Cabo Verde - IIBanks · 2. BES Cabo Verde BES Cabo Verde was inaugurated in July 2010 and started...
Transcript of Cabo Verde - IIBanks · 2. BES Cabo Verde BES Cabo Verde was inaugurated in July 2010 and started...
Cabo Verde
2011AnnualReport
Annual Report 20112 Management Report
Contents
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Management Report
Message from the Chairman
BES Cabo Verde
2.1. Share Capital and Shareholder Structure
2.2. Corporate Bodies
2.3. Main Events in 2011
2.4. Geographical Presence, Branch Network and Facilities
2.5. Human Resources
2.6. Social Responsibility
Economic Framework 2011
3.1. International Framework
3.2. National Framework
3.3. Sectoral Overview of Cape Verde’s Economy
Commercial Activity
4.1. Strategy and Business Model
Credit Risk Analysis
5.1. Credit Portfolio and Provisions
5.2. Credit Risk Analysis
Analysis of the Evolution of Activity
6.1. Summary of Activity
6.2. Balance Sheet
6.3. Main Indicators
6.4. BESCV in the Context of Cape Verde’s Financial System
Financial and Prudential Statements
7.1. Results
7.2. Financial Ratios
7.3. Prudential Ratios
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Final Notes
8.1. Declaration of Conformity with the Financial Information Reported
8.2. Profit Allocation Proposal
8.3. Acknowledgments
Financial Statements and Notes to the Financial Statements
Financial Statements
Explanatory Notes to the Financial Statements
Statutory Audit
Statutory Auditors’ Report and Opinion
External Audit Report
Information on Corporate Governance
Organizational and Governance Structure
Powers of the Board of Directors
Internal Control and Risk Management Systems
3.1. Global Risk Area
3.2. Compliance & AML
3.3. Internal Audit
Administrative and Finance
Operative
Commercial
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Annual Report 20114 Management Report
Management Report
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Cabo Verde
5BANCO ESPÍRITO SANTO CABO VERDE
1. Message from the Chairman
The macroeconomic environment and the international financial crisis of 2011, which mainly affected the eurozone, contributed to the slowdown in economic activity and, at the same time, influenced the recurrent cooperative support that Cape Verde has been benefiting from over the last few years.
However, these realities did not prevent us from achieving our purpose of continuing to support Cape Verde’s legitimate desire to become an international platform of service provision, especially of financial services, targeted at the west coast of Africa (WCA). In this context, we visited ECOWAS countries and multilateral institutions and signed cooperation agreements and arrangements with the Grand Canária council (Las Palmas), the Agency for the Promotion of Investment in the Azores (APIA), and the Banco Espírito Santo of the Azores, always bearing in mind the promotion of bilateral commercial relations and the financing of FDI in Cape Verde within the framework of the consolidation of Macaronesia (the Azores, Cape Verde, the Canary Islands, and Madeira). We also signed an agreement with the Society for the Financing of Development (SOFID) for the establishment and financing of partnerships between Portuguese and Cape Verdean companies.
Internally, we expanded our network, opening the Sal branch in Santa Maria, and continuing with our selective criteria for credit approval, especially targeted at the sector which generally contributes the most to Cape Verde’s GDP, that is, tourism, the building and infrastructure industry, and commerce in general.
On an institutional level, we kept our commitment to updating and presenting to the public the already traditional economic outlooks on Cape Verde and some sectors relevant to the Cape Verde an economy, the first of which was presented in March and the second during the “Sea Cluster” conference held in Mindelo.
We have also maintained our support for the BES Group’s social responsibility programme through the Cape Verdean National Committee of the Planet Earth Institute (PEI). In this context, it is worth mentioning the invitation we received to make a statement at the United Nations headquarters on May 13 on environmental sustainability in the Cape Verdean territory, which is at a noticeably high level.
Finally, we must give very special thanks to all BESCV employees for the dedicated and professional way that they continued to work on our expansion project, both nationally and internationally, in close cooperation with Banco Espírito Santo, which enables us to envision more and better support for the development of our clients’ activities in the increasingly auspicious African market.
Pedro Menéres Cudell(Chairman)
Annual Report 20116 Management Report
2. BES Cabo Verde
BES Cabo Verde was inaugurated in July 2010 and started its commercial activity in August of the same year, with one branch in Cidade da Praia, on the Island of Santiago, capital of the Republic of Cape Verde. In 2011, a second branch was opened on the Island of Sal, allowing the network to grow and more intense commercial activity to be carried out.
2.1. Share Capital and Shareholder Structure
BESCV has a share capital of 1,433,000,000$00 (one thousand, four hundred and thirty three million escudos), divided into 1,433,000 shares with a nominal unit value of 1,000$00 (one thousand escudos) and owned by the following shareholders:
2.2. Corporate Bodies
The corporate bodies of Banco Espírito Santo Cabo Verde (BESCV) were elected at the shareholders’ General Meeting that took place on 30 June 2010.
The articles of association of BESCV establish the existence of an organic structure, composed ofa General Meeting, a Board of Directors, and a Statutory Auditor.
General MeetingChairmanRui Manuel Duarte Sousa da Silveira
SecretaryNelson Raposo Bernardo
Board of DirectorsThe Board of Directors is composed of three effective members and one substitute member appointed by the General Meeting.
ChairmanPedro Menéres Cudell
MembersAntónio Manuel Cerveira DuarteJoão Carlos Pereira Dias Baptista
Substitute MemberJosé Francisco de Oliveira e Silva Mendes Palma
Statutory AuditorKPMG & Associados Sociedade de Revisores Oficiais de Contas, SA, represented by Sílvia Cristina de Sá Velho Corrêa da Silva Gomes.
2.3. Main Events in 2011
2011 was marked by the growth of our commercial activity, both in the sector of resident private clients and in the companies sector.
One of the factors that most contributed to this growth was the opening of a second branch, which allowed our client portfolio to be broadened to the Island of Sal, where the BES External Financial Branch financed the largest residential tourist resort in Cape Verde: the Vila Verde Resort.
Synergies were thereby strengthened, allowing the bank branch to be opened in this resort with more than 1263 residential units.
Another activity which played an important role in this period was the promotion and signing of the two commercial agreements that BESCV established with two regions of Macaronesia: the Canary Islands (Gran Canárias), through an agreement with Banco Pastor (Banco Popular Group), and the Azores Islands, through an agreement with BES Azores.
These two actions aimed to connect the different regions of Macaronesia and create a banking relationship that is based on synergies and that promotes trade and increases the banking and commercial relationships that exist between Portugal, Spain, and Cape Verde.
The bank continued its process of IT development by launching new products and services adapted to the needs of the resident-client market, having been innovative in the Cape Verdean market with the launch of Corporate TV, an integrated audiovisual system placed in the bank’s branches which represented a technological milestone for the branch’s relationship with both clients and employees.
An offer for the international market was also created during the second half of 2011, with the bank targeting non-residential clients and therefore potentially creating a financial centre in Cape Verde and increasing our activity in potential markets on the west coast of Africa: one of the goals that BESCV intends to work on over the next few years.
2.4. Geographical Presence, Branch Network and Facilities
BES Cabo Verde (BESCV) has its headquarters in Av. Cidade de Lisboa, Cidade da Praia, where the main branch and the central/administrative services are also located.
In this financial year, several construction works were carried out in order to improve the building that houses the headquarters, adapting it to the growing needs of the bank both in terms of the number of employees and the physical structure needed.
BESCV opened a second branch in June 2011 on the island of Sal and is planning to open a new one in 2012, expanding its national coverage and the offer of our products to a growing market in the context of a policy of proximity to our clients.
Number of shares Value Percentage
BES África, SGPS - S.A. 1,432,850 1.432,850,000 99.9895%
Pedro Roberto Menéres Cudell 50 50,000 0.0035%
António Manuel Cerveira Duarte 50 50,000 0.0035%
João Carlos Pereira Dias Baptista 50 50,000 0.0035%
Total 1,433,000 1,433,000,000 100%
Shareholder Structure(Amounts in escudos)
7BANCO ESPÍRITO SANTO CABO VERDE
2.5. Human Resources
The bank’s staff is comprised of twenty employees, four of whom work under contract and sixteen of whom are permanent. Of these employees, 35% are men and 65% are women. Only one staff member does not have an academic degree.
Six senior technical staff were hired during the year: four to reinforce the commercial team at the headquarters and the Sal agency, and two for the Operational and Financial areas in the central services.
BES Cabo Verde has been developing a continuous internal training process for its staff and, whenever possible, it invests in internal (GBES) and external training abroad.
The bank has a recruitment process through which applicants are selected on the basis of staff-management banking criteria.
The bank has developed a model for career and wage progression based on roles and career levels with a system for individual performance assessment.
2.6. Social Responsibility
BESCV promotes a pro-nature attitude by adopting the motto “the green bank that invests in sustainability” and through simple gestures in its daily management.
By minimizing paper, consumables, water, and power consumption and, consequently, reducing atmospheric emissions, the BES Group reduces its direct contribution to environmental pollution as well as its operational costs.This twofold goal motivates the staff and the internal management to reduce their “ecological footprint” and to make the Group’s operations more and more eco-efficient.
Paper consumption plays a relevant role in operational activities, which is why the bank has been investing in the digitalization of documents and internal and external process which are necessary for its relationship with both clients and suppliers. Dematerialization is a continuous project, associated with the operational modernization of the bank and the flexibility of communication.
The new products are a good example of this modernization of the financial services provided by BES Cabo Verde. Whenever possible, the processes associated with the products are dematerialized, allowing the client to use the service through the available online transactions.
In 2011, BES Cabo Verde and BES Angola established a partnership with the Planet Earth Institute for the creation of a social non-profit association called “Cape Verdean National Committee of the Planet Earth Institute”. This association aims to develop actions in the environment, biodiversity, and geodiversity areas in compliance with international norms.
It is also worth noting that, throughout 2011, BESCV continued to support welfare institutions which accommodate children and teenagers at risk, thus contributing to the development of a more balanced society.
3. Economic Framework 2011
3.1. International Framework
2011 continued to be marked by the sovereign debt crisis in the eurozone, especially as a result of the strong imbalance in Greece’s public accounts and of the difficulties faced by the Greek economy in implementing an ambitious austerity programme. This clearly contaminated other countries such as Portugal and Spain, but also core economies such as France, Belgium, Austria, Holland, and Finland. There was therefore a progressive deterioration in the European financial situation: fear concerning the possibility of the debt crisis contaminating other countries increased the reluctance of financial institutions to expose themselves to each other; the resulting lack of liquidity hindered the financing of investments and consumption; on the other hand, the restrictive fiscal policies simultaneously adopted by the contaminated economies as a response to the crisis have strengthened the deceleration of European economic activities throughout the second semester.
As a consequence of investors’ lack of confidence, the value of the euro dropped by 3% against the USD in this period, with EUR/USD at 1.2939 by the end of the year, and the DAX, CAC40, IBEX and PSI-20 share price indexes were devalued by 14.7%, 17%, 13.1%, and 27.6% respectively.
Financial instability also influenced the evolution of activities in the world’s major economic areas, with the discrepant impacts of the processes of fiscal
Av. Cidade de Lisboa, CP 35 – Cidade da Praia
Telephone: +238 2602626
Fax: +238 2602634
Vila Verde Resort, Condolote 01, Bloco D, Loja R , CP 142
Telephone: +238 2428210
Fax: +238 2428219
BESCV’s Geographical Presence
Headquarters/ Praia Branch – Santiago Island
Sal Branch
2010 2011
Staff
Central Services 8 10
Commercial Area 6 10
Total 14 20
Human Resources Structure
Santiago Island
Island of Sal
Annual Report 20118 Management Report
consolidation affecting internal demand and, above all, international trade flows. After the significantly positive results of 2010, GDP grew by 2.8% in Germany, 1.5% in the eurozone, and 1.8% in the USA. The major emerging economies were also affected by the crisis in the eurozone and by the cooling down of global activity. China and Brazil saw their economies decelerate in 2011, with the former growing by approximately 9% (10.3% in 2010) and the latter by 2.9% (7.5% in the previous year).
In terms of prices, the eurozone registered an average annual inflation rate of 2.6% after registering 1.6% in 2010. In this context, by the end of the year, the European Central Bank (ECB) started a cycle of reducing the main reference interest rate to 1.25%, with an initial reduction of 25 bps in November, followed by a second cut of 25 bps in December, after which it stabilized at 1%. The ECB also announced a set of measures to facilitate banks’ access to liquidity and the regular functioning of the interbank monetary market.
In the United States, the evolution of inflation was not a concern for the monetary authorities, allowing the Federal Reserve to maintain the Fed Fund rate between 0% and 0.25% and to implement Operation Twist (the selling of Fed securities maturing in three years or less and the buying of assets maturing in six to thirty years).
In Portugal, restrictive fiscal policies and the difficult context of external financing have had a negative impact on internal demand (private consumption and investment) and growth, with a GDP contraction of 1.5% taking place. On the positive side, exports have continued to evolve positively. Simultaneously, Portugal continued to diversify the markets for exports, which translated into a significant growth in sales to several emerging economies in Africa, Asia, and Latin America.
The contamination of the sovereign debt crisis in the eurozone has led Portugal to request international financial support. The so-called Memorandum of Interest – between the national authorities and the mission of the European Commission/ECB/IMF – established that Portugal would receive financial support in the amount of EUR 78 billion over a 3-year period.
3.2. National Framework
After a more intense slowdown in 2009, the Cape Verdean economy intensified its growth rate again in 2010, taking advantage of investment growth in line with the execution of the public investment programme - Public Investment Program (PIP) - carried out by the government in the areas of water supply, sewerage services, and council housing, among others. In 2011, economic activity remained dynamic. With regard to the evolution of consumption, deceleration was visible from April onwards, both in terms of the consumption of durable and non-durable goods. Conversely, public consumption and service exports – via the positive evolution of the tourism sector – have grown ever more important for economic growth. In terms of investment, a degree of expansion was also visible, with special focus on investment in the transport sector.
In this context, even in the international framework of economic deceleration experienced in 2011, the Cape Verdean economy performed positively, growing by 5.6% (5.4% in 2010) and being positively influenced by the continued execution of the PIP associated with the good performance of the tourism sector.
Throughout 2011, a slight deterioration in external and public accounts was visible. On the one hand, the increase in cash outflow (via imports, income from external investments and the amortization of the external debt incurred by banks and other companies), associated with a drop in direct foreign investment, led to a drop in external reserves. At the same time, a slowdown in emigrants’ remittances was registered over the second half of the year. On the other hand, a deterioration in the public accounts has occurred following the state’s need to provide the national funds for the PIP projects.
In 2011, inflation increased, partly influenced by the evolution in the prices of fuel and several basic consumer goods, the average annual inflation rate reaching approximately 5%. The slow yet sustainable reduction in the Cape Verdean unemployment rate (slightly above 10% of the active population by the end of the year) has supported a more intense demand for particular consumer goods and, consequently, influenced their prices. In this context, the monetary authorities in Cape Verde have raised the key interest rate (by 150 points, from 4.25% to 5.75%) and the minimum reserve requirement for commercial banks by two percentage points (from 16% to 18%). Lastly, given the fact that Cape Verde adopted a system which pegs the CVE (Cape Verdean escudo) to the euro exchange rate, its currency was devalued against the major international currencies, just as the European single currency was devalued against the USD and the yen.
3.3. Sectoral Overview of Cape Verde’s Economy
Tourism and fishing are the key sectors of the Cape Verdean economy: tourism because of what it currently represents to the archipelago’s economy (16% of direct contributions to GDP and nearly 45% of total contributions according to WTTC’s estimates for 2011) and fishing because of its current impact, both on a small and an industrial scale, on the Cape Verdean economy, which we hope might be reinforced in the future.
The development of the tourism sector has been a key element in the process of developing the Cape Verdean economy. Its impact goes beyond the strict limits of the sector and has played an important role in the evolution of Cape Verdean society. The tourism potential of the country is still far from exhausted and its exploitation, within a framework of sustainability, will be
Cape Verde: Real Growth of GDP and GDP per capita (% and USD)
12
10
8
6
4
2
0
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
%
USD
2003 2004 2005 2006 2007 2008 2009 2010 2011
4.7
1,7611,966
2,038
2,287
2,710 3,122 3,1003,157
3,470
4.3
6.5
10.1
8.6
6.2
3.7
5.4 5.6
9BANCO ESPÍRITO SANTO CABO VERDE
a privileged way of extending the benefits of economic growth to every part of the country.
The growth of the tourism sector in Cape Verde has dynamized and boosted other sectors of the economy such as the hotel industry, the construction and real estate industries, commerce and food production and distribution, all of which are now highly in demand due to the prominent increase in overnight stays from 685,000 overnight stays in 2000 to over 2.3 million in 2010. The World Travel and Tourism Council (WTTC) estimates an average annual growth in income to the tourism sector of approximately 10% (7.3% in real terms) over the next ten years, with this sector now representing 14% of the total number of jobs in the country. At a global level, Cape Verde occupies 12th position in terms of the relative importance of the tourism sector for its economy and 9th position in regard to the growth expectations for the sector. This scenario translates into a progressive increase in the accommodation capacity of the islands and the improvement in the quality of the infrastructures and human resources available.
The Cape Verdean economy is essentially a service economy (73% of GDP in 2010, with tourism playing a decisive role) and the socioeconomic impact of fishing has been growing in the territory, leading government officials to consider that activities in this sector contributed over 7% of Cape Verdean GDP in 2011.
The tourism and fishing sectors interconnect in the current strategic roles that they are called to play in the name of the sustainability of the future growth of the country. This growth needs to be more diversified, less exposed to external shocks and more capable of embracing the totality of the territory.
The “Sea Cluster” is a project that, in the name of structured development, materializes the ambition, repeatedly expressed by the Cape Verdean authorities, of mobilizing a set of activities and skills which go far beyond the traditional maritime sectors: it involves tourism, leisure activities on the coast, cruise tourism, fishing and the processing of fishery products, aquaculture, the exploitation of marine resources, sea logistics, energy, shipbuilding and repair, research, and water collecting. There are also several associated projects, such as the creation of an international centre for the storage, processing, and export of fishery products. For Cape Verde to become a key point in the mid-Atlantic, it is therefore crucial that Porto Grande in Mindelo, along with other international ports (Cidade da Praia, Sal and Santo Antão) are renovated and/ or reconverted.
Cape Verde, with the 6th largest exclusive economic zone in sub-Saharan Africa and a strategic location between Europe, Africa, and America, has all the conditions required to become a key country in the context of the marine economy, developing a set of values which find, in tourism and fishing, the developmental axes for a broad set of interconnected and related activities which have the sea as a common reference point and a generator of synergies.
The establishment of the country as a gateway to west Africa will benefit from its full regional integration in ECOWAS (the Economic Community of West African States, with 230 million inhabitants and 25 member states) and from the close relationship with members of the CPLP (Community of Portuguese Language Countries), a community which encompasses countries belonging to other regional communities on the African west coast.
Creating in Cape Verde an important logistical platform for the mid-Atlantic, whose main goal is to serve all of West Africa, is a project which, within the framework of a “sea cluster”, might turn Cape Verde into an important player in the context of the marine economies of the region and the Atlantic.
2011 saw some important steps being taken towards the materialization of this reality, for example, through the signing of a contract for the building of a cold store in Porto Grande which will turn this port into a key international fishing port for industrial fleets; the arrival of the Norwegian research vessel Fridtjof Nansen for the assessment of the country’s fishing resources; the selection of Cape Verde, within the framework of the Dutch government’s ORIO programme (Facility for Infrastructure Development), for the building of a new cruise terminal in Mindelo; the beginning of the first stage of enlargement and modernization of Praia port; and the continuous attraction of foreign investment in the tourism industry, with special focus on Boavista Island.
Access to electricity supply, a key factor for attracting investment, has also been improving dramatically, covering 95% of the territory in 2010. The continuous increase in demand and the government’s intention to reduce oil dependency have resulted in important investments, for example, in the area of renewable energies: Cape Verde is already using 25% of renewable energies for power supply and its strategy is to reach 50% by 2020. Similarly, the government of Cape Verde relies on the support of the World Bank for the financing of new projects to be concluded between 2013 and 2014 whose goal is to end the energy constraints of the country. Significant efforts have also been made to improve the communications network (fixed, mobile, and internet).
With regard to the financial sector, the economic situation of the country has stimulated its increasing “bankarization” (access to banking services). In 2010, after three more credit institutions started operating, Cape Verde’s banking system included eight institutions operating in the onshore market and nine operating in the offshore market. This expansion led to the strengthening of the internal distribution network and to the offering of associated financial activities by the banks. In general, the balance sheet of the Cape Verdean banking system shows a 9% growth of net assets in 2010 compared to a 7% growth in the previous year.
The results achieved in the different areas of the Cape Verdean economy have been appreciated by the major international institutions. The World Bank’s indicator for ease of doing business, Doing Business 2012 (DB 2012), places the country ten places higher than the previous year, the fifth largest rise at a global level (119 out of 183 economies analysed). In sub-indicators such as cross-border trade (61) and the observance of contracts (37), the Cape Verdean economy is on the same level as the more developed economies.
Cape Verde is one of the uppermost countries in the “average human development” index, occupying the 133th position globally (187 countries
Source: African Development Bank, ES Research - Research Sectorial
Sectoral distribution of GDP, 2010 (%)
26.5
12.3
14.1
17.1
4
7.3
8.2
2.2
Commerce, hotel and catering industry
Financial sector, real estate
and services Transports and communication
Agriculture, forestry and fishing
Other services
Industry
Administration
Energy, gasand sewerage
8.3Building industry
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assessed). In 2011, Cape Verde occupied the sixth highest position among sub-Saharan African countries. In respect of the climate of economic freedom perceived to exist in the islands, the Heritage Foundation places Cape Verde in 66th position out of 179 countries in 2012 (4th out of 46 sub-Saharan African countries) and, similarly, the Transparency International indicator “Corruption Perception Index 2011” ranks the country 41st out of 183 countries and 2nd in the African continent.
On the whole, this is a set of consistent signals that are being sent to the economic agents and which are deemed to be very important within the framework of an economic model characterized by an outward-looking attitude whose development model, which has been strategically adopted, depends on confidence levels and the quality of the relationship provided.
4. Commercial Activity
4.1. Strategy and Business Model
BES Cabo Verde (BESCV) currently favours direct face-to-face contact when targeting clients, paying business visits to clients and potential clients and explaining to them the advantages of having a customized service in their bank, which is a strategy that we also use in fundraising and the extension of credit.
By financing client companies and public-private partnerships, BESCV has encouraged investments in tourism and real estate and has contributed to the development of the Cape Verdean economy through the financing of companies (local and locally-based Portuguese companies) related to construction and public works which, in turn, participate in the construction and/or modernization of large-scale infrastructures throughout the country (ports, airports, roads etc).
BESCV’s targets are the sector comprising middle-to high-income private individuals, both resident and non-resident, and, in the corporate sector, medium and large-sized companies and local branches of foreign and institutional businesses. Its main goal is to attract, manage, and invest resources in local and foreign currencies through the dissemination, promotion and support of local and regional investments, which the bank clearly accomplished in 2011, enabling its own assets and wealth to grow.
BESCV has invested in the promotion of partnerships with Cape Verdean companies, contributing to their expansion to new markets in west and central Africa.
These companies are offered different solutions for their current liquidity management, which is why they have made their structure more similar to that used by BESCV. This is something that can be observed through an analysis of client portfolios.
By the end of 2010, BESCV made a 50 million euro credit line available to support companies that export or wish to export to Cape Verde, providing the clients (companies) with coverage of export-related risks, as well as anticipated access to the income deriving from the activity.
In December 2011, this credit line was extended to the Azores through the signing of an agreement with BES Azores which followed the agreement established in March in the Canary Islands with Banco Pastor (Banco Popular Group). Both agreements aimed to help companies interested in exporting to Cape Verde and, possibly, other countries on the west coast of Africa in an attempt to increase commercial exchanges between the Macaronesian islands.
BESCV’s client portfolio grew by 348% in 2011, with a significant increase in the number of private individuals and corporate clients.
The portfolio consists of clients who have been fulfilling their obligations to the bank and, equally importantly, who have maintained a satisfactory volume of deposits at BESCV.
Of the 632 clients, 75% (473) are private clients, resident and non-resident in the country, as well as emigrants and 25% (159) are national and foreign companies, the majority of which are based in Cape Verde, which shows the extent to which the local community trusts in the bank.
5. Credit Risk Analysis
5.1. Credit Portfolio and Provisions
In 2011 the extension of credit, which started in mid-August 2010, reached a volume eight times greater than that registered in 2010 (730% growth), with 85% of credit being extended to the corporate sector and 15% to private individuals.
The evolution of the credit portfolio is presented in the table below, encompassing the amounts of credit extended according to sector (companies and private individuals) and area of activity.
Evolution in the Active Client Portfolio
40
+298%
+368%
159
Companies
101
473
Private
2010
2011
(Number of active clients)
Client Characterization
25%
75%
Companies
Private
11BANCO ESPÍRITO SANTO CABO VERDE
In calculating credit provisions, we have considered the total balance of the portfolio (loans, escrow current accounts, authorized and non-authorized overdrafts) on the balance sheet date, the number of days of delay in installment payments, and the guarantees attached to each of the transactions mentioned.
The distribution of credit figures according to risk class has resulted in the concentration of 99.9% of credit transactions in risk class A and, consequently, the definition of 1% as the provision rate for this group.
However, the average provision for BESCV’s credit portfolio, as at 31 December 2011, is 1.11%.
5.2. Credit Risk Analysis
BESCV has committed itself, over the year, to diversifying its credit portfolio across the country’s different sectors of activity (construction, commerce, hotel and restaurant services, service provision, transport, and communications) in response to its increase in volume. Credit risk can thereby be diluted through the economy and, at the same time, the bank can comply with the concentration limit for credit risk that has been imposed by the supervisory body.
Despite this diversification, service providers and trade companies make up the sector with the largest concentration (40%) in the credit portfolio.
The limitations on credit extension essentially involve the quality and risk level of both client and transaction, as well as the criteria for formalizing the process. 86% of approved transactions were financed in compliance with the goals defined for credit.
In the context of credit management, the proposals were rigorously analyzed and approved by a Credit Committee with the participation of the various units that took part in the process, which essentially aimed to mitigate the credit risk of the institution.
The identification and assessment of the client/initial transaction risk and the continuous monitoring of the quality of the credit portfolio, the identification of clients who have a tendency to default and the analysis of risk concentration in specific clients and the respective economic sector have enabled the bank to implement, in due course, the necessary measures intended to regularize possible cases of non-fulfillment and also to monitor the risks involved in transactions, thereby minimizing, above all, loan impairment losses.
Taking into account the parameter “delay in loan settlement”, as well as other criteria established by the Central Bank (BCV) for measuring credit provision, six clients with overdue installments were identified, the impairment percentage being increased, as a matter of prudence, since the provisioning rate for these credits had increased.
The distribution of credit transactions according to risk class has resulted in a concentration of 99.53% of credit transactions in class A and the application of the respective provision rate of 1%. Provision rates of 5% and 25% were applied to credits with delays in paying installments in amounts that corresponded to 0.02% and 0.45%, respectively, of the credit volume.
The regular monitoring of the credit portfolio during the period under review, the observance of the regulations concerning the limits to the extension of credit and risk concentration, and the timely regularization of credit irregularities have contributed to the classification of the bank’s credit portfolio as a level A portfolio in terms of risk quality, with a provisioning percentage close to the minimum level required by the regulatory body.
6. Analysis of the Evolution of Activity
6.1. Summary of Activity
The banking activity of Banco Espírito Santo Cabo Verde, S.A., acting in the local market and in the Diaspora, offers to its clients opportunities to develop their businesses and personal projects.
With correspondent banks inside the BES Group and a highly qualified, motivated team of young people, BESCV has the necessary structure and capacity to meet the needs of the intended target market, which allows the bank to provide rapid and high-quality responses.
BES Cabo Verde offers a wide range of financial products and services that aim to create different business opportunities, not only for the corporate sector but also for the personal sector, as well as to encourage entrepreneurship and investments through customized client management.
By focusing on aggressive actions and presenting competitive solutions, BESCV has managed to build a substantial client portfolio of high-quality clients, strengthening its net lending and stimulating the business environment, providing products at attractive rates and flexible terms to both investments and lending.
To this end, the bank has created two offices for client monitoring, one for each sector, whose main goal is to manage and coordinate the client portfolio of the two branches (Praia and Sal) and to prospect for business all over the national territory.
The personal sector corresponds to 75% of the clients, holds 15% of the credit portfolio and 7% of the resources available. However, corporate-sector clients are those who monopolize the business, having a range of solutions for their activities at their disposal, from liquidity assistance to the financing of investments and incentives for imports and/or exports.
In the personal sector, the majority of clients have access to credit to buy or build their own homes, which represents 64% of the credit extended to this sector and 10% of the portfolio. In the corporate sector, the majority of loans are granted to companies in the commerce sector and companies that provide services to other companies, representing 46% of the loans to companies and 40% of the portfolio.
Credit portfolio (balance)
By Sector 179,104 100% 1,485,910 100% 730%
Private Individual 29,123 16% 221,930 15% 662%
Company 149,981 84% 1,263,980 85% 743%
By Area of Activity 179,104 100% 1,485,910 100% 730%
Housing 19,006 11% 142,556 10% 650%
Other Private 10,117 6% 79,374 5% 685%
Commerce and Services 10,000 6% 587,079 40% 5,771%
Construction and Public Works 109,857 61% 357,831 24% 226%
Industry 26,779 15% 213,526 14% 697%
Hotel and Restaurant Services 3,344 2% 105,543 7% 3,056%
Provisions (1,791) 1.00% (16,470) 1.11% 819%
Credit net of provisions 177,312 1,469,439 729%
Evolution in the Credit Portfolio as at 31/12/2010 and 30/12/2011
2010 2011 Var. 2011/2010
Annual Report 201112 Management Report
Structure and Quality of the credit portfolio
The credit portfolio for clients presents a stock of 1.5 billion escudos, with 73% of the total volume being used as long-term credit. Where terms are concerned, credit proportionality was reversed in 2011, since short-term credits made up the majority (61%) of credit in 2010.
Representing 22% of total assets, the bank’s portfolio is a high-quality portfolio. This is the result of the rigorous policy of targeting clients, carrying out risk assessment, and extending credit that requires the bank to assess clients and transactions and carry out constant a posteriori monitoring.
The portfolio’s evolution over the year reflects the dynamics implicit in the management of the bank, which favours the free movement of capital and boosts the entire banking sector as a whole.
Loans and advances to commerce and services, which comprise service providers and commercial establishments, the prime movers of the Cape Verdean economy, make up a large part of the portfolio, which leads us to draw conclusions concerning the direct participation of BESCV in the economic development of the country.
Loans and advances to the economy (the private sector, exclusively) represent 85% of the portfolio, with the remaining 15% including loans and advances to private clients (5% for consumer credit and 10% for mortgage credit).
BESCV is noted for its credit diversification in sectors which show great potential for growth, in line with national economic development.
In this sector, off-balance-sheet arrangements took on an important role in the context of the support provided to companies over the year, contributing at a structural level to the increase in banking income.
It is worth noting the importance of bank guarantees provided, especially transactions intended to support the construction sector, such as construction works for the state. The transactions intended to provide support for imports played an important role in this context, representing an active form of support for our clients. In fact, the bank issued letters of credit representing 20% of total off-balance-sheet arrangements in 2011 in the amount of 2,296 million escudos.
For the purpose of increasing the speed and quality of client targeting, in 2011 BESCV invested in the implementation of new tools for payments, receipts, and transfers (PS2, TEF, BESXpress, Swift), thereby improving its operational efficiency.
The Corporate TV system was installed in each of the branches in 2011. This tool, which is used for presenting, managing, and distributing multimedia contents, functions as a complementary tool and a way of strengthening communication in a specific place. But this solution is also an excellent tool for promotion, with all the information being edited and updated remotely, anytime and anywhere, no matter where the screens might be.
The Corporate TV system allows products offered by the bank to be advertised inside its own branches and also allows information relevant to the financial sector to be presented on occasion, which contributes to improving the bank’s service provision and communication with clients, adds a touch of modernization and innovation to customer service spaces and, at the same time, allows these services to supply news and institutional and cultural information in an effective and compelling way.
6.2. Balance Sheet
In December 2011, BESCV had net assets of 6.9 billion escudos, representing a growth in wealth of 327% in comparison to 2010. Investments in other institutions together with loans to clients made a decisive contribution to this growth, contributing more than 80% to the increase in total assets.
61% of the assets were used in financial products, which generated considerable income. Financial and monetary investments represent 76% of the assets, equivalent to 5.2 billion escudos.
The securities portfolio consists of public debt securities, that is, treasury bonds or “held-to-maturity” securities issued by the state of Cape Verde, paying out monthly and with a maturity of eight years.
Investments in fixed assets, representing 2% of total assets, represent a balance of 160 million escudos and growth of 85 million in comparison to 2010, which reflects the investments that the bank has been making, mostly in facilities and software, keeping up with the growth/ development of the institution.
Composition of Assets
0.2%2.3%
21.6%
14.6%Other Assets
Real Estate Assets
Credit Investments
Monetary Investments
61.3%Financial Investments
Monthly evolution of loans and advances to clients
Nov.2010
Oct.2010
Dec.2010
Jan.2011
Feb.2011
Mar.2011
Apr.2011
May.2011
Jun.2011
Jul.2011
Aug.2011
Sep.2011
Oct.2011
Nov.2011
Dec.2011
26%
26%28%
53%
14%
40%
17%
56%
2%
12%7%
16%
10%
11%
6%
13BANCO ESPÍRITO SANTO CABO VERDE
6.3. Main Indicators
In the first complete year of activity, the management of the client portfolio and investments turned out to be very efficient, producing positive results.
The dynamics instilled in commercial management resulted in the winning of important resources, which allowed credit to be extended and, consequently, favourable banking income to be created.
Banking income thereby increased substantially, cash flow being a strong indicator of the productivity achieved in 2011.
Provisions, in the amount of 16 million escudos, observe the criteria defined by law and are intended to cover general credit risks.
Similarly to 2010, the liabilities structure is dominated by liabilities to clients (deposits), which represent 99% of the total.
The bank has resources in the amount of 1.5 billion escudos which, together with liabilities in the amount of 5.4 billion escudos, make up 6.9 billion escudos in total liabilities, basically divided into client resources and its own resources.Market resources, represented by deposits from other credit institutions, have a residual value (197,000 escudos) when compared with liabilities (5.4 billion escudos), representing 0.003% of its global structure.
Of the 5.37 billion escudos in client deposits, 4.9 are demand deposits, most of which are from non-resident companies. Time deposits rose considerably and, similarly to loans and advances, their proportionality was reversed, with time deposits making up the largest share.
The volume of deposits, resulting from the commercial strategy developed by the bank, is 3.6 times higher than the volume of loans and advances. This makes it possible for the credit portfolio to be totally financed by client deposits and, at the same, leaves some room for liquidity purposes, which runs counter to the trend in the banking sector in Cape Verde.
14%
7%
5%
10%
Industry
Hotel and Restaurant
Services
Other Private
Housing
40%24% Commerce
and Services Construction and Public Works
Active Loan Portfolio - Credit net of provisions
Composition of Total Liabilities
21.481% 0.732%Own
fundsOther liabilities
77.784%
0.003%
Customer Deposits
Market resources
Credit versus Deposits in the Balance Sheet Structure
Net Assets
Loans and Advances to Clients
Client Deposits
Millions of CVE
5,365
1,486
6,901
2011 2010
Net Assets 6,901,034 1,613,305
Net Assets (without securitisation)
Loans to Clients 1,485,910 179,104
Loans to Clients (without securitisation)
Client Deposits 5,364,512 165,600
2011 2010
ACTIVITY
Net Assets 6,901,034 1,613,305
Loans and Advances to Clients 1,485,910 179,104
Client Deposits 5,364,512 165,600
Net interest income 97,993 18,485
Banking Income (BI) 167,505 22,121
Cash Flow 91,513 9,143
Income for the year 44,611 4,811
FUNCTIONING
Number of Branches 02 01
Number of Employees 20 16
Number of Employees/ Number of Branches 10 16
PRODUCTIVITY
Average Assets/ Average Number of Employees 345,052 100,832
Cash Flow/ Average Number of Employees 4,576 571
Structure Costs/ Average Assets 1.79% 0.80%
Structure Costs + Depreciation/ BI (Cost-to-Income) 53.93% 62.71%
Main Indicators (Values expressed in thousands of escudos)
Annual Report 201114 Management Report
6.4. BESCV in the Context of Cape Verde’s Financial System
The Cape Verdean financial system consists of fifteen (15) credit institutions, eight (8) of which are commercial banks (onshore) and seven (7) of which are offshore banks.
The eight commercial banks have been expanding nationwide, opening new branches in smaller locations in compliance with a national “bankarization” programme whose aim is to achieve more transparency in the banking sector.Official information on the Cape Verdean financial system is still unavailable because the banks’ balance sheets are yet to be audited. However, our knowledge of the system and the information relating to the first semester allow us to infer that the ranking of the banks should not have suffered a significant change.
In short, in the first semester “the national banking system showed positive signs of activity and solvency growth. Bank profitability, however, showed signs of deceleration. The quality of the credit portfolio worsened slightly. Liquidity indicators also indicated levels of increasing deterioration. In an attempt to cover the risks involved in their activities, the banks have significantly raised their eligible capital” (in Financial Stability Report, Bank of Cape Verde, June 2011, p. 7).
BESCV has been gaining market share in the national financial system. Besides having the second largest share capital in the banking sector, equalling 20% of total capital, the dynamics that it uses to win resources and extend funding, its positioning within a client sector (personal and medium- and large-sized companies), and, consequently, the quality of its credit portfolio are all outstanding within the banking sector.
In the provisional data collected in the sector, BESCV stands out with regard to the evolution of some important items, both in terms of balance sheet and income. Where the balance sheet is concerned, we highlight liquidity and deposits, with over 45% of the amount invested in credit institutions and 16% of the amount invested in public securities belonging to BESCV, which shows a high level of liquidity.
The bank also holds more than 12% of the funds owned by all the banks and, although this was its first complete year, 5% of the sector’s (provisional) net profit is due to BESCV.
We can conclude that BESCV has become one of the leading banks in the country, gradually gaining its own market share within the parameters established, with an increasing number of clients showing interest in its range of products and solutions for the market.
7. Financial and Prudential Statements
7.1. Results
BESCV’s net profit was highly satisfactory, taking into account the country’s and the world’s present economic situation, not to mention the fact that the national market is very small and vulnerable to international fluctuations.
In 2010, even though the bank only had a short period of activity, its net profit was 4.8 million escudos, an amount that was carried over and incorporated into the reserves. In 2011 the bank’s income, resulting solely from operating activities, was 44.6 million, nine times that of 2010.
Its cash flow was 92 million escudos, more than twice the net profit, which shows the efficiency of the bank’s financial management.
The quality of its investment portfolio, especially that of the security, credit and other income-generating financial investment portfolios, can be verified by analysing its net interest income of 98 million escudos, which is 430% higher than that of 2010.
The net commissions that were generated, in the amount of 55.6 million escudos, particularly reflect the profit deriving from bank guarantees and import letters of credit.
The financial transactions that were carried out over the year have generated an income of 10.8 million escudos, leading to increased banking income.
Operating costs keep up with the physical and structural growth of the bank, reflecting equitably on the costs associated with staff, external supplies and third-party services.
Depreciations and provisions were carried out in compliance with the applicable regulations and based on investments made in capital stock and credit stock, respectively.
Main Indicators BESCV System Comparison
Net Assets 6,901,034 155,297,844 4.4%
Loans and Advances to Clients 1,485,910 90,547,745 1.6%
Client Deposits 5,364,512 112,921,237 4.8%
Net interest income 97,993 5,675,728 1.7%
Banking Income (BI) 167,505 7,479,631 2.2%
Cash-Flow 91,513 2,916,900 3.1%
Income for the year 44,611 954,002 4.7%
Return on Assets (ROA) 0.65% 0.64% Above Average
Return on Equity (ROE) 3.01% 8.04% Below Average
Profit Margin 22.14% 12.75% Above Average
Cost-to-Income 53.93% 68.56% Above Average
Comparison of the Main Indicators (System vs. BESCV)
(Values expressed in thousands of CVE)
Evolution of net interest income
Feb.2011
Jan.2011
Mar.2011
Apr.2011
May.2011
Jun.2011
Jul.2011
Aug.2011
Sep.2011
Oct.2011
Nov.2011
Dec.2011
1.07%
3.53%
max. = 4.31% (Jun)
15BANCO ESPÍRITO SANTO CABO VERDE
7.3. Prudential Ratios
BESCV has net assets in the amount of 1.4 billion escudos, which far exceeds the minimum amount required by the supervisory authority, covering the majority of the possible risks that the bank might face.
In terms of the economic sectors financed by the bank, 40% of the portfolio focuses on companies related to commerce and services, which does not mean, however, that there is a high concentration risk, since the clients are very diversified and different from each other and, consequently, the probability of them being exposed to the same risks in the event of negative impacts in the sector is almost non-existent.
With a net investment in fixed assets in the amount of 131 million escudos and net assets in the amount of 1.4 billion, the fixed assets coverage ratio is 1.068%. The notice that regulates investment in fixed assets stipulates that fixed assets must not exceed net assets, which leaves an important margin for investment in fixed assets.
The solvency ratio, which is the most important indicator of sustainability for a credit institution, is 10%, as determined by law. After weighing up the risks of all of its assets, in 2011 BESCV has a ratio of 44%, which means that its net assets are enough to cover the possible risks of the system.
8. Final Notes
8.1. Declaration of Conformity with the Financial Information Reported
The Board of Directors of Banco Espírito Santo Cabo Verde, S.A., declare that:
• The financial statements of Banco Espírito Santo Cabo Verde, S.A. for the year ended 31 December 2010 and for the year ended 31 December 2011 have been prepared in compliance with the international norms of the International Financial Reporting Standards (IFRS), as defined by the Bank of Cape Verde’s Notice no. 2/2007 of 25 February 2008;
• To the best of its knowledge, the financial statements referred to in the preceding subparagraphs provide an authentic and appropriate picture of its assets and liabilities, as well as of the financial situation and income of BES Cabo Verde, in compliance with the standards mentioned above, and were subject to approval by the board of directors in the meeting that took place on 30 March 2012.
Banking income keeps up with the rising income generated by services and commissions, thereby representing a fundamental basis for the year’s profit. The net profit was 27% of banking income, which reflects a significant degree of control over operational and management costs.
7.2. Financial Ratios
The efficiency ratio (Cost-to-Income) is 59.93%, nearly 9% lower than that of 2010, which shows efficiency gains in a period when the bank had to pay for the enlargement of its headquarters, the creation of another branch, and the hiring of more employees.
The ratio for the transformation of deposits into credit is 28%, since the volume of deposits exceeds the credit stock, indicating greater liquidity and opening up new opportunities to use deposits such as investing in derivatives and increasing the bank’s participation in the interbank market through the extension of overnight credit.
Where profitability ratios are concerned, this year saw a return-on-assets ratio (ROA) of 0.65% and a return-on-equity ratio (ROE) of 3%, with significant improvement in profitability when compared to 2010.
Results for the year
Net Interest Income
Fees and Commissions
Market Income
Banking Income
Administrative Costs
Depreciations and
Provisions
Other Costs
Net Income
millions of CVE
451829
76
168
14
56
98
Results
Net Interest Income Banking Income Cash Flow Income for the Year
millions of CVE
45
92
168
98
0.300.65
0.33
3.01
Financial Ratios
2010
2011
ROA ROE
%
Annual Report 201116 Management Report
• The management report shows the evolution of the activity and the performance and financial status of BES Cabo Verde in 2011 and also describes the expected evolution of the company.
8.2. Profit Allocation Proposal
In accordance with its statutory rights, the Board of Directors of BES Cabo Verde presents to the General Meeting the following Profit Allocation Proposal in the amount of 44,610,777$00 (forty four million, six hundred and ten thousand, seven hundred and seventy seven escudos):
8.3. Acknowledgments
The Board of Directors of Banco Espírito Santo Cabo Verde, S.A. expresses their gratitude to the clients for the trust that they place in the bank, to the government and supervisory authorities for their cooperation, and, especially, to the bank’s employees for their loyalty and dedication.
Cidade da Praia, 30 March 2012
The Board of Directors of BES Cabo Verde
CVE
Legal reserve (10%) 4,461,100
Other reserves (90%) 40,149,900
Total net income 44,611,000
17BANCO ESPÍRITO SANTO CABO VERDE
Financial Statements and Notes to the Financial Statements
II
Cabo Verde
Annual Report 201118 Financial Statements and Notes to the Financial Statements
1. Financial Statements
Notes 2011 2010 Abs. ∆ Rel. ∆ (%)
Assets
Cash and deposits at central banks 5 881,920 70,942 810,977 1143%
Deposits with other credit institutions 6 120,558 27,583 92,975 337%
Financial assets held for trading 5,235 - 5,235 -
Investments in credit institutions 7 4,023,710 1,047,547 2,976,163 284%
Loans and advances to customers (net) 8 1,476,394 178,590 1,297,803 727%
Held-to-maturity investments 9 203,791 203,538 253 0%
Other tangible assets 10 131,784 61,054 70,730 116%
Intangible assets 11 28,533 13,552 14,981 111%
Investments in affiliated or subsidiary companies excluded from consolidation - - - -
Current tax assets - - - -
Deferred tax assets - - - -
Other assets 12 12,639 8,707 3,932 45%
Total assets 6,884,564 1,611,514 5,273,051 327%
Liabilities
Deposits from other credit institutions 197 649 (452) -70%
Customer deposits and other loans 13 5,367,710 165,870 5,201,840 3,136%
Liabilities represented by securities 13 187 78 109 141%
Current tax liabilities 14 17,886 1,647 16,239 986%
Other liabilities 15 16,162 5,459 10,703 196%
Total liabilities 5,402,142 173,703 5,228,440 3,010%
Equity 16 1,433,000 1,433,000 - 0%
Other reserves and retained profits 4,811 - 4,811 -
Net Income 44,611 4,811 39,800 827%
Total shareholders’ equity 1,482,422 1,437,811 44,611 3%
Total equity and liabilities 6,884,564 1,611,514 5,273,051 327%
Balance Sheet for the year ended 31 December 2011 (Values expressed in thousand escudos)
Notes 2011 2010 Abs. ∆ Rel. ∆ (%)
Interest and similar income 17 107,288 19,186 88,102 459%
Interest and similar expenses 18 9,295 701 8,594 1,226%
Net interest income 97,993 18,485 79,508 430%
Dividend income
Fee and commission income 19 56,416 4,403 52,013 1181%
Fee and commission expense 19 (854) (120) (734) 612%
Net result from available-for-sale financial assets 25,387 - 25,387 -
Net results from foreign exchange (14,587) 1 (14,588) -1,458,800%
Revaluation Net gains from the sale of other - - - -
Financial assets Other operating results 3,149 (648) 3,797 -586%
Operating income 167,504 22,121 145,383 657%
Wages and salaries 20 33,989 6,289 27,700 440%
General and administrative expenses 21 42,002 6,690 35,312 528%
Depreciation and amortisation 14,337 894 13,443 1504%
Loan impairment net of reversals and recoveries 8 14,679 1,791 12,888 720%
Income before taxes and minority interests 62,497 6,458 56,040 868%
Taxes 14 17,886 1,647 16,239 986%
Current 14 17,886 1,647 16,239 986%
Income after taxes and before minority interests 44,611 4,811 39,800 827%
Minority interests - - - -
Consolidated income statement for the period 44,611 4,811 39,800 827%
Income Statement for the year ended 31 December 2011 (Values expressed in thousand escudos)
19BANCO ESPÍRITO SANTO CABO VERDE
2011 2010
Operating Activities
Interest, commission and similar income 163,704 23,589
Interest, commission and similar costs paid (10,150) (820)
Other operating income and costs 28,538 (648)
Payments to employees and suppliers (75,992) (12,978)
Payment of income taxes ( 1,647) 0
Net cash flow from operational results before variation in operating funds 104,453 9,142
(Increase) Decrease in operating assets
Available-for-sale financial assets held for negotiation ( 5,235) -
Held-to-maturity financial assets (253) (203,538)
Investments in credit institutions ( 85,497) 0
Loans to customers (1,312,483) (180,382)
Other assets (3,932) (8,707)
Increase (Decrease) in operating liabilities
Deposits from central banks and other credit institutions -452 649
Customer deposits 5,201,840 165,870
Liabilities represented by securities 109 78
Other liabilities 10,703 5,459
Net cash flow from operating activities 3,804,800 (220,571)
Investment Activities
Purchased intangible assets (22,358) (13,936)
Purchased tangible assets (77,690) (61,564)
Cash flow from investment activities (100,047) (75,500)
Financing Activities
Capital Subscription - 1,433,000
Net cash flow from financing activities - 1,433,000
Net changes in cash and cash equivalents 3,809,205 1,146,071
Cash and cash equivalents at the beginning of the year 1,146,072 -
Effects of exchange rate variations on cash and cash equivalents (14,694) 1
Cash and cash equivalents at the end of the year 4,940,584 1,146,072
Cash and cash equivalents includes:
Cash 62,619 12,427
Deposits at Central Banks 819,301 58,515
(of which, mandatory reserve deposits) 155,788 30,678
Deposits with other credit institutions 4,058,664 1,075,130
Total 4,940,584 1,146,072
2011 2010
Profit for the year 44,611 4,811
Other comprehensive income for the year after taxes - -
Fair value adjustments, net of taxes - -
Total comprehensive income for the year 44,611 4,811
Equity Net income Total the year Equity of
Balance as at 31 December 2010 1,433,000 4,811 1,437,811
Net profit for the year - 44,611 44,611
Total gains and losses recognised in the year - - 0
Capital increase - - 0
Balance as at 31 December 2011 1,433,000 49,422 1,482,422
Cash flow statement for the year ended 31 December 2011
Comprehensive Income Statement for the year ended 31 December 2011
Statement of changes in equity for the year ended 31 December 2011
(Values expressed in thousand escudos)
(Values expressed in thousand escudos)
(Values expressed in thousand escudos)
Annual Report 201120 Financial Statements and Notes to the Financial Statements
2. Explanatory Notes to the Financial Statements
NOTE 1 - Activities
The Banco Espírito Santo Cabo Verde, S.A. (BESCV) is a commercial bank, with its head office in Praia that was opened in July 2010, and began trading in mid-August of the same year.
The Bank’s activities include those generally associated with the banking sector, but with particular emphasis on the medium-sized and large company market.
The Bank is part of the Grupo Banco Espírito Santo (GBES), which, through BES Africa SGPS, INC. (100% owned by GBES), holds 99.9% of its capital. Currently, BESCV operates through its head office in Praia and its branch on Ilha do Sal.
NOTE 2 - Bases for presentation and accounting policies
2.1. Bases for Presentation
The Bank’s financial statements presented here are for the year ended 31 December 2011, and were prepared in accordance with the principles enshrined in the International Financial Reporting Standards (IFRS).
The IFRS includes the accounting standards adopted by the International Accounting Standards Board (IASB) and the interpretations adopted by the International Financial Reporting Interpretation Committee (IFRIC), and by the respective bodies that preceded it.
The BESCV financial statements presented here relate to the year ended 31 December 2011 and were prepared in accordance with the IFRS in force up to 31 December 2011.
The financial statements are expressed in thousands of Cape Verdean escudos, rounded to the nearest thousand. These were prepared in accordance with the historical cost principle, with the exception of assets and liabilities which were recorded at their fair value.
The preparation of financial statements in accordance with the IFRS requires the Bank to apply judgement and use estimates and assumptions that affect the process of applying accounting policies and the amounts of profits, costs, assets and liabilities. Alterations or differences in these assumptions depending on the situation may impact on current estimates and judgements. The areas that involve a higher level of judgement or complexity, or where significant assumptions and estimates are used to prepare the financial statements are analysed in Note 3.
These financial statements were approved at the Board of Directors’ meeting of 30 March 2012.
2.2. Summary of the Principal Accounting Policies
a) Accrual Basis
The Bank employs accrual accounting for the majority of the items in the financial statements, particularly with regard to interest on assets and liabilities that are registered as they are generated, irrespective of when paid or collected.
b) Foreign currency transactions
Transactions in foreign currency are recorded in accordance with the principles of the multi-currency system, whereby each transaction is recorded in the respective currency. This approach envisages that all foreign currency balances are converted into Cape Verdean escudos, on the basis of the average rate of exchange for the day as reported by the Bank of Cape Verde. The exchange rate differences from currency conversion are shown in the results for the year.
c) Loans and advances to customers
Customer loans and advances include those originated by the Bank, which are not intended for short-term sale, and which are recognised on the date the sum is advanced to the customer.
Customer loans are only off balance sheet when (i) the contractual rights of the Bank relating to the respective cash flow have expired, (ii) the Bank has substantially transferred all the risks and benefits associated with holding them, or, (iii) notwithstanding the fact that the Bank may have retained part, but not substantially all, of the risks and benefits associated with holding them, control over the assets has been transferred.
21BANCO ESPÍRITO SANTO CABO VERDE
Loans and advances to customers are initially measured at fair value plus any transaction fees and are subsequently measured at amortised cost, using the effective interest-rate method, less impairment losses
Impairment
The Bank regularly assesses the existence of objective evidence of impairment in the loan portfolios. Impairment losses identified are charged against income, and subsequently the charge is reversed if there is a reduction in the estimated losses in a subsequent period.
Customer loans or a loan portfolio, defined as a group of loans with similar credit risk, may be classified as impaired when: (i) there is objective evidence of impairment as a result of one of more events that took place after its initial recognition and (ii) when these events have an impact on the recoverable value of the future cash flows of the loan or loan portfolio that can be reliably estimated.
Initially, the Bank assesses if there is individually, for each loan, objective evidence of impairment. To make these assessments and to identify the impairment loans individually, the Bank uses information that supplies the credit risk models implemented and takes the following into consideration:
• The aggregate exposure of customers and the existence of defaulted loans;• The financial economic viability of customers’ business models and their ability to generate sufficient cash flow to service their debt obligations;• The extent of other creditors’ commitments ranking ahead of the Bank;• The existence, nature and estimated value of collaterals;• The exposure of the customer within the financial sector;• The amount and timing of expected recoveries.
If, for a given loan, there is no objective evidence of impairment on an individual basis, the loan is included in a group of loans with similar credit risk characteristics (credit portfolio), which is collectively assessed – collective impairment analysis. Loans that are assessed individually and for which an impairment loss has been identified are not included in the collective assessment.
If any impairment loss is identified on an individual basis, the sum of the loss to be recognised corresponds to the difference between the carrying value and the present value of expected future cash flows (taking into consideration the recovery period), less the original effective interest rate of the loan. The loans and advances granted are shown in the net impairment balance sheet. For a loan with a variable interest rate, the discount rate to use to determine the respective impairment loss is the rate of current effective interest set by the rules of each loan.
Changes in the total of impairment losses, attributable to the discount effect, are recognised as interest and similar profits.
The calculation of the present value for estimated future cash flows reflects the cash flows that can result from the repossession and sale of collaterals, calculated from the costs inherent in their repossession and sale.
For collective impairment analysis, the loans are grouped according to similar credit risk factors in conjunction with the risk assessment undertaken by the Bank. Future cash flows for a credit portfolio, whose impairment is collectively assessed, are estimated on the basis of contractual cash flows and on experience of historical losses. The methodology and the assumptions used by the Bank to estimate future cash flows are regularly reviewed in order to monitor the differences between estimated and real losses.
When the Bank considers that a given loan cannot be collected having recognised an impairment loss of 100%, this is written off from assets.
d) Other financial assets
The Bank classifies its other financial assets at acquisition date, considering underlying intention.
Within this category are held-to-maturity investments. These investments are non-derivative financial assets with fixed or determinate payments and fixed maturities that the Bank intends to hold to maturity.
These assets are initially recognized at fair value plus transaction fees.
After their initial recognition the investments held to maturity are measured at amortised cost, using the effective interest rate method, less impairment losses.
Impairment
The bank regularly assesses the existence of objective evidence of impairment in a financial asset or group of financial assets. When evidence of impairment is encountered, the respective recoverable amount of the asset is determined and any impairment losses are recorded against income.
A financial asset or group of financial assets are considered to be impaired whenever there is objective evidence of impairment arising from one or more events that occurred after their initial recognition, such as: (i) for shares and other capital instruments, when there has been a significant or prolonged decline
Annual Report 201122 Financial Statements and Notes to the Financial Statements
in their value below acquisition cost, and (ii) for debt securities, when this event (or events), have an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.
Regarding held-to-maturity investments, the sum of impairment losses corresponds to the difference between the carrying value and the present value of expected future cash flows (taking into consideration the recovery period), less the original effective interest rate of the financial asset.
These assets are presented in the balance sheet, net of impairment. In the case of an asset with a variable interest rate, the discount rate to be used to determine the respective impairment loss is the current effective interest rate, determined in accordance with the rules of each contract. In the case of held-to-maturity investments, should the amount of the impairment loss fall in a subsequent period, and if such a reduction may be objectively related to an event that happened after the recognition of the impairment, this is recognised in the yearly income statement.
e) Financial liabilities
An instrument is classified as a financial liability when there is a contractual obligation for its settlement to be effected through the delivery of cash or other financial asset, regardless of its legal form.
Non-derivative financial assets include funding from credit institutions and customers, loans and liabilities represented by debt instruments and liabilities incurred to pay for services rendered or the purchasing of assets, as set out in “other liabilities”
After their initial recognition the financial liabilities are measured at their fair value, less transaction fees and subsequently at their amortised cost, using the effective interest rate method.
f) Other tangible assets
Other tangible assets are valued at purchase price less accumulated depreciation and impairment losses. Expenditure on maintenance and repair is charged as costs, in accordance with the accrual method.
Depreciations are calculated in accordance with the straight-line method at the following rates of depreciation that reflect the expected useful life of the goods:
When there is an indication that an asset may be impaired, the IAS 36 requires that its recoverable amount be estimated, and an impairment loss recognized when the net value of an asset exceeds its recoverable amount. Impairment losses are recognized in the income statement.
The recoverable amount is determined as the greater of the net selling price or its value in use, calculated on the basis of the current value of the estimated future cash flows obtained from the continued use of the asset and its sale at the end of its useful life.
g) Intangible assets
Costs incurred with the purchase, production and development of software are capitalized, as are the additional expenses borne by the bank required for its implementation. These costs are amortised on a straight-line basis over the expected useful life of these assets, which is normally between 3 to 6 years.
All other charges related to information technology services that are not expected to generate future economic benefits beyond one year are classified as costs when incurred.
h) Employees’ benefits
Obligations regarding employees’ benefits are classified in accordance with those advocated in the IAS 19.
Since the right to holidays is acquired in the year in which they are taken, there is no provision for costs associated with these benefits.
Number of Years
Premises for own use 25
Furniture and materials 4-8
Computer equipment 4
Machinery and tools 5
Transport materials 4
Interior fittings 8-10
Security equipment 4-5
23BANCO ESPÍRITO SANTO CABO VERDE
i) Taxes on profits
The bank is subject to Income Tax (IUR) at the rate of 25%, plus a fire tax of 2% on the tax collected, giving an overall rate of 25.5%.
j) Interest accrual
Interest income for financial instruments measured at amortised cost and from financial assets available for sale is recognized in the interest income and similar revenues or interest and similar expenses, using the effective interest rate method. The interest from the financial assets and liabilities at fair value according to income are also included in the interest income and similar revenues or interest and similar expenses, respectively.
The effective interest rate is the rate that exactly discounts estimated future cash payments of 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. The effective interest rate is established in the initial recognition of the financial assets and liabilities and is not subsequently revised.
To calculate the effective interest rate, the future cash flow is estimated considering all the contractual terms of the financial instrument (for example early payment options), but without however considering future credit losses. The calculation includes the commissions that are included in the effective interest rate, transaction costs and all other premiums and discounts directly related to the transaction. If a financial asset or group of similar financial assets has been recorded as an impairment loss, interest income is calculated using the rate of interest used to measure impairment loss.
k) Fee and commissions income
Fees and commissions are recognised as follows:
• Fees and commissions earned in the execution of a significant act, for example such as commissions in the syndication of loans, are recognized in the profit and loss results when the significant act is complete;• Fees and commissions earned over the period in which the services are provided are recognised as income in the period the services are provided;• Fees and commissions that are an integral part of the effective interest rate of a financial instrument are registered as income using the effective interest rate method.
l) Cash and cash equivalents
For purposes of the cash flow statement, cash and cash equivalents comprise amounts recorded as balances with maturity of less than three months from the date of acquisition/contract, including cash, cash available from central banks and from other credit institutions.
NOTE 3 - Critical accounting estimates and judgements in preparing the financial statements
The IFRS sets out a range of accounting procedures and requires the Board of Directors to make necessary judgements and estimates in order to decide the most appropriate accounting procedure. The main accounting decisions and judgements used by the Bank in applying the accounting policies are discussed in this note in order to improve the understanding of how their application affects the Bank’s reported results and disclosures. A more detailed description of the main accounting policies employed by the Bank is given in Note 2 to the financial statements.
Considering that, in many cases, there are several alternatives to the accounting treatment adopted by the Board of Directors, the Bank’s reported results would be different had a different treatment been chosen. The Board of Directors believes that the choices made are appropriate and that the financial statements provide an adequate picture of the Bank’s financial position and results in all materially relevant respects.
3.1. Impairment losses on customer loans and advances
The Bank reviews its loan portfolios to assess impairment on a regular basis, as described in item c) of Note 2.2. The evaluation process in determining whether an impairment loss should be recorded is subject to a number of estimates and judgements. This process includes factors such as the frequency of default, risk ratings, loss recovery rates and the estimates of both future cash flow and the time of its receipt.
The use of alternative methodologies and other assumptions and estimates may result in different levels of impairment losses, with a consequent impact on the Bank’s statements.
3.2. Held-to-maturity investments
The Bank classifies its non-derivative assets with fixed or determinable payments and fixed maturities as held-to-maturity investments, in accordance with the requirements of the IAS 39. This classification requires a significant level of judgement.
In making this judgement, the Bank evaluates intention and ability to hold such investments to maturity. If the Bank does not hold these investments to maturity, except in specific circumstances – for example, disposing of a non-significant part approaching maturity – it is necessary to reclassify the entire portfolio of available financial assets for sale, with its consequent measuring at fair value and not at amortised cost.
Annual Report 201124 Financial Statements and Notes to the Financial Statements
The held-to-maturity assets are subject to impairment tests, which are followed by the Bank’s analysis and decision. The use of different methodologies and assumptions from those used in those calculations already made may have different impacts on results.
3.3. Taxes on profits
The Bank is subject to taxes on profits in several jurisdictions. Determining the overall amount of taxes on profits calls for certain interpretations and estimates. There are a number of transactions and calculations where the final value of tax payable is difficult to assess during a normal business cycle.
Other interpretations and estimates could lead to a different amount for tax payable current and deferred, recorded for the year.
The Tax Authorities are entitled to review the Bank’s determination of its taxable earnings within a period of 5 years, in case of tax losses carried forward. As a result, it is possible that additional taxes may be assessed, mainly as a result of differences in the interpretation of tax laws. However, the Board of Directors is confident that there will be no significant correction to the taxes on profits recorded in the financial statements.
NOTE 4 - Segments reporting
Considering that the Bank does not hold any of its own equity or debt that can be traded on the open market, under paragraph 2 of the IFRS S 8 – Operating Segments, the Bank does not include information relating to the segments.
NOTE 5 - Cash and deposits in central banks
This item breaks down as follows:
Deposits at Banco de Cabo Verde include compulsory deposits (compulsory reserve requirements), valued at 156 million escudos (as at 31 December 2010, 31 million escudos), constituted in accordance with Circular no. 157 of 08/11/2010, issued by Banco de Cabo Verde.
NOTE 6 - Deposits with other credit institutions This item breaks down as follows:
Cheques receivable correspond to cheques issued by customers from other banks which were filed for payment.
Demand deposits at other credit institutions are non-interest-bearing.
31.12.11 31.12.10
Cash 62,619 12,427
Deposits at Banco de Cabo Verde 819,301 58,515
Total 881,920 70,942
(Values expressed in thousands of CVE)
31.12.11 31.12.10
Deposits with other credit institutions in the country
Cheques receivable 3,012 3,800
Deposits with other credit institutions abroad
Demand deposits 117,546 23,783
Total 120,558 27,583
(Values expressed in thousand CVE)
25BANCO ESPÍRITO SANTO CABO VERDE
NOTE 7 - Investments in credit institutions
This item breaks down as follows:
The scheduling of investments in credit institutions, in terms of maturity, as at 31 December 2011 and 2010, is as follows:
Investments in credit institutions, as at 31 December 2011, earned interest at the annual average rate of 1.64%. As at 31 December 2010, the sole existing investment earned interest at the annual rate of 0.5%.
NOTE 8 - Loans and advances to customers
This item breaks down as follows:
31.12.11 31.12.10
Investments in foreign financial institutions
Short-term investments in BES 2,652,050 1,047,518
Investments in other financial institutions 1,368,800 0
Interest 2,860 29
Total 4,023,710 1,047,547
(Values expressed in thousand CVE)
31.12.11 31.12.10
Up to 3 months 3,935 300 1,047,547
From 3 months to 1 year 85,550 0
Total 4,020,850 1,047,547
(Values expressed in thousand CVE)
31.12.11 31.12.10
Loans and advances to customers
Short Term 397,861 109,091
Medium and long term 1,088,049 70,013
1,485,910 179,104
Current account loans 227,381 2,943
Demand deposit overdrafts 6,742 3,650
Mortgage credit 142,556 19,006
Personal loans 8,653 3,239
Loans 1,029,857 143,387
Private Others 70,721 6,878
1,485,910 179,104
Loan interest 6,954 1,278
Impairment losses (16,470) (1,791)
Loans net of provisioning 1,476,394 178,590
(Values expressed in thousands of CVE)
Loans granted to employees at reduced interest rates are included under mortgage credit and personal loans.
Annual Report 201126 Financial Statements and Notes to the Financial Statements
The scheduling of loans and advances to customers, in terms of maturity, as at 31 December 2011 and 2010, is as follows:
The portfolio of loans and advances to customers, as of 31 December 2011, was negotiated at an average interest rate of 9.41% (31 December 2010: 8.95%).
NOTE 9 - Held-to-maturity investments
This item breaks down as follows:
The bond portfolio (2011 and 2010) has an eight (8) year maturity and earns an average interest rate of 5.625%.
NOTE 10 - Other tangible assets
This item breaks down as follows:
31.12.11 31.12.10
Property
Buildings 73,037 -
Improvements of rented buildings 20,201 -
93,238 -
Equipment
Furniture 18,231 10,062
Machines and office equipment 783 361
Motor vehicles 10,300 10,300
Interior fixtures 2,434 -
Computer equipment 12,061 7,341
Security equipment 2,857 -
46,666 28,064
Tangible assets in progress
Property - 33,126
Equipment 58 375
58 33,501
Depreciation and amortisation (8,178) (510)
Total 131,784 61,054
(Values expressed in thousand CVE)
31.12.11 31.12.10
Held-to-maturity investments
Cape Verde Treasury Bonds 200,000 200,000
Interest from held-to-maturity investments 3,791 3,538
Total 203,791 203,538
(Values expressed in thousands of CVE)
31.12.11 31.12.10
Up to 3 months 372,656 24,859
From 3 months to 1 year 567,939 81,899
From 1 to 5 years 77,735 51,006
Longer than 5 years 467,792 18,396
No set timeframe 6,742 2,943
Total 1,492,864 179,104
(Values expressed in thousands of CVE)
A total of 39,500 thousand escudos in Cape Verde treasury bonds have been transferred to customers in the form of a sale/ buy-back agreement.
27BANCO ESPÍRITO SANTO CABO VERDE
The movement under this heading was as follows:
NOTE 11 - Intangible assets
This item breaks down as follows:
The movement under this heading was as follows:
(Values expressed in thousands of CVE)
Property
Buildings - - - 39,949 33,088 243 73,038 243 72,794
Improvement of rented buildings - - - 20,164 37 337 20,201 337 19,864
- - - 60,113 33,126 580 93,239 580 92,658
Equipment
Furniture 10,062 137 9,925 8,333 2,167 18,396 2,304 16,091
Machines and office equipment 361 6 355 422 86 783 92 690
Motor vehicles 10,300 215 10,085 2,575 10,300 2,790 7,510
Fixtures - - - 2,059 375 36 2,434 36 2,398
Computer equipment 7,341 153 7,188 4,556 2,104 11,897 2,257 9,640
Security equipment - - - 2,857 119 2,857 119 2,738
28,064 510 27,553 18,227 375 7,088 46,666 7,598 39,067
Tangible assets in progress
Own buildings 33,088 - 33,088 - (33,088) - - - -
Costs of rented buildings 37 - 37 - (37) - - - -
Equipment 375 - 375 58 (375) - 58 - 58
33,501 - 33,501 58 (33,501) - 58 - 58
61,564 510 61,054 78,398 - 7,668 139,962 8,178 131,784
Balance as at 31.12.10 Balance as at 31.12.11
Accumulated depreciation
Net value
GrossValue
Depreciationand amortisation
TransfersAdditions Accumulated depreciation
Net value
GrossValue
(Values expressed in thousands of CVE)
Software 13,935 383 13,552 21,650 - 6,669 35,585 7,052 28,533
13,935 383 13,552 21,650 - 6,669 35,585 7,052 28,533
Balance as at 31.12.10 Balance as at 31.12.11
Accumulated depreciation
Net value
GrossValue
Depreciation and amortisation
TransfersAdditions Accumulated depreciation
Net value
GrossValue
31.12.11 31.12.10
Other intangible assets
Automatic information processing systems (software) 35,585 13,936
Depreciation and amortisation (7,052) (383)
Total 28,533 13,552
(Values expressed in thousand CVE)
Annual Report 201128 Financial Statements and Notes to the Financial Statements
NOTE 12 - Other assets
This item breaks down as follows:
NOTE 13 - Customer deposits and other loans
This item breaks down as follows:
“Other customer deposits” include the nominal values of Cape Verde treasury bonds, transferred to customers in the form of a sale/ buy-back agreement.
The scheduling of other customer deposits, in terms of maturity, as at 30 December 2011 and 31 December 2010, is as follows:
Other fixed-term customer deposits were negotiated at an average annual interest rate of 4.01% (31 December 2010: 4.18%).
31.12.11 31.12.10
Sundry debtors
Receivables from the Group 3,097 -
Income receivable
Other 2,762 -
Deferred expenses
Other administrative expenses 5,376 8,428
Other accruals 1,404 279
Total 12,639 8,707
(Values expressed in thousands of CVE)
31.12.11 31.12.10
Due on demand 4,982,477 67,515
Due on fixed term 382,035 98,433
Up to 3 months 263,253 64,248
From 3 months to 1 year 107,882 24,185
From 1 to 5 years 10,900 10,000
Total 5,364,512 165,948
(Values expressed in thousands of CVE)
31.12.11 31.12.10
Deposits 5,325,012 155,600
On demand 4,982,477 67,515
Fixed term 342,535 88,085
Other customer deposits 39,500 10,000
INTEREST 3,385 348
TOTAL 5,367,897 165,948
Customer deposits
Resident 775,721 154,314
Non-resident 4,555,262 596
Emigrants 36,914 11,038
Total 5,367,897 165,948
(Values expressed in thousands of CVE)
29BANCO ESPÍRITO SANTO CABO VERDE
NOTE 14 - Current tax liabilities
This item includes the estimated tax payable on the profit for the year ended 31 December 2011 and is presented as follows:
NOTE 15 - Other liabilities
This item breaks down as follows:
NOTE 16 - Equity
The share capital of the Bank is mCVE 1 433 000 (equivalent to 1,433,000 shares) and is fully paid up. 99.99% of the share capital is held by BES África SGPS, S.A.
NOTE 17- Interest and similar income
This item breaks down as follows:
31.12.11 31.12.10
Current tax liabilities
Sole Income Tax (Imposto Único sobre o Rendimento - IUR) 17,886 1,647
(Values expressed in thousands of CVE)
(Values expressed in thousands of CVE)
(Values expressed in thousand CVE)
31.12.11 31.12.10
Sundry creditors
Payables to the group 7,383 1,252
General Government 3,928 2,615
Payable expenses
Administrative costs 2,182 -
Wages and salaries 2,400 -
Other accruals 269 1,593
Total 16,162 5,459
31.12.11 31.12.10
Subscribed capital
Ordinary shares 1,433,000 1,433,000
(Values expressed in thousands of CVE)
31.12.11 31.12.10
Interest from investments in financial institutions 7,094 29
Interest from loans and advances to customers 68,782 2,645
Interest from Cape Verde government bonds 31,412 16,512
Total 107,288 19,186
Annual Report 201130 Financial Statements and Notes to the Financial Statements
NOTE 18 - Interest and similar expenses
This item breaks down as follows:
NOTE 19 - Fee and commission income and costs
This item breaks down as follows:
NOTE 20 - Wages and salaries
This item breaks down as follows:
NOTE 21 - General and administrative expenses
This item breaks down as follows:
Included in the item various specialized services are expenses related to (i) contracting and hiring of staff from Multipessoal Cabo Verde, totalling around mCVE 8,050, (ii) payment-system services, of around mCVE 1,900, (iii) auditing services, of around mCVE 2,205.
(Values expressed in thousand CVE)
(Values expressed in thousand CVE)
31.12.11 31.12.10
Interest from the interbank money market 1,095 104
Interest from customer deposits 7,268 519
Other 932 78
Total 9,295 701
31.12.11 31.12.10
Fee and commission income
Granted guarantees and endorsements 20,010 0
Documentary credit 19,199 0
Other commissions 17,207 4,403
56,416 4,403
Fee and commission expenses
For banking services rendered by third parties 854 120
Total 55,562 4,283
(Values expressed in thousand CVE)
31.12.11 31.12.10
Salaries 28,295 5,476
Social Charges 3,179 692
Other Staff Costs 2,515 120
Total 33,989 6,289
(Values expressed in thousands of CVE)
31.12.11 31.12.10
Supplies provided by third parties 2,717 216
Rent 2,006 0
Travelling and representation costs 6,466 33
Advertising 4,316 642
Professional charges incurred 6,030 662
Various specialized services 18,688 5,012
Other services 1,779 125
Total 42,002 6,690
31BANCO ESPÍRITO SANTO CABO VERDE
NOTE 22 - Contingent liabilities and commitments
Contingent liabilities and commitments related to the Bank’s activities appear under the off-balance-sheet item and break down as follows:
NOTE 23 - Transactions with related parties
The value of the bank’s transactions with related parties in the years ended 31 December 2011 and 2010, as well as related costs and income, is as follows:
Assets on the balance sheet related to related parties included in the table above are mainly connected to deposits and investments made in respect of those parties. Liabilities are essentially received bank deposits and various expenses to be reimbursed.
NOTE 24 – Fair value of financial assets and liabilities
Taking into consideration the maturity of assets and liabilities included in the balance, their book value corresponds to a reasonable estimate of their fair value.
NOTE 25 – Activity risk management
The Bank is exposed to various risks related to the use of financial instruments, which are analysed below:
Credit risk
Credit Risk results from the possibility of financial losses stemming from defaults on the part of customers or counterparts in relation to contractual obligations signed with the Bank when taking out credit. Credit risk is mainly related to traditional banking products – loans, guarantees, and other contingent liabilities.
Continuous management of the loan portfolio is undertaken, favouring the interaction between the various teams that are involved in risk management throughout the successive phases of the credit process. This approach is complemented by the introduction of continuous improvements both in the methodology and the tools for risk assessment and control, and of the procedures and decision-making circuits.
The bank’s credit risk profile is regularly scrutinized by the Credit Committee, specifically in regard to the evolution of the exposure to credit risk and the monitoring of eventual losses.
Market risk
Market risk generically represents liabilities resulting from an adverse change in value of a financial instrument because of variations in interest rates, exchange rates, share values, the prices of goods, volatility and credit spreads. In our market, and taking into consideration the relatively small scale of the financial and capital market, the risk is not highly significant with the exception of the exchange risk associated with currencies with variable exchange rates in relation to the Cape Verde escudo, in particular the US dollar, a currency in relation to which the Bank presents a balanced matching in terms of foreign exchange position.
(Values expressed in thousands of CVE)
31.12.11 31.12.10
Guarantees granted 1,140 317 227,091
Open documentary credit 462,256 63,455
Total 1,602,572 290,546
(Values expressed in thousand CVE)
Banco Espírito Santo 1,487,370 - 5,228 765 1,071,330 - 29 -
Banque Privée 2,653,886 - 1,836 - - - - -
Banco Espírito Sucursal Financeira Exterior Cabo Verde 1,443 7,580 - - - 1,901 - -
Total 4,142,699 7,580 7,064 765 1,071,330 1,901 29 -
Balance as at 31.12.10 Balance as at 31.12.11
Liabilities LiabilitiesIncome IncomeAssets AssetsExpenses Expenses
Annual Report 201132 Financial Statements and Notes to the Financial Statements
However, our market risk management is integrated with the management of the balance through the ALCO (Asset and Liability Committee) structure, a high-level committee within the BES Group. This body is responsible for defining policies in relation to the allocation and structuring of the balance, as well as for the control of exposure to risks related to interest rates, exchange rates and liquidity.
Liquidity Risk
By definition, liquidity risk results from the possible inability to finance assets by fulfilling responsibilities on the due dates and from potential difficulties in settling the portfolio of positions without incurring significant losses. The control of liquidity levels aims to maintain a satisfactory level of money in hand to respond to short-, medium- and long term financial needs. The financial strategy of the Group is expanded in the Management Report.
In order to assess the global exposure to liquidity risk, daily cash-flow reports are issued which make it possible not only to identify negative mismatches but also to provide information to dynamically cover them.
The bank has made significant efforts to diversify its resource base through the intensification of interventions at the level of the external market. This diversification lowers the liquidity risk and is one of the goals of the bank’s liquidity risk tolerance policies.
Operational risk
Operational Risk reflects in general the risk of negative impacts on earnings and/or equity as a result of inadequate or failed internal processes, information systems, or people-related or external events, including legal risks.
In order to manage operational risk, the Bank has started to implement a system which aims to identify the events which might represent a risk in order to monitor, control and mitigate risks.
NOTE 26 - Accounting Standards and Recently Issued Interpretations
Accounting Standards and recently issued interpretations which have not yet been adopted by the Bank
The accounting standards and recent interpretations that have not yet entered into force and which the Bank did not apply in its Financial Report can be analysed below. The Bank will adopt these standards when they come into force.
IFRS 9 - Financial instruments
In November 2009, the International Accounting Standards Board (IASB) published IFRS 9 - Financial Instruments Part I: Classification and Measurement Instruments, which must obligatorily be applied to annual periods beginning on or after 1 January 2013, with optional early application. This standard is part of the first phase of the IASB global project, which aims to replace the IAS 39 and covers the classification and measurement of financial assets.
The main aspects considered are as follows:
• Financial assets are to be classified in two categories: amortized cost or fair value. This decision is to be made at the initial moment of recognition of financial assets. Its classification depends on how the entity presents these financial assets in its business management model, as well as on the contractual characteristics of the financial flow associated with each financial asset;
• Debt instruments can only be measured for amortised cost accounting when their contracted financial flows represent only capital and interest, i.e., when they contain only basic debt characteristics and the entity, in its business-management model, holds these financial assets with the aim of capturing only their corresponding financial flows. All other debt instruments are recognised at their fair value;
• Equity instruments issued by third parties are recognised at their fair value, with subsequent variations being registered in the results for the year. However, an entity can choose to designate irrevocably a financial asset for which the variations in fair value and respective losses and gains are recognised as reserves. Losses and gains thus recognised cannot be recycled in the profits of the year. This is a discretionary decision and does not imply that all financial assets are treated in the same way. Dividends received are recognised as profits of the year;
• All financial assets will have to be measured at fair value, and the option established by IAS 39 of keeping these securities at their purchase value in situations when it cannot be reliably assessed ceases to exist;
• Changes in fair value attributable to credit risk connected to the financial liabilities classified in the category fair value option are directly recognised as Other comprehensive income. The remaining variations in fair value associated with these liabilities shall be recognised as profits. The amounts registered under Other comprehensive income shall not subsequently be transferred to profits.
The Bank is currently assessing the impact of adopting this standard.
33BANCO ESPÍRITO SANTO CABO VERDE
IFRS 13 - Fair Value Measurement
In May 2011, the International Accounting Standards Board (IASB), published the IFRS 13 - Fair Value Measurement, to be obligatorily applied to annual periods beginning on or after 1 January 2013, with optional early application. This standard presents a revised concept of fair value and new information requirements.
No significant impacts are expected for the Bank as a result of adopting this standard.
IAS 27 - Separate Financial Statements
In May 2011, the International Accounting Standards Board (IASB) published the IAS 27 - Separate Financial Statements, to be obligatorily applied to annual periods beginning on or after 1 January 2013, with optional early application. This standard IAS 27 (2011) does not introduce any changes in the application of IAS 27 with regard to separate financial statements; rather, it merely clarifies: 1) that an entity that prepares separate financial statements will have to comply with all the relevant IFRS standards, and 2) the need for disclosure requirements.
No significant impacts are expected for the Bank as a result of adopting this standard.
IFRS 7 (Changed) - Disclosures- Offsetting of financial gains and losses
In May 2011, the International Accounting Standards Board (IASB) published the IFRS 7 - Disclosures- Offsetting of financial gains and losses - to be obligatorily applied to annual periods beginning on or after 1 January 2013, with optional early application.
This standard has changed the requirements concerning information disclosure so that users of financial reports can assess the effect or potential effect of presenting the net form of financial assets and liabilities in an entity’s financial situation.
The Bank is currently assessing the impact of adopting this changed standard.
IAS 32 (Changed) - Offsetting of financial gains and losses
In May 2011, the International Accounting Standards Board (IASB) published a change to the IAS 32 - Offsetting of financial gains and losses, to be obligatorily applied to annual periods beginning on or after 01 January 2014, with optional early application. This change replaced paragraph AG38 of IAS 32 with new paragraphs AG38A-AG38f in relation to the required conditions to present financial assets and liabilities in net form in the financial situation of an entity.
• the criterion that an entity has the legal right to liquidate recognised amounts for their net value, and• the criterion that an entity has the intention of liquidating the amounts in net form or realizing the assets and liquidating the liabilities simultaneously.
The Bank is currently assessing the impact of adopting this standard.
Annual Report 201134 Financial Statements and Notes to the Financial Statements
3. Statutory Audit
Introduction
1 We have examined the consolidated financial statements of Banco Espírito Santo Cabo Verde, S.A., which comprises: the consolidated balance sheet as at 31 December 2011 (revealing total assets of CVE 6,884,564 million Cape Verde Escudos and total equity of CVE 1,482,422 million, including net income in the sum of CVE 44,611 million), the income and comprehensive income statements, the cash-flow statement and changes to equity for the year ended 31 December 2011, and respective Annexes.
Responsibilities
2 Responsibilities of the Board of Directors: a) the preparation of financial statements, in compliance with International Financial Reporting Standards, that truly and fairly reflect the financial position of the Bank, the results of their operations and comprehensive income. The cash-flows and changes to equity; b) the adoption of suitable accounting criteria and policies; c) the maintaining of an appropriate system of internal control.
3 Our responsibility is to express a professional, independent opinion based on our audit of the aforementioned financial statements.
Scope
4 The audit was performed in accordance with the Technical Standards and Audit Directives of the Portuguese Chamber of Chartered Accountants, which require that an audit be so planned and performed as to obtain an acceptable degree of assurance that the financial statements are free from materially relevant distortions. To this end, the audit includes:
• verification, based on sampling, of the documents underlying the figures and disclosures contained in the financial statements and an evaluation of the estimates, based on opinions and criteria determined by the Board of Directors, used in their preparation; • appraisal of the suitability of the accounting policies used and of their disclosure, taking into account the circumstances; • verification of the applicability of the principle of continuity; and • appraisal of the overall suitability of the presentation of the financial statements.
5 Our audit also included the verification of consistency between the financial information included in the Management Report and the financial statements.
6 It is our opinion that the audit performed provides an acceptable basis for the expression of our opinion.
Opinion
7 It is our opinion that the aforementioned financial statements truly and fairly present, in all materially relevant aspects, the financial position of Banco Espírito Santo Cabo Verde. S.A. as at 31 December 2011, the results of their operations, the comprehensive income, the cash-flows and changes to equity for the year ended 31 December 2011, in accordance with International Financial Reporting Standards (IFRS).
Report on other legal requirements
8 It is also our opinion that the information included in the Management Report is in accordance with the financial statements of the financial year ended 31 December 2011.
Lisbon, 30 March 2012
KPMG & AssociadosSociedade de Revisores Oficiais de Contas, S.A., (no. 189) represented by Fernando Gustavo Duarte Antunes (C.A. no. 1233)
KPMG & Associados - Sociedade de Revisores Oficiais de Contas, S.A.
Edifício Monumental
Av. Praia da Vitória, 71 - A, 11º
1069-006 Lisboa, Portugal
Telephone: +351 210 110 000
Fax: +351 210 110 121
Internet: www.kpmg.pt
35BANCO ESPÍRITO SANTO CABO VERDE
4. Statutory Auditor’s Report and Opinion
REPORT AND OPINION OF THE CHARTERED ACCOUNTANT
To the Shareholders of Banco Espírito Santo Cabo Verde, S.A.
It is our duty, as Statutory Auditor of Banco Espírito Santo Cabo Verde, S.A., to present the Report in our audit, as well as our opinion on the management, accounts and proposals report of the Board of Directors of Banco Espírito Santo Cabo Verde, S.A., for the year ended 31 December 2011.
Through contacts with the Board of Directors, as well as clarifications and information received from competent authorities, we obtained information on the bank’s activity and the business management undertaken and we audited the financial information produced over the fiscal year ended 31 December 2011, carrying out the required analysis.
We checked for compliance with the Law and Statutes of the Bank, verified the correctness of the bookkeeping and the corresponding supporting documentation, analysed whether the accounting policies and valuation criteria used by the bank lead to a correct evaluation of the balance sheets and results, and proceeded with other proceedings deemed necessary in the circumstances.
After year-end closing, we analysed the reporting documentation, namely the management report drawn up by the Board of Directors as well as the financial statements that include the balance sheet, income statement, comprehensive income statement, cash-flow statement and changes to equity for the year ended 31 December 2011, and the respective notes.
Based on the audit performed, we issued the corresponding Statutory Audit without reservations. We thank the Board of Directors and the competent authorities, from whom we always received the requested documentation and clarifications, concluding that:
a. The financial statements adequately present the financial position and results of the Bank; b. The accounting policies and valuation criteria adopted are suitable; and c. The management report presents the evolution of the bank’s business and its position in accordance with the legal and statutory provisions. Based on the work carried out, it is our opinion that the Annual General Meeting of the Bank may approve:
a.The Management Report and Accounts for the fiscal year ended 31 December 2011; b. The proposed appropriation of results included in the aforementioned Management Report. Finally, we would like to point out and thank the outstanding cooperation experienced in dealing with the Board of Directors of the Bank and the services with which we had contact.
Lisbon, 30 March 2012
THE CHARTERED ACCOUNTANT
KPMG & AssociadosSociedade de Revisores Oficiais de Contas, S.A., (no. 189) represented by Fernando Gustavo Duarte Antunes (C.A. no. 1233)
KPMG & Associados - Sociedade de Revisores Oficiais de Contas, S.A.
Edifício Monumental
Av. Praia da Vitória, 71 - A, 11º
1069-006 Lisboa, Portugal
Telephone: +351 210 110 000
Fax: +351 210 110 121
Internet: www.kpmg.pt
Annual Report 201136 Financial Statements and Notes to the Financial Statements
BANCO ESPÍRITO SANTO CABO VERDE, S.A.AUDITORS’ REPORT
Introduction
1 We have examined the consolidated financial statements of Banco Espírito Santo Cabo Verde, S.A., which comprises: the consolidated balance sheet as at 31 December 2011 (revealing total assets of CVE 6,884,564 million Cape Verde Escudos and total equity of CVE 1,482,422 million, including net income in the sum of CVE 44,611 million), the income and comprehensive income statements, the cash-flow statement and changes to equity for the year ended 31 December 2011, and respective annexes. Responsibilities
2 Responsibilities of the Board of Directors:
a) The preparation of financial statements, in compliance with International Financial Reporting Standards, that truly and fairly reflect the financial position of the bank. The result of the operations, the comprehensive income, cash-flows and changes to equity; b) adoption of suitable accounting criteria and policies; and c) the maintaining of an appropriate system of internal control.
3 Our responsibility is to express a professional, independent opinion based on our audit of the aforementioned financial statements.
Scope
4 The audit was performed in accordance with the Technical Standards and Audit Directives of the Portuguese Chamber of Chartered Accountants, which require that an audit be so planned and performed as to obtain an acceptable degree of assurance that the financial statements are free from materially relevant distortions. To this end, the aforementioned audit includes: • the verification, based on sampling, of the documents underlying the figures and disclosures contained in the financial statements and an evaluation of the estimates, based on opinions and criteria determined by the Board of Directors, used in their preparation; • the appraisal of the suitability of the accounting policies used and of their disclosure. Taking into account the circumstances; • the verification of the applicability of the principle of continuity; and • the appraisal of the overall suitability of the presentation of the financial statements.
5 Our audit also included the verification of consistency between the financial information included in the management report and the financial statements.
6 It is our opinion that the audit performed provides an acceptable basis for the expression of our opinion.
KPMG & Associados - Sociedade de Revisores Oficiais de Contas, S.A.
Edifício Monumental
Av. Praia da Vitória, 71 - A, 11º
1069-006 Lisboa, Portugal
Telephone: +351 210 110 000
Fax: +351 210 110 121
Internet: www.kpmg.pt
5. External Audit Report
37BANCO ESPÍRITO SANTO CABO VERDE
Opinion
7 It is our opinion that the aforementioned financial statements truly and fairly present, in all materially relevant aspects, the financial position of Banco Espírito Santo Cabo Verde. S.A. as at 31 December 2011, the results of their operations, the comprehensive income, the cash-flows and changes to equity for the year ended 31 December 2011, in accordance with International Financial Reporting Standards (IFRS). Report on other legal requirements
8 It is also our opinion that the information included in the management report is in accordance with the financial statements of the financial year ended 31 December 2011.
Lisbon, 30 March 2012
KPMG & AssociadosSociedade de Revisores Oficiais de Contas, S.A., (no. 189) represented by Fernando Gustavo Duarte Antunes (C.A. no. 1233)
Annual Report 201138 Information on Corporate Governance
Information on Corporate Governance
III
Cabo Verde
39BANCO ESPÍRITO SANTO CABO VERDE
1. Organizational and Governance Structure
The organic structure comprises a Board of Directors, supported by several areas: Global Risk, Compliance & AML, Internal Audit and two Boards: the Finance and Administrative Board and the Commercial Board.
The Commercial Board is managed by the Inside Director, proposals concerning commercial operations are presented by the coordinators and managers and are approved by the Credit Committee.
Administrative and Finance Board Commercial Board
Accounting& Reporting
Organization and Quality
Private Account Managers
Corporate Account Managers
National and International Operative
Commercial Assistants
Branches - Main Office, and Sal
Internal Audit
Global Risk
Compliance & AML
Organizational Chart
Secretariat
Board of Directors
Annual Report 201140 Information on Corporate Governance
2. Powers of the Board of Directors
The Chairman has full powers, individually or together with the Inside Director, with regard to the bank’s daily management, including: to represent the bank in any and all acts, contracts or documents within the scope of its activity, namely, credit concession and associated operations and to represent the bank before any public or private departments.
Together with the Administrative and Finance Director, the Inside Director also has powers to represent the Bank in a wide range of acts and contracts associated with the bank’s daily management, which include credit concession, granting bank guarantees, the subscription of financial instruments, human resource management, and relationships with public and private institutions, albeit limited by the amounts stated in the resolution of the Board of Directors, adopted on 7 June 2010.
Therefore, the Bank is legally bound by the signature of the Chairman and/or by two signatures, such as the signature of the Chairman and the Inside Director and, alternatively, the signature of the Inside Director and the Administrative and Finance Director for the acts and within the limits stated in the regulations of the Board of Directors.
3. Internal Control and Risk Management Systems
The internal control system includes three extremely important areas - the area of Compliance & AML, and the area of Risk - one operating upstream and the other downstream, thus involving all points of the process, from the beginning to its conclusion.
3.1. Global Risk Area
In 2011 the Global Risk area, in continuously managing and monitoring credit risk, operational risk, liquidity risk, and the bank’s interest rate, stood out for the improvements introduced to its techniques for analysing and monitoring credit operations, evaluating operational risk indicators, identifying actions to improve and mitigate risk sources of this nature, controlling the liquidity level and monitoring bank operations liable to exchange rates and interest rate variations.
Regarding credit risk management, although the bank does not have a quantitative internal model for measuring rating/scoring and impairment, all credit proposals were subjected to a risk analysis and opinion and to the deliberation of the Credit Committee.
The frequent monitoring of credit operations and the timely identification of operations with default triggers resulted in a quality credit portfolio and, therefore, a reduced amount of loss due to the impairment of credit operations. In general, a minimum 1% of credit provision was applied, determined by regulation in the case of class A credit risk.
In 2011, the bank started implementing the Operational Risk Management System by identifying operational risk sources and events associated with the activities of the bank. There are still several ongoing related activities, such as the creation of procedures concerning the collection, communication, recording, evaluation and reporting of operational risk events. For that
purpose, the bank produced operational internal risk regulations and several other documents supporting the management of that risk, such as the process catalogue and tree.
Market and liquidity risk was another risk which was subjected to special attention in 2011, with particular focus on interest rate risk. The bank monitored and analysed the degree of liquidity, identified the gap between operations (credit and deposit), and also measured the impact of operations liable to interest and exchange rate variations in the results of this period.
Some tools (several maps) were also implemented, based on the procedures set up by Basel III for measuring and evaluating the liquidity and interest rate risk level.
3.2. Compliance & AML
The area of Compliance & AML, Compliance and Anti-Money Laundering, which is responsible for the control and compliance of activities and business deals carried out, ensures that support is given to the other areas of the bank involved in the contractual process. Its main function is to ensure correct compliance with legal norms and provisions, while setting up procedures in line with the demands of the competent regulatory bodies and main-office strategies.
This area is also responsible for internal norms and procedures and the practice of internal control and is also in charge of preventing and combating money laundering, while setting up procedures in line with the demands of the competent regulatory bodies and institutional strategies.
In 2011, the institution carried out two refresher actions abroad, focusing on the areas of internal control and the prevention of money laundering in line with the priorities outlined / adopted by the Government of Cape Verde, which has selected the fighting of financial crime as the sine qua non condition for maintaining the country’s international credibility.
With the aim of ensuring proper supervision of the bank’s activities in relation to its competences, several control mechanisms were created which can be applied to its main processes and operations, always with the objective of complying with current instructions and regulations.
A contingency plan was also implemented, using periodic tests, and aid was provided for the implementation of policies for monitoring national and international trends in the sector.
3.3. Internal Audit
The main objective of the Internal Audit area is to determine whether the risk management, internal control, and governance systems which have been defined and implemented are appropriate and operate in such a way as to ensure that:
• Risks are properly identified and managed;• The most relevant information concerning management, financial and operational activities is correct, reliable, and timely;• The most significant actions of employees are in compliance with the policies, norms, procedures, laws and regulations of Cape Verde;• Resources are economically procured, efficiently used and appropriately protected;• Programmes, plans and objectives are accomplished;• The legal and regulatory requirements that have the greatest impact on the organization are identified and properly dealt with.
41BANCO ESPÍRITO SANTO CABO VERDE
This action is carried out by the Audit and Inspection Department of BES Group within the scope of its area of intervention, directly managed with the Administration of the Bank.
4. Administrative and FinanceWithin the scope of its competences, the Administrative and Finance area carries out the supervision and monitoring of the administrative area, ensuring the supply of goods and services which are needed for the running of the bank while also providing Management Information deemed to be relevant to the bank´s activity, including the preparation of the monthly activity report.
Regarding this component, its area of activity includes Accounting and Report management, specifically comprising:
• Entering all operations carried out by the branch;• Providing the necessary reporting, both internally and externally;• Preparing the branch’s budget and analysing and monitoring its enforcement;• Ensuring compliance with tax obligations;• Carrying out the necessary reconciliation controls.
Another area of activity is Treasury Management and Capital Markets, which includes:
• Financing the branch’s activity and the daily management of liquidity;• Managing foreign exchange and Money Market positions;• Monitoring exposure to counterparties, in view of approved limits;• Managing assets and liabilities, with the aim of risk reduction;• Interest rate hedging.
5. OperativeThe operative area is responsible for the operative process of account opening, managing credit cards, debit cards (vint24) and pre-paid cards, issuing and transferring credit contracts, term deposit contracts and issuing guarantees and documentary credits.
During 2011, interbank transfers played a major role in the Operative area, particularly external operations, which have surpassed domestic operations in terms of turnover.
With a vast network of correspondent banks, the BES Group can use this network for its international operations, facilitating communication and speeding up processes.
6. CommercialThe Commercial Board is responsible for the overall management of clients. For improved client management, two preferential sectors were set up: individuals and companies. Two coordinating offices were thereby created to supervise each of the market sectors, their main objective being to manage and coordinate the client portfolio in the two branches (Praia and Sal).
In the private-account sector, commercial activities, characterized by personalized management and service, focus on clients with a medium to high income, and in the corporate sector, on medium to large companies and branches of foreign companies in Cape Verde.
The commercial model is as follows: the branches’ activities involve only the basic customer transactions (deposits, withdrawals, sale/ purchase of foreign currency, payments), while other operations (opening an account, transfers, credit, the collection of term deposits) are managed by the commercial area (commercial managers and assistants) and are executed by the BackOffice in the operative area.
According to this model, the branches undertake full commercial activity whereas the operational activities are carried out centrally.
Concerning the operative area
Received payment orders 941 8,485
Domestic 485 551
International 456 7,934
Issued payment orders 1,278 10,804
Domestic 589 574
International 689 10,230
Documentary Credit 10 342
Import 10 342
Export 0 0
Bank Guarantees 49 1,210
Issued 49 1,210
Received 0 0
External Operations
Quantity Amount
2011
Cabo Verde
Banco Espírito Santo Cabo Verde, S.A.Avenida Cidade de Lisboa, C.P. 35, Praia, Santiago, Cape VerdeShare Capital CVE 1,433,000,000$00Registered at Praia Company Register under number 3076VAT 261973240
Cover image:Dragoljub Zamurovic“Costa Atlântica, Praia de São Pedro da Maceda”, 6 july 2011