Page 1

A KEY PLAYER IN THE ECONOMIC GROWTH OF LATIN AMERICA

2010 ANNUAL REPORT


4

Note: Corporate GoverNaNCe (For purposes of section 303 a, of the NYSe Listed Company Manual / Corporate Governance rules). Bladex Choose to include the information and documentation pertaining to compliance with section 303a of the NYSe Listed Company Manual / Corporate Governance rules on its website (www.bladex.com) Bladex will continuously update this information.

2

Message to Shareholders

22

Consolidated Financial Data

24

Mission and vision

26

Macroeconomic environment

32

Commercial Division

38

treasury and Capital Markets

40

operating results

48

our Commitment to Social Development

54

Human Capital and talent

56

Board of Directors

58

Shareholders

60

executive team

62

executive Staff

66

representative offices

76

Financial Statments


3


MeSSaGe to tHe SHareHoLDerS Performance reflects solid market fundamentals and the Bank’s strong position. Bladex is executing on an ambitious, steady course.

For Bladex, 2010 was defined by a strong economic recovery in Latin america, with increased trade flows adding significant scale and diversification to the Bank’s business. Bladex also invested in the capabilities and size of its commercial and risk management teams, strengthening the Bank's origination capacity with additional banking professionals across an expanding network of representative offices. throughout the year, Bladex maintained solid financial fundamentals. Indicators relating to the Bank's capitalization, liquidity, and credit quality remained strong, reflecting the sound, conservative management of the Bank’s operations, even as business expanded at a rapid pace.

4

Sometime during the second quarter of 2010, the global economy found itself in an unprecedented situation, with emerging markets recovering strongly from the 2009 recession, while developed economies, particularly those of the european Union, were forced to confront a serious sovereign debt problem on the heels of the 2008 financial crisis. as a result, the 2010 average economic growth rate in emerging markets, at 7.1%, significantly exceeded the 3.0% indicator in developed economies. In Latin america in particular, the combination of improving commodity prices and strong consumer demand, accompanied by generally well-managed fiscal and monetary policy, resulted in average economic growth of 5.9%, a noticeable improvement from the 1.8% economic contraction in 2009.


Jaime Rivera

Gonzalo MenĂŠndez Duque

presidente ejecutivo

presidente de la Junta Directiva

5


La

6

tin

Am e

ri c

a


Significantly for Bladex, the recovering economic activity in Latin america brought about a 26% increase in the region's trade flows. the work that the Bank had carried out during the previous two years in terms of expanding its infrastructure and

delivery platform paid off handsomely, allowing Bladex to increase disbursements in 2010 by 79% to $7.4 billion, and grow year-end credit balances by 35%, to $4.9 billion.

Trade Flows - Latin America

2,000

1,706

1,600

Bladex - Credit Disbursements

10.0 7.4

1,351

1,200

4.1

800 400 0 2009

2010

US$ Billion

US$ Billion

0

Bladex - Credit Portfolio End of Period Balances

4.9

5.0

2009

2010

Bladex - Non-Accruing Loans to Total Loans, net

2.0

1.8%

3.6 0.7%

0 US$ Billion

0 2009

2010

2009

2010

7


During 2010, while much of the financial industry was still recovering from the financial crisis, Bladex expanded its geographic footprint, establishing representative offices in Monterrey, Mexico, and porto alegre, Brazil. With the benefit of a reinforced commercial team, the Bank was able to capture additional business throughout the region across a variety of industries, increasing the diversification of the Bank’s portfolio and the quality of revenues.

Corporate Portfolio Composition by Industry December 31, 2010 airlines

4%

Minerals

5%

oil & Gas

26%

Coffee

8% Metals (manufacturing)

7%

Chemicals

6%

Food

15% Commodities

11%

8

others (Construction, Sugar, etc.)

18%


Despite increased competition, Bladex was successful in managing its mix of clients and services, keeping its overall intermediation margins reasonably stable and at levels well above those prior to the financial crisis.

Bladex - Financial Margins 1.78%

1.73%

1.55%

1.62%

1.70% 1.43%

0.69%

0.78%

2006

2007

Net Interest Margin (NIM)

0.98%

2008

1.12%

2009

2010

Net Interest Spread (NIS)

In order to support the Bank's rapid growth with both new and existing clients while maintaining its trademark strong liquidity levels, Bladex’s required a larger and more diversified funding base. With this in mind, the Bank continued to expand its sources of funding in asia, and further strengthened its commercial ties with the Latin american Central Banks. as a result, deposits reached record levels, demonstrating the close relationships and the trust between the Bank and Latin american governments.

Bladex - Total Deposits 1,821

2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 US$ Million

1,256

2009

2010

9


there was only one line of business that did not meet expectations in 2010: the asset Management Unit which, after three successful years, posted its first annual loss. In order to reduce the volatility in its financial results, as well as to provide funding for other fee generating opportunities, the Bank has announced its intention to gradually withdraw its accumulated profits in the Unit.

While net income from the Bank’s commercial activities in 2010 improved by 27%, driven by disbursements that grew by 79%, portfolio balances that expanded by 35%, and credit quality that improved even beyond the excellent indicators of 2009, the negative results in the asset Management Unit impacted the Bank’s consolidated figures, taking some of the shine from what was otherwise a solid performance.

Bladex - Net Income / Asset Management Unit 20

18.5

15

14.1

12.3

10 5

-9.7

0

US$ Million

-5 -10 -15

2007

2008

2009

2010

Bladex - Net Income

Bladex - Net Income / Commercial and Treasury Divisions 60

60

51.9

50

50

10

40.9

30

30

20

20

10 0

2009

42.2

40

US$ Million

US$ Million

40

54.9

2010

10 0

2009

2010


Global Changes Are Shaping Our Strategy Bladex’s future endeavors are being shaped by what the Bank believes are powerful, global economic and demographic shifts. the emergence of China, Brazil, and India are only part of a process that Bladex believes will result in increasing demand for food, energy, metals, transportation, housing, entertainment, health care services, etc., on behalf of huge population pools that, until recently, were on the fringes of the global economy. In addition, the Bank believes that manufacturing facilities will continue to migrate toward emerging markets, as developed economies concentrate resources on the high technology and service sectors.

In Bladex's view, this scenario presents a historic opportunity for Latin america, a region that enjoys significant comparative advantages in the production of commodities in general, and where a number of countries represent a natural alternative for US and eU manufacturers seeking higher efficiencies to compete with asian facilities. Importantly, the use of world-class technologies in agriculture, oil exploration, and mining is allowing the region to reap significant new value-added benefits from these industries.

11


By definition, as increasing amounts of surplus food, energy, minerals, etc., move from Latin america to the rest of the world, the region's trade flows will expand, and with them, Bladex's business opportunities. the combination of rising commodity prices and growing investment flows into the region will benefit Bladex’s business, but could also bring inflationary pressures to bear on the region's economies. these flows could also fuel additional local currency appreciation, which monetary authorities in the region will need to continue managing with care. taken as a whole, however, all indications point to the second decade of the 21st century as Latin america’s, and Bladex's, time to shine.

12

Aiming for Increased Value the ongoing global changes in trade flow dynamics play to Bladex's strengths, and are taking place quickly. this is why Bladex, too, is evolving rapidly, welcoming change as an opportunity to assert its unique market position. Beginning in 2009, the Bank started to invest in the expansion of its team and its geographic coverage. In addition to the new offices in Monterrey and porto alegre, the Bank has secured peruvian regulatory approval to establish an office in Lima, and is about to begin the process to do likewise in Bogota, Colombia, with the possibility of yet further expansion in the near future. on the commercial front, the Bank has refined its client segmentation, focusing on customizing services to


the special and changing needs of banks, large corporations, middle market companies, and the rapidly growing number of regional organizations. More fundamentally, Bladex has strengthened core competencies by refining its knowledge of the region, expanding the scope of its relationships with its 23 government shareholders, and by perfecting its standards of corporate governance. In addition, Bladex is also investing in product and service innovation as a means of developing new revenue sources, and to better serve clients. the major thrust in this regard has been the research and development of a regional factoring network, a project that has been maturing over the last two years.

Finally, Bladex is reviewing and automating its policies and procedures to support improved agility and customer service that new market realities demand, as well as to provide even more effective controls. Current global trends, along with Bladex's improved positioning, will allow the Bank to continue to leverage its balance sheet in a steady, prudent manner as Bladex expands its franchise and generates additional revenue. the goal is for the Bank’s business to grow at a pace significantly faster than the region’s underlying economic growth rate, bringing about a growing, sustainable level of roe and added economic value.

13


Sharing Success with Shareholders as the Bank executed its strategy in 2010, we were glad to see that shareholders realized a 33% appreciation on the value of their holdings. We suggest, however, that the Bank’s solid financial condition, the favorable and well established trends in its business, and the excellent prospects in its markets, justify a richer valuation. In addition to the increased share price, during the year our shareholders received the added benefit of a 4% dividend yield. on January 19, 2011, based on fourth quarter 2010 results, the Board of Directors voted for the second dividend increase in the past year, continuing Bladex's tradition of sharing its success with its shareholders, a practice that the Bank intends to maintain as its business continues to grow in a sustainable manner. From Latin america´s perspective, the $7.4 billion in financing that Bladex disbursed during the year across 18 countries and 18 industries, to companies large and small, represented a tangible contribution to the well-being of thousands of workers throughout Latin america, while providing support for the fiscal and current accounts of most countries in the region. Our Values and Sense of Social Solidarity Bladex has explicitly defined five values that are at the core of what the Bank does and what it believes. these core values are excellence, integrity, respect, humility and commitment. over the years, these are the values that have come to define our organization, anchoring it through the ebbs and flows in the market, and guiding it through radical changes in the industry. 14


Consistent with these values, the Bank has recognized education, particularly the education of underprivileged children in violence-prone areas, as a key factor to the success of the region's efforts to achieve excellence. In 2010, Bladex supported wellrecognized children's education programs in Honduras, Nicaragua, and panama, to complement its support of similar programs in ecuador, Brazil, and trinidad and tobago. Positioned for the Future as 2010 drew to a close, Bladex found itself in a privileged position to benefit from a rapidly growing market that it knows well, where it enjoys significant competitive advantages, and where its brand and reputation are second to none. Bladex firmly believes that the coming years will see the Bank realize the full returns from the solid groundwork that it has laid. In closing, we wish to thank our clients, depositors, multilateral agencies, correspondents, rating agencies, directors, and associates for their help in allowing us to convert the passion that we feel for our business and for Latin america into solid value for you, our shareholders, whose confidence and support we gratefully acknowledge. on behalf of the Bladex team,

Gonzalo MenĂŠndez Duque

Jaime Rivera

president of the Board

Chief executive officer

15


BoarD o

16


F DIreCtorS CLaSS “a” DIreCtorS Guillermo Güémez García* BaNCo De MeXICo, Mexico

esteban alejandro acerbo* BaNCo De La NaCIÓN arGeNtINa, argentina

João Carlos de Nobrega pecego *** BaNCo Do BraSIL, Brazil

* expires in 2011 ** expires in 2012 *** expires in 2013

17


18


CLaSS “e” DIreCtorS Mario Covo*

Maria da Graça França***

United States of america

Brazil

Will C. Wood**

William D. Hayes***

United States of america

United States of america

Herminio Blanco*** Mexico

* expires in 2011 ** expires in 2012 *** expires in 2013 19


20


DIreCtorS ALL CLASSES

Gonzalo Menéndez Duque** Chile

Jaime rivera** panama

DIGNItarIeS Gonzalo Menéndez Duque Charmain of the Board

ricardo Manuel arango Secretary

Maria da Graça França treasurer * expires in 2011 ** expires in 2012 *** expires in 2013

Jaime rivera Chief executive officer

21


CoNSoLIDateD FINaNCIaL Data - SUMMarY YEAR ENDED DECEMBER 31 (In US$ millIion, except per share amounts) Income Statement Data Net interest income reversal (provision) for credit losses (1) Fees and commissions, net operating expenses Net income attributable to Bladex Selected Balance Sheet Data Investment securities Investment fund Loan portfolio (2) Credit portfolio, net of unearned income (3) total assets total liabilities Stockholders' equity

22

2009

2010

65 (15) 7 (38) 55

75 5 10 (42) 42

507 198 2,775 3,617 3,879 3,168 676

437 167 4,060 4,880 5,100 4,384 697

Per Common Share Data Net income per share (US$) Book value per common share -period end- (US$) Common Shares outstanding: (in thousands) period average period end

1.50 18.49

1.15 18.99

36,493 36,546

36,647 36,711

Selected Financial Ratios (In %) return on average assets return on average stockholders' equity Net interest margin operating expenses to total average assets Non-accruing loans to total loans, net of discounts (2) Charge-offs to total loan portfolio (2) allowance for loan losses to total loan portfolio (2) allowance for losses on off-balance sheet credit risk to total contingencies Stockholders' equity to total assets tier 1 capital to risk-weighted assets total capital to risk-weighted assets

1.4% 8.6% 1.62% 0.96% 1.8% 0.0% 2.7% 8.3% 17.4% 25.8% 27.0%

1.0% 6.2% 1.70% 0.97% 0.7% 0.1% 1.9% 3.5% 13.7% 20.5% 21.8%


Notes (1) Includes reversal (provision) for loan losses and off-balance sheet credit risk. (2) Loan portfolio is presented net of unearned income and deferred loans fees. (3) Includes book value of loans, fair value of investment securities, acceptances, and contingencies, (including confirmed letters of credit, stand-by letters of credit, and guarantees covering commercial and country risks, credit default swaps and credit commitments).

23


oUr MISSIoN to provide seamless support to Latin america’s foreign trade, while creating values for our shareholders.

oUr vISIoN to be the premier provider of integrated finacial solutions across Latin america’s foreign trade value chain.

24


25


MaCroeCoNoMIC eNvIroMeNt

We expect that the macroeconomic environment in Latin america and the Caribbean will continue to show a long-term positive trend. the region’s GDp is expected to post 6% growth in 2010, following a decrease of 1.8% in 2009. the region was one of the least affected by the international crisis that started in 2008, and showed a great ability to recover, enacting counter-cyclical measures that were made possible by the fiscal discipline of previous years. the region also took advantage of the sustained demand for raw materials from China and other emerging countries.

26

In fact, in spite of the reduction in interest rates, inflation remained close to the targets set by the central banks. another key aspect of the region’s continued economic stability has been the financial sector's solvency, which has allowed for counter-cyclical monetary initiatives to be implemented and ensured the provision of banking credit to the private sector. Capital markets have played an important role expanding funding in the region, in addition to banking credit. Based on these factors, the favorable trend in the risk profile has been reflected in the region`s economic stability, and on upgrades to the international risk rating of Latin american countries, in clear contrast to the evolution recorded by developed economies.


In this scenario, Bladex enhanced its ability to support both international and interregional trade, resulting in one of its highest levels of geographic diversification in credits granted, and in a downward trend for the systemic risk related to such placements throughout the period. the macroeconomic environment is expected to remain favorable in 2011, with GDp growth near 4%. this expectation is based on a positive perspective in terms of both trade and the partial withdrawal of the stimulus implemented through fiscal measures.

the region is expected to continue on the course of fiscal consolidation, with lower deficits than the one recorded in 2010, of 2.3% (2.9% in 2009). We remain cautious about macroeconomic risks, such as the uncertainty regarding the economic recovery of developed countries, potential new interruptions in the credit markets due to concerns about european sovereign risks, and the continued appreciation of Latin american currencies.

27


170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0

152

158

162

169

144

114 89

97

120

124

129

135

105

79 67 56

46

2

3

4

5

6 7

14 17 9 11

22

29

37

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

In US$ Billion

Total Accumulated Credits

Risk Management Bladex's risk Management is based on an enterprise risk management model, in line with the best international risk management practices, reflecting the organization's degree of complexity. this division is independent from the other areas of the Bank, and the Senior vice president for risk Management has veto power granted by the Board of Directors.

28

this unit is organized by type of risk and line of business (Institutional, Corporate, and Middle Market Companies) with personnel dedicated exclusively to analyzing and monitoring Country risk, Credit risk, Market risk, and operational risk. In 2010 this structure was strengthened even further with the addition of an executive in charge of the middle market companies segment, and


Bladex’s Credit Ratings ratING aGeNCIeS terM

Short term Long term perspective

another executive for portfolio Management and Monitoring. the portfolio Management and Monitoring executive provides us with a portfoliolevel vision that supplements the scheduled and ad hoc monitoring already performed by the area, including regular visits to all countries and customers, contact with local authorities, financial institutions’ top executives and employees, as well

MooDY'S DeC ‘10

S&p MaY ‘10

Fitch aUG ‘10

p-2 Baa2 Stable

a-2 BBB Stable

F-2 BBB Stable

as representatives of international risk rating agencies operating in the country. as part of its Corporate Governance model, Bladex counts on different analysis and approval levels for its activities. In the case of the risk Division, these include:

29


The Risk Policy & Evaluation Committee (RPEC) formed by members of the Board of Directors. this Committee approves the internal risk ratings, amounts, maturities, and other conditions for each country where we have operations. It also reviews and ratifies risk policies after they are approved by management. this Committee meets at least five times per year. The Country Risk Committee proposes the countries’ internal ratings to the rpeC and substantiates Management’s opinion with regard to general and specific reserves. this committee meets on a quarterly basis, or at the discretion of its members upon the occurrence of events requiring their attention. The Credit Committee has different approval levels, depending on the nature of the client (e.g., 30

if it is a new client, or if it is based in a deteriorated country), and the amount requested. Bladex does not approve credit facilities upon a single signature: it always requires the confirmation of a business officer, and two signatures authorized at the Bank’s headquarters (the risk Division’s confirmation is mandatory and has veto power). this conservative approach to risk management has ensured that the Bank maintains its assets' high quality in spite of adverse macroeconomic conditions. Since its founding, Bladex's total writeoffs account for only 0.2% of the overall accumulated credit granted. During 2010, write offs charged against specific reserves totaled $5.3 million. By the end of 2010, Bladex reported total general reserves of $80.5 million, while at the end of 2009 these reserves were $86.7 million.


Credit Quality Indicators (In US$ thousands, except percentages)

2009

2010

Balance at beginning of the year

54,648

73,789

provision (reversal of provision) for loan losses

18,293

9,091

Loan recoveries

866

996

Loans written-off against the allowance for loan losses

(18)

(5,261)

73,789

78,615

Balance at beginning of the year

30,724

27,261

provision (reversal of provision) for losses on off-balance sheet credit risk

(3,463)

(13,926)

Balance at end of the year

27,261

13,335

Balance at beginning of the year

85,372

101,050

provision (reversal of provision) for credit losses

14,830

(4,835)

Credit losses recoveries

866

996

Loans written-off against the allowance for credit losses

(18)

(5,261)

101,050

91,950

allowance for loan losses to total loan portfolio(1)

2.7%

1.9%

allowance for losses on off-balance sheet credit risk to total contingencies

8.3%

3.5%

allowance for credit losses to total commercial portfolio

3.2%

2.1%

At December 31 Components of the allowance for credit losses Allowance for loan losses:

Balance at end of the year Allowance for losses on off-balance sheet credit risk:

Allowance for credit losses:

Balance at end of the year

(1) Loan portfolio is presented net of unearned income and deferred loans fees.

31


CoMMerCIaL DIvISIoN

32

according to the World trade organization, global trade made an important return to growth in 2010. their latest report showed growth in trade volumes of 13.5% in 2010, comprised of 11.5% growth in developed countries, and 16.5% in developing economies.

2010, growth of 43% year to year. total disbursements for the year reached $7.4 billion, up from $4.1 billion in 2009, an impressive growth of 79% year to year. as a result, Net Income generated by the Division reached $ 56.8 million, showing an increase of 63% when compared to 2009 figures.

We at Bladex were able to identify opportunities and capture this growth in Latin america in our core trade finance business. We increased our portfolio from $3.1 billion, in 2009, to $4.4 billion in

We also restructured the Commercial Division into three main departments: one for our traditional business with financial institutions, another to focus on corporations, and a third to develop


business with middle market companies. In order to approach this third segment, it was necessary to reorganize the sales force, and to expand our physical presence in two important markets, Brazil and Mexico, by opening representative offices in porto alegre, and Monterrey. our business with Corporations focused mainly on those groups involved in intra-regional trade, providing them with medium-term financing to support their expansion into new markets, mainly

within Latin america. Credit balances with corporate clients grew from $1.5 billion to $2.3 billion during the year. our portfolio of credits in favor of Financial Institutions was managed opportunistically, identifying accumulations of demand in different markets, and responding quickly to our clients’ needs. as a result, our Financial Institutions portfolio grew from $1.4 billion to $1.9 billion over the course of 2010. We also launched our marketing initiative to middle market companies in 2010. We expect that this

Commercial Portfolio Profile By Line of Business 31 Dec 2010

By Remaining Term 31 Dec 2010 Short term

Corporations

trade

72%

51%

By Trade Indicator 31 Dec 2010

59%

Banks

44% Medium term

Middle-market companies

Non-trade

28%

5%

By Line of Business 31 Dec 2009

41%

By Remaining Term 31 Dec 2009

Corporations

trade

Short term

49%

By Trade Indicator 31 Dec 2009

62%

69% Banks

46%

Middle-market companies

5%

Medium term

31%

Non-trade

38%

33


34

new market will allow the Bank to increase its client base significantly over the coming years, leveraging off our very successful experience with Corporations, and our excellent long-standing relationships with the local banks in the region. We finished the year with a portfolio of $226 million in the middle market companies segment.

We also established a special area to design and offer new products to companies that export to Latin america from the United States. In this context, we disbursed a total of $338 million, capturing new types of transactions, and establishing a recurrent business with several important new exporters.

In the course of 2010, we were able to add almost 100 new clients to the Bank, including 47 new middle market companies clients, 40 Corporations, and 10 Financial Institutions.

We will continue to expand our footprint in 2011, opening new offices in peru (already authorized by the local authorities) and in Colombia, which is in its application phase with the local regulators.


Commercial Portfolio by Type of Institution (1)

private Corporations State-owned Corporations

42%

8% private Companies

Central Banks and Governments

5%

5%

State-owned Banks

8% private Banks

32% (1) Includes book value of loans, acceptances, and contingencies (including confirmed letters of credit, stand-by letters of credit, guarantees covering commercial and country risks, and credit commitments).

35


Commercial Portfolio Distribution by Country (In US$ Millions) at the end of December 31 COUNTRY

2009

2010

arGeNtINa BraZIL CHILe CoLoMBIa CoSta rICa DoMINICaN repUBLIC eCUaDor eL SaLvaDor GUateMaLa HoNDUraS JaMaICa MeXICo paNaMa perU trINIDaD & toBaGo UrUGUaY veNeZUeLa otHerS

$73 1,358 258 200 107 33 135 42 75 23 31 362 41 161 72 46 92 1

$237 1,649 328 585 120 135 165 39 93 38 65 456 49 343 63 0 80 1

$3,110

$4,446

totaL CoMMerCIaL portFoLIo (1)

(1) Includes book value of loans, acceptances, and contingencies (including confirmed letters of credit, stand-by letters of credit, and guarantees covering commercial and country risks and credit commitments).

36


Average Commercial Portfolio acceptances and Contingencies Loans, net of discount and deferred commission

5,000 4,314

4,500 3,793

4,000 3,500

2,988 2,692

2,721

149

219

3,000

355

2,500

2,633

2,543

2,502

1-Qtr-09

2-Qtr-09

3-Qtr-09

2,923

3,076

255

308

2,667

2,768

4-Qtr-09

1-Qtr-10

3,258 298

327

388 3,926

3,466

2,960

2,000

US$ Million

1,500 1,000 500 0

these two new offices will be important for our growth with middle market companies in the region. the offices in porto alegre and Monterrey are already fully operational and originating transactions with middle market companies.

2-Qtr-10

3-Qtr-10

4-Qtr-10

our outlook for 2011 in the business environment, mainly in trade finance, is positive, and we are positioned to take full advantage of the region’s excellent growth prospects for 2011. We are prepared to convert that economic growth into value for our shareholders, complying with Bladexʹs mission to promote Latin america’s foreign trade.

37


treaSUrY aND CapItaL MarKetS

With funding costs trending downward, and with high liquidity balances, the Bank used mediumterm funds obtained in 2009, as well as the traditional funding sources from international and Latin american banks, to support the strong growth of its commercial portfolio in 2010. In order to diversity its funding sources and to cover its future medium-term requirements, the Bank’s euro Medium-term Notes (eMtN) program was reactivated. this program allows Bladex to issue debt in the capital markets in several currencies, maturities and markets. the Bank made presentations to investors in several international and Latin american markets, and executed a plan to expand its network of

38

correspondent agents in the asian capital markets. at the end of the year, we announced the structuring of a new syndicated loan in asia. the investment portfolio managed by our treasury Division maintained its sound structure in 2010. this portfolio consists of Latin american securities, of which 83% were issued by sovereign or stateowned entities. the asset Distribution team had a particularly successful year, acting as an intermediary in the international markets on behalf of Bladex, through the purchase and sale of Latin american credits both in the primary and secondary markets.


Asset Management Unit For the first time since its inception in 2006, the asset Management Unit showed a net loss for the year. the Bladex Capital Growth Fund (BCGF), managed by the Bank’s New York-based subsidiary, Bladex asset Management, posted a loss of 5.19%, after fees. Including the 2010 performance, the Fund has accumulated an annualized return of 8.4% since inception.

and places a strong emphasis on risk management and capital preservation. the Fund can take long or short positions in order to maximize yield under a broad range of market conditions.

Funding Sources Medium and Longterm Borrowings and Debt

Deposits

25% BCGF adopts a macro-style strategy and invests in a broad range of financial instruments: fixed income bonds, local interest rate instruments, currencies, and stock exchange indices in Latin america. BCGF maintains a highly liquid portfolio, employs limited leverage and moderate volatility,

43%

Short-term Borrowings and Debt (1)

32%

(1)

Includes short-term borrowings, trading liabiilities and securities sold under repurshase agreements.

39


operatING reSULtS

For the year 2010 Bladex posted net income of $42.2 million, or $1.15 per share, representing a variance of -$12.6 million and -$0.35, respectively, when compared to the net income of $54.9 million, or $1.50 per share, in 2009. the 2010 results were mainly driven by the Commercial Division’s net income of $56.8 million, partially offset by net losses of $9.7 million from the asset Management Unit and net losses of $4.9 million from the treasury Division, compared to $34.8 million, $14.1 million and $6.1 million, for the year 2009 respectively. this variation in results for 2010 versus 2009 reflects the Bank's capacity to leverage the trade flows that have been recovering in the region, to expand its operations and grow its core business through higher average credit volumes and higher fee income, consolidating even further its critical role in the financial relations between Latin america and the international markets.

40

RESULTS BY BUSINESS SEGMENT Commercial Division the Commercial Division incorporates the Bank’s core business of financial intermediation and fee generation activities, and its portfolio includes loans, letters of credit, guarantees, and loan commitments. Net income includes net interest income from loans, fee income, net allocated operating expenses, the reversal (provisions) for credit losses, and any impairment on assets. Net income for 2010 amounted to $56.8 million, compared to $34.8 million in 2009. the $22.0 million, or 63%, increase during the year was a result of: i) a net reversal in its provisions for credit losses, due to improved risk profile and credit quality of the portfolio, ii) an increase in net interest income and other fee income mostly attributable to higher commercial portfolio's balances, and iii) an increase in operating expenses as the Division expanded its sale force and local presence in various markets.


the commercial portfolio’s balance as of December 31, 2010 was $4.4 billion, versus $3.1 billion in the previous year, the annual increase was largely attributable to increased demand from the Bank’s established client base of large corporations and financial institutions, while the business expansion into the middle market segment continued. as of December 31, 2010, the commercial portfolio was mostly short-term and trade-related in nature, with 72%, or $3.2 billion, maturing on or before December 31, 2011. trade financing operations accounted for 59% of the commercial portfolio.

Net Operating Revenues Distribution 2010

Non-interest operating income

3%

Net Interest Income

as of December 31, 2010, the Bank had $29.0 million of loans in non-accruing status, representing 0.7% of the total loan portfolio.

97% 2009

Non-interest operating income

41%

Net Interest Income

59% 41


Treasury Division the treasury Division incorporates the Bank’s liquidity management and investment securities activities. Net income is presented net of allocated operating expenses, and includes net interest income on treasury assets (interest-bearing deposits with banks, investment securities, and trading assets), and net other income (loss), such as net gain (loss) from trading, the sale of securities available for sale, foreign currency exchange, and hedging activities of derivative instruments. the treasury Division's net loss for the year 2010 was $4.9 million, compared to a net income of $6.1 million in 2009. the 2010 results were mainly driven by a $3.6 million trading loss, compared to a $13.1 million gain during 2009, as increases in securities valuations were more than offset by the diminished valuations of associated trading derivates. the 2010 year-end investment securities portfolio totaled $437 million, posting a 14% decrease from December 31, 2009. at December 31, 2010, the securities portfolio accounted for 9% of the Bank’s total credit portfolio, and consisted mostly of Latin american securities, 83% of which were issued by sovereign or state-owned entities. on that same date, 81% of the portfolio consisted of securities available for sale, 12% were trading securities, and the remaining 8% were securities held to maturity.

42

In the available-for-sale portfolio, and in order to hedge the instruments’ interest rate risk, the Bank enters into interest rate swap agreements to convert bonds from fixed to floating rate instruments. the available-for-sale portfolio is marked to market, with the impact recorded in the stockholders’ equity through the accumulated other Comprehensive Loss account which stood at $6 million at year-end 2010, nearly the same level as a year ago. as of December 31, 2010, liquid assets totaled $421 million, representing 8.2% of total assets and 23.1% of liability deposits. Liability deposit balances totaled $1.8 billion, representing an increase of $565 million, or 45%, versus year-end 2009. Bladex Asset Management Unit the asset Management Unit oversees the Bank’s asset management activities, through its subsidiary, Bladex asset Management, Inc. (“BaM”). the Unit manages the Bladex Capital, Growth Fund (“the Fund”), which follows a Latin america macro strategy, by using a combination of products (foreign exchange, equity indexes, interest rate swaps, and credit derivative products) to establish long and short positions in the Latin american markets. at December 31, 2010, Bladex owned 88.67% of Bladex offshore Feeder Fund, with the remaining balance owned by third parties.


Net Income Distribution by Business Segment

asset Management Unit Commercial Division treasury Division

70 60

54.9

50

14.1

42.2

40

US$ Million

30 20

34.8

56.8

10 0 -10 -20

6.1 2009

-4.9 -9.7 2010

43


Capital preservation is one of the Fund’s main objectives, coupled with a trading strategy focused on high liquidity, moderate volatility, and lower leverage.

44

at December 31, 2010, the Fund's net asset value totaled $167 million, compared to $198 million as of December 31, 2009, of which redeemable noncontrolling interest amounted to $19 million and $35 million, respectively.

the Unit's net income is presented net of operating expenses, and includes the Fund’s net interest income, as well as its net gains (losses) from trading, and other related income (loss).

Net Interest Income

the net loss for 2010 amounted to $9.7 million, compared to a net gain of $14.1 million in 2009. the decrease was mainly due to net losses from the Fund’s securities trading.

For the year 2010, net interest income amounted to $74.5 million, an increase of $9.7 million, or 15%, from 2009, reflecting a $697 million, or 27%, increase in the average balance of the Commercial

CONSOLIDATED RESULTS OF OPERATIONS


Division’s loan portfolio and the decrease by 112 bps in the average yield paid on interest-bearing liabilities, partially offset by a 81 bps decrease in the average yield on interest-earning assets.

decrease in generic reserves, resulting from lower reserve requirements related to the improved risk profile and credit quality of the portfolio.

During 2010, the Bank’s net commission income amounted to $10.3 million, compared to $6.7 million in 2009. the $3.6 million, or 53%, increase mainly results from the higher volumes of letters of credit.

at December 31, 2010, the Bank’s allowance for credit losses amounted to $92.0 million, compared to $101.0 million at December 31, 2009, of which $80.5 million and $86.7 million, respectively, were related to generic credit provisions. the ratio of the allowance for credit losses to the commercial portfolio was 2.1% as of December 31, 2010, compared to 3.2% as of December 31, 2009.

Reversal (Provision) for Credit Losses

Derivative Financial Instruments and Hedging

For the year 2010, the Bank recorded a net reversal in the amount of $4.8 million in its provisions for credit losses (including both a $9.1 million provision for loan losses and a $13.9 million reversal for losses on off-balance sheet credit risk), compared to a net provision of $14.8 million in 2009. the year 2010’s net reversal results mainly due to the

the Bank recorded a $1.4 million loss in derivative financial instruments and hedging in 2010, compared to a $2.5 million loss in 2009. these results reflect the effect of recording the effectiveness on hedging relationships and the discount of the Bank's own credit risk when calculating the fair value of its cross-currency swap

Fees and Commissions, Net

45


Efficiency Ratio

US$ Million

operating revenues operating expenses efficiency ratio

120

55%

100 80

50% 109.0

60 40

35%

76.9

20%

-

(40) (60)

46

40% 30%

20

(20)

60%

2009 (38.2)

2010 (42.1)

10% 0%


portfolio that it contracts for hedging purposes. the fair value of these cross-currency swaps improved in 2010 and, consequently, the credit risk discount decreased with the valuation of such derivatives. Net Gain (Loss) from Investment Fund Trading the Bank recorded a net loss of $8.0 million from investment fund trading in 2010, compared to a net gain of $25 million in 2009. this net loss reflects the trading results of the Fund managed by BaM. Net Gain (Loss) from Trading Securities the Bank recorded a $3.6 million net loss from trading securities in 2010, compared to a net gain of $13.1 million in 2009, as increases in securities valuations were more than offset by the diminished valuations of associated trading derivaties. Net Gain on Sale of Securities Available for Sale

them prior to maturity. these debt instruments are classified as securities available for sale and are included as part of the Bank’s credit portfolio. the Bank’s net gain from the sale of securities available for sale in 2010 was $2.3 million, compared to $0.5 million in 2009. Operating Expenses In 2010, total operating expenses amounted to $42.1 million, compared to $38.2 million in 2009. the $3.9 million, or 10%, increase was attributable to the net effect of salary and other employee expenses associated with higher average headcount and professional fees in support of the Commercial Division and the risk Management’s expansion, as well as capital market issuance programs, and lower performance-related expenses from the Investment Fund. the efficiency level (operating expenses as a percentage of net revenues) was 55% in 2010, up from 35% in 2009.

the Bank purchases debt instruments as part of its treasury operations, with the possibility of selling

47


oUr CoMMItMeNt to SoCIaL DeveLopMeNt

48


Bladex understands that the Bank plays an important economic role as an agent for the development of the communities in which it operates. the work carried out during 2010 reiterates the Bank’s commitment to sustainable development, as well as the improvement of the quality of life for the people of Latin america. With this goal in mind, Bladex, as a socially responsible institution, has continued its contribution to programs and projects that support education, children, culture, and the environment.

as part of Bladex’s strategy to expand its social contribution to the region, last year the Bank extended its presence to Nicaragua, Honduras, and Haiti through partnerships with recognized associations whose programs focus primarily on youth education and welfare of children and youth. In Nicaragua, through the Zamora terån Foundation, Bladex provided a multigrade elementary school with one laptop for each student and teacher, opening a window of opportunity and knowledge for those who otherwise would have no access to a computer and the Internet.

49


In Honduras, Bladex built, together with the Ficohsa Foundation, a preschool center in one of the most marginal areas of San pedro Sula to offer the facilities required for the community’s children, ages three to five. particularly in Haiti, both the Bank, as an institution, and its employees, helped the Haitian people following the tragic earthquake of January 2010. Bladex allocated institutional funds, through the Banque de la republique, to the reconstruction of a school in the capital city so that it could be reopened in 2011. In panama, where the Bank’s headquarters are located, Bladex continued to support fifteen organizations operating throughout the country. the Bank's main project in the country is the Marie poussepin educational Center, where Bladex started building the first stage of a complex that will offer seventh through twelfth grade classes,

50

Nicaragua


Brazil

Honduras

51


Colombia

52


Panama

increasing the number of students at this school to 850. providing a solid education has contributed to reducing youth violence, gang activities, and dropout rates. additionally, in 2010 Bladex hired a fulltime counselor at the school, and expanded the capacity of the school's computer lab. as Bladex have done since its foundation, the Bank’s employees maintained their support for this school's scholarship program in 2010, benefiting 120 students during the year. Bladex’s employees also organized recreational and cultural activities for the students.

the Bank’s social commitment also involves the recognition of efforts made by Latin american companies to promote the foreign trade in the region. Bladex’s 2010 exporter award was announced during the 22nd annual National Colombian exporter Conference. the winner was agua Bendita, recognized as the most outstanding Small Business in the consumer goods industry.

53


54


SoUND GroWtH aND DeveLopMeNt IN HUMaN CapItaL aND taLeNt In spite of the turbulence that persists in the financial markets worldwide, Latin america showed significant signs of recovery in 2010, as was evidenced by the positive evolution in foreign trade figures. Bladex actively contributed to that recovery, playing an important role in funding the region’s international trade flows. this has allowed the Bank to accomplish its mission of promoting the economic development of Latin american countries. the organizational strategy of fostering the region's development, led us to open new representative offices in porto alegre (Brazil), Monterrey (Mexico), and Lima (peru), accompanied by a significant increase of our commercial team. During 2010, we focused particularly on recruiting a considerable number of professionals who have contributed to strengthening Bladex’s human capital and talent, and on realigning the Bank's processes and structures, in order to achieve higher levels of agility and effectiveness. all these factors, coupled with our constant efforts to strengthen the organizational culture based on the Bank's values, have enabled Bladex to offer its customers and the region an organization that is committed to Latin america's sustained growth.

55


BoarD oF DIreCtorS Class “A”

All Classes

Guillermo Güémez García*

Gonzalo Menéndez Duque**

BaNCo De MÉXICo, Mexico

Chile

esteban alejandro acerbo*

Jaime rivera**

BaNCo De La NaCIÓN arGeNtINa, argentina

João Carlos de Nobrega pecego *** BaNCo Do BraSIL, Brazil

Class “E” Mario Covo*

United States of america

Will C. Wood**

United States of america

Herminio Blanco*** Mexico

Maria da Graça França*** Brazil

William D. Hayes*** United States of america

Honorary Chairman Nicolás ardito Barletta Honorary Chairman

* expires in 2011 ** expires in 2012 *** expires in 2013

56

panama

Dignitaries

Advisory Council roberto Feletti

Secretary of economic policy Ministry of economy and public Finances, argentina

roberto texeira da Costa Board Member Sul américa S.a., Brazil

Carlos Martabit

Gonzalo Menéndez Duque Charmain of the Board

General Manager, Finance Division Banco del estado de Chile, Chile

ricardo Manuel arango

Santiago perdomo

Secretary

Maria da Graça França treasurer

Jaime rivera

Chief executive officer

president Banco Colpatria – red Multibanca Colpatria, Colombia

alberto C. Motta Jr.

president Inversiones Bahía, panamá

enrique Cornejo ramírez Minister Ministry of transportation and Communications, peru


57


SHareHoLDerS Class “A” (17.28%) Banco de la Nación argentina Central Bank of Barbados Ministerio de economía y Finanzas públicas (Bolivia) Banco do Brasil Banco del estado de Chile Banco de Comercio exterior de Colombia, S.a. Banco Central de Costa rica Banco Central del ecuador Banco Central de reserva de el Salvador Banco de Guatemala Banque de la republique D’Haiti Banco Central de Honduras National export-Import Bank of Jamaica Banco de México Banco Central de Nicaragua Banco Nacional de panamá Banco Central del paraguay Banco de la Nación (perú) Banco de reservas de la república Dominicana Centrale Bank van Suriname Central Bank of trinidad and tobago Banco de la república oriental del Uruguay Banco de Comercio exterior (Bolivarian republic of venezuela) Class “B” (6.92%) Argentina aBN aMro Bank N.v. Banco avellaneda S.a. (In Liquidation - resolution No. 515 of November 1, 1991, Source: Central Bank of argentina) Banco B.I. Creditanstalt S.a. Banco de Corrientes S.a. Banco de Formosa S.a. Banco de Galicia y Buenos aires S.a. Banco de Italia y río de la plata S.a. (In Liquidation – resolution No. 841 of December 11, 1987, Source: Central Bank of argentina) Banco de la Ciudad de Buenos aires Banco de la Nación argentina Banco de La pampa Banco de la provincia de Buenos aires Banco de la provincia de Córdoba

58

Banco de San Juan S.a. Banco de Santa Cruz Banco de valores S.a. Banco Feigin S.a. (Bankruptcy request – File No. 518690/36) Banco Finansur S.a. Banco General de Negocios Banco Macro Bansud S.a. Banco patagonia Sudameris S.a. Banco provincia del Neuquén Banco río de la plata S.a. BBva Banco Francés S.a. HSBC Bank argentina, S.a. Nuevo Banco de Santa Fe, S.a. Scotiabank Quilmes S.a. (Suspension of operations – National Court of Commercial First Instance No.14, Secretariat No. 27, Source: Central Bank of argentina) Belgium KBC Bank N.v. Brussels Belize atlantic Bank Limited Brazil auxiliar S.a. Banco aBC Brasil S.a. Banco Banorte S.a. (extraordinary Liquidation, Source: Central Bank of Brazil) Banco Bradesco, S.a. Banco do estado de Sao paulo (Banespa) Banco do estado do espirito Santo S.a. Banco do estado do para S.a. Banco do Nordeste do Brasil S.a. Banco Industrial e Comercial S.a. Banco Itaú Banco Santander Brasil S.a. Banestado, S.a. participacoes, adm. y Serv. Chile Banco de Chile Banco de Crédito e Inversiones Banco Santiago BBv Banco BHIF


Colombia Bancolombia Costa Rica Banco BaC San José, S.a. Banco BCt, S.a. Banco HSBC Costa rica, S.a. Dominican Republic Banco Intercontinental, S.a. Banco popular Dominicano Ecuador Banco del pacífico Banco pichincha C.a. El Salvador Banco de Fomento agropecuario Guatemala Banco agromercantil de Guatemala, S.a. Banco de Guatemala Banco G&t Continental, S.a. Banco Industrial, S.a. Banco Inmobiliario Banco Internacional, S.a. Banco promotor, S.a. Banco reformador, S.a. Corporación Financiera Nacional-Corfina Crédito Hipotecario Nacional de Guatemala Fideicomiso de administración y realización de activos para el pago de Bonos Hipotecarios Bancafé I – el Crédito Hipotecario Nacional (Fiduciario) Haiti Banque Nationale de Credit Honduras Banco atlántida, S.a. Banco Continental, S.a. Banco de los trabajadores Banco de occidente, S.a. Banco Hondureño del Café, S.a. Banco Nacional de Desarrollo agrícola Financiera Centroamericana, S.a.

Jamaica National Commercial Bank Jamaica, Ltd. National export-Import Bank of Jamaica rBtt Bank Jamaica Limited Korea the Korea exchange Bank Mexico Banco Nacional de Comercio exterior, S.N.C. Banco Nacional de México, S.a. Banco Santander, S.a. BBva Bancomer, S.a. HSBC México, S.a. Nacional Financiera, S.a. Panama Banco de Bogotá Bancolombia (panamá), S.a. Corporación Financiera Nacional (Cofina) Metrobank Multibank popular Bank Ltd., Inc. towerbank International Inc. Peru Banco Internacional del perú Corporación Financiera de Desarrollo, S.a. Puerto Rico Bancaracas International Banking Corp.

Bolivarian Republic of Venezuela Banco de Maracaibo Banco Latino, C.a.S.a.C.a. Banco Metropolitano, C.a. Class “E” (75.80%) Individual and Institutional Investors (Shares Listed on the New York Stock exchange)

59


eXeCUtIve teaM

60


Jaime rivera Chief executive officer

rubens v. amaral Jr. executive vice president Chief Commercial officer

Miguel Moreno executive vice president Chief operating officer

Gregory D. testerman executive vice president Senior Managing Director, treasury and Capital Markets

Miguel a. Kerbes predari Senior vice president Chief risk officer

Christopher Schech Senior vice president Chief Financial officer

Gustavo DĂ­az Senior vice president Controller

61


eXeCUtIve StaFF Executive Office Jaime Rivera Chief executive officer

62

Craig Escalante vice president Patricio Mainardi vice president

Commercial Banking

Marcia Müller vice president

Rubens V. Amaral Jr. Chief Commercial officer

Federico Pérez-Sartori vice president

Middle Market

Eliseo Sánchez-Lucca vice president

Luiz Yamasaki Director

Marcos dos Santos vice president

Alejandro Barrientos Deputy Director

Verónica Alarcón Manager

Miguel Calvillo vice president

Catalina Antúnez Manager

Murilo D'Avila vice president

María Paz Balbuena Manager

Martinho Oliveira Fernandes vice president

Adriana Lima Santechole Manager

Claudia Flores vice president

Mónica Suárez Manager

Francisco Lozano vice president

Financial Institutions and Solutions

Anselmo Sandri vice president

Pierre Dulin Director

Corporate Banking

Claudia Ades Hibner vice president

Ulysses Marciano Director

Christian Novy vice president

Magaly Calderón de la Barca vice president

Fernando Pompeu vice president


Fernando Riojas vice president

Annette Van Hoorde de Solís assistant vice president

Lourdes Huang assistant vice president

Marianela Broce Manager

Nitza Maiolini assistant vice president

Adriana Espinosa de Arias Manager

Eucadis de Molina assistant vice president María Olivera Manager Leasing Edmur Ribeiro Director Gabriel Vázquez Celis assistant vice president

Risk Management Miguel A. Kerbes Predari Chief risk officer Yoel Alveo vice president José Eladio Rodríguez vice president Alejandro Tizzoni vice president

Treasury & Capital Markets

Leonel van Grieken vice president

Gregory D. Testerman Senior Managing Director

Leandro Ordoñez assistant vice president

Milciades Denis Director

Ana María Bonilla attorney

Raúl Plata vice president

Felipe Jaramillo attorney

Stella Chen assistant vice president

Elia Rivera attorney

Ann Vanessa Dinsmore assistant vice president

Carlos Moreno economist

Ana Teresa de Méndez assistant vice president

63


eXeCUtIve StaFF Finance

Human Resources

Christopher Schech Chief Financial officer

María Teresa Jaramillo assistant vice president

Financial Planning and Analysis

Larissa Córdoba Manager

Ana Graciela de Méndez vice president

Administration

Mónica Cosulich Manager

Oscar Díaz assistant vice president

Marixenia Polo Manager

Carlos López Manager

Accounting

Operations

Eduardo Sánchez vice president

Carmen Murillo vice president

Jaime Espinosa Manager

María de Cano Manager

Ana Cristina Modes Manager

Rosa Sheppard Manager

Regulatory Reporting

Itzel Valdés Manager

Ana María Chiquilani de Sosa Manager

Technology and Processes Roger Iván Córdoba vice president

Support Services Miguel Moreno Chief operating officer Organizational Performance and Development Ana María M. de Arias Senior vice president

64

Milagros Cedeño assistant vice president Iván Vergara assistant vice president Roberto Bárcenas Manager


Luis Carlos Bustamante Manager Ovidio Gutiérrez Manager Ismael Rodríguez Manager

Internal Audit María Alejandra De León Manager Leonildo Gordón Manager Lourdes de Colona Manager

New York Agency Pedro Toll General Manager

Institutional Relations and Marketing

B. Netram Rambudhan vice president – Deputy General Manager

Nikolina de Alvarado Manager

Henry Rodríguez Manager Legal Department

Shareholder Relations Luisa de Polo Manager

Tatiana Calzada vice president - Chief Legal Counsel

Bladex Asset Management (BAM) Controller Gustavo Díaz Controller Compliance

Manuel E. Mejía-Aoun General Manager John Cadley Head of risk Management and Compliance Urvish Bidkar Director

Julio Aguirre assistant vice president Head Compliance officer

Tulio Vera Director

Luis Cifuentes Compliance officer – NY & BaM

Linette Figueroa de Vega Manager

65


NeW YorK aGeNCY

pedro toll General Manager

B. Netram rambudhan Deputy General Manager

Luis Cifuentes vice president – Compliance officer NY & BaM

Henry rodrĂ­guez Manager

66


BLaDeX aSSet MaNaGeMeNt (BaM) Manuel e. MejĂ­a-aoun General Manager

tulio vera Director

Urvish Bidkar Director

John Cadley Head of risk Management and Compliance

67


repreSeNtatIve oFFICe BraZIL

68


Ulysses Marciano

Claudia ades Hibner

Marcos dos Santos

Director - Corporate Banking

vice president

vice president

Luiz Yamasaki

Martinho oliveira Fernandes

Murilo D’avila

Director - Middle Market

vice president

vice president

anselmo Sandri

Marcia MĂźller

adriana Lima Santechole

vice president

vice president

Manager

Jose eladio rodrĂ­guez vice president

69


repreSeNtatIve oFFICe arGeNtINa

70


Federico pĂŠrez-Sartori vice president

MarĂ­a paz Balbuena Manager

71


repreSeNtatIve oFFICe MeXICo

72


alejandro Barrientos Deputy Director - Middle Market

Miguel Calvillo

Magaly Calderón

Catalina antúnez

vice president

vice president

Manager

Craig escalante

Mónica Suárez

vice president

Manager

Claudia Flores

verónica alarcón

vice president

Manager

Francisco Lozano vice president

73


repreSeNtatIve oFFICe MIaMI

74


rubens v. amaral Jr. Chief Commercial officer

pierre Dulin Director - Financial Institutions and Solutions

edmur ribeiro Director - Leasing

Fernando riojas vice president

Christian Novy vice president

MarĂ­a olivera Manager

75


%DQFR/DWL %DQFR/DWLQRDPHULFDQRGH&RPHUFLR([WHULRU6$  LQRDPHULFDQRGH&RPHUF   FLR([WHULRU6$     DQG6XEVLGLDULHV DQG6XEV   VLGLDULHV :LWK5HSRUWVRI,QGHSHQGHQW5HJLVWHUHG3XEOLF$FFRXQWLQJ)LUP :LWK5HSR  RUWVRI,QGHSHQGHQW5HJLVW    WHUHG3XEOLF$FFRXQWLQJ)    )LUP  &RQVROLGDWHG%DODQFH6KHHWVDVRI'HFHHPEHUDQGDQ &RQVROLGDWHG%DODQFH6KHHWVDVRI'HFHPEHUDQGDQG5HODWHG QG5HODWHG &RQVROLGD &RQVROLGDWHG DWHG 6WDWHPHQWV RI ,QFRPH 6WRFNKROGHUVª (TXLW\ &RPS &RPSUHKHQVLYH SUHKHQVLYH ,QFRPH / /RVV  /RVV  DQG &DVK )ORZV IRU (DFK (  RI WKH 7KUHH <HDUV LQ WKH W  3HULRG (QGHG'HFHPEHU (QGHG'H  FHPEHU   &RQVROLGDWHG)LQDQFLDO6WDWHPHQWVDQG &RQVROLGDWHG G)LQDQFLDO6WDWHPHQWV     DQG   &RQWHQWV &RQWHQWV

3DJHV

5HSRUWRI,QG 5HSRUWRI,QGHSHQGHQW5HJLVWHUHG3XEOLF$FFRXQWLQJ)LUPÂ¥&RQVROLGDWHG)LQDQFLDO   HSHQGHQW5HJLVWHUHG3XEOLF$FF    FRXQWLQJ)LUPÂ¥&RQVROLGDWHG)     )LQDQFLDO   6WDWHPHQWV 6WDWHPHQWV V

77

&RQVROLGDWHGEDODQFHVKHHWV &RQVROLGDWHGEDODQFHVKHHWV  

78

&RQVROLGDWHGVWDWHPHQWVRILQFRPH &RQVROLGDWHGVWDWHPHQWVRILQFRPH   

79

&RQVROLGDWHGVWDWHPHQWVRIFKDQJHVLQVWRFNKROGHUVªHTXLW\ &RQVROLGDWHGVWDWHPHQWVRIFKDQJHVLQVWRFN   J   NKROGHUVªHTXLW\  T \  DQGUHGHHPDEOHQRQFRQWUROOLQJLQWHUHVWLQWKHLQYHVWPHQWIXQG DQGUHGHHP  PDEOHQRQFRQWUROOLQJLQWHUHVWLQ    QWKHLQYHVWPHQWIXQG    

80

&RQVROLGDWHGVWDWHPHQWVRIFRPSUHKHQVLYHLQFRPH ORVV  &RQVROLGDWHGVWDWHPHQWVRIFRPSUHKHQVLYHL   LQFRPH ORVV   

81

&RQVROLGDWHGVWDWHPHQWVRIFDVKIORZV &RQVROLGDWHGVWDWHPHQWVRIFDVKIORZV    

82

1RWHVWRFRQVROLGDWHGILQDQFLDOVWDWHPHQWV 1RWHVWRFRQV   VROLGDWHGILQDQFLDOVWDWHPHQWV    5HSRUWRI,QGHSHQGHQW5HJLVWHUHG3XEOLF$FFRXQWLQJ)LUPÂ¥,QWHUQDO&RQWURO2YHU 5HSRUWRI,QG   HSHQGHQW5HJLVWHUHG3XEOLF$FF    FRXQWLQJ)LUPÂ¥,QWHUQDO&RQWUR     RO2YHU   )LQDQFLDO5HSRUWLQJ )LQDQFLDO5 5HSRUWLQJ

76

Â¥ 83 - 122

123


'HORLWWH,QF 'HORLWWH,QF &RQWDGRUHV3~EOLFRV$XWRUL]DGRV & RQWDGRUHV3 3~EOLFRV$  XWRUL]DGRV $SDUWDGR $S SDUWDGR 3DQDPi5HSGH3DQDPi 3DQDPi5HSGH3DQDPi  7HOpIRQR   7HOpIRQR   )DFVLPLOH   )DFVLPLOH   ZZZGHORLWWHFRPSD ZZZGHORLWWHFRPSD 

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³³%DQN´  %DQN´  DV DV RI 'HFHPEHU    DDQG QG   DDQG QG WWKH KH UUHODWHG HODWHG ([WHULRU RI 'HFHPEHU  FRQVROLGDWHG VWDWHPHQWV VWDWHPHQWV RI RI LQFRPH LQFRPH FKDQJHV FKDQJHV LQ LQ VWRFNKROGHUV¶ VWRFNKROGHUV¶ HTXLW\ HTX T LW\ DDQG QG UH GHHPDEOH QRQFRQWUROOLQJ QRQFRQWUROOLQJ FRQVROLGDWHG UHGHHPDEOH LQWHUHVW LQ WKH LQYHVWPHQW IXXQG FRPSUHHKHQVLYH LQFRPH ORVV  DQG FDVK IORZV IRRU HDFK RI WKH WKUH K H \HDUV LQWHUHVWLQWKHLQYHVWPHQWIXQGFRPSUHKHQVLYHLQFRPH ORVV DQGFDVKIORZVIRUHDFKRIWKHWKUHH\HDUV LQ WKH SHULRG R  HQGHG 'HFHPEHU     7KHVH ILQDQFLDO VWDWHPHQWWV DUH WKKH UHVSRQVLELOLW\ RI WKH %DQN¶V LQWKHSHULRGHQGHG'HFHPEHU7KHVHILQDQFLDOVWDWHPHQWVDUHWKHUHVSRQVLELOLW\RIWKH%DQN¶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

 WKH WKH %DQN¶V %DQN¶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¶VLQWHUQDOFRQWURORYHUI ILLQDQFLDOUHSRUWLQJ H[SUHVVHGDQXQTXDOLILHGRSLQLRQRQWKH%DQN¶VLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ  7 KH DDFFRPSDQ\LQJ FFRP PSDQ\LQJ FFRQVROLGDWHG RQVROLGDDWHG IILQDQFLDO LQDDQFLDO VVWDWHPHQWV WDWHPHQWV KDYH KDYH EH HHQ WUDQVODWHG WUDQVODWHG LLQWR QWR ( QJOLVK IRU IRRU WWKH KKH 7KH EHHQ (QJOLVK FFRQYHQLHQFHRIUHDGHUVRXWVLGHRI3DQDPD RQYHQLHQFHRI  IUHDGHUVRX  XWVLGHRI  I3DQDPD     )HEUXDU\ ) HEUXDU\

$XGLWx7D[x&RQVXOWLQJx&RUSRUDWH)LQDQFHx $ XGLWx7D[x&RQVXOWLQJx&RUSSRUDWH)LQQDQFHx



77


%DQFR/DWLQRDPHULFDQRGH&RPHUFLR([WHULRU6$DQG6XEVLGLDULHV %DQFR/DWLQRD  DPHULFDQRGH&RPHUFLR([WHULRU6       6$DQG6XEVLGLDULHV  &RQVROLGDWHGE &RQVROLGDWHGEDODQFHVKHHWV EDODQFHVKHHWV       'HFHPEHU  DQG   'HFHPEHUDQG     LQ86WKRXVDQ   QGH[FHSWVKDUHDPRXQWV

   LQ86WKRXVDQGH[FHSWVKDUHDPRXQWV        &DVKDQGGXHIURPEDQNV  &DVKDQGGXHI   IURPEDQNV  ,QWHUHVWEHDULQJGHSRVLWVLQEDQNV LQFOXGLQJSOHGJHGGHSRVLWV  ,QWHUHVWEHDULQJ JGHSRVLWVLQEDQNV LQFOXGLQJSOHGJH      HGGHSRVLWV   RILQDQGLQ   RILQ   QDQGLQ

    7UDGLQJDVVHWV LQFOXGLQJSOHGJHGVHFXULWLHVWRFUHGLWRUVRI 7UDGLQJDVVHWV   LQFOXGLQJSOHGJHGVHFXULWLHVWRFUHGL     LWRUVRI    LQ  LQ     6HFXULWLHVDYDLODEOHIRUVDOH LQFOXGLQJSOHGJHGVHFXULWLHVWRFUHGLWRUVRI 6HFXULWLHVDYDLOD  DEOHIRUVDOH LQFOXGLQJSOHGJHGVHFX    XULWLHVWRFUHGLWRUVRI  LQDQGLQ   LQ  DQGLQ

    6HFXULWLHVKHOGWRPDWXULW\ PDUNHWYDOXHRILQ   6HFXULWLHVKHOG  WRPDWXULW\ PDUNHWYDOXHRI     LQ

   LQFOXGLQJSOH LQFOXGLQJSOHGJHGVHFXULWLHVWRFUHGLWRUVRI   HGJHGVHFXULWLHVWRFUHGLWRUVRI        ,QYHVWPHQWIXQG ,QYHVWPHQWIXQG  G /RDQV  /RDQV  /HVV /HVV    $OORZDQFH $OORZDQFHIRUORDQORVVHV  HIRUORDQORVVHV     8QHDUQHG 8QHDUQHGLQFRPHDQGGHIHUUHGIHHV  LQFRPHDQGGHIHUUHGIHHV    /RDQVQHW /RDQVQHW  &XVWRPHUVªOLDELOLWLHVXQGHUDFFHSWDQFHV  &XVWRPHUVªOLDE  ELOLWLHVXQGHUDFFHSWDQFHV   $FFUXHGLQWHUHVWUHFHLYDEOH  $FFUXHGLQWHUHV  VWUHFHLYDEOH  3UHPLVHVDQGHTXLSPHQW QHWRIDFFXPXODWHGGHSUHFLDWLRQDQG 3UHPLVHVDQGH  HTXLSPHQW QHWRIDFFXPXODWHGGHSUH     HFLDWLRQDQG    DPRUWL]DWLRQ DPRUWL]DWLRQRILQDQGLQ   RILQDQGLQ       

 'HULYDWLYHILQDQFLDOLQVWUXPHQWVXVHGIRUKHGJLQJUHFHLYDEOH  'HULYDWLYHILQDQ  QFLDOLQVWUXPHQWVXVHGIRUKHGJLQJ      UHFHLYDEOH  2WKHUDVVHWV 2WKHUDVVHWV 7RWDODVVHWV 7RWDODVVHWV     /LDELOLWLHVDQGVWRFNKROGHUVªHTXLW\  /LDELOLWLHVDQG  VWRFNKROGHUVªHTXLW\  'HSRVLWV 'HSRVLWV  1RQLQWHUHVWEHDULQJ'HPDQG  1RQLQWHUHVWE EHDULQJ'HPDQG   ,QWHUHVWEHDUL ,QWHUHVWEHDULQJ'HPDQG  LQJ'HPDQG   7LPH 7LPH  7RWDOGHSRVLWV 7RWDOGHSRVLWV

 









1RWHV 1RWHHV                              

                                       

                                

                        

                                                

                                           

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

                        

                                    

                           

&RPPLWPHQWVDQGFRQWLQJHQFLHV  &RPPLWPHQWVD DQGFRQWLQJHQFLHV 

  





   

   

5HGHHPDEOHQRQFRQWUROOLQJLQWHUHVWLQWKHLQYHVWPHQWIXQG  5HGHHPDEOHQR  RQFRQWUROOLQJLQWHUHVWLQWKHLQYHVWPH     HQWIXQG  6WRFNKROGHUVªHTXLW\ 6WRFNKROGHUVªHT  TXLW\ §&ODVV$¨FRPPRQVWRFNQRSDUYDOXHDVVLJQHGYDOXHRI  §&ODVV$¨FRP    PPRQVWRFNQRSDUYDOXHDVVLJQHGY       YDOXHRI   HGRXWVWDQGLQJ      $XWKRUL]HGRXWVWDQGLQJ    $XWKRUL]H   PPRQVWRFNQRSDUYDOXHDVVLJQHGY      YDOXHRI    §&ODVV%¨FRP §&ODVV%¨FRPPRQVWRFNQRSDUYDOXHDVVLJQHGYDOXHRI  $XWKRUL]HHGRXWVWDQGLQJ    LQ     $XWKRUL]HGRXWVWDQGLQJLQ  DQG  LQ

    DQGLQ   §&ODVV(¨FRP   PPRQVWRFNQRSDUYDOXHDVVLJQHGY       YDOXHRI    §&ODVV(¨FRPPRQVWRFNQRSDUYDOXHDVVLJQHGYDOXHRI  $XWKRUL]HHGRXWVWDQGLQJ    LQ     $XWKRUL]HGRXWVWDQGLQJLQ  DQG  LQ

    DQGLQ    DLGLQFDSLWDOLQH[FHVVRIDVVLJQHGY       YDOXHRIF   RPPRQVWRFN  $GGLWLRQDOSDLGLQFDSLWDOLQH[FHVVRIDVVLJQHGYDOXHRIFRPPRQVWRFN $GGLWLRQDOSD  UYHV  &DSLWDOUHVHUYHV &DSLWDOUHVHU  UQLQJV  5HWDLQHGHDUQLQJV 5HWDLQHGHDU $ O W GRWKHUFRPSUHKHQVLYHORVV G WK  K L O   $FFXPXODWHGRWKHUFRPSUHKHQVLYHORVV $FFXPXODWHG  FN  7UHDVXU\VWRFN 7UHDVXU\VWRF 7RWDOVWRFNKROGH  HUVªHTXLW\  7RWDOVWRFNKROGHUVªHTXLW\      7RWDOOLDELOLWLHV  VDQGVWRFNKROGHUVªHTXLW\   7RWDOOLDELOLWLHVDQGVWRFNKROGHUVªHTXLW\      7KHDFFRPSDQ\  \LQJQRWHVDUHSDUWRIWKHVHFRQVROLGD       DWHGILQDQFLDO  VWDWHPHQWV 7KHDFFRPSDQ\LQJQRWHVDUHSDUWRIWKHVHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV

78





                                                        

      

                  

   

   

 

                             


DPHULFDQRGH&RPHUFLR([WHUL    LRU6$DQG6XEVLGLDULHV     %DQFR/DWLQRD %DQFR/DWLQRDPHULFDQRGH&RPHUFLR([WHULRU6$DQG6XEVLGLDULHV   

           &RQVROLGDWHGVWD  DWHPHQWVRILQFRPH   &RQVROLGDWHGVWDWHPHQWVRILQFRPH      <HDUVHQGHG'HFHPEHUDQG     <HDUVHQGHG'HF   FHPEHUDQG      LQ86WKRXVDQGH[FHSWSHUVKDUHDPRXQWV      LQ86WKRXVDQG   GH[FHSWSHUVKDUHDPRXQWV

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

    IRUORDQORVVHV IRUORDQORVVHV   V     2WKHULQFRPH H[SHQVH  2WKHULQFRPH H[   [SHQVH   5HYHUVDO SURYLVLRQ IRUORVVHVRQRIIEDODQFHVKHHWFUHGLWULVN 5HYHUVDO SURY  YLVLRQ IRUORVVHVRQRIIEDODQFHVKHHW      WFUHGLWULV   N  )HHVDQGFRP )HHVDQGFRPPLVVLRQVQHW   PPLVVLRQVQHW    'HULYDWLYHILQDQFLDOLQVWUXPHQWVDQGKHGJLQJ  'HULYDWLYHILQD  DQFLDOLQVWUXPHQWVDQGKHGJLQJ     5HFRYHULHVQHWRILPSDLUPHQWRIDVVHWV  5HFRYHULHVQH  HWRILPSDLUPHQWRIDVVHWV      1HWJDLQ ORVV  1HWJDLQ ORVV IURPLQYHVWPHQWIXQGWUDGLQJ  

IURPLQYHVWPHQWIXQGWUDGLQJ      1HWJDLQ ORVV IURPWUDGLQJVHFXULWLHV  1HWJDLQ ORVV  

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

   

1RWHV 1RWH HV                                                                          

    

    

                                                             

    

                     

       

    

                                                      

  

                                   



  

  









                                                            

    

                   

    

                                                                                                



                                                                             

 

   

 

   

 

   

 

 

                                              

       



79


ULFDQRGH&RPHUFLR([WHULRU6     $DQG6XEVLGLDULHV    %DQFR/DWLQRDPHU %DQFR/DWLQRDPHULFDQRGH&RPHUFLR([WHULRU6$DQG6XEVLGLDULHV   

                  &RQVROLGDWHGVWDWHPH  HQWVRIFKDQJHVLQVWRFNKROGHUVªHT      XLWW\ \DQGUHGHHPDEOHQRQFRQWUROOLQJ    JLQWHUHVWLQWKHLQYHVWPHQWIXQG      &RQVROLGDWHGVWDWHPHQWVRIFKDQJHVLQVWRFNKROGHUVªHTXLW\DQGUHGHHPDEOHQRQFRQWUROOLQJLQWHUHVWLQWKHLQYHVWPHQWIXQG <HDUVHQGHG'HFHPEHUDQG <HDUVHQGHG'HFHPEH   HUDQG               LQ86WKRXVDQG

                   6WRFNKROGHUVªHTXLW\ KROGHUVªHTXLW\         6WRFNK

      

      

      

      

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

1HWLQFRPH ORVV  5HGHHPDEOHQRQFRQWURO 5HGHHPDEOHQRQFRQWUROOLQJLQWHUHVWVXEVFULSWLRQV  OOLQJLQWHUHVWVXEVFULSWLRQV    5HGHHPDEOHQRQFRQWURO 5HGHHPDEOHQRQFRQWUROOLQJLQWHUHVWUHGHPSWLRQV  OOLQJLQWHUHVWUHGHPSWLRQV    2WKHUFRPSUHKHQVLYHOR 2WKHUFRPSUHKHQVLYHORVV   RVV &RPSHQVDWLRQFRVWVWR &RPSHQVDWLRQFRVWVWRFNRSWLRQVDQG    RFNRSWLRQVDQG     VWRFNXQLWVSODQV VWRFNXQLWVSODQV ,VVXDQFHRIUHVWULFWHGVW ,VVXDQFHRIUHVWULFWHGVWRFN    WRFN ([HUFLVHGRSWLRQVDQGVW ([HUFLVHGRSWLRQVDQGVWRFNXQLWVYHVWHG    WRFNXQLWVYHVWHG    5HSXUFKDVHRIFRPPRQ 5HSXUFKDVHRIFRPPRQVWRFN§&ODVV(¨   QVWRFN§&ODVV(¨    'LYLGHQGVGHFODUHG 'LYLGHQGVGHFODUHG %DODQFHVDW'HFHPEHU %DODQFHVDW'HFHPEHU     

        

        

        

        

  $GGLWLRQDO $ GGLWLRQDO   SDLGLQFDSLWDO SDLGLQFDSLWDO   LQH[FHVVRI LQH[FHVVRI  DVVLJQHGYDOXH  DVVLJQHGYDOXH  &RPPRQ &RPPRQ RRIFRPPRQ IFRPPRQ &&DSLWDO DSLWDO VVWRFN WRFN VVWRFN WRFN UH UHVHUYHV HVHUYHV

80





 

       5HGHHPDEOH 5HGHHPDEOH 7RWDO QRQFRQWUROOLQJ 7RWDO QRQFRQWUROOLQJ VVWRFNKROGHUVª WRFNKROGHUVª LQWHUHVWLQWKH LQWHUHVWLQWKH HHTXLW\ TXLW\ LLQYHVWPHQWIXQG QYHVWPHQWIXQG

        

   

                                                    

           

                                     

                 

                                               

   

                                                      

                                            

                 

                                             

   

                     

 

                             

 

        

     

                            

                

                       

                          

                             

      

         

        

     

  

7KHDFFRPSDQ\LQJQRWHVDUHSDUWRIWKHVHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV 7KHDFFRPSDQ\LQJQRWH   HVDUHSDUWRIWKHVHFRQVROLGDWHGILQDQFL       DOVWDWHPHQWV

    

       $FFXPXODWHG $FFXPXODWHG  RWKHU  RWKHU  5 5HWDLQHG HWDLQHG FRPSUHKHQVLYH FRPSUHKHQVLYH 7UHDVXU\ 7UHHDVXU\ HHDUQLQJV DUQLQJV LQFRPH ORVV  LQFRPH ORVV  VVWRFN WRFN









     

 

       

       

 

 

 



















 

 

 

 

 

 


%DQFR/DWLQRDPHULFDQRGH&RPHUFLR([WHULRU6$DQG6XEVLGLDULHV %DQFR/DWLQR  RDPHULFDQRGH&RPHUFLR([WHU    ULRU6$DQG6XEVLGLDULHV                          &RQVROLGDWHGVWDWHPHQWVRIFRPSUHKHQVLYHLQFRPH ORVV         &RQVROLGDWHGV VWDWHPHQWVRIFRPSUHKHQVLYHLQFRP    PH ORVV

 <HDUVHQGHG'HFHPEHUDQG        <HDUVHQGHG'   HFHPEHUDQG      LQ86WKRXVDQG        LQ86WKRXVDQ   QG                       1RWHV      1RWHV        1HWLQFRPH     1HWLQFRPH            2WKHUFRPSUHKHQVLYHLQFRPH ORVV       2WKHUFRPSUHKH  HQVLYHLQFRPH ORVV

         8QUHDOL]HGJDLQV ORVVHV RQVHFXULWLHVDYDLODEOHIRUVDOH     8QUHDOL]HGJDLQ  QV ORVVHV RQVHFXULWLHVDYDLODEOHIRU     VDOH         8QUHDOL]HGJDLQV ORVVHV DULVLQJIURPWKH\HDU      8QUHDOL]HGJ JDLQV ORVVHV DULVLQJIURPWKH\HDU       LILFDWLRQDGMXVWPHQWVIRUQHWJDLQV       /HVVUHFODVV /HVVUHFODVVLILFDWLRQDGMXVWPHQWVIRUQHWJDLQV       

LQFOXGHGL LQQHWLQFRPH       

   

 

  LQFOXGHGLQQHWLQFRPH      

        1HWFKDQJHLQX   XQUHDOL]HGJDLQV ORVVHV RQVHFXULWLH     HV 1HWFKDQJHLQXQUHDOL]HGJDLQV ORVVHV RQVHFXULWLHV      DYDLODEOHIRU  DYDLODEOHIRUVDOH      

VDOH   

        

        8QUHDOL]HGJDLQ  QV ORVVHV RQGHULYDWLYHILQDQFLDOLQVW      WUXPHQWV 8QUHDOL]HGJDLQV ORVVHV RQGHULYDWLYHILQDQFLDOLQVWUXPHQWV      8QUHDOL]HGJ  JDLQV ORVVHV DULVLQJIURPWKH\HDU         8QUHDOL]HGJDLQV ORVVHV DULVLQJIURPWKH\HDU    

 

 /HVVUHFODVV       LILFDWLRQDGMXVWPHQWVIRUQHW JDLQV O     ORVVHV  /HVVUHFODVVLILFDWLRQDGMXVWPHQWVIRUQHW JDLQV ORVVHV   LQFOXGHGL  LQQHWLQFRPH       

        

LQFOXGHGLQQHWLQFRPH       

     1HWFKDQJHLQX   XQUHDOL]HGJDLQV ORVVHV RQGHULYDWLY     YHILQDQFLDO  1HWFKDQJHLQXQUHDOL]HGJDLQV ORVVHV RQGHULYDWLYHILQDQFLDO  LQVWUXPHQWV         

LQVWUXPHQWV     

          2WKHUFRPSUHKH  HQVLYHLQFRPH ORVV

    

        

2WKHUFRPSUHKHQVLYHLQFRPH ORVV       

           

&RPSUHKHQVLYH HLQFRPH ORVV

   &RPSUHKHQVLYHLQFRPH ORVV    

        &RPSUHKHQVLYH HLQFRPH ORVV DWWULEXWDEOHWRWKHUHG       GHHPDEOHQRQF  RQWUROOLQJLQWHUHVW  

 

      &RPSUHKHQVLYHLQFRPH ORVV DWWULEXWDEOHWRWKHUHGHHPDEOHQRQFRQWUROOLQJLQWHUHVW                &RPSUHKHQVLYH HLQFRPH ORVV DWWULEXWDEOHWR%ODGH[              

&RPSUHKHQVLYHLQFRPH ORVV DWWULEXWDEOHWR%ODGH[    

                                                            7KHDFFRPSDQ\LQJQRWHVDUHSDUWRIWKHVHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV 7KHDFFRPSDQ\  \LQJQRWHVDUHSDUWRIWKHVHFRQVROLGD       DWHGILQDQFLDO  VWDWHPHQWV 

                      

   

81


%DQFR/DWLQRDPHULFDQRGH&RPHUFLR([WHULRU6$DQG6XEVLGLDULHV %DQFR/DWLQR  RDPHULFDQRGH&RPHUFLR([WHU    ULRU6$DQG6XEVLGLDULHV      

          &RQVROLGDWHGVWDWHPHQWVRIFDVKIORZV       &RQVROLGDWHGVW  WDWHPHQWVRIFDVKIORZV    <HDUVHQGHG'HFHPEHUDQG       <HDUVHQGHG'H   HFHPEHUDQG      LQ86WKRXVDQG       LQ86WKRXVDQ   QG                              &DVKIORZVIURPRSHUDWLQJDFWLYLWLHV       &DVKIORZVIURP   PRSHUDWLQJDFWLYLWLHV   1HWLQFRPH    1HWLQFRPH     $GMXVWPHQWVWRUHFRQFLOHQHWLQFRPHWRQHWFDVKSURYLGHGE\      $GMXVWPHQWVWRUHFRQFLOHQHWLQFRPHWRQHWFDVK        SURYLGHGE\     RSHUDWLQJDFWLYLWLHV    RSHUDWLQJDFWLYLWLHV $FWLYLWLHHVRIGHULYDWLYHILQDQFLDOLQVWUXPHQWV      DQGKHGJLQJ       $FWLYLWLHVRIGHULYDWLYHILQDQFLDOLQVWUXPHQWVDQGKHGJLQJ  

        'HSUHFLDWLRQDPRUWL]DWLRQDQGLPSDLUPHQWRISUHPLVHVDQGHTXLSPHQW    'HSUHFLLDWLRQDPRUWL]DWLRQDQGLPSDLUPHQWR      RISUHPLVHVDQGHTXL   SPHQW    3URYLVLRRQ UHYHUVDORISURYLVLRQ IRUORDQORVV       VHV   

   3URYLVLRQ UHYHUVDORISURYLVLRQ IRUORDQORVVHV      3URYLVLRRQ UHYHUVDORISURYLVLRQ IRUORVVHVRQ       QRIIEDODQFHVKH   HWFUHGLWULVN   N 

        3URYLVLRQ UHYHUVDORISURYLVLRQ IRUORVVHVRQRIIEDODQFHVKHHWFUHGLWULVN       ,PSDLUPHQ QWORVVRQDVVHWV            ,PSDLUPHQWORVVRQDVVHWV  1HWJDL  QRQVDOHRIVHFXULWLHVDYDLODEOHIRUV      VDOH  

   

   

 

   1HWJDLQRQVDOHRIVHFXULWLHVDYDLODEOHIRUVDOH &RPSHQ QVDWLRQFRVWFRPSHQVDWLRQSODQV         &RPSHQVDWLRQFRVWFRPSHQVDWLRQSODQV     ,VVXDQFFHRIUHVWULFWHGVWRFN         ,VVXDQFHRIUHVWULFWHGVWRFN     ([HUFLVHHGGHIHUUHGFRPSHQVDWLRQXQLWV          ([HUFLVHGGHIHUUHGFRPSHQVDWLRQXQLWV    $PRUWL]]DWLRQRISUHPLXPDQGGLVFRXQWVRQ      LQYHVWPHQWV      $PRUWL]DWLRQRISUHPLXPDQGGLVFRXQWVRQLQYHVWPHQWV    1HWGHFUHDVH  H LQFUHDVH LQRSHUDWLQJDVVHWV     1HWGHFUHDVH LQFUHDVH LQRSHUDWLQJDVVHWV     7UDGLQJDVVHWV         



 

  

   7UDGLQJDVVHWV    ,QYHVWP PHQWIXQG   

   ,QYHVWPHQWIXQG      

 

   $FFUXHGLQWHUHVWUHFHLYDEOH       $FFUXHG GLQWHUHVWUHFHLYDEOH     2WKHUD  VVHWV             2WKHUDVVHWV    1HWLQFUHDVH 1HWLQFUHDVH GHFUHDVH LQRSHUDWLQJOLDELOLWLHV       GHFUHDVH LQRSHUDWLQJOLDELOLWLHV       7UDGLQJ 7UDGLQJOLDELOLWLHV  

   OLDELOLWLHV   GLQWHUHVWSD\DEOH         

 

   $FFUXHG $FFUXHGLQWHUHVWSD\DEOH           2WKHUOL  

2WKHUOLDELOLWLHV  DELOLWLHV           

 

 1HWFDVKS  SURYLGHGE\RSHUDWLQJDFWLYLWLHV                   1HWFDVKSURYLGHGE\RSHUDWLQJDFWLYLWLHV             &DVKIORZVIURP   PLQYHVWLQJDFWLYLWLHV  &DVKIORZVIURPLQYHVWLQJDFWLYLWLHV       1HWGHFUHDVH  H LQFUHDVH LQSOHGJHGGHSRVLWV      

 1HWGHFUHDVH LQFUHDVH LQSOHGJHGGHSRVLWV    

   

 1HWGHFUHDVH LQFUHDVH LQORDQV        1HWGHFUHDVH  H LQFUHDVH LQORDQV    3URFHHGVIURP  PWKHVDOHRIORDQV       3URFHHGVIURPWKHVDOHRIORDQV       

 $FTXLVLWLRQRISUHPLVHVDQGHTXLSPHQW       

 

$FTXLVLWLRQR RISUHPLVHVDQGHTXLSPHQW     3URFHHGVIURPWKHUHGHPSWLRQRIVHFXULWLHVDYDLODEOHIRUVDOH    3URFHHGVIURP  PWKHUHGHPSWLRQRIVHFXULWLHVDYDLOD      DEOHIRUVDOH   3URFHHGVIURP  PWKHVDOHRIVHFXULWLHVDYDLODEOHIRU      VDOH    3URFHHGVIURPWKHVDOHRIVHFXULWLHVDYDLODEOHIRUVDOH     3URFHHGVIURPWKHPDWXULW\RIVHFXULWLHVKHOGWRPDWXULW\    3URFHHGVIURP  PWKHPDWXULW\RIVHFXULWLHVKHOGWRP      PDWXULW\      

 3XUFKDVHVRILQYHVWPHQWVDYDLODEOHIRUVDOH       

 

3XUFKDVHVRI  ILQYHVWPHQWVDYDLODEOHIRUVDOH   

 

 3XUFKDVHVRILQYHVWPHQWVKHOGWRPDWXULW\     3XUFKDVHVRI  ILQYHVWPHQWVKHOGWRPDWXULW\   

  

 

 

   1HWFDVKSURYLGHGE\ XVHGLQ LQYHVWLQJDFWLYLWLHV 1HWFDVKS  SURYLGHGE\ XVHGLQ LQYHVWLQJDFWLYLW      WLHV      

                    &DVKIORZVIURPILQDQFLQJDFWLYLWLHV    &DVKIORZVIURP   PILQDQFLQJDFWLYLWLHV    1HWLQFUHDVH GHFUHDVH LQGXHWRGHSRVLWRUV    

1HWLQFUHDVH   GHFUHDVH LQGXHWRGHSRVLWRUV       

  1HWLQFUHDVH GHFUHDVH LQVKRUWWHUPERUURZLQJV 1HWLQFUHDVH   GHFUHDVH LQVKRUWWHUPERUURZLQJV         DQGVHFXULWLHVVROGXQGHUUHSXUFKDVHDJUHHPHQWV     

 

DQGVHFXU  LWLHVVROGXQGHUUHSXUFKDVHDJUHHPH     QWV  

3URFHHGVIURP  PERUURZLQJVDQGORQJWHUPGHEW        3URFHHGVIURPERUURZLQJVDQGORQJWHUPGHEW    5HSD\PHQWVRIERUURZLQJVDQGORQJWHUPGHEW      W    

 5HSD\PHQWVRIERUURZLQJVDQGORQJWHUPGHEW       

 

'LYLGHQGVSD  DLG    

        

 'LYLGHQGVSDLG VRIUHGHHPDEOHQRQFRQWUROOLQJLQWHUH     HVWLQWKHLQYH    VWPHQWIXQG    6XEVFULSWLRQVRIUHGHHPDEOHQRQFRQWUROOLQJLQWHUHVWLQWKHLQYHVWPHQWIXQG    6XEVFULSWLRQV VRIUHGHHPDEOHQRQFRQWUROOLQJLQWHUH     HVWLQWKHLQYHV    WPHQWIXQG 

5HGHPSWLRQVRIUHGHHPDEOHQRQFRQWUROOLQJLQWHUHVWLQWKHLQYHVWPHQWIXQG    

   

 

 5HGHPSWLRQV  RFNRSWLRQV     ([HUFLVHGVWRFNRSWLRQV    ([HUFLVHGVWR  5HSXUFKDVHR RIFRPPRQVWRF   N         5HSXUFKDVHRIFRPPRQVWRFN   1HWFDVKS  SURYLGHGE\ XVHGLQ ILQDQFLQJDFWLYL      WLHV        



     

         1HWFDVKSURYLGHGE\ XVHGLQ ILQDQFLQJDFWLYLWLHV            1HWLQFUHDVH GH   HFUHDVH LQFDVKDQGFDVKHTXLYDOHQW      WV  1HWLQFUHDVH GHFUHDVH LQFDVKDQGFDVKHTXLYDOHQWV  

    &DVKDQGFDVK   HTXLYDOHQWVDWEHJLQQLQJRIWKH\HDU      U            &DVKDQGFDVKHTXLYDOHQWVDWEHJLQQLQJRIWKH\HDU     &DVKDQGFDVK   HTXLYDOHQWVDWHQGRIWKH\HDU         &DVKDQGFDVKHTXLYDOHQWVDWHQGRIWKH\HDU               6XSSOHPHQWDOG GLVFORVXUHVRIFDVKIORZLQIRUPDWLRQ     Q 6XSSOHPHQWDOGLVFORVXUHVRIFDVKIORZLQIRUPDWLRQ      XULQJWKH\HDUIRULQWHUHVW                &DVKSDLGGXULQJWKH\HDUIRULQWHUHVW     &DVKSDLGGX             7KHDFFRPSDQ\  \LQJQRWHVDUHSDUWRIWKHVHFRQVROLGD       DWHGILQDQFLDO  VWDWHPHQWV 7KHDFFRPSDQ\LQJQRWHVDUHSDUWRIWKHVHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV                                            

82

             





 

  

      


%DQFR/DWLQRDPHULFDQRGH&RPHUFLR([WHULRU6$DQG6XEVLGLDULHV %DQFR/DWLQR  RDPHULFDQRGH&RPHUFLR([WHU    ULRU6$DQG6XEVLGLDULHV     ROLGDWHGILQDQFLDOVWDWHPHQWV   1RWHVWRFRQV 1RWHVWRFRQVROLGDWHGILQDQFLDOVWDWHPHQWV    

2UJDQL]DWLRQ 2UJDQL]]DWLRQ



%DQFR/DWLQRDPHULFDQRGH&RPHUFLR([WHULRU6$ §%ODGH[+HDG2IILFH¨DQGWRJHWKHUZLWKLWVVXEVLGLDULHV§%ODGH[¨RUWKH %DQFR / /DWLQRDPHULFDQR  GH &RPHUFLR ([WHHULRU 6 $ §%ODGH[ +HDG 2IILFH¨ DQ QG WRJHWKHU ZLWK LWV VXEVLGLDULHV §% %ODGH[¨ RU WKH §%DQN¨  KHDGTXDUWHUHGLQ3DQDPD&LW\5HSXEOLFRI3DQDPDLVDVSHFLDOL]HGVXSUDQDWLRQDOEDQNHVWDEOLVKHGWRILQDQFHWUDGH §%DQN¨ KHDGTXDUWHUHGLQ3DQDPD&LW\5HSXEOLFRI3DQDPDLVDVSHFLDOL]HGVXSUDQDWLRQDOEDQNHVWDEOLVKHGWRILQDQFHWUDGH LQ/DWLQ$PHULFDDQGWKH&DULEEHDQ WKH§5HJLRQ¨ 7KH%DQNZDVHVWDEOLVKHGSXUVXDQWWRD0D\SURSRVDOSUHVHQWHGWR LQ /DWLQ$PHULFDDQGWKH&DULEEHDQ WKH§5 5HJLRQ¨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



2Q$SULOWKH%DQNªVVKDUHKROGHUVDSSURYHGDWLWV$QQXDO6KDUHKROGHUVª0HHWLQJVRPHDPHQGPHQWVWRWKH%DQNªV 2Q $SULO O   WKH %DQNªV VKDUHKROGHUUV DSSURYHG DW LWV $QQXDO 6KDUHKROOGHUVª 0HHWLQJ VRPH DPHQGPHQWV WR WKH %DQNªV $UWLFOHVRI,QFRUSRUDWLRQ7KHDPHQGPHQWVWKDWZHUHHIIHFWLYHRQ-XQHLQFOXGHDPRQJRWKHUV $UWLFOHV RI,QFRUSRUDWLRQ7KHDPHQGPHQWV    VWKDWZHUHHIIHFWLYHRQ-XQH         LQFOXGHDPRQJRWKHUV    $FKDQJHLQWKHOHJDOQDPHRIWKH%DQNIURP%DQFR/DWLQRDPHULFDQRGH([SRUWDFLRQHV6$WR%DQFR/DWLQRDPHULFDQR  $ FK KDQJHLQWKHOHJDOQDPHRIWKH%DQ QNIURP%DQFR/DWLQRDPHULFDQRGH H([SRUWDFLRQHV6$WR%DQFR/DWLQRDPHULFDQR GH&RPHUFLR([WHULRU6$ GH& &RPHUFLR([WHULRU6$     $QH[WHQVLRQRIWKHVFRSHRIWKH%DQNªVDFWLYLWLHVWRHQFRPSDVVDOOW\SHVRIEDQNLQJLQYHVWPHQWDQGILQDQFLDORURWKHU  $Q H H[WHQVLRQ  RI WKH VFRSH RI WKH %DQNNª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ªV%RDUGRI'LUHFWRUVDQG  WKHHVWDEOLVKPHQWRIDQHZFODVVRIFRPPRQVKDUHV WLPH HWRWLPHDWWKHGLVFUHWLRQRIWKH%DQ QNª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



7KH%DQNRSHUDWHVXQGHUDJHQHUDOEDQNLQJOLFHQVHLVVXHGE\WKH1DWLRQDO%DQNLQJ&RPPLVVLRQRI3DQDPDSUHGHFHVVRURI 7KH %DQ QNRSHUDWHVXQGHUDJHQHUDOEDQNLQ QJOLFHQVHLVVXHGE\WKH1DWLRQDO%DQNLQJ % &RPPLVVLRQRI3DQDPDSUHGHFHVVRU S RI WKH6XSHULQWHQGHQF\RI%DQNVRI3DQDPD WKH§6%3¨  WKH6XSH  HULQWHQGHQF\RI%DQNVRI3DQDPD      WKH  WKH§6%3¨

 6%3 



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ªVVXEVLGLDULHVDUHWKHIROORZLQJ %ODGH[+ +HDG2IILFHªVVXEVLGLDULHVDUHWKHIR      ROORZLQJ 

%ODGH[+ROGLQJV,QFLVDZKROO\RZQHGVXEVLGLDU\LQFRUSRUDWHGXQGHUWKHODZVRIWKH6WDWHRI'HODZDUH8QLWHG6WDWHV %ODGH[ +ROGLQJV,QFLVDZKROO\RZ ZQHGVXEVLGLDU\LQFRUSRUDWHGXQGHHUWKHODZVRIWKH6WDWHRI'HODZDUH8QLWHG6WDWHV RI$PHULFD 86$ RQ0D\%ODGH[+ROGLQJV,QFH[HUFLVHVFRQWURORYHUWKHIROORZLQJVXEVLGLDU\FRPSDQLHV RI $PHULFD 86$ 

RQ0D\ \ %ODGH[+ROGLQJV J ,QFH[HUFLVHVFRQWURO F RYHUWKHIROORZLQJ JVXEVLGLDUU\ \FRPSDQLHV S  %ODGH[$VVHW0DQDJHPHQW,QFLQFRUSRUDWHGRQ0D\XQGHUWKHODZVRIWKH6WDWHRI'HODZDUH86$ Â&#x2021;Â&#x2021; %ODGH[ $VVHW0DQDJHPHQW W,QFLQFRUSRUDWHGRQ0D\XQGHUWKHODZVRIWKH6WDWHRI'HODZDUH86$ VHUYHVDVLQYHVWPHQWPDQDJHUIRU%ODGH[2IIVKRUH)HHGHU)XQG WKH§)HHGHU¨ DQG%ODGH[&DSLWDO*URZWK)XQG VHUYHV DVLQYHVWPHQWPDQDJHUIRU%ODGH[2IIVKRUH)HHGHU)XQG WKH§)HHGHU¨ DQG%ODGH[&DSLWDO*URZWK)XQG WKH§)XQG¨ 2Q6HSWHPEHU%ODGH[$VVHW0DQDJHPHQW,QFZDVUHJLVWHUHGDVDIRUHLJQHQWLW\LQWKH WKH §)XQG¨ 2Q6HSWHPEHHU%ODGH[$VVHW0DQDJHPHHQW,QFZDVUHJLVWHUHGDVDIRUHLJQ QHQWLW\LQWKH 5HSXEOLFRI3DQDPDWRHVWDEOLVKDEUDQFKLQ3DQDPDZKLFKLVPDLQO\HQJDJHGLQSURYLGLQJDGPLQLVWUDWLYH 5HSXEOLF RI 3DQDPD WR HVWWDEOLVK D EUDQFK LQ 3DQDPD ZKLFK K LV PDLQO\ HQJDJHG LQ SURYLGLQJ DGPLQLVWUDWLYH D  DQGRSHUDWLQJVHUYLFHVWR%ODGH[$VVHW0DQDJHPHQW,QFLQ86$ DQGRSHUDWLQJVHUYLFHVWR%    %ODGH[$VVHW0DQDJHPHQW,QFLQ8     86$  &ODYH[//&LQFRUSRUDWHGRQ-XQHXQGHUWKHODZVRIWKH6WDWHRI'HODZDUH86$DGRUPDQWFRPSDQ\ Â&#x2021;Â&#x2021; &ODYH[ //&LQFRUSRUDWHGRQ Q-XQHXQGHUWKHODZVRIWKH6WDWHRI'HODZDUH86$DGRUP PDQWFRPSDQ\ VLQFH)HEUXDU\



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§&,0$¨ XQGHUWKH0XWXDO)XQGV )HHGHU DQG WKH )XQG DUH UHJLVWHUHHG ZLWK WKH &D\PDQ ,VODQG 0RQHWWDU\ $XWKRULW\ §&,0$¨  XQGHU WKH 0XWXDO 0  )XQGV /DZRIWKH&D\PDQ,VODQGV7KHREMHFWLYHRIWKH)XQGLVWRDFKLHYHFDSLWDODSSUHFLDWLRQE\LQYHVWLQJLQ/DWLQ$PHULFDQ /DZ RIWKH&D\PDQ,VODQGV7KHRE EMHFWLYHRIWKH)XQGLVWRDFKLHYHFDSLWDODSSUHFLDWLRQE\LQYHVWLQJLQ/DDWLQ$PHULFDQ GHEWVHFXULWLHVVWRFNLQGH[HVFXUUHQFLHVDQGWUDGLQJGHULYDWLYHLQVWUXPHQWV GHEWVHFXULWLHVVWRFNLQGH[HVFXUU     UHQFLHVDQGWUDGLQJGHULYDWLYHLQVWU     UXPHQWV

    Notes to consolidated financial statements

83




%ODGH[ 5HSUHVHQWDFDR/WGDLQFRUSSRUDWHGXQGHUWKHODZVRI%UD]LORQ-DQXDU\ DFWVDVWKH%DQNªVUHSUHVHQWDWLYH U  %ODGH[5HSUHVHQWDFDR/WGDLQFRUSRUDWHGXQGHUWKHODZVRI%UD]LORQ-DQXDU\DFWVDVWKH%DQNªVUHSUHVHQWDWLYH RIILFHLQ%UD]LO%ODGH[5HSUHVHQWDFDR/WGDLVRZQHGE\%ODGH[+HDG2IILFHDQGWKHUHPDLQLQJ RIILFH LQ %UD]LO  %ODGH[ 5HSUHVHQ QWDFDR /WGD LV  RZQHG E\ %ODGH[ +HDG 2IILFH DQG WKH UHPDDLQLQJ  RZQHGE\%ODGH[+ROGLQJV,QF



&ODYH[6$LVDZKROO\RZQHGVXEVLGLDU\LQFRUSRUDWHGRQ0D\XQGHUWKHODZVRIWKH5HSXEOLFRI3DQDPD &ODYH[ 6$LVDZKROO\RZQHGVX XEVLGLDU\LQFRUSRUDWHGRQ0D\  XQGHUWKHODZVRIWKH5HSXEOLFRI3DQDPD WRPDLQO\SURYLGHVSHFLDOL]HGWUDLQLQJ WRPDLQO\SURYLGHVSHFLDOL]HGWUDLQ     QLQJ 



%ODGH[+HDG2IILFHKDVDQDJHQF\LQ1HZ<RUN&LW\86$ WKH§1HZ<RUN$JHQF\¨ ZKLFKEHJDQRSHUDWLRQVRQ0DUFK %ODGH[ + 2IILFHKDVDQDJHQF\LQ1HZ<RUN +HDG < &LW\86$ WKH§1HZ<RUN$JHQFF\¨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§,%)¨  %DQNLQJ J'HSDUWPHQW J'HSDUWPHQW86$WRRSHUDWHDQ,Q  86$ WRRSHUDWHDQ,Q    QWHUQDWLRQDO%DQNLQJ)DFLOLW\    §,%)¨

,%)

 



7KH%DQNKDVUHSUHVHQWDWLYHRIILFHVLQ%XHQRV$LUHV$UJHQWLQDLQ0H[LFR&LW\')0H[LFRLQ3RUWR$OHJUH%UD]LODQGLQ 7KH %DQ QN KDV UHSUHVHQWDWLYH RIILFHV LQ %X XHQRV $LUHV $UJHQWLQD LQ 0H[LFR &LW\ &  ') 0H[LFR LQ 3RUWR $OHJUH %UD]LO DQG LQ 0RQWHUUH\0H[LFRDQGDQLQWHUQDWLRQDODGPLQLVWUDWLYHRIILFHLQ0LDPL)ORULGD86$7KHRIILFHVLQ3RUWR$OHJUHDQG0RQWHUUH\ 0RQWHUUH H\0H[LFRDQGDQLQWHUQDWLRQDODGGPLQLVWUDWLYHRIILFHLQ0LDPL)ORULGDD86$7KHRIILFHVLQ3RUWR$OHJUHDQG D 0RQWHUUH\ VWDUWHGRSHUDWLRQVLQ VWDUWHGR RSHUDWLRQVLQ  



%ODGH[+HDG2IILFHRZQVRIWKHHTXLW\VKDUHVRI%&*3$//&DFRPSDQ\LQFRUSRUDWHGXQGHUWKHODZVRIWKH6WDWHRI %ODGH[ +  2IILFH RZQV  RI WKH HTXLLW\ VKDUHV RI %&* 3$ //& D FRPSDDQ\ LQFRUSRUDWHG XQGHU WKH ODZV RI +HDG R  WKH 6WDWH RI 'HODZDUH86$7KLVFRPSDQ\RZQV§&ODVV&¨VKDUHVRIWKH)XQGWKDWHQWLWOHLWWRUHFHLYHDSHUIRUPDQFHDOORFDWLRQRQWKLUG 'HODZDU UH86$7KLVFRPSDQ\RZQV§&ODVV V&¨VKDUHVRIWKH)XQGWKDWHQWLWOH HLWWRUHFHLYHDSHUIRUPDQFHDOORFDDWLRQRQWKLUG SDUW\LQYHVWPHQWVLQWKH)HHGHUDQGLQWKH)XQG SDUW\LQY  YHVWPHQWVLQWKH)HHGHUDQGLQWKH       )XQG



2Q$XJXVWWKH%DQNUHFHLYHGDXWKRUL]DWLRQWRRSHQDUHSUHVHQWDWLYHRIILFHLQWKHFLW\RI/LPD3HUX$GGLWLRQDOO\RQ 2Q $XJX XVWWKH%DQNUHFHLYHGDXWKRUL]DWLRQWRRSHQDUHSUHVHQWDWLYHRIILFHLQWKHFLW\RI/LPD3HUX$GGGLWLRQDOO\RQ 6HSWHPEHUWKH%DQNUHFHLYHGDXWKRUL]DWLRQWRRSHQWZRQHZVXEVLGLDULHVRQHLQ&D\PDQ,VODQGVDQGWKHRWKHULQ 6HSWHPE EHUWKH%DQNUHFHLYHGDX XWKRUL]DWLRQWRRSHQWZRQHZVXEVLGLDULHVRQHLQ&D\PDQ,VODQGVDQG GWKHRWKHULQ %UD]LO

 

6XPPDU\RIVLJQLILFDQWDFFRXQWLQJSROLFLHV 6XPPDU U\RIVLJQLILFDQWDFFRXQWLQJSROLFL     LHV D  %D %DVLVRISUHVHQWDWLRQ D  DVLVRISUHVHQWDWLRQ   7KHVH VWDWHPHQWV DFFHSWHG 7K KHVH FRQVROLGDWHG ILQDQFLDO VWDWHP PHQWV KDYH EHHQ SUHSDUHG XQGHU DFFRXQWLQJ D  SULQFLSOHV JHQHUDOO\ DF FFHSWHG LQ WKH 8QLWHG6WDWHVRI$PHULFD §86*$$3¨ $OODPRXQWVSUHVHQWHGLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDQGQRWHVDUH 8 QLWHG6WDWHVRI$PHULFD §86*$$3 3¨ $OODPRXQWVSUHVHQWHGLQWKHFRQVROLGDWHG F ILQDQFLDOVWDWHPHQWVDQG D QRWHVDUH H[SUHVVHGLQGROODUVRIWKH8QLWHG6WDWHGRI$PHULFD §86¨ ZKLFKLVWKH%DQNªVIXQFWLRQDOFXUUHQF\7KHDFFRPSDQ\LQJ H[ [SUHVVHGLQGROODUVRIWKH8QLWHG6WDDWHGRI$PHULFD §86¨ ZKLFKLVWKH H%DQNªVIXQFWLRQDOFXUUHQF\7KHDFFRPSDQ\LQJ D  FRQVROLGDWHGILQDQFLDOVWDWHPHQWVKDYHEHHQWUDQVODWHGIURP6SDQLVKWR(QJOLVKIRUXVHUVRXWVLGHRIWKH5HSXEOLFRI FR RQVROLGDWHG ILQDQFLDO VWDWHPHQWV KDYH EHHQ WUDQVODWHG IURP 6SDQLVK WR (QJOLVK IRU XVHUV RXWVLGH RI WKH 5HSXEOLF RI 3DQDPD 3D DQDPD 7KH$FFRXQWLQJ6WDQGDUGV&RGLILFDWLRQ WKH§$6&¨ LVVXHGE\WKH)LQDQFLDO$FFRXQWLQJ6WDQGDUGV%RDUG WKH§)$6%¨  7K KH $FFRXQWLQJ 6WDQGDUGV &RGLILFDWWLRQ WKH §$6&¨  LVVXHG E\ WKH )LQDDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG G WKH §)$6%¨  FRQVWLWXWH QRQJRYHUQPHQWDO FR RQVWLWXWH WKH VLQJOH RIILFLDO VRXUFH H RI DXWKRULWDWLYH QRQ QRQJRYHUQPHQ JRYHUQPHQ QWDO *$$3 RWKHU WKDQ JXLGDQFH LLVVXHG VVXHG E\ WKH 6HFXULWLHVDQG([FKDQJH&RPPLVVLRQ §6(&¨ $OORWKHUOLWHUDWXUHLVFRQVLGHUHGQRQDXWKRULWDWLYH 6H HFXULWLHVDQG([FKDQJH&RPPLVVLR    Q §6(&¨ $OORWKHUOLWHUDWXUHLVFRQ       QVLGHUHGQRQDXWKRULWDWLYH E  3U 3ULQFLSOHVRIFRQVROLGDWLRQ E  ULQFLSOHVRIFRQVROLGDWLRQ   

7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVLQFOXGHWKHDFFRXQWVRI%ODGH[+HDG2IILFHDQGLWVVXEVLGLDULHV%ODGH[+HDG 7K KH FRQVROLGDWHG ILQDQFLDO VWDWHPHQ QWV LQFOXGH WKH DFFRXQWV RI %ODGH[ +HDG 2IILFH DQG LWV VXEVLGLDULHV  %ODGH[ +HDG 2IILFHFRQVROLGDWHVLWVVXEVLGLDULHVLQZKLFKLWKROGVDFRQWUROOLQJILQDQFLDOLQWHUHVW$OOLQWHUFRPSDQ\EDODQFHVDQG 2I IILFH FRQVROLGDWHV LWV VXEVLGLDULHV LQ L  ZKLFK LW KROGV D FRQWUROOLQJ ILQDDQFLDO LQWHUHVW  $OO LQWHUFRPSDQ\ EDODQFHV DQG WUDQVDFWLRQVKDYHEHHQHOLPLQDWHGIRUFRQVROLGDWLRQSXUSRVHV WUD DQVDFWLRQVKDYHEHHQHOLPLQDWHGIR      IRUFRQVROLGDWLRQSXUSRVHV 



WKH :KHQ %ODGH[ KROGV DQ LQWHUHVW LQ LQYHVWPHQW FRPSDQLHV XQGHU WK : KH )HHGHU0DVWHU VWUXFWXUH ZKHUH WKH )HHGHUª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¥,QYHVWPHQW&RPSDQLHV 6H HUYLFHV¥,QYHVWPHQW&RPSDQLHV     F  F

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

G  G

6SHFLDOL]HGDFFRXQWLQJIRULQYHVWPHQWFRPSDQLHV 6SHFLDOL]HGDFFRXQWLQJIRULQYHVWP 6S    PHQWFRPSDQLHV  7KH)HHGHUDQGWKH)XQGDUHRUJDQL]HGXQGHUD§)HHGHU0DVWHU¨VWUXFWXUH8QGHUWKLVVWUXFWXUHWKH)HHGHULQYHVWV 7K KH )HHGHU DQG WKH )XQG DUH RUJDQ QL]HG XQGHU D §)HHGHU0DVWHU¨ VWUX XFWXUH  8QGHU WKLV VWUXFWXUH WKH )HHGHU )  LQYHVWV DOO 6SHFLDOL]HG DO OO LWV DVVHWV LQ WKH )XQG ZKLFK LQ WXUQ LQYHVWV LQ YDULRXV DVVHWV RQ EHKDOI RI LWV LQYHVWRU LQYHVWRU   6SHFLDOL]H HG DFFRXQWLQJ IRULQYHVWPHQWFRPSDQLHVUHTXLUHVWKH)HHGHUWRUHIOHFWLWVLQYHVWPHQWLQWKH)XQGLQDVLQJOHOLQHLWHPHTXDOWRLWV IR RU LQYHVWPHQW FRPSDQLHV UHTXLUHV WKH )HHGHU WR UHIOHFW LWV LQYHVWPHQ QW LQ WKH )XQG LQ D VLQJOH OLQH LWHP P HTXDO WR LWV SURSRUWLRQDWHVKDUHRIWKHQHWDVVHWVRIWKH)XQGUHJDUGOHVVRIWKHOHYHORI)HHGHUªVLQWHUHVWLQWKH)XQG7KH)HHGHU SU URSRUWLRQDWH VKDUH RI WKH QHW DVVHWWV RI WKH )XQG UHJDUGOHVV RI WKH OHYYHO RI )HHGHUªV LQWHUHVW LQ WKH )XQGG  7KH )HHGHU UHFRUGVWKH)XQGªVUHVXOWVE\DFFRXQWLQJIRULWVSDUWLFLSDWLRQLQWKHQHWLQWHUHVWLQFRPHDQGH[SHQVHVRIWKH)XQGDV UH HFRUGV WKH )XQGªV UHVXOWV E\ DFFRXQ QWLQJ IRU LWV SDUWLFLSDWLRQ LQ WKH QHHW LQWHUHVW LQFRPH DQG H[SHQVHV RI I WKH )XQG DV ZHOODVLWVSDUWLFLSDWLRQLQWKHUHDOL]HGDQGXQUHDOL]HGJDLQVRUORVVHVRIWKH)XQG Z ZHOODVLWVSDUWLFLSDWLRQLQWKHUHDOL]H       HGDQGXQUHDOL]HGJDLQVRUORVVHVR      RIIWKH)XQG 

84

    Notes to consolidated financial statements


$V V SHUPLWWHG E\ $6& 7RSLF   ¥ &RQVROLGDWLRQ ZKHQ %ODGGH[ FRQVROLGDWHV LWV LQYHVWPHQW LQ WKH )HHGHU LW $VSHUPLWWHGE\$6&7RSLF¥&RQVROLGDWLRQZKHQ%ODGH[FRQVROLGDWHVLWVLQYHVWPHQWLQWKH)HHGHULW UHWDLQVWKHVSHFLDOL]HGDFFRXQWLQJIRULQYHVWPHQWFRPSDQLHVDSSOLHGE\WKH)HHGHULQWKH)XQGUHSRUWLQJLWZLWKLQWKH UH HWDLQVWKHVSHFLDOL]HGDFFRXQWLQJIRRULQYHVWPHQWFRPSDQLHVDSSOLHGE\ E WKH)HHGHULQWKH)XQGUHSRUWLQJ JLWZLWKLQWKH §,QYHVWPHQWIXQG¨OLQHLWHPLQWKHFRQVROLGDWHGEDODQFHVKHHWDQGSUHVHQWLQJWKHWKLUGSDUW\LQYHVWPHQWVLQWKH)HHGHU §,Q QYHVWPHQWIXQG¨OLQHLWHPLQWKHFRRQVROLGDWHGEDODQFHVKHHWDQGSUHVVHQWLQJWKHWKLUGSDUW\LQYHVWPHQWVLQWKH)HHGHU LQ Q WKH §5HGHHPDEOH QRQFRQWUROOLQJ LQWHUHVW LQ WKH LQYHVWPHQW IXQG¨ OLQH LWHP EHWZHHQ OLDELOLWLHV DQG VWRFNKROGHUVª HTXLW\7KH%DQNUHSRUWVLQWHUHVWLQFRPHDQGH[SHQVHIURPWKH)XQGLQWKH,QYHVWPHQWIXQGOLQHLWHPZLWKLQLQWHUHVW HT TXLW\  7KH %DQN UHSRUWV LQWHUHVW LQFFRPH DQG H[SHQVH IURP WKH )XQG LQ WKH ,QYHVWPHQW IXQG OLQH LWHP ZLWKLQ Z  LQWHUHVW LQFRPHDQGH[SHQVHUHDOL]HGDQGXQUHDOL]HGJDLQVDQGORVVHVLQWKH§1HWJDLQ ORVV IURPLQYHVWPHQWIXQGWUDGLQJ¨OLQH LQ QFRPHDQGH[SHQVHUHDOL]HGDQGXQ QUHDOL]HGJDLQVDQGORVVHVLQWKH§1 1HWJDLQ ORVV IURPLQYHVWPHQWIXQG GWUDGLQJ¨OLQH LWHPDQGH[SHQVHVIURPWKH)XQGDUHUHSRUWHGLQ§([SHQVHVIURPWKHLQYHVWPHQWIXQG¨OLQHLWHPLQWKHFRQVROLGDWHG LWH HP DQG H[SHQVHV IURP WKH )XQG DUH D  UHSRUWHG LQ §([SHQVHV IURP WKH H LQYHVWPHQW IXQG¨ OLQH LWHP LQ WKH H FRQVROLGDWHG VWDWHPHQWVRILQFRPH VW WDWHPHQWVRILQFRPH    H  H

8VHRIHVWLPDWHV 8  



7KHSUHSDUDWLRQRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVUHTXLUHVPDQDJHPHQWWRPDNHHVWLPDWHVDQGXVHDVVXPSWLRQV 7K KHSUHSDUDWLRQRIWKHFRQVROLGDWHGILQDQFLDO I VWDWHPHQWVUHTXLUHVPDQDJHPHQWWRPDNHHVWLPDWHVDQGXVH HDVVXPSWLRQV WKDW GLVFORVXUH WKH WK KDW DIIHFW WKH UHSRUWHG DPRXQWV RI I DVVHWV DQG OLDELOLWLHV DQG GLVFORV VXUH RI FRQWLQJHQW OLDELOLWLHV DW WK H GDWH RI WKH FRQVROLGDWHG UHYHQXHV SHULRG FR RQVROLGDWHG ILQDQFLDO VWDWHPHQWV DQG D  WKH UHSRUWHG DPRXQWV RI UHYHQ QXHV DQG H[SHQVHV GXULQJ WKH SH HULRG 0DWHULDO HVWLPDWHVWKDWDUHSDUWLFXODUO\VXVFHSWLEOHWRVLJQLILFDQWFKDQJHVUHODWHWRWKHGHWHUPLQDWLRQRIWKHDOORZDQFHVIRUFUHGLW HV VWLPDWHVWKDWDUHSDUWLFXODUO\VXVFHSSWLEOHWRVLJQLILFDQWFKDQJHVUHODWHWRWKHGHWHUPLQDWLRQRIWKHDOORZDQ QFHVIRUFUHGLW ORVVHV DYDLODEOHIRUVDOH KHOGWRPDWXULW\ OR RVVHV LPSDLUPHQW RI VHFXULWLHV DYD DLODEOHIRUVDOH DQG KHOGWRPDWXUL W\ DQG WKH IDLU YDOXH RI ILQDQFLDO O LQVWUXPHQWV $FWXDOUHVXOWVFRXOGGLIIHUIURPWKRVHHVWLPDWHV0DQDJHPHQWEHOLHYHVWKHVHHVWLPDWHVDUHDGHTXDWH $F FWXDOUHVXOWVFRXOGGLIIHUIURPWKRVH      HHVWLPDWHV0DQDJHPHQWEHOLHYHV    VWK  HVHHVWLPDWHVDUHDGHTXDWH

I  I

&DVKHTXLYDOHQWV &  &DVKHTXLYDOHQWVLQFOXGHGHPDQGGHSRVLWVLQEDQNVDQGLQWHUHVWEHDULQJGHSRVLWVLQEDQNVZLWKRULJLQDOPDWXULWLHVRI &D DVKHTXLYDOHQWVLQFOXGHGHPDQGGHSRVLWVLQEDQNVDQGLQWHUHVWEHDULLQJGHSRVLWVLQEDQNVZLWKRULJLQDO OPDWXULWLHVRI WKUHHPRQWKVRUOHVVH[FOXGLQJSOHGJHGGHSRVLWV WK KUHHPRQWKVRUOHVVH[FOXGLQJSOHG      JHGGHSRVLWV  

J  J

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ªV SROLF\ LV WR UHOLQTXLVK SRVVHVVLRQ S  RI WKH VHFXULWLHV VROG XQGHU X  DJUHHPHQWV WR UHSXUFKDVH  'HVSLWH VXFK UHOLQTXLVKPHQWRISRVVHVVLRQUHSXUFKDVHDJUHHPHQWVTXDOLI\DVVHFXUHGILQDQFLQJVLIDQGRQO\LIDOORIWKHIROORZLQJ UH HOLQTXLVKPHQW RI SRVVHVVLRQ UHSXUFKDVH DJUHHPHQWV TXDOLI\ DV VHFXUUHG ILQDQFLQJV LI DQG RQO\ LI DOO RI WKH IROORZLQJ FRQGLWLRQV VXEVWDQWLDOO\ WUDQVIHUUHG FR RQGLWLRQV DUH PHW WKH DVVHWV WR EH E  UHSXUFKDVHG DUH WKH VDPH RU VX XEVWDQWLDOO\ WKH VDPH DV WKRVH WUD DQVIHUUHG WKH WUDQVIHURU WKHP NHHSLQJ WHUPV WUD DQVIHURU LV DEOH WR UHSXUFKDVH WKH HP ZLWK WKH FROODWHUDO UHFHLYHG UHFHLYHG  NH HHSLQJ VXEVWDQWLDOO\ WKH DJUHHG WH HUPV  HYHQ LQ HUPV WKH WUDQVIHUHH UHSXUFKDVH PDWXULW\ WK KH HYHQW RI GHIDXOW RI WKH WUDQVIHU UHH WKH DJUHHPHQW LV WR UHSXUFKD VH RU UHGHHP WKHP EHIRUH PDWXUL LW\ DW D IL[HG DQGGHWHUPLQDEOHSULFHDQGWKHDJUHHPHQWLVHQWHUHGLQWRFRQFXUUHQWO\DWWKHWUDQVIHUGDWH,QRUGHUWREHDEOHWR DQ QG GHWHUPLQDEOH SULFH DQG WKH DJJUHHPHQW LV HQWHUHG LQWR FRQFXUUHQ QWO\ DW WKH WUDQVIHU GDWH  ,Q RUGHU WR EH DEOH WR UHSXUFKDVHDVVHWVRQVXEVWDQWLDOO\WKHDJUHHGWHUPVHYHQLQWKHFDVHRIGHIDXOWIURPWKHFRXQWHUSDUW\WKHWUDQVIHURU UH HSXUFKDVH DVVHWV RQ VXEVWDQWLDOO\ WKH W  DJUHHG WHUPV HYHQ LQ WKH FDVH H RI GHIDXOW IURP WKH FRXQWHUSDUW\ WKH WUDQVIHURU PXVWDWDOOWLPHVGXULQJWKHFRQWUDFWWHUPKDYHREWDLQHGFDVKRURWKHUFROODWHUDOVXIILFLHQWWRIXQGVXEVWDQWLDOO\DOOWKH P PXVW DWDOOWLPHVGXULQJWKHFRQWUDFW WWHUPKDYHREWDLQHGFDVKRURWKHU UFROODWHUDOVXIILFLHQWWRIXQGVXEVWDDQWLDOO\DOOWKH FRVWRISXUFKDVLQJWKHWUDQVIHUUHGDVVHWVIURPRWKHUFRXQWHUSDUWLHV FR RVWRISXUFKDVLQJWKHWUDQVIHUUHGDV      VVHWVIURPRWKHUFRXQWHUSDUWLHV    :KHQUHSXUFKDVHDJUHHPHQWVGRQRWPHHWWKHDERYHQRWHGFRQGLWLRQVWKH\TXDOLI\DVVDOHVRIVHFXULWLHVIRUZKLFKWKH :KHQ : UHSXUFKDVHDJUHHPHQWVGRQRRWPHHWWKHDERYHQRWHGFRQGLWLRQVWKH\TXDOLI\DVVDOHVRIVHFXULWLHVIRUZKLFKWKH UHODWHGVHFXULW\LVUHPRYHGIURPWKHEDODQFHVKHHWDQGDIRUZDUGSXUFKDVHDJUHHPHQWLVUHFRJQL]HGIRUWKHREOLJDWLRQWR UH HODWHGVHFXULW\LVUHPRYHGIURPWKHEDODQFH E VKHHWDQGDIRUZDUGSXUFKDDVHDJUHHPHQWLVUHFRJQL]HGIRUWKH HREOLJDWLRQWR UHSXUFKDVHWKHVHFXULW\&KDQJHVLQIDLUYDOXHRIWKHIRUZDUGSXUFKDVHDJUHHPHQWDVZHOODVDQ\JDLQRUORVVUHVXOWLQJ UH HSXUFKDVHWKHVHFXULW\&KDQJHVLQIDLUYDOXHRIWKHIRUZDUGSXUFKDVH HDJUHHPHQWDVZHOODVDQ\JDLQRUORVVUHVXOWLQJ IURPWKHVDOHRIVHFXULWLHVXQGHUUHSXUFKDVHDJUHHPHQWVDUHUHSRUWHGLQHDUQLQJVRIWKHSHULRGZLWKLQQHWJDLQ ORVV  IUR RPWKHVDOHRIVHFXULWLHVXQGHUUHSSXUFKDVHDJUHHPHQWVDUHUHSRUWHGLQ L HDUQLQJVRIWKHSHULRGZLWKLQQHW Q JDLQ ORVV  IURPWUDGLQJVHFXULWLHV IUR RPWUDGLQJVHFXULWLHV  

K  K

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

L  L 

,QYHVWPHQWVHFXULWLHV ,Q QYHVWPHQWVHFXULWLHV  6HFXULWLHVDUHFODVVLILHGDWWKHGDWHRISXUFKDVHEDVHGRQWKHDELOLW\DQGLQWHQWWRVHOORUKROGWKHPDVLQYHVWPHQWV7KHVH 6H HFXULWLHVDUHFODVVLILHGDWWKHGDWHRI ISXUFKDVHEDVHGRQWKHDELOLW\DQGLQWHQWWRVHOORUKROGWKHPDVLQYHVVWPHQWV7KHVH VHFXULWLHVFRQVLVWRIGHEWVHFXULWLHVVXFKDVQHJRWLDEOHFRPPHUFLDOSDSHUERQGVDQGIORDWLQJUDWHQRWHV VH HFXULWLHVFRQVLVWRIGHEWVHFXULWLHVV     VXFKDVQHJRWLDEOHFRPPHUFLDOSDS     SHUERQGVDQGIORDWLQJUDWHQRWHV

    Notes to consolidated financial statements

85


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ª JD DLQVDQGORVVHVDUHUHSRUWHGDVQHWLQFUHDVHVRUGHFUHDVHVWRRWKHUFRP PSUHKHQVLYHLQFRPH ORVV  2&, LQVWRFNKROGHUVª HTXLW\XQWLOWKH\DUHUHDOL]HG5HDOL]HGJDLQVDQGORVVHVIURPWKHVDOHRIVHFXULWLHVZKLFKDUHLQFOXGHGLQQHWJDLQRQ HT TXLW\ XQWLO WKH\ DUH UHDOL]HG 5HDOL]]HG JDLQV DQG ORVVHV IURP WKH VDOH RI VHFXULWLHV ZKLFK DUH LQFOXGHG LQ Q QHW JDLQ RQ VDOHRIVHFXULWLHVDUHGHWHUPLQHGXVLQJWKHVSHFLILFLGHQWLILFDWLRQPHWKRG VD DOHRIVHFXULWLHVDUHGHWHUPLQHGXVL      LQJWKHVSHFLILFLGHQWLILFDWLRQPHWKR     RG 6HFXULWLHVKHOGWRPDWXULW\ 66H HFXULWLHVKHOGWRPDWXULW\ K OG \ 

6HFXULWLHVFODVVLILHGDVKHOGWRPDWXULW\UHSUHVHQWVHFXULWLHVWKDWWKH%DQNKDVWKHDELOLW\DQGWKHLQWHQWWRKROGXQWLO 6H HFXULWLHV FODVVLILHG DV KHOGWRPDWX XULW\ UHSUHVHQW VHFXULWLHV WKDW WKH %DQN %  KDV WKH DELOLW\ DQG WKH LQWHQW W WR KROG XQWLO PDWXULW\7KHVHVHFXULWLHVDUHFDUULHGDWDPRUWL]HGFRVWDQGDUHVXEMHFWWRWKHVDPHDSSURYDOFULWHULDDVWKHUHVWRIWKH 7KHVHVHFXULWLHVDUHFDUULHG P PDWXULW\ GDWDPRUWL]HGFRVWDQGDUHVXEMHFFWWRWKHVDPHDSSURYDOFULWHULDDVWKH W UHVWRIWKH FUHGLWSRUWIROLR FU UHGLWSRUWIROLR  



,QWHUHVWRQVHFXULWLHVLVUHFRJQL]HGEDVHGRQWKHLQWHUHVWPHWKRG$PRUWL]DWLRQRISUHPLXPVDQGGLVFRXQWVDUHLQFOXGHG ,Q QWHUHVWRQVHFXULWLHVLVUHFRJQL]HGEDVHG E RQWKHLQWHUHVWPHWKRG$PRUWWL]DWLRQRISUHPLXPVDQGGLVFRXQWV VDUHLQFOXGHG LQLQWHUHVWLQFRPHDVDQDGMXVWPHQWWRWKH\LHOG LQ QLQWHUHVWLQFRPHDVDQDGMXVWPHQW      WWRWKH\LHOG    



,PSDLUPHQW ,P PSDLUPHQW S



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



,QWHUHVWDFFUXDOLVVXVSHQGHGRQVHFXULWLHVWKDWDUHLQGHIDXOWRURQZKLFKLWLVOLNHO\WKDWIXWXUHLQWHUHVWSD\PHQWVZLOO ,Q QWHUHVWDFFUXDOLVVXVSHQGHGRQVHFFXULWLHVWKDWDUHLQGHIDXOWRURQZK KLFKLWLVOLNHO\WKDWIXWXUHLQWHUHVWSD\PHQWVZLOO QRWEHUHFHLYHGDVVFKHGXOHG QR RWEHUHFHLYHGDVVFKHGXOHG     M  M

,QYHVWPHQW)XQG ,Q QYHVWPHQW)XQG  7KH)HHGHUUHFRUGVLWVLQYHVWPHQWLQWKH)XQGDWIDLUYDOXHZKLFKLVWKH)HHGHUªVSURSRUWLRQDWHLQWHUHVWLQWKHQHWDVVHWV 7K KH)HHGHUUHFRUGVLWVLQYHVWPHQWLQWKH)XQGDWIDLUYDOXHZKLFKLVWKH H)HHGHUªVSURSRUWLRQDWHLQWHUHVWLQWKH W QHWDVVHWV RIWKH)XQG RI IWKH)XQG  7KH)XQGLQYHVWVLQWUDGLQJDVVHWVDQGOLDELOLWLHVWKDWDUHFDUULHGDWIDLUYDOXHZKLFKLVEDVHGXSRQTXRWHGPDUNHW 7K KH )XQG LQYHVWV LQ WUDGLQJ DVVHWV DQG OLDELOLWLHV WKDW DUH FDUULHG DW IDLU I  YDOXH ZKLFK LV EDVHG XSRQ TXRWHG PDUNHW SULFHVZKHQDYDLODEOH)RUILQDQFLDOLQVWUXPHQWVIRUZKLFKTXRWHGSULFHVDUHQRWDYDLODEOHWKH)XQGXVHVLQGHSHQGHQW SU ULFHVZKHQDYDLODEOH)RUILQDQFLDOLQVWUXPHQWVIRUZKLFKTXRWHGSULFHVDUHQRWDYDLODEOHWKH)XQGXVHV VLQGHSHQGHQW YDOXDWLRQVIURPSULFLQJSURYLGHUVWKDWXVHWKHLURZQSURSULHWDU\YDOXDWLRQPRGHOVWKDWWDNHLQWRFRQVLGHUDWLRQGLVFRXQWHG YD DOXDWLRQVIURPSULFLQJSURYLGHUVWKDDWXVHWKHLURZQSURSULHWDU\YDOXDWLRQPRGHOVWKDWWDNHLQWRFRQVLGHUDWLRRQGLVFRXQWHG H[SHFWHG FUHGLW VHFXULW\ H[ [SHFWHG W G FDVK K IORZV IO  XVLQJ L  PDUNHW N W UDWHV W  FRPPHQVXUDWH W  ZLWK LWK WKH WK  FUH GLW TXDOLW\ OLW  DQG G PDWXULW\ W LW  RI I WKH WK  VH HFXULW\ LW   7KHVH 7K  SULFHVDUHFRPSDUHGWRLQGHSHQGHQWYDOXDWLRQVIURPFRXQWHUSDUWLHV7KH)XQGUHSRUWVWUDGLQJJDLQVDQGORVVHVIURP SU ULFHV DUH FRPSDUHG WR LQGHSHQGHQW W YDOXDWLRQV IURP FRXQWHUSDUWLHV  7KH 7  )XQG UHSRUWV WUDGLQJ JDLQV DQG ORVVHV IURP QHJRWLDWLRQRIWKHVHLQVWUXPHQWVDVUHDOL]HGDQGXQUHDOL]HGJDLQVDQGORVVHVRQLQYHVWPHQWV QH HJRWLDWLRQRIWKHVHLQVWUXPHQWVDV     UHDOL]HGDQGXQUHDOL]HGJDLQVDQG      VVHVRQLQYHVWPHQWV OR

86

    Notes to consolidated financial statements


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

//RDQV /R RDQVDUHUHSRUWHGDWWKHLUSULQFLSDORXWVWDQGLQJ R DPRXQWVQHWRIXQHDUQ QHGLQFRPHGHIHUUHGIHHVDQGDOORZ ZDQFHIRUORDQ /RDQVDUHUHSRUWHGDWWKHLUSULQFLSDORXWVWDQGLQJDPRXQWVQHWRIXQHDUQHGLQFRPHGHIHUUHGIHHVDQGDOORZDQFHIRUORDQ OORVVHV,QWHUHVWLQFRPHLVUHFRJQL]HGXVLQJWKHLQWHUHVWPHWKRG7KHDPRUWL]DWLRQRIQHWXQHDUQHGLQFRPHDQGGHIHUUHG OR VVHV,QWHUHVW , W WLQFRPH L LV L UHFRJQL]HG L GXVLQJ L WKH WK LQWHUHVW L W WPHWKRG WK G 7KH 7K DP PRUWL]DWLRQ WL WL RI IQHW WXQHDUQHG GLQFRPH L HDQG GGHIHUUHG G I G IH HHVDUHUHFRJQL]HGDVDQDGMXVWPHQ      QWWRWKHUHODWHGORDQ\LHOGXVLQJWK        KHHIIHFWLYHLQWHUHVWPHWKRG IHHVDUHUHFRJQL]HGDVDQDGMXVWPHQWWRWKHUHODWHGORDQ\LHOGXVLQJWKHHIIHFWLYHLQWHUHVWPHWKRG 3X XUFKDVHGORDQVDUHUHFRUGHGDWDFTXLVLWLRQFRVW7KHGLIIHUHQFHEHWZHHHQWKHSULQFLSDODQGWKHDFTXLVLWLRQ QFRVWRIORDQV 3XUFKDVHGORDQVDUHUHFRUGHGDWDFTXLVLWLRQFRVW7KHGLIIHUHQFHEHWZHHQWKHSULQFLSDODQGWKHDFTXLVLWLRQFRVWRIORDQV WK KHSUHPLXPVDQGGLVFRXQWVLVDPRUWL]HGRYHUWKHOLIHRIWKHORDQDVDQDGMXVWPHQWWRWKH\LHOG$OORWKHUFRVWVUHODWHG WKHSUHPLXPVDQGGLVFRXQWVLVDPRUWL]HGRYHUWKHOLIHRIWKHORDQDVDQDGMXVWPHQWWRWKH\LHOG$OORWKHUFRVWVUHODWHG WR RDFTXLVLWLRQRIORDQVDUHH[SHQVHG      ZKHQLQFXUUHG   WRDFTXLVLWLRQRIORDQVDUHH[SHQVHGZKHQLQFXUUHG 7K KH %DQN LGHQWLILHV ORDQV DV GHOLQTX XHQW ZKHQ QR GHEW VHUYLFH DQGRU LQWHUHVW SD\PHQW KDV EHHQ UHFHLYHHG IRU  GD\V 7KH%DQNLGHQWLILHVORDQVDVGHOLQTXHQWZKHQQRGHEWVHUYLFHDQGRULQWHUHVWSD\PHQWKDVEHHQUHFHLYHGIRUGD\V DI IWHU VXFK SD\PHQWV ZHUH GXH 7KH H RXWVWDQGLQJ EDODQFH RI D ORDQ LV V FRQVLGHUHG SDVW GXH ZKHQ WKH WRWDO W  SULQFLSDO DIWHU ED DODQFHZLWKRQHVLQJOHEDOORRQSD\\PHQWKDVQRWEHHQUHFHLYHGZLWKLQ QGD\VDIWHUVXFKSD\PHQWZDVGXHRUZKHQ EDODQFHZLWKRQHVLQJOHEDOORRQSD\PHQWKDVQRWEHHQUHFHLYHGZLWKLQGD\VDIWHUVXFKSD\PHQWZDVGXHRUZKHQ Q RDJUHHGXSRQSHULRGLFDOSD\PHQW    KDVEHHQUHFHLYHGIRUDSHULRGRI         GD\VDIWHUWKHDJUHHGXSRQGDWH     H QRDJUHHGXSRQSHULRGLFDOSD\PHQWKDVEHHQUHFHLYHGIRUDSHULRGRIGD\VDIWHUWKHDJUHHGXSRQGDWH //R RDQV DUH SODFHG O G RQ D FDVK K EDVLV E L  Q QRQDFFUXDO  O  ZKHQ K  LQWHUHVW L W W RU SULQF L FLSDO L O LV L  RYHUGXH G  IRU I   GD\V G  RU PRUUH RU EHIRUH E I  LI /RDQVDUHSODFHGRQDFDVKEDVLV QRQDFFUXDO ZKHQLQWHUHVWRUSULQFLSDOLVRYHUGXHIRUGD\VRUPRUHRUEHIRUHLI WK KH%DQNªVPDQDJHPHQWEHOLHYHVWK     HUHLVDQXQFHUWDLQW\ZLWKUHVSHFWW      WRWK  HXOWLPDWHFROOHFWLRQRISULQFLS     SDORULQWHUHVW    WKH%DQNªVPDQDJHPHQWEHOLHYHVWKHUHLVDQXQFHUWDLQW\ZLWKUHVSHFWWRWKHXOWLPDWHFROOHFWLRQRISULQFLSDORULQWHUHVW )D DFWRUVFRQVLGHUHGE\WKH%DQNªVPDDQDJHPHQWLQGHWHUPLQLQJLPSDLUPHQWLQFOXGHFROOHFWLRQVWDWXVFROODWHHUDOYDOXHWKH )DFWRUVFRQVLGHUHGE\WKH%DQNªVPDQDJHPHQWLQGHWHUPLQLQJLPSDLUPHQWLQFOXGHFROOHFWLRQVWDWXVFROODWHUDOYDOXHWKH SU UREDELOLW\RIFROOHFWLQJVFKHGXOHGSUULQFLSDODQGLQWHUHVWSD\PHQWVZKHQ QGXHDQGHFRQRPLFFRQGLWLRQVLQWKH W ERUURZHUªV SUREDELOLW\RIFROOHFWLQJVFKHGXOHGSULQFLSDODQGLQWHUHVWSD\PHQWVZKHQGXHDQGHFRQRPLFFRQGLWLRQVLQWKHERUURZHUª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ªV P  SHUIRUPDQFHLQDFFRUGDQFHZLWKWKHFRQWUDFWXDOWHUPVRIDWOHDVWVL[PRQWKVDQG  LILQWKH%DQNPDQDJHPHQWª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ªV HQYLURQPHQW UHJXODWRU\ TXDOLW\ P PDQDJHPHQWDQGVKDUHKROGHUV$G    GHVFULSWLRQRIWKHVHLQGLFDWRUVLVDV      VIRO  ORZV PDQDJHPHQWDQGVKDUHKROGHUV$GHVFULSWLRQRIWKHVHLQGLFDWRUVLVDVIROORZV 5DWLQJJ WR

&ODVVLILFDWLRQ 1RUPDO

' 'HVFULSWLRQ S &OLHQWVZLWKSD\PHQWDELOLW\WRVDWLVI\WKHLUILQDQFLDOFRPPLWPHQWV &OLHHQWVZLWKSD\PHQWDELOLW\WRVDWLVI\      WKHLUILQDQFLDOFRPPLWPHQWV WKHLUILQDQFLDOFRPPLWPHQWV   



6SHFLDO0HQWLRQ

&OLHQWVH[SRVHGWRV\VWHPLFULVNVVSHFLILFWRWKHFRXQWU\RUWKHLQGXVWU\LQZKLFKWKH\ &OLHHQWVH[SRVHGWRV\VWHPLFULVNVVSHFFLILFWRWKHFRXQWU\RUWKHLQGXVWU\LQZKLFKWKH\ DUHORFDWHGIDFLQJDGYHUVHVLWXDWLRQVLQWKHLURSHUDWLRQRUILQDQFLDOFRQGLWLRQ$WWKLV DUH H ORFDWHG IDFLQJ DGYHUVH VLWXDWLRQV LQ WKHLU RSHUDWLRQ RU ILQDQFLDO FRQ QGLWLRQ $W WKLV OHYHODFFHVVWRQHZIXQGLQJLVXQFHUWDLQ OHYH HODFFHVVWRQHZIXQGLQJLVXQFHUW       WDLQ



6XEVWDQGDUG

&OLHQWVZKRVHSULPDU\VRXUFHRISD\PHQW RSHUDWLQJFDVKIORZ LVLQDGHTXDWHDQGZKR &OLH HQWVZKRVHSULPDU\VRXUFHRISD\PHQW RSHUDWLQJFDVKIORZ LVLQDGHTXDWHDQGZKR VKRZHYLGHQFHRIGHWHULRUDWLRQLQWKHLUZRUNLQJFDSLWDOWKDWGRHVQRWDOORZWKHPWR VKR RZ HYLGHQFH RI GHWHULRUDWLRQ LQ WKHHLU ZRUNLQJ FDSLWDO WKDW GRHV QRW DOORZ D  WKHP WR VDWLVI\SD\PHQWVRQWKHDJUHHGWHUPVHQGDQJHULQJUHFRYHU\RIXQSDLGEDODQFHV VDW LVI\SD\PHQWVRQWKHDJUHHGWHUPV      HQGDQJHULQJUHFRYHU\RIXQSDLGE     ED  ODQFHV



'RXEWIXO

&OLH HQWVZKRVHRSHUDWLQJFDVKIORZFRQ QWLQXRXVO\VKRZVLQVXIILFLHQF\WRVHHUYLFHWKHGHEW &OLHQWVZKRVHRSHUDWLQJFDVKIORZFRQWLQXRXVO\VKRZVLQVXIILFLHQF\WRVHUYLFHWKHGHEW RQ WKH RULJLQDOO\ DJUHHG WHUPV  'XH WR W  WKH IDFW WKDW WKH GHEWRU SUHVHQWV V DQ LPSDLUHG RQWKHRULJLQDOO\DJUHHGWHUPV'XHWRWKHIDFWWKDWWKHGHEWRUSUHVHQWVDQLPSDLUHG ILQD DQFLDODQGHFRQRPLFVLWXDWLRQ DQFLDODQGHFRQRPLFVLWXDWLRQWKH    WKHOLNHOLKRRGRIUHFRYHU\LVORZ OLNHOLKRRGRIUHFRYHU\LVORZ      ILQDQFLDODQGHFRQRPLFVLWXDWLRQWKHOLNHOLKRRGRIUHFRYHU\LVORZ



8QUHFRYHUDEOH

&OLH HQWV ZLWK RSHUDWLQJ FDVK IORZ WKDW GRHV QRW FRYHU WKHLU FRVWV DUH LQ VXVSHQVLRQ V  RI &OLHQWVZLWKRSHUDWLQJFDVKIORZWKDWGRHVQRWFRYHUWKHLUFRVWVDUHLQVXVSHQVLRQRI SD\ \PHQWV SUHVXPDEO\ WKH\ ZLOO DOVR KDYH GLIILFXOWLHV WR IXOILOO SRVVLEOH H UHVWUXFWXULQJ SD\PHQWV DJU UHHPHQWVDUHLQDVWDWHRILQVROYHQ       F\RUKDYHILOHGIRUEDQNUXSWF\DP       PRQJRWKHUV DJUHHPHQWVDUHLQDVWDWHRILQVROYHQF\RUKDYHILOHGIRUEDQNUXSWF\DPRQJRWKHUV

    Notes to consolidated financial statements

87


/RDQVZLWKUDWLQJVEHWZHHQDQGDUHUHYLHZHGDQQXDOO\UDWLQJVDQGDUHUHYLHZHGVHPLDQQXDOO\DQGWKRVHZLWK /R RDQVZLWKUDWLQJVEHWZHHQDQGDUHUHYLHZHGDQQXDOO\UDWLQJVDQ QGDUHUHYLHZHGVHPLDQQXDOO\DQGWKRVHZLWK JUHDWHUUDWLQJVDUHUHYLHZHGTXDUWHUO\ JU UHDWHUUDWLQJVDUHUHYLHZHGTXDUWHUO     O\ 7KH%DQNªVOHQGLQJSRUWIROLRLVVXPPDUL]HGLQWKHIROORZLQJVHJPHQWVFRUSRUDWLRQVVRYHUHLJQPLGGOHPDUNHWFRPSDQLHV 7K KH%DQNªVOHQGLQJSRUWIROLRLVVXPPDUL]HGLQWKHIROORZLQJVHJPHQWVFRRUSRUDWLRQVVRYHUHLJQPLGGOHPDUNNHWFRPSDQLHV DQGEDQNLQJDQGILQDQFLDOLQVWLWXWLRQV7KHGLVWLQFWLRQEHWZHHQFRUSRUDWLRQVDQGPLGGOHPDUNHWFRPSDQLHVGHSHQGV DQ QG EDQNLQJ DQG ILQDQFLDO LQVWLWXWLRRQV  7KH GLVWLQFWLRQ EHWZHHQ FRUSRRUDWLRQV DQG PLGGOHPDUNHW FRPSDDQLHV GHSHQGV RQWKHFOLHQWªVOHYHORIDQQXDOVDOHVLQUHODWLRQWRWKHFRXQWU\ULVNDPRQJRWKHUFULWHULD([FHSWIRUWKHVRYHUHLJQVHJPHQW RQ QWKHFOLHQWªVOHYHORIDQQXDOVDOHVLQ QUHODWLRQWRWKHFRXQWU\ULVNDPRQJ JRWKHUFULWHULD([FHSWIRUWKHVRYHUHHLJQVHJPHQW VHJPHQWVDUHEURNHQGRZQLQWRVWDWHRZQHGDQGSULYDWH VH HJPHQWVDUHEURNHQGRZQLQWRVWDW      WHRZQHGDQGSULYDWH   7KH%DQNªVOHQGLQJSROLF\LVDSSOLFDEOHWRDOOFODVVHVRIORDQV 7K KH%DQNª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ªVSHUIRUPLQJ RIWKHFUHGLWLVORZHUWKDQWKHFDUU\LQJYDOXHRIWKDWFUHGLW7KHIRUPXODEDVHGFRPSRQHQWFRYHUVWKH%DQNªVSHUIRUPLQJ FU UHGLW SRUWIROLR DQG LV HVWDEOLVKHG EDDVHG LQ D SURFHVV WKDW HVWLPDWHV WK KH SUREDEOH ORVV LQKHUHQW LQ WKH SRRUWIROLR EDVHG FUHGLWSRUWIROLRDQGLVHVWDEOLVKHGEDVHGLQDSURFHVVWKDWHVWLPDWHVWKHSUREDEOHORVVLQKHUHQWLQWKHSRUWIROLREDVHG RQ Q VWDWLVWLFDO DQDO\VLV DQG PDQDJH HPHQWªV TXDOLWDWLYH MXGJPHQW  7KH H VWDWLVWLFDO FDOFXODWLRQ LV D SURGX XFW RI LQWHUQDO PDQDJHPHQWªV SURGXFW ULV VN FODVVLILFDWLRQV SUREDELOLWLHV RI GHIDXOW G  DQG ORVV JLYHQ GHIDXOW  7KH H SUREDELOLW\ RI GHIDXOW LV VXSSRUWHHG E\ %ODGH[ªV ULVNFODVVLILFDWLRQVSUREDELOLWLHVRIGHIDXOWDQGORVVJLYHQGHIDXOW7KHSUREDELOLW\RIGHIDXOWLVVXSSRUWHGE\%ODGH[ªV KL LVWRULFDO SRUWIROLR SHUIRUPDQFH FRP PSOHPHQWHG E\ SUREDELOLWLHV RI GHIDDXOW SURYLGHG E\ H[WHUQDO VRXUFHV LQ L  YLHZ RI WKH KLVWRULFDOSRUWIROLRSHUIRUPDQFHFRPSOHPHQWHGE\SUREDELOLWLHVRIGHIDXOWSURYLGHGE\H[WHUQDOVRXUFHVLQYLHZRIWKH JU UHDWHU UREXVWQHVV RI WKLV H[WHUQDO GDWD G  IRU VRPH FDVHV  7KH ORVV JLYHHQ GHIDXOW LV EDVHG RQ %ODGH[ªV KLVVWRULFDO ORVVHV JUHDWHUUREXVWQHVVRIWKLVH[WHUQDOGDWDIRUVRPHFDVHV7KHORVVJLYHQGHIDXOWLVEDVHGRQ%ODGH[ª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ªV KLVWRULFDOSRUWIROLRSHUIRUUPDQFHSHUUDWLQJFDWHJRU\FRPSOHP PHQWHGE\6WDQGDUG 3RRUªV §6 3¨¨ SUREDELOLWLHV %ODGH[ªVKLVWRULFDOSRUWIROLRSHUIRUPDQFHSHUUDWLQJFDWHJRU\FRPSOHPHQWHGE\6WDQGDUG 3RRUªV §6 3¨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

88

    Notes to consolidated financial statements


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¥ *RRGZ ZLOO DQG 2WKHU ¥ ,QWHUQDO8VH 6RIWZ ZDUH  7KHVH FRVWV FRQVLVW RI SD\PHHQWV PDGH WR 7RSLF,QWDQJLEOHV¥*RRGZLOODQG2WKHU¥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

%R RUURZLQJVDQGGHEW   %RUURZLQJVDQGGHEW 6K KRUWDQGORQJWHUPERUURZLQJVDQG     GHEWDUHDFFRXQWHGIRUDWDPRUWL]H      HGFRVW 6KRUWDQGORQJWHUPERUURZLQJVDQGGHEWDUHDFFRXQWHGIRUDWDPRUWL]HGFRVW

V  DSLWDOUHVHUYHV  V  &D &DSLWDOUHVHUYHV &D DSLWDO UHVHUYHV DUH HVWDEOLVKHG DV D VHJUHJDWLRQ RI UHWDLQHG HDUQLQJV V DQG DUH DV VXFK D IRUP RI UHWDLQ QHG HDUQLQJV &DSLWDOUHVHUYHVDUHHVWDEOLVKHGDVDVHJUHJDWLRQRIUHWDLQHGHDUQLQJVDQGDUHDVVXFKDIRUPRIUHWDLQHGHDUQLQJV (Y YHQWKRXJKWKHFRQVWLWXWLRQRIFDSLWWDOUHVHUYHVLVQRWUHTXLUHGE\WKH6%3 6 WKHLUUHGXFWLRQVUHTXLUHWKHDSSSURYDORIWKH (YHQWKRXJKWKHFRQVWLWXWLRQRIFDSLWDOUHVHUYHVLVQRWUHTXLUHGE\WKH6%3WKHLUUHGXFWLRQVUHTXLUHWKHDSSURYDORIWKH %D DQNªV%RDUGRI'LUHFWRUVDQGWKH6%       %3 %DQNªV%RDUGRI'LUHFWRUVDQGWKH6%3 W  W 

6W WRFNEDVHGFRPSHQVDWLRQDQGVWR    RFNRSWLRQVSODQV   6WRFNEDVHGFRPSHQVDWLRQDQGVWRFNRSWLRQVSODQV 7K K %DQN KH % NDSSOLHV OL $6&7RSLF 7 L ¥&R &RPSHQVDWLRQ WL 6WRFN 6W N&RPSHQVDWLRQ & WL QWR W DFFRXQW WIRU I FRPSHQVDWLRQ WL FRVWV WVRQUHVWULFWHG W L W G 7KH%DQNDSSOLHV$6&7RSLF¥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ªH[SHFWHGWHHUPLVFDOFXODWHGXVLQJWKHVLPSOLILLHGZHLJKWHG XVLQJWKH%ODFN6FKROHVRSWLRQSULFLQJPRGHO7KHRSWLRQVªH[SHFWHGWHUPLVFDOFXODWHGXVLQJWKHVLPSOLILHGZHLJKWHG DY YHUDJH PHWKRG EHFDXVH WKH %DQN GRHV G  QRW KDYH VXIILFLHQW KLVWRULFDO H[HUFLVH GDWD WR SURYLGH IRU D UHDVVRQDEOH EDVLV DYHUDJHPHWKRGEHFDXVHWKH%DQNGRHVQRWKDYHVXIILFLHQWKLVWRULFDOH[HUFLVHGDWDWRSURYLGHIRUDUHDVRQDEOHEDVLV WR HVWLPDWHH[SHFWHGWHUP    WRHVWLPDWHH[SHFWHGWHUP :KHQRSWLRQVDQGVWRFNDUHH[HUFLVH :      HGWKH%DQNªVSROLF\LVWRUHLVVXHV        KDUHVIURPWUHDVXU\VWRFN :KHQRSWLRQVDQGVWRFNDUHH[HUFLVHGWKH%DQNªVSROLF\LVWRUHLVVXHVKDUHVIURPWUHDVXU\VWRFN

X  HULYDWLYHILQDQFLDOLQVWUXPHQWVDQ    QGKHGJHDFFRXQWLQJ   X  'H 'HULYDWLYHILQDQFLDOLQVWUXPHQWVDQGKHGJHDFFRXQWLQJ 7K KH%DQNXVHVGHULYDWLYHILQDQFLDOLQ QVWUXPHQWVIRULWVPDQDJHPHQWRILQ QWHUHVWUDWHDQGIRUHLJQH[FKDQJHULVNV U ,QWHUHVW 7KH%DQNXVHVGHULYDWLYHILQDQFLDOLQVWUXPHQWVIRULWVPDQDJHPHQWRILQWHUHVWUDWHDQGIRUHLJQH[FKDQJHULVNV,QWHUHVW UD W VZDSFRQWUDFWV WH W W DQG GFURVVFXUUHQ QF\VZDSFRQWUDFWV W W KDYH K EHHQ E XVHG GWR W PDQDJHLQWHUHVW L W WUDWH W DQG GIRUHL I LJQ L H[FKDQJH K  UDWHVZDSFRQWUDFWVDQGFURVVFXUUHQF\VZDSFRQWUDFWVKDYHEHHQXVHGWRPDQDJHLQWHUHVWUDWHDQGIRUHLJQH[FKDQJH ULV VNVDVVRFLDWHGZLWKGHEWVHFXULWLHVDQG D ERUURZLQJVZLWKIL[HGUDWHVDQG GORDQVDQGERUURZLQJVLQIRUHLJQFXUUHQF\ F 7KH ULVNVDVVRFLDWHGZLWKGHEWVHFXULWLHVDQGERUURZLQJVZLWKIL[HGUDWHVDQGORDQVDQGERUURZLQJVLQIRUHLJQFXUUHQF\7KH DF FFRXQWLQJ IRU FKDQJHV LQ YDOXH RI D GHULYDWLYH GHSHQGV RQ ZKHWKHU WK KH FRQWUDFW LV IRU WUDGLQJ SXUSRVHV V RU KDV EHHQ DFFRXQWLQJIRUFKDQJHVLQYDOXHRIDGHULYDWLYHGHSHQGVRQZKHWKHUWKHFRQWUDFWLVIRUWUDGLQJSXUSRVHVRUKDVEHHQ GH HVLJQDWHGDQGTXDOLILHVIRUKHGJHD      DFFRXQWLQJ GHVLJQDWHGDQGTXDOLILHVIRUKHGJHDFFRXQWLQJ

    Notes to consolidated financial statements

89


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

,W LVGHWHUPLQHGWKDWWKHGHHULYDWLYHLVQRORQJHUHIIHFWLYHLQRIIIVHWWLQJFKDQJHVLQWKHIDLUYDOXHRUFDVKIORZV ,WLVGHWHUPLQHGWKDWWKHGHULYDWLYHLVQRORQJHUHIIHFWLYHLQRIIVHWWLQJFKDQJHVLQWKHIDLUYDOXHRUFDVKIORZV RIDKHGJHGLWHP

 

7KHGHULYDWLYHH[SLUHVRULV     VROGWHUPLQDWHGRUH[HUFLVHG    7KHGHULYDWLYHH[SLUHVRULVVROGWHUPLQDWHGRUH[HUFLVHG

 

7KH %DQN RWKHUZLVH GHWHUP PLQHV WKDW GHVLJQDWLRQ RI WKH GH HULYDWLYH DV D KHGJLQJ LQVWUXPHQW LV QR ORQJHU GHWHUPLQHV GHULYDWLYH DSSURSULDWH

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Â&#x2021;Â&#x2021;

%ODGH[ +HDG2IILFHLVH[HPSWHHGIURPSD\PHQWRILQFRPHWD[HVLQ Q3DQDPDLQDFFRUGDQFHZLWKWKHFRRQWUDFWVLJQHG %ODGH[+HDG2IILFHLVH[HPSWHGIURPSD\PHQWRILQFRPHWD[HVLQ3DQDPDLQDFFRUGDQFHZLWKWKHFRQWUDFWVLJQHG EHWZHHQWKH5HSXEOLFRI3DQD     DPDDQG%ODGH[   EHWZHHQWKH5HSXEOLFRI3DQDPDDQG%ODGH[

Â&#x2021;Â&#x2021;

7KH )HHGHU DQG WKH )XQG DUH H QRW VXEMHFW WR LQFRPH WD[HV LQ DFFFRUGDQFH ZLWK WKH ODZV RI WKH &D\\PDQ ,VODQGV 7KH)HHGHUDQGWKH)XQGDUHQRWVXEMHFWWRLQFRPHWD[HVLQDFFRUGDQFHZLWKWKHODZVRIWKH&D\PDQ,VODQGV 7KH )HHGHUDQGWKH)XQGUHFHHLYHGDQXQGHUWDNLQJ JH[HPSWLQJ S JWKHHPIURPWD[DWLRQRIDOOIXWXUHSSURILWWVXQWLO0DUFK 7KH)HHGHUDQGWKH)XQGUHFHLYHGDQXQGHUWDNLQJH[HPSWLQJWKHPIURPWD[DWLRQRIDOOIXWXUHSURILWVXQWLO0DUFK 

Â&#x2021;Â&#x2021;

&ODYH[6$LVVXEMHFWWRLQFR       RPHWD[HVLQ3DQDPDRQSURILWVIURP       PORF  DORSHUDWLRQV &ODYH[6$LVVXEMHFWWRLQFRPHWD[HVLQ3DQDPDRQSURILWVIURPORFDORSHUDWLRQV

Â&#x2021;Â&#x2021;

%ODGH[5HSUHVHQWDFDR/WGDLV    VVXEMHFWWRLQFRPHWD[HVLQ%UD]LO       %ODGH[5HSUHVHQWDFDR/WGDLVVXEMHFWWRLQFRPHWD[HVLQ%UD]LO

Â&#x2021;Â&#x2021;

7KH 1HZ<RUN$JHQF\DQG%ODDGH[ªVVXEVLGLDULHVLQFRUSRUDWHGLQ86$DUHVXEMHFWWRIHGHUDODQGORFFDOWD[DWLRQLQ 7KH1HZ<RUN$JHQF\DQG%ODGH[ªVVXEVLGLDULHVLQFRUSRUDWHGLQ86$DUHVXEMHFWWRIHGHUDODQGORFDOWD[DWLRQLQ 86$EDVHGRQWKHSRUWLRQRI      LQFRPHWKDWLVHIIHFWLYHO\FRQQHFWH     GZLWKLWVRSH    UDWLRQVLQWKDWFRXQWU    U\  86$EDVHGRQWKHSRUWLRQRILQFRPHWKDWLVHIIHFWLYHO\FRQQHFWHGZLWKLWVRSHUDWLRQVLQWKDWFRXQWU\ 6XFKDPRXQWVRILQFRPHWD[     [HVKDYHEHHQLPPDWHULDOWRGDWH       6XFKDPRXQWVRILQFRPHWD[HVKDYHEHHQLPPDWHULDOWRGDWH

[  5HGHHPDEOHQRQFRQWUROOLQJLQWHUHV   VWLQWKHLQYHVWPHQWIXQG     [  5 5HGHHPDEOHQRQFRQWUROOLQJLQWHUHVWLQWKHLQYHVWPHQWIXQG 7K HUHGHHPDEOHQRQFRQWUROOLQJLQWHUHHVWLQWKH)HHGHUUHSUHVHQWVWKHSDUWLFLSDWLRQRIRWKHULQYHVWRUVLQWKH HQHWDVVHWVRI 7KHUHGHHPDEOHQRQFRQWUROOLQJLQWHUHVWLQWKH)HHGHUUHSUHVHQWVWKHSDUWLFLSDWLRQRIRWKHULQYHVWRUVLQWKHQHWDVVHWVRI WKH H)HHGHU WKH)HHGHU

90

    Notes to consolidated financial statements


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ªHTXLW\LQWKHFRQVROLGDWHGEDODQFHVKHHWV$GGLWLRQDOO\QHWDVVHWVRIWKH)HHGHUDUHPHDVXUHGDQG  DQG DQ QG VWRFNKROGHUVª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§$68¨ DSSOLFDEOHWR 'X XULQJQHZDFFRXQWLQJVWDQGDDUGVPRGLILFDWLRQVLQWHUSUHWDWLRQVDQGXSGDWHVWRVWDQGDUGV §$68¨ DSSOLFDEOHWR WKH%DQNKDYHEHHQLVVXHGDQGDUHQRWLQHIIHFWRULIHIIHFWLYHKDYHQRWKDGDQLPSDFWRQWKHFRQVROLGDWHGILQDQFLDO WKH H%DQNKDYHEHHQLVVXHGDQGDUHQRWLQHIIHFWRULIHIIHFWLYHKDYHQRW Q KDGDQLPSDFWRQWKHFRQVROLGDDWHGILQDQFLDO VWDWHPHQWV7KHVHVWDQGDUGVHVWDEOLVKWKHIROORZLQJ VWD DWHPHQWV7KHVHVWDQGDUGVHVWDEOLV    VKWKHIROORZLQJ   $68¥&RQVROLGDWLRQ 7RSLF

$6 68Â¥&RQVROLGDWLRQ 7RSLF     S F



7KHREMHFWLYHRIWKLVXSGDWHLVWRGHIHUWKHDSSOLFDWLRQRI)$6 $68&RQVROLGDWLRQV IRUFHUWDLQLQYHVWPHQW 7K KHREMHFWLYHRIWKLVXSGDWHLVWRGHIHHUWKHDSSOLFDWLRQRI)$6 $68&RQVROLGDWLRQV IRUFHUWDLQLQYHVWPHQW FRPSDQLHVWKDWKDYHDWWULEXWHVVXEMHFWWR7RSLF¥)LQDQFLDO6HUYLFHV¥,QYHVWPHQW&RPSDQLHV FR RPSDQLHVWKDWKDYHDWWULEXWHVVXEMH     HFWWR7RSLF¥)LQDQFLDO6HUYLFH       HV¥  ,QYHVWPHQW&RPSDQLHV 7KLVXSGDWHLVHIIHFWLYHIRUILQDQFLDOVWDWHPHQWVEHJLQQLQJDIWHU1RYHPEHU7KLVXSGDWHKDVQRWKDGDQLPSDFW 7K KLVXSGDWHLVHIIHFWLYHIRUILQDQFLDOVWDWHPHQWV V EHJLQQLQJDIWHU1RYHPE EHU7KLVXSGDWHKDVQRWKDG K DQLPSDFW RQWKH%DQNªVFRQVROLGDWHGILQDQFLDOVWDWHPHQWV RQ QWKH%DQNªVFRQVROLGDWHGILQDQFLDO     OVWDWHPHQWV   $68¥5HFHLYDEOHV 7RSLF

$6 68Â¥5HFHLYDEOHV 7RSLF     S  

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§'HIHUUDORIWKHHIIHFWLYHGDWHRIGLVFORVXUHVDERXWWURXEOHGGHEWUHVWUXFWXULQJV¨ DV VSUHVFULEHGE\$68§'HIH      UUDORIWKHHIIHFWLYHGDWHRIGLVFORVX       XUHVDERXWWURXEOHGGHEWUHVWUXFWXU     LQJV¨   

&DVKDQGFDVKHTXLYDOHQWV &DVKDQ  QGFDVKHTXLYDOHQWV  



&DVKDQGFDVKHTXLYDOHQWVDUHDVIROORZV &DVKDQ  GFDVKHTXLYDOHQWVDUHDVIROORZV      

,QWKRXV  VDQGVRI86

  ,QWKRXVDQGVRI86

&DVKDQ  QGGXHIURPEDQNV    &DVKDQGGXHIURPEDQNV ,QWHUHVWEHDULQJGHSRVLWVLQEDQNV ,QWHUHVW EHDULQJGHSRVLWVLQEDQNV    ,QWHUHVWEHDULQJGHSRVLWVLQEDQNV 7RWDO /HVV 3OHGJHGGHSRVLWV 3OHGJHHGGHSRVLWV  

    Notes to consolidated financial statements

'HFHPEHU 'HFH 'HFHPEH H HU HPEH        

    

   

   

91


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

  7UDGLQJDVVHWVDQGOLDELOLWLHV 7UDGLQJ DVVHWVDQGOLDELOLWLHV 7KHIDLUY  YDOXHRIWUDGLQJDVVHWVDQGOLDELOLWL      HVLVDVIROORZV    7KHIDLUYDOXHRIWUDGLQJDVVHWVDQGOLDELOLWLHVLVDVIROORZV

,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

  7UDGLQJDVVHWV 7UDGLQJ DVVHWV 6RYHUHLJQERQGV 6RYHU  UHLJQERQGV  &RUSRUDWHERQGV &RUSR  RUDWHERQGV  &UHGLWGHIDXOWVZDS &UHGL  LWGHIDXOWVZDS   7RWDO 7UDGLQJ OLDELOLWLHV 7UDGLQJOLDELOLWLHV ,QWHU  UHVWUDWHVZDSV   ,QWHUHVWUDWHVZDSV &URV  VVFXUUHQF\LQWHUHVWUDWHVZDSV    &URVVFXUUHQF\LQWHUHVWUDWHVZDSV 7RWDO

'HFHPEHU 'HFHPE 'HFHPEHU E  EHU        

     

  

  

6RYHUHLJ JQDQGFRUSRUDWHERQGVRXWVWDQGLQ QJDVRI'HFHPEHUKDYHJHQHUDWHG J JDLQVRIPLOOLRQDQG GPLOOLRQ 6RYHUHLJQDQGFRUSRUDWHERQGVRXWVWDQGLQJDVRI'HFHPEHUKDYHJHQHUDWHGJDLQVRIPLOOLRQDQGPLOOLRQ GXULQJ DQGUHVSHFWLYHO\ZKLFK     KDYHEHHQUHFRUGHGLQHDUQLQJV       GXULQJDQGUHVSHFWLYHO\ZKLFKKDYHEHHQUHFRUGHGLQHDUQLQJV $V RI 'H HFHPEHU   ERQGV ZLWK D FDUU\LQJ F  YDOXH RI  FXUHG UHSXUFKDVH DJUHHPHQWV DFFR RXQWHG IRU DV 'HFHPEHU  PLOOLRQ VHF VHFXUHG DFFRXQWHG VHFXUHG ERUURZLQJV  VHFXUHGERUURZLQJV 'XULQJ 'XULQJDQGWKH%DQNUHFRJQL]HGWKHIROORZLQJJDLQVDQGORVVHVUHODWHGWRWUDGLQJGHULYDWLYHILQDQFLDOLQVWUXPHQWV   DQGWKH%DQNUHFRJQL]HHGWKHIROORZLQJJDLQVDQGORVVHVUHHODWHGWRWUDGLQJGHULYDWLYHILQDQFLDDOLQVWUXPHQWV

,QWKRXVDQGVRI86

, WK XVDQGVRI86

,QWKRX G  I86

 )RUZDUGUHSXUFKDVHDJUHHPHQWV  )RUZDUG UHSXUFKDVHDJUHHPHQWV  ,QWHUHVWUDWHVZDSV ,QWHUHVW  UDWHVZDSV  &URVVFXUUHQF\LQWHUHVWUDWHVZDSV &URVVFX  XUUHQF\LQWHUHVWUDWHVZDSV    &UHGLWGHIDXOWVZDS &UHGLWGH   HIDXOWVZDS  7RWDO

'HFHPEHU 'HFHPE 'HFHPEHU E  EHU    



   

    



   

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

92

    Notes to consolidated financial statements


 VDQGVRI86

  ,QWKRXV ,QWKRXVDQGVRI86

 ,QWHUHVWUDWHVZDSV  ,QWHUHVWUDWHVZDSV &URVVFXUUHQF\LQWHUHVWUDWHVZDSV &URVVFX XUUHQF\LQWHUHVWUDWHVZDSV    &UHGLWGHIDXOWVZDS &UHGLWGH  HIDXOWVZDS  7RWDO   

1RP 1RPLQDO PLQDO $PRXQW $P PRXQW      



)DLU9DOXH $VVHW /LDELOLW\\     

1RPLQDO $PRXQW

      

     

)DLU9DOXH )DLU9 9DOXH $VVHW /LDELOLW\\    

   

,QYHVWPHQWVHFXULWLHV ,QYHVWPH HQWVHFXULWLHV  6HFXULWLHVDYDLODEOHIRUVDOH 6HFXULWLH HVDYDLODEOHIRUVDOH  7KHDPRUWL]HGFRVWUHODWHGXQUHDOL]HGJURVVJDLQ ORVV DQGIDLUYDOXHRIVHFXULWLHVDYDLODEOHIRUVDOHE\FRXQWU\ULVNDQGW\SH 7KH DPRRUWL]HGFRVWUHODWHGXQUHDOL]HGJURVVVJDLQ ORVV DQGIDLUYDOXHRIVHFX XULWLHVDYDLODEOHIRUVDOHE\FRXQWU\ULVNDQGW\SH RIGHEWDUHDVIROORZV RIGHEWD  DUHDVIROORZV   ,QWKRXV  VDQGVRI86

  ,QWKRXVDQGVRI86

&RUSRUDW WHGHEW  &RUSRUDWHGHEW %UD]LO &KLOH  6RYHUHLJQGHEW 6RYHUHLJJQGHEW  %UD]LO &RORPELD &RORP  PELD 'RPLQLFDQ5HSXEOLF 'RPLQ  QLFDQ5HSXEOLF  (O6DOYDGRU (O6DOY   YDGRU 0H[LFR 0H[LFFR  3DQDPD 3DQDP  PD 9HQH]XHOD 9HQH]]XHOD   7RWDO

,QWKRXV  VDQGVRI86

  ,QWKRXVDQGVRI86

&RUSRUDW &RUSRUDWHGHEW WHGHEW  %UD]LO &KLOH 3DQDP  3DQDPD PD  6RYHUHLJQGHEW 6RYHUHLJJQGHEW  %UD]LO &RORPELD &RORP  PELD 'RPLQLFDQ5HSXEOLF 'RPLQ  QLFDQ5HSXEOLF  (O6DOY   YDGRU (O6DOYDGRU 0 LFR 0H[LF  0H[LFR 3DQDP  PD 3DQDPD 3HUX 9HQH]]XHOD  9HQH]XHOD  7RWDO

$PRUWL]HG &RVW

'HFHPEHU 'H HFHPEHU   8QUHDOL]HG 8QUHDOL]HG 8QUHDOL]HG *URVV*DLQ *URVV* *DLQ *URVV/RVV

)DLU 9DOXH

      

          

  

      

          

                     

       

          



  





$PRUWL]HG &RVW

'HFHPEHU 'H HFHPEHU   8QUHDOL]]HG 8QUHDOL]HG 8QUHDOL]HG *URVV* *DLQ *URVV/RVV *URVV*DLQ

)DLU 9DOXH

     

          

   

     

             

                         

         

             



  





$V RI 'HHFHPEHU   DQG  VHFXULWLHV DYDLODEOHIRUVDOH ZLWK D FDUUU\LQJ YDOXH RI  PLOOLRQ DQG  PLOOLRQ $VRI'HFHPEHUDQGVHFXULWLHVDYDLODEOHIRUVDOHZLWKDFDUU\LQJYDOXHRIPLOOLRQDQGPLOOLRQ UHVSHFWLY YHO\ZHUHSOHGJHGWRVHFXUHUHSXUF      FKDVHWUDQVDFWLRQVDFFRXQWHG   IRUDV  VVHFXUHGILQDQFLQJV   UHVSHFWLYHO\ZHUHSOHGJHGWRVHFXUHUHSXUFKDVHWUDQVDFWLRQVDFFRXQWHGIRUDVVHFXUHGILQDQFLQJV

    Notes to consolidated financial statements

93


7KH IROORRZLQJWDEOHGLVFORVHVWKRVHVHFXULWLLHVWKDWKDYHKDGXQUHDOL]HGORVVHV VIRUOHVVWKDQPRQWKVDQGIRUPRQWKVRU 7KHIROORZLQJWDEOHGLVFORVHVWKRVHVHFXULWLHVWKDWKDYHKDGXQUHDOL]HGORVVHVIRUOHVVWKDQPRQWKVDQGIRUPRQWKVRU ORQJHU

VDQGVRI86

  ,QWKRXVDQGVRI86

,QWKRXV 

&RUSRUDW S WHGHEW  &RUSRUDWHGHEW 6RYHUHLJJQGHEW  6RYHUHLJQGHEW

,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

 

6RYHUHLJJQGHEW  6RYHUHLJQGHEW

PRQWKV  /HVVWKDQPRQWKV /HVVWKDQ  8QUHDOL]HG )DLU *URVV 9DOXH /RVVHV     

  

/HVVWKDQPRQWKV /HVVWKDQ  PRQWKV  8QUHDOL]HG )DLU *URVV 9DOXH /RVVHV 



'HFHPEHU 'HFHPEHU   PRQWKVRUORQJHU   J RUORQJHU PRQWKVR  8QUHDOL]HG )DLU *URVV 9DOXH /RVVHV    

)DLU 9DOXH

  

    

'HFHPEHU 'HFHPEHU   PRQWKVRUORQJHU PRQWKVR    J RUORQJHU 8 8QUHDOL]HG )DLU *URVV 9DOXH /RVVHV 

7RWDO 8 8QUHDOL]HG *URVV /RVVHV

)DLU 9DOXH



  

7RWDO 8 8QUHDOL]HG *URVV /RVVHV





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

,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

  *DLQV /RVVHV 1HW

<HDUHQGHG'HFHPEHU <HDUHQGHG'HFHPEHU    





  

  

 

 





/RVVHV R VHFXULWLHVDYDLODEOHIRUVDOHGXULQ RQ QJZHUHPDLQO\WKHUHVXOWRIWUDQVDFWLRQV W RIVHFXULWLHVVROGXQGHHUUHSXUFKDVH /RVVHVRQVHFXULWLHVDYDLODEOHIRUVDOHGXULQJZHUHPDLQO\WKHUHVXOWRIWUDQVDFWLRQVRIVHFXULWLHVVROGXQGHUUHSXUFKDVH DJUHHPH HQWVDFFRXQWHGIRUDVVDOHVDWWKHW       WUDQVIHUGDWHRIWKRVHVHFXULWLHV       VHH H1RWH

H1RWH   DJUHHPHQWVDFFRXQWHGIRUDVVDOHVDWWKHWUDQVIHUGDWHRIWKRVHVHFXULWLHV VHH1RWH  $QDQDO\  \VLVRIUHDOL]HGORVVHVLVGHVFULEHG       EHORZ $QDQDO\VLVRIUHDOL]HGORVVHVLVGHVFULEHGEHORZ

,QWKRXV  VDQGVRI86

  ,QWKRXVDQGVRI86

5HDOL]HGORVVHVRQVDOHRIVHFXULWLHVDYDLODEOHIRUVDOH 5HDOL]HG GORVVHVRQVDOHRIVHFXULWLHVDYDLOD       EOHIRUVDOH 5HDOL]HGORVVHVIRUWUDQVIHUVRIVHFXULWLHVXQGHUUHSXUFKDVHDJUHHPHQWV 5HDOL]HG GORVVHVIRUWUDQVIHUVRIVHFXULWLHVX       QGHUUHSXUFKDVHDJUHHPHQWV   DFFRXQWHGIRUDVVDOHV VHH1RWH

DFFRXQ  QWHGIRUDVVDOHV VHH1RWH

      7RWDOUHDOL]HGORVV 7RWDOUHD  DOL]HGORVV 

94

<HDUHQGHG'HFHPEHU <HDU <HDUHQGHG'HFHPEHU U UHQGHG'HFHPEH  H  HU   









  

 







    Notes to consolidated financial statements


7KHDPRRUWL]HGFRVWDQGIDLUYDOXHRIVHFXULLWLHVDYDLODEOHIRUVDOHE\FRQWUDFWXDOPDWXULW\DVRI'HFHPEHU 7KHDPRUWL]HGFRVWDQGIDLUYDOXHRIVHFXULWLHVDYDLODEOHIRUVDOHE\FRQWUDFWXDOPDWXULW\DVRI'HFHPEHUDUHVKRZQ DUHVKRZQ LQWKHIR LQWKHIROORZLQJWDEOH   ROORZLQJWDEOH   $PRUWL]HG &RVW

,QWKRXVDQGVRI86

,QWKRX  XVDQGVRI86

  'XHZLWKLQ\HDU 'XHZLW  WKLQ\HDU   $IWHU\HDUEXWZLWKLQ\HDUV $IWHU\  \HDUEXWZLWKLQ\HDUV     $IWHU\HDUVEXWZLWKLQ\HDUV $IWHU\  \HDUVEXWZLWKLQ\HDUV    

     

)DLU 9DOXH      

6HFXULWLHHVKHOGWRPDWXULW\  \ 6HFXULWLHVKHOGWRPDWXULW\ 7KH DPRRUWL]HG FRVW UHODWHG XQUHDOL]HG JURVVV JDLQ ORVV  DQG IDLU YDOXH RI VHFFXULWLHV KHOGWRPDWXULW\ E\ FRXQWU\ ULVN DQG W\SH 7KHDPRUWL]HGFRVWUHODWHGXQUHDOL]HGJURVVJDLQ ORVV DQGIDLUYDOXHRIVHFXULWLHVKHOGWRPDWXULW\E\FRXQWU\ULVNDQGW\SH RIGHEWD  DUHDVIROORZV   RIGHEWDUHDVIROORZV

,QWKRXVDQGVRI86

,QWKRX  XVDQGVRI86

  &RUSRUD DWHGHEW  &RUSRUDWHGHEW 3DQDPD 3DQDDPD  6RYHUHLJ JJQGHEW  6RYHUHLJQGHEW &RORP  PELD &RORPELD &RVWD  D5LFD &RVWD5LFD +RQGGXUDV  +RQGXUDV 3DQDDPD  3DQDPD 7RWDO

$PRUWL]HG &RVW

'HFHHPEHU 'HFHPEHU E   8QUHDOL]HG 8QUH HDOL]HG 8QUHDOL]HG *URVV*DLQ *URV VV*DLQ  *URVV/RVV

)DLU 9DOXH









       

    

    

       









6HFXULWLHHVWKDWVKRZJURVVXQUHDOL]HGORVVHV KDYHKDGORVVHVIRUOHVVWKDQPRQWKVDQGWKHUHIRUHVXFKORVVHVDUHFRQVLGHUHG KDYHKDGORVVHVIRUOHVVWKDQPRQWKV P DQGWKHUHIRUHVXFKORVVHVDUH D FRQVLGHUHG 6HFXULWLHVWKDWVKRZJURVVXQUHDOL]HGORVVHV WHPSRUDU\ WHPSRUDDU\ 7KHDPRUWL]HGFRVWRIVHFXULWLHVKHOGWRPDWXULW\E\FRQWUDFWXDOPDWXULW\DVRI'HFHPEHUDUHVKRZQLQWKHIROORZLQJ 7KHDPRRUWL]HGFRVWRIVHFXULWLHVKHOGWRPDDWXULW\E\FRQWUDFWXDOPDWXULW\DVRI I'HFHPEHUDUHVKRZQLQ QWKHIROORZLQJ WDEOH WDEOH $PRUWL]HG ,QWKRXVDQGVRI86

,QWKRX  XVDQGVRI86

  &RVW 'XHZLW 'XHZLWKLQ\HDU  WKLQ\HDU   $IWHU\HDUVEXWZLWKLQ\HDUV $IWHU\  \HDUVEXWZLWKLQ\HDUV    

   

$VRI'HFHPEHUVHFXULWLHVKHOGWRPDWXULW\ZLWKDFDUU\LQJYDOXHRIPLOOLRQZHUHSOHGJHGWRVHFXUHUHSXUFKDVH $VRI'HHFHPEHUVHFXULWLHVKHOGWRRPDWXULW\ZLWKDFDUU\LQJYDOXHRI IPLOOLRQZHUHSOHGJHGWRVHFXUHUHSXUFKDVH DJUHHPHHQWVDFFRXQWHGIRUDVVHFXUHGILQDQ      QFLQJV DJUHHPHQWVDFFRXQWHGIRUDVVHFXUHGILQDQFLQJV  

,QYHVWP PHQWIXQG  ,QYHVWPHQWIXQG 7KHEDODDQFHLQWKHLQYHVWPHQWIXQGIRU PLOOLRQLQDQGPLOOLRQ P LQUHSUHVHQWVWKHSDUWLFFLSDWLRQRIWKH 7KHEDODQFHLQWKHLQYHVWPHQWIXQGIRUPLOOLRQLQDQGPLOOLRQLQUHSUHVHQWVWKHSDUWLFLSDWLRQRIWKH )HHGHULQWKHQHWDVVHWYDOXH 1$9 RIWKH)XQG )HHGHUL  QWKHQHWDVVHWYDOXH 1$9 RIWKH)        )XQG )XQGยชV FRPSRVHGE\FDVKLQYHVWPHQWV LQVWUXPHQWVDQG GHULYDWLYHILQDQFLDO 7KH )XQ QGยชV QHW DVVHWV DUH PDLQO\ FRPSRV VHG E\ FDVK LQYHVWPHQWV LQ HTXLW\ \ DQG GHEW LQVWUXPHQWV DQG GHULYD DWLYH ILQDQFLDO LQVWUXPHQWVWKDWDUHTXRWHGDQGWUDGHGLQDFWLYHPDUNHWV LQVWUXPH HQWVWKDWDUHTXRWHGDQGWUDGHGLQ       DFWLYHPDUNHWV   $VRI'HFHPEHUWKH)HHGHURZQVRIWKH)XQGZLWKDWRWDORIVKDUHVLVVXHGGLYLGHGLQยง&ODVV VKDUHVLVVXHGGLYLGHGLQยง&ODVV $V RI'HHFHPEHUWKH)HHGHURZQVRIWKH)XQGZLWKDWRWDORI  $ยจVKDUHVยง&ODVV$ยจVKDUHVยง&ODVV%ยจVKDUHVDQGยง&ODVV(ยจVKDUHV $ยจVKDUH  HVยง&ODVV$ยจVKDUHV      ยง&ODVV%ยจVKDUHVDQGยง& &ODVV(ยจVKDUHV    $VRI'HFHPEHUWKH)HHGHURZQHGRIWKH)XQGZLWKDWRWDORIVKDUHVLVVXHGGLYLGHGLQ $V RI'HHFHPEHUWKH)HHGHURZQHHGRIWKH)XQGZLWKDWRWDO ORIVKDUHVLVVXHGGLYLGHHGLQ ยง&ODVV$ยจVKDUHVยง&ODVV%ยจVKDUHVDQGยง&ODVV(ยจVKDUHV ยง&ODVV$ $ยจVKDUHVยง&ODVV%ยจVKDUH      HVDQGยง&ODVV(ยจVKDUHV       7KH)XQGKDVLVVXHGยง&ODVV$ยจยง&ODVV$ยจยง&ODVV%ยจยง&ODVV&ยจยง&ODVV'ยจยง&ODVV(ยจDQGยง&ODVV(ยจVKDUHVDQGDGPLQLVWUDWLYH 7KH )XQG KDV LVVXHG ยง&ODVV $ยจ ยง&ODVV $ยจ ยง&ODVV %ยจ ยง&ODVV &ยจ ยง&ODVV 'ยจ ยง&ODDVV (ยจ DQG ยง&ODVV (ยจ VKDUHV DQG DGPLQLVWUDWLYH D  VKDUHVยง&ODVV$ยจยง&ODVV$ยจDQGยง&ODVV%ยจVKDUHVDUHSDUWLFLSDWLQJVKDUHVLQWKHQHWJDLQV ORVVHV RIWKH)XQGDQGRQO\GLIIHU VKDUHV VKDUHV ยง&ODVV &ODVV$ $ยจยง&ODVV &ODVV$ $ยจDQGยง&ODVV &ODVV% %ยจVKDUHVDUHSDUWLFLSDWLQJVKDUHVLQWKH W QHWJDLQV ORVVHV RIWKH)XQG )XQG DQG D RQO\GLIIHU LQUHODWLRQWRFHUWDLQDGPLQLVWUDWLYHIHHVยง&ODVV&ยจDQGยง&ODVV'ยจVKDUHVGRQRWSDUWLFLSDWHLQWKHQHWJDLQV ORVVHV RIWKH)XQG LQ UHODWLRRQWRFHUWDLQDGPLQLVWUDWLYHIHHVยง& &ODVV&ยจDQGยง&ODVV'ยจVKDUHVGRQRWSDUWLFLSDWHLQWKHQHWJDLQV ORVVHVV RIWKH)XQG WKH\DUHRQO\HQWLWOHGWRWKHSHUIRUPDQFHDOORFDWLRQIURPยง&ODVV$ยจยง&ODVV$ยจDQGยง&ODVV%ยจVKDUHV7KHยง&ODVV(ยจDQGยง&ODVV WKH\ DUHRQO\HQWLWOHGWRWKHSHUIRUPDQFHDOORFDWLRQ D IURPยง&ODVV$ยจยง&ODVV$ยจ ยจDQGยง&ODVV%ยจVKDUHV7KHยง&ODVV(ยจDQGยง&ODVV (ยจVKDUHVDUHQRWVXEMHFWWRHLWKHUDGPLQLVWUDWLYHIHHVRUSHUIRUPDQFHDOORFDWLRQ7KH%DQNRZQVWKH)HHGHUยชVDQGWKH)XQGยชV (ยจ VKDUUHVDUHQRWVXEMHFWWRHLWKHUDGPLQLVVWUDWLYHIHHVRUSHUIRUPDQFHDOORFDWWLRQ7KH%DQNRZQVWKH)HHGHUยชVDQG D WKH)XQGยชV DGPLQLVWUDWLYHVKDUHV DGPLQLVW WUDWLYHVKDUHV 

    Notes to consolidated financial statements

95


§&ODVV$¨§&ODVV$¨DQG§&ODVV(¨VKDUHVFDQEHUHGHHPHGPRQWKO\E\LQYHVWRUVZLWKGD\ªVQRWLFHPLOOLRQRIWKH §&ODVV $  §&ODVV $¨ DQG §&ODVV (¨ VKDUHV FDQ EH UHGHHPHG PRQWKO\ E\ LQYHHVWRUV ZLWK  GD\ªV QRWLFH   PLOOLRQ RI WKH $¨ §&ODVV%¨VKDUHVFDQQRWEHUHGHHPHGXQWLO'HFHPEHU §&ODVV%¨  ¨VKDUHVFDQQRWEHUHGHHPHGXQWLO      'HFHPEHU    

/RDQV       %DQNªVORDQSRUWIROLR   7KHIROORZLQJWDEOHVHWIRUWKGHWDLOVRIWKH%DQNªVORDQSRUWIROLR 7KHIROOR  RZLQJWDEOHVHWIRUWKGHWDLOVRIWKH% 'HFHPEHU 'HFHHPEHU H  

,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

  &RUSRUDWWLRQV &RUSRUDWLRQV  H 3ULYDWH 6WDWHRRZQHG  6WDWHRZQHG %DQNLQJ JDQGILQDQFLDOLQVWLWXWLRQV   %DQNLQJDQGILQDQFLDOLQVWLWXWLRQV  H 3ULYDWH 6WDWHRRZQHG  6WDWHRZQHG 0LGGOHP PDUNHWFRPSDQLHV  0LGGOHPDUNHWFRPSDQLHV  H 3ULYDWH 6RYHUHLJJQ 6RYHUHLJQ 7RWDO



 

 

 

 

    

     

7KHFRP  SRVLWLRQRIWKHORDQSRUWIROLRE\LQG       GXVWU\LVDVIROORZV    7KHFRPSRVLWLRQRIWKHORDQSRUWIROLRE\LQGXVWU\LVDVIROORZV ,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

 

'HFFHPEHU F  'HFHPEHU 

%DQNLQJDQGILQDQFLDOLQVWLWXWLRQV %DQNLQJ JDQGILQDQFLDOLQVWLWXWLRQV   ,QGXVWULDO ,QGXVWULDDO 2LODQGSHWUROHXPGHULYHGSURGXFWV 2LODQG  SHWUROHXPGHULYHGSURGXFWV   $JULFXOWXUDO $JULFXOWX XUDO 0LQLQJ 6HUYLFHV 6RYHUHLJQ 6RYHUHLJJQ 2WKHUV 7RWDO

          

           

$VRI'  'HFHPEHUORDQVFODVVLILHG 'HFHPEHU   ORDQVFODVVLILHG   GE\FUHGLWTXDOLW\LQGLFDWRUVDUHD       VIROORZV IROORZV  $VRI'HFHPEHUORDQVFODVVLILHGE\FUHGLWTXDOLW\LQGLFDWRUVDUHDVIROORZV ,QWKRXVDQGVRI86

,QWKRXVDQ  QGVRI86

 

&RUSRUDWLRQV S 3ULYDWH 6WDWHRZQHG 6WDWHRZ ZQHG

%DQNLQJDQGILQDQFLDO %DQNLQJDQGILQDQFLDO LQVWLWXWLRQV 3ULYDWH 6WDWHRZQHG



  

























































 

















5DWLQJ J 



  7RWDO

 

  



0LGGOHPDUNHW 0LGGOHPDUNHW FRPSDQLHV S 3ULYDWH

6RYHUHLJQ J

7RWDO

&XUUHQWUDWLQJVDVRI'HFHPEHU QWUDWLQJVDVRI'HFHPEHU          &XUUHQ

96

    Notes to consolidated financial statements


7KHUHP  DLQLQJORDQPDWXULWLHVDUHVXPPDU     UL]HGDVIROORZV   7KHUHPDLQLQJORDQPDWXULWLHVDUHVXPPDUL]HGDVIROORZV ,QWKRXVDQGVRI86

,QWKRX  XVDQGVRI86

  &XUUHQW 

 8SWR  8SWRPRQWK  PRQWK )URP  )URPPRQWKWRPRQWKV PRQWKWRPRQWKV    )URP  )URPPRQWKVWRPRQWKV PRQWKVWRPRQWKV    )URP  )URPPRQWKVWR\HDU PRQWKVWR\HDU    )URP  )URP\HDUWR\HDUV \HDUWR\HDUV    )URP  )URP\HDUVWR\HDUV \HDUVWR\HDUV    0 0RUHW  0RUHWKDQ\HDUV W WK WKDQ\HDUV 

 'HFHPEH 'HFHPEHU H  HU 'HFHPEHU            

         





       

       

'HOLQTX 'HOLQTXHQW XHQW ,PSDLUHG ,PSDLUH G &XUUHQWEDODQFHVZLWKLPSDLUPHQW &XUUHQ QWEDODQFHVZLWKLPSDLUPHQW    3DVWGXHEDODQFHVZLWKLPSDLUPHQW 3DVWGX  XHEDODQFHVZLWKLPSDLUPHQW    7RWDO   

'HFHPEHUªVFXUUHQWORDQVLQFOXGHXQLPSDLUHGORDQVRQQRQDFFUXDOVWDWXVIRUWKRXVDQG 'HF FHPEHUªVFXUUHQWORDQVLQF      FOXGHXQLPSDLUHGORDQVRQQRQDF     FUXDOVWDWXVIRUWKRXVDQG

7KHIROOR  RZLQJWDEOHSURYLGHVDEUHDNGRZQR       RIORDQVE\FRXQWU\ULVN    7KHIROORZLQJWDEOHSURYLGHVDEUHDNGRZQRIORDQVE\FRXQWU\ULVN ,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

  &RXQWU\ $UJHQWLQD $UJHQ QWLQD %UD]LO &KLOH &RORPELD &RORP PELD &RVWD5LFD &RVWD 5LFD 'RPLQLFDQ5HSXEOLF 'RPLQ QLFDQ5HSXEOLF  (FXDGRU (FXDG GRU (O6DOYDGRU (O6DOY  YDGRU *XDWHPDOD *XDWH HPDOD +RQGXUDV +RQGX XUDV -DPDLFD -DPDL FD 0H[LFR 0H[LF FR 1LFDUDJXD 1LFDUD DJXD 3DQDPD 3DQDP PD 3HUX 7ULQLGDGDQG7REDJR 7ULQLGD DGDQG7REDJR   8UXJXD\ 8UXJX XD\

'HFHPEH 'HFHPEHU H  HU  'HFHPEHU                    

                   

7KHIL[HG  GDQGIORDWLQJLQWHUHVWUDWHGLVWULEXW      WLRQRIWKHORDQSRUWIROLRLVDVIRO        ORZ ZV 7KHIL[HGDQGIORDWLQJLQWHUHVWUDWHGLVWULEXWLRQRIWKHORDQSRUWIROLRLVDVIROORZV

,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

  )L[HGLQWHUHVWUDWHV )L[HGLQW  WHUHVWUDWHV  )ORDWLQJLQWHUHVWUDWHV )ORDWLQJ LQWHUHVWUDWHV 

'HFHPEHU 'HFHPEHU E          

    

$V RI 'HHFHPEHU   DQG   DQG  UHVSHFWLYHO\ RI WKH ORDQ Q SRUWIROLR DW IL[HG LQWHUHVW UDWHV KDV K  UHPDLQLQJ $VRI'HFHPEHUDQGDQGUHVSHFWLYHO\RIWKHORDQSRUWIROLRDWIL[HGLQWHUHVWUDWHVKDVUHPDLQLQJ PDWXULWLH HVRIOHVVWKDQGD\V      PDWXULWLHVRIOHVVWKDQGD\V

    Notes to consolidated financial statements

97


7KHIROOR  RZLQJLVDVXPPDU\RILQIRUPDWLRQ      LQQRQDFFUXLQJORDQVDQGLQ     WHUHVVWDPRXQWVRQQRQDFFUXLQJORDQV     7KHIROORZLQJLVDVXPPDU\RILQIRUPDWLRQLQQRQDFFUXLQJORDQVDQGLQWHUHVWDPRXQWVRQQRQDFFUXLQJORDQV ,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

 

' 'HFHPEHU   



/RDQVLQ /RDQVLQQRQDFFUXDOVWDWXV  QRQDFFUXDOVWDWXV  3ULYDWH FRUSRUDWLRQV 3ULYDWHFRUSRUDWLRQV 3ULYDWH PLGGOHPDUNHWFRPSDQLHV  3ULYDWHPLGGOHPDUNHWFRPSDQLHV 7RWDOORDQVLQQRQDFFUXDOVWDWXV 7RWDOORD  QVLQQRQDFFUXDOVWDWXV    )RUHJRQHLQWHUHVWUHYHQXHDWEHJLQQLQJRIWKH\HDU )RUHJRQH HLQWHUHVWUHYHQXHDWEHJLQQLQJRIW      WKH\HDU   ,QWHUHVWZ ZKLFKZRXOGKDYHEHHQUHFRUGHGLI      IWKHORDQVKDGQRWEHHQLQD        QRQ ,QWHUHVWZKLFKZRXOGKDYHEHHQUHFRUGHGLIWKHORDQVKDGQRWEHHQLQDQRQ DFFUXDO OVWDWXV DFFUXDOVWDWXV ,QWHUHVWL  QFRPHFROOHFWHGRQQRQDFFUXLQJO    ORDQV ,QWHUHVWLQFRPHFROOHFWHGRQQRQDFFUXLQJORDQV )RUHJRQHLQWHUHVWUHYHQXHDWHQGRIWKH\HDU )RUHJRQH HLQWHUHVWUHYHQXHDWHQGRIWKH\HD        DU



     

   

  







 





  

 

   

$QDQDO\  \VLVRIQRQDFFUXLQJORDQVZLWKLPS      SDLUHGEDODQFHVDVRI'HFHPE     HU  DQGLVGHWDLOHGDVIRO        ORZV $QDQDO\VLVRIQRQDFFUXLQJORDQVZLWKLPSDLUHGEDODQFHVDVRI'HFHPEHUDQGLVGHWDLOHGDVIROORZV ,QWKRXVDQGVRI86

,QWKRXVD  DQGVRI86

   :LWKDQ  DOORZDQFHUHFRUGHG  :LWKDQDOORZDQFHUHFRUGHG 3ULYDW WHFRUSRUDWLRQV  3ULYDWHFRUSRUDWLRQV 3ULYDW WHPLGGOHPDUNHWFRPSDQLHV   3ULYDWHPLGGOHPDUNHWFRPSDQLHV 7RWDO

8 8QSDLGSULQFLSDO   EDODQFH

5HODWHG DOORZDQFH

$YHUDJHEDODQFH RIORDQ

,QWWHUHVWLQFRPH ,QWHUHVWLQFRPH   UHFRJQL]HG U J

    

    

  

5HODWHG DOORZDQFH

$YHUDJHEDODQFH RIORDQ

,QWHHUHVWLQFRPH ,QWHUHVWLQFRPH   U J UHFRJQL]HG

    

    

     

,QWKRXVD  DQGVRI86

  ,QWKRXVDQGVRI86

 :LWKDQDOORZDQFHUHFRUGHG :LWKDQ  DOORZDQFHUHFRUGHG  3ULYDWHFRUSRUDWLRQV 3ULYDWH HFRUSRUDWLRQV 3ULYDWHPLGGOHPDUNHWFRPSDQLHV 3ULYDWH HPLGGOHPDUNHWFRPSDQLHV  7RWDO

8QSDLGSULQFLSDO 8   EDODQFH     

  

7KHIROORZLQJWDEOHSUHVHQWVDQDJLQJDQDO\VLVRIWKHORDQSRUWIROLR 7KHIROOR  RZLQJWDEOHSUHVHQWVDQDJLQJDQDO      \VLVRIWKHORDQSRUWIROLR     ,QWKRXVDQGVRI86

,QWKRXVD  DQGVRI86

   &RUSRUDWLRQV &RUSRUD DWLRQV %DQNLQ %DQNLQJDQG QJDQG   ILQD ILQDQFLDO DQFLDO LQVW LQVWLWXWLRQV WLWXWLRQV 0LGGOH 0LGGOHPDUNHW PDUNHW FRP FRPSDQLHV PSDQLHV 6RYHUHL 6RYHUHLJQ LJQ 7RWDO

98

  \ GD\V

   \ GD\V

  GD\V \

*UHDWHU WKDQ GD\V \

7RWWDO 7RWDO 3DVW 3D DVW 'XH 'X XH

'HOLQTXHQW T

&XUUHQW

7RWDO /RDQV

































  

  

  

  

      

  

     

    

    Notes to consolidated financial statements


,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

   &RUSRUDWLRQV &RUSRUDWLRQV

*UHDWHU  WKDQ  GD\V \ \ GD\V

7RWDO 3DVW 'XH

  \ GD\V

  GD D\V \ GD\V



















 

  

 



 



%DQNLQJDQG %DQNLQJDQG   ILQDQFLDO ILQ  QDQFLDO LQVWLWXWLRQV LQVVWLWXWLRQV  0LGGOHPDUNHW 0LGGOHHPDUNHW FRPSDQLHV FRRPSDQLHV 6RYHUHLJQ 6RYHUHHLJQ 7RWDO

&XUUHQW

7RWDO /RDQV



 







 



 

 

 

     

    







 



'HOLQTXHQW T

$V RI 'HHFHPEHU   DQG  WKH %DQN KDV FUHGLW WUDQVDFWLRQV LQ WKH QRUPDO FRXUVH RI EXVLQHVV ZLWK  DQG  $VRI'HFHPEHUDQGWKH%DQNKDVFUHGLWWUDQVDFWLRQVLQWKHQRUPDOFRXUVHRIEXVLQHVVZLWKDQG UHVSHFWLY UHVSHFWLYHO\RILWV&ODVV§$¨DQG§%¨VWRFNKROGHUV VHH1RWH $OOWUDQVDFWLRQVDUHPDGHEDVHGRQDUPªVOHQJWKWHUPVDQG YHO\ RI LWV&ODVV§$¨DQG §%¨VWRFNKROGHUV VHH1RWH  $OO WUDQVDFWLRRQVDUH PDGHEDVHGRQ DUPªVOHQJJWKWHUPV DQG VXEMHFW WR W  SUHYDLOLQJ FRPPHUFLDO FULWHULD DQG D  PDUNHW UDWHV DQG DUH VXEMHFW WR DOO RI WKH %DQNªV FRUSRUDWH JRY JRYHUQDQFH YHUQDQFH DQG FRQWURO FRQWUROSURFHGXUHV$VRI'HFHPEHUDQGDSSUR[LPDWHO\DQGUHVSHFWLYHO\RIWKHRXWVWDQGLQJORDQ S SURFHGXUHV   $V RI 'HFHPEHU    DQG  DSSUR[LPDWHO\   DQG  UHVSHFWLYHO\ RI WKH RXWVVWDQGLQJ ORDQ SRUWIROLR LVSODFHGZLWKWKH%DQNªV&ODVV§$¨ ¨DQG§%¨VWRFNKROGHUVDQGWKHLUUHODDWHGSDUWLHV$VRI'HFHPEHU WKH%DQN SRUWIROLRLVSODFHGZLWKWKH%DQNªV&ODVV§$¨DQG§%¨VWRFNKROGHUVDQGWKHLUUHODWHGSDUWLHV$VRI'HFHPEHUWKH%DQN ZDV ZDVQRWGLUHFWO\RULQGLUHFWO\RZQHGRUFRQWUROOHGE\DQRWKHUFRUSRUDWLRQRUDQ\IRUHLJQJRYHUQPHQWDQGQR&ODVV§$¨RU§%¨ QRW GLUHFWO\ RU LQGLUHFWO\ RZQHG RU FRQ QWUROOHG E\ DQRWKHU FRUSRUDWLRQ RU DQ\ D  IRUHLJQ JRYHUQPHQW DQG QR &ODVV §$¨ RU §%¨ VKDUHKRO OGHUZDVWKHUHJLVWHUHGRZQHURIPRRUHWKDQRIWKHWRWDORXWVWDQGLQ QJVKDUHVRIWKHYRWLQJFDSLWDOVWRFNRIWKH%DQN VKDUHKROGHUZDVWKHUHJLVWHUHGRZQHURIPRUHWKDQRIWKHWRWDORXWVWDQGLQJVKDUHVRIWKHYRWLQJFDSLWDOVWRFNRIWKH%DQN 'XULQJ WK KH\HDUWKH%DQNVROGORDQVZLWKDERRNYDOXHRIPLOOLRQZLWK Z DQHWJDLQRIWKRXVDQG7KHUH 7 ZHUHQR 'XULQJWKH\HDUWKH%DQNVROGORDQVZLWKDERRNYDOXHRIPLOOLRQZLWKDQHWJDLQRIWKRXVDQG7KHUHZHUHQR ORDQVDOH  HVGXULQJ    ORDQVDOHVGXULQJ  

$OORZDQ QFHIRUFUHGLWORVVHV    $OORZDQFHIRUFUHGLWORVVHV 7KH%DQ  NFODVVLILHVWKHDOORZDQFHIRUFUHGLW      WORVVHVLQWRWZRFRPSRQHQWV      7KH%DQNFODVVLILHVWKHDOORZDQFHIRUFUHGLWORVVHVLQWRWZRFRPSRQHQWV D

ZDQFHIRUORDQORVVHV    D  $OORZ $OORZDQFHIRUORDQORVVHV



'HFHPEHU E   





















/RDQVZULWWHQRIIDJDLQVWWKHDOORZDQFHIRUORDQORVVHV /RDQVZ ZULWWHQRIIDJDLQVWWKHDOORZDQFHIRU     UORDQORVVHV  

   



 



%DODQFHDWHQGRIWKH\HDU %DODQFH HDWHQGRIWKH\HDU    

  





*HQHULFDOORZDQFH *HQHULF DOORZDQFH







6SHFLILFDOORZDQFH 6 LIL DOORZDQFH 6SHFLILF  OO

 

 



7RWDODOORZDQFHIRUORDQORVVHV 7RWDODOOR  RZDQFHIRUORDQORVVHV   

 





,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

  %DODQFHDWEHJLQQLQJRIWKH\HDU %DODQFH HDWEHJLQQLQJRIWKH\HDU     3URYLVLRQ UHYHUVDORISURYLVLRQ IRUORDQORVVHV 3URYLVLRQ Q UHYHUVDORISURYLVLRQ IRUORDQORV       VVHV /RDQUHFRYHULHV /RDQUHF  FRYHULHV

&RPSRQHQWV &RPSRQ S QHQWV

3URYLVLRQ Q UHYHUVDORISURYLVLRQ RIJHQHULFDOORZDQFH D IRUFUHGLWORVVHVDUHPRVWWO\UHODWHGWRFKDQJHVLQYROXPHDQG GFRPSRVLWLRQ 3URYLVLRQ UHYHUVDORISURYLVLRQ RIJHQHULFDOORZDQFHIRUFUHGLWORVVHVDUHPRVWO\UHODWHGWRFKDQJHVLQYROXPHDQGFRPSRVLWLRQ RI WKHFUUHGLWSRUWIROLR7KHLQFUHDVHLQWKHJHQHULFDOORZDQFHIRUORDQORVVHVLQZDVSULPDULO\GXHWRDQLQ QFUHDVHLQWKH RIWKHFUHGLWSRUWIROLR7KHLQFUHDVHLQWKHJHQHULFDOORZDQFHIRUORDQORVVHVLQZDVSULPDULO\GXHWRDQLQFUHDVHLQWKH ORDQSRU  UWIROLRPLWLJDWHGE\DQLPSURYHPHQW     WRIWKHULVNSURILOHRIWKH5HJ        LRQD  QGDSUXGHQWSRUWIROLRPDQDJHPHQ     QW ORDQSRUWIROLRPLWLJDWHGE\DQLPSURYHPHQWRIWKHULVNSURILOHRIWKH5HJLRQDQGDSUXGHQWSRUWIROLRPDQDJHPHQW

    Notes to consolidated financial statements

99


Following is a summary as of December 31, 2010 of loan balances and reserves for loan: (In thousands of US$) Corporations Allowance for loan losses Specific allowance Generic allowance Total of allowance for loan losses Loans Loans with specific allowance Loans with generic allowance Total loans

Banking and financial institutions

Middle-market companies

Sovereign

Total

11,200 42,960 54,160

18,790 18,790

300 4,965 5,265

400 400

11,500 67,115 78,615

28,000 2,056,386 2,084,386

1,701,062 1,701,062

1,002 223,756 224,758

54,126 54,126

29,002 4,035,330 4,064,332

b) Reserve for losses on off-balance sheet credit risk: December 31,

(In thousands of US$)

Balance at beginning of the year Provision (reversal of provision) for losses on off-balance sheet credit risk Balance at end of the year

2010

2009

2008

27,261

30,724

13,727

(13,926)

(3,463)

16,997

13,335

27,261

30,724

The reserve for losses on off-balance sheet credit risk reflects the Bankâ&#x20AC;&#x2122;s management estimate of probable losses on offbalance sheet credit risk items such as: confirmed letters of credit, stand-by letters of credit, guarantees and credit commitments (see Note 18). The 2010â&#x20AC;&#x2122;s decrease in the reserve for losses on off-balance sheet credit risk was primarily due to changes in volume, composition, and improvement of the risk profile of the portfolio, together with the purchase of international insurance to mitigate exposures on the off-balance sheet credit risk portfolio. 9.

Premises and equipment A breakdown of cost and accumulated depreciation and amortization for premises and equipment as of December 31, 2010 and 2009 is as follows: December 31,

(In thousands of US$) Land Building and improvements Furniture and equipment Less: accumulated depreciation and amortization

2010

2009

462 5,365 17,345 23,172 16,640 6,532

462 5,254 16,323 22,039 14,290 7,749

In 2008, the Bank recorded impairment on a portion of a financial information system for $968 thousand that was included in the depreciation, amortization and impairment of premises and equipment expense line. 10.

Other assets As of December 31, 2010 and 2009, other assets include an equity investment in a private investment fund with a carrying value of $1.7 million and 1.9 million, respectively. During 2010, the Bank did not increase its participation in this fund.

100

Notes to consolidated financial statements


 'HSRVLWVV  7KHUHPDLQLQJPDWXULW\SURILOHRIWKH%DQNªVGHSRVLWVLVDVIROORZV 7KHUHP  DLQLQJPDWXULW\SURILOHRIWKH%DQN      NªVGHSRVLWVLVDVIROORZV     ,QWKRXV  VDQGVRI86

  ,QWKRXVDQGVRI86

'HPDQGG 8SWRPRQWK 8SWR   PRQWK )URPPRQWKWRPRQWKV )URPP  PRQWKWRPRQWKV    )URPPRQWKVWRPRQWKV )URPP  PRQWKVWRPRQWKV    )URPPRQWKVWR\HDU )URPP  PRQWKVWR\HDU   



'HFHPEHU

         

              

7KHIROORZLQJWDEOHSUHVHQWVDGGLWLRQDOLQIRUPDWLRQDERXWGHSRVLWV 7KHIROOR  RZLQJWDEOHSUHVHQWVDGGLWLRQDOLQIR     RUPDWLRQDERXWGHSRVLWV   ,QWKRXV  VDQGVRI86

  ,QWKRXVDQGVRI86

$JJUHJDWHDPRXQWVRIWLPHGHSRVLWVRIRUPRUH $JJUHJD DWHDPRXQWVRIWLPHGHSRVLWVRI       RUPRUH   $JJUHJD $JJUHJDWHDPRXQWVRIGHSRVLWVLQRIILFHVRXWVLGH3DQDPD DWHDPRXQWVRIGHSRVLWVLQRIILFHVR       RXWVLGH3DQDPD  ,QWHUHVWH[SHQVHSDLGWRGHSRVLWVLQRIILFHVRXWVLGH3DQDPD ,QWHUHVWH[SHQVHSDLGWRGHSRVLWVLQRIILFHVRXWVLGH3DQDPD



'HFHPEHU  

   

       

  6HFXULWLHHVVROGXQGHUUHSXUFKDVHDJUHHP     PHQWV  6HFXULWLHVVROGXQGHUUHSXUFKDVHDJUHHPHQWV 7KH%DQNªVILQDQFLQJWUDQVDFWLRQVXQGHUUHSSXUFKDVHDJUHHPHQWVDPRXQWHGWRPLOOLRQDQGPLOOLRQDV VRI'HFHPEHU 7KH%DQNªVILQDQFLQJWUDQVDFWLRQVXQGHUUHSXUFKDVHDJUHHPHQWVDPRXQWHGWRPLOOLRQDQGPLOOLRQDVRI'HFHPEHU   DQGUHVSHFWLYHO\   DQGUHVSHFWLYHO\ $V RI 'HHFHPEHU    DQG   LQWHUHVW H[SHQVH UHODWHG WR ILQDQFFLQJ WUDQVDFWLRQV XQGHU UHSXUFKDVH H DJUHHPHQWV $VRI'HFHPEHUDQGLQWHUHVWH[SHQVHUHODWHGWRILQDQFLQJWUDQVDFWLRQVXQGHUUHSXUFKDVHDJUHHPHQWV WRWDOHG  PLOOLRQ  PLOOLRQ DQG   PLOOLRQ UHVSHFWLYHO\ ZHUH UHF FRUGHG  7KHVH H[SHQVHV DUH SUHV VHQWHG LQ WKH  UHFRUGHG SUHVHQWHG FRQVROLG GDWHGVWDWHPHQWVRILQFRPHDVLQWHU      UHVWH[SHQVH¥ERUURZLQJV    FRQVROLGDWHGVWDWHPHQWVRILQFRPHDVLQWHUHVWH[SHQVH¥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§KDLUFXWV¨ KDLUFXWV  WKDQ LQ WKH SDVW SDVW  DV V D UHVXOW RI WKH RXWEUHDN RI WKH OLT TXLGLW\ DQG FUHGLW FULVLV LQ WKH ILQDQFLDO PDUNHWV GLVFRXQWVRU§KDLUFXWV¨WKDQLQWKHSDVWDVDUHVXOWRIWKHRXWEUHDNRIWKHOLTXLGLW\DQGFUHGLWFULVLVLQWKHILQDQFLDOPDUNHWV QHDU WKH HHQGRI7KHVHZHUHVKRUWWHUUPUHSXUFKDVHDJUHHPHQWVZLWKDQWWLFLSDWHGPDWXULW\GDWHVZLWKLQWKHILUVW I TXDUWHURI QHDUWKHHQGRI7KHVHZHUHVKRUWWHUPUHSXUFKDVHDJUHHPHQWVZLWKDQWLFLSDWHGPDWXULW\GDWHVZLWKLQWKHILUVWTXDUWHURI  WUDDQVDFWHGZLWKFRXQWHUSDUWLHVRIKLJKUHSXWH7KH%DQNUHDFTXLUHGDOOWKH W VHFXULWLHVWKDWJXDUDQWHHGWKHVH HWUDQVDFWLRQV WUDQVDFWHGZLWKFRXQWHUSDUWLHVRIKLJKUHSXWH7KH%DQNUHDFTXLUHGDOOWKHVHFXULWLHVWKDWJXDUDQWHHGWKHVHWUDQVDFWLRQV $VXPP  PDU\RIWKHUHSXUFKDVHDJUHHPHQWV      DQGWKHLUHIIHFWLQWKHUHVXOWV      RI\H  HDULVSUHVHQWHGEHORZ     $VXPPDU\RIWKHUHSXUFKDVHDJUHHPHQWVDQGWKHLUHIIHFWLQWKHUHVXOWVRI\HDULVSUHVHQWHGEHORZ ,QWKRXV  VDQGVRI86

  ,QWKRXVDQGVRI86

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

    Notes to consolidated financial statements

101


$VXPPDU\RIWKHHIIHFWRIWKHVHILQDQFLDOLQVWUXPHQWVLQQHWLQFRPHRI\HDUHQGHG'HFHPEHULVSUHVHQWHGEHORZ $VXPPD  DU\RIWKHHIIHFWRIWKHVHILQDQFLDOL        LQVWUXPHQWVLQQHWLQFRPHRI     \HDUH HQGHG'HFHPEHULVSUHVH      QWHGEHORZ  ,QWKRXV  VDQGVRI86

   ,QWKRXVDQGVRI86 



&KDQJHVLQIDLUYDOXHRIIRUZDUGUHSXUFKDVHDJUHHPHQWV &KDQJHVLQIDLUYDOXHRIIRUZDUGUHSXUFKDVH      HDJUHHPHQWV  &KDQJHVLQIDLUYDOXHRIVRYHUHLJQERQGV &KDQJHVLQIDLUYDOXHRIVRYHUHLJQERQGV      &KDQJHVLQIDLUYDOXHRILQWHUHVWUDWHVZDSV       VWKDWKHGJHGWUDQVIHUUHG    &KDQJHVLQIDLUYDOXHRILQWHUHVWUDWHVZDSVWKDWKHGJHGWUDQVIHUUHG VHFXULWLHV VHFXULLWLHV  7RWDOFKDQJHVLQIDLUYDOXHRIILQDQFLDOLQVWUXPHQWVUHVXOWLQJIURPWUDQVIHUVRI 7RWDOFKD  DQJHVLQIDLUYDOXHRIILQDQFLDOLQVWU       UXPHQWVUHVXOWLQJIURPWUDQVIH    UVRI  I VHFXULLWLHVXQGHUUHSXUFKDVHDJUHHPHQWV     VHFXULWLHVXQGHUUHSXUFKDVHDJUHHPHQWV











7KH HIIHFWV HIIHFFWV LQ WKH VWDWHPHQW RI LQFRPH IRU U WKH \HDU HQGHG 'HFHPEHU       RI WUDQVIHUV RI VHFXULWLHV XQGHU XQGHHU UHSXUFKDVH DJUHHPHQWVLVVXPPDUL]HGEHORZ DJUHHPHQ QWVLVVXPPDUL]HGEHORZ     

,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

  /RVVLQVDOHWUDQVDFWLRQVXQGHUUHSXUFKDVHDJUHHPHQWV /RVVLQV  VDOHWUDQVDFWLRQVXQGHUUHSXUFKDVH     DJUHHPHQWV &KDQJHV VLQIDLUYDOXHRIILQDQFLDOLQVWUXPHQ QWVUHVXOWLQJIURP &KDQJHVLQIDLUYDOXHRIILQDQFLDOLQVWUXPHQWVUHVXOWLQJIURP WUDQVIHUVRIVHFXULWLHVXQGHUUHSXUFKDVHDJUHHPHQWV WUDDQVIHUVRIVHFXULWLHVXQGHUUHSXUFKD     DVHDJUHHPHQWV  7RWDO ORV VV LQ WUDQVIHUV RI VHFXULWLHV XQG HU UHSXUFKDVH ORVV XQGHU DJ JUHHPHQWV DJUHHPHQWV



 



 6KRUWWHUPERUURZLQJV 6KRUWWHUUPERUURZLQJV   7KHEUHD  NGRZQRIVKRUWWHUPERUURZLQJVGX     XHWRILQDQFLDOLQVWLWXWLRQVWRJH     WKHU UZLWKFRQWUDFWXDOLQWHUHVWUDWHVLV      DVIROORZV  7KHEUHDNGRZQRIVKRUWWHUPERUURZLQJVGXHWRILQDQFLDOLQVWLWXWLRQVWRJHWKHUZLWKFRQWUDFWXDOLQWHUHVWUDWHVLVDVIROORZV ,QWKRXV ,QWKRXVDQGVRI86

 DQGVRI86

 



'HFHPEHU 'HFHPEHU E 

 

$GYDQFHVIURPILQDQFLDOLQVWLWXWLRQV $GYDQFHV VIURPILQDQFLDOLQVWLWXWLRQV   $WIL[HG  $WIL[HGLQWHUHVWUDWHV  LQWHUHVWUDWHV  $WIORDWLQJLQWHUHVWUDWHV $WIORDWL   LQJLQWHUHVWUDWHV    7RWDOVKR  UWWHUPERUURZLQJV  7RWDOVKRUWWHUPERUURZLQJV

      

       

$YHUDJHR RXWVWDQGLQJEDODQFHGXULQJWKH\HD     DU $YHUDJHRXWVWDQGLQJEDODQFHGXULQJWKH\HDU



  

0D[LPXPEDODQFHDWDQ\PRQWKHQG 0D[LPXP PEDODQFHDWDQ\PRQWKHQG   

 

 

5DQJHRIIL[HGLQWHUHVWUDWHVRQERUURZLQJVLQ86GROODUV 5DQJHRI  IIL[HGLQWHUHVWUDWHVRQERUURZLQJV      LQ8 LQ86GROODUV  6 GROODUV

WR WR  WR 

 WR    WR WR   

5DQJHRIIORDWLQJLQWHUHVWUDWHVRQERUURZLQJVLQ86GROODUV 5DQJHRI  IIORDWLQJLQWHUHVWUDWHVRQERUURZLQ      QJVLQ86GROODUV   

WR WR



:HLJKWHG GDYHUDJHLQWHUHVWUDWHDWHQGRIWKH        H\HDU  :HLJKWHGDYHUDJHLQWHUHVWUDWHDWHQGRIWKH\HDU





:HLJKWHG :HLJKWHGDYHUDJHLQWHUHVWUDWHGXULQJWKH\HDU GDYHUDJHLQWHUHVWUDWHGXULQJWKH\      \HDU





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

102

    Notes to consolidated financial statements


'HFHPEHU ,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

 



%RUURZLQ %RUURZLQJV QJV $WIL[HG $WIL[HGLQWHUHVWUDWHVZLWKGXHGDWHVIURP-DQXDU\  LQWHUHVWUDWHVZLWKGXHGDWHVIURP      -DQXDU\   WR6HS  SWHPEHU  WR6HSWHPEHU $WIORDWLQJLQWHUHVWUDWHVZLWKGXHGDWHVIURP0DUFK $WIORDWLQ  QJLQWHUHVWUDWHVZLWKGXHGDWHVIUR       P0DUFK    WR-XO\ WR-XO\  \ 7RWDOERU  UURZLQJV 7RWDOERUURZLQJV

 





       

         

       

         

7RWDOERUURZLQJVDQGORQJWHUPGHEWRXWVWDQGLQJ 7RWDOERU  UURZLQJVDQGORQJWHUPGHEWRXWVWD     DQGLQJ



   

$YHUDJHRXWVWDQGLQJEDODQFHGXULQJWKH\HDU $YHUDJHRXWVWDQGLQJEDODQFHGXULQJWKH\H     HDU



   

'HEW $WIL[HG  LQWHUHVWUDWHVZLWKGXHGDWHVLQ1RY       YHPEHU  $WIL[HGLQWHUHVWUDWHVZLWKGXHGDWHVLQ1RYHPEHU $WIORDWLQ  QJLQWHUHVWUDWHV    $WIORDWLQJLQWHUHVWUDWHV 7RWDOGHE  EW 7RWDOGHEW

0D[LPXPRXWVWDQGLQJEDODQFHDWDQ\PRQWKHQG 0D[LPXP PRXWVWDQGLQJEDODQFHDWDQ\PRQ      QWKHQG



   

5DQJHRI  IIL[HGLQWHUHVWUDWHVRQERUURZLQJV      VDQGGHEWLQ     5DQJHRIIL[HGLQWHUHVWUDWHVRQERUURZLQJVDQGGHEWLQ 86GR   ROODUV 86GROODUV

WR  WR  

WR W WR 

5DQJHRIIORDWLQJLQWHUHVWUDWHVRQERUURZLQJVDQGGHEWLQ 5DQJHRI  IIORDWLQJLQWHUHVWUDWHVRQERUURZLQ      QJVDQGGHEWLQ     86GROODUV 86GR  ROODUV

WR  WR  

WR W WR 

5DQJHRI 5DQJHRIIL[HGLQWHUHVWUDWHVRQERUURZLQJVLQ0H[LFDQ  IIL[HGLQWHUHVWUDWHVRQERUURZLQJV      VLQ0H[LFDQ    SHVRV

WR  WR  

WR W WR 

5DQJHRI 5DQJHRIIORDWLQJLQWHUHVWUDWHVRQERUURZLQJVLQ0H[LFDQ  IIORDWLQJLQWHUHVWUDWHVRQERUURZLQ      QJVLQ0H[LFDQ    SHVRV

WR  WR  

WR W WR 

)L[HGLQW  WHUHVWUDWHRQGHEWLQ3HUXYLDQVROH       V )L[HGLQWHUHVWUDWHRQGHEWLQ3HUXYLDQVROHV

 

 

:HLJKWHG :HLJKWHGDYHUDJHLQWHUHVWUDWHDWWKHHQGRIWKH\HDU GDYHUDJHLQWHUHVWUDWHDWWKHHQGR       RIWKH\HDU   

 

 

:HLJKWHG :HLJKWHGDYHUDJHLQWHUHVWUDWHGXULQJWKH\HDU GDYHUDJHLQWHUHVWUDWHGXULQJWKH\      \HDU 

   

   

7KH %DQ NªV IXQGLQJ DFWLYLWLHV LQFOXGH D (X XUR1RWH SURJUDP ZKLFK PD\ EH XVHG X  WR LVVXH QRWHV IRU XS WR   ELOOLRQ ZLWK %DQNªV (XUR1RWH PDWXULWLH HVIURPGD\VXSWRDPD[LPXPRI I\HDUVDWIL[HGRUIORDWLQJLQWHUHHVWUDWHVRUDWGLVFRXQWDQGLQYDULRXVFXUUHQFLHV PDWXULWLHVIURPGD\VXSWRDPD[LPXPRI\HDUVDWIL[HGRUIORDWLQJLQWHUHVWUDWHVRUDWGLVFRXQWDQGLQYDULRXVFXUUHQFLHV 7KHQRWH  VDUHJHQHUDOO\VROGLQEHDUHURUUH        JLVWHUHGIRUPWKURXJKRQHRU     PRUH HDXWKRUL]HGILQDQFLDOLQVWLWXWLRQV   7KHQRWHVDUHJHQHUDOO\VROGLQEHDUHURUUHJLVWHUHGIRUPWKURXJKRQHRUPRUHDXWKRUL]HGILQDQFLDOLQVWLWXWLRQV 6RPH ERRUURZLQJ DJUHHPHQWV LQFOXGH YDULRRXV HYHQWV RI GHIDXOW DQG FRYHQDQ QWV UHODWHG WR PLQLPXP FDSLWDO DGHHTXDF\ UDWLRV 6RPHERUURZLQJDJUHHPHQWVLQFOXGHYDULRXVHYHQWVRIGHIDXOWDQGFRYHQDQWVUHODWHGWRPLQLPXPFDSLWDODGHTXDF\UDWLRV LQFXUUHQF FH RI DGGLWLRQDO OLHQV DQG DVVHW VDDOHV DV ZHOO DV RWKHU FXVWRPDU\ FRRYHQDQWV UHSUHVHQWDWLRQV DQG ZDUUUDQWLHV  $V RI LQFXUUHQFHRIDGGLWLRQDOOLHQVDQGDVVHWVDOHVDVZHOODVRWKHUFXVWRPDU\FRYHQDQWVUHSUHVHQWDWLRQVDQGZDUUDQWLHV$VRI 'HFHPEH HUWKH%DQNZDVLQFRPS        OLDQFHZLWKDOOFRYHQDQWV    'HFHPEHUWKH%DQNZDVLQFRPSOLDQFHZLWKDOOFRYHQDQWV 7KHIXWXU 7K I UHUHPDLQLQJPDWXULWLHVRIORQJWHUP    IO  PGHEWDQGERUURZLQJVRXWVWDQG G E  GE   GLQJ JDVRI'HFHPEHUDUHDV   I'  E     IROORZV I  OO 7KHIXWXUHUHPDLQLQJPDWXULWLHVRIORQJWHUPGHEWDQGERUURZLQJVRXWVWDQGLQJDVRI'HFHPEHUDUHDVIROORZV ,QWKRXVDQGVRI86

,QWKRXVDQ  GVRI86

  'XHLQ    

    Notes to consolidated financial statements

2XWVWDQGLQJ 2X XWVWDQGLQJ J       

103


&RPPRQVWRFN  &RPPRQ  QVWRFN 

7KH%DQNªVFRPPRQVWRFNLVGLYLGHGLQWRIRXUFDWHJRULHV 7KH%DQN  NªVFRPPRQVWRFNLVGLYLGHGLQWRIR       RXUFDWHJRULHV    

  

  



 

§&ODVV$¨VKDUHVPD\RQO\EHLVVXHGWR/DWLQ$PHULFDQ&HQWUDO%DQNVRUEDQNVLQZKLFKWKHVWDWHRURWKHUJRYHUQPHQW §&OD DVV$¨VKDUHVPD\RQO\EHLVVXHGWR/DWLQ$PHULFDQ&HQWUDO%DQNVRU R EDQNVLQZKLFKWKHVWDWHRURWKHHUJRYHUQPHQW DJHQF\LVWKHPDMRULW\VKDUHKROGHU DJH HQF\LVWKHPDMRULW\VKDUHKROGHU      §&ODVV%¨VKDUHVPD\RQO\EHLVVXHGWREDQNVRUILQDQFLDOLQVWLWXWLRQV §&OD DVV%¨VKDUHVPD\RQO\EHLVVXHGW       WREDQNVRUILQDQFLDOLQVWLWXWL     RQV §&ODVV(¨VKDUHVPD\EHLVVXHGWRDQ\SHUVRQZKHWKHUDQDWXUDOSHUVRQRUDOHJDOHQWLW\ §&OD DVV(¨VKDUHVPD\EHLVVXHGWRDQ\        \SHUVRQZKHWKHUDQDWXUDOSH      UVRQRUDOHJDOHQWLW\     RWKHUV §&OD DVV )¨ FDQ RQO\ EH LVVXHG WR VWDWH H HQWLWLHV DQG DJHQFLHV RI QRQ/DWLQ $PHULFDQ FRXQWULHV LQFOXGLQJ DPRQJ D §&ODVV)¨FDQRQO\EHLVVXHGWRVWDWHHQWLWLHVDQGDJHQFLHVRIQRQ/DWLQ$PHULFDQFRXQWULHVLQFOXGLQJDPRQJRWKHUV FHQ QWUDOEDQNVDQGPDMRULW\VWDWHRZQHHGEDQNVLQWKRVHFRXQWULHVDQGPXOWLODWHUDOILQDQFLDOLQVWLWXWLRQVHLWKHU ULQWHUQDWLRQDO FHQWUDOEDQNVDQGPDMRULW\VWDWHRZQHGEDQNVLQWKRVHFRXQWULHVDQGPXOWLODWHUDOILQDQFLDOLQVWLWXWLRQVHLWKHULQWHUQDWLRQDO RUU UHJLRQDOLQVWLWXWLRQV   RUUHJLRQDOLQVWLWXWLRQV

7KH KROGHHUVRI§&ODVV%¨VKDUHVKDYHWKHULJK KWWRFRQYHUWRUH[FKDQJHWKHLU§&ODDVV%¨VKDUHVDWDQ\WLPHDQGZLWKRRXWUHVWULFWLRQ 7KHKROGHUVRI§&ODVV%¨VKDUHVKDYHWKHULJKWWRFRQYHUWRUH[FKDQJHWKHLU§&ODVV%¨VKDUHVDWDQ\WLPHDQGZLWKRXWUHVWULFWLRQ IRU§&ODV  V(¨VKDUHVDWDUDWHRIRQHWRRQH          H IRU§&ODVV(¨VKDUHVDWDUDWHRIRQHWRRQH 7KH IROORZ ZLQJ WDEOH SURYLGHV GHWDLOHG LQIRUP PDWLRQ RQ WKH %DQNªV FRPPRQ VWRFFN DFWLYLW\ SHU FODVV IRU HDFK RI WKH H \HDUV LQ WKH 7KHIROORZLQJWDEOHSURYLGHVGHWDLOHGLQIRUPDWLRQRQWKH%DQNªVFRPPRQVWRFNDFWLYLW\SHUFODVVIRUHDFKRIWKH\HDUVLQWKH WKUHH\HD DUSHULRGHQGHG'HFHPEHU       WKUHH\HDUSHULRGHQGHG'HFHPEHU 6KDUHXQLWV

6KDUHXQL  LWV

§&ODVV$¨

§&ODVV%¨

§&ODVV(¨

§&ODVV)¨

7RWDO

$XWKRUL]HGG











2XWVWDQGLQJDW-DQXDU\ 2XWVWDQGLQ QJDW-DQXDU\    











&RQYHUVVLRQV &RQYHUVLRQV











5HVWULFWHHGVWRFNLVVXHG   5HVWULFWHGVWRFNLVVXHG















  



  











&RQYHUVLRQV &RQYHUVVLRQV











5HVWULFWHGVWRFNLVVXHG 5 W L WHGVWRFNLVVXHG 5HVWULFWH G W NL  G





  



  

([HUFLVHGVWRFNRSWLRQVFRPSHQVDWLRQSODQV ([HUFLVHHGVWRFNRSWLRQVFRPSHQVDWLRQSODQV    















  



  











&RQYHUVLRQV &RQYHUVVLRQV











5HSXUFKDVHRIFRPPRQVWRFN 5HSXUFK KDVHRIFRPPRQVWRFN   











5HVWULFWHHGVWRFNLVVXHG   5HVWULFWHGVWRFNLVVXHG











([HUFLVHHGVWRFNRSWLRQVFRPSHQVDWLRQSODQV     ([HUFLVHGVWRFNRSWLRQVFRPSHQVDWLRQSODQV















  



  







 



([HUFLVHHGVWRFNRSWLRQVFRPSHQVDWLRQSODQV     ([HUFLVHGVWRFNRSWLRQVFRPSHQVDWLRQSODQV 2XWVWDQGLQJDW'HFHPEHU 2XWVWDQGLQ QJDW'HFHPEHU    

5HVWULFWHGVWRFNXQLWVYHVWHG 5HVWULFWHHGVWRFNXQLWVYHVWHG    2XWVWDQGLQ QJDW'HFHPEHU     2XWVWDQGLQJDW'HFHPEHU

5HVWULFWHHGVWRFNXQLWVYHVWHG    5HVWULFWHGVWRFNXQLWVYHVWHG 2XWVWDQGLQJDW'HFHPEHU 2XWVWDQGLQ QJDW'HFHPEHU    

104

    Notes to consolidated financial statements


7KHIROORZ 7KHIROORZLQJWDEOHSUHVHQWVLQIRUPDWLRQUHJDUGLQJVKDUHVUHSXUFKDVHGEXWQRWUHWLUHGE\WKH%DQNDQGDFFRUGLQJO\FODVVLILHG ZLQJWDEOHSUHVHQWVLQIRUPDWLRQUHJJDUGLQJVKDUHVUHSXUFKDVHGEXWQRRWUHWLUHGE\WKH%DQNDQGDFFRUGLQ QJO\FODVVLILHG DVWUHDVX  U\VWRFN  DVWUHDVXU\VWRFN §&ODVV$¨  ¨

GVH[FHSWIRUVKDUHGDWD

    ,QWKRXVDQG ,QWKRXVDQGVH[FHSWIRUVKDUHGDWD



6KDUHV    2XWVWDQGLQJ JDW-DQXDU\ 2XWVWDQGLQJDW-DQXDU\ 5HVWULFWHGVW  WRFNLVVXHG  5HVWULFWHGVWRFNLVVXHG    ([HUFLVHGVWRFNRSWLRQVÂ¥ ([HUFLVHGVW  RFNRSWLRQVÂ¥ FRPSHQVDWLRQSODQV  FRPSHQVVDWLRQSODQV    2XWVWDQGLQJ JDW'HFHPEHU 2XWVWDQGLQJDW'HFHPEHU

§&ODVV%¨

$PRXQW $P PRXQW

6KDUHV

§&ODVV(¨

$PRXQW

6KDUHV













 





 





5HVWULFWHGVW  WRFNLVVXHG  5HVWULFWHGVWRFNLVVXHG    ([HUFLVHGVW  RFNRSWLRQVÂ¥ ([HUFLVHGVWRFNRSWLRQVÂ¥  FRPSHQVVDWLRQSODQV FRPSHQVDWLRQSODQV





  5HVWULFWHGVWRFNXQLWVYHVWHG 5HVWULFWHGVW  WRFNXQLWVYHVWHG





   2XWVWDQGLQJ JDW'HFHPEHU 2XWVWDQGLQJDW'HFHPEHU

  



  



 

   

7RWDO 7RW WDO

$PRXQW

6KDUHV

 

 

  



$PRXQW 







 



 



 





















 



 



 





 



 

















5HSXUFKDVHRIFRPPRQVWRFN   5HSXUFKDVHRIFRPPRQVWRFN

















5HVWULFWHGVW  WRFNLVVXHG  5HVWULFWHGVWRFNLVVXHG    ([HUFLVHGVW  RFNRSWLRQVÂ¥ ([HUFLVHGVWRFNRSWLRQVÂ¥ FRPSHQVVDWLRQSODQV  FRPSHQVDWLRQSODQV



















  5HVWULFWHGVW  WRFNXQLWVYHVWHG 5HVWULFWHGVWRFNXQLWVYHVWHG





   2XWVWDQGLQJ JDW'HFHPEHU 2XWVWDQGLQJDW'HFHPEHU





















 



 









 





 















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ªVSODQVDUHRQO\FRPSULVHGRIVSHFLILHG WR WKH JURRZWK DQG SURILWDELOLW\ RI WKH %DQN  9HVWLQJ FRQGLWLRQV IRU HDFK RI WK KH %DQNªV SODQV DUH RQO\ FRPSULVHG RI VSHFLILHG UHTXLVLWHVHUYLFHSHULRGV UHTXLVLWH VHUYLFHSHULRGV  $6WRFN,QFHQWLYH3ODQ¥'LUHFWRUVDQG([HFXWLYHV $6 6WRFN,QFHQWLYH3ODQ¥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§&ODVV(¨FRPPRQVKDUHV7KH PD[LPXP PDJJUHJDWHQXPEHURIVKDUHVZKLFFKPD\EHLVVXHGXQGHUWKLVSODQLVWZRPLOOLRQ§&ODVV(¨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¥'LUHFWRUV 5HVW WULFWHGVWRFN¥'LUHFWRUV    ,Q-XO\DQGWKH%RDUGRI'LUHFWRUVJUDQWHGDQGUHVSHFWLYHO\§&ODVV(¨FRPPRQ ,Q -X XO\DQGWKH%RDUG GRI'LUHFWRUVJUDQWHGDQGUHVSHFWLYHO\§&ODVVV(¨FRPPRQ VKDUHVZRUWKWKRXVDQGIRUHDFK'LUHFWRUDQGWKRXVDQGWRWKH&KDLUPDQRIWKH%RDUG7KHIDLUYDOXHRIUHVWULFWHG VKDU K UHVZRUWK WKWKRXVDQG WK GIRU I HDFK K'LLUHFWRU L W DQG GWKRXVDQG WK GWR W WKH WK &K K L KDLUPDQ RI IWKH WK %RDUG % G 7KH 7K IDLU I L YDOX O HRI IUHVWULFWHG W L W G VWRFNJUDQWHGZDVEDVHGRQWKHVWRFNFORVLQJSULFHLQWKH1HZ<RUN6WRFN([FKDQJHRIWKH§&ODVV(¨VKDUHVRQ-XO\ VWRFN NJUDQWHGZDVEDVHGRQWKHVWRFNFORVLQJ F SULFHLQWKH1HZ<RUN6WRFN([FKDQJHRIWKH§&ODVV(¨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

    Notes to consolidated financial statements

105


$VX $VXPPDU\DVRI'HFHPEHURIWKHUHVWULFWHGVWRFNJUDQWHGWR'LUHFWRUVGXULQJWKH\HDUVDQGLV XPPDU\DVRI'HFHPEHURI R WKHUHVWULFWHGVWRFNJUDQWHGWR'LUUHFWRUVGXULQJWKH\HDUV DQGLV SUHV HQWHGEHORZ  SUHVHQWHGEHORZ

6KDUHV

2XWV VWDQGLQJDW-DQXDU\     2XWVWDQGLQJDW-DQXDU\ *UDQ QWHG *UDQWHG 9HVWH HG 9HVWHG 2XWVWDQGLQJDW'HFHPEHU 2XWVVWDQGLQJDW'HFHPEHU     *UDQ QWHG *UDQWHG 9HVWHHG 9HVWHG 2XWVWDQGLQJDW'HFHPEHU 2XWVVWDQGLQJDW'HFHPEHU     *UDQWHG *UDQ QWHG 9HVWHG 9HVWHHG 2XWVVWDQGLQJDW'HFHPEHU     2XWVWDQGLQJDW'HFHPEHU ([SHFWHGWRYHVW ([SHHFWHGWRYHVW   

        

   

 

:HLJKWHHGDYHUDJH :HLJKWHGDYHUDJH   JUDQW JUDQWGDWHIDLU GDWHIDLU   YD YDOXH DOXH           

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§&ODVV(¨VKDUHSH       HUHDFKH[HUFLVHGRSWLRQRUYHVWHG      UHVWULFWHGV   WRFNXQLW 7KH%DQNJUDQWVRQH§&ODVV(¨VKDUHSHUHDFKH[HUFLVHGRSWLRQRUYHVWHGUHVWULFWHGVWRFNXQLW 5HVWULFWHGVWRFNXQLWV 7KHIDLUYDOXHRIWKHVWRFNXQLWVZDVEDVHGRQWKH§&ODVV(¨VWRFNFORVLQJSULFHLQWKH1HZ<RUN6WRFN([FKDQJHRQ 7KH IDLUYDOXHRIWKHVWRFNXQLWVZDV Z EDVHGRQWKH§&ODVV(¨VWRFNFOORVLQJSULFHLQWKH1HZ<RUN6WRFN([FKDQJHRQ WKHJUDQWGDWH7KHVHVWRFNXQLWV      YHVWHDFK\HDURQWKHJUDQWG       GDWHªV  DQQLYHUVDU\ WKHJUDQWGDWH7KHVHVWRFNXQLWVYHVWHDFK\HDURQWKHJUDQWGDWHª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

2XWVWDQGLQJDW-DQXDU\ *UDQWHG )RUIHLWHG 2XWVWDQGLQJDW'HFHPEHU      2XWVWDQGLQJDW'HFHPEHU *UDQWHG )RUIHLWHG 9HVWHG 2XWVWDQGLQJDW'HFHPEHU 2XWVWDQGLQJDW'HFHPEHU      *UDQWHG )RUIHLWHG 9HVWHG 2XWVWDQGLQJDW'HFHPEHU 2 W W GL  W' 2XWVWDQGLQJDW'HFHPEHU  E    ([SHFWHGWRYHVW

6WRFNXQLWV

    

  

 

      

    

:HLJKWHHG :HLJKWHG DYHUDJHJU  UDQW DYHUDJHJUDQW GDWHIDLU GDWHIDL  LU YDOXH                     

:HLJKWHG DYHUDJH UHPDLQLQJ FRQWUDFWXDO WHUP

\HDUV  

$JJUHJDWH $J JJUHJDWH LQWULLQVLFYDOXH LQWULQVLFYDOXH  WKR WKRXVDQGV

WKR RXVDQGV

      

7KH IDLUYDOXHRIYHVWHGVWRFNGXULLQJWKH\HDUVDQGZDV  WKRXVDQGDQGWKRXVDQGGUHVSHFWLYHO\ 7KHIDLUYDOXHRIYHVWHGVWRFNGXULQJWKH\HDUVDQGZDVWKRXVDQGDQGWKRXVDQGUHVSHFWLYHO\

106

    Notes to consolidated financial statements


Stock purchase options: The fair value of stock purchase options granted to certain Executives during 2010, 2009 and 2008 was estimated using the “Black-Scholes” option-pricing model, based on the following factors: 2010 $2.91 4.75 37% 2.32% 5.00%

Weighted average fair value per option Weighted average expected term, in years Expected volatility Risk-free rate Expected dividend

2009 $1.90 4.75 37% 1.79% 6.00%

2008 $3.52 5.50 37% 2.72% 4.84%

These options expire seven years after the grant date and are exercisable at a rate of 25% each year on the grant date’s anniversary. Related cost charged against income during 2010, 2009 and 2008 as a result of the amortization of these plans amounted to $742 thousand, $436 thousand and $178 thousand, respectively. The remaining compensation cost pending amortization of $1,752 thousand in 2010 will be amortized over a period of 2.53 years. A summary of stock options granted is presented below:

Outstanding at January 1, 2008 Granted Forfeited Outstanding at December 31, 2008 Granted Forfeited Outstanding at December 31, 2009 Granted Forfeited Exercised Outstanding at December 31, 2010 Exercisable Expected to vest

Options

232,403 (3,318) 229,085 601,985 (27,076) 803,994 420,777 (646) (82,106) 1,142,019 172,898 969,121

Weighted average exercise price $15.43 15.43 15.43 10.15 12.43 $11.58 13.52 15.43 10.15 $12.39 $13.46 $12.20

Weighted average remaining contractual term

5.29 years 4.12 years 5.44 years

Aggregate intrinsic value (thousands)

$6,928 $ 865 $6,063

The intrinsic value of exercised options during the year ended December 31, 2010 was $383 thousand. During the year ended December 31, 2010 the Bank received $834 thousand from exercised options. B. Restricted Stock – Directors (Discontinued) During 2003, the Board of Directors approved a restricted stock award plan for Directors of the Bank that was amended in 2007 and subsequently terminated in 2008. No grants were made after the 2007’s grant. The restricted stock vests at a rate of 20% each year on the grant date’s anniversary. Related costs to outstanding restricted stock were charged against income totaled $108 thousand, $123 thousand and $217 thousand in 2010, 2009 and 2008, respectively. As of December 31, 2010, the Bank had unrecognized compensation costs of $139 thousand related to this plan that will be amortized over 1.49 years.

Notes to consolidated financial statements

107


$VXPPDDU\DVRI'HFHPEHURIUHVVWULFWHGVWRFNJUDQWHGWR'LUHFWRUVXQGHU $VXPPDU\DVRI'HFHPEHURIUHVWULFWHGVWRFNJUDQWHGWR'LUHFWRUVXQGHUWKLVSODQDQGFKDQJHVGXULQJ X WKLVSODQDQGFKDQJHVGXULQ QJ DQG  LVSUHVHQWHGEHORZ   DQGLVSUHVHQWHGEHORZ

6KDUHV    

     

   

 

1RQYHVWH  HGDW-DQXDU\     1RQYHVWHGDW-DQXDU\ *UDQWHG 9HVWHG 1RQYHVWH 1RQYHVWHGDW'HFHPEHU  HGDW'HFHPEHU     *UDQWHG 9HVWHG 1RQYHVWHGDW'HFHPEHU 1RQYHVWH  HGDW'HFHPEHU     *UDQWHG 9HVWHG 1RQYHVWH 1RQYHVWHGDW'HFHPEHU  HGDW'HFHPEHU     ([SHFWHG ([SHFWHGWRYHVW WRYHVW 

:HLJKWHGDYHU :HLJKWHGDYHUDJH  UDJH JUDQWGDWHIDLU JUDQWGDWHID   DLU YDOXH                        

7KH WRWDO IDLU YDOXH RI YHVWHGVWRFN YHVWHG VWRFN GXULQJWKH\HDUVHQGHG'HFHPEHU GXULQJ WKH \HDUV HQGHG 'HFHPEHU     DQG  DQG  ZDV  WKRXVDQG WKRRXVDQG  WKRXVDQGDQGWKRXVDQGUHVSHFWLYHO\ WKRXVDQG DQGWKRXVDQGUHVSHFWLYHO\    &6WRFN2SWLRQ3ODQÂ¥'LUHFWRUVDQG([HFXWLYHV 'LVFRQWLQXHG

&6WRFN2 2SWLRQ3ODQÂ¥'LUHFWRUVDQG( S       ([HFXWLYHV 'LVFRQWLQXHG



7KH6WRFN2SWLRQ3ODQZDVWHUPLQDWHGLQ7KHRSWLRQVJUDQWHGXQGHUWKLVSODQH[SLUHVHYHQ\HDUVDIWHUWKHJUDQWGDWH 7KH 6WRFN2SWLRQ3ODQZDVWHUPLQDWHGLQ L 7KHRSWLRQVJUDQWHGXQGHUWKLVSODQH[SLUHVHYHQ\HDUVDIWHUWKH W JUDQWGDWH DQGDUHH[HUFLVDEOHDWDUDWHRIHDFK\HDURQWKHJUDQWGDWHªVDQQLYHUVDU\1RJUDQWVZHUHPDGHDIWHUWKHªVJUDQW DQGDUHH  H[HUFLVDEOHDWDUDWHRIHDFK\H        HDURQWKHJUDQWGDWHªVDQQLY      HUVDU\\1RJUDQWVZHUHPDGHDIWHUWKH        ª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

2XWVWDQGLQJDW-DQXDU\ 2XWVWDQG LQJDW-DQXDU\     )RUIHLWHG 2XWVWDQG LQJDW'HFHPEHU     2XWVWDQGLQJDW'HFHPEHU )RUIHLWHG 2XWVWDQG 2XWVWDQGLQJDW'HFHPEHU LQJDW'HFHPEHU     )RUIHLWHG 2XWVWDQG 2XWVWDQGLQJDW'HFHPEHU LQJDW'HFHPEHU     ([HUFLVDE ([HUFLVDEOHDW'HFHPEHU EOHDW'HFHPEHU     ([SHFWHGWRYHVW ([SHFWHG WRYHVW 

2SWLRQV S     

       

:HLJKWHG G DYHUDJH H[HUFLVHSULFH H[HUFLVHSUL S LFH                       

:HLJKWHG DYHUDJH UHPDLQLQJ FRQWUDFWXDO WHUP

\HDUV \HDUV \HDUV

$JJUHJDWH LQWULQVLF YDOXH WKRXVDQGV

   

',QGH[HHG6WRFN2SWLRQ3ODQ 'LVFRQWLQXHG   S   G 

 ',QGH[HG6WRFN2SWLRQ3ODQ 'LVFRQWLQXHG  'XULQJ WKH%RDUGRI'LUHFWRUVDSSURYHGDQLQGH[HGVWRFNSXUFKDVHRSWLRQ QSODQIRU'LUHFWRUVDQGFHUWDLQH[HHFXWLYHVRIWKH 'XULQJWKH%RDUGRI'LUHFWRUVDSSURYHGDQLQGH[HGVWRFNSXUFKDVHRSWLRQSODQIRU'LUHFWRUVDQGFHUWDLQH[HFXWLYHVRIWKH %DQNZKLLFKZDVVXEVHTXHQWO\WHUPLQDWHGLQ Q$SULO7KHLQGH[HGVWRFNRSWLRQVH[SLUHLQWHQ\HDUVDQGDUHYHHVWHGDWDUDWH %DQNZKLFKZDVVXEVHTXHQWO\WHUPLQDWHGLQ$SULO7KHLQGH[HGVWRFNRSWLRQVH[SLUHLQWHQ\HDUVDQGDUHYHVWHGDWDUDWH RI  HDDFK \HDU RQ WKH JUDQW GDWHªV DQQLYYHUVDU\  7KH H[HUFLVH SULFH LV DGMXVVWHG EDVHG RQ WKH FKDQJH LQ D FXVWRPL]HG /DWLQ RIHDFK\HDURQWKHJUDQWGDWHªVDQQLYHUVDU\7KHH[HUFLVHSULFHLVDGMXVWHGEDVHGRQWKHFKDQJHLQDFXVWRPL]HG/DWLQ $PHULFDQJHQHUDOPDUNHWLQGH[$VRI'HFHP PEHUWKHUHZDVQRFRPSHQ QVDWLRQFRVWSHQGLQJDPRUWL]DWLRQ5HODWHGFRVWV $PHULFDQJHQHUDOPDUNHWLQGH[$VRI'HFHPEHUWKHUHZDVQRFRPSHQVDWLRQFRVWSHQGLQJDPRUWL]DWLRQ5HODWHGFRVWV FKDUJHGDJDLQVW D LQFRPHDPRXQWHGWRWK KRXVDQGWKRXVDQGDQGWKRXVDQGLQDQG UHVSHFWLYHO\ FKDUJHGDJDLQVWLQFRPHDPRXQWHGWRWKRXVDQGWKRXVDQGDQGWKRXVDQGLQDQGUHVSHFWLYHO\

108

    Notes to consolidated financial statements


$VXPPDDU\DVRI'HFHPEHUDQGFKDQJHVGXULQJWKH\HDUVDQGRIWKHLQGH[HGVWRFNSXUFFKDVHRSWLRQV $VXPPDU\DVRI'HFHPEHUDQGFKDQJHVGXULQJWKH\HDUVDQGRIWKHLQGH[HGVWRFNSXUFKDVHRSWLRQV LVSUHVHQW  WHGEHORZ  LVSUHVHQWHGEHORZ

2SWLRQV S 2XWVWDQG LQJDW-DQXDU\     2XWVWDQGLQJDW-DQXDU\ )RUIHLWHG ([HUFLVHGG 2XWVWDQGLQJDW'HFHPEHU 2XWVWDQGLQJDW'HFHPEHU     )RUIHLWHG ([HUFLVHGG 2XWVWDQGLQJDW'HFHPEHU 2XWVWDQGLQJDW'HFHPEHU     )RUIHLWHG ([HUFLVHGG 2XWVWDQGLQJDW'HFHPEHU     2XWVWDQGLQJDW'HFHPEHU ([HUFLVDE ([HUFLVDEOHDW'HFHPEHU EOHDW'HFHPEHU    

  



   

     

    

:HLJKWHGD :HLJKWHGDYHUDJH DYHUDJH H[HUFLVHS S SULFH H[HUFLVHSULFH

:HLJKWHG DYHUDJH UHPDLQLQJ FRQWUDFWXDO WHUP

$ $JJUHJDWH  LQW LQWULQVLFYDOXH WULQVLFYDOXH  WKRXVDQGV

W WKRXVDQGV

\HDUV \HDUV

 

         

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ªV6WRFN2SWLRQ3ODQ 'LVFRQWLQXHG

(D DQGªV6WRFN2SWLRQ3ODQ 'LVF    S   FRQWLQXHG

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

2SWLRQV S 2XWVWDQGLQJDW-DQXDU\ 2XWVWDQGLQJDW-DQXDU\     )RUIHLWHG ([SLUHG 2XWVWDQGLQJDW'HFHPEHU 2XWVWDQGLQJDW'HFHPEHU     )RUIHLWHG ([SLUHG 2XWVWDQGLQJDW'HFHPEHU 2XWVWDQGLQJDW'HFHPEHU     )RUIHLWHG ([SLUHG 2XWVWDQGLQJDW'HFHPEHU 2XWVWDQGLQJDW'HFHPEHU     ([HUFLVDEOHDW'HFHPEHU ([HUFLVDE EOHDW'HFHPEHU    

 

   

 

   

   

 

:HLJKWHGD :HLJKWHGDYHUDJH DYHUDJH H[HUFLVHS H[HUFLVHSULFH S SULFH           

:HLJKWHG DYHUDJH UHPDLQLQJ FRQWUDFWXDO WHUP

$ $JJUHJDWH  LQW LQWULQVLFYDOXH WULQVLFYDOXH  WKRXVDQGV

WKRXVDQGV

W

\HDUV \HDUV

 

$OORSWLRQ  QVDUHDYDLODEOHWREHH[HUFLVHGDV       RI'HFHPEHU    $OORSWLRQVDUHDYDLODEOHWREHH[HUFLVHGDVRI'HFHPEHU )'HIHUUH HG&RPSHQVDWLRQ3ODQ WKH§'&3OD  S     DQ¨

)'HIHUUHG&RPSHQVDWLRQ3ODQ WKH§'&3ODQ¨

,Q  WKH W  %RDUG RI 'LUHFWRUV DSSURYHG WK KH '& 3ODQ ZKLFK ZDV VXEVHTXHQWWO\ WHUPLQDWHG LQ   7KH %DQN FRXOG JUDQW D ,QWKH%RDUGRI'LUHFWRUVDSSURYHGWKH'&3ODQZKLFKZDVVXEVHTXHQWO\WHUPLQDWHGLQ7KH%DQNFRXOGJUDQWD QXPEHU R GHIHUUHGHTXLW\XQLWV §'(8¨  RI

(OLJLEOHHPSOR\HHVZRXOGYHVWWKH'((8DIWHUWKUHH\HDUVRIVHUYLFHDQG GGLVWULEXWLRQV QXPEHURIGHIHUUHGHTXLW\XQLWV §'(8¨ (OLJLEOHHPSOR\HHVZRXOGYHVWWKH'(8DIWHUWKUHH\HDUVRIVHUYLFHDQGGLVWULEXWLRQV ZHUH PDGGHRQWKHODWHURI L WKHGDWHWKHYHHVWHG'(8ZHUHFUHGLWHGWRWKHHPSSOR\HHªVDFFRXQWDQG LL WHQ\HDUVWKHHPSOR\HH ZHUHPDGHRQWKHODWHURI L WKHGDWHWKHYHVWHG'(8ZHUHFUHGLWHGWRWKHHPSOR\HHªVDFFRXQWDQG LL WHQ\HDUVWKHHPSOR\HH ZDVILUVWF  FUHGLWHGZLWK'(83DUWLFLSDWLQJHP     PSOR\HHVUHFHLYHGGLYLGHQGV   ZLWKUH  HVSHFWWRWKHLUXQYHVWHGGHIHUUHGH      TXLW\XQLWV   ZDVILUVWFUHGLWHGZLWK'(83DUWLFLSDWLQJHPSOR\HHVUHFHLYHGGLYLGHQGVZLWKUHVSHFWWRWKHLUXQYHVWHGGHIHUUHGHTXLW\XQLWV

    Notes to consolidated financial statements

109


$VXPPDU\RQFKDQJHVLVSUHVHQWHGEHORZ $VXPPD  U\RQFKDQJHVLVSUHVHQWHGEHORZ       2XWVWDQGL 2XWVWDQGLQJDWEHJLQQLQJRI\HDU LQJDWEHJLQQLQJRI\HDU      ([HUFLVHG ([HUFLVHG 2XWVWDQGL LQJDWHQGRI\HDU      2XWVWDQGLQJDWHQGRI\HDU

          

  



         



     

   

   

 

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ªVFRQWULEXWLRQV VDUHGHWHUPLQHGDVDSHUFHQWDJHRI R WKHDQQXDO SDUWLFLSDWHLQWKH3DQDPDQLDQVRFLDOVHFXULW\V\VWHP7KH%DQNªVFRQWULEXWLRQVDUHGHWHUPLQHGDVDSHUFHQWDJHRIWKHDQQXDO VDODULHV RI IWRSH[HFXWLYHVHOLJLEOHIRUWKHSODQ QHDFKFRQWULEXWLQJDQDGGLWLRQDODPRXQW D ZLWKKHOGIURPWKHLUVDODU\&RQWULEXWLRQV &  VDODULHVRIWRSH[HFXWLYHVHOLJLEOHIRUWKHSODQHDFKFRQWULEXWLQJDQDGGLWLRQDODPRXQWZLWKKHOGIURPWKHLUVDODU\&RQWULEXWLRQV WR WKLV SODDQ DUH PDQDJHG E\ D IXQG PDQDJJHU WKURXJK D WUXVW  7KH H[HFXWLYHHV DUH HQWLWOHG WR WKH %DQNªV FRQWULEXWLRQV DIWHU WRWKLVSODQDUHPDQDJHGE\DIXQGPDQDJHUWKURXJKDWUXVW7KHH[HFXWLYHVDUHHQWLWOHGWRWKH%DQNªVFRQWULEXWLRQVDIWHU FRPSOHWLQ QJ DW OHDVW WKUHH \HDUV RI VHUYLFH LQ Q WKH %DQN  'XULQJ WKH \HDUV    DQG  WKH %DQN FKDUJHHG WR VDODULHV FRPSOHWLQJDWOHDVWWKUHH\HDUVRIVHUYLFHLQWKH%DQN'XULQJWKH\HDUVDQGWKH%DQNFKDUJHGWRVDODULHV H[SHQVH    WKRXVDQG  WKRXVDQG DQ QG  WKRXVDQG UHVSHFWLYHO\ WKDDW FRUUHVSRQG WR WKH %DQNªV FRQWULEXWLRQV WR WKLV H[SHQVHWKRXVDQGWKRXVDQGDQGWKRXVDQGUHVSHFWLYHO\WKDWFRUUHVSRQGWRWKH%DQNªVFRQWULEXWLRQVWRWKLV SODQ KHDFFXPXODWHGOLDELOLW\SD\DEOHDP PRXQWHGWRWKRXVDQGDQG WKRXVDQG $VRI'HFHPEHUDQGWK SODQ$VRI'HFHPEHUDQGWKHDFFXPXODWHGOLDELOLW\SD\DEOHDPRXQWHGWRWKRXVDQGDQGWKRXVDQG UHVSHFWLYH HO\ UHVSHFWLYHO\   SHUVKDUH   (DUQLQJV (DUQLQJVSHUVKDUH 

7KH IROORZ ZLQJ WDEOH SUHVHQWV D UHFRQFLOLDWLRQ Q RI WKH LQFRPH DQG VKDUH GDWD XVVHG LQ WKH EDVLF DQG GLOXWHG HDUQLQ QJV SHU VKDUH 7KHIROORZLQJWDEOHSUHVHQWVDUHFRQFLOLDWLRQRIWKHLQFRPHDQGVKDUHGDWDXVHGLQWKHEDVLFDQGGLOXWHGHDUQLQJVSHUVKDUH §(36¨ FR  PSXWDWLRQVIRUWKHGDWHVLQGLFDWHG      §(36¨ FRPSXWDWLRQVIRUWKHGDWHVLQGLFDWHG ,QWKRXVDQGVRI86H[FHSWSHUVKDUHDPRXQWV

,QWKRXVD  DQGVRI86H[FHSWSHUVKDUHDPR       XQWV



<HDUHQGHG'HFHPEHU <HDUHQGHG'HFHPEHU <HDUHQGHG'HFHP   PEHU E   



1HWLQFRPHDWWULEXWDEOHWR%ODGH[IRUERWKEDVLFDQGGLOXWHG(36 1HWLQFRP  PHDWWULEXWDEOHWR%ODGH[IRUERWKE      EDVLFDQGGLOXWHG(36   







:HLJKWHGDYHUDJHFRPPRQVKDUHVRXWVWDQGLQJDSSOLFDEOHWREDVLF :HLJKWHGDYHUDJHFRPPRQVKDUHVRXWVWDQG    GLQJDSSOLFDEOHWREDVLF     (36 %DVLFHDUQLQJVSHUVKDUH %DVLFHDUQ  QLQJVSHUVKDUH  

  

  

 













  

  

 

:HLJKWHGDYHUDJHFRPPRQVKDUHVRXWVWDQGLQJ :HLJKWHG DYHUDJHFRPPRQVKDUHVRXWVWDQG    GLQJ DSSOLFDEOHWRGLOXWHG(36 DSSOLFDE  EOHWRGLOXWHG(36    (IIHFWRIG (IIHFWRIGLOXWLYHVHFXULWLHV  GLOXWLYHVHFXULWLHV     6WRFNRSWL 6WRFNRSWLRQVDQGUHVWULFWHGVWRFNXQLWVSODQV  LRQVDQGUHVWULFWHGVWRFNXQLWVSODQ      QV $GMXVWHGZHLJKWHGDYHUDJHFRPPRQVKDUHVRXWVWDQGLQJ $GMXVWHGZ ZHLJKWHGDYHUDJHFRPPRQVKDUHV     RXWVWDQGLQJ DSSOLFDE  EOHWRGLOXWHG(36    DSSOLFDEOHWRGLOXWHG(36 'LOXWHGHD  DUQLQJVSHUVKDUH   'LOXWHGHDUQLQJVSHUVKDUH

 $VRI'HFHPEHUDQGZHLJKWHGDYHUDJHRSWLRQVRIDQGUHVSHFWLYHO\ZHUH $VRI I'HFHPEHUDQG ZHLJKWHGDYHUDJHRSWLRQVRI DQGUHVSSHFWLYHO\ZHUH H[FOXGHGIURPWKHFRPSXWDWLRQRIGLOXWHGHDUQLQJVSHUVKDUHEHFDXVHWKHRSWLRQªVH[HUFLVHSULFHZDVJUHDWHUWKDQWKH H[FOX XGHG IURP WKH FRPSXWDWLRQ RI GLOX XWHG HDUQLQJV SHU VKDUH EHFDXVH WK KH RSWLRQ RSWLRQªV V H[HUFLVH SULFH ZDV JUHDWHU WKDQ WKH DYHUDJHTXRWHGPDUNHWSULFHRIWKH%DQNªVFRPPRQVWRFN DYHUD DJHTXRWHGPDUNHWSULFHRIWKH%DQ       QNªVFRPPRQVWRFN   



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

110

    Notes to consolidated financial statements


   QWVZLWKRIIEDODQFHVKHHWFUH     GLWULV    7KH%DQ 7KH%DQNªVRXWVWDQGLQJILQDQFLDOLQVWUXPHQWVZLWKRIIEDODQFHVKHHWFUHGLWULVNZHUHDVIROORZV  QNªVRXWVWDQGLQJILQDQFLDOLQVWUXPHQ  VNZHUHDVIROORZV ,QWKRXVDQGVRI86

,QWKR  XVDQGVRI86

 



&RQILUPHGOHWWHUVRIFUHGLW &RQILUP HGOHWWHUVRIFUHGLW    6WDQGE\OHWWHUVRIFUHGLWDQGJXDUDQWHHV 6WDQGE\ \OHWWHUVRIFUHGLWDQGJXDUDQWHHV     &RXQWU\ULVN &RXQ QWU\ULVN  &RPPHUFLDOULVN &RPP PHUFLDOULVN  &UHGLLWGHULYDWLYH  &UHGLWGHULYDWLYH &UHGLWFRPPLWPHQWV &UHGLWFR  RPPLWPHQWV

'HFHPEHU ' HFHPEHU 







        

           

$VRI'HFHPEHUWKHUHPDLQLQJPDWXULW\SURILOHRIWKH%DQNªVRXWVWDQGLQJILQDQFLDOLQVWUXPHQWVZLWKRIIEDODQFH $V RI 'HHFHPEHU   WKH UHPDLQLQJ PDWXULW\ SURILOH RI WKH %DQNªV RXWVVWDQGLQJ ILQDQFLDO LQVWUXPHQWV ZLWWK RIIEDODQFH VKHHWFUH  HGLWULVNLVDVIROORZV     VKHHWFUHGLWULVNLVDVIROORZV ,QWKRXVDQGVRI   86

,QWKRXVDQGVRI86

0DWXULWLHV :LWKLQ\HDU     V )URPWR\HDUV )URPWR\HDUV     V $IWHU\HDUV

$PRXQW       

$VRI'H   HFHPEHUDQGWKHEUH       HDNGRZQRIWKH%DQNªVRIIEDOD     QFHVKHHWH[SRVXUHE\FRXQWU\ULVNLVD      DVIROORZV   $VRI'HFHPEHUDQGWKHEUHDNGRZQRIWKH%DQNªVRIIEDODQFHVKHHWH[SRVXUHE\FRXQWU\ULVNLVDVIROORZV ,QWKRXV  VDQGVRI86

  ,QWKRXVDQGVRI86

&RXQWU\ %UD]LO &RORPELD &RORPELD &RVWD5LFD &RVWD5 5LFD 'RPLQLFDQ5HSXEOLF 'RPLQLFFDQ5HSXEOLF  (FXDGRUU (O6DOYDGRU (O6DOYD  DGRU *XDWHPDOD *XDWHP PDOD +RQGXUDV +RQGXUDDV -DPDLFD L D 0H[LFR 3DQDPDD 3HUX 6ZLW]HUODQG 6ZLW]HUODQG 8UXJXD\\ 9HQH]XHOD 9HQH]XHHOD

                  

                  

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ªVREOLJDWLRQWRPDNH WKH FRP PPLWPHQW LV LUUHYRFDEOH DQG UHPDLQ QV YDOLG XQWLO LWV H[SLUDWLRQ  &UHGLW W ULVN DULVHV IURP WKH %DQNªV REOLJDDWLRQ WR PDNH SD\PHQWLQWKHHYHQWRIDFXVWRPHUªVFRQWUDFWXDOGHIDXOWWRDWKLUGSDUW\5LVNVDVVRFLDWHGZLWKVWDQGE\OHWWHUVRIFUHGLWDQG SD\PHQW WLQWKHHYHQWRIDFXVWRPHUªVFRQWUUDFWXDOGHIDXOWWRDWKLUGSDUW\5LVVNVDVVRFLDWHGZLWKVWDQGE\OHWWHUV VRIFUHGLWDQG JXDUDQWHHVDUHLQFOXGHGLQWKHHYDOXDWLRQRIWKH%DQNªVRYHUDOOFUHGLWULVN7KH%DQNLVVXHVVWDQGE\OHWWHUVDQGJXDUDQWHHV JXDUDQWH HHV DUH LQFOXGHG LQ WKH HYDOXDWLRQ RI WKH %DQNª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

    Notes to consolidated financial statements

111


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

,QWKRXVDQGVRI8   86

<HDU     

     

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

,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

 

)DLUYDOX  XHKHGJHV XHKHGJHV  )DLUYDOXHKHGJHV ,QWHUHVW ,QWHUHVWUDWHVZDSV UDWHVZDSV  &URVVFX &URVVFXUUHQF\LQWHUHVWUDWHVZDSV XUUHQF\LQWHUHVWUDWHVZDSV    &DVKIORZKHGJHV &DVKIOR  RZKHGJHV  ,QWHUHVW UDWHVZDSV  ,QWHUHVWUDWHVZDSV &URVVFX XUUHQF\LQWHUHVWUDWHVZDSV    &URVVFXUUHQF\LQWHUHVWUDWHVZDSV )RUZDUG IRUHLJQH[FKDQJH  )RUZDUGIRUHLJQH[FKDQJH 7RWDO 1HWJDLQ 1HWJDLQ ORVV RQWKHLQHIIHFWLYH  Q ORVV RQWKHLQHIIHFWLYH     SRUWL SRUWLRQRIKHGJLQJDFWLYLWLHV RQRIKHGJLQJDFWLYLWLHV     

112

1RPLQDO $PRXQW

 )DLU9DOXH 

$VVHW /LDELOLW\\

1RPLQDO $PRXQW

 )DLU9DOXH )DLU9 9DOXH 

$VVHW /LDELOLW\\

 

 

     

 

 

 

    

  

       

    

  

  





  













7KHIDLUYDOXHRIDVVHWVDQGOLDELOLWLHVLVUHSRUWHGZLWKLQWKHGHULYDWLYHILQDQFLDOLQVWUXPHQWVXVHGIRUKHGJLQJUHFHLYDEOHDQGSD\DEOHOLQHV  7KHIDLLUYDOXHRIDVVHWVDQGOLDELOLWLHVLVUHSRUWWHGZLWKLQWKHGHULYDWLYHILQDQFLDOLQVWUX XPHQWVXVHGIRUKHGJLQJUHFHLYDEOHDQ QGSD\DEOHOLQHV LQWK LQWKHFRQVROLGDWHGEDODQFHVKHHWVUHVSHFWLYHO\  HFRQVROLGDWHGEDODQFHVKHHWVUHVSHFWL     YHO\



*DLQVDQGORVVHVUHVXOWLQJIURPLQHIIHFWLYHQHVVDQGFUHGLWULVNLQKHGJLQJDFWLYLWLHVDUHUHSRUWHGZLWKLQWKHGHULYDWLYHILQDQFLDOLQVWUXPHQWV  *DLQVDQGORVVHVUHVXOWLQJIURPLQHIIHFWLYHQHVVDQGFUHGLWULVNLQKHGJLQJDFWLYLWLHVDUH D UHSRUWHGZLWKLQWKHGHULYDWLYHILQDQFFLDOLQVWUXPHQWV DQGK DQGKHGJLQJOLQHLQWKHFRQVROLGDWHGVWDWHPHQWVRILQFRPH KHGJLQJOLQHLQWKHFRQVROLGDWHGVWDWHP      PHQWVRILQFRPH   

    Notes to consolidated financial statements


7KHJDLQVDQGORVVHVUHVXOWLQJIURPDFWLYLWLHVRIGHULYDWLYHILQDQFLDOLQVWUXPHQWVDQGKHGJLQJUHFRJQL]HGLQWKHFRQVROLGDWHG 7KH JDLQ QVDQGORVVHVUHVXOWLQJIURPDFWLYLWLHVRIGHULYDWLYHILQDQFLDOLQVWUXPHQWVDQGKHGJLQJUHFRJQL]HGLQWKH HFRQVROLGDWHG    Z VWDWHPHQWVRILQFRPHDUHSUHVHQWHGEHORZ VWDWHPH QWVRILQFRPHDUHSUHVHQWHGEHORZ    ,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

 

'HULYDWLYYHVÂ¥FDVKIORZ 'HULYDWLYHVÂ¥FDVKIORZ     KHGJH J ,QWHUHVWUD  DWHVZDSV  ,QWHUHVWUDWHVZDSV &URVVFXUUHQF\LQWHUHVWUDWH &URVVFXUUUHQF\LQWHUHVWUDWH    VZDSV )RUZDUGIRUHLJQH[FKDQJH )RUZDUGI IRUHLJQH[FKDQJH  7RWDO

*DLQ ORVV  UHFRJQL]HGLQ2&, UHFRJQL]HGLQ2  2&, HIIHFWLYHSRUWLRQ

HIIHFWLYHSRUWLR S RQ

&ODVVLILFDWLRQRIJDLQ &ODVVLILFDWLRQRIJDLQ ORVV 



*DLQ ORVV UHFODVVLILHGIURP *D DLQ ORVV UHFODVVLILHGIURP     DFFXPXODWHG2&,WRWKH VWDWHPHQWVRILQFRPH HIIHFWLYHSRUWLRQ

S

*DLQ ORV *DLQ ORVV UHFRJQL]HG  VV UHFRJQL]HG   RQGHULYDWLYHV RQG  HULYDWLYHV LQHIIHFWLYHSRUWLRQ

LQHIIHF FWLYHSRUWLRQ

S

  

  

*DLQ ORVV RQIRUHLJQ 

   FXUUHQF\H[FKDQJH ,QWHUHVWLQFRPHORDQV *DLQ ORVV RQIRUHLJQ FXUUHQF\H[FKDQJH









 

 

 ,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

 

'HULYDWLYYHVÂ¥FDVKIORZ 'HULYDWLYHVÂ¥FDVKIORZ     KHGJH J ,QWHUHVW UDWHVZDSV  ,QWHUHVWUDWHVZDSV &URVVFX XUUHQF\LQWHUHVWUDWH    &URVVFXUUHQF\LQWHUHVWUDWH VZDSSV VZDSV

)RUZDUG GIRUHLJQH[FKDQJH  )RUZDUGIRUHLJQH[FKDQJH

7RWDO

*DLQ ORVV    UHFRJQL]HGLQ UHFRJQL]HGLQ2&,  2&, HIIHFWLYHSRUWLRQ

HIIHFWLYHSRUWL S RQ

&ODVVLILFDWLRQRIJDLQ &ODVVLILFDWLRQRIJDLQ

 ORVV 

*DLQ ORVV UHFODVVLILHGIURP *D DLQ ORVV UHFODVVLILHGIURP     DFFXPXODWHG2&,WRWKH VWDWHPHQWVRILQFRPH HIIHFWLYHSRUWLRQ

S

*DLQ OR *DLQ ORVV UHFRJQL]HG  RVV UHFRJQL]HG   RQ RQGHULYDWLYHV GHULYDWLYHV LQHIIHFWLYHSRUWLRQ

LQHIIH HFWLYHSRUWLRQ

S







  

*DLQ ORVV RQIRUHLJQ FXUUHQF\H[FKDQJH 'HULYDWLYHILQDQFLDO LQVWUXPHQWVDQGKHGJLQJ ,QWHUHVWH[SHQVHÂ¥ ERUURZLQJV ,QWHUHVWLQFRPHORDQV *DLQ ORVV RQIRUHLJQ FXUUHQF\H[FKDQJH









 

 

  

 

7KH%DQNUHFRJQL]HGLQHDUQLQJVWKHJDLQ ORVV  7KH%DQNUHFRJQL]HGLQHDUQLQJVWKHJDLQ ORVV RQGHULYDWLYHILQDQFLDOLQVWUXPHQWVDQGWKHJDLQ ORVV RIWKHKHGJHGDVVHWRU RQGHULYDWLYHILQDQFLDOLQVWUXP PHQWVDQGWKHJDLQ ORVV RIWKHKHHGJHGDVVHWRU OLDELOLW\U OLDELOLW\UHODWHGWRTXDOLI\LQJIDLUYDOXHKHGJHVDVIROORZV UHODWHGWRTXDOLI\LQJIDLUYDOXHKHGJ      JHVDVIROORZV    ,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

  'HULYDWLYYHVIDLUYDOXH 'HULYDWLYHVIDLUYDOXH     KHGJH J ,QWHUHVWUDWHVZDSV ,QWHUHVWUD  DWHVZDSV 

&URVVFXUUUHQF\LQWHUHVW   &URVVFXUUHQF\LQWHUHVW UDWHVZDS  SV UDWHVZDSV

&ODVVLILFDWLRQLQVWDWHPHQWVRI &ODVVLILFDWLRQLQVWDWHPHQWVRI    LQ LQFRPH FRPH

,QWHUHVWLQFRPH¥DYDLODEOHIRUVDOH ,QWHUHVWLQFRPH¥  ¥DYDLODEOHIRUVDOH 'HULYDWLYHILQDQFL  DOLQVWUXPHQWVDQG    'HULYDWLYHILQDQFLDOLQVWUXPHQWVDQG KHGJLQJ LQHIIHFWLYHQHVV

KHGJLQJ LQHIIHFWL  LYHQHVV

'HULYDWLYHILQDQFL  DOLQVWUXPHQWVDQG    'HULYDWLYHILQDQFLDOLQVWUXPHQWVDQG KHGJLQJ LQHIIHFWL  LYHQHVV

KHGJLQJ LQHIIHFWLYHQHVV

,QWHUHVWLQFRPH¥  ¥ORDQV ,QWHUHVWLQFRPH¥ORDQV ,QWHUHVWH[SHQVH¥  ¥ERUURZLQJV ,QWHUHVWH[SHQVH¥ERUURZLQJV *DLQ ORVV RQIRU    UHLJQFXUUHQF\   *DLQ ORVV RQIRUHLJQFXUUHQF\ H[FKDQJH

    Notes to consolidated financial statements

*DLQ ORVV  *DLQ ORVV RQ 

RQ GHULYDWLYH GHULYDWLYHV HV





*DLQ ORVV RQ KHGJHGLWHP J 

1HWJDLQ ORVV















  



 

  

 



 

 

113


 ,QWKRXVDQGVRI86

,QWKRXV  VDQGVRI86

  'HULYDWLY YHVIDLUYDOXH     'HULYDWLYHVIDLUYDOXH KHGJH J ,QWHUHVWUD  DWHVZDSV  ,QWHUHVWUDWHVZDSV

&ODVVLILFDWLRQLQVWDWHPHQWVRI &ODVVLILFDWLRQLQVWDWHPHQWVRI    LQ LQFRPH FRPH

*DLQ ORVV  *DLQ ORVV RQ 

RQ GHULYDWLYH GHULYDWLYHV HV

1HWJDLQ ORVV

,QWHUHVWLQFRPH¥  ¥DYDLODEOHIRUVDOH ,QWHUHVWLQFRPH¥DYDLODEOHIRUVDOH 

&URVVFXU UUHQF\LQWHUHVW   &URVVFXUUHQF\LQWHUHVW UDWHVZDS  SV UDWHVZDSV

*DLQ ORVV RQ KHGJHGLWHP J 

'HULYDWLYHILQDQFL  LDOLQVWUXPHQWVDQG    'HULYDWLYHILQDQFLDOLQVWUXPHQWVDQG KHGJLQJ LQHIIHFWL  LYHQHVV

KHGJLQJ LQHIIHFWLYHQHVV

,QWHUHVWLQFRPH¥ORDQV ,QWHUHVWLQFRPH¥  ¥ORDQV ,QWHUHVWH[SHQVH¥ERUURZLQJV ,QWHUHVWH[SHQVH¥  ¥ERUURZLQJV *DLQ ORVV RQIRUHLJQFXUUHQF\ *DLQ ORVV RQIRU    UHLJQFXUUHQF\   H[FKDQJH





   





  



 

 



 



)RU FRQW FRQWURO WURO SXUSRVHV GHULYDWLYH LQVWUXPHQ LQVWUXPHQWV QWV DUH UHFRUGHG DW WKHLU QRPLQDO DPRXQW §QRWLRQDO DPRXQW¨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ªWUDQVDFWLRQQHHGVDQGWRPDQDJHWKHIRUHHLJQFXUUHQF\ULVN$OOVXFKSRVLWLRQ QVDUHKHGJHG H[FKDQJHWUDGHVWRVHUYHFXVWRPHUVª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

114

    Notes to consolidated financial statements


 

$FFXPX XODWHGRWKHUFRPSUHKHQVLYHLQFRP    PH ORVV

 $FFXPXODWHGRWKHUFRPSUHKHQVLYHLQFRPH ORVV

$V RI 'HFHPEHU '     DQG   WKH EUHDNGRZQ RI DFFXPXODWHG G RWKHU FRPSUHKHQVLYH LQFRPH OR RVV  UHODWHG WR  ORVV  LQYHVWP HQWVHFXULWLHVDYDLODEOHIRUVDOHDQG    GGHULYDWLYHILQDQFLDOLQVWUXPH    QWVL  VDVIROORZV   LQYHVWPHQWVHFXULWLHVDYDLODEOHIRUVDOHDQGGHULYDWLYHILQDQFLDOLQVWUXPHQWVLVDVIROORZV

,QWKRX  XVDQGVRI86

  ,QWKRXVDQGVRI86

6 6HFXULWLHV  $YDLODEOH $ IRU6DOH

%DODQFHDVRI-DQXDU\ %DODQFH HDVRI-DQXDU\ HDVRI-DQXDU\     1HWXQUHDOL]HGJDLQV ORVVHV DULVLQJIURPWKH\HDU 1HWXQUH  HDOL]HGJDLQV ORVVHV DULVLQJIURPW     WKH\HDU  5HFODVVLILFDWLRQDGMXVWPHQWIRU JDLQV ORVVHVLQFOXGHGLQQHWLQFRPH 5HFODVVLLILFDWLRQDGMXVWPHQWIRU JDLQV ORVV     VHVLQFOXGHGLQQHWLQFRPH      

%DODQFH HDVRI'HFHPEHU     %DODQFHDVRI'HFHPEHU 1HWXQUH  HDOL]HGJDLQV ORVVHV DULVLQJIURPW     WKH\HDU  1HWXQUHDOL]HGJDLQV ORVVHV DULVLQJIURPWKH\HDU 5HFODVVLLILFDWLRQDGMXVWPHQWIRU JDLQV ORVV     VHVLQFOXGHGLQQHWLQFRPH      

5HFODVVLILFDWLRQDGMXVWPHQWIRU JDLQV ORVVHVLQFOXGHGLQQHWLQFRPH %DODQFHDVRI'HFHPEHU %DODQFH HDVRI'HFHPEHU     1HWXQUH 1HWXQUHDOL]HGJDLQV ORVVHV DULVLQJIURPWKH\HDU  HDOL]HGJDLQV ORVVHV DULVLQJIURPW     WKH\HDU  5HFODVVL LILFDWLRQDGMXVWPHQWIRU JDLQV ORVV     VHVLQFOXGHGLQQHWLQFRPH      

5HFODVVLILFDWLRQDGMXVWPHQWIRU JDLQV ORVVHVLQFOXGHGLQQHWLQFRPH %DODQFH HDVRI'HFHPEHU     %DODQFHDVRI'HFHPEHU



 



 

 



  

 

 

  



 

 

'HULYDWLYH )LQDQFLDO ,QVWUXPHQWV

7RWDO



 



   



     

  



 

  



 

 

 



   

  



5HFODVVLILFDWLRQDGMXVWPHQWVLQFOXGHDPRXQWVUHFRJQL]HGLQQHWLQFRPHGXULQJWKHFXUUHQW\HDUWKDWKDGEHHQSDUWRIRWKHU PRXQWVUHFRJQL]HGLQQHWLQFRPHGX XULQJWKHFXUUHQW\HDUWKDWKDGEHHQ QSDUWRIRWKHU 5HFODDVVLILFDWLRQDGMXVWPHQWVLQFOXGHDP FRP FRPSUHKHQVLYHLQFRPH ORVV LQWKLVDQGSUHYLRXV\HDUV SUHKHQVLYHLQFRPH ORVV LQWKLVDQ      QGSUHYLRXV\HDUV  



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ªVRZQDVVXPSWLRQVDERXWWKHDVVXPSWLRQVPDUNHWSDUWLFLSDQWVZRXOGXVHLQSULFLQJWKHDVVHWRUOLDELOLW\ WKH UHSRRUWLQJHQWLW\ª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¥$VVHWVRUOLDELOLWLHVIRUZKLFKDQLGHQWLFDOLQVWUXPHQWLVWUDGHGLQDQDFWLYHPDUNHWVXFKDVSXEOLFO\WUDGHGLQVWUXPHQWV /HYHO ¥$VVHWVRUOLDELOLWLHVIRUZKLFKDQLGGHQWLFDOLQVWUXPHQWLVWUDGHGLQDQDFWLYHPDUNHWVXFKDVSXEOLFO\WUDGHGLQVWUXPHQWV RUIXWXUHVFRQWUDFWV RUIXWXUH  HVFRQWUDFWV   /HYHO¥$VVHWVRUOLDELOLWLHVYDOXHGEDVHGRQREVHUYDEOHPDUNHWGDWDIRUVLPLODULQVWUXPHQWVTXRWHGSULFHVLQPDUNHWVWKDW /HYHO ¥$VVHWVRUOLDELOLWLHVYDOXHGEDVHG GRQREVHUYDEOHPDUNHWGDWDIRUVLP PLODULQVWUXPHQWVTXRWHGSULFHVLQ QPDUNHWVWKDW DUHQRWDFWLYHRURWKHUREVHUYDEOHLQSXWVWKDWFDQEHFRUURERUDWHGE\REVHUYDEOHPDUNHWGDWDIRUVXEVWDQWLDOO\WKHIXOOWHUP DUH QRW DFWLYH RU RWKHU REVHUYDEOH LQSXWV WKDW FDQ EH FRUURERUDWHG E\ REVHUYYDEOH PDUNHW GDWD IRU VXEVWDQWLDOO\ \ WKH IXOO WHUP RIWKHD RIWKHDVVHWRUOLDELOLW\   VVHWRUOLDELOLW\ VVHWRUOLDELOLW\   /HYHO¥$VVHWVRUOLDELOLWLHVIRUZKLFKVLJQLILFDQWYDOXDWLRQDVVXPSWLRQVDUHQRWUHDGLO\REVHUYDEOHLQWKHPDUNHWLQVWUXPHQWV /HYHO ¥$VVHWVRUOLDELOLWLHVIRUZKLFKVLJQ QLILFDQWYDOXDWLRQDVVXPSWLRQVDUHQRW Q UHDGLO\REVHUYDEOHLQWKHPDUNHWLQVWUXPHQWV PHDVXUHGEDVHGRQWKHEHVWDYDLODEOHLQIRUPDWLRQZKLFKPLJKWLQFOXGHVRPHLQWHUQDOO\GHYHORSHGGDWDDQGFRQVLGHUVULVN PHDVXUH HG EDVHG RQ WKH EHVW DYDLODEOH LQIRRUPDWLRQ ZKLFK PLJKW LQFOXGH VRP PH LQWHUQDOO\GHYHORSHG GDWD DQG FRQVLGHUV F  ULVN SUHPLXPVWKDWDPDUNHWSDUWLFLSDQWZRXOGUHTXLUH SUHPLXP PVWKDWDPDUNHWSDUWLFLSDQWZRXOG       UHTXLUH

    Notes to consolidated financial statements

115


:KHQ GHWHUPLQLQJ WKH IDLU YDOXH PHDVXUHHPHQWV IRU DVVHWV DQG OLDELOLWLHV WK :KHQGHWHUPLQLQJWKHIDLUYDOXHPHDVXUHPHQWVIRUDVVHWVDQGOLDELOLWLHVWKDWDUHUHTXLUHGRUSHUPLWWHGWREHUHFRUGHGDW KDW DUH UHTXLUHG RU SHUPLWWHG WR EH H UHFRUGHG DW IDLU YDOX YDOXH XH WKH %DQN FRQVLGHUV WKH SULQFLS SULQFLSDO SDO RU PRVW DGYDQWDJHRXV PDUNHW LQ ZKLFK LW ZRXOG WUDQVDFW DQG FRQVLGHUV F  WKH DVVXPSW DVVXPSWLRQV WLRQV WKDW PDUNHW SDUWLFLSDQWV ZRX ZRXOG XOG XVH ZKHQ SULFLQJ WKH DVVHW RU U OLDELOLW\ :KHQ SRVVLEOH WKH %DQ %DQN N XVHV DFWLYH DQG DQGREVHUYDEOHPDUNHWVWRSULFHLGHQWLFDODVVHWVRUOLDELOLWLHV:KHQLGHQWLFDODVVHWVDQGOLDELOLWLHVDUHQRWWUDGHGLQDFWLYH REVVHUYDEOH PDUNHWV WR SULFH LGHQWLFDO DVVHWV RU OLDELOLWLHV :KHQ LGHQWLFDDO DVVHWV DQG OLDELOLWLHV DUH QRW WUDDGHG LQ DFWLYH PDUNHWV WKH%DQNXVHVREVHUYDEOHPDUNHWLQIRUPDWLRQIRUVLPLODUDVVHWVDQGOLDELOLWLHV+RZHYHUFHUWDLQDVVHWVDQGOLDELOLWLHV PDUNHWVWKH%DQNXVHVREVHUYDEOHPDUNHWLQIRUPDWLRQIRUVLPLODUDVVHWVDQGOLDELOLWLHV+RZHYHUFHUWDLQDVVHWVDQGOLDELOLWLHV DUH QRW DFWLYHO\ WUDGHG LQ REVHUYDEOH PDUNNHWV DQG WKH %DQN PXVW XVH DOWHUQDDWLYH YDOXDWLRQ WHFKQLTXHV WR GHWHUUPLQH WKH IDLU DUHQRWDFWLYHO\WUDGHGLQREVHUYDEOHPDUNHWVDQGWKH%DQNPXVWXVHDOWHUQDWLYHYDOXDWLRQWHFKQLTXHVWRGHWHUPLQHWKHIDLU YDOXH PHDVXUHPHQW7KHIUHTXHQF\RIWUDQVDFWLRQVWKHVL]HRIWKHELGDVNVSSUHDGDQGWKHVL]HRIWKHLQYHVWPHHQWDUHIDFWRUV YDOXHPHDVXUHPHQW7KHIUHTXHQF\RIWUDQVDFWLRQVWKHVL]HRIWKHELGDVNVSUHDGDQGWKHVL]HRIWKHLQYHVWPHQWDUHIDFWRUV FRQVLGHU UHGLQGHWHUPLQLQJWKHOLTXLGLW\RIP      PDUNHWVDQGWKHUHOHYDQFHRI      REVHUUYHGSULFHVLQWKRVHPDUNHWV     FRQVLGHUHGLQGHWHUPLQLQJWKHOLTXLGLW\RIPDUNHWVDQGWKHUHOHYDQFHRIREVHUYHGSULFHVLQWKRVHPDUNHWV :KHQ WK KHUHKDVEHHQDVLJQLILFDQWGHFUHDVHLQWKHYROXPHRUOHYHORIDFWLYLW\ \IRUDILQDQFLDODVVHWRUOLDELOLW\WK KH%DQNXVHV :KHQWKHUHKDVEHHQDVLJQLILFDQWGHFUHDVHLQWKHYROXPHRUOHYHORIDFWLYLW\IRUDILQDQFLDODVVHWRUOLDELOLW\WKH%DQNXVHV WKH SUHVVHQW YDOXH WHFKQLTXH ZKLFK FRQVLGGHUV PDUNHW LQIRUPDWLRQ WR GHWHUPLQH D UHSUHVHQWDWLYH IDLU YDOXH LQ XVXDO PDUNHW WKHSUHVHQWYDOXHWHFKQLTXHZKLFKFRQVLGHUVPDUNHWLQIRUPDWLRQWRGHWHUPLQHDUHSUHVHQWDWLYHIDLUYDOXHLQXVXDOPDUNHW FRQGLWLR QV FRQGLWLRQV $ GHVFUL LSWLRQ RI WKH YDOXDWLRQ PHWKRGROR JLHV XVHG IRU DVVHWV DQG OLDELOLWLHV V PHDVXUHG DW IDLU YDOXH RQ D UHF FXUULQJ EDVLV GHVFULSWLRQ PHWKRGRORJLHV UHFXUULQJ LQFOXGLQ JWKHJHQHUDOFODVVLILFDWLRQRIVXFK      KDVVHWVDQGOLDELOLWLHVXQGHUWK      HID  DLUYDOXHKLHUDUFK\LVSUHVHQWHGEHOR      RZ LQFOXGLQJWKHJHQHUDOFODVVLILFDWLRQRIVXFKDVVHWVDQGOLDELOLWLHVXQGHUWKHIDLUYDOXHKLHUDUFK\LVSUHVHQWHGEHORZ



7UDGLQJDVVHWVDQGOLDELOLWLHVDQGVHFXULWLHVDYDLODEOHIRUVDOH 7UDGLQJ JDVVHWVDQGOLDELOLWLHVDQGVHFXULWLHV     VDYDLODEOHIRUVDOH  :KHQ TXRWHG T  SULFHV DUH DYDLODEOH LQ DQ DFWLYH PDUNHW DYDLODEOHIRUVDOH VHFXULWLHV V  DQG WUDGLQJ DVVHWV DQG OLDELOLWLHV DUH FODVVLILHG FODVVLILHGLQOHYHORIWKHIDLUYDOXHKLHUDUFK\,ITXRWHGPDUNHWSULFHVDUHQRWDYDLODEOHRUWKH\DUHDYDLODEOHLQPDUNHWV G LQ OHYHO  RI WKH IDLU YDOXH KLHUDDUFK\  ,I TXRWHG PDUNHW SULFHV DUH H QRW DYDLODEOH RU WKH\ DUH DYDLODEOH LQ PDUNHWV WKDW DUH QRW DFWLYH WKHQ IDLU YDOXHV DUH HVVWLPDWHG EDVHG XSRQ TXRWHG SULFHV V RI VLPLODU LQVWUXPHQWV RU ZKHUH WKHVH W  DUH QRW WKDWDUHQRWDFWLYHWKHQIDLUYDOXHVDUHHVWLPDWHGEDVHGXSRQTXRWHGSULFHVRIVLPLODULQVWUXPHQWVRUZKHUHWKHVHDUHQRW DYDLODEOH H  E\ XVLQJ LQWHUQDO YDOXDWLRQ WHFK H KQLTXHV  SULQFLSDOO\ GLVFRXQWHG FDVVK IORZV PRGHOV KQLTXHV PRGHOV   6XFK VHFXULWLHV DUH FODVVLILHG DYDLODEOHE\XVLQJLQWHUQDOYDOXDWLRQWHFKQLTXHVSULQFLSDOO\GLVFRXQWHGFDVKIORZVPRGHOV6XFKVHFXULWLHVDUHFODVVLILHG ZLWKLQOH  HYHORIWKHIDLUYDOXHKLHUDUFK\       ZLWKLQOHYHORIWKHIDLUYDOXHKLHUDUFK\



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§/,%25¨ §/,%25¨ 1RWDOOFRXQWHUSDUWLHVKDYHWKHVDPHFUHGLWUDWLQJWKDWLVLPSOLFLWLQWKH/,%25FXUYHWKHUHIRUHLWLVQHFHVVDU\WR ¨   1RW DOO FRXQWHUSDUWLHV KDYH WKH VDPH FUHGLW UDWLQJ WKDW LV LPSOLFLW LQ WKH /,%25 FXUYH WKHUHIRUH LW LV V QHFHVVDU\ WR WDNH WDNHLQWRDFFRXQWWKHFXUUHQWFUHGLWUDWLQJRIWKHFRXQWHUSDUW\IRUWKHSXUSRVHRIREWDLQLQJWKHWUXHIDLUYDOXHRIDSDUWLFXODU LQWR RDFFRXQWWKHFXUUHQWFUHGLWUDWLQJRIWKHFRXQWHUSDUW\IRUWKHSXUSRVHRIREWDLQLQJWKHWUXHIDLUYDOXHRI R DSDUWLFXODU LLQVWUXPHQW,QDGGLWLRQDGMXVWPHQWVWRELODWHUDORURZQULVNDUHDGMXVWHGWRUHIOHFWWKHEDQNªVFUHGLWULVNZKHQPHDVXULQJDOO LQVWUXPH W HQW W ,Q , DGGLWLRQ GGLWL DGMXVWPHQWV GM W W WR W ELODWHUDO W ORURZQULVN L NDUHDGMXVWHG GM W GWR W UHIOHFW U IO WWKH WK EDQNªV E Nª FUHGLW GLWULVN L NZKHQ K PHDVXULQJ P L DOO OO OLDELOLWLHV VDWIDLUYDOXH7KHPHWKRGRORJ\LV       FRQVLVWHQWZLWKWKHDGMXVWPHQ     WVDS  SSOLHGWRJHQHUDWHWKHFRXQWHUSDUW\     \FUHGLWULVN   OLDELOLWLHVDWIDLUYDOXH7KHPHWKRGRORJ\LVFRQVLVWHQWZLWKWKHDGMXVWPHQWVDSSOLHGWRJHQHUDWHWKHFRXQWHUSDUW\FUHGLWULVN

116

    Notes to consolidated financial statements


)LQDQFLDDO LQVWUXPHQWV PHDVXUHG DW IDLU YDOXH RQ D UHFXUULQJ EDVLV E\ FDSWLRQ Q RQ WKH FRQVROLGDWHG EDODQFH VKHHHWV XVLQJ WKH )LQDQFLDOLQVWUXPHQWVPHDVXUHGDWIDLUYDOXHRQDUHFXUULQJEDVLVE\FDSWLRQRQWKHFRQVROLGDWHGEDODQFHVKHHWVXVLQJWKH     IDLUYDOX  XHKLHUDUFK\DUHGHVFULEHGEHORZ IDLUYDOXHKLHUDUFK\DUHGHVFULEHGEHORZ

  

,QWKRXVDQGVRI86  ,QWKRXV  VDQGVRI86     4XRWHGPDUNHW 4XRWHG GPDUNHW SULFHVLQDQDFWLYH SULFHVLQ  QDQDFWLYH   PDUNHW PD DUNHW /HYHO

YHO

/HY 

,QWHUQDOO\GHYHORSH ,QWHUQDOO\GHYHORSHG  HG PRGHOVZLWKVLJQLILFDQW PRGHOVZLWKVLJQLILFD   DQW REVHUYDEOHPDUNHW  W LQIRUPDWLRQ /HYHO



,QWHUQDOO\ GHYHORSHGPRGHOV ZLWKVLJQLILFDQW XQREVHUYDEOHPDUNHW LQIRUPDWLRQ /HYHO







7R 7RWDOFDUU\LQJ RWDOFDUU\LQJ   YYDOXHLQWKH DOXHLQWKH    FRQVROLGDWHG FR RQVROLGDWHG EDODQFHVKHHWV EDOODQFHVKHHWV 

$VVHWV 7UDGLQJDVVHWV 7UDGLQJD DVVHWV 6RYHUHHLJQERQGV   6RYHUHLJQERQGV





&RUSRUUDWHERQGV   &RUSRUDWHERQGV

  





  

OWUDGLQJDVVHWV    7RWD 7RWDOWUDGLQJDVVHWV

  





  

6HFXULWLHVDYDLODEOHIRUVDOH 6HFXULWLHHVDYDLODEOHIRUVDOH  &RUSRUUDWHGHEW  &RUSRUDWHGHEW 6RYHUHHLJQGHEW  6RYHUHLJQGHEW 7RWDO VHFXULWLHVDYDLODEOH VHFXULWLHVDYDLODEOH  7RWDOVHFXULWLHVDYDLODEOH IRUVDDOH IRUVDOH ,QYHVWPHHQWIXQG  ,QYHVWPHQWIXQG 'HULYDWLYHILQDQFLDO 'HULYDWLY YHILQDQFLDO   LQVWUXPHQWVUHFHLYDEOH LQVWUXPH HQWVUHFHLYDEOH  ,QWHUHV VWUDWHVZDSV   ,QWHUHVWUDWHVZDSV &URVVF FXUUHQF\LQWHUHVWUDWH    &URVVFXUUHQF\LQWHUHVWUDWH VZDSV









 





 

 





 



  



 



 







  















   



  

  

    

 

  



  







 







   



  



  







  





)RUZDUGIRUHLJQH[FKDQJH )RUZDU UGIRUHLJQH[FKDQJH    7RWDO GHULYDWLYHILQDQFLDO   7RWDOGHULYDWLYHILQDQFLDO LQVWUX XPHQWVSD\DEOH  LQVWUXPHQWVSD\DEOH











  



  

7RWDOOLDELOLWLHVDWIDLUYDOXH 7RWDOOLDE  ELOLWLHVDWIDLUYDOXH   

 

  

 



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

    Notes to consolidated financial statements

117


   ,QWKRXVDQGVRI86

,QWKRXVD  DQGVRI86

  4XRWHGPDUNHW 4XRWHG GPDUNHW SULFHVLQDQDFWLYH SULFHVLQ  DQDFWLYH   PDUNHW PD DUNHW /HYHO

YHO

/HY 

,QWHUQDOO\GHYHORSH ,QWHUQDOO\GHYHORSHG  HG PRGHOVZLWKVLJQLILFDQW PRGHOVZLWKVLJQLILFD   DQW REVHUYDEOHPDUNHW  W LQIRUPDWLRQ /HYHO



,QWHUQDOO\ GHYHORSHGPRGHOV ZLWKVLJQLILFDQW XQREVHUYDEOHPDUNHW LQIRUPDWLRQ /HYHO



7R 7RWDOFDUU\LQJ RWDOFDUU\LQJ   YDOXHLQWKH YDOXHLQWKH    FRQVROLGDWHG FR RQVROLGDWHG EDODQFHVKHHWV EDOODQFHVKHHWV 

$VVHWV 7UDGLQJDV  VVHWV 7UDGLQJDVVHWV  6RYHUHLJ JQERQGV  6RYHUHLJQERQGV

  





  

 &RUSRUD DWHERQGV  &RUSRUDWHERQGV

















  





  

 &UHGLWG GHIDXOWVZDS  &UHGLWGHIDXOWVZDS  7RWDO WUDGLQJDVVHWV  7RWDOWUDGLQJDVVHWV 6HFXULWLHV VDYDLODEOHÂ¥IRUVDOH  6HFXULWLHVDYDLODEOHÂ¥IRUVDOH &RUSRUD DWHGHEW  &RUSRUDWHGHEW 6RYHUHLJ JQGHEW  6RYHUHLJQGHEW 7RWDOV VHFXULWLHVDYDLODEOH  7RWDOVHFXULWLHVDYDLODEOH IRUVDOH IRUVDOH ,QYHVWPHQ QWIXQG  ,QYHVWPHQWIXQG 'HULYDWLYHILQDQFLDOLQVWUXPHQWV ' L WL HILQDQFLDOLQVWUXPHQWV 'HULYDWLYH  IL L OL  W W  UHFHLYDEOH UHFHLYDE  EOH )RUZDUG GIRUHLJQH[FKDQJH  )RUZDUGIRUHLJQH[FKDQJH 7RWDOGHULYDWLYHILQDQFLDO 7RWDOG GHULYDWLYHILQDQFLDO   LQVWUXPHQWVUHFHLYDEOH LQVWUXP PHQWVUHFHLYDEOH  7RWDODVVH  HWVDWIDLUYDOXH    7RWDODVVHWVDWIDLUYDOXH



  





  





 

  

   



 



  



 



 







 







  

 





  







 







   



  



  







  



  



  



  

 

  

 



/LDELOLWLHVV 7UDGLQJOLDELOLWLHV 7UDGLQJOLD  DELOLWLHV ,QWHUHVW UDWHVZDSV  ,QWHUHVWUDWHVZDSV &URVVFX XUUHQF\LQWHUHVWUDWH    &URVVFXUUHQF\LQWHUHVWUDWH VZDSV 7RWDOW  UDGLQJOLDELOLWLHV  7RWDOWUDGLQJOLDELOLWLHV 'HULYDWLYHILQDQFLDOLQVWUXPHQWV 'HULYDWLYH HILQDQFLDOLQVWUXPHQWV   SD\DEOH  H ,QWHUHVW UDWHVZDSV  ,QWHUHVWUDWHVZDSV &URVVFX XUUHQF\LQWHUHVWUDWH    &URVVFXUUHQF\LQWHUHVWUDWH VZDSV 7RWDOGHULYDWLYHILQDQFLDO 7RWDOG GHULYDWLYHILQDQFLDO   LQVWUXPHQWVSD\DEOH LQVWUXP PHQWVSD\DEOH  7RWDOOLDE  ELOLWLHVDWIDLUYDOXH    7RWDOOLDELOLWLHVDWIDLUYDOXH

$6& 7RSLF   )LQDQFLDO ,QVWUXPHQWV UHTXLUHV GLVFORVXUH RI IDLU YDOXH RI ILQ $6&7RSLF)LQDQFLDO,QVWUXPHQWVUHTXLUHVGLVFORVXUHRIIDLUYDOXHRIILQDQFLDOLQVWUXPHQWVLQFOXGLQJWKRVHDVVHWVDQG QDQFLDO LQVWUXPHQWV LQFOXGLQJ WKRVVH DVVHWV DQG OLDELOLWLHV OLDELOLWLHVIRUZKLFKWKH%DQNGLGQRWHOHFWWKHIDLUYDOXHRSWLRQ%DQNªVPDQDJHPHQWXVHVLWVEHVWMXGJPHQWLQHVWLPDWLQJWKH IRUZKLFKWKH%DQNGLGQRWHOHFWWK KHIDLUYDOXHRSWLRQ%DQNªVPDQDJJHPHQWXVHVLWVEHVWMXGJPHQWLQHVWLPDWLQJ H WKH IDLU YDOXH H RI WKH %DQNªV ILQDQFLDO LQVWUXPHQ QWV KRZHYHU WKHUH DUH OLPLWDWLRQV LQ L  DQ\ HVWLPDWLRQ WHFKQLTXH  7KH HVWLPDWHG IDLU IDLUYDOXHRIWKH%DQNª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ªV V ILQDQFLDO DVVHWV DQG OLDELOLWLHV  'XH WR D ZLGH UDQJH RI YDOXDWLRQ WHHFKQLTXHV DQG SURYLGHGIRUDOLPLWHGSRUWLRQRIWKH%DQNªVILQDQFLDODVVHWVDQGOLDELOLWLHV'XHWRDZLGHUDQJHRIYDOXDWLRQWHFKQLTXHVDQG WKH GHJUHHHRIVXEMHFWLYLW\XVHGLQPDNLQJWKHHVWLPDWHVFRPSDULVRQRIIDLUYDOX XHLQIRUPDWLRQRIWKH%DQNDQGRWK KHUFRPSDQLHV WKHGHJUHHRIVXEMHFWLYLW\XVHGLQPDNLQJWKHHVWLPDWHVFRPSDULVRQRIIDLUYDOXHLQIRUPDWLRQRIWKH%DQNDQGRWKHUFRPSDQLHV PD\QRWE  EHPHDQLQJIXOIRUFRPSDUDWLYHDQD     DO\VLV DO\VLV  PD\QRWEHPHDQLQJIXOIRUFRPSDUDWLYHDQDO\VLV IROORZLQJ PDQDJHPHQW YDOXHV 7KH IROORZ ZLQJ PHWKRGV DQG DVVXPSWLRQV ZHUH Z  XVHG E\ WKH %DQNªV PDQDJH HPHQW LQ HVWLPDWLQJ WKH IDLU YDOXH HV RI ILQDQFLDO LQVWUXPHQ QWVZKRVHIDLUYDOXHDUHQRWPHDVX       XUHGRQDUHFXUULQJEDVLV     LQVWUXPHQWVZKRVHIDLUYDOXHDUHQRWPHDVXUHGRQDUHFXUULQJEDVLV

118

    Notes to consolidated financial statements


  \ J  KDWDSSUR[LPDWHVIDLUYDOXH  SS   )LQDQFLDOLQVWUXPHQWVZLWKFDUU\LQJYDOXHWKDWDSSUR[LPDWHVIDLUYDOXH )LQDQFLDO LQVWUXPHQWVZLWKFDUU\LQJYDOXHWK 7KH FDUU\LLQJYDOXHRIFHUWDLQILQDQFLDODVVHWVVLQFOXGLQJFDVKDQGGXHIURPEDQNNVLQWHUHVWEHDULQJGHSRVLWVLQEDQNNVFXVWRPHUVª 7KHFDUU\LQJYDOXHRIFHUWDLQILQDQFLDODVVHWVLQFOXGLQJFDVKDQGGXHIURPEDQNVLQWHUHVWEHDULQJGHSRVLWVLQEDQNVFXVWRPHUVª OLDELOLWLHV XQGHUDFFHSWDQFHVDFFUXHGLQWHUHVVWUHFHLYDEOHDQGFHUWDLQILQDQFLDOOLDELOLWLHV O LQFOXGLQJFXVWRPHUªVGHP PDQGDQGWLPH OLDELOLWLHVXQGHUDFFHSWDQFHVDFFUXHGLQWHUHVWUHFHLYDEOHDQGFHUWDLQILQDQFLDOOLDELOLWLHVLQFOXGLQJFXVWRPHUª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ªV 7KHIDLUYDOXHRIWKHORDQSRUWIROLRKDVEHHQGHWHUPLQHGEDVHGXSRQGLVFRXQWHGFDVKIORZPRGHOVWKDWFRQVLGHUWKHPDUNHWª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ªVFUH %DQN VFUH  HGLWPDUJLQ HGLWPDUJLQ   %DQNª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ªVILQDQFLDOLQVVWUXPHQWVWKDW 7KHIROORZLQJWDEOHSURYLGHVLQIRUPDWLRQRQWKHFDUU\LQJYDOXHDQGHVWLPDWHGIDLUYDOXHRIWKH%DQNªVILQDQFLDOLQVWUXPHQWVWKDW DUHQRWP  PHDVXUHGRQDUHFXUULQJEDVLV     DUHQRWPHDVXUHGRQDUHFXUULQJEDVLV ,QWKRXVD  DQGVRI86

  ,QWKRXVDQGVRI86

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

&DUU\LQJ 9DOXH



'HFHPEHU 'HFHPEHU  

 

)DLU 9DOXH

&DUU\LQJ 9DOXH

)DLU 9DOXH

  

  

  

  

  

  

  

  









 Q  /LWLJDWLRQ %ODGH[ LV V QRW HQJDJHG LQ DQ\ OLWLJDWLRQ WKDW W LV PDWHULDO WR WKH %DQNªV EXVLQHVV V RU WR WKH EHVW RI WKH NQRZOHGJH RI WKH %DQNªV %ODGH[LVQRWHQJDJHGLQDQ\OLWLJDWLRQWKDWLVPDWHULDOWRWKH%DQNªVEXVLQHVVRUWRWKHEHVWRIWKHNQRZOHGJHRIWKH%DQNª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ªVFDSSLWDODGHTXDF\ LUUHYRFDEOHFRQWLQJHQF\WUDQVDFWLRQVZHLJKWHGDFFRUGLQJWRWKHLUULVN$VRI'HFHPEHUWKH%DQNªVFDSLWDODGHTXDF\ UDWLR LV ZKLFKLVLQFRPSOLDQFHZLWKWKH HFDSLWDODGHTXDF\UDWLRVUHTXLUHGE\WKH%DQNLQJ/DZLQWKH5HSXEOLFRI3DQDPD UDWLRLVZKLFKLVLQFRPSOLDQFHZLWKWKHFDSLWDODGHTXDF\UDWLRVUHTXLUHGE\WKH%DQNLQJ/DZLQWKH5HSXEOLFRI3DQDPD

    Notes to consolidated financial statements

119


 %XVLQHVV %XVLQHVVVHJPHQWLQIRUPDWLRQ  VHJPHQWLQIRUPDWLRQ  7KH 7KH%DQNªVDFWLYLWLHVDUHRSHUDWHGDQGPDQDJHGLQWKUHHVHJPHQWV&RPPHUFLDO7UHDVXU\DQG$VVHW0DQDJHPHQW7KHVHJPHQW %DQNªªVDFWLYLWLHVDUHRSHUDWHGDQGPDQDJJHGLQWKUHHVHJPHQWV&RPPHUFLDOO7UHDVXU\DQG$VVHW0DQDJHPHQW7KHVHJPHQW LQIRUPDWLR RQUHIOHFWVWKLVRSHUDWLRQDODQGPDQDJHPHQWVWUXFWXUHLQDPDQQHUFRQVLVWHQW F ZLWKWKHUHTXLUHPHQWVRX XWOLQHGLQ$6& LQIRUPDWLRQUHIOHFWVWKLVRSHUDWLRQDODQGPDQDJHPHQWVWUXFWXUHLQDPDQQHUFRQVLVWHQWZLWKWKHUHTXLUHPHQWVRXWOLQHGLQ$6& 7RSLF 6HJPHQW5HSRUWLQJ7KHVHJPHQW WUHVXOWVDUHGHWHUPLQHGEDVHGRQWK KH%DQNªVPDQDJHULDODFFRXQWLQJSURFHVV S ZKLFK 7RSLF6HJPHQW5HSRUWLQJ7KHVHJPHQWUHVXOWVDUHGHWHUPLQHGEDVHGRQWKH%DQNªVPDQDJHULDODFFRXQWLQJSURFHVVZKLFK DVVLJQVFR  RQVROLGDWHGEDODQFHVKHHWVUHYHQX    XHDQGH[SHQVHLWHPVWRHDF      KUHSR  UWDEOHGLYLVLRQRQDV\VWHPDWLFEDV      VLV  DVVLJQVFRQVROLGDWHGEDODQFHVKHHWVUHYHQXHDQGH[SHQVHLWHPVWRHDFKUHSRUWDEOHGLYLVLRQRQDV\VWHPDWLFEDVLV 

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ªV QHHW LQWHUHVW LQFRPH UHSUHVHQWV WKH PDLQ P  GULYHU RI EDODQFHVKHHWFUHGLWULVNDQGUHFRYHULHVRQDVVHWV,QDGGLWLRQWKH%DQNª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ªV ILQDQFLDO FRQGLWLRQ DQG UHVXOWV RI RSHUDWLRQV  7KHHVH PHDVXUHV UHJDUGLQJILQDQFLDODQGEXVLQHVVWUHQGVUHODWLQJWRWKH%DQNªVILQDQFLDOFRQGLWLRQDQGUHVXOWVRIRSHUDWLRQV7KHVHPHDVXUHV H[FOXGH WK KHLPSDFWRIUHYHUVDOV SURYLVLRQV IRU I ORDQORVVHVDQGUHYHUVDOV SURYLLVLRQV IRUORVVHVRQRIIEDODQFHVKHHWFUHGLWULVN H[FOXGHWKHLPSDFWRIUHYHUVDOV SURYLVLRQV IRUORDQORVVHVDQGUHYHUVDOV SURYLVLRQV IRUORVVHVRQRIIEDODQFHVKHHWFUHGLWULVN WRJHWKHU UHIHUUHGWRDV§UHYHUVDO SURYLVLRQ I       IRUFUHGLWORVVHV¨ ZKLFK%DQNª    VPD  DQDJHPHQWFRQVLGHUVGLVWRUWWUHQGD    DQDO\VLV WRJHWKHUUHIHUUHGWRDV§UHYHUVDO SURYLVLRQ IRUFUHGLWORVVHV¨ ZKLFK%DQNªVPDQDJHPHQWFRQVLGHUVGLVWRUWWUHQGDQDO\VLV 1HW RSHUD DWLQJ LQFRPH GLVFORVHG E\ WKH %DQ QN VKRXOG QRW EH FRQVLGHUHG D VX XEVWLWXWH IRU RU VXSHULRU WR ILQDQF FLDO PHDVXUHV RSHUDWLQJ %DQN VXEVWLWXWH ILQDQFLDO FDOFXODWHG G GLIIHUHQWO\ IURP VLPLODU PHDVXUHV V XVHG E\ RWKHU FRPSDQLHV FRPSDQLHV   7KHVH PHDVXUHV PHDVXUHV  WKHUHIRUH WKHUHIRUH  PD\ QRW EH FRPSDUDEOH F  WR FDOFXODWHGGLIIHUHQWO\IURPVLPLODUPHDVXUHVXVHGE\RWKHUFRPSDQLHV7KHVHPHDVXUHVWKHUHIRUHPD\QRWEHFRPSDUDEOHWR VLPLODUPH  HDVXUHPHQWVXVHGE\RWKHUFRPSD     QLHV VLPLODUPHDVXUHPHQWVXVHGE\RWKHUFRPSDQLHV &RPPHUF LDO LQFRUSRUDWHV DOO RI WKH %DQNª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ªVWUDGLQJDVVHWVVHFXULWLHV V DYDLODEOHIRUVDOHDQGKHOGWRPDWXULW\ 7UHDVXU\LQFRUSRUDWHVGHSRVLWVLQEDQNVDQGDOORIWKH%DQNª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ªV SDUWLFLSDWLRQ LQ WKH QHW LQWHUHVW PDUJLQ RI WKH )XQG QHW JDDLQV IURP WKH QHW LQFOXGHVQHWLQWHUHVWPDUJLQUHODWHGWRWKH)HHGHUªVSDUWLFLSDWLRQLQWKHQHWLQWHUHVWPDUJLQRIWKH)XQGQHWJDLQVIURPWKH LQYHVWPHQ QWIXQGWUDGLQJIHHLQFRPHDQGDOO       ORFDWHGRSHUDWLQJH[SHQVHV   LQYHVWPHQWIXQGWUDGLQJIHHLQFRPHDQGDOORFDWHGRSHUDWLQJH[SHQVHV 7KHIROORZ  ZLQJWDEOHSURYLGHVFHUWDLQLQIRUPD     WLRQUHJDUGLQJWKH%DQNªVFRQWL     QXLQ QJRSHUDWLRQVE\VHJPHQW    7KHIROORZLQJWDEOHSURYLGHVFHUWDLQLQIRUPDWLRQUHJDUGLQJWKH%DQNªVFRQWLQXLQJRSHUDWLRQVE\VHJPHQW %XVLQHVV6HJPHQW$QDO\VLV 

,QPLOOLRQVRI86

,QPLOOLRQ  VRI86

  

&200(5& &,$/ &200(5&,$/ ,QWHUHVWLQFRPH ,QWHUUHVWLQFRPH  ,QWHUHVWH[SHQVH ,QWHUUHVWH[SHQVH   1HWLQWHUHVWLQFRPH 1HWLQWHUHVWLQFRPH  1HWRWKHULQFRPH 1HWRWKHULQFRPH   

2SHUDWLQJH[SHQVHV 2SHUDWLQJH[SHQVHV  1HWRSHUDWLQJLQFRPH 1HWRSH  HUDWLQJLQFRPH   

3URYLVLRQ UHYHUVDOVIRUORDQVDQGRIIEDODQFHVKHHWFUHGLWORVVHV 3URYLVLLRQ UHYHUVDOVIRUORDQVDQGRIIEDODQFH      HVKHHWFUHGLWORVVHV    5HFRYHULHVQHWRILPSDLUPHQWRQDVVHWV 5HFRYHHULHVQHWRILPSDLUPHQWRQDVVHWV       1HWLQFRPHDWWULEXWDEOHWR%ODGH[ 1HWLQF  FRPHDWWULEXWDEOHWR%ODGH[    &RPPH HUFLDODVVHWVDQGFRQWLQJHQFLHV HQGRI      ISHULRGEDODQFHV    &RPPHUFLDODVVHWVDQGFRQWLQJHQFLHV HQGRISHULRGEDODQFHV  ,QWHUHVW WHDUQLQJDVVHWV   

,QWHUHVWHDUQLQJDVVHWV 2WKHUDVVHWVDQGFRQWLQJHQFLHV 2WKHUD DVVHWVDQGFRQWLQJHQFLHV      7RWDOLQ 7RWDOLQWHUHVWHDUQLQJDVVHWVRWKHUDVVHWVDQGFRQWLQJHQFLHV  QWHUHVWHDUQLQJDVVHWVRWKHUDVVHWVDQG      FRQWLQJHQFLHV

120







 

  

   

  

     

 



 



 

    

  

 



  

  

  

    Notes to consolidated financial statements


,QPLOOLRQVRI86

,QPLOOLRQVR    

RI86

75($685< ,QWHUHVWLQFRPH ,QWHUHVVWLQFRPH  ,QWHUHVWH[SHQVH ,QWHUHVVWH[SHQVH  1HWLQ 1HWLQWHUHVWLQFRPH  WHUHVWLQFRPH  1HWRW 1HWRWKHULQFRPH  WKHULQFRPH   

2SHUDWLQJ 2SHUDWLQJH[SHQVHV JH[SHQVHV 1HWRSHUD 1HWRSHUDWLQJLQFRPH  DWLQJLQFRPH   

1HWLQFRP 1HWLQFRPH ORVV DWWULEXWDEOHWR%ODGH[  PH ORVV DWWULEXWDEOHWR%ODGH[     7UHDVXU\DVVHWVDQGFRQWLQJHQFLHV HQGRISHULRGEDODQFHV  7UHDVXU\ DVVHWVDQGFRQWLQJHQFLHV HQGRISHULR      RGEDODQFHV   ,QWHUHVWHDUQLQJDVVHWV ,QWHUHVWH HDUQLQJDVVHWV   

2WKHUDVVHWVDQGFRQWLQJHQFLHV 2WKHUDVV  VHWVDQGFRQWLQJHQFLHV    

7RWDOLQWH 7RWDOLQWHUHVWHDUQLQJDVVHWVRWKHUDVVHWVDQGFRQWLQJHQFLHV  HUHVWHDUQLQJDVVHWVRWKHUDVVHWVDQGFR      RQWLQJHQFLHV $66(70$1$  $*(0(17 $66(70$1$*(0(17 ,QWHUHV VWLQFRPH  ,QWHUHVWLQFRPH ,QWHUHV VWH[SHQVH  ,QWHUHVWH[SHQVH 1HWLQ 1HWLQWHUHVWLQFRPH  WHUHVWLQFRPH  1HWRW 1HWRWKHULQFRPH  WKHULQFRPH   

2SHUDWLQJ 2SHUDWLQJH[SHQVHV JH[SHQVHV 1HWRSHUD 1HWRSHUDWLQJLQFRPH  DWLQJLQFRPH   

1HWLQFRPH ORVV

1HWLQFRP  PH ORVV

 1HWLQFRP  PH ORVV DWWULEXWDEOHWRWKHUHGHHPDEOH      HQRQFRQWUROOLQJLQWHUHVW   1HWLQFRPH ORVV DWWULEXWDEOHWRWKHUHGHHPDEOHQRQFRQWUROOLQJLQWHUHVW 1HWLQFRP 1HWLQFRPH ORVV DWWULEXWDEOHWR%ODGH[  PH ORVV DWWULEXWDEOHWR%ODGH[     )XQGªVDV  VVHWVDQGFRQWLQJHQFLHV HQGRISHULRG      EDODQFHV  )XQGªVDVVHWVDQGFRQWLQJHQFLHV HQGRISHULRGEDODQFHV  ,QWHUHVWH HDUQLQJDVVHWV   

,QWHUHVWHDUQLQJDVVHWV 1RQLQWHUHVWHDUQLQJDVVHWV 1RQLQWHUUHVWHDUQLQJDVVHWV  7RWDOLQWH 7RWDOLQWHUHVWHDUQLQJDVVHWVRWKHUDVVHWVDQGFRQWLQJHQFLHV  HUHVWHDUQLQJDVVHWVRWKHUDVVHWVDQGFR      RQWLQJHQFLHV 727$/

,QWHUHVVWLQFRPH  ,QWHUHVWLQFRPH ,QWHUHVVWH[SHQVH  ,QWHUHVWH[SHQVH 1HWLQW 1HWLQWHUHVWLQFRPH  WHUHVWLQFRPH  1HWRWK 1HWRWKHULQFRPH  KHULQFRPH   

2SHUDWLQJH[SHQVHV 2SHUDWWLQJH[SHQVHV  1HWRSHUD 1HWRSHUDWLQJLQFRPH  DWLQJLQFRPH   

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

 



 







  

  

 





 







 

 



 

  

   





      

  

 

 

 







  

     

 



 

 

  

     

 



        

   

   

   

 

  

     

 



  

     

 



 

    

 

  

  

 

  

              

    7K 7KHQXPEHUVVHWRXWLQWKHVHWDEOHVKDYHEHHQURXQGHGDQGDFFRUGLQJO\PD\QRWWRWDOH[DFWO\ KHQXPEHUVVHWRXWLQWKHVHWDEOHVKDYHEHHQURXQG          GHGDQGDFFRUGLQJO\PD\QRWWRWDOH[DFWO\       

  1 1HWRWKHULQFRPHH[FOXGHVUHYHUVDOV SURYLVLRQV IRUORDQVDQGRIIEDODQFHVKHHWFUHGLWORVVHVDQGUHFRYHULHVRQDVVHWV HWRWKHULQFRPHH[FOXGHVUHYHUVDOV SURYLVLRQV IRUOR        RDQVDQGRIIEDODQFHVKHHWFUHGLWORVVHVDQGUHFRYH        HULHVRQDVVHWV   5HFRQFLOLDWLRQRI1HWRWKHULQFRPH  1HWRWKHULQFRPHÂ¥EXVLQHVVVHJPHQW 1HWRWKHULQFRPHÂ¥EXVLQHVVVHJPHQW       5HYHUVDO SURYLVLRQ IRUORVVHVRQRIIEDODQ      QFHVKHHWFUHGLWULVN        

 5HYHUVDO SURYLVLRQ IRUORVVHVRQRIIEDODQFHVKHHWFUHGLWULVN    5HFRYHULHVQHWRILPSDLUPHQWRQDVVHWV 5HFRYHULHVQHWRILPSDLUPHQWRQDVVHWV     

  

 



1HWRWKHULQFRPHÂ¥FRQVROLGDWHGILQDQFLD  1HWRWKHULQFRPHÂ¥FRQVROLGDWHGILQDQFLDOVWDWHPHQWV      DOVWDWHPHQWV        



1 HWRSHUDWLQJLQFRPHUHIHUVWRQHWLQFRPHH[FOXGLQJ        UHYHUVDOV SURYLVLRQV IRUORDQVDQGRIIEDODQFHVKHH       HWFUHGLWORVVHVDQGUHFRYHULHVRQDVVHWV         1HWRSHUDWLQJLQFRPHUHIHUVWRQHWLQFRPHH[FOXGLQJUHYHUVDOV SURYLVLRQV IRUORDQVDQGRIIEDODQFHVKHHWFUHGLWORVVHVDQGUHFRYHULHVRQDVVHWV 

  ,Q ,QFOXGHVORDQVQHWRIXQHDUQHGLQFRPHDQGGHIHUUHGORDQIHHV QFOXGHVORDQVQHWRIXQHDUQHGLQFRPHDQGGHIHUUHG         ORDQIHHV  

,Q QFOXGHVFXVWRPHUVªOLDELOLWLHVXQGHUDFFHSWDQFHVOHWWH      HUVRIFUHGLWDQGJXDUDQWHHVFRYHULQJFRPPHUFLDODQ        QGFRXQWU\ULVNDQGFUHGLWFRPPLWPHQWVDQGHTXLW\           ,QFOXGHVFXVWRPHUVªOLDELOLWLHVXQGHUDFFHSWDQFHVOHWWHUVRIFUHGLWDQGJXDUDQWHHVFRYHULQJFRPPHUFLDODQGFRXQWU\ULVNDQGFUHGLWFRPPLWPHQWVDQGHTXLW\ LQYHVWPHQWVUHFRUGHGDVRWKHUDVVHWV 

  ,Q ,QFOXGHVFDVKDQGGXHIURPEDQNVLQWHUHVWEHDULQJGHSRVLWVZLWKEDQNVVHFXULWLHVDYDLODEOHIRUVDOHDQGKHOGWRPDWXULW\WUDGLQJVHFXULWLHVDQGWKHEDODQFHRIWKH QFOXGHVFDVKDQGGXHIURPEDQNVLQWHUHVWEHDULQJG       GHSRVLWVZLWKEDQNVVHFXULWLHVDYDLODEOHIRUVDOHDQG        KHOGWRPDWXULW\WUDGLQJVHFXULWLHVDQGWKHEDODQFH        HRIWKH    ,QYHVWPHQW)XQG  5HFRQFLOLDWLRQRI7RWDODVVHWV 5HFRQFLOLDWLRQRI7RWDODVVHWV ,QWHUHVWHDUQLQJDVVHWVÂ¥EXVLQHVVVHJPHQ      QW    ,QWHUHVWHDUQLQJDVVHWVÂ¥EXVLQHVVVHJPHQW     $OORZDQFHIRUORDQORVVHV $OORZDQFHIRUORDQORVVHV 

   

   

&XVWRPHUVªOLDELOLWLHVXQGHUDFFHSWDQFHV &XVWRPHUVªOLDELOLWLHVXQGHUDFFHSWDQFHV        3UHPLVHVDQGHTXLSPHQW    3UHPLVHVDQGHTXLSPHQW     $FFUXHGLQWHUHVWUHFHLYDEOH $FFUXHGLQWHUHVWUHFHLYDEOH        'HULYDWLYHILQDQFLDOLQVWUXPHQWVXVHGIRUK  'HULYDWLYHILQDQFLDOLQVWUXPHQWVXVHGIRUKHGJLQJUHFHLYDEOH     KHGJLQJUHFHLYDEOH          2WKHUDVVHWV 2WKHUDVVHWV           7RWDODVVHWV¥FRQVROLGDWHGILQDQFLDOVWDWHPHQWV 7RWDODVVHWV¥FRQVROLGDWHGILQDQFLDOVWDWH       HPHQWV       

    Notes to consolidated financial statements

121


*HRJUDSKLFLQIRUPDWLRQLVDVIROORZV *HRJUDSKLF LQIRUPDWLRQLVDVIROORZV    

,QWKRXVDQG  GVRI86

  ,QWKRXVDQGVRI86

3DQDPD

8Q 8QLWHG6WDWHV QLWHG6WDWHV   R RI$PHULFD

7RWDO

,QWHUHVWLQFRPH ,QWHUHVWLQFR  RPH ,QWHUHVWH[SH  HQVH ,QWHUHVWH[SHQVH 1HWLQWHUHVWLQFRPH 1HWLQWHUHVW  LQFRPH

  

 

  

  

  

  

   

   

  

/RQJOLYHGDVVHWV /RQJOLYHGD DVVHWV 3UHPLVHVDQGHTXLSPHQWQHW 3UHPLVHVDQGHTXLSPHQWQHW  











,QWKRXVDQG  GVRI86

  ,QWKRXVDQGVRI86

3DQDPD ,QWHUHVWLQFRPH ,QWHUHVWLQFR  RPH ,QWHUHVWH[SH  HQVH ,QWHUHVWH[SHQVH 1HWLQWHUHVWLQFRPH 1HWLQWHUHVW  LQFRPH /RQJOLYHGD DVVHWV /RQJOLYHGDVVHWV 3UHPLVHVDQGHTXLSPHQWQHW   3UHPLVHVDQGHTXLSPHQWQHW

8Q 8QLWHG6WDWHV QLWHG6WDWHV   R RI$PHULFD

&D\PDQ &D\PDQ ,VODQGV

7RWDO

   



   



  



 

    







 



&D\PDQ &D\PDQ ,VODQGV

7RWDO



,QWKRXVDQG ,QWKRXVDQGVRI86

 GVRI86

 

122

&D\PDQ &D\PDQ ,VODQGV

3DQDPD

8Q 8QLWHG6WDWHV QLWHG6WDWHV   R RI$PHULFD

,QWHUHVWLQFRPH ,QWHUHVWLQFR  RPH ,QWHUHVWH[SHQVH ,QWHUHVWH[SH  HQVH 1HWLQWHUHVW 1HWLQWHUHVWLQFRPH  LQFRPH

 





 





  

 



  





  

/RQJOLYHGDVVHWV /RQJOLYHGD DVVHWV 3UHPLVHVDQGHTXLSPHQWQHW 3UHPLVHVDQGHTXLSPHQWQHW  









    Notes to consolidated financial statements


'HORLWWH,QF ' HORLWWH,QF &RQWDGRUHV3~EOLFRV$XWRUL]DGRV &RQWDGRUHV3~  ~EOLFRV$  XWRUL]DGRV $SDUWDGR $S SDUWDGR 3DQDPi5HSGH3DQDPi 3DQDPi5HSGH3DQDPi  7HOpIRQR   7HOpIRQR   )DFVLPLOH   )DFVLPLOH   ZZZGHORLWWHFRPSD ZZZGHORLWWHFRPSD 

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¶V $QQXDO 5HSRUUW RQ ,QWHUQDO &RQWU & RORYHU )LQDQFLDO 5HSRUUWLQJ 2XU UHSRUWLQJLQFOXGHGLQ0DQDJHPHQW¶V$QQXDO5HSRUWRQ,QWHUQDO&RQWURORYHU)LQDQFLDO5HSRUWLQJ2XU UHVSRQVLELOLW\LVWRH[SUHVVDQRSLQLRQR RQWKKH%DQN VLQWHUQDOFRQWURORYHUI ILLQDQFLDOUHSRUUWLQJEDVHGRQRXU UHVSRQVLELOLW\LVWRH[SUHVVDQRSLQLRQRQWKH%DQN VLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJEDVHGRQRXU DXGLW DXGLW  :H FRQGXFFWHG RXU DXGLW LQ DFFRUGDQFH ZLWK WKH VWDQGDUGV RI WKH 3XEO X LF &RPSDQ\ $FFRXQWLQJ 2YHUVLJKW :HFRQGXFWHGRXUDXGLWLQDFFRUGDQFHZLWKWKHVWDQGDUGVRIWKH3XEOLF&RPSDQ\$FFRXQWLQJ2YHUVLJKW %RDUG 8QLLWHG 6WDWHV   7KRVH VWDQGDUG GV UHTXLUH WKDW ZH SODQ DQG SH S UIIRUP R  WKH DXGLW WR REWDLQ UH U DVRQDEOH %RDUG 8QLWHG6WDWHV 7KRVHVWDQGDUGVUHTXLUHWKDWZHSODQDQGSHUIRUPWKHDXGLWWRREWDLQUHDVRQDEOH DVVXUDQFHDERXWZKHWKHUHIIIHFWLYHLQWHUQD U OFRQWURORYHU ILQDQFLDOUHSRUW S LQJZDVPDLQWDLQHGLQDOOPDWHULDO DVVXUDQFHDERXWZKHWKHUHIIHFWLYHLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJZDVPDLQWDLQHGLQDOOPDWHULDO UHVSHFWV  2 XU DDXGLW XGLW LQFOXGHG LQFOXGHG REWDLQLQJ REWDLQLQJ Q  DQ DQ XQGH UVWDQGLQJ RI RI LQWHUQDO LQWHUQDO FRQWURO FRQWURO RYHU RYHU IILQDQFLDO LQDQFLDO UHSRUWLQJ UHSRUUWLQJ UHVSHFWV 2XU XQGHUVWDQGLQJ DVVHVVLQJ WWKH KH UL VN WKDW WKDDW D D P DWHULDO ZHDNQHVV ZHDNQHVV HH[LVWV [LVWV WHVWLQJ WHVWLQJ DQG DQG HYDOXDWLQJ HYDOXDDWLQJ WKH WKH GHVLJQ GHVLJQ DQG DQG RSHUDWLQJ RSHUDDWLQJ DVVHVVLQJ ULVN PDWHULDO HIIHFWLYHQHVV RI LQWHUQDO FRQWURO EDVHG RQ WKH DVVHVVHG ULVN DQG SHUIIRRUPLQJ VXFK RWKHU SURFHGXXUHV DV ZH HIIHFWLYHQHVVRILQWHUQDOFRQWUROEDVHGRQWKHDVVHVVHGULVNDQGSHUIRUPLQJVXFKRWKHUSURFHGXUHVDVZH FRQVLGHUHGQHFHVVDU\LQWKHFLUFXPVWDQFHV:HEHOLHYHWKDDWRXUDXGGLWSURYLGHVDUHDVRQDEOHEDVLVIRRURXU FRQVLGHUHGQHFHVVDU\LQWKHFLUFXPVWDQFHV:HEHOLHYHWKDWRXUDXGLWSURYLGHVDUHDVRQDEOHEDVLVIRURXU RSLQLRQ RSLQLRQ  $ FRPSDQ\\ V LQWHUQDO FRQ QWURO RYHU ILQDQFLDO UHSRUUWLQJ LV D SURFHVV GHVLJQHG E\ RU XQGHU WKH VXSH X UYLVLRQ $FRPSDQ\ VLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJLVDSURFHVVGHVLJQHGE\RUXQGHUWKHVXSHUYLVLRQ RI I WKH WKH K  FFRPSDQ\ V RP PSDQ\ V SUL QFLSDO H[HFXWLYH H[HFXWLYH DQG DQG SULQFLSDO SULQFLSDO ILQDQFLDO ILQDQFLDO RIILFHUV RIIILFHUV RU SHUVRQV SHUVRQV SHUIRUPLQJ SHUIIRUP R LQJ Q  VVLPLODU LPLODU RI SULQFLSDO IIXQFWLRQVDQGHIIHFWHGE\WKHFRPSDQ\ VERDUGRIGLUHFWRUVPDQDJHPHQWDQGRWKHUSHUVRQQHOWRSURYLGH XXQFWLRQVDQGHIIHFWHGE\WKHFRPSDQ\ \ VERDUGRIGLUHFWRUVPDQDJHPHQWDQGRWKKHUSHUVRQQHOWRSURYLG H UH DVRQDEOH DVVXUDQFH DVVXUDQFH UHJDUGLQJ UHJDUGLQJ WKH WK KH UHOLDELOLW\ UHHOLDELOLW\ RRI I ILQDQFLDO ILQDQFLDO UHSRUWLQJ UHSRUWWLQJ DQG DQG WKH WKKH SUHSDUDWLRQ SUHSDUDDWLRQ RI RII ILQDQFLDO ILQDQFLDO UHDVRQDEOH VVWDWHPHQWV WDWHPHQWV IRU IRRU H[WHUQDO H[WHUQDO SXUSRVHV SXUSRV S S HV LQ LQ DFFRUGDQFH DFFRUGDQFH ZLWK ZLWK JJHQHUDOO\ HQHUDOO\ DFFHSWHG DFFHSSWHG DFFRXQWLQJ DFFRXQWLQJ J SULQFLSOHV SSULQFFLSSOHV  $ $ FFRPSDQ\ VLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJLQFOXGHVWKRVHSROLFLHVDQGSURFHGXUHVWKDW  SHUWDLQ RPSDQ\ VLQWHUQDOFRQ QWURORYHUILQDQFLDOUHSRUWLQJLQFOXGHVWKKRVHSR S OLFLHVDQGSURFHGXUHVWKDW  SHUWDLQ WWRWKHPDLQWHQDQFHRIUHFRUGVWKDWLQUHDVRQDEOHGHWDLODFFXUDWHO\DQGIDLUO\UHIOHFWWKHWUDQVDFWLRQVDQG R WKH PDLQW Q HQDQFH RI UHFRUGV WK KDW LQ UH U DVRQDEOH GHWDLO DFFXUDDWHO\ DQG IDLUO\ UHIOHFW WKKH WUDQVDFWLRQV DQG GL VSRVLWLRQVVRIWKHDVVHWVRIWKHFRPSDQ\ Q   SURYLGHUHDVRQDEOHDVVXUDQFHWKKDDWWUDQVDFWLRQV DUHHUHFRUGHG GLVSRVLWLRQVRIWKHDVVHWVRIWKHFRPSDQ\  SURYLGHUHDVRQDEOHDVVXUDQFHWKDWWUDQVDFWLRQVDUHUHFRUGHG DDV V QHFHVVDU\ QHFHVVDU\ WR WR SHUPLW SHUPLW SUHSDUDWLRQ SUHSDUDWLRQ RI R  IILQDQFLDO RI LQDQFLDO VVWDWHPHQWV WDWHPHQWV LQ LQ DFFRUGDQFH DFFRUGDQFH ZLWK ZLWK JHQHUDOO\ JHQHUDOO\ DFFHSWHG DFFHSWHG DDFFRXQWLQJ FFRXQWLQJ SUL QFLSOHV DQG DQG WKDW WKDDW UHFHLSWV UHFHLSW S V DQG DQG H[SHQGLWXUHV H[SHQGLWXUHV RI RI WKH WKKHH FRPSDQ\ FRPSDQ\ DUH DUH EHLQJ EHLQJ PDGH PDGH RQO\ RQO\ LQ LQ SULQFLSOHV DDFFRUGDQFHZLWKDXWKRUL]DWLRQVRIPDQDJHPHQWDQGGLUHFWRUVRIWKHFRPSDQ\DQG  SURYLGHUHDVRQDEOH FFRUGDQFHZLWK KDXWKRULL]DWLRQVRIPDQDJHPHQWDQG GLUHFWRUVRIWKHHFRPSDQ\DQG  SURYLGHUH U DVRQDEOH DDVVXUDQFHUHJDUGLQJSUHYHQWLRQRUWLPHO\GHWHFWLRQRIXQDXWKRUL]HGDFTXLVLWLRQXVHRUGLVSRVLWLRQRIWKH VVXUDQFHUH U JDUGLQJ SUHYHQWLRQRUWLPHO\ GHWHFWLRQRIXQDXWKRUL]HGDFTXLVLWLRQXVH RU GLVSRVLWLRQRI WKH FFRPSDQ\ VDVVHWVWKDWFRXOGKDYHDPDWHULDOHIIHFWRQWKHILQDQFLDOVWDWHPHQWV RPSDQ\ VDVVHWVWKDDWFRXOGKDYHDPDWHULDOHIIHFWRQ  WKHI ILLQDQFLDOVWDWHPHQWV      $XGLWx7D[x&RQVXOWLQJx&RUSRUDWH)LQDQFHx $ XGLWx7D[x&RQVXOWLQJx&RUSSRUDWH)LQQDQFHx

     Notes to consolidated financial statements

123


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

 124

    Notes to consolidated financial statements


125


Calle 50 y aquilino de la Guardia apartado 0819-08730, panamá república de panamá tel: (507) 210 8500 Fax: (507) 269 6333 e-mail: webmaster@bladex.com www.bladex.com


Bladex-2010-english  

annual report bladex 2010

Advertisement
Read more
Read more
Similar to
Popular now
Just for you