Consolidated annUal RePoRt 2015 - Poštová banka › media › 948453 › konsolid... · Nationale – Nederlanden poisťovňa, a.s., Aegon Životná poisťovňa, a.s., and Aegon,

Consolidated annUal RePoRt

2015

Content

1. Address by the Managing Director 4

2. General Information About the Company 6

3. Company Structure 10

4. Main Events 16

5. Corporate Social Responsibility 20

6. Personnel Policy 24

7. Brief Description of the Macroeconomic and Competitive

Environment 28

8. Report on Business Activities and Property Situation in 2015 32

9. Financial statements 36

10. Branch network 134

We are closest to youwherever you need us

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1. address by the Managing director

Dear Shareholders, Business Partners, and Colleagues,

Poštová banka has another year full of changes and novelties behind it. We can boast about new savings products, a gift payment card, and several interesting product benefits. In order to make the lives of our clients easier, we introduced a new deposit product, the Gold Deposit [Zlatý vklad] with a three-month notice of withdrawal period, which is possible to establish online. We continued to expand our distribution network, opening three branches and giving two a new facelift. Another important milestone was the bringing of the universal frontend called Venice to life, thanks to which the attending of clients became faster, of higher quality, and more effective.

The past year, too, was largely influenced by massive regulation, which affected the entire banking sector. Banks again had to tackle a bank levy, with the one in Slovakia being among the highest in Europe and reaching amounts that exceeded the European average several times over. Despite these regulations, however, Poštová banka confirmed its stable growth trend and ended the year with an increase in profit by 29.8 %, to 54.3 million euros.

Success goes hand-in-hand with responsibility. Therefore, our bank makes it its obligation to return part of its success to the society in which we are doing business. In the past year, we continued to support art and culture as the general partner of Radošinské naivné divadlo [Naive Theater of Radošiná] and the Slovak National Museum, as well as communities, seniors, socially disadvantaged families, and children‘s sports clubs and talents. The Poštová banka Group distributed a total of 690,000 euros in 2015.

We are happy that our subsidiaries also have a successful year behind them. Prvá penzijná [First Pension Management Company] administered assets amounting to 748 million euros in its funds, reaching a market share of 10.8 %. At the same time, it received an award in the Gold Coin [Zlatá minca] competition, where it took second place in the Real Estate Funds category with the fund NÁŠ PRVÝ REALITNÝ o.p.f. [Our First Real Estate Fund]. In cooperation with Poštová banka, it introduced the Good Saving – Investment [Dobré sporenie Investícia] product as an attractive combination of saving and investing in mutual funds.

Dôchodková správcovská spoločnosť Poštovej banky [Pension Management Company of Poštová banka] was also successful, closing the year with 93,417 savers, despite the fourth reopening of the second (private) pillar of the pension system. The Pension Management Company continues to administer four funds focused on shares, indexes, bonds, and balanced solutions.

Poštová poisťovňa [Postal Insurance Company] generated a profit in the amount of 1.7 million euros, which represented an increase of 10 % year-on-year. During 2015, it strengthened its cooperation with Slovenská pošta [Slovak Post] and introduced tailor-made accident insurance for the postal network. Clients primarily appreciate the processing speed, simplicity, and accessibility of this insurance product. Another success was the intensification of the sale of SIPO [Joint Collection of Utility Payments] insurance at post offices and a marked improvement in the terms and conditions of insurance of loans for clients of Poštová banka and Slovenská pošta.

My thanks for the excellent results of Poštová banka and its subsidiaries primarily goes to all employees who have done a great deal of work in this regard, as well as to shareholders for their support and trust. We have a demanding, but all the more interesting, year ahead of us, and I am convinced that it will be successful.

Ing. Andrej ZaťkoManaging Director and Chairman of the Board of Directors

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c) participating certificates and securities issued by foreign entities of collective investment; d) options, futures, swaps, forwards and other derivatives connected with securities,

currencies, interest rates or revenues, which may be settled by delivery or in cash; 3. Trading on own account in relation to the following financial instruments: a) negotiable securities; b) money market instruments; c) participating certificates and securities issued by foreign entities of collective investment; d) options, futures, swaps, forwards and other derivatives connected with securities,

currencies, interest rates or revenues, which may be settled by delivery or in cash; 4. Investment consulting in relation to the following financial instruments: a) negotiable securities; b) money market instruments; c) participating certificates and securities issued by foreign entities of collective investment; d) options, futures, swaps, forwards and other derivatives connected with currencies, interest

rates or revenues, which may be settled by delivery or in cash; 5. Subscription and placement of financial instruments on the basis of fixed commitment in

relation to the following financial instruments: a) negotiable securities; b) participating certificates and securities issued by foreign entities of collective investment; 6. Placement of financial instruments without fixed commitment in relation to the following

financial instruments: a) negotiable securities; b) participating certificates and securities issued by foreign entities of collective investment; 7. Custody and administration of financial instruments on the client‘s account, including holder

administration, and related services, particularly administration of cash and financial collateral, in relation to the following financial instruments:

a) negotiable securities; b) money market instruments; c) participating certificates and securities issued by foreign entities of collective investment; 8. Provision of credits and loans to investors to facilitate the realization of transactions involving

one or several financial instruments, in cases where the credit or loan provider is involved in such transactions.

9. Realization of transactions in foreign exchange assets if these are connected with the provision of investment services.

10. Execution of investment survey and financial analysis, or another form of general recommendation concerning trading in financial instruments;

11. Services related to the subscription of financial instruments.

share capital: EUR 366,305,193Paid-up share capital: EUR 366,305,193

2. General information about the Company

Legal name: Poštová banka, a.s.Registered office: dvořákovo nábrežie 4, 811 02 BratislavaIdentification number [IČO]: 31 340 890Date of incorporation: 31 december 1992Legal form: Joint stock company

scope of activities:

a) Pursuant to article 2 (1) and (2) of the act on Banks:

1. Acceptance of deposits; 2. Provision of loans; 3. Provision of payment services and clearing; 4. Provision of investment services, investment activities and secondary services pursuant to

the Act on Securities, to the extent referred to in Section (b) of this point, and investment into securities in own account;

5. Trading on own account in a) financial money market instruments in euros and foreign currency, including exchange

activities; b) financial capital market instruments in euros and foreign currency; c) precious metal coins, commemorative bank notes and commemorative coins, bank

notes sheets and sets of coins in circulation; 6. Administration of clients‘ receivables in their accounts, including related consulting; 7. Financial leasing; 8. Provision of guarantees, opening and certification of letters of credit; 9. Provision of consulting services in the area of business activities; 10. Issuance of securities, participation in issuance of securities and provision of related services; 11. Factoring; 12. Safekeeping of items; 13. Renting of safe deposit boxes; 14. Provision of bank information; 15. Activities as a depository; 16. handling of bank notes, coins, commemorative bank notes and commemorative coins; 17. Issuance and administration of electronic money; 18. Factoring according to special legislation as an independent financial agent in the sector of

insurance and reinsurance; 19. Factoring according to special legislation as an independent financial agent in the sector of

old-age pension saving.

b) Pursuant to article 79a (1) in conjunction with article 6 (1) and (2) of the act on securities:

1. Acceptance and forwarding of client‘s instruction concerning one or several financial instruments in relation to the following financial instruments:

a) negotiable securities; b) money market instruments; c) participating certificates and securities issued by foreign entities of collective investment; d) options, futures, swaps, forwards and other derivatives connected with securities,

currencies, interest rates or revenues, which may be settled by delivery or in cash; 2. Execution of client‘s instruction on their account in relation to the following financial instruments: a) negotiable securities; b) money market instruments;

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3. Company structure

Board of directors

supervisory Board

Mario Hoffmann – chairmaning. Jozef tkáč – deputy chairmaning. Mgr. tomáš drucker – memberMgr. Jozef salaj – member, re-elected with the effective date of 19 January 2015ing. Vladimír ohlídal, Csc. – member, re-elected by bank employees with the effective date of

15 June 2015

ing. andrej Zaťko – Chairman of the Board of directors since 12 august 2015

Graduated from the Department of Economic Informatics at the University of Economics in Bratislava, where he specialized in information technology. he started his career in mutual funds and later worked in the area of asset management for private clients. In 2006, he established and managed private banking at the Slovak branch of J&T BANKA. From 2011, he was a member of the Board of Directors of J&T BANKA, a.s. (Czech Republic). From November 2012, he held the position of director and head of the J&T BANKA, a.s. branch in the Slovak Republic – J&T BANKA, a.s., branch of a foreign bank. On 12 August 2015, he became Chairman of the Board of Directors and Managing Director of Poštová banka.

ing. daniela Pápaiová – member of the Board of directors since 26 July 2012

Graduated from the Department of Business Management at the University of Economics in Bratislava. In 1997–2009, she was primarily involved in the insurance sector, working for the companies ING Nationale – Nederlanden poisťovňa, a.s., Aegon Životná poisťovňa, a.s., and Aegon, d.s.s., a.s., as well as for Poisťovňa Poštovej banky, a. s. as a member of the Board of Directors. From May 2009 until the end of 2010, she held the position of member of the Board of Directors in the company Credium Slovakia, a.s. She joined Poštová banka in 2011 as director of the Finance Division. She has been a member of the Poštová banka Board of Directors since 26 July 2012, currently responsible for risk management and ALM.

ing. slavomír Varcholík – member of the Board of directors since 12 January 2015

Graduated from the Department of Trade at the University of Economics in Bratislava. In 1995–2012, he worked for the companies Ernst & young Audit, a.s., Schindler výťahy a eskalátory [Elevators and Escalators], a.s., GlobtelNet, a.s., and Orange Slovensko, a.s. he has worked for Poštová banka since 2012. he first held the position of director of the Finance Division and later became deputy managing director for finances. Since 12 January 2015, he has been a member of the Poštová banka Board of Directors responsible for the area of finances. JUdr. Ján nosko – member of the Board of directors since

10 april 2014

Graduated from the Department of Law at Matej Bel University in Banská Bystrica. Before joining Poštová banka, he was involved in company restructuring. he has worked for Poštová banka since 2010, when he assumed the position of head of the Department of Credit Claims and later became director of the Division of Legal Services and Compliance. he later became deputy managing director for internal services. he was elected as a member of the Poštová banka Board of Directors on 10 April 2014. he is responsible for the corporate banking area.

ing. Peter Hajko – member of the Board of directors since 3 december 2015

Graduated from the Department of Economic Informatics at the University of Economics in Bratislava. he was active in the banking sector in 1997–2000, working for Všeobecná úverová banka, a.s. as a sub-branch head and, in 2000–2015, for Tatra banka, a.s., where he held the positions of branch director, regional branch network director responsible for sales, servicing, and service quality for retail clients, Sales Department director responsible for the management of sales and the quality of services of the branch network of Tatra banka, a.s., and director of the Sales Department – Corporate Centers responsible for the management of sales and the quality of services for small and medium-sized enterprises and clients in the Middle Market segment. The last position that he held at Tatra banka, a.s. was that of director of the regional network of branches in the Nitra region. he joined Poštová banka in October 2015, assuming the position of director of the Retail Banking Division. he was elected as a member of the Poštová banka Board of Directors on 3 December 2015. he is responsible for the retail banking area.

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list of shareholders in Poštová banka, a.s. as of 31 december 2015

legal name and registered office of the shareholder

number of shares

Participation in share capital

in %

Participation in share capital in

eUR

J&T FINANCE GROUP SEPobřežní 297/14, 186 00 Prague 8, Czech Republic

213,288 64.46 236,109,816

Ministerstvo dopravy, výstavby a regionálneho rozvoja Slovenskej republiky [Ministry of Transport, Construction, and Regional Development of the Slovak Republic] Námestie slobody 6, 811 05 Bratislava, Slovak Republic

100 0.03 110,700

PBI, a.s.Pobřežní 297/14, Karlín, 186 00 Prague 8, Czech Republic

112,506 34.00 124,544,142

Slovenská pošta, a.s.Partizánska cesta 9, 975 99 Banská Bystrica, Slovak Republic

4,918 1.49 5,444,226

UNIQA Versicherungen AGUntere Donaustrasse 21, 1029 Wien, Austria

87 0.03 96,309

330,899 100.00 366,305,193

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June

Gift card was added to the portfolio of payment cards Our supply of payment cards was enhanced by a new product – a gift card with a cheerful universal design. The new gift card can be bought online without having to personally visit the bank or opening an account.

a new branch was opened in Vranov nad topľouA new branch of Poštová banka in Vranov nad Topľou was opened in June.

July

We carried out the Good neighbor project to support neighborly relations In cooperation with the Petit Press publishing house, Poštová banka launched a unique project called Good Neighbor during the summer vacation. Through regional newspapers, Slovaks could publicly thank a neighbor who helped his community. Poštová banka rewarded the neighbor for doing so.

new branch in MalackyAnother newly-opened branch of Poštová banka was the branch office in Malacky.

august

We offered a new good savings product We launched the sale of two savings products, dobrésporenie REZERVA [good savings RESERVE] and dobrésporenie ISTOTA [good savings SECURITy]. Prvá penzijná unveiled dobrésporenie INVESTÍCIA [good savings INVESTMENT], which replaced the previous investment savings products Solvent and MINI.

new managing director of Poštová bankaAndrej Zaťko assumed the position of Managing Director and Chairman of the Poštová banka Board of Directors.

september

another branch of Poštová bankaA new branch office of Poštová banka was opened in Topoľčany.

october

another product of Poštová banka, also offered onlineFrom October, our clients can establish a deposit product called Gold Deposit [Zlatý vklad] online, without having to visit a branch office.

december

Peter hajko became a new member of the Poštová banka Board of Directors. he is responsible for the Retail Banking Division.

new design for five branch officesFive branch offices were completely redesigned during 2015. Thanks to the new, modern design, we disproved the notion that banking institutions must be austere and severe in appearance.

4. Main events

January

new member of the Board of directorsSlavomír Varcholík became a new member of the Poštová banka Board of Directors; he is responsible for the area of finances.

We received two MasterCard awardsThe company MasterCard awarded the best projects of 2014 concerning payment cards. Poštová banka attracted its attention twice. We received the Issuer 2014 award for the largest increase in the number of MasterCard PayPass contactless cards issued. We won another award, Prepaid Product 2014, for the largest number of newly-issued prepaid cards.

Prvá penzijná celebrated its 20th birthdayIn 2015, the First Pension Management Company of Poštová banka celebrated its 20th anniversary. Over the past 20 years, the company has developed into a stable partner in the world of finance in the Slovak market with a team of top portfolio managers.

February

We opened a uniquely-designed branch in the sKYBoX complexPoštová banka introduced a new concept of a joint operation of a bank, post office and Moja Samoška grocery store in one place, the SKyBOX multifunctional complex in the Petržalka city district of Bratislava. The new branch is dominated by simplicity and functionality, but also modernity, and meets the requirements of the most discerning clients.

awards for PPssThe „Krátkodobý dlhopisový o.p.f. KORUNA“ [short-term bond fund] of the First Pension Management Company (PPSS) took third place in the Investment of the year 2014 ranking in the Money Market Funds category. In the TOP FOND SLOVAKIA ranking, PPSS won several awards:Best-selling mutual fund in the Money Funds and Short-Term Investment Funds category:Krátkodobý dlhopisový o.p.f. KORUNA – third place;Best-selling mutual fund in the Real Estate Funds and Alternative Investment Funds category:NÁŠ PRVÝ REALITNÝ [Our First Real Estate Fund] o.p.f. – first place;KAPITÁLOVÝ FOND [Capital Fund] o.p.f. – second place.

april

Gold deposit was added to the family of deposit productsThe Gold Deposit is in the group of Poštová banka deposit products with attractive interest rates. Its unique feature is that clients may access their savings free of charge as early as after the expiration of the three-month notice period.

May

a new communication concept was launched Within a new concept of communication, the public got to know four main characters with interesting stories about their joys and worries, full of humor, unexpected denouements, and practical solutions.

Change of the legal name of Poisťovňa Poštovej bankyPoisťovňa Poštovej banky [Insurance Company of Poštová banka] changed its legal name to Poštová poisťovňa [Postal Insurance Company]. This step is intended to contribute to an easier recognition of the insurance company and is also related to the arrival of a new shareholder – Slovenská pošta [Slovak Post].

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and their families. We provided funds for the construction of a children‘s playground in the village of Mengusovce, where we also help build cross-country skiing trails on a long-term basis within the Mengusovce Cross-Country skiing Paradise. We organized collections of clothes for the Rosa social services Home, as well as Easter, summer, and Christmas markets. During the year, we did not forget about those who needed our help and, via open grants, helped dozens of the needy.

The area of education was dominated by the slovak national Museum‘s project school in the Museum aimed at supporting educational activities in museums all over Slovakia. Under the auspices of this program, the Foundation also organized two summer camps for the children of its employees.

Last but not least, our activities in 2015 included projects that would not have worked without the help of our employees – be it the MaJÁK [lighthouse] employee grant program, thanks to which we supported 14 projects serving the public good, totaling €18,500, or the Christmas activity called the tree of Fulfilled Wishes. The Tree of Fulfilled Wishes, which was premiered, was an activity that moved the hearts of many. Thanks to the generosity of employees and a contribution from our Foundation, we magically conjured up a lovely Christmas for 55 children from a disadvantaged social background.

The year 2015 was indeed the year during which we built on the quality foundations from the past and supported our long-term projects. however, it was also the year that brought about many new activities and projects, through which the beams of our Foundation lighthouse lit up several places. We thank all those who participated in helping others in any way together with us. Without our fans and supporters, the PoŠtoVÁ BanKa FoUndation would not have been able to help to such an extent as it is doing at the present time. Thank you for helping together with us!

5. Corporate social Responsibility

We are aware of the need to participate in projects and activities that could not be carried out without support from commercial partners, which is why Corporate Social Responsibility has become an important part of the Poštová banka Group. Both through our foundation and with direct support, we supported several organizations and events in 2015 as well.

We have been the general partner of the naive theater of Radošiná since 2013. We are proud that in 2015, we moved the entire theater to its new premises, which we had remodeled for the needs of a modern and functional theater. Thanks to this, the new premises offer comfort not only to actors, but also the audience, without which the theater could not function.

The slovak national Museum, too, is among our long-term partners. Thanks to the museum, we contribute to the preservation of cultural heritage, which is important for us as a Slovak bank. In 2015, we contributed to the carrying-out of more than 10 projects, thus facilitating the organization of exhibitions, events, and a camp, as well as the restoration of several artifacts.

Poštová banka is a long-term partner of the association of Pensioners in slovakia. This organization brings together more than 1,500 general organizations all over Slovakia and organizes sport, art, and cultural events for its members, but, first and foremost, offers seniors to actively spend their free time.

We are proud of being able to be part of the Christmas Mail project again in 2015, thanks to which Father Christmas could send letters and Christmas presents to more than 100,000 children.

In 2015, we continued to support events such as the Štiavnica triathlon, the donovalský drapák mountain bike race, the slovak air Fest in Sliač, the Rýchlik Zoška ultra-marathon, relay race and long-distance hiking event, the PostPoint conference, and other events.

The POŠTOVÁ BANKA FOUNDATION has eight successful years behind it, during which there was no lack of interesting and meaningful projects. Such was the year 2015 as well. It was full of excellent sports performances, educational projects and activities, which gave people joy and, last but not least, helped out where necessary.

The summer swimming Camp of Martina Moravcová, which has been an inseparable part of the Foundation in summer months, took place in 2015 as well. A total of 175 young swimming hopefuls took part in the camp in three groups. The Foundation supported 42 talented children from socially disadvantaged families through a wild card system and enabled them to take part in the camp totally free of charge. A novelty in the camp was a one-day training camp at the Elements Resort in Šamorín and a visit by an immunologist who did spirometry tests to children.

Another of our sports projects that has a successful year behind it is the sport Family for all. Thanks to the Foundation, for seven years 50 children from socially-disadvantaged families and orphanages have been able to develop their talent in canoeing. In 2015, the two best participants took part in the World and European Junior Championships, where they achieved excellent results. In the Slovak Championships, the Sport Family for All won all 35 medals, including 12 titles.

The swimming Club sPK Bratislava, which the Foundation supports, has been among the top in Slovakia for a long time. This was also confirmed in 2015, when SPK again managed to defend its first position in the Slovak Team Cup. During the year, swimmers participated in many competitions, from where their brought well-earned medals. In the Slovak Championships alone, they won 97 medals, including 20 gold medals, and broke 207 personal records.

We wish all of our athletes that the year 2016 is as successful or more for them as the previous year.

In addition to sports, we also provided help in other areas in 2015. We supported the project of the to Children for life civic association, which helps young patients with oncological diseases

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A new innovation was development programs for corporate sales people, which received very positive feedback. This year, too, we continued to carry out individual coaching sessions (52 hours in total), and again with very positive responses, primarily for the group from the Talent Management Program and selected managers.

In the area of professional training, we continued to use targeted consulting provided by training specialists in selecting external professional activities. Bank employees participated in 3,717 hours in total, focusing on improving their professional expertise. We also supported the utilization of professional know-how across the bank via internal professional training sessions provided by internal instructors, as well as via the mentoring system.

We managed to considerably customize the iTutor information system, which has become the system support for the entire training process and enabled us to also launch e-learning platforms in the bank. Internally, we created five e-learning courses, which were successfully carried out.

We also successfully continued the implementation of the platform to support inspiration and self-development of employees – the Let Us Draw Inspiration forum – where we carried out eight meetings with a very positive response, and will continue this project in 2016 as well.

At the end of 2015, we expanded our hR team with hR partners and internal instructors, who assumed this role for sales channels – the network of post offices and branches. The primary goal of this expansion of the team is to focus on supporting business distribution channels of the Poštová banka Group, which will be in compliance with the new strategy of the bank. We prepared a change in the concept of adaptation and orientation training (in product and sales skills), which supports overall changes in the setup and management of retail operations.

From 2014, Poštová banka, a.s. launched a new system of employee benefits called Cafeteria for its employees. Benefits have been divided into five basic groups: labor and social Benefits, Product advantages, Family, Health, sport and Further education, and social and Cultural events. In 2015, too, employees received contributions for drawing benefits in the areas of health, sports, recreation, and relaxation. The health category also includes preventive and above-standard medical examinations. The aim of Poštová banka’s policy of benefits is to reinforce the perception of the value of benefits as part of total rewards, make it easier to attract qualified and high-performing employees on the market, and build employee pride in their company.

The end of 2015 was in the spirit of a change in the policy of remuneration of retail employees. We have successfully set up a new remuneration system, which is simple, transparent, competitive, and motivating for our employees.

In 2015, the human Resources Division ensured the comprehensive processing of payroll and personnel records, remuneration, and hR consulting for the individual subsidiaries. We supported cooperation of the individual departments of the bank with subsidiaries – by linking customer goals with internal training activities and other hR tools.

The objective and purpose of these activities is to harmonize, simplify, and streamline individual work processes and procedures to the largest possible extent for the purpose of reporting and other required outputs.

As of 1 January 2015, a new personnel and payroll system, EGJE, was introduced, within which services for both managers and employees of the Group were improved. The processes of approving vacations and leave in accordance with the Collective Agreement KZa, KZb were simplified. For managers, EGJE is a good source of information about employees, such as their work positions, remuneration, vacation, and daily attendance. The system supports the sending of notifications regarding coming changes in employment relationships of employees. In order to improve services provided to employees and managers, certain functionalities of the EGJE system were modified in 2015; for example, the possibility of the setting up of a substitute for a manager in his absence (approval workflow).

6. Personnel Policy

Our goal is a professional approach to the selection of high-quality people and a positive perception of the brand. We carry out regular measurements of the satisfaction of candidates and managers with the selection process, and with a high success rate compared to the rest of the market. For candidates, the Poštová banka Group represents professionalism, reliability, and an opportunity for a stable job with good prospects.

The number of employees in the Group decreased by 4.4 % compared to the previous year; as of 31 December 2015, the number of employees was 1,316. As of the same date, the individual subsidiaries employed a total of 480 people, including:• Poštovápoisťovňa,a.s.–48employees,• PRVÁPENZIJNÁSPRÁVCOVSKÁSPOLOČNOSŤPOŠTOVEJBANKY,správ.spol.,a.s.,and

Dôchodková správcovská spoločnosť Poštovej banky, d.s.s., a. s. – 38 employees,• PBPARTNER,a.s.–214employees,• POBAServis,a.s.–65employees,• PBFinančnéslužby,a.s.–28employees,• PBIT,a.s.–80employees,• BranchintheCzechRepublic–7employees.

Managers are supported in building and leading successful teams by hR business partners, who provide comprehensive consulting to managers and employees on hR issues.

In the area of performance management, we continued the implementation of the iTutor information system, in which the first run of the complete process of assigning and assessing goals and employee competencies in terms of personality was performed across the bank. The implementation of this system has done away with administrative steps that burdened managers and employees, and information on the performance of employees has been centralized in one place. In cooperation with our internal IT department and provider, we customized the system to Poštová banka needs in order to allow for easy and “friendly” use by all employees and management.

In 2015, we completed our one-year Talent Management Program and, after evaluating the program, we proposed a new design of a two-year Talent Program. It is focused on two concurrent priorities – retaining key experts of the bank and training new potential managers. Based on an innovative system of nominations, 20 employees of the bank and its subsidiaries were selected in this year’s run of the program. They were given increased individual care both by their supervising managers and the hR Department in the areas of individual career development, rewards, and benefits.

In the area of support for external talent, in 2015 we continued the fifth year of the very successful Trainee Program for fifth year university students. As in previous years, after the completion of the program, we hired 11 young people who participated in the program, out of a total of 16 participants, to work for the bank and its subsidiaries on a permanent basis. Following the completion and assessment of the fifth year, we launched the sixth run of the program with 12 participants.

This year, too, we continued carrying out activities resulting from the concept of training and development of employees of the Group. We continued to use financial resources invested in training in a targeted and effective manner – on the basis of a new model attributing training budgets to work positions according to their importance for the Group in terms of business. We thus tried to introduce the principle of internal justice in the redistribution of finances allocated to development and training.

In the area of development, we linked training activities to an updated model of personality competencies with the aim of focusing on the development of key competencies and expected behaviors of employees that lead to the Group’s success – achieving results, partnership and cooperation, self-management, improvement and development, and professional expertise. We continued the development of both soft skills and managerial skills through two internal instructors. By primarily using closed training sessions, we continued to strive for a more targeted and specific focus of training with respect to individual target groups. In total, we provided 2,653 hours of this type of training.

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This caused the dollar to become stronger and the euro again moved slightly lower. It ended the last day of the past year at the level of EUR 1.0862 EUR/USD. As is standard, the currencies in our region copy the development of the euro. During the past year, the euro weakened against the hungarian forint, the Polish zloty, and the Czech koruna. The Czech central bank (ČNB) continues intervening against the latter with the aim of weakening it.

As of 31 December 2015, a total of 13 banks having their registered offices in the territory of the Slovak Republic (including two banks without foreign capital participation and 11 banks with foreign capital participation), 14 branches of foreign banks, and one central bank were in operation in the Slovak banking sector. This means that the total number of banks decreased at the end of 2015, compared to 2014, as the number of branches of foreign banks decreased by one. Over the course of the same year, the number of branches and other organizational units in the banking sector increased by 14 to 1,291. By the end of 2015, 19,953 employees were working in the Slovak banking sector, which was 1.4 % more than at the end of 2014. According to preliminary results, total assets recorded in the banking sector amounted to EUR 67.4 billion last year. Deposits from citizens presented at the end of 2015 amounted to EUR 29.2 billion, growing by 8.5 % year-on-year. Loans to citizens increased by 12.7 %, to EUR 24.8 billion, compared to 2014. According to preliminary data, the banking sector generated a net profit of EUR 626 million, which represents an increase of as much as 13.1 % compared to 2014.

7. Brief description of the Macroeconomic and Competitive environment

The year 2015 brought about the fastest economic growth to Slovakia since 2010. The performance of the Slovak economy gradually increased during the individual quarters of last year. In the fourth quarter, the growth rate reached a level of 4.3 % year-on-year. The situation in the labor market developed hand-in-hand with the stronger economic growth, with the unemployment rate declining closer to 10 %. We witnessed a decrease in consumer prices throughout the year, as the inflation rate went negative in the individual months, thanks to which real wages grew.

The annual growth in Slovakia‘s GDP at the level of 3.6 % was primarily driven by domestic demand last year. The traditional driving force represented by foreign trade did not drive our economy as strongly as we were used to. The formation of gross fixed capital, that is, investments, which grew at a fast pace, largely contributed to an increase in domestic demand. This was related to the utilization of EU funds remaining in the program period that was coming to an end. Foreign demand remains subject to pressure owing to uncertain developments in China, which is among the main trading partners of Germany. Germany, in turn, is the most important trading partner of Slovakia. The largest European economy has been struggling with an enormous refugee crisis since last year, but the „Dieselgate“ affair has caused quite a lot of commotion as well. Foreign trade as such continued to be influenced by continued geopolitical tensions, among others, between Russia and Ukraine.

The inflation rate reached an average level of -0.3 % according to both the national consumer price index (CPI) and the harmonized consumer price index (hICP) in 2015. According to the national CPI index, the largest increase in prices, by 2.3 %, was recorded in the area of education. On the other hand, a drop in prices, by as much as 6.2 % year-on-year, was seen in transport owing to a significant fall in the prices of crude oil. however, foodstuffs and housing are the most expensive items of family budgets of Slovaks. We had a reason to rejoice in this regard. Although the prices of foodstuffs moderately grew year-on-year over several months, they were still cheaper by 0.3 % when calculated for the whole year. We paid 1 percent less for housing in 2015 compared to 2014.

The lines of the unemployed at labor offices became shorter during 2015, with the registered unemployment rate decreasing from 12.39 % in January to 10.63 % in December, which translated at the end of the year into more than 286,000 unemployed ready to immediately take up a job. however, the total number of unemployed was more than 334,000. This means that the revival of economic growth was translated into the creation of new jobs.

In the past, state financial management was better than planned, and the annual deficit of the state budget was lower by as much as 35 % than had been assumed when the budget was drawn up. The state budget closed the year 2015 with a deficit of EUR 1.93 billion, with the annual deficit decreasing by as much as 34 % year-on-year. The state budget income saw an increase by 30 % year-on-year, but expenditures rose as well, by 17.8 %.

The stagnating economy of the euro zone and the failure to meet the inflation target of the European Central Bank (ECB) resulted in the prime interest rate in the euro zone remaining at a technical zero throughout the year. In an effort to move inflation closer to the required limit, just below 2 %, the ECB launched a program of quantitative easing in March, within which it buys selected bonds in the amount of EUR 60 billion per month. The program continues to run at the present time and is likely to be modified soon. An increase in the amount of purchased bonds may also come into consideration.

The euro exchange rate against the dollar fluctuated during the course of 2015, but, in summary, the euro lost more than one-tenth of its value. During the first days of last year, it traded at around EUR 1.2000/USD. however, it plummeted to below EUR 1.0500/USD during the first three months, which resulted in more and more discussions about parity with the dollar. Though, the euro managed to bounce back from these amounts and more or less oscillated around EUR 1.1200 EUR/USD until October. Nevertheless, at the end of the year, the US Federal Reserve System increased its interest rates for the first time after almost a decade, also to demonstrate the strength of the US economy.

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8. Report on Business activities and Property situation in 2015

The year 2015 was successful for the Poštová banka Group in terms of business, which is testified to by a profit after tax of 48.9 million euros, representing an increase of 11.2 % compared to 2014. The positive financial result was primarily driven by a more effective functioning of the Group, in addition to lower overall risk costs of the Group and a reduction in the mandatory special levy.

The Group also recorded a year-on-year growth in net revenue from fees and commissions, namely by 53.6 %, to 27.4 million euros. This positive development was primarily influenced by a reduction in a special levy for selected financial institutions and a decrease in the payment to the Deposit Protection Fund.

The increased effectiveness of the Group functioning and the optimization of it operating expenses were reflected in a decrease in general operating expenses by 7.8 % to 83.3 million euros.

The Group includes Prvá penzijná správcovská spoločnosť Poštovej banky [First Pension Management Company of Poštová banka], which successfully continues selling participating certificates of real estate funds. The company administered assets amounting to 748 million euros in its funds, reaching a market share of 10.8 %. At the same time, it received an award in the Gold Coin [Zlatá minca] competition, where it took second place in the Real Estate Funds category with the fund NÁŠ PRVÝ REALITNÝ o.p.f. [Our First Real Estate Fund]. In cooperation with the bank, it introduced the Good Saving – Investment [Dobré sporenie Investícia] product as an attractive combination of saving and investing in mutual funds.

Insurance activities are provided by Poštová poisťovňa, a. s. [Postal Insurance Company]. Main activities of the company PB Finančné služby, a. s. [PB Financial Services] consist of the provision of financial and operational leasing and factoring. Intermediary activities are provided by the subsidiary PB PARTNER, a. s.Real estate management and registry services are carried out by the company POBA Servis, a. s. The main activity of Dôchodková správcovská spoločnosť Poštovej banky [Pension Management Company of Poštová banka] is management of pension funds (second [private] pillar). The subsidiary PB IT, a. s. provides computer services, IT operation, and project management in the area of information technology.

At the end of the year, the balance sheet amount of the Group reached 4.2 billion euros, thus maintaining its stable level from the end of the previous year.

Financial parameters that influenced the amount of the financial result of the Group are described in detail in the Notes to the Consolidated Annual Financial Statements.

assets

The largest part of assets of the Group consisted of loans, receivables from clients, and investment securities.

loans and receivables from clients decreased by 6.6 % compared to 2014, reaching a net value of 2,134 million euros (after taking the created value adjustments into consideration) and representing 51.1 % of total Group assets. Consumer loans provided (principal) amounted to 654.5 million euros, of which the “Dobrá pôžička”(Good Loan) product accounted for 144.7 million euros and “Lepšia splátka” (Better Installment) amounted to 336.7 million euros. The amount of consumer loans rose by 1.5 % year-on-year.

As of 31 December 2015, the Group had in its portfolio investment securities in the amount of 1,326.3 million euros (including coupon and accruals). The share of investment securities in total assets of the Group was 31.7 %. From the total volume of securities, government bonds represent 1,037.4 million euros, other bonds 92.1 million euros; and shares, participating certificates and other ownership interests 196.8 million euros.

In 2015, accounts in banks of issue and other banks represented 12.9 % of total assets with a value of 538.2 million euros. According to the IFRS, these assets are primarily presented as part of cash equivalents. Over the course of 2015, the Group deposited the required minimum reserves in the National Bank of Slovakia in compliance with prudent banking rules. By the end of 2015, the volume of the required minimum reserves represented 234.3 million euros. The Group deposited its temporarily available funds in banks of issue in the form of loans and short-term deposits. As of 31 December 2015, term deposits in the Czech National Bank (ČNB) amounted to 207.6 million euros. At the end of 2015, deposits in other banks for the entire Group amounted to 98.8 million euros, including euro deposits in the amount of 94.6 million euros and foreign currency deposits of 4.2 million euros.

Cash assets amounted to 21.9 million euros as of 31 December 2015, including 20.4 million euros in the euro currency and 1.5 million euros in foreign currency.

The share of tangible and intangible assets in total assets represents 1.1 % (47.2 million euros) as of 31 December 2015.

eQUitY and liaBilities

Primary resources from clients amounted to 3,507 million euros as of 31 December 2015, accounting for 83.9 % of the balance sheet amount. Balances of term deposits form the largest part of primary resources of the Group, with the largest growth being achieved by deposits in passbooks, whose volume increased year-on-year by 111.8 million euros (principal) to 672.2 million euros (principal) at the end of the year, representing a 20 % growth.

Funds in personal accounts reached the amount of 747.5 million eurs (principal), growing year-on-year by 15.8 %. More than 46,000 new personal accounts were established in 2015.

secondary resources (accounts of banks of issue and other banks) amounted to 3.9 million euros as of 31 December 2015.

As of 31 December 2015, equity of the Group amounted to 605 million euros, growing by 34.9 million euros compared to the previous year. Share capital of the Group amounts to 366.3 million euros, funds created from profit account for 35.9 million euros, retained earnings from previous years are at 133.5 million euros, and the financial result of the current year totals 48.9 million euros.

seleCted indiCatoRs

The development of selected qualitative indicators is documented in the table below.

indicatoractual figures as of 31 december 2015

actual figures as of 31 december 2014

Loans (net)/Assets 51.1 % 54.3 %

Financial institutions + central banks /Assets 12.9 % 8.1 %

Government bonds/Assets 24.8 % 27.2 %

ROA 1.2 % 1.1 %

ROE 8.1 % 7.7 %

Central banks: nBs – National bank of Slovakia, ČnB – Czech National BankRoa – Return on assets (year-end balance)Roe – Return on equity (year-end balance)

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Consolidated statement of financial position as at 31 december 2015

assets notes31.12.2015

€ ‘00031.12.2014

€ ‘000

Cash and deposits at central banks 7 570,697 366,894

Trading assets 8 2,106 2,370

hedging derivatives 8 1,242 –

Loans and advances to banks 9 2,482 1,806

Loans and advances 10 2,134,022 2,283,715

Investment securities 11 1,326,283 1,416,783

Investment in joint ventures 12 383 –

Property and equipment 13 20,098 21,620

Intangible assets 14 27,157 29,152

Deferred tax asset 15 14,273 21,834

Tax receivable 16 4,253 309

Other assets 17 77,557 63,950

4,180,553 4,208,433

equity notes31.12.2015

€ ‘00031.12.2014

€ ‘000

Share capital 26 366,305 306,305

Share premium 27 738 738

Reserves and retained earnings 28 234,660 202,899

Equity – shareholders 601,703 569,942

Non-controlling interests 3,305 145

605,008 570,087

4,180,553 4,208,433

liabilities notes31.12.2015

€ ‘00031.12.2014

€ ‘000

Trading liabilities 8 84 38

hedging derivatives 8 312 –

Deposits by banks 18 3,930 13,475

Customer accounts 19 3,506,955 3,557,002

Received loans 20 6,820 5,051

Provisions for off-balance sheet liabilities 21 1,960 66

Provisions for insurance contracts 22 11,097 8,805

Deferred tax liability 15 317 –

Tax liabilities 23 840 16,779

Other liabilities 24 35,217 29,117

Subordinated debt 25 8,013 8,013

3,575,545 3,638,346

These consolidated financial statements, which include the notes on pages 45 to 133, were approved by the Board of Directors on 24 March 2016.

Chairman of the Board of Directors Member of the Board of Directors Andrej Zaťko Slavomír Varcholík

9. Consolidated financial statements

Prepared in accordance with International Financial Reporting Standards as adopted by the European Union (English Translation)Year ended 31 december 2015

40 41

notes31.12.2015

€ ‘00031.12.2014

€ ‘000

Interest income 30 231,540 259,255

Interest expense 31 (41,168) (47,782)

net interest income 190,372 211,473

Fee and commission income 32 62,548 56,619

Fee and commission expense 33 (35,167) (38,791)

net fee and commission income 27,381 17,828

Net trading income 34 6,656 11,226

Net other (loss) /income* 35 3,871 (3,634)

Net earned premium 36 11,194 10,186

net non-interest income 49,102 35,606

operating income 239,474 247,079

Administrative expenses* 37 (83,314) (90,398)

Depreciation and amortisation 38 (10,635) (8,938)

Claim costs 39 (4,073) (3,307)

operating expenses (98,022) (102,643)

operating profit before impairment losses and provisions

141,452 144,436

Impairment losses on investment securities 11 – (5)

Impairment losses on receivables 10 (67,680) (79,724)

Impairment losses on tangible assets 13 (686) –

(Creation)/(release) of impairment losses on intangible assets

14 424 (424)

Impairment losses on other assets 17 (698) (29)

Creation of provisions for off-balance sheet liabilities 21 (1,894) (14)

Share on profit in joint venture 12 131 –

Profit before taxation 71,049 64,240

Income tax 41 (22,151) (20,252)

Profit after taxation 48,898 43,988

attributable to:

Shareholders of the Bank 48,728 43,924

Non-controlling interests 170 64

notes31.12.2015

€ ‘00031.12.2014

€ ‘000

Profit for the year 48,898 43,998

other comprehensive income

Change in fair value of available-for-sale financial assets:

Items that may be reclassified to profit or loss in the future from available-for-sale securities

4,032 (10,760)

Reclassification of revaluation differences from securities available-for-sale to profit or loss

7,633 13,908

Influence of change in fair value of hedged financial instruments

1,130 –

Income tax on other comprehensive income 41 (2,813) (692)

9,982 2,456

Translation difference from foreign operations 361 (172)

other comprehensive income after tax 10,343 2,284

total comprehensive income for the year 59,241 46,272

attributable to:

Shareholders of the Bank 59,020 46,208

Non-controlling interest 221 64

59,241 46,272

Net profit for the accounting period (in € ‘000) 48,898 43,988

Number of issued shares 330,899 330,899

Earnings per share (in EUR) 148 133

Consolidated income statement Year ended 31 december 2015

Consolidated statement of profit or loss and other comprehensive income Year ended 31 december 2015

The notes on pages 45 to 133 are an integral part of these consolidated financial statements.


* Specific information are described in point 3 (y)

42 43

note

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as at 1 January 2015 366,305 738 7,129 31,423 165,302 (955) 145 570,087

total comprehensive income for the year

Profit for 2015 28 – – – – 48,728 – 170 48,898


Net change in fair value of available-for-sale financial assets, net of tax

28 – – 9,931 – – – 51 9,982

Translation difference from foreign operations

28 – – – – – 361 – 361


– – 9,931 – 48,728 361 221 59,241

transaction with owners, recorded directly in equity

Transfer to legal reserve fund

28 – – – 4,544 (4,544) – – –

Dividends to shareholders

– – – – (30,117) – – (30,117)

Sale of shares in subsidiary

28 – – – – – – 3,046 3,046

Sale of subsidiary 28 – – – – 2,903 – (107) 2,796

Other 28 – – – (20) (25) – – (45)

total transactions with owners

– – – 4,524 (31,783) – 2,939 (24,320)

at 31 december 2015 366,305 738 17,060 35,947 182,247 (594) 3,305 605,008

note

s

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as at 1 January 2014 306,305 795 4,673 24,412 128,389 (783) – 463,791


Profit for 2014 28 – – – – 43,924 – 64 43,988


Net change in fair value of available-for-sale financial assets, net of tax

28 – – 2,456 – – – – 2,456

Translation difference from foreign operations

28 – – – – – (172) – (172)


– – 2,456 – 43,924 (172) 64 46,272

transaction with owners, recorded directly in equity

Transfer to legal reserve fund

– – – 7,011 (7,011) – – –

Increase in share capital 28 60,000 – – – – – – 60,000

Non-controlling interests on net assets of subsidiary

– – – – 81 81

Other transactions related to share issue

– (57) – – – – – (57)

total transactions with owners

60,000 (57) – 7,011 (7,011) – 81 60,024

at 31 december 2014 366,305 738 7,129 31,423 165,302 (955) 145 570,087

Consolidated statement of changes in equity Year ended 31 december 2015

Consolidated statement of changes in equity Year ended 31 december 2014

The notes on pages 45 to 133 are an integral part of these consolidated financial statements. The notes on pages 45 to 133 are an integral part of these consolidated financial statements.

44 45

Cash flows from operating activities notes31.12.2015

€ ‘00031.12.2014

€ ‘000

Profit before changes in operating assets and liabilities 42 169,582 158,163

Decrease in trading assets 264 8,124

Increase in hedging derivatives (930) –

Decrease/(increase) in compulsory minimum reserves (204,163) 193,611

(Increase) in loans and advances to banks (676) (1,399)

(Increase)/decrease in loans and advances 82,013 (487,960)

Change from revaluation of financial investments (12,795) –

Decrease/(increase) in other assets (14,305) 2,592

(Decrease)/increase in trading liabilities 46 (1,413)

Increase/(decrease) in deposits by banks (9,545) 5,846

(Decrease)/increase in customer accounts (50,047) 289,194

Increase in other liabilities 6,237 1,210

Income tax paid (36,829) (5,105)

Net cash flow from operating activities (71,148) 162,863

Cash flows from investing activities

Purchase of property and equipment (4,075) (6,698)

Proceeds from sale of property and equipment and intangible assets

705 698

Purchase of intangible assets (5,102) (6,468)

Sales of investment securities 104,880 110,560

Sale/(Acquisition) of subsidiary 6 2,720 (2,000)

Net cash from investing activities 99,128 96,092

Cash flows from financing activities

Dividends paid to shareholders (30,109) –

Loans received 1,796 –

Increase of share capital in the bank – 60,000

Other transactions related to share issue – (57)

Repayment of loans – (50,727)

Net cash from/(used in) financing activities (28,340) 9,216

net increase/(decrease) in cash and cash equivalents

(360) 268,171

Cash and cash equivalents at the beginning of year 336,737 68,566

Cash and cash equivalents at the end of year 7 336,377 336,737

activity share %

Dôchodková správcovská spoločnosť Poštovej banky, d. s. s., a. s.

Management of pension funds 100

PB Finančné služby, a. s.Financial and operational leasing

and factoring 100

PB IT, a. s. IT services 100

PB PARTNER, a..s. Financial intermediary 100

POBA Servis, a. s. Real estate administration 100

Poštová poisťovňa, a. s. Insurance 80

PRVÁPENZIJNÁSPRÁVCOVSKÁSPOLOČNOSŤ POŠTOVEJ BANKy, správ. spol., a. s.

Asset management 100

Jointly controlled entity:

SPPS, a. s. Payment services 40

NADÁCIA POŠTOVEJ BANKy Charitable foundation 100 %

1. General information

Poštová banka, a. s. (‘the Bank’) was incorporated in the Commercial Register on 31 December 1992 and commenced activities on 1 January 1993. The registered office of the Bank is Dvořákovo nábrežie 4, 811 02 Bratislava.

The Bank’s identification (‘IČO’), tax (‘DIČ’) and value added tax (‘IČ DPh’) numbers are as follows: iČo: 31 340 890 diČ: 2020294221 iČ dPH: SK7020000680The Bank is registered as VAT member of Poštová banka Group.

Principal activities

The principal activities of the Group are as follows:• Acceptingandprovidingdepositsineuroandinforeigncurrencies;• Providingloansandguaranteesineuroandforeigncurrencies;• Providingotherretailbankingservicestothepublic;• Providingservicesonthecapitalmarket;• Providinginvestmentmanagementservices;• Providinglifeandgeneralinsuranceservices;• Providingleasing,rentalsandfactoringservices.

The Bank operates through 45 branches located in Banská Bystrica, Bánovce nad Bebravou, Bardejov, Bratislava, Brezno, Dubnica nad Váhom, Dunajská Streda, humenné, Komárno, Košice, Levice, Lučenec, Malacky, Martin, Michalovce, Nitra, Nové Mesto nad Váhom, Nové Zámky, Pezinok, Poprad, Prešov, Prievidza, Rožňava, Sečovce, Skalica, Spišská Nová Ves, Topoľčany,Trebišov, Trenčín, Trnava, Vranov nad Topľou, Zvolen, Žiar nad hronom and Žilina. In addition, under an agreement with Slovenská pošta, the Bank sells its products and services through 1,540 post offices and selected bank services through 43 offices of Pošta-Partner, located throughout the country.

The Bank extended its activities to the Czech Republic in 2009. Poštová banka, a. s. pobočka Česká republika (‘the Branch’) was registered in the Commercial Register of the Czech Republic on 18 November 2009. The Branch commenced its activities on 1 March 2010.

At 31 December 2015, the Bank had the following subsidiaries and jointly controlled entity:

The Foundation is not included in the consolidated financial statements of Poštová banka, a.s.

All entities are resident in the Slovak Republic.

The Bank acts as a founder of the following non-profit oriented organisation as at 31 December 2015:

Consolidated statement of cash flows Year ended 31 december 2015

notes to the consolidated financial statements Year ended 31 december 2015


46 47

2. Basis of preparation of the consolidated financial statements

(a) statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union.

These financial statements are prepared as consolidated financial statements under Section 22 of the Slovak Act on Accounting 431/2002, as amended.

(b) Basis of preparation of financial statements

These financial statements have been prepared on the historical cost basis except for the following that are measured at fair value:• derivativefinancialinstrumentsaremeasuredatfairvalue;• financialinstrumentsatfairvaluethroughprofitorlossaremeasuredatfairvalue;• available-for-salefinancialassetsaremeasuredatfairvalue.

(c) Going concern assumption

The financial statements were prepared using the going concern assumption that the Group will continue in operation for the foreseeable future.

(d) Functional and presentation currency

These financial statements are presented in euro (€), which is the Group’s functional currency. Except as otherwise indicated, financial information presented in euro thousands and has been rounded, except when stated differently.

(e) Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is provided in notes 3 and 4.

shareholders of the Bank at 31 december 2015

name addresstotal numbers

of sharesshare capital

ownership in %

J&T FINANCE GROUP SEPobřežní 297/14, 186 00 Prague, Czech Republic

213,288 64.45

Ministerstvo dopravy, výstavby a regionálneho rozvoja SR

Námestie slobody 6, 810 05 Bratislava, Slovak Republic

100 0.03

PBI, a.s.Pobřežní 297/14, 186 00 Prague, Czech Republic

112,506 34.00


4,918 1.49


87 0.03

330,899 100.00

name addresstotal numbers

of sharesshare capital

ownership in %

ISTROKAPITAL SE41 – 43 Klimentos Street, 1061 Nicosia, Cyprus

27,947 8.45

J&T BANKA, a.s.Pobřežní 297/14, 186 00 Prague, Czech Republic

122,979 37.16

J&T FINANCE GROUP SEPobřežní 297/14, 186 00 Prague, Czech Republic

174,868 52.84

Ministerstvo dopravy, výstavby a regionálneho rozvoja SR

Námestie slobody 6, 810 05 Bratislava, Slovak Republic

100 0.03


4,918 1.49


87 0.03

330,899 100.00

Members of the Board of directors

Andrej Zaťko chairman (from 12 August 2015)

Marek Tarda chairman (till 12 August 2015)

Daniela Pápaiová board member

Ján Nosko board member

Slavomír Varcholík board member (from 12 January 2015)

Peter hajko board member (from 3 December 2015)

Peter Krištofovič board member (till 19 March 2015)

Members of the supervisory Board

Mario hoffmann chairman

Jozef Salaj board member

Vladimír Ohlídal board member

Jozef Tkáč board member

Tomáš Drucker board member

All shares are ordinary held in a dematerialized form and are registered. The nominal value of a share is Eur 1,107 (in 2014: Eur 1,107).

shareholders of the Bank at 31 december 2014

The consolidated financial statements of the Group for the preceding accounting period, the year ended 31 December 2014, were approved on 28 April 2015 by the Board of Directors.

The Group’s financial statements are included in the consolidated financial statements of J&T FINANCE GROUP SE, Pobřežní 297/14, 186 00 Praha, Czech Republic.

The consolidated financial statements are available at the registered office of J&T FINANCE GROUP SE.

On 27 March 2015, 10,473 shares representing 3.16 % of the total amount of shares were transferred between J&T FINANCE GROUP SE and J&T BANKA, a.s. The company ISTROKAPITAL SE sold 27 947 shares which represent 8.45 % of the total amount of shares to J&T FINANCE GROUP SE on 28 December 2015. A transfer of 112 506 shares between J&T BANKA, a.s. and PBI, a.s. (part of J&T FINANCE GROUP SE) representing 34 % of the total amount of shares was made on 23 December 2015.

48 49

(iv) Loss of controlWhen the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI and other component of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when the control is lost.

(v) Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(vi) Method of consolidation The Bank has assessed the shares and control of a subsidiary with respect to IFRS 10 and IFRS 12. Subsidiaries are consolidated using the full consolidation method. The joint venture SPPS, a.s., is in accordance of IFRS 11 consolidated using the equity method.

name of subsidiary shares in % Method of consolidation

Dôchodková správcovská spoločnosť Poštovej banky, d.s.s., a.s.

100 % Full consolidation

PB Finančné služby, a.s. 100 % Full consolidation

PB IT, a.s. 100 % Full consolidation

PB PARTNER, a.s. 100 % Full consolidation

POBA Servis, a.s. 100 % Full consolidation

Poštová poisťovňa, a.s. 80 % Full consolidation

PRVÁPENZIJNÁSPRÁVCOVSKÁSPOLOČNOSŤ POŠTOVEJ BANKy, správ. spol., a. s.

100 % Full consolidation

SPPS, a. s. 40 % Equity method

In 2015, the Bank sold 20 % shares in Poštová poisťovňa, a.s. to Slovenská pošta, a.s. A subsidiary of Poštová banka, a.s., PB Partner, a.s. sold its 100 % share in the company Salve Finance, a.s. (see point 6)

(b) Foreign currency

(i) Foreign currency transactionsTransactions denominated in foreign currencies are translated into euro at the exchange rates valid on the date of the transaction. Monetary assets and liabilities are translated at the rates of exchange valid at the balance sheet date. All resulting gains and losses are recorded in Net trading income in profit or loss.

(ii) Foreign operationsThe assets and liabilities of foreign operations are translated to euro at spot exchange rates at the balance sheet date. The income and expenses of foreign operations are translated to euro at spot exchange rates on the date of the transactions. Exchange rate differences on the translation of foreign operations are recognised in other comprehensive income.

Foreign exchange rate gains or losses arising from monetary items of receivables or payables of foreign operation, the settlement of which is neither planned nor likely to occur in the foreseeable future and which in substance is considered to form part of the net investment in the foreign operation, are recognised in other comprehensive income in the translation reserve.

3. significant accounting policies

The accounting policies set out below have been applied consistently in all periods presented in these consolidated financial statements.

These consolidated financial statements does not include reporting according segments due the reason, that the Bank does not fullfil the criteria in accordance of requirements of IFRS 8 – Operating segments for reporting of details of segment reporting.

(a) Basis for consolidation

The consolidated financial statements comprise the financial statements of the Bank, its subsidiaries and jointly controlled companies (refer to Note 1) for the year ended 31 December 2015.

Since 1 January 2014 IFRS 12 Disclosure of Interests in Other Entities is effective. The standard requires additional disclosure about significant judgments and assumptions which are used to define character of investments in the company or an agreement, investments in subsidiaries, joint-agreements and affiliates and in non-consolidated structured units. Based on the analysis performed by management, the Group does not have any interest in consolidated structured entities, nor in unconsolidated structured entities.

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.

(i) Business combinationsThe Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.

If share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards), then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based measure of the replacement awards compared with the market-based measure of the acquiree’s awards and the extent to which the replacement awards relate to pre-combination service.

(ii) SubsidiariesSubsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

(iii) Non-controlling interests (NCI)NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

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(h) income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except for items recognised directly in equity, or in other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(i) Financial assets and liabilities

(i) RecognitionThe Group initially recognises loans and advances, deposits by banks, customer accounts, loans received and debt securities on the date they are originated. All purchases and sales of securities are recognised on the settlement day. Derivative instruments are initially recognised on the trade date, at which the Group becomes a party to the contractual provisions of the instrument.

A financial asset or financial liability is measured initially at fair value plus transaction costs that are directly attributable to its acquisition or issue (for items that are not valued at fair value through profit or loss).

(ii) DerecognitionThe Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows from the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all risks and rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are retained, then the transferred assets are not derecognised from the statement of financial position. Transfers of assets with retention of all or substantially all risks and rewards include, for example, securities lending and repurchase transactions.

The Group also derecognises certain assets when it writes off assets deemed to be uncollectible.

(iii) OffsettingFinancial assets and liabilities are set off and the net amount presented in the statement of financial position when, and only when, the Bank has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Right to offset financial assets and financial liabilities are applicable only if it is not contingent on a future event and is enforceable by all counterparties in the normal course of business, as well as in the event of insolvency and bankruptcy. Compensation refers mainly to supplier-customer relations, accounted for only based on supported evidence of offsetting.

(c) interest income and expense

Interest income and expense are recognised in profit or loss using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability to the carrying amount of the financial asset or liability. The effective interest rate is determined on initial recognition of the financial asset and liability and is not revised subsequently.

The calculation of the effective interest rate includes all fees paid or received, transaction costs and discounts or premiums that are an integral part of the effective interest rate. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or retirement of a financial asset or liability. Interest income and expense from financial assets and liabilities through profit or loss are presented as part of Interest income and expense, and changes in the fair values of such instruments are presented at fair value in Net trading income.

Interest income and expense in the income statement include:• Interestonfinancialassetsandliabilitiesatamortisedcostcalculatedonaneffectiveinterest

basis;• Interestoninvestmentsecuritiesandtradingsecuritiescalculatedonaneffectiveinterestbasis;• Interestincomeonassignedreceivablesisrecognisedwhenreceived.

(d) Fees and commissions

Fees and commission income and expenses that are integral to the effective interest rate of a financial asset or liability, are included in the calculation of the effective interest rate.

Other fees and commission income, including account servicing fees, investment management fees, sales commission, placement fees and syndication fees, are recognised when the related services are performed. When a loan commitment is not expected to result in the draw-down of a loan, loan commitment fees are recognised on a straight-line basis over the commitment period.

Other fees and commissions relate mainly to transaction costs and service fees, which are recognised as the services are received.

(e) net trading income

Net trading income comprises gains and losses related to trading assets and liabilities, and includes all realised and unrealised fair value changes and foreign exchange rate differences.

(f) dividends

Dividend income is recognised when the right to receive income is established.

(g) lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

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book value of the financial asset and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and advances. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the impairment loss is reversed through profit or loss.

Impairment losses on available-for-sale investment securities are recognised by transferring the difference between the amortised acquisition cost and current fair value that has been recognised in other comprehensive income, and presented in the fair value reserve in equity, to profit or loss. When a subsequent event causes the amount of impairment loss on an available-for-sale debt security to decrease, the impairment loss is reversed through profit or loss. however, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income. Changes in impairment losses attributable to time value are reflected as a component of Net interest income.

(j) Cash and cash equivalents

Cash and cash equivalents comprises cash, unrestricted balances held with the National Bank of Slovakia and highly liquid financial assets with original maturities of less than three months, which are subject to an insignificant risk of changes in their fair value and are used by the Group in the management of short-term commitments.

Cash and cash equivalents are carried at amortised cost in the statement of financial position.

(k) trading assets and liabilities

Trading assets and liabilities are those assets and liabilities that the Group acquired or incured principally for the purpose of selling or repurchasing in the near term, or held as part of a portfolio that is managed together with achieving short-term profit or maintaining position.

Trading assets and liabilities are initially recognised and subsequently measured at fair value in the statement of financial position with transaction costs taken directly to profit or loss. All changes in fair value are recognised as part of Net trading income in the income statement.

Trading assets and liabilities are not reclassified subsequent to their initial recognition except that non-derivative financial assets, other than those designated at fair value through profit or loss upon initial recognition may be reclassified out of the fair value through profit or loss category if they are no longer held for the purpose of being sold or repurchased in the near term and the following conditions are met:• Ifthefinancialassetwouldhavemetthedefinitionofloansandreceivables,andithadnotbeen

required to be classified as held for trading at initial recognition, then it may be reclassified if the Group has the intention and ability to hold the financial asset for the foreseeable future or until maturity.

• Ifthefinancialassetwouldnothavemetthedefinitionofloansandreceivables,thenitmaybereclassified out of the trading category only in ‘rare circumstances’.

(l) derivatives held for risk management purposes

Derivatives held for risk management purposes include all derivative assets and liabilities that are not classified as trading assets or liabilities. Derivatives held for risk management purposes are measured at fair value in the statement of financial position. The treatment of changes in their fair value depends on their classification into the following categories:

Hedging derivativesUnder the bank strategy hedging derivatives are designed to secure and manage selected risks and fullfil all requirements of IAS 39 standard.

Income and expenses are presented on a net basis only when permitted by the reporting standards, or for gains and losses arising from a group of similar transactions such as in the Bank’s trading activity.

(iv) Amortised cost measurementThe amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation, using the effective interest method, of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.

(v) Fair value measurementIFRS 13 Fair Value Measurement was adopted by the EU on 11 December 2012 (effective for reporting periods starting on or after 1 January 2013). It does not change when an entity should use fair value, but rather prescribes how the entity, under this standard, should use fair value in situations when it is necessary or possible to use fair value. The application of this standard has no impact on the financial situation of profit or loss of the Group. The definition of the Fair Value according to IFRS 13 reads as follows: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The determination of the fair values of financial assets and financial liabilities is based on quoted market prices or dealer price quotations for financial instruments traded on active markets. For all other financial instruments, fair value is determined by using valuation techniques. Valuation techniques include the discounted cash flow method, comparison to similar instruments for which market-observable prices exist and valuation models. The Group uses widely recognised valuation models for determining the fair value of the more common financial instruments like options and interest rate and currency swaps. For these financial instruments, inputs into models are taken from market. A fair value hierarchy is monitored in relation to the valuation of quoted market prices, the valuation models with input data directly from the market, and input data that cannot be observed on the market.

(vi) Identification and measurement of impairmentAt each end of a reporting period, the Group assesses whether there is objective evidence that financial assets not carried at fair value through profit or loss are impaired. Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset, and that the loss event has an impact on the future cash flows of the asset that can be reliably estimated.

The Group considers evidence of impairment at both a specific asset and collective level. All individually significant financial assets are assessed individually for impairment. Assets that are not individually significant are also collectively assessed for impairment by grouping together financial assets (carried at amortised cost) with similar risk characteristics.

Objective evidence that financial assets (including investment securities) are impaired can include default or delinquency by a borrower, restructuring of a loan or advance by the Group on terms that the Group would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the disappearance of an active market for a security, or other observable data relating to a group of assets such as a deterioration in economic conditions or adverse changes in the payment status of borrowers or issuers in that group.

In assessing collective impairment, the Group uses statistical modelling of historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or lower than suggested by historical modelling. Default rates, loss rates and the expected timing of future recoveries are regularly compared to actual outcomes to ensure that they remain appropriate.

Impairment losses on assets carried at amortised cost are calculated as the difference between the

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Main bank criteria for classification of hedging derivatives are as follows:• relationship between hedging and hedged instrument, in meaning of risk characteristics,

function, target and strategy of hedging are formally documented at origination of the transaction, together with method, which is used for assessment of effectiveness of hedging relationship;

• relationshipbetweenhedgingandhedgedinstrumentisformallydocumentedattheoriginationof the hedging transaction and bank expects that it will decrease the risk of hedged instrument;

• during the termof the hedging relationship the hedging is highly effective.Bank considershedging as highly effective, if the changes in fair value relating to the hedged risk during the period covered compensate changes in the fair value of the hedging instrument in the range of 80 % to 125 %. The effectiveness of any hedging relationship is assessed prospectively and retrospectively.

(i) Fair value hedgeThe Bank uses financial derivatives to manage the level of risk in relation to interest rate risk. The Bank uses hedging derivatives to hedge the fair value of recognized assets (bonds with fixed income denominated in euros). As the purchase of assets – bonds with fixed income increased the interest rate risk of the Bank, the Bank entered into interest rate swaps to hedge the changes in fair value caused by changes in risk-free interest rates, and pays a fixed and receives a floating rate. Nominal and fair value of the aforementioned hedging derivatives are described in Note 8.

Changes in the fair value without interest component (clean price) of hedging instruments are presented in the consolidated income statement line as “Net trading income”.

The gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised in profit or loss as “Net trading income”.

Interest expense and interest income from the hedging instruments are presented together with interest income and expense items in consolidated income statement under “Net interest income”. Positive value of hedging instruments is recognized in consolidated statement of financial position as an asset “hedging derivatives”. Negative value of hedging instruments is recognized as a liability “hedging derivatives”. Summary of hedging derivatives is presented in Note 8.

If the derivative expires or is sold, terminated, or exercised, or no longer meets the criteria for fair value hedge accounting, or the designation is revoked, hedge accounting is discontinued. Any adjustment up to that point to a hedged item for which the effective interest method is used is amortised to profit or loss as part of the recalculated effective interest rate of the item over its remaining life.

(ii) Cash flow hedgeWhen a derivative is designated as a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. The amount recognised in other comprehensive income is removed and included in profit or loss in the same period as the hedged cash flows affect profit or loss under the same income statement line item as the hedged item. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.

If the derivative expires or is sold, terminated or exercised, or no longer meets the criteria for cash flow hedge accounting, or the designation is revoked, then hedge accounting is discontinued and the amount previously recognised in other comprehensive income and presented in the hedging reserve remains there until the forecast transaction affects profit or loss. If the forecast transaction is no longer expected to occur, then hedge accounting is discontinued and the balance in other comprehensive income is recognised immediately in profit or loss.

(iii) Other non-trading derivativesWhen a derivative is not held for trading and is not designated in a qualifying hedge relationship, all changes in its fair value are recognised immediately in profit or loss as a component of net income from financial operations.

(iv) Embedded derivativesDerivatives may be embedded in another contractual arrangement (a ‘host contract’). The Bank accounts for embedded derivatives separately from the host contract when the host contract is not itself carried at fair value through profit or loss and the characteristics of the embedded derivative are not clearly and closely related to the host contract. Separated embedded derivatives are accounted for depending on their classification and are presented in the statement of financial position together with the host contract.

(m) Receivables

Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and that the Group does not intend to sell immediately or in the near term.

When the Group is the lessor in a lease agreement that transfers substantially all of the risks and rewards incidental to ownership of an asset to the lessee, the agreement is presented within receivables.

When the Group purchases a financial asset and simultaneously enters into an agreement to resell the asset (or a substantially similar asset) at a fixed price on a future date (‘reverse repo or stock borrowing’), the agreement is accounted for as a loan or advance, and the underlying asset is not recognised in the Group’s financial statements.

Loans and advances are initially measured at fair value plus incremental direct transaction costs and subsequently measured at their amortised cost using the effective interest method.

(n) debt securities included in portfolio of loans and receivables

Debt securities included in portfolio of loans and receivables are non-derivative financial assets with fixed or determinable payments that are not listed at an active market other than:• thedebtsecuritiesheldwithintentiontosellimmediatelyorinshorttimeandthedebtsecurities

the entity defines as valued at fair value through profit or loss at initial recognition;• thedebtsecuritiestheentityclassifiedasavailableforsaleatinitialrecognition.

Such securities are measured at their amortized cost.

(o) investment securities

Investment securities are initially measured at fair value plus incremental direct transaction costs and subsequently accounted for depending on their classification as either held-to-maturity or available-for-sale.

(i) Held-to-maturityheld-to-maturity investments are non-derivative assets with fixed or determinable payments and fixed maturity that the Group has the positive intent and ability to hold to maturity and which are not designated at fair value through profit or loss or available-for-sale. held-to-maturity investments are carried at amortised cost using the effective interest method. Any sale or reclassification of a significant amount of held-to-maturity investments not close to their maturity, except for sales or reclassifications in accordance with IAS 39.9, would result in the reclassification of all held-to-maturity investments as available-for-sale and prevent the Group from classifying investments securities as investments held-to-maturity for the current and the following two financial years.

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If as a result of changes in intent or ability it is no longer appropriate to classify an investment as held to maturity, such investment is reclassified to the available for sale category and carried at fair value in accordance with paragraphs 51-55 of IAS 39.

Based on an assessment and analysis performed, the Bank will decide whether there are reasons for reclassification of the whole held-to-maturity portfolio to Available-for-sale portfolio.

(ii) Available-for-saleAvailable-for-sale investments are non-derivative investments that are not designated as another category of financial assets. Available-for-sale investments are carried at fair value.

Interest income is recognised in profit or loss using the effective interest method. Dividend income is recognised in profit or loss when the Group becomes entitled to the dividend. Foreign exchange gains or losses on available-for-sale debt security investments are recognised in profit or loss.

Fair value changes are recognised in other comprehensive income and presented in the revaluation reserve in equity until the investment is sold or impaired and the cumulative gain or loss is then recognised in profit or loss.

(p) Property, equipment and intangible assets

(i) Recognition and measurementItems of property and equipment are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of the cost of that equipment.

When parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components) of property.

(ii) Subsequent costsThe cost of replacing part of an item of property is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be reliably measured. The costs of the day-to-day servicing of property and equipment are recognised in profit or loss as incurred.

(iii) DepreciationDepreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated.

The estimated useful lives for the current and comparative periods are as follows:

the estimated useful lives for the current and comparative periods are as follows:

Buildings 40 years, straight line

Furniture, fittings and equipment 4 to 15 years, straight line

Motor vehicles 4 years, straight line

Software 4 to 7 years, straight line

Depreciation commences when the asset is put into use.

Depreciation methods, useful lives and residual values are reassessed each reporting date.

(q) intangible assets

SoftwareSoftware is carried at cost less accumulated amortisation and impairment losses. Amortisation is recognised on a straight line basis over the estimated useful life of the software, which is reassessed on yearly basis.

GoodwillGoodwill arising on a business combination is measured as the excess of the cost of the acquisition of the subsidiary over the interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Goodwill is recognised in the statement of financial position in Intangible assets.

Goodwill is stated at cost less accumulated impairment losses. Amortisation is not charged. Instead, goodwill is reviewed at each reporting date for impairment and an impairment loss is recognised in profit or loss when the carrying amount of goodwill exceeds its recoverable value.

Value of business acquired (VOBA)Expected rights and obligations arising from agreements on pension saving funds (“PSF”) acquired in business combinations are measured at fair value at the time of acquisition. The difference between the fair value of acquired rights and obligations under those agreements and the value of intangible assets measured in accordance with accounting principles applicable to the Group (deferred transaction costs) are capitalized as intangible assets (present value of the acquired portfolio of active contracts – VOBA). VOBA is amortized on a straight line basis over the life of the contracts acquired. The present value of an active portfolio of contracts is subject to assessment for impairment test as at the date of the financial statements.

The fair value of the rights and obligations arising from PSF contracts acquired is defined as the present value of net future cash flows over the remaining life of the acquired contracts. Estimates of the best conditions for cancellations, costs, fees and mortality adjusted for appropriate risk premium are used for calculating the present value of the acquired portfolio of active contracts.

(r) assets acquired through finance lease contracts

Leases under which the Group assumes substantially all the risks and rewards of ownership, are classified as finance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to the initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

All other leases are operating leases and the assets are not recognised on the Group’s statement of financial position.

(s) impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups.

Impairment losses are recognised directly in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

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The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(t) deposits, customer accounts, loans received and subordinated debt

Deposits, customer accounts, loans received and subordinated debt are the Group`s sources of debt funding.

Deposits, customer accounts, loans received and subordinated debt are initially measured at fair value plus transaction costs, and subsequently measured at their amortised cost, including accrued interest, using the effective interest method.

When the Group sells a financial asset and simultaneously enters into a ‘repo’ or ‘stock lending’ agreement to repurchase the asset (or a similar asset) at a fixed price on a future date, the arrangement is accounted for as a deposit, and the underlying asset continues to be recognised in the Group’s financial statements.

(u) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting the obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.

(v) employee benefits

(i) Defined contribution plansObligations for contributions to defined contribution pension plans are recognised as an expense in the income statement when they are due.

(ii) Termination benefitsTermination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date.

(iii) Short-term benefitsShort-term employee benefits obligations are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be reliably estimated.

(w) insurance and investment contracts

Insurance contracts in non-life insurance

Contracts under which the Group accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder are classified as insurance contracts.

Insurance risk is risk other than financial risk. Financial risk is the risk of a possible future change in interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, credit rating, credit index or other variable provided that the variable is not specific to a party to the contract. Insurance contracts may also contain certain financial risk.

Contracts under which the transfer of insurance risk from the policyholder to the Group is not significant are classified as investment contracts.

Revenue (premium)Gross premium written comprises the amounts of premium arising from insurance contracts due in the accounting period regardless of whether these amounts relate fully or partially to future periods (unearned premium). Premium written includes estimates for premium from insurance contracts with the beginning of insurance coverage in the accounting period, which may not be delivered at the end of the reporting period, and adjustments to estimates of premium written in previous years. Written premium are recognised net of bonuses and similar discounts offered on contract conclusion or renewal.

Premium from co-insurance is the proportional part of total premium from the co-insurance contracts due to the Group and is recognised as revenue. The earned proportion of premium is recognised as revenue. Premium are earned from the date of attachment of risk, over the coverage period, based on the pattern of the risks underwritten.

Unearned premium provisionThe provision for unearned premium (‘UPR’) comprises the portion of gross premium written which is estimated to be earned in the following or subsequent financial years, computed separately for each insurance contract using the daily pro rata method (365 method), adjusted, if necessary, to reflect any variation in the incidence of risk during the period covered by the contract.

Claim costsClaims incurred comprise the settlement and handling costs of paid and outstanding claims arising from events occurring during the financial year together with adjustments to prior and current year claims provisions. Claim costs are decreased by the amount of recourses.

Claim provisions Claims outstanding comprise provisions for the estimate of the ultimate cost of settling all claims incurred but unpaid at the end of the reporting period whether reported or not, and related internal and external claims handling expenses and an appropriate prudential margin. Claims outstanding are assessed by reviewing individual claims and making allowance for claims reported but not yet settled (‘RBNS’) and claims incurred but not yet reported (‘IBNR’), taking into account the effect of both internal and external foreseeable events, such as changes in claims handling procedures, inflation, judicial trends, legislative changes and past experience and trends. When the claim payments are made in the form of annuities, the provision is determined using actuarial methods. Provisions for claims outstanding (excluding annuities) are not discounted.

Unexpired risk provisionProvision is made for unexpired risks arising from non-life insurance contracts where the expected value of claims and expenses attributable to the unexpired periods of contracts in force at the end of the reporting period exceeds the unearned premiums provision in relation to such policies after the deduction of any deferred acquisition costs. The provision for unexpired risks is calculated

60 61

(x) Pension saving funds

Contracts that are concluded in accordance with the Act on pension saving funds are classified as service contracts under IAS 18 (pension saving funds). These are pension saving funds (hereinafter “PSF”) that are concluded by the subsidiary DSS Poštová banka, a.s. with its clients.

Deferred acquisition costs of acquisition of PSF contractsTransaction costs related to acquisition of PSF contracts are deferred by the subsidiary. Transaction costs are represented by commissions paid to intermediaries and organizers of the network of PSF brokers.

Direct transaction costs are deferred up to the amount of their expected returns from future revenues associated with these contracts.

Commissions paid are recognized as deferred transaction costs. If this expense does not meet the requirements of IAS 38 (the likelihood that it will bring economic benefit in the future is low, or it is not directly attributable to a particular PSF contract), it is accounted for as costs in its full amount when it occurs.

Deferred transaction costs recognized in the financial statements, are part of the brokerage commissions for PSF contracts paid that are deferred to future periods. Deferred costs of acquisition of PSF contracts are amortized using the straight-line basis over the expected life of the contract. At the termination of the contract a one-time write-off is made. The subsidiary tests deferred transaction costs for impairment on a regular basis (as at the date of the financial statements).

(y) Financial information for previous period *

In 2015 the Group reviewed the presentation of the consolidated financial statements. Based on this review the Group changed the presentation of certain items of income and expenses. Changes in the presentation are in accordance with International Financial Reporting Standards and provide reliable and more relevant information to users of financial statements. Due to changes in the presentation of the financial statements corresponding amounts have been reclassified in the consolidated income statement for the year ended 31 December 2015. Changes in presentation and more detailed information for the prior period are marked with an asterisk * or text “after changes”.

Comparison of the consolidated income statement for the year ended 31 December 2014 before and after adjusting the presentation is as follows:

€ ‘00031.12.2014

Before changeChange of

presentation31.12.2014

after change

Fees and commission expense (41,205) 2,414 (38,791)

Net other income/ (expense) (9,467) 5,833 (3,634)

Administrative expenses (82,151) (8,247) (90,398)

total (132,823) – (132,823)

Other items in the consolidated income statement for the year ended 31 December 2014 remain unchanged.

(z) new standards and interpretations not yet adopted

IFRS 9 Financial Instruments (Effective for annual periods beginning on or after 1 January 2018; to be applied retrospectively with some exemptions. The restatement of prior periods is not required, and is permitted only if information is available without the use of hindsight. Early application is permitted). This standard is not accpeted by European Union yet.

by reference to classes of business which are managed together, after taking into account the future investment return on investments held to back the unearned premiums and unexpired claims provisions. The unexpired risk provision is the result of a liability adequacy test in non-life insurance.

Insurance contracts in life insurance

Revenue (premiums)Gross premiums written comprise premiums due in the accounting period, estimates for premiums and adjustments to estimates of premiums written in previous years. The earned portion of premiums is recognised as revenue. Premiums are earned from the date of attachment of risk, over the coverage period, based on the pattern of the risks underwritten.

Unearned premiums provisionThe provision for unearned premiums comprises the portion of gross premiums written which is estimated to be earned in the following or subsequent financial years, computed separately for each insurance contract using the daily pro rata method (365 method), adjusted, if necessary, to reflect any variation in the incidence of risk during the period covered by the contract.

ClaimsClaims include maturities, annuities, surrenders and death claims, policyholder bonuses allocated in anticipation of a bonus declaration and claim payments from riders. Maturity and annuity claims are recognised as an expense when due for payment. Surrender claims are recognised when paid together with release of claim provision. Death claims and claims from riders are recognised when notified by creation of RBNS.

Claim provisions Claims outstanding comprise provisions for the estimate of the ultimate cost of settling all claims incurred but unpaid at the end of the reporting period, whether reported or not. These represent the claim payments from contracts classified as insurance contracts or investment contracts with discretionary participation feature (‘DPF’) and claim payments from related riders. It includes appropriate internal and external expenses related to settlement.

Claims outstanding are assessed by reviewing individual claims and making allowance for claims reported but not yet settled (‘RBNS’) and claims incurred but not yet reported (‘INBR’), taking into account the effect of both internal and external foreseeable events, such as changes in claims handling procedures, inflation, judicial trends, legislative changes and past experience and trends. When the claim payments are made in the form of annuities, the provision is determined using actuarial methods.

Provisions for claims outstanding (excluding annuities) are not discounted.

Life assurance provision The life assurance provision represents the actuarial estimate of the Group’s liabilities from traditional life insurance contracts. Life assurance provisions are calculated for each individual policy separately using the prospective Zillmer method, taking into account all guaranteed future benefits, already allocated profit-sharing and future Zillmer premium paid by policyholders. The provision is calculated using the same assumptions as used for the calculation of premiums. Changes in the life assurance provision are recognised in the period the change occurs.

Provision for premium deficiencyA liability adequacy test is performed as the reporting date. The test is performed by using actual actuarial assumptions (appropriately adjusted to include a risk margin) at the time of the test and the discounted cash flow methodology. If such test indicates that the initially determined life assurance provision is deficient as compared to the result of the liability adequacy test, an additional provision for premium deficiency is created as an expense of the current period.

62 63

Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations (Effective for annual periods beginning on or after 1 January 2016; to be applied prospectively. Early application is permitted.)

These Amendments require business combination accounting to be applied to acquisitions of interests in a joint operation that constitutes a business.

Business combination accounting also applies to the acquisition of additional interests in a joint operation while the joint operator retains joint control. The additional interest acquired will be measured at fair value. The previously held interests in the joint operation will not be remeasured.

It is expected that the Amendments, when initially applied, will not have a material impact on the Group’s financial statements.

IFRS 3 Business combinationsAmendments to IFRS 3 Business Combinations (and Subsequent amendments to other standards) make it clear that if a contingent consideration is a financial instrument and its classification as a liability or equity should be determined under IAS 32 and not under another standard. It also clarifies that contingent consideration that is classified as an asset or liability has to be valued at fair value at each reporting date of the financial statements. The Bank expects that the amendments will not have a significant impact on the presentation of the financial statements of the Bank when initially applied.

4. Use of estimates and judgements

These disclosures supplement the commentary on financial risk management.

Key sources of estimation uncertainty

Allowances for impairment

Assets accounted for at amortised cost are evaluated for impairment on the basis described in accounting policies and accounting methods 3 (i)(vi).

The specific counterparty component of the total allowances for impairment applies to receivables evaluated individually for impairment and is based on management’s best estimate of the present value of the cash flows that are expected to be received. In estimating these cash flows, management makes judgements about the counterparty’s financial situation and the net realisable value of any underlying collateral. Each impaired asset is assessed on its merits and the workout strategy and estimate of cash flows considered recoverable. The head of the Risk Management Division is responsible for the assessment of the extent of impairment of individually assessed receivables and for determining the amount of any impairment loss.

The valuation of collateral that is part of the calculation takes into account the conclusions of the professional evaluation performed by the Group’s expert valuators. The baseline for the valuation, according to the current methodology of the Group, is the actual Group`s value that reflects the valuation of collateral in case of forced realization achievable on the market (irrespective of the costs relating to acquisition and sale). The Group also takes into account the depreciation of the movable assets (machinery – technological devices, vehicles) by discounting with a coefficient of 5 % p.a. for the period from the calculation of the allowance for impairment until the expected date of realization of the collateral. Subsequently, the Group estimates the percentage loss from realization of the collateral as well as the expected date of realization.

Collectively assessed impairment allowances cover credit losses inherent in portfolios of receivables with similar economic characteristics when there is objective evidence to suggest that they contain impaired receivables, but the individual impaired items cannot yet be identified. In assessing the need for collective loan loss allowances, management considers factors such as credit quality,

This Standard replaces IAS 39, Financial Instruments: Recognition and Measurement, except that the IAS 39 exception for a fair value hedge of an interest rate exposure of a portfolio of financial assets or financial liabilities continues to apply, and entities have an accounting policy choice between applying the hedge accounting requirements of IFRS 9 or continuing to apply the existing hedge accounting requirements in IAS 39 for all hedge accounting. A financial asset is measured at amortized cost if the following two conditions are met:• theassetsisheldwithinabusinessmodelwhoseobjectiveistoholdassetsinordertocollect

contractual cash flows; and, • itscontractual termsgive riseonspecifieddates tocashflows thataresolelypaymentsof

principal and interest on the principal outstanding.

The impairment model in IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ model, which means that a loss event will no longer need to occur before an impairment allowance is recognised.

IFRS 9 includes a new general hedge accounting model, which aligns hedge accounting more closely with risk management. The types of hedging relationships – fair value, cash flow and foreign operation net investment – remain unchanged, but additional judgment will be required. The Group expects that the new Standard IFRS 9, when initially applied, will have a significant impact on the financial statements, since the classification and the measurement of the Group’s financial instruments are expected to change.

The application of the new Standard IFRS 9 will also, in case of credit risk, have a significant impact on the financial statements, since the creation of impairment allowances in time and amount will change.

IFRS 15 Revenue from contracts with customers(Effective for annual periods beginning on or after 1 January 2017. Earlier application is permitted.)

The new Standard provides a framework that replaces existing revenue recognition guidance in IFRS. Entities will adopt a five-step model to determine when to recognise revenue, and at what amount. The new model specifies that revenue should be recognised when (or as) an entity transfers control of goods or services to a customer at the amount to which the entity expects to be entitled. Depending on whether certain criteria are met, revenue is recognised:• overtime,inamannerthatdepictstheentity’sperformance;or• atapointintime,whencontrolofthegoodsorservicesistransferredtothecustomer.

The Group does not expect that the new Standard, when initially applied, will have material impact on the financial statements. The timing and measurement of the Group’s revenues are not expected to change under IFRS 15 because of the nature of the Group’s operations and the types of revenues it earns.

Amendments to IAS 1(Effective for annual periods beginning on or after 1 January 2016. Early application is permitted.)

The Amendments to IAS 1 include the following narrow-focus improvements to the disclosure requirements contained in the standard.The guidance on materiality in IAS 1 has been amended to clarify that: • Immaterialinformationcandetractfromusefulinformation.• Materialityappliestothewholeofthefinancialstatements.• MaterialityappliestoeachdisclosurerequirementinanIFRS.

The guidance on the order of the notes (including the accounting policies) have been amended, to: • RemovelanguagefromIAS1thathasbeeninterpretedasprescribingtheorderofnotestothe

financial statements.• Clarifythatentitieshaveflexibilityaboutwheretheydiscloseaccountingpoliciesinthefinancial

statements. The Group expects that the amendments, when initially applied, will not have a material impact on the presentation of the financial statements of the Group.

64 65

portfolio size, concentrations and economic factors. In order to estimate the required allowance, assumptions are made to define the way inherent losses are modelled and to determine the required input parameters based on historical experience and current economic conditions. The accuracy of the allowances depends on how well these estimate future cash flows for specific counterparty allowances and the model assumptions and parameters used in determining collective allowances.

The Group creates the collective impairment losses based on the probability of default (‘PD’) and loss given default (‘LGD’). A change of the LGD parameter by +/- 5 % or +/- 10 %, would result in a change in the allowances for impairment by +/- 5.18 % (in absolute numbers +/- € 6,548 thousand), or +/- 10.36 % (in absolute numbers +/- € 13,096 thousand). Back-testing carried out by the Bank in 2015 confirmed the adequacy of LGD settings in loans and debits. ‘PD’ values are recalculated and recalibrated regularly on monthly basis and they represent changes in impairment losses in particular portfolios. Insurance provisionsThe Group also uses estimates, assumptions and judgments when determining insurance technical provisions (in particular IBNR provisions and life assurance provisions). A set of assumptions is used when estimating future cash flows arising from the existence of insurance contracts and investment contracts with discretionary participation features (“DPF”). It cannot be assured that actual development will not significantly differ from the development predicted based on assumptions. All assumptions are estimated based on the Group’s own experience.

All provisions arising from insurance contracts and investment contracts with DPF are subject to a liability adequacy test, in which the carrying amount of technical provisions and liabilities is compared to the present value of future cash flows arising from these contracts. The present value of future liabilities is determined using the best estimate assumptions at the time of the test.

Summary of assumptions and margins for assumptions used in the liability adequacy test:

assumption assumption categorytest as at 31

december 2015test as at 31

december 2014Margin*)

Cancellation rate

in the first year of insurance 10 % – 51 % 10 % – 55 % -10 %

in the second year of insurance 9 % – 49 % 9 % – 65 % -10 %

in the next years of insurance 5 % – 49 % 6 % – 60 % -10 %

Costs fixed (in €) 9 EUR – 20 EUR 8 EUR – 19 EUR 10 %

Cost inflation -0.30 % – 1.78 % 0.03 % – 1.79 % 10 %

Investment yieldfor the following year 0.02 % 0.07 % 0,25 %

for next years 0.30 % – 2.23 % 0.23 % – 2.17 % 0,25 %

Discount ratefor the following year -0.40 % 0.09 % -0,25 %

for next years -0.30 % – 2.23 % 0.14 % – 2.19 % -0,25 %

Coefficient of payment out of pension contracts

in a lump sum 85 % 85 %

annuity 15 % 15 %

*) In case of discount rate and investment yield, the margin is additive, in other cases it is multiplicative.

The company performs test of adequacy individually for main covers (death and contract maturity) of life insurance contracts together with supplementary insurance to credit insurance for invalidity (where products are divided into eight homogeneous groups of products, as shown in the table below) and individually for all other supplementary insurances to life insurance (within the test of adequacy in non-life insurance). Inadequacy of provisions of particular groups of products in not covered by adequacy of provisions in other groups of products.

The results of the test of adequacy for main covers of life insurance contracts and for supplementary insurance to credit insurance for invalidity:

€ ‘000

Group of products

Pro

visi

on f

or

life insu

rance

inclu

din

g d

efe

rred

acquis

itio

n c

ost

s

Unearn

ed

pre

miu

m

pro

visi

on

Pro

visi

on f

or

report

ed b

ut

not

sett

led c

laim

s

tota

l of

pro

visi

ons

test

ed f

or

adequacy

Pre

sent

valu

e o

f fu

ture

cash

flo

ws (–)

Min

imum

requir

ed

pro

visi

on

inadequacy

of

pro

visi

on

Risk insurance with supplementary invalidity insurance

– – – – (1,406) – –

Endowment insurance and mixed insurance

1,771 17 30 1,818 1,953 1,953 135

Pension insurance 339 2 13 354 528 528 174

Insurance for funeral costs 5,100 109 – 5,209 3,981 3,981 –

Universal capital life insurance 553 – – 553 516 516 –

Investment life insurance 777 – – 777 565 565 –

Children’s insurance 400 – – 400 252 252 –

Risk insurance (144) 15 – (129) (451) – –

total 8,796 143 43 8,982 5,938 7,795 309

Results of the test of adequacy of other supplementary insurances to life insurance:The test has shown that future payments from supplementary insurances are sufficient to cover future costs of insurance claims and future administration costs for supplementary insurances.

Determining fair valuesThe determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of valuation techniques as described in accounting policy 3(i)(v). For financial instruments that trade infrequently and have little price transparency, fair value is less objective and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. Determining the fair value of such instruments is also influenced by the assessment of credit risk of the counterparty in accordance with the principles and procedures stated in point 5(b) Management of financial risks – credit risk. Further information about the values of financial instruments at fair value, analyzed according to the valuation methodology (broken down into individual valuation levels), are included later in this note.

Critical judgements in applying the Group’s accounting policies

Critical accounting judgements made in applying the Group’s accounting policies include:

Classification of insurance contractsContracts are classified as insurance contracts, if significant insurance risk is transferred from the policyholder to the Group. For some contracts, the Group assesses whether the extent of insurance risk transferred is significant. This is mostly the case when a contract also includes a savings component. The significance of insurance risk is assessed according to whether there may be situations in which the Group would be required to pay significant additional benefits compared to comparable savings product.

In assessing whether a scenario exists under which these additional benefits would be payable and significant, the whole duration of the contract is taken into account as well as all insurance risks, which the contract transfers, including negotiated riders. A contract that classifies as an insurance contract remains an insurance contract until it expires.

66 67

Some contracts include the right to a profit share. The Group assesses whether additional benefits under this right are likely to be a significant portion of the total contractual benefits and whether the amount and timing of allocation are at the discretion of the Group, and thus whether they are considered to be contracts with DPF. Such an assessment is made at the time of inception of the contract.

Financial asset and liability classificationThe Group’s accounting policies provide scope for assets and liabilities to be designated at inception into different accounting categories in certain circumstances:• Inclassifyingfinancialassetsorliabilitiesas‘atfairvaluethroughprofitorloss’,management

determines if the Group meets the description of trading assets and liabilities set out in note 3 (k).

• Inclassifyingfinancialassetsasheld-to-maturity,managementdetermines if theGrouphasboth the positive intention and ability to hold the assets until their maturity date as required by accounting policy, note 3 (o)(i).

Impairment of investments in equity securitiesInvestments in equity securities are evaluated for impairment on the basis described in accounting policy 3(i)(vi).

For an investment in an equity security, a significant or prolonged decline in its fair value below its cost is considered to be objective evidence of impairment. The Group regards a decline in fair value in excess of 20 % to be “significant” and a decline in a quoted market price on an active market that persist for nine months or longer to be prolonged.

Valuation of financial instrumentsThe Group’s accounting policies and methods for fair value measurement are discussed under note 3(i)(v).

The Group measures fair values using the following hierarchy:• Quotedmarketpriceinanactivemarketforanidenticalinstrument(Level1).• Valuationtechniquesbasedonobservableinputs.Thiscategoryincludesinstrumentsvalued

using: quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data (Level 2).

• Valuation techniques using significant unobservable inputs. This category includes allinstruments where the valuation technique includes inputs not based on observable data and the unobservable inputs could have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments (Level 3).

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices. For all other financial instruments, the Group determines fair values using valuation techniques.

Transfers of financial instruments between particular levels can occur only if market activity changed.

Valuation techniques include net present value and discounted cash flow models, comparison to similar instruments for which market observable prices exist and other valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads and other premium used in estimating discount rates. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date, that would have been determined by market participants acting at arm’s length.

The Group uses widely recognised valuation models for determining the fair value of common and more simple financial instruments, like interest rate and currency swaps that use only observable market data and require little management judgement and estimation. Observable

prices and model inputs are usually available in the market for listed debt and equity securities, exchange-traded derivatives and simple over-the-counter derivatives like interest rate swaps. The availability of observable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determination of fair values. The availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets.

For more complex instruments, the Group uses proprietary valuation models, which are usually developed based on recognised valuation models. Some or all of the significant inputs into these models may not be observable in the market, and are derived from market prices or rates or are estimated based on assumptions. Example of instruments involving significant unobservable inputs include certain over-the-counter structured derivatives, certain loans and securities for which there is no active market and certain investments in subsidiaries. Valuation models that employ significant unobservable inputs require a higher degree of management judgement and estimation in determination of fair value. Management judgement and estimation are usually required for selection of the appropriate valuation model to be used, determination of expected future cash flows from the financial instrument being valued, determination of the probability of counterparty default and prepayments and selection of appropriate discount rates.

The Group has an established control framework with respect to the measurement of fair values. This framework includes a control function performed by the Market Risks Department, which is independent from front office management. Specific controls include: verification of observable pricing inputs and reperformance of model valuations; a review and approval process for new models and changes to models; calibration and back-testing of models against observed market transactions; analysis and investigation of significant daily valuation movements; and review of significant unobservable inputs and valuation adjustments.

Basic parameters entering into the valuation model to determine the fair value of equity financial instruments are forecast economic results and equity of the company, market multiples indicators such as EBITDA, sales etc. for comparable companies, which are published by reputable companies for different sectors.

For fair value measurement of debt financial instruments the Group uses models based on net present value. The key estimation parameter is the discount interest rate. Determination of the discount interest rate is based on the risk free market rate, which corresponds to the incremental maturity of particular financial instruments and on a risk premium. The risk premium is determined to be consistent with regular market practice.

Even though these valuation techniques are considered to be appropriate and in compliance with market practice, still the estimations in discount interest rate and changes of basic assumptions in future cash flows can lead to a different fair value of financial instruments.

68 69

The following table shows a reconciliation of the opening balance to the closing balance of fair values in particular categories (Level 3). Valuation techniques – unobservable inputs:

investment securities2015

€ ‘0002014

€ ‘000

at 1 January 128,476 318,619

Total gains or losses:

in profit or loss (31) 7,180 9,139

in other comprehensive income 2,226 3,363

Settlements (maturities and sales) (97,385) (219,159)

Purchases 15,000 96,526

Transfers into the category – 5,201

Transfers out of the category – (85,213)

Other 1,984 –

at 31 december 57,481 128,476

Financial instrument type

Valuation technique

Fair value as at 31 december

2015

significant unobservable

input

Range employed

sensitivity to reported fair value

Debt financial instruments

Discounted cash flow

51,125 (2014: 118,799)

Credit premium2.00 %

(2014: 2.00 %)

Credit premium increase will cause

decrease of fair value and vice versa.

Equity instrumentsComparative

method6,356

(2014: 7,433)Sales multiple

change 10.00 %

(2014: 10 %)

Sales multiple increase will cause

increase of fair value and vice versa.

The following table shows information regarding the investment movements between all categories of valuation methods during 2015.

level 1 Quoted market prices in

active markets€ ‘000

level 2Valuation techniques:

observable inputs€ ‘000

level 3Valuation techniques:

unobservable inputs€ ‘000

trading assets

Transfers into the category – – –

Transfers from the category – – –

investment securities

Transfers into the category 50,302 – –

Transfers from the category – (50,302) –

total 50,302 (50,302) –

31 december 2014

note level 1

Quoted market prices in active

markets€ ‘000

level 2Valuation

techniques: observable

inputs€ ‘000

level 3Valuation

techniques: unobservable

inputs€ ‘000

total€ ‘000

assets

Trading assets 8 1,857 489 24 2,370

Investment securitiesAvailable-for-sale

11 695,297 – 128,476 823,773

697,154 489 128,500 826,143

liabilities

trading liabilities 8 – 38 – 38

31 december 2015

note level 1

Quoted market prices in active

markets€ ‘000

level 2Valuation

techniques: observable

inputs€ ‘000

level 3Valuation

techniques: unobservable

inputs€ ‘000

total€ ‘000

assets

Trading assets 8 1,556 550 – 2,106

hedging derivatives 8 – 1,242 – 1,242

Investment securitiesAvailable-for-sale

11 780,576 23,558 57,481 861,615

782,132 25,350 57,481 864,963

liabilities

Trading liabilities 8 – 84 – 84

hedging derivatives 8 – 312 – 312

– 396 – 396 In regards to the fair value assessment of equity financial instruments the Bank has simulated changes of income multiplicator by +/- 10 % against their expected value. As at 31 December 2015, the change of these parameters would have an unfavourable effect on recognised fair value amounting to € 225 thousand. In the case of an opposite movement, the favourable effect would be € 225 thousand.

In regards to the fair value assessment of debt financial instruments, the Group has simulated changes of credit risk premiums by +/- 200 bp against their current value. As at 31 December 2015, the change of these parameters would have an unfavourable effect on recognised fair value amounting to € 3,598 thousand. In the case of an opposite movement, the favourable effect would be € 3,892 thousand.

The reported amounts of financial instruments at fair value analysed according to valuation methodology were as follows:

70 71

5. Financial, operational and insurance risk management

(a) introduction

The Group has exposure to the following risks:• creditrisk,• liquidityrisk,• marketrisk,• operationalrisk,• insurancerisk.

The Board of Directors of each company in the Group is responsible for risk management. Information on the exposure to each of the above risks; the objectives, policies and processes for measuring and managing risk; and on the management of the Bank’s capital is set out below.

Risk management framework

The ultimate body responsible for risk management in the Bank is the Board of Directors. The Board of Directors has overall responsibility for the establishment and oversight of the Bank’s risk management framework. Some responsibilities are delegated to special advisory bodies – Assets-Liabilities Committee (ALCO), Credit Committee, Investment Committee, Operational Risk Management Committee (ORCO), Program and Project Committee (PPV), Management of Development requirements and changes APV – BITCO, Product Committee, Compensation Committee (NK), Disposal Committee (VK) and Risk Management Committee.

The Bank’s risk management policies are based on the Risk Management Strategy, which is the primary document for risk management. The Strategy has been approved by the Board of Directors, and is regularly reassessed and updated. The risk management process is a dynamic and constant process of identification, measurement, monitoring, control and reporting of risks within the Bank.

The process involves establishing limits and processes to monitor risks and adherence to those limits. Risk management policies and systems are reviewed and amended regularly to reflect changes in legislation, market conditions, products and services offered. The Bank, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations.

The Bank’s Supervisory Board which covers functions of Audit Committee is responsible for monitoring the effectiveness of the internal control and risk management systems. Its activities cover also a review of the external auditor’s independence and evaluation of the findings from the audit of the financial statements by the external auditor. They monitor Bank`s compliance with the financial accounting standards. The Audit Committee is assisted in these functions by Internal Audit.

(b) Credit risk

Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Bank’s loans and advances to customers, the provisions of guarantees, the issuance of documentary credits, loans and advances to other banks and the purchase of investment securities. For risk management reporting purposes, the Bank considers and consolidates all elements of its credit risk exposure (such as individual obligor default risk, management failure, country risk, sector and concentration risk).

Credit risk management within the Bank is the responsibility of the Retail Banking Risk Management Division (“ORR”) and of the Specialized unit of Corporate Banking Risk Management (“SU CRB”). The Board of Directors has delegated responsibility for the oversight of credit risk to its Credit Committee and Investment Committee in compliance with the competence order.

Credit risk management includes:• examinationoftheclients’creditworthiness,

• assessing limits for clients, economically connected parties, including monitoring portfolioconcentration,

• assessinglimitsforcounterparties,countries,banksandsectors,• mitigationofriskbyvariousformsofcollateral,• continuous monitoring of the loan portfolio development and prompt decision-making to

minimise possible losses.

In order to mitigate credit risk the Bank assesses the creditworthiness of the client/ deal using a rating tool with parameters specific to each client segment when providing the loan as well as during the life of the credit/ loan trade. The Bank has various rating models depending on the type of business.

The Group use for analysis of client/transaction:• Countryrating,• Bankrating,• Sectorrating,• Clientanddealrating,• Projectassessmenttool,• Scoringforretailloans.

The approval process of active bank transactions includes a review of the individual applicant of the transactions, credit limit of the counterparty and collateral in order to mitigate credit risk. The Bank monitors the development of the portfolio of active bank transactions yearly or more often if necessary, to ensure that prompt action can be taken to minimize potential risks.

Credit risk limits are generally determined on the basis of an economic analysis of the client, sector, region or country. Their design and evaluation is in the responsibility of the Corporate Banking Risk Management (ORKB) and are approved by the relevant authority. The procedure of determining individual limits is part of the Bank’s internal guidelines.

To mitigate credit risk, the Bank uses the following types of limits:• Financialinvolvementlimitsofclientoreconomicallyconnectedentities(clients),• Countrylimits,• Limitsonbanks• Limitsonsectors.

For corporate loans the Bank currently uses three rating system for the evaluation of clients, who prepare financial statements according to Slovak Accounting Standards, Czech Accounting Standards and International Financial Reporting Standards. The rating system evaluates quantitative and qualitative indicators of economic activities (eg. liquidity ratio, profitability, gearing etc.) and compares them to the subjective assessment of the client by the bank. In addition collateral accepted by the bank is also reflected in the deal rating. The Bank categorizes clients into rating levels from the best to the worst, the worst level representing the highest probability of default. The Bank has established a process of setting up the ratings and their regular updating and a control process of assigning of the rating and these are defined in the Bank`s internal guidelines. The bank continuously monitors, assesses and evaluates the compliance with the limits on country, maximum exposure, sector group and related parties and translates these into its activities.

For retail loans at the bank uses multiple rating models depending on the segment.

72 73

Loans and advances, excluding debt securities, were granted to customers in the following sectors (gross amount):

Loans and advances were made to customers in the following countries (gross amount):

Debt securities in the portfolio of loans and receivables by country of issuer (gross):

2015

€ ‘0002014

€ ‘000

Individuals 681,384 685,998

Financial services 472,011 505,645

Other services (accommodation services, real estate investment activities)

403,527 493,507

Manufacturing companies 260,365 110,599

Trading companies 170,199 390,415

Transport and telecommunication 34,239 15,969

Real estate constructions 16,091 24,110

Agriculture 962 509

health care and public services 454 586

2,039,232 2,227,338

2015

€ ‘0002014

€ ‘000

Slovak Republic 1,216,091 1,295,826

Other member countries of EU: 823,141 931,512

Out of which: Cyprus 392,356 549,154

Czech Republic 236,799 251,808

Poland 88,433 89,588

Luxembourg 88,323 –

Netherlands 8,900 11,102

Bulgaria 8,330 9,860

Romania – 20,000

2,039,232 2,227,338

2015

€ ‘0002014

€ ‘000

Slovak Republic 144,179 32,718

Other member countries of EU 85,397 160,737

from which: Cyprus 85,397 85,224

Czech Republic – 75,513

229,576 193,455

2015

€ ‘0002014

€ ‘000

Financial services 85,397 –

Manufacturing companies 64,716 85,660

Other services (accommodation, real estate investments activities)

79,463 –

Trading companies – 107,795

229,576 193,455

Classification of receivables

Individually significant receivables are classified into five categories (standard, standard receivables with a qualification, non-standard, doubtful and loss receivables), which, for the purposes of monitoring and reporting, are further classified into the following categories: – non-impaired, – impaired – impairment not more than 20 %,

impairment more than 20 %, but not more than 50 %, impairment more than 50 %, but not more than 95 %, impairment more than 95 %, – out of which: defaulted.

Receivables that are not individually significant, which are assessed on a portfolio basis, are classified based on the number of overdue days, as follows:Non-impaired – overdue 0 daysImpaired – overdue 1 – 90 daysDefaulted – overdue more than 90 days

The Group sets the level of significance at € 166 thousand. The loans and advances with a value equal or higher than € 166 thousand are assessed individually.

loans and receivables to clients – individually assessed – impaired

2015 2014

Gross€ ‘000

net€ ‘000

Gross€ ‘000

net€ ‘000

Impaired receivables:

Impaired not more than 20 % 49,537 49,415 94,852 87,359

Impaired and defaulted:

Impairment more than 20 %, but not more than 50 % 85,681 73,798 124,780 86,139

Impairment more than 50 %, but not more than 95 % – – 32,059 31,597

Impairment more than 95 % 66,804 29,198 46,905 27,514

202,022 152,411 298,596 232,608

The Bank presents a more detailed analysis of debt securities from the portfolio of loans and receivables, as well as comparative data for 31 December 2014 in the table below.

Debt securities in the portfolio of loans and receivables by sector (gross):

74 75

as at 31 december

loans and advances to customers

loans and advances to

central banks

investment debt securities

Bank guarantee and credit lines

2015

€ ‘000

2014

€ ‘000

2015

€ ‘000

2014

€ ‘000

2015

€ ‘000

2014

€ ‘000

2015

€ ‘000

2014

€ ‘000

Individually assessed

Not impaired 1,400,551 1,459,203 441,921 158,803 1,129,508 1,265,504 441,318 290,791

Out of whichOverdue, but not impaired

3,146 2,224 – – – – – –

Impaired, out of which: 202,022 298,596 – – – – 13,770 879

defaulted 152,485 203,743 – – – – 3,823 477

Out of total amount of individually assessed restructured loans

95,205 164,493 – – – – – –

Book value 1,602,573 1,757,799 441,921 158,803 1,129,508 1,265,504 455,088 291,670

Allowance for impairment

(49,611) (65,988) – – – – – –

Net book value 1,552,962 1,691,811 441,921 158,803 1,129,508 1,265,504 455,088 291,670

Collectively assessed

Not significant 666,235 662,995 – – – – 105,697 106,168

Book value 666,235 662,995 – – – – 105,697 106,168

Allowance for impairment

(85,175) (71,091) – – – – – –

net book value 581,060 591,904 – – – – 105,967 106,168

total net book value

2,134,022 2,283,715 441,921 158,803 1,129,508 1,265,504 560,785 397,838

Individually assessed loans and advances The Group uses an internal rating system for providing and monitoring loans and advance granted to corporate clients. The rating is given based on the assessment of the economic health, prospect and the client market share.

The receivables are reported as not impaired if they do not present any of the following triggers of impairment:a) significant financial difficulty of issuer or debtor,b) breach of contract, e.g. default or delay in repayment of principal or interests,c) lender granting to a borrower a concession due to economic or legal reasons that the lender

would not otherwise consider,d) borrower will enter bankruptcy or other financial reorganisation.

Impaired loans and securitiesImpaired loans and securities are loans and securities for which the Group determines that it is probable that it will be unable to collect all principal and interest due according to the contractual terms of the loan/securities agreement(s). Past due but not impaired loansLoans and securities where contractual interest or principal payments are past due but the Group believes that impairment is not appropriate on the basis of accepted collateral or status of repayments of amounts owed to the Group.

Loans with renegotiated termsLoans with renegotiated terms are loans that have been restructured due to deterioration in the borrower’s financial position and where the Group has made concessions that it would not otherwise consider. Once the loan is restructured it remains in this category independent of satisfactory performance after restructuring.

The Group distinguishes between performing and non-performing receivables, where the monitored features are the number of days overdue and the probability of default, without the realization of collateral. To consider receivable as non-performing, it is sufficient to meet at least one of these criteria.

Performing receivables are subsequently divided to performing without relief, performing with relief refinanced and performing with relief in the form of conditions modification.

The Group assesses receivable as performing with relief refinanced when the loan was provided for full or partial repayment of the original loan.

The Group assessed receivables as performing with relief in the form of conditions modification when there are changes in the contract`s conditions made and the loan is not refinanced. These changes would not be made if the client`s financial position did not deteriorate (while not refinanced receivables).

The loans which do not have any of the characteristics above are assessed by the Group as performing without relief.

Receivables as at 31 december 2014

Gross receivables€ ‘000

impairment allowances€ ‘000

net receivables€ ‘000

Non-performing 300,415 115,542 184,873

Non-performing total 300,415 115,542 184,873

Performing:

Without relief 1,908,899 14,595 1,894,304

With relief refinanced 7,219 127 7,092

With relief in form of conditions modification

204,261 6,815 197,446

Performing total 2,120,379 21,537 2,098,842

total 2,420,794 137,079 2,283,715

Receivables as at 31 december 2015

Gross receivables€ ‘000

impairment allowances€ ‘000

net receivables€ ‘000

Non-performing

Without relief 127,496 79,027 48,469

With relief refinanced 77,871 29,090 48,781


38,508 4,306 34,202

Non-performing total 243,875 112,423 131,452

Performing:

Without relief 1,970,766 19,909 1,950,857

With relief refinanced 47,046 2,369 44,677


7,121 85 7,036

Performing total 2,024,933 22,363 2,002,570

total 2,268,808 134,786 2,134,022

The gross amounts of individually impaired loans and advances to customers, banks and investment debt securities by risk grade are as follows:

76 77

Allowances for impairmentThe Group creates an allowance for impairment losses that represents its estimate of incurred losses in its loan portfolio. The main components of this allowance are a specific loan loss allowances that relate to individually significant exposures, and a collective loan loss allowance established for groups of homogeneous assets in respect of losses that have been incurred but have not been identified on loans subject to individual assessment for impairment.

ProvisionsIn accordance with International Accounting Standard IAS 37 the Group creates provisions for off balance sheet liabilities (valid credit lines, bank guarantees and letters of credit) if it expects emergence of potential credit risk. The Group creates provisions in accordance with materiality levels separately for individual off-balance sheet liabilities over € 166 thousand and portfolio off-balance sheet liabilities below € 166 thousand. For individually assessed liabilities the Group sets the percentage of loss to the same level as for undrawn lines of credit.

Write-off policyThe loan/security balance (and any related allowances for impairment losses) is written off when the Group discovers that the loans/securities are uncollectible. This decision is reached after considering information such as the occurrence of significant changes in the borrower/issuer’s financial position such that the borrower/issuer can no longer pay the obligation, or that proceeds from collateral will not be sufficient to pay back the entire exposure. For smaller balances of standardised loans, the write-off decision is generally based on a number of days past-due specific for a given product.

The exposure according to client types (internal classification) is as follows:

2015 2014

Gross amount€ ‘000

impairmentallowances

€ ‘000

Carrying amount€ ‘000

Gross amount€ ‘000

impairmentallowances

€ ‘000

Carrying amount€ ‘000

Retail clients:

Better payment (Lepšia splátka) 340,202 32,217 307,985 224,593 22,597 201,996

housing loans 77,155 11,085 66,070 156,151 11,030 145,121

Good loan (Dobrá pôžička) 149,432 8,899 140,533 120,561 3,741 116,820

Available loan (Dostupná pôžička) 65,195 28,754 36,441 119,846 30,150 89,696

Overdrafts at personal accounts 24,239 3,855 20,384 25,437 3,148 22,289

Practical mortgage (Praktická hypotéka)

10,282 139 10,143 15,785 94 15,691

Other 1,260 135 1,125 5,950 274 5,676

667,765 85,084 582,681 668,323 71,034 597,289

Corporate clients:

Large clients 1,266,949 23,166 1,243,783 1,314,034 35,979 1,278,055

Foreign currency loans 143,571 8,306 135,265 49,314 1 49,313

REPO deals – – – 80,943 – 80,943

Overdrafts 117,189 9,870 107,319 260,891 28,710 232,181

Small clients 87 – 87 147 4 143

Other receivables 151 88 63 475 51 424

Sold receivables 49,773 7,815 41,958 24,169 739 23,430

Leasing 23,323 457 22,866 22,498 561 21,937

1,601,043 49,702 1,551,341 1,752,471 66,045 1,686,426

total 2,268,808 134,786 2,134,022 2,420,794 137,079 2,283,715

Collateral

The Group holds collateral against loans and advances to customers in the form of mortgage interests over property and other registered securities over assets and guarantees. Estimates of fair values are based on the value of collateral assessed at the time before executing the deal and are reassessed in compliance with the internal methodology of the Bank. Generally, collateral is not held on loans and advances to banks, except when securities are held as part of reverse repurchase and securities borrowing activity.

The Group’s assessment of the net realisable value of the collateral is based on independent expert appraisals, which are reviewed by bank specialists, or internal evaluations prepared by the Bank. The net realisable value of collateral is derived from this value using a correction coefficient that is the result of the current market situation and reflects the Group’s ability to realize the collateral in case of involuntary sale for a price that is possibly lower than the market price. The Group, at least annually, updates the values of the collateral and the correction coefficient.

78 79

An estimate of the fair value of collateral and other security enhancement held to secure financial assets is shown below:

loans and advances to customers2015

€ ‘0002014

€ ‘000

against individually not impaired loans

Real estate 216,716 218,592

Movables 28,663 31,765

Debt securities – 6,737

Equity securities 157,235 398,536

Other 154,752 62,565

557,366 718,195

against individually impaired loans

Real estate 117,659 148,155

Movables 13,852 27,398

Bank guarantees – 319

Other 4,552 9,231

136,063 185,103

against collectively assessed loans

Real estate 9,136 16,951

Movables – 66

Other 93 139

9,229 17,156

spolu 702,658 920,454

Department. The Legal Department takes the necessary steps to obtain the maximum recovery from default receivables including realization of collateral and acts as the Group’s representative in creditor committees when the debtor is in bankruptcy.

Recovery of retail receivables is the responsibility of the Retail Banking Risk Division (ORR) – Department of Retail Loan Claiming (OVR). In the retail segment, the recovery process for overdue receivables is defined and centrally operated by workflow systems (the workflow system in the Bank’s environment is based on a system provided by the company Loxon. The system provides complex evidence of delinquent receivables, uses segmented strategy of recovery and also processes numerous task flows, automated collection tasks, etc.), which initiate activities for early recovery by the ORR OVR. The Bank also uses outsourcing services from collection companies. The Retail Banking Risk Division is responsible for defining the procedures for recovery and measurement, as well as the measurement of their effectiveness.

settlement risk

The Bank’s activities may give rise to risk at the time of settlement of transactions and trades. Settlement risk is the risk of loss due to the failure of a company to honour its obligations to deliver cash, securities or other assets as contractually agreed.

For certain types of transactions the Bank mitigates this risk by conducting settlements through a settlements’/clearing agents to ensure that a trade is settled only when both parties have fulfilled their contractual obligations.

Settlement limits form part of the credit approval/limit monitoring process. Acceptance of settlement risk on free settlement trades requires transaction-specific or counterparty-specific approval from the Risk Management Division.

Credit risk for the asset management company is defined as non-fulfilment of an issuer’s or a counterparty’s debt. The potential impact of credit risk on the value of assets is considered to be moderate.

Mutual funds minimise credit risk through trading with securities mainly by making deals with the units fund’s assets in compliance with the law, so that the principle “delivery against payment’’ in terms usual on the organised market is used. Risk management consists of verifying the credibility of the issuer or counterparty, setting the limit for the issuer or counterparty in terms of elimination and distribution of risks, inputting this limit to the information system of PRVÁ PENZIJNÁ SPRÁVCOVSKÁ SPOLOČNOSŤPOŠTOVEJBANKY,správ.spol.,a.s.anditssubsequentrecalculation.

Country risk

The Group monitors country risk in accordance with internal guidelines and in compliance with national legislation. Detailed information on concentration of portfolio of government securities can be found in Note 11 Investment securities.

(c) liquidity risk

Liquidity risk arises from the type of financing of the Group’s activities and the management of its positions. It includes financing the Group’s assets with instruments of appropriate maturity and the Group’s ability to dispose of its assets for acceptable prices within acceptable time periods.

The Group promotes a conservative and prudent approach to liquidity risk management.

The Group has a system of limits and indicators consisting of the following elements:• Short-termliquiditymanagementisperformedbytheGroup’sDealingDepartmentbymonitoring

the liabilities and receivables due, and fulfilling the compulsory minimum reserves,• Long-termliquidityriskmanagementisbasedonamodelofcoredepositsusingtheValueat

Risk method, or VaR,

assets obtained by taking possession of collateral

As at 31 December 2014 the Bank did not account for assets obtained by taking possession of collateral pledged in favour of the bank for loans. As at 31 December 2015 the bank acquired into its assets receivables in amount of € 336 thousand by taking possession. The receivables were valued by an independent external expert.

As noted above, to mitigate credit risk before providing loans to corporate clients, the Bank generally requires collateral. The following collateral types are accepted:• Cash,• Stateguarantees,• Securities,• First-classreceivables,• Bankguarantees,• Guaranteesissuedbyareputablethirdparty,• Realestate,• Machineryandequipment.

Recovery of delinquent receivables

Receivables whose repayment is threatened are administered by the Legal Services Division

80 81

The ratios are defined in the Provision of the National Bank of Slovakia No. 18/2008 on Bank liquidity. Liquidity coverage ratio was implemented through NBS Decree (Narodnej banky Slovenska) No. 11/2014 with effectiveness as of 1 December 2014, therefore there are no comparable data for 2014. As at 31 December 2014, liquidity coverage ratio was 1.76.

The remaining period to maturity of financial assets and liabilities as at 31 December 2015 and 31 December 2014 are set out in the following tables, which shows the undiscounted cash flows on the basis of their earliest contractual maturity in liabilities and the latest in assets. The Group’s expected cash flows may vary from this analysis.

• Long-term liquiditymanagement isalsoperformedusingGAPAnalysis (theclassificationofassets and liabilities based on their maturity into different maturity ranges) and evaluation of indicators of the net statement of financial position in euro.

Management of liquidity risk

The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group finances its assets mostly from primary sources. In addition, the Group has open credit lines from several financial institutions and is also able to finance its assets from interbank deposits. Due to its suitable structure of assets the Group has at its disposal sufficient amount of bonds that are, if necessary, acceptable for acquiring additional resources through refinancing operations organised by the European Central Bank. The Finance Division’s specialised ALM Department is responsible for liquidity management.

The Financial market Division receives information from other departments regarding the liquidity profile of their financial assets and liabilities and details about other projected cash flows arising from projected future business. The Financial market Division then maintains a portfolio of short-term liquid assets, made up of loans and advances to banks and other inter-bank facilities, to ensure that sufficient liquidity is maintained within the Group as a whole.

The daily liquidity position is monitored and monthly liquidity stress testing is conducted under a variety of scenarios covering both normal and more severe market conditions. The Group also has an emergency plan and crisis communication plan that describes the principles and procedures of management in extraordinary conditions and secures the availability of financial back-up sources. All liquidity policies and procedures are subject to review and approval by ALCO. Reports on the liquidity position of the Group are produced daily. A summary report, including any exceptions and remedial action taken, is submitted to ALCO at least once a month.

Exposure to liquidity risk

The key measures used by the Group for managing liquidity risk are: the liquidity ratio of fixed and illiquid assets, the ratio of liquid assets, the ratio of primary liquidity, liquidity coverage ratio, modified liquidity gap ratio and net stable funding ratio.

Details of the Group’s liquidity ratios at the reporting date and during the reporting period were:

31 december 2015 31 december 2014

the liquidity ratio of fixed and illiquid assets

End of the period 0.61 0.58

Average for the period 0.61 0.67

Maximum for the period 0.66 0.75

Minimum for the period 0.56 0.58

Ratio of coverage of liquid assets

End of the period 1.88 –

Average for the period 1.70 –

Maximum for the period 2.58 –

Minimum for the period 1.34 –

31 december 2015

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assets

Cash and deposits at central banks

570,697 570,697 – – – – 570,697

Trading assets, out of which:

securities 1,556 9 26 1,643 – – 1,678

derivative instruments

cash in 550 265,738 – – – – 265,738

cash out – (265,265) – – – – (265,265)

hedging derivatives

cash in 1,242 45 3,583 17,483 5,320 – 26,431

cash out – (57) (2,693) (17,920) (4,511) – (25,181)

Loans and advances to banks

2,482 2,482 – – – – 2,482

Loans and advances 2,134,022 300,382 474,713 1,412,901 908,303 – 3,096,299

Investment securities 1,326,283 79,091 127,958 793,728 246,769 196,775 1,444,321

Deferred tax asset 14,273 – 2,975 11,298 – – 14,273

Tax receivable 4,253 4,253 – – – – 4,253

Other assets 77,557 67,864 9,413 201 79 – 77,557

4,132,915 1,025,239 615,975 2,219,334 1,155,960 196,775 5,213,283

82 83

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Trading derivative liabilities

cash in – (63,398) – – – – (63,398)

cash out 84 63,495 – – – – 63,495

hedging derivatives

cash in – (181) (1,452) (5,850) (848) – (8,331)

cash out 312 248 774 6,174 1,447 – 8,643

Deposits by banks 3,930 3,930 – – – – 3,930

Customer accounts 3,506,955 2,576,666 469,094 510,143 4,381 235 3,560,519

Loans received 6,820 – 6,820 – – – 6,820

Provisions 1,960 – – – – 1,960 1,960

Provisions for insurance contracts

11,097 – – – – 11,097 11,097

Deferred tax liability 317 310 7 – – – 317

Tax liabilities 840 840 – – – – 840

Other liabilities 35,217 31,522 2,473 1,222 – – 35,217

Subordinated debt 8,013 107 322 1,711 8,321 – 10,461

3,575,545 2,613,539 478,038 513,400 13,301 13,292 3,631,570

31 december 2014

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assets


366,894 366,894 – – – – 366,894

Trading assets, out of which:

securities 1,881 – – – – 1,881 1,881

derivative instruments

cash in 489 104,000 – – – – 104,000

cash out – (103,479) – – – – (103,479)

Loans and advances to banks

1,806 1,806 – – – – 1,806

Loans and advances to customers

2,283,715 375,210 646,981 1,414,358 729,876 785 3,167,210

Investment securities 1,416,783 71,342 79,434 708,353 702,822 151,279 1,713,230

Deferred tax asset 21,834 – 813 21,021 – – 21,834

Tax receivable 309 259 50 – – – 309

Other assets 63,950 52,147 1,187 21 53 10,542 63,950

4,149,883 868,179 728,465 2,143,753 1,432,751 164,487 5,329,886

The Group monitors the remaining periods to maturity on the basis of estimated withdrawals or expected maturity of each item in asset and liabilities. The liquidity gap up to 3 months comes essentially from Deposits and loans from customers, which are expected to be prolonged as shown by historical evidence.

The remaining period to contractual maturity of commitments and contingencies items as at 31 December 2015 is set out in the following table:

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Commitments and contingencies

Bank guarantees to national banks

205,503 205,503 – – – – 205,503

Guarantees to clients 54,198 24,146 6,341 13,294 10,417 – 54,198

Undrawn committed facilities

301,084 301,084 – – – – 301,084

560,785 530,733 6,341 13,294 10,417 – 560,785

Contractual/notional amount of derivatives

Currency swaps 328,760 328,760 – – – – 328,760

hedging derivatives 203,610 – – 79,500 124,110 – 203,610

532,370 328,760 – 79,500 124,110 – 532,370

31 december 2014

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liabilities

Trading derivative liabilities

cash in – 1,700 – – – – 1,700

cash out 38 (1,741) – – – – (1,741)

Deposits by banks 13,475 13,475 – – – – 13,475

Customer accounts 3,557,002 2,555,045 559,357 465,295 – 13,746 3,593,443

Loans received 5,051 51 5,000 – – – 5,051

Provisions 66 66 – – – – 66

Provisions for insurance contracts

8,805 – – – – 8,805 8,805

Tax liabilities 16,779 16,623 113 – – 43 16,779

Other liabilities 29,117 28,392 525 – – 200 29,117

Subordinated debt 8,013 107 320 1,705 8,746 – 10,878

3,638,346 2,613,718 565,315 467,000 8,746 22,794 3,677,655

84 85

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Commitments and contingencies

Guarantees to national banks

121,180 121,180 – – – – 121,180

Guarantees to clients 37,748 11,078 8,200 18,415 55 – 37,748

Confirmed credit lines 238,910 238,910 – – – – 238,910

397,838 371,168 8,200 18,415 55 – 397,838

notional amount of derivatives

Currency swaps 105,229 105,220 – – – – 105,220

105,229 105,220 – – – – 105,220

The Group monitors remaining maturity based on the expected maturity particular assets and liabilities.

The liquidity gap up to 3 months comes essentially from Deposits and loans from customers, which are expected to be prolonged as shown by historical evidence.

The remaining period to contractual maturity of commitments and contingencies items as at 31 December 2014 is set out in the following table:

(d) Market risk

Market risk is the risk that changes in market prices, such as interest rates, equity prices, foreign exchange rates and credit spreads (not relating to changes in the obligor’s/issuer’s credit standing) will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

The Group separates its exposure to market risk between the trading and non-trading portfolios. Trading portfolios include proprietary position-taking, together with financial assets and liabilities that are managed on a fair value basis.

Management of market risks

Overall authority for market risk is vested in the ALCO. Members of ALCO are responsible for the decisions in relation to market risk management.

The principal tool used to measure and control market risk exposure within the Bank’s trading portfolios is Value at Risk (VaR). The VaR of a trading portfolio is the estimated loss that will arise on the portfolio over a specified period of time (holding period) from an adverse market movement with a specified probability (confidence level). The VaR model used by the Bank is based upon a 99 percent confidence level with 1 day holding period. The VaR model used is based mainly on historical simulation. Taking account of market data from the previous years, and observed relationships between different markets and prices, the model generates a wide range of plausible future scenarios for market price movements.

Although VaR is an important tool for measuring market risk, the assumptions on which the model is based do give rise to some limitations, including the following:• Aholdingperiodassumesthatitispossibletohedgeordisposeofpositionswithinthatperiod.

This is considered to be a realistic assumption in almost all cases but may not be the case in situations in which there is severe market illiquidity for a prolonged period.

• A99%confidenceleveldoesnotreflectlossesthatmayoccurbeyondthislevel.Evenwithinthe model used there is a one percent probability that losses could exceed the VaR.

• VaRiscalculatedonanend-of-daybasisanddoesnotreflectexposuresthatmayariseonpositions during the trading day.

• Theuseofhistoricaldataasabasisfordeterminingthepossiblerangeoffutureoutcomesmaynot always cover all possible scenarios, especially those of an exceptional nature.

• TheVaRmeasureisdependentupontheBank’spositionandthevolatilityofmarketprices.TheVaR of an unchanged position reduces if the market price volatility declines and vice versa.

Daily reports of utilisation of VaR limits are submitted to Market Risk Management and regular summaries are submitted to ALCO.

A summary of the VaR position of the Bank’s trading portfolios as at 31 December is as follows:

A summary of the VaR position of the Bank’s trading portfolio as at 31 December 2014 is as follows:

From 1 January 2015 the Bank started to use VaR model covering all market risks in the trading book replacing both individual VaR models for foreign exchange and equity risk. As a result of this change, there is no comparable data summarizing VaR for the year 2014.

The limitations of the VaR methodology are minimalized by supplementing limits for position and sensitivity and stop loss limits, including limits to address potential concentration risks within each trading portfolio. In addition, the Bank uses a wide range of stress tests to model the financial impact of a variety of exceptional market scenarios on individual trading portfolios and the Bank’s overall position.

Interest rate risk

The main source of the Group’s interest rate risk results from revaluation risk, which is due to timing differences in maturity dates (fixed rate positions) and in revaluation (variable rate positions) of banking assets and liabilities and positions in commitments, contingencies and derivative financial instruments.

Other sources of interest rate risk are:• Yieldcurverisk–riskofchangesintheyieldcurveduetothefactthatachangeininterestrates

on the financial market will occur in different extents at different periods of time for interest-sensitive financial instruments,

• Different interest base risk – reference rates, towhich active and passive transactions areattached, are different and do not move simultaneously,

• Riskfromprovisioningresultingfromthedecreaseofinterestsensitiveexposurewithincreasingvolume of impairment loss allowances. Reducing exposure affects bank interest sensitivity based on a short or long position.

31 december 2014

€ ‘000

average€ ‘000

Maximum€ ‘000

Minimum€ ‘000

Foreign exchange risk 10 9 19 2

Share price risk – 13 16 –

31 december 2015

€ ‘000

average€ ‘000

Maximum€ ‘000

Minimum€ ‘000

VaR position 17 57 236 11

86 87

200 bp parallel increase

€ ‘000

200 bp parallel decrease

€ ‘000

31 december 2015

As at 31 December (21,267) 4,095

Average for the period (49,084) 15,759

Maximum for the period (68,133) 30,833

Minimum for the period (17,967) 3,659

31 december 2014

As at 31 December (64,414) 27,709




The Bank’s Economic Value represents the difference between the fair value of the interest rate sensitive assets recorded in the bank book and the fair value of interest rate sensitive liabilities recorded in the bank book. Interest rate sensitive assets and liabilities are assets and liabilities for which fair value is variable depending on changes in market interest rates. Particular assets and liabilities are divided into re-pricing gaps based on their contractual re-pricing period, volatility of interest margins (for selected liability products) or roll forward (for assets and liabilities where it is not possible to use statistical models). In case the asset or the liability does not bear interest risk, it is assigned a 1 day maturity.

The change in the Bank’s Economic Value reflects the impact of a parallel interest shock on the value of interest sensitive assets and liabilities of the Bank. The table above shows that an increase in the interest curve decreases the Bank’s value and vice versa. It should be emphasized that this measure highlights the effect of a shift in interest curves on the present structure of assets and liabilities, and excludes assumptions on future changes in the structure of the balance sheet.

Sensitivity of reported equity to interest rate movements:

Sensitivity of the Bank’s economic value due the movement in interest rates:On the assets side of the statement of financial position, the Group manages interest rate risk mainly by providing a majority of loans with variable rates and by managing its investment securities portfolio mostly related to fixed rates. The Group continuously uses asset-liability management in its interest risk management. When purchasing bonds, the current interest position of the Group is taken into account, which then serves as a basis for purchase of fixed or variable bonds. The Bank uses interest swaps to hedge interest rates in fixed bonds in Available-for-sale portfolio. The Group uses currency swaps for hedging of interest rate risk related to financial assets with fixed interest rate.

The priorities of the Bank for interest rate risk management of liabilities comprise:• Stabilityofdeposits,especiallyoverlongertimeperiods,• Fastandflexiblereactionstosignificantchangesininter-bankinterestratesthroughadjustments

to interest rates on deposit products,• Continuously evaluating interest rate levels offered to clients compared to competitors and

actual and expected development of interest rates on the local market,• Management of the structure of liabilities in compliancewith the expecteddevelopment of

money market rates in order to optimise interest revenues and minimise interest rate risk.

Management of interest rate risk

Limits, indicators and methods of interest rate risk management are defined in accordance with the principles described in the Market Risk Management Strategy.

The Bank identifies, monitors and reports interest rate risk through the following methods:• Stressandbacktesting,• SensitivityoftheeconomicvalueoftheBank,• Gapanalysis,• VaRanalysis,• BasisPointValueanalysis.

The principal risk to which non-trading portfolios are exposed is the risk of loss from fluctuations in the future cash flows or fair values of financial instruments because of a change in market interest rates. Interest rate risk is managed principally through monitoring interest rate gaps and by having pre-approved limits for repricing bands. The ALCO is the monitoring body for compliance with these limits and is assisted by Risk Management in its day-to-day monitoring activities.

ALCO is responsible for setting interest rates for the Bank’s products.

The management of interest rate risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Bank’s financial assets and liabilities to various standard and non-standard interest rate scenarios. Standard scenarios that considered influence on change of economic value of the Bank are calculated monthly and includes a 200 basis point increase or decrease.

200 bp parallel increase

€ ‘000

200 bp parallel decrease€ ‘000

31 december 2015

As at 31 December (43,532) 43,532




31 december 2014

As at 31 December (53,409) 53,409




88 89

sensitivity of reported equity to interest rate movements

Interest rate movements affect reported equity in the following ways:• Profitfortheperiodarisingfromincreasesordecreasesinnetinterestincomeandthefairvalue

changes reported in profit or loss,• Revaluation reserves arising from increases or decreases in fair values of available-for-sale

financial instruments reported directly in equity,• Hedging reservesarising from increasesordecreases in fair valuesof hedging instruments

designated in qualifying cash flow hedge relationships.

Share price risk

Share price risk is the risk of movements in the prices of equity instruments held in the Group’s portfolio and financial derivatives derived from these instruments. The main source of the Group’s share price risk is speculative positions held in shares and positions held for strategic reasons.

When investing in shares, the Group:• Followsaninvestmentstrategywhichisupdatedonaregularbasis,• Hasapreferenceforpubliclytradedstocks,• Monitors limits tominimise share price risk (stop loss limits, asset concentration and VaR

indicators)• Performsriskanalysis,whichusuallyincludesforecastsofthedevelopmentoftheshareprice,

various models and scenarios for the development of external and internal factors with an impact on the income statement, asset concentration and the adequacy of own resources.

Limits, indicators and methods of share price risk management are defined in accordance with principles described in the Market Risk Management Strategy.

The Group uses the following limits and indicators in the management of share price risk:• Creditrisklimitsrelatingtosharepricerisk(limitsforindustries,countries,banksandindividual

issuers),• Stoplosslimitsforshares,• Portfoliolimits,• LimitsforsharesresultingfromtheRegulation(EU)No575/2013oftheEuropeanParliament

and of the Council and from the Provision of the National bank of Slovakia No 23/2014,• VaRindicator. The Group identifies, monitors and reports share price risk using the following methods:• OverviewofthecurrentsharepositionsoftheBank,• EquityVaRcalculation(historicalsimulationmethod),• Stressandbacktesting.

Foreign exchange risk

The main source of foreign exchange risk is the difference between assets and liabilities denominated in different currencies. The main source of foreign exchange risk in the banking book is from loans provided in foreign currency, while the Group obtains the necessary resources from currency derivatives on the inter-bank market.

The Group aims to hedge these positions in the banking book to the maximum extent possible through hedging instruments (e.g. currency derivatives), and thereby to minimise the foreign exchange risk. The Group reduces its foreign exchange risk through limits on unsecured foreign exchange positions and maintains an acceptable level for its size and business activities. The main currencies in which the Group holds positions are the Czech crown and US dollar.

Limits, indicators and methods of foreign exchange risk management are defined in accordance with the principles described in the Market Risk Management Strategy.

The Group identifies, monitors and reports the Group’s foreign exchange risk using the following methods:• ReportonunsecuredforeignexchangepositionoftheGroup,• Monitoringthestructureofforeigncurrencyassetsandliabilitiesbyparticularcurrencies,• VaRindicator,• Stressandbacktesting.

The Group performs daily stress and back testing of market risk for VaR model.

The Group subsequently verifies the impact of the results of stress testing.

The results of stress testing are taken into consideration when setting procedures and limits for risk exposures.

The Group had the following assets and liabilities denominated in foreign currencies at 31 December 2015:

Czech crown

€ ‘000Us dollar

€ ‘000other€ ‘000

total€ ‘000

assets


208,875 3,829 1,444 214,148

Loans and advances 138,052 9,181 2 147,235

Investment securities 8,037 – – 8,037

Tax receivable 740 – – 740

Deferred tax asset 9 – – 9

Other assets 117 15,476 1 15,594

355,830 28,486 1,447 385,763

liabilities

Deposits by banks 696 372 2 1,070

Customer accounts 73,753 9,834 1,252 84,839

Other liabilities 214 476 1 691

74,663 10,682 1,255 86,600

90 91

The Group had the following assets and liabilities denominated in foreign currencies at 31 December 2014:

Czech crown

€ ‘000Us dollar

€ ‘000other€ ‘000

total€ ‘000

assets


130,944 2,232 1,820 134,996

Loans and advances 115,575 6 2 115,583

Investment securities 7,800 – – 7,800

Tax receivable 88 – – 88

Deferred tax asset 17 – – 17

Other assets 259 6,240 – 6,499

254,683 8,478 1,822 264,983

liabilities

Deposits by banks 877 87 5 969

Customer accounts 134,929 6,691 1,725 143,345

Tax liability 1,674 – – 1,674

Other liabilities 298 1 1 300

137,778 6,779 1,731 146,288

Compliance with the Group’s standards is supported by a programme of periodic reviews undertaken by Internal Audit. The results of Internal Audit reviews are discussed with the relevant managers, with summaries submitted to the Supervisory Board (also cover the functions of Audit Committee) and the Board of Directors.

Legal risk

Legal risk forms part of operational risk and is the loss arising from unenforceable contracts, threats of unsuccessful legal cases or verdicts with negative impact on the members of the Group. In the environment of the Bank, it can be also the risk of sanctions from regulators which may be connected with reputational risk.

Legal risk management is the responsibility of the Legal Services Department.

Risks related to outsourcing

Outsourcing activities present a separate group of operational risks. Outsourcing involves the long-term performance of activities by a third party, which support the banking activities and are carried out on a contractual basis in order to increase the efficiency of Bank`s activities.

Risk management relating to outsourcing is part of the overall bank risk management. It is in the responsibility of the Board of Directors and include:• managingstrategyfortherisksassociatedwithoutsourcing,whichisapprovedbytheBoard

of Directors, as well as other particular internal regulations relating to outsourcing, security crisis plans for individual outsourced activities, or plans of the Bank when ceasing outsourced activities.

• Examinationofthequalityofserviceprovidersbeforeandduringtheoutsourcing• Regular inspections of performance of outsourcing companies by Department of Internal

control and internal audit,• minimizationoftheriskrelatedtooutsourcingwhenextraordinaryeventsoccur.

(f) insurance risk

Poštová poisťovňa, a.s. (insurance company) as the insurance company is exposed to insurance risk and to underwriting risk arising from the life and non-life insurance products. Internal guidelines are used to manage the risk relating to the development and valuation of products, determination of technical provisions, reinsurance determination and also to establish the rules for underwriting insurance.

Life insurance is exposed to insurance risk of morbidity, mortality, longevity and risk of concentration in case of epidemics and disasters. To eliminate these risks medical and financial underwriting or reinsurance (which then brings a credit risk from the reinsurer) are used. In non-life insurance, the company is exposed to particularly the risk of the adequacy of future premiums (due to the unexpected development of future claims, administrative costs, increased rates of cancellation, etc.), risk of extreme events (catastrophic risk) and the sufficiency of reserves for claims (due to unexpected development of already incurred claims, lawsuits, etc.).

Claims development

Claims development information is provided in the following tables in order to illustrate the risks arising from insurance contracts. The tables compare the development of the estimated ultimate loss on an accident-year basis. The first part of the table provides a review of current estimates of cumulative claims and demonstrates how the estimated claims have changed at subsequent accounting year-ends. The estimate is increased or decreased as losses are paid and more information becomes known about the frequency and severity of unpaid claims. The second part of the table shows the amount of claims paid according to the year of the insured event.

(e) operational risk

Operational risk is the risk of loss, including the damage caused by the Group’s processes, to the Group by inappropriate or incorrect procedures, human factor failure, failure of used systems and from external factors other than credit, market and liquidity risks. A part of the operational risk is legal risk arising from unenforceable contracted receivables, unsuccessful legal cases or verdicts with negative impact on the Group. Operational risk arises from all of the Group’s operations and is faced by all business entities.

From 31 December 2014, the Group uses a standardized approach for measuring and managing operational risk.

The Group continuously aims to improve implemented process of operational risk identification, usage of KRI indicators, self-evaluation procedures, planning of unforeseeable events and aims to secure business continuity and manage operational risk of the Group on a consolidated basis.

The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management in each division. This responsibility is supported by the development of overall standards for the management of operational risk in the following areas:• requirementsforthereconciliationandmonitoringoftransactions,• compliancewithregulatoryandotherlegalrequirements,• documentationofcontrolsandprocedures,• requirements for the periodic assessment of operational risks faced, and the adequacy of

controls and procedures to address the risks identified,• requirementsforthereportingofoperationallossesandproposedremedialaction,• developmentofcontingencyplans,• trainingandprofessionaldevelopment,• ethicalandbusinessstandards,• riskmitigation,includinginsurancewherethisiseffective.

92 93

Various factors may influence the re-estimated provisions and the cumulative excess or deficit presented in each table. These include inadequate information when reporting an insured event, problems with settlement etc. The information in the table provides a historical perspective on the adequacy of unpaid claims estimates, and may not be a reliable base for extrapolating surpluses or deficits of past provisions to current unpaid loss balances. The Group assumes that the expectation of unpaid claims at the year-end 2015 is appropriate.

analysis of claims development – gross of reinsurance

analysis of claims development – net of reinsurance

estimate of cumulative claims <

20

06

€

‘0

00

20

06

€ ‘0

00

20

07

€ ‘0

00

20

08

€ ‘0

00

20

09

€ ‘0

00

20

10

€ ‘0

00

20

11

€ ‘0

00

20

12

€ ‘0

00

20

13

€ ‘0

00

20

14

€ ‘0

00

20

15

€ ‘0

00

tota

l€

‘0

00

At the year-end when the claim occurred

2,052 671 293 104 144 73 81 114 110 141

one year later 2,331 550 225 72 56 45 50 77 77

two years later 2,268 522 222 69 53 45 49 77

three years later 2,311 641 223 68 53 45 49

four years later 2,260 524 219 69 53 45

five years later 2,252 523 219 69 53

six years later 2,252 523 219 69

seven years later 2,252 523 219

eight years later 2,251 523

nine years later 2,251

Estimate of cumulative claims

2,251 523 219 69 53 45 49 77 77 141 3,504

Cumulative payments 2,251 523 219 69 53 45 49 77 77 67 3,430

Cumulative claims provision (RBNS+IBNR)

171 0 0 0 0 0 0 0 0 0 74 245

estimate of cumulative claims <

2006

€ ‘000

2006

€ ‘000

2007

€ ‘000

2008

€ ‘000

2009

€ ‘000

2010

€ ‘000

2011

€ ‘000

2012

€ ‘000

2013

€ ‘000

2014

€ ‘000

2015

€ ‘000

tota

l€ ‘000

At the year-end when the claim occurred

2,922 1,333 546 181 246 141 140 178 161 186

one year later 3,035 1,030 403 118 74 62 64 103 98

two years later 2,899 975 397 115 68 62 61 103

three years later 2,986 975 397 115 68 62 61

four years later 2,920 978 391 116 68 62

five years later 2,920 976 391 116 68

six years later 2,920 976 391 116

seven years later 2,920 976 391

eight years later 2,919 976

nine years later 2,919

Estimate of cumulative claims

2,919 976 391 116 68 62 61 103 98 186 4,980

Cumulative payments 2,919 976 391 116 68 62 61 103 97 74 4,867

Cumulative claims provision (RBNS+IBNR)

421 0 0 0 0 0 0 0 0 1 112 534

Risks arising from life insurance contracts

Summary of provisions resulting from insurance contracts in life insurance:

31 december 2015

€ ‘000

traditional life insurance for death and

endowment

Current and deferred pensions

investment contracts

with discretionary participation

features

supplementary insurances

total

Before reinsurance 9,214 517 300 215 10,246

After reinsurance 9,209 517 300 209 10,235

31 december 2014

€ ‘000

traditional life insurance for death and

endowment

Current and deferred pensions

investment contracts

with discretionary participation

features

supplementary insurances

total

Before reinsurance 6,877 610 292 185 7,964

After reinsurance 6,870 610 292 176 7,948

Summary of reserves from non-life insurance before and after reinsurance is as follows:

amount of reserve as at 31 december 2015 € ‘000

lia

bili

ty

loss

of

em

plo

ymen

t

Pro

pert

y

Moto

r ve

hic

les

Healt

h/

accid

en

t,

oth

er

trave

l

tota

l

Before reinsurance 302 8 466 11 36 30 851

After reinsurance 127 8 244 5 35 0 419

amount of reserve as at 31 december 2014 € ‘000

lia

bili

ty

loss

of

em

plo

ymen

t

Pro

pert

y

Moto

r ve

hic

les

Healt

h/

accid

en

t,

oth

er

trave

l

tota

l

Before reinsurance 286 9 503 10 29 4 841

After reinsurance 121 9 259 5 – 3 397

Other risks

Other risks associated with insurance contracts with discretionary participation features (“DPF”) are persistency risk, market risk, expense risk and expense inflation risk.

Persistency risk is the risk that the client cancels the contract or stops paying new premiums into the contract, thereby exposing the insurance company to a loss resulting from an adverse movement in the actual experience compared to that expected in the product pricing. The insurance company manages this risk by making appropriate charges for early surrender where possible and by maintaining high levels of customer care. The insurance company is exposed to diminishing investment management revenues in line with the decline in asset values.

Market risk is the risk of loss in fair value resulting from adverse fluctuations in interest and foreign currency exchange rates and equity prices, and the consequent effect that this has on the value of charges earned by the Group and on any guarantees in the contracts.

94 95

The risk of expense inflation is the risk that the actual costs of the insurance company will be higher than cost calculation of the products in relation to the expected sale of contracts, long term development of all insurance contracts in the portfolio, price levels, etc.

Financial risk

The insurance company is exposed to financial risk through its life insurance contracts, financial assets, financial liabilities (including investment contracts with DPF) and reinsurers’ share on insurance provisions arising from insurance contracts. As stated above, the goal of the insurance company is to invest assets relating to liabilities from insurance and investment contracts with DPF into assets that face equal or similar risks. This principle ensures that the insurance company can meet its contractual liabilities when they become due.

The insurance company is exposed to residual financial risk mainly due to the following:• It isnotpossible toperfectlymatchfinancialassets to liabilities from insurance.This relates

mainly to non-life insurance, traditional and general life insurance contracts and to pension life insurance contracts. Additional risks relate to guarantees and options embedded in insurance and investment contracts with DPF.

• Theinsurancecompanyinvestspartofthecapitalintofinancialassets,whichisnotmatchedto liabilities from insurance and financial liabilities from investment contracts with DPF.

• Existingcreditriskrelatingtoreinsurers’shareonprovisionsresultingfrominsurancecontracts.

Solvency

Under the Act No. 39/2015 Coll. (Act on Insurance) as amended, the insurance company has an obligation to continuously maintain a minimum required solvency margin. The method of calculation and presentation of the solvency margin was set out by the NBS in Provision No. 25/2008 that was later amended by the NBS Provision No. 2/2013. The insurance company maintained the required margin throughout the year.

The actual solvency margin in 2015 was in amount of € 14,806 thousand (2014: € 14,537 thousand) while the required solvency amount as of 31 December 2015 was in amount of the guarantee fund which is set by decree to a minimum amount of € 7,400 thousand.

Concentration of risk in non-life insurance

Majority of underwritten risks are located in Slovak republic whereas the insurance company focuses on household insurance and non-life insurance of individuals and therefore is not exposed to significant concentration of risk considering the insurance contract. Insurance objects are evenly distributed and thus there is no significant geographical concentration of risk.

Concentration of mortality risk

Contracts covering mortality risk are not exposed to significant geographical concentration of risk however concentration of insurance amounts could have influence on damage volatility (and therefore also on profit and loss) if the insurance company concludes small amount of contracts with high insurance amounts. The below table illustrates concentration risk based on six groups of contracts defined according to the amount of insurance at death for each insured life (traditional endowment insurance, death insurance and investment contracts with DPF classified as life insurance).

Liquidity risk

An important part of assets and liabilities management of the insurance company is to secure sufficient amount of cash for payment of due payables. The insurance company holds cash and liquid deposits for everyday requirements for payment of its liabilities. Normally majority of insured events are settled by funds received from the insured and investors.

In long term the insurance company monitors predicted liquidity by estimation of future cash flows

from insurance and investment contracts with DPF. Negative difference in expected cash flows is covered by prolongation of term deposits and purchase of bonds from funds received as insurance premium. Expected cash flows of the insurance company are stated below. For non-life insurance contracts net expected insurance payments after reinsurance from insured events that arose up to the date as at preparation of the financial statements are stated since these are expected in short-term. For life insurance contracts net cash flows including future expected insurance payments, administrative expenses and received insurance premium from existing contracts are stated.

(g) Regulatory requirements of the asset management company

The asset management company is obliged to comply with regulatory requirements of the National Bank of Slovakia (”NBS”) which are set out under Act No. 203/2011 on collective investment and according to the NBS Provision No 7/2011 on capital resources of asset management companies. These include limits and restrictions on capital adequacy. These requirements apply to all asset management companies in Slovakia and their compliance is determined on the basis of reports submitted by the asset management company under statutory legal regulations.

The requirements applicable since 1 January 2012 are as follows:• Sharecapitalofmanagementcompanyisatleast€125,000.• Themanagementcompanyisobligedtocomplywithadequacyrequirementsforitsownfunds.

The own funds of the management company are considered appropriate under this Act, unless they are below:

a) € 125 thousand plus 0.02 % of the value of the assets in the funds managed by the company exceeding € 250,000 thousand. This amount is not further increased when it reaches € 10,000 thousand.

b) One quarter of the average general operating costs of the management company for the previous calendar year. If the management company exists for less than one year, a quarter of the amount of general operating costs according to its business plan.

• Themanagementcompanymaynotacquire into the funds‘assetsor itsownassetswhenacting jointly with any managed funds more than 10 % of the total nominal value of shares with voting rights issued by a single issuer.

• Themanagementcompanyactingjointlywithstandardfundsmaynotacquireintothefunds‘assets shares with voting rights which would entitle the management company to have a significant influence over the management of a issuer that is established in the Slovak republic, or in a non EU member State.

• Themanagementcompanyisrequiredtocomplywithrestrictionsontheacquisitionofsignificantinfluence on the management of an issuer that is established in a Member State, according to the laws of that Member State, taking into account the assets managed in standard funds.

• Themanagement companymust ensure eliminationof the risk imposedon the fund’s unitholders’ interest or its clients by a conflict of interest between the management company and its clients, between two of its clients mutually, between one of its clients and unit holders of a share fund or between the unit holders or unit holders of the European fund or between the shareholders of unit funds and European funds mutually.

Capital adequacy

The management company regularly and on a timely basis informs the NBS about the amount of initial capital, its own resources and their structure according to the NBS Provision No. 7/2011 on capital resources of asset management companies and reports the information about proportionality of its own resources in accordance with the Act no. 203/2011 on collective investments as amended.

(h) Regulatory requirements of the pension funds management company

The pension funds management company, when administering and creating of pension funds is obliged to comply with regulatory requirements of the National Bank of Slovakia, as stated in the Act No. 43/2004. on pension saving funds (hereinafter “Act on PSF”). These requirements apply to all pension funds management companies in Slovakia.

96 97

The Bank‘s position of own funds as at 31 December 2015 according to the Capital Requirement Regulation is displayed in the following table.

2015

€ ‘0002014

€ ‘000

Regulatory capital

Tier I Capital

Share capital and share premium 367,043 367,043

Reserve funds and other funds created from profit 35,163 30,782

Selected components of accumulated other comprehensive income 15,416 5,082

Profit or loss of previous years 126,486 116,978

Intangible assets (24,710) (26,701)

Additional valuation adjustments (1,522) (918)

Additional filters and adjustments – (6,037)

Total Tier I Capital 517,876 486,229

Tier II Capital

Subordinated debt (note 25) 8,000 8,000

Total Tier II Capital 8,000 8,000

Regulatory capital total 525,876 494,229

Capital Resources Requirements2015

€ ‘0002014

€ ‘000

Capital required to cover:

Credit risk 215,848 241,899

Risk on value adjustments to receivables 226 –

Risks from debt financial instruments, capital instruments, foreign exchange and commodities

172 143

Operational risk 34,927 34,465

total capital requirements 251,173 276,507

Capital ratios

Total capital level as a percentage of total risk weighted assets

16.75 % 14.30 %

Tier 1 capital as a percentage of total risk weighted assets 16.49 % 14.07 %

Among the important requirements of the Act on PSF are:• Thesharecapitalofthepensionfundsmanagementcompanyisatleast€9,950thousand.• Thepensionfundsmanagementcompanyshallmeetspecificcapitalrequirements.Equityis

adequate when: a) it is not less than 25 % of general operating expenses for the previous year. If the pension

funds management company is operating less than one year, 25 % of the amount of general operating expenses stated in its commercial and financial plan and

b) the ratio of the difference between liquid assets and liabilities and receivables to the value of assets in all pension funds under management is not less than 0.005 (according to the Act No. 43/2004 Section 60 as amended).

• Themanagerofassetsinthepensionfundisobligedtoactwithduecareanddiligenceinthebest interests of savers and pensioners and the interest of their protection in compliance with generally binding legal regulations, the statutes of the pension fund and the decisions of the National Bank of Slovakia.

• Thepensionfundsmanagementcompanycanbuyandsellproperty,whichmaybesubjecttoinvestment only if it does not conflict with the interests of savers and pensioners. The pension funds management company may not put its interest over the interest of savers and pensioners.

• Thepension fundsmanagementcompany’spropertyor assets in thepension fundsundermanagement, may not acquire more than 5 % of the total nominal value of shares issued by one issuer.

• Thepensionfundsmanagementcompanymaynotacquireshareswithvotingrightswhichwouldenable the management company to exercise a significant influence over the management of the issuer to own assets or assets in the pension funds under management.

(i) Capital management

In implementing current capital requirements, the Group is required to maintain a prescribed ratio of total capital to total risk-weighted assets and a ratio of TIER1 capital to total risk-weighted assets.

The Group is obliged to calculate share capital in accordance with CRR since 1 January 2014. The Group uses the standardised approach to credit risk, the standardized method for credit valuation adjustment and standardized approach to operational risk.

The Group’s regulatory capital is analysed into two tiers:• Tier1capital includesordinarysharecapital,sharepremium,reservefundsandotherfunds

created from profit, retained profit from previous years after deduction of losses for the current year, intangible assets and other specified deductible items.

• Tier2capitalincludestheapprovedpartofsubordinateddebtwithoriginalmaturityoverfiveyears

Banking operations are categorised in either a banking book or trading book, and risk-weighted assets are determined according to specified requirements that seek to reflect the varying levels of risk attached to assets and contingent liabilities.

The Group has complied with all externally imposed capital requirements throughout the year.

Own funds of the consolidated group take into consideration the capital position of the group under the prudential consolidation rules that can differ from the scale of accounting consolidation rules. The difference can arise primarily from not including some entities into the scope of prudential consolidation since these entities do not meet conditions defined by the CRR.

98 99

6. Changes in group consolidation

On 5 May 2015 Poštová banka, a.s. (the seller) and Slovenská pošta, a.s. (the buyer) transferred 20 % of ordinary shares of Poisťovna Poštovej banky, a. s. Poisťovňa Poštovej banky, a.s. has changed its name to Poštová poisťovňa, a.s. the 20 % share of Slovenská pošta is presented under non-controlling interests. Considering that the group has not lost control, under IFRS 10 it was a transaction within the equity.

PB Partner, a.s., a subsidiary of Poštová banka, a.s., sold 100 % of its share in Salve Finance, a.s. on 24 June 2015. Salve Finance, a.s. was a 50.05 % subsidiary of Poštová banka group and its main activity was mediation of sale of financial products.

As at 30 June 2015 Salve Finance, a.s. was deconsolidated from the Poštová banka group.

Analysis of assets and liabilities of Salve Finance, a.s.:

statement of financial position of salve Finance, a.s.:

30 June 2015**€ ‘000

2014€ ‘000

assets

Cash and cash equivalents 6 4

Receivables from clients 113 204

Investments 5 5

Tangible assets 27 9

Other assets 1,783 2,073

total assets 1,934 2,295

liabilities

Received loans 273 51

Provisions 30 –

Tax liabilities 16 –

Other liabilities 1,426 1,951

total liabilities 1,745 2,002

equity

Share capital 100 100

Legal reserve fund 20 20

Retained earnings 145 44

(Loss)/profit (76) 129

total equity 189 293

total liabilities and equity 1,934 2,295

** Assets and liabilities as at 30 June 2015 of Salve Finance, a. s. are not significantly different from assets and liabilities as at 24 June 2015.

Result from sale of the subsidiary Salve Finance, a.s. is presented in the consolidated income statement within “Net profit from financial operations”.

acquisition of subsidiary as at 31 december 2014

PB Partner, a.s., 100 % owned by Poštová banka, a.s., purchased 50.05 % share of share capital of Salve Finance, a.s. as at 5 August 2015. The purchase of shares was agreed on € 2,000 thousand. Through this transaction Salve Finance, a.s. became 50.05 % subsidiary of Poštová banka, a.s. Main activity of Salve Finance, a.s. is sale brokering of financial products.

as at 5 august 2014net book value

€ ‘000Fair value

€ ‘000

Cash and cash equivalents 5 5

Investments 5 5

Tangible assets 9 9

Other assets 2,467 2,467

assets 2,486 2,486

Loans received 1 1

Other liabilities 2,285 2,285

liabilities 2,286 2,286

Share capital 100 100

Legal reserve fund 20 20

Retained earnings (141) (141)

Loss for the year 221 221

share capital 200 200

liabilities and share capital 2,486 2,486

Acquisition cost and goodwill are as follows:

€ ‘000

Acquisition cost 2,000

Fair value of assets 2,486

Fair value of liabilities and contingent liabilities (2,286)

Net assets 200

Share of PB Partner 100

Goodwill 1,900

100 101

7. Cash and deposits at the central bank

2015

€ ‘0002014

€ ‘000

trading assets

Securities (a) 1,556 1,881

Derivative instruments (b) 550 489

2,106 2,370

Hedging derivatives

hedging derivatives (c) 1,242 –

trading liabilities

Derivative instruments (b) 84 38

Hedging derivatives

hedging derivatives (c) 312 –

2015

€ ‘0002014

€ ‘000

European Union bonds – Greece – 1,111

Equity securities 1,556 770

1,556 1,881

8. trading assets and liabilities and hedging derivatives

Reclassification of financial assets from trading portfolio

In 2008, following the issuance of Reclassification of Financial Assets, the amendments to IAS 39 and IFRS 7 (stated in note 3(o)), the Group reclassified certain trading assets to available-for-sale investment securities portfolio.

The Bank identified financial assets eligible under the amendments, for which it had changed its intent so that it no longer held these financial assets for the purpose of selling in the short term. For the trading assets identified for reclassification, the Group determined that the deterioration of the financial markets during 2008 constituted ‘rare circumstances’ that permitted reclassification out of the trading category.

Under the amendment to IAS 39 the reclassifications were made with effect from 1 July 2008 at fair value as at that date. The financial assets reclassified and their carrying and fair values were as in the table below. Fair values are the same as carrying values. In 2015 and 2014, both fair values and carrying amounts are zero.

2015Carrying/Fair

value€ ‘000

2014Fair/carrying

value€ ‘000

2013Fair/carrying

value€ ‘000

2012Fair/carrying

value€ ‘000

Reclassified assets from trading portfolio to available-for-sale portfolio

– – 8 5,218

– – 8 5,218

The remaining part of the reclassified securities was sold during the year 2014.

(a) Securities

2015

€ ‘0002014

€ ‘000

Cash in hand 21,864 19,986

Balances at the central banks

Compulsory minimum reserves 234,320 30,157

Term deposits 207,601 128,646

Other deposits 10,606 6,527

Loans and advances to banks with contractual maturity of 3 months or less (note 9)

96,306 181,578

570,697 366,894

The account Compulsory minimum reserve contains funds from the payment system as well as funds that the Group is obliged to maintain in average in order to fulfill requirements of the National Bank of Slovakia. Therefore, the account balance of Compulsory minimum reserve may significantly vary depending on the amount of incoming and outgoing payments. Compulsory minimum reserves are maintained at a level set by requirement of the National Bank of Slovakia. The amount of set reserve depends on the amount of deposits accepted by the Group and is calculated by multiplying particular items of the basis by the valid rate for calculation of the compulsory minimum reserve. The Group, during the reporting period, fulfilled the set amount of compulsory minimum reserves, which in December represented € 30,766 thousand.

Cash and cash equivalents are as follows:

2015

€ ‘0002014

€ ‘000

Cash in hand 21,864 19,986

Balances at the central banks

Term deposits 207,601 128,646

Other deposits 10,606 6,527

Loans and advances to banks with contractual maturity of 3 months or less (note 9)

96,306 181,578

336,377 336,737

102 103

During 2009 and 2014 there were no reclassifications of financial assets. In 2015 a reclassification of financial assets from held to maturity portfolio to Available for Sale portfolio was done, please see note 11.

The tables below set out the amounts actually recognised in profit or loss and equity as at 31 December 2015 and as at 31 December 2014 in respect of financial assets reclassified out of trading assets in 2008:

Reclassification in 2008

Profit or loss 2009

€ ‘000

other comprehensive

income 2009€ ‘000

Profit or loss 2008

€ ‘000

other comprehensive

income 2008€ ‘000

Period before reclassification:

Trading assets reclassified to available for-sale investment securities:

net trading loss – – (6,686) –


Profit or loss 2015

€ ‘000

Profit or loss 2014

€ ‘000

Trading assets reclassified to available-for-sale securities:

Net change in fair value – (6)

Foreign exchange gain – –

net trading loss – (6)

Reclassification of financial assets

The table below sets out the amounts that would have been recognised during the years 2015 and 2014 if the reclassifications had not been made.

(b) Derivative instruments

derivatives

Contract/notionalamount

€ ‘000

2015Fair value

Contract/notionalamount

€ ‘000

2014Fair value

assets€ ‘000

liabilities€ ‘000

assets€ ‘000


Currency swaps 328,760 550 84 105,229 489 38

Contracted/nominal

value€ ‘000

2015Fair value

Contracted/nominal

value€ ‘000

2014Fair value

assets€ ‘000


assets€ ‘000


Fair value hedge

Interest rate swaps 203,610 1,242 312 – – –

203,610 1,242 312 – – –

c) Hedging derivatives

hedged items are selected fixed-interest bonds from the Available for sale portfolio and hedging instruments are interest rate swaps for which the Bank pays fixed interest rate and receives floating interest rate. As at 31 December 2015, the hedge was effective in hedging the fair value exposure to interest rate movements. Changes in the fair value of these interest rate swaps due to changes in interest rates substantially offset changes in the fair value of the hedged bonds caused by changes in interest rates.

In 2015, the Bank reported a net loss on the hedging instruments in the amount of € 1,130 thousand (2014: € 0) and net gain on hedged items relating to hedged risk of € 1,130 thousand (2014: € 0). Both items are presented on the line “Net profit from financial operations”.

During 2015, interest and similar income from hedged securities from Available for sale portfolio since the origin date of hedging, amounting to € 181 thousand (2014: € 0) were offset by interest expense from interest rate swaps which represent hedging instruments in the amount of € 102 thousand (2014: € 0).

The contracted or nominal amounts and positive and negative fair values of unpaid positions of hedging derivatives as at 31 December 2015 are shown in the following table. The contracted or nominal amounts represent the volume of unpaid transactions at a certain point in time; do not represent the potential gain or loss associated with market risk or credit risk of these transactions.


Profit or loss 2015

€ ‘000

other comprehensive

income 2015€ ‘000

Profit or loss 2014

€ ‘000

other comprehensive

income 2014€ ‘000

Period after reclassification:

Trading assets reclassified to available for-sale investment securities:

Dividend income – – – –

Net change in fair value – – – (6)

Impairment loss – – (5) 5

Sale of security – – 1 –

Foreign exchange gain/(loss) – – – –

– – (4) (1)

104 105

2015

Possible effect of „master netting agreements“, which do not fulfill requirements for offsetting in balance sheet (€ ‘000)

Fin

ancia

l ass

ets

/gro

ss

off

set

gro

ss

valu

es

Pre

sente

d

net

valu

es

of

financia

l ass

ets

Fin

ancia

l in

stru

ments

accepte

d

cash

colla

tera

l

accepte

d

non-c

ash

fi

nancia

l colla

tera

l

net

valu

es

aft

er

poss

ible

off

sett

ing

Currency derivatives

550 – 550 – 484 – 66

hedging derivatives

1,242 – 1,242 – 1,242 – –

total 1,792 – 1,792 – 1,726 – 66

2014


Fin

ancia

l ass

ets

/gro

ss

off

set

gro

ss

valu

es

Pre

sente

d

net

valu

es

of

financia

l ass

ets

Fin

ancia

l in

stru

ments

accepte

d

cash

colla

tera

l

accepte

d

non-c

ash

fi

nancia

l colla

tera

l

net

valu

es

aft

er

poss

ible

off

sett

ing


489 – 489 – – – –

total 489 – 489 – – – –

2015


Fin

an

cia

l ass

ets

/gro

ss

off

set

gro

ss

valu

es

Pre

sen

ted

n

et

valu

es

of

fin

an

cia

l ass

ets

Fin

an

cia

l in

stru

men

ts

Pro

vid

ed

cash

colla

tera

l

Pro

vid

ed

n

on

-cash

fi

nan

cia

l colla

tera

l

net

valu

es

aft

er

poss

ible

off

sett

ing


84 – 84 – 17 – 67

hedging derivatives

312 – 312 – – – –

total 396 – 396 – 17 – 67

2014


Fin

ancia

l ass

ets

/gro

ss

off

set

gro

ss

valu

es

Pre

sente

d

net

valu

es

of

financia

l ass

ets

Fin

ancia

l in

stru

ments

Pro

vided

cash

colla

tera

l

Pro

vided

non-c

ash

fi

nancia

l colla

tera

l

net

valu

es

aft

er

poss

ible

off

sett

ing


38 – 38 – – – –

total 38 – 38 – – – –

offsetting of financial assets and liabilities

Following table shows financial assets which could be offset under „master netting agreements‘or similar agreements (legally enforceable):

Following table shows financial liabilities which could be offset under „master netting agreements:‘or similar agreements (legally enforceable):

Following table shows financial liabilities which could be offset under „master netting agreements:‘or similar agreements (legally enforceable):

Following table shows financial assets which could be offset under „master netting agreements:‘or similar agreements (legally enforceable):

9. loans and advances to banks

2015

€ ‘0002014

€ ‘000

Repayable on demand 93,073 100,207

Other loans and advances to banks by contractual maturity:

- 3 months or less 3,233 81,371

- 1 year or less but over 3 months – 1,366

- over 1 year 2,482 440

98,788 183,384

Less amounts with original contractual maturity up to 3 months (note 6)

(96,306) (181,578)

total 2,482 1,806

10. loans and advances

a) Receivables from customers

2015

€ ‘0002014

€ ‘000


Other loans and advances to customers by contractual maturity:

– Up to 3 months 1,127 6,372

– 1 year or less but over 3 months 46,791 167,127

– 5 years or less but over 1 year 555,050 515,646

– over 5 years 1,241,049 1,154,250

2,039,232 2,227,339

Allowances for impairment (134,786) (137,079)

Loans and receivables – debt securities 229,576 193,455

2,134,022 2,283,715

106 107

2015€ ‘000

2014€ ‘000

Securities held to maturity (a) 464,668 593,010

Securities available for sale (b) 861,615 823,773

1,326,283 1,416,783

2015€ ‘000

2014€ ‘000

Slovak government bonds 442,290 490,471

Government bonds of EU member countries 6,880 102,539

Mortgage bonds 14,991 –

Corporate bonds 507 –

464,668 593,010

(a) Securities held to maturity

securities portfolio

Value at initial recognition

€ ‘000

31.12.2014Carrying

value€ ‘000

31.12.2014Market value

€ ‘000

31.12.2014impairment

loss€ ‘000

Trading securities 1,905 1,111 1,111 n/a

held-to-maturity securities 37,925 49,848 86,091 –

Available for sale securities 87,489 – – –

total 127,319 50,959 87,202 –

individual allowances for impairment:2015

€ ‘0002014

€ ‘000

As at 1 January 65,999 30,430

Movement resulting from change of foreign exchange rate 47 14

Net charge to profit or loss 36,516 54,496

Release of impairment losses on assigned loans (52,951) (18,941)

as at 31 december 49,611 65,999

Impairment losses on loans and advances

The movements in impairment losses on loans and advances to customers were as follows:

Collective allowances for impairment:2015

€ ‘0002014

€ ‘000

As at 1 January 71,080 69,737

Movement resulting from change of foreign exchange rate (17) –

Net charge to profit or loss 31,164 25,225

Release of impairment losses on assigned loans (17,052) (23,882)

As at 31 December 85,175 71,080

impairment allowances total 134,786 137,079

The Group has assigned receivables to a recovery agency. If the Bank retained substantially the most of the risk and rewards related to ownership of assigned receivables through maintaining the right to participate on the recovery amount after assignment of receivables, the Bank recognize them as assigned receivables up to the amount of ongoing commitment. These receivables, before allowances for impairment, amounted to € 4 thousand (2014: € 1,792 thousand) and an impairment loss of € 4 thousand (2014: € 744 thousand) was recognised.

b) debt securities

debt securities2015

€ ‘0002014

€ ‘000

Corporate bonds 144,179 85,660

Bills of exchange 85,397 107,795

229,576 193,455

11. investment securities

As at 31 December 2015, the Group pledged securities with a carrying value of € 231,105 thousand (2014: € 138,700 thousand) out of which held-to-maturity amounted to € 207,547 thousand (2014: € 138,700 thousand). The Group did not realize any collateralized transactions with the central bank as at 31 December 2015.

The market price of securities held-to-maturity as at 31 December 2015 amounted to € 521,207 thousand (2014: € 688,721 thousand).

As at 31 December 2015, held-to-maturity investment securities with a carrying value of € 348,277 thousand are expected to be recovered after more than twelve months from the reporting date (2014: € 511,307 thousand).

(i) Greek government bonds

As at 31 December 2015 the Group does not own any Greek government bonds.

The table below summarizes the Group’s holding of Greek government bonds at the date of initial recognition and as at 31 December 2014 (comparable period):

In 2012, the Greek government performed a restructuring of its debt (Private Sector Involvement or „PSI“) replacing old Greek government bonds issued under Greek legislation by new securities. The replacement was completed on 12 March 2012.

In light of the above, on 12 March 2012 the account of the Group was credited with newby issued Greek and EFSF bonds with a total nominal value of € 246,548 thousand and with so called GDP-linked (derivative instrument that was booked into the trading portfolio at its fair value). The new Greek bonds were booked at their first fair value in the amount of € 127,319 thousand.

108 109

Reclassification of Greek government bonds from held-to-maturity portfolio during 2015

Overview of Greek government bonds after reclassification from held-to-maturity portfolio as at 30 June 2015:

securities portfolio Carrying

value€ ‘000

Market value€ ‘000

impairment loss€ ‘000

Trading securities 570 570 –

held-to-maturity securities – – –

Available for sale securities 62,476 62,476 –

total 63,046 63,046 –

30 June 2015Carrying value

€ ‘000

30 June 2015Fair value

€ ‘000

Reclassified assets from held-to-maturity portfolio to available-for-sale portfolio

50,302 62,476

50,302 62,476

Profit or loss acccount 30 June 2015

€ ‘000

other comprehensive income 30 June 2015

€ ‘000

Reclassification:

Financial assets reclassified to available-for-sale portfolio:

Revaluation to fair value – 12,174

Securities in the trading portfolio represented the GDP linked (derivative instrument that was booked into the trading portfolio at its fair value). In October 2015 the Bank sold this security.

As at 30 June 2015 the Bank reclassified financial asset, Greek government bonds, from the held-to-maturity portfolio to the available-for-sale portfolio. The reasons for the reclassification were based on a detailed analysis of the extraordinary situation that arose in Greece, characterised by the following:• inability(reluctance)ofGreecetorepayfundstotheIMF,• introductionofcapitalcontrols,• declarationofbankholidaysandrestrictionsofforeigntransactions,• limitationsofcashwithdrawals,• closingdownoftheAthenianstockexchange,• increaseofcreditspreadsonbondsportfolio,• notincreasingtheemergencyliquidassistance(ELA)forGreecebanks,• furtherdecreaseofGreecerating.

All these factors confirmed significant credit quality deterioration of the issuer of the bonds and substantially increased the probability of default of Greece as a debtor. In accordance with the IAS 39 rules the Bank identified financial assets where the intention changed and which could not be further classified as asset held to maturity. Such financial assets were reclassified to the available-for-sale portfolio and were revalued to fair value.

In accordance with the rules defined in IAS 39 the Bank reached a conclusion that the credit quality of the issuer had been significantly deteriorated that this happened outside of the Bank’s control and that Bank could not have reasonably anticipated it and that by reclassification of the Greek government bonds from the held-to-maturity portfolio the tainting rule has not been breached and there was no contamination of the remaining part of the financial assets in the held-to-maturity portfolio.

Reclassification of the Greek government bonds was initially presented with effect on 30 June 2015 at fair values as at this date. The reclassified financial assets and its book and fair values as at the date of reclassification were as follow:

The amounts reported in the statement of profit or loss and other comprehensive income as at 30 June 2015 in relation to the reclassification of financial assets from held-to-maturity portfolio were as follows:

sale of the reclassified Greek government bonds in 2015

In July 2015 the bank sold all the Greek government bonds which has been reclassified to the available-for-sale portfolio on 30 June 2015. In respect of this sale the bank cumulatively reclassified profit from the sale in amount of € 4,246 thousand from the Revaluation reserve to profit or loss.

arbitration proceedings

Poštová banka, a.s. entered into international arbitration proceedings (filed motion on 3 May 2013, registered by ICSID on 20 May 2013) against the Greek Republic (ICSID Case No. ARB/13/8) on the basis of an international treaty between the Government of the Czech and Slovak Federal Republic and the Government of the Greek Republic on the Promotion and Reciprocal Protection of Investments from 3 June 1991. International arbitration was conducted at the International Centre for Settlement of Investment Disputes registered in Washington DC, USA. The reason for the litigation brought to international arbitration is the forced exchange of Greek government bonds in March 2012, for which the basis was a change in the Greek national legislation, which unilaterally and retrospectively changed the conditions of government bonds issuance (the CAC clause).

On 9 April, the International Centre for Settlement of Investment Disputes (ICSID), set up at the World Bank, decided in the dispute between Poštová banka, a.s., ISTROKAPITAL SE and the Greek Republic. The arbitral tribunal decided that it has no authority to decide on the dispute because, based on the Agreement between the Government of the hellenic Republic and the Government of the Czech and Slovak Federal Republic for the Promotion and Reciprocal Protection (the “Slovakia-Greece BIT”), Greek bonds cannot be regarded as an investment. As a result, the proceedings were terminated. Poštová banka, a.s. considers this decision to be contrary to the terms of the Slovakia-Greece BIT agreement and prior arbitrary practice, whereby sovereign debt is regarded as an investment. The whole loss of the Bank from the Greek Republic bonds was accounted for in the financial statements for the year ended 31 December 2012 after prior period adjustment.

On 31 July 2015 Poštová banka, a.s. filed a proposal to cancel the decision issued by The International Centre for Settlement of Investment Disputes, established by the World bank from 9 April 2015 under No. ARB/13/8.

110 111

12. investment in jointly controlled entity

A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.

On 10 February 2012 new jointly controlled entity of Poštová banka, a.s. with 40 % share and Slovenská pošta with 60 % share on share capital, SPPS, a.s. was established. The company provides mainly modern payment system services.

The jointly controlled entity is revalued using the equity method.

equity securities:

Corporate equity securities and mutual funds 191,637 151,161

Other 5,137 123

196,774 151,284

Less allowances for impairment – (5)

196,774 151,279

861,615 823,773

2015€ ‘000

2014€ ‘000

debt securities:

Slovak government bonds 212,929 280,192

Government bonds of EU member countries 375,313 271,774

Mortgage bonds 23,558 –

Corporate bonds 53,041 120,528

664,841 672,494

b) Securities available for salesummary financial information of the jointly controlled entity***:

2015€ ‘000

statement of financial position

Current assets 1,760

out of which cash and cash equivalents 1,070

Non-current assets 278

total assets 2,038

Current liabilities 1,079

out of which current financial liabilities –

Non-current liabilities 2

out of which non-current financial liabilities –

total liabilities 1,081

Net assets 957

Group’s share on net assets 383

income statement

Revenues 3,051

out of which interest income –

Expenses (2,631)

out of which depreciation and amortization (79)

out of which interest expense (15)

Profit before tax 420

Income tax (92)

Profit after tax 328

Total comprehensive income for the year 328

Group’s share on profit after tax 131

*** Preliminary unaudited financial statements for 2015 are not significantly different to audited statements.

112 113

land andbuildings

€ ‘000

Furniture, fittings andequipment

€ ‘000

Motor vehicles

€ ‘000

assets not yet in use

€ ‘000

total€ ‘000

Cost

As at 1 January 2014 22,842 23,118 4,789 579 51,328

Acquisition through Business Combination

– – 9 – 9

Additions – – – 6,698 6,698

Transfers 809 2,769 862 (4,440) –

Disposals (1,356) (1,419) (883) (1,413) (5,071)

As at 31 December 2014 22,295 24,468 4,777 1,424 52,964

accumulated depreciation

As at 1 January 2014 (12,087) (15,005) (2,578) – (29,670)

Depreciation for the year (922) (2,967) (931) – (4,820)

Disposals 1,075 1,215 856 – 3,146

As at 31 December 2014 (11,934) (16,757) (2,653) – (31,344)

net book value

as at 31 december 2014 10,361 7,711 2,124 1,424 21,620

The Group uses fully depreciated tangible assets with acquisition cost of € 12,322 thousand (in 2014: € 14,396 thousand) as at 31 December 2015.

Property and equipment is insured against natural disasters, malicious damage, theft and robbery. Motor vehicles are insured through motor third-party liability and casco insurance.

Property and equipment is insured up to € 22,307 thousand (in 2014: € 23,785 thousand). The Group’s property is not pledged.

14. intangible assets

land andbuildings

€ ‘000

Furniture, fittings andequipment

€ ‘000

Motor vehicles

€ ‘000


€ ‘000

total€ ‘000

Cost

As at 1 January 2015 22,295 24,468 4,777 1,424 52,964

Additions – – – 4,075 4,075

Transfers 1,843 3,364 91 (4,652) 646

Disposals (5,805) (1,422) (720) – (7,947)

Wasted investment – – – (7) (7)

As at 31 December 2015 18,333 26,410 4,148 840 49,731

accumulated depreciation

As at 1 January 2015 (11,934) (16,757) (2,653) – (31,344)

Depreciation for the year (1,642) (2,356) (919) – (4,917)

Disposals 6,392 308 614 – 7,314

Impairment loss allowance (686) – – – (686)

As at 31 December 2015 (7,870) (18,805) (2,958) – (29,633)

net book value

as at 31 december 2015 10,463 7,605 1,190 840 20,098

13. Property and equipment

Goodwill€ ‘000

VoBa€ ‘000

software€ ‘000


€ ‘000

daC€ ‘000

total€ ‘000

Cost

As at 1 January 2015 10,435 3,168 40,852 2,089 8,879 65,423

Additions – – – 5,102 – 5,102

Transfers – – 5,813 (5,510) 1,209 1,512

Disposals (1,900) – (31) – (1,848) (3,779)

As at 31 December 2015 8,535 3,168 46,634 1,681 8,240 68,258

accumulated amortisation

At 1 January 2015 (2,924) (1,368) (28,113) – (3,866) (36,271)

Amortisation – (378) (4,112) – (1,228) (5,718)

Disposals – – 24 – 440 464

Impairment – release – – – – 424 424

As at 31 December 2015 (2,924) (1,746) (32,201) – (4,230) (41,101)

net book value

as at 31 december 2015

5,611 1,422 14,433 1,681 4,010 27,157

Goodwill€ ‘000

VoBa€ ‘000

software€ ‘000


€ ‘000

daC€ ‘000

total€ ‘000

Cost

As at 1 January 2014 8,535 3,168 34,075 4,801 8,549 59,128

Acquisition through Business Combination

1,900 – – – – 1,900

Additions – – – 5,130 1,338 6,468

Transfers – – 7,899 (7,842) – 57

Disposals – – (1,122) – (1,008) (2,130)

As at 31 December 2014 10,435 3,168 40,852 2,089 8,879 65,423

accumulated amortisation

At 1 January 2014 (2,924) (990) (26,236) – (2,790) (32,940)

Amortisation – (378) (3,088) – (652) (4,118)

Disposals – – 1,211 – – 1,211

Impairment – creation – – – – (424) (424)

As at 31 December 2014 (2,924) (1,368) (28,113) – (3,866) (36,721)

net book value

as at 31 december 2014

7,511 1,800 12,739 2,089 5,013 29,152

The value of business acquired (VOBA) relates to an acquisition of a subsidiary in 2011.

The Group tests goodwill for impairment once a year. As at 31 December 2015 the goodwill was not impaired based on the financial results of subsidiaries. The Group uses fully depreciated intangible assets with acquisition cost of € 20,062 thousands (in 2014: € 16,105 thousands).

114 115

Goodwill

2015€ ‘000

2014€ ‘000

PRVÁPENZIJNÁSPRÁVCOVSKÁSPOLOČNOSŤPOŠTOVEJBANKy, správ. spol., a. s.

4,137 4,137

Poisťovňa Poštovej banky, a. s. 1,474 1,474

Salve Finance, a.s. – 1,900

as of 31 december 5,611 7,511

Goodwill related to Prvá penzijná správcovská spoločnosť, a.s. includes goodwill related to a majority (100 %) shareholding of € 9,230 thousand. The amount of goodwill when purchasing the shares amounted to € 7,061 thousand, after recognition of impairment in 2006 its amount is € 4,137 thousand.

Goodwill related to Poštová poisťovňa, a.s. includes goodwill related to a majority (100 %) shareholding of € 11,411 thousand arisen in 2008 on the acquisition of this subsidiary operating in the field of insurance. The initial amount of goodwill amounted to € 1,474 thousand.

On 24 June 2015 PB Partner, a.s. sold its share in Salve Finance, a.s. which resulted in decrease of goodwill of € 1,900 thousand.

Goodwill is tested for impairment annually or more frequently, if events or changes in circumstances indicate that the carrying value may be impaired. Management considers both companies to be separate cash generating units for the purposes of impairment testing.

The basis on which the recoverable amount was determined for both subsidiaries is value in use. Value in use is estimated from the expected future cash flow projections based on the most recent budgets approved by senior management. The discount rate applied to future cash flows projections are adjusted by a projected growth rate. The discount rate and projected growth rate were determined with respect to the field and the territorial scope of business.

The following discount rates are used by the Group:

2015 2014

PRVÁPENZIJNÁSPRÁVCOVSKÁSPOLOČNOSŤPOŠTOVEJBANKy, správ. spol., a. s.

8.56 % 7.25 %

Poisťovňa Poštovej banky, a. s. 10.27 % 10.52 %

Salve Finance, a. s. – 8.29 %

Projected growth rate was estimated at 3% for both entities.

The calculation of value in use for the subsidiaries considers the following key assumptions:• interestmargins,• discountrates,• riskmargins• marketshareduringtheforecastperiod,• projectedgrowthratesusedtoextrapolatecashflowsbeyondtheforecastperiod.

Discount rates were determined using the “Capital asset pricing model” (“CAPM”). The impairment calculation is most sensitive to market interest rates, expected cash flows and projected growth rate.

deferred tax assetassets/(liabilities)

2015€ ‘000

assets/(liabilities)2014

€ ‘000

Property and equipment (2) (2)

Bonuses 10 19

as at 31 december 8 17

The deferred tax asset and deferred tax liabilities for the Branch in the Czech Republic (calculated using a corporate income tax rate of 19 %) are as follows:

Deferred tax liabilities for the Group are calculated using a corporate income tax rate of 22 % (2014: 22 %):

15. deferred tax asset

Recognised deferred tax asset and deferred tax liabilities

The deferred tax asset and deferred tax liabilities for the Group`s subsidiaries in Slovakia are calculated using a corporate income tax rate of 22 % (2014: 22 %) are as follows:


2015€ ‘000


€ ‘000

Property and equipment (369) (179)

Bonuses 803 777

Provisions for litigations and claims – 29

Provision for off-balance sheet liabilities 431 –

Impairment losses on receivables 8,086 11,727

Impairment losses on other receivalbes 62 –

Impairment losses for investment in subsidiaries 217 –

Discount on assigned receivables 395 390

Discount on rental contracts 50 58

Discount from sale of share 8 –

Investment securities available for sale (4,449) (1,939)

Tax losses carried forward 7,296 10,931

Other 1,735 23

as at 31 december 14,265 21,817


2015€ ‘000


€ ‘000

Property and equipment 7 –

Securities available-for-sale 291 –

Other 19 –

as at 31 december 317 –

116 117

2015€ ‘000

2014€ ‘000

tax receivable 4,253 309

16. tax receivable

A part of tax receivable is a tax receivable of the Czech branch in the amount of € 740 thousands.

17. other assets

18. deposits by banks

2015€ ‘000

2014€ ‘000


Collateral 1,340 –

as at 31 december 3,930 13,475

Movements in deferred tax:2015

€ ‘0002014

€ ‘000

As at 1 January 21,834 21,624

Through profit or loss (note 41) (5,065) 902

Charged to other comprehensive income (note 41) (2,813) (692)

as at 31 december 13,956 21,834

2015€ ‘000

2014€ ‘000

Factoring 30,021 15,763

Other debtors 14,252 16,019

Items from clearing from post offices 9,717 17,522

Deferred expenses 9,538 10,367

Prepayments 6,002 1,631

Receivable from transfer of business share 3,345 –

Other 2,897 214

Receivables from funds 1,140 1,276

Insurance receivable 1,058 435

Accrued income 481 173

Assets from reinsurance 444 460

Inventories 447 347

Receivables from real estate companies 146 989

Operational leasing 9 16

79,497 65,192

Allowances for impairment (1,940) (1,242)

77,557 63,950

2015€ ‘000

2014€ ‘000

As at 1 January 1,242 1,213

Increase 698 29


Items from clearing from post offices comprise deposits and other transactions of the Bank’s customers that have been made in post offices and not received by the Bank at the end of the reporting period. Generally, these items clear within three days.

The movements of allowances for impairment were as follows:

19. Customer accounts

2015€ ‘000

2014€ ‘000

Repayable on demand 1,506,659 1,307,177

Other deposits with original contractual maturity dates or periods of notice, by agreed maturity:

- up to 3 months 1,030,521 1,018,039

- 3 months to 1 year 356,551 507,701

- 1 year to 5 years 611,909 722,724

- above 5 years 1,315 1,361

as at 31 december 3,506,955 3,557,002

20. Received loans

2015€ ‘000

2014€ ‘000

Loan from bank 4,650 5,000

Received loans 2,170 51


A loan in amount of € 4,650 thousand was granted by Eximbanka, a.s. to the company PB Finančné služby, a.s. with interest rate of 1M EURIBOR + 0.80 %. The loan maturity is on 28 April 2016, prolongation of the loan on annual basis is being prepared.

OTP Bank Slovensko, a.s. provided loan in amount of € 2,170 thousand to PB Finančné služby, a.s. with interest rate 1M EURIBOR + 3.20 %. The loan maturity is on 6 May 2016, prolongation of the loan on annual basis is being prepared.

21. Provisions for off balance sheet liabilities

The movements in provisions were as follows:

2015

€ ‘0002014

€ ‘000

As at 1 January 66 52

Creation 2,038 60

Release of provisions (144) (46)

as at 31 december 1,960 66

Provisions were created for off balance sheet financial liabilities.

118 119

25. subordinated debt

26. share capital

2015

€ ‘0002014

€ ‘000


Creation of social fund 800 493

Usage of social fund (861) (368)


2015

€ ‘0002014

€ ‘000

Subordinated debt 8,000 8,000

Accrued interest 13 13

8,013 8,013

2015

€ ‘0002014

€ ‘000

As at 1 January 366,305 306,305

Increase in share capital – 60,000

as at 31 december 366,305 366,305

The Group entered into a subordinated debt agreement with J&T BANKA, a.s. on 21 September 2011 for € 8,000 thousand. This loan will mature in 2021 and bears interest of 5.34 % p. a. In the event of bankruptcy or liquidation of the Group, the loan will be subordinated to the claims of all other creditors of the Group.

27. share premium

2015

€ ‘0002014

€ ‘000


Usage of share premium – (57)


23. tax liabilities

24. other liabilities

2015

€ ‘0002014

€ ‘000

income tax payable 840 16,779

2015

€ ‘0002014

€ ‘000

Other creditors 23,953 13,950

Liabilities to employees 6,200 4,399

VAT, payroll and other tax liabilities 1,766 2,159

Withholding taxes payable 1,469 1,760

Other liabilities 1,195 634

Advances received 298 1,428

Liabilities from insurance and reinsurance 127 145

Accrued income 117 4,642

Liabilities from finance leases 84 –

Liabilities to shareholders 8 –

as at 31 december 35,217 29,117

The movements on the social fund account included in Liabilities to employees were as follows: 22. Provisions for insurance contracts

2015

€ ‘0002014

€ ‘000

Life insurance provision 9,683 7,481

Unearned premium provision 478 437

Claim provision 936 887


2015

€ ‘0002014

€ ‘000

At 1 January 8,805 6,888

Release of provisions:

- Unearned premium (note 36) 40 66

- Life insurance (note 39) 2,203 1,950

- Claims (note 39) 49 (99)


The movements in provisions were as follows:

120 121

2015

€ ‘0002014

€ ‘000

Contingencies:

Guarantees to customers 205,503 121,180

Guarantees to banks 54,198 37,748

Irrevocable letters of credit 16,800 18,900

Other commitments:

Confirmed credit lines 301,084 238,910

Derivative financial instruments (note 7)

Liabilities from trading derivatives 328,760 105,229

Liabilities from hedging derivatives 203,610 –

1,109,955 521,967

The breakdown of contingencies and commitments by country is as follows:

2015 2014

Guarantees to clients

€ ‘000

irrevocable letters of

credits€ ‘000

Confirmed credit lines

€ ‘000


€ ‘000


credits€ ‘000


€ ‘000

Slovak Republic 247,684 16,800 276,885 151,491 18,900 171,749

Czech Republic 7,206 – 24,179 2,749 – 64,404

European Union countries

4,811 – 14 4,688 – 2,757

Other European countries

– – 6 – – –

total 259,701 16,800 301,084 158,928 18,900 238,910

29 . Contingencies, commitments and derivative financial instruments

28. Reserves and retained earnings

Reva

luati

on r

ese

rve

€ ‘000

legal re

serv

e f

und

€ ‘000

Reta

ined e

arn

ings

€ ‘000

transl

ati

on r

ese

rve

€ ‘000

tota

l€ ‘000

As at 1 January 2014 4,673 24,412 128,389 (783) 156,691

Transfer to legal reserve fund – 7,011 (7,011) – –

Revaluation gain on securities Available-for-sale

2,456 – – – (2,456)

Translation difference from foreign operations – – – (172) (172)

Profit for the year – – 43,924 – 43,924

as at 31 december 2014 7,129 31,423 165,302 (955) 202,899

As at 1 January 2015 7,192 31,423 165,302 (955) 202,899

Transfer to legal reserve fund – 4,544 (4,544) – –

Paid dividends to shareholders – – (30,117) – (30,117)

Revaluation gain on securities available for sale

9,931 – – – 9,931

Translation difference from foreign operations – – – 361 361

Minority shares – sale of subsidiary – – 2,903 – 2,903

Other movements – (20) (25) – (45)

Profit for the year – – 48,728 – 48,728

as at 31 december 2015 17,060 35,947 182,247 (594) 234,660

a) Legal reserve fundUnder the Slovak Commercial Code, all companies are required to maintain a legal reserve fund to cover future adverse financial conditions. The Group is obliged to contribute an amount to the fund each year which is not less than 10 % of its annual net profit until the aggregate amount reaches a minimum level equal to 20 % of the issued share capital. The legal reserve fund is not readily distributable to shareholders.

b) Revaluation reserveThe revaluation reserve represents the cumulative net change in the fair value of available-for-sale investment securities net of deferred tax.

c) Translation reserve of foreign operationsThe translation reserve comprises all foreign exchange rate differences arising from the translation of the financial statements of foreign operations.

122 123

31. interest expense

32. Fee and commission income

2015

€ ‘0002014

€ ‘000

Deposits by banks (93) (161)

Customer accounts (40,301) (46,534)

Debt securities and Bills of exchange (301) (618)

Subordinated debt (427) (427)

Other (46) (42)

(41,168) (47,782)

2015

€ ‘0002014

€ ‘000

Administration and custody of securities 1,268 1,001

Loans, credit limits, guarantees and letters of credit 5,148 4,684

Clearing operations – banks 2,971 2,082

Payments and accounts management 29,708 30,639

Activities related to management of investment and pension funds 14,989 12,989

Other 8,464 5,224

62,548 56,619

30. interest income

2015

€ ‘0002014

€ ‘000

Deposits at the Central bank 69 182

Deposits at the banks 117 260

Loans and advances to customers 186,276 199,057

Financial investments held to maturity 20,389 29,364

Financial investments available for sale 11,743 23,793

Trading assets 330 466

Debt securities and bills of exchange 12,610 6,051

hedging derivatives – interest risk (102) –

Other 108 82

231,540 259,255

Accrued interest for impaired loans of € 12,403 thousands for the period ended 31 December 2015 (2014: € 9,713 thousand) is also included under interest income caption.

33. Fee and commission expense*

34. net trading income

2015

€ ‘0002014

€ ‘000

Administration and custody of securities (219) (234)

Other transaction and settlement fees (25,291) (24,865)

Special levy for banking institutions (7,183) (10,299)

Resolution fund (1,573) –

Deposit protection fund (901) (3,393)

(35,167) (38,791)

2015

€ ‘0002014

€ ‘000

Financial assets held for trading (3,117) 165

Financial assets available for sale 7,694 10,417

Foreign currency transactions 4,021 624

Results from hedging interest rates derivatives 1,130 –

Results from hedged items – financial investments available for sale (1,130) –

Other (1,942) 20

6,656 11,226

The breakdown of contingencies and commitments by sector is as follows:

2015 2014


€ ‘000


credits€ ‘000


€ ‘000


€ ‘000


credits€ ‘000


€ ‘000

Central Bank and banks

205,503 – 1,300 121,180 – –

Energy 5,686 – – 1,857 – –

Telecommunications 15,350 – – 17,520 – –

Wholesale 3,017 – 36,798 1,948 – 2,635

Retail – – 9,526 – – 13,140

Manufacturing – – 12,005 898 – 38,440

Construction 11,664 – 6,339 1,536 – 190

Services and good sale

3,394 16,800 49,802 4,176 18,900 66,685

Financial services 20,162 – 57,724 9,787 – 11,584

healthcare 25 – 79 25 – –

Rent – – 27,856 – – 176

households – – 105,638 – – 106,060

total 259,701 16,800 307,067 158,928 18,900 238,910

124 125

38. depreciation and amortisation

2015

€ ‘0002014

€ ‘000

Property and equipment (note 13) (4,917) (4,820)

Intangible assets (note 14) (5,718) (4,118)

(10,635) (8,938)

The costs of services provided by the statutory auditor (including VAT) were as follows:

37. administrative expenses

40. impairment losses and creation of provisions

39. Claim costs

2015

€ ‘0002014

€ ‘000

Audit (including other regulatory assurance services) (560) (626)

Other advisory – (43)

(560) (669)

2015

€ ‘0002014

€ ‘000

Wages and salaries (including bonuses) (35,208) (34,610)

Social expenses (11,619) (11,770)

Personnel costs (46,827) (46,380)

Marketing expenses (4,752) (5,622)

Services (15,775) (12,348)

Rent (8,163) (5,865)

Other administrative expenses (2,117) (5,272)

Material expenses (2,246) (2,575)

Operating expenses (996) (4,976)

Other services (2,438) (7,360)

(83,314) (90,398)

Average number of employees for the period 1,393 1,364

of which, management 26 87

2015

€ ‘0002014

€ ‘000

Impairment losses on loans and advances (note 10) (67,680) (79,724)

Impairment losses on investment securities (note 11) – (5)

Impairment losses on tangible assets (note 13) (686) –

Reversal of impairment losses on intangible assets (note 14) 424 (424)

Impairment losses on other assets (note 17) (698) (29)

Creation of provisions for off balance sheet liabilities (note 21) (1,894) (14)

(70,534) (80,196)

2015

€ ‘0002014

€ ‘000

Claims paid (1,860) (1,489)

Claims paid ceded 57 91

Change in claim provisions (note 22) (49) 99

Change in claim provisions ceded (18) (58)

Change in life insurance provision (note 22) (2,203) (1,950)

(4,073) (3,307)

41. income tax

2015

€ ‘0002014

€ ‘000

Current income tax expense payable (16,942) (21,154)

Correction of previous period (144) –

Deferred tax (note 15) (5,065) 902

total income tax expense (22,151) (20,252)

Tax is charged on the taxable profit for the year of each company in the Group at a rate of 22 % (2014: 22 %).

35. net other (loss)/income*

36. net earned premium

2015

€ ‘0002014

€ ‘000

Net loss from assigned receivables (1,982) (14,313)

Investments – 20

Rental income 1,002 (542)

Revenues from leasing* 1,205 1,424

Revenues from factoring* 1,021 479

Reimbursements received 284 254

Net (loss)/profit from disposals of property and equipment 88 40

Shortages and damages (404) (153)

Other 2,657 9,157

3,871 (3,634)

2015

€ ‘0002014

€ ‘000

Gross premium written 11,829 10,805

Change in unearned premium provision ('UPR') (note 22) (40) (66)

Written premium ceded (596) (569)

Reinsurers' share in the change in UPR 1 16

11,194 10,186

126 127

Reconciliation of the effective tax rate:

total income tax2015 2014

tax base€ ‘000

tax at 22 %€ ‘000

tax base€ ‘000

tax at 22 %€ ‘000

Profit before taxation 71,049 15,631 62,240 14,132

Tax deductible items:

Dividend income (7,694) (1,693) (5,999) (1,320)

Fees for loans and advances to clients taxed in previous periods

– – – –

Difference between tax and accounting depreciation

(10) (2) (223) (49)

Bonuses and provisions (3,569) (785) – –

Other provisions (144) (32) – –

Income from write-off of receivables (1,047) (230) (528) (116)

Release of impairment loss allowances (48,538) (10,678) – –

Other (7,226) (1,590) (4,162) (915)

Total tax deductible items (68,228) (15,010) (10,912) (2,400)

Tax non-deductible items:

Impairment losses on loans and advances to clients, net

54,510 11,992 46,425 10,213

Difference between tax and accounting depreciation

496 109 120 26

Bonuses and provisions 4,430 975 49 11

Other provisions 8,955 1,970 – –

Other 22,254 4,896 11,864 2,610

Total non-deductible items 90,645 19,942 58,458 12,860

Income tax expense before utilizing tax losses

– 20,563 – 24,593

Utilization of tax losses – (3,634) – (3,614)

Income tax expense – 16,929 – 20,979

Correction of previous period – 144 – –

Withholding tax – 13 – 175

Deferred tax – 5,065 – (902)

total income tax 22,151 20,252

effective tax rate 31.18 % 28.07 %

Many parts of Slovak tax legislation remain untested and there is uncertainty about the interpretation that the tax authorities may apply in a number of areas. The effect of this uncertainty cannot be quantified and will only be resolved as legislative precedents are set or when the official interpretations of the authorities are available.

42. Profit/(loss) before changes in operating assets and liabilities

2015

€ ‘0002014

€ ‘000

Profit after taxation 48,898 43,924

Adjustments for non-cash items:

Depreciation and amortisation 10,635 8,938

Impairment losses on loans and advances to customers 67,680 79,724

Investment revaluation 12,795 3,148

Impairment of other assets 698 29

Impairment losses on investment securities – 5

Impairment losses on tangible assets 686 –

(Release)/creation of provision to intangible asset (424) 424

Profit on disposal of property and equipment (88) (40)

Creation of provisions for off-balance sheet 1,894 14

Creation of provision for insurance contracts 2,292 1,917

Income tax 17,086 21,154

Change in deferred tax for 2015 5,065 (902)

Translation difference on foreign operations 361 (172)

Other non-cash operations 2,004 –

169,582 158,163

2015

€ ‘0002014

€ ‘000

Net cash flow from operating activities includes the following cash flows:

Interest received 261,730 253,146

Interest paid (48,997) (66,243)

212,733 186,903

43. lease commitments and receivables

2015

€ ‘0002014

€ ‘000

Available-for-sale financial assets (before tax) 11,665 3,148

Change of fair value of hedging derivatives (before tax) 1,130 –

Income tax (note 15) (2,813) (692)

net of tax 9,982 2,456

income tax recognised in other comprehensive income:

Minimum value of leasing payments2015

€ ‘0002014

€ ‘000

Receivables from leasing

less than 1 year 3,659 12,120

more than 1 year but less than 5 years 7,696 5,002

more than 5 years 687 989

12,042 18,111

Deduction of future financial income (unrealized income on finance leases)

(2,120) (3,418)

Present value of future leasing payments 9,922 14,693

Impairment loss allowances (457) (389)

128 129

Present value of leasing payments2015

€ ‘0002014

€ ‘000

Receivables from leasing

up to 1 year 3,524 9,904

more than 1 year but less than 5 years 5,810 4,077

more than 5 years 588 712

Present value of future leasing payments 9,922 14,693

Impairment loss allowances (457) (389)

lease commitments2015

€ ‘0002014

€ ‘000

Present value of minimum lease payments:

up to 1 year 3,769 3,669

up to 5 years 14 103

3,783 3,772

2015

€ ‘0002014

€ ‘000

J&t FinanCe GRoUP se.; PBi, a.s. (J&t BanKa a.s. up to 28 december 2015)

Loans and advances to customers 468 488

Loans and advances to banks 30,141 32,475

Other assets 8 3,070

Liabilities from trading (17) –

Deposits banks (110) –

Customer accounts (2,018) (10,022)

Subordinated debt (8,013) (8,013)

Interest income – 179

Other income 67 –

Net trading income 3,419 2,454

Loss from financial operations (4,900) (2,055)

Interest expense (427) –

Fee and commission expense (7) (443)

2015

€ ‘0002014

€ ‘000

Companies related to J&t FinanCe GRoUP se; PBi, a.s. (J&t BanKa a.s. up to 28 december 2015)

Investment securities – 27 482

Loans and advances – 52

Loans and advances to banks 32 –

Customer accounts – (24)

Other liabilities (2) –

Net profit from financial operations – 81

Interest income 2,101 2,043

Interest expense – (83)

Operational expenses (13) –

Operational income (8) –

b) Companies related to Group shareholders

c) Jointly controlled entity

a) Shareholders

2015

€ ‘0002014

€ ‘000

sPPs, a. s.

Other receivables 449 127

Customer accounts (1,249) (782)

Other income 388 536

Fee and commission expense (1,723) (1,251)

44. Related party transactions

Parties are considered to be related if one party has the ability to control the other party or if it has through its financial and operational decisions significant influence over the other party. Related parties include subsidiaries and jointly controlled entity as well as key management personnel and their close persons.

The following person or companies meet the definition of related parties:(a) Companies that directly or indirectly through one or more intermediaries control or are controlled

have significant influence or are under joint control of the reporting company;(b) Affiliated company in which the parent company has significant influence and which is not a

subsidiary nor a joint venture;(c) Individual owning directly or indirectly share in the voting right of the Group that gives them

significant influence over the Group and any other individual who may be expected to influence or be influenced by that person in their dealings with the Group;

(d) Key management personnel, i.e. persons having authority and responsibility for planning management and controlling activities of the Group including directors and managing employees of the Bank and persons related to them;

(e) Companies in which a significant share of voting rights is owned directly or indirectly by any person described in point (c) or (d) or over which such party may have a significant influence. This includes companies owned by directors or major shareholders of the Group and companies that have key member of management common with the Group.

130 131

Total remuneration and bonuses paid to members of the Supervisory Board and Board of Directors in 2015 was € 2,028 thousand (2014: € 3,528 thousand).

d) Key management personnel (KMP) and related parties to KMP

e) Others

2015

€ ‘0002014

€ ‘000

Investment securities 1,140 13 547

Loans and advances to customers – 77 462

Customer accounts (2,727) (5 407)

Net profit from financial operations – 2

Interest income 4,031 9 672

Fees and commission income 1,861 –

Net loss from financial operations – (151)

Expenses (14) (29)

45. Custodial services

The Group administers assets received into its custody from customers totalling € 218,627 thousand (2014: € 135,638 thousand). The assets comprise securities and other valuables.

46. Fair values

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The estimated fair values of the Group’s financial assets and liabilities were as follows:

2015

€ ‘0002014

€ ‘000

KMP

Loans and advances to customers – 8

Customer accounts (793) (664)

Income 3 13

Expense (2,294) (3,271)

Close persons to KMP

Loans and advances to customers – 29

Customer accounts (247) (316)

Income 1 2

Expense (5) (4)

31 december 2014Carrying

value€ ‘000

level 1€ ‘000

level 2€ ‘000

level 3€ ‘000

Fair value€ ‘000

Financial assets

Cash and balances at central banks 366,894 – 366,894 – 366,894

Trading assets 2,370 1,857 489 24 2,370

Loans and advances to banks 1,806 – 1,806 – 1,806

Loans and advances to customers 2,283,715 – – 2,551,047 2,551,047

Investment securities 1,416,783 695,297 688,721 128,476 1,512,494

From which: Available for sale 823,773 695,297 – 128,476 823,773

From which: Held to maturity 593,100 – 688,721 – 688,721

Other assets (only financial) 52,480 – 52,480 – 52,480

Financial liabilities


Deposits by banks 13,475 – 13,475 – 13,475

Customer accounts 3,557,002 – 3,580,568 – 3,580,568

Loans received 5,051 – 5,051 – 5,051

Subordinated debt 8,013 – 8,033 – 8,033

Other liabilities (only financial) 18,494 – 18,494 – 18,494

31 december 2015Carrying

value€ ‘000

level 1€ ‘000

level 2€ ‘000

level 3€ ‘000

Fair value€ ‘000

Financial assets

Cash and balances at central banks 570,697 – 570,697 – 570,697

Trading assets 2,106 1,556 550 – 2,106

hedging derivatives 1,242 – 1,242 – 1,242

Loans and advances to banks 2,482 – 2,482 – 2,482

Loans and advances to customers 2,134,022 – – 2,284,766 2,284,766

Investment securities 1,326,283 780,576 544,765 57,481 1,382,822

From which: Available for sale 861,615 780,576 23,558 57,481 861,615

From which: Held to maturity 464,668 – 521,207 – 521,207

Investment in jointly controlled entity 383 – 383 – 383

Other assets (only financial) 60,132 – 60,132 – 60,132

Financial liabilities


hedging derivatives 312 – 312 – 312

Deposits by banks 3,930 – 3,930 – 3,930

Customer accounts 3,506,955 – 3,520,816 – 3,520,816

Loans received 6,820 – 6,820 – 6,820

Subordinated debt 8,013 – 8,840 – 8,840

Other liabilities (only financial) 30,372 – 30,372 – 30,372

132 133

The following methods and assumptions were used in estimating the fair values of the Group’s financial assets and liabilities:

Cash and balances at the central banksCash and balances at the central banks represent short-term assets with maturity less than three months. Fair value of cash and balances at the central banks is identical with accounting value.

Trading assets The fair values of trading assets are calculated using quoted market prices or theoretical prices determined by discounting future cash flows by reference to the relevant interest rate for the term of the instrument.

Hedging derivativesThe fair value of hedging derivatives is determined using quoted market prices or theoretical prices determined by discounted future cash flows by reference interbank interest rate for the relevant period of the instrument.

Loans and advances to banksThe fair value of current accounts with other banks approximates to book value. For amounts with a remaining maturity of less than three months it is also reasonable to use book value as an approximation of fair value. The fair values of other loans and advances to banks are calculated by discounting the future cash flows using current interbank rates.

Loans and advancesLoans and advances are stated net of allowances for impairment. For loans and advances to customers with a remaining maturity of less than three months it is reasonable to use book value as an approximation of fair value. The fair values of other loans and advances to customers are calculated by discounting the future cash flows using current market rates and an estimate of current risk margins.

Investment securitiesThe fair values of held-to-maturity investment securities are calculated using quoted market prices. When quoted prices are not available securities are valued by discounting future cash flows using the capital asset pricing model.

Other assets (only financial)Other assets include short-term assets with maturity up to three months. The fair value of other assets is the same as its carrying amount.

Trading liabilitiesTrading liabilities are stated using quoted market prices or theoretical prices determined by discounting future cash flows by reference to the relevant interest rate for the term of the instrument.

Deposits by banksThe fair value of current accounts with other banks approximates to book value. For other amounts owed to banks with a remaining maturity of less than three months it is also reasonable to use book value as an approximation of fair value. The fair values of other deposits by banks are calculated by discounting the future cash flows using current interbank rates.

Customer accountsThe fair values of current accounts and term deposits with a remaining maturity of less than three months approximate their carrying amounts. The fair values of other customer accounts are calculated by discounting the future cash flows using current deposit rates.

Loans receivedFair values of loans are calculated by discounting future cash flows using effective interbank rates. For received loans with a remaining maturity of less than three months it is reasonable to regard their

book value as approximate fair value.

Subordinated debtThe fair values of subordinated debt are calculated by discounting the future cash flows using current market rates and an estimate of current risk margins.

Other liabilities (only financial)Other liabilities include short-term liabilities with maturity up to three months. The fair value of other assets is the same as its carrying amount.

47. information on events occurring between the balance sheet date and the date of preparation of financial statements

No events with material impacts that would require adjustment or disclosure in the Financial Statements as at 31 December 2015 occured after the date of preparation of the Financial Statements.

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136 137

Bánovce nad Bebravou Nám. Ľudovíta Štúra 8/8B, 957 01 Bánovce nad Bebravou

Banská Bystrica Dolná 62, 974 01 Banská Bystrica

Bardejov hviezdoslavova 3, 085 01 Bardejov

Bratislava Čachtická 25, 831 06 Bratislava Gorkého 3, 811 01 Bratislava Karloveská 34, 842 64 Bratislava Ľudovíta Fullu 3, 841 05 Bratislava Nám. SNP 35, 811 01 Bratislava Odborárske nám. 2, 811 07 Bratislava Prievozská 2/B, 821 09 Bratislava Tomášikova 21, 821 01 Bratislava Vlastenecké nám. 4, 851 01 Bratislava Pajštúnska 7 (SKyBOX), 851 02 Bratislava Dvořákovo nábrežie 4, 811 02 Bratislava*

Brezno Nám. M. R. Štefánika 7, 977 01 Brezno

dubnica nad Váhom Nám. Matice slovenskej 12/1298, 018 41 Dubnica nad Váhom

dunajská streda Bacsákova ul. 1, 929 01 Dunajská Streda

Humenné Nám. slobody 3, 066 01 humenné

Komárno Mederčská 4987/4, 945 01 Komárno

Košice Škultétyho 1, 040 01 Košice Toryská 3, 040 11 Košice

levice P. O. hviezdoslava 2/A, 934 01 Levice

lučenec T. G. Masaryka 19, 984 01 Lučenec

Malacky Zámocká 8, 901 01 Malacky

Martin Andreja Kmeťa 5397/23, 036 01 Martin

Michalovce Ul. kpt. Nálepku 26, 071 01 Michalovce

nitra Štefánikova trieda 65, 949 01 Nitra Sládkovičova 1, 949 01 Nitra

nové Mesto nad Váhom hviezdoslavova 19, 915 01 Nové Mesto nad Váhom

nové Zámky Komárňanská 2, 940 02 Nové Zámky

Pezinok Meisslova 1/A, 902 01 Pezinok

Poprad Vajanského 71, 058 01 Poprad

Prešov hlavná 114, 080 01 Prešov

Prievidza Bojnická cesta 15, 971 01 Prievidza

10. Branch network

45 own commercial locations

Rožňava Janka Kráľa 4, 048 01 Rožňava

skalica Potočná 20, 909 01 Skalica

spišská nová Ves Letná 51, 052 01 Spišská Nová Ves

topoľčany Námestie M. R. Štefánika 21, 955 01 Topoľčany

trebišov M. R. Štefánika 52, 075 01 Trebišov

trenčín Nám. sv. Anny 23, 911 01 Trenčín

trnava hlavná ulica 33, 917 01 Trnava

Vranov nad topľou Námestie slobody 5, 093 01 Vranov nad Topľou

Zvolen T. G. Masaryka 955/8, 960 01 Zvolen

Žiar nad Hronom Nám. Matice slovenskej 2820/24, 965 01 Žiar nad hronom

Žilina Na priekope 19, 012 03 Žilina

* commercial location dedicated to VIP clients

1 581 points of sale of slovenská pošta

More than 1 600 commercial locations make us the most accessible Bank in slovakia.

Consolidated annUal RePoRt 2015 - Poštová banka › media › 948453 › konsolid... · Nationale – Nederlanden poisťovňa, a.s., Aegon Životná poisťovňa, a.s., and Aegon,

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