MANAGEMENT REPORT ON THE BANK’S AND THE GROUP’S OPERATIONS DURING 2010

 

Dear customers, partners, shareholders and colleagues,

In 2010 despite challenging macro-economic banking environment in Latvia, AS “GE Money Bank” (hereinafter “Bank”) accomplished its business goals and attained the planned results.

The Bank conducted all the necessary actions to ensure safety and stability for its customers. Bank continued to ensure responsible banking policy in 2010. It was achieved by ensuring high liquidity and capital base that exceeds regulatory requirements. As always, GE Money Bank in Latvia leveraged the experience of its parent company, General Electric Company, one of the largest and most financially secure corporations in the world.

 

Providing safety and stability

 One of the most significant strategic directions in 2010 was ensuring stability for the Bank’s customers. Share capital of the Bank was increased by LVL 10 millions in July. Having regard of this, as well as of the amount of deposits attracted by the Bank, its capital adequacy indicator was 13.87% on 31.12.2010, which exceeds the requirement of 8% established by the Financial and Capital Market Commission (hereinafter – FCMC), while the liquidity ratio was 96.13%, which exceeded the FCMC standard by more than three times. 

Despite continuing challenges in the Latvian economy in 2010, the Bank managed to improve its risk management, compliance and controllership systems, introduced several IT projects, as well as implemented cost optimization actions. Exceptional results from risks sales and collections teams resulted in decrease of the expected losses.

 

The Bank continued to create allowances for loan losses in 2010. The total amount of the reserves created in 2010 was LVL 9,118 thousand. This amount covers 27% of the credit portfolio. As a result the Bank concluded the year 2010 with losses in amount of LVL 19,522 thousand. Company’s operating loss before tax and provisions was LVL 10,404 thousand.

The Bank’s total assets in 2010 are LVL 208,845 thousand. LVL 104,409 were allocated in loans; and the deposit volume reached LVL 181,578 thousand.

 

Work of the subsidiary companies 

 AS „GE Money Atklātais pensiju fonds” continued operations within the Bank’s group offering 3rd pillar pension plans “Rumba” and “Tvists” to customers. The investment management company „GE Money Asset Management” managed 2nd pension pillar plans “Džezs” and “Blūzs” and customer investment in three investment funds - “GE Money Eastern Europe Balanced fund”, “GE Money European Bond fund” and “GE Money Eastern Europe Equity fund”.

 

Totals assets managed by „GE Money Asset Management” decreased by 10.94 % in the accounting period and at the end of the period were LVL 16 489. 12.05% of these were assets of investment fund, 84.8% - investment plan and 3.15% - private pension fund portfolios. Company’s market share in the 2nd pillar pension funds management decreased from 2.3% to 1.69%. Total operating results of the investment management company during the accounting period were a profit of LVL 161,8 thousand (in 2009 – profit LVL 140,4 thousands).

 

While AS „GE Money Atklātais pensiju fonds” basic activity income reached LVL 5,583 in 2010, APF expenditures exceeded income in the accounting period and total operational results of APF during this period was negative, losses were -7.1 thousand LVL (in 2009 – losses 8.1 thousand LVL).

 

Corporate citizenship

A key element of the Bank’s strategy as well as GE’s strategy across all platforms around the world is corporate social responsibility and education of the society on financial matters.

In 2010 the Bank continued providing support to an independent non-profit organization “Money Planning Centre” (hereinafter – MPC). The primary goal of the MPC is educating society in various financial matters. AS “GE Money” established the MPC in 2007 already, as a reaction to the public demand and also to implement a philosophy of responsible lending.


 The Bank and the MPC supported several projects in 2010 and offered innovative budget planning tools to the society, virtual consultations and seminars were organized by MPC, explaining peculiarities and opportunities of money saving and budget planning. The special electronic teaching guide “Naudas mācība” (“Study of Money”), prepared by MPC, was presented to teachers. 

 The Bank considers its employees the most valuable asset. Therefore, a significant commitment to the employees has been made in the company: in 2010 more than 568 employees improved their skills by participating in various training programs organized by GE Money Bank Training Centre; several internal initiatives were launched in order to improve employees’ chances for career growth. The internal communication environment was improved by creating new information channels and rhythm.

 

Stable platform for development and growth

We expect that both Latvian society and the banking sector will continue facing economic challenges also in 2011 and for this reason the principle strategic direction of the Bank is to continue managing the company through the current economic cycle, thus ensuring the Bank’s security and stability for its customers.

Therefore our focus is to ensure high capital adequacy and liquidity base, healthy deposit base, providing for efficient risk management and debt collection systems.

Between the balance date and the date of signing this financial report there have been no events that could significantly influence the results of the accounting period.

 

In conclusion, we would like to express gratitude to the employees of the Bank for work contributed to the Bank’s development and to the customers and partners for their trust and loyalty to the Bank! 

         Kristine Circene
         Communication Project Manager
         GE Money Bank Latvia
         Ph.: +371 67029019
         Mob.: +371 26490696
         E-mail: kristine.circene@ge.com