CIRCUITO CERRADO DE TELEVISIÓN Y SEGURIDAD ELECTRÓNICA
7. MANTENIMIENTO DE INSTALACIONES DE CCTV Y SEGURIDAD
The capital management process is coordinated within Volksbank Group in close communication with the Bank’s share- holders. It is aimed at:
ensuring of the Bank’s long-term stability in relation to existing risks,
compliance with the supervisory capital requirements (capital adequacy) and maintaining a strong capital base to support business expansion
The Bank fulfils the requirement of CNB Decree No. 123/2007 (“the Decree“) for ongoing compliance with the capital adequacy limit by daily monitoring of risk-weighted assets. Required regulatory capital adequacy reports are filed with the CNB on a monthly basis. The Bank also informs the parent company on compliance with the regulatory capital requirements with the same frequency.
The methodology for calculation of capital is defined by the Decree. The Bank ensures that the capital level exceeds regulatory capital requirements in coordination with the parent company.
The Bank estimates capital requirements for coverage of individual risks in compliance with the valid regulatory legislation. Additionally, Bank’s internal capital adequacy assessment system ensures that internally determined capital resources exceed internally assessed capital required.
The table below summarises the composition of the Bank’s capital and risk-weighted assets. During both years, the Bank complied with the regulatory capital adequacy limit of 8%.
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(CZKm) 31.12. 2011 31.12. 2010
Tier 1
Share capital (net of treasury shares) 2,005 2,005
Share premium account 2,695 2,695
Obligatory reserve funds 93 79
Retained earnings from previous period 300 308 Less: Intangible assets other than goodwill (113) (123)
Other deductible items - -
Tier 1 capital 4,980 4,964 Tier 2 Subordinated debt A 206 251 Tier 2 capital 206 251 Total capital 5,186 5,215 Risk-weighted assets
Credit risk in investment/banking portfolio 36,507 34,070
Credit risk in trading portfolio - -
General interest rate risk - -
Operational risk 2,719 2,657
Total risk-weighted assets 39,226 36,727
Capital adequacy 13.22% 14.2%
34 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The following table summarises the carrying amounts and fair values of those financial assets and liabilities not presented on the Bank’s balance sheet at their fair value:
Fair value of financial assets and liabilities
31.12.2011 31.12.2010
(CZKm) Carrying amount Fair value Carrying amount Fair value
Financial assets
Loans and advances to banks 3,551 3,552 2,653 2,653 Loans and advances to customers thereof: 41,611 37,249 39,147 34,690 Retail 15,865 12,866 17,312 14,416 Corporate 25,746 24,383 21,835 20,274 Securities in category loans and receivables 61 63 - - Securities held to maturity 201 201 254 255
Financial liabilities
Deposits from banks 8,722 8,820 8,428 8,318 Due to customers thereof: 31,763 31,833 30,155 30,112 Retail 26,189 26,252 24,553 24,523
Corporate 5,574 5,581 5,602 5,589
Debt securities in issue thereof: 5,053 5,111 4,624 4,678
Retail 299 301 1,736 1,738
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The following methods and assumptions were used in estimating fair values of the Bank’s financial assets and liabilities: Loans and advances to banks
The carrying amounts of current account balances are, by definition, equal to their fair values. The fair values of term placements with banks are estimated by discounting their future cash flows using current inter-bank market rates. A majority of the loans and advances re-price within relatively short time spans; therefore, it is assumed their carrying amounts approximate their fair values.
Loans and advances to customers
A substantial majority of the loans and advances to customers re-price within relatively short time spans; therefore, it is assumed that their carrying amounts approximate their fair values. The fair values of fixed-rate loans to customers are estimated by discounting their future cash flows using current market rates adjusted for appropriate risk premium. Fair value incorporates expected future losses, while amortised cost and related impairment include only incurred losses as at the balance sheet date.
Deposits from banks
The carrying amounts of current account balances are, by definition, equal to their fair values. For other amounts due to banks with equal to or less than one year remaining maturity, it is assumed their carrying amounts approximate their fair values. The fair values of other amounts due to banks are estimated by discounting their future cash flows using current inter-bank market rates.
Due to customers
The fair values of current accounts as well as term deposits with equal to or less than one year remaining maturity approximate their carrying amounts. The fair values of other term deposits are estimated by discounting their future cash flows using rates currently offered for deposits of similar remaining maturities.
Debt securities in issue
Mortgage bonds issued are not publicly traded and their fair values are based upon quoted market prices of the debt securities with similar characteristics. The carrying amounts of promissory notes and certificates of deposit approximate their fair values.
Fair value hierarchy
The table below analyses financial instruments measured at fair value at the end of the reporting period. Informations about fair value measurement are disclosed using hierarchy that reflects the significance of inputs used in measuring the fair values of financial instruments (they are categorised into three levels):
Level 1 – fair value measurements using quoted prices (unadjusted) in active markets for identical assets and liabilities. Level 2 – fair value measurements using inputs other than quoted prices included within Level 1 that are observable
for the asset or lability either directly (i.e., as prices) or indirectly (i.e., derived from prices). Valuation techniques use inputs that are directly or indirectly observable from market data.
Level 3 – fair value measurements using inputs for the asset or lability that are not based on observable market data (i.e., unobservable inputs).
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(CZKm) Level 1 Level 2 Level 3 Total
As at 31 December 2011 Financial assets
Derivative financial instruments - 31 - 31 Financial assets at fair value through profit or loss 13 252 - 265 Investment securities
– Available for sale 2,446 - - 2,446
Financial liabilities
Derivative financial instruments - 25 - 25
Due to customers - 496 - 496
In 2011 there were no transfers of financial assets or liabilities between level 1 and 2.
35 DIVIDENDS
Final dividends are not accounted for until they have been ratified at the Annual General Meeting. At the Annual General Meeting held on 27 April 2011 the payment of dividend on 2010 profit and retained earnings was approved. The dividend amounted to CZK 650 per ordinary share and CZK 700 per preferred share. The total amount of dividends paid from profit for the year 2010 is CZK 265 million (At the Annual General Meeting held on 20 April 2010 the payment of dividend on 2009 profit and retained earnings was approved in the amount of CZK 366 million, i.e. CZK 900 per ordinary share and CZK 950 per preferred share).
Distribution of the net profit after tax for the year 2010 271
Transfer to statutory reserve funds (14)
Transfer from retained earnings 8
Dividends to shareholders (265)
The dividend for the year 2011 has not been declared yet.
36 SHAREHOLDERS
The shareholder structure of Volksbank CZ as at 31 December 2011 was as follows: Voting shareholders
Name and registered office Share in %
Volksbank International AG, Vienna 98.50 Banca Popolare di Vicenza, Vicenza 0.75
EM.RO.Popolare S.p.a., Modena 0.75
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37 RELATED PARTIES
Amounts of the income, expense and assets and liabilities balances regarding related parties were as follows: As at 31 December 2011 and year then ended
Ultimate Other related
(CZKm) Note Parent Management parties Total
Interest income 3 2 - 39 41
Commission and fee income 4 - - 9 9
Other operating income 8 - - 1 1
Interest expense 3 22 - 1 23
Commission and fee expense 4 10 - 14 24
Administrative expense 7 - - 57 57
Due from banks 12 412 - 647 1,059
Loans and advances 13 - 8 237 245
Securities classified as a financial assets from the beginning at fair value through
profit or loss 16 246 - - 246
Investment securities (available for sale) 17 - - - -
Other assets 21 - - 1 1
Due to banks 22 536 - 8 544
Due to customers 23 - 18 195 213
Other liabilities 25 - - 18 18
Guarantees granted and commitments given 29 - 5 379 384 Guarantees granted and commitments received 19 6 2,691 2,716 Assets under custody 497 6 1,709 2,212 Ultimate parent company is Volksbank AG (VBAG). Parent company Volksbank International AG and companies within Volksbank Group other than parent company are part of Other related parties.