Page 1


Хontents About UNISTREAM 2011 Market UNISTREAM operational structure Growth in volumes and number of clients Financial Performance of UNISTREAM Commercial Bank (JSC) in 2011 Network in Russia Development in CIS countries International development Terminal network Transfers from cell phone accounts Unified clients’ card promotion Compliance Financial statements

7 9 13 15 18 23 27 31 35 39 43 47 49


300 thousand service points across the Globe


185 000 Russia

15 000

About UNISTREAM Total network

CIS

Shareholders of UNISTREAM Commercial Bank (JSC)

Asia

Europe

North America

8 000

South America

3 000 Africa

6

85 000

10 000

5 000

Unistream / Annual report/ 2011

100

Australia and Oceania

Gagik Tigranovich Zakaryan — 37 %

UNISTREAM Commercial Bank (JSC) Board of Directors Chairman of the Board Gagik Tigranovich Zakaryan,

Russia

300 000 +

185 200

Georgy Igorevich Piskov — 37 % AURORA RUSSIA LIMITED Сompany — 26%

The UNISTREAM international money transfer system was founded in 2001. UNISTREAM’s organizational and operational center is UNISTREAM Commercial Bank (JSC) wich offices is located in Moscow. Starting its operations in Russia, the system has gradually transformed into a large international operator and has become one of the undisputed leaders within the Russian Federation and the CIS. Today, UNISTREAM provides services through more than 300 thousand points (centers) operating in 100 countries across the world. Total number of financial institutions as system partners – 400. Its network exceeds 15,000 service points within the CIS. Internationally, UNISTREAM is known for its active expansion within the Russian Federation, the CIS, Asia, the Gulf States and other regions. In Europe, the system develops networks through affiliated

Georgy Igorevich Piskov, Board member John McRoberts, Board member Leon David Isaacs, Board member Andrey Alekseevich Gurin, Board member

companies in Great Britain, Cyprus, Germany and Greece. The system is actively developing through various sales channels. One may use its services in terminals, send money from a phone bill by the largest mobile providers, carry out a transfer at retail chains, and send money via mobile phone using a standard SMSdialogue. The main components of the system’s strategy today are further market share increases in the Russian Federation, CIS and non-CIS countries.

Partnership network in Russia

12 000

UNISTREAM own network

200

Terminal network

CIS

Far Abroad

173 000

15 000

111 100

Unistream / Annual report / 2011

7


2011 Market

13,7

Volume of outbound transfers in Russia via transfer systems in 2007-2011 (CB RF).

17,5

9,44

12,8 9,97

16,00

Quality 10,00

London

Berlin

Speed

Moscow

2007 2008

Reliability Card Kiev

Volume of cross-border transfers exceeded $20 bln

Cell phone Банкомат account

2009

6,00

2010 2011

Integration Terminal

Retail

Dushanbe

The year 2011 particularly stood out due to its tempo, dynamics, and the development of new trends and innovative solutions. Certainly, each player will call it a difficult year because the level of competition has grown significantly. Customer requirements for systems and partner banks have increased greatly in driving how the system works and whom to choose. The philosophy of money transfers itself began to change in 2010. In 2011, it was completely transformed: transfers finally became an interconnected, equal in rights and logical part of the whole system of electronic payments and were consolidated within a product line of retail networks. From this point of view, the year will be remembered as one of the most interesting

periods in the development of the money transfer market. A certain point of no return was passed last year where money transfers became an integral part of electronic payments. This, in turn, gave rise to breakthroughs in many other areas: organizational, integration, and, certainly, in aspects of IT. According to the Central Bank of the Russian Federation, there were 20.3 billion U.S. dollars of cross-border transfers in 2011, compared with 14.81 billion U.S. dollars the previous year, an increase of 37 %. The situation began to «accelerate» in the first half of the year. Post-crisis restoration in the economy, particularly in industries where migrant labor is employed, was clearly evident: construction,

$ bln

services, and trade. It should be noted that the share of migrant labor in overall demand reached almost 80 percent in 2011. There were a number of factors which substantially contributed to the high growth rates. The most significant was the development of new sales channels to introduce and capture new customer segments. These channels include both terminals, and the promotion of mobile transfers and transfers through retail networks. All this opened up many first-time customers new to money transfer services, and allowed share to increase even more through official sending channels which incented substantial market growth during the first half of the year.

Nepal. Over 20 percent of GDP are money transfers. Total volume $4 bln in 2011.

Unistream / Annual report / 2011

9


UNISTREAM 18

82 Other systems

UNISTREAM market share in Russia to CIS outbound transfers in 2011.

System experts believe that more than 20 percent of new clients entered the money transfer market due to this factor. The number of customers who had not previously been «typical» system users increased, but nevertheless began using and preferring them to standard “account to account” bank transfers. Several factors contribute to this. During the past several years, the market went down steadily on the axis of tariffs. This made money transfers more and more attractive and competitive in comparison with bank transfers. In addition, there was no formality in opening an account, and the time to complete any money transfer took seconds, instead of days. All this drew a substantial quantity of new clients in this segment. Having accelerated during the first six months, the market experienced some significant hindrances from July to December that were related to completing the transition of certain new clients from the informal market into the official one, and to sharp currency fluctuations.

10

Unistream / Annual report/ 2011

Currency fluctuations played a major role in slowing growth. Customers held back from sending, expecting a return to more favorable dollar rates. There were months during the autumn when the effective annual growth was only 10-14 percent, significantly less compared with the first half of the year. To stimulate money transfers under such conditions, the primary issue in the market was about fixing an internal rate system to protect customers from instability on the foreign currency market. At the same time, one could observe a countervailing positive trend during the second half of the year. Increasing market entry through the retail channel began to fuel increasing growth. This involved a considerable sum of money from the informal market. As a result of these two opposing factors, the annual rate of growth was approximately 20 percent as the segment achieved a level of “cruising” equilibrium by the end of the year. Now we will characterize the main trends. In 2011, the market was characterized by sharp competition. It was competition for survival – the market had moved into such a phase – that gave impetus to everything that occurred, particularly the increased intensity with which players began to develop new products and projects. First of all, one should note the decrease in tariffs. In the CIS, the range moved from 2.0 - 2.5 percent in 2010, to 1.5 – 2.0 percent in 2011. In Russia, the range of 1.5-2.0 percent was shifted to 0.5 – 1.5 percent. Certain average tariffs on the market have been taken into account here. The considerable shift in both upper and lower bounds is obvious. A second important point was the standardization of promotional methods. Systems began to use a certain arsenal of promo-tools, following one another and copying the most creative approaches by the main market players. For example, if someone started to place advertizing in the underground, then everyone «went down» to the underground. If someone used advertizing media on minibuses,

then everyone paid attention to minibuses, and so on. Without exception, considerable growth in advertizing budgets occurred for all large players. For purposes of more thorough work with a customer, companies began to more frequently promote their services by means of promotional activities. One additional measure which gained clear acceptance and became a trend in 2011, was the intensified incentives for transaction officers at partner banks. Special bonus programs were introduced in which transaction officers received points for transfers they processed and incentive premiums were paid on their totals: 5 to 30 Russian rubles per transaction. While mentioning the struggle for partner banks and, in particular, the struggle for transfers within a separately chosen bank, it should be noted that the relationship between financial institutions and systems changed significantly. While transfers were previously considered to be a certain unessential by-product, the current situation has changed. Money transfers are included in the product lines of all large banks and are an integral part of the range of services they provide. During negotiations with partners, it became obvious that they discuss collaboration opportunities in detail, with interest and full knowledge. Moreover, concrete plans, figures and terms are discussed upfront. After commencing the work, banks carefully monitor transfers taking revenue and offers from competing systems into account. In this respect, we may say that 2011 was a year of struggling not only for a client, but also for banks, and especially for large ones. Shifting away from exclusivity was also a trend during 2011. Banks refused to work on an exclusive basis with a specific system, and began to try to create a competitive environment for different systems within their channel. System specialists believe that this is a temporary trend, since over time a bank will sooner or later make

5,59

4,37 2,85

4,69 5,00

4,00

I st quarter

3,00

II nd quarter The amount of outbound transfers in Russia in 2011 (quarterly), CB RF

$ bln

III rd quarter

Specialized centers for money transfers appeared in the CIS market for the first time. The UNISTREAM system became a pioneer here again. But what is important is that they appeared in Russia, Kyrgyzstan, Uzbekistan and Israel. It is an important step ahead of the market since a customer can receive everything required for transfers: information, options, new products etc. The importance of specialized centers is also the fact that they play an essential role in promoting civilized methods for sending money, and this is a new blow against “shadow” transfers. In addition, there was a need for them long ago, as an institute is indicative with respect to the quality of services rendered. UNISTREAM experts believe that further development of all of these trends will also occur in 2012. Certainly, it will take place under conditions of a new round of competition, and it is the competition that will drive both rates, new marketing approaches, and all other major trends in the market’s development.

IV th quarter its choice, partners «work well together», and a normal, harmonious «system-bank» emerges. Shifting away from exclusivity will remain a phenomenon within the market, however it won’t last long. This can be seen from UNISTREAM activity and work. Many banks remained precisely with our system. This will happen with mobile operators as well. This channel possesses a tendency to shift away from exclusivity, however this will not last for a long time. The strongest will prevail. Force here implies both advantages in marketing positioning, marketing budgets, flexibility in tariffs, and the potential to rapidly implement software changes, as well as in the ability to respond to market fluctuations quickly and more adequately. Shifting away from exclusivity is a trend in a rather new channel as well, retail, which has only begun to be developed, and the

competition for which gets stronger. There is one more item which must be noted in this account relating to partner banks in CIS countries. They began “to defend their rights” rather profoundly. This may be expressed in an active struggle for their own portion of a shared service fee, in the formation of sales plans and many other aspects. Everything is absolutely clear: transfers form essential portions of the gross domestic product in the majority of countries, and these are very tasty and large pieces of the pie even by measures of the overall banking sector. The year was marked by the increasing popularity of customer cards on the money transfer market. And UNISTREAM played an essential role here. The system managed to issue more than 1 million cards during 2011, and this became an essential driver in the quality development plan.

Unistream / Annual report / 2011

11


UNISTREAM Operational structure

UNISTREAM own network in Russia Bank-partners Partner terminal network

Full product line. Wide sales channel spectrum

UNISTREAM operational structure is built on a clear principle which fully addresses the need for permanently increase the system’s usability and convenience for clients. Its main aspects are: —— providing maximum coverage in a given area (region) taking into account the growing clients’ need for high quality services. In many cities, the main objective is to provide services within walking distance; —— offering clients the greatest possible product line for money transfers (this includes not only money transfers with payment in cash, but also money transfers into an account, on a bank card, with home delivery etc.); —— offering clients the widest product line for services not directly related to money transfers. In particular, the opportunity to repay credits, pay for public utility services, mobile communication, payments to corporations, etc.; —— constantly expanding the number of sales channels, including transfers from the accounts of mobile operators using Unistream Money card-cheques, via terminals and at retail sites; —— constantly opening new countries and regions of the world for clients.

Own terminal network Cellular operators Retail Own range of networks in Europe (UK, Greece, Germany, Cyprus) administrated by affiliated companies

System partners Post organizations Non-banking financial institutions

Unistream / Annual report / 2011

13


33

Growth in volumes and number of clients

40

25

40

30 ,00

20,00

I st quarter II nd quarter Total amount of transactions in 2011, quarterly.

Amount of transactions in 2011 – RUR 137 bln

The system entered 2012 by considerably higher financial highlights. This growth is reflected in the following indicators: —— pre-tax profit for UNISTREAM COMMERCIAL BANK (JSC), which is the financial settlement and organizational center of the system, increased more than fourfold to 135 million Russian rubles (IFRS standards, management statements data); —— transaction volume in ruble terms reached an all-time high of 138 billion Russian rubles, a 17 percent increase over the previous year; —— revenue increased by 24 percent within the CIS; —— revenue increased by 40 percent in non-CIS countries.

The system processed 7.1 million transactions in 2011, an annual increase of 17 percent. The system also announced considerable growth in various sales channels. In particular: —— revenue grew by 151 percent for cell phone money transfers; —— transfer volume via terminals grew 18-fold. In characterizing overall business activity during the past year, it should be noted that the system expanded in practically all aspects of the business. In particular, the number of locations in the Russian Federation surpassed 5,000 at the end of 2011, with 15,000 locations (without terminals) in the CIS, and the total worldwide network

10,00

III rd quarter

bln. RUR

IV th quarter grew by more than 300,000 locations in 100 countries (including terminals). A major factor in the growth of locations came from substantial increases in the number of partnerships. Thus, 177 net new partners were added in the Russian Federation, plus 132 new partners in the CIS. And in total, 382 financial institutions joined UNISTREAM as of the end of the fiscal year, which was a record amount. In 2011, we managed not only to achieve a considerable increase in client loyalty, but also to become one of the most attractive systems for potential partners. And this was true not only within the former Soviet Union, but in

Unistream / Annual report / 2011

15


1,96 1,83 1,41

1,95

122

2,00

117

93

119

137

1,50

I st quarter II nd quarter

1,00

III rd quarter

mln.

IV th quarter

5,55

160,00

6,10

5,84

3,79

8,00

7,14

100,00

2007

60,00

2008

mln. RUR.

2009 2010

5,00

2007

2,00

2008

mln.

2009 2010

2011

2011

UNISTREAM number of transactions in 2011 (quarterly).

UNISTREAM amount of transactions in 2007-2011.

UNISTREAM number of transactions in 2007-2011.

many other regions of the world as well, including Asia, Oceania, and the Gulf States. A serious step in this direction was also made in Western Europe. UNISTREAM managed to achieve great progress in developing key projects last year. In particular, the number of UNISTREAM card users exceeded 1 million in 2011. The share of transfers using the card varied across key segments from 50 to 80 percent. The network became more convenient due to expanding

opportunities to receive money at any system location in the country which the remitter specifies. In 2011, the system implemented large-scale projects which added 160 thousand terminals. Integration with national mobile providers also took place. The program of specialized centers for UNISTREAM money transfers was actively promoted. Large projects were implemented in Asia, in particular in the Philippines, Sri Lanka, United Arab Emirates, Israel, Bangladesh, as

well as in Nigeria and in the CIS. The system attained its highest level on quality of services, range of products and attractiveness in B2B and B2C aspects.

16

Unistream / Annual report / 2011

In 2011, bank demonstrated increase in profit


Financial Performance of UNISTREAM Commercial Bank (JSC) in 2011 The Bank’s total assets were 2,374 million Russian rubles as of January 1, 2012, thus exceeding the previous year’s indicator by 22 %.

2009

2010

2011

Operating income before reserves

60 608

405 301

978 771

997 782

907 021

1 108 556

Impairment expenses on reserves

(10 240)

(19 420)

1 881

1 185

(1 172)

60 608

415 541

998 191

995 901

905 836

1 107 384

Profit before tax Net profit

2011 financial result (IAS)

Unistream / Annual report/ 2011

C

The main source of growth was the Bank’s net profit of 105.1 million Russian rubles (an all-time high mark for the Bank) in 2011, a six-fold increase over profits in 2010.

2008

Operating expenses

22 % 1%

2007

Operating income

B

2011

18 %

2006

Performance over the year (thousand RUR)

18

This is primarily due to an increase in cash of 89 % - up to 640 million Russian rubles.

B

2010

A

2%

C A

81 %

Bank’s income structure 2010. (A ) — net fee and commission income (B) — net profit on foreign currency transactions (C) — net interest income

76 %

Bank’s income structure 2011. (A) — net fee and commission income (B) — net profit on foreign currency transactions (C) — net interest income

Financial performance (%)

2006

2007

2008

2009

2010

2011

(60 889)

(473 386)

(854 573)

(976 925)

(871 541)

(966 300)

(281)

(78 325)

104 778

22 738

36 665

141 085

Return on Total Assets (ROA)

-0,3

-5,9

5,5

0,8

0,9

4,43

(1 253)

(72 783)

64 116

12 870

18 373

105 111

Return on Equity (ROE)

-0,73

-16,14

12,45

2,48

3,38

16,78

Capital Adequacy Ratio (Н1)

122,7

92,5

102,5

81,3

48,5

35,4

Russia. In 2011, the National Payment System Law passed. In 2012 , the National Payment Council established UNISTREAM one of the co-founders.

In 2011, pre-tax profit increased by 104 million Russian rubles (up to 141 million Russian rubles) over 2010. Accordingly, as mentioned above, a six fold increase in the Bank’s net profit occurred during the year due to an increase in operating income of 22%, which was primarily due to increases in the following: —— net interest income on invested assets – a twofold increase to 19 million Russian rubles; —— net fee and commission income – up 13% to 846 million Russian rubles; —— net income on foreign currency transactions – a 44% increase to 241 million Russian rubles.

Unistream / Annual report / 2011

19


Interest income trend from placements in foreign currency.

Administrative and economic costs in 2010 and 2011

Dynamics of interest revenue from invested funds, RUR

Breakdown of general administrative expenses in 2011. (A) — staff expenses (B) — lease expenses (C) — security expenses (D) — advertising expenses (E) — other expenses

1204 1200

240 899 184 582

600

200 107

19 311 250 000

8,0

9 915

767 167 318

634

8 706

6,0

7,8 8 596

9 561 8 000

5,5 200

63 849

%

Thous. RUR

19

2007

3,1

2008

2009

The largest contributions to income come from fee and commission income and income on foreign currency transactions. The introduction of a new product – Bi-currency transfers – was a major factor in the increasing share of income from foreign currency transactions in 2011, compared with 2010.

Unistream Unistream / Annual / Annual report/ report 2011 / 2011

3,87

22

4 000 thousand RUR

2007

50 000

Revenue per outlet

20

3,4 2006

993 2006

4,4

4,0

150 000

293

2008

2009

2010

2011

thousand RUR

2010

Interbank rate

Net interest income

2011

FX income per location

Bank expenses Analysis for 2011 General administrative expenses increased to 966 million Russian rubles in 2011, an 11% increased compared with 2010. The main expenditure item is staff expenses which increasing from 387 million Russian rubles in 2010, to 451 million Russian rubles in 2011. This increase was due to the growth in the quantity and quality of staffing as part of the Bank’s expansion activities.

E

12 000

867

2009

A B C D E F

%

2010

%

2011

%

Staff expenses 409 583

42

387 286

44

451 499

47

Lease expenses 181 559

19

181 323

21

183 487

19

60 778

6

51 319

6

53 059

5

Security expenses

19

98 943

11

69 609

7

142 847

15

152 670

18

208 646

22

Total 976 925

100

871 541

100

966 300

100

Advertising expenses 182 158 Other expenses

5% 7%

A

47 %

19 %

D

B

Breakdown of general administrative expenses in 2010. (A) — staff expenses (B) — lease expenses (C) — security expenses (D) — advertising expenses (E) — other expenses

B

21 %

6%

Around the World. The most favorable countries for migration: USA, Russia, Germany, Saudi Arabia, Canada (WB, Factbook 2011)

A

44 %

2010

C 11 %

Russia. Russia is the third world largest remittance market following the US and Saudi Arabia (kommersant.ru)

2011

C

22 %

18 %

D

E

Unistream / Annual report / 2011

21


Network in Russia

Kaliningrad region St. Petersburg

Moscow and Moscow region Nijegorodsk region Krasnodar region

Samara region Chelyabinsk region

Omsk region

Sverdlovsk region

Novosibirsk region

TOP 10 UNISTREAM covered regions of Russia (own outlets).

The number of partners in Russia 177

The number of service points in Russia. By the beginning (A) and at the end (B) of 2011.

4500 Network development within the Russian Federation became one of the most important elements in the general concept for developing the system. This may be due to the fact that the Russian Federation, being a main donor country with regard to money transfers within the CIS, remained a leader among significant and prospective segments in the overall market. Along these lines, UNISTREAM management made every effort for dynamic and progressive expansion of the networks here in 2011. In a year, the number of locations in the Russian Federation increased by approximately 15 percent from 3,900 (by the end of 2010) to more than 4,500 (in the beginning of 2012). The total number of partner banks in which customers may use

UNISTREAM services increased to 177. Thirteen of these partner banks are among the largest in Russia. In 2011, 15 Russian financial institutions became new partners of the system. This does not include figures for terminals which support an option for UNISTREAM money transfers in various regions of the country. Network development took place progressively and steadily in all regions of the country with rates corresponding to levels of growth in customers’ needs. In particular, the number of locations increased by 23 percent in the Central federal district, by 20 percent in the Volga federal

3900 4000

Đ’ A

3000

2000 Points

Unistream / Annual report / 2011

23


306

A

(A) – Central Federal District (B) – Privolzhie Federal District (C) – Siberia (D) – North-West Federal District (E) – Urals (F) – Far East (G) – North Caucasus

B

800

142

C

TOP 10 most UNISTREAM covered regions of Russia. (A) — Moscow (B) — Moscow region (C) — St. Petersburg (D) — Bashkortostan (E) — Krasnodar region (F) — Sverdlovsk region (G) — Tatarstan (H) — Samara region (I) — Rostov region (J) — Omsk region

281

C

D

211

199

B

E

286 171

F

217

D 74

E 66

F

1318 727

40

367 274

200

271

thousand RUR

162 144

district, by 60 percent in the Northern federal district, by 27 percent in the Northwestern federal district, and by 24 percent in the Ural federal district.

24

Unistream / Annual report/ 2011

These growth rates were caused, first of all, by growing interest among banks in partnering with the system which, in turn, was associated with expanding UNISTREAM’s client portfolio, the level

131

825

G

31

2011 increase. The number of service points in Russia by the beginning of 2011. Dynamics of the outlet number in Russia across 2011.

A

600

of brand recognition, expanding the system’s product line and increasing the level of convenience. As of the end of 2011, the system had over 200 of its own

locations in the Russian Federation. Their main functions were: —— to ensure the necessary monitoring and high quality service of customers; —— to more effectively monitor all aspects of the constantly evolving market situation; —— to study the needs of customers thoroughly in each specific region; —— to guarantee availability of the system’s own network for coverage in areas where there is a deficiency of partners; —— to improve and develop the system’s own sales and marketing strategy; —— to participate actively in formation of an optimal tariff policy; In 2012, the network continued its fast pace of development within the Russian Federation.

G

126 106 86

J

I

H

Migration. Over 215 mln people (3% of the Earth total population) live outside the countries they were born in.

Unistream / Annual report / 2011

25


Development in CIS countries

The number of partners in CIS by the end of 2011.

Ukraine 41

Almost 15 000 service points are in CIS and Georgia

UNISTREAM’s objectives for promotion in the CIS remained largescale and ambitious as in previous years. This included intensive network development in all main lines, including Moldova and Ukraine, Tajikistan and Uzbekistan, Kazakhstan and Kyrgyzstan. Apart from expanding the partner network and active integration with banks, the system introduced new elements into the general

Moldova 19

Kyrgyzstan 19

Tajikistan 14

mosaic of promotion in this corridor. In particular, so-called specialized centers for money transfers were launched, similar to those that worked earlier in the Russian Federation and proved themselves to be effective. Their attributes include the most modern interiors and a convenient operational hall with several windows. Such centers can potentially

Uzbekistan 14

Georgia 10

Dynamics of the outlet number in CIS in 2011 (Countries with more than 1 thousand outlets)

In the beginning 1200 Uzbekistan: increase 74

Ukraine: increase 1386

In the beginning 8300

Cyprus. In 2007 UNISTREAM began to promote its own network in Cyprus via an affiliated company Unistream Cyprus.

Unistream / Annual report / 2011

27


H

I

92 62

G F

Distribution of UNISTREAM outlets in CIS by the end of 2011

B

691 712

E

F

Uzbekistan

G

Tajikistan Georgia

C

Moldova

H

Belarus

D

Kazakhstan

I

Armenia

E

Kyrgyzstan

Increase in the number of system outlets in CIS in 2011 (Countries with the number of outlets from 100 to 1 000)

570

39

177

920

C

1267

531

Increase

A

provide the full range of accompanying services to people, including informational booklets on trays and consultation with a specialist. Here, one can obtain a UNISTREAM customer card. Centers began to play an important role in the overall system’s infrastructure. To some extent, they served as a certain guideline on service quality, product line and convenience of use. Their

Unistream / Annual report/ 2011

118 55

B

28

Ukraine

9657

749

D

A

The number of locations by the end of 2011

development provided an additional argument for people to choose the UNISTREAM system. In 2011, such centers were opened in Uzbekistan and Kyrgyzstan. In Tajikistan, a project to replenish bank accounts was launched – in Georgia, transfers “from home.” In the area of network expansion, the system worked in partnership with 132 financial institutions within the CIS as of the end of 2011.

G

535

631 636

D

E

F

In total, the number of centers increased from 12,800 (as of the end 2010) to 14,700 (as of end 2011). In Kyrgyzstan, for example, the number of centers increased by 19 percent, in Tajikistan – by 9%, in Kazakhstan – by 33%, in Armenia – by 32%, and in Ukraine – by 17%. This made an essential contribution to the growth of key indicators. The increase in number of transfers varied from 8 to 45 percent.

A B C D E F G H I

12

Total amount of transactions via UNISTREAM to CIS in 2011.

34 52

Total number of transactions via UNISTREAM to CIS in 2011.

39 198 330 348 585

Total amount and the number of transactions to CIS in 2011 (A) — Belarus (B) — Kazakhstan (C) — Georgia (D) — Moldova (E) — Kyrgyzstan (F) — Ukraine (G) — Tajikistan (H) — Armenia (I) — Uzbekistan

360 689 409 673 366 782 589 755 707

1063 Confidence and turnover also increased steadily. Growth in various corridors was between 10 and 50 percent. In 2012, the system has continued working actively in the CIS to develop all major lines of business.

IAMTN. In 2006 the International Association of Money Transfer Systems began to work (IAMTN.)

Unistream / Annual report / 2011

29


International development

Top 3 UNISTREAM covered countries of Far East by the end of 2011 (number of service points)

Poland 11 700 China 10 000

India 75 500

400 partners in over 100 countries across the world

The UNISTREAM money transfer system is recognized as one of the most popular not only within Russia and the CIS countries, but also across the international market. The system’s main objectives with respect to the international market are as follows: —— to increase total number of UNISTREAM locations due to international projects; —— to open a number of new countries and world regions to customers by making the system even more attractive with respect to b2c; —— to expand the list of financial partners by increasing the system’s level of international integration; —— to promote its own networks in Europe more effectively through affiliated companies in Cyprus, Great Britain, Germany, and Greece; —— to actively participate in developing the main money transfer channels.

In 2010, the company’s management set a goal for further development to open more than 75,000 locations worldwide with partner involvement by the end of 2011. During this period, the system and its new partner in the Philippines – Asia United Bank – started a joint integration project through which money transfers became available in more than 3,000 locations. Filipinos obtained the opportunity to use the UNISTREAM international system of money transfers for sending money home. A new partner joined UNISTREAM in Nigeria – Reliable Transfer Koncern Limited – which enabled transfers to begin in 200 locations across 19 settlements within the country, including Lagos, Abuja and Kadun. The system consolidated its positions in Africa and continued further integration in Europe. Thus, MoneyTrans became a new partner in Belgium by which UNISTREAM increased the number of points in this country. The transition to addressless transfers in Mongolia was one of

UNISTREAM main achievements: more than 400 Blue Diamond locations in 336 cities and towns across the country. Brisk growth at the international level provided a strong incentive to increase turnover and raise the system’s attractiveness for customers.

Asia. In 2011, according to the World Bank, volume of inbound remittances to Asia exceeded $200 bln.

Unistream / Annual report / 2011

31


A B

A B 32

260 280

13 200 13 500

Unistream / Annual report/ 2011

North America. Total number of service points at the beginning (B) and by the end (A) of 2011.

A B

Europe. Total number of service points at the beginning (B) and by the end (A) of 2011.

A B

160 85

90 300 15 200

Africa. Total number of service points at the beginning (B) and by the end (A) of 2011.

Asia. Total number of service points at the beginning (B) and by the end (A) of 2011.

In 2011, UNISTREAM reached new level in its international development


Terminal Network

Terminals as one of the principal vectors in the system development.

Availability, ease of use and the wide number of options for using terminals to render various financial services helped to create the steadily growing demand by customers for this modern and technologically convenient money transfer solution. As a result, the development of a uniform terminal network for UNISTREAM transfers in 2011, including both components, – terminals for sending transfers and system points for delivery – started a year before and became an even higher priority, proceeding in several directions at once. Among them, the most obvious was the increase in the number of terminals through which UNISTREAM clients made money transfers within the Russian Federation and to CIS countries. However, considering the fact that sending transfers is only possible through terminals, at this stage the increase in the number of delivery points has become an equally important component of developing this popular transfer method, i.e. the development of the network itself. UNISTREAM treated this task seriously. During 2011, the number of points grew from 3,900 to 4,500 in the Russian Federation, and from 12,800 to 14,700 in the CIS.

It should be noted that operations for addressless transfers are implemented in terminals for convenience of the interface, simplification of the transfer sending procedure and, finally, for the reduction in time spent by a customer. It means that a sender specifies not a concrete system point to receive a transfer, but a destination country, and an addressee may use any delivery point convenient for him/her within that country. Thus, one of the most important tasks for UNISTREAM became an increase in the number of points capable of serving not only specific locations, but also addressless transfers. In 2011, the share of addressless points grew from 48 % to 78 % in the Russian Federation, and from 31 % to 78 % in the CIS. Thus, the uniform network of work with «terminal» money transfers grew from 150 thousand to 270 thousand. Aspiring to make transfers more convenient for customers, UNISTREAM, in cooperation with the QIWI terminal network and QIWI Bank, developed one more option – sending transfers through QIWI website and QIWI Purse. When using this option a client may send a transfer without approaching a terminal. The only thing necessary is access to

the website site via the Internet or via mobile devices. A transfer payment is possible both by means of money previously deposited to a QIWI Purse account, and by means of plastic cards. The number of terminals by the beginning (A) and at the end (B) of 2011.

173

111

A

B

Unistream / Annual report / 2011

35


Total volume of transfers via terminals in the accounting period.

Countries with inbound UNISTREAM transfers over $ 1 mln. (A) — Armenia (B) — Kyrgyzstan (C) — Moldova (D) — Russia (E) — Tajikistan (F) — Ukraine

20

Amount of UNISTREAM transactions via terminals in 2011 (quarterly).

Number of UNISTREAM transfers via terminals in 2011 (quarterly).

75

73 60

14

15

47

40

10

Total volume of transfers via terminals in 2010

12

15

9

800 20 thousand

5

18

$ mln.

3

Total volume of transfers via terminals in 2011

600

1

3

3

2

1

3

0,1

0,2 0,6

0,1

200 $ mln.

A

36

Unistream / Annual report/ 2011

B

C

D

E

F

Customers appreciated this technologically convenient solution, and by the end of the year the share of transfers through QIWI Purse exceeded 70 % of the volume of transfers made through the terminal network. The success in implementing these programs caused an almost tenfold growth in this business, from 152 million Russian rubles in 2010, to 1.2 billion Russian rubles in 2011.

I st quarter

II nd quarter

III rd quarter

I st quarter IV th quarter

II nd quarter

III rd quarter

IV th quarter

Russia. In 2010, UNISTREAM and QIWI implemented an unprecendented project to create national network of service points and terminals to do money transfers.

Unistream / Annual report / 2011

37


Potential audience 180 million

Transfers from cell phone accounts In 2011, UNISTREAM actively continued to develop promising new channels for money transfers, which of course includes transfers from the accounts of mobile network providers. Being a pioneer of this direction, UNISTREAM has actively developed this option, the result of which has been making this service available to subscribers of all of the “big three” providers since the 4th quarter of 2010, and the potential market of mobile transfer users is over 180 million people. Mobile network subscribers and UNISTREAM customers appreciated this new service which, in 2011, became an ever more common way to send express money transfers for small sums, and the monthly volume of money transfers from mobile provider accounts was approximately 500 million Russian rubles by December. In which case, customers actively utilized both ways of sending transfers – by filling in a form on the provider’s website and by using a special SMS format. Also, clients began to make transfers through special payment portals, such as “RURU payment world” (ruru.ru) that promoted this channel even further. UNISTREAM in turn continued to develop its partner network within the Russian Federation which increased from 3,900 to 4,500 centers which made receipt of transfers sent through mobile

providers even more convenient. It became one more reason for an explosive, over 60-fold growth in transfer volumes which increased from 58 million Russian rubles in 2010, to 3.7 billion Russian rubles in 2011. Since July 2011, the transfer geography ceased to be limited to the Russian Federation – sending transfers to CIS countries became feasible as well. Again, the UNISTREAM system and Vimpelcom provider (Beeline trademark) were pioneers in this venture. The role of this money transfer channel within the general market structure was also established rather clearly in 2011. Transfers through mobile network providers appeared to be a convenient, express means for sending money without visiting an office of a participating bank. The growth in popularity of this type of transfer and, as a result, the increase in business volumes in 2011, were to a certain extent limited to a tariff which made 4.95 % to 5.95 % which, against continued tariff cuts in other money transfer channels, particularly banks and retail networks, reduced the competitiveness of mobile transfers. This, in fact, defined transfers through mobile providers as an express means of sending small sums of money. The average

988 Number of UNISTREAM transfers from cell phone accounts of Beeline, Megafon and MTS in 2011 and 2010, thousand.

313

2010 2011

3,74 Amount of UNISTREAM transfers from cell phone accounts of Beeline, Megafon and MTS in 2011 and 2010, RUR bln.

1,19

2010 India. About 3% of GDP is money transfers. In 2011 they exceeded a $63-bln level 2011

Unistream / Annual report / 2011

39


274

308

228 179

250

Number of UNISTREAM transfers from cell phone accounts of Beeline, Megafon and MTS (quarterly).

Total volume of UNISTREAM transfers via Beeline, Megafon and MTS in 2011 (monthly),

459 400

150

372 352 I st quarter

300

II nd quarter

IV th quarter

thousand Total volume of UNISTREAM transfers via Beeline, Megafon and MTS in 2011 (quarterly).

1,22 1,03 0,66

bln. RUR

Unistream / Annual report/ 2011

194

68

256 72

277

105

293 88

76

94

96

96

92

80

70

51

0,2

40

115

60

0,83

II nd quarter

221

0,8

0,4

I st quarter

247

200 mln. RUR

348

328

50

III rd quarter

392

III rd quarter

bill for this type of transfers was about 4 thousand Russian rubles. In 2012, further development in mobile transfers will be associated with expanding the geography of delivery – transfers to CIS countries and foreign countries, developing ways to manage accounts - use of mobile applets, etc., and the volume of this type of transfer will in many respects be determined by the readiness of providers to cut tariffs for customers.

35 thousand

J

F

M A M

J

J

A

S O

N D

IV th quarter

Unistream / Annual report / 2011

41


Easy to send, easy to receive

Unified clients’ card promotion

In 2011, customer cards, which were first issued in 2010, reached a high point in popularity among the system’s customers. Its 9-digit number became the uniform identifier required to register a transfer. Entering a service point, a customer only needs to key in his/her card number which reduces the time to send money to 1 minute. Based on this card, an operator identifies the customer and accepts the list of his regular recipients from the system. The issue of recipient cards has been started as well. Among other things, this card is used in bonus programs and in QIWI terminals. A client needs to enter his/her number on a touch screen and the system provides a list of recipients or allows a new recipient to be entered. The appearance of customer cards with terminals was an important event in the market and one of the main highlights of its promotion in 2011. Cards are now being issued in Armenia and other foreign countries (e.g. United Arab Emirates, Germany, etc.), and this is among other important developments in this area of the business. In November 2011, the card celebrated a peculiar anniversary: the number of card holders surpassed 1 million. In total, more than 800 thousand people became card holders

during the year, raising the number of loyalty card holders to 1.1 million as of the beginning of 2012. Within some districts in Russia, the share of transfers with this card reached 90 percent in 2011. In particular, this figure was attained in the Northern federal district. In total, the indicator varied from 60 to 80 percent by federal districts of the Russian Federation which indicates a high level of popularity of this instrument among customers. In the CIS, the share of transfers with the card was 76 percent during 2011. In non-CIS countries, cards were issued in 14 countries, including France, Great Britain, Cyprus, Greece, Spain and Poland. As for the United Kingdom, Cyprus and Greece, for example, the share of transfers with cards exceeded 50 percent. In total, 76 percent of transfers were made using this card in 2011. At present, UNISTREAM management plans to offer more new applications for this instrument. In particular, it will become an important lever for making online transfers.

The number of clients’ cards in 2011 (quarterly).

240 212

205

161

250

150

100

I st quarter

II nd quarter

thousand

III rd quarter

IV th quarter

Unistream / Annual report / 2011

43


The number of UNISTREAM clients’ cards issued in different countries, thousand (A) — Ukraine (B) — Georgia (C) — UK (D) — Kazakhstan (E) — Armenia (F) — Kyrgyzstan

A B C D E F G H I J К

Total share of outbound transfers processed with UNISTREAM clients’ card in North West Federal District in 2011.

(G) — Greece (H) — izrael (I) — Cypruce (J) — Moldova (K) — Uzbekistan

Total share of inbound transfers processed with clients’ card in Asia in 2011.

Total share of inbound transfers processed with clients’ card in Europe in 2011.

Dynamics of number of UNISTREAM card issued throughout 2011.

1 100 33

910

Transfers share with the client’s card, %

700

670

57

59 1,4

460

1,6

3,4

thousand 1 st January 2012

43

41

67

300

300

Transfers share without the client’s card, %

3,4

1000

1 st October 2011 1 st Jule 2011

4,6

1 st April 2011

5,4 The share of transfers processed with loaylty card from North Caucasus region in 2011.

5,6

The share of transfers processed with loaylty card from Urals in 2011.

1 st January 2011

Total share of inbound transfers processed with clients’ card in Russia in 2011.

Total share of inbound transfers processed with clients’ card in CIS in 2011.

6,1 28

6,3

39

71

24

Transfers share with the client’s card, %

12

72

61 Transfers share without the client’s card, %

15

44

Unistream / Annual report/ 2011

Transfers share with the client’s card, %

Transfers share without the client’s card, %

76

29

Unistream / Annual report / 2011

45


Compliance

Actively following law

The methods and techniques of money laundering change rapidly in response to the development of measures aimed at preventing them. In recent years, the UNISTREAM international system of money transfers has been identifying more and more complex combinations of money transfers with the use of technology for concealing the true possession and control over criminal income. The hiring of professionals for consultations and assistance in criminal income laundering has also increased. These factors, together with the Bank’s experience led to revising and transforming the internal control system as a whole. The basis for the internal control system in UNISTREAM COMMERCIAL BANK (JSC) is the financial monitoring system which consists of four main elements: 1) organizational and functional components; 2) appointment of a special official; 3) educational and methodological components; 4) internal control systems. A number of fundamental measures for determining the control content of financial monitoring should be identified within its specified component, on the basis of measures carried out by UNISTREAM COMMERCIAL BANK (JSC) aimed at counteracting the legalization (laundering) of income obtained by criminal means, and terrorism financing.

These measures are as follows: 1) identification and analysis of a customer, customer representative and his beneficiary; 2) bank risk assessment; 3) monitoring customer operations; 4) information registration; 5) personnel training; 6) confidentiality compliance. In order to support the internal control system in UNISTREAM COMMERCIAL BANK (JSC), an employee is appointed as a special official responsible for overseeing internal control by the bank for the purpose of counteracting the legalization (laundering) of income obtained by criminal means, and terrorism financing. The main principle of the internal control system is to ensure participation of all bank employees, irrespective of their position, in implementing measures aimed at counteracting the legalization (laundering) of income obtained by criminal means, and terrorism financing. One of the purposes of internal control is to ensure effective management of the Bank’s risks. For these purposes, the Bank conducts an assessment of operational risks, legal risks and reputation risks on a mandatory basis when opening an account. UNISTREAM COMMERCIAL BANK (JSC) does not have any correspondent accounts and does not maintain relations with banks registered in states/countries not participating in the

system to counteract the legalization of income obtained by criminal means. To analyze a customer, the bank puts special emphasis on money transfers having the attributes of cross-border transfers, as well as on the transfer of complete information on a money transfer sender to a beneficiary bank at all stages of such transfer. The bank thoroughly studies money transfers which do not contain complete information on a sender. Today banks and other financial institutions are among the most available and convenient tools for realizing criminal activity related to money laundering. By realizing the importance of executing the policy, the UNISTREAM international system of money transfers utilizes complex software from Bridger Insight XG, which enables the requirements of both Russian legislation and of foreign states to be fulfilled with respect to identifying customers from «black lists.» This program enables immediate reaction to illegal money transfers by persons registered, residing or located within the territory of countries falling short in complying with the law on developing financial measures to counteract money laundering (Financial Action Task Force on Money Laundering), or carrying out specified transactions with the use of a bank account in a given state/country.

Unistream / Annual report / 2011

47


UNISTREAM COMMERCIAL BANK (JSC) Financial Statements for the year ended 31 December 2011


ZAO KPMG

Telephone +7 (495) 937 4477

10 Presnenskaya Naberezhnaya

Fax

+7 (495) 937 4400/99

Moscow, Russia 123317

Internet

www.kpmg.ru

UNISTREAM COMMERCIAL BANK (JSC)

Statement of Comprehensive Income for the year ended 31 December 2011 Notes

Independent Auditors’ Report To the Board of Directors of UNISTREAM COMMERCIAL BANK (JSC)

2011

2010

RUB’000

RUB’000

Interest income

19 311

9 561

Interest expense

(2)

(12)

Net interest income

4

19 309

9 549

Fee and commission income

5

2 073 676

1 897 550

6

(1 228 100)

(1 146 815)

845 576

750 735

240 899

167 318

We have audited the accompanying financial statements of

Auditors’ Responsibility

used and the reasonableness of accounting estimates made by

Fee and commission expense

UNISTREAM COMMERCIAL BANK (JSC) (the Bank), which comprise

Our responsibility is to express an opinion on these financial

management, as well as evaluating the overall presentation of the

Net fee and commission income

the statement of financial position as at 31 December 2011, and the

statements based on our audit. We conducted our audit in

financial statements.

Net foreign exchange income

statements of comprehensive income, changes in equity and cash

accordance with International Standards on Auditing. Those

We believe that the audit evidence we have obtained is sufficient

Other operating income (expenses)

2 773

(20 581)

flows for the year then ended, and notes, comprising a summary of

standards require that we comply with ethical requirements

and appropriate to provide a basis for our audit opinion.

Operating income

1 108 557

907 021

significant accounting policies and other explanatory information.

and plan and perform the audit to obtain reasonable assurance

7

about whether the financial statements are free from material

Opinion

(Charge for) recovery of impairment

8

(1 172)

1 185

Management’s Responsibility for the Financial Statements

misstatement.

In our opinion, the financial statements present fairly, in all material

Personnel expenses

9

(451 499)

(387 286)

Management is responsible for the preparation and fair presentation

An audit involves performing procedures to obtain audit evidence

respects, the financial position of the Bank as at 31 December

Other general administrative expenses

10

(514 801)

(484 255)

of these financial statements in accordance with International

about the amounts and disclosures in the financial statements. The

2011, and its financial performance and its cash flows for the year

Profit before income tax

141 085

36 665

Financial Reporting Standards, and for such internal control as

procedures selected depend on the auditor’s judgment, including

then ended in accordance with International Financial Reporting

Income tax expense

(35 974)

(18 292)

management determines is necessary to enable the preparation

the assessment of the risks of material misstatement of the financial

Standards.

Profit for the period

105 111

18 373

of financial statements that are free from material misstatement,

statements, whether due to fraud or error. In making those risk

Total comprehensive income for the period

105 111

18 373

whether due to fraud or error.

assessments, the auditor considers internal control relevant to the

ZAO KPMG

entity’s preparation and fair presentation of the financial statements

20 June 2012.

11

in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies The financial statements as set out on pages 4 to 40 were approved by management on 20 June 2012.

Mosina M.A. Seleznev M.I.

ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Chief Accountant

Chairman of the Management Board

The statement of comprehensive income is to be read in conjunction with the notes to, and forming part of, the financial statements.

2

Unistream / Annual report / 2011

Unistream / Annual report / 2011

3


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Statement of Financial Position as at 31 December 2011

Statement of Cash Flows for the year ended 31 December 2011 Notes

2011

2010

RUB’000

RUB’000

1 461 066

1 161 599

16 822

7 635

ASSETS

Notes

2011

2010

RUB’000

RUB’000

Interest receipts

18 480

9 457

Interest payments

(2)

(12)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash and cash equivalents

12

Mandatory reserve deposit with the Central Bank of the Russian Federation Loans and advances to banks and other financial institutions

13

643 523

600 831

Fee and commission receipts

2 073 676

1 897 550

Available-for-sale financial assets

14

-

299

Fee and commission payments

(1 228 100)

(1 146 815)

Property, equipment and intangible assets

15

171 007

147 018

Net receipts from foreign exchange

279 804

196 448

Other assets

16

81 623

22 094

Other income receipts

2 614

5 601

2 374 041

1 939 476

Other general administrative and personnel expenses paid

(933 361)

(844 569)

Total assets LIABILITIES

(Increase) decrease in operating assets

Deposits and balances from banks and other financial institutions

17

1 614 420

1 309 509

Mandatory reserve deposit with the Central Bank of the Russian Federation

(9 187)

(1 813)

Financial instruments at fair value through profit or loss

18

-

169

Loans and advances to banks and other financial institutions

(44 655)

(362 285)

Deferred tax liabilities

11

14 542

4 500

Financial instruments at fair value through profit or loss

-

10

Other liabilities

19

118 797

88 691

Other assets

(43 684)

3 678

1 747 759

1 402 869

Increase (decrease) in operating liabilities Deposits and balances from banks and other financial instutions

262 004

227 633

208 999

208 999

Financial instruments at fair value through profit or loss

(169)

-

Share premium

315 950

315 950

Other liabilities

15 393

3 804

Retained earnings

101 333

11 658

Net cash flows provided from (used in) operating activities before income tax paid

392 813

(11 313)

Total equity

626 282

536 607

Income tax paid

(46 391)

(2 435)

Total liabilities and equity

2 374 041

1 939 476

Cash flows provided from (used in) operating activities

346 422

(13 748)

Purchases of property, equipment and intangible assets

(58 623)

(43 118)

Proceeds from sale of property and equipment

2 466

-

Cash flows used in investing activities

(56 157)

(43 118)

Net increase (decrease) in cash and cash equivalents

290 265

(56 866)

Effect of changes in exchange rates on cash and cash equivalents

9 202

(4 963)

Cash and cash equivalents as at the beginning of the period

1 161 599

1 223 428

1 461 066

1 161 599

Total liabilities EQUITY Share capital

20

CASH FLOWS FROM INVESTING ACTIVITIES

Cash and cash equivalents as at the end of the period

12

The statement of financial position is to be read in conjunction with the notes to, and forming part of, the financial statements. The statement of cash flows is to be read in conjunction with the notes to, and forming part of, the financial statements.

4

Unistream / Annual report / 2011

Unistream / Annual report / 2011

5


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Statement of Changes in Equity for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

RUB’000

Share capital

Share premium

Retained earnings

Total

208 999

315 950

(6 715)

-

-

18 373

critical judgments made by management in the application of

differ from management’s assessment.

IFRS that have significant effect on these financial statements are

2. Basis of preparation

(e) Changes in accounting policies and presentation

granted its banking licence #3467 for roubles and foreign currency

(a) Statement of compliance

With effect from 1 January 2011, the Bank changed its accounting

operations on August 16, 2006. The principal activity is to provide

The accompanying financial statements are prepared in accordance

policies in the following areas:

18 373

money transfer services to individuals. The activities of the Bank are

with International Financial Reporting Standards (IFRS).

regulated by the Central Bank of the Russian Federation (the CBR).

(b) Basis of measurement

applied a revised version of IAS 24 (issued in 2009) Related Party Disclosures. This change has not had a significant impact on the

518 234

Total comprehensive income for the period

-

-

18 373

18 373

Balance as at 31 December 2010

208 999

315 950

11 658

536 607

The financial statements are prepared on the historical cost basis

Balance as at 1 January 2011

208 999

315 950

11 658

536 607

except that financial instruments at fair value through profit or loss

Total comprehensive income

Shareholders

Profit for the period

-

-

105 111

105 111

Total comprehensive income for the period

-

-

105 111

105 111

Transactions with shareholders, recorded directly in equity Distribution to shareholders, net of deferred tax (note 20)

-

-

(15 436)

described in note 13 in respect of the loan impairment allowance.

the Russian Federation as a joint-stock company in 2006 and was Total comprehensive income Profit for the period

financial position of the Bank. The future business environment may

(а) Organisation and operations UNISTREAM COMMERCIAL BANK (JSC) (the Bank) was established in

(accumulated losses) Balance as at 1 January 2010

1. Background

(15 436)

Total transactions with shareholders, recorded directly in equity

-

-

(15 436)

(15 436)

Balance as at 31 December 2011

208 999

315 950

101 333

626 282

With effect from 1 January 2011, the Bank retrospectively

related party disclosures. •

With effect from 1 January 2011, the Bank retrospectively

2011

2010

and available-for-sale financial assets are stated at fair value.

Ownership,%

Ownership,%

(c) Functional and presentation currency

applied limited amendments to IFRS 7 Financial Instruments:

Zakaryan G.T.

37,00%

37,00%

The functional currency of the Bank is the Russian Rouble (RUB) as,

Disclosures issued as part of Improvements to IFRSs 2010. These

Piskov G.I.

37,00%

37,00%

being the national currency of the Russian Federation, it reflects

amendments mainly relate to disclosures on collateral and other

AURORA RUSSIA LIMITED

26,00%

26,00%

the economic substance of the majority of underlying events and

credit enhancements.

100,00%

circumstances relevant to them.

100,00%

The RUB is also the presentation currency for the purposes of these

3. Significant accounting policies

(b) Russian business environment

financial statements.

The accounting policies set out below are applied consistently to

The Bank’s operations are primarily located in the Russian Federation.

Financial information presented in RUB is rounded to the nearest

all periods presented in these financial statements, except for the

Consequently, the Bank is exposed to the economic and financial

thousand.

changes described in note 2 (e).

markets of the Russian Federation which display characteristics of an

(d) Use of estimates and judgments

(a) Foreign currency

emerging market. The legal, tax and regulatory frameworks continue

The preparation of financial statements in conformity with IFRSs

Transactions in foreign currencies are translated to the functional

development, but are subject to varying interpretations and frequent

requires management to make judgments, estimates and assumptions

currency of the Bank at exchange rates at the dates of the

changes which together with other legal and fiscal impediments

that affect the application of accounting policies and the reported

transactions. Monetary assets and liabilities denominated in foreign

contribute to the challenges faced by entities operating in the

amounts of assets, liabilities, income and expenses. Actual results

currencies at the reporting date are retranslated to the functional

Russian Federation. In addition, the contraction in the capital and

could differ from those estimates.

currency at the exchange rate at that date. The foreign currency gain

credit markets and its impact on the Russian economy have further

Estimates and underlying assumptions are reviewed on an ongoing

or loss on monetary items is the difference between amortised cost

increased the level of economic uncertainty in the environment. The

basis. Revisions to accounting estimates are recognised in the period

in the functional currency at the beginning of the period, adjusted

financial statements reflect management’s assessment of the impact

in which the estimates are revised and in any future periods affected.

for effective interest and payments during the period, and the

of the Russian business environment on the operations and the

Information about significant areas of estimation uncertainty and

amortised cost in foreign currency translated at the exchange rate

The statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the financial statements.

6

Unistream / Annual report / 2011

Unistream / Annual report / 2011

7


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

at the end of the reporting period. Foreign currency differences

significantly modifies the cash flows that would otherwise be

Bank has the positive intention and ability to hold to maturity,

investments in equity instruments that do not have a quoted

(v) Fair value measurement principles

value at initial recognition, the financial instrument is initially

arising on retranslation are recognised in profit or loss, except for

required under the contract.

other than those that:

market price in an active market and whose fair value can not be

Fair value is the amount for which an asset could be exchanged,

measured at the transaction price and any difference between

the Bank upon initial recognition designates as at fair value

reliably measured, which are measured at cost.

or a liability settled, between knowledgeable, willing parties in

this price and the value initially obtained from a valuation model

differences arising on the retranslation of available-for-sale equity

All trading derivatives in a net receivable position (positive fair

--

through profit or loss

--

an arm’s length transaction on the measurement date.

is subsequently recognised in profit or loss on an appropriate

When available, the Bank measures the fair value of an instrument

basis over the life of the instrument but not later than when the

transfer of a financial asset carried at fair value does not qualify

using quoted prices in an active market for that instrument. A

valuation is supported wholly by observable market data or the

for derecognition, are measured at amortized cost.

market is regarded as active if quoted prices are readily and

transaction is closed out.

instruments or qualifying cash flow hedges, which are recognised in

value), as well as options purchased, are reported as assets. All

other comprehensive income.

trading derivatives in a net payable position (negative fair value),

--

the Bank designates as available-for-sale or,

through profit or loss and financial liabilities that arise when a

as well as options written, are reported as liabilities.

--

meet the definition of loans and receivables.

Management determines the appropriate classification of

Available-for-sale financial assets are those non-derivative

(b) Cash and cash equivalents Cash and cash equivalents include notes and coins on hand,

All financial liabilities, other than those designated at fair value •

unrestricted balances (nostro accounts) held with the CBR and other

financial instruments in this category at the time of the initial

financial assets that are designated as available-for-sale or

(iv) Amortised cost

regularly available and represent actual and regularly occurring

banks. The mandatory reserve deposit with the CBR is not considered

recognition. Derivative financial instruments and financial

are not classified as loans and receivables, held-to-maturity

market transactions on an arm’s length basis.

to be a cash equivalent due to restrictions on its withdrawability.

instruments designated as at fair value through profit or loss

investments or financial instruments at fair value through profit

at which the financial asset or liability is measured at initial

(c) Financial instruments

upon initial recognition are not reclassified out of at fair value

or loss.

recognition, minus principal repayments, plus or minus the

(i) Classification

through profit or loss category. Financial assets that would have

(ii) Recognition

Financial instruments at fair value through profit or loss are financial

met the definition of loan and receivables may be reclassified

Financial assets and liabilities are recognized in the statement

assets or liabilities that are:

out of the fair value through profit or loss or available-for-sale

--

acquired or incurred principally for the purpose of selling or

--

--

Bank has positions with offsetting risks, mid-market prices are used to measure the offsetting risk positions and a bid or asking

cumulative amortisation using the effective interest method of

techniques include using recent arm’s length transactions

price adjustment is applied only to the net open position as

any difference between the initial amount recognised and the

between

of financial position when the Bank becomes a party to the

maturity amount, minus any reduction for impairment. Premiums

reference to the current fair value of other instruments that

(vi) Gains and losses on subsequent measurement

category if the entity has an intention and ability to hold it for the

contractual provisions of the instrument. All regular way

and discounts, including initial transaction costs, are included

are substantially the same, discounted cash flow analyses and

repurchasing in the near term

foreseeble future or until maturity. Other financial instruments

purchases of financial assets are accounted for at the settlement

in the carrying amount of the related instrument and amortized

option pricing models. The chosen valuation technique makes

part of a portfolio of identified financial instruments that are

may be reclassified out of at fair value through profit or loss

date.

based on the effective interest rate of the instrument.

maximum use of market inputs, relies as little as possible on

managed together and for which there is evidence of a recent

category only in rare circumstances. Rare circumstances arise

(iii) Measurement

Financial assets or liabilities originated at interest rates different

estimates specific to the Bank, incorporates all factors that

actual pattern of short-term profit-taking

from a single event that is unusual and highly unlikely to recur

A financial asset or liability is initially measured at its fair

from market rates are re-measured at origination to their fair

market participants would consider in setting a price, and is

in the near term.

value plus, in the case of a financial asset or liability not at fair

value, being future interest payments and principal repayment(s)

consistent with accepted economic methodologies for pricing

as other comprehensive income in equity (except for impairment

Loans and receivables are non-derivative financial assets with

value through profit or loss, transaction costs that are directly

discounted at market interest rates for similar instruments. The

financial instruments. Inputs to valuation techniques reasonably

losses and foreign exchange gains and losses on debt financial

instruments) or,

fixed or determinable payments that are not quoted in an active

attributable to the acquisition or issue of the financial asset or

difference is credited or charged to profit or loss as gains or

represent market expectations and measures of the risk-return

instruments available-for-sale) until the asset is derecognized,

upon initial recognition, designated as at fair value through

market, other than those that the Bank:

liability.

losses on origination of financial instruments at rates different

factors inherent in the financial instrument.

at which time the cumulative gain or loss previously recognised

The best evidence of the fair value of a financial instrument at

in equity is recognized in profit or loss. Interest in relation to an

derivative financial instruments (except for derivative financial

profit or loss.

--

8

(if

appropriate.

available),

A gain or loss arising from a change in the fair value of a financial asset or liability is recognized as follows:

--

a gain or loss on a financial instrument classified as at fair value through profit or loss is recognized in profit or loss

--

a gain or loss on an available-for-sale financial asset is recognized

Subsequent to initial recognition, financial assets, including

from market rates. Subsequently, the carrying amount of such

derivatives that are assets, are measured at their fair values,

assets or liabilities is adjusted for amortization of the gains/

initial recognition is the transaction price, i.e., the fair value of

available-for-sale financial asset is recognized in profit or loss

or loss

without any deduction for transaction costs that may be incurred

losses on origination and the related income/expense is

the consideration given or received, unless the fair value of that

using the effective interest method.

on sale or other disposal, except for:

recorded in interest income/expense within profit or loss using

instrument is evidenced by comparison with other observable

loans and receivables which are measured at amortized cost

the effective interest method.

internally on a fair value basis

--

may not recover substantially all of its initial investment, other

--

than because of credit deterioration.

the designation eliminates or significantly reduces an accounting

Unistream / Annual report / 2011

parties

upon initial recognition designates as at fair value through profit upon initial recognition designates as available-for-sale or,

the asset or liability contains an embedded derivative that

willing

intends to sell immediately or in the near term

--

mismatch which would otherwise arise or,

knowledgeable,

--

the assets or liabilities are managed, evaluated and reported

--

through profit or loss where either:

--

Assets and long positions are measured at a bid price; liabilities and short positions are measured at an asking price. Where the

establishes fair value using a valuation technique. Valuation

The Bank may designate financial assets and liabilities at fair value --

If a market for a financial instrument is not active, the Bank

instruments that are designated and effective hedging --

The amortised cost of a financial asset or liability is the amount

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the

--

current market transactions in the same instrument (i.e., without

For financial assets and liabilities carried at amortized cost, a gain or loss is recognized in profit or loss when the financial

using the effective interest method

modification or repackaging) or based on a valuation technique

asset or liability is derecognized or impaired, and through the

held-to-maturity investments that are measured at amortized

whose variables include only data from observable markets.

amortization process.

cost using the effective interest method

When transaction price provides the best evidence of fair

Unistream / Annual report / 2011

9


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

(vii) Derecognition

amount equal to the lower of its fair value and the present value

reviews its loans and receivables to assess impairment on a

loan or receivable has been incurred, the amount of the loss is

investments are impaired, the impairment loss is calculated as

(iv) Non financial assets

The Bank derecognises a financial asset when the contractual rights

of the minimum lease payments at inception of the lease, less

regular basis. A loan or receivable is impaired and impairment

measured as the difference between the carrying amount of the

the difference between the carrying amount of the investment

to the cash flows from the financial asset expire, or when it transfers

accumulated depreciation and impairment losses.

losses are incurred if, and only if, there is objective evidence of

loan or receivable and the present value of estimated future

and the present value of the estimated future cash flows

at each reporting date for any indications of impairment. The

Other non financial assets, other than deferred taxes, are assessed

the financial asset in a transaction in which substantially all the risks

(iii) Depreciation

impairment as a result of one or more events that occurred after

cash flows including amounts recoverable from guarantees

discounted at the current market rate of return for a similar

recoverable amount of goodwill is estimated at each reporting

and rewards of ownership of the financial asset are transferred or

Depreciation is charged to profit or loss on a straight-line

the initial recognition of the loan or receivable and that event

and collateral discounted at the loan or receivable’s original

financial asset.

date. The recoverable amount of non financial assets is the

in which the Bank neither transfers nor retains substantially all the

basis over the estimated useful lives of the individual assets.

(or events) has had an impact on the estimated future cash flows

effective interest rate. Contractual cash flows and historical loss

All impairment losses in respect of these investments are

greater of their fair value less costs to sell and value in use.

risks and rewards of ownership and it does not retain control of the

Depreciation commences on the date of acquisition or, in respect

of the loan that can be reliably estimated.

experience adjusted on the basis of relevant observable data

recognized in profit or loss and can not be reversed.

In assessing value in use, the estimated future cash flows are

financial asset. Any interest in transferred financial assets that qualify

of internally constructed assets, from the time an asset is

Objective evidence that financial assets are impaired can include

that reflect current economic conditions provide the basis for

(iii) Available-for-sale financial assets

discounted to their present value using a pre-tax discount rate

for derecognition that is created or retained by the Bank is recognised

completed and ready for use. Land is not depreciated.

default or delinquency by a borrower, breach of loan covenants

estimating expected cash flows.

Impairment losses on available-for-sale financial assets

that reflects current market assessments of the time value of

The estimated useful lives are as follows:

or conditions, restructuring of a loan or advance on terms

In some cases the observable data required to estimate the

are recognised by transferring the cumulative loss that is

money and the risks specific to the asset. For an asset that does

that the Bank would not otherwise consider, indications that

amount of an impairment loss on a loan or receivable may be

recognised in other comprehensive income to profit or loss

not generate cash inflows largely independent of those from

as a separate asset or liability in the statement of financial position.

The Bank derecognises a financial liability when its contractual

obligations are discharged or cancelled or expire.

equipment

7 years

a borrower or issuer will enter bankruptcy, the disappearance

limited or no longer fully relevant to current circumstances.

as a reclassification adjustment. The cumulative loss that is

other assets, the recoverable amount is determined for the cash-

The Bank writes off assets deemed to be uncollectible.

fixtures and fittings

3 to 10 years

of an active market for a security, deterioration in the value of

This may be the case when a borrower is in financial difficulties

reclassified from other comprehensive income to profit or loss is

generating unit to which the asset belongs. An impairment loss

(viii) Offsetting

collateral, or other observable data relating to a group of assets

and there is little available historical data relating to similar

the difference between the acquisition cost, net of any principal

is recognised when the carrying amount of an asset or its cash-

such as adverse changes in the payment status of borrowers in

borrowers. In such cases, the Bank uses its experience and

repayment and amortisation, and the current fair value, less any

generating unit exceeds its recoverable amount.

judgement to estimate the amount of any impairment loss.

impairment loss previously recognised in profit or loss. Changes

All impairment losses in respect of loans and receivables are

in impairment allowance attributable to time value are reflected

recognized in profit or loss and reversed only if there has been

The Bank first assesses whether objective evidence of

recognized in profit or loss and are only reversed if a subsequent

as a component of interest income.

a change in the estimates used to determine the recoverable

Acquired intangible assets are stated at cost less accumulated

impairment exists individually for loans and receivables that are

increase in recoverable amount can be related objectively to an

For an investment in an equity security available-for-sale, a

amount. Any impairment loss reversed is only reversed to the

amortisation and impairment losses.

individually significant, and individually or collectively for loans

event occurring after the impairment loss was recognised.

significant or prolonged decline in its fair value below its cost is

extent that the asset’s carrying amount does not exceed the

Acquired computer software licences are capitalised on the basis

and receivables that are not individually significant. If the Bank

When a loan is uncollectable, it is written off against the related

objective evidence of impairment.

carrying amount that would have been determined, net of

Items of property and equipment are stated at cost less

of the costs incurred to acquire and bring to use the specific

determines that no objective evidence of impairment exists for

allowance for loan impairment. The Bank writes off a loan

If, in a subsequent period, the fair value of an impaired available-

depreciation or amortisation, if no impairment loss had been

accumulated depreciation and impairment losses.

software.

an individually assessed loan or receivable, whether significant

balance (and any related allowances for loan impairment) when

for-sale debt security increases and the increase can be

recognised. An impairment loss in respect of goodwill is not

Financial assets and liabilities are offset and the net amount

motor vehicles

reported in the statement of financial position when there is a legally

the group, or economic conditions that correlate with defaults

enforceable right to set off the recognised amounts and there is an

in the group.

intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

(e) Intangible assets •

(d) Property and equipment (i) Owned assets • •

6 years

All impairment losses in respect of non financial assets are

Amortisation is charged to profit or loss on a straight-line

or not, it includes the loan in a group of loans and receivables

management determines that a loan is uncollectible and when

objectively related to an event occurring after the impairment

reversed.

components having different useful lives, they are accounted for

basis over the estimated useful lives of intangible assets. The

with similar credit risk characteristics and collectively assesses

all necessary steps to collect the loan are completed.

loss was recognised in profit or loss, the impairment loss is

(g) Provisions

as separate items of property and equipment.

estimated useful live is 5 years.

them for impairment. Loans and receivables that are individually

(ii) Financial assets carried at cost

reversed, with the amount of the reversal recognised in profit

Financial assets carried at cost include unquoted equity

or loss. However, any subsequent recovery in the fair value of an

when the Bank has a legal or constructive obligation as a result

Where an item of property and equipment comprises major

A provision is recognised in the statement of financial position

(ii) Leased assets

(f) Impairment

assessed for impairment and for which an impairment loss is

Leases under which the Bank assumes substantially all the

(i) Financial assets carried at amortized cost

or continues to be recognised are not included in a collective

instruments included in available-for-sale financial assets that

impaired available-for-sale equity security is recognised in other

of a past event, and it is probable that an outflow of economic

risks and rewards of ownership are classified as finance leases.

assessment of impairment.

are not carried at fair value because their fair value can not

comprehensive income.

benefits will be required to settle the obligation. If the effect is

If there is objective evidence that an impairment loss on a

be reliably measured. If there is objective evidence that such

Equipment acquired by way of finance lease is stated at the

10

Unistream / Annual report / 2011

Financial assets carried at amortized cost consist principally of loans and other receivables (loans and receivables). The Bank

material, provisions are determined by discounting the expected

Unistream / Annual report / 2011

11


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

future cash flows at a pre-tax rate that reflects current market

financial reporting purposes and the amounts used for taxation

(k) Comparative information

(l) New standards and interpretations not yet adopted

assessments of the time value of money and, where appropriate,

purposes. Deferred tax is not recognised for the following

In the current year financial statements 2010 year comparative

The following new standards, amendments to standards and

the risks specific to the liability.

temporary differences: goodwill not deductible for tax purposes,

figures of nostro accounts with the CBR and nostro accounts with

interpretations are not yet effective as at 31 December 2011, and

beginning on or after 1 January 2015. The new standard is to

A provision for restructuring is recognised when the Bank has

the initial recognition of assets or liabilities that affect neither

banks and other financial institutions have been reclassified as

are not applied in preparing these financial statements. Of these

be issued in phases and is intended ultimately to replace IAS

approved a detailed and formal restructuring plan, and the

accounting nor taxable profit and temporary differences related

follows:

pronouncements, potentially the following will have an impact on

39 Financial Instruments: Recognition and Measurement. The first

restructuring either has commenced or has been announced

to investments in subsidiaries where the parent is able to control

the financial position and performance. The Bank plans to adopt these

phase of IFRS 9 was issued in November 2009 and relates to the

publicly. Future operating costs are not provided for.

the timing of the reversal of the temporary difference and it is

pronouncements when they become effective. The Bank has not yet

classification and measurement of financial assets. The second

analysed the likely impact of the new standards and amendments to

phase regarding classification and measurement of financial

standards on its financial position or performance.

liabilities was published in October 2010. The remaining parts

IFRS 13 Fair Value Measurement will be effective for annual

of the standard are expected to be issued during 2012. The Bank recognises that the new standard introduces many changes to

retrospectively from 1 July 2012 and early adoption is permitted. •

IFRS 9 Financial Instruments will be effective for annual periods

(h) Share capital

probable that the temporary difference will not reverse in the

(i) Ordinary shares

foreseeable future. Deferred tax is measured at the tax rates

Ordinary shares are classified as equity. Incremental costs directly

that are expected to be applied to the temporary differences

attributable to the issue of ordinary shares and share options are

when they reverse, based on the laws that have been enacted or

Statement of Financial Position

periods beginning on or after 1 January 2013. The new standard

substantively enacted by the reporting date.

as at 31 December 2010

replaces the fair value measurement guidance contained in

the accounting for financial instruments and is likely to have a

individual IFRSs with a single source of fair value measurement

significant impact on Bank’s financial statements. The impact of

guidance. It provides a revised definition of fair value, establishes

these changes will be analysed during the course of the project

a framework for measuring fair value and sets out disclosure

as further phases of the standard are issued. The Bank does not

recognised as a deduction from equity, net of any tax effects. (ii) Dividends • •

Before reclassification

The ability of the Bank to declare and pay dividends is subject to

probable that future taxable profits will be available against

the rules and regulations of the Russian legislation.

which the temporary differences, unused tax losses and credits

Dividends in relation to ordinary shares are reflected as an

can be utilised. Deferred tax assets are reduced to the extent

appropriation of retained earnings in the period when they are

that it is no longer probable that the related tax benefit will be

introduce new requirements to measure assets or liabilities at

declared.

realised.

fair value, nor does it eliminate the practicability exceptions to

by-standard basis. All amendments, which result in accounting

fair value measurement that currently exist in certain standards.

changes for presentation, recognition or measurement purposes,

The standard is applied prospectively with early adoption

will come into effect not earlier than 1 January 2012. The Bank

permitted. Comparative disclosure information is not required

has not yet analysed the likely impact of the improvements on

for periods before the date of initial application.

its financial position or performance.

Assets Cash and cash equivalents

(j) Income and expense recognition

Due from the Central Bank of the Russian

Federation

Income tax comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items of other comprehensive income or transactions with

339 014

176 638

822 585

176 638

Other fees, commissions and other income and expense items

recognised within other comprehensive income or directly

is provided. •

Current tax expense is the expected tax payable on the taxable

Mandatory reserve deposit with the Central Bank

-

7 635

-

7 635

of the Russian Federation Loans and advances to banks and other financial

the dividend is declared.

institutions

1 254 413

(653 582)

600 831

amendment requires that an entity present separately items of other comprehensive income that may be reclassified to profit

enacted at the reporting date, and any adjustment to tax payable

or loss on a straight-line basis over the term of the lease. Lease

to profit or loss. Additionally, the amendment changes the title

in respect of previous years.

incentives received are recognised as an integral part of the total

of the statement of comprehensive income to statement of

Deferred tax is recognised in respect of temporary differences

lease expense, over the term of the lease.

profit or loss and other comprehensive income. However, the

Unistream / Annual report / 2011

Various Improvements to IFRSs have been dealt with on a standard-

Presentation of Items of Other Comprehensive Income. The

Dividend income is recognised in profit or loss on the date that

or loss in the future from those that will never be reclassified

between the carrying amounts of assets and liabilities for

Amendment to IAS 1 Presentation of Financial Statements:

Payments made under operating leases are recognised in profit

intend to adopt this standard early.

requirements for fair value measurements. IFRS 13 does not

1 161 599

using the effective interest method. are recognised in profit or loss when the corresponding service

profit for the year, using tax rates enacted or substantially

12

Interest income and expense are recognised in profit or loss

shareholders recognised directly in equity, in which case it is within equity.

After reclassification

A deferred tax asset is recognised only to the extent that it is

(i) Taxation

Impact of reclassification

use of other titles is permitted. The amendment shall be applied

Unistream / Annual report / 2011

13


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

4. Net interest income

7. Net foreign exchange income 2011

2010

RUB’000

RUB’000

Interest income Loans and advances to banks and other financial institutions

19 311

9 561

(2)

(12)

19 309

9 549

2010

RUB’000

RUB’000

Income on spot and forward foreign exchange transactions

279 804

196 279

Loss from revaluation of financial assets and liabilities

(38 905)

(28 961)

240 899

167 318

2011

2010

RUB’000

RUB’000

Interest expense Deposits and balances from banks and other financial institutions

2011

8. (Charge for) recovery of impairment 5. Fee and commission income 2011

2010

Loans and advances to banks and other financial institutions

(1 205)

388

Other assets

33

797

(1 172)

1 185

2011

2010

RUB’000

RUB’000

RUB’000

RUB’000

Money transfer transactions

2 072 384

1 896 544

Cash operations

1 292

1 006

2 073 676

1 897 550

9. Personnel expenses

6. Fee and commission expense 2011

2010

RUB’000

RUB’000

Employee compensation

359 838

322 721

Money transfer transactions

1 211 294

1 134 731

Payroll related taxes

91 661

64 565

Cash operations

16 806

12 084

451 499

387 286

1 228 100

1 146 815

14

Unistream / Annual report / 2011

Unistream / Annual report / 2011

15


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

10. Other general administrative expenses

Reconciliation of effective tax rate: 2011

2010

2011

%

RUB’000

2010

%

RUB’000

RUB’000

Rent

183 487

181 323

Profit before income tax

141 085

Advertising and marketing

69 609

98 943

Income tax at the applicable tax rate

(28 217)

20,00%

(7 333)

20,00%

Communication and information services

67 968

45 680

Non-deductible costs net of non-taxable income

(7 757)

5,5%

(10 959)

29,89%

Security

53 059

51 319

(35 974)

25,5%

(18 292)

49,89%

Depreciation and amortization

32 169

29 928

Materials

23 155

10 296

Repairs and maintenance

15 661

13 751

Software maitenance

9 387

9 177

Taxes other than on profit

6 558

8 729

Insurance

5 158

4 790

Deferred tax assets and liabilities

Professional services

4 472

5 144

Temporary differences between the carrying amounts of assets and

expire under current tax legislation. Movements in tax effect on temporary differences during the years ended 31 December 2011 and 2010 are presented as follows:

Travel expenses

3 165

3 602

liabilities for financial reporting purposes and the amounts used for

Transport expenses

2 496

2 415

taxation purposes give rise to net deferred tax liabilities as at 31

Other

38 457

19 158

December 2011 and 2010. Deductible temporary differences do not

514 801

484 255

11. Income tax expense RUB’000

RUB’000 36 665

Balance

Recognised

Recognised

Balance

1 January 2011

in profit or loss

in equity

31 December 2011

2011

2010

RUB’000

RUB’000

Loans and advances to banks and other financial institutions

4 019

(10 259)

3 859

(2 381)

Current year tax expense

(22 073)

(11 793)

Other liabilities

(8 519)

(3 642)

-

(12 161)

Deferred taxation movement due to origination and reversal of temporary differences

(13 901)

(6 499)

(4 500)

(13 901)

3 859

(14 542)

Total income tax expense

(35 974)

(18 292)

In 2011, the applicable tax rate for current and deferred tax is 20% (2010: 20%).

16

Unistream / Annual report / 2011

Unistream / Annual report / 2011

17


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

13. Loans and advances to banks and other financial institutions Balance

Recognised

Recognised

Balance

RUB’000

1 January 2011

in profit or loss

in equity

31 December 2011

Loans and advances to banks and other financial institutions

-

4 019

-

4 019

Other liabilities

1 999

(10 518)

-

(8 519)

Loans and advances

1 999

(6 499)

-

(4 500)

12. Cash and cash equivalents

2011

2010

RUB’000

RUB’000

OECD banks

45 522

-

30 largest Russian banks

200 308

200 026

Other Russian banks

250 409

320 076

Total loans and advances

496 239

520 102

Settlements on money transfers transactions 2011

2010

OECD banks

33 097

66 152

RUB’000

RUB’000

Other foreign banks

75 017

11 913

Cash

640 242

339 014

30 largest Russian banks

3 816

337

Nostro accounts with the CBR

124 947

169 003

Other Russian banks

56 652

22 420

Total settlements on money transfers transactions

168 582

100 822

Nostro accounts with banks and other financial institutions OECD banks

551 018

431 066

Impairment allowance

(21 298)

(20 093)

Other foreign banks

26 828

44 469

Net loans and advances to banks and other financial institutions

643 523

600 831

30 largest Russian banks

80 939

153 386

Other Russian banks

37 092

24 661

Total nostro accounts with banks and other financial institutions

695 877

653 582

1 461 066

1 161 599

None of cash and cash equivalents are impaired or past due.

18

Unistream / Annual report / 2011

Concentration of cash and cash equivalents As at 31 December 2011 and 2010 the Bank has 1 bank, whose

gross value of these balances as at 31 December 2011 and 2010 is

balances individually exceed 10% of cash and cash equivalents. The

RUB 486 061 thousand and RUB 363 901 thousand respectively.

Unistream / Annual report / 2011

19


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

The following table provides information on the credit quality of loans and advances to banks and other financial institutions as at 31 December 2011:

The following table provides information on the credit quality of loans and advances to banks and other financial institutions as at 31 December 2010:

Gross loans and advances

Impairment allowance

Net loans and advances

Impairment allowance to gross loans

Gross loans and advances

Impairment allowance

Net loans and advances

Impairment allowance to gross loans

RUB’000

RUB’000

RUB’000

and advances,

RUB’000

RUB’000

RUB’000

and advances,

%

Loans and advances

%

Loans and advances

Loans and deposits without individual signs of impairment

496 239

-

496 239

0%

Loans and deposits without individual signs of impairment

520 102

-

520 102

0%

Total loans and advances

496 239

-

496 239

0%

Total loans and advances

520 102

-

520 102

0%

35 769

(16)

35 753

0%

44 997

(21)

44 976

0%

Settlements on money transfers transactions Settlements on money transfers transactions

Settlements on money transfers transactions 147 284

-

147 284

0%

without individual signs of impairment

Settlements on money transfers transactions without individual signs of impairment

Impaired:

Impaired:

- overdue more than 1 year

21 298

(21 298)

-

100%

- overdue less than 90 days

Total impaired

21 298

(21 298)

-

100%

- overdue more than 1 year

20 056

(20 056)

-

100%

Total settlements on money transfers transactions

168 582

(21 298)

147 284

13%

Total impaired

65 053

(20 077)

44 976

100%

Total loans and advances to banks and other financial institutions

664 821

(21 298)

643 523

3%

20

Unistream / Annual report / 2011

Total settlements on money transfers transactions

100 822

(20 093)

80 729

20%

Total loans and advances to banks and other financial institutions

620 924

(20 093)

600 831

3%

Unistream / Annual report / 2011

21


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

15. Property, equipment and intangible assets Concentration of loans and advances to banks and other financial institutions As at 31 December 2011 the Bank has 2 banks (2010: 3 banks), whose balances individually exceed 10% of total loans and advances to banks and other financial institutions. The gross value of these balances as at 31 December 2011 is RUB 412 597 thousand (2010: RUB 506 277 thousand).

Analysis of movements in the impairment allowance

RUB’000

Equipment

Fixtures and fittings

Motor vehicles

Intangible assets

Construction progress

Total

Balance at 1 January 2011

46 103

127 258

14 567

26 709

4 305

218 942

Cost 2011

2010

RUB’000

RUB’000

Balance at the beginning of the year

20 093

20 481

Additions

11 469

24 789

7 700

15 556

-

59 514

Net charge (recovery)

1 205

(388)

Disposals

(618)

(688)

(6 628)

-

(351)

(8 285)

Balance at the end of the year

21 298

20 093

Balance at 31 December 2011

56 954

151 359

15 639

42 265

3 954

270 171

Balance at 1 January 2011

(17 611)

(41 063)

(6 456)

(6 794)

-

(71 924)

Depreciation and amortization charge for the year

(6 456)

(17 894)

(2 980)

(4 839)

-

(32 169)

Depreciation

14. Available-for-sale financial assets

Promissory note

Disposals

374

317

4 238

-

-

4 929

2011

2010

Balance at 31 December 2011

(23 693)

(58 640)

(5 198)

(11 633)

-

(99 164)

RUB’000

RUB’000

Carrying amount

-

299

At 31 December 2011

33 261

92 719

10 441

30 632

3 954

171 007

-

299

Balance at 1 January 2010

37 122

152 138

13 694

9 484

3 983

216 421

Additions

10 061

13 964

2 159

17 225

322

43 731

Disposals

(1 080)

(38 844)

(1 286)

-

-

(41 210)

Balance at 31 December 2010

46 103

127 258

14 567

26 709

4 305

218 942

Balance at 1 January 2010

(12 271)

(36 107)

(4 228)

(3 801)

-

(56 407)

Depreciation and amortization charge for the year

(5 735)

(18 344)

(2 856)

(2 993)

-

(29 928)

Disposals

395

13 388

628

-

-

14 411

Balance at 31 December 2010

(17 611)

(41 063)

(6 456)

(6 794)

-

(71 924)

28 492

86 195

8 111

19 915

4 305

147 018

RUB’000 Cost

Availiable-for-sale financial assets as at 31 December 2010 are presented by a promissory note issued by AKB “FORA-BANK”. This promissory note is pledged under lease commitments.

Depreciation

Carrying amount At 31 December 2010

22

Unistream / Annual report / 2011

Unistream / Annual report / 2011

23


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

16. Other assets

17. Deposits and balances from banks and other financial institutions 2011

2010

RUB’000

RUB’000

Other non-financial assets

Vostro accounts

Prepayments

63 014

20 100

Income tax receivable

14 837

-

Other taxes receivable

3 599

1 869

Settlements with employees

1 558

1 543

Impairment allowance

(1 385)

(1 418)

Total other non-financial assets

81 623

22 094

2010

LIABILITIES

RUB’000

RUB’000

Derivative financial instruments

Balance at the beginning of the year

1 418

6 248

Foreign currency contracts

Net recovery

(33)

(797)

Write-offs

-

(4 033)

Balance at the end of the year

1 385

1 418

overdue less than 90 days with a gross value of RUB 622 thousand

90 days of RUB nil (2010: RUB nil), for receivables overdue for more

(2010: RUB 173 thousand), receivables overdue for more than 90 days

than 90 days but less than one year of RUB 63 thousand (2010: RUB

but less than one year with a gross value of RUB 315 thousand (2010:

262 thousand) and for receivables overdue for more than one year of

RUB 262 thousand), receivables overdue for more than one year with

RUB 1 322 thousand (2010: RUB 1 156 thousand), respectively.

RUB’000

RUB’000

1 614 420

1 309 509

1 614 420

1 309 509

18. Financial instruments at fair value through profit or loss

2011

As at 31 December 2011, included in other assets are receivables

2010

As at 31 December 2011 and 2010, the Bank has no counterparties, whose balance’s individually exceed 10% of total deposits and balances from banks and other financial institutions.

Analysis of movements in the impairment allowance

Bank created impairment allowance for receivables overdue less than

2011

2011

2010

RUB’000

RUB’000

-

(169)

-

(169)

The table below summarises, by major currencies, the contractual

remaining periods to maturity. Foreign currency amounts presented

are recognised in profit or loss and in financial instruments at fair

amounts of forward exchange contracts outstanding at 31 December

below are translated at rates ruling at the reporting date. The

value through profit or loss, as appropriate.

2011 and 2010 with details of the contractual exchange rates and

resultant unrealised gains and losses on these unmatured contracts Notional amount

Weighted average contractual

2011 RUB’000

2010 RUB’000

2011

2010

-

100 574

-

30,5280

-

100 574

a gross value of RUB 2 122 thousand (2010: RUB 1 156 thousand). The Buy USD sell RUB Less than 3 months

24

Unistream / Annual report / 2011

Unistream / Annual report / 2011

25


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

19. Other liabilities Credit, market and liquidity risks both at the portfolio and

(i) Interest rate risk

2010

transactional levels are managed and controlled through the

RUB’000

RUB’000

Asset and Liability Management Committee (the ALCO).

flows of a financial instrument will fluctuate because of changes

Both external and internal risk factors are identified and managed

in market interest rates. The Bank is exposed to the effects of

Unsettled money transfers

105 450

69 460

throughout the organisation. Particular attention is given to

fluctuations in the prevailing levels of market interest rates

Total other financial liabilities

105 450

69 460

identifying the full range of risk factors and determination of the

on its financial position and cash flows. Interest margins may

level of assurance over the current risk mitigation procedures.

increase as a result of such changes but may also reduce or

• 2011

Other financial liabilities

Other non-financial liabilities

Interest rate risk is the risk that the fair value or future cash

create losses in the event that unexpected movements occur.

Income tax payable

-

9 481

Apart from the standard credit and market risk analysis, the

Settlements with employees

4 279

6 299

Risk Department monitors financial and non-financial risks by

Average interest rates

Settlements with suppliers

8 317

2 806

holding regular meetings with operational units in order to

obtain expert judgments in their areas of expertise.

The table below displays average effective interest rates for interest bearing assets and liabilities as at 31 December 2011

Other taxes payable

751

645

Total other non-financial liabilities

13 347

19 231

(b) Market risk

and 2010. These interest rates are an approximation of the

118 797

88 691

yields to maturity of these assets and liabilities.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in

20. Share capital

--

(a) Issued capital 999 ordinary shares (2010: 208 999). All shares have a nominal value

--

2010

Average effective interest rate, %

Average effective interest rate, %

RUB

RUB

adherence to limits. Risk management policies and procedures

risk and other price risks. Market risk arises from open positions

thousand, net of deferred tax of RUB 2 463 thousand, above its

are reviewed regularly to reflect changes in market conditions,

in interest rate, currency and equity financial instruments, which

granting a loan to the entity under control of shareholders at

products and services offered and emerging best practice.

are exposed to general and specific market movements and

The Board of Directors has overall responsibility for the oversight

changes in the level of volatility of market prices. Loans and advances to banks and other financial institutions

whilst optimizing the return on risk.

- Nostro accounts with banks

1,1%

0,0%

0,6%

0,0%

0,18%

0,6%

Overall authority for market risk is vested in the ALCO, which is

- Loans and deposits

6,3%

-

3,0%

3,1%

-

-

annual and general meetings of shareholders.

21. Risk management

(b) Dividends

Management of risk is fundamental to the business of banking and is

implementation of risk mitigation measures and making sure

chaired by the Chairman of the Management Board. Market risk

Dividends payable are restricted to the maximum retained earnings

an essential element of the Bank’s operations. The major risks faced

that the Bank operates within the established risk parameters.

limits are approved by the ALCO based on recommendations of

of the Bank, which are determined according to the legislation of the

by the Bank are those related to market risk, credit risk and liquidity

The Head of the Risk Department is responsible for the

Russian Federation. As at the reporting date, reserves available for

risk.

overall risk management and compliance functions, ensuring

distribution amounted to RUB nil (2010: RUB nil).

(a) Risk management policies and procedures

the implementation of common principles and methods for

in relation to financial instruments, interest rate, maturity and

(c) Transaction with shareholders, recorded directly in equity

identifying, measuring, managing and reporting both financial

currency positions and stop-loss limits. These are monitored on

The Management Board is responsible for monitoring and

the Risk Department. •

The Bank manages its market risk by setting open position limits

During the year ended 31 December 2011 the Bank made distributions

manage the risks faced by the Bank, to set appropriate risk

and non-financial risks. He reports directly to the Chairman of

a regular basis and reviewed and approved by the Management

of RUB 15 436 thousand to its shareholders in the form of:

limits and controls, and to continuously monitor risk levels and

the Management Board and indirectly to the Board of Directors.

Board.

Unistream / Annual report / 2011

currencies

control market risk exposures within acceptable parameters,

582 thousand, net of deferred tax of RUB 1 396 thousand.

26

currencies

Other

procedures as well as approving significantly large exposures.

The holders of ordinary shares are entitled to receive dividends as

The risk management policies aim to identify, analyse and

USD

of key risks and reviewing its risk management policies and

of the risk management framework, overseeing the management

Other

Interest bearing assets

rate below market, resulting in a loss on origination of RUB 5

USD

The objective of market risk management is to manage and

of RUB 1 000. declared from time to time and are entitled to one vote per share at

2011

acquisition of loan claims to third parties at price of RUR 9 854 fair value as at the day of acquisition

The authorised, issued and outstanding share capital comprises 208

market prices. Market risk comprises currency risk, interest rate

Unistream / Annual report / 2011

27


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Interest rate sensitivity analysis

The following table shows the foreign currency exposure structure

The following table shows the currency structure

of financial assets and liabilities as at 31 December 2011:

of financial assets and liabilities as at 31 December 2010:

The management of interest rate risk based on interest rate gap analysis is suplemented by monitoring the sensitivity of financial assets and liabilities. An analysis of sensitivity of profit or loss and equity (net of income tax) to changes in interest rates (repricing risk) based on a simplified scenario of a 500 basis point (bp) symmetrical fall or rise in all yield curves and

RUB

USD

EUR

Other currencies

Total

RUB

USD

EUR

Other currencies

Total

positions of interest bearing assets and liabilities existing as at

RUB’000

RUB’000

RUB’000

RUB’000

RUB’000

RUB’000

RUB’000

RUB’000

RUB’000

RUB’000

31 December 2011 and 2010 is as follows: ASSETS 2011

2010

RUB’000

RUB’000

500 bp parallel fall

(17 611)

(20 173)

500 bp parallel rise

17 611

20 173

ASSETS

Cash and cash equivalents

573 523

773 922

89 930

23 691

1 461 066

Cash and cash equivalents

435 408

600 406

110 405

15 380

1 161 599

Mandatory reserve deposit with the Central Bank

16 822

-

-

-

16 822

Mandatory reserve deposit with the Central Bank

7 635

-

-

-

7 635

534 786

40 577

24 894

574

600 831

of the Russian Federation Loans and advances to banks and other financial

of the Russian Federation 502 877

58 612

47 989

34 045

643 523

institutions Total financial assets

institutions 1 093 222

832 534

137 919

57 736

2 121 411

LIABILITIES

(ii) Currency risk

Deposits and balances from banks and other

The Bank has assets and liabilities denominated in several foreign

financial institutions

currencies. •

28

Loans and advances to banks and other financial Available-for-sale financial assets

299

-

-

-

299

Total financial assets

978 128

640 983

135 299

15 954

1 770 364

500 860

676 124

130 638

1 887

1 309 509

-

169

-

-

169

LIABILITIES

680 106

775 046

157 703

1 565

1 614 420

Other financial liabilities

55 066

41 949

8 435

-

105 450

financial institutions

Currency risk is the risk that the fair value or future cash flows of a financial

Total financial liabilities

735 172

816 995

166 138

1 565

1 719 870

Financial instruments at fair value through

instrument will fluctuate because of changes in foreign currency exchange

Net position

358 050

15 539

(28 219)

56 171

401 540

profit or loss

Deposits and balances from banks and other

rates.Although the Bank hedges its exposure to currency risk,such activities

Other financial liabilities

40 239

25 873

3 348

-

69 460

do not qualify as hedging relationships in accordance with IFRS.

Total financial liabilities

541 099

702 166

133 986

1 887

1 379 138

Net position

437 029

(61 183)

1 313

14 067

391 226

The effect of foreign currency contracts

(100 743)

100 743

-

-

-

Net position after foreign currency contracts

336 286

39 560

1 313

14 067

391 226

Unistream / Annual report / 2011

Unistream / Annual report / 2011

29


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

A strengthening of the RUB, as indicated below, against the following

The maximum exposure to credit risk is generally reflected in the carrying

The Treasury Department receives information from business units

currencies at 31 December 2011 and 2010 would have increased

amounts of financial assets in the statement of financial position and

regarding the liquidity profile of their financial assets and liabilities and

(decreased) equity and profit or loss by the amounts shown below.

unrecognised contractual commitment amounts. The impact of possible

details of other projected cash flows arising from projected future business.

This analysis is on net of tax basis and is based on foreign currency

netting of assets and liabilities to reduce potential credit exposure is not

The Treasury Department then provides for an adequate portfolio of short-

exchange rate variances that the Bank considered to be reasonably

significant.

term liquid assets to be maintained, largely made up of loans and advances

possible at the end of the reporting period. The analysis assumes that

(d) Liquidity risk

to banks and other inter-bank facilities, to ensure that sufficient liquidity is

all other variables, in particular interest rates, remain constant.

Liquidity risk is the risk that the Bank will encounter difficulty in meeting

maintained within the Bank as a whole.

A weakening of the RUB against the same currencies at 31 December

obligations associated with its financial liabilities that are settled by

The daily liquidity position is monitored and regular liquidity stress testing

2011 and 2010 would have had the equal but opposite effect on the

delivering cash or another financial asset. Liquidity risk exists when the

under a variety of scenarios covering both normal and more severe market

Deposits and balances from banks and other financial institutions

1 614 420

-

-

-

-

1 614 420

1 614 420

same currencies to the amounts shown below, on the basis that all

maturities of assets and liabilities do not match. The matching and or

conditions is performed by the Treasury Department. Under the normal

Other financial liabilities

105 450

-

-

-

-

105 450

105 450

other variables remain constant.

controlled mismatching of the maturities and interest rates of assets and

market conditions, liquidity reports covering the liquidity position are

Total financial liabilities

1 719 870

-

-

-

-

1 719 870

1 719 870

liabilities is fundamental to liquidity management. It is unusual for financial

presented to senior management on a weekly basis. Decisions on liquidity

10% appreciation of RUB against USD 10% appreciation of RUB against EUR

2011

2010

institutions ever to be completely matched since business transacted is

management are made by the ALCO and implemented by the Treasury

RUB’000

RUB’000

often of an uncertain term and of different types. An unmatched position

Department.

potentially enhances profitability, but can also increase the risk of losses.

The following tables show the undiscounted cash flows on financial

(1 243)

(3 165)

The Bank maintains liquidity management with the objective of ensuring

liabilities on the basis of their earliest possible contractual maturity. The

that funds will be available at all times to honor all cash flow obligations

total gross outflow disclosed in the tables is the contractual, undiscounted

as they become due. The liquidity policy is reviewed and approved by the

cash flow on the financial liabilities.

2 257

(105)

Management Board.

(c) Credit risk

The maturity analysis for financial liabilities as at 31 December 2011 is as follows:

RUB’000

Demand

From

From

From

More

Total gross

Carrying

and less

1 to 3 months

3 to 6 months

6 to 12 months

than 1 year

amount of outflow

amount

than 1 month Non-derivative financial liabilities

The maturity analysis for financial liabilities as at 31 December 2010 is as follows:

Demand

From

From

From

More

Total gross

Carrying

The liquidity management policy requires:

RUB’000

and less

1 to 3 months

3 to 6 months

6 to 12 months

than 1 year

amount ofoutflow

amount

than 1 month

projecting cash flows by major currencies and considering the

(inflow)

level of liquid assets necessary in relation thereto

Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Bank

maintaining a diverse range of funding sources

has policies and procedures for the management of credit exposures (both

managing the concentration and profile of debts

Deposits and balances from banks and other financial institutions

1 309 509

-

-

-

-

1 309 509

1 309 509

for recognised financial assets and unrecognised contractual commitments),

maintaining debt financing plans

Other financial liabilities

69 460

-

-

-

-

69 460

69 460

including guidelines to limit portfolio concentration.

maintaining a portfolio of highly marketable assets that can

Derivative financial liabilities

Non-derivative financial liabilities

The Bank continuously monitors the performance of individual credit

easily be liquidated as protection against any interruption to

- Inflow

(100 574)

-

-

-

-

(100 574)

-

exposures and regularly reassesses the creditworthiness of its customers and

cash flow

- Outflow

100 743

-

-

-

-

100 743

169

1 379 138

-

-

-

-

1 379 138

1 379 138

counterparties. The review is based on the most recent financial statements

maintaining liquidity and funding contingency plans

and other information submitted by customers and counterparties, or

monitoring liquidity ratios against regulatory requirements.

Total financial liabilities

otherwise obtained by the Bank.

30

Unistream / Annual report / 2011

Unistream / Annual report / 2011

31


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

The table below shows an analysis, by expected maturities, of the amounts recognised in the statement of financial position as at 31 December 2011:

The table below shows an analysis, by expected maturities, of the amounts recognised in the statement of financial position as at 31 December 2010:

RUB’000

Demand and less

From 1 to

From 3 to

From 1 to

More than

than 1 month

3 months

12 months

5 years

5 years

No maturity

Overdue

Total

ASSETS

RUB’000

Demand and less

From 1 to

From 3 to

From 1 to

More than

than 1 month

3 months

12 months

5 years

5 years

No maturity

Overdue

Total

ASSETS

Cash and cash equivalents

1 461 066

-

-

-

-

-

-

1 461 066

Cash and cash equivalents

1 161 599

-

-

-

-

-

-

1 161 599

Mandatory reserve deposit with the Central Bank

-

-

-

-

-

16 822

-

16 822

Mandatory reserve deposit with the Central Bank

-

-

-

-

-

7 635

-

176 638

of the Russian Federation

of the Russian Federation

Loans and advances to banks and other financial institutions

598 002

-

-

45 521

-

-

Property, equipment and intangible assets

-

-

-

-

-

171 007

Other assets

30 141

3 599

46 209

-

-

-

Total assets

2 089 508

3 599

46 209

45 521

-

187 829

-

643 523

Loans and advances to banks and other financial institutions

555 855

-

-

-

-

-

44 976

600 831

-

171 007

Available-for-sale financial assets

299

-

-

-

-

-

-

299

1 674

81 623

Property, equipment and intangible assets

-

-

-

-

-

147 018

-

147 018

1 674

2 374 041

Other assets

308

17 102

4 511

-

-

-

173

22 094

Total assets

1 718 061

17 102

4 511

-

-

154 653

45 149

1 939 476

LIABILITIES Deposits and balances from banks and other financial institutions

1 614 420

-

-

-

-

-

-

1 614 420

LIABILITIES

Deferred tax liabilities

-

-

-

-

-

14 542

-

14 542

Deposits and balances from banks and other financial institutions

1 309 509

-

-

-

-

-

-

1 309 509

Other liabilities

118 797

-

-

-

-

-

-

118 797

Financial instruments at fair value through profit or loss

169

-

-

-

-

-

-

169

Total liabilities

1 733 217

-

-

-

-

14 542

-

1 747 759

Deferred tax liabilities

-

-

-

-

-

4 500

-

4 500

Net position

355 992

3 599

46 209

45 521

-

173 288

1 674

626 282

Other liabilities

88 691

-

-

-

-

-

-

88 691

Total liabilities

1 398 369

-

-

-

-

4 500

-

1 402 869

Net position

319 692

17 102

4 511

-

-

150 153

45 149

536 607

32

Unistream / Annual report / 2011

Unistream / Annual report / 2011

33


UNISTREAM COMMERCIAL BANK (JSC)

UNISTREAM COMMERCIAL BANK (JSC)

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

Notes to, and forming part of, the financial statements for the year ended 31 December 2011

The Bank also calculates mandatory liquidity ratios on a daily basis

22. Capital management

arising from accidents on its property or relating to operations. Until

in accordance with the requirements of the CBR. These ratios include:

The CBR sets and monitors capital requirements for the Bank.

the Bank obtains adequate insurance coverage, there is a risk that the

instant liquidity ratio (N2), which is calculated as the ratio of

The Bank defines as capital those items defined by statutory

highly liquid assets to liabilities payable on demand current liquidity ratio (N3), which is calculated as the ratio of

25. Related party transactions

(b) Transactions with other related parties

The outstanding balances and the related average effective interest

Other related parties include Uniastrum Bank, CJSC Unibank (Armenia),

rates as at 31 December 2010, and amounts included in profit or loss

loss or destruction of certain assets could have a material adverse

(a) Transactions with the members of the Board of Directors and the Management Board

UNISTREAM UK Limited, UNISTREAM Cyprus Limited, UNISTREAM Germany

in relation to transactions with other related parties for the year

regulation as capital for credit institutions. Under the current capital

effect on operations and financial position.

Total remuneration included in personnel expenses for the years ended 31

GmbH, UNISTREAM Greece Limited.

ended 31 December 2010 are as follows.

requirements set by the CBR, banks have to maintain a ratio of capital

(b) Litigation

December 2011 and 2010 is as follows:

The outstanding balances and the related average effective interest rates as

liquid assets to liabilities maturing within 30 calendar days

to risk weighted assets (statutory capital ratio) above the prescribed

In the ordinary course of business, the Bank is subject to legal actions

long-term liquidity ratio (N4), which is calculated as the ratio

minimum level. As at 31 December 2011, this minimum level is 10%.

and complaints. Management believes that the ultimate liability, if

of assets maturing after 1 year to the shareholders’ equity and

The Bank is in compliance with the statutory capital ratio during the

any, arising from such actions or complaints will not have a material

liabilities maturing after 1 year.

years ended 31 December 2011 and 2010. As at 31 December 2011,

adverse effect on its financial condition or the results of future

The Bank was in compliance with these ratios during the years

the value of the Bank’s capital was RUB 479 822 thousand (2010: RUB

operations.

ended 31 December 2011 and 2010. The following table shows the

439 186 thousand). As at 31 December 2011, the ratio of capital to

(c) Taxation contingencies

mandatory liquidity ratios calculated as at 31 December 2011 and

risk weighted assets (statutory capital ratio – N1) was 35.4% (2010:

The taxation system in the Russian Federation continues to

2010.

48.5%).

evolve and is characterised by frequent changes in legislation,

• •

Requirement

Instant liquidity ratio (N2)

Not less than

2011, %

83,7%

2010, %

80,1%

15% Current liquidity ratio (N3)

Not less than

110,6%

119,8%

50% Long-term liquidity ratio (N4)

Not more than 0,0% 120%

34

Unistream / Annual report / 2011

0,0%

at 31 December 2011, and amounts included in profit or loss in relation to 2011

2010

transactions with other related parties for the year ended 31 December 2011 are as follows.

RUB’000

RUB’000

Members of the Board of Directors

1 404

1 408

Members of the Management Board

9 677

7 418

Other related parties Average RUB’000

11 081

8 826

official pronouncements and court decisions, which are sometimes

23. Operating leases

contradictory and subject to varying interpretation by different tax

Statement of financial position

Leases as lessee

authorities. Taxes are subject to review and investigation by a number

ASSETS

The Bank leases a number of cash desks and offices under operating

of authorities who have the authority to impose severe fines, penalties

Loans and advances to banks and other

leases. All agreements for rent premises for cash desks and offices are

and interest charges. A tax year remains open for review by the tax

financial institutions

signed for a period of 11 months. All operating lease liabilities can be

authorities during the three subsequent calendar years; however,

Nostro accounts

canceled unilaterally.

under certain circumstances a tax year may remain open longer.

LIABILITIES

During 2011 and 2010 RUB 183 487 thousand and RUB 181 323

Recent events within the Russian Federation suggest that the tax

Deposits and balances from banks and

thousand, respectively, is recognised as an expenses in profit or loss

authorities are taking a more assertive position in their interpretation

other financial institutions

in respect of operating leases.

and enforcement of tax legislation.

Other liabilities

These circumstances may create tax risks in the Russian Federation

Profit or loss

24. Contingencies

Other related parties Average

effective

RUB’000

effective

interest rate,

interest rate,

%

% Statement of financial position ASSETS

45 552

3,0% Loans and advances to banks and other

100 823

0,0%

56 840

0,0%

211 992

0,0%

73 400

0,0%

financial institutions LIABILITIES Deposits and balances from banks and other financial institutions

12 318

that are substantially more significant than in other countries.

0,0%

Profit or loss Fee and commission income

37 422

Fee and commission expense

(26 890)

(a) Insurance

Management believes that it has provided adequately for tax

Interest income

4

The insurance industry in the Russian Federation is in a developing

liabilities based on its interpretations of applicable Russian tax

Fee and commission income

236 946

state and many forms of insurance protection common in other parts

legislation, official pronouncements and court decisions. However,

Fee and commission expense

(45 693)

of the world are not yet generally available. The Bank does not have

the interpretations of the relevant authorities could differ and the

parties mature within one year. Transactions with related parties are

full coverage for its premises and equipment, business interruption,

effect on the financial position, if the authorities were successful in

not secured.

or third party liability in respect of property or environmental damage

enforcing their interpretations, could be significant.

The majority of balances resulting from transactions with related

Unistream / Annual report / 2011

35


UNISTREAM COMMERCIAL BANK (JSC) Notes to, and forming part of, the financial statements for the year ended 31 December 2011

26. Financial assets and liabilities: fair values and accounting classifications The Bank estimated the fair value of its financial assets and liabilities

However given the uncertainties and the use of subjective judgment,

in accordance with the requirements of IFRS 7 Financial Instruments:

the fair value should not be interpreted as being realisable in an

Disclosures.

immediate sale of the assets or settlement of liabilities. Based on

The estimated fair value of all financial assets and liabilities are

the assessment of the nature of the Bank’s business and very short-

calculated using discounted cash flow techniques on estimated

term nature of financial instruments, management concluded that fair

future cash flow and discount rates for similar instruments at the

values of financial instruments are not materially different from their

reporting date.

carrying values.

The estimates of fair value are intended to approximate the amount for which a financial instrument could be exchanged between knowledgeable, willing parties in an arm’s length transaction.

36

Unistream / Annual report / 2011


Unistream Annual Report  

Unistream Annual Report 2011

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