TTK BANK S.C. SKOPJE ANNUAL REPORT 2007
CONTENTS Address by the President of the Management Board of ТТК Bank
7
Address by the managers of TTK Bank
9
Background of the Bank
15
Profile of the Bank
16
Vision and Mission of the Bank
16
Managing Board Members and Bank’s Stakeholders
17
Bank’s Key Statistics
18
Corporate Banking
23
Retail Banking
24
Assets and Liquidity Management
25
Risk Management
26
Stock Trade Department
27
Human Resources
28
Organization scheme
29
Scrupulous Citizen of the Society
33
TTK Bank close to the Clients
39
Independent Auditor’s Report
43
Income Statement
44
Balance Sheet
45
Statement of changes in equity
46
Report of Cash Flows
47
3
Annual Report 2007
Trust
trust means unlimited, instinctive and conscientious believe in one’s decency, capability and reliability, it means unreserved reliance on one’s integrity, strength, potential, certainty. ТТК Bank s.c. Skopje has been working steadily on strengthening the trust of the clients which represents the main prerequisite for a successful operation.
5
trust means unlimited, instinctive and conscientious believe in one’s decency, capability and reliability, it means unreserved reliance on one’s integrity, strength, potential, certainty. ТТК Bank s.c. Skopje has been working steadily on strengthening the trust of the clients which represents the main prerequisite for a successful operation.
Annual Report 2007
trust means unlimited, instinctive and conscientious believe in one’s decency, Honoured clients, business partners and shareholders, capability and reliability, it means unreserved reliance Firstly, allow me to express my pleasure to address you on behalf of the Management on one’s integrity, strength, Board of TTK Bank. It was more than two years ago when we established a rather large potential, certainty. financial institution, and by combining tradition, experience and enthusiasm of the two former banks (Teteks Kreditna Banka A.D. Skopje and Tetovska Banka A.D. Tetovo) we ТТК Banka s.c. Skopje has created a bank of great potential. A bank that gradually and surely takes its place in the been working steadily on strengthening the trust of the market. clients which represents the main prerequisite for a In the course of 2007, TTK Bank achieved a great success by the entry and successful operation. participation of the European Bank for Reconstruction and Development (EBRD), which meant a new capital strengthening as well as new potentials for new technological and organizational approach, and development of new products and services. Address by the President of the Management Board of the Bank
The successfulness and loyalty of the Bank can be confirmed by 50.000 clients, individuals and legal entities, who can also confirm Bank`s fulfilment of its mission and vision. The gradual increase of the number of clients speaks for itself in terms of the Bank’s success. Following continuously the trends of the world banking market, the Bank offers services according to the principles of liquidity, safety and stability. The success of Bank’s offer of high quality services is a result from the analysis of the needs of our current and future clients and their confidence in us. In conditions of high competitive banking sector in the country and an obvious outbreak of foreign capital to the banks in the Republic of Macedonia, TTK Bank notes a stable growth of its operation and expansion of the product and service portfolio. The Bank is continuously expanding its business network throughout the entire territory, at the same time supporting the interests of its shareholders, business partners and clients. Bank`s vision is to be a bank of choice of small and medium-size business and retail clients. The mission of the Bank is to be the best bank, a partner of small and medium-size businesses in Macedonia and the first choice of retail banking clients, aspiring to create highest values for its clients and shareholders. The bank falls into the group of banks having an up-to-date technical and technological basis for operation, electronic banking services and SWIFT money transfer. 7
The Bank achieves its positive results by following the strict banking principles, namely, exclusively by means of the assets from deposits of its clients and the capital of its shareholders, and also investing assets from foreign credit lines through the Macedonian Bank for Support and Development, the European Bank for Reconstruction and Development, and other recognized foreign banks and funds. The Bank continuously invests in training and advanced training of its employees and management, and improvement of the risks management system. In line with the Bank’s profile of an independent bank, market oriented and a private Macedonian bank, with universal range of products and services, the Bank demonstrated transparency in its operation and establishment of a good and strong cooperation with its clients. The management body and the Bank’s employees have the complete support and necessary assistance in creating a financial institution that will be a dominating one in the market and will achieve positive financial results. Allow me to express my deepest gratitude to our clients, business partners and shareholders who with their confidence, commitment and professionalism contribute to the achievement of the Bank’s objective – to create a powerful financial institution together.
Gligorie Gogovski President of the Management Board TTK Bank s.c. Skopje
Annual Report 2007
Address by the managers of the TTK Bank Honoured clients, business partners and shareholders, TTK Bank as a new subject on the Macedonian banking market, represents a compound of the experience of several decades and the tradition of the two banks our Bank was formed of. The need for a financial institution that will offer products and services appropriate for the Macedonian market impelled us to take this step. In the course of 2007, the European Bank for Reconstruction and Development entered our bank as a new shareholder with 25% of the capital, what was followed by reorganization of the Bank, new capital investments and technical and organizational assistance. Currently, the competition on the Macedonian banking market is fierce, taking into consideration the large banking brands from the country and from abroad. The year of 2007 was marked by stable economic situation in the country, considering the modest economic growth, fiscal indiscipline and inflation rate of 2,3%. In June 2007, EBRD assisted the effectuation of new credit line of EUR 5 million which was intended for crediting small and medium-size businesses. This way, the Bank defined itself as a universal bank, mainly focusing on small and medium-size business and retail banking. In the course of 2007, the Bank successfully realized its goals through presence and expansion of its market share in the country, by opening new sub-branches in Ohrid, Kavadarci and Rostuse. The Bank presently has a total number of 3 branches and 25 sub-branches. Main activities that marked the previous year are: The intensive reorganization of the Bank’s operations, according to the best up-todate banking experiences, strengthening of the risk management structures, the increase of management team efficiency, development and extension of the product and service portfolio, as well as increase in the number of satisfied clients. Priority was given to improvement of monitoring and efficacy in the budget control, planning and expenses. The Bank also invested in employees’ training in order to realize its plan for highly-skilled manpower that will enable a more professional work with clients and contribute to further development of the Bank. 9
The principled and transparent approach towards Bank’s operation resulted in increase of indicators in all operation fields, such as the number of depositors, increased pament operations, increased loan portfolio, increase in deposited funds, as well as successful dealing on the stock market. Total assets/liabilities note an increase of 29,7%, increase in the net credit portfolio of 28,6% and increase in deposits of 37,5%, leading to positive financial results. In the course of the business year of 2007, the Bank carried out its business activity in compliance with the business policy of the Bank, objectives and tasks of the monetary policy of NBRM and macroeconomic conditions characteristic of the Republic of Macedonia. We would like to express our gratitude to our clients for giving us their trust, to our partners for the successful cooperation, to our employees for their extraordinary devotion to fulfillment of the mission and vision, and of course, to the shareholders for their complete support in achieving our goals.
Atanas Spiroski First General Manager TTK Bank s.c. Skopje
Nikolce Petkoski Second General Manager TTK Bank s.c. Skopje
Annual Report 2007
LOOKING BACK, WE SEE HOW FAR WE HAVE REACHED LOOKING AHEAD, WE SEE HOW FAR WE CAN REACH
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Annual Report 2007
Expirience
13
experience is knowledge or practical wisdom, the understandings altogether that have been acquired based on what has been observed, met, experienced and remembered. We in the TTK Bank put all our experience, knowledge and know-how in the interest of our clients.
Annual Report 2007
BACKGROUND OF THE BANK Chronological review of the background of TTK Bank s.c. Skopje
1961
•
“Кomunalna Banka Tetovo” was established as a universal bank.
1962
•
“Komunalna Banka Tetovo” was transformed in “Komercijalna Banka Tetovo”.
1973
•
“Komercijalna Banka Tetovo” pools with “Stopanska Banka Skopje” and in the following years operates in the system of Stopanska Banka Skopje as a branch and as basic bank.
1993
•
On16.04.1993 Kreditna Banka A.D. Bitola (Credit Bank Ltd Bitola) was established.
1993
•
On 25.12.1993 Teteks Banka A.D. Skopje was established.
1995
•
Tetovska Banka a.d. Tetovo starts its independent operation after separating itself from Stopanska Banka A.D. Skopje.
experience Is knowledge or practical wisdom, the understandings altogether that have been acquired based on what has been observed, met, experienced and remembered. We in the TTK Bank put all our experience, knowledge and know-how in the interest of our clients.
2001
•
On 5.07.2001 Teteks Banka A.D. Skopje merges with Kreditna Banka A.D. Bitola, establishing Teteks – Kreditna Banka A.D. Skopje.
2004
•
In the second half of 2004, the Bank introduced a new, integrated, information system. The implementation of the integrated software for banking operations and procurement of a powerful cluster server system for the requirements of the new information system allowed the Bank to offer its clients services of higher quality.
2006
• •
• •
On 01.07.2006 Teteks Kreditna Banka merges with Tetovska Banka A.D. Tetovo and a new bank is established TTK Bank s.c. Skopje (TTK Bank ltd. Skopje). On 4.10.2006 the Subscription Agreement and Shareholders’ Agreement were signed between TTK Bank s.c. Skopje, Teteks A.D. Tetovo as the largest shareholder of the Bank and the European Bank for Reconstruction and Development (EBRD), thereby EBRD became owner the owner of 25% of the capital in TTK Bank s.c. Skopje (TTK Bank ltd. Skopje). On 19.12.2006 a contract was concluded with EBRD for a credit line for crediting small and medium-size businesses. On 15.3.2007 the European Bank for Reconstruction and Development became officially a shareholder in TTK Bank s.c. Skopje (TTK Bank ltd. Skopje) with 25% share.
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PROFILE OF THE BANK TTK Bank s.c. Skopje operates as joint-stock company in the capacity of legal entity since July the 1st 2006 as a result of the merger of Teteks – Kreditna Banka A.D. Skopje with Tetovska Banka A.D. Tetovo. TTK Bank operates in compliance with the provisions of the Banking Law, according to the decision of the Governor of the National Bank of the Republic of Macedonia (NBRM). The economic justifiability for the merger of both banks starts from the characteristics of the macroeconomic conditions in the Republic of Macedonia as environment for acting, from the market influence, i.e. the necessity to overcome pressures by the competition and the changes in relation to the awareness of clients of financial services offered by the banks – who are in search of better quality and more integrated financial services. TTK Bank s.c. Skopje realizes its activity based on the macroeconomic and monetary-credit policy of the country and the goals and tasks defined by the Bank’s business policy. The Bank executes independently and successfully all of its activities in the credit operations with natural and legal entities, crediting small and medium-size businesses and large clients, denar and foreign currency saving, payment cards, current accounts, domestic payment operations, foreign payment operations, stock trading, swift transfer of money with Money Gram and electronic banking, in compliance with all principles of banking operation, directed towards maintenance of stability and safety in operation, improvement of the financial reliability and profitability in the operation. The Bank conducts a policy of real positive interest rate, real tariff policy, in order to maintain competence capacity in the banking environment. The development plan of the Bank consists of making best decisions under certain conditions and taking activities to realize planned goals. By its presence through organizational units in other towns in the country, the Bank aims to come closer to its clients by offering banking services and solving other financial problems and issues they might have.
VISION AND MISSION OF THE BANK
The Bank’s vision The Bank’s vision is to be a bank of choice of small and medium-sized businesses and retail clients. This requires the Bank to be an inventive bank and to quickly respond to the demands of the clients regarding financial, at the same time striving to obtain maximum commitment to meet client’s needs. The Bank’s mission The Bank’s objective is to be the best bank, partner to small and medium-sized businesses in Macedonia and the bank of first choice of retail clients, striving for creation of highest values for its clients and shareholders, through professional engagement of employees and permanent improvement of the quality of business.
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MEMBERS OF THE MANAGEMENT BOARD AND BANK’S SHAREHOLDRES Management board Under the decision of the Shareholders Meeting of TTK Bank s.c. Skopje, held on December the 7th 2007, members of the Management Board of TTK Bank s.c. Skopje were appointed the following persons:
• • • • • • •
Mr. Gligorie Gogovski – Teteks A.D. Tetovo, General Manager PhD Tito Belicanec, regular professor at the University of Cyril and Methodius, Skopje Andrej Vitak, M. Sc. degree in Law Mr. Done Tanevski, General Manager of “Makedonija Turist A.D. Skopje” Mihail Petkovski, PhD, regular professor at the University “St. Kiril and Metodij”, Faculty of Economics in Skopje Metodija Nestorovski – PhD in economic sciences, regular professor at the University “St. Kiril and Metodij”, Faculty of Economics in Skopje Borislav Trpovski, deputy general manager of “Teteks A.D. Tetovo“
Under the decision passed at the Shareholders Meeting of TTK Bank s.c. Skopje, held on December the 7th, 2007, the Management Board was named Supervisory Board. Audit committee Under the decision passed at the Shareholders Meeting of TTK Bank s.c. Skopje, held on December the 7th, 2007, members of the Audit Committee of TTK Bank s.c. Skopje were appointed the following persons:
• Andrej Vitak, M.Sc., member of the Supervisory Board • Borislav Trpovski, member of the Supervisory Board • Mihail Petkoski, PhD, member of the Supervisory Board • Dragica Jovanovska, independent member • Dusko Apostoloski, independent member Structure of the shareholders’ capital According to the TTK Bank s.c. Skopje Shareholder Register, as of 31.12.2007 (the last taken from the Central Register), investors owning more than 5% of the shares are as follows:
• • •
Teteks A.D. Tetovo and Petrolgas (Teteks Group) with 43,1% European Bank for Reconstruction and Development (EBRD) with 25,0% Others with share under 5% with 31,9%
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KEY STATISTICS OF THE BANK Indicators of profitability, efficiency and productivity Financial indicators as of 31.12.2007 year Profitability Net profit after taxes
1.821
Return On Average Assets (ROAA)
0,04
Return On Average Equity (ROAE)
0,18
Total Operating Profit
360.215
Quality of assets Assets
4.855.422
Net credits/total assets
60,6%
Provision for credits/gross credits
7,9%
Fixed assets/capital
28,3%
Acquired resources/assets
4,97%
Adequacy of capital Total capital /total assets
22,89
Leverage (total assets /total capital)
4,4
Liquidity Liquid assets /total assets
21,89%
Client’s deposits /total deposits
94,93%
Productivity Assets/total employees
22.171
Commission income 15,6%
Interest income 34,4%
The Bank’s structure of assets for the period ending 31.12.2007 is as follows:
Exchange rate income 35,9%
Other income 14,2%
Other expenses 50,2%
Interest expenses 12,3%
The Bank’s structure of liabilities for the period ending 31.12.2007 is as follows:
Exchange rate expenses 34,9% Commission expenses 2,5%
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Annual Report 2007
Total assets/liabilities note increase of 29,7% compared to 31.12.2006. By balance categories, the following trends were realized:
• • • • • • • • • • • •
increase of 59,7% in cash assets and cash equivalents; increase of 33,0% in gross credits to MSP and large clients; increase of 13,6% in gross retail credits; increase of 33,8% in investments available for sale; decrease by 11,7% in acquired resources; increase of 32,2% in other receivables and assets; increase of 245,1% in deposits of banks; increase of 31,7% in deposits to SMEs and large clients; increase of 34,0% in retail deposits; increase of 3,4% in commitments for received credit; increase of 30,0% in commitments under other grounds; increase of 33,3% in shareholders’ equity.
The Bank’s structure of assets/liabilities for the period ending 31.12.2007 is as follows:
Other resources and investments 2,5%
Money 25,5%
Structure of assets Fixed assets and assets taken over 11,5%
Credits for clients-net 60,6%
Loans 8,1% Equity 22,9%
Structure of liabilities
Deposits 67,1%
Other liabilities 1,9%
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Annual Report 2007
Dedication
21
dedication means full occupation, maximum investment and activity in particular work. WE in TTK Bank never stop, permanently work and completely dedicate ourselves to fulfillment and realization of any of our clients wishes and needs.
ABOUT BANK’S ACTIVITIES
Annual Report 2007
CORPORATE BANKING In 2007, the Division for Corporate Banking enabled its clients a profitable growth and development, offering a wide range of banking products and services:
• • • • • • • • • • • • •
short-term and long-term credits from TTK Bank own sources credits from the EBRD credit line for investments and for fixed operating capital credits from credit lines of MBPR payment cards deposits guarantees letters of credit exchange operations documentary operations and documentary collection denar and foreign currency accounts of residents and non-residents
dedication means full ocupatioin, maximum investment and activity in particular work.
payment operations in the country and abroad stock trading
WE in TTK Bank never stop, permanently work and services in treasury operations completely dedicate ourselves From aspect of the sector structure of Bank’s credit portfolio, on 31.12.2007, the to fulfillment and share of the credits issued by the Corporate Banking Division in the total credits to realization of any of clients is 71,2%, marking an increase of 33,0% compared to 31.12.2006. our clients wishes and needs. For the period 1.1.2007 - 31.12.2007, new credits were granted to corporate clients amounting to a total of 1.898.143 thousand MKD, and MKD guarantees were issued such amounting to a total of 279.762 thousand MKD. The share of the deposits of corporate clients is 31,0 % in the deposit base, and compared to 31.12.2006, mark trend of increase of 31,7 % or in absolute amount of 243.273 thousand MKD. In 2007, 83 Letters of Credit were processed amounting to a total of EUR 2.043.793. For the period ending 31.12.2007 the total off-balance exposure of the Bank under nostro letters of credit amounts to 25.257 thousand MKD, and under nostro guarantees it amounts to 17.462 thousand MKD. NEW CLIENTS In the period 1.1.2007 - 31.12.2007 MKD giro accounts to 1.945 legal entities were opened with ТТК Bank s.c. Skopje, at the end of 2007 TTK Bank s.c. Skopje having a total of 8.956 depositors – legal entities, of which 515 are credit-exposed to the Bank, and 39 of them have time deposits. The services of the E-Banking service center are used by 500 clients – legal entities. NEW PRODUCTS
•5.000.000. EBRD Credit Line for small and medium-size businesses amounting to EUR In 2007 the EBRD credit line was presented, such amounting to EUR 5 million, intended for financing development of small and medium-size businesses in Macedonia. Realization of this credit line is enabled by the grant approved by the Ministry of Economy and Finance of the Republic of Italy. From the first installment, amounting to EUR 2.000.000, in the course of 2007, funds were withdrawn amounting to EUR 1.265.780 from the EBRD credit line.
•
ТТК – business card and DINERS – business card
In the second half of 2007 the payment card intended for legal entities T-business domestic card started to function, and in cooperation with Diners Club – Macedonia the co-branded credit card for legal entities TTK-Diners business card was launched.
23
RETAIL BANKING In the course of 2007, the Retail Division marks positive results and significant development of services and products offered to natural persons. This results from the introduction of new method of sale of products and services to natural persons, i.e. the new way of approach to clients on the part of the Bank. Of special importance is expending of the business network of sub-branches what enabled the Bank to be closer to its clients. Following market trends, in the course of the entire year, the Bank has put efforts in meeting clients`s requirements by enriching the credit portfolio with consumer credits, car credits, housing credits. In addition, the Bank reduced the interest rates and introduced new advantages in respect to the fees, terms of repayment and collateral. The total credit portfolio in the Retail Division on 31.12.2007 amounts to 919.646 thousand MKD, of which 8,4% are short-term credits while 91,6% are long-term credits. Analyzing the credits, the highest percentage share is the share of consumer credits of 83,4% of the total credit portfolio in the Retail Division. As regards the card business, in addition to the existing debit and credit cards, T-debit, T-Smile and T-Life, the Bank has successfully completed the co-branding project with Diners Club, enabling the users to use the international co-branded TTK-Diners Club card. Moreover, the first cash dispenser was placed and the first POS terminal at sales point. The total number of issued cards as on 31.12.2007 amounts to 4.552 debit, 526 credit and 10 business cards. Opening of new sub-branches and reconstruction of the existing ones led to establishment of one dispersed network of sub-branches, the Bank operating with 3 branches and 25 sub-branches in 17 towns in Macedonia. In the course of 2007, deposit operations in the Retail Division note an increase in all savings deposit products, sight saving and time saving, classic and rental saving. Total deposits with the Retail Division as on 31.12.2007 amounts to 2.083.177 thousand MKD. Out of the total deposits 41,5% are foreign currency deposits, while the others are MKD deposits. According to their term, 33,8% are sight deposits, while the other 66,2% are time deposits for a period exceeding one month.
Deposits from Retail Clients according to maturity
Deposits from Retail Clients according to currency
Denar deposits
Foreign currency deposits
58,5%
Time deposits 66,2%
Demand deposits 33,8%
41,5%
Long-term loans 91,6%
Loans to Retail Clients according to maturity
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Short -term loans 8,4%
Annual Report 2007
ASSETS AND LIQUIDITY MANAGEMENT In the course of 2007, the Bank realized an optimal level of denar and foreign currency liquidity, what enabled an adequate management of assets and liabilities and contributed to an uninterrupted execution of the financial activities and fulfillment of legal obligations. On an average, the daily balance on the Bank’s account and the balance in cash was 203.152 thousand MKD, while uninterruptedly maintaining the average level of obligatory reserve in MKD, that for December 2007 was 192.476 thousand MKD, while the obligatory reserve in foreign exchange was 111.520 thousand MKD or EUR 1.822.171. The Bank regulated liquidity by keeping a certain amount of funds at Bank’s account, according to the Decision on Obligatory reserve of banks, by using loans and investing excess liquid funds in short-term credits of other banks, subscription of treasury and government bills with the NBRM, taking care the coefficient of liquid assets in the total assets to be within the regulated percentage (not less than 20%) The Bank usually directed the excess of liquid funds in subscription of treasury bills with the NBRM.
Average daily liquidity of TTK Bank s.c. Skopje in 2007 295,000 245,000
Cash
195,000
Bank`s account
145,000
Dep.account balance daily turnover (500)
95,000 45,000
Daily liquid assets
December
November
October
September
August
July
June
May
April
March
February
January
-5,000
Liquidity of the Bank was stable, particularly in the first half of the year, with higher oscillations in July, August and September, but with tendency of stabilizing in the last months. From investments in home banks, treasury and government bills in 2007, return interest was realized amounting to 7.310 thousand MKD. Foreign exchange liquidity of the Bank is at high level. The Bank has correspondent accounts with a number of banks with which it keeps its assets abroad. These are one month time deposits, but mostly are over-night, and at this basis, in 2007 the Bank realized return interests amounting to a total of 15.133 thousand MKD. As regards the sources of financing funds, in the analyzed period, in addition to the deposits from corporate and retail banking, such being the main source for financing credits, funds from the Macedonian Bank for Development Promotion were also use, as well as funds from the EBRD credit line.
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RISK MANAGEMENT For the purpose of realizing its objective – creation of optimal credit portfolio, TTK Bank s.c. Skopje permanently works on improvement of the risks management system. Risk management of the Bank is conducted through the Risk Division within which are: Credit Risk Management Department, Market and Operating Risk Management Department, and Workout Department, as well as through the Risk Management Committee competent for establishing policies and formulating strategies for particular risk management, analysis of reports on the Bank’s exposure and taking appropriate measures for protection against risks. To restrict the risk taken the Bank has established credit exposure limits thereby facilitating the credit risk control and management. Established limits are in compliance with the legal regulations and the strategy that reflects the long-term orientation of TTK Bank s.c. Skopje. Credit risk management includes regular analysis of creditworthiness of each individual client and monitoring of the business diversification and concentration of exposure at the entire credit portfolio level. On 31.12.2007 credit investments classified in the risk category A and B represent 90,3% of the total credit portfolio. This proves the quality of the Bank’s credit portfolio. The share of non-functional credits in C, D and E category in the total investments amounts to 9,7%. Structure of credit portfolio according to risk category
Provisions for potential losses in relation to the total credit exposure of the Bank on 31.12.2007 amount to 8,5% what once again proves the low level of risk of the credit portfolio. The Bank also reduces the risk of the credit portfolio through sector diversification of its credit investments in various business activities. Loan portfolio according to operating activity Other, 5,4%
Industry, 24,4%
Retail, 31,0%
Transport, 6,8%
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Trade, 18,3%
Construction, 2,9%
Annual Report 2007
STOCK TRADE DEPARTMENT According to the decision made by the Stock Committee, TTK Bank s.c. Skopje has appeared as authorized participant on the capital market since 2003. Within the Bank also functions the Stock Trade Department. Stock trade is conducted in the registered premises of the department in Bitola and Skopje, and orders from clients are received in all of the Bank’s branches and sub-branches throughout the country. Trade is conducted by four licensed brokers who do their jobs professionally, meeting high standards. TTK Bank s.c. Skopje renders the following stock related services:
• • • • • •
buying and selling stocks to the order and account of a client; buying and selling stocks for his own account and on his behalf ; stocks portfolio management to order and for account of the individual client; conducting transactions and activities for account of an issuer of the stocks (securities), required for a successful public offer of stocks; acts as protector (patron) in quotation; and conducts transactions required for acquisition of a joint-stock company.
The year of 2007 was rather successful for the Stock Trade Department and its share in the total turnover of the stock exchange was significant. The realized trade in stocks in 2007 on the part of the Stock Department was as follows:
• • •
trade in shares, amounting to 3.448.230 thousand MKD (16.636 transactions), trade in block-transactions, amounting to 330.595 thousand MKD (11 transactions) and trade in bonds, amounting to 3.532.113 thousand MKD (615 transactions).
In this, 2.428 new contracts for brokerage were concluded, 9.073 trade orders were realized and a commission amounting to 26.083 thousand MKD was realized.
Bonds operations 48%
Stock operations 47%
Block transactions 5%
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HUMAN RESOURCES In order to emphasize the importance of the employees in the overall operating results of TTK Bank s.c. Skopje, at the beginning of 2007 the Human Resources Section was established. Under the new plan for institutional strengthening of the Bank, the Human Resources Section developed its operating strategy as organizational unit for support of the management of the Bank in the process of recruitment of new personnel and advanced training of existing employees. From the start of its operation, the team for human resources management works on the development and implementation of policies for recruitment, advanced training, motivation and remuneration of the employees. According to the adopted development strategy and the action plan, in 2007 a number of projects were completed among which the most important ones are:
• •
Establishment of HR electronic documentation – software to keep records and administration of employees, thereby enabling efficient and accessible database. An intensive and comprehensive training program was developed – system of trainings, seminars and conferences specially designed for the management and employees, within the framework of carrier development of each employee. The principles of the performance management system were laid down – system for individual motivation and use of employees’ potential.
•
STRUCTURAL REVIEW In respect to the internal organization, according to the plan for institutional strengthening of the Bank, since April 2007 TTK Bank s.c. Skopje accepted organizational structure according to the current banking standards, that would rise to the challenges of the banking operation. The main operating principles of TTK Bank s.c. Skopje: tradition, loyalty, professionalism and experience are presented through the structure of employees according to their years of service: Number of employees and composition according to years of service Composition of employees according to years of service
number
0-5 years 6-10 years 11-20 years 21-30 years 31-40 years Total
73 13 41 78 26 231
On 31.12.2007, the number of employees in TTK Bank s.c. Skopje is 231, which is an increase of 24,8% compared to the number of employees in 2006. Out of the total number of employees, 48% are not more than 40 years old and 54% have university qualifications. The average age of the employees is 46 years.
29%
Number of employees and composition according to age Composition of employees according to age
20-30 years 31-40 years 41-50 years 51-60 years over 60 years Total
28
1% 28%
number 64 37 59 68 3 231
20 - 30 y. 31 - 40 y. 41 - 50 y. 51 - 60 y. over 60 y.
26% 16%
Iso officer
Sales support
Vault
Multy channel management
Branch Bitola
Branch Tetovo
Branch Skopje
Retail banking
ALCO
Compliance
Support units
Sales support
SME
Large clients
Corporate banking
Sales
Liquidity and ALM
Treasury
Divisions
Human resources
Internal audit
Marketing
Operational and market risk
Work out
Credit risk
Risk management
Departments
Executive Body
Supervisory board
Assembly
Committee
Brokerage
Custody
Budgeting, controling and reporting
Accounting
Finance
Operations
Foreclosed assets
Legal affairs
General affairs
IT and Organization
Back office and treasury back office
Change team
RM Committee
IA Committee
ORGANIZATION SCHEME Annual Report 2007
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Annual Report 2007
Care
31
to care is to have mature and profound understanding of someone or something. it means care as interest, consideration, as human act of assistance and bearing responsibility. TTK Bank is considerate of the realization of both private and business plans of its clients. together we can achieve higher goals significant for the community which we are both part of.
Annual Report 2007
SCRUPULOUS CITIZEN OF THE SOCIETY Investments in the community TTK Bank s.c. Skopje is an institution of highly developed social responsibility, dedicated to economic development of the community as a whole. In times of the most advanced banking trends when globalization is becoming an everyday issue, TTK Bank managed to meet the quality standards, and at the same time taking care of the environment it operates in. Taking up the role of a society responsible company, TTK Bank merges enthusiasm of its employees, the cooperation of the partners and society spirit, and by integrating them together it becomes a ring in the chain of successful companies. to care is to have mature and profound understanding of Investing in the development of the society with a commitment to built a successful someone or something. it means care as interest, broader society, is not only a challenge and satisfaction for TTK Bank but it is also consideration, as humane act everyday work philosophy. of assistance and bearing responsibility. TTK Bank supports events of social interest, because it believes that every single individual has to take up a role of a responsible citizen in the process of building a TTK Bank is considered of the healthy society. Corporate social and society responsibility is a fundamental value realization of both private and business plans of its clients. for TTK Bank, which integrates social, humanistic and ethic dimension towards the Together we can achieve higher environment. goals significant for the community which we are both TTK Bank, having a strategy to invest in the society, tends to support and promote part of. internal values which are at the same time present in its operations – trust, tradition, enthusiasm, devotion, experience and knowledge, care, team spirit and professionalism. This active support can be seen in the Bank’s cooperation with its clients and partners, in the numerous sponsorships and donations, all with one aim – to promote society step by step.
Charitable donations Care for those imperilled and donations for health institutions that need help is the determination of TTK Bank, feeling as a part of the whole community of ours, willing all of us to live in good health and prosperity.
•
On July 29, 2007, TTK Bank granted a modest donation for air-conditioning units in the maternity hall in the public health institution - “General Hospital Tetovo“.
33
Investments in culture TTK Bank supports cultivation and promotion of our rich musical, theatre, film, artistic and folklore tradition, as well as deepening of our culture experience and exchange of cultural values.
•
•
•
On May 16, the theatrical performance “Look Back in Anger “ had its premiere at the National Theatre in Bitola, in co-production with Triniti Production from Bitola. TTK Bank was the sponsor and guest at this extraordinary theatrical event. The children’s music festival SI-DO was held in the Cultural Center in Bitola, from May 16 to May 18. TTK Bank also supported the young music talents by its sponsorship and presence. In the period from July 29 to August 1, 2007, the “St. Elias Days” (“Ilindenski Denovi”), the International Festival of Folk Songs and Dances, took place in Bitola, in which participated 1000 dancers from 38 folk ensembles and groups from the country and from abroad. TTK Bank was honoured to and with pleasure supported the Cultural Centre from Bitola in the organization of this important event.
Investments in sports By its voluntary undertaking for support of the sports in Macedonia, TTK Bank lays stress on the importance of team and competitive spirit and achievement of results.
•
•
•
In the period from April 12 – April 15, the traditional Basketball Trophy of Macedonia took place in Bitola. TTK Bank was the general sponsor. The traditional event “ Titov Vrv 2007” took place for the 26th time in the period from May 26- May 27, 2007. TTK Bank, in addition to the general sponsorship, participated with a team of its own employees, devotees and friends of the natural world, who conquered the Summit of Tito on our beautiful Shara Mountain, together with more than 500 participants from Macedonia and abroad. TTK Bank sponsored the traditional swimming marathon that took place in Ohrid on August 10, 2007. Our bank has a long lasting cooperation with the Swimming Federation of Macedonia and supports projects of this type that contribute to the promotion of the sports, health and natural beauties.
Investments in science and education There is no professionalism without knowledge. Professionalism is one of the basic distinguishing marks of TTK Bank. We in our bank are of the opinion that each denar invested in education and science is an investment in our progress and prosperity.
•
•
34
The national competitions of the schools of electrical engineering, mechanical engineering and communication in the Republic of Macedonia took place in Bitola on May 4 and 5. These competitions were called “Education and Training for the 21st Century”. TTK Bank supported the organizer of this event - “Gorgi Naumov” secondary technical school. The first co-branded Diners Club - TTK Bank personal credit card of TTK Bank was issued to Mile Oreskovic, the best student at the Faculty of Electric Engineering from Skopje, who graduated receiving the highest grade, and in addition to the card, TTK Bank granted Mr. Oreskovic scholarship for postgraduate study, subject – development of banking applicative software.
Annual Report 2007
35
Annual Report 2007
Closeness
37
Closeness means connection, established relation and uninterrupted communication. It is when someone is accessible to us and always here for us at any time and any place. Closeness represents friendship, partnership, support. We in TTK Bank work with strong team spirit, strong will and clear vision for extension of our network of branches and sub-branches, for the purpose of being as close as possible to our clients and their needs.
Annual Report 2007
TTK BANK CLOSE TO THE CLIENTS List of sub-branches and head offices and a map city Skopje Head Office Skopje
adress
phone
fax
Naroden Front 19а
02/3236 400
02/3236 444
Branch Center Aerodrom Avtokomanda
Nikola Vapcarov 12 Skopje 02/3216 200 Jane Sandanski bb 02/2403 329 16 Makedonska Udarna Brigada bb 02/3109 106
02/3296 099 02/2403 330 02/3109 106
Beverli Hils Karpos 4
Naroden front 19а Partizanski odredi 127
02/3236 423 02/3090 604
02/3236 455 02/3090 604
Gorce Petrov 33 Marsal Tito 124
02/2050 323 02/2050 539
02/2050 323 02/2050 539
Ilirija 14 Tetovo Ilindenska bb
044/335 280 044/350 740
044/335 274 044/350 740
Marsal Tito 47 Boris Kidric 4
044/335 275 044/350 010
044/335 275 044/350 010
Marsal Tito 16 Josif Josifovski bb 1-vi Maj 204/4
047/232 560 047/225 089 047/235 440
047/233 968 047/225 988 047/235 440
Gostivar Debar Rostuse Struga Ohrid Prilep Kumanovo Vinica Stip Radovis Strumica Kocani
JNA 144 Jordan Zafiroski bb 1254 Rostuse Proleterski Brigadi 43 Makedonski Prosvetiteli bb Boris Kidric Marsal Tito bb Nikola Karev bb Toso Arsov 64 22 Oktomvri bb Marsal Tito 16 Kej na Revolucija 13
042/221 873 046/838 610 042/479 005 046/784 467 046/231 895 048/400 098 031/438 660 033/363 244 032/385 001 032/630 650 034/343 871 033/277 766
042/221 874 046/810 610 042/479 005 046/784 467 046/231 897 048/400 097 031/438 661 033/363 244 032/385 010 032/630 650 034/343 872 033/277 761
Kicevo Kavadarci
11 Oktomvri 103/3 Plostad Marsal Tito 8
045/228 620 043/400 285
045/228 620 043/400 286
Gorce Petrov Saraj Tetovo Branch Теtovo Branch post office Branch Tetovo Branch ARM Bitola Branch Bitola Bitola 1 Bitola 2
Closeness means connection, established relation and uninterrupted communication. It is when someone is accessible to us and always here for us at any time and any place. Closeness represents friendship, partnership, support. We in TTK Bank work with strong team spirit, strong will and clear vision for extension of our network of branches and sub-branches, for the purpose of being as close as possible to our clients and their needs. .
Map of sub-branches and head offices Kumanovo
Tetovo
Kocani
Skopje Stip
Gostivar
Vinica Radovis
Rostuse Debar
Strumica
Kicevo Kavadarci Struga Ohrid
Prilep
Bitola 39
Annual Report 2007
Safety
41
to be safe is to be free from danger, risk, free from loss and concern. safety as belief in the power of safety, protection and guarantee. TTK Bank provides your safety.
Annual Report 2007
INDEPENDENT AUDITORS’ REPORT TO THE MANAGEMENT AND SHAREHOLDERS OF TTK BANK S.C. SKOPJE We have audited the accompanying financial statements (page 3 to 46) of TTK Bank s.c. Skopje (hereinafter referred to as the “Bank”), which comprise the Balance Sheet as of December 31, 2007 and the Income Statement, Statement of Changes in Equity and Cash Flow statement for the year then ended and a Summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements The management is responsible for the preparation and fair presentation of these financial statements in accordance with Accounting Standards prevailing in the Republic of Macedonia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the International Standards on Auditing. Those standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
to be safe is to be free from danger, risk, free from loss and concern. safety is belief in the power of safety, protection and guarantee. TTK Bank provides your safety.
Opinion In our opinion the financial statements of the Bank, present fairly, in all material respects the financial position of TTK Bank s.c. Skopje as of December 31, 2007, and its financial performance, changes in equity and its cash flows in accordance with Accounting Standards used in the Republic of Macedonia and accounting policies disclosed in Note 2 and 3 to the financial statements. Emphasis of Matters Without further qualifying our opinion, we draw attention to the following matters: (a) The Bank is required to maintain certain minimum or maximum ratios with respect to the scope of its activities and composition of risk assets in compliance with the requirements of the Macedonian Law on Banks and the National Bank of the Republic of Macedonia Regulations. As disclosed in the note 27 to the financial statements, as of December 31, 2007, there were operating ratios which were not within the prescribed limits. (b) As it is disclosed in note 16 to the financial statements, The Bank’s property as of December 31, 2007 includes the property stated in the net book value of 250,877 thousand MKD, for which the Bank is not in possession of title deeds, due to the fact that part of the Bank’s property is located in regions with incomplete cadastral books. The Bank proves its ownership with other appropriate ownership documents (ownership certificates, sale and purchase agreements, construction agreements) in accordance with the provisions on Law on Ownership.
This is an English translation of the original Report issued in Macedonian language
43
INCOME STATEMENT Year ended December 31, 2007 (Expressed in thousands of Denars)
Note
Year ended December 31, 2007
Period from July 1, through December 31, 2006
Interest income
3.1, 5
322,099
133,475
Interest expence
3.1, 5
(103,719)
(43,435)
218,380
90,040
Net interest income Fee and commision income
3.1, 6
99,901
39,403
Fee and commission expence
3.1, 6
(21,431)
(10,334)
78,470
29,069
3.2
9,144
7,075
7
54,221
10,024
3.3, 8a
(48,786)
28,118
9
(308,478)
(113,177)
2,951
51,149
(1,130)
(4,145)
1,821
47,004
2.1190
69.0305
Net fee and commission income Foreign exchange gains, net Other operating income Loss on impairment and uncollectabiility and provisions, net of release Other operating expences PROFIT BEFORE TAXATION Income Tax
3.11, 10
NET PROFIT Earnings per share (in denars)
11
The accompanying notes are an integral part of these financial statements
The financial statements were approved by managemant of the bank on February 29, 2008 and shall be proposed on approval by the Supervisory board on May 29, 2008. Signed on behalf of TTK Bank s.c. Skopje: Atanas Spiroski General Manager
Nikolce Petkoski General Manager
This is an English translation of the original Report issued in Macedonian language
44
Annual Report 2007
BALANCE SHEET At December 31, 2007 (In thousands of Denars)
Note
December 31, 2007
December 31, 2006
Cash and cash equivalents
12
1,235,937
773,729
Loans to customers
13
2,941,509
2,288,540
Securities available-for-sale
14
77,934
58,238
Held-to-maturity securities
15
2
12,615
ASSETS
Property and equipment
16
306,430
296,865
Intangible assets
16
8,371
8,944
Foreclosed assets
17
241,409
273,543
Other receivables
18
43,824
37,352
4,855,416
3,749,826
Total assets LIABILITIES AND EQUITY LIABILITIES Deposits from other banks and financial institutions
19
165,310
45,306
Deposits from customers
20
3,094,247
2,322,229
Loans payable
21
391,424
381,005
Other liabilities
22
92,884
77,024
3,743,865
2,825,564
907,888
680,916
7,051
-
Total liabilities EQUITY
23
Share capital Legal reserves Revaluation reserves Retained earnings Total equity Total liabilities and equity Commitments and contingencies
26
-
196,342
196,612
47,004
1,111,551
924,262
4,855,416
3,749,826
267,438
255,738
The accompanying notes are an integral part of these financial statements. This is an English translation of the original Report issued in Macedonian language
45
STATEMENT OF CHANGES IN EQUITY Year ended December 31, 2007 (In thousands of denars)
Share capital
Revaluation reserves
Legal reserves
Retained earnings
Total
680,916
196,435
-
-
877,351
Profit for the year
-
-
-
47,004
47,004
Effects of the disposal of revalued assets
-
(93)
-
-
(93)
Balance, December 31, 2006
680,916
196,342
-
47,004
924,262
Balance, January 1, 2007
680,916
196,342
-
47,004
924,262
-
-
7,051
(7,051)
-
Balance, January 1, 2006
Allocation of profit for 2006 Dividends paid
-
-
-
(39,953)
(39,953)
226,972
-
-
-
226,972
Transfer from revaluation reserves to retained earnings in accordance with the new regulations of the Central Bank relating to property and equipment
-
(130,358)
-
130,358
-
Transfer from revaluation reserves to retained earnings in accordance with the new regulations of the Central Bank relating to foreclosed assets
-
(64,433)
-
64,433
-
Profit for the year
-
-
-
1,821
1,821
Other
-
(1,551)
-
-
(1,551)
907,888
-
7,051
196,612
1,111,551
New issue of shares - EBRD
Balance, December 31, 2007
The accompanying notes are in integral part of these financial statements. This is an English translation of the original Report issued in Macedonian language
46
Annual Report 2007
STATEMENT OF CASH FLOWS Years ended December 31, 2007 (Expressed in thousands of denars)
Year ended December 31, 2007
Period from July 1, through December 31, 2006
2,951
51,149
20,543 1,460 48,786 (8,824) 28,919 93,835
9,292 (28,118) (1,989) 30,334
(728,900) 30,674 (10,577)
(412,256) 167,229 (12,714)
892,022 28,825 (12,965) 292,914
305,194 52,370 (1,126) 129,031
Decrease in held to maturity securities Increase in available for sale securities Purchase of property, equipment and intangible assets Net cash used in investing activities
12,613 (14,712) (25,137) (27,236)
(52,561) (52,561)
CASH FLOW FROM FINANCING ACTIVITIES Cash inflow from issue of shares Dividends paid Increase in loans payable Net cash from financing activities
226,972 (39,953) 10,419 197,438
127,703 127,703
463,116
204,173
(908) 773,729
569,556
1,235,937
773,729
Profit before taxation Adjustments for: Depreciation and amortization Impairment of foreclosed assets Allowance on impairment and uncollectability Income from dividends Write-off of available-for-sale securities (Increase)/decrease in operating assets: Loans to customers Foreclosed assets Other assets Net increase in operating liabilities: Deposits from banks and customers Other liabilities Paid tax on profit Net cash from operating activities CASH FLOWS FROM INVESTING ACTIVITIES
Net cash and cash equivalents Allowance for impairment of cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year
The accompanying notes are an integral part of these financial statements. This is an English translation of the original Report issued in Macedonian language
47
Annual Report 2007 ТТК Bank s.c. Skopjе St. Naroden Front 19a, 1000 Skopje tel.: 02/3236 400 fax: 02/3236 444 e-mail:
[email protected] www.ttk.com.mk
