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					              DSK Bank Group




   Consolidated IFRS Financial Statements

For the years ended 31 December 2006 and 2005

       and independent auditors’ report
                                                                                               DSK Bank Group
                                                                           Consolidated IFRS Financial Statements
                                                                  For the years ended 31 December 2006 and 2005




Consolidated income statements for the years ended 31 December 2006 and 2005




                                                                                  2006                      2005
In thousands of BGN                                  Note

Interest and similar income                                                    388 604                    345 242
Interest expense and similar charges                                         (102 524)                   (74 304)
Net interest income                                    3                       286 080                    270 938
Fee and commission income                                                      110 902                     74 659
Fee and commission expense                                                      (7 184)                    (5 196)
Net fee and commission income                          4                       103 718                     69 463
Net trading income                                     5                        11 268                       5 345
Total income from banking operations                                           401 066                    345 746
Administrative expenses                                6                     (159 156)                  (160 429)
Impairment losses                                      7                      (45 894)                   (35 554)
Other income                                           8                          8 832                      4 589
Share of results of associates                                                      968                      (315)
Profit before tax                                                              205 816                    154 037
Income tax expense                                     9                      (30 733)                   (23 908)
Profit for the year                                                            175 083                    130 129

Attributable to:
Equity holders of the parent                                                   175 119                   130 257
Minority interest (loss)                                                          (36)                     (128)




The income statements are to be read in conjunction with the notes forming part of the financial statements as set
out on pages 5 to 37.

The financial statements were approved on behalf of DSK Bank PLC on 12 March 2007.




               Violina Marinova                                                     Dorothea Nikolova
            Chief Executive Director                                                Executive Director




                                                        1
Translated from Bulgarian
                                                                                             DSK Bank Group
                                                                         Consolidated IFRS Financial Statements
                                                                For the years ended 31 December 2006 and 2005



Consolidated balance sheets as of 31 December 2006 and 2005


                                                                       31-Dec-2006                   31-Dec-2005
In thousands of BGN                                  Note

Assets
Cash and cash equivalents                             10                    138 934                       119 319
Loans and advances to banks and balances with
the Central Bank                                      11                  1 830 037                       828 337
Loans and advances to other customers                 12                  3 392 736                     2 892 089
Financial assets held for trading                     13                     68 694                        90 884
Other assets                                          14                     16 724                         8 826
Interest receivables                                  15                     32 167                        26 911
Investments available for sale and equity
investments                                           16                    195 343                       228 254
Investments held to maturity                          16                    162 509                       142 286
Fixed assets                                          17                    218 485                       196 905
Total assets                                                              6 055 629                     4 533 811

Liabilities
Deposits from banks                                   18                    475 758                       144 566
Loans from banks                                      18                    689 179                       379 040
Deposits from other customers                         19                  4 060 294                     3 347 162
Other liabilities                                     20                     70 697                        67 147
Interest payables                                     21                     21 017                        13 314
Deferred tax liabilities                              22                     11 408                        22 603
Total liabilities                                                         5 328 353                     3 973 832

Shareholders’ equity
Share capital                                         23                     93 984                        93 984
Reserves                                                                    632 942                       465 814
Total shareholders’ equity                                                  726 926                       559 798
Minority interest                                                               350                           181
Total equity                                                                727 276                       559 979

Total liabilities and equity                                              6 055 629                     4 533 811

Off balance sheet items
Contingent liabilities and commitments                24                    447 898                       259 171


The balance sheets are to be read in conjunction with the notes forming part of the financial statements as set out
on pages 5 to 37.

The financial statements were approved on behalf of DSK Bank PLC on 12 March 2007.




              Violina Marinova                                                  Dorothea Nikolova
           Chief Executive Director                                             Executive Director


                                                        2
Translated from Bulgarian
                                                                                            DSK Bank Group
                                                                        Consolidated IFRS Financial Statements
                                                               For the years ended 31 December 2006 and 2005




Consolidated cash flow statements for the years ended 31 December 2006 and 2005


                                                                                      2006                  2005
In thousands of BGN                                                   Note

Net cash flow from operating activities
Profit before taxation                                                             205 816              154 037
Increase in impairment of bad and doubtful debts and other assets       7           45 894                35 554
Depreciation and amortization                                                       19 241                19 584
Net effect of unrealised price revaluation of investments held for
trading                                                                                 891              (1 257)
Net effect of unrealised foreign exchange rate revaluation                         (16 076)              16 596
Other non cash changes                                                                1 058                  798
Share of results of associates                                                           36                  128
Minority interest in net profit                                                         169                  110
Net cash flow from operating activities before changes in
operating assets and liabilities                                                   257 029              225 550
Change in operating assets
Decrease /(increase) in securities held for trading                                  20 356              (1 523)
Decrease /(increase) in loans and advances to banks                                      96                 (56)
Increase in loans to customers                                                    (544 568)            (803 593)
Increase in other assets                                                           (13 203)              (3 443)
Change in operating liabilities
Increase in deposits from banks                                                    641 331              388 809
Increase in amounts due under deposits to other customers                          735 144              679 548
Increase/(decrease) in other liabilities                                            (3 132)              23 118
Net cash flow from operating activities                                          1 093 053              508 410
Cash flow from investing activities
Acquisition of non current assets, net                                            (40 821)              (41 340)
Decrease/(increase) in investments                                                  (9 340)                2 659
Net cash flow from investing activities                                           (50 161)              (38 681)
Tax prepaid                                                                       (21 481)              (14 140)
Net increase in cash and cash equivalents                                        1 021 411              455 589

Cash and cash equivalents at the beginning of period                   25          947 109              491 520
Cash and cash equivalents at the end of period                         25        1 968 520              947 109



The cash flow statements are to be read in conjunction with the notes forming part of the financial statements as
set out on pages 5 to 37.

The financial statements were approved on behalf of DSK Bank PLC on 12 March 2007.




              Violina Marinova                                                 Dorothea Nikolova
           Chief Executive Director                                            Executive Director

                                                       3
Translated from Bulgarian
                                                                                             DSK Bank Group
                                                                         Consolidated IFRS Financial Statements
                                                                For the years ended 31 December 2006 and 2005




Consolidated statements of changes in equity for the years ended 31 December 2006 and 2005




                                                Share         Retained    Statutory   Revaluation     Total
                                                capital       earnings     reserve      reserve
In thousands of BGN

Balance as of 1 January 2005                     93 984        121 298      116 930        69 939     402 151
Transferred reserve                                   -        (79 678)      79 678             -           -
Revaluation surplus from fixed assets                 -               -           -        32 442           -
Deferred tax liability on revaluation reserve
from fixed assets                                         -           -           -        (4 867)            -
Deferred tax liability on revaluation reserve
from financial assets available for sale                  -           -           -           123         123
Decrease in revaluation reserve from fully
depreciated or disposal of fixed assets, net
of tax                                                -           1 635           -        (1 635)          -
Other                                                 -               -           -          (308)      (308)
Net profit for the year                               -         130 257           -              -    130 257
Balance as of 31 December 2005                   93 984         173 512     196 608        95 694     559 798
Transferred reserve                                   -       (120 075)     120 075              -          -
Diferred tax liability on revaluation reserve
from change in tax rate                                   -           -           -          6 142      6 142
Decrease in revaluation reserve from fully
depreciated or disposal of fixed assets, net
of tax                                                    -        625            -          (625)            -
Decrease in revaluation reserve from sold
and matured securities available for sale                 -           -           -        (6 596)     (6 596)
Revaluation at fair value of securities
available for sale, net of tax                        -              -            -        (7 537)     (7 537)
Net profit for the year                               -        175 119            -              -    175 119
Balance as of 31 December 2006                   93 984        229 181      316 683        87 078     726 926




The statements of changes in equity are to be read in conjunction with the notes forming part of the financial
statements as set out on pages 5 to 37.


The financial statements were approved on behalf of DSK Bank PLC on 12 March 2007.




                   Violina Marinova                                             Dorothea Nikolova
                Chief Executive Director                                        Executive Director




                                                          4
Translated from Bulgarian
                                                                                            DSK Bank Group
                                                                        Consolidated IFRS Financial Statements
                                                               For the years ended 31 December 2006 and 2005




1.       Basis of preparation and legal status




(a)      Legal Status

         DSK Bank PLC as the former State Saving Bank was incorporated on 2 March 1951 in Bulgaria as a
         centralised deposit accepting institution. Since 1998, when the Law for DSK transformation has been
         passed, DSK Bank PLC (The "Bank") was transformed into a commercial bank and is allowed to
         conduct all the transactions stated in art.1, par.2 of the Banking Law. Later the Bank receives a full
         banking license to operate as a commercial bank by order No. 220882 of 26 September 2002 issued by
         the Bulgarian National Bank.

         On 26 January 1999 Sofia City Court registered the State Savings Bank as a solely owned joint stock
         company “DSK Bank”, 100% owned by the state. In 2001, pursuant to a court decision the Bank has
         been transformed to a joint stock company with its capital divided between the Council of Ministers –
         75% and the Bank Consolidation Company AD - 25%.

         On 29 November 2002 following a decision of the Sofia City Court the Bank Consolidation Company
         acquired 100% of the share capital of DSK Bank.

         On 29 October 2003 following a decision of the Sofia City Court OTP Bank, incorporated in Hungary,
         acquired 100% of the share capital of DSK Bank.

         The consolidated financial statements of the Bank for the years ended 31 December 2006 and 2005
         comprise the Bank and its subsidiaries (together referred to as the DSK Group).




(b)      Basis of preparation

         These consolidated financial statements have been prepared in accordance with International Financial
         Reporting Standards (IFRS) as adopted by the European Union (EU). IFRS as adopted by the EU do
         not currently differ from IFRS as issued by the International Accounting Standards Board (IASB),
         except for certain hedge accounting requirements under IAS 39 which have not been endorsed by the
         EU. The Bank has determined that the unendorsed hedge accounting requirements under IAS 39 would
         not impact the consolidated financial statements had they been endorsed by the EU at the balance sheet
         date.

         The financial statements are presented in thousands of Bulgarian Leva (BGN).

         The financial statements are prepared on historical cost basis with the exception of fair value basis for
         financial assets and liabilities held for trading, available-for-sale assets and derivative financial
         instruments except those for which a reliable measure of fair value is not available. Other financial
         assets and liabilities and non-financial assets and liabilities are stated at amortized cost or historical
         cost. Non-monetary assets are restated for the effects of hyperinflation where necessary and are
         subsequently revalued to fair value.




                                                        5
Translated from Bulgarian
                                                                                             DSK Bank Group
                                                                         Consolidated IFRS Financial Statements
                                                                For the years ended 31 December 2006 and 2005



(c)      Basis of consolidation



(1)      Subsidiaries

         Subsidiaries are those enterprises controlled by the Bank. Control exists when the Bank has the power,
         directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain
         benefits from its activities. The financial statements of the subsidiaries are included in the consolidated
         financial statements from the date control commences until the date the control ceases. All receivables
         and payables, income and expenses as well as intragroup profits resulting from transactions between
         Group companies are eliminated unless they are not material. The minority shareholders’ proportionate
         share in the income or expenses of the Group is disclosed separately from shareholders’ equity under
         the item Minority interest.

         Rodina Voluntary Savings Cooperative Fund, Rodina Professional Savings Cooperative Fund and
         Rodina Universal Pension Fund of Rodina Pension Company are excluded from the Consolidated
         Financial Statements of the DSK Bank Group as these funds are managed by the Rodina Pension
         Company on behalf of third parties.

         DSK Bank owns 97 % of the share capital of Rodina Pension Company, 100 % of DSK Tours, 66 % of
         the share capital of DSK Assets Management and DSK Trans security owns 100 % of DSK Tours as of
         December 31, 2006 and has control over the financial and operating policies of companies.



(2)      Associates

         Associates are those enterprises in which the Bank has significant influence, but not control, over the
         financial and operating policies. Investments in associates are accounted for under the equity method.
         Equity accounting involves recognition of the Bank’s share of the total recognized gains and losses of
         associates for the year in the income statement. The Bank’s interest in the associates is carried in the
         balance sheet at an amount that reflects its share of the net assets of the associate.

         DSK Bank owns 22.16 % of the equity of LIC DSK Garancia and 22.75 % of the equity of IC DSK
         Garancia and has significant influence over the financial and operating policies of the companies. DSK
         Bank owns 50 % of the share capital of DSK Leasing where OTP Leasing has control over the
         activities of company.



2.       Significant accounting policies


(a)      Income recognition

         Interest income and expense is recognized in the income statement as it accrues, based on the effective
         yield of the asset. Interest income and expense include the amortization of upfront loan origination
         fees, discounts, premiums or other differences between the initial carrying amount of an interest
         bearing instrument and its amount at maturity calculated on effective interest rate basis.

         Fee and commission income and expense from financial services provided by DSK Bank Group are
         recognized in the income statement when they occur.

         Net trading income includes gains and losses arising from disposals of assets and changes in the fair
         value of financial assets and liabilities held for trading.


                                                        6
Translated from Bulgarian
                                                                                             DSK Bank Group
                                                                         Consolidated IFRS Financial Statements
                                                                For the years ended 31 December 2006 and 2005




(b)      Foreign currency transactions

         Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the
         transaction. Monetary assets and liabilities denominated in foreign currencies, and stated at historical
         cost, are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising
         on translation are recognized in the income statement. Non-monetary assets and liabilities denominated
         in foreign currencies, which are stated at historical cost, are reported at the foreign exchange rate ruling
         at the date of the transaction.



(c)      Financial instruments

         The financial instruments are reported as financial assets held for trading, available for sale and held to
         maturity and advances to banks and other customers in the Balance Sheet of DSK Bank Group.


(1)      Classification

         Financial assets held for trading are those that DSK Bank Group principally holds for the purpose of
         short-term liquidity and profit taking. These include investments, certain purchased loans and
         derivative instruments that are not for a certain purpose, and liabilities from short sales of financial
         instruments.

         Net receivable under trading derivatives in a position (positive change in fair value), as well as options
         purchased, are reported as trading assets.

         Net payable under trading derivatives in a position (negative change in fair value), as well as options
         written, are reported as trading liabilities.

         Loans and receivables are those instruments issued by the Bank Group through providing financing as
         a lender other than those held with the intention of short-term profit taking. Loans and receivables
         comprise loans and advances to banks and customers.

         Held-to-maturity financial assets are financial assets with fixed or determinable yield and fixed
         maturity that DSK Bank Group has the intent and ability to hold to maturity. These include certain
         purchased loans and advances to banks and customers and certain debt instruments.

         Available-for-sale assets are financial assets that are not held for trading purposes, loans originated by
         DSK Bank Group, or held to maturity. Available-for-sale instruments include money market
         placements and certain debt and equity investments.


(2)      Recognition

         DSK Bank Group recognizes initially financial assets held for trading and available-for-sale assets on
         the settlement date. From this moment increases and decreases arising from changes in fair value of the
         assets are recognized on each balance sheet date.

         Held-to-maturity loans and loans and receivables originated by the Bank Group are recognized on the
         settlement date.




                                                         7
Translated from Bulgarian
                                                                                             DSK Bank Group
                                                                         Consolidated IFRS Financial Statements
                                                                For the years ended 31 December 2006 and 2005



(3)      Measurement

         Financial instruments are measured initially at cost, including transaction costs.

         Subsequent to initial recognition financial instruments held for trading and all available-for-sale assets
         are measured at fair value, except instruments that do not have a quoted market price in an active
         market and which fair value cannot be reliably measured, which are stated at cost, including
         transaction costs, less impairment losses.

         All non-trading financial liabilities, loans and receivables originated by the Bank Group and held-to-
         maturity financial assets are measured at amortized cost less impairment losses. Amortized cost is
         calculated on the basis of effective interest rate method. Upfront loan origination fees, premiums and
         discounts, including initial transaction costs, are included in the carrying amount of the related
         instrument and amortized based on the effective interest rate of the instrument.


(4)      Fair value measurement principles

         The fair value of financial instruments is based on their quoted market price at the balance sheet date
         without any deduction for transaction costs. If a quoted market price is not available, the fair value of
         the instrument is estimated using pricing models or discounted cash flow techniques.

         Where discounted cash flow techniques are used, estimated future cash flows are based on
         management’s best estimates and the discount rate is a market related rate at the balance sheet date for
         an instrument with similar terms and conditions. Where pricing models are used, inputs are based on
         market related measures at the balance sheet date.

         The fair value of derivatives that are not exchange-traded is estimated at the amount that DSK Bank
         Group would receive or pay to terminate the contract at the balance sheet date taking into account
         current market conditions and the current creditworthiness of the counterparties.


(5)      Gains and losses on subsequent measurement

         Gains and losses arising from a change in the fair value of trading securities are recognized in the
         income statement, and changes in fair value of securities available for sale are recognized as
         revaluation reserve in equity respectively.



(d)      Cash and cash equivalents

         Cash and cash equivalents comprise cash balances on hand and cash deposited with the Central Bank
         nostro accounts and short term highly liquid receivables from banks with maturity of up to three
         months or less when purchased.




(e)      Investments

         Investments that DSK Bank Group holds for the purpose of short-term liquidity and profit taking are
         classified as trading instruments.

         Securities in investment portfolio that DSK Bank Group has the intent and ability to hold to maturity
         are classified as held-to-maturity assets.



                                                        8
Translated from Bulgarian
                                                                                             DSK Bank Group
                                                                         Consolidated IFRS Financial Statements
                                                                For the years ended 31 December 2006 and 2005



         For the purposes of measuring the equity investments subsequent to initial recognition, they are
         classified as available-for-sale financial assets. When the fair value of these investments is not reliably
         measurable they are stated at cost.



(f)      Receivables from banks and other customers

         Receivables from banks and other customers are placements of deposits with banks and lending of
         amounts to corporate and retail customers under contracts with stated repayment schedule, amount,
         currency, interest rate, collateral and other transaction terms.

         Loans and advances are reported net of impairment to the amount of the estimated recoverable
         amounts (refer to accounting policy (j)).



(g)      Derecognition

         A financial asset is derecognized on the value date after DSK Bank Group loses control over the
         contractual rights that comprise that asset. This occurs when the rights are realized, expired or are
         surrendered. A financial liability is derecognized when it is extinguished.

         Available-for-sale assets and assets held for trading that are sold are derecognized and corresponding
         receivables from the buyer are recognized as of the date of the contract for sale of the asset. DSK Bank
         Group uses a specific method to identify the gain or loss on derecognition.

         Financial instruments held to maturity and, loans and receivables are derecognized on the date they are
         settled.



(h)      Repurchase agreements

         DSK Bank Group enters into purchases (sales) of investments under agreements to resell (repurchase)
         substantially identical investments at a certain date in the future at a fixed price. Investments purchased
         subject to commitments to resell them at future dates are not recognized. The amounts paid are
         recognized in loans to banks either banks or loans to other customers. The receivables are reported as
         collateralised by the underlying security received. Investments sold under repurchase agreements
         continue to be recognized in the balance sheet and are measured in accordance with the accounting
         policy for either assets held for trading or available-for-sale as appropriate. The proceeds from the sale
         of the investments are reported as liabilities to either banks or other customers.

         The difference between the sale and repurchase considerations is recognized on an accrual basis over
         the period to maturity of the transaction and is included in interest receivable.



(i)      Offsetting

         Financial assets and liabilities are offset and the net amount is reported in the balance sheet when DSK
         Bank Group has a legally enforceable right to set off the recognized amounts and the transactions are
         intended to be settled on a net basis.




                                                        9
Translated from Bulgarian
                                                                                             DSK Bank Group
                                                                         Consolidated IFRS Financial Statements
                                                                For the years ended 31 December 2006 and 2005



(j)      Impairment

         The carrying amounts of DSK Bank Group’s assets are reviewed at the sheet date to determine whether
         there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is
         estimated. An impairment loss is recognized whenever the carrying amount of an asset or its cash-
         generating unit exceeds its recoverable amount. Impairment losses are recognized in the income
         statement.


(1)      Originated loans and advances and held-to-maturity loans

         The recoverable amount of originated loans and advances and purchased loans that are classified as
         held-to-maturity, is calculated as the present value of the expected future cash flows, discounted at the
         instrument’s original effective interest rate.

         Loans and advances are presented net of allowances for uncollectibility determined on specific
         individual loan basis for individually significant exposures or on portfolio basis. Specific allowances
         are made against the carrying amount of loans and advances that are identified as being impaired based
         on regular reviews of outstanding balances to reduce these loans and advances to their recoverable
         amounts. Portfolio basis allowances are maintained to reduce the carrying amount of portfolios of
         similar loans and advances to their estimated recoverable amounts at the balance sheet date. The
         expected cash flows for portfolios of similar assets are estimated based on previous experience and
         considering the credit rating of the underlying customers and late payments of interest or penalties.
         Increases in the allowance amount are recognised in the income statement. When a loan is known to be
         uncollectible, all the necessary legal procedures have been completed, and the final loss has been
         determined, the loan is written off the balance sheet.

         If in a subsequent period the amount of impairment loss decreases and the decrease can be linked
         objectively to an event occurring after the write down, the impairment loss write-down or allowance is
         reversed through the income statement.



(2)      Goodwill

         The recoverable amount of goodwill is estimated at each balance sheet date. An impairment loss is
         recognized in the financial statements whenever the carrying amount of an asset exceeds its
         recoverable amount. Impairment losses are recognized in the income statement.


(k)      Fixed assets

         The Bank applies a policy to carry property, plant and equipment at revalued amount under the
         allowed alternative approach in IAS 16, Property, plant and equipment.

         Items of land and buildings are stated at fair value determined periodically by an independent
         registered valuer. Fair value of other fixed assets is their market value. The revaluation of fixed assets
         is carried asset by asset based on proportional calculation of the book value of the asset and the
         accumulated for it depreciation as of the book date of revaluation. When the carrying amount of assets
         is increased as a result of revaluation, the increase is credited directly to equity as revaluation reserve.
         When the carrying amount of assets is decreased as a result of revaluation, the decrease is recognized
         as a decrease of previous revaluation reserve and any excess is recognized as an expense in the income
         statement. Revaluations of land and buildings have been performed in 2002 and 2005.



                                                        10
Translated from Bulgarian
                                                                                              DSK Bank Group
                                                                          Consolidated IFRS Financial Statements
                                                                 For the years ended 31 December 2006 and 2005



         Items of fixtures and fittings and other tangible assets are stated in the balance sheet at their acquisition
         cost less accumulated depreciation.

         Depreciation is provided on a straight-line basis at prescribed rates designed to write down the cost or
         revalued amount of fixed assets over their expected useful life.



         The following are approximations of the annual rates used:
                                                                                                                 %
              Buildings                                                                                    2 and 4
              Machines and equipment                                                                            30
              Motor cars                                                                                        25
              Vehicles (without motor cars)                                                                     10
              Computers, according to their class and useful life                                20, 25, 33 and 50
              Fixtures and fitting and other depreciable fixed assets                                           15



         Assets are depreciated from the date they are brought into use and transferred from assets in
         construction into the relevant asset category.




(l)      Intangible assets



(1)      Goodwill

         Goodwill arising on acquisitions represents the excess of the cost of the acquisition over the carrying
         value of the net identifiable assets acquired. Goodwill is stated at cost less accumulated amortisation
         until 2004 (see below) and impairment losses (refer to accounting policy j). In respect of associates the
         carrying amount of goodwill is included in the carrying amount of the investment in the associate.



(2)      Other intangible assets

         Other intangible assets, which are acquired by DSK Bank Group, are stated at cost less accumulated
         amortization and any impairment losses.

(3)      Amortization

         Amortization is calculated on a straight-line basis over the expected useful life of the asset. The annual
         rates of amortization are as follows:

                                                                                                                 %
         Computer software, according to its class and useful life                                    20, 25 and 50
         Goodwill                                                                                                20




                                                        11
Translated from Bulgarian
                                                                                              DSK Bank Group
                                                                          Consolidated IFRS Financial Statements
                                                                 For the years ended 31 December 2006 and 2005



(m)      Provisions

         A provision is recognized in the balance sheet when DSK Bank Group has a legal or constructive
         obligation as a result of a past event, and it is probable that an outflow of economic benefits will be
         required to settle the obligation. If the effect is material, 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.


(n)      Taxation

         Tax on the profit for the year comprises current tax and deferred tax. Income tax is recorded in the
         income statement except to the extent that it relates to items recognized directly to equity, in which
         case it is recognized in equity. Current tax comprises tax payable calculated on the basis of the
         expected taxable income for the year, using the tax rates effective or enacted by the balance sheet date,
         and any adjustment of tax payable for previous years.

         Deferred tax is provided using the balance sheet liability method on all temporary differences between
         the carrying amounts for financial reporting purposes and the amounts used for taxation purposes.

         Deferred tax is calculated on the basis of the tax rates that are expected to apply to the period when the
         asset is realised or the liability is settled. The effect on deferred tax of any changes in tax rates is
         charged to the income statement, except to the extent that it relates to items previously charged or
         credited directly to equity.

         A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be
         available against which the unused tax losses and credits can be utilised. Deferred tax assets are
         reduced to the extent that it is no longer probable that the related tax benefit will be realised.



(o)      Changes in shares in the capital of subsidiaries and associates

         On April 20, 2006 Sofia City Court, following the decision of the Management Board of DSK Bank of
         March 27, 2006, registered an increase in share capital of Rodina Pension Company from BGN 6 000
         thousand to BGN 6 010 thousand. DSK Bank share of 97 % of the equity of the company remains
         unchanged.

         On September 15, 2006 Sofia City Court, following the decision of the Management Board of DSK
         Bank of July 12, 2006, registered an increase in share capital of DSK Assets Management from BGN
         500 thousand to BGN 650 thousand. DSK Bank share of 66 % of the equity of the company remains
         unchanged.

         On December 18, 2006 Sofia City Court, following the decision of a General Meeting of Shareholders
         of November 20, 2006, registered an increase in share capital of DSK Garancia LIC from BGN 2 750
         thousand to BGN 6 000 thousand. DSK Bank share of 26 % of the equity of the company has changed
         to 22.16 %.

         On December 19, 2006 Sofia City Court, following the decision of the Deputy Chairman of Financial
         Supervision Commission of December 13, 2006, registered an increase in share capital of DSK
         Garancia IC from BGN 3 000 thousand to BGN 6 000 thousand. DSK Bank share of 26 % of the
         equity of the company has changed to 22.75 %.

                                                        12
Translated from Bulgarian
                                                                                          DSK Bank Group
                                                                      Consolidated IFRS Financial Statements
                                                             For the years ended 31 December 2006 and 2005




3.       Net interest income
                                                                                      2006             2005
        In thousands of BGN

        Interest and similar income
        Interest and similar income arise from:
        Loans and advances to banks                                              25 084               8 009
        Loans and advances to other customers                                   341 412             313 488
        Financial instruments held for trading and investments                   22 108              23 745
        Total                                                                   388 604             345 242
        Interest expense and similar charges
        Interest expense and similar charges arise from:
        Deposits from banks                                                     (1 380)             (1 329)
        Loans from banks                                                       (20 709)             (7 147)
        Deposits from other customers                                          (80 435)            (65 828)
        Total                                                                 (102 524)            (74 304)

        Net interest income                                                     286 080             270 938




4.       Net fee and commission income
                                                                              2006                     2005
           In thousands of BGN

           Fee and commission income
           In Bulgarian Leva
           Payments                                                         33 567                   17 013
           Loan administration                                              36 604                   26 144
           Deposits                                                         18 738                   21 360
           Other                                                             4 094                    2 018
                                                                            93 003                   66 535
           In foreign currencies
           Payments                                                         11 855                    6 304
           Loan administration                                               4 877                    1 095
           Deposits                                                            494                      383
           Other                                                               673                      342
                                                                            17 899                    8 124
           Total                                                           110 902                   74 659
           Fee and commission expense
           In Bulgarian Leva                                                (5 931)                  (4 473)
           In foreign currencies                                            (1 253)                    (723)
           Total                                                            (7 184)                  (5 196)
           Net fee and commission income                                   103 718                   69 463




                                                     13
Translated from Bulgarian
                                                                                         DSK Bank Group
                                                                     Consolidated IFRS Financial Statements
                                                            For the years ended 31 December 2006 and 2005




5.       Net trading income
                                                                             2006                       2005
         In thousands of BGN

         Net trading income arises from:
         Securities                                                          6 949                     1 725
         Foreign exchange rate fluctuations                                 4 319                      3 620
         Net trading income                                                11 268                      5 345




6.       Administrative expenses
                                                                                     2006               2005
         In thousands of BGN

         General and administrative expenses arise from:
         Personnel and Management and Supervisory Board members cost              64 310              70 465
         Pension severance payments under Labour Code                                409               1 271
         Materials, rent and services                                             46 192              47 932
         Depreciation and amortization                                            19 241              19 584
         Guarantee fund instalment                                                14 556              11 064
         Administration, marketing and other costs                                14 448              10 113
         Administrative expenses                                                 159 156             160 429



         According to the pension insurance legislation and the Labour Code after termination of a labour
         contract of an employee liable to retirement the Bank is obliged to pay a severance payment equal to
         two gross monthly salaries. If the employee has been working for the Bank for the last 10 years the
         severance payment is six gross monthly salaries.

         On the basis of an actuarial valuation the Bank formed liabilities for the stated severance payments
         according to the Labour Code and included them in the financial statements according to IAS 19,
         Employee benefits.




7.       Impairment losses
                                                                                  2006                  2005
         In thousands of BGN

         Impairment loss charge for loans and advances to customers
         and other assets                                                    (109 712)              (68 585)
         Loss recovery of loans and advances to customers and other
         assets                                                                 63 818                33 031
         Net impairment losses                                                (45 894)              (35 554)




                                                    14
Translated from Bulgarian
                                                                                           DSK Bank Group
                                                                       Consolidated IFRS Financial Statements
                                                              For the years ended 31 December 2006 and 2005




8.       Other income
                                                                                   2006                 2005
          In thousands of BGN

          Income from non-financial services                                   3 336                   2 286
          Gain from sale of property, plant and equipment                          9                     738
          Income from dividends                                                   88                       2
          Income from fines and penalties                                         29                      14
          Other income                                                         5 370                   1 549
          Total                                                                8 832                   4 589




9.       Taxation
                                                                                    2006                2005
           In thousands of BGN

           Current taxes                                                      (30 927)              (24 175)
           Deferred taxes (refer note 22)                                          194                   267
           Income tax expense                                                 (30 733)              (23 908)


         Current taxes are calculated using a tax rate of 15% for 2005 and 2006.




10.      Cash and cash equivalents
                                                                      31-Dec-2006               31-Dec-2005

           In thousands of BGN

           Cash on hand
             In Bulgarian Leva                                             101 956                    85 539
             In foreign currencies                                          29 482                    26 997

           Current accounts with domestic and foreign banks
             In Bulgarian Leva                                                  31                       125
             In foreign currencies                                           7 465                     6 658
           Total                                                           138 934                   119 319




                                                     15
Translated from Bulgarian
                                                                                          DSK Bank Group
                                                                      Consolidated IFRS Financial Statements
                                                             For the years ended 31 December 2006 and 2005




11.      Loans and advances to banks and balances with the Central Bank



(a)       Analysis by type

                                                                        31-Dec-2006              31-Dec-2005
          In thousands of BGN

          Deposits with domestic and foreign banks
             In Bulgarian Leva                                               675 673                  101 000
             In foreign currencies                                           700 739                  420 959
          Blocked deposits with foreign banks                                    451                      547
          Balances with the Central Bank
             In Bulgarian Leva                                               105 036                  191 219
             In foreign currencies                                           348 138                  114 612
          Total                                                            1 830 037                  828 337




(b)       Geographical analysis

                                                                        31-Dec-2006              31-Dec-2005
          In thousands of BGN

          Domestic banks                                                     790 402                  536 994
          Foreign banks                                                    1 039 635                  291 343
          Total                                                            1 830 037                  828 337




         The current account with the Central Bank is used for direct participation in the money and securities
         markets and for settlement purposes. Balances with the Central Bank include minimum required
         reserves amounting to BGN 383 736 thousand and BGN 282 930 thousand as of 31 December 2006
         and 2005 respectively. Minimum reserves are non-interest bearing and are regulated on a monthly
         basis. Daily fluctuations are allowed. Shortages on monthly basis bear penalty interest.

         The Bank purchases financial instruments under agreements to resell them at agreed future dates
         (“reverse repurchase agreements”) and are presented as part of loans and advances to banks. The seller
         commits to repurchase the same or similar instruments at an agreed future date. Reverse repurchases
         are used as a facility to provide funds to customers. At 31 December 2006 and at 31 December 2005
         there are no open repurchases.




                                                     16
Translated from Bulgarian
                                                                                          DSK Bank Group
                                                                      Consolidated IFRS Financial Statements
                                                             For the years ended 31 December 2006 and 2005




12.      Loans and advances to other customers


                                                                           31-Dec-2006           31-Dec-2005

        In thousands of BGN

        Individuals
           In Bulgarian Leva
                Consumer loans                                                1 479 301              1 729 735
                Housing loans                                                   803 783                470 761
           In foreign currencies
                Consumer loans                                                   10 936                13 178
                Housing loans                                                   202 335               121 095
        Companies
           In Bulgarian Leva
                Working capital loans                                           177 708               295 293
                 Investment loans                                               201 724                84 942
           In foreign currencies
                Working capital loans                                           397 671               213 622
                 Investment loans                                               247 761                46 199
        State Budget
           In Bulgarian Leva                                                      1 487                  1 671
        Less impairment allowances                                            (129 970)               (84 407)
        Loans and advances to other customers                                 3 392 736              2 892 089




         Impairment allowances of loans and advances to other customers


                                                                           31-Dec-2006           31-Dec-2005

        In thousands of BGN

        Balance at 1 January                                                     84 407                 49 007
        Net change for the year                                                  45 887                 35 538
        Write-offs                                                                (324)                  (138)
        Balance at 31 December                                                  129 970                 84 407




         Interest rates on loans as at 31 December 2006 vary as follows: receivables from individuals from 1.50
         % to 19.95 %; receivables from companies from 3.037 % to 14.722 %; receivables from State Budget
         from 6.63 % to 13.5 %.




                                                     17
Translated from Bulgarian
                                                                                          DSK Bank Group
                                                                      Consolidated IFRS Financial Statements
                                                             For the years ended 31 December 2006 and 2005




13.      Financial assets held for trading


                                                                  31-Dec-2006                    31-Dec-2005

         In thousands of BGN

         Government securities – Republic of Bulgaria
         denominated in Bulgarian Leva                                   23 555                        32 203
         Government securities – Republic of Bulgaria
         denominated in foreign currencies
                                                                         29 701                        42 487
         Other sovereign debt                                             9 304                         9 675
         Corporate securities denominated in BGN                            101                           695
         Corporate securities denominated in foreign
         currencies                                                       2 226                         5 652
         Other non-interest bearing securities                            2 721                              -
         Derivatives positive fair value                                  1 086                           172
         Total                                                           68 694                        90 884




        Government securities issued by Republic of Bulgaria and the governments of other countries comprise
        coupon and discount securities denominated in BGN, USD and EUR. The BGN denominated securities
        earn interest between 2.75 % and 7.50 %, the securities denominated in USD earn interest at 5.12 % and
        securities denominated in EUR earn interest between 2.90 % and 7.50 %. Securities issued by other
        countries are denominated in EUR and earn interest between 2.5 % and 3.25 %. Corporate securities
        denominated in USD, available as at December 31, 2005 are matured in 2006.




14.      Other assets

                                                                  31-Dec-2006                     31-Dec-2005

         In thousands of BGN

         Deferred expense                                                 2 386                          1 471
         Materials, spare parts                                           2 293                          2 215
         Assets held for sale                                               152                            133
         Other assets                                                    12 661                          5 767
         Impairment allowances                                            (768)                          (760)
         Total                                                           16 724                          8 826




                                                       18
Translated from Bulgarian
                                                                                         DSK Bank Group
                                                                     Consolidated IFRS Financial Statements
                                                            For the years ended 31 December 2006 and 2005




15.      Interest receivables


                                                                    31-Dec-2006               31-Dec-2005
          In thousands of BGN

          Individuals
             In Bulgarian Leva                                           10 580                     11 899
             In foreign currencies                                          656                        515
          Companies
             In Bulgarian Leva                                             827                         580
             In foreign currencies                                         745                         298
          State Budget
             In Bulgarian Leva                                               4                           2
          Banks
             In Bulgarian Leva                                            7 070                         12
             In foreign currencies                                          464                        413
          Investments
             In Bulgarian Leva                                            3 460                      3 980
             In foreign currencies                                        8 361                      9 212
          Total                                                          32 167                     26 911




16.      Investments


                                                                         31-Dec-2006          31-Dec-2005

         In thousands of BGN

         Debt and other fixed-income instruments held-to-maturity             66 888                61 636
         Government debt securities held to maturity                          51 162                52 706
         Sovereign debt securities held to maturity                           44 459                27 944
         Total investments held to maturity                                  162 509               142 286


         Equity investments and other fixed-income instruments
         available for sale                                                   23 197                38 051
         Other non-fixed income instruments available for sale                 5 131                 5 280
         Government debt securities available for sale                       151 076               164 669
         Sovereign debt securities available for sale                         15 939                20 254
         Total investments available for sale and equity
         investments                                                         195 343               228 254

         Total investments                                                   357 852               370 540




                                                    19
Translated from Bulgarian
                                                                                           DSK Bank Group
                                                                       Consolidated IFRS Financial Statements
                                                              For the years ended 31 December 2006 and 2005



         The DSK Bank assets in investment portfolio consist of investments held-to-maturity and investments
         available for sale.

         Debt and other fixed-income instruments, held to maturity, include Government debt securities issued
         by Ministry of Finance in BGN, earning interest between 2.75 % and 7.5 %.

         Government debt securities classified as held to maturity represent long term bonds denominated in
         EUR earning interest between 5.75% and 7.25%, and denominated in USD earning interest at 5.12 %.
         In this group are included securities with floating rate issued by government decree.

         The foreign securities held to maturity comprise securities denominated in EUR and USD. The EUR
         denominated securities earn interest between 3.25 % and 6.25 % and those denominated in USD earn
         interest between 3.25 % and 10.00 %. They are stated at amortized cost.

         The equity investments represent shares in domestic companies, financial institutions, Bulgarian Stock
         Exchange, incident to the Bank's membership in them and also participations in subsidiaries and
         associates. For valuation purposes these assets are classified as available for sale. The investments
         classified as equity investments and other non-fixed income instruments available for sale are stated at
         cost, when their fair value can not be measured reliably. Equity investments in associates are stated at
         prime cost by equity method.




         The fair value of the investments as at 31 December 2006 is as follows:


                                                      Carrying amount            Fair value          Difference
                                                           of securities

        In thousands of BGN

        Debt and other fixed-income financial
        instruments held-to- maturity                             66 888             68 105                1 217
        Government debt securities held to
        maturity                                                  51 162             52 689                1 527
        Foreign securities held to maturity                       44 459             44 416                 (43)
        Equity investments and other fixed-
        income instruments available for sale                     23 197             23 197                     -
        Other non-fixed income instruments
        available for sale                                         5 131              5 131                     -
        Government debt securities available for
        sale                                                     151 076            151 076                     -
        Sovereign debt securities available for
        sale                                                      15 939             15 939                    -
        Total                                                    357 852            360 553                2 701




                                                      20
Translated from Bulgarian
                                                                                                                                              DSK Bank Group
                                                                                                                          Consolidated IFRS Financial Statements
                                                                                                                 For the years ended 31 December 2006 and 2005

17. Fixed assets


                                      Land and     Machines and    Motor          Fixtures and     Other fixed     Intangible      Assets under        Total
                                      buildings     equipment     Vehicles           fittings        assets          assets        construction
In thousands of BGN

Cost or revalued amount
As of 31 December 2005                   156 353         49 542       3 954               11 073           97           29 341             19 647       270 007
   Additions                                   -             57         308                    2             6           2 108             43 056        45 537
   Disposals                               (533)          (758)        (72)                (194)           (1)           (852)            (4 172)        (6 582)
   Transfers                               5 091         13 586           -                4 380             1           6 178           (29 236)              -
Cost or revalued amount as of 31
December 2006                            160 911         62 427       4 190               15 261           103          36 775             29 295       308 962

Depreciation
As of 31 December 2005                    15 050         29 259       2 120                5 066            26          21 581                    -      73 102
   Charge for the period                   3 274          8 607         934                1 802            16           4 607                    -      19 240
   Disposals                               (113)          (753)        (54)                (131)             -           (814)                    -      (1 865)
Depreciation as of 31 December 2006       18 211         37 113       3 000                6 737            42          25 374                    -      90 477


Net book value 31 December 2006          142 700         25 314       1 190                8 524            61          11 401             29 295       218 485
Net book value 31 December 2005          141 303         20 283       1 834                6 007            71            7 760            19 647       196 905




                                                                             21
Translated from Bulgarian
                                                                                          DSK Bank Group
                                                                      Consolidated IFRS Financial Statements
                                                             For the years ended 31 December 2006 and 2005




18.      Deposits and loans from banks

                                                                       31-Dec-2006               31-Dec-2005
           In thousands of BGN

           Deposits from banks
           Term deposits                                                    469 707                   144 525
           Current accounts                                                   6 051                        41
           Total deposits                                                   475 758                   144 566


           Loans from banks
           Short term loans in foreign currency                             273 816                    97 792
           Long term loans in foreign currency                              415 363                   281 248
           Total loans                                                      689 179                   379 040




         On 01 February 2006 OTP Bank granted DSK Bank 3-year loan to the amount of EUR 200 000
         thousand. The interest rate on the loan is 3-month EURIBOR plus 0.45 points. As of 31 December
         2006 the loan is disbursed.

         On 30 November 2004 EBRD granted DSK Bank 5-year credit line to the amount of EUR 10 000
         thousand aimed at crediting small and medium-sized enterprises. The interest rate on the loan is 6-
         month EURIBOR plus 1.50 points. As of 31 December 2006 the loan is disbursed.

         On 30 November 2004 EBRD granted DSK Bank 5-year credit line to the amount of EUR 10 000
         thousand – Energy Efficiency Project and Renewable-energy Project. The interest rate on the loan is 6-
         month EURIBOR plus 1.50 points. As of 31 December 2006 EUR 2 500 thousand from the loan are
         disbursed.

         On 28 July 2005 EBRD granted 5-year credit line to DSK Bank to the amount of EUR 10 000
         thousand – Residential Energy Efficiency Project. The interest rate on the loan is 6-month EURIBOR
         plus 1.30 points. As of 31 December 2006 EUR 1 300 thousand from the loan are disbursed.

         The granted on 17 December 2004 3-year syndicated term loan facility to DSK Bank amounting to
         EUR 140 000 thousand is disbursed. The interest rate is 3-month EURIBOR plus 0.60 points. The
         participating banks are as follows:
                       Main Loan Arrangers – Bayerische Landesbank; BNP Paribas; OTP Bank
                       Senior Arrangers – Erste Bank der Oesterreichischen Sparkassen AG; Alpha Bank AE.,
                        London Branch; Commerzbank Aktiengesellschaft; KBC Bank N.V. Dublin Branch;
                        Lloyds TSB Bank PLC; SANPAOLO IMI S.p.A.,
                       Arrangers - American Express Bank GmbH; Bank Austria Creditanstalt AG; Société
                        Générale; Sumitomo Mitsui Banking Corporation Europe Limited
                       Co-Arrangers - Baden-Württembergische Bank Aktiengsellschaft; Banco Popolare di
                        Verona e Novara S.c.r.l., London Branch; Bank für Arbeit und Wirtschaft
                        Aktiengesellschaft




                                                     22
Translated from Bulgarian
                                                                                          DSK Bank Group
                                                                      Consolidated IFRS Financial Statements
                                                             For the years ended 31 December 2006 and 2005




19.      Deposits from other customers




                                                                        31-Dec-2006              31-Dec-2005
          In thousands of BGN

          Individuals
             In Bulgarian Leva
                   Term deposits                                           1 144 916                 1 051 293
                   Demand deposits                                         1 040 571                   945 881
             In foreign currencies
                   Term deposits                                             674 144                  527 554
                   Demand deposits                                           231 493                  186 714
          Companies
             In Bulgarian Leva
                   Term deposits                                             189 948                  109 347
                   Demand deposits                                           408 616                  334 604
             In foreign currencies
                   Term deposits                                              36 344                    11 551
                   Demand deposits                                            80 539                    37 659
          State Budget
             In Bulgarian Leva
                   Term deposits                                              47 739                    17 703
                   Demand deposits                                            64 937                    38 223
             In foreign currencies
                   Term deposits                                              46 927                    49 141
                   Demand deposits                                             3 664                     2 193
          Financial institutions
             In Bulgarian Leva
                   Term deposits                                              66 000                    30 579
                   Demand deposits                                            23 897                     4 172
             In foreign currencies
                   Term deposits
                   Demand deposits                                               559                       548
          Total                                                            4 060 294                 3 347 162




         The interest rates on deposits as at 31 December 2006 are ranged as follows: deposits from individuals
         from 0.20 % to 7.50 %; deposits from companies from 0.20 % to 5.50 %; deposits from State Budget
         from 0.20 % to 5.30 %; deposits from financial institutions from 0.20 % to 6.50 %.




                                                     23
Translated from Bulgarian
                                                                                              DSK Bank Group
                                                                          Consolidated IFRS Financial Statements
                                                                 For the years ended 31 December 2006 and 2005




20.      Other liabilities


                                                                         31-Dec-2006               31-Dec-2005
         In thousands of BGN

         Liabilities to the state budget - taxes                               12 385                     8 340
         Liability for centralisation of state budget with BNB                  6 408                     6 725
         Liabilities to personnel and management                               19 419                    30 607
         Money transfers for execution                                         25 481                     8 718
         Negative fair value of derivatives                                     1 043                    12 613
         Other                                                                  5 961                       144
         Total                                                                 70 697                    67 147




21.      Interest payables


                                                                       31-Dec-2006                 31-Dec-2005
         In thousands of BGN

         Individuals
            In Bulgarian Leva                                                11 990                       9 973
            In foreign currencies                                             2 310                       1 407
         Companies
            In Bulgarian Leva                                                 3 219                         821
            In foreign currencies                                               306                         127
         State Budget
            In Bulgarian Leva                                                   193                         113
            In foreign currencies                                               112                          93
         Banks
            In Bulgarian Leva                                                    85                          34
            In foreign currencies                                             2 802                         746
         Total                                                               21 017                      13 314




22.      Deferred tax liabilities

         Deferred income taxes for 2006 are calculated on all temporary differences under the liability method
         using a principal tax rate of 10 % for 2007. The change in tax rate effective from 01 January 2007
         affects the formed deferred tax, respectively increases the revaluation reserve from fixed assets with
         BGN 5 759 thousand and the revaluation reserve from financial assets available for sale with BGN
         383 thousand.




                                                      24
Translated from Bulgarian
                                                                                              DSK Bank Group
                                                                          Consolidated IFRS Financial Statements
                                                                 For the years ended 31 December 2006 and 2005




         Deferred income tax balances are attributable to the following items:


                                                       Assets                Liabilities                      Net
                                                    2006    2005           2006       2005           2006            2005
         In thousands of BGN

         Pension severance payments under
         Labour Code                                (156)      (190)             -             -       (156)          (190)
         Loan impairment allowances
         according to IAS 39                        (325)          -             -         2 269       (325)          2 269
         Financial assets available for sale        (125)       (21)           890         3 702         765          3 681
         Loans and advances to other
         customers                                   (29)      (112)             -          -           (29)          (112)
         Fixed assets                               (191)      (289)        11 505     17 368         11 314         17 079
         Other items (unused leave)                 (161)      (124)             -          -          (161)          (124)
         Net deferred tax (assets)/liabilities      (987)      (736)        12 395     23 339         11 408         22 603



         Deferred tax liabilities in relation to fixed assets revaluation are calculated on the basis of revaluation
         reserves for statutory tax purposes, which amount to BGN 115 049 thousand as of 31 December 2006
         and BGN 115 778 thousand as of 31 December 2005. Those revaluation reserves are taxable when the
         fixed assets are sold or fully depreciated.




         Movement in temporary differences during the year:


                                          Balance as      Reversed         Recalculated       Formed          Recognised
                                            of 31           in the         on change of      during the        in equity
                                          December         income            tax rate          year
                                                          statement
                                             2005            2006             2006             2006                 2006
        In thousands of BGN

        Pension severance payments
        under Labour Code                         (190)          (44)                 78                  -                 -
        Loan impairment allowances
        according to IAS 39                       2 269                -               -           (2 594)                  -
        Financial assets available for
        sale                                      3 681                -               -           (2 533)            (383)
        Loans and advances to other
        customers                                 (112)            70                 13                  -                -
        Fixed assets                             17 079         (102)                 96                  -          (5 759)
        Other items (unused leave)                (124)         (118)                 81                  -                -
        Total                                    22 603         (194)                268           (5 127)           (6 142)




                                                          25
Translated from Bulgarian
                                                                                              DSK Bank Group
                                                                          Consolidated IFRS Financial Statements
                                                                 For the years ended 31 December 2006 and 2005



23.       Shareholders’ equity

(a)       Face value of registered shares
                                                                        31-Dec-2006                     31-Dec-2005
          In thousands of BGN

          Ordinary registered voting shares                                   93 984                          93 984



(b)       Retained earnings

          Retained earnings comprise accumulated profit and loss from prior periods.



(c)       Revaluation reserve

          The revaluation reserves comprise the revaluation surplus of assets, net of related deferred tax
          liabilities.



(d)       Statutory reserve

          The local legislation stipulates that the Bank should set aside 20 percent of its net profit for the current
          year after tax and before dividend distribution to form statutory reserves. The allocation continues until
          funds reach the level of 1.25 percent of the sum of the Bank’s total balance and off balance sheet
          commitments.



 24.      Contingent liabilities and commitments

 (a)      Off balance sheet liabilities and commitments


                                                                            31-Dec-2006                 31-Dec-2005
          In thousands of BGN

          Litigation against the Bank                                                  902                      3 817

          Bank guarantees and letters of credit
            In Bulgarian Leva                                                     32 984                      11 872
            In foreign currencies                                                 86 374                      73 509
                                                                                 119 358                      85 381
          Commitments for undrawn credit facilities
            In Bulgarian Leva                                                    125 960                     110 679
              In foreign currencies                                               94 103                      24 410
                                                                                 220 063                     135 089
          Forward and spot deals - sell
             In Bulgarian Leva                                                    39 311                           -
             In foreign currencies                                                68 264                      34 884
                                                                                 107 575                      34 884

          Total                                                                  447 898                     259 171




                                                         26
 Translated from Bulgarian
                                                                                           DSK Bank Group
                                                                       Consolidated IFRS Financial Statements
                                                              For the years ended 31 December 2006 and 2005




(b)      Contingent liabilities on guarantees and letters of credit

         The Bank provides financial guarantees and letters of credit to guarantee the performance of
         commitments of its customers to third parties. These agreements have fixed limits and generally extend
         over a period of up to two years. The largest exposure amounting to BGN 53 million is a guarantee to
         the Austrian company EVN AG that is cross-guaranteed by OTP Bank Hungary.

         The amounts represented in the table as guarantees and letters of credit represent the maximum
         accounting loss that would be recognized at the balance sheet date if counterparties failed completely
         to perform their obligations as contracted.

         These commitments and contingent liabilities have off balance sheet credit risk because only fees and
         accruals for probable losses are recognized in the balance sheet until the commitments are fulfilled or
         expire. The contingent liabilities and commitments will expire without being advanced in whole or in
         part. Therefore, the amounts do not represent expected future cash flows.



(c)      Litigation

         The litigations filed against the Bank (principals and statutory interest) are approximately BGN 902
         thousand as of 31 December 2006. The most significant litigations against the Bank are: a claim
         against the ownership of the Bank’s premises at 15, Vitosha Blvd. in Sofia amounting to BGN 460
         thousand and a claim on deposit amounting to BGN 120 thousand. No provisions for potential
         liabilities have been made in the financial statements, as the management believes that the outcome of
         litigations will be predominantly in favour of the Bank.



(d)      Assets pledged as collateral

         As of 31 December 2006 DSK Bank has pledged Government bonds to the amount of BGN 174 078
         thousand as collaterals for funds due to the State Budget.




25.      Cash and cash equivalents


                                                                          31-Dec-2006             31-Dec-2005
          In thousands of BGN

          Cash on hand                                                         131 438                 112 537
          Balances with the Central Bank                                       453 174                 305 830
          Receivables from bank with maturity up to 3 months                 1 383 908                 528 742

          Total                                                              1 968 520                 947 109




                                                      27
Translated from Bulgarian
                                                                                            DSK Bank Group
                                                                        Consolidated IFRS Financial Statements
                                                               For the years ended 31 December 2006 and 2005




26.      Risk management disclosures



(a)      Trading activities

         DSK Bank Group maintains active trading positions in a limited number of derivatives and non-
         derivative financial instruments. Most of DSK Bank’s derivative trading activities are aimed at offering
         products to corporate clients at competitive prices. DSK Bank Group uses a cash and capital market
         instrumentarium to maintain liquidity and to maximize net trading income.

         DSK Bank Group manages its trading activities by type of risk involved on the basis of the categories
         of trading instruments held.


(1)      Credit risk

         The risk that counterparties to trading instruments might default on their obligations is monitored on
         an ongoing basis. To manage the level of credit risk, DSK Bank deals within the set by management
         limits only with counterparties of good credit standing, and when appropriate, requires collateral.


(2)      Market risk

         All trading instruments are subject to market risk, as a result of future changes in market conditions,
         which may decrease the market value of the instruments. The instruments are valued at fair value, and
         all changes in market conditions directly affect the net trading income.

         DSK Bank Group manages its use of trading instruments in response to the changing market
         conditions. Exposure to market risk is managed in accordance with risk limits set by senior
         management.




(b)      Non-trading activities

         Below are represented the various risks on which DSK Bank Group is exposed as a result of its non-
         trading activities as well as the approaches taken to manage those risks.


(1)      Liquidity risk

         Liquidity risk occurs as a result of the necessity to provide general funding for DSK Bank’s activities
         and the management of its positions. It includes both the risk of being unable to fund the due liabilities
         and the risk of a financial loss caused by forced sale of assets in order to provide liquidity.

         The following table presents the allocation of the financial assets and liabilities of DSK Bank Group
         into relevant maturity groupings based on the remaining periods to repayment as of the balance sheet
         date.




                                                       28
Translated from Bulgarian
                                                                                              DSK Bank Group
                                                                          Consolidated IFRS Financial Statements
                                                                 For the years ended 31 December 2006 and 2005




          Maturity table as of 31 December 2006




                                 Up to 1 month    From 1 to    From 3     From 1 to    Maturity     Maturity    Total
                                                  3 months    months to    5 years     more than      not
                                                               1 year                   5 years     defined
In thousands of BGN

Assets
Cash and cash equivalents              138 934            -           -            -            -          -    138 934
Loans and advances to banks
and balances with the Central
Bank                                 1 393 190      420 000      16 847            -            -          -   1 830 037
Loans and advances to other
customers                              239 799      142 766     615 015    1 379 497    1 015 659          -   3 392 736
Financial assets held for
trading                                  1 216        3 999       2 591      25 268       35 620           -     68 694
Other assets                            16 724            -           -           -            -           -     16 724
Interest receivables                    21 950        9 532         616          61            8           -     32 167
Investments available for sale
and equity investments                       -        1 000       2 674     110 102       75 438       6 129    195 343
Investments held to maturity            10 960       38 110      20 303      83 439        9 697           -    162 509
Fixed assets                                 -            -           -           -            -     218 485    218 485
Total assets                         1 822 773      615 407     658 046    1 598 367    1 136 422    224 614   6 055 629

Liabilities
Deposits from banks                    473 757            -       2 001           -            -           -     475 758
Loans from banks                             -            -     273 816     415 363            -           -     689 179
Deposits from other customers        3 060 216      401 857     584 131      14 090            -           -   4 060 294
Other liabilities                       69 907           53         218           -          519           -      70 697
Interest payables                        7 606        5 917       6 933         561            -           -      21 017
Deferred tax liability                       -            -           -      11 408            -           -      11 408
Total liabilities                    3 611 486      407 827     867 099     441 422          519           -   5 328 353

Positive/(negative) maturity
mismatch                            (1 788 713)     207 580   (209 053)    1 156 945    1 135 903    224 614    727 276




          The analysis of the maturity of the assets and liabilities shows that a significant part of the deposits
          with contracted maturity up to one month revolves on maturity, thus forming a relatively stable core
          deposit base.




                                                         29
Translated from Bulgarian
                                                                                              DSK Bank Group
                                                                          Consolidated IFRS Financial Statements
                                                                 For the years ended 31 December 2006 and 2005




          Maturity table as of 31 December 2005


                                      Up to 1      From 1 to    From 3     From 1 to 5   Maturity    Maturity    Total
                                      month        3 months    months to      years      more than     not
                                                                1 year                    5 years    defined
In thousands of BGN

Assets
Cash and cash equivalents               119 319            -           -             -           -          -        119 319
Loans and advances to banks and
balances with the Central Bank          828 337            -           -             -           -          -        828 337
Loans and advances to other
customers                               197 332      137 843     565 894     1 270 625     720 395          -   2 892 089
Financial assets held for trading           176            -      13 444        34 769      42 495          -      90 884
Other assets                              8 826            -           -             -           -          -       8 826
Interest receivables                     18 984        3 566       2 865         1 267         229          -      26 911
Investments available for sale and
equity investments                        3 582            -           -      127 335       93 991      3 346        228 254
Investments held to maturity              4 215            -      15 899      110 907       11 265          -        142 286
Fixed assets                                  -            -           -            -            -    196 905        196 905
Total assets                          1 180 771      141 409     598 102     1 544 903     868 375    200 251   4 533 811

Liabilities
Deposits from banks                     144 015            -         551            -            -          -     144 566
Loans from banks                              -            -      97 792      281 248            -          -     379 040
Deposits from other customers         2 549 910      314 065     478 424        4 763            -          -   3 347 162
Other liabilities                        66 565           66         356           63           97          -      67 147
Interest payables                         4 299        3 633       5 270          112            -          -      13 314
Deferred tax liability                        -            -           -       22 603            -          -      22 603
Total liabilities                     2 764 789      317 764     582 393      308 789           97          -   3 973 832

Positive/(negative) maturity
mismatch                             (1 584 018)   (176 355)      15 709     1 236 114     868 278    200 251        559 979




          The analysis of the maturity of the assets and liabilities shows that a significant part of the deposits
          with contracted maturity up to one month revolves on maturity, thus forming a relatively stable core
          deposit base.




(2)       Market risk

(2.1)     Interest rate risk

          DSK Bank Group’s activities are subject to the risk of interest rate fluctuations to the extent that
          interest-bearing assets (including investments) and interest-bearing liabilities mature or undergo
          changes in their interest rates at different times and to a different degree. In cases of assets and
          liabilities with floating interest rates, DSK Bank Group is exposed to risk of changes in the basic


                                                         30
Translated from Bulgarian
                                                                                              DSK Bank Group
                                                                          Consolidated IFRS Financial Statements
                                                                 For the years ended 31 December 2006 and 2005



         points, which serve to determine the interest rates and are defined as the difference between the
         characteristics of the floating rate indices, such as the basic interest rate, 6-month LIBOR or different
         interest rates. Risk management activities are aimed at optimizing net interest income, and reaching
         market interest rate levels consistent with DSK Bank Group’s business strategy.

         Interest rate risk management activities are conducted in the context of DSK Bank Group’s sensitivity
         to interest rate changes. The actual effect will depend on a number of factors, including the degree to
         which repayments are made earlier or later than the contracted dates as well as variations in the interest
         rate, caused by the sensitivity to different periods and currencies.




         Interest repricing table as of 31 December 2006


                                        Up to 1     From 1       From 3       From 1    Over 2         Non-      Total
                                        month        to 3         to 12         to 2    years        interest-
                                                    months       months        years                 bearing
In thousands of BGN


Cash and cash equivalents                   1 937           25            -         -            -     136 972    138 934
Fixed Rate                                      -           25            -         -            -           -         25
Variable Rate                               1 937            -            -         -            -           -      1 937
Non-interest- Bearing                           -            -            -         -            -     136 972    136 972
Loans and advances to banks and
balances with the Central Bank          1 139 914    220 103      16 847            -            -     453 173   1 830 037
Fixed Rate                              1 139 092    220 000      16 847            -            -           -   1 375 939
Variable Rate                                 822        103           -            -            -           -         925
Non-interest- Bearing                           -          -           -            -            -     453 173     453 173
Loans and advances to other
customers                               3 257 754      1 643       6 399       45 905    80 705            330   3 392 736
Fixed Rate                                  7 316      1 643       6 399       45 905    80 705              -     141 968
Variable Rate                           3 250 438          -           -            -         -              -   3 250 438
Non-interest- Bearing                           -          -           -            -         -            330         330
Financial assets held for trading          25 045      3 999           -       10 005    25 838          3 807      68 694
Fixed Rate                                      -          -           -        9 089    25 408              -      34 497
Variable rate                              25 045      3 999           -          916       430              -      30 390
Non-interest-bearing                            -          -           -            -         -          3 807       3 807
Investments available for sale and
equity investments                          5 131      1 000       1 468       19 521   162 095          6 128    195 343
Fixed Rate                                      -          -       1 468       19 521   162 095              -    183 084
Variable Rate                               5 131      1 000           -            -         -              -      6 131
Non-interest-bearing                            -          -           -            -         -          6 128      6 128
Investments held to maturity               19 479     37 173      26 228       10 895    68 734              -    162 509
Fixed Rate                                 10 960     35 140      18 803       10 895    68 734              -    144 532
Variable Rate                               8 519      2 033       7 425            -         -              -     17 977
Non-interest-bearing                            -          -           -            -         -              -          -


Total assets                            4 449 260    263 943      50 942       86 326   337 372        600 410   5 788 253
Fixed Rate                              1 157 368    256 808      43 517       85 410   336 942              -   1 880 045
Variable Rate                           3 291 892      7 135       7 425          916       430              -   3 307 798
Non-interest-bearing                            -          -           -            -         -        600 410     600 410




                                                       31
Translated from Bulgarian
                                                                                              DSK Bank Group
                                                                          Consolidated IFRS Financial Statements
                                                                 For the years ended 31 December 2006 and 2005



Deposits from banks                         470 513          -      2 001          -           -       3 244       475 758
Fixed Rate                                  467 705          -      2 001          -           -           -       469 706
Variable Rate                                 2 808          -          -          -           -           -         2 808
Non-interest-bearing                              -          -          -          -           -       3 244         3 244
Loans from banks                            224 921    442 604     21 654          -           -           -       689 179
Fixed Rate                                        -          -          -          -           -           -             -
Variable Rate                               224 921    442 604     21 654          -           -           -       689 179
Non-interest-bearing                              -          -          -          -           -           -             -
Deposits from other customers             4 013 126     23 478     11 978          -           -      11 712     4 060 294
Fixed Rate                                   30 544     23 478     11 978          -           -           -        66 000
Variable Rate                             3 982 582          -          -          -           -           -     3 982 582
Non-interest-bearing                              -          -          -          -           -      11 712        11 712


Total liabilities                         4 708 560    466 082     35 633          -           -      14 956     5 225 231
Fixed Rate                                  498 249     23 478     13 979          -           -           -       535 706
Variable Rate                             4 210 311    442 604     21 654          -           -           -     4 674 569
Non-interest-bearing                              -          -          -          -           -      14 956        14 956




          Financial assets and liabilities in the table above are grouped on the basis of the earlier date of the next
          interest rate repricing date or on the basis of the maturity date.




(2.2)     Currency risk

          DSK Bank Group is exposed to currency risk of conducting transactions with financial instruments
          denominated in foreign currencies.

          As a result of the implementation of Currency Board in Bulgaria, the Bulgarian currency is pegged to
          the Euro. As the currency in which DSK Bank Group prepares its financial statements is the Bulgarian
          lev, DSK Bank Group’s financial statements are affected by volatilities in the exchange rates between
          the Bulgarian lev and currencies outside the Euro-zone.

          The risk management policy is aimed at limiting the possible losses from negative volatilities of
          foreign currencies different from Euro. DSK Bank manages its currency risk within limits set by senior
          management on maximum open positions, stop-loss and value-at-risk.

          DSK Bank Group’s profits and losses due to transactions in foreign currency are recognized on the
          income statement. Such exposures are the monetary assets and liabilities of DSK Bank Group,
          denominated in currency different from the currency used in the financial statements of DSK Bank
          Group. These exposures are as follows:




                                                         32
Translated from Bulgarian
                                                                                        DSK Bank Group
                                                                    Consolidated IFRS Financial Statements
                                                           For the years ended 31 December 2006 and 2005




         Foreign currency table as of 31 December 2006




                                                         BGN and             Other               Total
                                                           Euro             foreign
                                                         currencies        currencies
    In thousands of BGN

    Assets
    Cash and cash equivalents                               127 672             11 262            138 934
    Loans and advances to banks and balances with the
    Central Bank                                          1 703 082            126 955          1 830 037
    Loans and advances to other customers                 3 387 165              5 571          3 392 736
    Financial assets held for trading                        54 337             14 357             68 694
    Other assets                                             16 684                 40             16 724
    Interest receivables                                     30 983              1 184             32 167
    Investments available for sale and equity
    investments                                             180 023             15 320            195 343
    Investments held to maturity                            121 300             41 209            162 509
    Fixed assets                                            218 485                  -            218 485
    Total assets                                          5 839 731            215 898          6 055 629


    Liabilities
    Deposits from banks                                     456 452             19 306            475 758
    Loans from banks                                        689 179                  -            689 179
    Deposits from other customers                         3 864 386            195 908          4 060 294
    Other liabilities                                        70 105                592             70 697
    Interest payables                                        20 547                470             21 017
    Deferred tax liability                                   11 408                  -             11 408
    Total liabilities                                     5 112 077            216 276          5 328 353




                                                    33
Translated from Bulgarian
                                                                                             DSK Bank Group
                                                                         Consolidated IFRS Financial Statements
                                                                For the years ended 31 December 2006 and 2005




          Foreign currency table as of 31 December 2005


                                                              BGN and                 Other                   Total
                                                                  Euro               foreign
                                                             currencies           currencies
      In thousands of BGN

      Assets
      Cash and cash equivalents                                107 934                11 385               119 319
      Loans and advances to banks and balances with
      the Central Bank                                         701 868               126 469               828 337
      Loans and advances to other customers                  2 868 395                23 694             2 892 089
      Financial assets held for trading                         68 519                22 365                90 884
      Other assets                                               8 670                   156                 8 826
      Interest receivables                                      25 941                   970                26 911
      Investments available for sale and equity
      investments                                              210 770                17 484               228 254
      Investments held to maturity                             107 484                34 802               142 286
      Fixed assets                                             196 905                     -               196 905
      Total assets                                           4 296 486               237 325             4 533 811


      Liabilities
      Deposits from banks                                      139 592                 4 974               144 566
      Loans from banks                                         379 040                     -               379 040
      Deposits from other customers                          3 115 398               231 764             3 347 162
      Other liabilities                                         66 381                   766                67 147
      Interest payables                                         12 920                   394                13 314
      Deferred tax liability                                    22 603                     -                22 603
      Total liabilities                                      3 735 934               237 898             3 973 832




          For monetary assets and liabilities denominated in foreign currencies that are not hedged, DSK Bank
          Group maintains reasonable net exposure by buying and selling foreign currencies at spot rates when
          considered appropriate.




(3)       Credit risk

          DSK Bank Group is subject to credit risk through its trading, lending, and investing activities and in
          cases where it acts as an intermediary on behalf of customers or other third parties or issues guarantees.

          Credit risk associated with trading and investing activities is managed through DSK Bank Group’s
          counterparty risk management procedures.

          The risk that counterparties to both derivative and other instruments might default on their obligations
          is monitored on an ongoing basis. To manage the level of credit risk, DSK Bank Group deals with


                                                        34
Translated from Bulgarian
                                                                                           DSK Bank Group
                                                                       Consolidated IFRS Financial Statements
                                                              For the years ended 31 December 2006 and 2005



         counterparties of credit rating, which is acceptable to the Bank. A system of counterparty limits has
         been created and is applied.



         DSK Bank Group’s primary exposure to credit risk arises from its loans and advances to customers.
         The amount of credit exposure in this regard is represented by the carrying amounts of the assets in the
         balance sheet. In addition, DSK Bank Group is exposed to off balance sheet credit risk through
         commitments to extend credit and guarantees and letters of credit issued.

         DSK Bank Group is also exposed to significant concentrations of credit risk (whether on or off
         balance sheet) that arises from financial instruments of banks counterparties, which have similar
         economic characteristics and consequently changes in economic or other conditions would affected
         their ability to meet contractual obligations in a similar way. The major concentration of credit risk
         arises from the sector where it operates and type of customer in relation to DSK Bank Group’s
         investments, loans and advances, agreements to extend credit and guarantees issued. Exposures at risk
         are managed in accordance with approved limits for diversification of credit risk.




         Loans and advances to customers by industry sector


                                                                      31-Dec-2006                  31-Dec-2005
         In thousands of BGN

         Manufacturing                                                     261 651                      201 838
         Construction                                                       99 479                       51 907
         Agriculture and forestry                                           34 897                       30 996
         Transport and communications                                       67 326                       28 563
         Trade and services                                                323 588                      215 640
         Other industry sectors                                            239 410                      112 783
         Individuals                                                     2 496 355                    2 334 769
         Total                                                           3 522 706                    2 976 496

         Impairment for uncollectability                                 (129 970)                     (84 407)
         Total                                                           3 392 736                    2 892 089




         DSK Bank Group’s policy is to require suitable collateral to be provided by customers prior to the
         disbursement of the approved loans. Guarantees and letters of credit are also a subject to strict
         preliminary examination. The agreements specify monetary limits to DSK Bank Group’s obligations.
         The amount of the collateral held for provided guarantees and letters of credit is 100 percent as a
         minimum.

         Collaterals for loans, guarantees, and letters of credit are usually in the form of cash, inventory,
         registered government securities, or other property.

         The table below shows a breakdown of the total amount of credits granted to customers, non-financial
         institutions, and other customers and the type of collateral:


                                                      35
Translated from Bulgarian
                                                                                           DSK Bank Group
                                                                       Consolidated IFRS Financial Statements
                                                              For the years ended 31 December 2006 and 2005




                                                                      31-Dec-2006                 31-Dec-2005
         In thousands of BGN

         Secured by mortgages                                            1 225 022                   1 081 120
         Cash collateral                                                    14 409                      29 360
         Other types of collateral*                                      2 146 929                   1 781 609
         Without collateral                                                  6 376                           -
         Total                                                           3 392 736                   2 892 089

         * Other types of collateral comprise also personal guarantees for consumer loans.




(4)      Operational risk


          Based on the recommendations of the Basel Committee DSK Bank has established a system for
          monitoring and measurement of its operational risk. Operational risk is the risk of direct or indirect
          losses, resulting from inadequate or failed internal processes, people and systems errors. Operational
          risk management includes activities such as identifying and registering the bearers of this risk,
          assessing their size and determining the capital needed to cover the risk of eventual loss. Operational
          risk could be risk of operations, risk of information systems, external and internal law system risk,
          human resources risk. Currently DSK Bank risk exposure to operational risk is monitored both by
          type of the risk events and by different products.



27.      Related party transactions


         DSK Bank Group has a controlling related party relationship with its parent company OTP Bank.

         DSK Bank Group has a related party relationship with its subsidiaries and associates and with its
         directors and executive officers and other companies within OTP Bank Group.


         In thousands of BGN

         Related party                                                  Type of transaction             Amount

         Employees                                                         Loans extended                33 579
         Directors and executive officers                                  Loans extended                 3 856
         OTP Bank                                     Current and deposit accounts in OTP               747 313
         OTP Bank                                Current and deposit accounts in DSK Bank               240 077
         OTP Bank                                                           Loans received              412 680
         OTP Bank                                                           Interest income              15 192
         OTP Bank                                                                 Fees paid                 330
         OTP Bank                                                          Interest expense              11 727
         OTP Bank                                                             Fees received               7 980
         OTP Bank                                     Forward currency exchange contracts                33 171
         OTP Bank                                                       Received guarantee               53 003




                                                      36
Translated from Bulgarian
                                                                                          DSK Bank Group
                                                                      Consolidated IFRS Financial Statements
                                                             For the years ended 31 December 2006 and 2005




28.      Group enterprises



         Control of the Group

         DSK Bank Group’s parent company is the DSK Bank PLC.




         Subsidiaries:
                                                                       Ownership interest %
                                                                  31-Dec-2006               31-Dec-2005

         DSK Tours                                                    100.00%                      100.00%
         Rodina Pension Company                                        97.00%                       97.00%
         DSK Assets Management                                         66.00%                       66.00%
         DSK Trans Security *                                         100.00%                      100.00%



         * DSK Trans Security is fully owned by DSK Tours.




         Associates
                                                                       Ownership interest %
                                                                  31-Dec-2006               31-Dec-2005

         DSK Leasing                                                   50.00%                       50.00%
         LIC DSK Garancia                                              22.16%                       26.00%
         IC DSK Garancia                                               22.75%                       26.00%




                                                   37
Translated from Bulgarian

				
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