AS LATVIJAS PASTA BANKA · join the euro zone from 2014. The performance of the Bank as a...
Transcript of AS LATVIJAS PASTA BANKA · join the euro zone from 2014. The performance of the Bank as a...
AS LATVIJAS PASTA BANKA
Interim condensed financial statements
for the six-month period ended 30 June 2013
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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CONTENTS
Page
Management Report 3 - 4
The Council and the Board 5
Statement of Management’s Responsibility 6
Independent Auditors’ Report 7
Interim Condensed Financial Statements of the Bank:
Interim Condensed Statement of Comprehensive Income 8
Interim Condensed Statement of Financial Position 9
Interim Condensed Statement of Changes in Equity 10
Interim Condensed Statement of Cash Flows 11
Notes to the Interim Condensed Financial Statements 12 – 27
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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MANAGEMENT REPORT
Dear customers, cooperation partners and shareholders!
The management of AS Latvijas pasta banka (hereinafter also – the Bank) is proud to announce
that the Bank has closed the first half of the year 2013 and successfully retained and enhanced its
position and business profile in the local financial market.
2013 started with positive trends in the economy; however, the external environmental risks
remain related to future development in the euro zone. Because of decrease in economic growth
of main trade partners of Latvia, the Latvian export growth may slow down and its positive
effect on the economy as a whole can diminish. Latvian economic development is ensured not
only by export but also by demand in the domestic market. The increase of private consumption
is determined by gradual improvement of labour market – employment growth and labour wage
increase. Favourable ratings to the Latvian economy by international lenders and credit rating
agencies, confirms that the Latvian business environment stabilizes. It is also acknowledged by
the Economic and Financial Affairs Council`s (ECOFIN) decision made on 9 July for Latvia to
join the euro zone from 2014.
The performance of the Bank as a relatively new (this year marks the 5th anniversary of
establishment of the Bank) member of the local financial market is certainly assessed as positive
and approves the Bank's ability to meet challenges and operate in all conditions.
The core values of the Bank have not changed, namely, honesty – honest and fair attitude to all
Bank`s clients, professionalism – professional team, responsibility – high level of responsibility
for decisions made, loyalty – equal treatment to all the Bank’s clients and colleagues, quality –
convenient and qualitative Banking services to clients and competitiveness of the Bank’s
services, flexibility – the ability to adjust to the needs of the customers, safety – the clients can
be sure about their deposits and information provided in cooperation with the Bank.
The range of banking services is constantly extended, maintaining quality, as indicated by the
consistently and organically growing number of customers.
The Bank fully complies with all regulatory requirements. The capital adequacy ratio of the
Bank is 22.96% and it exceeds the minimum rate set by the law. The liquidity ratio is 94.05%,
which also exceeds the minimal requirement of 30% for several times as set by the law.
Based on the above, it appears that the Bank has all the abilities to successfully continue the
implementation of its operational strategy.
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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MANAGEMENT REPORT (continued)
Also in the future the important role in the Bank’s strategy is to be played by the administration
of wealthy client`s funds and products that meet the individual needs of our clients.
A priority in the Bank’s further strategy is payment card issuing and acceptance in POS
terminals and Internet, collaborating with wide-known organizations such as MasterCard, Visa,
Tieto, First Data, Global Payment using MasterCard acquiring licence for Europe and Visa
acquiring licence for Europe, thereby ensuring services for Internet sellers in the Europe.
The Bank's management is constantly monitoring the rapidly changing financial market
conditions being aware of their responsibility to clients and potential risks which are evaluated in
detail and administrated following prudent precaution principles, maintaining moderate level of
general risks.
In order to facilitate the further development of the Bank, in May 2013 the Bank has purchased a
building in Brivibas Street 54, Riga, Latvia and started work in the central office in the city
center.
The Bank is able to be a reliable partner for clients’ economic and personal activities,
maintaining stable and professional approach to cooperate on behalf of further development.
We wish to thank AS Latvijas pasta banka customers for their loyalty and look forward to further
common and beneficial business in the future!
Best regards,
Biomins Kajems
Chairman of the Council
Boriss Ulmans
Chairman of the Board
Riga, 15 August 2013
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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THE COUNCIL AND THE BOARD
The Council
The Council of the Bank as at 30 June 2013
Name Position Date of appointment
Biomins Kajems Chairman of the Council 13/10/2008
Jūlija Kozlova Council Member 13/10/2008
Guntars Grīnvalds Council Member 13/10/2008
The Board
The Board of the Bank as at 30 June 2013
Name Position Date of appointment
Boriss Ulmans Chairman of the Board 05/09/2008
Arnis Kalveršs Board Member 05/09/2008
Dairis Krūmiņš Board Member 27/03/2012
On behalf of the Bank’s management:
Biomins Kajems Boriss Ulmans
Chairman of the Council Chairman of the Board
Riga, 15 August 2013
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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STATEMENT OF MANAGEMENT’S RESPONSIBILITY
The management of AS LATVIJAS PASTA BANKA (hereinafter – the Bank) are responsible
for the preparation of the Bank’s interim condensed financial statements. These financial
statements are prepared in accordance with IAS 34 as adopted by the European Union on a going
concern basis. Appropriate accounting policies have been applied on a consistent basis in
preparing the Bank’s financial statements. Prudent and reasonable judgments and estimates have
been made by the management in the preparation of the financial statements.
The Bank’s financial statements set out on pages 8 to 27 are prepared in accordance with the
source documents and present fairly the financial position of the Bank as at 30 June 2013 and the
results of its operations and cash flows for the six-month period ended 30 June 2013.
The management of the Bank are responsible for the maintenance of proper accounting records,
the safeguarding the Bank’s assets, and the prevention and detection of fraud and other
irregularities in the Bank. They are also responsible for operating the Bank in compliance with
the Law on Credit Institutions, regulations of the Financial and Capital Market Commission and
other legislation of the Republic of Latvia applicable to credit institutions.
On behalf of the Bank’s management:
Biomins Kajems Boriss Ulmans
Chairman of the Council Chairman of the Board
Riga, 15 August 2013
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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AUDITORS’ REPORT
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Notes
Six-month period ended
30.06.2013 30.06.2012
Interest and similar income 6 1 131 1 106
Interest and similar expense 6 (212) (443)
Net interest income 919 663
Commission and fee income 7 1 187 1 009
Commission and fee expense 7 (433) (338)
Net commission and fee income 754 671
Net trading income 301 45
Other income 19 10
Net operating income 1 993 1 389
Administrative expense 8 (858) (512)
Amortisation/ depreciation (44) (41)
Other expense (138) (150)
Operating expense (1 040) (703)
Net provisions for doubtful assets 6 (1)
Profit before tax 959 685
Corporate income tax 9 (146) (104)
Net profit for the period 813 581
Revaluation reserve (205) 12
Total comprehensive income 608 593
Profit per share (LVL) 0.13 0.09
The accompanying notes on pages 12 to 27 form an integral part of these interim condensed
financial statements.
The Bank’s financial statements set out on pages 8 to 27 were approved by the Board on 15
August 2013 and by the Council on 15 August 2013.
Biomins Kajems Boriss Ulmans
Chairman of the Council Chairman of the Board
Riga, 15 August 2013
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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CONDENSED STATEMENT OF FINANCIAL POSITION
Notes 30.06.2013 31.12.2012
ASSETS
Cash and balances with the Bank of Latvia 10 4 221 3 076
Due from credit institutions 11 10 855 14 040
Available-for-sale financial assets 13 7 219 6 705
Derivative financial instruments 55 -
Loans and receivables 12 9 408 8 506
Held-to-maturity financial investments 13 19 062 23 034
Property, plant and equipment 5 085 27
Intangible assets 344 367
Other assets 471 1 146
Prepaid expense and accrued income 85 66
Total assets 56 805 56 967
LIABILITIES
Due to credit institutions 15 3 403 -
Liabilities at amortised cost 45 718 49 253
Deposits from customers 16 44 839 47 847
Subordinated liabilities 17 879 1 406
Derivative financial instruments 23 -
Current tax liabilities - 3
Deferred tax liabilities 82 46
Other liabilities 349 1 049
Deferred income and accrued expense 207 135
Total liabilities 49 782 50 486
EQUITY ATTRIBUTABLE TO THE BANK’S
SHAREHOLDERS
Paid-in share capital 18 6 200 6 200
Asset revaluation reserve 13 10 215
Accumulated loss - 66
Profit for the period 813 -
Total equity attributable to the Bank’s shareholders 7 023 6 481
Total equity 7 023 6 481
Total liabilities and equity 56 805 56 967
The accompanying notes on pages 12 to 27 form an integral part of these interim condensed
financial statements.
The Bank’s financial statements set out on pages 8 to 27 were approved by the Board on 15
August 2013 and by the Council on 15 August 2013.
Biomins Kajems Boriss Ulmans
Chairman of the Council Chairman of the Board
Riga, 15 August 2013
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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CONDENSED STATEMENT OF CHANGES IN EQUITY
Bank
Paid in share
capital
Fair value
revaluation
reserve of
available-
for-sale
financial
assets
Retained
earnings /
(Accumula-
ted loss)
Total
Balance as at 31 December 2011 6 200 (63) (974) 5 163
Total comprehensive income - 12 581 593
Balance as at 30 June 2012 6 200 (51) (393) 5 756
Total comprehensive income - 266 459 725
Balance as at 31 December 2012 6 200 215 66 6 481
Dividends paid - - (66) (66)
Total comprehensive income - (205) 813 608
Balance as at 30 June 2013 6 200 10 813 7 023
The accompanying notes on pages 12 to 27 form an integral part of these interim condensed
financial statements.
The Bank’s financial statements set out on pages 8 to 27 were approved by the Board on 15
August 2013 and by the Council on 15 August 2013.
Biomins Kajems Boriss Ulmans
Chairman of the Council Chairman of the Board
Riga, 15 August 2013
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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CONDENSED STATEMENT OF CASH FLOWS
Six-month period ended
30.06.2013 30.06.2012
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 959 685
Amortisation/ depreciation 44 41
(Decrease) / increase in provisions for doubtful debts (6) 1
Unrealised foreign exchange loss / (gain) 69 (51)
Increase in cash and cash equivalents from operating activities
before changes in assets and liabilities
1 066
676
Increase in balances due from credit institutions (79) (1 272)
Increase in loans and receivables (896) (161)
Decrease in other assets 591 103
Increase in balances due to credit institutions - 54
Decrease in deposits from customers (3 008) (49)
Decrease in other liabilities (605) (74)
Corporate income tax paid (1) -
Cash used in operating activities (2 932) (723)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (5 078) (7)
Decrease / (increase) in held-to-maturity financial investments 3 761 (6 299)
Increase in available-for-sale financial assets (610) (3 093)
Cash and cash equivalents used in investing activities (1 927) (9 399)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (66) -
Decrease in subordinated liabilities (527) (527)
Increase in subordinated liabilities - 879
Cash and cash equivalents (used in) / generated from financing
activities (593) 352
Net cash flows for the period (5 452) (9 770)
Cash and cash equivalents at the beginning of the period 12 887 15 227
Foreign exchange (loss) /gain (69) 51
Cash and cash equivalents at the end of the period 7 366 5 508
The accompanying notes on pages 12 to 27 form an integral part of these interim condensed
financial statements.
The Bank’s financial statements set out on pages 8 to 27 were approved by the Board on 15
August 2013 and by the Council on 15 August 2013.
Biomins Kajems Boriss Ulmans
Chairman of the Council
Chairman of the Board
Riga, 15 August 2013
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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NOTE 1 GENERAL INFORMATION
AS Latvijas pasta banka (hereinafter – the Bank) is a joint stock company registered in the
Republic of Latvia and operating according to the laws of the Republic of Latvia and the licence
issued by the Financial and Capital Market Commission on 12 September 2008.
The registered office of AS Latvijas pasta banka is at Brivibas iela 54, Riga, LV-1011, Latvia.
The Bank has the head office and two customer service centres. The core business activity of the
Bank comprises local and international payments, attraction of deposits, issue and servicing of
payment cards, issue of loans, securities and foreign exchange transactions.
According to the Commercial Law of the Republic of Latvia, the general shareholders’ meeting
has a right and duty to decide on the approval of the annual report.
NOTE 2 BASIS OF PREPARATION
(a) Statement of compliance
These interim condensed financial statements of AS Latvijas pasta banka are prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. These
interim condensed financial statements do not include all the information and disclosures
required in the complete financial statements and should be read in conjunction with the Bank’s
financial statements for the financial year ended 31 December 2012.
(b) Going concern
The financial statements are prepared on the going concern basis. The Bank’s management have
analysed the Bank’s financial position, availability of financial resources as well as the impact of
the financial crisis on the future operations of the Bank. The bank operates using development
strategy based on an assumption that the initial Pasta Banka project is not supported and the
initial development strategy cannot be implemented. This strategy will be applied until it is
confirmed legally that the initial strategy is or is not feasible. The Bank’s strategy is aimed at
creating a bank servicing certain customers and developing customised products and service
technologies.
Monitoring of the Bank’s capital sufficiency is performed by:
- the analysis in accordance with the Bank's minimum capital requirement calculation
procedure set out in the reports at least once a month;
- evaluating the significant risks to the Bank to cover the amount of capital required and
the amount of capital available for 3-year planning period at least once a year and every
month, comparing to the actual Bank's financial performance with planned;
- performing an active assessment of the quality and the required provision calculations at
least once a quarter.
In long-term capital crisis, the Bank's capital crisis management plan predicts to use its capital
reserves, attract subordinated deposits or to ask shareholders to raise the Bank's capital.
Having analysed the key risks related to the present and potential economic situation in Latvia,
the development of the banking industry as well as the change on the Bank`s central office to the
Riga centre, the Bank has selected to pursue the following strategy:
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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- As a priority, to offer its services to legal entities, forming the customer portfolio based on
customised services;
- Along with legal entities, to offer equal customised services also to high-income and ultra-
high income private individuals;
- To be present in Latvia, Russia, Ukraine, EEA;
- To define as the priority business activity the following:
issue and acceptance of payment cards via POS terminals and the Internet, in
cooperation with such well-known organizations such as MasterCard, Visa, Tieto,
First Data, Global Payment using MasterCard acquiring license to Europe and
Visa acquiring license to Europe, thus providing services to Internet marketers
across Europe,
placement of capital in financial instruments,
issuance of credit cards to private individuals,
issue of loans to legal entities based on the moderately conservative risk
approach, especially financing of current assets and transportation flows;
The Bank has set the target capital adequacy ratio of at least 20 per cent for 2013.
(c) Functional and presentation currency
These financial statements are reported in thousands of lats (LVL’000), unless otherwise stated.
The functional currency of the Bank is the Latvian lat (LVL).
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Except as disclosed below, in preparing these interim condensed financial statements, the Bank
consistently applied accounting policies in line with those used for the financial period ended 31
December 2012.
Income tax expense is recognised in each interim period based on the best estimate of the
weighted average effective annual income tax rate expected for the full financial year. Amounts
accrued for income tax expense in one interim period may have to be adjusted in a subsequent
interim period of that financial year if the estimate of the weighted average effective annual
income tax rate changes. Interim period income tax expense is accrued using the tax rate that
would be applicable to expect total annual earnings, that is, the estimated average annual
effective income tax rate is applied to the pre-tax income of the interim period.
The interim condensed financial statements are prepared in accordance with IAS 34 Interim
financial reporting as adopted by European Union. These interim condensed financial statements
should be read in conjunction with the 2012 full annual financial statements prepared in
accordance with International financial reporting standards (IFRS) endorsed in the European
Union.
The accounting methods used in the preparation of the year 2012 annual financial statements, are
not changed for preparation of the interim condensed financial statements.
Certain new standards and interpretations have been published that become effective for the
accounting periods beginning on or after 1 January 2013 or later periods and which are not
relevant to the Bank or are not yet endorsed by the EU:
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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Amendment IAS 19 'Accounting for Employee benefits' (effective for accounting
periods beginning on 1 January 2013 or later).
IFRS 10 "Consolidated Financial Statements" (effective for accounting periods
beginning on 1 January 2013 or later, approved by EU in December 2012 for reporting
periods beginning on 1 January 2014 or later).
IFRS 11 "Joint arrangements" (effective for accounting periods beginning on 1
January 2013 or later, approved by EU in December 2012 for reporting periods
beginning on 1 January 2014 or later).
IFRS 12 'Disclosure of interests in other entities' (effective for accounting periods
beginning on 1 January 2013 or later, pproved by EU in December 2012 for reporting
periods beginning on 1 January 2014 or later).
Amendment 10., 11. and 12. Application of IFRS (effective for accounting periods
beginning on1 January 2013or later, approved by EU on December 2012 for reporting
periods beginning on 1 January 2013 or later).
IFRS 13 "Fair Value Measurement" (effective for accounting periods beginning on 1
January 2013 or later, approved by EU on December 2012).
IAS 27 (revised in 2011) "Separate Financial Statements" (effective for accounting
periods beginning io 1 January 2013 or later, approved by EU on December 2012 for
reporting periods beginning on 1 January 2014 or later).
IAS 28 (revised in 2011) "Associates and joint ventures' (effective for accounting
periods beginning on 1 January 2013 or later, approved by EU on December 2012 for
reporting periods beginning on 1 January 2014 or later).
Amendment IFRS 7 "Financial Instruments: Disclosures" for financial assets and
financial liabilities netting `(effective for accounting periods beginning on 1 January
2013 or later).
Amendment IAS 32'Financial Instruments: Disclosures "for financial assets and
financial liabilities netting (effective for accounting periods beginning on 1 January 2014
or later).
Amendments IFRS 1 "First time adoption`, on government loans" (effective for
accounting periods beginning on 1 January 2013 or later, is not yet approved in the EU).
International Financial Reporting Standards Improvements (issued in May 2012,
most of the improvement are effective for reporting periods beginning on 1 January 2013
or later, they are not yet endorsed by the EU):
- IFRS 1 'First time adoption";
- IAS 1 'Financial Statement presentation";
- IAS 16 "Property, plant & equipment";
- IAS 32 'Financial Instruments: Presentation";
- IAS 34 "Interim Financial Reporting".
Amendment IFRS 10, IFRS 12 and IAS 27 for investment companies (effective for
accounting periods beginning on 1 January 2014 or later, is not yet approved in the EU).
IFRS 9 "Financial Instruments - classification and measurement '(effective for
annual periods beginning on 1 January 2015 or later, and it is not yet approved in the
EU).
IFRIC 20 "Stripping costs in the production phase of a surface mine" (effective for
accounting periods beginning on 1 January 2013 or later).
The Bank evaluates the potential effect, if any, of these new standards and interpretations on the
financial statements.
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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NOTE 4 RISK MANAGEMENT
All the aspects of the Bank’s risk management objectives and policies are consistent with those
disclosed in the Bank’s financial statements for the period ended 31 December 2012.
NOTE 5 JUDGMENTS AND ESTIMATES
The preparation of interim financial statements requires the management to make judgments,
estimates and assumptions that affect the adoption of accounting policies, the reported amounts
of assets, liabilities, income and expense. Accordingly, actual results could differ from those
estimates. The significant areas of judgment regarding the adoption of accounting policies and
the key sources of estimate uncertainty used in preparing these interim condensed financial
statements are consistent with those used in the financial statements for the financial period
ended 31 December 2012.
NOTE 6 NET INTEREST INCOME
Six-month period ended
30.06.2013 30.06.2012
Interest income
Due from credit institutions 126 80
Loans and receivables 379 323
Securities 626 703
Incl. held to maturity 533 628
available for sale 93 75
Total interest income: 1 131 1 106
Interest expense
Due to credit institutions (1) (59)
Non-bank deposits (169) (332)
Payments to the Deposit Guarantee Fund (42) (52)
Total interest expense: (212) (443)
Net interest income 919 663
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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NOTE 7 NET COMMISSION AND FEE INCOME
Six-month period ended
30.06.2013 30.06.2012
Commission and fee income
Service fee for account maintenance and cash
transactions
252
127
Asset management 65 50
Payment card transactions 743 594
Brokerage services 71 168
Guarantees, loans, letters of credit 56 70
Total commission and fee income: 1 187 1 009
Commission and fee expense
Correspondent bank services (54) (35)
Payment card transactions (356) (266)
Brokerage operations (17) (31)
Other bank transactions (6) (6)
Total commission and fee expense: (433) (338)
Net commission and fee income 754 671
NOTE 8 ADMINISTRATIVE EXPENSES
Six-month period ended
30.06.2013 30.06.2012
Personnel remuneration expenses
Council and Board remuneration 36 24
Personnel remuneration 498 285
State compulsory social insurance contributions 129 75
Total personnel remuneration expenses: 663 384
Rent and exploitation expenses 51 45
Non-refundable value added tax 33 24
Communications (telephone, post) 17 11
IT equipment and software related expenses 20 11
Professional and legal services 14 11
Office supplies and other office expenses 7 7
Other personnel related expenses 12 14
Real estate tax 9 -
Other administrative expenses 20 4
Non business related expenses 12 1
Total other expenses: 195 128
Administrative expenses 858 512
On 30 June 2013 number of employees in the Bank was 121 (on 30 June 2012 – 83).
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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NOTE 9 CORPORATE INCOME TAX
Corporate income tax expense comprises the following items:
Six-month period ended
30.06.2013 30.06.2012
Current corporate income tax charge for the reporting period 111 -
Deferred corporate income tax 35 104
Total corporate income tax expense 146 104
30.06.2013 31.12.2012
Deferred corporate income tax liability:
Accumulated excess of tax depreciation over accounting
depreciation 87 53
Deferred corporate income tax asset:
Temporary difference on vacation reserve (10) (7)
Other deferred tax assets 5 -
Deferred income tax liability 82 46
NOTE 10 CASH AND BALANCES WITH THE BANK OF LATVIA
30.06.2013 31.12.2012
Cash 1 287 532
Balances with the central bank 2 934 2 544
Total 4 221 3 076
Balances with central bank include cash on the correspondent account and a short-term deposit
with the Bank of Latvia. According to the instructions of the Bank of Latvia, the Bank’s average
monthly balance on its correspondent account may not be less than the compulsory reserve
calculated for the balance of liabilities included in the reserve basis on the last day of the month.
As at 30 June 2013, the Bank’s compulsory reserve requirement was LVL 1 751 thousand (31
December 2012: LVL 1 922 thousand).
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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NOTE 11 DUE FROM CREDIT INSTITUTIONS
30.06.2013 31.12.2012
Amounts due on demand 6 436 9 811
Credit institutions registered in Latvia 112 4 183
Credit institutions registered in the EU 2 474 3 183
Credit institutions of other countries 3 850 2 445
Term deposits 4 419 4 229
Credit institutions registered in Latvia 1 357 2 430
Credit institutions of other countries 3 062 1 799
Total 10 855 14 040
The Bank’s average interest rates applicable for the balances due from credit institutions in the
first half of 2013 are as follows: LVL 0.171% USD 0.191%, EUR 0.144%. (in the first half of
2012 - LVL 0.317% USD 0.723%, EUR 0.238%).
NOTE 12 LOANS
(a) Loans and receivables by customer profile
30.06.2013 31.12.2012
Private non-financial companies 8 034 7 840
Financial institutions 179 84
Households 1 276 669
Total loans 9 489 8 593
Impairment (81) (87)
Total net loans 9 408 8 506
(b) Loans and receivables by geographical profile
30.06.2013 31.12.2012
Residents of Latvia 8 891 8 285
Residents of EU Member States 105 34
Residents of other countries 493 274
Total loans 9 489 8 593
Impairment (81) (87)
Total net loans 9 408 8 506
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(c) Loans and receivables by types
30.06.2013 31.12.2012
Commercial loans 2 229 3 085
Industrial loans 908 683
Finance leases 497 542
Credit card loans 54 60
Mortgage loans 2 145 1 117
Factoring 1 042 556
Other loans 2 548 2 466
Cash with financial institutions 66 84
Total loans 9 489 8 593
Impairment (81) (87)
Total net loans 9 408 8 506
(d) Significant credit risk concentration
As at 30 June 2013, the Bank had 6 borrowers or group of related borrowers whose aggregate
liabilities to the Bank exceeded 10% of the Bank’s capital (31 December 2012 – 6 borrowers or
groups of related borrowers). The total liabilities of the borrower or group of related borrowers
whose aggregate liabilities to the Bank exceeded 10% of the Bank’s share capital on 30 June
2013 was LVL 4 969 thousand or 80% of the Bank’s share capital (31 December 2012 – LVL 5
443 thousand or 86% of the Bank’s share capital).
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
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NOTE 13 FINANCIAL ASSETS
a) Investments in financial assets by portfolios
30.06.2013 31.12.2012
Available-for-sale financial assets
Debt securities issued by the Latvian government 1 015 -
Debt securities issued by EU central governments 1 974 2 390
Debt securities issued by other country central governments 568 568
Debt securities issued by EU credit institutions 1 211 1 221
Debt securities issued by EU local governments 744 791
Debt securities issued by EU non-finance institutions 1 707 1 735
Total available-for-sale financial assets 7 219 6 705
Held-to-maturity financial investments
Debt securities issued by the Latvian government 13 604 15 849
Debt securities issued by EU central governments 2 180 3 525
Debt securities issued by EU credit institutions 704 704
Debt securities issued by other country credit institutions 1 108 2 172
Debt securities issued by EU finance institutions 211 424
Debt securities issued by the Latvian non-finance institutions 1 255 360
Total held-to-maturity financial investments 19 062 23 034
b) available-for-sale financial assets by geographical profile
30.06.2013 31.12.2012
Carrying
amount
% of
equity
Revaluation
reserve
Carrying
amount
% of
equity
Revaluation
reserve
Debt securities issued by
central governments 3 557 x (37) 2 958 x 146
Latvia 1 015 16.36 (55) - - -
Poland - - - 735 11.62 2
Slovenia 1 410 22.73 3 737 11.66 3
Other countries 1 132 18.25 15 1 486 23.50 141
Debt securities issued by
credit institutions 1 211 x 21 1 221 x 25
Sweden 845 13.62 11 841 13.30 12
Other countries 366 5.90 10 380 6.01 13
Debt securities issued by
local governments 744 x 14 791 x 26
Poland 744 11.99 14 791 12.51 26
Debt securities issued by
non-finance institutions 1 707 x 12 1 735 x 18
Austria 730 11.77 5 756 11.96 5
Germany 977 15.75 7 979 15.48 13
Total available-for-sale
financial assets 7 219 x 10 6 705 x 215
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
21
c) held-to-maturity financial assets by geographical profile
30.06.2013 31.12.2012
Carrying
amount
% of
equity
Fair
value
Carrying
amount
% of
equity
Fair
value
Debt securities issued by
central governments 15 784 x 17 216 19 374 x 21 445
Latvia 13 604 219.28 15 000 15 849 250.66 17 798
Ireland - - - 1 438 22.74 1 469
Portugal 2 180 35.13 2 216 2 087 33.01 2 178
Debt securities issued by
credit institutions 1 812 x 1 844 2 876 x 2 936
Russia 1 108 17.86 1 141 2 172 34.35 2 233
Germany 704 11.35 703 704 11.13 703
Debt securities issued by
finance institutions 211 3.40 213 424 6.70 426
Debt securities issued by the
private non-finance
institutions
1 255 x 1 260 360 x 360
Latvia 1 255 20.23 1 260 360 5.69 360
Total net held-to-maturity
financial investments 19 062 x 20 533 23 034 x 25 167
Maturity of debt securities of Portugal is 23 September 2013.
The Bank uses the following hierarchy of three levels of input data for determining and
disclosing the fair value of financial assets and liabilities:
Level 1: Quoted prices in active markets;
Level 2: Other techniques for which all inputs which have a significant effect on the
recorded fair value are observable.
Level 3: Other techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
As at 30 June 2013, all the Bank’s financial assets and liabilities met the requirements of Level 1
and Level 2.
Assessing the economic and financial situation in Portugal and Latvia, the Bank has concluded
that number of objective circumstances exist, which might help the Bank to fully recover
investments from central government securities in countries mentioned above. Therefore, the
Bank has not changed the classification of these investments or created provisions, but the Bank
continues to follow and keep up to date the information relating to these investments.
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
22
NOTE 14 FUNDS UNDER TRUST MANAGEMENT
30.06.2013 31.12.2012
Assets 59 350 55 342
Loans to private non-financial companies 27 758 23 124
Loans to households 584 405
Investments in finance instruments 31 008 31 813
Liabilities 59 350 55 342
Credit institutions 30 970 31 784
Private non-financial companies 27 184 23 054
Households 1 196 504
The Bank issues loans classified as funds under trust management based on specific requests of
asset owners. According to the trust management agreements concluded with customers, the
asset owners assume all the risks inherent in these loans and the Bank acts only as an
intermediary receiving the management fee.
As at 30 June 2013, the accumulated outstanding commission fee for the asset management was
LVL 39 thousand (31 December 2012: LVL 29 thousand).
NOTE 15 DUE TO CREDIT INSTITUTIONS
30.06.2013 31.12.2012
Term deposits
Latvian credit institutions 3 403 -
including interbank REPO transactions 2 003 -
Total 3 403 -
The Bank’s average interest rates applicable for the balances due to credit institutions in the first
half of 2013 are as follows: LVL 0.171%, EUR 0.144%, (in the first half of 2012: LVL 0.493%,
USD 1.218%).
NOTE 16 DEPOSITS FROM CUSTOMERS
(a) Demand and term deposits by customer profile:
30.06.2013 31.12.2012
Demand deposits 30 443 33 568
Private non-financial companies 22 280 19 636
Households and non-profit organisations serving them 8 089 13 046
Financial institutions 74 886
Term deposits 15 275 14 279
Private non-financial companies 822 814
Households and non-profit organisations serving them 14 453 13 465
Total 45 718 47 847
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
23
(b) Demand and term deposits by geographical profile
30.06.2013 31.12.2012
Demand deposits 30 443 33 568
Residents of Latvia 14 115 16 980
Residents of EU Member States 11 351 9 219
Residents of other countries 4 977 7 369
Term deposits 15 275 14 279
Residents of Latvia 14 440 13 383
Residents of EU Member States 808 796
Residents of other countries 27 100
Total 45 718 47 847
The Bank’s average interest rate on customer deposits for the first half of 2013 is 1.412%
(LVL), 1.901% (USD) and 1.376% (EUR). In the first half of 2012: 1.806% (LVL), 2.043%
(USD), 2.770% (EUR))
NOTE 17 SUBORDINATED LIABILITIES
Lender
30.06.2013 31.12.2012
Carrying
value Date Interest
Carrying
value Date Interest
Household resident, not
related party to the bank - - - 527 06.12.2016 7
Household resident, not
related party to the bank 879 23.02.2017 7 879 23.02.2017 7
Total subordinated
liabilities 879 x x 1 406 x x
Contracts on subordinated loans are agreed for the term of 5 years. Interest on subordinated loan
is paid once per month, on the last working day of month.
Effective from April 2013, the Bank terminated one of the subordinated liabilities agreements,
repaying 527 thousand lats.
According to the contract terms, lenders has the right to recover the loan ahead of schedule only
in case of the Bank's liquidation and the creditor's claim is upheld after all other creditors, but
before the Bank's shareholders' claims.
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
24
NOTE 18 PAID-IN SHARE CAPITAL
As at 30 June 2013, the Bank’s registered and paid-in share capital was LVL 6,2 million (31
December 2012: LVL 6.2 million).
Share capital consists only of ordinary shares with voting rights. The value of one share is 1 Lat,
and at 30 June 2013 all shares were fully paid and the Bank did not own any of shares.
As at 31 December 2012 and 30 June 2013, the Bank’s sole shareholder was SIA Mono, reg.no
40003004625, legal address Riga, Katlakalna street 1, which is Bank`s ultimate parent company.
NOTE 19 EARNINGS PER SHARE
Earnings per share are calculated by dividing net profit by the weighted average number of
shares issued during the reporting period. As at 30 June 2013, basic earnings per share were
equal to diluted earnings per share.
Six-month period ended
30.06.2013 30.06.2012
Net profit (LVL’000) 813 581
Weighted average number of ordinary shares (‘000) 6 200 6 200
Earnings per share (LVL) 0.13 0.09
NOTE 20 CASH AND CASH EQUIVALENTS
30.06.2013 31.12.2012
Cash and demand deposits with the Bank of Latvia 4 221 3 076
Balances due from other credit institutions with original maturities
of less than three months 6 548 9 811
Balances due to other credit institutions with original maturities of
less than three months (3 403) -
Total 7 366 12 887
NOTE 21 MEMORANDUM ITEMS
30.06.2013 31.12.2012
Contingent liabilities 431 2 563
Guarantees 431 2 563
Financial commitments 2 524 2 396
Unutilised credit lines 2 263 2 175
Credit card commitments 261 221
Total memorandum items, gross 2 955 4 959
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
25
In the ordinary course of business, the Bank issues loans and guarantees. The main purpose of
these financial instruments is to ensure that adequate funds are available to customers.
Guarantees that comprise irrevocable commitments are assigned the same risk as loans because
those commit the Bank to paying in the event of a customer’s default. Liabilities arising from
credit lines represent the undrawn balances of credit lines. As regards credit risk, the Bank is
potentially exposed to a loss arising also from loan commitments.
NOTE 22 RELATED PARTY TRANSACTIONS
Related parties are defined as shareholders that have the ability to control or exercise significant
influence over the Bank’s management policy, Council and Board members, their close family
members, and entities in which these persons have a controlling interest.
In the ordinary course of business, the Bank enters into transactions with related parties. All
loans are issued to and financial transactions are made with related parties on an arm’s length
basis. As at 30 June 2013, there were no any loans issued to related parties that would have been
past due or impaired.
The Bank’s financial statements include the following balances of assets, liabilities and
memorandum items associated with the Bank’s transactions with related parties:
30.06.2013 31.12.2012
Carrying
amount
Memoran
dum
items
Total Carrying
amount
Memoran
dum
items
Total
Assets 529 175 704 253 2 900 3 153
Loans and receivables,
net 529 175 704 253 2 900 3 153
Parent company - - - - 2 412 2 412
Council and Board 1 18 19 - 19 19
Related companies and
persons 528 157 685 253 469 722
Liabilities 8 094 - 8 094 4 637 - 4 637
Deposits 8 074 - 8 074 4 637 - 4 637
Parent company 43 - 43 333 - 333
Council and Board 3 360 - 3 360 3 416 - 3 416
Related companies and
persons
4 671
-
4 671
888
-
888
Derivatives 20 - 20 - - -
Related companies and
persons 20 - 20 - - -
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
26
The table below presents income and expense on the balances due from/ to related parties:
Six-month period ended
30.06.2013 30.06.2012
Interest income 44 15
Interest expense (24) (58)
Net interest income / (expense) 20 (43)
Commission and fee income
109 50
NOTE 23 CAPITAL MANAGEMENT The capital adequacy calculation of the Bank can be disclosed as follows:
30.06.2013 31.12.2012
Tier I
- paid-in share capital 6 200 6 200
- prior period accumulated loss - (974)
- audited profit - 580
Less
- intangible assets (344) (367)
Total Tier I 5 856 5 439
Subordinated liabilities 879 1 406
Subordinated liabilities amortisation (176) (106)
Total Tier II 703 1 300
Decrease of Tier I and Tier II capital resulting from specific
regulatory provisions (355) (416)
Total eligible capital 6 204 6 323
Risk capital requirements
Total capital charge for credit risk and counterparty risk, incl. the
following statutory asset classes:
Central governments or central banks - 12
Regional or local governments 30 32
International organizations 3 7
Credit institutions 447 598
Commercial institutions 811 692
Other assets 544 99
Other risk capital requirements:
Foreign exchange risk capital requirement 22 21
Operational risk capital requirement 305 199
Total capital requirement 2 162 1 660
The capital adequacy ratio
(Equity capital / Total capital) x 8% 22.96% 30.47%
AS LATVIJAS PASTA BANKA
Interim condensed financial statements 000’LVL for the six-month period ended 30 June 2013
27
NOTE 24 EVENTS AFTER REPORTING DATE
As of the last day of the reporting period until the date of signing these financial statements there
have been no events requiring adjustment of or disclosure in the financial statements or notes.
* * *