♦ G4-18. This report is presented for the 2015 calendar year as part of Center-invest Bank’s integrated IFRS reporting. The G4 Sustainability Reporting Guidelines were taken into account in the compilation of this report, to the extent to which the information is of interest to the bank’s current and potential shareholders, partners, customers and employees. The sections of the report presented in accordance with GR-4 are appropriately colour coded.
♦ G4-36. The contact person for this report is Sergei Smirnov, Deputy Chairman of the Executive Board.
1. In 2015 global markets remained volatile and negative trends in the Russian economy intensified. And yet in these very difficult conditions the transformational banking business model1 introduced by Center-invest Bank proved resilient. Transformational banking is the new reality:
2. At a time of increased risks and threats, the most effective solution was to work within Center-invest Bank’s ecosystem. The definition “Center-invest: it’s the best!” is not an advertising slogan, but an intentional focus on:
The bank regularly analysed the markets in which its ecosystem was evolving. As well as educational resources, we provided new products and approaches for small business, information technologies, energy efficiency, the agribusiness sector, consumer lending, and the training of creative cadres of young people, entrepreneurs and civil servants.
The bank has introduced new ways of working with various social groups: a micro cluster project, “Project for My City” (13,000 participants); the first stage of the project “My Strategy: Me and the World in 2030” (1,500 participants); a Financial Literacy Centre (15,000 participants); “Enterprise for All” (20,500 participants); and the Endowment Fund for Education and Science in the Southern Federal District (20,000 participants).
3. The geopolitical crises and sanctions created new conditions for the development of the bank’s ecosystem:
Faced with these new challenges, Center-invest Bank’s transformational banking business model and ecosystem enabled us to:
4. To mitigate geopolitical risks the bank played an active part in organising international events:
1. Center-invest Bank complied with all regulatory requirements under Russian and international standards. This was confirmed by all of the inspections conducted by supervisory and regulatory bodies. Taken together, these inspections lasted a total of 2,500 days (+50% compared to 2014).
2. Center-invest Bank strengthened its positions in the regional and Russian markets, including for the following important parameters: SME lending (ranked 16th among Russia’s banks), reliability (ranked 38th by Forbes), growth rate (5th among regional banks), and successfulness (17th place among all Russian banks and 1st place among regional banks).
3. In 2015, 78 children were born to Center-invest Bank employees.
|Net loans and leasing, RUBbn||30.6||42.5||48.4||61.5||72.0||72.7|
|CAR, RAS, % ≥ 10||14.7||13.3||13.3||12.4||10.9||12.8|
|CAR, IFRS,% ≥ 8||19.8||18.2||17.4||15.6||14.5||17.1|
|CAR, Basel 3, % ≥ 10,5||16.4||15.9||15.3||13.9||13.0||15.1|
|CAR Tier 1, IFRS,% ≥ 4,0||11.9||11.6||11.8||11.3||10.3||12.7|
|CAR Tier 1, Basel 3, ≥ 8,5||9.9||10.1||10.4||10.0||9.2||11.2|
|Number of children born to bank employees||81||82||71||83||86||78|
1. At a time of crisis and volatility, causing Russian consumers to uncertainly, the local population, businesses, government bodies and even Center-invest Bank’s competitors in southern Russia are guided more than ever by our intelligent risk analysis and sustainable conduct:
2. Center-invest Bank’s participation in cultural projects promotes the cultural development of southern Russia’s regions. We support public events held by theatres and museums, as well as competitions and cultural projects.
The results achieved allowed Center-invest Bank to approve a new strategy: “Global Competitiveness in Transformations”, a Strategy for Developing Center-invest Bank’s Ecosystem in 2016-2018. The bank is already implementing this strategy successfully in the new conditions. Each section in the strategy sets out both the challenges and the proven solutions that the bank is using in response.
|New challenges||Center-invest Bank’s solutions|
Volatility of global markets
|Strengthening its positions in southern|
Russia, a sustainably developing region.
Making a substantial contribution to the
Russian economic stagnation
|Using the advantages of southern Russia’s|
diversified economy and entrepreneurial
Using attractive interest rates to gain the best quality
Uncertainty about financial
market reforms in Russia
|Business based on a sustainable banking|
Сontinual transformation of business in a rapidly
Held its thirteenth annual scholarship competition for southern Russia’s top university students. Over 2,000 students entered the competition, and the 400 winners each received a Center-invest Bank scholarship.
Participated in the Euromoney Central and Eastern European Forum held in Vienna on 20-21 January 2015.
Spoke at the Russian Housing and Utilities Forum 2015 about its unique experience of providing loans for the renovation of multifamily residential buildings.
Won both a people’s vote and an expert jury vote in the Golden Wheel banking competition held in Rostov-on-Don by the news portal 161.ru.
Was one of the first banks in Russia to participate in the “Mir” national payment card system. Center-invest Bank was also part of the pilot programme to test the issuing and servicing of the Mir card.
Organised Russia’s first Positive Economy Forum. Sixty-five world-class experts travelled to Rostov-on-Don for the event, the majority of whom were from the European Union. Over 1,000 people visited the Forum.
Sponsored a start-up forum held in Rostov-on-Don in June 2015.
Won a prestigious Relationship Award 2014 from Commerzbank AG, Europe’s largest bank (Frankfurt, Germany). The award recognises the high quality of Center-invest Bank’s payments and its successful cooperation.
Presented its experience of transformation at the Skolkovo Business School. Yuri Bogdanov, Chairman of the Executive Board of Center-invest Bank, shared his experience and expertise.
Was recognised as Russia’s best regional bank and one of the country’s top 3 retail banks. We also took 7th place among Russia’s “banking market leaders” (Sravni.ru comparison site).
Took part in an IFC Financial Institutions Group Knowledge Forum. The results of the bank’s work were presented in a paper entitled “Transformational Banking: made in Russia”.
Presented “transformational banking” at the XIII International Banking Forum “Russian Banks - 21st Century”.
Came first place in the “cheapest car loans” ranking published by Sravni.ru.
Was a co-organiser and financial partner for an international conference of young scientists and academics from BRICS countries held on 24-26 September 2015 at Southern Federal University in Rostov-on-Don.
Was included by the Bank of Russia in its updated list of significant banks in the payment systems market. There are 51 banks on the list. (Bank of Russia Order dated 25 March 2015 “On Recognition by the Bank of Russia of Credit Institutions as Significant in the Payment Services Market”).
In partnership with the Rostov-on-Don city administration, co-organised a city-wide environmental social advertising competition “Let’s Make Our City Cleaner”.
Presented its unique experience in energy efficiency at the Energy Efficiency Finance Forum held under the aegis of the EBRD in partnership with the United Nations Environment Programme Finance Initiative (UNEP FI). The event, held in Istanbul on 16-17 September 2015, was entitled “Building a Global Energy Efficiency Financing Alliance”.
Participated in the 4th Positive Economy Forum in Le Havre (France), at which delegates discussed prospects for building a positive world by 2030.
Held over 70 events in universities to promote knowledge and research into entrepreneurship and also the acquisition of entrepreneurial skills.
Supported the “Don Teacher of the Year” competition for the thirteenth time.
Supported and participated in the Sixth Festival of Science in southern Russia.
Supported a music festival (together with the Alliance Française), Youth Day (together with the city administration) and a classical concert conducted by Misha Katz. It also organised its traditional concert to commemorate Victory Day.
Participated in Global Money Week. The bank put together a number of events for schoolchildren, students, entrepreneurs and pensioners.
Center-invest Bank’s sustainable banking business model comprises decisions taken voluntarily by its shareholders and employees in the interests of current and future generations. These obligations have become a cornerstone of Center-invest Bank’s corporate culture. They inform the bank’s customer and partner relationships and provide a mechanism for successful business management even at a time of crisis.
The distinctive features of the sustainable banking business model are:
By applying a sustainable banking business model Center-invest Bank is achieving: sustainable, balanced growth; a high level of competitiveness (including when compared to the speculative market); and high rankings in ratings of Russian banks, especially for the latest and most popular inclusive finance products.
Center-invest Bank applies best international practice to improve its business performance. The following factors make our business model competitive in Russian and international markets and will ensure that it remains so in the long term: transparent procedures; a clearly defined corporate culture and unambiguous rules of conduct; independent risk management and internal control; a commitment to nurturing our employees; transparent and accessible reporting under national and international standards; a modern and constantly evolving information system; highly responsive liquidity management procedures; and technology, operations and product development.
Center-invest Bank is the leading bank in southern Russia. In terms of efficiency, southern Russia lags behind developed countries and the rest of Russia as a whole. This creates scope to introduce best international practice with the aim of increasing efficiency three- to fivefold throughout the regional economy and raising standards of living.
Center-invest Bank is committed to helping maintain southern Russia’s environmental diversity and to reducing environmental harm. For example, the bank takes great care when selecting which agribusiness projects to finance. We are a market leader for energy efficiency finance, small business and youth enterprise development, and products to support women in business. We also offer products to enable the residents of southern Russia to improve their standard of living: consumer loans, mortgage loans and car loans. We do not, however, provide express loans. Rather, in dialogue with the customer, we assess the risks relating to the loan purpose, factoring in the long-term interests of the customer’s family and loved ones. We also look for opportunities to provide special purpose loans to enable customers to purchase energy efficiency technologies or carry out housing renovations (including to multi-family residential buildings). Drawing on its accumulated experience of introducing best international practice, the bank is broadening the scope of its lending on the basis of public private partnerships (PPP).
Center-invest Bank’s social and educational projects are designed to raise new generations of schoolchildren, students, entrepreneurs, civil servants and company managers.
The bank helps businesses in southern Russia to expand their contacts with partners from Europe and CIS and BRICS countries. For example, we have updated an online database of SMEs in southern Russia. We establish correspondent banking relationships with new partner banks abroad, and we hold training events where bankers from various countries can share experience of introducing a sustainable banking business model.
Center-invest Bank provides continuous staff training on new areas in banking, in line with the sustainable banking business model. We have established a positive corporate culture, with a creative atmosphere and employees who take responsibility for, and have confidence in, the successful implementation of the bank’s own strategy and those of its customers. An important result of this is the high birth rate among our employees. We have every reason to be confident that all the members of our team are committed to helping the bank and our customers achieve new sustainable results.
Southern Russia (Southern Federal District (SFD) and North Caucasus Federal District (NCFD) as % of Russian Federation
|Gross regional product/value of goods and services produced||7.6||7.1||8.5||8.8||8.8||9.0||9.4||10.8||17.6|
|Average monthly wage|
|Average per capita income (monthly)|
*SMEs and individual entrepreneurs, data as at 01.01.2013
— in which the staff of Center-invest Bank’s 132 branches are fulfilling their civic and professional responsibility to work in the immediate and long-term interests of the region by promoting effective economic development, social stability, and environmentally responsible behaviour;
— in which Center-invest Bank effectively manages the regional risks associated with accepting deposits and lending to retail and business customers, the requirements of supervisory and regulatory bodies, the impact of global processes, and the specifics of Russian legislation;
— that, at a time of globalisation, effectively combines the advantages conferred by its geographical position, favourable climate, diverse natural and human resources, and infrastructure;
— that has long been populated by people of different nationalities, whose lives are enriched by the region’s cultural diversity and tradition of enterprise, and who value their freedom and independence;
— that, with its economic diversity and high levels of entrepreneurship, serves as a model for the future Russian economy;
— in which salaries are 30-40% lower than the Russian average and five times lower than in European countries;
— that is experiencing a faster rate of economic recovery after the crisis, and slower growth in production costs, than the rest of Russia as a whole. This makes the region more competitive. Indeed, southern Russia plays the same role in the Russian economy as do the BRICS countries in the global economy;
— where SMEs are modernising successfully on the basis of best international practice.
— an integral part of the corporate culture for its employees and customers;
— procedures to comply with the environmental requirements of the bank’s IFI shareholders and partners;
— the bank’s experience in financing projects pertaining to energy efficiency, SME modernisation, and agribusiness, which have increased business efficiency three- to fivefold;
— increased operational efficiency on the basis of best international practice: transparent corporate governance, risk management and internal control procedures, advanced information technologies, and a new corporate culture;Ы
— a risk management system based on a combination of data analysis methods that ensures the appropriate allocation of capital, powers and responsibilities among the bank’s business units and employees;
— a consistently strong financial performance that is persuasive not only for supporters of sustainable development but also for speculative market participants;
— increasing the competitiveness of the bank’s customers and raising the population’s standard of living by providing training in best international practice for a wide audience, including managers and other personnel, young people and schoolchildren.
Full name of the bank:
Center-invest Bank carries out the following banking operations in accordance with General Licence of the Central Bank of Russia No. 2225 dated 9 September 2013 (General Licence No. 2225 dated 26 January 1998 expired due to the amendment by federal statute of the descriptions of specific banking operations):
Center-invest Bank is listed in the Unified State Register of Legal Entities (Certificate series 61 No. 002690018 dated 26 August 2002). Its primary state registration number is 1026100001949.
Center-invest Bank is registered as a member of the mandatory insurance system (Certificate No. 283 dated 9 December 2004).
Center-invest Bank holds the following professional securities market participant licences: № 061-03243-100000 dated 29 November 2000 for carrying out broker activities; № 061-03332-010000 dated 29 November 2000 for carrying out dealer activities; № 061-03407-001000 dated 29 November 2000 for carrying out securities management activities; № 061-04118-000100 dated 20 December 2000 for carrying out depository activities.
Center-invest Bank is authorised to issue guarantees in favour of customs authorities (Notification of the State Customs Committee of the Russian Federation dated 01 March 2016).
Center-invest Bank has exclusive rights to an item of intellectual property, namely, its trademark (State Register of Trademarks and Service Marks of the Russian Federation, Certificates Nos. 330123, 330124, 328151 and 330126 dated 24 July 2007).
Although the bank has not formally signed the following documents, it subscribes to and applies their main principles:
The bank’s head office is located at: 62 Sokolova Avenue, Rostov-on-Don, Russia, 344000. Telephone number, fax number: +7 863 2-000-000, +7 863 299-49-65.
Email address: email@example.com. Website addresses: www.centrinvest.ru, центр-инвест.рф.
Number of bank employees at FYE 2015: 1,612.
Center-invest Bank is very careful to ensure the correct balance between the scale of lending and the sources of funding. In 2015 the bank’s assets continued to be kept in the real economy, primarily in retail and SME lending, and at a time of economic crisis the bank managed the risks in its loan portfolio effectively. Amid market volatility, customers were reassured by our competent approach and transparency. In 2015 customer accounts grew at a faster pace, which allowed the bank to reduce expensive borrowings from the financial markets.
|FYE 2015||FYE 2014||2015 / 2014|
|Assets (RUBm)||89 641||100%||91 316||100%||–1.8%|
|Net loans and leases||72 672||81%||71 980||79%||1.0%|
|Cash and mandatory reserves with the Russian|
|12 598||14%||11 999||13%||5.0%|
|Other assets||2 100||2%||5 027||6%||–58.2%|
|Fixed assets||2 271||3%||2 311||3%||–1.8%|
|Liabilities (RUBm)||89 641||100%||91 316||100%||–1.8%|
|Customer accounts,of which||65 040||72%||49 218||54%||32.2%|
|retail customer accounts||51 603||57%||37 595||41%||37.3%|
|business customer accounts||13 437||15%||11 623||13%||15.6%|
|Equity||10 603||12%||9 585||10%||10.6%|
|Debt securities in issue||3 172||3%||9 060||10%||–65.0%|
|Funds from Russian Central Bank||0||0%||10 079||11%|
|Borrowings from IFIs and banks||10 403||12%||12 909||14%||–19.4%|
In 2015 the bank substantially increased the amount of funds attracted from retail customers. We achieved this by offering the best possible terms and conditions for deposits, and by further improving our customer service offering (for example, customers can now pay into their deposit accounts via self-service payment terminals and online banking).
|31.12.2015||31.12.2014||2015 / 2014|
|Retail customer funds, RUBm||51 603||37 595||+37.3%|
|including term deposits||46 648||33 310||+40.0%|
|Number of deposit accounts||248 262||220 629||+12.5%|
|Interest expense for customer deposits and accounts, RUBm||4 633||2 661||+74.1%|
In 2015 the bank accepted RUB17.3bn in bill payments from retail customers (+6.1%).
We continued to improve our processes for accepting bill payments from customers. The majority of payments are made in real time and do not require customers to complete payment requests. To speed up the process, the bank’s system reads the barcodes on bills. Moreover, payment recipients are gradually switching to electronic documentation systems. Customers can use the bank’s self-service terminals, ATMs and Internet banking service to make payments for various services.
|2015||2014||2015 / 2014|
|Western Union and Zolotaya Korona money transfers, millions|
|Foreign exchange transactions, millions|
|31.12.2015||31.12.2014||2015 / 2014|
|Retail loan portfolio, RUBbn||36.67||100%||33.98||100%||+7.9%|
The bank continued its efforts to improve the population’s standard of living by offering consumer loans, mortgage loans and car loans. The bank is actively developing its loan products based on bank cards.
In 2015 Center-invest Bank issued 61,093 loans for a total of RUB16.91bn (2014: 61,397 loans for a total of RUB20.82bn). This included:
Retail lending increased by RUB2.7bn in 2015. The retail loan portfolio at year end was RUB37bn.
In 2015 we developed and introduced special mortgage programmes that allow customers access to unique loan offers with minimal documentation requirements. These programmes are proving very popular in southern Russia.
Center-invest Bank continued to participate in a number of government loan programmes. For example, we issued 200 mortgage loans for a total of RUB500m to borrowers receiving government subsidies to help them meet interest and capital repayments. This included mortgage lending under the Young Teachers programme.
Our retail customers continued to take out loans to make energy efficiency improvements to their homes. In 2015 we issued 4,624 such loans, for a total of RUB1.2bn.
In 2015 the bank agreed 26,383 card credit limits for a total of RUB1.78bn.
We made our “grace period credit card” even more advantageous and attractive for customers: upon the expiry of the grace period (a maximum of 55 days), customers do not have to pay off the balance in full, but only the money borrowed in the previous month (as at the last working day of the previous calendar month).
Center-invest Bank’s retail customers can now repay their loans using online banking. This option allows customers to manage their finances in a timely manner.
|Loans issued||2015||2014||2015 / 2014|
|Consumer loans||30 009||8.99||35 015||11.70||–14.3%||–23.2%|
|Car loans||1 954||1.26||2 544||1.54||–23.2%||–18.2%|
|Mortgages||2 747||4.88||3 402||5.82||–19.2%||–16.2%|
|Bank card loans*||26 383||1,78||20 426||1,76||+22,6%||+1,1%|
|Total||61 093||16.91||61 397||20.82||–0.5%||–23.1%|
* Number and value of credit limits agreed
Throughout the course of 2014-2015 all of the bank’s business units that are involved in retail lending transitioned to working with Terrasoft software, which is integral to the work of the retail credit committee and decision-making on other issues (collateral substitution, recalculating schedules, granting grace periods).
Customers can submit new loan applications on the bank’s website (www.centrinvest.ru) and also check the status of existing applications.
Center-invest Bank is the only bank in southern Russia to have its own modern processing centre. This advantage enables us to systematically expand our services based on bank cards, and also to quickly introduce innovative products and services to a high standard.
There were many exciting developments for Center-invest Bank in 2015:
Center-invest Bank’s “grace period card” won the “Credit Card of the Year” category in the Banker of the Year awards run by the Banki.ru portal.
Center-invest Bank’s “grace period card” won the “Credit Card of the Year” category in the Banker of the Year awards run by the Banki.ru portal.
In 2015 Center-invest Bank was one of the first to sign up to Russia’s new national payment card system, “Mir”. We passed all of the tests for issuing and servicing Mir cards.
Center-invest Bank won Federal Treasury tenders to service the accounts and payment (debit) cards of public sector organisations in Krasnodar Krai and the Volgograd region. We are a reliable partner for the Federal Treasury, servicing the accounts used to make payments to public sector organisations in the Rostov and Volgograd regions, and Krasnodar Krai.
In terms of innovative technology, we launched a new bank product that allows customers to make payments with just one tap of their watch: the Watch2pay device with PayPass technology and a Center-invest bank card. This product can be included as part of any service bundle.
As well as the benefits of convenience, customers paying for purchases with a Center-invest bank card can now earn cashback. As part of the Universal, Premium and Exclusive service packages:
— under a joint project with Booking.com, customers who book a hotel using the Booking.com system on the bank’s website and pay using a Center-invest bank card will receive 5% cashback on the cost of their booking,
— a promotion was launched giving customers up to 10% cashback on purchases from our partners’ online stores (including AliExpress, Lamoda, Asos and MediaMarkt). Full information about the promotion is available on the bank’s website.
Center-invest Bank introduced new regulations on exchange rate conversions for bank cards, giving cardholders access to better exchange rates.
We launched a new product for our business customers who use a Center-invest Bank payroll programme: the “MasterCard-Bonus”. This product allows customers to enjoy savings on business expenses, and it makes our payroll programmes even more attractive and competitive.
Customers can now use their Center-invest bank cards to pay for services at self-service terminals.
To increase the security of bank cards, we introduced a safe payments service using 3DSecure online for MasterCard Worldwide cards. In addition, work was completed on certifying NCR ATMs for use with chip cards.
|Bank cards||FYE 2015||FYE 2014||2015 / 2014|
|Number of transactions||75 000 000||50 000 000||+50%|
|Number of active cards||280 969||265 293||+5.9%|
|Number of payroll programmes||2466||2275||+8.39%|
|Number of cards to service the accounts of Federal Treasury|
|14 292||12 490||+14.43%|
|Number of ATMs||458||437||+4.8%|
|Number of goods and services providers using the bank’s payment processing centre||2629||1896||+40.66%|
To expand our merchant acquiring operations, we introduced new tariffs: when a company enters into an agreement with the bank for acquiring services, it can open a Center-invest Bank current account free of charge, and the account fee will reduce as its turnover increases.
Under our ongoing World of Discounts programme, over 200 goods and service providers offer discounts for Center-invest Bank cardholders.
In 2015 the bank continued to work on attracting more business customers. At FYE 2015, we had 54,250 business accounts (+3.7%). Center-invest Bank is continually expanding the functionality of its online business banking system, improving existing services and offering new features. For example, in 2015 we connected customers to a new service providing secure remote banking: SafeTouch and eToken Gost (for more information please see page 35).
The bank’s business customers make extensive use of remote banking channels. By FYE 2015, 37,500 customers were using remote banking (up 23%). As part of remote banking, we also introduced new services to facilitate communications between the bank and the customer.
To expand our customer base, we are continually enhancing our payment and cash management services. Providing a full range of modern banking services, we act as the main payment centre for our customers.
Center-invest Bank is authorised by the Russian Central Bank to service the accounts of pension and government funds. We also provide payment services to Federal Treasury departments in the Rostov and Volgograd regions and Krasnodar Krai.
In 2016 the bank developed new types of bank account agreements, thanks to which we can open and service a wide range of special accounts for our customers.
Center-invest Bank lends to companies and organisations operating in the real economy of southern Russia.
The bank has a team of skilled loan officers who ensure the high quality of our loan portfolio by carefully analysing the potential returns and risks when assessing loan applications.
The bank provides loans to finance promising, potentially profitable projects that are in line with its strategic aims. We do not engage in highly competitive but unjustified types of lending.
We develop long-term relationships with our customers. By looking carefully at their requirements and selecting the best loan product for each project, we enable our customers to be competitive in the new economic environment and to localise best international practice in the production of goods and services.
Thanks to our effective lending policy and experience in the lending market, we can maintain the quality and reliability of our loan portfolio.
We offer our customers a comprehensive range of finance products, including: credit lines, overdraft facilities, standard loans, bank guarantees, leasing, and trade finance for imports of goods and equipment.
|At year end||2015||2014||2015 / 2014|
|Business loan portfolio, RUBbn||40.2||41.6||–3.6%|
|Number of active loan agreements||4962||5108||–2.9%|
|Value of guarantees, RUBbn||2.8||3.3||–15.2%|
|Number of active guarantees||2193||2022||+8.5%|
|Number of new loan agreements||4344||4829||–10.1%|
|During the year||2015||2014||2015 / 2014|
|Total value of agreements entered into, RUBbn||34.9||34.7||+0.6%|
|Volume of funds released, RUBbn||89.2||87.7||+1.7%|
|Number of guarantees issued||2416||2603||–7.2%|
|Value of bank guarantees, RUBbn||3.7||3.9||–5.1%|
Developing entrepreneurship in southern Russia is a priority for Center-invest Bank under its 2016-2018 Strategy “Global Competitiveness in Transformations”. As SMEs have adapted to the tougher business climate2, we have seen a prudent reduction in borrowing. At the same time, Center-invest Bank’s ecosystem has proved the most attractive and reliable for entrepreneurs.
In 2015 we continued to work successfully with regional SME loan guarantee programmes in the Rostov region, the Volgograd region, Krasnodar Krai and Stavropol Krai.
Center-invest Bank has been running programmes to support SMEs in southern Russia for the past twenty years. These include not only a wide range of loan products, but also advisory and educational programmes:
— Our Business Loans for Women programme offers loans with a preferential interest rate and a grace period to businesswomen and companies providing services and/or selling goods for women;
— Under the Youth Business Russia programme, new entrepreneurs under the age of 35 can take out a RUB300,000 loan for up to 36 months at 12% per annum and with a six-month grace period. The programme also includes free online business banking for the first year and comprehensive advice and mentoring from successful business people. The mentors share their experience and help the new companies grow;
— For customers who want to start their own business, the “Start-Up” programme offers loans of up to RUB3m for a term of up to 36 months.
|FYE 2015||FYE 2014||2015 / 2014|
|Number of SME customers||54 250||52 300||+3.7%|
|Number of active SME loan agreements||4 763||4870||–2.2%|
|SME loan portfolio, RUBbn||30.6||30.5||+0.3%|
|Number of new loans made to SMEs during the year||4 138||4596||–9.9%|
|Value of new loans made to SMEs during the year, RUBbn||28.5||28.6||–0.3%|
|Special loan programmes for SMEs||FYE 2015||FYE 2014||2015 / 2014|
|“Start-up”, up to RUB3m, up to 36 months||302||510||240||416.8||+25.8%||+22.4%|
|“Youth Business Russia” togetherwith the International Business Leaders Forum (IBLF), RUB 300,000, up to 36 months||125||34||75||20.3||+66.7%||+67.5%|
|Business Loans for Women||250||310||175||196.2||+42.9%||+58.0%|
Structure of SME
For the following international institutions, Center-invest Bank is the leading Russian partner for the implementation of energy saving projects: the EBRD, IFC, FMO, KfW, EDB, IIB and OeEB. Center-invest Bank finances projects to introduce energy efficient technologies in industry, agriculture, the service sector, the public sector, the housing and communal services (utilities) sector, and the private residential sector.
At FYE 2015, Сenter-invest Bank’s total investment to date in energy efficiency projects was RUB12.3bn (+22%). We have financed a total of 750 projects in the industrial, agricultural and service sectors, and 15,900 projects in the housing and communal services sector and private residential sector. The modernisation financed by the bank has reduced annual CO2 emissions by 159,200 tonnes (equivalent to the emissions produced or absorbed by 93,100 light vehicles, 454,900 barrels of oil, or 6.4m trees).
Our loan programme for the renovation of multifamily residential buildings is proving popular. Under Russian law, the owners of apartments in multifamily residential buildings have to pay monthly contributions to a capital repairs fund. This fund is used to renovate buildings in accordance with a regional capital repairs schedule. Center-invest Bank introduced a unique arrangement allowing our customers to take out a loan so that they can renovate their buildings straightaway. They pay the same contributions as before, but the money goes towards the loan repayments.
The bank’s success in financing energy efficiency projects is attributable to a fundamentally new approach: sustainable lending. This approach combines technical, financial and social engineering. In seminars and presentations, experts from Center-invest Bank share their unique experience of energy efficiency lending with representatives of Russian government bodies, municipal authorities, and financial institutions from various CIS countries, Eastern Europe, the Middle East, North Africa and BRICS countries.
In 2015 Center-invest Bank lent a total of RUB2.3bn for energy efficiency projects. This comprised: 4,185 loans to retail customers for energy efficiency improvements to their homes (RUB1.2bn); 7 loans to homeowners’ associations for capital repairs (RUB11m), and 120 loans to companies for the introduction of energy efficiency technologies (RUB1.1bn).
Agribusiness lending accounts for 11% of our business loan portfolio (RUB8.5bn).
The bank finances investment projects in all agricultural sectors. The finance is used to introduce modern technologies for production, improve the quality of soil cultivation and crop growing, and increase livestock productivity. We also provide finance for major fertiliser dealers, grain producers, grain traders and agricultural equipment dealers.
|2015||2014||2015 / 2014|
|Number of borrowers in the agribusiness sector||736||686||+7.3%|
|Number of loans made||1224||1193||+2.6%|
|Value of loans made, RUBbn||8.1||7.6||+6.6%|
|of which, loans for investment purposes, RUBbn||2.1||1.8||+16.6%|
Center-invest Bank is a member of the international association SWIFT, which ensures rapid clearing of payments and the safe and reliable communication of financial messages to correspondent banks. The main currencies for payments are US dollars, euros, pounds sterling, Swiss francs and Chinese yuan.
Our network of correspondent banks includes: Citibank NA (New York, USA), Commerzbank AG (Frankfurt, Germany), Societe Generale SA (Paris, France), UniCredit SpA (Milan, Italy), Erste Group Bank AG (Vienna, Austria), Raiffeisenlandesbank Oberoesterreich AG (Linz, Austria), and Bank of Communications Co. Ltd (Shanghai, China). In 2015, transactions through correspondent accounts totalled USD1.2bn and EUR1bn.
Our trade finance partners in 2015 included banks from Germany, the Netherlands, Italy, China, and Greece.
In 2015, trade finance transactions amounted to USD 0.3m. By using structured trade finance mechanisms, we are able to minimise the risks and reduce the potential losses for our customers who are trading internationally.
To reduce market risk, in 2015 the bank sold its whole securities trading book. (Bond portfolio at FYE 2014, RUB3.75bn; at FYE 2015, zero).
The annual return on ruble bond transactions in 2015 was 16.24% (2014: 0.87%).
Center-invest Bank processes foreign currency transactions for its business customers who have international trade contracts. In accordance with Russian legislation, the bank holds “transaction certificates” for these customers, which provide evidence that the transfer of funds is legitimate. Center-invest Bank has been accepting a significant number of transaction certificates for customers who have switched from other banks because we offer more favourable terms.
Center-invest Bank works continually to boost southern Russia’s import and export trade. We hold special seminars and networking meetings where Center-invest Bank customers can meet customers of our partner banks from abroad. Together with our foreign partner banks, we arrange for our customers to visit trade fairs abroad so that they can make new business contacts and sign new contracts.
|Volume of transactions under international trade contracts||2015||2014||2015 / 2014|
|₽ m||7 200||5 048||+42.6%|
At FYE 2015 the value of net assets under management was RUB156.9m (FYE 2014: RUB146.4m).
The annual rate of return for our bank-managed mutual fund (BMMF) Center-invest 1, which invests cash in Russian equities, was 39.5% (2014: –6.2%), while for BMMF Center-invest 2, which invests assets in bonds, it was 19.1% (2014: –3.3.%).
Center-invest Bank’s priorities in terms of information technologies are:
To strengthen its competitive advantages, the bank draws on its experience of introducing and expanding the functionality provided by leading global suppliers of banking software. Using its experience of introducing SAP for Banking, transformational banking methods, and its partnership with SAP AG, the bank succeeded in introducing a front office solution that is integrated with SAP Banking Services.
As part of their co-innovation partnership, Center-invest Bank and SAP AG continued their work on localising SAP software for Russia. The focus this year was on Loans and Deposits software. In 2015 the bank and SAP AG held several joint brainstorming sessions looking at how best to develop the product line. As a result of this collaboration and the introduction of SAP Banking Services, Center-invest Bank can set up new deposit products much more quickly.
In 2015 Center-invest Bank completed its work on optimising the retail lending process. The bank used information technologies to optimise the whole retail lending cycle: from receipt of loan applications, to drawing up loan documentation, to issuing loans. This project has reduced labour costs by 30% and halved the amount of time taken to assess applications. The number of online loan applications has tripled, and the bank’s loan portfolio has increased.
Our project to automate retail lending won a special prize “for IT innovation” at the RETAIL FINANCE AWARDS 2015. Founded in 2007, these annual awards recognise the standout companies in the retail finance business, and draw the attention of the professional community to the most significant achievements in the industry in the past year.
In 2015 Center-invest Bank introduced:
— “individual areas” for retail customers submitting loan applications. Customers can now save partly completed applications online and return to complete them at a later stage. They can also track the status of submitted applications. This new service enhances the existing service whereby customers can request SMS updates on the progress of loan applications;
— an option for customers to use self-service terminals and online banking to request information from government authorities about the payment of penalties for traffic offences, taxes and duties. Customers can also pay monies due;
— a new module in the retail online banking system that allows customers to manage their deposit accounts in a timely manner (obtain online information about their balances, transaction history, and pay in money);
— a new sub-system allowing business customers to set up and monitor deposits online. This enabled the bank to complete the automation of transactions and the calculation and payment of monies due under deposit contracts with business customers. This led to an influx of new customers, reduced the labour intensity of transactions, and expanded the bank’s liability funding base, and also its product line, thanks to more flexible conditions.
In 2015 the bank rolled out its electronic customer queue management system to all of its sites. This helped optimise human resources.
Throughout 2015 we expanded the capabilities of new software for self-service terminals. The new software package provided a number of advantages, enabling the bank to: expand the number of payment recipients; speed up the introduction of new types of terminal-based services; and reduce the time taken to connect the bank to the services of external service providers (by using existing integration gateways). Using the new software package we were able to address a number of business tasks, in particular, we introduced an option whereby customers can pay into deposit accounts at self-service terminals. More modern monitoring tools have simplified the administration of the terminals and made it easier to modify the user interface. The new capabilities led to an increase in the profitability of the bank’s terminal network, and also increased the fault tolerance of the system as a whole.
As always, a lot of attention was given to the information security of customers conducting financial transactions online. This resulted in the introduction of the new SafeTouch and eToken GОSТ technologies for our business customers and our own verification centre. The SafeTouch device displays the key data from payment instructions and guarantees that electronic documents are not signed until the user presses the “confirm” button. eToken GOST is a certified electronic signature device. By ensuring that our business online banking system can support these devices the bank has increased online banking security for its business customers.
In addition to working on the bank’s internal business tasks, our information technology departments also help to develop information communication technologies in southern Russia. In 2015, our IT experts played their part in developing Center-invest Bank’s ecosystem. They were involved in the following: developing the Rostov Region’s Information Technology Strategy; the work of the Public Chamber of the Rostov Region’s Ministry for Information Technologies and Communications; and training university students in the Financial Literacy Centre. They also took part in competitions for developers.
In 2015 the bank began working with the National Council for the Financial Market. This is a non-commercial partnership representing the interests of the financial community in dealings with government authorities. At the present time, our collaboration with the Council allows us to participate in pilot projects concerning the use of electronic government services. These include: obtaining data from the Pension Fund of the Russian Federation, and simplified customer identification using the Unified Identification and Authorisation System.
The bank upgraded the software, equipment and technology for its business units on a planned basis. It introduced new, up-to-date solutions that improve the reliability of the equipment being used. The requisite equipment and software is purchased on a competitive basis. Transparent procedures are used to select offers with the lowest price, proven reliability, a long warranty period, after sales servicing, and the shortest delivery times.
At FYE 2015 Center-invest Bank’s branch network comprised 132 branches located in the Rostov and Volgograd regions, Krasnodar Krai, Stavropol Krai, Moscow and Nizhny Novgorod. Center-invest Bank continues to actively develop its branch network: its extensive physical presence in southern Russia indisputably gives the bank a competitive advantage in implementing its development strategy.
Our branches offer business and retail customers a wide range of products and services on attractive terms, including: loans and leasing, deposit accounts, payments and cash management, money transfers, credit and debit cards, and payroll programmes. Irrespective of their geographical distance from Head Office, all of our branches adhere to the same high standards of customer care and the same work principles, and internal procedures are consistent throughout the branch network.
We are continually improving our branch network and making it more efficient. As well as modernising and updating the format of its existing branches, the bank is giving considerable attention to the use of modern technologies to deliver services to customers. We are working to increase the volume of products and services accessed via remote banking channels, including via the bank’s website. To capitalise on the increased functionality of its self-service terminals and ATMs, the bank is now working to provide customers with access to “24-hour zones” where they can conduct banking transactions and access services around the clock.
Regional breakdown for key indicators, RUBm
|Loans and leasing||Deposits|
|2015||2014||2015 / 2014||2015||2014||2015 / 2014|
excluding Head Office
|40 043||38 345||+4.43%||29 153||19 271||+51.3%|
|Krasnodar Krai||11 986||13 118||–8.63%||2 675||1 711||+56.3%|
|Volgograd region||3 091||2 867||+7.81%||428||229||+86.8%|
|Stavropol Krai||4 475||4 240||+5.54%||330||200||+65.0%|
|Head Office||17 686||17 507||+1.02%||19 017||16 184||+17.5%|
|Total||77 281||76 077||+1.58%||51 603||37 595||+37.3%|
|Total % attributable to branches||77.1%||77.0%||63.0%||57.0%|
In December 2015, we opened three small, modern branches in Nizhny Novgorod, providing retail banking services and products. Over 1,200 public sector employees have already become customers of these branches, having discovered for themselves the advantages of Center-invest Bank’s payroll cards and our attractive retail deposit and loan products. The branches are located in large districts of the city, and they have modern interiors and are easy to navigate.
In conjunction with the introduction of new technologies and optimisation of business processes, our branch network continually delivers high-quality growth for key indicators. At FYE 2015 our branches accounted for 77.1% of the bank’s loan portfolio and 63% of deposits. Thanks to our training and development programme for branch staff and increased staff multifunctionality, work productivity is continually increasing.
In 2015 the Internal Audit Service:
In 2015 the Compliance Service:
|Checks conducted by the Internal Audit Service||2015||2014||2013|
|Comprehensive audits of branches||17||32||16|
|Checks of cash and valuables||7||10||20|
|Investigation into customer complaints||0||0||1|
|Audits of specific aspects of the work of business units||86||71||62|
|Audits of professional activities on the securities market||4||4||4|
Center-invest Bank continually monitors its compliance with all requirements on the prevention of money laundering and the financing of terrorism. The bank’s internal documents regulating activities in this area are based on the principle “Know Your Customer”, national legislation, and best international practice. In 2015 the bank continued to work on improving the co-ordination of the activities of its business units and increasing compliance monitoring.
Risk management is part of corporate governance and encompasses all areas of Center-invest Bank’s activities.
Center-invest Bank’s risk management strategy is based on a sustainable banking business model. It envisages that the bank will:
Center-invest Bank’s Risk Management Policy was produced in 2014 and approved by the Board of Directors in February 2015. The policy regulates our risk management procedures and is based on our current development strategy and Sustainable Banking principles.
Center-invest Bank’s risk management system covers the whole spectrum of risks arising from all the different areas of our operations.
By constantly tracking global, national and regional economic trends and their impact on regional and sectoral risks, the bank is able to both minimise the systemic and strategic risks of its operations at a time when global markets are highly volatile, and also to meet customer needs.
Center-invest Bank’s risk management system ensures that both the bank and its customers develop sustainably and that shareholder and depositor investments are protected.
Center-invest Bank sets a positive example as a socially responsible business. Our sustainable banking business model focuses on introducing new knowledge and new technologies in the interests of future generations. Our social and educational projects aim to increase the importance attached to quality education in Russia today and to expand knowledge about the economy.
Center-invest Bank’s social projects have received awards in the annual “Public Recognition” competition held by the Krasnodar Krai Public Chamber.
The school.centrinvest.ru online training portal was launched in March 2013. Financed by Center-invest Bank, this initiative draws on our twenty years of experience in working with local entrepreneurs. Using a combination of textbooks and modules (with end-of-module tests), the portal provides free training in the basics of entrepreneurship. Participants receive a certificate upon successful completion of the course. An English version of the portal went live in January 2014. Child and Youth Finance International (CYFI) has included this training resource in its global electronic library. In the three years since it was launched, 20,500 people have registered on the portal and 8,200 people have already completed the course.
The portal has the support of the local governments of the Rostov region, the Volgograd region, Krasnodar Krai and Stavropol Krai, as well as the Rostov Region Association of Municipal Districts and the Rostov Region Public Chamber. These bodies have all agreed that the use of this self-study resource will count towards their employees’ continuing professional development.
For the past thirteen years Center-invest Bank and the Endowment Fund for Education and Science in the Southern Federal District have held an annual scholarship competition for southern Russia’s top students. The annual scholarship fund exceeds RUB7m. In 2015, we saw an increase in the number of successful entries from outside the Rostov region, and in recognition of this, award ceremonies were held in Krasnodar and Volgograd, as well as Rostov-on-Don. At all three ceremonies, a jazz orchestra provided musical entertainment.
More than 15,000 students have entered the scholarship competition since it began, and 3,300 scholarships have been awarded.
In April 2014, in partnership with Southern Federal University, the bank set up a Financial Literacy Centre. Open to all, the centre provides free advice and training on personal finance for all groups of the population of southern Russia.
Experts from the bank regularly train students to work as volunteers at the Centre. The training covers the following key financial issues: personal financial management, business planning, sensible borrowing, online banking, taxation, and the safe use of bank cards.
In the last two years the Financial Literacy Centre has provided advice to 15,000 people.
Four groups of financial literacy volunteers completed their training in 2015. The most successful volunteers went on to take up paid positions with Center-invest Bank.
For entrepreneurs the Centre provides free training in how to use Center-invest Bank’s business online banking system. They can also obtain advice on taxation, finance and accountancy from specialists in these areas.
On Tuesdays the Centre runs classes for pensioners. Members of the older generation can learn how to: pay their bills from the comfort of their home, choose a reliable bank, use their bank card to obtain their pension without having to queue, and also to make safe electronic payments. They can also ask any questions they might have about financial issues.
For the thirteenth year in a row, the bank funded free entry for schoolchildren to exhibitions at the Rostov Region Local Studies Museum, the Regional Museum of Fine Art, and the Battle of Stalingrad Panorama Museum in Volgograd. To date, more than 130,000 schoolchildren have participated in this project.
The head of the Rostov-on-Don city administration, Sergei Gorban, presented Mrs Tatiana Vysokova, member of the Board of Directors of Center-invest Bank, with a letter of gratitude for her contribution to the city’s socioeconomic development and her philanthropic work.
The governor of the Rostov region, Vasily Golubev, presented Dr Vasily Vysokov, chairman of the Board of Directors of Center-invest Bank, with a Medal of the Order “for services to the Rostov region” in recognition of his considerable contribution to the region’s socioeconomic development.
♦ G4-34 The governance of Center-invest Bank complies with Russian civil law and the recommendations of international organisations, in particular, the Basel Committee on Banking Supervision.
♦ G4-35 The bank’s highest governance body is the General Meeting of Shareholders, which elects the Board of Directors (seven people, including two independent directors).
♦ G4-42 The Board of Directors determines the bank’s strategy: the main types of activities, permissible level of risk, overall expenditure, anticipated financial results, and performance incentive scheme. It also approves the composition of the Executive Board (four people) and the single-person executive body, which is the Chairman of the Executive Board.
The Executive Board, headed by its Chairman and acting within its terms of reference, organises implementation of the approved strategy, business plans and budget.
Pursuing its strategic mission, the bank introduces the most progressive forms of governance.
Center-invest Bank has had corporate governance rules and procedures since 2004, including сodes of corporate conduct and ethics, and policies for specific areas of the business. Incorporating best international practice, these rules allowed us to maintain stable relationships between our shareholders, managers, employees and customers during the crisis.
In 2015 the Board of Directors and the Executive Board continued their practice of holding joint meetings.
In 2015 the Board of Directors held eleven meetings (2014: eight meetings). In addition to current issues, it considered the bank’s personnel policy. Taking into account feedback from the Internal Audit Service, which monitors compliance with the bank’s Code of Corporate Conduct, the Board of Directors regularly carries out surveys and evaluates performance in terms of corporate conduct.
The Chairman of the Board of Directors, Dr Vasily Vysokov, was elected by the Board of Directors on 15 June 2015.
♦ G4-38 The Board of Directors approved the composition of its committees as follows:
— Strategic Planning Committee: P. Fischer (Committee Chairman), independent director; V. V. Vysokov; A. Popov
— Audit and Compliance Committee: T. N. Vysokova (Committee Chairman); V. V. Vysokov; F. J. Flosbach, independent director.
— Appointments and Remunerations Committee: V. V. Vysokov (Committee Chairman); T. N. Vysokova, A. Zeisler.
— The Board of Directors does not have any executive members. The Chairman of the Board of Directors is not an executive director. All the decisions of the Board of Directors are taken unanimously.
♦ G4-40 Shareholders (a shareholder) holding at least 2% of the bank’s voting shares are (is) entitled to propose agenda items for the annual general meeting, and also to nominate candidates for the bank’s Board of Directors and Revision Commission. Such proposals must be received by the bank no later than 30 days after the end of the financial year.
Candidates for the Board of Directors give their consent and confirm that they meet the criteria specified in the By-Law “On the Board of Directors of the Bank”.
|at FYE 2015||at FYE 2014|
|Shareholding, %||Ordinary shares|
|Shareholding, %||Ordinary shares|
Members of the Board of Directors should have:
In addition to these criteria, the independent director should have at least 20 years’ experience in international finance or in a Western bank with assets of at least USD500m.
Shareholders are entitled to receive information about the candidates and to vote by cumulative voting.
♦ G4-41 Candidates for the Board of Directors disclose information about their membership of other Boards, shareholding with stakeholders, and related parties. Newly elected Board members receive training on the bank’s procedures to prevent conflicts of interests.
As part of its annual reporting, the bank includes information about transactions entered into by the bank with a member of the Board of Directors, his (her) spouse, parents, children, full siblings, half siblings, adoptive parents, adopted children and (or) their related parties, and also if these persons participated in a transaction with the bank as a beneficiary, intermediary, or representative in the transaction, or they hold 20% and more of the voting shares of a legal entity that is a party, beneficiary, intermediary or representative in a transaction with the bank, or they hold a position in a governance body of a legal entity that is a party, beneficiary, intermediary or representative in a transaction, or a position in a governance body of the management company of such a legal entity.
Information about such transactions must include information about all of the participants in the transaction, the time of making the transaction, its execution, price, and approval of the transaction by the bank’s Board of Directors or General Meeting of Shareholders.
♦ G4-44 The Board of Directors evaluates its performance, including with respect to economic, environmental and social topics, through self-assessment.
The results of evaluation of Center-invest Bank’s corporate governance are examined annually at a meeting of the Board of Directors’ Strategic Planning Committee and approved by the Chairman of the Board of Directors.
The Board of Directors continually reviews the composition of the governance bodies and policy documents.
♦ G4-45 At meetings of the Board of Directors and the Board Committees, and in conference calls and correspondence, the Board of Directors and the Executive Board regularly share information about economic, environmental and social impacts, risks and opportunities, and the management thereof. The bank regularly meets with customers and partners to discuss impacts, risks and opportunities relating to economic, environmental and social development.
Under the bank’s procedures, it is mandatory for meetings of the Board of Directors, the Board Committees and the Executive Board to consider risks relating to economic, environmental and social topics.
♦ G4-48 The bank’s annual report contains information about its sustainable development work. The Board of Directors considers the annual report and recommends it for approval by the meeting of shareholders.
♦ G4-49 The Board of Directors receives timely information about any development issues and concerns and also about the actions taken by the governance bodies to resolve these concerns.
♦ G4-50 In 2015 the Board of Directors considered three issues: market volatility, Russian economic stagnation, and the mechanisms and frequency of inspections of Center-invest Bank. In all three cases, the Board approved the actions taken by the bank’s executive bodies to resolve concerns on the basis of new technologies and methods.
♦ G4-51 The members of the Board of Directors receive remuneration for their work in accordance with and on the basis of a decision of the meeting of shareholders. The amount of remuneration depends on the bank’s performance (assets growth and profits, calculated under IFRS). Total remuneration cannot exceed 4% of profits calculated under IFRS.
♦ G4-52 Proposals as to the amount of remuneration are produced by the Remunerations Committee. The Board of Directors submits the proposals for approval by the meeting of shareholders, which takes the final decision about total remuneration.
♦ G4-53 Recommendations on remuneration for the Board of Directors take into account relevant trends and international practice.
♦ G4-56 Center-invest Bank’s Code of Conduct and Code of Ethics have become an integral part of its corporate governance culture.
All bank employees are entitled to address any question to any level of management and to receive a substantive response. The persons responsible must not only respond to questions from any employee, but also take steps to ensure compliance with rules and procedures to prevent such concerns from arising again.
Pursuant to the bank’s articles of association, the governance bodies are: the General Meeting of Shareholders, the elected Board of Directors (seven directors, including two independent directors), the Executive Board and the Chairman of the Executive Board. The Executive Board is a collegial executive body. At 2015 year end the Executive Board comprised four members (2014: four members). The Chairman of the Executive Board is a single-person executive body.
♦ G4-17 The consolidated financial statements for the Center-invest Bank Group comprise the financial statements for OJSC Center-invest Bank and its wholly owned subsidiary LLC Center-leasing.
♦ G4-35 Environmental and social topics
The Board of Directors approves the bank’s Environmental and Social Policy. The policy sets out the bank’s strategy for managing and assuming environmental and social risks. A member of the Executive Board is assigned responsibility for compliance with the principles and approaches specified in the policy. The Executive Board member is responsible for ensuring that the policy is conveyed to all bank employees and for compliance with the policy. All of the bank’s credit committees are also guided by the policy. An environmental report containing the main results of the bank’s work in the previous year is produced annually and made publicly available.
The Board of Directors of Center-invest Bank has approved all the methodology required to ensure the bank’s uninterrupted operation. Responsibility for compliance with these decisions lies with the Executive Board and various committees (credit committees, ALM committee, risk management committee.) The decisions of these bodies are binding on all bank employees.
♦ G4-ЕС1 The Chairman of the Executive Board is Yuri Bogdanov.
The composition of the Executive Board is shown below:
|At FYE 2014||At FYE 2015|
|Center-invest Bank’s Policies||Date approved||Approved by|
|1.||Internal Control Policy||30.09.2014||Board of Directors|
|2.||Credit Policy||14.11.2007||Board of Directors|
|3.||Information Policy||14.11.2007||Board of Directors|
|4.||Information Security Policy||05.08.2004||Board of Directors|
|5.||Risk Management Policy||03.02.2015||Board of Directors|
|6.||Liquidity Management Policy||03.02.2012||Board of Directors|
|7.||Personnel Policy||16.12.2013||Board of Directors|
|8.||Employee Remuneration Policy||16.12.2013||Board of Directors|
|9.||By-law on Dividend Policy||07.12.2011||Board of Directors|
|10.||Environmental and Social Policy||06.09.2010||Board of Directors|
|11.||Accounting Policy for 2016||29.12.2015||Board of Directors Audit|
and Compliance Committee
|12.||Accounting Policy for Reporting|
under IFRS for 2016
|29.12.2015||Board of Directors Audit|
and Compliance Committee
|13.||Taxation Accounting Policy for 2016||29.12.2015||Board of Directors Audit|
and Compliance Committee
|14.||Consolidated Financial Statements|
Accounting Policy for 2016
|29.12.2015||Board of Directors Audit|
and Compliance Committee
Middle managers are answerable to the Executive Board and its Chairman for the implementation of the Code of Ethics in their departments and for ensuring that their staff understand and comply with the Code.
The Executive Board and its Chairman are answerable to the Board of Directors.
The Board of Directors protects the bank’s ethical views and values, leads by example, and diffuses conflicts between individuals. While ensuring compliance with all legal requirements, the Board of Directors is also careful to meet the needs of shareholders and other stakeholders. It also aims to ensure harmonious relations between managers and other employees.
The Chairman of the Board of Directors represents the bank and issues statements on behalf of the Board of Directors. The Chairman is the official channel for informing management of matters that are of concern to the Board of Directors. The Chairman encourages the Board members to take maximum responsibility for their decisions on the key issues affecting the bank.
When addressing a corporate conflict, the main objective of the bank’s governance bodies is to find a legal and justified solution that is also consistent with the bank’s interests.
The principles and provisions of the Code of Ethics are incorporated in the bank’s internal control system. The bank’s strict and objective procedures for evaluating its work, identifying shortcomings, and acting to remedy shortcomings, are regularly reviewed and updated.
♦ G4-58Center-invest Bank’s ethical values, which are shared by its employees, customers and partners, are reflected in the sustainable development declaration (pages 10-13) and enshrined in the bank’s codes and policies (page 46). These values are part of the bank’s corporate culture.
♦ G4-ЕС1Center-invest Bank’s activities, underpinned by its sustainable banking business model, were directed at generating income from the real economy (89%) and distributing income to depositors (37%), partners (32%), shareholders (17%), and employees and the government (14%).
♦ G4-ЕС2Southern Russia’s economy (agribusiness, recreation and tourism, transport) is sensitive to climate change risks. The impact of climatic factors can be offset through the use of modern technologies and best international practice. The following strengths permit Center-invest Bank to have a high-quality portfolio in this sector: its customers’ many years of experience in the sector, the broad sweep of climate zones, crop rotation, application of modern production technologies, high-quality risk management, and an appropriate level of provisions for these customers. The key indicators (non-performing loans, returns, concentration) are mid-range when compared to the bank’s loan portfolio as a whole.
♦ G4-ЕС3The bank does not have any pension plan liabilities.
In compliance with Russian legislation, in 2015 the bank paid RUB237.8m to the Russian Pension Fund in insurance contributions for mandatory pension and medical insurance for bank employees.
♦ G4-ЕС4Center-invest Bank does not receive any financial assistance from the government. It is, however, actively involved in efforts to promote the socioeconomic development of southern Russia and the Russian Federation as a whole.
♦ G4-ЕС5The wages of the bank’s employees are in line with the market conditions in southern Russia and reflect the skills and experience required.
|Formation and distribution of Center-invest Bank’s income||2014,|
% of total
|2015 / 2014|
|Of which, lending to the real economy||9.5||11.1||88.8||+16.9%|
|Distribution of income||8.0||10.4||100.0|
|To the population — on retail deposits||2.7||4.6||37.1||37.2||+72.8%|
|To society — social projects||0.026||0.012||0.1|
|To partners — for funds raised||2.2||3.0||24.3||32.3||+25.6%|
|To employees — remuneration||1.4||1.5||11.8||13.8||–6.9%|
|To the government — taxes and other mandatory payments||0.4||0.3||1.4|
|To shareholders - dividends||0.3||0.018||0.14||16.7||–27.5%|
|Allocated to bank development||2.6||2.1||16.6|
♦ G4-ЕС6Heads of Center-invest Bank’s governance bodies and senior executives reside in the Southern Federal District (SFD), which is the location of the bank’s operations.
|Number of personnel||of which, residents of the SFD|
|Board of Directors||7||2||29|
|Managers of head office divisions and|
Managers or Deputy Managers of the bank’s branches (one manager may be responsible
for several branches).
|Average monthly nominal gross wage, RUB||32 629.1||25 979.0||23 932.6||23476.7||22 557.3|
|Average wage for the bank’s business|
|60 244.8||57 055.8||53 731.1||61 011.7||52 398.1|
♦ G4-ЕС9Three quarters of the bank’s spending on suppliers is on local suppliers.
Proportion of spending on local suppliers
♦ G4-EN1, G4-EN2In 2015 the bank used 161 tonnes of paper. The bank does not use recycled waste or materials.
♦ G4-EN3—G4-EN7Despite its sustainable growth, the bank is continually reducing its energy and water consumption.
♦ G4-EN6Energy consumption
|Gasoline, tonnes||166||5 324 284||188||6 028 950||–704 666||–12%|
|Gas, thousand metres3||375||12 750 000||424||14 416 000||–1 666 000||–12%|
|Electricity, kilowatt hours||4 669 342||16 809 631||4 883 800||17 581 680||–772 049||–4%|
|Total||34 883 915||38 026 630||–3 142 715||–8%|
♦ G4-EN11, G4-EN12, G4-EN14, G4-EN13The bank does not have any operations in protected areas. It does not have any impact on biodiversity or protected species.
The bank regularly participates in activities to restore natural habitats.
♦ G4-EN15—G4-EN19The bank has run an energy efficiency finance programme since 2005. It provides both business and retail customers with loans to finance the introduction of modern energy saving technologies and measures.
The bank does not conduct any activities involving:
The bank uses authorised municipal contractors for solid waste disposal.
Under Center-invest Bank’s Environmental and Social Policy, during the initial assessment stage, all projects are categorised by environmental and social risks (low, average or high risk). The bank aims to minimise potential environmental and social impacts, for example, with sector-specific guidelines on environmental protection and health and safety. When this is not possible, the bank has the right to refrain from financing a project. The Environmental and Social Policy also contains an Exclusion List and a list of Category A projects (which require extra scrutiny). The bank regularly holds seminars and advises its customers on the environmental impacts of their activities and the use of new technologies to reduce negative impacts.
|Energy efficiency projects||2015||Total|
|Number of projects||4312||15912|
|Total finance provided, RUBbn||2.3||12.4|
|Reduction in СО2 emissions, thousand tonnes per year||15.3||159.2|
|Equivalent to the emissions produced by cars||8720||93 100|
|Oil, thousand barrels||43.1||454.9|
|Or absorbed by trees, million||0.7||6.4|
♦ G4-EN28The bank does not use any reclaimed packaging materials.
♦ G4-EN23, G4-EN30
|2015||2014||2015 / 2014|
|Reduction in transportation (gasoline consumption),|
|2015||2014||2015 / 2014|
|Environmental protection expenditures, RUB thous.||570||566||–0.7%|
|Waste water collection and treatment||245||332||–26.2%|
All new applicants for business loans undergo thorough assessment and are assigned a rating (in accordance with the criteria specified in the Environmental and Social Policy). This process includes an appraisal applying environmental criteria.
The bank’s customers comply with Russian legislation on environmental protection. In accordance with its Environmental and Social Policy, the bank has the right to refuse to finance projects that do not comply with applicable law.
No grievances about environmental impacts have been filed against the bank.
♦ G4-HR1—G4-HR12Center-invest Bank’s loan agreements stipulate that borrowers must comply with applicable Russian legislation. Moreover, the criteria in the bank’s Environmental and Social Policy are applied when assessing all loan applications. Social risks are considered, including observance of human rights. Observance of human rights is also mandatory under the bank’s funding agreements with its international partners.
Training on human rights is provided as part of the process of familiarising new employees with the bank’s codes and policies.
All customers are checked for compliance with Russian legislation. The bank refrains from working with customers who violate human rights.
All of the bank’s security personnel have been appropriately educated in policies and procedures concerning human rights and the rights of indigenous peoples. The bank’s employees comply with applicable Russian legislation in all aspects, including human rights.
Any grievances raised with the bank are examined and monitored in compliance with applicable legislation.
Center-invest Bank is a member of the following associations:
— Association of European Business (AEB) (Chairman of the Board of Directors of Center-invest Bank, Dr Vasily Vysokov, represents the Rostov region);
— Rostov Region Chamber of Commerce and Industry (Dr Vysokov is a member of its Board);
— Russian-German Chamber of Commerce (Deutsch-Russische Auslandshandelskammer);
— German-Russian Forum (Deutsch-Russische Forum);
— Krasnodar Krai Chamber of Commerce and Industry;
— Rostov Region Employers’ Union, Russian Union of Industrialists and Entrepreneurs;
— Rostov-on Don Council of Directors, Bataisk Council of Directors.
The bank participates in the work of the aforementioned associations and pays membership subscriptions.
Dr Vysokov and Mrs Tatiana Vysokova have been elected to the following public bodies:
— The Rostov Region Public Chamber (Dr Vysokov is chairman of the Commission for Economic Development, Enterprise and Innovation);
— The Public Chambers of the following bodies: North Caucasus Internal Affairs Directorate (Transport) (Dr Vysokov, member), The Rostov Region Ministry of Property Relations (Tatiana Vysokova, member), Regional Inspectorate of the Federal Tax Service (Dr Vysokov and also Pavel Shvarz from Center-invest Bank, members);
— Boards of Trustees of Southern Federal University, Don State Technical University, Southern Russia Technical University, Rostov State Economics University (Dr Vysokov is a member of all four boards).
— Boards of Trustees of the Endowment Fund for Education and Science in the Southern Federal District (Dr Vysokov, chairman; Tatiana Vysokova, board member), the Southern Federal University Endowment Fund (Tatiana Vysokova, chairman), Don State Technical University Endowment Fund (Dr Vysokov, board member).
In addition to its membership of the above, the bank works with the following organisations: the Association of Russian Banks, the Association of Regional Banks of Russia, the Association of Rostov Region Municipal Districts, the Rostov Region Association of Homeowners’ Associations.
All of the bank’s business units actively engage with local communities. In 2015 the bank held 165 seminars and briefings for municipal bodies in southern Russia on current issues in banking, economic development, entrepreneurship, and housing and utilities.
The bank refrains from operations that would have a negative impact on local communities. In a timely manner, the bank communicates its anti-corruption policy and procedures to local communities and informs them of the impact of external risks. In accordance with Russian legislation, the bank informs law enforcement agencies of any incidents of corruption and breaches of the law. The bank refrains from financing political parties and it does not receive payment for its advice to political and non-governmental organisations. It participates in the public chambers of a number of government bodies.
In 2015 the bank received the following fines:
— RUB23,000 fine from the Federal Tax Service for late submission of information about customer accounts and other information.
All new applicants for a business loan undergo thorough assessment and are assigned a rating (using the criteria specified in the Environmental and Social Policy). This includes a society impact assessment.
All of the bank’s new products and services are assessed for their potential negative impact on society. The bank refrains from providing products and services that could potentially have such an impact.
Center-invest Bank: does not provide any products or services that have a negative impact on health and safety or that do not comply with regulations. It does not sell any banned or disputed goods or any goods that do not comply with regulations, including those on advertising, promotion and sponsorship;
Taking customer views into account, Center-invest Bank continually develops its products and services. It voluntarily and intentionally develops and sells products and services that help its customers raise their standards of living and run sustainable businesses.
The bank regularly and purposefully informs customers of its products and services through all forms of mass media. It uses information technologies to enable customers to select for themselves the most suitable terms on which to receive services.
By analysing customer feedback and using mystery shoppers, the bank monitors the compliance of its products and services with regulations and voluntarily assumed obligations. No significant deviations from regulations or voluntary obligations have been found.
The bank receives and responds promptly to numerous customer enquiries (annually, more than 1 million calls to the call centre and communications sent via Twitter, Facebook, Instagram and VKontakte).
The bank complies in full with legislation on banking secrecy and data protection. The bank has not received any fines concerning its provision of products and services.
Center-invest bank group
Summary Consolidated Financial Statements prepared from the International Financial Reporting Standards Consolidated Financial Statements and Report of the Independent Auditor
31 December 2015
|In thousands of Russian Roubles||31 December |
|31 December |
|Cash and cash equivalents||12 186 777||11 454 902|
|Mandatory cash balances with the Central Bank of the Russian Federation||411 386||543 600|
|Trading securities and repurchase receivables||—||3 747 222|
|Due from other banks||416 240||300|
|Loans and advances to customers||72 310 896||71 456 556|
|Finance lease receivables||361 190||523 714|
|Investment in associate||323 144||332 202|
|Intangible assets||252 756||280 610|
|Средства в других банках||416 240||300|
|Premises and equipment||2 270 541||2 310 867|
|Other financial assets||678 051||417 308|
|Other assets||361 711||248 900|
|Deferred income tax asset||68 307||—|
|Total assets||89 640 999||91 316 181|
|Due to the Central Bank of the Russian Federation||—||10 079 160|
|Due to other banks||630 001||1 529 410|
|Customer accounts||65 039 828||49 217 578|
|Debt securities in issue||3 171 560||9 060 314|
|Borrowings from international financial institutions||6 079 705||8 532 622|
|Subordinated debt||3 692 976||2 846 628|
|Other financial liabilities||93 503||171 600|
|Other liabilities||330 031||170 031|
|Deferred income tax liability||—||123 361|
|Total liabilities||79 037 604||81 730 704|
|Share capital||1 326 277||1 258 709|
|Share premium||2 078 860||1 646 428|
|Revaluation reserve for land and premises||1 192 811||1 229 040|
|Retained earnings||6 005 447||5 451 300|
|Total equity||10 603 395||9 585 477|
|Total liabilities and equity||89 640 999||91 316 181|
|In thousands of Russian Roubles||2015||2014|
|Interest income||11 089 497||9 489 711|
|Interest expense||(7 661 920)||(4 876 879)|
|Contributions to the state deposit insurance scheme||(179 563)||(158 188)|
|Net interest income||3 248 014||4 454 644|
|Provision for impairment of loan portfolio and finance lease receivables||(1 374 838)||(1 482 362)|
|Net interest income after impairment provisions||1 873 176||2 972 282|
|Fee and commission income||1 192 570||1 038 111|
|Fee and commission expense||(364 039)||(326 575)|
|Gains less losses from trading securities||43 168||(84 732)|
|Gains less losses from trading in foreign currencies||117 629||181 925|
|Foreign exchange translation gains less losses||459 976||135 083|
|Losses less gains from conversion operations on the interbank market||(510 026)||(216 367)|
|Other provisions and expenses||(39 795)||(129 671)|
|Repayment of debt written off||61 768||55 878|
|Other operating income||54 280||42 456|
|Administrative and other operating expenses||(2 174 975)||(2 233 979)|
|Share of result of associate||(10 743)||(5 093)|
|Profit before tax||702 989||1 429 318|
|Income tax expense||(168 157)||(322 262)|
|Profit for the year||534 832||1 107 056|
|Other comprehensive income|
|Items that will not be reclassified to profit or loss:|
|Revaluation of premises and equipment of associate||1 685||—|
|Income tax recorded directly in other comprehensive income||(528)||—|
|Other comprehensive income for the year||1 157||—|
|Total comprehensive income for the year||535 989||1 107 056|
|In thousands of Russian Roubles||Share|
|Balance at 1 January 2014||1 258 709||1 646 428||1 327 697||4 519 573||8 752 407|
|Profit||—||—||—||1 107 056||1 107 056|
|Total comprehensive income|
for the year
|—||—||—||1 107 056||1 107 056|
|— ordinary shares||—||—||—||(255 917)||(255 917)|
|— preference shares||—||—||—||(18 099)||(18 099)|
|Transfer of revaluation surplus on|
premises to retained earnings
|—||—||(98 657)||98 657||—|
|Balance at 31 December 2014||1 258 709||1 646 428||1 229 040||5 451 300||9 585 477|
|Profit||—||—||—||534 832||534 832|
|Other comprehensive income||—||—||1 685||(528)||1 157|
|Total comprehensive income|
for the year
|—||—||1 685||534 304||535 989|
|Issue of ordinary shares||67 568||432 432||—||—||500 000|
|— preference shares|
|— preference shares||—||—||—||(18 099)||(18 099)|
|Transfer of revaluation surplus on|
premises to retained earnings
|—||—||(37 914)||37 914||—|
|Balance at 31 December 2015||1 326 277||2 078 860||1 192 811||6 005 447||10 603 395|
|In thousands of Russian Roubles||2015||2014|
|Cash flows from operating activities|
|Interest received||10 633 457||9 245 897|
|Interest paid||(7 320 027)||(4 580 268)|
|Contributions to the state deposit insurance scheme||(170 115)||(154 099)|
|Fees and commissions received||1 186 107||1 075 057|
|Fees and commissions paid||(359 518)||(324 156)|
|Losses less gains from trading securities||(13 899)||(16 489)|
|Gains less losses from trading in foreign currencies||117 629||181 925|
|Losses less gains paid from conversion operations on the interbank market||(535 872)||(191 964)|
|Receipts from assignment of rights of claim||175 551||170 944|
|Repayment of debt written off||61 768||47 853|
|Other operating income received||38 142||29 215|
|Staff costs paid||(1 461 384)||(1 403 142)|
|Operating expenses paid||(592 678)||(651 015)|
|Income tax paid||(174 549)||(431 830)|
|Cash flows from operating activities before changes in operating assets|
|1 584 612||2 997 928|
|Changes in operating assets and liabilities|
|Net change in mandatory cash balances with the Central Bank of the Russian|
|132 214||(15 470)|
|Net change in trading securities and repurchase receivables||3 774 339||(1 721 479)|
|Net change in due from other banks||(415 081)||1 099 978|
|Net change in loans and advances to customers||(568 995)||(9 701 957)|
|Net change in finance lease receivables||153 575||82 345|
|Net change in other financial and other assets||(371 024)||4 298|
|Net change in due to the Central Bank of the Russian Federation and due|
to other banks
|(11 030 428)||11 322 898|
|Net change in customer accounts||14 566 850||(2 200 635)|
|Net change in promissory notes issued||151 629||(205 458)|
|Net change in other financial and other liabilities||(37 506)||(31 472)|
|Net cash received from operating activities||7 940 185||1 630 976|
|Cash flows from investing activities|
|Acquisition of premises and equipment||(73 876)||(102 407)|
|Proceeds from disposal of premises and equipment||2 206||541|
|Acquisition of intangible assets||(10 695)||(21 333)|
|Net cash used in investment activities||(82 365)||(123 199)|
|Cash flows from financing activities|
|Issue of bonds||2 927 122||7 020 332|
|Repurchase and repayment of bonds||(8 885 204)||(6 810 889)|
|Borrowings from international financial institutions||—||3 523 408|
|Repayment of borrowings from international financial institutions||(3 009 074)||(2 345 574)|
|Repayment of subordinated debt||—||(172 075)|
|Issue of ordinary shares||500 000||—|
|Dividends paid||(18 071)||(273 986)|
|Net cash (used in)/from financing activities||(8 485 227)||941 216|
|Effect of exchange rate changes on cash and cash equivalents||1 359 282||2 007 148|
|Net increase in cash and cash equivalents||731 875||4 456 141|
|Cash and cash equivalents at the beginning of the year||11 454 902||6 998 761|
|Cash and cash equivalents at the end of the year||12 186 777||11 454 902|
Basis for preparation
These summary consolidated financial statements of Open Joint-Stock Company Commercial Bank «Center-invest» (the “Bank”) and its subsidiary (the “Group”) have been prepared by extraction, without any modification, of the consolidated statements of financial position, of profit or loss and other comprehensive income, of changes in equity and of cash flows from the consolidated financial statements of the Group prepared in accordance with International Financial Reporting Standards
The consolidated financial statements, from which the summary consolidated financial statements have been derived, are available from the Bank upon request at 62 Sokolova Avenue, Rostov-on-Don, Russia, 344000