ASSETS BALANCE SHEET fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos 2011 2010 A Cash and cash resources (Note 2.2.) 890,991 819,555 Cash 193,430 189,553 Financial Institutions and Correspondents 697,561 630,002 - Argentine Central Bank (B.C.R.A.) 597,021 408,341 - Other domestic institutions 3,944 5,613 - Other foreign institutions 96,596 216,048 B Government and Corporate Securities (Schedule A and Note 2.4.) 2,156,269 2,437,975 Holdings booked at fair market value 524,170 237,218 Holdings booked at cost plus return 45,395 1,188,741 Investments in listed corporate securities 52,339 51,157 Securities issued by the BCRA 1,534,365 979,874 Allowances (Schedule J) - (19,015) C Loans (Schedules B, C and D and Notes 2.3. and 2.5.) 5,742,304 5,177,211 To the non-financial public sector 50,889 49,856 To the financial sector 146,532 101,870 Interfinancial (call granted) 35,500 30,000 Other loans to domestic financial entities 110,154 71,411 Accrued interest, adjustments and quotation differences receivable 878 459 To the non-financial private sector and foreign residents 5,707,490 5,186,466 Overdraft facilities 482,925 336,268 Promissory notes 88,292 97,860 Mortgage loans 1,675,137 1,724,887 Pledge loans 35,779 11,615 Consumer loans 558,762 469,013 Credit cards 1,584,635 1,371,949 Unallocated collections (6,884) (8,644) Other 1,239,139 1,135,347 Accrued interest and quotation differences receivable 51,200 50,047 Documented interest (1,495) (1,876) Allowances (Schedule J and Note 7) (162,607) (160,981) D Other receivables for financial transactions (Schedules B, C and D and Notes 2.3. and 2.6.) 1,678,964 1,516,867 Argentine Central Bank 103,114 40,335 Amounts receivable for spot and forward sales to be settled 619 802 Securities to be received under spot and forward purchases to be settled 968,647 862,790 Negotiable obligations without quotation 75,394 62,247 Balances of forward transactions not yet settled without delivery of underlying asset 53,810 49,984 Others not included in the debtor classification regulations (Note 10) 487,161 492,784 Others included in the debtor classification regulations (Notes 10 and 11) 43,807 49,569 Accrued interest receivable included in the debtor classification regulations (Note 11) 11,678 11,687 Allowances (Schedule J and Note 7) (65,266) (53,331) General August 10, 2011
BALANCE SHEET fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos 2011 2010 F Investments in other companies (Schedule E and Notes 2.7, 26 and 29) 336,333 283,773 In financial institutions 83,090 85,661 Others 253,243 198,112 G Miscellaneous Receivables (Schedules B, C and D and Note 2.8.) 447,433 423,830 Receivables from sales of goods - 15 Minimum deemed income tax - fiscal credit (Notes 2.19 and 34) 151,011 137,190 Others (Note 12) 299,225 289,604 Other accrued interest receivable 1,658 1,482 Allowances (Schedule J and Note 7) (4,461) (4,461) H Bank Premises and Equipment (Schedule F and Note 2.9.) 96,950 93,895 I Miscellaneous Assets (Schedule F and Note 2.9.) 39,218 40,783 J Intangible Assets (Schedule G and Note 2.11.) 81,522 84,167 Goodwill 27,104 28,582 Organization and development expenses 54,418 55,585 K Items pending allocation 1,699 761 TOTAL ASSETS 11,471,683 10,878,817 General August 10, 2011
LIABILITIES BALANCE SHEET fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos 2011 2010 L Deposits (Schedules H and I and Notes 2.3., 2.12. and 25) 5,280,892 4,876,083 Non-financial public sector 2,092,416 1,900,857 Financial Sector 12,359 12,341 Non-financial private sector and foreign residents 3,176,117 2,962,885 Current accounts 77,894 75,070 Savings Accounts 433,418 362,596 Time deposits 2,563,044 2,441,236 Investment accounts 11,791 14,056 Others 67,810 44,754 Accrued interest and quotation differences payable 22,160 25,173 M Other liabilities for financial trading transactions (Schedule I and Notes 2.3. and 2.13) 2,835,070 2,718,270 Argentine Central Bank 16 24 Other 16 24 Unsubordinated negotiable obligations (Note 13) 1,687,865 1,591,645 Amounts payable under spot and forward purchases to be settled 200,996 174,264 Securities to be delivered under spot and forward sales to be settled 651,893 623,740 Loans received from domestic financial institutions 100,026 80,045 Interfinancial loans (calls received) 100,000 80,000 Accrued interest payable 26 45 Balances of forward transactions not yet settled without delivery of underlying asset 5,096 4,784 Others (Note 16) 169,440 224,800 Accrued interest and quotation differences payable 19,738 18,968 N Miscellaneous Liabilities (Note 2.14.) 135,795 143,093 Fees 6,563 7,656 Others (Note 17) 129,232 135,437 O Provisions (Schedule J and Notes 2.10., 2.15., 2.16., 2.17 and 18.) 148,160 164,208 Q Items pending allocation 3,669 2,930 TOTAL LIABILITIES 8,403,586 7,904,584 SHAREHOLDERS' EQUITY (per related statement) (Note 2.20.) 3,068,097 2,974,233 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 11,471,683 10,878,817 Notes and Schedules are an integral part of these financial statements. General August 10, 2011
STATEMENT OF INCOME fiscal period ended 06/30/2011 In comparative format with the same period of the previous fiscal year In thousands of Argentine Pesos 2011 2010 A Financial Income 638,653 596,281 Interest on cash and cash resources 20 18 Interest on loans to the financial sector 8,229 1,460 Interest on overdraft facilities 22,603 28,178 Interest on promissory notes 6,108 4,204 Interest on mortgage loans 91,708 90,698 Interest on pledge loans 2,197 2,546 Interest on credit card loans 133,781 92,813 Interest on other loans 134,455 88,957 Interest on other receivables for financial transactions 17,722 21,115 Net income from government and corporate securities 197,863 222,614 Adjustment from application of CER (coefficient for reference stabilization) clause 15,410 26,184 Adjustment from application of CVS (coefficient for salary variation) clause. 4 - Others (Note 19) 8,553 17,494 B Financial Expenses 359,012 351,915 Interest on current account deposits - 223 Interest on savings account deposits 740 479 Interest on time deposits 216,266 144,190 Interest on interfinancial loans received 2,006 252 Interest on other liabilities resulting from financial transactions 73,879 109,234 Other interest 4,549 23,590 Adjustment from application of CER (coefficient for reference stabilization) clause 1 11 Contribution to the deposits security fund 4,575 3,393 Gold and foreign currency quotation difference 13,688 35,353 Others (Note 19) 43,308 35,190 GROSS INTERMEDIATION MARGIN 279,641 244,366 C Loan Loss Provision 33,894 46,224 D Income from services 236,683 200,064 Linked with lending transactions 131,445 103,739 Linked with borrowing transactions 20,314 15,366 Other commissions 2,269 877 Others (Note 20) 82,655 80,082 E Expenses for Services 74,442 68,105 Commissions 5,428 6,780 Others (Note 21) 69,014 61,325 General August 10, 2011
STATEMENT OF INCOME fiscal period ended 06/30/2011 In comparative format with the same period of the previous fiscal year In thousands of Argentine Pesos 2011 2010 G Administrative expenses 349,923 273,317 Personnel expenses 224,034 166,695 Directors and syndics fees 4,471 3,316 Other fees (Note 22) 33,822 23,861 Advertising and publicity 9,887 20,240 Taxes 15,139 10,531 Depreciation of bank premises and equipment 5,802 6,277 Amortization of organization and development expenses 9,780 7,022 Other operating expenses (Note 22) 39,357 28,477 Other 7,631 6,898 NET INCOME FROM FINANCIAL TRANSACTIONS 58,065 56,784 I Miscellaneous income 128,675 75,500 Net income from long term equity investments 52,560 18,334 Penalty interest 2,912 4,034 Loans recovered and allowances reversed 58,801 44,504 Others (Note 23) 14,402 8,628 J Miscellaneous losses 79,501 48,147 Penalty interest and charges in favor of the BCRA 7 16 Loan loss provision for miscellaneous receivables and other provisions 34,936 10,624 Depreciation and loss of miscellaneous assets 482 242 Amortization of Goodwill 1,478 - Others (Note 24) 42,598 37,265 NET INCOME BEFORE INCOME TAX 107,239 84,137 NET INCOME FOR THE PERIOD 107,239 84,137 Notes and Schedules are an integral part of these financial statements. General August 10, 2011
Changes of cash and cash equivalent STATEMENT OF CASH FLOWS fiscal period ended 06/30/2011 In comparative format with the same period of the previous fiscal year In thousands of Argentine Pesos 2011 2010 Cash at Beginning of Fiscal Year (Note 31) 780,479 763,505 Cash at Fiscal Period End (Note 31) 810,848 769,096 Net increase in cash (in constant currency) 30,369 5,591 Causes of cash changes (in constant currency) Operating activities Net collection (payment) on: Government and corporate securities 281,706 155,113 Loans To the Non-financial Public Sector (1,033) 7,516 To the Financial Sector (44,662) (33,971) To the Non-financial Private Sector and Foreign Residents (392,311) (735,568) Other receivables for financial transactions (162,097) (193,666) Deposits To the Financial Sector - (485) To the Non-financial Public Sector 191,559 364,607 To the Non-financial Private Sector and Foreign Residents 213,232 390,314 Other (except for liabilities under Financing activities) 20,588 (36,822) Collection linked with income from services 236,683 200,064 Payments linked with expenses for services (74,442) (68,105) Administrative expenses paid (340,143) (260,018) Collection net of penalty interest 2,912 4,034 Other collection / (payment) linked to miscellaneous profits and losses 17,142 (15,609) Net collection from other operating activities (94,072) 335,818 Net cash flow originated from (used for) operating activities (144,938) 113,222 Investment activities Net collection (payment) on bank premises and equipment (1,490) (11,011) Net cash flow originated from (used for) investment activities (1,490) (11,011) Financing Activities Net collection (payment) on: Unsubordinated negotiable obligations (96,220) (340,932) Net cash flow originated from (used for) financing activities (96,220) (340,932) Financial gain (loss), holding of cash and cash equivalent (including interest and monetary results) 273,017 244,312 Net increase in cash 30,369 5,591 General August 10, 2011
MEMORANDUM ACCOUNTS fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos 2011 2010 DEBIT 15,414,702 14,883,923 Contingent 6,840,559 6,694,696 Loans obtained (unused balances) 80,683 80,683 Guarantees received 4,690,038 4,539,956 Others not included in the debtor classification regulations 286,806 236,453 Contingent re. contra items 1,783,032 1,837,604 Control 5,242,039 4,829,533 Uncollectible loans 766,508 806,343 Other 4,369,033 3,936,500 Control re. contra items 106,498 86,690 Derivatives 3,332,104 3,359,694 "Notional" value of forward transactions without delivery of the underlying asset 1,850,753 1,471,272 Interest rate swap 904,075 750,960 Derivatives - re. contra items 577,276 1,137,462 CREDIT 15,414,702 14,883,923 Contingent 6,840,559 6,694,696 Loans granted (unused balances) included in the debtor classification regulations (Schedules B, C, and D) 209,282 258,080 Other guarantees provided included in the debtor classification regulations (Schedules B, C, and D) 20,181 29,800 Other guarantees provided not included in the debtor classification regulations 65,469 63,316 Contingent re. contra items 6,545,627 6,343,500 Control 5,242,039 4,829,534 Amounts to be credited 25,617 7,780 Control re. contra items 5,216,422 4,821,754 Derivatives 3,332,104 3,359,693 "Notional" value of forward transactions without delivery of the underlying asset 577,873 1,138,168 Derivatives - re. contra items 2,754,231 2,221,525 Notes and Schedules are an integral part of these financial statements. General August 10, 2011
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY fiscal period ended 06/30/2011 In comparative format with the same period of the previous fiscal year In thousands of Argentine Pesos Non-Capitalized Contributions Profit reserves 1. Opening Changes Capital Stock Share issuance Irrevocable contributions Equity Legal Others Retained Total for the Total for the premiums for future capital Adjustments period period increases earnings 06/30/2011 06/30/2010 balances 1,500,000 834-717,115 437,461-318,823 2,974,233 2,777,529 2. Subtotal (*) 1,500,000 834-717,115 437,461-318,823 2,974,233 2,777,529 3. Distribution of retained earnings Shareholders' - - - - 39,063 - (52,438) (13,375) - Meeting 04/13/2011 6. Net income for the period - - - - - - 107,239 107,239 84,137 7. Fiscal period Closing balances 1,500,000 834-717,115 476,524-373,624 3,068,097 2,861,666 (*) Treasury Stocks 36,634,733. See Note 1 General August 10, 2011
GOVERNMENT AND CORPORATE SECURITIES fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos SCHEDULE ( A ) Description Identification Market value Holding Book value 06/30/2011 Book value 12/31/2010 Position without options Options Final position GOVERNMENT SECURITIES AT FAIR MARKET VALUE Argentina - 524,170 237,218 524,170-524,170 In Argentine Pesos - 120,627 151,075 120,627-120,627 Bonar XIV BONAR XIV - 17,342 78,705 17,342-17,342 BONAR V BONAR V - - 9,750 - - - Discount Bond Pesos DICP - - 161 - - - BOGAR 2018 NF 18-9,772-9,772-9,772 BONAR XV BONAR XV - 23,200-23,200-23,200 GDP-Linked Negotiable Securities in Argentine Pesos TVPP - 70,313 62,456 70,313-70,313 BOCON PRE IX - - 3 - - - In foreign currency - 403,543 86,143 403,543-403,543 BODEN 2015 RO 15-184,267 23,296 184,267-184,267 BONAR 2017 AA 17-177,904 62,731 177,904-177,904 GDP-Linked Negotiable Securities in US dollars TVPA - 41 33 41-41 DISCOUNT BONDS 2010/2033 DIAO - 82 83 82-82 GDP-Linked Negotiable Securities in US dollars TVPY - 41,249-41,249-41,249 TOTAL GOVERNMENT SECURITIES AT FAIR MARKET VALUE - 524,170 237,218 524,170-524,170 GOVERNMENT SECURITIES AT COST PLUS RETURN Argentine 37,781 45,395 1,188,741 45,395-45,395 In Argentine Pesos 19,519 27,133 64,805 27,133-27,133 Mortgage Refinancing Trust Bond 2014 2014 322 322-322 - 322 BONAR XIV BONAR XIV - - 30,817 - - - BOGAR BOGAR - - 6,636 - - - BOGAR RIO NEGRO RNG 2.1 - - 6 - - - Discount Bonds in Argentine Pesos DICP 19,036 26,650 27,171 26,650-26,650 BOCON PRO IX - - 4 - - - DISCOUNT BONDS IN ARGENTINE PESOS 2010/2033 - DIPO DIP 0 11 11 5 11-11 BOCON PRO VII 150 150 166 150-150 In foreign currency 18,262 18,262 1,123,936 18,262-18,262 GLOBAL BOND 2017 GJ 17 - - 23 - - - BONCOR 2017 CO17 18,262 18,262 17,536 18,262-18,262 BODEN 2012 BODEN 2012 - - 1,106,377 - - - TOTAL GOVERNMENT SECURITIES AT COST PLUS RETURN 37,781 45,395 1,188,741 45,395-45,395 General August 10, 2011
GOVERNMENT AND CORPORATE SECURITIES fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos SCHEDULE ( A ) Continued Description Identification Market value Holding Book value 06/30/2011 Book value 12/31/2010 Position without options Options Final position INVESTMENTS IN LISTED CORPORATE SECURITIES Argentina - 52,339 51,157 52,339-52,339 In Argentine Pesos - 50,337 48,978 50,337-50,337 Banco Francés - 13,017 13,876 13,017-13,017 Banco Macro - 7,870 9,562 7,870-7,870 Edenor SA - 1,187 1,505 1,187-1,187 Pampa Holding SA - 17,063 17,701 17,063-17,063 Telecom - 5,705-5,705-5,705 Banco Patagonia - 5,495 6,334 5,495-5,495 Abroad - 2,002 2,179 2,002-2,002 In foreign currency - 2,002 2,179 2,002-2,002 ADR Banco Francés - 2,002 2,179 2,002-2,002 TOTAL INVESTMENTS IN LISTED CORPORATE SECURITIES - 52,339 51,157 52,339-52,339 SECURITIES ISSUED BY THE BCRA - 1,534,365 979,874 1,534,365-1,534,365 Bills at fair market value - - 196,584 - - - Bills at cost plus return - - 331,243 - - - Notes at fair market value - 773,271-773,271-773,271 Notes at cost plus return - 761,094 452,047 761,094-761,094 TOTAL SECURITIES ISSUED BY THE BCRA - 1,534,365 979,874 1,534,365-1,534,365 TOTAL GOVERNMENT AND CORPORATE SECURITIES 37,781 2,156,269 2,456,990 2,156,269-2,156,269 General August 10, 2011
SCHEDULE ( B ) CLASSIFICATION OF FINANCING ACCORDING TO LOANS AND GUARANTEES RECEIVED fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos COMMERCIAL PORTFOLIO 2011 2010 Normal Situation 2,363,239 2,004,017 With "B" preferred collateral and counter-guarantees 107,356 88,989 Without preferred collateral or counter-guarantees 2,255,883 1,915,028 Special follow-up 126 4,705 With "B" preferred collateral and counter-guarantees - - Without preferred collateral or counter-guarantees 126 4,705 With problems 2 4 With "B" preferred collateral and counter-guarantees - - Without preferred collateral or counter-guarantees 2 4 High risk of insolvency 19,850 20,237 With "B" preferred collateral and counter-guarantees 12,208 15,631 Without preferred collateral or counter-guarantees 7,642 4,606 Uncollectible 12,490 12,408 With "B" preferred collateral and counter-guarantees - - Without preferred collateral or counter-guarantees 12,490 12,408 Uncollectible due to technical reasons - - With "B" preferred collateral and counter-guarantees - - Without preferred collateral or counter-guarantees - - TOTAL COMMERCIAL PORTFOLIO 2,395,707 2,041,371 General August 10, 2011
SCHEDULE ( B ) Continued CLASSIFICATION OF FINANCING ACCORDING TO LOANS AND GUARANTEES RECEIVED fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos CONSUMER AND HOUSING PORTFOLIO 2011 2010 Normal Situation 3,696,327 3,541,010 With "B" preferred collateral and counter-guarantees 1,521,265 1,580,710 Without preferred collateral or counter-guarantees 2,175,062 1,960,300 Low Risk 56,978 48,248 With "B" preferred collateral and counter-guarantees 23,275 20,290 Without preferred collateral or counter-guarantees 33,703 27,958 Medium Risk 35,110 31,461 With "B" preferred collateral and counter-guarantees 12,067 13,280 Without preferred collateral or counter-guarantees 23,043 18,181 High Risk 56,229 60,950 With "B" preferred collateral and counter-guarantees 6,368 7,237 Without preferred collateral or counter-guarantees 49,861 53,713 Uncollectible 24,186 25,606 With "B" preferred collateral and counter-guarantees 2,460 5,532 Without preferred collateral or counter-guarantees 21,726 20,074 Uncollectible due to technical reasons 716 944 With "B" preferred collateral and counter-guarantees 544 741 Without preferred collateral or counter-guarantees 172 203 TOTAL CONSUMER AND HOUSING PORTFOLIO 3,869,546 3,708,219 GENERAL TOTAL 6,265,253 5,749,590 General August 10, 2011
SCHEDULE ( C ) CONCENTRATION OF FINANCING fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos FINANCING Number of customers 2011 2010 Debt balance % of total portfolio Amount % of total portfolio 10 largest customers 948,804 15.14% 695,695 12.10% 50 following largest customers 1,094,134 17.46% 1,071,208 18.63% 100 following largest customers 314,064 5.01% 238,084 4.14% Rest of customers 3,908,251 62.39% 3,744,603 65.13% Total 6,265,253 100% 5,749,590 100%, General August 10, 2011
SCHEDULE (D) BREAKDOWN OF FINANCINGS ACCORDING TO MATURITY DATES fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos Description Past due portfolio Remaining term to maturity 1 month 3 months 6 months 12 months 24 months More than 24 months Non-financial public sector - 1,732 1,532 2,317 4,748 9,241 31,319 50,889 Financial sector 178 63,610 49,576 33,168 - - - 146,532 Non-financial private sector and residents abroad 130,805 1,445,393 820,253 704,126 782,439 794,635 1,390,181 6,067,832 Total 130,983 1,510,735 871,361 739,611 787,187 803,876 1,421,500 6,265,253 Total General August 10, 2011
BREAKDOWN OF INVESTMENTS IN OTHER COMPANIES fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos SCHEDULE ( E ) Item Shares and/or Units Information on the issuer Description Class Face value per unit Votes per share Number Balances as of 06/30/2011 Balances as of 12/31/2010 Principal line of Business Data on latest fin. Statement Fiscal period Shareholder Result for Capital Stock Closing date s' Equity the period - In Financial Institutions, supplementary and authorized activities Controlled - Argentina - BACS Banco de Crédito y Securitización S.A ordinary 1 1 43,750,000 83,090 85,661 Banking 06/30/2011 62,500 118,699 (3,077) - BH Valores SA Soc de Bolsa ordinary 1 1 1,425,000 5,260 5,237 Brokerage 06/30/2011 1,500 5,538 25 - BHN Sociedad de Inversión S.A. ordinary 1 1 39,127,849 125,364 97,860 Investments 06/30/2011 39,132 125,376 29,354 - TARSHOP S.A. ordinary 1 1 107,037,152 122,608 95,004 Issuance and marketing of TC 06/30/2011 133,796 153,260 36,603 Subtotal controlled - Argentina 336,322 283,762 - In Other Companies Non-controlled - Argentina (*) - BHN Vida S.A. ordinary 1 1 120 - - Insurance 06/30/2011 5,112 76,234 25,696 (*) - BHN Seguros Generales S.A. ordinary 1 1 120 - - Insurance 06/30/2011 5,112 20,875 2,545 - Mercado Abierto Electrónico S.A. ordinary 1,200 1 1 4 4 Securities open market 03/31/2011 242 15,324 893 - ACH S.A. ordinary 1 1 2,500 7 7 Electronic payment company 12/31/2010 650 218 (1,939) Subtotal non-controlled - Argentina 11 11 Total investments in other companies 336,333 283,773 (*) TOTAL EQUITY INVESTMENT IN ARGENTINE PESOS - BHN Vida S.A. 120 - BHN Seguros Generales S.A. 120 General August 10, 2011
BANK PREMISES AND EQUIPMENT AND MISCELLANEOUS ASSETS fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos SCHEDULE ( F ) Item Residual value at the beginning of fiscal year Additions Transfers Withdrawals Losses due to impairment of value Depreciation for the period Assigned useful life (years) Amount Residual value at the end of the period 06/30/2011 Residual value at the end of fiscal year 12/31/2010 BANK PREMISES AND EQUIPMENT - Real estate properties 75,143 - - - - 50 1,086 74,057 75,143 - Furniture and facilities 8,386 1,534 - - - 10 771 9,149 8,386 - Machinery and equipment 4,412 3,867 - - - 5 1,415 6,864 4,412 - Computer equipment 5,543 3,138 - - - 3 2,407 6,274 5,543 - Vehicles 14 139 - (10) - 5 19 124 14 - Miscellaneous 397 189 - - - 5 104 482 397 Total 93,895 8,867 - (10) - 5,802 96,950 93,895 MISCELLANEOUS ASSETS - Construction in progress 2,374 886 - - - - - 3,260 2,374 - Works of art and collectors' items 195 - - - - - - 195 195 - Leased assets 2,985 - - - - 50 43 2,942 2,985 - Assets acquired through foreclosures 8,155 170 - (3,097) - 50 49 5,179 8,155 - Stationery and office supplies 3,437 1,240 - - - - - 4,677 3,437 - Other miscellaneous assets 23,637 - - (441) - 50 231 22,965 23,637 Total 40,783 2,296 - (3,538) - 323 39,218 40,783 General August 10, 2011
SCHEDULE ( G ) INTANGIBLE ASSETS fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos Item Residual value at beginning of fiscal year Additions Transfers Withdrawals Losses due to impairment of value Amortization for the period Assigned useful life (years) Amount Residual value at he end of the period 06/30/2011 Residual value at the end of the fiscal year 12/31/2010 Organization and development expenses 55,585 8,613 - - - 5 9,780 54,418 55,585 Goodwill 28,582 - - - - 10 1,478 27,104 28,582 Total 84,167 8,613 - - - 11,258 81,522 84,167 General August 10, 2011
SCHEDULE ( H ) CONCENTRATION OF DEPOSITS fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos Number of customers 2011 2010 Debt balance % of total portfolio Debt balance % of total portfolio 10 largest customers 2,246,692 42.54% 2,008,272 41.19% 50 following largest customers 977,432 18.51% 856,452 17.56% 100 following largest customers 514,034 9.73% 439,116 9.01% Rest of customers 1,542,734 29.22% 1,572,243 32.24% Total 5,280,892 100% 4,876,083 100% General August 10, 2011
BREAKDOWN OF DEPOSITS, OTHER LIABILITIES FOR FINANCIAL TRANSACTIONS AND SUBORDINATED NEGOTIABLE OBLIGATIONS ACCORDING TO MATURITY DATE fiscal period ended 06/30/2011 In thousands of Argentine Pesos SCHEDULE ( I ) Remaining terms to maturity Item 1 month (*) 3 months (*) 6 months (*) 12 months (*) 24 months (*) More than 24 months (*) Total Deposits 2,426,849 1,460,036 512,461 183,493 698,031 22 5,280,892 - Time deposits 1,894,707 1,460,036 512,461 183,493 698,031 22 4,748,750 - Investment account 12,224 12,224 - Savings accounts 342,126 342,126 - Current accounts 97,456 97,456 - Other deposits 80,336 80,336 Other liabilities for financial transactions 276,273-264,421-260,549 1,175,842 1,977,085 - Argentine Central Bank - - - - - 16 16 Others - - - - - 16 16 Unsubordinated negotiable obligations 15,865-264,421-260,549 1,175,826 1,716,661 Long-term Bond denominated in US dollars - - 89,279-87,960 87,960 265,199 Long-term Bond denominated in Euros - - 175,142-172,589 172,589 520,320 Newly Issued Bond 15,865 - - - - 915,277 931,142 Loans received from domestic financial institutions 100,026 - - - - - 100,026 Local institutions 100,026 - - - - - 100,026 - Others 160,382 - - - - - 160,382 Others 160,382 - - - - - 160,382 Total 2,703,122 1,460,036 776,882 183,493 958,580 1,175,864 7,257,977 (*) These figures are stated pursuant to contract clauses. General August 10, 2011
CHANGES INALLOWANCES AND PROVISIONS fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos SCHEDULE ( J ) Breakdown Opening balances Increases in constant currency Decreases in constant currency Reversals Allocations Balances at period end 06/30/2011 Balances at fiscal year end 12/31/2010 ALLOWANCES Government and corporate securities Allowance for impairment 19,015 - - 19,015-19,015 Loans For uncollectibility risk and loss of value (a) 160,981 33,894-32,268 162,607 160,981 Other receivables for financial transactions For uncollectibility risk and loss of value (b) 53,331 13,269-1,334 65,266 53,331 Miscellaneous receivables For uncollectibility risk and loss of value (c) 4,461 - - - 4,461 4,461 Total 237,788 47,163-52,617 232,334 237,788 PROVISIONS Other contingencies (d) 164,208 34,936-50,984 148,160 164,208 Total 164,208 34,936-50,984 148,160 164,208 a) FOR UNCOLLECTIBILITY RISKS OF LOANS: Stems from the analysis covering uncollectibility risks of the loan portfolio performed by the Bank, which considers the regulations laid down by the Argentine Central Bank and estimates for the fiscal year, as mentioned in Note 7. b) FOR UNCOLLECTIBILITY RISKS OF OTHER RECEIVABLES FOR FINANCIAL TRANSACTIONS: Reflects the potential uncollectibility of mortgage loans transferred in trust, but not yet securitized and allowances for loss of value of debt securities and certificates of participation under lawsuits related to asymmetric pesification. (Notes 2.6 and 11). c) FOR UNCOLLECTIBILITY RISKS OF MISCELLANEOUS RECEIVABLES: Set up to cover any possible uncollectibility of miscellaneous receivables. d) FOR OTHER CONTINGENCIES: This provision was set up to cover contingencies involving lawsuits, legal fees, certain expenses related to the administrative restructuring undertaken by the Bank and defaulted notes. In addition, the balance as of 06/30/2011 and 12/31/2010 includes the reserve for pending insurance claims as required by the National Insurance Superintendency. General August 10, 2011
SCHEDULE (K) COMPOSITION OF CAPITAL STOCK fiscal period ended 06/30/2011 In thousands of Argentine Pesos Shares Capital Stock Class Number (1) Votes per share Outstanding Issued Treasury Stock Pending issuance or distribution Allotted Paid-in Unpaid Ordinary Book-entry shares 1,500,000,000 (1) 1,463,365 36,635 - - 1,500,000 - Total 1,463,365 36,635 - - 1,500,000 - (1) See Note 1 General August 10, 2011
FOREIGN CURRENCY BALANCES fiscal period ended 06/30/2011 In comparative format with the previous fiscal year In thousands of Argentine Pesos SCHEDULE (L) CAPTIONS ASSETS Head office and branches in Argentina Total for the period at 06/30/2011 Total for the period US$ EUROS YENES Total for the fiscal year at 12/31/2010 Cash and cash resources 474,873 474,873 452,632 22,238 3 470,571 Government and corporate securities 423,806 423,806 423,806 - - 1,193,262 Loans 776,058 776,058 776,058 - - 691,209 Other receivables for financial transactions 842,733 842,733 184,117 658,616-736,270 Miscellaneous receivables 79,423 79,423 79,423 - - 70,286 Items pending allocation - - - - - 2 Total 2,596,893 2,596,893 1,916,036 680,854 3 3,161,600 LIABILITIES Deposits 932,057 932,057 932,057 - - 717,689 Other liabilities for financial transactions 2,360,071 2,360,071 1,749,765 610,306-2,236,407 Miscellaneous liabilities 359 359 352 7-494 Items pending allocation 1 1 1 - - - Total 3,292,488 3,292,488 2,682,175 610,313-2,954,590 MEMORANDUM ACCOUNTS DEBIT (except for contra items) 932,073 932,073 929,650 2,423-708,259 Contingent 597,621 597,621 597,621 - - 475,765 Control 334,452 334,452 332,029 2,423-232,494 CREDIT (except for contra items) 133,045 133,045 133,045 - - 138,856 Contingent 133,045 133,045 133,045 - - 138,856 General August 10, 2011
FINANCIAL ASSISTANCE TO RELATED PARTIES fiscal period ended 06/30/2011 In comparative format with previous fiscal year In thousands of Argentine Pesos SCHEDULE ( N ) Description Situation Normal Potential risk / inadequate performance With problems / deficient performance High risk of insolvency / difficult collection Uncollectible Uncollectible for technical reasons Total Not yet due Past due Not yet due Past due 06/30/2011 12/31/2010 1. Loans 269,212 - - - - - - - 269,212 173,600 - Overdraft facilities 94,890 - - - - - - - 94,890 87,920 With "B" preferred collateral and counter-guarantees - - - - - - - - - - Without preferred collateral and counter-guarantees 94,890 - - - - - - - 94,890 87,920 - Mortgage and pledge loans 2,561 - - - - - - - 2,561 2,330 With "B" preferred collateral and counter-guarantees 2,561 - - - - - - - 2,561 2,330 Without preferred collateral and counter-guarantees - - - - - - - - - - - Credit cards 429 - - - - - - - 429 331 Without preferred collateral and counter-guarantees 429 - - - - - - - 429 331 - Other 171,332 - - - - - - - 171,332 83,019 Without preferred collateral and counter-guarantees 171,332 - - - - - - - 171,332 83,019 2. Equity investments in other companies 336,322 - - - - - - - 336,322 283,762 Total 605,534 - - - - - - - 605,534 457,362 Allowances 2,437 - - - - - - - 2,437 1,736 General August 10, 2011
DERIVATIVE FINANCIAL INSTRUMENTS fiscal period ended 06/30/2011 In thousands of Argentine Pesos SCHEDULE ( O ) Kind of Agreement Purpose of transactions made Underlying assets Kind of settlement Trading environment or counterparty Average weighted term originally agreed Average residual weighted term Average weighted term for the settlement of differences Amount Swap (Note 15.1.) Foreign currency hedge Foreign currency With delivery of the underlying ass Foreign residents 116 29 6 656,667 Swap (Note 15.1.) Foreign currency hedge Foreign currency With delivery of the underlying ass Foreign residents 76 29 6 84,570 Swap (Note 15.2.) Brokerage own account Others Upon maturity of differences Foreign residents 90 13 6 236,605 Futures (Note 15.3.) Foreign currency hedge Foreign currency Daily differences MAE 1-1 1,260,164 Futures (Note 15.3.) Foreign currency hedge Foreign currency Daily differences MAE 1-1 (25,087) Futures (Note 15.3.) Brokerage own account Foreign currency Upon maturity of differences OTC Domestic residents- Non-financial Sector 14 11 14 (40,996) Futures (Note 15.3.) Brokerage own account Others Daily differences MAE 1-1 49,998 Swap (Note 15.10.) Brokerage own account Others Upon maturity of differences OTC Domestic residents- Non-financial Sector 11 11 1 35,000 Swap (Note 15.10.) Brokerage own account Others Upon maturity of differences OTC Domestic residents - Financial Sector 8 8 1 20,000 Swap (Note 15.10.) Brokerage own account Others Upon maturity of differences OTC Domestic residents - Financial Sector 25 17 1 15,000 Swap (Note 15.4.) Brokerage own account Others Upon maturity of differences Domestic residents - Non-financial sector 210 187 1 173,614 Swap (Note 15.5.) Brokerage own account Others Upon maturity of differences Domestic residents - Non-financial sector 208 186 1 303,985 Swap (Note 15.6.) Brokerage own account Others Upon maturity of differences Domestic residents - Non-financial sector 206 187 1 187,329 Swap (Note 15.7.) Brokerage own account Others Upon maturity of differences Domestic residents - Non-financial sector 240 228 1 246,402 Swap (Note 15.8.) Brokerage own account Others Upon maturity of differences Domestic residents - Non-financial sector 235 227 1 108,373 Swap (Note 15.9.) Brokerage own account Others Upon maturity of differences Domestic residents - Non-financial sector 233 230 1 118,356 Repo transactions (Note 15.11) Brokerage own account National government securities With delivery of the underlying ass MAE 1 1 1 223,178 General August 10, 2011
fiscal period ended June 30, 2011 1. BANCO HIPOTECARIO SOCIEDAD ANÓNIMA Pursuant to Law 24855 enacted on July 2, 1997 and promulgated by the National Executive Branch through Decree 677 dated July 22, 1997, and decree 924/97 Banco Hipotecario Nacional was declared "subject to privatization" under the terms of Law 23696 and the National Executive Branch was ordered to proceed to its transformation into a corporation ("sociedad anónima"). The new entity arising from this transformation will do business under the denomination of "Banco Hipotecario Sociedad Anónima", and as a commercial bank in accordance with Law 21526 and complementary rules, as amended, with the scope envisaged by the regulations, and with the rights and obligations of its predecessor. Banco Hipotecario Sociedad Anónima has a corporate capital of ARS 1,500,000 thousand, fully subscribed and paid-in, represented by 1,500,000,000 ordinary book-entry Class A, B, C and D shares, with a face value of ARS 1 each and one vote per share (according to the decision made by the General and Extraordinary Shareholder's Meeting held on July 21, 2006), except for the special multiple vote right for the Class D shares envisaged by the Bank's by-laws. By reason of the expiration on January 29, 2009 of the Total Return Swap that had been executed and delivered on January 29, 2004, Deutsche Bank AG transferred to the Bank 71,100,000 ordinary Class D shares in Banco Hipotecario Sociedad Anónima with face value $ 1 each, which were available for the term and in the conditions prescribed by the Argentine Companies Law, in its Section 221. Through Minutes No. 268 dated January 12, 2010, the Board of Directors resolved: 1) to propose to the Shareholders Meeting that treasury Class D shares be given as payment to the holders of DAAs (StARS) to the extent of their accrued amounts, considering the shares value at that moment, and 2) to discuss possible alternatives for the Shareholders Meeting to resolve upon the allocation of the remaining shares. On April 30, 2010, the General Ordinary Shareholders Meeting resolved to extend for a year, counted as from January 31, 2010, the term for realizing the treasury shares held by the Bank. On the other hand, the General Extraordinary Shareholders Meeting resolved to delegate upon the Board of Directors the decision to pay with the treasury shares in portfolio the Stock Appreciation Rights (StAR) coupons resulting from the 2003 debt restructuring as advisable based on the contractually agreed valuation methods and their actual market value after allowing the shareholders to exercise their preemptive rights on an equal footing. On June 16, 2010, the Board of Directors resolved to launch a preemptive offer to sell a portion of the Bank s treasury shares, for a total of 36,000,000 class D shares. The remaining shares would be delivered in payment to the holders of Stock Appreciation Rights (StAR) coupons arising from the debt restructuring, which fell due on August 3, 2010. On July 26, 2010, within the framework of the referred offer, the Bank sold approximately 26.9 million of the shares mentioned above. General August 10, 2011
fiscal period ended June 30, 2011 On August 3, 2010 the proceeds of the offer and the balance of the shares referred in the preceding paragraph were made available to the holders of the Stock Appreciation Rights (StAR) coupons. With the above-mentioned offering, 999,312 Class D shares were sold in excess of those required to pay off the obligation previously mentioned. In connection with such excess sale, Ps. 554 thousand were recorded as Unappropriated retained earnings to reflect the addition of the shares to the entity s equity, which took place on January 29, 2009 as detailed in this note, and a further Ps. 834 thousand were booked as Additional paid-in capital for the difference between the value as added to the entity s equity and the sales value. On April 13, 2011, the General Extraordinary Shareholders Meeting authorized the Board of Directors to sell own treasury stock in the market reducing to ten days the term for exercising the preemptive right, and suspending the exercise thereof when the sale of shares does not exceed 1% of the Capital Stock within any twelve-month period. Besides, on February 2, 1999, Banco de la Nación Argentina, as trustee of the Assistance to the Federal Trust Fund for Regional Infrastructure Trust Fund, made the combined public offering of 42,000,000 ordinary Class D shares and 270,000 options, each of the latter representing the right to purchase 100 shares, and the investors are required to acquire a minimum quantity of Class D shares so as to be awardees of the options. This right expired on February 2, 2004. With the authorization of the National Securities Commission of Argentina, the Bank placed 13,616,606 Class D shares and 61,289 options on the local capital market, and 28,383,394 ADSs (Shares Deposited in Custody), each representing one Class D share and 208,711 options, on the international capital market in compliance with Rule 144A of the Securities Act of 1933 of the United States of America. As a result of the expiration of the time frame for exercising the options indicated above, on February 2, 2004 certain holders of those options acquired 17,909,500 class D shares. The following table shows the capital status, as of June 30, 2011, detailing the classes of shares and their face value. Class Shares Face value Capital Stock A 658,530,880 1 658,530,880 B 75,000,000 1 75,000,000 C 75,000,000 1 75,000,000 D 691,469,120 1 691,469,120 1,500,000,000 1,500,000,000 General August 10, 2011
fiscal period ended June 30, 2011 2. BASIS FOR PRESENTATION OF THE FINANCIAL STATEMENTS These financial statements have been prepared in line with accounting standards established by the Argentine Central Bank through CONAU 1 Circular, supplementary rules and amendments. The financial statements of the predecessor entity, Banco Hipotecario Nacional, have been adjusted for inflation in conformity with the guidelines set in Communication "A" 551 of the Argentine Central Bank up to the financial year ended December 31, 1994, and prepared in accordance with the standards laid down by CONAU 1 Circular. As from January 1, 1995, and according to the authorization accorded by Resolution No. 388 of the Argentine Central Bank's Superintendency of Financial and Exchange Institutions, the Bank discontinued the adjustment for inflation of its financial statements until December 31, 2001. As from January 1, 2002, as a result of the application of Communication "A" 3702 which established the repeal of any legal and regulatory rule that did not allow companies to restate their accounting balances at period-end currency values, the Bank resumed the application of the adjustment for inflation in accordance with the rules issued in due time by the Argentine Central Bank using the adjustment coefficient derived from the domestic wholesale price index published by the National Statistics and Census Institute (INDEC). Furthermore, it has been considered that the accounting measurements derived from the changes in the purchasing power of the currency between December 31, 1994 and 2001 are stated in the currency value as of the latter date. On March 25, 2003, the Executive Branch issued Decree 664 establishing that the financial statements for years ending as from that date are to be stated in nominal currency. Consequently, in accordance with Communication "A" 3921 of the BCRA, the restatement of the financial statements was discontinued as from March 1, 2003. These financial statements have been prepared in line with the accounting standards issued by the Argentine Central Bank for application by financial institutions. The differences between the Argentine Central Bank regulations and the professional accounting standards in force in the Autonomous city of Buenos Aires are detailed in Note 3. The principal disclosure and valuation criteria followed for preparing these financial statements are described below: 2.1. Foreign currency assets and liabilities US dollar assets and liabilities have been valued at the rate of exchange between the peso and the US dollar published by the Argentine Central Bank. Assets and liabilities valued in foreign currencies other than the US dollar were converted into the latter currency using the swap rates communicated by the Argentine Central Bank s operations desk, in force at the close of operations on the last business day of the period ended June 30, 2011 and the fiscal year ended December 31, 2010. General August 10, 2011
fiscal period ended June 30, 2011 2.2. Gold and other precious metals Holdings of gold were valued at the latest selling quotation on the London market, in US dollars, net of the direct selling expenses, converted into Ps. at the rate of exchange between the peso and the US dollar published by the Argentine Central Bank, in force at the close of operations on the last business day of the period ended June 30, 2011 and the fiscal year ended December 31, 2010. 2.3. Interest accruals and adjustments of principal amounts (CER and CVS) Interest accruals were determined using the exponential method for all lending and certain borrowing transactions in local and foreign currency, and interest accruals for loans overdue more than ninety days were discontinued. Adjustments of principal amounts from application of the CER and CVS were accrued as established by Argentine Central Bank regulations, and interest accruals on loans overdue more than ninety days were discontinued. 2.4. Government and corporate securities As of June 30, 2011 and December 31, 2010, the securities classified as "Holdings booked at fair market value", "Investment in listed corporate securities" and "Securities issued by the BCRA" with volatility published by the BCRA, have been valued at period or year-end market quotation. As of June 30, 2011 and December 31, 2010, the securities classified as Holdings booked at cost plus return and Securities issued by the BCRA with no volatility published by the BCRA, except Secured Bonds and Discount Bonds as of December 31, 2010, have been valued, in accordance with the provisions of Communication A 5180 and supplementary rules, at their acquisition cost subject to an exponential increase based on the internal rate of return. As of December 31, 2010, in view of the alternative of realizing a portion of the position in the US$ BODEN 2012 Government securities through the market, an allowance for risk of impairment was raised in an amount equivalent to the estimated difference between the book value and the realizable value deemed reasonable. As of June 30, 2011 the entire holding of those securities has been realized. As of December 31, 2010, Secured Bonds issued by the Fiduciary Fund for Provincial Development received within the framework of Decree 1579/02, Ministry of Economy Technical Pronouncement 539/02 and complementary rules were recorded. These bonds were stated at the higher value arising from comparing the listed value as of the measurement date and the book value of the preceding month, net of contra accounts and financial services collected since such General August 10, 2011
fiscal period ended June 30, 2011 2.5. Loans date in compliance with the guidelines established by Communication "A" 4898, complementary rules and amendments. As of December 31, 2010, the Discount Bonds exchanged in the sovereign debt restructuring process have been valued according to the criteria established by Communication "A" 4270, supplementary rules and amendments thereto, at the lower value arising from comparing the aggregate nominal cash flow until maturity under the issuance conditions for the new securities, with the carrying value of the securities offered, which is equivalent to the present value of the Secured Bonds (BOGAR 2018). The portfolio of performing loans and loans due ninety days or less has been valued in terms of the principal amounts actually lent, plus capitalized interest, net of principal amortization collected and debt balance refinancing, plus adjustments (from the application of the CER, and CVS where applicable) and accrued interest receivable and less the estimated reserve for loan losses. Other loans to the public sector: i) as of December 31, 2010, they were valued at their net book value as of January 31, 2009, net of contra accounts and financial services collected after that date (Communiqué "A" 4898, supplementary rules and amendments thereto). As of June 30, 2011, those loans were valued at cost plus return according to point 2.2.6 of Communication A 5180, taking as cost their book value as of December 31, 2010. ii) those originally granted in foreign currency have been converted into Ps. at the exchange rate of $1.40 per US dollar, as established by Law 25561, Decree 214 and complementary rules and amendments. Since February 3, 2002, the CER has been applied to the amount of those loans and maximum rates have been established, in accordance with Decree 1579/02, if those assets were subjected to the Exchange of Provincial Public Debt. Loans to the non-financial private sector originally granted in foreign currency have been converted into Ps. at the exchange rate of $1.00 per US dollar, as established by Law 25561, Decree 214 and complementary rules and amendments. Since February 3, 2002, the CER and CVS have been applied to the amount of those loans and maximum rates have been established, depending on the borrower. General August 10, 2011
fiscal period ended June 30, 2011 2.6. Other receivables for financial transactions The individual mortgage loans the trustee ownership of which was transferred by the Bank and recorded in this caption have been valued and converted into Ps. following the criterion described in points 2.3. and 2.5. The Bank holds in its portfolio, its own Negotiable Obligations which are valued at their net book value plus accrued interest. The rights arising from currency swap transactions carried out as a hedge have been valued at the quotation of that currency following the criterion described in point 2.1 (Notes 15.1 and 15.5). The financial trust participation certificates have been valued according to the equity method of accounting, written down, if applicable, to reflect any allowances for impairment. Financial trust debt securities have been stated at face value, index-adjusted by applying the CER to the appropriate instruments, plus interest accrued until the end of the period or fiscal year, written down, if applicable, to reflect any allowances for impairment and the negative amount of the Participation Certificates reported by the Trustee. Currency swap transactions carried out as a hedge for the Bank s exposure to local-currencydenominated, CER-adjusted liabilities, without transfer of the principal, have been valued as of June 30, 2011 and as of December 31, 2010 according to the net asset or liability position derived from variations in the underlying assets (Note 15.2.). In addition, following a prudent criterion, the Bank creates provisions for these transactions when the value stated above exceeds its fair value. The interest rate swap transactions carried out for the purposes of hedging assets and liabilities with fixed and floating rates has been valued in accordance with the unsettled balances of agreed upon lending and borrowing interests rates (Notes 15.4, 15.6, 15.7, 15.8, 15.9 and 15.10). Unlisted negotiable obligations have been valued at acquisition cost exponentially increased according to the internal rate of return. Reverse swap transactions have been valued at the book value of the underlying securities, as shown in item 2.4. 2.7. Investments in other companies This caption mainly includes the equity investments held by the Bank in BACS Banco de Crédito y Securitización Sociedad Anónima, BHN Sociedad de Inversión Sociedad Anónima, BH Valores SA Sociedad de Bolsa and Tarshop (Note 26). As of June 30, 2011 and as of December 31, 2010, those equity investments were recorded at their equity value according to the BCRA s accounting rules, General August 10, 2011
fiscal period ended June 30, 2011 plus intercompany profits not involving third parties, where applicable, which amount to Ps. 336,322 thousand and Ps. 283,762 thousand, respectively. The above equity investments arise from the financial statements of BACS Banco de Crédito y Securitización Sociedad Anónima, BHN Sociedad de Inversión Sociedad Anónima, BH Valores SA Sociedad de Bolsa and Tarshop S.A. for the fiscal period ended June 30, 2011 and the fiscal year ended December 31, 2010. 2.8 Miscellaneous receivables Miscellaneous receivables have been valued at the amounts actually transacted, plus interest accrued and net of allowances for loan losses or impairment, if applicable. 2.9. Bank premises and equipment and miscellaneous assets These assets are recorded at cost restated in constant monetary units until February 28, 2003, following the method mentioned in the second and third paragraphs of this Note, net of accumulated depreciation calculated following the straight-line method, based on the estimated useful life of the assets. The cost of assets added before December 31, 1994 is restated in uniform currency as of that date, while subsequent transactions are valued in current purchasing power values of the period or year to which they correspond. The Bank records in "Miscellaneous assets Assets acquired through foreclosures" housing units added to the Bank s assets in repayment of mortgage loans. These housing units have been valued at the lower of market value or the value of the loan, net of allowances. The net book values of the assets taken as a whole do not exceed their economic value, except for the assets intended for sale, which do not exceed net realizable value. 2.10. Housing, life and unemployment insurance premiums in lending and other transactions originated in its capacity of insurer, in accordance with the franchise granted by the privatization law (Notes 1 and 9). The Bank's policy is to recognize the premium income when the corresponding loan installment accrues, except for those loans that are more than ninety days in arrears, and allocate the expenditures for claims to the net income/(loss) for the period or year in which they occur. The Bank has set up an insurance claims reserve for Ps. 1,181 thousand as of June 30, 2011 and December 31, 2010, which is shown in the "Provisions" caption under Liabilities (Note 18). General August 10, 2011