12/07 31/12/06 On demand Interbank placements with Emporiki Bank and Sofinco Total due for other bank (Note 22) (19) (26)

20 12. Loans and advances to customers 31/12/07 31/12/06 Loans to individuals Credit cards Consumer loans of fixed duration Other loans Loans to corporate entities Business loans Total accrued interest Total loans and advances to customers Less: Impairment losses on loans and advances ( ) ( ) The balance of the loans (gross of impairment and accrued interest) under floating interest rate were at 31/12/ while at 31/12/06 were Changes on impairment losses for loans and advances 31/12/07 31/12/06 Opening balance Impairment charge for credit losses Closing balance Investments in subsidiaries/associates / Company Country of incorporation % Held as at Balance as at % Held as at Balance as at EMPORIKI RENT SA GREECE 100% % 0 ANTENA RENT CAR COMMERCIAL 2. COMPANY GREECE 80% % 0 3. C RREFOUR MARINOPOULOS CREDIT GREECE 40% % (20) (26)

21 The movement in the investment portfolio is summarized as follows: Subsidiaries Associates 31/12/ /12/ /12/ /12/2006 Opening balance Addition investments Closing balance Carrefour Marinopoulos Credit SA was established at 28/8/2007. Carrefour Marinopoulos S.A and Emporiki Credicom S.A participating interest in the share capital of the above company is 60% and 40% respectively. Its main activity is to provide loans or other forms of lending products to individuals to satisfy their consuming and personal needs. ntena Rent a car commercial company principal activity is operating and finance lease services. Emporiki Credicom Bank S.A. participating interest in the share capital of Antena is 80 % and the remaining 20% is owned by Mr. Pazaropoulos Spiridon. Emporiki Rent S.A is principal activity is operating and finance lease services. 14. Intangible (software) assets and property, plant & equipment Intangible Assets Software Buildings Property, plant & equipment Furniture and other equipment TOTAL Cost Accumulated depreciation ( ) ( ) ( ) ( ) Net book value Cost Balance Additions for the period Balance Depreciation Balance ( ) ( ) ( ) ( ) Depreciation for the period ( ) (81.354) ( ) ( ) Balance ( ) ( ) ( ) ( ) Net book value (21) (26)

22 15. Other assets 31/12/07 31/12/06 Prepaid expenses Other advances and receivables * The amounts of 2006 have been adjusted for comparison purposes * 16. Due to other banks 31/12/07 31/12/06 Borrowings from Emporiki Bank Borrowings from Sofinco Accrued interest Due to customers Concern the obligatory time deposits at TEK (floating interest rate). 18. Other borrowed funds 31/12/07 31/12/06 Subordinated note due to Emporiki Bank Subordinated note due to Sofinco Concerns placements from the 2 parent companies. The placements have value date 30/06/2006 and maturity date 02/10/2016 with floating interest rate Euribor 3m + 75 bp. 19. Other liabilities 31/12/07 31/12/06 Accrued expense Suppliers Taxes payable Social security obligation Other liabilities * * The amounts of 2006 have been adjusted for comparison purposes (22) (26)

23 20. Deferred income tax Assets / (Liabilities) Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate which is expected to apply upon finalization of this difference by the tax authorities. Deferred tax assets and liabilities arise from: 31/12/07 31/12/06 Deferred tax Assets / (Liabilities) Intangible assets write-off (79.746) Differences due to application of the effective interest rate according to IAS 39 ( ) ( ) Provision for staff expenses Impairment of loans and advances ( ) ( ) Carryforward of unused tax losses Net deferred tax assets / (liabilities) ( ) The charge / (release) of deferred tax assets and liabilities through the income statement is as follows: Deferred tax (Income Statement) 31/12/07 31/12/06 Intangible assets variation ( ) ( ) Differences due to application of the effective interest rate according to IAS ( ) Provision for staff expenses Impairment of loans and advances ( ) ( ) Carryforward of unused tax losses ( ) ( ) ( ). (23) (26)

24 21. Share capital and share premium The Extraordinary General Meeting resolution on approved a share capital increase of new ordinary shares were issued at 3 par value and purchase price of 30 each. The net proceeds were The total paid up share capital of the Bank after the rights issue amount to The Extraordinary General Meeting resolution on approved a share capital increase of new ordinary shares were issued at 3 par value and purchase price of 30 each. The net proceeds were The total paid up share capital of the Bank after the rights issue amount to The Extraordinary General Meeting resolution on approved a share capital increase of new ordinary shares were issued at 3 par value and purchase price of 30 each. The net proceeds were The total paid up share capital of the Bank after the rights issue amount to Cash and cash equivalents For cash flow purposes cash and cash equivalents includes the following accounts that have maturity up to 3 months from the date of purchase: 31/12/07 31/12/06 Cash and balances with Central Bank (Note 10) Due from banks (Note 11) Related party transactions The two shareholders of Credicom, Emporiki Bank and Sofinco, provide the necessary funding for the activities of the Company, as mentioned in Note 16 of the these Financial Statements, Due to other Banks. The total interest expense recognised in the Income Statement is: 1/1/07 31/12/07 1/1/06 31/12/06 Emporiki Bank Sofinco Credicom maintains deposits at Emporiki Bank and at Sofinco, as it is also mentioned at Note 11 of the Financial Statements Due from other Banks. The total interest income from deposits was ,93 for the year 2007 and for the year Credicom s shareholders at 31 December 2007 were Emporiki Bank and Sofinco, each with a participating interest of 50%. (24) (26)

25 ) Transactions and balances with the Board of Directors members: There are no fees to the members of the Board of Directors of the Bank for the year There are no loans outstanding that relate to the members of the Board of Directors, their immediate family members and companies they control or influence. ) Transactions and balances with subsidiaries and associates: Subsidiaries (Emporiki Rent S.A., ntena Hire A Car Commercial Company) 31/12/ /12/2006 Assets Loans and advances to customers Other assets Income Interest & similar income Expense Other operating expenses Associates No transactions have taken place. Participating interest in the share capital of Carrefour Marinopoulos Credit S.A. is 40%. 24. Capital adequacy The Bank s solvency ratio is calculated in accordance with PD/BOG 2053/92 Definition of equity for credit institutions in Greece and PD/BOG 2397/96 Solvency ratio for credit institutions (last modified PD/BOG 2494/02), with a minimum ratio of 8%. Based on management estimations and after taking into consideration the above mentioned legislation and exempt items, the Capital adequacy relevant index for the Bank at 31/12/2007 is close to 8,7%. Weighted Assets Weighted Assets on credit risks Total risk Weighted Assets Regulatory shareholder s Equity Tier #1 Capital Tier #2 Capital Total regulatory equity Contingent Liabilities and commitments The Bank during its normal course of its business is a defendant in claims from customers and other legal actions for which the Bank does not expect to have any, further, material effect on its financial position or operations. (25) (26)