Second quarter interim report

Transcription

1 2015 Second quarter interim report Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

2 Contents Review of operations... 4 Significant economic events... 4 Key performance indicators and ratios... 4 Financial review...5 Group s capital ratios...8 Bigbank group structure...10 Condensed consolidated interim financial statements Consolidated statement of financial position Consolidated statement of comprehensive income...12 Consolidated statement of cash flows...13 Consolidated statement of changes in equity...14 Notes to the condensed consolidated interim financial statements...15 Note 1. Accounting policies...15 Note 2. Cash equivalents...15 Note 3. Financial assets held for trading...16 Note 4. Loans to customers...16 Note 5. Loan receivables from customers by due dates...17 Note 6. Ageing analysis of loan receivables...17 Note 7. Loan receivables from customers by contractual currency...18 Note 8. Impairment allowances by loan assessment category...18 Note 9. Past due loans...19 Note 10. Held-to-maturity financial assets Note 11. Other receivables Note 12. Prepayments Note 13. Investment properties...21 Note 14. Deposits from customers...21 Note 15. Other reserves...21 Note 16. Net currency positions Note 17. Contingent liabilities and assets pledged as collateral Note 18. Interest income Note 19. Interest expense Note 20. Other income Note 21. Other operating expenses Note 22. Other expenses Note 23. Related parties Statement by the management board Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

3 Bigbank AS consolidated interim report for the second quarter of 2015 Business name BIGBANK AS Registry Registration number Date of entry Commercial Register of the Republic of Estonia January 1997 Address Phone: Fax: Corporate website Financial year Reporting period Chairman of the management board Business line Auditor Reporting currency Rüütli 23, Tartu, Estonia January December January June 2015 Kaido Saar Provision of consumer loans and acceptance of deposits Ernst & Young Baltic AS The reporting currency is the euro and numerical financial data is presented in millions of currency units rounded to three digits after the decimal point. The Public interim report can be accessed on the website of Bigbank AS at The version in English can be accessed at Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

4 REVIEW OF OPERATIONS Review of operations Significant economic events Loan portfolio of Bigbank AS (hereinafter also Bigbank and the Group ) grew moderately during the second quarter of Group s loan portfolio increased 0.8 million euros i.e. 0.3% during the quarter. The largest contributor to the growth of the loan portfolio was the Lithuanian branch. The Group s net profit for the second quarter of 2015 comprised 2.8 million euros. Profit before impairment allowances totalled 9.2 million euros in the second quarter of The corresponding figure was 8.2 million euros in the second quarter of 2014 (an increase of 12.1%). The supervisory board of Bigbank AS has five members the chairman of the supervisory board Parvel Pruunsild and the members Vahur Voll, Juhani Jaeger, Raul Eamets and Andres Koern. The management board has three members, new member Bigbank s head of technology Agur Jõgi was elected in May, while Veiko Kandla was recalled from the management board. Kaido Saar continues as the chairman of the management board and Ingo Põder as a member of the management board. At the end of the second quarter of 2015, Bigbank had a total of 454 employees: 224 in Estonia, 85 in Latvia, 60 in Lithuania, 33 in Finland, 29 in Spain and 23 in Sweden. At the end of the second quarter, the Group had 5 branch offices, of which 1 were located in Estonia, 2 in Latvia, 1 in Lithuania and 1 in Spain. Bigbank AS has signed a merger agreement with its subsidiary OÜ Kaupmehe Järelmaks after the balance sheet date, on 17 August Merger is intended to increase operational efficiency after it is completed in the fourth quarter Key performance indicators and ratios Financial position indicators (in millions of euros) 30 June Dec 2014 Change Total assets % Loans to customers % of which loan portfolio % of which interest receivable % of which impairment allowances % of which impairment allowances for loans % of which impairment allowances for interest receivables % of which statistical impairment allowances % Deposits from customers % Equity % 4 Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

5 REVIEW OF OPERATIONS Financial performance indicators (in millions of euros) Q Q Change Interest income % Interest expense % Expenses from impairment allowances % Income from debt collection proceedings % Profit before impairment allowances % Net profit % Ratios 2Q Q 2015 Q Q Q Return on equity (ROE) 13.5% 6.5% 22.6% 20.2% 10.1% Equity multiplier (EM) Profit margin (PM) 15.3% 7.4% 25.6% 20.6% 11.2% Asset utilization ratio (AU) 22.0% 21.6% 21.7% 23.3% 20.8% Return on assets (ROA) 3.4% 1.6% 5.6% 4.8% 2.3% Price difference (SPREAD) 16.0% 15.8% 15.0% 16.1% 13.8% Ratios are presented on an annual basis (i.e. annualised). The statement of financial position indicators used in calculating the ratios are found as the arithmetic means of respective data as at the end of the month preceding the reporting quarter and as at the end of each month of the reporting quarter. In the case of indicators of the consolidated statement of comprehensive income, the annualized actual data of the reporting quarter are used. Explanations of ratios: Return on equity (ROE) net profit to equity Equity multiplier (EM) total assets to total equity Profit margin (PM) net profit to total income Return on assets (ROA) net profit to total assets SPREAD ratio of interest income to interest-bearing assets less ratio of interest expense to interest-bearing liabilities Asset utilisation (AU) total income (incl. interest income, fee income, dividend income and other operating income) to total assets Financial review Financial position As at 30 June 2015, the consolidated assets of Bigbank AS Group totalled million euros, having increased by 8.2 million euros (+2.5%) during the quarter. As at 30 June 2015, loans to customers accounted for 84.3% of total assets, the proportion of liquid assets (amounts due from banks, financial assets held for trading and held-to-maturity financial assets) was 11.0%. At the end of the second quarter, liquid assets totalled 36.9 million euros. Part of bank s liquidity buffer was placed in a trading portfolio of debt securities, which are highly liquid, hold investment grade credit Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

6 REVIEW OF OPERATIONS ratings, and can be sold at any moment. Financial assets held for trading totalled 11.3 million euros as at 30 June Free funds were partly invested also in short-term debt securities with fixed payments and maturities, which the Group intends to and is able to hold until maturity. At 30 June 2015, the Group had 1.7 million euros of such debt securities. At the end of the second quarter, the Group had 170 thousand loan agreements, 70 thousand of them in Latvia, 39 thousand in Estonia, 30 thousand in Lithuania, 13 thousand in Finland, 11 thousand in Spain and 7 thousand in Sweden. Geographical distribution of loans to customers: 23.5% Latvia, 18.0% Finland, 17.3% Estonia, 15.3% Lithuania, 15.2% Sweden, 10.7% Spain. At 30 June 2015, loans to customers totalled million euros, comprising of: the loan portfolio of million euros, loans to individuals accounting for 94.9% of the total; interest receivable on loans of 21.3 million euros; impairment allowances for loans and interest receivables of 51.1 million euros (consisting of an impairment allowance for loans of 38.5 million euros, an impairment allowance for interest receivables of 7.5 million euros and a statistical impairment allowance of 5.1 million euros). Bigbank s loan portfolio is diversified at the reporting date the average loan was 1,835 euros and as at 30 June 2015, 40 largest loans accounted for 4.6% of the loan portfolio. Bigbank AS focuses on the provision of consumer loans. In line with the corporate strategy, as at 30 June 2015 loans against income accounted for 88.3%, loans against surety for 4.0%, loans secured with real estate for 7.5%, loans with insurance coverage for 0.1% and loans granted against other types of collateral for 0.1% of the total loan portfolio. As regards past due receivables, it is important to note that the collection of non-performing consumer loans differs significantly from the recovery of loans that have physical collateral (for example, mortgage-backed loans). Due to their nature (as a rule, consumer loans are backed with the customer s regular income), claims related to terminated consumer loans are satisfied in smaller instalments over an extended period rather than in a lump sum raised through the sale of the collateral. Past due loans comprise loan principal that has fallen due. Under the terms and conditions of its loan agreements, the Group may terminate an agreement unilaterally if at least three scheduled payments are in arrears. When an agreement is terminated, the customer has to settle any outstanding loan principal, any accrued interest, and any collateral claims resulting from the settlement delay. Loans past due for more than 90 days consist of past due principal payments plus the total amount of loan principal that has fallen due in connection with termination of agreements. To mitigate the risks arising from customers payment behaviour and to cover potential credit losses, the Group makes impairment allowances, which are created on a conservative basis. At 30 June 2015, impairment allowances totalled 52.0 million euros, consisting of: impairment allowances for loan receivables of 38.5 million euros, impairment allowances for interest receivables 6 Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

7 REVIEW OF OPERATIONS statistical impairment allowances of 5.1 million euros, impairment allowances for other receivables of 0.9 million euros. Where debt recovery proceedings do not yield expected results, the underlying receivable is written off the statement of financial position. At the end of the second quarter of 2015, the Group s liabilities totalled million euros. Most of the debt raised by the Group, i.e million euros (98.3%) consisted of term deposits (including subordinated deposits in the amount of 1.9 million euros). In the second quarter of 2015, the Group s equity was 83.9 million euros. The equity to assets ratio amounted to 25.0%. Financial performance Interest income for the second quarter reached 16.3 million euros, increasing by 2.3 million euros (16.6%) year over year. The increase in interest income results from growth in the loan portfolio. The period s ratio of interest income (annualised) to average interest-earning assets was 18.8% and (annualised) return on the loan portfolio accounted for 20.8% of the average loan portfolio. Interest expense for the second quarter of 2015 was 1.7 million euros, decreasing by 0.2 million euros year over year (12.1%). The ratio of interest expense to interest income was 10.4 %. The ratio of interest expense to average interest-bearing liabilities (annualised) was 2.9%. including remuneration of 2.3 million euros. As at the end of the period, the Group had 454 employees. In the second quarter, impairment losses increased by 6.4 million euros, consisting of: impairment losses on loan receivables of 5.0 million euros, impairment losses on interest receivables of 1.1 million euros, impairment losses on other receivables of 0.3 million euros. Impairment allowances are made on a conservative basis. Other income for the second quarter of 2015 was 1.3 million euros, the largest proportion of which resulted from debt collection income. In the same period of 2014, other income was 1.7 million euros. Other expenses for the second quarter reached 0.7 million euros, decreasing by 0.1 million euros year over year. The Group s net profit for the second quarter of 2015 amounted to 2.8 million euros. In comparison to the second quarter of 2014, net profit has increased by 1.0 million euros (53.2%). Second-quarter profit before impairment allowances was 9.2 million euros, the corresponding figure for the second quarter of 2014 was 8.2 million euros (an increase of 12.1%). Other operating expenses for the second quarter totalled 2.2 million euros (an increase of 0.1 million euros year over year). Salaries and associated charges for the second quarter of 2015 amounted to 3.8 million euros, Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

8 REVIEW OF OPERATIONS Group s capital ratios Own funds As at Basel III 30 June 2015 Basel III 31 Dec 2014 Paid up capital instruments Other reserves Previous years retained earnings Other accumulated comprehensive income Other intangible assets Profit or loss eligible Adjustments to CET1 due to prudential filters Common equity Tier 1 capital Tier 1 capital Tier 2 capital Deductions - - Total own funds Total risk exposure amount As at Risk weighted exposure amounts for credit and counterparty credit (standardized approach) Basel III 30 June 2015 Basel III 31 Dec 2014 Central governments or central banks Regional governments or local authorities Institutions Corporates Retail Secured by mortgages on immovable property Exposures in default Other items Total risk weighted exposure amounts for credit and counterparty credit (standardized approach) Total risk exposure amount for foreign exchange risk (standardized approach) Total risk exposure amount for operational risk (standardized approach) Total risk exposure amount for credit valuation adjustment (standardized approach) Total risk exposure amount Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

9 REVIEW OF OPERATIONS Capital ratios Basel III 30 June 2015 Basel III 31 Dec 2014 CET1 Capital ratio 23.2% 24.7% T1 Capital ratio 23.2% 24.7% Total capital ratio 23.7% 25.2% Leverage ratio 23.6% 22.9% Own Funds are calculate on the base of Regulation (EU) no 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms that incorporate the Basel III framework. Leverage ratio is calculated by dividing the capital measure (Tier 1 capital) by total exposure measure and is expressed as a percentage. Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

10 REVIEW OF OPERATIONS Bigbank group structure Bigbank AS was founded on 22 September A licence for operating as a credit institution was obtained on 27 September Bigbank s core services are term deposits and consumer loans. The Group s structure at the reporting date: Bigbank AS Bigbank AS Latvijas filiāle 2 Bigbank AS filialas 3 Bigbank AS Suomen sivuliike 4 Bigbank AS Consumer Finance Sucursal en Espana 5 Bigbank AS Sverige Filial 6 Baltijas Izaugsmes Grupa AS Balti Võlgade Sissenõudmise Keskus OÜ OÜ Rüütli majad OÜ Kaupmehe Järelmaks Baltijas Parādu Piedziņas Centrs SIA Baltijos Skolų Išieškojimo Centras UAB 1 registered in the Republic of Estonia 2 registered in the Republic of Latvia 3 registered in the Republic of Lithuania 4 registered in the Republic of Finland 5 registered in the Kingdom of Spain 6 registered in the Kingdom of Sweden The branches in Latvia, Lithuania, Finland, Spain and Sweden offer lending services similar to those of the parent. In addition, the parent and its Latvian, Finnish and Swedish branches offer deposit services. In addition, Bigbank AS provides cross-border deposit services in Germany, the Netherlands and Austria. The core business of OÜ Rüütli Majad is managing the real estate used in the parent s business operations in Estonia. OÜ Balti Võlgade Sissenõudmise Keskus and its subsidiaries support the parent and its branches in debt collection and OÜ Kaupmehe Järelmaks offers hire purchase services. 10 Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

11 (in millions of euros, unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Condensed consolidated interim financial statements Consolidated statement of financial position As at Note 30 June Dec 2014 Assets Cash and balances at central banks Cash and balances at banks Financial assets held for trading Loans to customers 4,5,6,7,8, Held-to-maturity financial assets Derivatives with positive fair value Other receivables Prepayments Property and equipment Investment property Intangible assets Deferred tax assets Total assets Liabilities Deposits from customers Derivatives with negative fair value Provisions Other liabilities Deferred income and tax liabilities Total liabilities Equity Share capital Capital reserve Other reserves Earnings retained in prior years Total equity Total liabilities and equity Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

12 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in millions of euros, unaudited) Consolidated statement of comprehensive income Note Q Q M M 2014 Interest income Interest expense Net interest income Net fee income Net gain/loss on financial transactions Other income Total income Salaries and associated charges Other operating expenses Depreciation and amortisation expense Impairment losses on loans and financial investments Other expenses Total expenses Profit before income tax Income tax expense/income Profit for the period Other comprehensive income Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange differences on translating foreign operations Net profit on hedges of net investments in foreign operations Net other comprehensive income to be reclassified to profit or loss in subsequent periods Other comprehensive income for the period Total comprehensive income for the period Basic earnings per share (EUR) Diluted earnings per share (EUR) Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

13 (in millions of euros, unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Consolidated statement of cash flows Note 6M M 2014 Cash flows from operating activities Interest received Interest paid Salary and other operating expenses paid Other income received Other expenses paid Fees received Fees paid Recoveries of receivables previously written off Received for other assets Paid for other assets Loans provided Repayment of loans provided Change in mandatory reserves with central banks Proceeds from customer deposits Paid on redemption of deposits Net acquisition and disposal of trading portfolio Income tax paid/received Effect of movements in exchange rates Net cash used in operating activities Cash flows from investing activities Acquisition of property and equipment and intangible assets Proceeds from sale of property and equipment Proceeds from sale of investment properties Change in term deposits Acquisition of financial instruments Proceeds from redemption of financial instruments Net cash used in/from investing activities Cash flows from financing activities Dividends paid Net cash used in financing activities Effect of exchange rate fluctuations Decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

14 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in millions of euros, unaudited) Consolidated statement of changes in equity Share capital Statutory capital reserve Attributable to equity holders of the parent Other reserves Retained earnings Balance at 1 January Profit for the period Other comprehensive income Exchange differences on translating foreign operations Net loss on hedges of net investments in foreign operations Total other comprehensive income Total comprehensive income for the period Dividend distribution Total transactions with owners Balance at 30 June Total Balance at 1 January Profit for the period Other comprehensive income Exchange differences on translating foreign operations Net loss on hedges of net investments in foreign operations Total other comprehensive income Total comprehensive income for the period Dividend distribution Total transactions with owners Balance at 30 June Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

15 (in millions of euros, unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Notes to the condensed consolidated interim financial statements Note 1. Accounting policies The condensed consolidated interim financial statements of Bigbank AS as at and for the second quarter ended 30 June 2015 have been prepared in accordance with the international financial reporting standard IAS 34 Interim Financial Reporting as adopted by the European Union. The interim financial statements do not include all the information required for full annual financial statements and they should be read in conjunction with the Group s latest published annual financial statements as at and for the year ended 31 December 2014, which have been prepared in accordance with International Financial Reporting Standards (IFRS EU). The condensed interim financial statements have been prepared using the same accounting policies and measurement bases that were applied in preparing the latest annual financial statements as at and for the ended 31 December The new and revised standards and interpretations effective from 1 January 2015 do not have a significant impact on the Group s financial statements as at the preparation of the interim report. This interim report has not been audited or otherwise reviewed by auditors and only includes the condensed consolidated financial statements of the Group. The financial statements are presented in millions of euros, unless otherwise indicated and numerical data has been rounded to three digits after the decimal point. Note 2. Cash equivalents As at 30 June Dec June 2014 Demand and overnight deposits with credit institutions* Term deposits with credit institutions with maturity of less than 1 year* Surplus on mandatory reserves with central banks* Term deposits with credit institutions with maturity of over one year Mandatory reserves Interest receivable from central banks Total cash and balances at banks of which cash and cash equivalents * Cash equivalents Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

16 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in millions of euros, unaudited) Note 3. Financial assets held for trading As at 30 June Dec 2014 Total Financial assets held for trading Financial assets held for trading by issuer Government bonds Credit institutions Corporate bonds Financial assets held for trading by currency EUR (euro) Financial assets held for trading by rating Aa1-Aa A1-A Baa1-Baa Note 4. Loans to customers Loans to customers as at 30 June 2015 Estonia Latvia Lithuania Finland Spain Sweden Total Loan receivables from customers Impairment allowances for loans Interest receivable from customers Impairment allowances for interest receivables Statistical impairment allowance Total loans to customers, incl. interest and allowances Share of region 17.3% 23.5% 15.3% 18.0% 10.7% 15.2% 100.0% 16 Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

17 (in millions of euros, unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Loans to customers as at 31 December 2014 Estonia Latvia Lithuania Finland Spain Sweden Total Loan receivables from customers Impairment allowances for loans Interest receivable from customers Impairment allowances for interest receivables Statistical impairment allowance Total loans to customers, incl. interest and allowances Share of region 18.9% 23.7% 13.9% 17.9% 10.8% 14.8% 100.0% Note 5. Loan receivables from customers by due dates As at 30 June Dec 2014 Up to 1 year years years More than 5 years Total Note 6. Ageing analysis of loan receivables Ageing analysis as at 30 June 2015 Loans against income Not past due 30 days or less days days Over 90 days Loan portfolio Impairment allowance Surety loans Loan portfolio Impairment allowance Loans secured with real estate Loan portfolio Impairment allowance Loans with insurance cover Loan portfolio Impairment allowance Loans against other collaterals Loan portfolio Impairment allowance Total loan portfolio Total impairment allowance Total Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

18 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in millions of euros, unaudited) Ageing analysis as at 31 December 2014 Loans against income Not past due 30 days days days Over 90 days Loan portfolio Impairment allowance Surety loans Loan portfolio Impairment allowance Loans secured with real estate Loan portfolio Impairment allowance Loans with insurance cover Loan portfolio Impairment allowance Loans against other collaterals Loan portfolio Impairment allowance Total loan portfolio Total impairment allowance Total Note 7. Loan receivables from customers by contractual currency As at 30 June Dec 2014 EUR (euro) LTL (Lithuanian litas) SEK (Swedish krona) Total loan receivables from customers Note 8. Impairment allowances by loan assessment category Impairment allowances as at 30 June 2015 Loan receivables Impairment allowance for loans Interest receivables Impairment allowance for loan interest Total impairment allowances Collectively assessed items Individually assessed items Statistical impairment allowance Total Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

19 (in millions of euros, unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Impairment allowances as at 31 December 2014 Loan receivables Impairment allowance for loans Interest receivables Impairment allowance for loan interest Total impairment allowances Collectively assessed items Individually assessed items Statistical impairment allowance Total Change in impairment of loans, receivables and financial investments 30 June Dec June 2014 Balance at beginning of year Loan and interest receivables written off the statement of financial position Increase in allowances for loan and interest receivables Effect of movements in exchange rates Balance at end of period Impairment losses on loans, receivables and financial investments Q Q M M 2014 Recovery of loan and interest receivables written off the statement of financial position Increase in allowances for loan and interest receivables Impairment losses on other receivables Total impairment losses Note 9. Past due loans Past due loans as at 30 June 2015 Estonia Latvia Lithuania Finland Spain Sweden Total Up to 30 days days days Over 90 days Total Past due loans as at 31 December 2014 Estonia Latvia Lithuania Finland Spain Sweden Total Up to 30 days days days Over 90 days Total Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

20 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in millions of euros, unaudited) The table above shows only loan principal that is past due. In accordance with the terms of the loan agreements, the Group may terminate the agreement unilaterally if at least three scheduled payments are in arrears. When an agreement is terminated, the customer has to settle the entire loan amount. Note 10. Held-to-maturity financial assets As at 30 June Dec 2014 Acquisition cost of the debt securities portfolio Accrued interest Total held-to-maturity financial assets Held-to-maturity financial assets by issuer Government bonds Held-to-maturity financial assets by currency EUR (euro) LTL (Lithuanian litas) Held-to-maturity financial assets by rating A1-A Baa1-Baa Held-to-maturity financial assets include acquired bonds that the Group has the intention and ability to hold until maturity. Note 11. Other receivables As at 30 June Dec 2014 Late payment interest and penalty payments receivable Fees receivable Collection, recovery and other charges receivable Guarantee and deposit payments made Miscellaneous receivables Impairment allowance for other receivables Total Note 12. Prepayments As at 30 June Dec 2014 Prepaid taxes Other prepayments Total Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

21 (in millions of euros, unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 13. Investment properties 30 June Dec June 2014 Opening balance at 1 January Additions Sales Net loss from fair value adjustment Closing balance at end of period The investment properties comprise plots, houses and apartments originally pledged by customers as loan collateral and later bought by the Group through auctions. In prior interim reports these items were recognised under other assets, reclassification was performed in the 4th quarter Note 14. Deposits from customers As at 30 June Dec 2014 Term deposits Term deposits by customer type Individuals Legal persons Term deposits by currency EUR (euro) SEK (Swedish krona) Tem deposits by maturity Maturing within 6 months Maturing between 6 and 12 months Maturing between 12 and 18 months Maturing between 18 and 24 months Maturing between 24 and 36 months Maturing between 36 and 48 months Maturing in over 48 months Average deposit amount Weighted average interest rate 2.8% 3.1% Weighted average duration until maturity (months) Weighted average total contract term (months) Note 15. Other reserves Exchange differences on translating foreign operations Net gain/loss on hedges of net investments in foreign operations 30 June 2015 Change 31 Dec 2014 Change 31 Dec Asset revaluation reserve Total other reserves Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

22 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in millions of euros, unaudited) Note 16. Net currency positions Net currency positions as at 30 June 2015 Position in the statement of financial position Position off the statement of financial position Net position Assets Liabilities Assets Liabilities EUR (euro) SEK (Swedish krona) GBP (British pound) Net currency positions as at 31 December 2014 Position in the statement of financial position Position off the statement of financial position Net position Assets Liabilities Assets Liabilities EUR (euro) LTL (Lithuanian litas)* SEK (Swedish krona) GBP (British pound) * On 1 January 2015, the Republic of Lithuania joined the euro area and all currency positions in Lithuanian litas were converted to euros on that date. The loans provided by the Group are denominated in the currency of the corresponding region or in euros. Note 17. Contingent liabilities and assets pledged as collateral As at 30 June Dec 2014 Irrevocable transactions, of which Issued bank guarantees Credit lines and overdrafts Assets pledged and encumbered with usufruct, of which Mortgages* Bonds and deposits encumbered with collateral * The liabilities related to mortgages have been settled by the date of release of this report. Note 18. Interest income Q Q M M 2014 Interest income on loans to customers Interest income on financial assets held for trading Interest income on deposits Interest income on held-to-maturity financial assets Total interest income Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015

23 (in millions of euros, unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 19. Interest expense Q Q M M 2014 Interest expense on deposits Note 20. Other income Q Q M M 2014 Income from debt recovery proceedings Miscellaneous income Total other income Note 21. Other operating expenses Q Q M M 2014 Marketing expenses Office, rental and similar expenses Miscellaneous operating expenses Total other operating expenses Note 22. Other expenses Q Q M M 2014 Expenses related to enforcement proceedings Legal regulation charges Expenses from investment properties Onerous contracts provisions Miscellaneous expenses Total other expenses Note 23. Related parties For the purposes of these financial statements, parties are related if one controls the other or exerts significant influence on the other s business decisions. Related parties include: shareholders of Bigbank AS; members of Group companies management and supervisory boards; close family members of the above; companies connected with the above persons, except where the persons cannot exert significant influence on the company s business decisions. As at 30 June 2015, the Group had no interest and deposit liabilities to related parties. Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER

24 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in millions of euros, unaudited) Statement by the management board According to the knowledge and belief of the Management Board of Bigbank AS, as at the date of publication: the figures and additional information presented in the condensed consolidated interim report for the second quarter of 2015 are true and complete; and 30 June 2015 has been prepared in accordance with the international financial reporting standard IAS 34 Interim Financial Reporting as adopted by the European Union and with the information disclosure requirements established by the Bank of Estonia. Bigbank AS is a going concern. the condensed consolidated financial statements provide a true and fair view of the Group s financial position, financial performance and cash flows. The condensed consolidated interim report as at Kaido Saar Chairman of the Management Board 31 August 2015 [digitally signed] Ingo Põder Member of the Management Board 31 August 2015 [digitally signed] Agur Jõgi Member of the Management Board 31 August 2015 [digitally signed] 24 Bigbank AS I CONSOLIDATED INTERIM REPORT FOR THE SECOND QUARTER 2015