CONSOLIDATED FINANCIAL STATEMENTS OF THE BANK OCHRONY ŚRODOWISKA S.A. GROUP FOR THE THIRD QUARTER 2010

Transcription

1 CONSOLIDATED FINANCIAL STATEMENTS OF THE BANK OCHRONY ŚRODOWISKA S.A. GROUP FOR THE THIRD QUARTER 2010 November 2010

2 Contents BOŚ S.A. GROUP INTERIM FINANCIAL STATEMENTS INTERIM CONSOLIDATED INCOME STATEMENT INTERIM CONSOLIDATED COMPREHENSIVE INCOME INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY INTERIM CONSOLIDATED CASH FLOW STATEMENT INTERIM FINANCIAL STATEMENTS OF BOŚ S.A. INTERIM INCOME STATEMENTS OF THE BANK INTERIM COMPREHENSIVE INCOME STATEMENT OF THE BANK INTERIM STATEMENT OF FINANCIAL POSITION OF THE BANK INTERIM STATEMENT OF CHANGES IN EQUITY OF THE BANK INTERIM CASH FLOW STATEMENT OF THE BANK 1. Information on accounting principles (policy) adopted in preparing the consolidated financial statements 2. Comparative data 3. Adjustment of prior period errors 4. Change in consolidated contingent liabilities and assets 5. Impairment write-downs for loans and advances to clients and banks in the consolidated financial statements 6. The Group structure, entities covered by and excluded from consolidation ADDITIONAL NOTES TO THE FINANCIAL STATEMENTS OF THE BOŚ S.A. GROUP 1. Summary results of Bank Ochrony Środowiska S.A. Group for three quarters of Macroeconomic situation 3. Financial results of the Group 3.1. Financial results of the Group after Q The Group balance sheet 3.3. Total equity and liabilities of the Group Change in total equity and liabilities structure of the Group Liabilities of the Group 3.4. Assets of the Group Change in the structure of assets Loans and advances to clients 4. Selected operational data of the Group 5. The Group s accomplishments in the third quarter Segment reporting 7. The Group s ratios and operational safety 8. Factors and events, especially unusual ones, that affected performance 9. Factors likely to affect performance at least in the next quarter 10. The Management Board position on the feasibility of the published forecasts 11. Seasonal or cyclical developments 12. Issue, redemption and payment of debt securities or equity securities 13. Dividends 14. Transactions with related entities 15. Loan or cash advance sureties or guarantees, or guarantees granted 16. Proceedings before courts, arbitration bodies or public administration authorities 17. Shareholders holding directly or indirectly, through subsidiaries, at least 5% of the total number of votes at Issuer s General Meeting 18. Shares of BOŚ S.A. held by members of executive and supervisory bodies 19. Other information which the issuer deems necessary to assess its human resources, assets, financial position, financial performance, and their changes, as well as information relevant to an assessment of the issuer s capacity to meet its liabilities 20. Employment 21. The Bank Supervisory Board 22. The Bank Management Board 23. Important Q events as published by the Bank 2

3 BOŚ S.A. GROUP INTERIM FINANCIAL STATEMENTS INTERIM CONSOLIDATED INCOME STATEMENT Continued operations Q3 01 Jul 2010 to 30 Sep months ended 30 Sep 2010 Q3 01 Jul 2009 to 30 Sep months ended 30 Sep 2009 Interest and similar income Interest expense and similar charges Net interest income Fee and commission income Fee and commission expense Net fee and commission income Dividend income Net trading income Result on investment securities Foreign exchange result Other operating income Other operating expense Net impairment gains / losses on loans and advances, and off-balance sheet items Administrative expenses Operating income Profit before tax Income tax expense current deferred Net profit Of which attributable to: equity holders of the Bank minority interests Earnings per share attributable to the Bank s equity holders during the period (in PLN) basic diluted No discontinued operations were reported for the 9 months ended 30 September 2010 or in INTERIM CONSOLIDATED COMPREHENSIVE INCOME Q3 01 Jul 2010 to 30 Sep months ended 30 Sep 2010 Q3 01 Jul 2009 to 30 Sep months ended 30 Sep 2009 Net profit Valuation (net) of financial assets available for sale Total gains and losses Of which attributable to: equity holders of the Bank minority interests INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS 30 Sep Dec 2009 Cash and balances with the Central Bank

4 Deposits with other banks, loans and advances to other banks Trading securities Derivative instruments Loans and advances to clients Investment securities available for sale held to maturity Assets under pledge Intangible assets Property and equipment Income tax assets current deferred Other assets Total assets LIABILITIES Amounts owed to Central Bank Amounts owed to other banks Derivative financial instruments Amounts owed to clients Debt securities issued Subordinate debt Provisions Current income tax liabilities Other liabilities Total liabilities EQUITY Equity attributable equity holders of the Bank: Core capital Share capital Share premium Revaluation reserve Retained earnings Minority interests - - Total equity Total equity and liabilities

5 INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Core capital Equity attributable to equity holders of the Bank Retained earnings Share capital Share premium Revaluation reserve Other supplementary capital Other reserve capital General risk fund Accumulated losses Total equity As at 01 Jan Valuation of assets available for sale Deferred tax on valuation of assets available for sale Gains and losses recognised directly in equity Net profit Total gains and losses Capital increase Distribution of gains and losses, of which: Transfer to other reserves Transfer of rounding As at 30 Sep As at 01 Jan Valuation of assets available for sale Deferred tax on valuation of assets available for sale Gains and losses recognised directly in equity Net profit Total gains and losses Distribution of gains and losses, of which: Transfer to other reserves Transfer on roundings As at 31 Dec

6 Core capital Equity attributable to equity holders of the Bank Retained earnings Share capital Share premium Revaluation reserve Other supplementary capital Other reserve capital General risk fund Accumulated losses Total equity As at 01 Jan Valuation of assets available for sale Deferred tax on valuation of assets available for sale Gains and losses recognised directly in equity Net profit Total gains and losses Distribution of gains and losses, of which: Transfer to other reserves Transfer on roundings As at 30 Sep

7 INTERIM CONSOLIDATED CASH FLOW STATEMENT Indirect method 9 months ended 30 Sep months ended 30 Sep 2009 CASH FLOW FROM OPERATING ACTIVITIES Profit before tax Adjusted for: Amortisation and depreciation Net interest on operating activities Net interest on financing activities Result on investing activities 105 Income tax paid Change in the balance of trading securities Change in the balance of other placements on the money market Change in the balance of assets and liabilities due to valuation of derivative financial instruments Change in the balance of loans and advances to banks Change in the balance of investment securities Change in assets under pledge Change in the balance of other assets Change in amounts owed to banks and the Central Bank Change in amounts owed to clients Change in provisions Change in liabilities arising from debt securities issued 32 8 Change in other liabilities Net cash flow from operating activities CASH FLOW FROM INVESTTING ACTIVITIES Inflows Redemption of other placements on money market Redemption of securities held to maturity Interest received Sale of intangible assets 988 Sale of property, plant and equipment Outflows Purchase of intangible assets Purchase of property, plant and equipment Net cash flow from investing activities CASH FLOW FROM FINANCING ACTIVITIES Inflows Outflows Interest paid on bonds issued by the Bank Net cash flow from financing activities TOTAL NET CASH FLOW BALANCE SHEET CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD Cash and cash equivalents under restricted use

8 INTERIM FINANCIAL STATEMENTS OF BOŚ S.A. INTERIM INCOME STATEMENTS OF THE BANK Q3 01 Jul 2010 to 30 Sep months ended 30 Sep 2010 Q3 01 Jul 2009 to 30 Sep months ended 30 Sep 2009 Interest and similar income Interest expense and similar charges Net interest income Fee and commission income Fee and commission expense Net fee and commission income Dividends received Net trading income Result on investment securities Foreign exchange result Other operating income Other operating expense Net impairment on loans and advances, and offbalance sheet items Administrative expenses Operating income Profit before tax Income tax expense current deferred Net profit Of which attributable to: equity holders of the Bank minority interests Net profit per share attributable to the Bank's equity holders during the period (PLN): basic diluted No discontinued operations were reported for the 9 months ended 30 September 2010 or in INTERIM COMPREHENSIVE INCOME STATEMENT OF THE BANK Q3 01 Jul 2010 to 30 Sep months ended 30 Sep 2010 Q3 01 Jul 2009 to 30 Sep months ended 30 Sep 2009 Net profit Valuation (net) of financial assets available for sale Total gains and losses INTERIM STATEMENT OF FINANCIAL POSITION OF THE BANK ASSETS 30 Sep Dec

9 Cash and balances with the Central Bank Placements with other banks, loans and advances to other banks Trading securities Derivative instruments Loans and advances to clients Investment securities available for sale held to maturity Assets under pledge Investment in subsidiaries Intangible assets Property and equipment Deferred income tax assets current deferred Other assets Total assets LIABILITIES Amounts owed to Central Bank Amounts owed to other banks Derivative instruments Amounts owed to clients Debt securities issued Subordinate debt Provisions Current income tax liabilities Other liabilities Total liabilities EQUITY Core capital Share capital Share premium Revaluation reserve Retained earnings Total equity Total equity and liabilities

10 INTERIM STATEMENT OF CHANGES IN EQUITY OF THE BANK Core capital Retained profits Share capital Share premium Revaluation reserve Other supplementary capital General risk fund Accumulated losses Total equity As at 01 Jan Valuation of assets available for sale Deferred tax on valuation of assets available for sale Gains and losses recognised directly in equity Net profit Total gains and losses Capital increase Distribution of gains and losses, of which: Transfer to other reserves As at 30 Sep As at 01 Jan Valuation of assets available for sale Deferred tax on valuation of assets available for sale Gains and losses recognised directly in equity Net profit Total gains and losses Distribution of gains and losses, of which: Transfer to other reserves As at 31 Dec

11 Core capital Retained profits Share capital Share premium Revaluation reserve Other supplementary capital General risk fund Accumulated losses Total equity As at 01 Jan Valuation of assets available for sale Deferred tax on valuation of assets available for sale Gains and losses recognised directly in equity Net profit Total gains and losses Distribution of gains and losses, of which: Transfer to other reserves As at 30 Sep

12 INTERIM CASH FLOW STATEMENT OF THE BANK Indirect method 9 months ended 30 Sep months ended 30 Sep 2009 CASH FLOW FROM OPERATING ACTIVITIES Profit before tax Adjusted for: Amortisation and depreciation Net interest on operating activities Net interest on financing activities Dividends received Result on investing activities 86 Income tax paid Change in the balance of trading securities Change in the balance of assets and liabilities due to valuation of derivative financial instruments Change in the balance of loans and advances to banks Change in the balance of loans and cash advances to clients Change in the balance of investment securities Change in assets under pledge Change in other assets Change in amounts owed to banks and the Central Bank Change in amounts owed to clients Change in provisions Change in liabilities arising from debt securities issued 32 8 Change in other liabilities Net cash flow from operating activities CASH FLOW FROM INVESTTING ACTIVITIES Inflows Redemption of other placements on money market Redemption of securities held to maturity Interest received Sale of intangible assets 988 Sale of property, plant and equipment Dividends received Outflows Purchase of intangible assets Purchase of property, plant and equipment Net cash flow from investing activities CASH FLOW FROM FINANCING ACTIVITIES Inflows Outflows Interest paid on bonds issued by the Bank Net cash flow from financing activities TOTAL NET CASH FLOW BALANCE SHEET CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD Cash and cash equivalents under restricted use

13 1. Information on accounting principles (policy) adopted in preparing the consolidated financial statements These interim consolidated financial statements of data for the BOŚ S.A. capital group ( Group ) and financial statements for BOŚ S.A. for three quarters of 2010 have been prepared in compliance with the International Financial Reporting Standards (IFRS), as adopted for use in the European Union and at the report period, i.e., 30 September 2010, and in compliance with Minister of Finance regulation of 19 February 2009 on current and periodic information provided by issuers of securities (Journal of laws Dz. U No. 33 item 259). The presented consolidated financial statements for three quarters of 2010 meet the International Financial Reporting Standards, as well as International Accounting Standard (IAS 34) on interim financial reporting. As at the date this report was signed off for publication, as the IFRS implementation is under way in the European Union and given the activity areas of the Group, the accounting principles applied by the Group display no difference between the IFRS standards that have come into force and the IFRS approved by the EU. The IFRS comprise standards and interpretations approved by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC). The quarterly consolidated financial statements of the Group have been prepared according to the historical cost method, as modified by the revaluation of financial assets available for sale, financial assets for trading, and as well as all derivative contracts measured at fair value. The accounting principles the Group applies as described in detail in the Consolidated Financial Statements of the BOŚ S.A. Group for the period of twelve months ended 31 December 2009 apply to the financial statements prepared for three quarters of 2010 as well. As from 1 January 2010 changes in fair value of any derivative instruments are posted with the income statement for the running period in the position Net trading result. Changes in comparative data presentation are presented under point 2. The accounting policies presented were applied in observance of the comparability concept in all reporting periods presented. The drafting of the financial statements in compliance with IFRS requires the application of specific accounting estimates. It also requires the Management Board to use its own judgment in applying the accounting policies adopted by the Group. The issues in relation to which a greater degree of judgment is required, more complex issues, or such issues which involve a significant degree of application of estimates or judgments for the purpose of the consolidated financial statements in respect of credit impairment, impairment of equity instruments available for sale, debt securities held to maturity, fair value of financial instruments available for sale, provisions against future liabilities and claims, and amortisation and depreciation, were presented in the Interim Consolidated Financial Statements of the BOŚ S.A. Group for the period of six months ended 30 June 2009 apply to the financial statements prepared for the third quarter 2009, and they also apply in this report as well. The above accounting principles were applied in observance of the comparability concept in all reporting periods presented. The drafting of the financial statements in compliance with IFRS requires the application of specific accounting estimates. It also requires that the Management Board use their own judgment in applying generally binding accounting policies. The issues in relation to which a greater degree of judgment is required, more complex issues, or such issues which involve a significant degree of application of estimates or judgments for the purpose of the consolidated financial statements in respect of credit impairment, impairment of equity instruments available for sale, debt securities held to maturity, fair value of unlisted financial instruments available for sale, provisions against future liabilities and claims, were presented in the Consolidated Financial Statements of the BOŚ S.A. Group for the period of twelve months ended 31 December 2009 and apply to this report as well. Unless expressly stated otherwise, the financial statements are drafted, and all values are quoted, in thousands of złotys (PLN 000). 2. Comparative data The Group made the following changes to its financial statements for the day of 30 September 2010 from the previously published report, as at 30 September 2009: 13

14 INTERIM CONSOLIDATED INCOME STATEMENT Position Net trading income Foreign exchange result Title Change of presentation of net valuation to fair value of FX spot and FX forward transactions 9 months ended 30 Sep 2009 published data Impact of presentation adjustment 9 months ended 30 Sep 2009 adjusted data As above INTERIM CONSOLIDATED CASH FLOW STATEMENT Position Title CASH FLOW FROM OPERATING ACTIVITIES 9 months ended 30 Sep 2009 published data Impact of presentation adjustment 9 months ended 30 Sep 2009 adjusted data Adjustments total: Net interest on Net interest on securities investing activities held to maturity Change in other placements on the money market Redemption of NBP bonds recognised in investing activities part Change in the balance of investment securities Net cash flow from operating activities Change in securities held to maturity recognised in investing activities part CASH FLOW FROM INVESTING ACTIVITIES INFLOWS Redemption of other Redemption of NBP bonds placements on the money market Redemption of securities held to maturity Redemption of Treasury bonds Interest received Net cash flow from investing activities Interest received on securities redeemed Adjustment of prior period errors In 2010, no prior period adjustment had to be made. 14

15 4. Change in consolidated contingent liabilities and assets 30 Sep Dec 2009 Contingent liabilities: a) financial of which: open credit lines open import letters of credit credit promises FX transaction limits other b) guarantees of which: loan payment endorsements and guarantees performance guarantees other c) issue underwritings Contingent assets: a) financing of which: open credit lines commitments from NFOŚiGW and WFOŚiGW on syndicated loans other b) guarantees c) other Total assets and contingent liabilities Impairment write-downs for loans and advances to clients and banks in the consolidated financial statements 30 Sep Sep 2009 At beginning of period Increase in impairment write-downs Loans written off during the reporting period as uncollectible Other decreases/increases 17 1 At end of period The Group structure, entities covered by and excluded from consolidation As at 30 September 2010, the Bank Ochrony Środowiska S.A. Group is composed of Bank Ochrony Środowiska S.A., the parent entity, and a subsidiary, a brokerage service called Dom Maklerski BOŚ S.A. Another subsidiary is BOŚ Eko Profit S.A., a public liability company incorporated 12 August 2009 and registered with the National Court Register 2 September 2009 As at 30 September 2010, the Bank held 100% of share capital and votes at Dom Maklerski BOŚ S.A. The Group maintains 51% of votes at the General Meeting of Towarzystwo Inwestycyjno-Leasingowe EKOLEASING S.A. in liquidation. Due to the liquidation process, the Group lost its control and influence on the company before 1 January In the interim abridged consolidated financial statements for the period ended 30 September 2010, the company is classified as assets available for sale and backed with a 100% net impairment provision. The consolidated statements comprise data of Dom Maklerski BOŚ S.A. and BOŚ Eko Profit S.A., which are subject to full-scale consolidation. 15

16 ADDITIONAL NOTES TO THE FINANCIAL STATEMENTS OF THE BOŚ S.A. GROUP 1. Summary results of Bank Ochrony Środowiska S.A. Group for three quarters of 2010 Bank Ochrony Środowiska S.A. Group posted the following results: As at 30 September 2010 : Balance sheet value of loans and advances to clients in the Group amounted to PLN mn, 9.9% up from end Growth rates were posted for the following client segments: retail, by 20.8%, corporate, by 2.6%, public finance, by 4.8% % Loans to clients, by market segment PLN million % % Public finance Corporate clients Retail clients BOŚ S.A. Group liabilities amounted to PLN mn owed to clients, 19.8% up from the end 2009 figure. Growth rates were posted in the corporate clients, retail clients, public finance and environmental funds segments % Environmental funds Amounts owed to clients, by market segment PLN million +36.1% 5.0% % 806 Public finance Dec Sep Dec Sep Dec Sep Dec Sep 2010 Corporate clients Retail clients The balance sheet total of the Group amounted to PLN mn, or 18.9% above the end 2009 figure. Balance sheet total, PLN million % Dec Sep 2010 Net profit the BOŚ S.A. Group posted after three quarters 2010 amounted to PLN 51.2 mn, 244% above the same period last year. Net fees and commissions increased 4.4%, mainly following deposit cost reductions and lending volume growth. Net fees and commissions increased 6.9%, as current account fees, investment and insurance premiums, commissions on full-amount loan repayment and higher earnings on payment cards all grew. Net write-downs on loans and advances impairment decreased. Significantly, general administrative expense dropped 2.2%, following workforce cost reductions and reduced costs of other activities. Net profit, PLN million +244% Q Q Bank products sold strongly increased in quantity in three quarters of 2010: 16

17 the number of personal accounts sold grew by 6.9%, mainly owing to well-selling new products, an Exceptional Account [Konto Wyjątkowe] the Bank included in its offer in 2009 and a No-Kidding Account [Konto bez Kantów] launched in September the number of payment cards and credit cards held by individual clients grew by 12.0%. Dom Maklerski BOŚ S.A., the brokerage service in the Group, benefited from a bullish market in 2010 and actively continued to win new clients. The number of broker accounts has increased by 20.2% from the beginning of the year. 2. Macroeconomic situation Economic growth GDP at constant prices grew 3.5% in Q on the same period last year. The main driving force behind the economic growth was consumer demand on the home market, which grew 3.9% over the report period. Individual consumption and restoration of stocks contributed to the growth. GDP growth estimates imply GDP should differ in no significant way from the Q2 figure in July-September Encouraging manufacturing output figures throughout Q3 are mentioned as evidence in support thereof Quarterly GDP rates Q to Q I 2007 II 2007 III 2008 IV 2008 I 2008 II 2008 III 2009 IV 2009 I 2009 II 2009 III 2010 IV 2010 I II Interest rates NBP basic interest rates did not change in the Tyree quarters Market interest rates, especially longer term ones, dropped. Inflation in the former half 2010 dropped below target inflation, which suppressed expectations of basic rate growth, thereby helping push down market rates. But inflation as well as 3M and 6M WIBOR rates rose in Q % 4.30% 4.10% 3.90% 3.70% 3.50% WIBOR Jan-Oct 2010 WIBOR 1M WIBOR 3M WIBOR 6M 3.30% Jan 10 Feb 10 Mar 10 Apr 10 May10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 The labour market Unemployment 2010 was at 11.5% in September, compared with a revised 11.4% in August this year. Unemployment grew 0.6% on an annual basis. The registered jobless number at end September was Productivity in the manufacturing sector in the period of January- September was 11.9% higher than in the same period 2009, as employment increased 1.1% average monthly wage went up. thousand Registered unemployment Sep 2009 to Sep % 10% 8% Number jobless Unemployment rate 6% 4% 2% Sep 09 pa? 09Nov 09 Dec 09 Jan 10Feb 10Mar 10Apr 10May 10 Jun 10Jul 10Aug 10 Sep 10 0% 17

18 Exchange rates The złoty strengthened against the principal currencies by end September 2010 from June this year, most strongly against the U.S. dollar. Before, in Q2 this year, the Polish currency was weakening, in connection with the unstable financial situation in Greece. The strengthening of the złoty in Q3 this year was to do with the growing depreciation pressure on the U.S. dollar touched off by expectations of further deregulation of American monetary policy. Currency rates Jan-Sep 2010 EUR/PLN USD/PLN CHF/PLN Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep Financial results of the Group 3.1. Financial results of the Group after Q No. Item Q Q1 Q PLN 000 Q Q1 Q Q3 10/ Q3 09 Dynamics Q1 Q3 10/ Q1 Q3 09 Continued operations 1. Interest and similar income Interest expense and similar charges Net interest income Fee and commission income Fee and commission expense Net fee and commission income Dividend income Net trading income Result on investment securities x x 10. Net foreign exchange gains Other operating income Other operating expense Impairment losses, net x Administrative expenses OPERATING PROFIT PROFIT BEFORE TAX Income tax expense x 18. current deferred NET PROFIT BOŚ S.A. Group posted a net profit of PLN 51.2 mn after three quarters 2010, a 244.5% increase on the same period last year. Net interest income grew 4.4% in three quarters 2010 from the same period last year. This index kept on a longer term upward trend, as Q figure was 6.7% above that reported for Q and 32.1% higher than net interest in Q1 2010, mainly a result of lower deposit costs and growing lending and deposit volumes. A positive impulse in that respect came from the launch by the Bank of a new loan portfolio based on higher margins. Net fees and commissions for three quarters of 2010 grew 6.9% following substantially increased earnings from personal account maintenance fees, investment and insurance commissions, commissions on full-amount loan repayment (transactions in the corporate clients and public finance segment) and increased earnings from payment cards. Brokerage commissions decreased too. 18

19 In three quarters 2010 from better results were posted than last year for loan and cash advance impairment write-downs: PLN 29.2 mn, compared with PLN 38.7 mn in the same period last year. These write-downs in three quarters 2010 were posted mainly in the retail segment (following valuation of mortgage backed loans by the portfolio method), loans to clients in the corporate and public finance segment, with the release at the same time of previous provisions for loans to banks. General administrative expense dropped 2.2% from three quarters last year following workforce costs and other costs The Group balance sheet Total balance sheet value of the Group was PLN mn as at 30 September 2010, 18.9% from end Total equity and liabilities of the Group Change in total equity and liabilities structure of the Group No. Item 30 Sep Dec 2009 Dynamics PLN Dec 2009= Amounts owed to Central Bank Amounts owed to other banks Derivative financial instruments Amounts owed to clients Debt securities issued Subordinate debt Provisions Current income tax liabilities x 9. Other liabilities Equity Total equity and liabilities The structure of liabilities did not change significantly after three quarters The one noticeable change perhaps was posted in the position amounts owed to clients. The aggregate amount of liabilities to clients grew 0.6 p.p., to 78.5%, as a result of a 19.8% increase in liabilities to clients. Amounts owed to other banks, the next biggest item in BOŚ S.A. liabilities structure, grew 23.6%. Liabilities to banks increased 0.4 p.p. Share decreases in the balance sheet structure were posted in the position equity (by 0.1 p.p.) and other liabilities (by 0.8 p.p.). BOŚ S.A. Group s equity position was PLN mn as at 30 September 2010, which was 17.1% above the end 2009 figure, following registration of a capital increase in June 2010 and the financial result posted. In Q3 2010, BOŚ S.A. Group had full capacity to pay any due liabilities and to finance its lending activity or other investment expenditure Liabilities of the Group Liabilities of BOŚ S.A. Group to clients amounted to PLN mn as at 30 September 2010, and were 19.8% above the end 2009 figure. The main source of financing of the Group, apart from its own funds, are liabilities to clients, including: cash deposits taken by the Bank outlets, loans and cash advances from international financial institutions, cash received from external donors to finance lending (the National Fund for Environmental Protection and Water Resource Management [NFOŚiGW], Regional Funds for Environmental Protection and Water Resource Management [WFOŚiGWs], and a Counterpart Fund European Fund for the Development of Polish Villages [Europejski Fundusz Rozwoju Wsi Polskiej]). 19

20 No. Item 30 Sep Jun Dec 2009 Dynamics PLN Jun 2009 = Dec 2009 = Amounts owed to corporate clients Amounts owed to retail clients Amounts owed to public finance Amounts owed to environmental funds Amounts owed to other clients Loans and advances received from international financial institutions Cash from environmental funds to finance loans TOTAL AMOUNTS DUE TO CLIENTS Important changes were noted in the deposit structure in three quarters Retail deposits decreased their share in total amounts owed to clients 5.0 p.p. increased its With the growth of financial means in the corporate sector the Bank posted 4.4 p.p. and 0.7 p.p. increases of the shares of corporate clients and environmental funds, respectively, in its total deposit value. Retail client deposits were at PLN mn as at 30 September The biggest amounts were bought by deposit products: a Good Day Deposit [Lokata KaŜdy Dzień Dobry], a Welcome Deposit [Lokata on Dzień Dobry] and a personal account called Exceptional Account [Konto Wyjątkowe] which attracts clients with competitive interest rates. As at end Q the Bank had garnered a total PLN mn from sales of these products. Another product popular with clients is Ekoprofit, a product combining features of a savings account and a term deposit with progressive interest. Clients had deposited a total PLN 954 mn on these accounts by end September Assets of the Group Change in the structure of assets Loans and advances to clients made the biggest position in the Group total assets (71.1%). Loans grew by PLN mn in three quarters 2010, but their share in assets dropped 5.8 p.p. from end 2009, as a result of a higher rate of growth of investment paper (securities). The growth was mainly due to posting new deposits from corporate clients on investment accounts. These funds will be used step by step to finance development of the Bank s lending activity. No. Item 31 Sep Dec 2009 Dynamics PLN Dec 2009= Cash and balances with the Central Bank Deposits with other banks, loans and advances to other banks Trading securities Derivative instruments Loans and advances to clients Investment securities available for trading held to maturity Assets under pledge Intangible assets Property and equipment Income tax assets Other assets TOTAL ASSETS