ANNUAL
REPORT
2013 In Tune with Our Customers’ Dreams and Aspirations 1
In Tune with Our Customers’ Dreams and Aspirations We are more than a Bank, Our customers depend on us to facilitate the realization of their dreams and aspirations regardless of the economic challenges being faced. This is why we remain a "customer-centric" institution with the full understanding that being in tune with our customers is the only way we will be able to serve them and drive better performance and profitability for the Bank and its stakeholders.
TABLE OF CONTENTS
Mission & Vision 4 • Notice of Annual General Meeting 5 Corporate Information 6 • Chairman’s Report 8 • Board of Directors 12 Directors’ Report 13 • Senior Management Team 17 Managing Director’s Report 18 • Independent Auditors’ Report 21 Consolidated Financial Statements 22
The steel pan, a timeless instrument, is being played by a woman whose face is hidden from the viewer. Caribbean women are becoming more expressive in the visual arts and music
MISSION STATEMENT
VISION STATEMENT
To be customer-focused, innovative, and
Deeply rooted in the local community,
efficient. To be the preferred provider of
we are the leaders in delivering a more
superior financial products and services
unique banking experience through
through caring, professional staff and
quality people, strong relationships,
appropriate technology. To exceed
financial strength, sustained growth
shareholder expectations and be a
and integrity.
catalyst for development.
NOTICE OF ANNUAL GENERAL MEETING
N
otice is hereby given that the 28th Annual Meeting of the Shareholders of the Bank of St. Vincent and the Grenadines Ltd. will be held at the Methodist Church Building, Grenville St., Kingstown, June 17, 2014 at 5:00 pm, for the following purposes:
1.
To consider and adopt the Report of the Auditors and Audited Financial Statements of the Company for the year ended December 31, 2013
2.
To consider and adopt the Directors’ Report
3.
To sanction Dividends of $0.37 cents per share paid for the financial period ended December 31, 2013
4.
To appoint Auditors for the Financial period January to December 2014
5.
To consider any other business relating to the Company
Note: Votes at meetings of shareholders may be given either personally or by proxy or, in the case of a shareholder who is a body corporate or association, by an individual authorized by a resolution of the directors or governing body of that body corporate or association to represent it at meetings of shareholders of the Company. A person appointed by proxy need not be a shareholder. A proxy is enclosed for the use of shareholders and must reach the Corporate Secretary at least 48 hours prior to the date of the meeting. By Order of the Board
Nandi Williams CORPORATE SECRETARY
Once in the practice area – pannists and instrument become a singular musical energy of vibrating sound.
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CORPORATE INFORMATION REGISTERED OFFICE & POSTAL ADDRESS: Reigate Granby Street P.O. Box 880 Kingstown VC 0100 St. Vincent and the Grenadines West Indies Email:info@bosvg.com Website:www.bosvg.com Telephone: (784) 457-1844 Fax: (784) 456-2612
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Chairman: Sir Errol Allen Secretary: Ms. Nandi Williams LEGAL COUNSELS: Williams & Williams Chambers, Middle Street P.O. Box 589 Kingstown St. Vincent Telephone: (784) 456-1757 Fax: (784) 456-2259 Principal: Mr. Arthur Williams Regal Chambers Second Floor, Regal Building Middle Street,Kingstown St. Vincent Telephone: (784) 457-2210 Fax: (784) 457-1823 Principal: Mr. Grahame Bollers Cardinal Law Firm 114 Granby Street P.O. Box 401 Kingstown St. Vincent Telephone: (784) 456-1954 Fax: (784) 451-2391
Principal: Mr. Andrew Cummings Q.C PARENT COMPANY: East Caribbean Financial Holding Company Ltd (ECFH) 1 Bridge Street P.O. Box 1860 Castries, St. Lucia West Indies Email:ecfh@candw.lc Website:www.ecfh.com Telephone: (758) 456-6000 Fax:(758) 456-6702 SUBSIDIARY COMPANY: Property Holding SVG Ltd. Bedford Street P.O. Box 880 Kingstown St. Vincent and the Grenadines Telephone: (784) 457-1844 Fax: (784) 456-2612 AFFILIATIONS: Members of: Caribbean Association of Banks Caribbean Association of Audit Committee Members Caribbean Banks Users Group Eastern Caribbean Institute of Banking ECCU Bankers Association St. Vincent and the Grenadines Bankers Association St. Vincent and the Grenadines Chamber of Industry and Commerce St. Vincent Employers’ Federation
A shiny steel pan has visual appeal as its surface reflects the colours and distorts the shapes of its surroundings.
REGULATORS: Eastern Caribbean Central Bank Eastern Caribbean Securities Regulatory Commission Financial Intelligence Unit Financial Services Authority Ministry of Finance EXTERNAL AUDITORS: Ernst & Young P.O. Box 261 Worthing Christ Church Barbados Telephone: (246) 430-3900 Fax: (246) 426-9551 OWNERSHIP IN BANK OF ST.VINCENT AND THE GRENADINES LTD. AS AT 31/12/2013 ECFH 51% Gov’t of SVG 22.26% NIS 10% Public 15.78% Staff of BOSVG 0.96% CORRESPONDENT BANKS REGIONAL Antigua Commercial Bank Limited P.O. Box 95 St. John’s, Antigua Eastern Caribbean Central Bank P.O Box 89 Basseterre, St. Kitts 1st National Bank St. Lucia Limited P.O. Box 168 Castries, St. Lucia
First Citizens Bank 62 Independence Square Port of Spain Trinidad National Commercial Bank Jamaica 54 King Street Kingston Jamaica Republic Bank Barbados Limited Trident House Lower Broad Street Bridgetown Barbados Republic Bank (Guyana) Limited 110 Camp & Regent Streets Lacytown Georgetown Guyana Republic Bank Trinidad Ltd 59 Independence Square Port of Spain Trinidad National Bank Dominica Roseau, Dominica
Republic Bank Grenada Limited NCB House, P.O. Box 857 Maurice Bishop Highway Grand Anse, St. George’s Grenada
St. Kitts Nevis Anguilla National Bank P.O. Box 343 Basseterre St. Kitts INTERNATIONAL Bank of America 100 SE 2nd Street 13th Floor, Miami Florida 33131, USA Bank Of Montreal 105 St. James Street West Quebec H3c 3b1 Canada Commerzbank D-6000 Frankfurt/Main Postfach 2534 Germany Lloyds TSB Bank Monument International Office 11/15 Monument Street London England EC3R 8JU Toronto Dominion Bank Toronto Data Centre 26 Gerrard Street West Toronto Ontario M5B, 1G3 Canada Bank of New York Mellon 1 Wall Street New York, NY 10286 Crown Agents Bank St. Nicholas House, St. Nicholas Road Sutton Surrey SM1 1EL, United Kingdom
The polished qualities of the musical instrument
7
CHAIRMAN’S REPORT
T
8
The year 2013 is the first in the Bank’s 36 year history that it has operated with a diverse shareholder base. As at December 31, 2013, 16.74% of the 10,000,000 issued shares of the Bank were held by residents and corporate entities of the Organisation of Eastern Caribbean States (OECS). It is for this reason I am especially pleased to report that, despite the subdued economic environment in which we operate, the Bank continued the positive performance trend in 2013 following on the rebranding just over three years ago. For the financial year ended December 31, 2013, the Bank recorded a profit after tax of $7.49 million. This represents an increase of $1.86 million or 33% over the 2012 figure of $5.63 million. During the year, total assets grew from $795.6 million at December 31, 2012 to $834.3 million at the end of the year under review. The profitability and the balance sheet position were achieved at a time when growth in the domestic economy was estimated to have remained under 2%. This estimate is consistent with the growth rates projected for the other territories in the Eastern Caribbean Currency Union as the fall-out from the global recession continues to negatively impact the productive sectors of these small economies. As a direct result, the financial sector across the sub region, being such an integral part of the respective economies, continues to be adversely affected mainly by way of rising non-performing loans and reduced profitability.
Sir Errol Allen Chairman
It is against this economic background that we remained focused through 2013 on the key areas of activity that had served to insulate the Bank over the previous two years. These include: • The efficient management of the quality of the Bank’s assets with particular emphasis on credit risk management and administration. Accordingly, we have been able to maintain the performance of the loan portfolio at just above 93%.
•
The efficient management of costs. Based on a comparison with 2012, we have managed to contain our operating cost at the same level in 2013. We however recognize that there are still some cost efficiencies that can be achieved through ongoing improvements in the operations of the Bank. We will therefore continue to focus on determining the most effective ways to realize these efficiencies without compromising on the critical areas of risk management and customer service.
Growing orchestras is evidence of a generation that strongly appreciates pan.
•
The continuous improvement in customer service delivery is another key area of focus for the Bank, particularly as the customer base continues to increase. During the year, we adjusted the branch operating structure with a view to standardizing the quality of the customer service across the branch network. We will continue to invest in the necessary training and other essential resources to optimize the service quality throughout the various service delivery channels.
Generally, we have taken a rather pragmatic approach to dealing with the many changes in the macro and micro environments. Critical to this however is a deep understanding of who our customers are, and the nature of the markets that we serve. Our approach to strategy has therefore been fashioned around the simple concept of providing the best solutions to our community of customers. As noted earlier, 2013 was also a historic year for the Bank. At the close of the Initial Public Offering on January 25, 2013, a portion of the shares of the Bank was acquired by the public for the first time as a result of the further divestment by the Government of St. Vincent and the Grenadines. As at December 31, 2013, 16.74% of the shares of the Bank were held by the public shareholders inclusive of the 0.96% held by the employees of the Bank. This is in addition to the 10% held by the National Insurance Services (NIS) SVG and 51% held by the East Caribbean Financial Holding Company Ltd (ECFH). The remaining 22.26% of the shares are held by the Government of St. Vincent and the Grenadines. We welcome all of the new shareholders and look forward to your respective contributions to the future development of the Bank. The positive growth experienced in 2013, both on the balance sheet and in overall profitability, despite the prevailing economic circumstances, augurs well for the future of the Bank. This is clearly an affirmation of the increased level of
Our approach strategyand has the Grenadines Limit Bank of St. to Vincent therefore beenStatement fashionedofaround the Consolidated Financial Position simple of 2012 providing the best As at 31concept December solutions to our community of (expressed in Eastern Caribbean dollars) customers. public confidence and trust that we must endeavor to convert into greater value for our Cash and balances with Central Bank (Note 5) the customers and shareholders. We anticipate Treasury bills (Note 6) potential increase the Bank’s Deposits withthat otherexists banksto (Note 7) Financial assets held for trading (Note 8) customer base over time will no doubt Loans and receivables - loans and advances to customers contribute to sustaining the performance trend (Note 9) (Noteyears. 11) established over the- bonds past three Investment securities - held-to-maturity (Note 12) - available-for-sale (Note 12) Financial instruments - pledged assets to continue In closing, we are indeed energized Property and equipment (Note 14) building on the success Investment property (Note 15)of the Bank for the Other assets (Note 16) benefit of all of the key stakeholders. In this Income tax recoverable regard, taxI asset would Deferred (Notelike 17) to recognize and wholeheartedly thank my fellow Directors for Total assets their contributions during the year and for the unwavering commitment to this cause that Liabilities they have each demonstrated. I will also like to Deposits from banks (Noteto18) use this opportunity extend our profound Due to customers (Note 19) Director, Mrs. Evelyn gratitude to former Other funding Instruments Borrowed (Note 20) Jackson funds who retired in July 2013 after serving Other liabilities 21) 12 years on the(Note Board. Mrs. Jackson served with distinction Total liabilitiesand contributed immensely to the changing fortunes of the Bank over the years. I also, on behalf of the Board of Directors, wish Equity to extend appreciation to the management and Share capital (Note 22) the staff for 23) their dedication and hard work in Reserves (Note Unrealised investments achievinggains theonresults for the year. Special Retained earnings thanks also to our shareholders and to our loyal Total equity who continue to place their faith customers and confidence in the Bank – we appreciate the Total liabilities and equity ongoing support and encouragement.
Assets
59, 4, 42,
526, 10, 58, 5,
59, 4, 3, 3,
778,
9
40, 594,
30, 19,
685,
14, 14, 1, 61,
92,
778,
Approved by the Board of Directors on June 14th 2013
_______________________________ Director Errol Allen Chairman of Bank Of St. Vincent and the Grenadines Limited
The familiarity and enjoyable moment of making music.
_ ________
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PROFILE OF DIRECTORS NAME: PROFESSION: SUBSTANTIVE POSITION: (BOSVG) APPOINTED: APPOINTED BY: QUALIFICATION: NAME: PROFESSION: SUBSTANTIVE POSITION: (BOSVG) APPOINTED: APPOINTED BY: QUALIFICATION:
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NAME: PROFESSION: SUBSTANTIVE POSITION: (BOSVG) APPOINTED: APPOINTED BY: QUALIFICATION: NAME: PROFESSION: SUBSTANTIVE POSITION: (BOSVG) ELECTED: ELECTED BY: QUALIFICATION: NAME: PROFESSION: SUBSTANTIVE POSITION: (BOSVG APPOINTED: APPOINTED BY: QUALIFICATION:
Sir. Errol N. Allen Economist - Retired Chairman of the Board of Directors Chairman of the Executive Committee Chairman of Human Resources Committee Chairman of Credit Committee First Appointment: October 28, 2005 Last Appointment: July 25, 2013 East Caribbean Financial Holdings Company Ltd. BSc. Economics, MSc. International Economics Mrs. Judith G. Veira Consulting Actuary Director of the Board Member of Executive Committee Member of the Audit Committee First Appointment: August 15, 2008 Last Appointment: July 26, 2013 Government of St. Vincent and the Grenadines BA Hons. Actuarial Science Fellow of the Society of Actuaries Mr. Andre Iton Financial Consultant Director of the Board Member of the Credit Committee First Appointment: 2003-2006 & November 18, 2010 Last Appointment: July 25, 2013 East Caribbean Financial Holdings Company Ltd. Bsc. Economics; A.C.A. Dr. Timothy Providence Medical Doctor Director of the Board Member of the Credit Committee Member of the Human Resources Committee July 25, 2013 The Public MBBS , MRCOG, FRCOG Mr. Godwin Daniel Agricultural Economist - Retired Director of the Board Chairman of the Audit Committee Member of Executive Committee First Appointment: July 1, 2002 Last Appointment: July 26, 2013 Government of St. Vincent and the Grenadines BSc. Agriculture, MSc. Agricultural Economics
The movement of the people and the steel pan music that energizes everyone
PROFILE OF DIRECTORS continued NAME: PROFESSION: SUBSTANTIVE POSITION: (BOSVG) APPOINTED: APPOINTED BY: QUALIFICATION: NAME: PROFESSION: SUBSTANTIVE POSITION: (BOSVG) APPOINTED: APPOINTED BY: QUALIFICATION: NAME: PROFESSION: SUBSTANTIVE POSITION: (BOSVG)
Mrs. Esther Brown-Weekes Bank Executive Director of the Board Member of the Executive Committee First Appointment: January 16, 2013 Last Appointment: July 25, 2013 East Caribbean Financial Holdings Company Ltd. MSC Finance, Accredited Director Mr. Hildreth Joseph Alexander Business Executive Director of the Board Member of the Human Resources Committee First Appointed: July 12, 2012 Last Appointed: July 25, 2013 East Caribbean Financial Holding Company Ltd. MBA, BSc. Mathematics
APPOINTED: ELECTED BY: QUALIFICATION:
Mr. Lennox Bowman Chief Executive Officer Director of the Board Member of the Credit Committee Member of the Audit Committee July 25, 2013 National Insurance Services, SVG MAAT, ACIB
NAME: PROFESSION: SUBSTANTIVE POSITION: (BOSVG APPOINTED: APPOINTED BY: QUALIFICATION:
Mr. Omar Davis Accountant Director of the Board Member of the Audit Committee September 11, 2013 East Caribbean Financial Holding Company Ltd Chartered Accountant
NAME: PROFESSION: SUBSTANTIVE POSITION: (BOSVG) APPOINTED: QUALIFICATION:
Mr. Derry Williams Bank Executive Managing Director Director of the Board April 1, 2011 MBA-Finance
The background is broken into simpler planes and muted hues
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BOARD OF DIRECTORS Left to Right Sitting
Mr. Godwin Daniel Director
Sir. Errol N. Allen Chairman
Mrs. Judith G. Veira Director
Left to Right Standing
Mr. Lennox Bowman Director
Dr. Timothy Providence
12
Director
Left to Right
Left to Right
Director
Director
Mr. Andre Iton Mr. Derry Williams Director
Mr. Omar Davis Mr. Hildreth Alexander Director
Mrs. Esther Brown-Weekes Director
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DIRECTORS’ REPORT The Directors of the Bank of St. Vincent and the Grenadines are pleased to present the report of the Directors for the period January 2013 to December 2013: DIRECTORS The composition of the Board of Directors was changed with the passing of the special resolution by the shareholders at the Special Meeting of the Shareholders held on July 25, 2013. The special resolution was to approve the policy on Directors appointment with respect to shareholding. The special resolution read ‘Be it resolved that: Each ordinary shareholder of the Bank of St. Vincent and the Grenadines who holds 10% of the issued ordinary shares of the Company shall be entitled to appoint one (1) Director for each 10% of the issued ordinary shares of the Company held’. During the year, we welcomed the following new Directors to the Board: Mr. Lennox Bowman and Dr. Timothy Providence as at July 25, 2013, and Mr. Omar Davis as at September 11, 2013. Mrs. Evelyn Jackson retired from the Board as at July 25, 2013. Mrs. Jackson served on the Board of the Bank of St. Vincent and the Grenadines for twelve years. Mrs. Jackson represented the Government of St. Vincent and the Grenadines. As at the close of the financial year the following directors held office: •
Sir Errol Allen
-
Chairman /Appointed by ECFH
•
Mrs. Esther Brown-Weekes
-
Appointed by ECFH
•
Mr. Hildreth Alexander
-
Appointed by ECFH
•
Mr. Andre Iton
-
Appointed by ECFH
•
Mr. Omar Davis
-
Appointed by ECFH
•
Mrs. Judith Veira
-
Appointed by the Government of SVG
•
Mr. Godwin Daniel
-
Appointed by the Government of SVG
•
Mr. Timothy Providence
-
Elected by the Public
•
Mr. Lennox Bowman
-
Appointed by the National Insurance
•
Mr. Derry Williams
-
Managing Director
Services, SVG
All Directors appointed and elected at the Annual General Meeting of Shareholders on July 25, 2013 and those appointed subsequently will serve a three year term until the close of the Annual General Meeting of Shareholders in 2016 in accordance with the Company's Articles of Association.
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malesuada magna mollis euismod. Maecenas faucibus
13
DIRECTORS REPORT continued
DIRECTORS’ INTEREST The interests of the Directors holding office at the end of the Company’s Financial Year 2013 in the Ordinary Shares of the Company were as follows: Director
Beneficial Interest
Sir Errol Allen
-
3,550
Mrs. Judith Veira
-
31,000
Dr. Timothy Providence
-
60,000
Mr. Godwin Daniel
-
1,000
Mr. Derry Williams
-
3,650
There was no contract of significance subsisting during or at the end of the financial year in which a Director was materially interested directly or indirectly.
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GOVERNANCE The Board continues to satisfy its governance obligations by convening the meetings necessary to carry on the business of the Company. In total, sixteen (16) Board and Board Committees Meetings were held during 2013. There were seven (7) Board of Directors Meetings, one (1) Executive Committee Meeting, two (2) Credit Committee Meetings, two (2) Human Resources Committee Meetings and four (4) Audit Committee Meetings. The composition of each of the Board Committees was changed in September 2013 based on the increase in the number of Directors. The current Board Committees are: Executive Committee: Errol Allen (Chairman), Godwin Daniel, Judith Veira and Esther Brown-Weekes Credit Committee: Errol Allen (Chairman), Lennox Bowman, Andre Iton and Timothy Providence Human Resources Committee: Errol Allen (Chairman), Hildreth Alexander and Timothy Providence Audit Committee: Godwin Daniel (Chairman), Lennox Bowman, Judith Veira and Omar Davis SUBSTANITAL INTEREST IN SHARE CAPITAL AS AT DECEMBER 31, 2013 The table below shows the Bank of St. Vincent and the Grenadines Ltd. substantial shareholders as at December 31, 2013. Substantial shareholders hold at least ten percent of the shares in the Company:
Young students are gathered in an after school steel pan practice session.
DIRECTORS’ REPORT continued
SHAREHOLDER
NO. OF COMMON SHARES
PERCENTAGE
East Caribbean Financial Holding Company Ltd.
5,100,000
51%
Government of St. Vincent and the Grenadines
2,225,920
22.26%
The Public inclusive of employees of the Bank
1,674,080
16.74%
The National Insurance Services
1,000,000
10%
SIGNIFICANT TRANSACTIONS There was a significant transaction in form of a loan from the National Insurance Services in the amount of $10,000,000 to finance the purchase of the Reigate building. The repayment terms are 6.75% per annum with quarterly payments of Three Hundred and Forty Five Thousand Eight Hundred and Twenty One Dollars and Ninety Three cents ($345,821.93). The loan will mature in December 2022. DIVIDENDS An interim dividend for the financial year 2013 was not declared by the Board, however, a final dividend in the amount of 0.37 cents per share was declared by the Board to all shareholders on record as at May 19, 2014. This dividend payment will be tabled at the 28th Annual Meeting of the Shareholders for sanction. SHAREHOLDERS RELATIONS As reported at the last AGM, the Bank intends to list its securities on the Eastern Caribbean Securities Exchange and has begun the due diligence process in this regard. It is expected that the listing will be completed during the 2014 financial year. As at date of this report, the Government of St. Vincent and the Grenadines still had an amount of 220,200 shares available for sale to the Public. AUDITORS The Auditors, Ernst & Young retire and offer themselves for re-appointment. The Board of Directors recommends to the shareholders at the 28th Annual General Meeting their re-appointment for the financial year ending December 31, 2014. Young students are gathered in an after school steel pan practice session.
15
PROFILE OF SENIOR MANAGEMENT NAME: POSITION: QUALIFICATION: APPOINTED:
Derry Williams Managing Director MBA-Finance April 2011
NAME: POSITION:
Bernard Hamilton Manager Credit Administration QUALIFICATION: MBA, MSc. Economics APPOINTED: February 2005
16
NAME: Bennie Stapleton POSITION: Chief Financial Officer QUALIFICATION: Certified Internal Auditor, FCCA, BSc. Accounting APPOINTED: September 2009 NAME: POSITION:
Cerlian Russell Manager Business & Operations QUALIFICATION: MBA – General Management APPOINTED: March 2010
NAME: POSITION:
Charron Dos Santos Manager Human Resources QUALIFICATION: Executive Diploma Management APPOINTED: September 2010 NAME: Nandi Williams POSITION: Corporate Secretary QUALIFICATION: GDL, LLM International Trade Law, BSc. Economics with Law APPOINTED: December 2004 NAME: POSITION:
La Fleur Hall Manager Risk and Compliance QUALIFICATION: CAMS, MSc. Audit Management and Consultancy, CFFA APPOINTED: February 2011
NAME: POSITION:
Wendell Davis Manager Information Systems QUALIFICATION: MBA Information Technology, BSc. Computer & Management Studies APPOINTED: August 2005
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SENIOR MANAGEMENT TEAM
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Left to Right
Charron Dos Santos – Manager Human Resources Bernard Hamilton – Manager Credit Administration Cerlian Russell – Manager Business & Operations Derry Williams – Managing Director Nandi Williams – Corporate Secretary Bennie Stapleton – Chief Financial Officer Wendell Davis – Manager Information Technology La Fleur Hall – Manager Risk and Compliance
The familiarity and enjoyable moment of making music.
Managing CHAIRMAN’S Director’s REPORT Report
T
18
The year 2013 is the first in the Bank’s 36 Introduction year that itprospects has operated with a Mindful of history the limited for growth, diverse shareholder base. As at Decemour main objective at the beginning of the ber 31, 2013, 16.74% of the 10,000,000 2013 financial year was to maintain a high issued of across the Bank were held level ofshares stability the activities of by the Bank. Central to this was the maintenance of residents and corporate entities of the Organthe quality of theCaribbean balance sheet particisation of Eastern Stateswith (OECS). It ular on I the assets.pleased Based to on is foremphasis this reason am loan especially the results the end the year,economic we have report that, at despite theofsubdued achieved thisin objective at the the Bank same environment which we while operate, time, improved the overall financial perforcontinued the positive performance trend in mance of the Bank. Forrebranding this, I wish just to extend 2013 following on the over commendation to the management team and three years ago. For the financial year ended the rest of the staff of the Bank for their conDecember 31, 2013, the Bank recorded a profit tinued and commitment to proafter taxdedication of $7.49 million. This represents an viding the highest level of care and service to increase of $1.86 million or 33% over the 2012 our valued customers. figure of $5.63 million. Financial Performance During the year, total assets grew from $795.6 The improved profitability for 2013 was drivmillion at December 31, 2012 to $834.3 million en mainly by the increase in interest income at the end of the year under review. The profitand non-interest income categories. Expensability and the balance sheet position were es, with the exception of interest expense, reachieved at a time year whenover growth the domesmained constant year.inThe increase tic economy was estimated to have in interest expense was due mainlyremained to the inunder estimate balances is consistent with the crease2%. in This the average held during growth rates projected for the other territories the year for, due to customers, borrowings in the Eastern Caribbean Currency Union as and other liabilities. the fall-out from the global recession continues to negatively the productive sectorsmilof Total assets impact grew marginally to $834.3 these small economies. As a direct result, the lion. The increase in loans and advances was financial sector the sub due mainly to across the decision toregion, report being $23.9 such an of integral part ofsold the respective million mortgages to EasterneconoCaribbean Home Mortgage Bank (ECHMB) on balmies, continues to be adversely affected ance sheet. The liabilityloans is remainly by way of corresponding rising non-performing corded as borrowings and reduced profitability.on the balance sheet. These mortgages were previously held off balance sheet. The liquidity position of the Bank remained stable during the year. This is reflected in the increase in liquid assets held.
Sir Errol Allen Chairman
The equity increased background to $100.2 million It is total against this economic that while the capital adequacy ratio at 20.28% we remained focused through 2013 on the remained relatively with the prekey areas of activity consistent that had served to insuvious year. late the Bank over the previous two years. These include: Customer Servicemanagement Initiatives of the quality • The efficient In response the increasing for of the to Bank’s assets withdemand particular convenience banking services, we expandemphasis on credit risk management ed our ATM network by installing a new maand administration. Accordingly, we chine at the LIME building on Halifax Street, have been able to maintain the perforKingstown. This has eased the congestion mance of the loan portfolio at just above at our main branches at Bedford Street and 93%. the Reigate building. At the same time, we have also significantly increased the distriefficient management of costs. • The bution of our EZdebit Card – a proprietary Based on a comparison with 2012, we international debit card issued through VISA have managed toused contain operating – which is now widely by our customers loat the and same level in 2013. We howcally, cost regionally internationally. ever recognize that there are still some cost efficiencies that can be achieved Human Resource Development through ongoing improvements in year the Our training and development for the operations of on thethe Bank. We will therefocused primarily critical areas that fore continue to focus on determining we considered central to the further adthe most ways to realize these vancement ofeffective the capabilities within the efficiencies without compromising on Bank. Accordingly, our training activities the critical areas risk management included sessions on of self-empowerment/ leadership development, and customer service. credit risk management and customer service. Apart from on the job training, the Bank continued to
A popular medium of expression for our youth.
demonstrate its commitment to staff developimprovement in customer • The continuous ment service by way delivery of the ongoing supportive is another key areapoliof cies for the pursuit of certification in a number focus for the Bank, particularly as the of relevant areasbase of study. customer continues to increase. During the year, we adjusted the branch Corporate Social Responsibility operating structure with a view to During the year, we demonstrated our comstandardizing the quality of the customer mitment to providing much needed assistance service across the branch network. We in a number of vital areas as part of our manwill continue to invest in the necessary date to supporting the community. Our Cortraining and other essential resources to porate Social Responsibility program for the optimize the service quality throughout year included contributions to: the various service delivery channels. • Education – mainly through our scholarship programs and our continuing Generally, we have a rather pragmatic support for taken the Annual George Philapproach to dealing with the many changes in lips Awards (in collaboration with the the macro andClub microofenvironments. Rotary St. Vincent), Critical as well to as, this however is a deep understanding of who financial assistance to the Vincentian our customers are, and the(VINSA) nature of Student Association at the the markets that we serve. Our approach to University of the West Indies. strategy has therefore been around • Special Olympics St.fashioned Vincent and the the simple concept – ofproviding providing budgetary the best Grenadines solutions to our to community of the customers. support assist with implementation of the annual work program. Youth Development – sponsorship of As• noted earlier, 2013 was also a historic year Annual Youth for thethe Bank. At theSVG closeCoast of the Guard Initial Public Program. Also, the Offering on January 25, the 2013,donation a portion to of the Artist Movement shares Contemporary of the Bank wasYoung acquired by the public – a group of young Vincentian Artists for the first time as a result of the further whose work has been featured in our divestment by the Government of St. Vincent calendar.As at December 31, 2013, and the2014 Grenadines. • Sports – ongoing of by the 16.74% of the shares of thesponsorship Bank were held Barrouallie Football League. Barrouallthe public shareholders inclusive of the 0.96% ie is the defending champions in the held by the employees of the Bank. This is in National Community Football Compeaddition to the 10% held by the National tition. Insurance Services (NIS) SVG and 51% held by • Culture – ongoing sponsorship of, Jazz the East Caribbean Financial Holding Company on the Green, Vincy Mas, National HeriLtd (ECFH). The remaining 22.26% of the tage Parade and the National Theater shares are held by the Government of St. Arts Festival. Vincent and the Grenadines. We welcome all of the new shareholders look forwardprogram to your Our Corporate Socialand Responsibility respective contributions to the for 2013 has contributed significantly future to the development of the Bank. success that was achieved in each of the areas
Our approach to strategy has therefore been fashioned aroundinthe The 2013 results were achieved what simple of providing best can be concept characterized as the challenging solutions to our community of economic circumstances. customers. Conclusion public confidence and trust that we must The 2013 results were achieved in what can be endeavor to convert into greater value for our characterized as challenging economic circustomers and shareholders. We anticipate the cumstances. However, we remain focused on potential that exists to increase the Bank’s building the BOSVG brand; making it a sound customer base over time will no doubt financial option for the public to save, invest contribute to sustaining the performance trend and obtain financing to meet their changover the threespecial years. thanks ingestablished needs. I wish to past express to our loyal customers for their support and In closing, we are energizedtotodemoncontinue understanding, andindeed for continuing building on the success of the Bank forthe the strate a very high level of confidence in benefit of wish all oftothe key stakeholders. In this Bank. I also recognize and especially regard, I would like to recognize and thank the Board of Directors for the invaluwholeheartedly my support fellow Directors for able guidance andthank general provided their contributions during the year and for the to the management and staff during the year. unwavering commitment to this cause that they have each demonstrated. I will also like to use this opportunity to extend our profound gratitude to former Director, Mrs. Evelyn Jackson who retired in July 2013 after serving 12 years on the Board. Mrs. Jackson served with Derry Williams Managing Director distinction and contributed immensely to the changing fortunes of the Bank over the years. I also, on behalf of the Board of Directors, wish to extend appreciation to the management and the staff for their dedication and hard work in achieving the results for the year. Special thanks also to our shareholders and to our loyal customers who continue to place their faith and confidence in the Bank – we appreciate the ongoing support and encouragement.
listed above. We are indeed very pleased to Thegiven positive growth experienced in 2013, be such a unique opportunity to both posion the balance sheet and in overall profitability, tively impact the lives of so many persons. despite the prevailing economic circumstances, augurs well for the future of the Bank. This is clearly an affirmation of the increased level of The cubist influenced artwork into simpler planes so that the face of the subject becomes prominent.
19
Pan on Canvas
Celebrating the influence of the Steelpan through the imagination and creativity of the Contemporary Young Artist Movement.
Joy Celestine melodies from her HeART Mixed Media | Painting
20
Kithesha James young players Oil pastel on paper | Painting
Leytisha Jack light on pan Charcoal on paper | Drawing
Sean Roache a reflection of peace Acrylic | Painting
Olivia Stephens soothing sound of steel Graphite on paper | Drawing
Oranzo gumbs his release Charcoal & Pencil | drawing
Leytisha Jack steel of ages multicolour print on paper | printmaking
Lanique holder Pan on a string Acrylic | Painting
Leytisha Jack pan man multicolour print on paper | printmaking
Roland Layne dance to the rhythm and beat multicolour print on paper | printmaking
Oranzo gumbs Up close and personal Acrylic | Painting
Olivia Stephens harmony in d yard Mixed media on water-color paper | Painting
–EXTRACT FROM THE BOSVG 2014 CALENDAR–
Ernst & Young POBx GM 368, Rodney Bay, Gros Islet, St. Lucia , W.I.
Tel: +758-458-4720 +758-458-4730 Fax: +758 458-4710
Street Address Mardini Building, Rodney Bay, Gros Islet, St. Lucia, W.I.
ey.com
INDEPENDENT AUDITORS’ REPORT To the shareholders of Bank of St. Vincent and the Grenadines Limited We have audited the accompanying consolidated financial statements of Bank of St. Vincent and the Grenadines Limited and its subsidiary (the Group), which comprise the consolidated statement of financial position as at 31 December 2013, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s responsibility for the consolidated financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2013, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.
CHARTERED ACCOUNTANTS St. Lucia April 25, 2014
21
Bank of St. Vincent and the Grenadines Limited
Bank of St. Vincent and the Grenad Consolidated Statement of Financial Position
As at 31 December 2013 Bank of St. Vincent and the GrenadinesPosition Limited Consolidated Statement of Financial Consolidated Statement of Financial Position of December St. Vincent and the Grenadines Limited As atBank Year 31 2013 As at 31 December 2013 of Financial Position Consolidated Statement (expressed in December Eastern Caribbean dollars) As at 31 2013
(expressed in Eastern Caribbean dollars)
(expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
Assets
Restated Restated Restated Restated as as 2013 2012 at 2013 2012 at Jan Jan 1, 1, 2012 2012 Restated Restated as $$ $$ $$ 2013 2012 at Jan 1, 2012 $ with Central $ Bank (Note 5)$ Cash and balances
Assets
Assets Treasury bills (Note 6) 63,027,459 59,258,809 45,047,725 Deposits63,027,459 with other banks (Note 7) Cash and balances with Central Bank (Note 5) 59,258,809 45,047,725 5,981,449 4,633,348 4,643,605 Financial 5,981,449 assets held for4,633,348 trading (Note 8) Treasury bills (Note 6) 4,643,605 Cash andwith balances Central (Note 5) 63,027,459 59,258,809 45,047,725 Deposits otherwith banks (Note Bank 7) 69,426,904 42,300,299 26,609,618 69,426,904 42,300,299 26,609,618 Loans and receivables loans and advances to customers ( Treasury 5,981,449 4,633,348 4,643,605 45,518 41,109 40,271 Financial bills assets(Note held6) for trading (Note 8) 45,518 41,109 40,271 bonds (Note 11) Deposits with other banks (Note 69,426,904 42,300,299 26,609,618 Loans and receivables - loans and7)advances to customers (Note 9)Investment 564,081,530 543,799,900 454,708,591 564,081,530 543,799,900 454,708,591 securities (Note 12) Financial assets held for trading (Note 45,518 41,109 40,271 - bonds (Note 11)8) 10,032,877 10,032,877 10,514,894 10,032,877 10,032,877 10,514,894 Property and equipment (Note 14) 454,708,591 Loans and receivables loans and advances to customers (Note 9) 564,081,530 543,799,900 51,240,589 63,805,828 82,059,224 Investment securities (Note 12) 51,240,589 63,805,828 82,059,224 Investment property (Note 15) - bonds 10,032,877 10,032,877 10,514,894 Property and equipment (Note(Note 14) 11) 58,639,831 59,955,388 57,436,607 58,639,831 59,955,388 57,436,607 Other assets (Note 16) 63,805,828 Investment (Note15) 12) 51,240,589 82,059,224 4,331,000 4,437,000 3,809,400 Investment securities property (Note 4,331,000 4,437,000 3,809,400 Deferred58,639,831 tax asset (Note 17) Property and(Note equipment 59,955,388 57,436,607 16) (Note 14) 5,084,321 3,676,364 7,586,658 Other assets 5,084,321 3,676,364 7,586,658 Income tax recoverable Investment (Note 4,331,000 4,437,000 3,809,400 Deferred taxproperty asset (Note 17)15) -549,459 1,393,897 549,459 1,393,897 Other (Note 16) 5,084,321 3,676,364 7,586,658 2,359,150 3,112,387 3,572,397 Incomeassets tax recoverable 2,359,150 3,112,387 3,572,397 Deferred tax asset (Note 17) 549,459 1,393,897 Total assets Income tax recoverable 2,359,150 3,112,387 3,572,397 Total assets 834,250,628 795,602,768 697,422,887 834,250,628 795,602,768 697,422,887 Total assets Liabilities Liabilities Deferred tax liability (Note 17) Deposits from banks (Note 18) Deferred tax liability (Note Due to customers (Note 19) 17) Deposits from banks Borrowings (Note 20)(Note 18) Due toliabilities customers(Note (Note21) 19) Other Borrowings (Note 20) Other liabilities (Note 21) Total liabilities Total liabilities Equity Equity Share capital (Note 22) Reserves (Note 23) Share capital (Note Unrealised gains on 22) investments Reserves (Note 23) Retained earnings Unrealised gains on investments Retained earnings Total equity Total equity Total liabilities and equity Total liabilities and equity Approved by the Board of Directors on
834,250,628 Liabilities
795,602,768
Deferred tax liability (Note 17) Deposits from banks (Note 18) -244,563 244,563 42,788,717 40,404,614 Due to customers 19) 42,788,717 (Note40,404,614 244,563 589,139,473 594,989,882Borrowings (Note 20) 594,989,882 589,139,473 42,788,717 40,404,614 66,289,814 47,835,676 Other liabilities (Note 21) 66,289,814 47,835,676
697,422,887
589,139,473 35,572,347 35,572,347 66,289,814 Total liabilities 35,572,347 734,034,914 734,034,914
594,989,882 19,491,087 19,491,087 47,835,676 19,491,087 702,721,259 702,721,259
-17,082,484 17,082,484 543,854,979 543,854,979 17,082,484 30,181,258 30,181,258 543,854,979 15,516,898 15,516,898 30,181,258 15,516,898 606,635,619 606,635,619
734,034,914
702,721,259
606,635,619
Equity
Share capital (Note 22)14,753,306 14,753,306 14,753,306 Reserves14,753,306 (Note 23) 14,753,306 14,753,306 14,753,306 14,753,306 Unrealised gains on investments 14,753,306 14,753,306 1,703,817 1,860,347 1,703,817 1,860,347 Retained14,753,306 earnings 14,753,306 69,005,285 61,514,550 69,005,285 61,514,550
14,753,306 14,753,306 14,753,306 14,753,306 14,753,306 1,800,042 1,800,042 14,753,306 59,480,614 59,480,614 1,800,042 59,480,614 90,787,268 90,787,268
69,005,285 Total equity 100,215,714 100,215,714
1,703,817
1,860,347 61,514,550 92,881,509 92,881,509
100,215,714
92,881,509
90,787,268 697,422,887 697,422,887
834,250,628
795,602,768
697,422,887
Total liabilities and equity 834,250,628 795,602,768 834,250,628 795,602,768
Approved by the Board of Directors on
Approved by the Board of Directors on _______________________________ Director
_______________________________ Director _______________________________ Director
_______________________________ Director
_______________________________ Director
The accompanying notes form an integral part of these financial statements. The accompanying notes form an integral part of these fina The accompanying notes form an integral part of these financial statements.
22
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income Bank of St. Vincent and the Grenadines Limited
For the year ended December 31, 2013 For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2013 $
2012 $
Interest income (Note 25)
47,825,394
46,347,376
Interest expense (Note 25)
(21,884,437)
(20,268,190)
Net interest income
25,940,957
26,079,186
6,623,709
5,365,159
49,414
113,517
5,324,565
4,105,004
89,755
1,044,200
Net fee and commission income (Note 26) Dividend income (Note 27) Net foreign exchange trading income (Note 28) Other gains (Note 29)
(29,415,268)
(29,817,041)
Impairment losses on investment securities
(770,900)
(1,264,060)
Recoveries of loans and advances, net (Note 32)
1,195,762
1,312,418
Profit before income tax
9,037,994
6,938,383
(1,547,259)
(1,304,447)
7,490,735
5,633,936
Operating expenses (Note 30)
Income tax expense (Note 33) Profit for the year
The accompanying notes form an integral part of these financial statements
3
In Tune with Our Customers’ Dreams and Aspirations
23
Bank of St. Vincent and the Grenadines Limited Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income Bank of St. Vincent and the Grenadines Limited
ForYear the year ended31December 31, 2013 For the ended December 2013 (expressed in Eastern Caribbeandollars) dollars) (expressed in Eastern Caribbean
Profit for the year
2013 $
2012 $
7,490,735
5,633,936
(156,530)
60,305
7,334,205
5,694,241
0.73
0.56
Other comprehensive (loss)/income
Other comprehensive income to be reclassified to Profits or loss in subsequent periods: Unrealised (losses)/gains on available-for-sale securities Total comprehensive income for the year Earnings per share (Note 34)
The accompanying notes form an integral part of these financial statements.
4
24
In Tune with Our Customers’ Dreams and Aspirations
5
The accompanying notes form an integral part of these financial statements.
14,753,306
14,753,306
-
-
Total comprehensive income
At 31 December 2013
14,753,306
14,753,306
Balance at 1 January 2013
14,753,306
-
-
Dividend paid (Note 36) 14,753,306
-
-
Total comprehensive income
Balance at 31 December 2012
14,753,306
Reserves (Note 23) $
14,753,306
Share Capital (Note 22) $
Balance at 1 January 2012
(expressed in Eastern Caribbean dollars)
(expressed in Eastern Caribbean dollars)
For the year ended 31 December 2013
For Consolidated the Year ended 31 December Statement of Changes 2013 in Equity
Consolidated Statement of Changes Equity Bank of St. Vincent and the GrenadinesinLimited
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
25
1,703,817
(156,530)
1,860,347
1,860,347
-
60,305
1,800,042
Unrealised Gains/(Losses) On Investments $
69,005,285
7,490,735
61,514,550
61,514,550
(3,600,000)
5,633,936
59,480,614
Retained Earnings $
100,215,714
7,334,205
92,881,509
92,881,509
(3,600,000)
5,694,241
90,787,268
Total $
Bank of St. Vincent and the Grenadines Limited
Bank of St. Vincent and the Grenadines Limited Consolidated Statement Cash Flows Consolidated Statement of Cashof Flows For the Year ended 31 31 December 2013 For the year ended December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2013 $
Restated 2012 $
Cash flows from operating activities Profit before income tax Adjustments for: Interest income Interest expense Impairment on investments Depreciation Impairment losses on loans and advances Fair value gains on investment property Loss on disposal of investment property Gain on disposal of property and equipment
9,037,994
6,938,383
(4,681,619) 2,041,189 770,900 2,888,364 99,779 15,750 (105,505)
(5,808,413) 1,463,001 1,264,060 2,568,996 1,506,595 (629,599) (298)
Cash flows before changes in operating assets and liabilities
10,066,852
7,302,725
(764,559) (13,448,689) (1,407,957) (5,850,408) 2,384,103 16,081,260
(5,807,819) (73,613,068) 3,910,293 51,134,903 23,322,130 3,974,189
7,060,602
10,223,353
Interest received Interest paid
4,684,064 (1,922,110)
7,315,766 (1,473,808)
Net cash generated from operating activities
9,822,556
16,065,311
90,250 (1,348,101) 17,313,515 (5,678,151) (1,584,831) 117,529
1,999 19,648,276 (3,613,712) (5,087,779) 300
8,910,211
10,949,084
Increase in mandatory deposits with Central Bank Increase in loans and advances to customers (Increase)/decrease in other assets (Decrease)/increase in due to customers Increase in deposits from banks Increase in other liabilities Net cash used in operations
Cash flows from investing activities Proceeds from sale of investment property Purchase of treasury bills Proceeds from disposal and redemption of investment securities Purchase of investment securities Purchase of property and equipment Proceeds from disposal of property and equipment Net cash generated from investing activities
6
26
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank of St. Vincent and the Grenadines Limited Consolidated Statement of Cash Flows (continued) Consolidated Statement of Cash Flows (continued)
For the ended 31December December 2013 ForYear the year ended 31, 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
Cash flows from financing activities Dividends paid Repayment of borrowings Proceeds from borrowings
2013 $
Restated 2012 $
(2,793,584) 14,195,921
(3,600,000) (2,174,514) 2,854,903
Net cash from financing activities
11,402,337
(2,919,611)
Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year
30,135,104 67,016,408
24,094,784 42,921,624
Cash and cash equivalents at end of year
97,151,512
67,016,408
7
In Tune with Our Customers’ Dreams and Aspirations
27
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
1
General information Bank of St. Vincent and the Grenadines Limited (the Bank), (the Parent Company or “Group”) (formerly the National Commercial Bank (SVG) Ltd.) was incorporated in St. Vincent and the Grenadines on 1 June 1977. On 19 June 2009, the Bank and the St. Vincent and the Grenadines Development Bank Inc. were amalgamated and continued under the name of the National Commercial Bank (SVG) Ltd. The Bank’s name was changed to Bank of St. Vincent and the Grenadines Limited on 26 November 2012. In addition to the Company’s Act of 1994, the Bank is subject to the provisions of the Banking Act 2006. Property Holdings SVG Ltd. (the “Subsidiary”) is wholly owned by the Bank. The Subsidiary was incorporated in Saint Vincent and the Grenadines on 13 December 2010. The Subsidiaries’ principal activity is to own, develop and manage real estate properties acquired by the Bank. The Bank and the Subsidiary together “the Group” is a 51% subsidiary of ECFH. Of the remaining 49%, 22.26% owned by the Government, 10% owned by the National Insurance Services and 16.74% owned by the public as at 31 December 2013. The principal activity of the Group is the provision of retail, corporate, banking and investment services in St. Vincent and the Grenadines. The Group’s principal place of business and registered office is located at Reigate Building, Granby Street Kingstown St. Vincent. The statement of financial position was restated retrospectively for the following: The recognition of loans sold to ECHMB previously reported off statement of financial position. These amounts were adjusted for against loans and advances (Note 9) and borrowings (Note 20).
2
Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Statement of compliance Bank of St. Vincent and the Grenadines Limited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standard Board (IASB). Basis of preparation The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets and financial assets held at fair value through profit or loss, classified in the consolidated statement of financial position as trading financial assets and land and buildings classified as property and equipment and investment properties. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4. 8
28
In Tune with Our Customers’ Dreams and Aspirations
Error! Unknown document property name. Notes to Consolidated Statements Limited Bank of St.the Vincent andFinancial theFinancial Grenadines Notes to the Consolidated Statements Error! Unknown document property name.For the Year ended Error! Unknown document property Bank of St. Vincent and the Grenadines Limited
Notes to the Consolidated Financial2013 Statements For the Year ended 31 December name.Error! AutoText entry not For the Year ended 31 December 2013defined.31 December 2013 (expressed in Eastern Caribbean dollars) Error! document property name. (expressed in Unknown Eastern Caribbean dollars)
2
Summary of significant significant accounting accountingpolicies policies…continued …continued Future changes in accounting policiespolicies Future changes in accounting Certain new standards and amendments to existing standards have been that arethat mandatory for Certain new standards and amendments to existing standards havepublished been published are mandatory the Group’s periods beginning on or afteron 1 January Of these, relevantare for theaccounting Group’s accounting periods beginning or after 2013. 1 January 2013.the Offollowing these, theare following to the relevant Group but not been to have the Group butadopted: have not been adopted: IAS Presentation of items otherofcomprehensive income income – amendments to IAS 1toJuly • 1 IAS 1 Presentation ofof items other comprehensive – amendments IAS2012 1 July 2012 IFRS Financial Instruments: (Amendments) Offsetting Financial Assets and • 7IAS 1 Presentation of Disclosures Financial Statements - Clarification of requirements forFinancial comparative Liabilities 1 January information (as2013 part of the Annual Improvements to IFRSs 2009 - 2011 cycle) • IFRS Consolidated Financial Statements 1 January(Amendments) 2013 • 10 IFRS 7 Financial Instruments: Disclosures Offsetting Financial Assets and • IFRS 12 Disclosure of Interests in Other Entities 1 January 2013 Financial Liabilities 1 January 2013 • IFRS Fair10Value Measurements 1 January 2013 1 January 2013 • 13 IFRS Consolidated Financial Statements • IAS 36 Impairment of Assets • IFRS 11 Joint Arrangements 1 January 2013 • IFRS 12 Disclosure of Interests in Other Entities 1 January 2013 (a) New andValue amendments/revisions to published • standards IFRS 13 Fair Measurements 1 January 2013 standards and interpretations effective in 2013 • IAS 36 Impairment of Assets • •
The following amendments to published standards are mandatory for the Group’s accounting periods beginning on or after 1 January 2013: (a) New standards and amendments/revisions to published standards and interpretations effective in 2013 of Items of Other Comprehensive Income - Amendments to IAS 1 IAS 1 Presentation The amendment to IAS 1 introduced a grouping requirement for items presented in other comprehensive TheItems following amendments to published standards mandatorystatement for the Group’s accounting periods income. that will be reclassified ('recycled') to theare consolidated of income in the future beginningdifferences on or afteron 1 January 2013: (e.g. exchange translating foreign operations) will be presented separately from items that will not be reclassified (e.g. gain recognised on revaluation of land and buildings). The amendment only 1 Presentation of Items Comprehensive Income Amendments to IASposition 1 affectsIAS disclosures of the Group andof asOther such did not have any impact on- the Group's financial or The amendment to IAS 1 introduce a grouping requirement for items presented in other performance. comprehensive income. Items that will be reclassified ('recycled') to the consolidated statement of in the future (e.g. exchange differences on translatingofforeign operations) be presented IAS 1income Presentation of Financial Statements - Clarification requirements forwill comparative separately from of items that willImprovements not be reclassified (e.g.2009 gain-recognised information (as part the Annual to IFRSs 2011 cycle)on revaluation of land and Theclarify amendment only affect disclosures of the Group and as such did not have any Thesebuildings). amendments the difference between voluntary additional comparative information andimpact the on the Group's financial position or performance. minimum required comparative information. An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the IAS required 1 Presentation of Financial Statements - Clarification of opening requirements forofcomparative minimum comparative period. The amendments clarify that the statement financial information of the Improvements to IFRSs 2009 - 2011 cycle) position presented (as as part a result ofAnnual retrospective restatement or reclassification of items in financial statements not haveclarify to bethe accompanied by comparative in the relatedinformation notes. Theand Thesedoes amendments difference between voluntaryinformation additional comparative amendments affect presentation only and have no impactAn on the Group’s position or performance. the minimum required comparative information. entity must financial include comparative information in the related notes to the financial statements when it voluntarily provides comparative information IFRSbeyond 7 Financial Instruments Disclosures: Offsetting Financial Assets and Financial Liabilities the minimum required comparative period. The amendments clarify that the opening Amendments 7 position presented as a result of retrospective restatement or reclassification of statementtoofIFRS financial The amendment to IFRSstatements 7 requires does an entity to disclose information about rights of offset and related items in financial not have to be accompanied by comparative information in the arrangements (e.g. collateral agreements). new disclosures required for allonrecognised financial related notes. The amendments affectThe presentation only andarehave no impact the Group’s financial instruments are set off in accordance with IAS 32 Financial Instruments: Presentation. The positionthat or performance. disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or 'similar agreement',Disclosures: irrespective ofOffsetting whether they are set off in accordance with IFRS 7 Financial Instruments Financial Assets and Financial IAS 32. The amendment only affects disclosures of the Group and as such did not have any impact on Liabilities - Amendments to IFRS 7 the Group's financial position or performance. The amendments to IFRS 7 requires an entity to disclose information about rights of offset and related arrangements (e.g. collateral agreements). The new disclosures are required for all IFRSrecognised 10 Consolidated Financial Statements, 27 Separate Financial financial instruments that areIAS set off in accordance with Statements IAS 32 Financial Instruments: IFRS Presentation. 10 replaces the The portion of IAS 27 that addresses the accounting for disclosures also apply to recognised financialconsolidated instrumentsfinancial that are statements. subject to an It alsoenforceable addresses the issuesnetting raised arrangement in SIC-12 Consolidation — Special Purpose Entities, which resulted master or 'similar agreement', irrespective of whether they areinset SIC-12 withdrawn.with IAS IAS 27, as is limited toonly the accounting for investments in subsidiaries, offbeing in accordance 32.revised, The amendment affect disclosures of the Group and as such did not have any impactinon the Group's financial position or performance. joint ventures, and associates separate financial statements. 9
9
In Tune with Our Customers’ Dreams and Aspirations
29
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies …continued IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements IFRS 10 replaces the portion of IAS 27 that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation — Special Purpose Entities, which resulted in SIC-12 being withdrawn. IAS 27, as revised, is limited to the accounting for investments in subsidiaries, joint ventures, and associates in separate financial statements. IFRS 10 does not change consolidation procedures (i.e., how to consolidate an entity) rather, IFRS 10 changes whether an entity is consolidated by revising the definition of control. Control exists when an investor has all of the following: • Power over the investee (defined in IFRS 10 as when the investor has existing rights that give it the current ability to direct the relevant activities) • Exposure, or rights, to variable returns from its involvement with the investee AND • The ability to use its power over the investee to affect the amount of the investor’s returns. IFRS 10 also provides a number of clarifications on applying this new definition of control, including the following key points: • An investor is any party that potentially controls an investee; such party need not hold an equity investment to be considered an investor. • An investor may have control over an investee even when it has less than a majority of the voting rights of that investee (sometimes referred to as de facto control). • Exposure to risks and rewards is an indicator of control, but does not in itself constitute control. • When decision-making rights have been delegated or are being held for the benefit of others, it is necessary to assess whether a decision-maker is a principal or an agent to determine whether it has control. • Consolidation is required until such time as control ceases, even if control is temporary. IFRS 10 only affect disclosures of the Group and as such did not have any impact on the Group’s financial position or performance. IFRS 12 Disclosure of Interests in Other Entities IFRS 12 set out the requirements for disclosures relating to an entity's interest in subsidiaries, joint arrangements, associates and structured entities. Some of the more extensive qualitative and quantitative disclosures of IFRS 12 include: • Summarised financial information for each subsidiary that has non-controlling interests that are material to the reporting entity. • Significant judgements used by management in determining control, joint control and significant influence, and the type of joint arrangement (i.e., joint operation or joint venture), if applicable. • Summarised financial information for each individually material joint venture and associate. • Nature of the risks associated with an entity’s interests in unconsolidated structured entities, and changes to those. IFRS 12 only affect disclosures of the Group and as such did not have any impact on the Group's financial position or performance.
10
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In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies …continued IFRS 13 Fair Value Measurement IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS. Fair value under IFRS 13 is defined as "the price that would be received to sell an asset or paid to transfer to liability in an orderly transaction between market participants at the measurement date" (i.e. an exit price). IFRS 13 provides clarification on a number of areas, including the following: • Concepts of ‘highest and best use’ and ‘valuation premise’ are relevant only for non-financial assets. • Adjustments for blockage factors (block discounts) are prohibited in all fair value measurements. • A description of how to measure fair value when a market becomes less active. IFRS 13 has not materially impacted the fair value measurements of the Group. Additional disclosures where required, are provided in the notes to consolidated financial statements. Fair value hierarchy is provided in Note 3. (a) New standards and amendments / revisions to published standards and interpretations effective in 2013 but not applicable to the Group. The following new and revised IFRS that has been issued does not apply to the activities of the Group: • IFRS 1 Government Loans - Amendments to IFRS 1 - Effective 1 January 2013 • IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine - Effective 1 January 2013 • Annual Improvements to IFRSs 2009 - 2011 cycle – Effective 1 January 2013: • IFRS 1 First-time Adoption of International Financial Reporting Standards - Repeated application of IFRS 1and borrowing costs • IAS 16 Property Plant and Equipment - Classification of servicing equipment • IAS 32 Financial Instruments, Presentation - Tax effect of distributions to holders of equity instruments • IAS 34 Interim Financial Reporting - Interim financial reporting and segment information for total assets and liabilities (b) New interpretations and revised or amended standards that are not yet effective and have not been early adopted by the Group • • • • • • •
IFRS 9 Financial Instruments - Classification and Measurement - In July 2013 the IASB tentatively decided to defer the mandatory effective date of IFRS 9 (1 January 2015) until the issue date of the completed version of IFRS 9 is known. IFRS 10, IFRS 12 and IAS 27 Investment Entities - Amendments - Effective 1 January 2014 IAS 32 Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 - Effective 1 January 2014 IAS 36 Recoverable Amount Disclosures for Non-Financial Assets - Amendments to IAS 36 Effective 1 January 2014 IAS 39 Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39 – Effective 1 January 2014 IFRIC 21 Levies - Effective 1 January 2014
11
In Tune with Our Customers’ Dreams and Aspirations
31
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies …continued IAS 1 is mandatory for annual years beginning on or after 1 July 2012. All of the remaining standards noted above are effective for annual years beginning on or after 1 January 2013, except for IFRS 9 which is required for annual years beginning on or after 1 January 2015. Early adoption is permitted, and management is considering the implications of these new standards, the impact on the Bank and the timing of their adoption by the Bank. IAS 36 describes the recoverable amount for disclosures for non-financial assets Consolidation The financial statements of the subsidiaries used to prepare the consolidated financial statements were prepared as of the parent company’s reporting date. The consolidation principles are unchanged as against the previous year. The consolidated financial statements of the Group comprise the financial statements of the parent entity and all subsidiaries as of 31 December 2013 (the reporting date). Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) • Exposure, or rights, to variable returns from its involvement with the investee, and • The ability to use its power over the investee to affect its returns • When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: • The contractual arrangement with the other vote holders of the investee • Rights arising from other contractual arrangements • The Group’s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the noncontrolling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
12
32
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Basis of preparation…continued Consolidation…continued A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: • Derecognises the assets and liabilities of the subsidiary • Derecognises the carrying amount of any non-controlling interest • Derecognises the cumulative translation differences recorded in equity • Recognises the fair value of the consideration received • Recognises the fair value of any investment retained • Recognises any surplus or deficit in profit or loss • Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate. The results of the subsidiaries acquired or disposed of during the year are included in the consolidated statement of income from the effective acquisition date or up to the effective date on which control ceases, as appropriate. The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired, is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of income. Inter-company transactions, balances and unrealised gains on transactions between Group companies have been eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred. The integration of the subsidiaries into the consolidated financial statements is based on consistent accounting and valuation methods for similar transactions and other occurrences under similar circumstances.
13
In Tune with Our Customers’ Dreams and Aspirations
33
Bank of St. Vincent and the Grenadines Limited
Bank St. Consolidated Vincent and theFinancial Grenadines Limited Notes toofthe Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Basis of preparation…continued Consolidation…continued (a) Transactions and non-controlling interests The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. Any losses applicable to the non-controlling interest are allocated against the interests of the non-controlling interest even if this results in a deficit balance. Non-controlling interests are presented separately within equity in the consolidated statement of financial position. When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. (b) Associates Associates are entities over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. Investment in associates is accounted for by the equity method of accounting and initially recognised at cost. After application of the equity method, the Group determines whether it is necessary to recognize an impairment loss on its investment in its associate. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, then recognizes the loss as ‘Share of profit of an associate’ in the statement of profit or loss. Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognized in profit or loss. The Group’s share of its associate’s post-acquisition profits or losses is recognised in the consolidated statement of income, and its share of post-acquisition movements in reserves recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
14
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In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Basis of preparation…continued Consolidation…continued Unrealised gains on transactions between the Group and its associate are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months’ maturity from the date of acquisition including: cash and non-restricted balances with the Central Bank, treasury bills, deposits with other banks, deposits with a non-bank financial institutions and other short-term securities. For the purposes of the statement of cash flow, cash and cash equivalents comprise balances with less than three months’ maturity from the date of acquisition including: cash and non-restricted balances with the Central Bank, treasury bills, deposits with other banks, deposits with non-bank financial institutions and other short-term securities. Financial assets The Group allocates financial assets to the following IAS 39 categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. Management determines the classification of its financial instruments at initial recognition. (a) Financial assets at fair value through profit or loss This category has two sub-categories; financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profittaking. Financial instruments included in this category are recognised initially at fair value; transaction costs are taken directly to the statement of income. Gains and losses arising from changes in fair value are included directly in the statement of income. Interest income and expense and dividend income and expenses on financial assets held for trading are included in ‘Net interest income’. The instruments are derecognised when the rights to receive cash flows have expired or the Group has transferred substantially all the risks and rewards of ownership and the transfer qualifies for derecognising.
15
In Tune with Our Customers’ Dreams and Aspirations
35
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Basis of preparation…continued (b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than: (a) those that the entity intends to sell immediately or in the short term, which are classified as held for trading, and those that the entity upon initial recognition designates as at fair value through profit or loss; (b) those that the entity upon initial recognition designates as available for sale; or (c) those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration. Loans and receivables are initially recognised at fair value – which is the cash consideration to originate or purchase the loan including any transaction costs – and measured subsequently at amortised cost using the effective interest rate method. Loans and receivables are reported in the statement of financial position as loans and advances to customers or as investment securities. Interest on loans and advances to customers and investment securities are included in the statement of income. In the case of impairment, the impairment loss is reported as a deduction from the carrying value of the loan and recognised in the statement of income. (c) Held-to-maturity Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity, other than: (i) those that the Group upon initial recognition designates as at fair value through profit or loss. (ii) those that the Group designates as available for sale; and (c) those that meet the definition of loans and receivables. These are initially recognised at fair value including direct and incremental transaction costs are measured subsequently at amortised cost, using the effective interest method less impairment. Interest on held-to-maturity investments is included in the consolidated statement of income. The losses arising from impairment are recognised in the consolidated statement of income as finance costs. If the Group were to sell other than an insignificant amount of held-to-maturity assets, the entire category would be tainted and reclassified as available-for-sale. The difference between the carrying value and fair value is recognised in equity. (d) Available-for-sale financial assets Available-for-sale investments are financial assets that are intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices or that are not classified as loans and receivables, held to- maturity investments or financial assets at fair value through profit or loss. Available-for-sale financial assets are initially recognised at fair value, which is the cash consideration including any transaction costs, and measured subsequently at fair value with gains and losses being recognised in the statement of comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial asset is derecognised. Management makes judgement at each reporting date to determine whether available for sale investments are impaired. These investments are impaired when the carrying value is greater than the recoverable amount and there is objective evidence of impairment. If an available-for-sale financial asset is determined to be impaired, the cumulative gain or loss previously recognised in the statement of comprehensive income is recognised in the statement of income. Interest is calculated using the effective interest method, and foreign currency gains and losses on monetary assets classified as available-for-sale are recognised in the statement of income. Dividends on available-for-sale equity instruments are recognised in the statement of income when the Group’s right to receive payment is established. Where fair value cannot be determined cost was used. 16
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In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements For Notes the Year 31 December 2013 For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Recognition/Derecognition The Group uses trade date accounting for regular way contracts when recording financial asset transactions. Financial assets that are transferred to a third party but do not qualify for derecognition are presented in the consolidated statement of financial position as ‘Assets pledged as collateral’, if the transferee has the right to sell or re-pledge them. Financial assets are derecognised when the rights to the cash flow from the asset has expired or when it has transferred substantially all the risks and rewards of the ownership. Impairment of financial assets The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the Group uses to determine that there is objective evidence of an impairment loss include: • • • • • •
significant financial difficulty of the issuer or obligor; a breach of contract, such as a default or delinquency in interest or principal payments; the Group granting to the borrower, for economic or legal reasons relating to the borrower’s financial difficulty, a concession that the lender would not otherwise consider; it becoming probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for that financial asset because of financial difficulties or; observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the Group, including: - adverse changes in the payment status of borrowers in the Group; or - national or local economic conditions that correlate with defaults on the assets in the Group.
The estimated period between a loss occurring and its identification is determined by management for each identified portfolio. In general, the periods used vary between three months and 12 months; in exceptional cases, longer periods are warranted. The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the assets in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. Loans and advances that have been assessed individually and found not to be impaired and all individually performing loans and advances are assessed collectively in groups of assets with similar risk characteristics to determine whether provisions should be made due to incurred loss events which are not yet evident. The collective assessment takes account of data from the loan portfolio such as credit quality, levels of arrears, credit utilisation, and loan to collateral ratios, concentrations of risks and economic data country risk and the performance of different groups.
17
In Tune with Our Customers’ Dreams and Aspirations
37
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements For Notes the Year 31 December 2013 For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Impairment of financial assets…continued Assets carried at amortised cost If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity investments carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the statement of income. If a loan or held-to-maturity investment has variable interest rates, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may or may not result from foreclosure less costs for obtaining and selling the collateral, whether or not the foreclosure is probable. When a loan is uncollectible, it is written off against the related provision for loan impairment. Such loans are written off after all the necessary procedures have been completed and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off decrease the amount of the provision for the loan impairment in the statement of income. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the statement of income. Assets classified as available-for-sale and held for trading The Group makes judgement at each reporting date of determine whether available-for-sale investments are impaired. These investments are impaired when the carrying value is greater than the recoverable amount and there is objective evidence of impairment. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is objective evidence of impairment resulting in the recognition of an impairment loss. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the profit or loss – is removed from equity and recognised in the consolidated income statement. Impairment losses recognised in the consolidated income on equity instruments are not reversed through the consolidated income statement. If in subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an even occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the consolidated income statement. Renegotiated loans During the normal course of business financial assets carried at amortised cost may be restructured with the mutual agreement of the “Group” and the counterparty. When this occurs for reasons other than those which could be considered indicators of impairment, the Group assesses whether the restructured or renegotiated financial asset is significantly different from the original one by comparing the present value of the restructured cash flows discounted at the original instruments interest rate. If the restructured terms are significantly different the Group derecognises the original financial asset and recognises a new one at fair value with any difference recognized in the statement of income. 18
38
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements For Notes the Year 31 December 2013 For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Impairment of financial assets…continued Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. Property and equipment All property and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent expenditures are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of income during the financial year in which they are incurred. Land is not depreciated. Depreciation on other assets is calculated on the straight-line method to allocate their cost to their residual values over their estimated useful lives as follows: Leasehold improvements 20% Furniture and equipment 10%-20% Motor vehicles 25% Property 2% Computer Software 20% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate at each statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carry amount is greater than its estimated recoverable amount. The recoverable amount is the higher of the asset’s fair value less cost to sell and value in use. Gains and losses on disposal are determined by comparing proceeds with carrying amount and are included in the consolidated statement of comprehensive income. Investment properties Properties that are held for long term rental or for capital appreciation or both, and that are not occupied by the Group, are classified as investment properties. Investment property comprises of land for capital appreciation. Recognition of investment property takes place only when it is probable that the future economic benefits that are associated with the investment property will flow to the cost can be measured reliably. This is usually the day when all risks are transferred. Investment properties are measured initially at cost, including Subsequent expenditure is included in the assets carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated statement of income during the financial year in which they are incurred.
19
In Tune with Our Customers’ Dreams and Aspirations
39
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Investment properties… continued Investment property is carried at fair value, representing open market value determined annually by external professionally qualified valuers. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If the information is not available, the Group uses alternative valuation methods such as recent prices on less active markets or discounted cash flow projections. Investment property is reviewed annually by independent external evaluators. Investment property is measured at cost until the earlier of the date construction is completed and the date at which fair value comes reliably measurable. Impairment of other non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount exceeds its recoverable amount. The recoverable amount is higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. Income tax (a) Current tax Income tax payable (receivable) is calculated on the basis of the applicable tax law in the respective jurisdiction and is recognised as an expense (income) for the year except to the extent that current tax related to items that are charged or credited in other comprehensive income or directly to equity. In these circumstances, current tax is charged or credit to other comprehensive income. Where the Group has tax losses that can be relieved against a tax liability for a previous year, it recognises those losses as an asset, because the tax relief is recoverable by refund of tax previously paid. This asset is offset against an existing current tax balance. Where tax losses can be relieved only by carry-forward against taxable profits of future years, a deductible temporary difference arises. Those losses carried forward are set off against deferred tax liabilities carried in the statement of Financial Position. The Group does not offset income tax liabilities and current income tax assets. (b) Deferred tax Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred tax asset is realised or the deferred income tax liability is settled.
20
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In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank of St.Consolidated Vincent and the Grenadines Limited Notes to the Financial Statements Notes to ended the Consolidated Financial Statements For the Year 31 December 2013 For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Income tax ...continued (b) Deferred tax…continued The principal temporary differences arise from depreciation of property and equipment and unlimited tax losses. The rates enacted or substantively enacted at the statement of financial position date are used to determine deferred income tax. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither the accounting, nor taxable profit or loss. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Financial liabilities The Group’s holding in financial liabilities is at amortised cost. Financial liabilities are derecognised when extinguished. Financial liabilities measured at amortised cost are deposits from banks or customers, debt securities in issue for which the fair value option is not applied, and subordinated debts. Borrowings Borrowings are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between proceeds net of transaction costs and the redemption value is recognised in the statement of income over the year of the borrowings using the effective interest method. Provisions Provisions are recognised when the Bank has a present of legal or constructive obligation as a result of a past event, it is more likely that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Employee benefits Pension The Group operates a defined contribution pension scheme. The scheme is generally funded through payments to trustee-administered funds, determined by the provisions of the plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior years. The Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
21
In Tune with Our Customers’ Dreams and Aspirations
41
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies‌continued Guarantees and letters of credit Guarantees and letters of credit comprise undertakings by the Group to pay bills of exchange drawn on customers. The Group expects most guarantees and letters of credit to be settled simultaneously with the reimbursement from the customers. Such financial guarantees are given to banks, financial institutions and other bodies on behalf of customers. The fair value of a financial guarantee at the time of signature is zero because all guarantees are agreed on arm’s length terms and the value of the premium agreed corresponds to the value of the guarantee obligation. No receivable for the future premiums is recognised. Any increase in the liability relating to guarantees is reported in the statement of income within other operating expenses. Share capital (i) Share issue costs Incremental costs directly attributable to the issue of new shares or options or to the acquisition of a business are shown in equity as a deduction, from the proceeds. (ii) Dividends on ordinary shares Dividends on ordinary shares are recognised in equity in the period which they are declared. Dividends for the year that are declared after the statement of financial position date are dealt with the subsequent events note. Interest income and expense Interest income and expense are recognised in the consolidated statement of comprehensive income for all financial instruments measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
22
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In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Fee and commission income Fees and commissions are generally recognised on an accruals basis when the service has been provided. Loan commitment fees for loans that are likely to be drawn down are deferred (together with related direct costs) and recognised as an adjustment to the effective interest rate on the loan. Commissions and fees arising from negotiating, or participating in the negotiation of, a transaction for a third party, such as the arrangement of the acquisition of shares or other securities or the purchase or sale of a business, are recognised on completion of the underlying transaction. Portfolio and other management advisory and service fees are recognised based on the applicable service contracts, usually on a time apportioned basis. Asset management fees related to investment funds are recognised rateably over the period the service is provided. The same principle is applied for financial planning and custody services that are continuously provided over an extended period of time. Dividend income Dividend income is recognised when the right to receive payment is established. Foreign currency translation Functional and presentation currency Items in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Eastern Caribbean dollars, which is the Group’s functional and presentation currency. Transactions and balances Foreign currency transactions that are transactions denominated, or that require settlement in a foreign currency translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary items denominated in foreign currency are translated with the closing rates as at the reporting date. Non-monetary items measured at historical cost denominated in a foreign currency are translated with the exchange rate as at the date of initial recognition. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive income. In the case of changes in the fair value of monetary assets denominated in foreign currency classified as available for sale, a distinction is made between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in the amortised cost are recognised in profit and loss, and other changes in the carrying amount, except impairment, are recognised in comprehensive income. Translation differences on non-monetary financial instruments, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary financial instruments, such as equities classified as available-for-sale financial assets, are included in the other comprehensive income. 23
In Tune with Our Customers’ Dreams and Aspirations
43
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Leases The leases entered into by the Group are primarily operating leases. The total payments made under operating leases are charged to operating expenses in the statement of income on a straight-line basis over the year of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. Financial instruments Financial instruments carried on the statement of financial position include cash resources, investment securities, loans and advances to customers, deposits with other banks, and deposits from banks, due to customers and borrowings. The particular recognition methods adopted are disclosed in the individual policy statement associated with each item. Comparatives Except when a standard or an interpretation permits or requires otherwise, all comparatives are amended to meet current year presentation. 3
Financial risk management Strategy in using financial instruments The Group’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, acceptance and management of some degree of risk or combination of risks. Taking risk is core to the financial business, and the operational risks are an inevitable consequence of being in business. The Group’s aim is therefore to achieve an appropriate balance between risk and return and minimise potential adverse effects on the Group’s financial performance. The Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-todate information systems. The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice. Risk management is carried out by the Management Committee under policies approved by the Board of Directors. The Group’s Management Committee identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, and non-derivative financial instruments. In addition, the Internal Audit Department is responsible for the independent review of risk management and the control environment. The most important types of risk are credit risk, liquidity risk, market risk and other operational risk. Market risk includes currency risk, interest rate risk.
24
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In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bankto of the St. Vincent and the Grenadines Limited Notes Consolidated Financial Statements Notes the Consolidated Financial Statements For the to Year ended 31 December 2013 For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Credit risk Credit risk is the risk of suffering financial loss, should any of the Group’s customers, clients or market counterparties fail to fulfill their contractual obligations to the Group. Credit risk arises mainly from commercial and consumer loans and advances, credit cards, and loan commitments arising from such lending activities, but can also arise from credit enhancement provided, such as credit financial guarantees, letters of credit, endorsements and acceptances. The Group is also exposed to other credit risks arising from investments in debt securities and other exposures arising from its trading activities (‘trading exposures’), including non-equity trading portfolio assets. Loans and advances The Group takes on exposure to credit risk which, is the risk that a counterparty will be unable to pay amounts in full when due. Impairment provisions are provided for losses that have been incurred at the statement of financial position date. Significant changes in the economy, or in the health of a particular industry segment that represents a concentration in the Group’s portfolio, could result in losses that are different from those provided for at the statement of financial position date. Management therefore carefully manages its exposure to credit risk. Debt securities and other bills For debt securities and other bills external rating such as Standard & Poor’s or Caricris or their equivalents are used by Asset Liability Committee for managing of the credit risk exposures. The investments in those securities and bills are viewed as a way to gain a better credit quality mapping and maintain a readily available source to meet the funding requirement at the same time. Cash and balances with Central Bank Credit risk from balances with banks and financial institutions is managed by the Group in accordance with the Group’s policy. Counterparty credit limits are reviewed by the Group’s Risk Department on an annual basis, and may be updated throughout the year subject to approval of the Group’s Investment Committee and where necessary The Board of Directors. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty’s failure to make payments. Risk limit control and mitigation policies The Group manages, limits and controls concentrations of credit risk wherever they are identified − in particular, to individual counterparties and groups, and to industries and countries. The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers, and to the industry segments. Such risks are monitored on a revolving basis and subject to an annual or more frequent review, when considered necessary by the Board of Directors. Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to meet interest and capital repayment obligations and by changing these lending limits where appropriate. Some other specific control and mitigation measures are outlined below.
25
In Tune with Our Customers’ Dreams and Aspirations
45
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Credit risk …continued Credit risk is the risk of suffering financial loss, should any of the Group’s customers, clients or market counterparties fail to fulfill their contractual obligations to the Group. Credit risk arises mainly from commercial and consumer loans and advances, credit cards, and loan commitments arising from such lending activities, but can also arise from credit enhancement provided, such as credit financial guarantees, letters of credit, endorsements and acceptances. Collateral The Group employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security for funds advances, which is common practice. The Group implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans and advances are: • • •
Mortgages over residential properties; Charges over business assets such as premises, inventory and accounts receivable; and Charges over financial instruments such as debt securities and equities.
Longer-term finance and lending to corporate customers and individuals are generally secured. In addition, in order to minimise the credit loss the Group will seek additional collateral from the counterparty as soon as impairment indicators are noticed for the relevant individual loans and advances. Collateral held as security for financial assets other than loans and advances is determined by the nature of the instrument. Debt securities, treasury and other eligible bills are generally unsecured. Credit-related commitments The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees and standby letters of credit carry the same credit risk as loans. Documentary and commercial letters of credit – which are written undertakings by the Group on behalf of a customer authorising a third party to draw drafts on the Group up to a stipulated amount under specific terms and conditions – are authorisations by the underlying shipments of goods to which they relate and therefore carry less risk than a direct loan. Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans, guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Group is potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit standards. The Group monitors the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments. Impairment and provisioning policies The internal rating systems focus more on credit-quality mapping from the inception of the lending and investment activities. In contrast, impairment provisions are recognised for financial reporting purposes only for losses that have been incurred at the reporting date based on objective evidence of impairment.
26
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In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Credit risk…continued Management determines whether objective evidence of impairment exists based on the following criteria set out by the Group: • • • • • •
Delinquency in contractual payments of principal or interest; Cash flow difficulties experienced by the borrower (e.g. equity ratio, net income percentage of sales); Breach of loan covenants or conditions; Initiation of bankruptcy proceedings; Deterioration of the borrower’s competitive position; and Deterioration in the value of collateral.
The Group’s policy requires the review of individual financial assets that are above materiality thresholds at least annually or more regularly when individual circumstances require. Impairment allowances on individually assessed accounts are determined by an evaluation of the incurred loss at statement of financial position date on a case-by-case basis, and are applied to all individually significant accounts. The assessment normally encompasses collateral held (including re-confirmation of its enforceability) and the anticipated receipts for that individual account.
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In Tune with Our Customers’ Dreams and Aspirations
47
Bank of St. Vincent and the Grenadines Limited Notesto to the Consolidated Financial Statements Notes the Consolidated Financial Statements Bank of St. Vincent and the Grenadines Limited
For the Year ended December 2013 For the Year ended 3131December 2013 (expressed in EasternCaribbean Caribbean dollars) (expressed in Eastern dollars) 3
Financial risk management…continued Credit risk…continued Maximum exposure to credit risk Credit risk exposures relating to the financial assets in the statement of financial position: Maximum exposure 2013 $ Cash balance with Central Bank Treasury bills Deposits with other banks Financial assets held for trading − Debt securities Loans and advances to customers: − Overdrafts − Term loans − Corporate loans − Mortgage loans − Credit cards Loans and receivables - Bonds Held to maturity debt securities Available for sale equity securities Other assets Total Credit Exposure Credit risk exposures relating to off-statement of financial position items: Loan commitments Guarantees and letters of credit
2012 $
63,027,459 5,981,449 69,426,904
59,258,809 4,633,348 42,300,299
45,518
41,109
69,904,137 95,821,234 141,958,912 253,559,825 2,837,422 10,032,877 46,155,993 5,084,596 3,886,138
60,176,506 95,807,120 148,678,550 236,807,538 2,330,186 10,032,877 58,564,702 5,241,126 2,840,115
767,722,464
726,712,285
7,713,000 1,412,665
6,784,248 1,635,275
9,125,665
8,419,523
776,848,129
735,131,808
The above table represents a worst case scenario of credit risk exposure to the Group at 31 December 2013 and December 2012, without taking account of any collateral held or other credit enhancements attached. For assets included on statement of financial position, the exposures set out above are based on net amounts. As shown above, 72.61% (2012 - 73.97%) of the total maximum exposure is derived from loans and advances to customers; 7.89% (2012 - 10.04%) represents investments in debt securities.
28
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In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management‌continued Credit risk‌continued Loans and advances to customers are summarised as follows: 2013 $
2012 $
Neither past due nor impaired Past due but not impaired Impaired
444,191,270 86,810,323 39,307,137
450,704,367 64,327,311 35,071,596
Gross
570,308,730
550,103,274
(6,227,200)
(6,303,374)
Less allowance for impairment losses on loans and advances to customers (Note 10) Net
564,081,530
543,799,900
The total impairment provision for loans and advances to customers is $6,227,200 (2012 - $6,303,374) of which $5,063,325(2012 - $4,641,568) represents the individually impaired loans and the remaining amount of $1,163,875 (2012 - $1,661,806) represents the collective provision. Further information on the allowance for impairment losses on loans and advances to customers is provided in Notes 9 and 10. Loans and advances to customers neither past due nor impaired The credit quality of the portfolio of loans and advances that were neither past due nor impaired can be assessed by reference to the internal rating system adopted by the Group. Mortgage Loans $
Large Corporate Loans $
31 December 2013
70,016,014 64,363,042 204,863,565
102,810,133
2,138,516 444,191,270
31 December 2012
60,358,118 63,964,685 197,794,451
126,829,650
1,757,463 450,704,367
Overdrafts $
Term Loans $
Credit Cards $
Total $
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In Tune with Our Customers’ Dreams and Aspirations
49
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Credit risk…continued Loans and advances to customers past due but not impaired Loans and advances less than 90 days past due are not considered impaired, unless other information is available to indicate the contrary. The gross amount of loans and advances by class to customers that were past due but not impaired were as follows: Term Loans $
Mortgage Loans $
Large Corporate Loans $
Credit Cards $
Total $
15,745,959 2,299,453 1,203,452
28,673,289 6,520,165 2,076,140
11,616,773 3,655,224 14,374,585
531,178 57,317 56,788
56,567,199 12,532,159 17,710,965
19,248,864
37,269,594
29,646,582
645,283
86,810,323
16,493,431 3,010,276 2,367,932
22,451,530 3,908,165 2,705,368
4,857,806 4,916,980 3,046,770
506,912 46,114 16,027
44,309,679 11,881,535 8,136,097
21,871,639
29,065,063
12,821,556
569,053
64,327,311
At 31 December 2013 Past due up to 30 days Past due 30 - 60 days Past due 60 - 90 days
At 31 December 2012 Past due up to 30 days Past due 30 - 60 days Past due 60 - 90 days
Loans and advances to customers individually impaired: Over -drafts $
Term Loans $
Mortgage Loans $
Large Corporate Loans $
Credit Cards $
Total $
31 December 2013
340,973
14,309,783
12,861,689
11,654,369
140,323
39,307,137
31 December 2012
312,650
11,923,605
11,606,090
11,115,534
113,717
35,071,596
30
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In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Credit risk…continued Repossessed collateral At the end of 31 December 2013 and 31 December 2012, the Group had no repossessed collateral. Debt securities and other eligible bills The table below presents an analysis of debt securities, treasury bills and other eligible bills by rating agency designation at 31 December 2013 and 2012, based on Standard & Poor’s and Caricris ratings: Financial Assets Financial Assets held- Available-forto-maturity sale $ $ At 31 December 2013 AA- to AA+ A- to A+ Lower than AUnrated
At 31 December 2012 AA- to AA+ A- to A+ Lower than AUnrated
Financial Assets heldfor-trading $
Loans and Receivables – Bonds $
Total $
8,269,742 11,415,386 26,470,865
5,084,596
45,518
10,032,877
8,269,742 11,415,386 41,633,856
46,155,993
5,084,596
45,518
10,032,877
61,318,984
8,733,690 20,961,984 28,869,028
5,241,126
41,109
- 8,733,690 - 20,961,984 10,032,877 44,184,140
58,564,702
5,241,126
41,109
10,032,877
73,879,814
Concentrations of risks of financial assets with credit exposure (a) Geographical sectors The Group operates primarily in Saint Vincent and the Grenadines. Based on the country of domicile of its counterparties, exposure to credit risk is concentrated in this location, except for investments which have other exposures, primarily in the other Caribbean Countries. (b) Industry sectors The following table breaks down the Group’s credit exposure at gross amounts without taking into account any collateral held or other credit support by the industry sectors of the Group’s counterparties.
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51
161,814,876
At 31 December 2013
Credit risk – off statement of financial position items Guarantees, letters of credit, loan commitments and other credit related obligations
22,199,772 4,057,681 -
-
2,610,809 304,713 142,020 -
63,027,459 69,426,904 45,518
Financial Institutions $ -
20,781,645 -
-
32
350,000
890,865
5,176,400 16,322,075 131,172,776
-
42,717,295 51,656,866 2,644 10,032,877
5,981,449 -
-
-
Other Personal Industries $ $
-
3,174,576 1,026,915 3,886,138
974,800
6,810,000
100,000
17,025,727 356,575,889 79,634,721
-
13,375,525 8,265,173 59,556,181 300,244 90,016,266 1,884,750 - 252,671,086 877,697 3,343,116 2,966,795 9,201,724 6,842 2,656,569 26,740 -
-
Professional and Other Tourism Government Services $ $ $
3,528,871 14,515,867 434,002 575,163 11,042 1,202,485 1,228,438 2,607 -
-
Manufacturing $
Geographical and economic concentrations of assets...continued
Financial risk management…continued
Cash and balances with Central Bank Treasury bills Deposits with other banks Financial assets held for trading Loans and receivables: - Loans and advances to customers - Corporate - Term - Mortgages - Overdrafts - Credit cards - Bonds Investment securities: - Held to maturity - Available for sale Other assets
3
(expressed in Eastern Caribbean dollars)
(expressed Eastern Caribbean dollars) For theinYear ended 31 December 2013
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements For Bank the Year 31 December 2013 of ended St. Vincent and the Grenadines Limited
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
52
9,125,665
767,722,464
46,155,993 5,084,596 3,886,138
141,958,912 95,821,234 253,559,825 69,904,137 2,837,422 10,032,877
63,027,459 5,981,449 69,426,904 45,518
Total $
132,403,454
At 31 December 2012
Credit risk – off statement of financial position items Guarantees, letters of credit, loan commitments and other credit related obligations
22,560,404 4,077,208 -
-
4,039,869 125,755 -
59,258,809 42,300,299 41,109
Financial Institutions $
Cash and balances with Central Bank Treasury bills Deposits with other banks Financial assets held for trading Loans and receivables: - Loans and advances to customers - Corporate - Term - Mortgages - Overdrafts - Credit cards - Bonds Investment securities: - Held to maturity - Available for sale Other assets
(expressed in Eastern Caribbean dollars)
(expressed in Eastern Caribbean dollars) 2013 For the Year ended 31 December
Notes to the Consolidated Financial Statements
28,771,061 -
-
33
350,000
1,113,475
7,907,450 16,654,501 140,589,240
-
54,851,053 42,300,901 10,032,877
6,480,740 14,988,932 464,760 191,997 961,950 1,473,572 -
4,633,348 -
-
-
Other Personal Industries $ $
-
7,233,237 1,163,918 2,840,115
-
6,444,248
511,800
15,681,301 340,082,172 73,394,168
-
12,868,728 10,357,802 49,131,295 411,299 89,538,204 1,160,991 994,081 - 235,813,457 2,401,274 2,042,523 10,870,531 2,330,186 -
-
Professional and Other Tourism Government Services $ $ $ -
-
Manufacturing $
Notes to the Consolidated Financial Statements Bank St. Vincent and the For the Yearof ended 31 December 2013Grenadines Limited
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
53
8,419,523
726,712,285
58,564,702 5,241,126 2,840,115
148,678,550 95,807,120 236,807,538 60,176,506 2,330,186 10,032,877
59,258,809 4,633,348 42,300,299 41,109
Total $
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Market risk The Group takes on exposure to market risks, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks arise from open positions in interest rate and equity products, all of which are exposed to general and specific market movements and changes in the level of volatility of market rates or prices such as interest rates, credit spreads, foreign exchange rates and equity prices. The Group exposure to market risks arises from its non-trading portfolios. Senior management of the Group monitors and manages market through the Asset Liability Committee which advises on financial risks and assigns risk limits for the Group. Non-trading portfolios market risk primarily arises from the interest rate management of the Group’s retail and commercial banking assets and liabilities. Non-trading portfolios also consist of equity risks arising from the Group’s held-to-maturity and available-for-sale investments. Currency risk The Group takes on exposure to effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The Board of Directors sets limits on the level of exposure by currency and in total for both overnight and intra-day positions, which are monitored daily. The Group’s exposure to currency risk is minimal since most of its assets and liabilities in foreign currencies are held in United States dollars. The exchange rate of the Eastern Caribbean dollar (EC$) to the United States dollar (US$) has been formally pegged at EC$2.70 = US$1.00 since 1974.
34
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3
5,761,821
698,571,790
Total financial assets
1,589,267
4,098 -
1,005,750 -
16,377,562 1,026,915 -
29,778,431 3,047,833 3,886,138 58,227,272
-
-
-
564,081,530 10,032,877
687,260 5,024,945 45,518
EURO
377,731 205,786 -
BDS
2,303,211 38,519,584 -
USD
58,703,405 5,981,449 23,060,127 -
ECD
Financial assets Cash and balances with Central Bank Treasury bills Deposit with other banks Financial assets held for trading Loans and receivables: – loans and advances to customers – bonds Investment securities: – held-to-maturity – available-for-sale Other assets
As at 31 December 2013
Concentrations of financial assets and financial liabilities
Currency risk…continued
Financial risk management…continued
(expressed in Eastern Caribbean dollars)
(expressed in Eastern Caribbean dollars)
ForNotes the Year 31 December 2013 to theended Consolidated Financial Statements For the Year ended 31 December 2013
Notes Consolidated Bankto ofthe St. Vincent and the Financial GrenadinesStatements Limited
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
55
1,415,765
-
-
487,134 928,631 -
GBP
2,041,995
-
-
468,413 1,573,582 -
CAD
114,554
-
-
305 114,249 -
Other
767,722,464
46,155,993 5,084,596 3,886,138
564,081,530 10,032,877
63,027,459 5,981,449 69,426,904 45,518
Total
3
-
1,412,665
18,688,492 -
10,777,820
Net asset
39,538,780
19,893,379 19,645,401 -
USD
7,713,000
687,793,970
Total financial liabilities
Commitments, guarantees letters of credit and other credit related obligations
42,788,717 562,788,493 46,644,413 35,572,347
ECD
Financial liabilities Deposits from banks Due to customers Borrowed funds Other liabilities
As at 31 December 2013
Concentrations of financial assets and financial liabilities
Currency risk…continued
Financial risk management…continued
(expressed in Eastern Caribbean dollars)
(expressed in Eastern Caribbean dollars)
Notes to the Consolidated Financial Statements For the Year ended 31 December 2013
36
-
-
1,589,267
-
-
BDS
Notes to the Consolidated Financial Statements For the Year ended 31 December Bank of St. Vincent and the2013 Grenadines Limited
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
56
-
-
755,484
5,006,337
5,006,337 -
EURO
-
-
1,373,427
42,338
42,338 -
GBP
-
-
633,069
1,408,926
1,408,926 -
CAD
Total
-
-
114,554
1,412,665
7,713,000
33,932,113
- 733,790,351
- 42,788,717 - 589,139,473 - 66,289,814 - 35,572,347
Other
3
Financial assets Cash and balances with Central Bank Treasury bills Deposit with other banks Financial assets held for trading Loans and receivables: – loans and advances to customers – bonds Investment securities: – held-to-maturity – available-for-sale Other assets Total financial assets
As at 31 December 2012
Concentrations of financial assets and financial liabilities
Currency risk…continued
Financial risk management…continued
(expressed in Eastern Caribbean dollars)
(expressed Eastern Caribbean dollars) For theinYear ended 31 December 2013
2,058,561 19,777,473 25,971,687 1,159,820 48,967,541
10,032,877 32,593,015 3,047,833 2,840,115 668,623,978
USD
54,970,753 4,633,348 16,706,137 543,799,900
ECD
Notes to the Consolidated Financial Statements
EURO
GBP
4,098 -
1,029,375 -
-
-
1,723,401 3,251,255 1,673,798
-
-
511,927 618,504 511,741 182,099 2,587,544 1,162,057 41,109 -
BDS
Notes to the Consolidated Financial Statements ForBank the Year 31 December 2013 of ended St. Vincent and the Grenadines Limited
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
57
2,297,635
-
-
586,729 1,710,906 -
CAD
174,677
-
-
594 174,083 -
Other
726,712,285
58,564,702 5,241,126 2,840,115
10,032,877
59,258,809 4,633,348 42,300,299 41,109 543,799,900
Total
3
-
17,597,875
6,784,248
1,635,275
Net assets/(liabilities)
Commitments, guarantees letters of credit and other credit related obligations
3,180,823
45,786,718
651,026,103
Total financial liabilities
28,883,388 16,903,330 -
USD
40,404,614 560,198,056 30,932,346 19,491,087
ECD
Financial liabilities Deposits from banks Due to customers Borrowed funds Other liabilities
As at 31 December 2012
Concentrations of financial assets and financial liabilities
Currency risk…continued
Financial risk management…continued
(expressed in Eastern Caribbean dollars)
(expressed Eastern Caribbean dollars) For theinYear ended 31 December 2013
Notes to the Consolidated Financial Statements
38
-
-
1,723,401
-
-
BDS
EURO
-
-
711,153
2,540,102
2,540,102 -
Notes to the Consolidated Financial Statements For Bank the Year 31 December 2013 of ended St. Vincent and the Grenadines Limited
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
58
-
-
721,382
952,416
952,416 -
GBP
-
-
(118,285)
2,415,920
2,415,920 -
CAD
-
-
174,677
-
-
Other
1,635,275
6,784,248
23,991,026
702,721,259
40,404,614 594,989,882 47,835,676 19,491,087
Total
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management‌continued Interest rate risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates. The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on both its fair value and cash flow risks. Interest margins may increase as a result of such changes but may reduce or create losses in the event that unexpected movements arise. The Board of Directors sets limits on the level of mismatch of interest rate re-pricing that may be undertaken.
39
In Tune with Our Customers’ Dreams and Aspirations
59
3
-
10,926,018 47,266,547 14,330,669 346,161,472 573,118 361,065,259
(313,798,712) (14,084,154) (62,397,062)
Total financial assets
Financial liabilities Deposits from banks Due to customers Borrowed funds Other liabilities
Total financial liabilities
Net interest re-pricing gap
60
40
73,941,239
8,647,592 65,047,580 246,067 -
84,426,134
17,264,274 63,783,614 3,378,246 -
22,029,072
7,267,785 -
59,405,942 -
20,311,370 -
59,857,085
11,638,651 -
451,143 -
3,122,636 -
3 – 12 months $
5,981,449 10,002,192 45,518
1–3 months $
Financial assets Cash and balances with Central Bank Treasury bills Deposits with other banks Financial assets held for trading Loans and receivables: – loans and advances to customers – bonds Investment securities: – held-to-maturity – available for sale Other assets
As at 31 December 2013
Up to 1 month $
64,630,629
12,384,994
12,384,994 -
77,015,623
20,119,565 -
56,896,058 -
-
1–5 years $
383,997,622
49,707,389
49,707,389 -
433,705,011
7,842,625 -
415,829,509 10,032,877
-
Over 5 years $
(24,416,210)
152,265,336
2,546,182 114,146,807 35,572,347
127,849,126
33,932,113
733,790,351
42,788,717 589,139,473 66,289,814 35,572,347
767,722,464
46,155,993 5,084,596 3,886,138
564,081,530 10,032,877
5,084,596 3,886,138
63,027,459 5,981,449 69,426,904 45,518
Total $
63,027,459 55,850,933 -
Non-interest bearing $
Interest rate risk …continued The table below summarises the Group’s exposure to interest rate risks. Included in the table are the Group’s assets and liabilities at carrying amounts, categorised by the earlier of contractual re-pricing or maturity dates.
Financial risk management…continued
(expressed in Eastern Caribbean dollars)
Notes to the Consolidated Financial Statements For the Year ended 31 December 2013
(expressed in Eastern Caribbean dollars)
Bank of St. Vincent and the Grenadines Limited
For the Year ended 31 December 2013
Notes to the Consolidated Financial Statements
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
3
51,112,201 3,761,409 -
24,589,961 10,952,014 37,743,321 14,007,697 345,298,750 510,034 359,816,481
(322,073,160) (33,429,597)
Total financial assets
Financial liabilities Deposits from banks Due to customers Borrowed funds Other liabilities
Total financial liabilities
Net interest re-pricing gap
41
88,739,981
10,061,079 78,544,721 134,181 -
55,310,384
436,774 -
1–3 months $
2,160,237 41,109
Up to 1 month $
Financial assets Cash and balances with Central Bank Treasury bills Deposits with other banks Financial assets held for trading Originated loans: – loans and advances to customers – bonds Investment securities: – held-to-maturity – available for sale Other assets
As at 31 December 2012
Interest rate risk …continued
Financial risk management…continued
(expressed in Eastern Caribbean dollars)
For the Year ended 31 December 2013 Notes to the Consolidated Financial Statements For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars)
3 – 12 months $
(39,732,911)
66,885,033
14,645,658 50,329,396 1,909,979 -
27,152,122
7,722,563 -
11,757,818 -
4,633,348 3,038,393 -
Notes theVincent Consolidated Financial Statements Bankto of St. and the Grenadines Limited
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
61
-
Over 5 years $
17,657,968 -
59,258,809 4,633,348 42,300,299 41,109
Total $
58,564,702 5,241,126 2,840,115 104,004,945 726,712,285
5,241,126 2,840,115
- 543,799,900 - 10,032,877
59,258,809 36,664,895 -
Non-interest bearing $
38,259,239
(37,993,337) 23,991,026
141,998,282 702,721,259
1,690,180 40,404,614 120,817,015 594,989,882 38,259,239 47,835,676 19,491,087 19,491,087
69,825,998 387,394,033
7,022,243
7,022,243 -
76,848,241 425,653,272
18,470,748 -
58,377,493 397,962,427 - 10,032,877
-
1–5 years $
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Interest rate risk…continued The table below summarize the effective interest rate by major currencies for monetary financial instruments not carried at fair value through profit or loss:
As at 31 December 2013 Assets Treasury bills Deposits with other banks Loans and receivables: - loans and advances to customers - bonds Investment securities: - held-to-maturity Liabilities Due to customers Borrowed funds Deposits from banks
As at 31 December 2012 Assets Treasury bills Deposits with other banks Loans and receivables: - loans and advances to customers - bonds Investment securities: - held-to-maturity Liabilities Due to customers Borrowed funds Deposits from banks
EC$ %
USD %
BDS %
EURO %
GBP %
4.41 4.12
0.30
-
-
-
-
-
8.69 7.50
-
-
-
-
-
-
5.06
6.95
-
-
-
-
-
3.17 7.03 3.56
1.54 3.42 -
-
1.28 -
-
-
-
EC$ %
USD %
BDS %
EURO %
GBP %
5.60 4.82
0.52
-
-
-
-
-
9.00 7.50
-
-
-
-
-
-
5.54
7.61
-
-
-
-
-
3.27 7.06 4.20
1.67 3.76 -
-
1.00 -
-
-
-
42
62
In Tune with Our Customers’ Dreams and Aspirations
CAD OTHER % %
CAD OTHER % %
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the Year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management‌continued Interest rate risk Cash flow interest rate risk arises from loans and advances to customers and borrowings at variable rates. At 31 December 2013, if variable interest rates had been 0.5% higher/lower with all other variables held constant, post-tax profit for the year would have been $2,820,408 (2012 - $2,637,608) higher/lower interest income on variable rate loans. Liquidity risk Liquidity risk is the risk that the Group is unable to meet its obligations when they fall due as a result of customer deposits being withdrawn, payment of cash requirements from contractual commitments, or other cash out flows. The Group is exposed to daily cash calls on its available cash resources from overnight deposits, current accounts, maturing deposits, loan draw-downs, guarantees. The Group does not maintain cash resources to meet all these needs, as experience shows that a minimum level of reinvestments of maturing funds can be predicted with a high level of certainty. The Board of Directors set limits on the minimum proportion of maturing funds available to meet such calls and on the minimum level of interbank and other borrowings facilities that should be in place to cover withdrawals at unexpected levels of demand. Liquidity risk management process The matching and controlled mismatching of the contractual maturities and interest rates of assets and liabilities is fundamental to the management of the Group. It is unusual for banks to be completely matched as transacted business is often of uncertain term and of different types. An unmatched position potentially enhances profitability, but also increases the risk of losses. The contractual maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature, are important factors in assessing the liquidity of the Group and its exposure to changes in interest rates and exchange rates. Liquidity requirements to support calls under guarantees and standby letters of credit are considerably less than the amount of the commitment because the Group does not generally expect the third party to draw funds under the agreement. The total outstanding contractual amount of commitments to extend credit does not necessarily represent future cash requirements, since many of these commitments will expire or terminate without being funded. Funding approach Sources of liquidity are regularly reviewed to maintain a wide diversification by currency, geography, provider, product and term. Non derivative cash flows The table below presents the cash flows payable by the Group under non-derivative financial liabilities by remaining contractual maturities at the reporting date. The amounts disclosed in the table are the contractual undiscounted cash flows, whereas the Group manages the inherent liquidity risk based on expected undiscounted cash inflows.
43
In Tune with Our Customers’ Dreams and Aspirations
63
3
16,942,742 460,308,279 746,054 35,572,347 513,569,422 63,027,459 6,000,000 65,886,001 45,518 19,901,031 10,962,258 5,251,831 171,074,098
Total financial liabilities
Financial assets Cash and balances with Central Bank Treasury Bills Deposit with other Banks Financial Assets Held for Trading Loans and advances to customers Bonds Investment Securities (Held to Maturity) Investment Securities (Available for Sale) Other Assets
Total financial assets held for managing liquidity
Up to 1 Month
Financial liabilities Deposits from banks Due to customers Borrowed funds Other liabilities
As at 31 December 2013
Financial risk management‌continued
(expressed in Eastern Caribbean dollars)
(expressed in the Eastern For YearCaribbean ended 31 dollars) December 2013
Notes to the Consolidated Financial Statements
44
20,197,706
450,224 19,695,535 51,947 -
74,450,583
8,807,952 65,047,580 595,051 -
1 to 3 Months
Notes to the Consolidated Financial Statements For the Bank Year ended December of St.31Vincent and2013 the Grenadines Limited
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
64
88,194,014
3,143,401 75,055,269 750,000 9,245,344 -
86,634,040
17,786,194 63,783,614 5,064,232 -
3 to 12 Months
351,839,274
323,055,574 3,000,000 24,756,785 1,026,915 -
19,046,730
19,046,730 -
1 to 5 years
506,878,400
482,248,827 10,719,178 9,852,714 4,057,681 -
55,879,004
55,879,004 -
Over 5 years
1,138,183,492
63,027,459 6,000,000 69,479,626 45,518 919,956,236 14,469,178 54,869,048 5,084,596 5,251,831
749,579,779
43,536,888 589,139,473 81,331,071 35,572,347
Total
3
15,745,524 490,229,872 666,483 19,491,087 526,132,966 59,258,809 38,825,605 41,109 29,506,822 10,981,952 3,676,365 142,290,662
Total financial liabilities
Financial assets Cash and balances with Central Bank Treasury Bills Deposit with other Banks Financial Assets Held for Trading Loans and advances to customers Bonds Investment Securities (Held to Maturity) Investment Securities (Available for Sale) Other Assets
Total financial assets held for managing liquidity
Up to 1 Month
Financial liabilities Deposits from banks Due to customers Borrowed funds Other liabilities
As at 31 December 2012
Financial risk management‌continued
(expressed in Eastern Caribbean dollars)
(expressed in Eastern dollars) For the Year endedCaribbean 31 December 2013
Notes to the Consolidated Financial Statements
23,917,186
438,089 19,668,190 3,810,907 -
66,117,915
10,168,092 55,615,478 334,345 -
1 to 3 Months
3 to 12 Months
92,998,458
4,741,742 3,073,067 73,745,445 750,000 10,688,204 -
119,531,941
15,019,315 101,426,599 3,086,027 -
Notes to the Consolidated Financial Statements Bank of St. Vincent and the2013 Grenadines Limited For the Year ended 31 December
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
65
347,369,943
315,964,686 3,000,000 28,405,257 -
11,832,153
11,832,153 -
1 to 5 years
521,700,058
483,472,024 11,502,055 21,484,853 5,241,126 -
45,404,536
45,404,536 -
Over 5 years
1,128,276,307
59,258,809 4,741,742 42,336,761 41,109 922,357,167 15,252,055 75,371,173 5,241,126 3,676,365
769,019,511
40,932,931 647,271,949 61,323,544 19,491,087
Total
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial Statements For the Year ended 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Assets held for managing liquidity risk The Group holds a diversified portfolio of cash and investment securities to support payment obligations. The Group’s assets held for managing liquidity risk comprise cash and balances with central banks, certificate of deposit, government bonds that are readily acceptable in repurchase agreements, treasury and other eligible bills, loans and advances to financial institutions, loans and advances to customers and other items in the course of collection. The Group would also be able to meet unexpected net cash outflows by selling investment securities and accessing additional funding sources. Off-statement of financial position items (a) Loan commitments The dates of the contractual amounts of the Group’s off-statement of financial position financial instruments, that commit it to extend credit to customers and other facilities (Note 24), are summarised in the table below. (b) Financial guarantees and other financial facilities Financial guarantees (Note 24) are also included below based on the earliest contractual maturity date.
At 31 December 2013 Loan commitments Guarantees and letters of credit
<1 Year $
Total $
7,713,000 1,412,665
7,713,000 1,412,665
Total
9,125,665
9,125,665
At 31 December 2012 Loan commitments Guarantees and letters of credit
6,784,248 1,635,275
6,784,248 1,635,275
Total
8,419,523
8,419,523
(c) Capital Capital commitments are within one year see (Note 24)
46
66
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management‌continued Fair values of financial assets and liabilities Fair value amounts represent estimates of the consideration that would currently be agreed upon between knowledgeable willing parties who are under no compulsion to act and is best evidenced by a quoted market value, if one exists. The following methods and assumptions were used to estimate the fair value of financial instruments. The fair values of cash resources, other assets and liabilities, cheques and other items in transit and due to other banks are assumed to approximate their carrying values due to their short term nature. The fair value of off-statement of financial position commitments is also assumed to approximate the amounts disclosed in Note 24 due to their short term nature. Due to customers The estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits, is the amount repayable on demand. Deposits payable on a fixed date are at rates, which reflect market conditions and are assumed to have fair values which approximate carrying value. Investment securities Investment securities include interest bearing debt and equity securities held to maturity and available-forsale. Assets classified for sale are measured at fair value based on market prices or broker/dealer price quotations. Where this information is not available, fair value is estimated using quoted market prices for securities with similar credit maturity and yield characteristics.
47
In Tune with Our Customers’ Dreams and Aspirations
67
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Fair values of financial assets and liabilities...continued Loans and advances Loans and advances are net of provisions for impairment. The estimated fair value of loans and advances represents the discounted amount of estimated future cash flow expected to be received. Expected cash flows are discounted at current market rate to determine fair value. The table below summarises the carrying amounts and fair values of those financial assets and financial liabilities not presented on the Group’s statement of financial position at their fair value.
Financial assets Loans and advances to customers: − Term loans − Large corporate loans − Mortgage loans − Overdrafts Credit Cards − Bonds Investment securities: − Held-to-maturity Financial liabilities Deposits from banks Due to Customers Borrowings
Carrying value 2013 $
2012 $
Fair value 2013 $
2012 $
95,821,234 141,958,912 253,559,825 69,904,137 2,837,422 10,032,877
95,807,120 148,678,550 236,807,538 60,176,506 2,330,186 10,032,877
79,659,241 114,440,781 180,798,812 69,390,444 2,628,326 9,238,884
78,558,062 123,408,011 169,891,555 60,176,507 2,330,186 9,017,708
46,155,993
58,564,702
51,036,545
62,916,629
42,788,717 589,139,473 66,289,814
40,404,614 594,989,882 47,835,676
42,788,717 589,139,473 48,907,673
40,404,614 594,989,882 35,689,628
The value of regional bonds classified as loans and receivable with evidence of open market trades at par plus accrued interest is deemed to approximate fair value. Fair value hierarchy IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable inputs reflect the Group’s market assumptions. These two types of inputs have created the following fair value hierarchy: -
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity securities and debt instruments on actively traded exchanges.
-
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
-
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). This level includes equity investments and debt instruments with significant unobservable components. 48
68
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Fair values of financial assets and liabilities...continued Fair value hierarchy…continued This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market prices in its valuations where possible. Level 2 $
Level 3 $
Total $
-
45,518
45,518
Financial assets available for sale - Equity securities
2,032,665
3,051,931
5,084,596
Total financial assets
2,032,665
3,097,449
5,130,114
-
41,109
41,109
Financial assets available for sale - Equity securities
2,189,195
3,051,931
5,241,126
Total financial assets
2,189,195
3,093,040
5,282,235
31 December 2013 Financial assets held for trading - Debt securities
31 December 2012 Financial assets held for trading - Debt securities
The fair value of financial instruments that are not traded in an active market is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, deal, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in Level 1. Instruments included in Level 1 comprise primarily DAX, FTSE 100 and Dow Jones debt securities classified as trading securities or available-for-sale. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter fixed income securities) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
49
In Tune with Our Customers’ Dreams and Aspirations
69
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Fair values of financial assets and liabilities...continued Fair value hierarchy…continued Specific valuation techniques used to value financial instruments include: • Quoted market prices or dealer quotes for similar instruments. • The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves. • The fair value of forward foreign exchange contracts is determined using forward exchange rates at the statement of financial position date, with the resulting value discounted back to present value. • Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments. Note that all of the resulting fair value estimates are included in Level 2. The following table presents the changes in level 3 instruments for the year ended 31 December 2013 and 2012. Financial assets Held for trading Debt Securities $
Financial assets Available for sale Equity Securities $
Currency revaluation Additions
41,109 1,964 2,445
3,051,931 -
3,093,040 1,964 2,445
At the end of the year
45,518
3,051,931
3,097,449
Financial assets Held for trading Debt securities $
Financial assets Available for sale Equity securities $
At the beginning of year Currency revaluation
40,271 838
3,051,931 -
3,092,202 838
At 31 December 2012
41,109
3,051,931
3,093,040
31 December 2013 At the beginning of the year
32 December 2012
50
70
In Tune with Our Customers’ Dreams and Aspirations
Total $
Total $
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Capital management The Group’s objectives when managing capital, which is a broader concept than the ‘equity’ on the face of statement of financial position, are: •
To comply with the capital requirements of the Banking Act 2006.
•
To comply with the capital requirements set by the regulators of the banking markets where the Group operates;
•
To safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and
•
To maintain a strong capital base to support the development of its business.
Capital adequacy and the use of regulatory capital are monitored daily by the Group’s management, employing techniques based on the guidelines developed by the East Caribbean Central Bank the Authority for supervisory purposes. The required information is filed with the Authority on a quarterly basis. The Authority requires each bank or banking group to hold the minimum level of the regulatory capital to the risk-weighted asset (the ‘Basel capital adequacy ratio’) at or above the internationally agreed minimum of 8% of tier one capital. The Group’s regulatory capital as managed by its Treasury is divided into two tiers:
Tier 1 capital: share capital (net of any book values of the treasury shares), minority interests arising on consolidation from interests in permanent shareholders’ equity, retained earnings and reserves created by appropriations of retained earnings. The book value of goodwill is deducted in arriving at Tier 1 capital; and
Tier 2 capital: qualifying subordinated loan capital, collective impairment allowances and unrealised gains arising on the fair valuation of equity instruments held as available for sale and fixed asset revaluation reserves (limited to 50% of Tier 1 capital).
Investments in associated are deducted from Tier 1 and Tier 2 capital to arrive at the regulatory capital. The risk-weighted assets are measured by means of a hierarchy of five risk weights classified according to the nature of − and reflecting an estimate of credit, market and other risks associated with − each asset and counterparty, taking into account any eligible collateral or guarantees. A similar treatment is adopted for offstatement of financial position exposure, with some adjustments to reflect the more contingent nature of the potential losses. The table below summarises the composition of regulatory capital and the ratios of the Group for the year ended 31 December 2013. During those two years, the Group complied with all of the externally imposed capital requirements to which they are subject. 51
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71
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued Capital management…continued Fair value hierarchy…continued
Tier 1 capital Share capital Statutory reserve Retained earnings
2013 $
2012 $
14,753,306 14,753,306 69,005,285
14,753,306 14,753,306 62,631,178
Total qualifying Tier 1 capital
98,511,897
92,137,790
Tier 2 capital Revaluation reserve – available-for-sale investments Collective impairment allowance
1,703,817 1,163,874
1,860,347 1,661,806
Total qualifying Tier 2 capital
2,867,691
3,522,153
Total regulatory capital
101,379,588
95,659,943
Risk-weighted assets: On-statement of financial position Off-statement of financial position
461,181,730 38,828,226
449,148,000 28,838,000
Total risk-weighted assets
500,009,956
477,986,000
20.28%
20.01%
Basel capital adequacy ratio
52
72
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial Statements For the Year ended 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
4
Critical accounting estimates, and judgements in applying accounting policies The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Going Concern The Group’s management is satisfied that it has the resources to continue in business for the foreseeable future. The Group’s management is not aware of any material uncertainties that may cast significant doubt upon its ability to continue as a going concern. Impairment losses on loans and advances to customers The Group reviews its loan portfolio to assess impairment at least annually. In determining whether an impairment loss should be recorded in the consolidated statement of income, the Group makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. To the extent that the net present value of estimated cash flows differs by +/-5%, the provision would be estimated at $226,850/$562,658 (2012 - $1,089,261/$476,363) lower/higher respectively. Impairment of available-for-sale equity investments The Group determines that available-for-sale equity investments are impaired when there has been a significant or prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires judgement. In making this judgement, the Group evaluates among other factors, the normal volatility in share price. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance, changes in technology and operational and financing cash flows. The Group individually assesses available-for-sale debt securities for objective evidence of impairment. If an impaired instrument has been renegotiated, interest continues to be accrued on the reduced carrying amount of the asset and is recorded as part of “interest income”. If the carrying value of the instrument increases in a subsequent year, the impairment loss is reversed through the consolidated statement of income. Held-to-maturity investments The Group follows the guidance of IAS 39 on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. This classification requires significant judgement. In making this judgement, the Group evaluates its intention and ability to hold such investments to maturity. If the Group fails to keep these investments to maturity other than for the specific circumstances - for example, selling an insignificant amount close to maturity - it will be required to reclassify the entire class as available for sale. The investments would therefore be measured at fair value not amortised cost. If the entire held-to-maturity investments are tainted, the carrying value would increase by $4,880,552 (2012 - $4,351,927) with a corresponding entry in the fair value reserve in equity.
Fair value of financial instruments
Financial instruments where recorded current market transactions or observable market data are not available at fair value using valuation techniques. Fair value is determined using a valuation model that has been tested against prices or inputs to actual market transactions and using the group’s best estimates of the most appropriate model assumptions.
53
In Tune with Our Customers’ Dreams and Aspirations
73
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
4
Critical accounting estimates and judgements in applying accounting policies‌continued Deferred taxes In calculating the provision for deferred taxation, management uses judgment to determine the possibility that future taxable profits will be available to facilitate utilization of temporary tax differences which may arise. Revaluation of land and buildings and investment property The Group measures its land and buildings at revalued amounts with changes in fair value being recognized in the comprehensive income statement. The Group engages independent valuation specialists to determine fair value of its land and buildings. The valuer uses judgment in the application of valuation techniques such as replacement cost, capitalization of potential rentals and the market price of comparable properties, as applicable in each case. Corporate income taxes Significant estimates are required in determining the provision for income taxes. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions. The deferred tax assets recognised at 31 December 2013 have been based on future profitability assumptions over a five year horizon. In the event of changes to these profitability assumptions, the tax assets recognised may be adjusted.
5
Cash and balances with Central Bank
2013 $
2012 $
Cash in hand Balances with Central Bank other than mandatory reserve deposits
13,546,695 14,132,396
24,612,762 62,238
Included in cash and cash equivalents (Note 35)
27,679,091
24,675,000
Mandatory reserve deposits with Central Bank
35,348,368
34,583,809
63,027,459
59,258,809
Pursuant to the Banking Act of 2006, the Banking institutions are required to maintain in cash and deposits with the Central Bank reserve balances in relation to the deposit liabilities of the institution. Mandatory reserve deposits are not available for use in the Banking institutions’ day-to-day operations. The balances with the Central Bank are non-interest bearing.
54
74
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes to of the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
6
Treasury bills
More than 90 days to maturity
2013 $
2012 $
5,981,449
4,633,348
Treasury bills are debt securities issued by the Governments of Saint Lucia and St. Vincent. The weighted average effective interest rate on treasury bills at 31 December 2013 was 4.41% (2012 - 5.60%). 7
Deposits with other banks
2013 $
2012 $
Items in the course of collection with other banks Placements with other banks Interest bearing deposits
7,386,437 48,464,496 13,575,971
9,013,385 27,651,510 5,635,404
Included in cash and cash equivalents (Note 35)
69,426,904
42,300,299
The weighted average effective interest rate in respect of interest bearing deposits at 31 December 2013 was 3.74% (2012 - 3.97%). 8
Financial assets held for trading
Debt securities
2013 $
2012 $
45,518
41,109
Trading financial assets were acquired for the purpose of selling in the near term and would otherwise have been classified as held-to-maturity investments and are non-interest bearing.
55
In Tune with Our Customers’ Dreams and Aspirations
75
Bank of St. Vincent and the Grenadines Limited
Bank St.Consolidated Vincent and theFinancial Grenadines Limited Notes toof the Statements Notes to the Consolidated Financial2013 Statements For the Year ended 31 December For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
9
Loans and advances to customers
2013 $
2012 $
Large corporate loans Mortgage loans Term loans Credit cards Overdrafts
144,112,084 254,994,848 97,921,689 2,924,122 70,355,987
150,686,271 238,458,612 97,845,651 2,440,233 60,672,507
Gross
570,308,730
550,103,274
Less allowance for impairment losses on loans and advances (Note 10)
(6,227,200)
(6,303,374)
Net
564,081,530
543,799,900
Current Non-current
91,355,963 472,725,567
87,426,989 456,372,911
564,081,530
543,799,900
The weighted average effective interest rate on productive loans stated at amortised cost at 31 December 2013 was 8.69% (2012 - 9%) and productive overdrafts stated at amortised cost was 9.62% (2012 – 9.69%). Included in loans and advances and borrowed funds (note 20) are $23,917,555 of mortgage loans held by the Eastern Caribbean Home Mortgage Bank for 2013 and $16,984,836 in 2012.
56
76
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
10
Allowance for impairment losses on loans and advances The movement on the provision by class was as follows: Large corporate loans At beginning of year Increase in provision for loan impairment Written-off during the year as uncollectible
2013 $
2012 $
2,007,722 141,595 3,855
1,253,144 663,721 90,857
At end of year
2,153,172
2,007,722
Mortgages At beginning of year (Decrease)/increase in provision for loan impairment Written-off during the year as uncollectable
1,651,074 (15,462) (200,589)
1,752,798 272,281 (374,005)
At end of year
1,435,023
1,651,074
Term loans At beginning of year (Decrease)/increase in provision for loan impairment Written-off during the year as uncollectible
2,038,531 49,742 12,182
1,836,479 280,186 (78,134)
At end of year
2,100,455
2,038,531
Overdrafts At beginning of year (Decrease)/increase in provision for loan impairment Written-off during the year as uncollectible
496,000 (45,475) 1,325
190,593 180,360 125,047
At end of year
451,850
496,000
Credit Cards At beginning of year (Decrease)/increase in provision for loan impairment Written-off during the year as uncollectible
110,047 (30,621) 7,274
110,047 -
86,700
110,047
6,227,200
6,303,374
At end of year Total
57
In Tune with Our Customers’ Dreams and Aspirations
77
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
11
Loans and receivables – bonds
Government bonds
2013 $
2012 $
10,032,877
10,032,877
Government bonds are purchased from and issued directly by the Government of Saint Vincent and the Grenadines. The weighted average effective interest rate at 31 December 2013 on Government bonds at amortised cost was 7.50% (2012 – 7.50 %) 12
Investment securities
2013 $
2012 $
32,703,704 16,537,926
42,490,677 18,388,762
49,241,630
60,879,439
(3,085,637)
(2,314,737)
46,155,993
58,564,702
2,032,665 3,051,931
2,189,195 3,051,931
5,084,596
5,241,126
Total investment securities
51,240,589
63,805,828
Current Non-current
18,193,803 33,046,786
22,435,986 41,369,842
51,240,589
63,805,828
Securities held-to-maturity Debt securities at amortised costs - Unlisted - Listed Less allowance for impairment Securities available for sale Listed equity securities Unlisted equity securities
The weighted average effective interest rate on securities held-to-maturity stated at amortised cost at 31 December 2013 was 5.72% (2012 - 6.63%).
58
78
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
12
Investment securities...continued Movements of the Group’s financial assets are summarised as follows:
Held-tomaturity $,000
Available for sale $’000
Held for trading $,000
Loans and receivables -bonds $,000
Total $’000
At 1 January 2013
58,564,702
5,241,126
41,109
10,032,877
73,879,814
Additions Currency revaluation Disposals (sale and redemption) Impairment loss Losses from change in fair value
5,675,706 (17,313,515) (770,900) -
2,445 1,964 -
-
5,678,151 1,964 (17,313,515) (770,900) (156,530)
At 31 December 2013
46,155,993
5,084,596
45,518
10,032,877
61,318,984
At 1 January 2012
76,878,403
5,180,821
40,271
10,514,894
92,614,389
2,083,741 (19,133,382) (1,264,060) -
60,305
838 -
58,564,702
5,241,126
41,109
Additions Currency revaluation Disposals (sale and redemption) Impairment loss Gains from change in fair value At 31 December 2012 13
(156,530)
32,877 (514,894) 10,032,877
2,116,618 838 (19,648,276) (1,264,060) 60,305 73,879,814
Related parties balances and transactions Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. The Group is controlled by East Caribbean Financial Holding Company Limited which owns 51% of the ordinary shares and is related to the companies listed below by common ownership and control. A number of banking transactions are entered into with related parties in the normal course of business. These include loans and deposits.
59
In Tune with Our Customers’ Dreams and Aspirations
79
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and theFinancial Grenadines Limited Notes Consolidated Statements to theended Consolidated Financial 2013 Statements For Notes the Year 31 December For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
13
Related parties balances and transactions‌continued The following accounts maintained by related parties are included under investment securities, due from banks and due to banks: 2013 $
2012 $
11,759,202 6,147,592
3,834,434 5,870,504
17,906,794
9,704,938
448,825 7,112,500 1,920,000
434,530 7,182,423 1,920,000
9,481,325
9,536,953
1,080,000
1,350,000
30,035,644
29,510,879
Income Interest income
2013 $
2012 $
2,387,145
2,647,971
Expenses Interest expense Management fees
455,007 1,146,162
541,349 1,146,162
Bank of Saint Lucia Limited Due from banks Due to banks
Eastern Caribbean Amalgamated Bank Limited Due from banks Due to banks Available for sale investments
East Caribbean Financial Holding Company Limited Held to maturity investment
Government of St. Vincent and the Grenadines Held to maturity investment Transactions carried out with related parties:
60
80
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
13
Related parties balances and transactions‌continued Other related parties A number of banking transactions are entered into with other related parties in the normal course of business. These include loans and deposits. These transactions were carried out on commercial terms and at market rates. Other related parties balances with the Group:
Government of St Vincent and the Grenadines Statutory bodies
Directors and key management
2013 Loans $
Deposits $
2012 Loans $
Deposits $
92,294,692 7,520,307
41,277,795 65,740,644
96,243,360 5,595,182
80,873,523 60,219,197
99,814,999
107,018,439
101,838,542
141,092,720
1,751,549
920,289
1,601,500
430,143
101,566,548
107,938,728
103,440,042
141,522,863
No provisions have been recognised in respect of loans given to related parties. The loans issued to directors and other key management personnel during the year are repayable monthly over an average of nine (9) years and have a weighted average effective interest rates of 5.03% (2012 - 4.75%) Interest income and interest expense with other related parties:
Government of St. Vincent and the Grenadines Statutory bodies Directors and key management
2013 Income Expenses $ $ 6,978,138 444,856 62,034
2,312,735 2,465,320 34,708
2012 Income $ 7,246,911 258,238 78,657
Expenses $ 3,436,857 2,409,036 15,691
Key management compensation Key management includes the Executive Management team. The compensation paid or payable to key management for employee services is shown below: 2013 $ Salaries and other short-term benefits Pension cost
2012 $
1,162,875 1 42,880
1,017,100 40,291
1,205,755
1,057,391
61
In Tune with Our Customers’ Dreams and Aspirations
81
46,194,456 2,319,907 (466,069) 48,048,294 49,306,138 (1,257,844) 48,048,294 48,048,294 348,576 (574,832) 47,822,038 49,654,714 (1,832,676) 47,822,038
Closing net book amount
At 31 December 2012 Cost Accumulated depreciation
Net book amount
Year ended 31 December 2013 Opening net book amount Additions Transfers Disposals Depreciation charge (Note 30)
Closing net book amount
At 31 December 2013 Cost Accumulated depreciation
Net book amount
62
116,849
1,495,810 (1,378,961)
116,849
218,664 (101,815)
218,664
1,495,810 (1,277,146)
218,664
288,489 36,263 (106,088)
Leasehold Land and building Improvements $ $
Year ended 31 December 2012 Opening net book amount Additions Transfers Disposals Depreciation charge
14 Property and equipment
(expressed in Eastern Caribbean dollars)
For the year ended 31 December 2013
(expressed Eastern Caribbean dollars)Statements Notes tointhe Consolidated Financial
Bank of St. Vincent and the Grenadines Limited
For the Year ended 31 December 2013
1,496,175
1,496,175 -
1,496,175
4,930,765 (3,434,590) -
Work in Progress $
7,768,311
15,980,836 (8,212,525)
7,768,311
216,148
216,148 -
216,148
7,673,032 1,496,175 1,605,031 - (1,280,027) (11,879) (1,497,873) -
7,673,032
14,387,684 (6,714,652)
7,673,032
4,255,960 4,732,131 (2) (1,315,057)
Office Furniture and Equipment $
Notes to the Consolidated Financial Statements
Bank of St. Vincent and the Grenadines Limited
In Tune with Our Customers’ Dreams and Aspirations
82
2,467,214
9,577,909 (7,110,695)
2,467,214
2,433,923 696,483 (142) (663,050)
2,433,923
8,881,568 (6,447,645)
2,433,923
1,667,558 1,339,068 (572,703)
Computer Equipment and Software $
249,271
847,034 (597,763)
249,271
85,300 214,768 (3) (50,794)
85,300
1,008,572 (923,272)
85,300
99,379 95,000 (109,079)
Motor Vehicles $
58,639,831
77,772,451 (19,132,620)
58,639,831
59,955,388 2,864,858 (1,280,027) (12,024) (2,888,364)
59,955,388
76,575,947 (16,620,559)
59,955,388
57,436,607 8,522,369 (3,434,590) (2) (2,568,996)
Total $
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
15
Investment property
2013 $
2012 $
Cost at 1 January
3,809,400
3,809,400
Book value at 1 January Disposal Fair value gains
4,437,000 (106,000) -
3,809,400 (1,999) 629,599
Book value at 31 December
4,331,000
4,437,000
The investment properties are valued annually based on open market value by an independent, professionally qualified valuator. 16
Other assets
2013 $
Other receivables Prepaid expenses
17
2012 $
3,886,138 1,198,183
2,840,115 836,249
5,084,321
3,676,364
2013 $
2012 $
Deferred tax liability/asset The movement on the deferred tax (liability)/asset is as follows:
At beginning of year Current year charge (Note 33)
549,459 (794,022)
1,393,897 (844,438)
At end of year
(244,563)
549,459
The deferred tax asset account is detailed below:
2013 $
Unutilised tax losses Temporary differences on capital assets
2012 $
539,322 (783,885)
1,292,557 (743,098)
(244,563)
549,459
Deferred income taxes and liabilities are offset when there are legally enforceable rights to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.
63
In Tune with Our Customers’ Dreams and Aspirations
83
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
18
Deposits from banks
Deposits from other banks
2013 $
2012 $
42,788,717
40,404,614
2013 $
2012 $
148,998,191 248,483,119 191,658,163
156,236,620 266,895,106 171,858,156
589,139,473
594,989,882
589,139,473
594,989,882
Interest rates range from 3.50% to 4.00% (2012 - 3.5% to 5.0%) 19
Due to customers
Term deposits Saving deposits Demand deposits
Current
The weighted average effective interest rate of customers’ deposits at 31 December 2013 was 3.13 % (2012 3.23%). 20
Borrowings Due Caribbean Development Bank National Insurance Scheme ECHMB
2013 – 2029 2012 – 2025
Interest Rate %
2013 $
Interest Rate %
2012 $
3.05 5.94 7.87
19,645,401 22,726,857 23,917,556
3.15 5.74 8.15
16,903,330 13,947,510 16,984,836
66,289,814
64
84
In Tune with Our Customers’ Dreams and Aspirations
47,835,676
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
20
Borrowed funds...continued
Current Non-current
2013 $
2012 $
4,197,431 62,092,383
2,554,194 45,281,482
66,289,814
47,835,676
Security The borrowings from the Caribbean Development Bank are guaranteed by the Government of St. Vincent and the Grenadines. Borrowings from the National Insurance Services are secured by property owned by the Bank of St. Vincent and the Grenadines.The Group has not had any defaults of principal, interest or other breaches with respect to borrowings during the year. The ECHMB borrowings represent the value of loans sold to ECHMB. Under the terms of the agreement, Bank of St. Lucia Limited and Bank of St. Vincent Limited remain obligated to indemnify ECHMB with respect to any default, loss or title deficiency occurring during the life of the loans secured by the purchase of mortgages. An equal amount is included within loans and advances. Fees earned on the administration of the loans are reported in other income. 21
Other liabilities
Managers’ cheques outstanding Trade and other payables Customers Security Deposits
22 Share capital
Issued and fully paid: 10,000,000 23 Reserves
At beginning and end of year
2013 $
2012 $
1,284,047 9,395,635 24,892,665
2,978,690 8,453,239 8,059,158
35,572,347
19,491,087
2013 $
2012 $
14,753,306
14,753,306
2013 $
2012 $
14,753,306
14,753,306
Pursuant to Section 14 (1) of the Banking Act of 2006, the Group shall, maintain a general reserve fund which is not available for distribution by way of dividends equal to 100% of its paid up capital. 65
In Tune with Our Customers’ Dreams and Aspirations
85
Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
24
Contingent liabilities and commitments Commitments The following table indicates the contractual amounts of the Group financial instruments that commit it to extend credit to customers. 2013 2012 $ $ Loan commitments Guarantees and letters of credit
25
6,784,248 1,635,275
9,125,665
8,419,523
2013 $
2012 $
43,143,775 4,438,696 242,923
40,538,963 5,623,574 184,839
47,825,394
46,347,376
8,598,612 7,957,512 3,078,603 2,041,189 208,521
9,427,744 6,855,618 2,521,827 1,272,774 190,227
21,884,437
20,268,190
25,940,957
26,079,186
Net interest income Interest income Loans and advances Treasury bills and investment securities Deposits with banks
Interest expense Savings deposits Time deposits Demand deposits Other borrowed funds Correspondent banks
Net interest income
66
86
7,713,000 1,412,665
In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bank oftoSt.the Vincent and the Grenadines Notes Consolidated FinancialLimited Statements Notes to the Consolidated Statements For the Year ended 31 Financial December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
26
Net fee and commission income
Credit relates fees and commissions 27
Dividend income
Investment available for sale 28
Net foreign exchange trading income Foreign exchange Net realized gains Net unrealized gains
29
Other gains
Fair value gain on investment property Gain on restructuring of Investment Gain from disposal of fixed asset Loss on sale of Investment Properties
2013 $
2012 $
6,623,709
5,365,159
2013 $
2012 $
49,414
113,517
2013 $
2012 $
5,160,986 163,579
4,097,849 7,155
5,324,565
4,105,004
2013 $
2012 $
105,505 (15,750)
629,599 414,601 -
89,755
1,044,200
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Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
30
Operating expenses
Employee benefit expense (Note 31) Interest levy expense Rent Audit and accounting fees Director fees Computer expense Insurance Repairs and maintenance Subscription and donations Commission and fees Depreciation (Note 14) Utilities Credit card expenses Management fees Advertisement and sponsorship Legal and professional fees Postage and stationary Bank and other licences Security Other expenses
2013 $
2012 $
8,819,051 3,827,768 282,908 314,715 254,722 21,418 615,380 669,765 137,131 779,860 2,888,364 2,584,388 1,018,023 1,146,162 435,278 996,793 880,056 1,106,888 503,133 2,133,465
8,737,501 4,054,172 280,159 372,784 256,421 124,463 859,303 519,059 225,683 688,875 2,568,996 2,446,675 923,464 1,146,162 961,202 1,215,558 1,003,131 950,638 447,589 2,035,206
29,415,268
29,817,041
2013 $
2012 $
7,010,295 1,525,777 282,979
6,942,375 1,480,992 314,134
8,819,051
8,737,501
31 Employee benefit expense
Wages and salaries Other staff cost Pensions
The number of employees at 31 December 2013 was 161 (2012 - 156).
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In Tune with Our Customers’ Dreams and Aspirations
Bank of St. Vincent and the Grenadines Limited
Bankto of the St. Vincent and the Grenadines Limited Notes Consolidated Financial Statements to the ended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
32 Recoveries of loans and advances, net
2013 $
(Provision)/recoveries against profit for the year Amounts written off during the year as uncollectible Recoveries of amounts previously written off
2012 $
(99,779) (134,383) 1,429,924
(1,506,595) (101,407) 2,920,420
1,195,762
1,312,418
2013 $
2012 $
753,237 794,022
460,009 844,438
1,547,259
1,304,447
33 Income tax expense
Current tax Deferred tax
Tax on the Group’s profit before taxation differs from the theoretical amount that would arise using the statutory tax rate of 32.5% as follows:
Profit before income tax Tax calculated at the applicable tax rate of 32.5% Tax effect of exempt income Tax effect of expenses not deductible for tax purposes
2013 $
2012 $
9,037,994
6,938,383
2,937,346 (1,446,826) 56,739
2,254,974 (1,915,395) 964,868
1,547,259
1,304,447
The Group has unutilised tax losses of $1,658,412 (2012 - $3,977,097) for which the deferred tax asset has been recognised as the Group is expected to generate future profits. Unutilized tax losses may be carried forward and deducted against 50 % of future taxable income within five years following the year in which the losses were incurred. The losses are based on income tax returns, which have not yet been assessed by the Inland Revenue Department.
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Bank of St. Vincent and the Grenadines Limited
Banktoofthe St. Vincent and the Financial GrenadinesStatements Limited Notes Consolidated to theended Consolidated Financial Statements ForNotes the Year 31 December 2013 For the year ended 31 December 2013 (expressed in Eastern Caribbean dollars) (expressed in Eastern Caribbean dollars)
33
Income tax expense...continued Tax losses of $1,194,422 and $463,990 expire in 2015 and 2016 respectively. There was no income tax effect relating to components of other comprehensive income.
34
Earnings per share Earnings per share (EPS) are calculated by dividing the profit for the year attributable to shareholders by the weighted average number of ordinary shares in issue during the year. The EPS calculated for 2013 was $0.73 (2012 - $0.56).
35 Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprise the following:
Cash and balances with Central Bank (Note 5) Deposits with other banks (Note 7) Financial assets held-for-trading (Note 8)
2013 $
2012 $
27,679,090 69,426,904 45,518
24,675,000 42,300,299 41,109
97,151,512
67,016,408
36 Contingent liability The Bank has received communication from a third party of an additional liability. The claim was referred to the Bank’s professional advisors, who have advised that based on the facts; the Bank does not have an outstanding obligation. 37 Dividends A final dividend of $0.37 per share was approved for the year ended 31 December 2013. These dividends have not been paid nor recorded as at the date of approval of these statements.
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BANK OF ST VINCENT & THE GRENADINES Telephone: 1 (784) 457 1844 Fax: 1 (784) 456 2612 Address: P O Box 880 Kingstown St Vincent & the Grenadines West Indies
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