Annual report for the year 2011 - bcr.md 8,069.2 2 16.91% ... Banca de Economii 5,841.0 4 12.24% Eximbank 3,616.5 5 7.58% Banca Socială 3,193.2 6 6.69% Medium banks

March, 2012

Annual report for the year 2011 Banca Comercială Română Chişinău S.A.

BCR Chişinău – Annual Report 2011 pag. 2 of 30

S U M M A R Y

PAG.

EXECUTIVE SUMMARY

I. GENERAL INFORMATION ABOUT BANK’S ACTIVITY

3

4

II. MACROECONOMIC ENVIRONMENT AND BANK’S POSITION ON THE BANK SERVICES MARKET

4

III. FINANCIAL SITUATION OF BCR CHIȘINĂU S.A. IN 2011 9

ASSETS 9

LIABILITIES 10

ANALYSIS OF INCOME AND EXPENSES 13

IV. CLIENTS 15

V. CREDITING ACTIVITY 16

VI. FINANCING 20

VII. ACTIVITY ON THE FOREX MARKET 20

VIII. ACTIVITY ON THE INVESTMENT MARKET OF MOLDOVA 21

IX. OPERATIONS WITH CARDS 22

X. ALTERNATIVE CHANNELS 22

XI. INFORMATIONAL TECHNOLOGIES 23

XII. CORPORATE GOVERNANCE

XIII. RISK MANAGEMENT

XIV. ACTIVITY OF HUMAN RESOURSES AND ORGANISATIONAL STRUCTURE

XV. ANNEXES

23

26

27

27


EXECUTIVE SUMMARY

For BCR Chișinău S.A. 2011 year was successful, with positive results and achievements.

Ellaborated strategies and concepts have been implemented, the performance representing the

strong point of bank activity in this period.

Due to professional team, able to develop its potential according to modern requirements, a

series of successful projects have been implemented. Starting with 2011 Contact transfer service has

been launched. An agreement with EBRD has been signed to facilitate investment in energy

efficiency, electric and thermic energy systems renovation. In Aprilie the bank adopted changed the

visual of its logo, as part of 2011 strategy. In October 2011 EBA (European Business Association)

was launched, with the purpose to atract new investment, and implement best practices and

standards of European companies. BCR Chisinau S.A. is one of the founding members of the

Association. At the end of the year BCR Chisinau S.A. became member of Western Union

international transfer system. An important factor to maintain its engagement to local market was the

increase of banks shareholder’s capital to 627.580.000 MDL. All these achievements, as well as

many social and charity activities implemented during 2011 proved the success of this year for BCR

Chisinau S.A.

Due to corporate and retail functional line professionals, new products focused to different

market segments have been launched, so that product portfolio has been enlarged with high quality

services, adapted to modern requirements and trends. Mortgage loans offer has been enlarged with

Prima Casa and Rezidential Extra BCR products, cards offer has been supplemented with a special

special tariff plan for students, credit line, escrow service, working capital loan have been adopted,

quick transfers service has been enlarged.

Implementation of a sustainable risk management in accordance with Group standards

adapted to local maret, as well as energic actions for recovery of non-performant loans, led to a

significant improvement of Bank’s assets quality and contributed to registered results.

High performance data management systems and modern equipment allows BCR Chisinau

S.A. to considerably reduce the time of banking operations, with a continuous improvement of service

quality. In 2011 a series of pilot projects have been launched: IFRS implementation, new module of

payments collection, business intelligence reporting system, IVR implementation, Call Center.

A series of interna land external events have been organized, which ensured a significant

growth of bank brand awareness, on local and international market. Marketing, Communication and

Community Department has managed with professionalism these issues, allowing an intensive

communication with the public, so that BCR brand was in top most mentionned banking brands for

the whole year.


I. GENERAL INFORMATION ABOUT BANK’S ACTIVITY

BCR Chișinău S.A. was founded in October 1998. The Bank is offering a large spectrum of services to all categories of clients through 5 units, head Office, tree branches: one branch in Balti and two in Chisinau, and one representative office in Chişinău.

The main focus at foundation of the Bank was to offer qualitative services to the clients involved in different industries in the Republic of Moldova. Thus, BCR Chișinău S.A. became an universal financial institution. At the moment the Bank is a dynamic and professional participant on the financial market of the Republic of Moldova.

Policy of the Bank is oriented towards increasing the value of investments made by its shareholders through a profitable activity and development of the bank to ensure stability to its assets against impairment and increase the market value of the Bank. BCR Chișinău S.A. is activating according to its Charter and License issued to the National bank of Moldova.

The unique shareholder of the Bank is Banca Comercială Română S.A., holding 62,758 shares with a nominal value of 10,000 lei.

During 2011 BCR Chișinău S.A. registered 1 additional issuance of shares. As at 31.12.2011 the share capital of the Bank was 627.58 million lei.

External auditor for 2011 was international audit company “Ernst&Young” SRL that expresses its opinion on the correctness of the BCR Chișinău S.A. financial statements.

II. MACROECONOMIC ENVIRONMENT AND BANK’S POSITION ON THE BANK SERVICES MARKET

Gross domestic product (GDP) In January-September 2011 GDP amounted to 60,497 mil.

lei, at current prices, with a real growth of 6,7% compared to January-September 2010 and with 63,0% and 21,8% more than in January-September 2000 and January-September 2005, respectively. Gross value added in goods sector has grown by 7,2% compared to the similar period of last year, having a positive influence (1,6%) on GDP growth. This growth was significantly influenced by industry gross value added growth (+10,3%). Agriculture gross value added increased by 2.9% in January-September 2011 compared to the same period of 2010, this growth being lowert than a yaer before (+6.6% growth registered in January-September 2010 compared to the same period of 2009). Goods have contributed with 24.6% at GDP formation (22.5% in 2010). Services gross value added increased by 6,0%, and has contributed with 3,9% at GDP formation. Retail and wholesale trade; cars repair services registered the highest growth rates in gross value added (+14,4%), followed by constructions (+7,1%), transport and communications (+4,2%) and other services (+3,0%). In Janaury-September 2011 services contributed with 61,5% to GDP formation (63,3% in January-September 2010). For the analysed period gross value added ratio (Gross value added/ output volume) for the whole economy increased by 0.6 pp, and for goods this increase was of 2.0 pp. For service this ratio remained at the level of the previous year (51,0%). The average monthly salary per employee in the economy In 2011 the average monthly nominal salary amounted to 3193,9 lei and increased by 11,6% in nominal terms compared to 2010, the real salary (adjusted with CPI) increased by cu 3,7%. In December 2011 the average salary amounted to 3707,4 lei, 8,4% more than in December 2010, and by 14,7% higher compared to November 2011. Real salary growth index in December 2011 compared to December 2010 (calculated as ratio of Salary index to CPI) represented 100,6%. In December 2011 the average salary in public sector amounted to 2936,3 lei (+10,3% compared to December 2010). The average salary in real sector for December 2011 amounted to 4070,1 lei (+7,8% compared to December 2010).


In Quarter IV, 2011 the annual inflation rate measured by CPU changed its growing trend started in February 2011 to a decreasing trend. As result the average value of 8.5 per cent was by 0.3 pp lower than in previous quarter.The monthly evolution of this indicator shows a more significant reduction in December 2011 ( 7.8 per cent), after a 4 months stable value at 9.0 per cent. Analysed by elements, inflation in December 2011 increased more for services (11.6 per cent), food (7.4 per cent) and non-food products (5.2 per cent).

Basic inflation annual rate reduced form 4.4 per cent in September to 4.1 per cent in

December 2011. CPI increase in Quarter IV 2011 was influenced mainly by the following effects: the increase of prices for utility services, and secondary effects of these increases; adverse meteorological conditions for some agricultural products; increase of international prices for oil derviatives; increase in demand from the population due to increase in disposable income, increase of external demand for some local products, especially in first half of 2011.

BANKING SYSTEM

As at 31.12.2011 on the territory of the Republic of Moldova were activating 15 commercial banks.

Based on assets volume the banks from the Republic of Moldova can be split into the following groups:

1. „Large” banks with assets volume greater than 3 billion lei; 2. „Medium” banks with assets volume 1-3 billion lei; 3. „Small” banks with assets volume less than 1 billion lei.

Table 1

Total assets in banking sector in 2011

Bank Total assets as at 31.12.2011

Million lei Ranking Market share

Large banks

MAIB 9,201.4 1 19.29%

Victoriabank 8,069.2 2 16.91%

Moldindconbank 6,726.5 3 14.10%

Banca de Economii 5,841.0 4 12.24%

Eximbank 3,616.5 5 7.58%

Banca Socială 3,193.2 6 6.69%

Medium banks

Mobiasbancă 2,917.3 7 6.11%

ProCredit Bank 1,774.7 8 3.72%

FinComBank 1,654.4 9 3.47%

Energbank 1,585.1 10 3.32%

BCR 1,266.2 11 2.65%

Small banks

Unibank 614.6 12 1.29%

Comerţbank 583.1 13 1.22%

Universalbank 207.4 14 0.43%

EuroCreditBank 457.4 15 0.96%

System 47,707.9 100.00%


During 2011 the banking sector from the Republic of Moldova has registered general positive development trends.

Table 2

Balance Sheet Indicators

Indicators 31.12.2010 31.12.2011 Change

million lei million lei %

Total assets 42,269.55 47,707.87 12.87%

Loans 25,497.91 29,813.49 16.93%

Liquid assets 14,447.08 15,825.02 9.54%

Total deposits 28,718.52 32,632.10 13.63%

Clients deposits 27,927.19 31,187.43 11.67%

Capital 7,258.67 8,094.33 11.51%

During 2011 the banking system of the Republic of Moldova registered positive trends of development.

Tier I capital as at 31.12.2011 has increased by 12.4 percent. This evolution shows the consolidation of the banking system and strengthening of its resistnace to external shoks.

The share of foreign investments in banks’ capital amounted to 74 percent or by 3 p.p. more than at the end of prevoius year. It represents the increase in share capital by resident shareholders.

The average solvability per bank system is still at a high level, amounting to 30.4 percents (being higher than the minimum of 12 percents). Increase of this index by 0.4 p.p. compared to end of 2010 shows the potential of the banks in performing their crediting operations, without any damage to their financial security.

Total assets increased during the past year by 12.9 percents amounting to 47,707.9 million lei as aresult of increase in equity and liabilities. Increase in this indicator shows the extensive development of the banking system, being higher than the 5.8 increase registered in 2010.

The following assets have increased: net loans – by 19 percent up to 27,747.6 million lei, due from NBM – by 84.1 percent up to 4,390.3 million lei. At the same time, net due from banks and overnights decreased - by 17.2 percents up to 3,442.3 million lei, net financial assets - by 3.5 percents up to 6,416.9 million lei, net other assets decreased - by 1.2 percents up to 3,719.9 million lei, and cash decreased - by 0.2 percents up to 1,990.9 million lei.

Table 3

Assets quality, liquidity and solvency indicators

Indicators 31.12.2010 31.12.2011 Change (%)

Overdue loans / Total Loans 11.23% 7.18% -4.05%

Unfavourable Loans / Total Loans ratio 13.33% 10.66% -2.67%

Provisions for loan losses / Totral Loans ratio 8.98% 6.74% -2.24%

Solvency ratio 30.00% 30.42% 0.42%

Liquidity ratio 34.18% 33.17% -1.01%

Increase in assets was determined mainly by increase in loans. During 2011 the quality of the loan portfolio has improved. Thus, the share of unfavourable loans (substandard, non performant and loss) in total loans portfolio has decreased by 6.5 p.p. compared to the beginning of the year, diminishing by 6.5 percent their share in total till 10.7 percent as at the year-end. At the same time, the share of unfavourable loans in total normative capital decreased by 7.9 p.p. amounting 41.8 percent as at 31.12.2011. Loan portfolio quality has improved based on write-off of overdue loans, a more favourable classification of issued loans and a higher reimbursement rate.


Banks diversified their risks as follows: the main share in total loan portfolio as at 31.12.2011 have loans for industry and trade – 54.6 percents, agriculture and food industry – 13.5 percent, real estate, construction and development - 12.2 percents and consumer loans – 6.7 percent.

The volume of new loans issued in 2011 amounted to 29,608 million lei, increasing by 26.4 compared to 2010. The volume of new term deposits attracted by bank amounted to 40,450.2 million lei in 2011, being higher by 10.8 percent compared to 2010.

Table 4

Profitability indicators

um/mil. lei

Indicators 31.12.2010 31.12.2011 Change

Net profit 219.12 879.72 660.60

Net Interest Income 1,973.66 2,358.39 384.73

Net Non-Interest Income -793.87 -517.16 276.71

Provision allocation 2,147.41 2,065.91 -81.50

ROA 0.47% 1.95% 1.48%

ROE 2.61% 11.51% 8.90%

Cost / Income ratio 66.67% 54.99% -11.68%

For 2011 the net interest income registered for the banking system amounted to 879.7 million lei or 4.7 times more than in previous year.

ROA and ROE as at 31.12.2011 amounted 2 percent and 11.5 percent, being higher than previous year by 1.5 percent and 8.9 percent accordingly.

The liquidity indicator according to principle I (assets with maturity over 2 years shall not exceed financial resources with a potential maturity over 2 years) represents 0.7. The liquidity indicator according to principle II (liquid assets, expessed by cash, due from NBM, securities, net interbank loans with maturity up to one month /total assets x 100% shall not fall below 20.0 percent) represents 33.2 percent. The liquidity indicator shows the capacity of the banks to honour their short and long term liabilities and also shows the low level of vulnerability.

The development trend of deposits in 2011 shows the credibility of banking system. The overall situation of deposits shows an increase by 13.6 percent up to 32,632.1 million lei. Especially deposits of individuals increased by 13.8 percent up to 20,675.4 million lei, and deposits of legal entities increased by 7.8 percent up to 10,512.0 million lei.

FOREX MARKET

During 2011 the official nominal exchange rate of the local currency reported to US dollar has appreciated by 3.6 percent (12.1539 lei for 1 US dollar as at 31 December 2010 to 11.7154 lei for 1 US dollar as at 31 December 2011), and reported to Euro it has appreciated by 6.4 percent (16.1045 lei for 1 Euro as at 31 December 2010 to 15.0737 lei for 1 Euro as at 31 December 2011).

In 2011 Euro depreciated against US dollar by 2.9%, Russian rubble appreciated by 5.2%, and Romanian leu – by 3.2%.


INSTRUMENTS OF MONETARY POLICY

Sale of NBM Certificates

During 2011 the surplus of liquidity from the banking system was maintained at a high level and was regulated only through sales of NBM Certificates. Operations were held in accordance with the time table published on the NBM’s Web page, twice per week, announcing the maximum IR equivalent to the basic NBM rate. NBM Certificates issued at the year-end has 14 days maturity.

During the analised period banks offered only maximum rate announced by NBM, thus the average IR of Certificates issued by NBM at the end of the year was 9.84 percent annual rate.

Mandatory reserves

During 2011 the mandatory reserve was used more frequently as a monetary policy instrument, supporting the main monetary instrument – basic rate. Minimum reserve rate remained unchanged at 14% in MDL and currency for the whole year.

Mandatory reserves in MDL for the funds attracted on 8 November - 7 December 2011, maintained by banks on 8 December 2011 – 7 January 2012 amounted to 2,387.1 million lei, increasing by 1,092.2 million lei compared to the same period of 2010, maintained by banks on 21 December 2010 – 5 January 2011.

Mandatory reserves in US dollars and EURO amounted to 60.5 million USD and 89.9 million EURO, increasing by 2.7 percent and by 2.5 percent compared to 30 September 2011.

Increase in mandatory reserves in MDL as well as in foreign currency was determined by positive evolution of attracted funds in the abovementioned currencies.

FINANCIAL ASSETS MARKET

The maximum interest rate of the state bonds amounted to 13.6% (in 2010 – 9.33%), and minimum rate – 7.0% (2010 – 2.09%).


III. FINANCIAL SITUATION OF BCR CHIȘINĂU S.A. IN 2011

ASSETS

Assets of BCR Chișinău S.A. as at 31.12.2011 amounted to 1,266.15 million lei. During 2011

the assets value decreased by 3.03% (or 37.21 million lei), with a decrease in market share from 2.91% to 2.65%. The share of interest bearing assets consisting 82.6%, and the share of liquid assets – around 32.18% of total assets.

In 2011 interest bearing assets increased by 71.54 million lei (or 7%), amounting to 1,046.15 million lei. This change was due to increase in the volumes of interest bearing assets: loans to legal entities and individuals, interbank deposits and state bonds.

Maintaining the liquid and interest bearing assets at such a level, the bank places its resources into profitable operations, obtaining sufficient income for further development. At the same time, the bank maintains its liquidity in order to be able at any time to honour the obligations towards de clients. Bank’s liquidity as at 31 December 2011, according to both principles of calculations amounted to 0.53 and 32.18%.

Diagram 1

In the assets structure has changed the share of interest bearing assets, the main increase

being registered for loans: from 43.4% in 2010 to 50.2% in 2011 and the share of securities increased from 15.5% at year-end 2010 to 22.8% at year-end 2011.

At the same time, has reduced the shre of placements in banks: from 15.5% in 2010 to 3.5% in 2011 and overnights: reducing from 7.2% to 5.4%.


Diagram 2

In 2011 the Bank placed its resources in interbank deposits, overnights and NBM instruments (bank certificates).

LIABILITIES

Liabilities and share capital are sources of financing the operations of the Bank. As at 31.12.2011 the share of Bank’s capital 20.2% and its liabilities – 79.8%.


Diagram 3

Structure of liabilities

Bank’s liabilities as at 31.12.2011 amounted to 1,010.47 million lei, decreasing by 5% (or 56.28 million lei). In 2011 the Bank was focused on attracting the clients, resulting in an increase in movements and balances of legal entities in foreign currency and individuals deposit accounts in local currency. The volume of individuals deposit accounts increased by 8% (or 11.8 million lei), while the volumes of legal entities deposit accounts decreased by 18% (or 58.0 million lei).

During 2011 the Bank’s strategy on attracting the funds was oriented on attracting the deposits from clients at lower costs. The Bank focused on attracting demand deposits from legal entities and individuals, that have a lower interest rate. At the same time, the volume of term deposits from individuals has been maintained.


Diagram 4

Diagram 5


Diagram 6

Analysis of income and expenses

Based on 2011 results the Bank registered a profit in amount of 28.66 million lei, compared to 190.97 million lei loss in 2010.


Diagram 7

Total income increased by 2.84% amounting to 131.64 million lei, while total expenses amounted to 102.96 million lei, decreasing by 67.71%.

The main share in total income (75.5%) own interest income, amounting to 99.43 million lei showing a decrease by 4.2% compared to 2010. Non-interest income in amount of 32.21 million lei increased by 33.04%.

Decrease in interest income was caused by reduction in interest bearing assets (except state treasury bill), and also due to written-off non-performant loans from previous periods.

Commission income increased in 2011 by 21% compared to previous year: the main increase being registered for other commissions (32%) especially for guaranties issued, followed by commissions for accounts maintenance and commissions from lending activity (27% and 9% accordingly).

Total expenses (Total interest and non-interest expenses) amounted 149.03 million lei in 2011. The main share in total expenses have other expenses, salary expenses, interest expense on clients deposits expenses for fixed assets.

In 2011 the average interest rates for deposits attracted from legal entities on term greater than 1 month have increased for all banking sector by 0.48 p.p.: from 8.65% in January to 9.13% in December 2011 for deposits in lei and decreased by 1.01 p. p. for deposits in currencies: from 4.01% to 3.00%. Below are presented the Average interest rates for new attracted deposits by BCR Chișinău S.A. in comparison with average interest rates for the whole bank sector.

The Bank attracted term deposits in lei from legal entities on term greater than 1 month at interest rates higher than average rates per bank sector, while in currencies the rate being lower than per bank sector. The average interest rate for deposits in lei was 7.66% compared to 6.09% per sector, and for deposits in currencies the interest rate was 2.93% compared to 3.83% average per sector.

For deposits attracted from individuals was registered an increase in interest rate for the whole bank sector (IR for deposits in lei increased by 0.65 p.p. – from 9.16% in January to 9.81% in December, and for deposits in currencies increased by 0.72 p.p. – from 3.36% to 4.08%). BCR Chișinău S.A. for its products maintained an average interest rate higher than the market one in order to attract new clients, while the average interest rate for products in foreing currencies was lower than average per bank sector. Therefore, the average IR for deposits in lei was 9.79% compared to 9.40% per bank sector, and in currency was 2.95% compared to 3.72% per bank sector.


IV. CLIENTS

The basis for offering services to clients was to offer to its clients an integral and modern set bank services and products. The quality of offered services is permanently maintained at international standards level. In 2011 the number of new clients increased by 37% (from 11,657 in 2010 to 15,956), and the number of new accounts increased by 34% (from 18,906 to 25,274 accounts). The increase in the number of new accounts was registered for both legal entities (+12%, from 6,169 to 6,917 accounts), and individuals (+44%, from 12,737 to 18,357 accounts), showing an equilibrated development of clients portfolio.

Diagram 8

It should be mentioned the fact that, besides corporate clients that have active accounts, the Bank serves many clients without opening an account. These are payments made for the benefit of service suppliers, money transfers through international payment systems, Forex operations etc.

BCR Chișinău S.A. offers to its clients a large set of services, including settlement services, payments through Money Gram, Coinstar, Posta Rapida, Western Union, Contact and Unistream, loans, Forex, salary projects etc.

The Bank guarantees to its clients:

Confidentiality;

Individual approach and flexibility in relations;

Complete information about the activity of the Bank.


V. CREDITING ACTIVITY

In 2011 BCR Chișinău S.A. continued to develop and improve its crediting policy.

Bank’s policy in crediting was very rationale in 2011. Interest rates for offered loans were variable and were established depending on market environment, the risk level of crediting operations, financial and economic situation of the clients, their credit reputation, on the credit scope and term.

Priority directions of Bank credit activity were oriented towards the following sectors:

1. Processing industry;

2. Industry and trade;

3. Real estate;

4. Consumer loans

The Bank granted loans to industrial enterprises, trade enterprises and individuals. Loans were granted in lei USD and Euro.

The main focus of credit activity of the Bank in 2011 was to insure profitable placements of funds with a minimum risk through:

Rigorous selection of potential clients.

Improvement of loan portfolio quality.

Diversification of services rendered to its clients.

Additional guarantees for loans reimbursement.

Diversification of portfolio depending on the loan term, mortgage type, industry of the client.

As at the year end 2011 the volume of loan portfolio amounted to 666.14 million lei, representing 52.61% of total assets. It should be mentioned that the bank continued the clean-up of its loan portfolio that led to the improvement of the non-performant loans / total loans ratio. Considering all these measures, the bank succeeded to register net increased of 8% (or 49.03 million lei) of its loan portfolio.

BCR Chișinău S.A. placed on 11th place on the market based on loan portfolio, with a share of 2.23% that represents a decrease by 0.19 p.p. compared to previous year.

Loans volume. In 2011 the Bank clients benefited from 866 loans in total amount of 554.07 million lei.

Diagram 9


Loan portfolio quality: As at 31.12.2011 the main share in the loans portfolio had performant loans (classified in „Standard” and „Watch” risk category) – 95.1% (as at 31.12.2010 – 77.5%).

Diagram 10

Indicator of unfavourable loans / total portfolio is 4.89 p.p., being lower by 5.77 p.p. than the bank sector (10.66%). Another important indicator of loan portfolio quality is the share of overdue loans more than 30 days in total loan portfolio. BCR Chișinău S.A. registered a coefficient of 5.87%, decreasing by 18.81 p.p. compared to 2010, while in the bank sector this indicator was 7.18%.

Table 5

Indicators of loan portfolio quality

Indicator

31.12.2010 31.12.2011 Change

Loans overdue more than 30 days/ Loans ratio 24.68% 5.87% -18.81%

Unfavourable Loans / Loans ratio 22.59% 4.89% -17.69%

Provisions for loan losses/ Loans ratio 13.59% 4.51% -9.07%

Large Loans/Capital ratio 0.89 0.21 -0.68


Diagram 11

In 2011 the structure of loan portfolio divided by industries has changed significantly compared to 2010. The share of loans granted to agriculture, real estate and other loans increased from 6.3%, 9.7% and 7.8% in 2010 to 22.7%, 14.6% and 12.5% in 2011 accordingly, while loans granted for industry and trade and consumer loans decreased from 70.5% and 5.7% in 2010 to 46.2% and 4.2% in 2011 accordingly.


Diagram 12

According to market trend of overall bank sector, as well as BCR Chisinau S.A., the interest rate for new issued loans has diminished. Thereof, the average interest rate for loans in lei granted to legal entities in December 2011 decreased compared to December 2010 by 2.15 p.p. (from 17.54% to 15.39%), and by 1.36% for loans in currency (from 9.29% to 7.93%). The average interest rate for loans granted to individuals decreased by 0.08 p.p. (from 18.65% to 18.57%).

Average interest rates for new granted loans as at the year-end 2011 increased by 2.29 p.p. compared to January 2011. Compared to bank sector BCR Chișinău S.A. granted loans at a greater rate during 2011: 14.57% compared to 13.89% per bank sector.

The bank granted loans in currencies to legal entities at a rate lower than IR per bank sector: 8.10% compared to 8.82% per bank sector.

In The average IR for new granted loans to individuals exceeded the bank sector of 17.95% only by 0.49 p.p. amounting to 18.45%.

Starting with April 2011 the Bank has granted loans in currencies to individuals. The average IR for new granted loans to individuals in currency exceeded the bank sector of by 2.26 p.p. amounting to 9.25%.

In 2011 the Bank plans to increase and diversify its loan portfolio. At the same time, the Bank is struggling to maintain a high quality of loan portfolio through an efficient and well developed crediting policy.


VI. FINANCING

2011 was again a very difficult year not only for BCR Chișinău S.A., but for the whole bank sector of the Republic of Moldova. Due to an efficient liquidity and risk management, intensive work with Work Out clients, resulted in a net profit for 2011 of 28.66 million lei.

Capital. In 2011 BCR S.A., the unique shareholder of the Bank increased the share capital through an additional issuance of shares: on 1st of November 2011 of 64.830 million lei. At the year-end 2011 the share capital amounted to 627.58 million lei (2010: 562.75 million lei).

Subordinated loans. In order to increase the shareholders equity one subordinated loan of 4 million euro was converted into social capital.

As at the year-end 2011 The Tier I Capital amounted to 252.41 million lei.

Table 6

Nr. Indicators Normative Value

1 Total Normative Capital (TNC) (million lei) min 150 mln. lei 252.41

2 Solvency (%) min 12% 44.70%

3 Long term liquidity (P I) max 1 0.53

4 Current liquidity (P II) min 20% 32.18

5 Large exposures max 5 ori 0.21

VII. ACTIVITY ON FOREX MARKET

The activity on the Forex market in 2011 was oriented towards: currency conversion transactions, clients’ operations with foreign currencies, contracts for placing and attracting funds etc.

The strategy for Forex operations on the market was determined by the following factors:

Increase of the clients base;

Increase of the clients number that perform transactions of currency buying/selling;

Dynamic of official exchange rate of the NBM.

It should be mentioned that BCR Chișinău S.A. has 4 units of currency exchange (in 2010 – 4), that operates with 6 currencies. The main operating currencies remained US dollar and Euro, having a share of – 98% of all operations in 2011, remaining almost unchanged as in 2010. In 2011 has continued the last years trend of increasing the share of operations in Euro and decreasing the share of operations in USD. Thereof, in 2011 the share of operations in Euro increased to 82% (77% in 2009). For USD the share decreased to 16% in 2011 (21% in 2010).

Volume of assets in currencies increased by 15% compared to 31.12.2010, amounting to – 580.13 million lei as at 31.12.2011 (54.18% of total assets).

Movements of currency buying/selling transactions in 2011 amounted to 369.93 million lei, including inter-banking operations of 39.49% and cash operations – 60.51%. The movements have decreased compared to 2010 by 85.52% (or 316.37 million lei). The interbank operations decreased by two times (or 149.8 million lei), while cash operations decreased by 74.44% (or 166.6 million lei).

Income from Forex transactions in 2011 amounted to 17.03 million lei, which is 28.43% greater than in 2010.


VIII. ACTIVITY ON THE INVESTMENT MARKET OF MOLDOVA

Another important element in the assets structure is the investment activity. The advantage of placing the funds into securities is the stable income with a minimum risk level and the possibility to manage the Bank’s liquidity.

Diagram 13

Analysis of investment portfolio (volumes in million lei)

In 2011 the Bank placed a great amount of funds into acquisition of NBM Certificates, generating 17.91 million lei (or 13.6% of total income) of income from investment activity. Compared to the previous year the income has decreased by 15.41% (or 3.26 million lei).

Investment portfolio volume as at 31.12.2011 amounted to 288.34 million lei.

Diagram 14

Dynamic of changes in average volumes of investments and related income (In million lei)


IX. OPERATIONS WITH BANK CARDS

In 2011 the number of cards issued by BCR Chișinău S.A. amounted to 7,504 units, showing an increase of 65.00%. As at the end of 2011 the Bank had a 0.82% share on the bank cards market.

In 2011 transactions at ATMs BCR increased by 89% as volum, as well as number, remaining with a national market share of 4.96% and 7.33% in Chisinau.

BCR Chișinău S.A. proposes collaboration to enterprises and organizations in the field of salary projects for their employees. During 2011 the Bank managed to enlarge the sector of salary projects services, through additional salaries projects, representing more new salary cards.

At 31.12.2010 the card accounts balance amounted to 179% of the indicator for 2010. At 31.12.2010 volume of transactions on cards accounts amounted to 203% of the indicator for 2010. The increase in number of cards, volume of transactions and card accounts balance was due to the following characteristics:

- extension of ATMs network at 40 in 2011 and presence in different regions where now there aren’t branches (Hancesti, Sangerei,Falesti);

- relocation of ATMs with a low activity;

- reactivation of inactive cards through direct contacts with clients;

- launch of campaign for cards dedicated to students (450 new cards);

- contracted 3 partnerships for selling cards;

- opening of Visa cards acceptance channel at ATM’s network;

- implementation of ATM Group Fee for cash withdrawal at Erste Bank Group ATM’s network representing the preferential access allowed to BCR Chisinau S.A. cardholders at more than 8,000 ATM’s from Austria, Hungary, Czech Republic, Slovakia, Ukraine, Romania, Serbia, Croatia).

X. ALTERNATIVE CHANNELS

Taking into consideration the need to align bank’s services offer at customer requests and importance of existing alternative channels to compensate low level of network dimension, alternative sales channels represent a strategic concern of Bank strategy.

Based on this strategy, in November 2011, the execution of currency payments was implemented via Internet-Banking System, which generated an increase in the volume of transactions through this system. Payments through Internet Banking generated over 60% of total revenues for payments execution.

In December 2010, Bank has initiated the implementation a new integrated solution of Internet-Banking System, for individuals and legal entities, whose completion is planned (scheduled) for QII 2012.


XI. INFORMATIONAL TEHNOLOGIES OF THE BANK

A high level of services can be ensured only using modern information technologies. The high level of information technologies is insuring fast information supply, speed of transaction processing, decision making process, potential development.

IT today has a key role in the activity and development of a banking business. BCR Chișinău has a Data Centre in compliance to international standards. New implemented infrastructure in BCR assures a high performance production network, a modern server and data storage infrastructure. Implementation of new technologies and infrastructure upgrades insures the bank and the client a high level of reliability, processing speed and redundancy of information systems. Bank has modern technology network of IP telephony that interconnects all bank sites. IVR service and Call Centre (Info BCR), Internet site and Intranet Portal is constantly improved to insure a large range of services and quicker access to information provided to internal and external clients based on new technologies implemented by leading companies in the field of communication and data processing services.

During 2011, the bank has fully segregated in Core System the Central Office operations and branch operations. Implementation of IFRS was one of major targets for 2011, successfully accomplished. The Core Information System was adjusted to insure implementation of new products as well as adjustments of existing ones for a better flexibility of product options. The integration with the electronic services of the new Credit Bureau founded in Moldova, implementation of new payment system (Western Union), automation of internal payment systems were additional achievements of the year.

The Bank has modern and efficient systems that replicates information on-line and insures to the bank high level of reliability for data processing systems. Technological ground and the modern solutions allow developing in the future new services and solutions according to the necessities of the Bank, provided by the expectations of the Client.

XII. CORPORATE GOVERNANCE

In compliance with the provisions of Corporate Governance Code within Banca Comerciala Romana Chisinau SA (approved at General Meeting of Shareholders from 30.04.2010) Bank’s management during 2011 has been conducted by the following principles of corporate governance:

- guarantee of legal rights and interests of shareholder;

- efficient management;

- efficient control on economic-financial activity;

- financial transparency and information disclosure;

- respect of legality and ethical norms;

- prevention and regulation of conflicts of interests

General Shareholders Meeting.

Bank’s General Shareholders Meeting is the supreme governing body which is authorized to decide all questions of organization, management and activity of the Bank. Bank’s charter foresees the approval of issues by General Shareholders Meeting under its competence with voting quota higher than foreseen by Law.

The ordinary General Shareholders Meeting approved the annual financial report, Budget of revenues and expenditures, financial plan, as well confirmed the organization of external audit and settled the amount of retribution for its services, approved the amount of earnings for members Censors’ Commission.


On 01.11.2011 has been assembled the General Extraordinary Meeting with the subject: increase of statutory capital of the Bank.

Supervisory Board

The Supervisory Board represents a fundamental element for a stable and reliable Bank activity. The Supervisory Board is responsible for approval of corporate strategy, control of risks policies and business plans and exercises the supervision on performing of them by Executive Committee.

The decisions of Supervisory Board are approved with the vote of majority from the elected members, if by Law, Bank’s Charter or own Regulation is not foreseen a larger quota. The process of decision taking in business activity shall remain a collective responsibility of Supervisory Board, which shall be kept jointly responsible for all taken decisions in exercising its competences.

The Bank discloses the information regarding Supervisory Board members on official web site.

In 2010, were convened 27 ordinary and unusual meetings of Supervisory Board. On the agenda were reviewed/approved reports on the overall activity of the Bank, Executive Committee’s activity, financial results, corporate and retail activities, risks management, audit and compliance activity, internal regulations.

Working committees of Supervisory Body

Compliance and Audit Committee

Compliance and Audit Committee is composed of three members of Supervisory Board. The Committee has the following attributions:

Assesses the implementation by Executive Committee of internal control and risk management procedures;

Requires information from Executive Committee and from internal and external auditors on risks and significant exposures, as well plans on diminishing of these risks;

Assures that the found out significant aspects and made recommendations by external auditors are received and discussed on a regular basis within the Bank;

Analyzes together with Executive Committee the annual financial situations confirmed by the internal and external auditors;

Analyzes the activities and organizational structure of compliance and internal audit functions;

Analyses the efficiency of monitoring system of compliance with laws and other regulations;

Analyses the results of any control made by regulatory authorities.

Executive Committee

The role of Executive Committee consists in current management of the Bank, in order to achieve the objectives set out in Bank’s strategy and business plan. Executive Committee members act independently in business decision taking, representing Bank’s interests.

The formation mode, subordination to Supervisory Board assures the efficient activity of Executive Committee. Tasks, competences, constitution mode of these are settled both in Bank’s Charter and regulation on activity of this management body.

The Bank discloses the information regarding Executive Committee members, including President on official web site.

Executive Committee assumes the commitments regarding transparency:

a. Bank’s annual financial report;

b. submitted reports by external auditors;

Bank monitors compliance with rules of corporate governance, regulations, codes and policies which are subject to Bank and assures that deviations from Law are reported to Executive Committee.


Working Committees of Executive Committee

Asset-Liability Committee

Asset-Liability Committee is being organized and operates as a body for analysis / pre-approval / approval in attracting resources and making investments, setting interest rate policy in order to maintain adequate liquidity.

Corporate/retail loan committee (subcommittee)

Loan Committees are being organized and function as assessment/pre-approval/approval bodies of documents on loans approvals, modification of granting conditions, usage, granting and/or reimbursement of some anterior granted loans, requests for agreements and prolongation of validity period of these, issue of guarantee letters, loans agreements, in the authority limit settled through Bank’s regulations for any type of customers.

Regulation of conflicts of interests

In the Bank exists, is being improved and being performed the mechanisms of prevention and regulation of conflicts of interests. Within these mechanisms, the resolution of conflicts of interests respond at maximum to Bank’s interests, shareholder and customers, being, at the same time, legal and founded.

Supervisory Board approves corresponding norms for facilitation the identification and adequate resolution of situations into which appear material interests of members of Supervisory Board or of Executive Committee direct, indirect or on behalf of a third parties.

During approval of transactions with affiliated persons, the member of Supervisory Board – affiliated person that had material interest in the transaction is leaving the meeting during which is put into discussion the transaction.

Internal Control System

In compliance with Bank’s Internal Control Policy the Bank has built a complex and efficient control system of its activity: used procedures for defining the risk management, settle responsibilities of management bodies and Bank’s employees. The principle of corporate governance foresees existence and functioning in the Bank on ongoing grounds of collection systems, processing and informing of management bodies about all important banking risks, elaboration and implementation of regulations, used for assessment and supervision of level of bank risks.

In order to manage the risks in different fields of the Bank, has been defined 3 independent functions:

risk control function

compliance function

internal audit function

The Bank undertakes measures for identification of risk sources, assessment and monitoring of Bank’s exposures establishing risk quotas for different counterparties as well countries, banks, financial institutions affiliated to banking groups, group of customers, liquidity quotas etc.

Existent internal control system assures a strict segregation of responsibilities and an allocation of competences on the ground of clear, transparent and well documented process regarding decision taking.

Internal control system includes organization of accountancy, information treatment, risks assessment and systems of measurement of these.


XIII. RISK MANAGEMENT

Ensuring a responsible, prudent and profitable banking activity first and foremost requires the identification, assessment, monitoring and managing of significant risks,

Significant risks are determined conditional upon the nature, volume and complexity of the activities unfolded by the bank.

In this respect, the risks which may strongly impact the patrimonial status and/or the reputation of the bank, that BCR Chisinau S.A. considers significant risks are: credit, market, liquidity, operational and reputational risks.

For a proper management of significant risks, the bank uses:

a system of procedures for the authorization of operations affected by the respective risks, consisting in the drawing up of credit approval competences/ pouvoirs for: the granting of loans and credit-type products, interbank placements, operations with derivatives, etc.;

a risk exposures reporting system, as well as additional aspects related to these risks, to the proper management levels (reports on the bank’s exposure to significant risks, the compliance with the risk limits drawn up by the bank etc.),;

a system of responsibilities, policies, norms and procedures on internal control at bank level;

a system for the management of legal risk and compliance risk;

criteria for the recruitment and remuneration of personnel, including criteria drawn up in order to avoid conflicts of interest, which should stipulate high training, experience and integrity standards;

personnel training programs;

The risk management activity is consolidated under the Finance and Risk functional line. In these terms, risk management specialists are clearly delimited from an organizational point of view from the employees who have responsibilities in the business development area.

The bank properly assigns attributions to all its organizational levels, making sure that the personnel does not have responsibilities which might lead to conflicts of interest (e.g. dual responsibilities for one individual, such as: the unfolding of both front-office and back-office activities, approval of fund drawings and performing the respective drawings, the assessment of the credit documentations and the monitoring of the client after the latter has obtained the loan, etc.).

Credit risk, being the risk of losses or of failing to achieve the estimated profit, due to the inability of counterparty to fulfill its contractual obligations, is the main risk faced by the bank due to the fact that more than 50% of the assets are loans.

The main risk management focus will be on an active management of the lending book, on the improvement of the asset quality (keeping NPL under control) and setting the basis for a healthy growth of loan portfolio.

In the context of the global financial crisis, BCR Chisinau S.A. establishes limits on countries, sovereign entities, banks and financial institutions affiliated to bank groups, closely monitors its exposures, performing risk analysis whenever negative information emerge on one of its counterparties and putting forth adequate measures with respect to the risk limits assigned.

Market risk is the risk of registering losses or of failing to achieve the estimated profits due to the market fluctuation of prices, interest rates and exchange rates.

The bank pays special attention to the identification of the market risk sources, evaluation of its risk exposure and setting a proper limits for market risk mitigation/limitation, having as an objective assurance of a proper structure of its portfolio in the way that the change of interest rates, FX rates and market prices won’t have an important negative impact on BCR Chisinau S.A. activity and financial performance.


Liquidity risk represents the risk of registering losses or of failing to achieve the estimated profits due to the impossibility of credit institutions to honor their short-term payment obligations at any point, without there being any costs or losses which may not be covered by the respective institution.

The administration of liquidity risks envisages the ensuring of the necessary liquid funds enabling the bank to cover its financial obligations at any point, to maintain a proper liquidity level for all time buckets and the maximization of the net income obtained from interests. The bank pays special attention to the identification of the liquidity risk sources, to the assessment of the bank’s exposure to this risk and to the drawing up of the appropriate risk limits.

Operational risk represents the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. Operational risk also includes legal risk, but excludes strategic and reputational risk.

The management of operational risks seeks to ensure the internal framework which enables the identification, assessment, monitoring and undertaking of appropriate measures in order to decrease the operational losses.

Reputational risk represents the ongoing or potential risk of negative profit and capital, entailed by the unfavorable perception of the bank’s image by clients, counterparties, shareholders, investors or monitoring bodies.

When assessing legal and reputation risk, the bank considers the ongoing legal and regulatory framework, including the one applicable to the social domain, as well as any other elements which might affect the activities. The management of reputational risks seeks to ensure the internal framework enabling the bank to identify, assess, monitor and undertake the necessary measures in order to prevent the losses generated by this risk.

XIV. HUMAN RESOURSES ACTIVITY AND ORGANISATIONAL STRUCTURE

In 2011 HR management continued to be the most important issue for Bank management.

Modification of organizational structure contributed to the strengthening of Bank’s position on the market, as well as to implementation of strategic plans. Thus, at the end of 2011 the Bank had 143 employees (2010: 140 employees).

In order to hire the necessary staff according to the modification of organizational structure was approved the selection and hiring Procedure, consisting of candidates preselecting, testing, contest, probation period. Such a structure offers the possibility to choose the best candidates that form the professional team – the most valuable asset of the Bank.

The Bank offered a number of possibilities to its employees to show their potential anddevelop a career. The Bank policy is to promote first of all its own stuff.

Diversification of Bank activity and fulfilment of the new strategic objectives implies hiring of the new personnel in line with the Bank development. Therefore, the HR policy for 2012 continue to be oriented towards: improvement of training process and professional development; optimization of personnel structure and number; individual targets setting, evaluation of individual input and labour productivity increase. HR activity will contribute to the implementation of overall Bank objectives.

XV. ANNEXES


Annex 1

BALANCE SHEET

Indicators 2010 2011 Change

million Lei share, % million Lei million Lei share, %

ASSETS

Cash 31.50 2.56% 23.51 1.86% (7.99) -25.37%

Due from banks 190.76 15.52% 45.09 3.56% (145.67) -76.36%

Less Provisions for due from banks 0.60 0.05% 0.94 0.07% 0.34 56.67%

Due from banks, net 190.16 15.47% 44.15 3.49% (146.01) -76.78%

Due from National Bank of Moldova 81.01 6.59% 95.28 7.53% 14.27 17.62%

Overnight placements 89.13 7.25% 67.97 5.37% (21.16) -23.74%

Less Provisions for overnight placements 0.40 0.03% - 0.00% (0.40) 100.00%

Overnight placements, net. 88.73 7.22% 67.97 5.37% (20.76) -23.40%

Financial investments X X X X X X

Available-for-sale - 0.00% - 0.00% - 0.00%

Held-to-maturity 190.55 15.51% 288.35 22.77% 97.80 51.33%

Less provisions for financial investments 0.02 0.00% 0.02 0.00% - 0.00%

Financial investments, net 190.52 15.50% 288.33 22.77% 97.81 51.34%

Loans and financial leasing X X X X X X

Loans 617.11 50.21% 666.14 52.61% 49.03 7.95%

Financial leasing - 0.00% - 0.00% - 0.00%

Less Loan loss provisions 83.86 6.82% 30.07 2.37% (53.79) -64.14%

Loans and financial leasing, net 533.25 43.39% 636.06 50.24% 102.81 19.28%

Fixed assets, net 33.85 2.75% 27.62 2.18% (6.23) -18.40%

Accrued interest receivable 17.10 1.39% 19.84 1.57% 2.74 16.02%

Other property 56.00 4.56% 40.05 3.16% (15.95) -28.48%

Other assets 6.98 0.57% 24.24 1.91% 17.26 247.28%

Less Provisions for other assets 0.17 0.01% 0.91 0.07% 0.74 435.29%

Other assets, net 6.81 0.55% 23.33 1.84% 16.52 242.58%

Total assets 1,228.94

1,266.15

37.21 3.03%

EQUITY AND LIABILITIES X X X X X X

LIABILITIES X X X X X X

Non-interest bearing deposits X X X X X X

Due to banks - 0.00% - 0.00% - 0.00%

Deposits of individuals 8.15 0.66% 13.60 1.07% 5.45 66.87%

Deposits of legal entities 106.43 8.66% 143.99 11.37% 37.56 35.29%

Total non-interest bearing deposits 114.58 9.32% 157.59 12.45% 43.01 37.54%

Interest bearing deposits X X X X X X

Due to banks 421.41 34.29% 336.36 26.57% (85.05) -20.18%


Deposits of legal entities 211.14 17.18% 115.56 9.13% (95.58) -45.27%

Total interest bearing deposits 770.20 62.67% 595.56 47.04% (174.64) -22.67%

Total deposits 884.78 72.00% 753.15 59.48% (131.63) -14.88%

Other borrowings 99.06 8.06% 240.37 18.98% 141.31 142.65%

Accrued interest payable 3.75 0.31% 4.99 0.39% 1.24 33.07%

Other liabilities 14.24 1.16% 11.45 0.90% (2.79) -19.59%

Subordinated loans 64.42 5.24% - 0.00% (64.42) -100.00%

Provisions for contingent liabilities 0.50 0.04% 0.50 0.04% - 0.00%

Total liabilities 1,066.75 86.80% 1,010.47 79.81% (56.28) -5.28%

EQUITY X X X X X X

Shares X X X X X X

Ordinary shares 562.75 45.79% 627.58 49.57% 64.83 11.52%

Total shares in issue 562.75 45.79% 627.58 49.57% 64.83 11.52%

Reserve capital 12.77 1.04% 12.77 1.01% - 0.00%

Retained earnings (413.32) -33.63% (384.66) -30.38% 28.66 -6.93%

Total equity 162.19 13.20% 255.69 20.19% 93.50 57.65%

Total equity and liabilities 1,228.94

1,266.15

37.21 3.03%


Annex 2

INCOME STATEMENT

Indicators 2010 2011 Change

million Lei share, % million Lei million Lei share, %

Interest income from

Due from banks 1.64 1.28% 3.19 2.42% 1.55 94.51%

Overnight placements 1.16 0.91% 1.73 1.31% 0.57 49.14%

Financial investments 21.16 16.53% 17.90 13.60% (3.26) -15.41%

Loans interest income and commissions 79.83 62.38% 76.61 58.20% (3.22) -4.03%

Other interest income - 0.00% - 0.00% - 0.00%

Total interest income 103.78 81.09% 99.43 75.54% (4.35) -4.19%

Interest expense on

Due to banks 22.84 16.29% 13.38 8.98% (9.46) -41.42%


Deposits of legal entities 19.50 13.91% 17.57 11.79% (1.93) -9.90%

Total interest expense on deposits 50.43 35.97% 40.41 27.12% (10.02) -19.87%

Overnights - 0.00% - 0.00% - Other borrowings 10.02 7.15% 11.90 7.98% 1.88 18.76%

Total interest expense on borrowings 10.02 7.15% 11.90 7.98% 1.88 18.76%

Total interest expense 60.46 43.12% 52.31 35.10% (8.15) -13.48%

Net interest income 43.33

47.12

3.79 8.75%

Less: Loan loss provision 178.69

(46.07)

(224.76) 125.78%

Net interest income after LLP (135.36)

93.19

228.55 168.85%

Non-interest income (expense)

Income (expense) from available-for-sale - 0.00% - 0.00% - 0.00%

Income (expense) from investment securities - 0.00% - 0.00% - 0.00%

Income (expense) from FOREX 11.94 9.33% 17.03 12.94% 5.09 42.63%

Fees and commissions 9.48 7.41% 12.52 9.51% 3.04 32.07%

Other income 2.79 2.18% 2.66 2.02% (0.13) -4.66%

Total non-interest income (expense) 24.20 18.91% 32.20 24.46% 8.00 33.06%

Non-interest expense

Salary 23.51 16.77% 22.99 15.43% (0.52) -2.21%

Bonuses - 0.00% 3.43 2.30% 3.43

Social and medical fund 7.30 5.21% 11.34 7.61% 4.04 55.34%

Expenses related to fixed assets 17.11 12.20% 20.72 13.90% 3.61 21.10%

Taxes 0.95 0.68% 1.40 0.94% 0.45 47.37%

Consulting and audit 1.30 0.93% 1.46 0.98% 0.16 12.31%

Other expenses 24.82 17.70% 37.54 25.19% 12.72 51.25%

Provisions for non-interest bearing assets 5.97 4.26% 1.26 0.85% (4.71) -78.89%

Provisions for contingent liabilities (1.21) -0.86% 0.01 0.01% 1.22 100.83%

Total non-interest expense 79.75 56.88% 96.72 64.90% 16.97 21.28%

Profit (loss) before taxation and extraordinary items (190.91)

28.67

219.58 115.02%

Income tax 0.06

-

(0.06) 100.00%

Profit (loss) before extraordinary items (190.97)

28.66

219.63 115.01%

Extraordinary profit (loss) -

-

- Income tax -

-

-

Extraordinary profit (loss) less income tax -

-

-

Net profit (loss) (190.97)

28.66

219.63 115.01%


Annex 3

CASH FLOW STATEMENT

Indicators 2011 2010

million Lei million Lei

Cash flows from operating activities

Interest and commissions proceeds 60,539 73,058

Interest and commissions payments -51,513 -61,166

Proceeds from assets previously written off 61,521 27,189

Other income 17,302 14,253

Staff costs paid -31,625 -30,805

Payments to suppliers -43,780 -24,330

Operating profit before working capital changes 12,444 -1,801

(Increase) / decrease in operating assets:

Placements in banks 100,331 -61,622

Placements in NBM 7,871 70,676

Loans to customers -28,698 123,164

Other assets -957 7,197

Increase / (decrease) in operating liabilities

Due to banks 21,807 -989,039

Due to customers -46,580 230,311

Other liabilities -6,569 11,369

Net cash flow from operating activities before income tax 59,649 -609,745

Income tax payments - -

Net cash from operating activities 59,649 -609,745

Cash flows from investing activities

Loans to customers -63,057 -54,851

Changes in investment securities -60,826 27,934

Payments for tangible assets -2,388 -15,430

Payments for intangible assets -842 -164

Interest proceeds/payments 48,671 47,752

Net cash used in investing activities -78,442 5,241

Cash flows from financing activities

Cash proceeds from the own shares issue - 163,305

Proceeds/(payments) for long-term loans and borrowings 34,455 -7,649

Net cash from financing activities -4,106 -

Cash flows from financing activities 30,349 155,656

Unrealized foreign exchange loss 2,367 -1,329

Net increase/decrease in cash and cash equivalents 13,923 -450,177

Balance as at 1 January 257,044 707,221

Balance as at 31 December 270,967 257,044


Annex 4

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Indicators 2011 2010

million Lei million Lei

Share capital


Ordinary shares 64,830 220,000


Reserve capital


Transfers between reserves - -


Retained earnings

Balance as at 1 January -413,324 -222,352

Net profit for the year 28,663 -190,972

Allocations to reserve capital - -

Balance as at 31 December -384,661 -413,324

Total shareholders’ equity 255,686 162,193


Annex 5

FINANCIAL INDICATORS Indicator 31.12.2010 31.12.2011 Change (%)

Assets 1,228.94 1,266.15 3.03%

Loans 617.11 666.14 7.95%

Deposits 884.78 753.15 -14.88%

Capital 162.19 255.69 57.65%

Market share

31.12.2010 31.12.2011 Change

Assets 2.91% 2.65% -0.25%

Loans 2.42% 2.23% -0.19%

Deposits 3.08% 2.31% -0.77%

Capital 2.22% 3.16% 0.93%

Rating

31.12.2010 31.12.2011 Change

Assets 11 11 0

Loans 11 11 0

Deposits 10 10 0

Capital 14 10 4

Profitability indicators

31.12.2010 31.12.2011 Modificare

Net profit (190.97) 28.66 219.63

Net Interest Income 43.33 47.12 3.79

Net Non-Interest Income (55.55) (64.52) (8.97)

Provision allocation (178.69) 46.07 224.76

ROA -15.54% 2.26% 17.80%

ROE -117.74% 11.21% 128.95%

Cost / Income ratio 144.28% 97.65% -46.62%

Indicatorii de calitate a portofoliului de credite

31.12.2010 31.12.2011 Modificare

Loans overdue more than 30 days/Loans ratio 24.68% 5.87% -18.81%

Unfavourable Loans (non-interest) / Loans ratio 22.59% 4.89% -17.69%

Provisions for loan losses/Loans ratio 13.59% 4.51% -9.07%

Large Loans/Capital ratio 0.89 0.21 (0.68)

Solvency ratio 32.68% 44.70% 12.02%

Liquidity ratio 37.21% 32.18% -5.03%

Documents

Annual report for the year 2011 - bcr.md 8,069.2 2 16.91% ... Banca de Economii 5,841.0 4 12.24% Eximbank 3,616.5 5 7.58% Banca Socială 3,193.2 6 6.69% Medium banks