FIRST INVESTMENT BANK AD
CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
WITH INDEPENDENT AUDITORS' REPORT THEREON
1
Individual statement of profit or loss and of other comprehensive income for the year ended 31 December 2021
In BGN '000
Note 2021 2020
Interest income 334,310 313,863
Interest expense (51,845 ) (64,185 )
Net interest income 6 282,465 249,678
Fee and commission income 149,209 120,807
Fee and commission expense (25,704 ) (21,615 )
Net fee and commission income 7 123,505 99,192
Net trading income 8 15,742 12,531
Other net operating income 9 13,258 12,308
TOTAL INCOME FROM BANKING OPERATIONS 434,970 373,709
Administrative expenses 10 (192,083 ) (193,807 )
Allowance for impairment 11 (125,663 ) (98,707 )
Other income/(expenses), net 12 7,608 (29,696 )
PROFIT BEFORE TAX 124,832 51,499
Income tax expense 13 (13,424 ) (5,982 )
GROUP PROFIT AFTER TAX 111,408 45,517
Other comprehensive income
Items which should or may be reclassified as profit or loss
Exchange rate differences from translation of foreign
operations1,333 (774 )
Revaluation reserve of investments in securities(9,319 ) 658
Total other comprehensive income (7,986 ) (116 )
TOTAL COMPREHENSIVE INCOME 103,422 45,401
Net profit attributable to:
Ordinary equity holders 110,595 44,974
Non-controlling interest 813 543
Total comprehensive income attributable to:
Ordinary equity holders 102,609 44,858
Non-controlling interest 813 543
Basic and diluted earnings per share (BGN) 14 0.74 0.36
The statement of profit or loss and of comprehensive income is to be read in conjunction with the notes to and
forming part of the financial statements set out on pages 5 to 80.
The financial statements have been approved by the Managing Board on 28 April 2022 and signed on its behalf by:
Svetozar Popov
Executive Director
Chavdar Zlatev
Executive Director
Ianko Karakolev
Chief Financial Officer
Audited as per the auditors' report dated 28/04/2022:
Nedyalko Apostolov
Partner
BDO Bulgaria OOD
Tsvetana Stefanina, Manager
Registered auditor
responsible for the audit
Atina Mavridis
Partner
ECOVIS AUDIT BG OOD
Rayna Stefanova
Registered auditor
responsible for the audit
2
Consolidated statement of the financial position as at 31 December 2021
In BGN '000
Note
2021 2020
ASSETS
Cash and balances with Central Banks 15 1,970,814 2,133,197
Investments in securities 16 1,673,781 1,292,641
Loans and advances to banks and other financial institutions 17 87,456 106,111
Loans and advances to customers 18 6,653,944 6,312,887
Property and equipment 19 80,198 77,026
Intangible assets 20 15,566 16,443
Derivatives held for risk management 1,042 5,110
Current tax assets - 283
Repossessed assets 22 459,853 713,619
Investment Property 23 732,850 414,021
Rights of use assets 24 92,169 154,080
Other assets 25 129,548 110,002
TOTAL ASSETS 11,897,221 11,335,420
LIABILITIES AND CAPITAL
Due to banks 26 8,722 2,747
Due to other customers 27 9,973,631 9,542,276
Liabilities evidenced by pape
r
28 120,002 103,649
Financial liabilities at fair value through profit or loss 2,164 -
Subordinated term debt 29 9,622 9,623
Hybrid debt 29 320,733 267,579
Derivatives held for risk management 2,166 410
Defe
r
red tax liabilities 21 26,927 21,644
Current tax liabilities 1,714 12
Lease liabilities 24 92,405 154,481
Other liabilities 30 19,293 16,579
TOTAL LIABILITIES 10,577,379 10,119,000
Issued share capital 31 149,085 149,085
Share premium 31 250,017 250,017
Statutory reserve 31 39,865 39,865
Revaluation reserve of investments in securities 9,115 18,434
Revaluation reserve on property 4,500 4,500
Reserve from translation of foreign operations 2,592 1,259
Other reserves and retained earnings 31 860,339 749,744
TOTAL SHAREHOLDERS’ EQUITY 1,315,513 1,212,904
Non-controlling interest 4,329 3,516
TOTAL GROUP EQUITY
TOTAL LIABILITIES AND GROUP EQUITY
The statement of the financial position is to be read in conjunction with the notes to and forming part of the financial statements
set out on pages 5 to 80
The financial statements have been approved by the Managing Board on 28 April 2022 and signed on its behalf by:
Svetozar Popov
Executive Director
Chavdar Zlatev
Executive Director
Ianko Karakolev
Chief Financial Officer
Audited as per the auditors' report dated 28/04/2022:
Nedyalko Apostolov
Partner
BDO Bulgaria OOD
Tsvetana Stefanina, Manager
Registered auditor
responsible for the audit
Atina Mavridis
Partner
ECOVIS AUDIT BG OOD
Rayna Stefanova
Registered auditor
responsible for the audit
3
Consolidated statement of cash flows for the year ended 31 December 2021
In BGN '000
2021 2020
Net cash flow from operating activities
Net profit 111,408 45,517
Adjustment for non-cash items
Allowance for impairment 125,664 54,680
Net interest income (282,465 ) (249,678 )
Depreciation and amortization 12,201 13,165
Tax expense 13,424 5,982
(Profit)/loss from sale and write-off of tangible and intangible fixed assets, net (13 ) 44
Loss/(Profit) from sale of other assets, net 5,835 (999 )
(Positive) revaluation of investment property (30,340 ) (2,312 )
(44,286 ) (133,601 )
Change in operating assets
(Increase) in financial assets at fair value through profit or loss (2,156 ) (329 )
(Increase) in financial assets at fair value in other comprehensive income (272,846 ) (110,506 )
(Increase)/decrease in loans and advances to banks and financial institutions (4,141 ) 1,055
(Increase) in loans to customers (558,881 ) (338,605 )
Net decrease in other assets 51,027 8,134
(786,997 ) (440,251 )
Change in operating liabilities
Increase in due to banks 6,051 745
Increase in amounts owed to other depositors 452,177 447,090
Net (decrease) in other liabilities (59,506 ) (5,554 )
Interest received 371,517 287,855
Interest paid (72,731 ) (72,963 )
Dividends received 455 430
Paid profit tax, net (5,039 ) (1,672 )
NET CASH FLOW FROM OPERATING ACTIVITIES (138,359 ) 82,079
Cash flow from investing activities
(Purchase) of tangible and intangible fixed assets (14,435 ) (12,408 )
Sale of tangible and intangible fixed assets 37 32
Sale of other assets 14,396 13,651
(Increase) of investments (116,363 ) (186,581 )
NET CASH FLOW FROM INVESTING ACTIVITIES (116,365 ) (185,306 )
Financing activities
Increase/(decrease) in borrowings 16,453 (5,805 )
Increase in subordinated liabilities 53,145 5,688
Capital increase through newly issued shares - 39,085
Increase of share premium reserve of newly issued shares - 153,017
NET CASH FLOW FROM FINANCING ACTIVITIES 69,598 191,985
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (185,126 ) 88,758
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD (See Note 33)
The cash flow statement is to be read in conjunction with the notes to and forming part of the financial statements set out on
pages 5 to 80.
The financial statements have been approved by the Managing Board on 28 April 2022 and signed on its behalf by:
Svetozar Popov
Executive Director
Chavdar Zlatev
Executive Director
Ianko Karakolev
Chief Financial Officer
Audited as per the auditors' report dated 28/04/2022:
Nedyalko Apostolov
Partner
BDO Bulgaria OOD
Tsvetana Stefanina, Manager
Registered auditor
responsible for the audit
Atina Mavridis
Partner
ECOVIS AUDIT BG OOD
Rayna Stefanova
Registered auditor
responsible for the audit
4
Consolidated statement of shareholders’ equity for the year ended 31 December 2021
In BGN '000
Issued
share
capital
Share
premiu
m
Other
reserves
and
retained
earnings
Revaluation
reserve of
investments
in securities
Revaluati
on
reserve
on
property
Reserve
from
translatio
n of
foreign
operation
s
Statutor
y
reserve
Non-
controlling
interest Total
Balance at 01 January 2020
Total comprehensive
income for the period
Net profit for the year ended
31 December 2020 - - 44,974 - - - - 543 45,517
Other comprehensive
income for the period
Revaluation reserve of
investments in securities
Reserve from translation of
foreign operations
(774 )
(774 )
Capital increase through newly
issued shares 39,085 - - - - - - - 39,085
Share premium reserve of
newly issued shares - 156,339 - - - - - - 156,339
Decrease of premium reserve
related to capital issue
expenses - (3,322 ) - - - - - - (3,322 )
Balance as at 31 December
2020
Total comprehensive
income for the period
Net profit for the year ended
31 December 2021 - - 110,595 - - - - 813 111,408
Other comprehensive
income for the period
Revaluation reserve of
investments in securities
(9,319 )
Reserve from translation of
foreign operations
Balance as at 31 December
2021
The statement of changes in equity is to be read in conjunction with the notes to and forming part of the financial statements set
out on pages 5 to 80.
The financial statements have been approved by the Managing Board on 28 April 2022 and signed on its behalf by:
Svetozar Popov
Executive Director
Chavdar Zlatev
Executive Director
Ianko Karakolev
Chief Financial Officer
Audited as per the auditors' report dated 28/04/2022:
Nedyalko Apostolov
Partner
BDO Bulgaria OOD
Tsvetana Stefanina, Manager
Registered auditor
responsible for the audit
Atina Mavridis
Partner
ECOVIS AUDIT BG OOD
Rayna Stefanova
Registered auditor
responsible for the audit
Notes to the financial statements
5
1. Basis of preparation
(a) Statute
registered office in Sofia, at 37 Dragan Tzankov Blvd .
Following the successful Initial Public Offering of new shares at the Bulgarian Stock Exchange – Sofia,
on June 13th 2007 the Bank was registered as a public company in the Register of the Financial
Supervision Commission pursuant to the provisions of the Law on the Public Offering of Securities.
The Bank’s management has a dual board structure, with the Managing Board and the Supervisory
Board having the following members:
Managing Board
o Mr Nikola Bakalov – Chief Executive Officer
o Mr Svetozar Popov – Executive Director
o Mr Chavdar Zlatev – Executive Director
o Ms Ralitsa Bogoeva – Executive Director
o Mr Ianko Karakolev – Managing Board member
o Ms Nadya Koshinska – Managing Board member
In 2020, the composition of the Managing Board changed, as follows:
o Mr Nikola Bakalov (currently Chief Executive Officer) was appointed as member of the
Bank’s Managing Board and Executive Director after approval from the Bulgarian National
Bank; he has been performing these functions since this circumstance was listed in the
Commercial Register and Register of NPLE with the Registry Agency on 7 February 2020.
On 25 March 2020 he was appointed as Chief Executive Officer.
o The circumstance that Mr Nedelcho Nedelchev was no longer member of the Bank’s
Managing Board and Chief Financial Officer was registered in the Commercial Register
and Register of NPLE on 14 April 2020 after approval from the Bulgarian National Bank.
o The circumstance that Mr Jivko Todorov was no longer member of the Bank’s Managing
Board was registered in the Commercial Register and Register of NPLE on 22 April 2020
after approval from the Bulgarian National Bank.
o Ms Ralitsa Bogoeva (Executive Director) was appointed as member of the Bank’s
Managing Board and Executive Director after approval from the Bulgarian National Bank;
she has been performing these functions since this circumstance was listed in the
Commercial Register and Register of NPLE with the Registry Agency on 29 May 2020.
o Mr Ianko Karakolev (Managing Board member) was appointed as member of the Bank’s
Managing Board after approval from the Bulgarian National Bank; he has been performing
this function since this circumstance was listed in the Commercial Register and Register of
NPLE with the Registry Agency on 25 June 2020.
Supervisory Board
o Mr Evgeni Lukanov – Supervisory Board chairperson
o Mr Jordan Skortchev – Supervisory Board member
o Mr Georgi Mutafchiev - Supervisory Board member (deceased on 03.07.2021, delisted as
member on 13.12.2021)
o Ms Radka Mineva – Supervisory Board member
o
Ms Maya Georgieva – Supervisory Board member
Notes to the financial statements
6
o Mr Jyrki Koskelo – Supervisory Board member
At 31 December 2021 the total number of employees was 2,466 (31 December 2020: 2,524).
The Bank’s beneficial owners are disclosed in Note 31 below.
The consolidated financial statements of the Bank as at and for the year ended 31 December 2021
comprise the Bank and its subsidiaries (see note 36), together referred to as the “Group”.
The Group has foreign operations in Cyprus (Cyprus Branch) and Albania (subsidiary).
(b) Statement of compliance
The financial statements were drawn up in accordance with the International Financial Reporting
Standards (IFRS) endorsed by the European Commission.
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of
applying the Group’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements, are
disclosed in Note 2 (p).
(c) Presentation
The financial statements are presented in Bulgarian Leva (BGN) rounded to the nearest thousand.
The financial statements are prepared in accordance with the fair value principle of derivative financial
instruments, financial instruments recognised at fair value in profit or loss, investment properties, as
well as assets recognised at fair value in other comprehensive income. Other financial assets and
liabilities and non-financial assets and liabilities are stated at amortised cost or historical cost
convention.
(d) New standards, amendments and interpretations effective as of 01 January 2020
The following amendments to existing standards issued by the International Accounting Standards
Board are effective for the current period:
Amendments to the Conceptual Framework for Financial Reporting (issued on 29 March 2018 and
effective for annual periods beginning on or after 1 January 2020)
Definition of Material – Amendments to IAS 1 and IAS 8 (issued on 31 October 2018 and effective
for annual periods beginning on or after 1 January 2020)
Interest Rate Benchmark Reform – Amendments to IFRS 9, IAS 39 and IFRS 7 (issued on 26
September 2019 and effective for annual periods beginning on or after 1 January 2020)
Definition of a Business – Amendments to IFRS 3 (issued on 22 October 2018 and effective for
acquisitions that occur on after the beginning of the annual reporting period beginning on or after 1
January 2020).
Amendment to IFRS 16 Leases – Covid-19-Related Rent Concessions (issued on 28 May 2020
and effective for annual periods beginning on or after 1 January 2020)
The adoption of these amendments to the existing standards has not led to any changes in the Group’s
accounting policies.
(e) Documents issued by IASB/IFRICs not yet endorsed by the European Commission
These new or revised standards, new interpretations and amendments to existing standards that at
the reporting date are already issued by the International Accounting Standards Board have not yet
been endorsed by the EU and therefore are not taken into account by the Company in preparing these
financial statements.
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current
or Non-current, effective as of 1 January 2023, not yet adopted by the EU.
Notes to the financial statements
7
Amendments to IAS 1 Presentation of Financial Statements, IFRS Practice Statement 2:
Disclosure of Accounting Policies, effective as of 1 January 2023, not yet adopted by the EU.
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors:
Definition of Accounting Estimate, effective as of 1 January 2023, not yet adopted by the EU.
Amendments to IAS 12 Income Taxes: Deferred tax related to assets and liabilities arising from
a single transaction, effective as of 1 January 2023, not yet adopted by the EU.
(i) Interest income and expense
Interest income and expense is recognised in the profit or loss as it accrues, taking into account the
effective yield of the asset (liability) or an applicable floating rate. The effective interest rate is the rate
that exactly discounts the estimated future cash payments and receipts through the expected life of
the financial asset or liability to the carrying amount of the financial asset or liability.
When calculating the effective interest rate, the Group estimates future cash flows considering all
contractual terms of the financial instrument but not future credit losses.
The calculation of the effective interest rate includes all fees paid or received as well as discount and
premiums which are an integral part of the effective interest rate. Transaction costs include incremental
costs that are directly attributable to the acquisition or issue of a financial asset or liability.
Interest income is calculated by applying the effective interest rate on the gross value of the financial
asset, except for impaired assets for which the effective interest rate is applied to the amortised cost
of the financial asset.
(ii) Fees and Commissions
Fee and commission income arises on financial services provided by the Group and is recognised in
profit or loss when the corresponding service is provided.
(iii) Net trading income
Net gains (losses) on financial assets and liabilities held for trading includes those gains and losses
arising from disposals and changes in the fair value of financial assets and liabilities held for trading
as well as trading income in dealing with foreign currencies and exchange differences from daily
revaluation of the net open foreign currency position of the Group.
(iv) Dividend income
Dividend income is recognised when the right to receive income is established. Usually this is the ex-
dividend date for equity securities.
(b) Basis of consolidation
(i) Business Combinations
Business combinations are accounted for using the acquisition method as at the acquisition date – i.e.
when control is transferred to the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity.
The Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• if the business combination is achieved in stages, the fair value of the pre-existing equity
interest in the acquiree; less
• the net recognised amount (generally fair value) of the identifiable assets acquired and
liabilities assumed.
Negative goodwill arising on acquisition is re-assessed and any excess remaining after the
reassessment is recognised in the income statement.
Notes to the financial statements
8
The consideration transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognised in profit or loss.
Transaction costs, other than those associated with the issue of debt or equity securities, that the
Group incurs in connection with a business combination are expensed as incurred.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent
consideration is classified as equity, then it is not remeasured and settlement is accounted for within
equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised
in profit or loss.
If share-based payment awards (replacement awards) are required to be exchanged for awards held
by the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of
the amount of the acquirer’s replacement awards is included in measuring the consideration
transferred in the business combination. This determination is based on the market-based value of
the replacement awards compared with the market-based value of the acquiree’s awards and the
extent to which the replacement awards relate to past and/or future service.
(ii) Non-controlling interest
Non-controlling interest is measured at its proportionate share of the acquiree’s identifiable net assets
at the acquisition date.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for
as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are
based on a proportionate amount of the net assets of the subsidiary. No adjustments are made to
goodwill and no gain or loss is recognised in profit or loss; they are recognised directly in equity.
(iii) Subsidiaries
Subsidiaries are those enterprises controlled by the Bank. The Group controls an entity when it is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases.
(iv) Loss of control
On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-
controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit
arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the
previous subsidiary, then such interest is measured at fair value at the date that control is lost.
Subsequently that retained interest is accounted for as an equity-accounted investee or in accordance
with the Group’s accounting policy for financial instruments depending on the level of influence
retained.
(v) Transactions eliminated on consolidation
Intra-group income, expenses, balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated in preparing the consolidated financial
statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
(c) Foreign currency transactions
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (‘the functional currency’).
The consolidated financial statements are presented in Bulgarian leva, which is the Group’s functional
and presentation currency.
Notes to the financial statements
9
(ii) Transactions and balances
Transactions in foreign currencies are translated into the respective functional currencies of the
operations at the spot exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated into the functional currency at
the spot exchange rate at that date. Foreign currency differences arising on translation are difference
between amortised cost in functional currency in the beginning of period, adjusted with effective
interest and received payments during the period, and amortised cost in foreign currency at the spot
exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated into the functional currency at the spot
exchange rate at the date that the fair value was determined.
(iii)
Foreign operations
The assets and liabilities of foreign operations are translated to Bulgarian leva at exchange rates at
the reporting date. The income and expenses of foreign operations are translated to Bulgarian leva at
exchange rates at the dates of the transactions. Foreign currency differences are recognised in other
comprehensive income. The functional currency of the foreign operations in Cyprus is determined by
the management to be the Euro. The functional currency of the foreign operations in Albania is
determined by the management to be the Albanian Lek.
(d) Financial assets
(i) Recognition
The Group recognizes a financial asset when it becomes a party to the contractual provisions of the
instrument. The Group initially recognizes trade and other receivables on the date of transaction.
Advances to customers are recognised when cash is advanced to the borrowers. At initial recognition,
the Bank measures all financial assets at fair value plus, in the case of financial asset not measured
at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of
the financial asset.
The Group classifies financial assets in the following categories: financial assets measured at
amortized cost, financial assets measured at fair value through other comprehensive income, or
financial assets measured at fair value through profit or loss. Management determines the
classification of investments at initial recognition according to the business model for management of
the specific class of financial assets and the contractual features of the cash flows associated with that
financial asset.
(ii) Financial assets at amortised cost
Debt instruments held within the Group’s business model whose objective is to hold assets in order to
collect contractual cash flows and where the contractual cash flows give rise only to principal and
interest payments are recognised at amortised cost. After the initial recognition assets are booked at
amortised cost.
Recognition at amortised cost requires application of the effective interest rate method. The amortised
cost of a financial asset is the value at which the financial asset was initially recognised, minus the
principal repayments plus or minus the amortisation accrued by using the effective interest rate method
for each difference between the initial value and the value at the maturity date and minus impairment.
(iii) Financial assets at fair value through other comprehensive income
Debt instruments held within the Group’s business model whose objective is to hold assets in order to
collect contractual cash flows or to sell the asset and where the contractual cash flows give rise only
to principal and interest payments are recognised at fair value in other comprehensive income. After
initial recognition, the asset is measured at fair value with changes in fair value in revaluation reserve
of investments in securities (other comprehensive income). When the debt instrument is written off,
the profit or loss accrued and recognised in other comprehensive income is transferred to profit or loss.
Notes to the financial statements
10
(iv) Financial assets at fair value through profit or loss
The position contains two categories: financial assets held for trading and financial assets not
classified in the above two categories. A financial asset is classified in this category if it was acquired
for the purpose of short-term sale or if its contractual characteristics do not meet the requirement for
generating payments of only principal and interest. Derivatives are also categorised as held for trading
unless they are designated as hedges.
The Group does not designate any debt instrument as at fair value through profit or loss to remove or
significantly reduce an accounting mismatch.
(v) Capital instruments at fair value through other comprehensive income
The Group may make an irrevocable election to recognize changes in fair value of investments in
equity instruments through other comprehensive income, not through profit or loss. A gain or loss from
fair value changes will be shown in other comprehensive income and will not be reclassified
subsequently to profit or loss. When the equity instrument is written off, the profit or loss accrued and
recognised in other comprehensive income is directly transferred to other reserves and retained
earnings.
(vi) Fair value measurement principles
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal, or in its absence,
the most advantageous market to which the Group has access at that date. The fair value of a liability
reflects its non-performance risk.
When applicable, the Group measures the fair value of an instrument using the quoted price in an
active market for that instrument. A market is regarded as active if transactions for the asset or liability
take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
When there is no quoted price in an active market, the Group uses valuation techniques that maximise
the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen
valuation technique incorporates all the factors that market participants would take into account in
pricing a transaction.
The best evidence of the fair value of a financial instrument at initial recognition is normally the
transaction price – i.e. the fair value of the consideration given or received. If the Group determines
that the fair value at initial recognition differs from the transaction price and the fair value is evidenced
neither by a quoted price in an active market for an identical asset or liability nor based on a valuation
technique that uses only data from observable markets, the financial instrument is initially measured
at fair value, adjusted to defer the difference between the fair value at initial recognition and the
transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis
over the life of the instrument but no later than when the valuation is supported wholly by observable
market data or the transaction is closed out.
If an asset or a liability measured at fair value has a bid price and an ask price, the Group measures
assets and long positions at a bid price and liabilities and short positions at an ask price.
The Group which holds portfolios of financial assets and financial liabilities is are exposed to market
risk and credit risk. If the Group manages these portfolios on the basis of its net exposure either to
market risk or credit risk, the fair value is measured on the basis of a price that would be received to
sell a net long position or paid to transfer a net short position for a particular risk exposure. Those
portfolio-level adjustments are allocated to the individual assets and liabilities on the basis of the
relative risk adjustment of each of the individual instruments in the portfolio.
The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting
period during which the change has occurred.
(vii) Derecognition
The Group derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or when the Group transfers these rights in a transaction in which substantially
Notes to the financial statements
11
all the risks and rewards of ownership of the financial assets are transferred to the buyer. Any interest
in transferred financial assets that is created or retained by the Group is recognised as a separate
asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or
cancelled or expire.
The Group enters into transactions whereby it transfers financial assets recognised in its statement of
financial position, but retains either all or substantially all risks and rewards of the transferred asset. If
all or substantially all risks and rewards are retained, then the transferred assets are not derecognised
in the statement of financial position (an example of such transactions are repo deals).
In transactions in which the Group neither retains nor transfers substantially all the risks and rewards
of ownership of a financial asset, it derecognises the asset if it does not retain control over the asset.
The rights and obligations retained in the transfer are recognised separately as assets and liabilities
as appropriate. In transfers in which, control over the asset is retained, the Group continues to
recognise the asset to the extent of its continuing involvement, determined by the extent to which it is
exposed to changes in the value of the transferred asset.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, cash deposited with central banks and
short-term highly liquid accounts and advances to banks with original maturity of up to three months.
(f) Investments
Investments that the Group holds for the purpose of short-term profit taking or repurchases are
classified as financial assets for trading. Investments in debt instruments held by the Group as part of
a business model for the purpose of collecting contractual cash flows are classified as financial assets
at amortised cost. Investments in debt instruments held by the Group as part of a business model for
the purpose of collecting contractual cash flows and sale are classified as financial assets at fair value
in other comprehensive income. All other investments, including those whose contractual terms do not
meet the requirement for generation of only principal and interest payments are classified as
recognised at fair value in profit or loss.
(g) Securities borrowing and lending business and repurchase transactions
(i) Securities borrowing and lending
Investments lent under securities lending arrangements continue to be recognised in the statement of
financial position and are measured in accordance with the accounting policy for assets held for trading
or available-for-sale as appropriate. Cash collateral received in respect of securities lent is recognised
as liabilities to either banks or customers. Investments borrowed under securities borrowing
agreements are not recognised. Cash collateral placements in respect of securities borrowed are
recognised under loans and advances to either banks or customers. Income and expenses arising
from the securities borrowing and lending business are recognised on an accrual basis over the period
of the transactions and are included in interest income or expense.
(ii) Repurchase agreements
The Group enters into purchases (sales) of investments under agreements to resell (repurchase)
substantially identical investments at a certain date in the future at a fixed price. Investments
purchased subject to commitments to resell them at future dates are not recognised.
The amounts paid are recognised in loans to either banks or customers. The receivables are shown
as collateralised by the underlying security. Investments sold under repurchase agreements continue
to be recognised in the statement of financial position and are measured in accordance with the
accounting policy for either assets held for trading or available-for-sale as appropriate. The proceeds
from the sale are reported as liabilities to either banks or other customers.
The difference between the purchase (sale) and resell (repurcha
se) considerations is recognised on
an accrual basis over the period of the transaction and is included in interest income (expenses).
Notes to the financial statements
12
Borrowings are recognised initially at ‘cost’, being their issue proceeds (fair value of consideration
received) net of transaction costs incurred. Borrowings are subsequently stated at amortised cost and
any difference between net proceeds and the redemption value is recognized in profit or loss over the
period of the borrowings using the effective yield method.
If the Group purchases its own debt, it is removed from the statement of financial position and the
difference between the carrying amount of a liability and the consideration paid is included in other
operating income.
(i) Offsetting
Financial assets and liabilities are offset and the net amount is reported in the statement of financial
position when the Group has a legally enforceable right to set off the recognised amounts and the
transactions are intended to be settled on a net basis.
(j) Impairment of financial assets
The Group recognizes 12-month expected credit loss as loss allowance when there is no significant
increase in the credit risk since initial recognition. When there is a significant increase in credit risk
since initial recognition, expected credit losses for the remaining life of the financial assets are
recognized as loss allowance.
Whether credit risk is significantly increased or not is determined based on the following factors and
events for the debtor or the exposure:
Internal behavioural scoring of natural persons, companies and institutions whose exposures are
above the threshold for significance;
Decrease in credit rating (internal or external) by a given number of notches for companies and
institutions whose exposures are above the threshold for significance.
Delinquencies;
Other factors.
(k) Property and equipment
Land and buildings are presented in the statement of financial position at their revalued amount which
is the fair value of the asset as at the date of revaluation less any subsequent amortisation and
depreciation and accumulated impairment losses. All others classes of items of property, plant and
equipment are stated in the statement of financial position at their acquisition cost less accumulated
depreciation and allowance for impairment.
Depreciation is calculated on a straight-line basis at prescribed rates designed to decrease the cost
or valuation of fixed assets over their expected useful lives. The annual rates of amortisation are as
follows:
A
ssets %
Buildings 3 - 4
Equipment 10 - 50
Fixtures and fittings 10 - 15
Motor vehicles 10 - 20
Leasehold Improvements 2 - 50
Assets are not depreciated until they are brought into use and transferred from assets in the course of
construction into the relevant asset category.
(l) Intangible assets
Intangible assets, which are acquired by the Group, are stated at cost less accumulated amortisation
and any impairment losses.
Amortisation is calculated on a straight-line basis over the expected useful life of the asset. The annual
rates of amortisation are as follows:
Notes to the financial statements
13
A
ssets %
Licenses and trademarks 10 - 14
Software and licences 10 - 50
(m) Investment Property
Investment property is property (land or a building or part of a building or both) held to earn rentals or
for capital appreciation or both. The Bank has chosen for its accounting policy to account for
investment property using the fair value model and applies this to all its investment property.
Investment properties are initially measured at cost and are subsequently measured using the fair
value model, and the revaluation income and expense is recognised in the profit for period in which
they occurred. The reclassification of repossessed assets reported as inventories into investment
properties is possible only where a contract to rent out the respective property has been signed. The
fair value of assets constituting investment property was determined by independent property
assessors holding recognised professional qualification and recent experience in assessing property
with similar location and category, using reliable techniques for determining fair values.
(n) Provisions
A provision is recognised in the statement of financial position when the Group has a legal or
constructive obligation as a result of a past event, it is probable that an outflow of economic benefits
will be required to settle the obligation and a reliable assessment of the amount due can be made. If
the effect is material, provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
(o) Acceptances
An acceptance is created when the Group agrees to pay, at a stipulated future date, a draft drawn on
it for a specified amount. The Group’s acceptances primarily arise from documentary credits stipulating
payment for the goods to be made a certain number of days after receipt of required documents. The
Group negotiates most acceptances to be settled at a later date following the reimbursement from the
customers. Acceptances are accounted for as liabilities evidenced by paper.
(p) Off-balance sheet commitments
In the ordinary course of its business, the Group enters into off-statement of financial position
commitments such as guarantees and letters of credit. The Group recognizes provision for off-
statement of financial position commitments when it has a present obligation as a result of a past
event, when it is probable that an outflow of resources embodying economic benefit will be required to
settle the obligation, and when a reliable estimate can be made of the obligation.
(q) Taxation
Tax on the profit for the year comprises current tax and the change in deferred tax. Current tax
comprises tax payable calculated on the basis of the expected taxable income for the year, using the
tax rates enacted by the statement of financial position date, and any adjustment of tax payable for
previous years.
Deferred tax is provided using the balance sheet liability method on all temporary differences between
the carrying amounts for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is calculated on the basis of the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled. The effect on deferred tax of any changes in tax rates is
charged to profit or loss, except to the extent that it relates to items previously recognised either in
other comprehensive income or directly in equity.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will
be available against which the unused tax losses and credits can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the re
lated tax benefit will be realised.
Notes to the financial statements
14
(r) Critical accounting estimates and judgements in applying accounting policies
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities
within the next financial year. Estimates and judgements are continually evaluated and are based on
historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances.
Information on the valuations and the valuation uncertainty, for which there is a significant risk of
change as of 31 December 2021 are stated below and are related to the impairment of financial
instruments, income tax and the following notes related to other elements of the financial statements:
Note 5, 19 - determining of the fair value of the financial instruments, land and buildings through
valuation techniques, in which the input data for the financial assets and liabilities are not based
on the available market information. The Management uses valuation techniques for the fair value
of financial instruments (when there is no quoted price in an active market) and non-financial
assets. In applying the valuation techniques, the Management uses to a maximum degree market
data and assumptions which market participants would take into account in pricing an instrument.
When there is no available market data, the Management uses its best judgement of the
assumptions that market participants would make. These judgements may differ from the actual
prices that may be determined in a fair market transaction between informed and willing parties at
the end of the reporting period.
Notes 11, 16, 18 – measuring the expected credit loss – credit losses constitute the difference
between all contractual cash flows payable to the Bank and all cash flows which the Bank expects
to receive. Expected credit loss is the probability-weighted estimate of credit losses which require
the Group’s judgement. Expected credit loss is discounted with the initial effective interest rate (or
with the loan-adjusted effective interest rate for purchased or initially created financial assets with
credit impairment).
Notes 16, 18 – debt instruments at amortised cost – the analysis and intentions of the Management
are confirmed by the business model of holding debt instruments that meet the requirements for
receiving only principal and interest payments and holding assets until collecting the contractual
cash flows from the bonds which are classified as debt instruments at amortised cost.
Note 24 – Lease contract term – in determining the lease contract term the Management takes
into consideration all facts and circumstances that create economic incentives for exercising the
option to extend the lease, or not to exercise the option to terminate the lease. Extension options
(or the periods after termination options) are included in the lease contract term only if it is
reasonably certain that the lease contract has been extended (or has not been terminated).
Note 30 – in accordance with IAS 37 — Provisions, Contingent Liabilities and Contingent Assets
and the internal rules for setting aside provisions for pending court cases the Group has recognised
provisions for pending court cases. The Group is a defendant in pending cases and the outcome
of those cases may lead to liabilities in an amount different from the amount of provisions
recognized in the financial statement.
(ii) Assessment of repossessed assets from collaterals
Assets accepted as collateral are recognized at the lower of the cost of acquisition and the net
realizable value. When evaluating the net realizable value of the assets the Bank prepares several
models for appraisal (e.g. discounted cash flows) and makes comparison to available market data
(e.g. similar market transactions, offers from potential buyers).
(iii) Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant estimates are required in
determining the worldwide provision for income taxes. There are many transactions and calculations
for which the ultimate tax determination is uncertain during the ordinary course of business. The Group
recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes
will be due. Where the final tax outcome of these matters is different from the amounts that were
Notes to the financial statements
15
initially recorded, such differences will impact the income tax and deferred tax provisions in the period
in which such determination is made.
(s) Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for the Bank’s ordinary shares.
Basic EPS is calculated by dividing the profit or loss for the period attributable to ordinary shareholders
of the Bank by the weighted average number of ordinary shares outstanding during the period. Diluted
EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares,
which comprise convertible notes and share options granted to employees.
(t) Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed
contributions into a separate entity and will have no legal or constructive obligation to pay further
amounts. The Government of Bulgaria is responsible for providing pensions in Bulgaria under a
defined contribution pension plan. The Bank’s contributions to the defined contribution pension plan
are recognised as an employee benefit expense in profit or loss in the periods during which services
are rendered by employees.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The
Group’s net obligation in respect of defined benefit plans is calculated by estimating the amount of
future benefit that employees have earned in return for their service in the current and prior periods;
that benefit is discounted to determine its present value.
The Bank has an obligation to pay certain amounts to each employee who retires with the Bank in
accordance with Art. 222, § 3 of the Labour Code.
According to these regulations in the LC, when a labour contract of a bank’s employee, who has
acquired a pension right, is ended, the Bank is obliged to pay him compensations amounted to two
gross monthly salaries. Where the employee has been with the same employer for the past 10 years,
this employee is entitled to a compensation amounting to six gross monthly salaries. As at balance
sheet date, the Management of the Bank estimates the approximate amount of the potential
expenditures for every employee using the projected unit credit method.
For the last two years the Bank has prepared estimates for the due provisions for pensions and has
not identified significant liabilities.
Termination benefits
Termination benefits are recognised as an expense when the Group is committed demonstrably,
without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment
before the normal retirement date, or to provide termination benefits as a result of an offer made to
encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as
an expense if the Bank has made an offer of voluntary redundancy, it is probable that the offer will be
accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than
12 months after the reporting period, then they are discounted to their present value.
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed
as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-
sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result
of past service provided by the employee, and the obligation can be estimated reliably. The Group
recognises as a liability the undiscounted amount of the estimated costs related to annual leave
expected to be paid in exchange for the employee’s service for the period completed.
Notes to the financial statements
16
(u) Insurance Contracts
Classification of insurance contracts
Contracts in which the Group undertakes significant insurance risk of a third party (insured party)
through compensation to the insured party or another beneficiary in case of a specific uncertain future
event (insured event) which has a negative impact on the insured party or the beneficiary, are classified
as insurance contracts.
Insurance risk is every risk, which is not financial risk. Financial risk is any risk related to probable
future change in one or several of the following: interest, price of the security, market prices, currency
prices, credit rating, credit index or other variable- if there are the non-financial variables, the variable
is not specific for the counterparties. Insurance contracts may also transfer part of the financial risk.
Written premiums
Written premiums are recognized as income on the basis of the due premium from the insured
individuals for the underwriting year, which begins during the financial year, or the due single premium
instalment for the total period of insurance coverage of the insurance contracts signed within the
financial year. Gross written premiums are not recognized when future cash flows related to them are
not guaranteed. Written premiums are presented gross of the due agents’ commissions.
Reversed premiums
Reversed insurance premiums are insurance premiums for which there has been a violation of the
General terms of the insurance contract or a change in the terms of the contract. Reversed premiums
within the current year, related to policies written within the current year, decrease the Gross Written
Premiums of the Group. Reversed premiums within the current year, related to policies written within
the previous year, increase the Gross Written Premiums of the Group.
Unearned-premium reserve
The unearned premium reserve is formed to cover the claims and administrative expenses, which are
expected to arise on the respective type of insurance contract after the end of the reporting period.
The basis for calculation of the unearned premium reserve corresponds to the base for recognition of
the Group’s written premiums.
The amount of the reserve is calculated under the precise day method, under which the premium is
multiplied with a coefficient for deferral. The coefficient for deferral is calculated as a ratio between the
number of the days within the following reporting period during which the contract is valid to the total
number of days during which the contract is valid.
Unexpired risk reserve
Unexpired risk reserve is formed to cover risks for the period between the end of reporting period and
the date on which the insurance contract expires in order to cover the payments and expenses related
to these risks which are expected to exceed the UPR formed.
Claims incurred
Claims incurred include claims paid and claims-handling expenses due within the financial year
including the change in outstanding claims reserve.
Outstanding claims reserve
Outstanding claims reserve is calculated on the basis all claims from events incurred within the current
and previous reporting periods, which have not been paid as of year-end. OCR also includes the total
amount of incurred but not reported claims (IBNR), calculated as a percentage from the earned
premiums for the financial year and the incurred claims.
Acquisition costs
Acquisition costs include accrued commission expense from agents and brokers.
Notes to the financial statements
17
(v) Leases
(i) The Company as lessee
For new contracts concluded on or after 1 January 2019 the Group assess whether the contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use
of an asset (the identified asset) for a period of time in exchange for consideration. In order to apply
this definition, the Group assesses three key elements:
Whether the contract refers to an identified asset which is either explicitly specified in a contract,
or implicitly specified at the time that the asset is made available for use;
The Group has the right to obtain substantially all of the economic benefits from use of the
identified asset throughout the period of use, within the scope of its right of use defined in the
contract;
The Group has the right to direct the use of the identified asset throughout the period of use.
The Group assesses whether it has the right to direct how and for what purpose the asset will be used
throughout the period of use.
Assessment and recognition of leases by the Group as lessee
On the commencement date of the lease contract the Group recognises the right-of-use asset and the
lease liability in the statement of financial position. The right-of-use asset is assessed at cost which
comprises the amount of the initial measurement of the lease liability, any initial direct costs incurred
by the Group, an estimate of costs to be incurred by the lessee in dismantling and removing the
underlying asset at the end of the lease contract, and any lease payments made at or before the
commencement date (less any lease incentives received).
The Group depreciates the right-of-use asset using the linear method from the commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The
Group also reviews the right-of-use assets for impairment, where such indicators exist.
On the commencement date of the lease contract the Group measures the lease liability at the present
value of the remaining lease payments at that date, discounted using the borrowing rate stipulated in
the lease contract, if that rate can be readily determined, or the company’s incremental borrowing rate.
As of 01.01.2019 the Group applies IFRS 16 Leases. To this end, an analysis was made of the
requirements of this Standard, and the following key elements were identified:
IFRS 16 Leases introduces new rules for reporting lease agreements. First of all, the standard requires
that an analysis be made of whether and which agreements with or without the legal form of lease
constitute a lease or contain lease components in accordance with the definition of lease contained in
IFRS 16, paragraph 9. According to Paragraph 9, a contract is, or contains, a lease if:
there is an identified asset, and
-the contract conveys the right to control the use of the identified asset for a period of time in exchange
for consideration.
In the general case, the lessee is required recognise a right-of-use asset and a lease liability at the
commencement date.
Also, instead of applying the requirements for recognition of a right-of-use asset in return for
consideration under a lease contract, the lessee may choose to report lease contracts as an expense
under the linear method for the duration of the lease in the following types of contracts:
- ending within 12 months of the date of initial application of IFRS 16
- lease of low-value assets
Notes to the financial statements
18
In the process of assessing the effects of application of this Standard, the Group did the following:
- Full review of all agreements was made in order to establish whether it may be necessary to
consider additional agreements as lease agreements according to the new IFRS 16 definition;
- A decision was made for partial retrospective application (which means that the comparative
information will not be changed). Under the modified approach it is possible not to assess whether
existing agreements contain leases and other relief. Under the modified approach it is possible not
to assess whether existing agreements contain leases and other relief.
The Management analysed the effect of application of the Standard for contracts expected to last up
to five years because a big part of the rental agreements to which the Group is a party as a tenant, the
Group can terminate after a three- or six-months’ notice without owing an indemnity. Even in the other
contracts this possibility is available in accordance with the law.
This reflects on the expected actual duration of the lease because the contract term depends on the
probability that the Group would exercise that option. With relation to this the Group considers that a
duration of five years is indicative of the maximum duration of the lease term, irrespective of whether
contracts of longer duration exist or not.
In order to determine the incremental borrowing rate, the Group uses an interest rate consisting of the
risk-free interest rate and a surcharge reflecting the credit risk related to the Group and additionally
adjusted for the specific conditions of the lease contract, including term, country, currency, and
collateral.
Lease payments included in measuring the lease liability comprise fixed payments (including in-
substance fixed payments), variable lease payments that depend on an index or a rate, amounts
expected to be payable by the lessee under residual value guarantees, and the exercise price of a
purchase option if the Group is reasonably certain to exercise that option.
After the commencement date, the lease liability shall be decreased with the amount of payments
made and shall be increased with the amount of the interest. The lease liability is remeasured to reflect
any reassessment or lease modifications, or to reflect revised in-substance fixed lease payments.
When the lease liability is remeasured, the amount of the remeasurement is recognised in the right-
of-use asset or in profit or loss, if the carrying amount of the right-of-use asset is already reduced to
zero.
The Group has chosen to report short-term leases and leases of low-value assets by using practical
expedients envisaged in the standard. Instead of recognising right-of-use assets and lease liabilities,
the Bank recognizes the payments related to them as an expense in profit or loss using the linear
method during the lease term.
In the statement of financial position, right-of-use assets are presented on a separate row “Right-of-
use assets”, and the liabilities under lease contracts are also presented on a separate row - “Lease
liabilities”.
Extension options or termination options are included in a number of the Group’s property rentals.
They are used to increase the operative flexibility in the management of assets used in its operations.
Notes to the financial statements
19
The company as lessor
The portion of IFRS 16 which concerns the Group as lessor no significant changes were found in
comparison to the previous IAS 17. The Group classifies a lease contract as a finance lease if it has
transferred substantially all risks and rewards related to ownership of the asset subject to the lease.
All other lease contracts are classified as operating.
In case of a finance lease, the Group recognises as asset a receivable under the contract in an amount
equal to the net investment in the lease. During the lease term the Group recognizes interest income
on the amount receivable at an interest rate reflecting the return rate of the net investment in the lease.
In case of operating lease, the Group recognises lease payments as revenue on a linear basis.
As lessor, the Group classifies each of its lease contracts as either an operating lease or a finance
lease.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental
to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer
substantially all the risks and rewards incidental to ownership of an underlying asset.
3. Risk management disclosures
A. Trading activities
The Group maintains active trading positions in a limited number of non-derivative financial
instruments. Most of the Group’s trading activities are customer driven. In anticipation of customer
demand, the Group carries an inventory of money market instruments and maintains access to market
liquidity by trading with other market makers. These activities constitute the proprietary trading
business and enable the Group to provide customers with money market products at competitive
prices.
The Group manages its trading activities by type of risk involved and on the basis of the categories of
trading instruments held.
(i) Credit risk
Credit risk is the total risk of losses from positions in financial instruments as a result of the inability of
one or more parties to the exposure to meet their obligations. Main components of credit risk:
1) Default risk
The risk that issuers to financial instruments might default on their obligations.
2) Counterparty credit risk
Counterparty credit risk is the risk that the counterparty to a transaction could default before the
final settlement of the transaction’s cash flows. It occurs under transactions with derivatives,
repo deals, transactions for granting/receiving a loan of securities and goods, margin lending
transactions and extended settlement transactions.
3) Settlement risk
To the Bank settlement risk is the risk of unsettled transactions with securities, goods or cash. It
occurs both under transactions with settlement of services of the “delivery versus payment”
(DvP) type, and under trade without DvP (“free deliveries”). All instruments exposed to
counterparty credit risk fall within the scope of this type of risk.
Credit risk is monitored on an ongoing basis subject to Bank’s internal risk management procedures
and is controlled through minimum thresholds for the credit quality of the issuer/counterpart and setting
limits on exposure amount according to credit quality.
(ii) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market conditions. The Bank assumes market risk when taking positions in
debt instruments, equities, derivatives and foreign exchange transactions. These risks are managed
Notes to the financial statements
20
by enforcing limits on positions taken and their risk sensitivities as measured by value-at-risk, duration
or other measures appropriate for particular position in view of its sensitivity to risk factors. The major
risk factors that affect trading activities based on the recognition of premium income in the annual
financial statements if the Group are changes of interest rates (interest rate risk), changes of exchange
rates (foreign exchange risk) and changes of equity prices (price risk).
Exposure to market risk is formally managed in accordance with risk limits set by senior management
and the adopted risk strategy.
The Value at Risk is calculated and monitored on a daily basis as part of the Bank’s ongoing risk
management. Value at risk is calculated using one day horizon and 99 per cent confidence level,
meaning that there is 1% probability that a portfolio will incur a loss in one day greater than its VaR.
Parameters of the VaR model are estimated on the basis of exponentially weighted historical price
changes of risk factors.
The following table summarises the range of interest VaR for all positions in the Bank’s trading portfolio
carried at fair value:
31 December 2021 31 December
in thousands of BG
N
2021 average low high 2020
V
aR 0.0 0.4 0.0 38.4 0.0
B. Non-trading activities
Below is a discussion of the various risks the Group is exposed to as a result of its non-trading activities
and the approach taken to manage those risks.
(i) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with
financial liabilities. Liquidity risk arises in the general funding of the Group’s activities and in the
management of positions. It includes both the risk of being unable to fund assets at appropriate
maturity and rates and the risk of being unable to liquidate an asset at a reasonable price and in an
appropriate time frame to meet the liability obligations.
Funds are raised using a broad range of instruments including deposits, other liabilities evidenced by
paper, subordinated debt instruments and share capital. This enhances funding flexibility, limits
dependence on any one source of funds and generally lowers the cost of funds. The Group makes its
best efforts to maintain a balance between continuity of funding and flexibility through the use of
liabilities with a range of maturity. The Group continually assesses liquidity risk by identifying and
monitoring changes in funding required to meet business goals and targets set in terms of the overall
Bank strategy. The body managing liquidity is the Assets, Liability and Liquidity Management Council.
In compliance with the requirements of the Law on Credit Institutions, Ordinance No 7 of BNB for the
organization and management of risks in banks and Directive 2014/59 / EU of the European
Parliament and of the Council for establishing a framework for the recovery and resolution of credit
institutions and investment firms, First Investment Bank AD prepared a recovery plan if financial
difficulties occur. It includes qualitative and quantitative early warning signals and indicators of
recovery such as capital and liquidity indicators, income indicators, market-oriented indicators upon
the occurrence of which recovery measures are triggered.
Liquidity indicators include Liquidity Coverage Ratio (LCR); net withdrawal of financing; liquid assets
to deposits by non-financial customers ratio; Net Stable Funding Ratio (NSFR). Different stress test
scenarios related to idiosyncratic shock, system shock and aggregate shock have been prepared.
In case of liquidity pressure, there are systems in place to ensure prompt and adequate reaction which
include obtaining additional funds from local and international markets through issuance of appropriate
financial instruments depending on the specific case as well as sale of non-liquid assets. The levels
of decision making are clearly determined. In order to reduce the liquidity risk, preventive measures
have been taken aimed to extend the maturity of borrowings from customers, to encourage long-term
relationships with clients and to increase customer satisfaction. In order to adequately manage liquidity
risk, the Bank monitors cash flows on a daily basis.
Notes to the financial statements
21
As part of the liquidity risk management, the Group keeps available liquid assets. They consist of cash,
cash equivalents and government securities, which could be sold immediately in order to provide
liquidity:
Liquid assets
2021 2020
In BGN '000
Balances with BNB 1,455,038 1,611,383
Current accounts and amounts with other banks 505,826 536,182
Unencumbered gove
r
nment securities 974,719 797,949
Gold 2,818 2,661
Total liquid assets 2,938,401 2,948,175
Reasonable liquidity management requires avoidance of concentration of the borrowings from large
depositors. Analysis of the significant borrowings in terms of total amount is performed on a daily basis
and the diversity of the total liabilities portfolio is supervised.
As at 31 December 2021 the thirty largest non-bank unguaranteed depositors represent 7.40% of total
deposits from other customers (31 December 2020: 5.88%).
One of the main ratios used by the Group for managing liquidity risk is the ratio of liquid assets to total
borrowings from other clients.
31 December 2021 31 December 2020
Ratio of liquid assets to total borrowings from other clients 29.46% 30.90%
The following table provides an analysis of the financial assets and liabilities of the Group into relevant
maturity groupings based on the remaining periods to repayment.
Maturity table as at 31 December 2021
in thousands of BGN
Up to 1
Month
From 1 to 3
Months
From 3
months to
1 yea
r
More than 1
yea
r
Maturity not
defined
Indefinite
Maturity Total
Assets
Cash and balances with Central
Banks 1,970,814 - - -
1,970,814
Financial assets at fair value through
profit or loss 244,379 - - - 24,359
268,738
Financial assets at fair value through
other comprehensive income 1,088,905 - - - -
1,088,905
Financial assets at amortised cost - - - 316,139 -
316,139
Loans and advances to banks and
other financial institutions 77,836 5,909 963 2,748 - 87,456
Loans and advances to customers 775,717 162,175 1,102,093 4,613,959 - 6,653,944
Other trading assets 1,042 - - - - 1,042
Total financial assets 4,158,693 168,084 1,103,056 4,932,846 24,359 10,387,038
Liabilities
Due to banks 8,722 - - - - 8,722
Due to other customers 5,891,987 1,145,143 2,320,041 616,460 - 9,973,631
Liabilities evidenced by paper 5,780 42,839 3,992 67,391 - 120,002
Financial liabilities at fair value
through profit or loss - - - 2,164 - 2,164
Subordinated term debt - - - 9,622 - 9,622
Hybrid debt - - - - 320,733 320,733
Other financial liabilities, net (81) 2,853 (606) - - 2,166
Total financial liabilities 5,906,408 1,190,835 2,323,427 695,637 320,733 10,437,040
Net liquidity gap (1,747,715) (1,022,751) (1,220,371) 4,237,209 (296,374) (50,002)
The table shows investments at fair value through other comprehensive income with a maturity of up
to 1 month in order to reflect the management’s ability to sell them within a short-term period, if needed.
Notes to the financial statements
22
The Group does not recognize as liquidity risk the current undrawn amounts of loans extended
because the management considers that, based on the agreed conditions, the Bank can at any time
terminate the extension of funds to its borrowers in case it is expected that their credit risk will increase.
Loans and advances to customers reflect also financial lease receivables.
Maturity table as at 31 December 2020
in thousands of BGN
Up to 1
Month
From 1 to
3 Months
From 3
months to
1
y
ea
r
More than
1
y
ea
r
Maturity
not
defined
Indefinite
Maturit
y
Total
Assets
Cash and balances with Central
Banks
2,133,197
-
- - - 2,133,197
Financial assets at fair value
throu
g
h profit or loss 243,846
-
- - 23,083 266,929
Financial assets at fair value
through other comprehensive
income 825,882 - - - - 825,882
Financial assets at amortised
cost
-
-
- 199,830 - 199,830
Loans and advances to banks
and other financial institutions 85,849 4,387 755 15,120 - 106,111
Loans and advances to
t
819,458 218,111 776,001 4,499,317 - 6,312,887
Other tradin
g
assets 724 - - 4,386 - 5,110
Total financial assets 4,108,956 222,498 776,756 4,718,653 23,083 9,849,946
Liabilities
Due to banks
2,747 - - - - 2,747
Due to other customers
5,148,701
1,136,114
2,574,551 682,910 - 9,542,276
Liabilities evidenced b
y
paper 8 20 3,857 99,764 - 103,649
Subordinated term deb
t
- - - 9,623 - 9,623
H
y
brid deb
t
- - - - 267,579 267,579
Other financial liabilities, net
104
306
- - - 410
Total financial liabilities
5,151,560
1,136,440
2,578,408 792,297
267,579 9,926,284
Net liquidit
y
g
ap
(
1,042,604
)
(
913,942
)
(
1,801,652
)
3,926,356
(
244,496
)
(
76,338
)
Notes to the financial statements
23
The following table provides a remaining maturities analysis of the financial assets and liabilities of the
Group as at 31 December 2021 based on the contractual undiscounted cash flows.
in thousands of BGN
Up to 1
Month
From 1 to
3 Months
From 3
months to 1
y
ea
r
More than
1
y
ea
r
Total
Financial assets
Cash and balances with Central
Banks 1,970,814 - - - 1,970,814
Financial assets at fair value through
profit or loss 268,738 - - - 268,738
Financial assets at fair value through
other comprehensive income 1,088,905 - - - 1,088,905
Financial assets at amortised cos
t
49,884 97,804 - 170,666 318,354
Loans and advances to banks and
other financial institutions 77,836 5,909 963 2,748 87,456
Loans and advances to customers 755,949 159,703 1,109,144 5,505,204 7,530,000
Total financial assets 4,212,126 263,416 1,110,107 5,678,618 11,264,267
Financial liabilities
Due to banks 8,722 - - - 8,722
Due to other customers 5,892,071 1,145,286 2,321,131 617,857 9,976,345
Liabilities evidenced b
y
paper 5,782 42,910 4,008 69,965 122,665
Financial liabilities at fair value
through profit or loss
- - - 2,164 2,164
Subordinated term deb
t
- - 376 11,141 11,518
H
y
brid debt - - 227,406 138,137 365,542
Total financial liabilities 5,906,575 1,188,196 2,552,921 839,264 10,486,956
Derivatives held for risk
mana
g
ement
Out
g
oin
g
cash flow 52,622 - - - 52,622
Incomin
g
cash flow 50,023 639 606 - 51,268
Cash flow from derivatives, net
(
2,599
)
639 606 -
(
1,354
)
Notes to the financial statements
24
The following table provides a remaining maturities analysis of the financial assets and liabilities of the
Group as at 31 December 2020 based on the contractual undiscounted cash flows.
in thousands of BGN
Up to 1
Month
From 1 to
3 Months
From 3
months to 1
y
ea
r
More than
1
y
ea
r
Total
Financial assets
Cash and balances with Central Banks 2,133,197 - - - 2,133,197
Financial assets at fair value through
profit or loss 266,929 - - - 266,929
Financial assets at fair value through
other comprehensive income 825,882 - - - 825,882
Financial assets at amortised cos
t
- - 39,150 166,008 205,158
Loans and advances to banks and
other financial institutions 85,849 4,387 755 15,120 106,111
Loans and advances to customers 800,971 216,457 773,023 5,393,518 7,183,969
Total financial assets 4,112,828 220,844 812,928 5,574,646 10,721,246
Financial liabilities
Due to banks 2,747 - - - 2,747
Due to other customers 5,148,965 1,136,589 2,578,545 688,085 9,552,184
Liabilities evidenced b
y
paper 8 20 3,875 103,030 106,933
Subordinated term deb
t
- - 376 11,518 11,894
H
y
brid debt - - 27,577 291,236 318,813
Total financial liabilities 5,151,720 1,136,609 2,610,373 1,093,869 9,992,571
Derivatives held for risk
mana
g
ement
Out
g
oin
g
cash flow 2,587 308 - 46,923 49,818
Incomin
g
cash flow 733 1 - 48,896 49,630
Cash flow from derivatives, net
(
1,854
)
(
307
)
- 1,973
(
188
)
The expected cash flows of the Bank from some financial assets and liabilities are different from the
cash flows as per the loan contract. The main differences are:
There is an expectation that the deposits on demand and term deposits will remain stable and will
increase.
Retail mortgages have original maturity of 18 years on average, but the expected average effective
maturity is 12 years as some clients take advantage of the early repayment possibility.
(ii) Market risk
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Group’s operations are subject to the risk of interest
rate fluctuations to the extent that interest-earning assets and interest-bearing liabilities mature or
reprice at different times or in differing amounts.
Interest rate risk in the banking book (IRRBB)
In the case of floating rate assets and liabilities the Bank is also exposed to basis risk, which is the
difference in repricing characteristics of the various floating rate indices, such as the Bulgarian Basic
Interest Rate, the LIBOR and EURIBOR, although these indices tend to move in high correlation. In
addition, the actual effect will depend on a number of other factors, including the extent to which
repayments are made earlier or later than the contracted dates and variations in interest rate sensitivity
within repricing periods and among currencies.
Notes to the financial statements
25
In order to quantify the interest rate risk of its non-trading activities, the Bank measures the impact of
a change in the market rates both on net interest income and on the Bank’s economic value defined
as the difference between fair value of assets and fair value of liabilities.
The interest rate risk on the economic value of the Group following a standardised shock of +100bp/-
100bp as at 31 December 2021 is BGN +12 276/+36 424 thousands
The interest rate risk on the Bank's net interest income one year forward following a standardised
shock of +100bp/-100bp as at 31 December 2021 is BGN -1,573/+572 thousand.
Net interest income Equity
100 bp increase
100 bp
decrease 100 bp increase
100 bp
decrease
Effect in BGN '000
31 December 2021
as at 31 December
(1,573) 572 12,276 35,424
A
vera
g
e for the period
(1,519) 921 3,343 43,614
Maximum for the period
140 1,630 12,276 59,165
Minimum for the period
(2,672) (99) (3,146) 28,159
31 December 2020
as at 31 December
745 (474) 19,761 11,949
Credit Spread Risk in the Banking Book (CSRBB)
The risk arising from changes in market perception regarding the price of credit risk, the liquidity
premium and other potential components of credit risk instruments that cause fluctuations in the price
of credit risk, the liquidity premium and other potential components, which is not explained by IRRBB
or by the expected credit / (jump to-) default risk. Only those instruments in the bank’s book which are
reported at market value are subject to credit spread risk.
Similar to the interest rate risk arising from non-trading book activities, for credit spread risk the Bank
calculates the risk arising from potential changes in two aspects: how it affects net interest income and
how it affects the Bank’s economic value.
The applicable stress test scenarios were calibrated with 99% confidence level compared to the
historically observed changes. Shocks vary depending on the maturity of cash flows and the issuer’s
credit rating.
Credit Spread Risk in the Banking Book (CSRBB)
The effect on the Group’s economic value as at 31 December 2021 amounted to BGN (40,727)
thousand, and the effect on the net interest income amounted to BGN 336 thousand.
Net interest
income
Equity
Effect in BGN '000
2021
as at 31 December
336 (40,727)
A
vera
g
e for the period
564 (38,564)
Maximum for the period
788 (35,738)
Minimum for the period
413 (42,154)
2020
as at 31 December
294 (30,281)
Notes to the financial statements
26
The following table indicates the effective interest rates at 31 December 2021 and the periods in which
financial liabilities and assets reprice.
Fixed rate instruments
in thousands of BG
N
Total
Floating rate
instruments
Less than
1 month
Between 1
month
and 3
months
Between 3
months
and 1
y
ea
r
More
than 1
y
ea
r
Assets
Cash and balances with Central
Banks 821,327 762,358 53,101 - 5,868 -
Financial assets at fair value
throu
g
h profit or loss 239,883 - 239,883 - - -
Financial assets at fair value
through other comprehensive
income 1,088,904 26,014 1,062,890 - - -
Financial assets at amortised cos
t
316,139 - 52,166 97,655 1,765 164,553
Loans and advances to banks and
other financial institutions 24,727 13,089 11,638 - - -
Loans and advances to customers 5,893,880 5,422,610 24,264 20,076 103,640 323,290
Total interest-bearin
g
assets 8,384,860 6,224,071 1,443,942 117,731 111,273 487,843
Liabilities
Due to banks 8,722 1,847 6,875 - - -
Due to other customers 9,950,042 4,248,206 1,621,634 1,145,143 2,320,041 615,018
Liabilities evidenced b
y
paper 117,363 95,035 5,776 8,582 - 7,970
Subordinated term deb
t
9,622 - - - 38 9,584
H
y
brid deb
t
372,906 - - - - 372,906
Total interest-bearin
g
liabilities 10,458,655 4,345,088 1,634,285 1,153,725 2,320,079 1,005,478
The following table indicates the effective interest rates at 31 December 2020 and the periods in which
financial liabilities and assets reprice.
Fixed rate instruments
in thousands of BG
N
Total
Floating rate
Instruments
Less than
1 month
Between 1
month
and 3
months
Between 3
months
and 1
y
ea
r
More
than 1
y
ea
r
Assets
Cash and balances with Central
Banks 578,072 561,491 16,581 - - -
Financial assets at fair value
throu
g
h profit or loss 239,537 - 239,537 - - -
Financial assets at fair value
through other comprehensive
income 825,882 24,011 801,871
-
-
-
Financial assets at amortised cos
t
199,830 - -
-
39,150
160,680
Loans and advances to banks and
other financial institutions 30,030 16,198 10,877
-
2,955
-
Loans and advances to customers 5,597,939 5,264,311 17,068 19,315 101,495 195,750
Total interest-bearin
g
assets 7,471,290 5,866,011 1,085,934 19,315 143,600 356,430
Liabilities
Due to banks 2,747 945 1,802 - - -
Due to other customers 9,518,132 3,505,275 1,619,284 1,136,114 2,574,551 682,908
Liabilities evidenced b
y
paper 103,649 100,397 - - - 3,252
Subordinated term deb
t
9,623 - - - - 9,623
H
y
brid deb
t
267,579 - - - - 267,579
Total interest-bearin
g
liabilities 9,901,730 3,606,617 1,621,086 1,136,114 2,574,551 963,362
Notes to the financial statements
27
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. The Group is exposed to currency risk in performing
transactions in foreign currencies and foreign-currency denominated financial instruments.
As a result of the currency Board in place in Bulgaria, the Bulgarian currency is pegged to the Euro.
As the currency in which the Bank presents it financial statements is the Bulgarian lev, the Group’s
financial statements are effected by movements in the exchange rates between the Bulgarian lev and
currencies other than the Euro.
The Group’s transactional exposures give rise to foreign currency gains and losses that are recognised
in profit or loss. These exposures comprise the monetary assets and monetary liabilities of the Group
that are not denominated in the presentation currency of the Group. These exposures were as follows:
in thousands of BG
N
2021 2020
Monetar
y
assets
Euro 4,497,484 4,548,854
US dollar 543,386 579,050
Other 519,260 420,912
Gold 2,818 2,661
Monetar
y
liabilities
Euro 3,771,479 3,740,051
US dollar 544,057 575,854
Other 449,517 378,172
Gold 2,246 2,172
Net position
Euro 726,005 808,803
US dollar
(
671
)
3,196
Other 69,743 42,740
Gold 572 489
In respect of monetary assets and liabilities in foreign currencies that are not economically hedged,
the Group manages foreign currency risk in line with policy that sets limits on currency positions and
dealer limits.
(iii) Credit risk
Credit risk is the risk that a counterparty to a financial instrument will cause a financial loss for the
Group by failing to discharge an obligation. The Group is subject to credit risk through its lending
activities and in cases where it acts as an intermediary on behalf of customers or other third parties or
issues guarantees. The management of the credit risk exposures to borrowers is conducted through
regular analysis of the borrowers’ credit worthiness and the assignment of a rating grade. Exposure to
credit risk is also managed in part by obtaining collateral and guarantees.
Notes to the financial statements
28
The table below sets out information about maximum exposure to credit risk:
in thousands
of BG
N
Loans and
advances to other
customers
Loans and advances
to banks and
balances with central
banks
Investment in debt
securities
Off balance sheet
commitments
2021 2020 2021 2020 2021 2020 2021 2020
Carrying
amoun
t
6,653,944 6,312,887 1,796,271 2,050,211 1,644,876 1,265,249 - -
Amount
committed/
g
uaranteed - - - - - - 846,337 794,833
The Group’s primary exposure to credit risk arises through its loans and advances. The amount of
credit exposure in this regard is represented by the carrying amounts of the assets on the balance
sheet. These exposures are as follows:
31 December 2021 in thousands of BG
N
Class of exposure
Gross amount of loans
and advances to
customers
Allowance fo
r
impairment
Carrying amount of loans
and advances to customers
Performing
Collectively impaired
5,789,680
(
81,572
)
5,708,108
Nonperforming
Collectively impaired
235,768
(
75,703
)
160,065
Individuall
y
impaired 1,108,263
(
322,492
)
785,771
Total 7,133,711
(
479,767
)
6,653,944
31 December 2020 in thousands of BG
N
Class of exposure
Gross amount of loans
and advances to
customers
Allowance fo
r
impairment
Carrying amount of loans
and advances to customers
Performin
g
Collectivel
y
impaired 5,320,585
(
77,627
)
5,242,958
Nonperformin
g
Collectivel
y
impaired 252,313
(
108,415
)
143,898
Individuall
y
impaired 1,264,301
(
338,270
)
926,031
Total 6,837,199
(
524,312
)
6,312,887
Distribution of trade receivables and impairment as adjustment for financial assets (receivables from
customers) according to the requirements of IFRS9:
Notes to the financial statements
29
31/12/2021 31/12/2020
Gross amount of
loans and
advances to
customers
Allowance
for
impairment
Gross amount of
loans and
advances to
customers
Allowance
for
impairment
Exposures without increase of
credit risk after the initial
reco
g
nition
(
phase 1
)
4,840,376
(
15,935
)
4,299,116
(
14,739
)
Exposures with significant increase
of credit risk after the initial
reco
g
nition
(
phase 2
)
949,304
(
65,637
)
1,021,469
(
62,888
)
Non-performing (impaired)
exposures
(
phase 3
)
1,344,031
(
398,195
)
1,516,614
(
446,685
)
Total 7,133,711
(
479,767
)
6,837,199
(
524,312
)
Exposures classification into risk classes reflects the management’s estimate regarding the loans
recoverable amounts.
As at 31 December 2021 the gross amount of overdue loans and advances to customers measured
as exposures 90+ days overdue is BGN 961,205 thousand (2020: BGN 779, 167 thousand).
In addition, the Group is exposed to off-balance sheet credit risk through commitments to extend
credits and issue contingent liabilities (See Note 32).
Concentrations of credit risk (whether on or off-balance sheet) that arise from financial instruments
exist for counterparties when they have similar economic characteristics that would cause their ability
to meet contractual obligations to be similarly affected by changes in economic or other conditions.
The major concentrations of credit risk arise by location and type of customer in relation to the Bank’s
investments, loans and advances and off-balance sheet commitments.
Total economic sector credit risk concentrations in loans and advances to customers are presented in
the table below:
in thousands of BG
N
2021 2020
Trade
784,314
847,347
Industr
y
1,325,019
1,308,787
Services
668,753
745,050
Finance
179,548
122,506
Transport, lo
g
istics
257,355
236,908
Communications
151,715
148,277
Construction
421,176
387,563
Ag
riculture
243,141
185,157
Tourist services
307,981
285,411
Infrastructure
444,456
425,845
Private individuals
2,338,338
2,132,631
Other
11,915
11,717
A
llowance for impairment
(479,767)
(
524,312
)
Total 6,653,944 6,312,887
The amounts reflected in the tables represent the maximum accounting loss that would be recognised
at the statement of financial position date if counterparts failed completely to perform as contracted
and any collateral or security proved to be of no value. The amounts, therefore, greatly exceed
expected losses, which are included in the allowance for impairment.
The Group has extended loans to enterprises involved in different types of activities but within the
same economic sector - industry. As such the exposures share a similar industry risk. There are three
Notes to the financial statements
30
such groups of enterprises at 31 December 2021 with total exposures outstanding amounting to BGN
207,934 thousand (2020: BGN 198,704 thousand) - ferrous and non-ferrous metallurgy, BGN
86,060thousand (2020: BGN 85,933thousand) – mining industry and BGN 72,319 thousand (2020:
BGN 81,708thousand) - power engineering.
The Group has extended loans, confirmed letters of credit and granted guarantees to 6 individual
clients or groups (2020:6) with each individual exposure exceeding 10% of the capital base of the
Group, based on the amortised cost of the respective loan facilities and after application of the required
regulatory exemptions and techniques for reducing credit risk. The total amount of these exposures
was BGN 1,091,472 thousand, i.e. 70.25% of tier 1 capital (2020: BGN 930,420 thousand which
represented 59.33% of tier 1 capital).
No loans extended by the branch in Cyprus in 2021, in 2020 loans extended by the branch in Cyprus
amount to BGN 1,018 thousand (gross carrying amount before any allowances), for 2021 in Albania
amount to BGN 349,691 thousand (2020: BGN 283,149 thousand) gross carrying amount before any
allowances)
The Group’s policy is to require suitable collateral to be provided by certain customers prior to the
disbursement of approved loans. Guarantees and letters of credit are also subject to strict credit
assessments before being provided. The agreements specify monetary limits to the Bank’s obligations.
Collateral held against different types of assets:
Type of credit exposure Main type of collateral Collateral coverage ratio
2021 2020
Repurchase agreements Tradable securities 99% 97%
Loans and advances to
banks None -
Mortgage loans Real estate 263% 270%
Consumer lending
Mortgage, warrant, financial and
other collateral 96% 52%
Credit cards None - -
Loans to companies
Mortgage, pledge of enterprise,
pledge of long-term tangible
assets, pledge of goods, pledge
of other short-term tangible
assets, financial and other
collateral 515% 461%
The table below shows a breakdown of total gross loans and advances (gross balance sheet value)
extended to customers by the Group by type of collateral to the amount of the collateral, excluding
credit cards in the amount of BGN
167,126 thousand (2020: BGN 179,780 thousand).
In BGN '000 2021 2020
Mort
g
a
g
e 1,923,945 1,826,307
Pled
g
e of receivables 1,986,909 1,808,484
Pled
g
e of commercial enterprise 14,395 17,385
Securities 44,365 61,434
Bank
g
uarantees 3,750 -
Other
g
uaranties 2,627,275 2,587,594
Pled
g
e of
g
oods 7,990 7,410
Pled
g
e of machines 54,917 49,888
Mone
y
deposit 96,295 48,330
Stake in capital - -
Gold - -
Other collateral - -
Unsecured 206,744 250,587
Total 6,966,586 6,657,419
Notes to the financial statements
31
Residential mortgage lending
Other collateral includes insurance policies up to the amount of the insurance cover, future
receivables, remuneration transfers, etc.
The table below represents credit exposures from housing and mortgage loans to household
customers by ranges of loan-to-value (LTV) ratio. LTV is calculated as the ratio of the gross amount
of the loan to the value of the collateral. The gross amount excludes any impairment allowances. The
valuation of the collateral excludes any adjustments for obtaining and selling the collateral. The value
of the collateral for residential mortgage loans is based on the collateral value at origination updated
based on changes in house price indices.
The table below represents a separation of the gross amount of housing mortgages granted to
households according to the LTV ratio.
Loans to corporate customers
Individually significant loans to corporate customers are subject to individual credit appraisal and
impairment testing. The general creditworthiness of a corporate customer tends to be the most
relevant indicator of credit quality of a loan. However, collateral provides additional security and the
Group requests corporate borrowers to provide it. The Group takes collateral in the form of a first
charge over real estate, floating charges over all corporate assets, and other liens and guarantees.
The Group routinely analyses collateral for possible changes in value due to market conditions, legal
framework or debtor’s actions. Where such changes lead to a breach in the requirements for
sufficiency of collateral, the Group requires provision of additional collateral within a certain timeframe.
As at 31 December 2021 the net carrying amount of individually impaired loans to corporate customers
amounts to BGN 840,810 thousand (2020: BGN 970,113 thousand) and the value of collateral held
against those loans amounts to BGN 806,086 thousand (2020: BGN 920,046 thousand).
The Group constantly monitors the risk of default on already given loans and if there is available data
for potential or actual problems, the Group prepares an action plan and takes measures for managing
the possible unwanted results, including restructuring of the loans
For the purposes of the disclosure in these financial statements “renegotiated loans” are defined as
loans, which have been renegotiated as a result of a change in the interest rates, repayment schedule,
upon a client request, and others.
In BGN '000 2021 2020
Loan to value
(
LTV
)
ratio
Less than 50% 233,969 199,775
51% to 70% 340,022 277,854
71% to 90% 453,506 417,209
91% to 100% 35,421 31,671
More than 100% 90,507 83,394
Total 1,153,425 1,009,903
Notes to the financial statements
32
Renegotiated Loans
In BGN '000
Type of renegotiation
2021 2020
Gross amount
of loans and
advances to
customers
Allowance
for
impairment
Gross amount
of loans and
advances to
customers
Allowance
for
impairment
Loans to individuals
233,554 8,552 397,971 10,898
Change of maturity
119,847 6,133 123,189 5,562
Change of amount of instalment
- - 18,319 548
Change of interest rate
7,991 9 5,839 17
Change due to customers request
47,386 171 32,993 30
Other reasons
58,330 2,239 217,631 4,741
Loans to corporate clients
1,859,968 75,970 2,684,400 218,920
Change of maturity
229,270 2,013 150,620 1,617
Change of amount of instalment
46,736 614 385,940 3,138
Change of interest rate
24,192 26 15,843 24
Change due to customers request
885,746 37,708 587,254 24,421
Other reasons
674,024 35,609 1,544,743 189,720
Total:
2,093,522 84,522 3,082,371 229,818
Structure and organization of credit risk management functions
Credit risk management as a comprehensive process is accomplished under the supervision of the
Management Board of the Bank. The Supervisory Board exercises control over the activities of the
Management Board on the credit risk management either directly or through the Risk Committee,
which supports the Supervisory Board with the extensive supervision over the risk management
function in the Bank, including over the formation of risk exposures.
There are collective bodies in the Bank the function of which is to support the activities of the
Management Board on the credit risk management- Credit Council and Restructuring Committee. The
Credit Council supports the adopted credit risk management and forms an opinion on loans as per its
limits of competence. The Restructuring Committee is a specialized body for supervision of the loan
exposures with indicators for deterioration. In addition to the collective bodies in the Bank, there are
other independent specialized bodies - the Risk Analysis and Control Department and the Credit Risk
Management, Monitoring and Provisioning Department, which fulfil the functions of identification,
evaluation and management of the credit risk, including performing additional second control over the
risk exposures. The realization, coordination and current control over the lending process is organized
from the following departments: Corporate Banking, SME financing, Retail Banking, and Loan
Administration, while the problem assets management is performed by the Impaired Assets
Department.
Notes to the financial statements
33
(iv) Government debt exposures
The Group closely manages the credit risk on government debt exposures and as a result the overall quality of the government debt portfolio is very high.
The table below shows the carrying amount of the government debt portfolio by country issuer.
In BGN
'000
31 December 2021
Portfolio
Bulgaria Albania Slovakia Latvia Lithuania US
A
Romania EFSF*
Belgiu
m Italy Spain Portugal Hungary Croatia Israel
European
Union
Ireland
Saudi
Arabia
Financial
assets at fair
value through
profit or loss
3,348-----------------
Financial
assets at fair
value through
other
comprehensiv
e income
414,481 183,228 2,158 64 44,010 155,011 80,442 2,015 2,506 1,807 20,974 19,891 15,340 7,651 3,916 561 19,101 10,037
Financial
assets at
amortised cost
164,553 - - - - - - - - - - - - - 52,166 - - -
Total
582,382 183,228 2,158 64 44,010 155,011 80,442 2,015 2,506 1,807 20,974 19,891 15,340 7,651 56,082 561 19,101 10,037
Notes to the financial statements
34
*European Financial Stability Facility
In BGN '000
31 December 2020
Portfolio Bul
g
aria Albania Slovakia Latvia
Lithua
nia US
A
Romania EFSF* Bel
g
ium Ital
y
Spain Portu
g
al Hun
g
ar
y
Croatia Israel
Europea
n Union
Financial
assets at fair
value through
profit or loss
3,053---------------
Financial
assets at fair
value through
other
comprehensive
income
323,285 152,364 2,216 66 45,950 143,432 53,029 2,063 2,579 10,478 21,535 20,433 15,520 7,835 - 596
Financial
assets at
amortised cost
116,192 - - - - - - - - - 39,150 - - - 44,488 -
Total
442,530 152,364 2,216 66 45,950 143,432 53,029 2,063 2,579 10,478 60,685 20,433 15,520 7,835 44,488 596
*European Financial Stability Facility
Notes to the financial statements
35
Maturity table of government debt securities by country issuer as at 31 December 2021
in thousands of BGN
Country issue
r
Up to 1 Month
From 1 to 3
Months
From 3
months to 1
yea
r
From 1 to 5
years
Over
5 years Total
Bulgaria - 55,549 20,841 261,095 244,897 582,382
Albania 4,095 32,271 25,542 80,870 40,450 183,228
Slovakia - - - - 2,158 2,158
Latvia - - - 64 - 64
Lithuania - - - 44,010 - 44,010
USA 34,537 86,336 - 34,080 58 155,011
Romania - - 23,546 45,416 11,480 80,442
EFSF - - - 2,015 - 2,015
Belgium - - - 2,506 - 2,506
Italy - - - - 1,807 1,807
Spain - - - 20,974 - 20,974
Portugal - - - - 19,891 19,891
Hungary - - - - 15,340 15,340
Croatia - - - 7,651 - 7,651
Israel 52,166 - 3,916 - - 56,082
European Union - - - - 561 561
Ireland - - - - 19,101 19,101
Saudi Arabia - - - - 10,037 10,037
Total 90,798 174,156 73,845 498,681 365,780 1,203,260
Maturity table of government debt securities by country issuer as at 31 December 2020
in thousands of BG
N
Countr
y
issue
r
Up to 1
Month
From 1 to 3
Months
From 3
months to
1
y
ea
r
From 1 to
5
y
ears
Over
5
y
ears Total
Bul
g
aria - 8,383 - 229,196 204,951 442,530
A
lbania 93 9,616 13,193 95,402 34,060 152,364
Slovakia - - - - 2,216 2,216
Latvia - - - 66 - 66
Lithuania - - - - 45,950 45,950
US
A
39,846 103,586 - - - 143,432
Romania - - - - 53,029 53,029
EFSF - - - - 2,063 2,063
Bel
g
ium - - - 2,579 - 2,579
Ital
y
- - - - 10,478 10,478
Spain - - 39,150 - 21,535 60,685
Portu
g
al - - - - 20,433 20,433
Hun
g
ar
y
- - - - 15,520 15,520
Croatia - - - 7,835 - 7,835
Israel - - - 44,488 - 44,488
European Union - - - - 596 596
Total 39,939 121,585 52,343 379,566 410,831 1,004,264
C. Capital adequacy
Since 1 January 2014, the provisions of the CRD IV package have been in force. Through Regulation
(EU) No 575/2013 on prudential requirements for credit institutions and investment firms and Directive
Notes to the financial statements
36
2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit
institutions and investment firms, CRD IV package transposes into European law the provisions of the
new capital standards for banks – Basel III.
Regulatory capital
The equity capital of the Group for regulatory purposes consists of the following elements:
Common Equity Tier 1 capital
a) issued and paid up capital instruments (ordinary shares);
b) share premium from issuance of ordinary shares;
c) audited retained earnings;
d) accumulated other comprehensive income, including revaluation reserves;
e) other reserves;
Deductions from components of the Common Equity Tier 1 capital include intangible assets, as well as
value adjustments due to the requirements for prudential assessments and other deductions. The
increase of CET1 includes the adjustments related to the transitional treatment of the effect from the
initial application of IFRS 9.
In 2020, as disclosed in Note 31, the Bank completed successfully its capital increase by issue of new
shares which led to an increase of share capital by BGN 39,085 thousand and of premium reserve by
BGN 153,017 thousand, net of issue costs.
Additional Tier 1 capital
The instruments of Additional Tier 1 capital include hybrid debt (see note 29). As disclosed in note 37
Post balance sheet events, on 6 February 2020, by Resolution No 38/6 February 2020, the Governing
Council of the Bulgarian National Bank granted permission to First Investment Bank to include in its
additional tier 1 capital the amount of EUR 30,000 thousand (equivalent to BGN 58,675
thousand),attracted via the capital instrument issued by the Bank, an issue of perpetual, non-cumulative,
non-convertible bonds registered on 20 December 2019 with the Central Depository under ISIN code
BG2100023196
Notes to the financial statements
37
Tier 2 Capital
Tier 2 capital amortised in accordance with the requirements of Regulation 575 includes subordinated
term debt in the amount of EUR 4,900 thousand (equivalent to BGN 9,584thousand), issued in 2019
(EUR 2,000 thousand) and in 2020 (EUR 2,900 thousand) in the form of subordinated bonds of the
subsidiary First Investment Bank - Albania Sh.a. (See Note 29).
In thousands of BG
N
Total own funds
2021 2020
Common Equit
y
Tier 1 capital
Paid up capital instruments 149,085 149,085
(
-
)
Indirect shareholdin
g
in Common Equit
y
Tier 1 capital instruments
(
30
)
(
40
)
Premium reserves 250,017 250,017
Other reserves 787,532 743,386
A
ccumulated other comprehensive income 16,207 24,193
Ad
j
ustments of Common Equit
y
Tier 1 capital
(
-
)
Intan
g
ible assets
(
15,129
)
(
16,018
)
Transitional ad
j
ustments of Common Equit
y
Tier 1 capital 132,906 179,270
(
-
)
Other deductions
(
21,111
)
(
16,054
)
Common Equit
y
Tier 1 capital 1,299,477 1,313,839
Additional Tier 1 capital instruments
H
y
brid deb
t
254,258 254,258
Tier 1 Capital 1,553,735 1,568,097
Tier 2 Capital instruments
Subordinated term deb
t
9,048 9,584
Tier 2 Capital 9,048 9,584
Total own funds 1,562,783 1,577,681
The Group calculates the following ratios:
а) the Common Equity Tier 1 capital ratio is the Common Equity Tier 1 capital of the institution expressed
as a percentage of the total risk exposure amount;
b) the Tier 1 capital ratio is the Tier 1 capital of the institution expressed as a percentage of the total risk
exposure amount;
c) the total capital ratio is the own funds of the institution expressed as a percentage of the total risk
exposure amount.
The total risk exposure is calculated as the total of the risk-weighted assets for credit, market and
operational risk.
Notes to the financial statements
38
The Group calculates the requirements for credit risk for its exposures in banking and trading portfolios
based on the standardised approach. Exposures are taken into account using their balance sheet
amount. Off-balance-sheet credit-related commitments are taken into account by applying different
categories of conversion factors designed to convert these items into balance sheet equivalents. The
resulting equivalent amounts are then weighted for risk using different percentages depending on the
class of exposure and its credit rating assessment. Various credit risk mitigation techniques are used, for
example collateralised transactions and guarantees. Forwards and options based derivative instruments
are weighted for counterparty credit risk.
The Group calculates also capital requirements for market risk for foreign currency and commodity
instruments in trading book and banking book.
The Group calculates capital requirements for operational risk by application of the standardized
approach. In this approach the Group distributes the net income from banking operations (called the
relevant indicator) over the last three years for the respective business lines. Next, the distributed amount
from the relevant indicator is multiplied by its corresponding percentage (beta factor) to obtain the annual
capital requirement for each business line. The Group calculates the capital requirement for operational
risk as the average value for the three-year period of the sum of the annual capital requirements for all
business lines. The respective risk exposure is calculated by further multiplication of the capital
requirement by 12.5.
The Group has complied with the regulatory capital requirements throughout the period.
Notes to the financial statements
39
Capital adequacy level is as follows:
In BGN '000
Balance sheet/notional
amount
Risk exposures
2021 2020 2021 2020
Risk weighted exposures fo
r
credit risk
Balance sheet assets
Exposure class
Central governments or central banks 2,701,510
2,657,149 240,405 196,160
Multilateral development banks 83
57 - -
International organizations 344
- - -
Institutions 415,065
418,974 172,596 114,078
Corporates 2,529,636
2,246,575 2,135,238 2,159,321
Retail 1,652,426
1,488,854 1,067,622 970,252
Secured by mortgages on immovable property 1,840,139
1,739,834 689,933 676,718
Exposures in default 942,997
1,069,585 1,006,304 1,123,685
Collective investments undertakings 2,705
2,694 2,705 2,694
Equity 39,183
36,719 58,778 54,811
Other items 1,766,993
1,659,820 1,508,390 1,471,456
Total 11,891,081
11,320,261
6,881,971
6,769,175
Off balance sheet items
Exposure class
Institutions
- - 41 343
Corporates
337,817 281,554 42,406 49,367
Retail
479,353 479,350 5,123 5,340
Secured by mortgages on immovable property
29,167 33,929 6,060 7,317
Other items
- - 11 9
Total
846,337 794,833 53,641 62,376
Derivatives
Exposure class
Central governments or central banks
----
Institutions
44 4,722 22 2,333
Corporates
3,821 156 3,821 156
Other items
2,246 746 2,246 746
Total
6,111 5,624 6,089 3,235
Total risk
-
weighted exposures for credit risk
6,941,701 6,834,786
Total amount of exposures to market risk
4,713 5,525
Amount of exposures for deferred risk
552,425 573,675
Total amount of risk exposures
7,498,839 7,413,986
Capital adequacy ratios
Equity Capital ratios %
2021 2020 2021 2020
Common Equity Tier 1 capital
1,299,477 1,313,839 17.33% 17.72%
Tier 1 Capital
1,553,735 1,568,097 20.72% 21.15%
Total own funds
1,562,783 1,577,681 20.84% 21.28%
Notes to the financial statements
40
Other risks - Covid-19
(i) General information on Covid-19 and impact on the economy
With relation to the pandemic of Covid-19 (coronavirus) which reached a global scale at the end of
February and the beginning of March 2020 and then continued in various stages of different intensity
throughout 2020 leading to a significant plunge in financial activity worldwide, the Group analysed,
based on the currently available data, the potential impact on its financial position and in particular on
the models used in accordance with IFRS 9.
This disclosure is in compliance with the requirements of IFRS 7 and IFRS 9, as well as with the
recommendations issued by the European Securities and Markets Authority (ESMA).
It should be noted that as at the date of preparation of these individual financial statements the economic
activity is not yet fully recovered and there is no sufficiently stable statistical information available -
neither on the real impact on the Bulgarian and the global economy, nor on significant forecasts for their
recovery in the following months.
(ii) Development of the Covid-19 pandemic (coronavirus)
On 13 March 2020 the National Assembly of the Republic of Bulgaria issued a resolution introducing a
state of emergency which lasted until 13 May 2020. Similar measures were introduced by all EU member
states, and by Bulgaria’s main trade partners (outside the EU). Subsequently, after the state of
emergency was ended, the government of the Republic of Bulgaria introduced a state of epidemics
which has lasted until the end of the financial year and continues to the date of issue of these individual
financial statements.
As a result of the measures imposed by governments worldwide, a significant part of the economic
activity in various countries was stayed, and in addition, much of the international trade was impeded.
Despite the fact that lockdown measures were eased and then re-introduced, the international financial
institutions and the international credit agencies are foreseeing significant economic impact in the
shorter term, with expectation that the overall growth levels of the economy would recover in 2021-2022.
The Group’s management has analysed the expected impact both on economic growth, and on the
credit quality of countries to which it has exposures, and the analysis is shown below.
Impact on economic growth
The table below shows information on the expected economic growth in the Republic of Bulgaria, as per
data published by the International Monetary Fund, including forecasts made after the start of the Covid-
19 pandemic.
Historical data
(
%
)
Forecast data
(
%
)
2019 2020 2021 2022 2023 2024
Economic GDP
g
rowth 3.4% -4.2% 4.5% 4.4% 4.0% 3.6%
The table below shows information on the expected economic growth in the Eurozone countries (which
are Bulgaria’s main external market), as per data published by the International Monetary Fund,
including forecasts made after the start of the Covid-19 pandemic.
Historical data
(
%
)
Forecast data
(
%
)
2019 2020 2021 2022 2023 2024
Economic GDP
g
rowth 1.50% -6.30% 5.00% 4.30% 2.00% 1.60%
Notes to the financial statements
41
As seen from the figures above, the Management takes into account the possible short-term risks for
the overall development of the economy of the Republic of Bulgaria and its major trade partners, noting
that in some markets the expected drop in GDP would be significant; however, the Management also
takes into account the general expectations for recovery in the 2021-2022 period, with expectations for
return to the average forecasted growth pre-Covid-19 growth levels, as a result of the measures taken
by the governments for vaccination and for stimulating economic activities.
Impact on credit ratings
As a result of the expected economic consequences of the slower overall activities, some rating
agencies downgraded the outlook on long-term debt positions, both with regard to sovereign debt, and
with regard to corporate debt positions. The table below shows information on the change in credit
ratings (including Outlook) awarded to the Republic of Bulgaria by Fitch Ratings.
As at 21.01.2022
Ratin
g
Outlook
Republic of Bul
g
aria BBB Positive
At present, despite the overall downgrading of outlooks and the limited number of credit rating
downgrading of a number of countries, the Management is of the opinion that it is not possible to make
a sufficiently sustainable and reliable assessment of the impact which the Covid-19 situation may have
before a longer period of time has elapsed, during which symptoms of overall credit quality impairment
may occur – both for investments, and for the general environment in which the Group operates.
(iii) Analysis of the impact on the IFRS 9 model
The Group’s management has analysed the expected impact on the overall IFRS 9 model; detailed
results from the analysis are presented below. It should be noted that the analysis was focused on:
Assessment of impairment of the credit quality of counterparties
Assessment of the potential impact on expected credit loss from exposures to counterparties
The overall conclusion of the Group’s Management is that as at the time of issue of these statements,
in the shorter term a significant impairment of counterparties’ credit quality is not expected due to:
The measures taken by the government of the Republic of Bulgaria, the governments of other
countries, including with respect to the existing private moratoria, which currently do not lead to
additional indications of significantly impaired credit quality of counterparties. The Management
continues to monitor strictly for the occurrence of long-term impairment indications, and the general
temporary potential liquidity problems of counterparties caused directly by Covid-19 (coronavirus)
are not considered as indications for impaired credit quality.
At present, despite the overall downgrading of outlooks and the limited number of credit rating
downgrading of a number of countries, the Management is of the opinion that it is not possible to
make a sufficiently sustainable and reliable assessment of the impact which the Covid-19 situation
may have before a longer period of time has elapsed, during which symptoms of overall credit
quality impairment may occur – both for investments, and for the general environment in which the
Group operates.
As regards the model for calculating expected credit loss, the Management considers that it is not
possible to make a significant change of the overall model because of the lack of stable data.
Nevertheless, the Management takes into account the possible short-term risks for the overall
development of Bulgaria’s economy, and the fact that the expected drop in GDP might significantly affect
some industries, but also takes into account the general expectations for speedy recovery in the 2021-
2022 period and return to the average forecasted pre- Covid-19 growth levels.
Notes to the financial statements
42
(iv) Moratorium on loans
In April 2020 the Bulgarian National Bank approved the “Procedure for Deferral and Settlement of
Liabilities Payable to Banks and their Subsidiaries – Financial Institutions in relation to the state of
emergency enforced by the National Assembly on 13 March 2020 as a result of the COVID-19
pandemic” prepared by the Association of Banks in Bulgaria (ABB); later, in July and in December 2020,
BNB approved the extension of the validity of this documents and amendments to it. The document is a
private (non-legislative) moratorium within the meaning of the Guidelines on legislative and non-
legislative moratoria on loan repayments applied in the light of the COVID-19 crisis (EBA/GL/2020/02)
adopted by the European Banking Authority (EBA); pursuant to it the deferral of such exposures does
not automatically lead to their reclassification due to restructuring or default.
Faced with the consequences of the Covid-19 pandemic which far outreach the impact on public health,
both the Albanian government and the Central Bank of Albania have prepared and implemented
immediate measures to mitigate the social and economic impact. The government announced a
sovereign guarantee for the entire business sector that is struggling with liquidity problems and is
seeking financing. The Central Bank of Albania announced that customers that are suffering from
liquidity problems can ask for postponement of their liabilities to banks until 31.12.2020.
Some of the Group’s borrowers also used this moratorium in Bulgaria and the measures taken in
Albania, and the total amount of renegotiated exposures was BGN 1,377,438 thousand, gross of
impairment (BGN 1,344,725 thousand net of impairment), and as at 31 December 2020 the total amount
of renegotiated exposures still covered by the moratorium on loan payments was BGN
337,542thousand, gross of impairment (BGN 336,097 thousand net of impairment).
As at 31.12.2021 no exposures were covered by the moratorium.
The table below shows information on exposures renegotiated within the moratorium which at 31
December 2020 were still benefitting from it based on borrower type:
In BGN '000 Total value of the loan portfolio Rene
g
otiated within the moratorium
Gross
value
Allowance
for
impairment Amortised cost
Gross
value
Allowance
for
impairmen
t Amortised cost
Lar
g
e enterprise 2,610,673
(
215,481
)
2,395,192 217,791
(
202
)
217,589
Medium enterprise 1,144,173
(
141,592
)
1,002,581 37,082
(
288
)
36,794
Small business 564,876
(
44,851
)
520,025 19,257
(
102
)
19,155
Micro enterprise 350,200
(
11,340
)
338,860 21,932
(
227
)
21,705
Households
- Consumer loans 972,496
(
67,693
)
904,803 14,802
(
158
)
14,644
- Mort
g
a
g
e loans 1,009,903
(
17,395
)
992,508 23,462 - 23,462
- Credit cards 179,780
(
25,960
)
153,820 3,216
(
468
)
2,748
- Other
programmes and
collateralised
financin
g
5,098 - 5,098 - - -
Total 6,837,199
(
524,312
)
6,312,887 337,542
(
1,445
)
336,097
The table below shows information on exposures renegotiated within the moratorium which at 31
December 2020 were still benefitting from it based on the IFRS 9 phase in which the exposure is
classified:
Notes to the financial statements
43
Total value of the loan portfolio Renegotiated within the moratorium
Gross
value
Allowance
for
impairment Amortised cost
Gross
value
Allowance
for
impairment Amo
r
tised cost
Exposures without
increase of credit
risk after the initial
recognition (phase
1) 4,299,116 (14,739) 4,284,377 301,180 (451) 300,729
Exposures with
significant increase
of credit risk after
the initial
recognition (phase
2) 1,021,469 (62,888) 958,581 34,820 (570) 34,250
Total 5,320,585 (77,627) 5,242,958 336,000 (1,021) 334,979
4. Segment Reporting
Segment information is presented in respect of the Group’s geographical segments. The primary format,
geographical segments, is based on the Bank’s management and internal reporting structure.
Reporting and measurement of segment assets and liabilities and segment revenues and results is
based on the accounting policies set out in the accounting policy notes.
Transactions between segments are conducted on an arm’s length basis.
The Group operates principally in Bulgaria, but also has operations in Cyprus and Albania.
In presenting information on the basis of geographical segments, revenue and operating income is
allocated after intragroup eliminations based on the location of the Bank branch that generated the
revenue. Segment assets and liabilities are allocated after intragroup eliminations based on their
geographical location.
In BGN '000 Bulgarian operations Foreign operations Total
2021 2020 2021 2020 2021 2020
Interest income 309,069 292,862 25,241 21,001 334,310 313,863
Interest expense (41,934) (59,343) (9,911) (4,842) (51,845) (64,185)
Net interest income 267,135 233,519 15,330 16,159 282,465 249,678
Fee and commission
income 133,898 111,592 15,311 9,215 149,209 120,807
Fee and commission
expense (24,442) (20,752) (1,262) (863) (25,704) (21,615)
Net fee and
commission income 109,456 90,840 14,049 8,352 123,505 99,192
Net trading income 13,406 10,458 2,336 2,073 15,742 12,531
Administrative
expenses (178,584) (181,339) (13,499) (12,468) (192,083) (193,807)
31.12.2021 31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020
Assets 10,787,623 10,780,146 1,109,598 555,274 11,897,221 11,335,420
Liabilities 9,400,108 9,268,356 1,177,271 850,644 10,577,379 10,119,000
Notes to the financial statements
44
The table below shows assets and liabilities and income and expense by business segments as at 31
December 2021.
The Bank discloses the following information pursuant the requirements of Art. 70(6) of the Law on
Credit Institutions.
In BGN '000
Business Bulgaria
other EU
member
states
third
countries
Total
Turnover rate 401,422 7,128 26,420 434,970
Equivalent number of full-time emplo
y
ees 2,487 13 367 2,867
Profit before tax 109,653 3,509 11,670 124,832
A
ccrued taxes on the financial result of the activit
y
(
11,253
)
(
466
)
(
1,705
)
(
13,424
)
Return on assets
(
ROA
)
0.9% 0.7% 1.5% 0.9%
Government subsidies received 170
170
The information given in the column on third countries includes the subsidiary First Investment Bank -
Albania Sh.a. which is covered in Note 36(C).
The information on other EU member states includes the Cyprus branch and the subsidiary First
Investment Finance B.V. which is covered in Note 36(A).
In BGN '000
Business Assets Liabilities
Net interest
income
Net fee and
commission
income
Net trading
income
Other net
operating
income
Corporate
Bankin
g
3,207,874 1,286,184
98,841 31,758 - 206
Small and
medium
enterprises 1,043,436 604,890 42,601 21,597 - 135
Retail Bankin
g
2,402,634 8,087,358 153,495 68,206 - 3,071
Treasur
y
3,733,093 98,637 1,331 777 15,742 2,968
Other 1,510,184 500,310
(
13,803
)
1,167 - 6,878
Total 11,897,221 10,577,379 282,465 123,505 15,742 13,258
Notes to the financial statements
45
5. Financial assets and liabilities
Accounting classification and fair values
The Group’s accounting policy on fair value measurements is set out in Note 2(d)(vi).
The Group measures fair values using the following fair value hierarchy that reflects the significance of
the inputs used in making the measurements:
Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments.
Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e.
as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted
market prices in active markets for similar instruments; quoted prices for identical or similar instruments
in markets that are considered less than active; or other valuation techniques where all significant inputs
are directly or indirectly observable from market data.
Level 3: inputs are observable date for a given asset or liability. This category includes all instruments
where the valuation technique includes inputs not based on observable data and the unobservable
inputs have a significant effect on the instrument’s valuation. This category includes instruments that
are valued based on quoted prices for similar instruments where significant unobservable adjustments
or assumptions are required to reflect differences between the instruments.
Fair values of financial assets and financial liabilities that are traded in active markets are based on
quoted market prices or dealer price quotations. For all other financial instruments the Group determines
fair values using other valuation techniques.
Other valuation techniques include net present value and discounted cash flow models, comparison to
similar instruments for which market observable prices exist, option pricing models and other valuation
models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest
rates, credit spreads and other premia used in estimating discount rates, bond and equity prices, foreign
currency exchange rates, equity and equity index prices and expected price volatilities and correlations.
The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that
would be received to sell the asset or paid to transfer the liability in an orderly transaction between
market participants at the measurement date.
The Group uses widely recognised valuation models for determining the fair value of common and more
simple financial instruments, like interest rate and currency swaps that use only observable market data
and require little management judgement and estimation. Observable prices and model inputs are
usually available in the market for listed debt and equity securities, exchange traded derivatives and
simple over the counter derivatives like interest rate swaps. Availability of observable market prices and
model inputs reduces the need for management judgement and estimation and also reduces the
uncertainty associated with determination of fair values. Availability of observable market prices and
inputs varies depending on the products and markets and is prone to changes based on specific events
and general conditions in the financial markets.
However, where the Group measures portfolios of financial assets and financial liabilities on the basis
of net exposures, it applies judgement in determining appropriate portfolio level adjustments such as
bid-ask spread.
Such adjustments are derived from observable bid-ask spreads for similar instruments and adjusted for
factors specific to the portfolio.
For more complex instruments, the Group uses proprietary valuation models, which usually are
developed from recognised valuation models. Some or all of the significant inputs into these models
may not be observable in the market, and are derived from market prices or rates or are estimated
based on assumptions. Example of instruments involving significant unobservable inputs include certain
over the counter derivatives, certain loans and securities for which there is no active market and retained
interests in securitisations. Valuation models that employ significant unobservable inputs require a
higher degree of management judgement and estimation in the determination of fair value. Management
judgement and estimation are usually required for selection of the appropriate valuation model to be
Notes to the financial statements
46
used, determination of expected future cash flows on the financial instrument being valued,
determination of probability of counterparty default and prepayments and selection of appropriate
discount rates.
The Group has an established control framework with respect to the measurement of fair values. This
framework includes a Risk Management function, which is independent of Treasury division and reports
to management, and which has overall responsibility for independently verifying the results of trading
and investment operations and all significant fair value measurements. Specific controls include:
verification of observable pricing;
a review and approval process for new models and changes to models involving the Risk Analysis
and Control Division and the Group’s Management Board;
calibration of models against observed market transactions;
analysis and investigation of significant daily valuation movements;
review of significant unobservable inputs, valuation adjustments and significant changes to the fair
value measurement of Level 3 instruments compared to previous month, by Risk Analysis and
Control division.
Where third-party information, such as broker quotes or pricing services, are used to measure fair value,
Risk Analysis and Control division assesses and documents the evidence obtained from the third parties
to support the conclusion that such valuations meet the requirements of IFRS. This includes:
verifying that the broker or pricing service is approved by the Bank for use in pricing the relevant
type of financial instrument;
understanding how the fair value has been arrived at and the extent to which it represents actual
market transactions;
when prices for similar instruments are used to measure fair value, how these prices have been
adjusted to reflect the characteristics of the instrument subject to measurement;
where a number of quotes for the same financial instrument have been obtained, how fair value has
been determined using those quotes.
The tables below set out analysis of financial instruments measured at fair value at the end of the
reporting period classified by fair value hierarchy level framework categorising fair value measurement.
The amounts are based on the amounts in the statement of financial position.
in thousands of BG
N
31 December 2021 Level 1 Level 2 Level 3 Total
Financial assets at fair value throu
g
h profit or loss 7,840 260,884 14 268,738
Financial assets at fair value through other
comprehensive income 860,091 228,813 - 1,088,904
Derivatives held for risk mana
g
emen
t
1,042 - - 1,042
Total 868,973 489,697 14 1,358,684
Financial liabilities at fair value through profit and loss
- 2,164 - 2,164
In BGN '000
31.12.2020 г. Level 1 Level 2 Level 3 Total
Financial assets at fair value throu
g
h profit or loss 7,358 259,557 14 266,929
Financial assets at fair value through other
comprehensive income 649,016 176,376 490 825,882
Derivatives held for risk mana
g
emen
t
724 3,976 - 4,700
Total 657,098 439,909 504 1,097,511
Notes to the financial statements
47
The tables below set out analysis of the fair values of financial instruments not recognised at fair value,
classified by fair value hierarchy level framework categorising fair value measurement
in thousands of BGN
31 December 2021 Level 1 Level 2 Level 3
Total fair
values
Total
balance
sheet value
Assets
Cash and balances with
Central Banks - 1,970,814 - 1,970,814 1,970,814
Financial assets at amortised
cost 318,404 - - 318,404 316,139
Loans and advances to banks
and other financial institutions - 87,456 87,456 87,456
Loans and advances to
t
- 945,836 5,826,681 6,772,517 6,653,944
Total 318,404 3,004,106 5,826,681 9,149,191 9,028,353
Liabilities
Due to banks - 8,722 - 8,722 8,722
Due to other customers - 5,891,986 4,083,577 9,975,563 9,973,631
Liabilities evidenced b
y
paper - 119,980 - 119,980 120,002
Subordinated term deb
t
- 9,622 - 9,622 9,622
H
y
brid deb
t
- 320,733 - 320,733 320,733
Total - 6,351,043 4,083,577 10,434,620 10,432,710
31 December 2020 Level 1 Level 2 Level 3
Total fair
values
Total
balance
sheet value
Assets
Cash and balances with
Central Banks - 2,133,197 - 2,133,197 2,133,197
Financial assets at amortised
cost 207,740 - - 207,740 199,830
Loans and advances to banks
and other financial institutions - 106,111 - 106,111 106,111
Loans and advances to
t
- 1,069,929 5,374,522 6,444,451 6,312,887
Total 207,740 3,309,237 5,374,522 8,891,499 8,752,025
Liabilities
Due to banks - 2,747 - 2,747 2,747
Due to other customers - 5,148,701 4,401,305 9,550,006 9,542,276
Liabilities evidenced b
y
paper - 103,662 - 103,662 103,649
Subordinated term deb
t
- 9,623 - 9,623 9,623
H
y
brid deb
t
- 267,579 - 267,579 267,579
Total - 5,532,312 4,401,305 9,933,617 9,925,874
Where available, the fair value of loans and advances is based on observable market transactions.
Where observable market transactions are not available, fair value is estimated using valuation models,
such as discounted cash flow techniques. Input into the valuation techniques includes expected lifetime
credit losses, interest rates, prepayment rates. For collateral-dependent impaired loans, the fair value is
measured based on the value of the underlying collateral. To improve the accuracy of the valuation
Notes to the financial statements
48
estimate for retail and smaller commercial loans, homogeneous loans are grouped into portfolios with
similar characteristics such as product and borrower type, maturity, currency, collateral type.
The fair value of deposits from banks and customers is estimated using discounted cash flow
techniques, applying the rates that are offered for deposits of similar maturities and terms. The fair value
of deposits payable on demand is the amount payable at the reporting date.
6. Net interest income
in thousands of BG
N
2021 2020
Interest income
Accounts with and placements to banks and financial
institutions 335 628
Revenue from interest on liabilities 9
-
Lar
g
e enterprise 88,623 85,815
Medium enterprise 39,910 36,379
Small business 20,737 22,232
Micro enterprise 23,975 15,086
Households 135,633 130,289
Debt instruments 25,088 23,434
334,310 313,863
Interest expense
Deposits from banks
(
47
)
(
5
)
Deposits from other customers
(
14,045
)
(
30,268
)
Liabilities evidenced b
y
paper
(
668
)
(
660
)
Subordinated term deb
t
(
380
)
(
281
)
H
y
brid deb
t
(
27,634
)
(
27,541
)
Interest on assets cost
(
8,712
)
(
5,026
)
Lease a
g
reements and other
(
359
)
(
404
)
(
51,845
)
(
64,185
)
Net interest income 282,465 249,678
For 2021 the recognized interest income from individually impaired financial assets (loans to customers)
amounted to BGN 44,311 thousand (2020: BGN 32,252 thousand).
Notes to the financial statements
49
7. Net fee and commission income
in thousands of BGN
Fee and commission income 2021 2020
Letters of credit and guarantees 3,466 2,412
Payment operations 24,877 19,787
Customer accounts 39,772 34,766
Card services 37,917 32,406
Other 43,177 31,436
149,209 120,807
Fee and commission expense
Letters of credit and guarantees (606) (484)
Payment systems (2,968) (2,353)
Card services (17,322) (14,809)
Other (4,808) (3,969)
(25,704) (21,615)
Net fee and commission income 123,505 99,192
8. Net trading income
in thousands of BGN 2021 2020
Net trading income arises from:
- Debt instruments (64) (68)
- Equities 200 (120)
- Foreign exchange rate fluctuations 15,606 12,719
Net trading income 15,742 12,531
9. Other net operating income
In BGN '000 2021 2020
Other net operating income arising from:
- Net income from transactions and revaluation of gold and
precious metals 1,176 604
- -rental income 5,702 5,740
- Debt instruments 2,941 3,517
- Equities 27 2,188
- income from management of assigned receivables 3,075 162
- Gain on administration of loans acquired through business
combination 337 97
Other net operating income 13,258 12,308
10. Administrative expenses
in thousands of BGN 2021 2020
General and administrative expenses comprise:
- Personnel cost
71,871
67,742
Amortization of equipment and tangible fixed assets
12,201
13,165
Rights of use assets
35,089
35,011
- Advertising
8,944
10,298
-Telecommunication, software and other computer maintenance
13,146
12,665
- Other expenses for external services
50,832
54,926
Administrative expenses 192,083 193,807
Notes to the financial statements
50
Personnel costs include salaries, social and health security contributions under the provisions of the local
legislation. At 31 December 2021 the total number of employees was 2,867 (31 December 2020: 2,910).
The amounts accrued in 2021 for services provided by the registered auditors for independent financial
audit amounted to BGN 623 thousand. The amounts accrued in 2020 for services provided by the
registered auditors for independent financial audit amounted to BGN 394 thousand. There are no
amounts accrued in 2021 for other services unrelated to audit and provided by the registered auditors.
(For 2020: BGN 153 thousand)
11. Allowance for impairment
in thousands of BG
N
2021 2020
Write-downs
Loans and advances to customers
(
160,033
)
(
140,462
)
Investments in non
-
consolidated subsidiaries - -
(v) Capital instruments at fair value through other
comprehensive income
(
190
)
(
124
)
Off balance sheet commitments
(
775
)
(
490
)
Reversal of write-downs
Loans and advances to customers 35,069 41,971
(v) Capital instruments at fair value through other
comprehensive income 3 42
Off balance sheet commitments 263 356
Impairment, net
(
125,663
)
(
98,707
)
The expense for impairment in 2021 and 2020 is due to additional allowances resulting from the
development of credit risk in a period of challenging economic environment and the conservative
approach applied by the Group in recognising the risk of loss for certain individually impaired exposures.
12. Other income/(expenses), net
2020 2020
(Loss)/profit from the sale and write-off of assets acquired as
collateral
(6,034)
1,591
Revaluation of investment propert
y
30,340
2,312
Income/
(
expense
)
from sale of investment propert
y
16
(
368
)
Dividend income
455
430
Net earned insurance premiums
7,236
6,281
Cost of
g
uarantee schemes
(23,710)
(
35,945
)
Claims incurred
(3,591)
(
3,459
)
Reversal of expense/(expense) for provisions for pending court
508
(
69
)
Other income, net
2,388
(
469
)
Total
7,608
(
29,696
)
Notes to the financial statements
51
13. Income tax expense
2021 2020
Current taxes (8,043) (1,213)
Deferred taxes (See Note 21) (5,381) (4,769)
Income tax expense (13,424) (5,982)
Reconciliation between tax expense and the accounting profit is as follows:
in thousands of BGN 2021 2020
Accounting profit before taxation 124,832 51,499
Corporate tax at applicable tax rate (10% for 2021 and 10% for 2020) 12,483 5,150
Effect from tax rates of foreign subsidiaries and branches 657 739
Tax effect of permanent tax differences 172 23
Other 112 70
Income tax expense 13,424 5,982
Effective tax rate 10.75% 11.62%
14. Earnings per share
2021 2020
Net profit attributable to shareholders (in thousands of BGN)
110,595
44,974
Average weighted number of ordinary shares held (in thousands)
149,085
126,339
Earnings per share (BGN)
0.74
0.36
The basic earnings per share, calculated in accordance with IAS 33, are based on the profit attributable
to ordinary equity holders of the Group. In 2021 as in the previous year, no conversion or option rights
were outstanding. The diluted earnings per share, therefore, correspond to the basic earnings per share.
15. Cash and balances with Central Banks
in thousands of BG
N
2021 2020
Cash on hand
- in BGN 189,400 135,251
- in forei
g
n currenc
y
72,599 53,845
Balances with Central Banks 1,499,754 1,655,521
Current accounts and amounts with local banks 2,916 -
Current accounts and amounts with forei
g
n banks 206,145 288,580
Total 1,970,814 2,133,197
16. Investments in securities
In thousands of BGN 2021 2020
Bonds and notes issued by:
Bulgarian Government
- denominated in BGN 369,107 260,139
- denominated in foreign currencies 213,275 182,390
Foreign governments 620,878 561,735
Corporates 317,559 236,974
Foreign banks 124,057 24,011
Other issuers – equity instruments 28,905 27,392
Total 1,673,781 1,292,641
Of which financial assets:
at fair value through other comprehensive income 1,088,904 825,882
at amortised cost 316,139 199,830
at fair value through profit and loss 268,738 266,929
Total 1,673,781 1,292,641
A portion of the reported bonds of the Bulgarian and of foreign governments amounting to BGN 83,314
thousand (BGN 86,103 thousand in 2020) are subject to a Total Return Swap Agreement.
Notes to the financial statements
52
As at the end of 2021, part of the reported foreign government securities in the amount of BGN 16,196
thousand are subject to repo agreements.
17. Loans and advances to banks and other financial institutions
(a) Analysis by type
in thousands of BG
N
2021 2020
Placements with banks 38,727 34,094
Other 48,729 72,017
Total 87,456 106,111
17. Loans and advances to banks and other financial institutions
(b) Geographical analysis
in thousands of BG
N
2021 2020
Domestic banks and financial institutions 22,208 39,596
Forei
g
n banks and other financial institutions 65,248 66,515
Total 87,456 106,111
18. Loans and advances to customers
in thousands of BG
N
31/12/2021
Gross
value
Allowance
for
impairment Amortised cost
Large enterprise
2,236,375
(
142,266
)
2,094,109
Medium enterprise
1,385,398
(
154,722
)
1,230,676
Small business
594,327
(
60,043
)
534,284
Micro enterprise
519,600
(
43,361
)
476,239
Households
- Consumer loans
1,074,443
(
48,682
)
1,025,761
- Mortgage loans
1,153,425
(
12,908
)
1,140,517
- Credit cards
167,126
(
17,785
)
149,341
- Other programmes and collateralised financing
3,017 - 3,017
Total 7,133,711
(
479,767
)
6,653,944
In BGN '000
31.12.2020 г.
Gross
value
Allowance
for
impairment
Amortised
cost
Large enterprise 2,610,673 (215,481) 2,395,192
Medium enterprise 1,144,173 (141,592) 1,002,581
Small business 564,876 (44,851) 520,025
Micro enterprise 350,200 (11,340) 338,860
Households
- Consumer loans 972,496 (67,693) 904,803
- Mortgage loans 1,009,903 (17,395) 992,508
- Credit cards 179,780 (25,960) 153,820
- Other pro
g
rammes and collateralised financin
g
5,098 - 5,098
Total
6,837,199 (524,312) 6,312,887
Notes to the financial statements
53
(a) Movement in impairment allowances
in thousands of BG
N
Balance as at 01 Januar
y
2021
524,312
A
dditional allowances
160,033
A
mounts released
(35,069)
Write-offs
(171,512)
Other
2,003
Balance as at 31 December 2021
479,767
19. Property and equipment
in thousands of BGN
Land
and
Buildin
g
s
Fixtures and
fittings
Motor
vehicles
Assets
under
Constructio
n
Leasehold
Improvemen
ts
Total
Cost
At 01 Januar
y
2020 22,208 145,269 6,892 15,870 67,829 258,068
A
dditions - 433 - 10,938 138 11,509
Exchan
g
e rate differences -
(
105
)
(
5
)
(
4
)
(
37
)
(
151
)
Write-offs -
(
3,203
)
-
(
56
)
(
1,484
)
(
4,743
)
Transfers - 3,577 84
(
9,122
)
125
(
5,336
)
At 31 December 2020 22,208 145,971 6,971 17,626 66,571 259,347
A
dditions 4,035 460 - 9,558 117 14,170
Exchan
g
e rate differences - 167 9 5 57 238
Write-offs -
(
11,787
)
(
24
)
-
(
4,544
)
(
16,355
)
Transfers 6,822 -
(
8,619
)
130
(
1,667
)
At 31 December 2021 26,243 141,633 6,956 18,570 62,331 255,733
Amortisation
At 01 Januar
y
2020 5,278 122,259 6,516 - 42,277 176,330
Exchan
g
e rate differences -
(
66
)
(
3
)
-
(
29
)
(
98
)
A
ccrued durin
g
the
y
ear 807 7,069 141 - 2,739 10,756
For write offs -
(
3,183
)
--
(
1,484
)
(
4,667
)
At 31 December 2020 6,085 126,079 6,654 - 43,503 182,321
Exchan
g
e rate differences
122 7 - 45 174
A
ccrued durin
g
the
y
ear 807 6,064 131 - 2,369 9,371
For write offs -
(
11,767
)
(
24
)
-
(
4,540
)
(
16,331
)
At 31 December 2021 6,892 120,498 6,768 - 41,377 175,535
Carr
y
in
g
amount
At 01 Januar
y
2020 16,930 23,010 376 15,870 25,552 81,738
At 31 December 2020 16,123 19,892 317 17,626 23,068 77,026
At 31 December 2021 19,351 21,135 188 18,570 20,954 80,198
Notes to the financial statements
54
Assessment methodology
Significant
unobservable inputs
Connection between
key unobservable
inputs and fair value
1. Discounted cash flows: this valuation model takes into
account the present value of cash flows generated by
property, taking into account the expected growth of rental
prices, the period required for cancellation, the level of
occupancy, premiums such as periods in which no rent is paid
and other expenses which are not paid by tenants. The
expected net cash flows are discounted using discount rates
adjusted for risk. Among other factors, when determining the
discount rate, the quality of the building and its location are
taken into account (first-rate or second-rate), as well as the
creditworthiness of the tenant and the duration of the loan
agreement.
1. Expected market
growth of rent (4.5-
6.8%, weighted
average 5.6%).
2. Period for cancellation
(6 months on average
after each rental
agreement).
3. Occupancy (90-95%,
weighted average
92.5%).
4. Periods when no rent is
paid (1 year for new
rental agreement).
5. Risk adjusted discount
rate (4-9%, weighted
average 6.5%).
The fair value will
increase (decrease)
where:
the expected market
growth of rent is
higher (lower);
periods for
cancellation are
shorter (longer);
Occupancy is higher
(lower);
the periods when no
rent is paid are
shorter (longer); or
the risk adjusted
discount rate is lower
(higher).
2. Market approach/Comparative approach. This method is
based on the comparison of the property being evaluated to
other similar properties which have been sold recently or
which are available for sale. Using this method, the value of a
given property is determined in direct comparison to other
similar properties which have been sold in a period of time
close to the time when the valuation is made. Based on
detailed research, review and analysis of data from the
property market, the value is formed and it is the most
accurate indicator of market value.
This method consists of using information about actual
transactions in the real estate market in the last six months.
Successful application of this method is only possible where
a trustworthy database is available as regards actual
transactions with properties similar to the property being
valued. Information from real estate sites, local press and
other such refers to future investment intentions of the seller
and cannot be deemed a trustworthy source of information.
When using such sites, the offer price for each analogous
property is discounted at the valuator’s discretion, but by no
less than 5%.
1. Expected market
growth of property (5-
10%, weighted
average 7.5%).
2. Time required to effect
the sale (6 months on
average after the offer
is placed).
3. Transaction success
rate (90-95%,
weighted average
92.5%).
4. Location (1.0-1.05,
weighted average
1.025).
5. Property status (1.0-
1.1, weighted average
1.05).
The fair value will
increase (decrease)
where:
the expected
market growth of
property is higher
(lower);
the period of time
required for the sale
is shorter (longer);
there is a change in
the technical
condition of the
property
The fair value of assets constituting land and buildings was determined by independent property
assessors holding recognised professional qualification and recent experience in assessing property
with similar location and category. The Group's policy requires that independent assessors determine
the fair value sufficiently frequently so as to ensure that the balance sheet value does not differ
significantly from the fair value at the end of the reporting period. As at 31 December 2021 the fair value
of land and buildings was not significantly different from their balance sheet value as at that date. The
fair value of land and buildings is categorised as Level 3 fair value on the basis of incoming data on the
assessment methodology used.
Notes to the financial statements
55
20. Intangible assets
in thousands of BGN
Software and
licences
Goodwill Total
Cost
At 01 Januar
y
2020 42,344 540 42,884
A
dditions 899 - 899
Exchan
g
e rate differences 26. - 26.
Write-offs
(
1
)
-
(
1
)
Transfers 5,336 - 5,336
At 31 December 2020 48,552 540 49,092
A
dditions 265 - 265
Exchan
g
e rate differences 57 - 57
Transfers 1,667 - 1,667
At 31 December 2021 50,541 540 51,081
Amortisation
At 01 Januar
y
2020 30,258 - 30,258
Exchan
g
e rate differences
(
17
)
-
(
17
)
A
ccrued durin
g
the
y
ear 2,409 - 2,409
For write offs
(
1
)
-
(
1
)
At 31 December 2020 32,649 - 32,649
Exchan
g
e rate differences 36 - 36
A
ccrued durin
g
the
y
ear 2,830 - 2,830
At 31 December 2021 35,515 - 35,515
Carr
y
in
g
amount
At 01 Januar
y
2020 12,086 540 12,626
At 31 December 2020 15,903 540 16,443
At 31 December 2021 15,026 540 15,566
21. Deferred tax liabilities
Deferred income taxes are calculated on all temporary differences under the liability method using a
principal tax rate of 10% for Bulgaria and of 15% for Albania.
The deferred tax as at 31 December 2021 refers to the following items of the statement of financial
position:
In thousands of BG
N
Assets Liabilities Net
Propert
y
, equipment and intan
g
ibles
(
46
)
2,800 2,754
Investment Propert
y
- 23,675 23,675
Tax loss - - -
Other
(
2,394
)
2,892 498
Net tax
(
assets
)
/liabilities
(
2,440
)
29,367 26,927
Notes to the financial statements
56
The deferred tax as at 31 December 2020 refers to the following items of the statement of financial
position:
In thousands of BG
N
Assets Liabilities Net
Propert
y
, equipment and intan
g
ibles
(
74
)
2,677 2,603
Investment Propert
y
- 20,617 20,617
Tax loss
(
2,089
)
-
(
2,089
)
Other
(
2,445
)
2,958 513
Net tax
(
assets
)
/liabilities
(
4,608
)
26,252 21,644
The movements of temporary differences in 2020 are recognised as follows:
In BGN '000 31.12.2020 г.
31 December
2021
Net liabilities
Recognised
during the
period (in
profit
)
or loss
Recognised
during the
period in
equit
y
Other
movements Net liabilities
Property, equipment
and intan
g
ibles 2,603 152 -
(
1
)
2,754
Investment Propert
y
20,617 3,058 - - 23,675
Tax loss
(
2,089
)
2,089 - - -
Other 513 82
(
106
)
9 498
Net tax
(
assets
)
/liabilities 21,644 5,381
(
106
)
8 26,927
Notes to the financial statements
57
22. Repossessed assets
in thousands of BG
N
2021 2020
Land 256,609 473,315
Buildin
g
s 189,831 205,905
Machines, plant and vehicles 12,596 33,594
Fixtures and fittin
g
s 817 805
Total 459,853 713,619
Repossessed assets acquired as collateral are measured at the lower of cost and net realisable value.
The net realizable value of the lands and buildings is approximately equal to their fair value. The
assessment methodology for land and buildings is given in note 19.
23. Investment Property
in thousands of BGN
Balance as at 01/01/2021 414,021
Incomin
g
s for the period 197
Transferred from repossessed assets 290,975
Revaluation of investment propert
y
to the fair value reco
g
nised at transfer 30,340
Write-offs upon sale
(
2,683
)
Balance as at 31/12/2021 732,850
24. Rights of use assets
in thousands of BG
N
At 01 Januar
y
2021 154,080
A
dditions 1,040
A
mortisation
(
35,105
)
Effect of modification to lease terms and expectations on lease term
(
28,193
)
Exchan
g
e rate differences 347
At 31 December 2021 92,169
Lease liabilities
At 01 Januar
y
2021 154,481
A
dditions 1,040
Lease pa
y
ments
(
34,976
)
Effect of modification to lease terms and expectations on lease term
(
28,164
)
Exchan
g
e rate differences 24
At 31 December 2021 92,405
Notes to the financial statements
58
24. Right of use assets
Right-of-use assets recognised by the Group are the branches and offices in various towns in Bulgaria
Cyprus and Albania , as well as the buildings in which the Bank's headquarters are located - lines Upon
completing the initial recognition, the Group analysed and took into account information on the expected
duration of the period in which the Group will be using the assets. In 2021 some of these expectations
changed and as a result the Group reviewed its initial assessment and recognized a decrease in the
right-of-use assets in the amount of BGN 28,193 thousand, and in lease liabilities in the amount of BGN
28,164 thousand.
In the assessment of right-of-use assets and lease liabilities, the Group took into consideration the
current level of financing costs in case it plans to finance the purchase of the assets in question, and
included this assumption both in the initial, and in the subsequent valuation of right-of-use assets and
of lease liabilities.
The table below analyses lease liabilities according to the expected residual term of rental agreements:
In BGN '000 Maturity analysis of lease liabilities
To 1
y
ea
r
More than 1
y
ea
r
Total
At 01 January 2021
32,046 122,435 154,481
At 31 December 2021
20,565 71,840 92,405
25. Other assets
in thousands of BG
N
2021 2020
Deferred expense 15,668 11,474
Gold 2,818 2,661
Investments in non-consolidated subsidiaries 10,248 9,247
Other assets 100,814 86,620
Total 129,548 110,002
26. Due to banks
in thousands of BG
N
2021 2020
- -
Pa
y
able on demand 8,722 2,747
Total 8,722 2,747
27. Due to other customers
in thousands of BG
N
2021 2020
Retail customers
- current accounts 2,478,823 1,967,574
- term and savin
g
s deposits 4,971,344 5,288,201
Businesses and public institutions
- current accounts 2,074,799 1,757,737
- term deposits 448,665 528,764
Total 9,973,631 9,542,276
Notes to the financial statements
59
28. Liabilities evidenced by paper
in thousands of BG
N
2021 2020
A
cceptances under letters of credi
t
3,388 6,776
Liabilities under repurchase a
g
reements 14,358 -
Debt related to a
g
reements for full swap of profitabilit
y
73,391 73,240
Financin
g
from financial institutions 26,227 23,633
Liabilities related to a structured investment produc
t
2,638 -
Total 120,002 103,649
Financing from financial institutions through extension of loan facilities can be analysed as follows:
Lender Interest rate Maturity
Amortised cost as at 31
December 2021
European Investment Fund –
JEREMIE 2 0% - 1.087% 30/09/2025 2,731
Bulgarian Bank for
Development AD 1% - 1.583% 15.03.2027 - 30.11.2028 15,525
Manager of financial
instruments in Bul
g
aria fund 0% 31/12/2033 7,971
Total 26,227
Lender Interest rate Maturity
Amortised cost as at 31
December 2020
European Investment Fund –
JEREMIE 2 0 % - 1.136% 30/09/2025 4,244
Bulgarian Bank for
Development AD 1% - 1.583% 15.03.2027 - 30.11.2028 16,137
Manager of financial
instruments in Bul
g
aria fund 0% 31/12/2033 3,252
Total 23,633
Notes to the financial statements
60
29. Hybrid and subordinated debt
In BGN '000
Principal
amount
Amortised cost as at 31
December 2021
H
y
brid debt with principal EUR 40 mio 78,233 84,910
H
y
brid debt with principal EUR 60 mio 117,350 123,840
H
y
brid debt with principal EUR 30 mio 58,675 58,829
H
y
brid debt with principal EUR 27.133 mio 53,068 53,154
Total 307,326 320,733
In BGN '000
Principal
amount
Amortised cost as at 31
December 2020
H
y
brid debt with principal EUR 40 mio 78,233 84,910
H
y
brid debt with principal EUR 60 mio 117,350 123,840
H
y
brid debt with principal EUR 30 mio 58,675 58,829
Total 254,258 267,579
The bonds under the four instruments are registered, dematerialized, interest-bearing, perpetual,
unsecured, freely transferable, non-convertible, deeply subordinated and without incentive to redeem.
The four hybrid instruments fully comply with the requirements of Regulation 575/2013 and are included
in the additional tier 1 capital.
As at 31.12.2021 for the amount of EUR 27,133 thousand (equivalent to BGN 53,068 thousand) issued
through a capital instrument, an issue of perpetual, non-cumulative, uncollateralized, deeply
subordinated, freely transferrable, non-convertible bonds registered in two tranches – on 22 December
2021 and on 29 December 2021 - with Clearstream Banking S.A. under a common ISIN code
XS2419929422, the Bank has not submitted an application to the Bulgarian National Bank for inclusion
of the amount in the Bank’s additional tier 1 capital within the meaning of Article 52 of Regulation (EU) No
575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for
credit institutions and investment firms and amending Regulation (EU) No. 648/2012.
On 6 February 2020, by Resolution No 38/6 February 2020, the Governing Council of the Bulgarian
National Bank granted permission to the Group to include in its additional tier 1 capital the amount of EUR
30,000 thousand (equivalent to BGN 58,675 thousand),attracted via the capital instrument issued by the
Group, an issue of perpetual, non-cumulative, non-convertible bonds registered on 20 December 2019
with the Central Depository under ISIN code BG2100023196
Notes to the financial statements
61
29. Hybrid and subordinated debt, continued
On 25 April 2019, the Group (through its subsidiary bank in Albania) issued subordinated term debt. The
maturity date of the subordinated term debt is 25 April 2026, and it is denominated in Euro with total
amount of EUR 2,000 thousand.
On 18 June 2020, the Group (through its subsidiary bank in Albania) issued subordinated term debt. The
maturity date of the subordinated term debt is 25 April 2026, and it is denominated in Euro with total
amount of EUR 2,000 thousand.
In BGN '000
In BGN '000
Amortised cost as at
31 December 2021
Amortised cost as
at 31 December 2020
Subordinated term debt with
principal of EUR 2 million 3,943 3,943
Subordinated term debt with
principal of EUR 2.9 million
5,679 5,680
Total 9,622 9,623
The two subordinated term debt fully comply with the requirements of Regulation 575/2013 and are
included in the additional tier 2 capital.
30. Other liabilities
in thousands of BG
N
2021 2020
Liabilities to personnel
1,406
1,878
Insurance contract provisions
5,586
4,711
Provisions for pendin
g
court cases
523
1,031
Impairment on off balance sheet commitments
1,356
843
Other pa
y
ables
10,422
8,116
Total
19,293
16,579
31. Capital and reserves
(a) Number and face value of registered shares as at 31 December 2021
The subscription for the public offering of shares of First Investment Bank AD was completed successfully
on 3 July 2020. Out of the 40 000 000 ordinary dematerialized shares with nominal value of BGN 1, and
issue value of BGN 5.00 each, a total of 39 084 800 shares were subscribed and paid up.
On 31 July 2020 First Investment Bank’s capital increase was registered in the Commercial Register and
Register of Non-for-profit Legal Entities. This registration was carried out after the subscription for shares
was successfully completed on 03 July 2020 based on the prospectus confirmed by the Financial
Supervision Commission.
Thus, the Bank’s capital was increased to BGN 149 084 800 by issue of 39 084 800 new ordinary,
registered, dematerialized shares, each with one voting right in the general meeting, with nominal value
of BGN 1 and issue value of BGN 5. The amount of the capital after the increase was reflected in the By-
Laws of First Investment Bank AD after approval granted by the Bulgarian National Bank.
With relation to this issue, the Bank’s premium reserve increased by BGN 153,017 thousand, net of the
issue costs, reaching a total amount of BGN 250,017 thousand (as at 31 December 2019: BGN 97,000
thousand).
Notes to the financial statements
62
(b) Shareholders
The table below shows those shareholders of the Bank holding shares as at 31 December 2021 together
with the number and percentage of total issued shares.
Number of
shares
% of issued share
capital
Mr. Ivailo Dimitrov Mutafchiev 46,750,000 31.36
Mr. Tzeko Todorov Minev 46,750,000 31.36
Bul
g
arian Bank for Development AD 27,350,000 18.35
Valea Foundation 11,734,800 7.87
Other shareholders (shareholders holding shares subject to free
trade on the Bul
g
arian Stock Exchan
g
e
–
Sofia
)
16,500,000 11.06
Total 149,084,800 100.00
(c) Statutory reserve
Statutory reserves include amounts set aside for purposes regulated by local legislation. According to
Bulgarian legislation the Bank is obliged to set aside at least 1/10 of its annual profit as statutory reserve
until the total amount of reserves reaches 1/10 of the Bank’s share capital.
In 2010, as in the previous year, the Bank did not distribute dividends.
32. Commitments and contingent liabilities
(a) Contingent liabilities
The Group provides financial guarantees and letters of credit to guarantee the performance of
customers to third parties. These agreements have fixed limits and generally extend for a period of up
to two years.
The contractual amounts of commitments and contingent liabilities are set out in the following table by
category. The amounts reflected in the table for contingent liabilities represent the maximum accounting
loss that would be recognised in the statement of financial position if counterparts failed completely to
perform as contracted and any collateral or security proved to be of no value.
in thousands of BG
N
2021 2020
Bank
g
uarantees
164,055
181,347
Unused credit lines
671,131
588,900
Letters of credit
12,507
25,430
Total
847,693
795,677
Impairment on off balance sheet commitments
1,356
843
Notes to the financial statements
63
These commitments and contingent liabilities have off balance-sheet credit risk and only organization
fees and accruals for probable losses are recognised in the statement of financial position until the
commitments are fulfilled or expire. Most of the contingent liabilities and commitments will expire without
being advanced in whole or in part. Therefore, the amounts do not represent expected future cash flows.
The contingent loan is a framework agreement for collateral management under numerous loan
transactions made with one or more clients. The contingent loan does not lead to an obligation of the
Group to extend specific financial instruments. The negotiation of a specific loan transaction with the
Group client, e.g. extension of a loan or overdraft, contingent liabilities, such as bank guarantees and
letters of credit, is subject to a separate decision and approval of the Group.
As at the date of the report there are no other significant contingent liabilities and commitments requiring
additional disclosure.
33. Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprises the following
balances with less than 90 days original maturity:
In BGN '000
2021 2020
Cash and balances with Central Banks 1,970,814 2,133,197
Loans and advances to banks and financial
institutions with ori
g
inal maturit
y
less than 3 months 46,831 69,574
Total 2,017,645 2,202,771
34. Average balances
The average carrying amounts of financial assets and liabilities are set out in the table below. The
amounts are calculated by using a simple average of monthly balances for all instruments.
in thousands of BGN 2021 2020
FINANCIAL ASSETS
Cash and balances with Central Banks
1,970,372 1,898,055
Investments in securities
1,555,408 1,142,514
Loans and advances to banks and other financial
institutions
81,164 80,748
Loans and advances to customers
6,486,634 6,203,222
FINANCIAL LIABILITIES
Due to banks
11,591 1,565
Due to other customers
9,744,588 9,164,760
Liabilities evidenced by paper
115,414 106,255
Subordinated term debt
9,660 7,378
Hybrid debt
279,858 269,268
Notes to the financial statements
64
35. Related party transactions
Parties are considered to be related if one party has the ability to control or exercise significant influence
over the other party on making financial or operational decisions, or both parties are under common
control.
A number of banking transactions are entered into with related parties in the normal course of business.
These include loans, deposits and other transactions. These transactions were carried out on
commercial terms and at market rates. The volume of these transactions and outstanding balances at
the end of respective periods are as follows:
Type of related party
Parties that control or
manage the Group
Enterprises under
common control
In BGN '000
2021 2020 2021 2020
Loans
Loans outstanding at beginning of the period
1,769 2,327 70,992 7,709
Loans issued/(repaid) during the period
1,746 (558) (628) 63,283
Loans outstanding at end of the period
3,515 1,769 70,364 70,992
Deposits and loans received:
At beginning of the period
13,275 11,718 15,194 9,459
Received/(paid) during the period
450 1,557 (1,612) 5,735
At the end of the period
13,725 13,275 13,582 15,194
Deposits placed
Deposits at beginning of the period
- - - 18,748
Deposits placed/(matured) during the year
- - - (15,793)
Deposits at end of the period
- - - 2,955
Other receivables
At beginning of the period
- - 17,565 16,790
Received/(paid) during the period
- - 472 775
At the end of the period
- - 18,037 17,565
Other receivables
At beginning of the period
- - - -
Received/(paid) during the period
- - 320 -
At the end of the period
- - 320 -
Off-balance sheet commitments
At beginning of the period
1,031 975 703 1,062
Issued/(expired) during the period
30 56 (109) (359)
At the end of the period
1,061 1,031 594 703
Lease liabilities
At beginning of the period
- - - -
Issued/(expired) during the period
- - 1,513 -
At the end of the period
- - 1,513 -
Notes to the financial statements
65
The key management personnel received remuneration of BGN 10,863 thousand for 2021 (2020:
BGN10,087 thousand), and other related parties received BGN 1,882 thousand (2020: BGN 1,985
thousand).
Type of related party
Parties that control or
mana
g
e the Group
Enterprises under common
control
In BGN '000
2021 2020 2021 2020
Interest income 24 25 2,085 2,415
Interest expense 8 10 1 1
Fee and commission
income 16 14 861 166
Fee and commission
expense 4 3 293 293
Notes to the financial statements
66
36. Subsidiaries
(a) First Investment Finance B.V.
In April 2003 the Group created a special purpose entity, incorporated in the Netherlands, First
Investment Finance B.V. The company is owned by the Group. The purpose for creating the entity is to
accomplish a narrow and well-defined objective of receiving loans from foreign financial institutions and
attracting investors by issuing bonds and other financial instruments guaranteed by the Group. The
entity’s issued and paid up share capital is EUR 18 thousand divided into 180 issued and paid up shares,
each with nominal value of EUR 100. The Group consolidates its investment in the enterprise.
(b) Diners Club Bulgaria AD
In May 2005 the Group acquired 80% of the share capital of Diners Club Bulgaria AD. The company
was incorporated in 1996 as a franchise and processing agent of Diners Club International. As at 31
December 2021 the share capital of the company is BGN 610 thousand, and the Group’s shareholding
is 94.79%. The Group consolidates its investment in the enterprise.
(c) First Investment Bank − Albania Sh.a.
In April 2006 the Group acquired 99.9998% of the capital of First Investment Bank − Albania Sh.a. upon
its incorporation. On 27 June 2007 First Investment Bank – Albania was granted a full banking licence
by the Bank of Albania, and on 1 September 2007 it effectively took over the activities of the former
branch FIB – Tirana, assuming all rights and obligations, assets and liabilities.
As at 31 December 2021 the share capital of First Investment Bank – Albania Sh.a. was EUR 11,975
thousand, fully paid up, and the Group’s shareholding is
100%. The Group consolidates its investment
in the enterprise.
(d) Debita OOD and Realtor OOD - in liquidation
Acting jointly the Group and First Financial Brokerage House OOD (FFBH) set up two new companies
Debita OOD and Realtor OOD, which were entered in the Commercial Registry in January 2010. The
capital of the two companies is BGN 150,000 each, distributed in shares with value of BGN 100 each,
as follows:
1. Debita OOD - 70%, i.e. 1,050 shares for the Group and 30%, i.e. 450 shares for FFBH OOD.
2. Realtor OOD - in liquidation - 51%, i.e. 765 shares for the Group and 49%, i.e. 735 shares for FFBH
OOD.
The companies were established as servicing companies within the meaning of Article 18 of the Law on
Special Investment Purpose Companies. The main lines of business for Debita OOD include acquisition,
servicing, management and disposal of receivables and the related consultancy services; the main lines
of business for Realtor OOD include management, servicing and maintenance of real estate,
construction and refurbishment works and consultancy in the field of real estate. These companies are
not included in the consolidated financial statements of the Group for the year ended 31 December
2021, as they are considered immaterial to the financial position, financial result and the cash flow of
the Group for the year. The assessment for consolidation of the subsidiaries is reconsidered at each
reporting date.
By the decision of the general meeting of associates held on 14.06.2021 the operations of Realtor OOD
were terminated and winding-up proceedings were initiated, to be completed within six months. The
notice to creditors was published in the Commercial Register and Register of Non-for-Profit Legal
Entities on 08.09.2021, and this is the starting date of the period for winding-up.
(e) Fi Health Insurance AD
In the second half of 2010 the Group acquired a majority stake capital of Health Insurance Fund FI
Health AD (formerly Health Insurance Fund Prime Health AD), a company engaged in voluntary health
insurance as well as acquisition, management and sale of investments in other companies. With a
decision of the Financial Supervision Commission issued in June 2013 the company has been granted
a license to operate as an insurer. The name was changed to FI Health Insurance AD and the principal
Notes to the financial statements
67
activity is insurance – Disease and Accident. In June 2018 the company expanded its license with one
more insurance class - "Various financial loss". As at 31 December 2021 the share capital of the
company is BGN 5,000 thousand, and the Group’s shareholding is 59.10%. The Group consolidates its
investment in the enterprise.
(f) Balkan Financial Services EAD
In February 2011 the Group acquired 100 shares representing 100% of the capital of Balkan Financial
Services EOOD. The company is engaged in consultancy services related to implementation of financial
information systems and software development. In January 2012 the company was transformed into a
sole-shareholder company. In 2019 First Investment Bank increased its capital from BGN 50 thousand
to BGN 6,437 thousand, divided into 128,734 ordinary registered dematerialized shares with voting
rights, of BGN 50 thousand par value each, and the increase of BGN 6,387 thousand was by a non-
cash instalment – contribution of software and hardware. As at 31 December 2021 the share capital
of the company is BGN 6,436.7 thousand, and the Group’s shareholding is 100%. The company is not
included in the consolidated financial statements of the Group for the year ended 31 December 2021,
as it is considered immaterial to the financial position, financial result and the cash flow of the Group for
the year. The assessment for consolidation of the subsidiary is reconsidered at each reporting date.
On 11.11.2021 the Management Board of First Investment Bank as the sole shareholder of Balkan
Financial Services EOOD decided to terminate the company, announce its liquidation and open winding-
up proceedings; this resolution was approved by the Supervisory Board on 22.12.2021. The winding-up
proceedings will continue with a notice in the Commercial Register and Register of Non-for-Profit Legal
Entities published by the appointed liquidator to all creditors after expiry of the legally stipulated term of
the notice to the revenue agency.
(g) Turnaround Management EOOD - deleted trader, Creative Investment EOOD and Lega Solutions
EOOD
During the first half of 2013 the Group established as the sole shareholder the companies Turnaround
Management EOOD, Creative Investment EOOD and Lega Solutions EOOD. Each company has the
minimum required capital of BGN 2 and their principal activities include manufacturing and trade in
goods and services in Bulgaria and abroad (Turnaround Management EOOD, Creative Investment
EOOD), acquisition, management and sale of assets, information processing, financial consultations
(Lega Solutions EOOD), etc. These companies are not included in the consolidated financial statements
of the Group for the year ended 31 December 2021, as they are considered immaterial to the financial
position, financial result and the cash flow of the Group for the year. The assessment for consolidation
of the subsidiaries is reconsidered at each reporting date.
After completion of winding-up proceedings for Turnaround Management EOOD, based on a resolution
of the Management Board of First Investment Bank as the sole shareholder dated 07.01.2021 and
approved by the Bank’s Supervisory Board on 20.01.2021, on 11.01.2022 the company was delisted in
the Commercial Register and Register of Non-for-Profit Legal Entities.
(h) AMC Imoti EOOD
AMC Imoti EOOD was registered in September 2010 and was acquired by the Group in 2013 through
the purchase of MKB Unionbank EAD as its subsidiary. The scope of operations of the company
includes activities related to acquisition of property rights and their subsequent transfer, as well as
research and evaluation of real estate, property management, consulting and other services. As at 31
December 2021 the capital of the company is BGN 500 thousand, and the Group is the sole owner. The
company is not included in the consolidated financial statements of the Group for the year ended 31
December 2021, as it is considered immaterial to the financial position, financial result and the cash
flow of the Group for the year. The assessment for consolidation of the subsidiary is reconsidered at
each reporting date.
(I) Other
The Group indirectly holds the subsidiary Fi Health EOOD. The company is not included in the
consolidated financial statements of the Group for the year ended 31 December 2021, as it is considered
Notes to the financial statements
68
immaterial to the financial position, financial result and the cash flow of the Group for the year. The
assessment for consolidation of the subsidiary is reconsidered at each reporting date.
(j) MyFin EAD
At its meeting held on 21 March 2019 the Group's Managing Board decided to establish the sole-
shareholder company MyFin EAD to be operating as an issuer of electronic money within the meaning
of Article 34, Para. 2(2) of the Payment Services and Payment Systems Act. The Group’s Managing
Board decision was approved by the Supervisory Board on 27 March 2019. On 19 April 2019 the Group
paid up the company's capital, amounting to BGN 1,000 thousand, as per the decisions of the competent
bodies. The company holds a license to operate as an electronic money institution, and also has the
right to carry out the activities listed in the payment services license, as stated in the company’s scope
of operation by Resolution No. 71 of 27.02.2020 issued by the BNB Governor, under No. BNB-
26660/02.03.2020. After the company obtained its license, it was listed in the Commercial Register and
Register of Non-Profit Legal Entities on 25.03.2020 under listing No. 20200325093135 The company is
not included in the consolidated financial statements of the Group for the year ended 31 December
2021, as it is considered immaterial to the financial position, financial result and the cash flow of the
Group for the year. The assessment for consolidation of the subsidiary is reconsidered at each reporting
date.
The company’s own capital was increased from BGN 1 000 thousand to BGN 2 000 thousand through
the issue and subscription by the Bank as the sole shareholder of 1 000 000 new ordinary registered
dematerialised voting shares, each with a nominal value of BGN 1 (one), for a total value of BGN 1 000
000 (one million). The resolution for the capital increase was made by the Management Board at its
meeting held on 17.06.2021, and then approved by the Bank’s Supervisory Board on 30.06.2021. The
company’s company increase was listed in the Commercial Register and Register of Non-Profit Legal
Entities on 02.09.2021 under listing No. 20210902164014.
37. Post balance sheet events
No adjusting and significant non-adjusting events have occurred after the end of the reporting period,
other than those disclosed below:
After completion of winding-up proceedings for Turnaround Management EOOD, based on a resolution
of the Management Board of First Investment Bank as the sole shareholder dated 07.01.2021 and
approved by the Bank’s Supervisory Board on 20.01.2021, on 11.01.2022 the company was delisted in
the Commercial Register and Register of Non-for-Profit Legal Entities.
On 24 February 2022 Russia began large-scale action against Ukraine. In response to the Russian
actions against Ukraine, the EU member states and the USA imposed wide-ranging sanctions against
Russia and Belarus, including but not limited to, large Russian banks, some other companies, members
of the Russian parliament and some representatives of the Russian elite and their families, and also
banned primary/secondary trade in government bonds and other select securities. Secondary effects,
such as the increasing prices and the sufficiency of energy supply in Europe, as well as the economic
impact of various scenarios, are difficult to forecast and may have significant effects on the EU economy.
The crisis has the potential to exacerbate further the already tense situation with energy prices in
Europe, which may lead to slowing of the economy and to higher losses, including higher impairment.
The risks to future development include the potential impacts on the business model of macroeconomic
and global geopolitical insecurity related to the Russian actions against Ukraine. Customers’ activities
may also be affected by the higher prices of energy and the disruption of supply chains.
The Group monitors the situation closely, and carries out additional stress tests under different
scenarios. The Group’s exposure to counterparties from Russia, Ukraine and Belarus is insignificant.
As at the time of preparation of these financial statements, the Management did not expect that as a
whole the crisis would have immediate significant impacts on the Group’s operations.
ACTIVITY REPORT 2021
(ON A CONSOLIDATED BASIS)
OF FIRST INVESTMENT BANK AD
APRIL 2022
ActivityReport2021
onaconsolidatedbasis
FIRSTINVESTMENTBANK
2/146
Thepresentreportispreparedonthegroundsofandincompliancewiththerequirementsofthe
AccountingAct,theLawonPublicOfferingofSecurities,Ordinance№2oftheFinancialSupervision
Commissionforinitialandsubsequentdisclosureofinformationinpublicofferingandadmittance
fortradeonaregulatedmarketofsecurities,Regulation(EU)No 575/2013 of the European
Parliamentand of the Council onprudential requirements for credit institutions and investment
firms,Regulation(EU)2020/852oftheEuropeanParliamentandoftheCouncilontheestablishment
ofaframeworktofacilitatesustainableinvestment,anditssupplementing acts, as well as the
NationalCorporateGovernanceCode,approvedbytheFinancialSupervisionCommission.
ActivityReport2021
onaconsolidatedbasis
FIRSTINVESTMENTBANK
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SELECTEDINDICATORS
ActivityReport2021
onaconsolidatedbasis
FIRSTINVESTMENTBANK
4/146
TABLEOFCONTENTS
MACROECONOMICDEVELOPMENT.................6
BANKINGSYSTEM..........................................11
MISSIONANDDEVELOPMENTPRIORITIES......16
FIBANKPROFILE.............................................17
Corporatestatus............................................17
Participationsandmemberships...................17
Marketposition.............................................17
Marketshare.................................................17
Correspondentrelations...............................18
Branchnetwork.............................................18
Subsidiaries....................................................19
Awards2021..................................................20
FIRSTINVESTMENTBANK:DATESANDFACTS.21
HIGHLIGHTS2021...........................................24
FINANCIALREVIEW........................................27
Keyindicators................................................27
Sustainabledevelopment..............................27
Creditrating...................................................28
Financialresults.............................................29
Balancesheet................................................32
Loanportfolio................................................34
Loans.........................................................3 4
Relatedpartytransactions........................36
Contigentliabilities....................................37
Attractedfunds.............................................38
Capital............................................................40
Regulatorycapital.....................................40
Capitalrequirements.................................42
Capitalbuffers...........................................42
Leverage....................................................43
Eligibleliabilities........................................44
RISKMANAGEMENT.......................................45
Riskmanagementstrategy............................45
Riskappetiteframework...........................46
Riskmap....................................................46
Riskculture................................................47
Riskmanagementframework......................48
Linesofdefence........................................48
Structureandinternalorganisation.........48
Collectiveriskmanagementbodies..........49
Systemoflimits.........................................50
Recoveryplan............................................51
Creditrisk......................................................51
Loanprocess.............................................52
Modelsforcreditriskmeasurement.........53
Creditriskmitigationmethods.................54
Problemexposuresandstrategyfortheir
reduction...................................................54
Impairmentandprovisioningofrisk
exposures..................................................56
Marketrisk....................................................57
Positionrisk...............................................57
Interestrateriskinthebankingbook.......58
Currencyrisk.............................................58
Counterpartyriskandsettlementrisk......59
Liquidityrisk..................................................59
Internalliquidityadequacyassessment
process......................................................60
Operationalrisk............................................61
Informationsecurity.................................62
Personaldataprotection..........................62
Businesscontinuitymanagement.............62
Riskexposures..............................................63
Internalcapitaladequacyanalysis................63
DISTRIBUTIONCHANNELS..............................66
Branchnetwork............................................66
Contactcenter..............................................67
Corporatewebsite........................................68
Corporateblog..............................................68
Sales..............................................................68
Digitalbanking..............................................69
Myfibankelectronicbanking...................69
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CORPORATEGOVERNANCESTATEMENT........71
Corporategovernanceframework................72
Corporategovernancecode..........................73
Codeofconductandwhistleblowing........73
Managementstructure.................................74
SupervisoryBoard.........................................75
Structureandcompetences.......................75
Diversitypolicyandindependence............75
Functionsandresponsibilities...................76
Assessmentoftheactivity.........................76
Committees...............................................77
ManagingBoard............................................79
Structureandcompetences.......................79
Diversitypolicy...........................................79
Functionsandresponsibilities...................80
CommitteesandcouncilstotheMB..........80
GeneralMeetingofShareholders.................81
Controlenvironmentandprocesses.............82
Internalaudit.............................................82
Registeredauditors...................................82
Protectionofshareholders’rights.................83
ConveningofGMSandinformation..........83
Maintransferrightsandrestrictions.........83
Minorityshareholdersandinstitutional
investors....................................................84
Informationdisclosure..................................84
Investorrelationsdirector.........................86
Stakeholders..................................................86
Shareholders’structure.................................87
Sharepriceandmarketcapitalisation...........87
REPORTONTHEIMPLEMENTATIONOFTHE
REMUNERATIONPOLICY................................89
Remunerationpolicy.....................................90
NON‐FINANCIALDECLARATION......................93
Businessmodel..............................................94
Sustainabledevelopment..............................95
Environmentalissues.................................96
Socialissues...............................................99
Governanceissues..................................100
Ethicalissues...............................................100
Codeofethics..........................................100
Responsibilityandcompliance................101
Whistleblowing.......................................101
Applicationatgrouplevel.......................101
HUMANCAPITAL.........................................103
Policyfornominationandsuitability
assessment.................................................105
INFORMATIONTECHNOLOGY......................106
BUSINESSREVIEW........................................108
Retailbanking.............................................108
Deposits..................................................108
Loans.......................................................109
Corporatebanking......................................111
Deposits..................................................111
Loans.......................................................111
Europrograms.............................................116
Paymentservices........................................117
Cardpayments........................................118
Internationalpayments..........................119
Goldandcommemorativecoins.................120
Privatebanking...........................................121
Capitalmarkets...........................................122
BUSINESSREVIEWOFTHESUBSIDIARY
COMPANIES.................................................124
FirstInvestmentBank–AlbaniaSh.a.........124
DinersClubBulgariaAD..............................128
FiHealthInsuranceAD...............................130
MyfinEAD...................................................132
MEETINGTHE2021GOALS...........................134
SUBSEQUENTEVENTS..................................137
DEVELOPMENTPRIORITIES..........................138
OTHERINFORMATION.................................139
MembersoftheSupervisoryBoard............139
MembersoftheManagingBoard..............142
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MACROECONOMICDEVELOPMENT
In2021,theBulgarianeconomyreportedsignsofrecoveryfromthepandemicrelatedtothespread
ofCOVID‐19.TheparticipationofBulgariaintheEuropeanExchange Rate Mechanism II and the
BankingUnion,togetherwiththecurrentcurrencyboardsystemandthefiscalpolicy,contributedto
macroeconomicstability.
2021 2020 2019 2018 2017
Grossdomesticproduct(BGNmillion) 132,744 119,951 120,395 109,964 102,741
Grossdomesticproduct,realgrowth(%) 4.2 (4.4) 4.0 2.7 2.8
‐ Privateconsumption,realgrowth(%)
8.0 (0.4) 6.0 3.7 2.5
‐ Publicconsumption,realgrowth(%)
4.0 8.3 2.0 5.4 4.3
‐ Investments,realgrowth(%)
(11.0) 0.6 4.5 5.4 3.2
‐ Netexports,realgrowth(%)
(2.3) (6.7) (1.2) (4.0) (1.6)
Inflation,atperiod‐end(%)
7.8 0.1 3.8 2.7 2.8
Averageannualinflation(%)
3.3 1.7 3.1 2.8 2.1
Unemployment,atperiod‐end(%)
4.8 6.7 5.9 6.1 7.1
Currentaccount(%ofGDP)
(2.1) (0.3) 1.9 0.9 3.3
Tradebalance(%ofGDP)
(5.0) (3.2) (4.7) (4.8) (1.5)
InternationalreservesofBNB(BGNmillion)
67,666 60,334 48,574 49,037 46,279
FDIinBulgaria(%ofGDP)
1.5 3.7 2.7 1.7 3.1
Grossexternaldebt(%ofGDP)
61.8 64.6 61.3 66.1 71.8
Governmentandgovernmentguaranteeddebt
(%ofGDP)
25.0 24.6 19.8 21.8 24.9
Consolidatedbudgetbalance(%ofGDP)
(3.0) (2.9) (1.0) 0.1 0.8
USDexchangerate(BGNforUSD1)
1.73 1.59 1.74 1.71 1.63
Sources:NSI,BNB,MF,Employmentagency
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For2021,thecountry'sgrossdomesticproductincreasedby4.2%YOY(2020:‐4.4%),asmainpositive
driversweretheprivateconsumptionat8,0%(2020:‐0.4%),aswellasthepublicconsumption(2021:
4,0%;2020:8,3%),asaresultofthecontinuedfiscalmeasurestakenatthestateleveltocounteract
theconsequencesofthepandemic.
Netexportsdecreasedby2.3%YOY(2020:‐6.7%),andfixedcapitalinvestmentsweredownby11.0%
for2021(2020:+0.6%),duetolimitationsintrade,aswellasmovementofpeople,goodsandservices,
asaresultofthecoronaviruscrisis.
In 2021, gross value added in the economy increased by 3.6% (2020: ‐4.5%), with positive trends
observedinallmajorareasofactivity,includingintheindustrialsector,whichincreasedby6.6%for
theperiod(2020:‐8,2%)andmorespecificallyintheminingandprocessingindustry(2021:9.4%),at
theexpenseofconstructionwhichwasdown(2021:‐7.8%;2020:‐1.0%).
Positivedriverforthevalueaddedhadalsotheservicessector,whichincreasedby2.8%(2020:‐3.3%),
andinparticularinthefinanceandinsurancesectors(2021:7.7%),telecommunications(2021:6.3%),
realestatetransactions(2021:4.7%),publicadministrationandhealthcare(2021:3.3%).Thetrade,
transportandtourismsectorsreportedadeclineof2.5%,whichremainedamongthehardesthitby
the restrictions imposed related to the continued pandemic situation.Anincreaseof6.1%was
reported in the agricultural sector (2020: ‐3.3%), mainly influenced by plant‐growing sectors, incl.
cerealsandindustrialcropsandtoalesserextendbystock‐breedingsectors.
In2021,thelabormarketreportedsignsofrecovery,astheunemploymentratedeclinedto4.8%at
the end of the year (2020: 6.7%), reflecting the positive expectations of companies in terms of
investmentand costs.The total number of employed personsamounted to 3,081thousand in the
fourthquarterof2021,withtheemploymentrate(forpersonsaged15‐64)amountingto68.5%.Asof
theendofDecember2021,64%oftheworkforcewasemployedintheservicessector,30%inindustry
and6%inagriculture.Theprogramsforjobretentioninthecountrythroughsubsidizedemployment
(incl.theso‐called"60/40"measure)continued,whichenvisagedcompensationinthemostaffected
sectors,suchastransport,tourismandthehospitalityindustry.
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Duringtheyear,inflationinthecountryfollowedanupwardtrend,astheaverageannualinflationin
2021amountedto3.3%(2020:1.7%),andinflationattheendoftheperiodreached7.8%(2020:0.1%).
Theinfluencewaswide‐spreadacrosscomponents,withmaineffectofenergyproductsandfoodin
anenvironmentofsignificantincreaseinthepricesofbasicrawmaterials(naturalgas,oilandother)
ontheinternationalmarkets.Theincreaseinpricesinthenon‐foodsectorreached9.5%,including
transport(22.2%),whichgrouphasamajorrelativeweight(35%)intheconsumerbasket.Influence
ontheincreasehadalsothefoodproducts(8.8%),services(4.5%)andcatering(6.8%).Harmonized
inflation,whichisoneofthepricestabilitycriteriaforjoiningtheEurozone,was6.6%attheendof
2021(2020:0.0%)and2.8%onaveragefortheperiod(2020:1.2%).
For2021, foreign directinvestmentinthe countryamountedto EUR1,036millionor 1.5% ofGDP
(2020: EUR 2,273 million or 3.7% of GDP). Such dynamics mainly reflect higher revenues from
reinvestedearnings,attheexpenseofinvestmentsinequityanddebtinstruments(financial,bondand
trade loans). By country, most investments were attracted from Luxembourg (EUR 455 million),
followedbyGermany(EUR285million)andAustria(EUR213million).
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Theacceleratedincreaseinimports(28.6%for2021YOYtoEUR37,574million)comparedtoexports
(25.4%toEUR34,205million)ledtoincreaseinthetradedeficitamountingtoEUR‐3,368millionor‐
5.0%ofGDPattheendof2021(2020:EUR‐1,945millionor‐3.2%ofGDP).Asaresult,thecurrentand
capitalaccountdeficitincreasedtoEUR1,381millionor2.1%ofGDPYOY.
Thecountry'sgrossexternaldebtincreasedtoEUR41,529millionattheendof2021,or61.8%ofGDP
(2020:EUR39,627millionor64.6%ofGDP),withmorepronounceddynamicsinthepublicsectorasa
resultofthecontinuedfiscalmeasurestakentocountertheCOVID‐19pandemic.Publicexternaldebt
reached18.7%ofGDPbyDecember2021(EUR12,554million),remainingamongthelowestintheEU.
Totalgovernmentandgovernment‐guaranteeddebt,includingdebtissuedonthedomesticmarket,
amountedto25.0%ofGDPbytheendof2021(2020:24.6%),comparedtoaveragelevelsaround80%
fortheEUandeuroareacountries.TheBNBreserveassetscovered515.1%oftheshort‐termdebtby
theendof2021(2020:507.9%)and506.0%oftheforeigncurrencydeposits(2020:415.4%)inthe
country.
In2021,theconsolidatedbudgetreachedadeficitofBGN3,910millionor3.0%ofGDPattheendof
theyear(2020:BGN3,533millionor2.9%ofGDP),reflectingthehighergrowthofcostsrelativeto
revenues. Expenditures under the consolidated fiscal program increased by 17.6% to BGN 56,251
million(2020:BGN47,850million),mainlyduetotheincreaseinnon‐interestexpensesasaresultof
the continued socio‐economic measures taken to minimize the effects of the coronavirus crisis,
includingpaymentsunderthe60/40subsidizedemploymentmeasure,paymentstofront‐lineworkers
inthefight against thepandemic, expenditure on medicines andvaccines,monthlyallowancesfor
pensionersandpaymentstobusinessesandfarmers.
Taxrevenuesalsoincreased,albeitataslowerpace:14%YOYtoBGN40,876millionasofDecember
2021,asanincreasewasreportedinallmaincomponents,incl.personalincometax(by15.7%toBGN
4,839million),corporatetax(by25.5%toBGN3,406million),VATrevenues(by17.8%toBGN12,979
million)andexciseduties(by4.0%toBGN5,660million).Revenuesfromsocialsecuritycontributions
alsoincreased,amountingtoBGN12,230millionasofDecember2021,ofwhichBGN8,841million
weresocialsecuritycontributionsandBGN3,389millionhealthinsurancecontributions.
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During the year Fitch Ratings (BBB, positive outlook) and Standard & Poor’s (BBB, stable outlook)
confirmedthecreditratingofBulgaria,asaresultofthemaintainedmacroeconomicstability,gradual
recoveryoftheeconomicactivityandeasingthenegativeeffectsandconsequencesrelatedtoCOVID‐
19 pandemic to the economy in the country, as well as expectations on future development and
integrationintheEuroAreacountries.
Since2020, the Bulgarian levisofficially partoftheEuropean Exchange RateMechanism(ERM)II,
whilemaintainingthecurrentcurrencyboardsysteminthecountry.
Expectationsfor2022includecontinuingprocessesforgradualeliminationoftheconsequncesofthe
COVID‐19pandemic,takingintoaccounttherisksrelatedtoglobaluncertaintiesduetotheemerging
geopoliticaltensionsfromtheconflictinUkraineanditspotentialeffects.TheestimatesoftheMinistry
ofFinanceareforrealGDPgrowthof3.4‐4.8%fortheperiod2022‐2024,andthoseoftheBulgarian
NationalBankareof3.6‐4.5%fortheperiod2022‐2023.
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BANKINGSYSTEM
In2021,thebankingsysteminBulgariareportedincreasedresultsandstabledevelopment,drivenby
the gradual recovery of economic activity and consumer demand in the context of the ongoing
pandemic.Contributorswerethegoodpre‐criseskeyindicators,includinghighlevelsofliquidityand
capitaladequacywellabovetheregulatoryrequirements,whichcontributedtothecontinuationof
lending in line with market demand and maintaining confidence in the system. The processes of
integrationwiththeEuropeanregulatoryframeworkcontinuedtohaveanadditionalimpactonthe
developmentofbankingpolicies.Since2020BulgariaispartoftheBankingUnionthroughparticipation
intheSingleSupervisoryMechanism(SSM)andtheSingleRestructuringMechanism(SRM).
In order to further strengthen the system and ensure buffers against the negative effects of the
coronavirus,inJanuary2021theBulgarianNationalBankcontinuedsomeofthemeasuresaimedat
furtherincreasingthecapitalofbanks,includingthroughrequirementsforcapitalizationofprofits.
in%/changeinp.p.
2021 2020 2019 21/20 20/19
CET1ratio 21.66 21.69 19.04 (0.28) 2.65
Tier1capitalratio 22.04 22.10 19.50 (0.31) 2.60
Capitaladequacyratio
22.62 22.74 20.16 (0.38) 2.58
Leverageratio
10.61
1
10.74 10.55 (0.13) 0.19
Liquiditycoverageratio(LCR)
274.1 279.0 269.9 (4.9) 9.1
Loans/deposits
2
69.38 69.04 72.17 0.34 (3.13)
Return‐on‐equity(ROE)
8.93
1
5.31 11.63 3.62 (6.32)
Return‐on‐assets(ROA)
1.10
1
0.66 1.47 0.44 (0.81)
Non‐performingloansandadvances
3
4.60 5.65 6.48 (1.05) (0.83)
Source:BulgarianNationalBank
Thetotalcapitalratioforthesystemamountedto22.62%bytheend‐2021(2020:22.74%),whilethe
CET 1 ratio to 21.66% (2020: 21.69%), as the indicators were significantly above the regulatory
requirements. Contributing factor to the dynamics was the higher growth in risk‐weighted assets,
comparedtothoseintherelevantcomponentsoftheownfunds.Theleverageratio,comparingTier1
capitaltothetotalon‐andoff‐balancesheetexposuresofbanks,was10.61%asofSeptember2021,
comparedto10.74%asof31.12.2020.
Withrespecttothereportedlevelsofgrowthinlendingandthecyclicalrisksontherealestatemarket,
duringtheyearBNBincreasedtwicethelevelofthecountercyclicalcapitalbufferfrom0.5%to1.0%
effectivefromOctober2021andto1.5%asofJanuary2023.DuringtheyeartheBNBannouncedits
annualreviewofthebufferforOtherSystemicallyImportantInstitutions(O‐SIIs)andidentifiedassuch
eightbanksforwhichindividuallevelsweresetintherangeof0.50%to1%for2021and2022.In2021,
thesystemicriskbufferremainedunchangedat3%ofbanks’riskexposuresinBulgaria.
Liquidityinthesystemremainedhigh,reflectingtheconsistentconservativeriskmanagementandthe
increaseddepositbase.Theliquiditycoverageratio(LCR),correlatingtheliquiditybuffersmaintained
1
Dataasof30September2021
2
Grossloansandadvances(withoutcentralbanksandcreditinstitutions)/deposits(withoutcreditinstitutions)
3
Non‐performingloansandadvances/grossloanandadvances.(Forcomparability,abroaddefinitionofloans
andadvanceshasbeenused,includingcashbalanceswithcentralbanksandotherdemanddeposits).
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bybanksagainstnetoutflowsoveraperiodof30calendardays,increasedto274.1%attheendof
2021(2020:279.0%),whichiswellabovetheminimumrequirementof100%.Theratioofliquidity
buffertobalancesheetassetsforthesystemwas30.6%attheendofDecember2021.
In2021,thebankingsystemrealizedanetprofitofBGN1,416million,comparedtoBGN815milliona
yearearlier.Anincreasewasreportedinallmainsourcesofincome,incl.inthenetinterestincome
andnetfeeandcommissionincome,aswellasdecreaseintheimpairmentcharges,whichreached
BGN594millionfortheperiod(2020:BGN876million).
BGNmillion/changein%
2021 2020 2019 21/20 20/19
Netinterestincome
2,757 2,649 2,746 4.1 (3.5)
Netfeeandcommissionincome 1,241 1,039 1,106 19.4 (6.1)
Administrativeexpenses
1,784 1,677 1,664 6.4 0.1
Impairment
594 876 431 (32.2) 103.4
Netprofit
1,416 815 1,675 73.7 (51.4)
Source:BulgarianNationalBank
Netinterestincomefor2021increasedby4.1%toBGN2,757million(2020:BGN2,649million)against
abackdrop ofcontinuinglowinterest rates,whilenet feeandcommissionincome–toBGN1,241
million(2020:BGN1,039million),providingasolidcontributiontoprofitandforming27.9%ofthe
totaloperatingrevenuesofthesystem(2020:25.0%). Theachievedfinancialresults accounted for
returnonassets(ROA)of1.10%forthefirstninemonthsof2021(2020:0.66%)andreturnonequity
(ROE)of8.93%forthesameperiod(2019:5.31%)
Totalbalancesheetassetsincreasedby9.2%YOYtoBGN135,410millionasofDecember2021(2020:
BGN124,006million).Loansandadvanceshadapredominantshareinthebalancesheetstructureat
58.2%oftotalassets(2020:58.9%),followedbycashandbalanceswithcentralbanks–21.0%(2020:
21.9%) and investments in securities at 16.7% (2020: 14.6%), which included mainly government
securities.
Lendingactivityin2021increasedwithmorepronounceddynamicsinhouseholds,comparedtonon‐
financialcorporations.Residentialmortgageloansincreasedby15.0%toBGN15,815million(2020:
BGN13,752million),whileconsumerloans–by11.0%toBGN14,304(2020:BGN12,882million)at
theendofDecember2021.Loanstonon‐financialcorporationsretainedtheirmajorshareat53.1%of
totalloanstocustomers,reachingBGN40,286million(2020:BGN38,042million).
Theshareofnon‐performingloansandadvancescontinuedtodecrease,reaching4.60%ofgrossloans
and advances as of December 2021 (2020: 5.65%). For comparability with previous periods it is
calculatedusingabroaddefinitionofloansandadvances,includingcashbalanceswithcentralbanks
andotherdemanddeposits.Loanstonon‐financialcorporationsaccountedforthelargestshareinthe
structureofnon‐performingloans(63.7%),followedbyloanstohouseholds(33.8%)andotherfinancial
corporations(2.4%).
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BGNmillion/changein% 2021 2020 2019 21/20 20/19
Assets
135,410 124,006 114,201 9.2 8.6
Loanstonon‐financialcorporations 40,286 38,042 36,573 5.9 4.0
Loanstoindividuals,including:
29,468 25,882 24,193 13.9 7.0
‐ Mortgageloans
15,815 13,752 12,487 15.0 10.1
‐ Consumerloans
14,304 12,882 12,427 11.0 3.7
Depositsfromnon‐financialcorporations
34,374 31,701 28,150 8.4 12.6
Depositsfromindividuals
68,107 62,636 57,616 8.7 8.7
Source:BulgarianNationalBank
In2021,theapplicationofpreparedbytheAssociationofBanksinBulgaria(ABB)andapprovedby
BulgarianNationalBankProcedurefordeferralandsettlementofpaymentsduetobanksandtheir
financialinstitutionsubsidiariesinconnectionwiththeCOVID‐19pandemiccontinuedaccordingtothe
termsandconditionsofitsimplementation.Thedocumentconstitutesanon‐legislativemoratorium
within the meaning of the European Banking Authority (EBA) Guidelines on legislative and non‐
legislativemoratoriaonloanrepaymentsappliedinthelightoftheCOVID‐19crisis(EBA/GL/2020/02),
accordingtowhichtheapplicationofthegeneralpaymentmoratoriuminitselfshouldnotleadto
reclassificationoftheexposureasforborne(eitherperformingornon‐performing).Asof31December
2021,themoratoriumwasappliedtodeferalsontheamountofBGN8,255million,representing10.9%
ofthesystem'sgrossloanportfolio.Ofthese,BGN6,481millionwereexposurestobusinessesand
BGN1,774milliontohouseholds.
In2021,borrowedfundsinthebankingsystem(excludingcreditinstitutions)continuedtheirupward
trend,growingby8.6% to BGN 109,365 million as of December 2021 (2020: BGN 100,671 million)
despitethelowinterestrateenvironment,reflectingtheconfidenceinthesystemanduncertaintyof
theenvironment.Anincreasewasreportedbothindepositsofnon‐financialcorporations(by8.4%to
BGN34,374million)andofhouseholds(by8.7%toBGN68,107million),retainingadominantshareof
62.3%ofallattractedfunds.Inthecurrencystructureofborrowedfunds,theshareofBGNdeposits
increased to 63.7% as of December 2021 (2020: 61.9%) at the expense of EUR deposits, which
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decreasedto29.2%(2020:31.0%),andthoseinothercurrenciesremainedunchangedat7.1%(2020:
7.1%).
Duringtheyear,thedownwardtrendininterestratescontinuedinlinewiththedynamicsintheEU
andEurozonecountries.In2021,interestratesondeposits(newbusiness
4
)ofhouseholdsandnon‐
financial corporations fell on average (volume weighted) to 0.06% and ‐0.17%, respectively (2020:
0.09%and‐0.04%).Adecreasewasalsoreportedininterestratesonloans(newbusiness
5
):fornon‐
financialcorporations–downto2.60%onaveragefortheperiod(2020:2.91%),formortgageloans–
to2.71%(2020:2.88%)andforconsumerloans–to8.08%(2020:8.20%).
AttheendofDecember2021,therewere25creditinstitutionsoperatinginthecountry,including7
branchesofforeignbanks,astheconsolidationprocessesinthesystemcontinued,followingtheglobal
trends for demanding optimizations in the structure and efficiency of banking institutions on the
backboneofintensecompetitionandpressurefromnewprovidersoffinancialservices.
Thesignificantbankinginstitutions(accordingtotheECBcriteria)inthecountryaccountedfor66.1%
ofbankassetsasofSeptember2021,thelesssignificantbankinginstitutions–for30.6%,whilethe
branchesofforeignbanks–3.3%
Amongthemainchallengestobanksremaindealingwiththeuncertainties–politicalandeconomic,
caused by the international circumstances, overcoming the consequences of COVID‐19 pandemic,
developmentswithrespecttodigitalizationandcybersecurity,aswellasthevolumeofregulations
affectingthecompetitiveadvantagesofbanks,incl.theMRELrequirementsandthosewithrespectto
sustainability(ESGfactors).
REGULATORYFRAMEWORKDEVELOPMENTS
In2021,anumberofregulatorychangeswererealized,withmoreimportantbeingthefollowing:
Atthebeginningoftheyear,changesweremadetotheLawontheRecoveryandResolutionofCredit
InstitutionsandInvestmentFirms,transposingtherequirementsofDirective(EU)2019/879(BRRDII).
The changes introduced minimum requirements for own funds and eligible liabilities (MREL),
calculatedindividuallyforeachbankasapercentageofthetotalriskexposureamount(TREA)andthe
leverageratioexposuremeasure(LRE),withadeadlineforreachingthesetminimumrequirementsby
1January2024
Changes in the Law on Credit Institutions harmonized the possibilities for the regulator to impose
additional capital requirements on credit institutions, as wellastoissuerecommendationsfor
additionalequityinordertocoverlossesinstressfulsituations.Inthisregard,anewOrdinanceNo.8
oftheBNBonCapitalBuffers,theCombinedBufferRequirement,RestrictionsonDistributionsandthe
Guidance on Additional Own Funds was adopted, which also regulates the leverage ratio buffer
requirement.
In2021,takingintoaccountthedevelopmentofinnovativeschemesofpayment,amendmentswere
madetotheLawonPaymentServicesandPaymentSystems.Regulatedwerethesocalled“instant
payments”,whichareperformedundertheSEPAInstantCreditTransfer scheme of the European
PaymentsCouncil.
Duringtheyear,changesweremadetoOrdinanceNo.7oftheBNBon the Organization and Risk
Management of Banks, harmonizing the requirements regarding materiality thresholds for credit
4
TermdepositsinBGNupto1year
5
LoansinoriginalmaturityinBGN
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obligationspastdue,aswellastheprovisionsformanaginginterestrateriskinthebankingbookand
outsourcingrisk.
ChangeswerealsoadoptedtoOrdinanceNo.4oftheBNBontheRequirementsforRemunerationsin
Banks,furtherregulatingthepersonsfallingwithinthescopeoftheremunerationpolicy,aswellas
introducing exemptions from requirements for deferral, retention or payment of variable
remunerationininstrumentsinaccordancewiththeprinciplesofproportionality.TheEBAGuidelines
onsoundremunerationpoliciesunderDirective2013/36/EU(EBA/GL/2021/04)werealsorevised.
Duringtheperiod,OrdinanceNo.21oftheBNBontheMinimumRequiredReservesMaintainedwith
theBulgarianNationalBankbyBankswasamended,changingthedefinitionofexcessreserves,which
isassumedtobeanyexcessofholdingsinreserveassetsoverthe required amount of minimum
requiredreserves.
Changesweremadewithaviewtorefiningtextsandoptimizingprocessesconcerningthecentralized
registersmaintainedbytheBNB,regulatedinOrdinanceNo.22ontheCentralCreditRegisterand
OrdinanceNo.12ontheRegisterofBankAccountsandSafeDepositBoxes.
In2021, the developmentandimprovementcontinuedof theregulatoryframeworkgoverningthe
requirementsfortheactivitiesofpubliccompaniesandotherissuersofsecurities.AnewOrdinance
No.2oftheFSCwasadoptedontheinitialandsubsequentdisclosureofinformationinpublicoffering
ofsecuritiesand admission of securities to trading onaregulatedmarket.Thechangesstemfrom
amendmentstothePublicOfferingofSecuritiesAct(POSA),introducingintonationallawmeasures
fortheimplementationofRegulation(EU)2017/1129ontheprospectuses.
In2021,theEuropeanlegalframeworkgoverningtheactivitiesofcreditinstitutionswassupplemented
andfurtherdevelopedwithrevisedGuidelinesoftheEuropeanBankingAuthority(EBA),whichwere
adopted by the BNB for implementation in the country. Revised were the Guidelines on internal
governanceunderDirective2013/36/EU(EBA/GL/2021/05),theGuidelinesontheassessmentofthe
suitability of members of the management body and key function holders (EBA/GL/2021/06), the
Revised Guidelines on major incident reporting under Directive (EU) 2015/2366 (PSD2)
(EBA/GL/2021/03),aswellastheGuidelinesoncustomerduediligenceиfactorsthatfirmsshould
consider when assessing the money laundering/terrorist financing risk associated with a business
relationshiporoccasionaltransaction.
WithaviewtomeetingtheobjectivesoftheEuropeanUnionforimplementation of the UN 2030
AgendaforSustainableDevelopment,aswellastoachievingclimateneutralityby2050,in2021the
environmentalregulatoryframeworkcontinuedtoevolve.
In early 2021, the implementation began of Regulation (EU) 2019/2088 on sustainability‐related
disclosuresinthefinancialservicessector(„SustainableFinanceDisclosureRegulation“),introducing
harmonizeddisclosurerequirementsontheintegrationofsustainabilityrisksintoinvestmentdecision‐
makingandinvestmentadvice.Duringtheyear,delegatedregulationssupplementingRegulation(EU)
2020/852onthetaxonomywereadopted,specifyingthecontentandpresentationofinformationto
be disclosed by undertakings concerning environmentally sustainableeconomic,aswellasthe
technicalscreeningcriteriafordeterminingtheconditionsunderwhichaneconomicactivityqualifies
ascontributingsubstantiallytoclimatechangemitigationorclimatechangeadaptation.
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MISSIONANDDEVELOPMENTPRIORITIES
First Investment Bank AD aspires to continue to be one of the best banks in Bulgaria,
recognized as a rapidly growing, innovative, customer‐oriented bank, offering outstanding
productsandservicestoitscustomers,ensuringexcellentcareers for its employees, and
contributing to the community. The Bank shall continue to develop high‐technological
solutionsprovidingitscustomerswithopportunitiesforbankingfromanyplacearoundthe
worldatanytime.
Formoreinformationseesection„Developmentpriorities“.
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FIBANKPROFILE
CORPORATESTATUS
FirstInvestmentBankisajoint‐stockcompany
registeredwithSofiaCityCourtpursuanttoaruling
dated8October1993.Since28February2008the
BankhasbeenregisteredintheCommercial
RegisteroftheRegistryAgency.
First Investment Bank is a public company
registeredintheCommercialRegisterofSofiaCity
Court by a decision dated 4 June 2007 and in the
registerofpubliccompaniesandotherissuersheld
bytheFinancialSupervisionCommissionbya
decisiondated13June2007.
The Bank owns a universal banking license for
domestic and international operations. First
Investment Bank is a licensed primary dealer in
government securities and it is a registered
investmentintermediary.
PARTICIPATIONSAND
MEMBERSHIPS
AssociationofBanksinBulgaria
BulgarianStockExchangeAD
CentralDepositoryAD
BORICAAD
MasterCardInternational
VISAInc.
S.W.I.F.T.
FactorsChainInternational
MARKETPOSITION
6
Fifthinassets
Sixthinlending
Fourthincorporatelending
Fifthinconsumerloans
Sixthinmortgageloans
Fifthindeposits
Fifthindepositsfromindividuals
MARKETSHARE
7
8.32%ofbankassetsinBulgaria
9.34%ofloansinthecountry
10.84%ofcorporatelending
8.56%ofconsumerlending
6.37%ofmortgagelending
8.69%ofdepositsinthecountry
10.27%ofdepositsfromindividuals
Amongtheleadingbanksinthecardbusiness.Amongtheleadingbanksinpaymentservices,
includinginternationalpaymentsandtradetransactions
6
MarketpositionsaredeterminedbasedonunconsolidateddatafromtheBNB
.
7
MarketsharesaredeterminedbasedonunconsolidateddatafromtheBNB
.
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CORRESPONDENTRELATIONS
Fibankhasawidenetworkbuiltupofcorrespondentbanks,throughwhichitperformsinternational
paymentsandtradefinancingoperationsinalmostallpartsofthe world. The Bank executes
internationaltransfersinforeigncurrency,andissueschequesandperformsdifferentdocumentary
operations. Fibank is a respected, reliable and fair partner, which has built over the years a good
reputationamonginternationalfinancialinstitutionsandgainedvaluableexperienceandknow‐how
fromitsnumerousbusinesspartners,investors,customersandcounterparties.
BRANCHNETWORK
Asat31December2021theGroup
ofFirstInvestmentBankhadatotal
of 141 branches and offices: 126
branches and offices, including a
HeadOffice,coveringtheterritoryof
Bulgariaandaforeignbranchin
Cyprus,aswellasaHeadOfficeand
14 branches of the subsidiary bank
FirstInvestmentBank‐AlbaniaSh.a.
inAlbania.
Fibank maintains diversification of
the distribution channels, which
constantly enhance in accordance
withtechnologicaldevelopmentand
customerneeds.
Forfurtherinformationregardingthebranchnetwork,seesection“Distributionchannels”,aswell
assection“Businessreviewofsubsidiarycompanies”.
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SUBSIDIARIES
Asat31December2021,FirstInvestmentBankADhadtwelvesubsidiarycompanies:FirstInvestment
Bank‐AlbaniaSh.a.(100%),DinersClubBulgariaAD(94.79%),FiHealthInsuranceAD(59.10%),MyFin
EAD(100%), FirstInvestmentFinanceB.V.(100%), DebitaOOD(70%),RealtorOOD–inliquidation
(51%), Balkan Financial Services EAD (100%), Creative Investment EOOD (100%), Turnaround
ManagementEOOD–inliquidation(100%),LegaSolutionsEOOD(100%)andAMCImotiEAD(100%).
Asof31.12.2021,thefollowingcompanieswereincludedintheconsolidatedfinancialstatementsof
theGroupofFirstInvestmentBank:FirstInvestmentBank‐AlbaniaSh.a.,DinersClubBulgariaAD,Fi
HealthInsuranceAD,andFirstInvestmentFinanceB.V.Theremainingsubsidiarieswerenotincluded
intheconsolidatedfinancialstatements,astheywereconsideredimmaterialtothefinancialposition,
financial results and cash flows of the Group for the year ended 31.12.2021. The assessment for
consolidationofsubsidiariesisreconsideredateachreportingdate.
In2021,thecapitalofthesubsidiaryMyFinEADwasincreasedfromBGN1milliontoBGN2millionin
ordertodevelopitsactivityandoffernewservicestocustomers
Duringtheyear,decisionsweremadetoterminatetheactivityofthesubsidiariesRealtorOODand
Balkan Financial Services EAD and liquidation proceedings were opened for these companies. In
January2022,pursuanttothedecisiontoclosethesubsidiaryTurnaroundManagementEOOD,the
companywasdeletedfromtheCommercialRegister.
For further information regarding subsidiary companies, see section “Business review of subsidiary
companies”,aswellasNote36“Subsidiaries”oftheConsolidatedFinancialStatementsfortheyear
ended31December2021.
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AWARDS2021
FirstInvestmentBankwasawardedasDigitalBankoftheYear–
Bulgaria by the international Global Brands Magazine for its
contributiontothedevelopmentofinnovationsandensuringa
secureandreliabledigitalbankingsystem.
Foryetanotheryear,FibankwontheFavoriteBrandawardand
thefirstplaceintheFinancialInstitutionscategoryoftheMyLove
Marksconsumerrating.
Fibank received the Golden Heart Award of Business Lady
Magazineforitsconsistentpolicyinthefieldofcorporatesocial
responsibility.
In2021,thesubsidiaryMyFinEADreceivedabrandrecognition
award and was a finalist in the Green Planet category of the
annualawardsforcharityandcorporatesocialresponsibilityheld
byBusinessLadymagazine.
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FIRSTINVESTMENTBANK:DATESANDFACTS
1993
FirstInvestmentBankwasestablishedon8October1993inSofia.
FibankwasgrantedafullbankinglicenseforcarryingoutoperationsinBulgariaandabroad.
1994‐
1995
TheBankdevelopedandspecializedinservicingcorporateclients.
1996
FirstInvestmentBankwasthefirstinBulgariatoofferservicesenablingbankingfromhomeorfromthe
office.
Fibankwasthefirstbanktoreceivea5‐yearloanfromtheEuropeanBankforReconstructionand
Developmentforfinancingsmallandmedium‐sizedenterprisesinBulgaria.
1997
TheBankstartedissuingCirrus/Maestrodebitcards,Eurocard/MastercardcreditcardsandtheAmerican
Expresscard.FibankwasthefirstBulgarianbanktoofferdebitcardswithinternationalaccess.
ThompsonBankwatchawardedFibankitsfirstcreditrating.
TheBankopeneditsfirstbranchabroad,inCyprus.
1998
Fibankobtaineditsfirstsyndicatedloanfromforeignbanks.TheBanknegotiatedfinancingfortheimport
ofinvestmentgoodsfromanumberofEUcountries,guaranteedbyexportinsuranceagencies.
1999
TheBanknegotiatedasyndicatedloanorganizedbyEBRDtothetotalamountofEUR12.5million.
First Investment Bank received a medium‐term loan for EUR 6.6 million from a German government
organizationforfinancingofBulgariancompanies.
TheBankopenedaforeignbranchinTirana,AlbaniaofferingbankingservicestoAlbaniancompaniesand
individuals.
2000
FirstInvestmentBankstarteddevelopingitsbusinessinthefieldofretailbanking.Depositsfromprivate
individualsgrew2.3‐fold.
2001
FibanklaunchedthefirstvirtualbankbranchinBulgaria,allowingcustomerstobankviatheInternet.
TheBankwasawardedtheprize“BankoftheYear”by‘Pari’(‘Money’)daily.
MayaGeorgieva(ExecutiveDirectorofFirstInvestmentBank),receivedtheprize“BankeroftheYear”from
‘Banker’Weekly.
2002 Fibankwasnamed“BankoftheClient“intheannualratingof‘Pari’daily.
2003
ProductsandservicestoindividualsbecamethefocusoftheBank’sactivities.Loanstoindividualsincreased
overfivetimesduringtheyear.
Fibankwasnamed“BankoftheClient”forthesecondtimeintheannualratingof‘Pari’daily.
2004
TheBankexpandeditsinfrastructure.Thebranchnetworkexpandedby27newbranchesandoffices,the
ATMnetworkmorethandoubled.
Fibankwasawardedtheprize“FinancialProductoftheYear”foritsMortgageOverdraftproduct.
2005
Fibankacquired80%ofthecapitalofDinersClubBulgariaAD.
TheBankissuedEurobondstotheamountofEUR200millionontheLuxembourgStockExchange.Fibank
wasalsothefirstBulgarianbanktoissueperpetualsubordinatedbonds.
MatthewMateev(DeputyChiefExecutiveDirectorofFirstInvestmentBank)wasawardedtheprize“Banker
oftheYear”by‘Banker’weekly.
2006
Fibankwasnamed“BankoftheClient”forthethirdtimeintheannualratingof‘Pari’daily.
FirstInvestmentBankreceivedasyndicatedloan,totheamount of EUR 185 million, organised by
BayerischeLandesbank,inwhich33banksparticipated.
TheBank’ssharecapitalwasincreasedfromBGN20milliontoBGN100millionbytransformingretained
profitsintonewshares.
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2007
FirstInvestmentBankrealizedthebiggestbankinginitialpublicofferingofsharesinBulgariaandbecamea
publiccompany.
„FibankMobile“–thefirstbankingmobileportalcreatedbytheBankwithusefulfinancialinformationfor
itscustomers,startedfunctioning.
FibankisamongthefirstbanksinBulgariatoimplementchiptechnologybyissuingcards.
FirstInvestmentBank–AlbaniaSh.a.wasissuedafullbankinglicenseinAlbania.
2008
FibankimplementedanewcentralizedandintegratedcorebankinginformationsystemFlexCube.
FibankreceivedasyndicatedloanintheamountofEUR65millionfrom11leadinginternationalbanks.
FibankbecamethefirstbankinBulgariatolaunchitsowncorporateblog.
FibankreceivedtheOSCARDSawardforinnovationinthecardbusiness.
2009
Fibankstartedofferingthesaleandredemptionofinvestmentdiamonds.
First Investment Bank offered a new Internet service “My Fibank”,whichprovides
e‐statementsonbankaccountsandcreditcards.
2010
Fibankwelcomeditsonemillionthclient.
FirstInvestmentBanksignedanagreementwithIFCforcooperationinthefieldoftradefinance.
FibankwasthefirstBankinBulgariatooffercontactlesspaymentsusingthePayPasstechnology.
FibankacquiredacontrollinginterestinFIHealthADhealthinsurancefund.
2011
First Investment Bank was recognized as the Best Bank in Bulgaria in 2011 by the financial magazine
Euromoney.
NewExecutiveDirectorsoftheBankappointed–DimitarKostov,VassilChristov,SvetoslavMoldovansky.
MayaGeorgieva(ExecutiveDirectorofFirstInvestmentBank)receivedtheBankeroftheYear2011award
from“Banker”Weeklyformarketsustainabilityachievedandcustomerconfidenceearned
2012
Fibankwasgranted“BankoftheYear“awardfrom“BankoftheYear”Association,withthebestcomplex
performance.
TheBanksignedan agreement with theEuropeanInvestmentFundforthefinancingofSMEunderthe
JEREMIEinitiative.
VassilChristov,ExecutiveDirectorofFirstInvestmentBankwontheprestigiousaward“BankeroftheYear”
ofthe“Banker”Weekly
2013
FirstInvestmentBankADsignedanagreementwiththeHungarianMKBBankZrt.fortheacquisitionof
100%ofthesharesofMKBUnionbankEAD.
Fibankfinalizedtheissuanceofnewhybriddebt(twobondsemissions)tothetotalamountofEUR100
million,includedintheTierIcapital.
Clients were provided with the opportunity to purchase online products of investment gold and other
preciousmetals.
MayaOyfaloshwaselectedExecutiveDirectorofFirstInvestmentBankAD.
2014
ThemergerofUnionBankEADintoFirstInvestmentBankADwascarriedout, includingintegration of
operationalsystems,procedures,infrastructure,humanresources,productsandservices
Fibankovercamethepressureonthebankingsystemthankstoitssoundliquidity,highprofessionalism,as
wellastotheliquiditysupportreceivedpursuanttoECDecisionC(2014)4554/29.06.2014.
FibankwasawardedasthebestbankinthefieldofretailbankingbytheinternationalportalGlobalBanking
&FinanceReview.
2015
FirstInvestmentBankrealizedajointprojectwiththeIFCforupgradingFibank’sriskmanagementand
corporategovernancesystemsinaccordancewiththeprinciplesoftheBaselCommitteeandtherecognized
internationalstandards.
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A new independent member of the SupervisoryBoardwaselected: Mr.JyrkiKoskelo, an accomplished
professionalhavingextensiveexperiencewiththeIFC.
AneworganizationalstructureoftheBankwasadopted,furtherdevelopingthecontrolfunctions.
Withaviewtomaintaininganopenlineofcommunicationwithinvestorsandenhancing dialogue with
minorityshareholders,aClubofinvestorswascreated.
FirstInvestment Bank was distinguished by theglobalorganizationSuperbrands as the strongest brand
amongfinancialinstitutionsinBulgaria.
2016
AninnovativeplatformwaslaunchedforelectronicpaymentsusingNFC‐enabledmobiledevicesanddigital
bankcards.
TheBankrepaidtheliquiditysupportreceivedpursuanttoECDecisionC(2014)8959/25.11.2014.
Fibanksuccessfullypassedtheassetqualityreviewandthestresstestconductedinthecountry.
Newcontactlessdebitcardsforchildrenandteenagersweredeveloped.
2017
Fibank created its integrated e‐banking platform My Fibank, using a single customer service channel
(Omnichannel).
FirstInvestmentBankjoinedasdirectparticipantthePan‐EuropeanAutomatedClearingHouseSTEP2SEPA
CreditTransfer(SCT).
FibankupdateditscorebankinginformationsystembymigratingtoOracleFlexcube12.
Fibankdevelopeditsonlineconsumercreditservicesatwww.credit.fibank.bg.
2018
FirstInvestmentBankcelebratedthe25thanniversaryofitsfounding.
AnewSmartLadyprogramwaslaunchedinsupportofwomenentrepreneurs,mainlytargetingmicro,small
andmediumenterprises.
AsoftwareFibankTokenwasdevelopedasameansofsignatureand authentication in the electronic
bankingsystemoftheBank.
Aninnovativenew‐generationEvolvecreditcardwasdeveloped,combiningthreebrands(Fibank,Diners
ClubandMastercard)intoonepaymentinstrument.
FibanksignedaCOSME+agreementwiththeBulgarianDevelopmentBankforthefinancingofSMEs.
2019
FirstInvestmentBanksuccessfullyplacedahybridinstrument(bondissue)totalingEUR30million.
FibankwasamongtheleadingbankstojointheglobalSWIFTgpisolution,whichsignificantlyimprovesthe
speedandtraceabilityofcross‐bordertransfers.
Cardserviceswerefurtherdeveloped,withanemphasisondigitalcardsandpaymentsusingsmartdevices.
AcentralizedbackofficewasinitiatedintheBank'ssystem,its main purpose being to optimize the
efficiencyinservicingtheBank'scustomers.
FibankpassedtheassetqualityreviewandstresstestconductedbytheECBduringtheyear.
Initiativeswereundertakenaimedatenhancingfinancialliteracy,includingamongchildrenandteens.
2020
FirstInvestmentBanksuccessfullyincreaseditscapitalbyBGN195,424thousand.Newshareholdersofthe
BankbecametheBulgarianDevelopmentBankADwith18.35%andValeaFoundationwith7.87%.
FibankwasthefirstbankinBulgaria,whichallowedreschedulingofpaymentstoborrowersexperiencing
difficultiesinconnectionwiththestateofemergencyandtheCOVID‐19pandemic.
Newexecutivedirectorswereelected–NikolaBakalovandRalitsaBogoeva,aswellasnewChiefFinancial
Director–IankoKarakolev.
Fibanksupportedthefoundingofastartupcompanyinthefieldofpaymentservices:MyFinEAD,licensed
asanelectronicmoneycompanywithasharecapitalofBGN1million.
First Investment Bank signed agreements with the Bulgarian Development Bank and Fund of Funds in
supportofindividualsandSMEsforovercomingtheconsequencesfromtheCOVID‐19pandemic.
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HIGHLIGHTS2021
JANUARY
Videoconsultation:anewcustomerserviceregardingcreditproducts
forindividuals, available atwww.fibank.bg and throughMy Fibank
electronicbanking.
Newgoldandsilverheart‐shapedmedallionbars,producedbythe
SwissrefineryPAMPfollowingaconceptualdesignbyFibank.
Fibankextendedthedeadlineforcustomerrequestsfordeferralof
obligations under the moratoriumonloanrepaymentsrelatedtothe
COVID‐19pandemic.
FEBRUARY
ConsumerloanfromFibank:providedentirelyonlineforindividuals,alsofeaturingtheoption
forremotesigningofdocuments.
Bankemployeesfromaroundthecountrytookpartinthesecondedition of Fibank & Cook
Academy:aprojectconductedonlinewiththeparticipationofrenownedculinaryexperts.
FiHealthInsurancefurtherdevelopeditsproducts,includingbyofferingadditionalcoverageto
the"PeaceofMindwithFiHealth"policyincaseofunemployment.
MARCH
TheBankprovidedtheoptiontoremotelyapplyformortgageloans,availablethroughtheMy
Fibankmobileapplication.
Morefunctionalitieswereaddedtodigitalbanking,allowingtheuseofnewservicesandmaking
onlinepurchases.
Fibank'sSmart Lady program in supportofwomen entrepreneursand micro‐enterprises was
furtherdeveloped,withfundedprojectsexceedingBGN85million.
Diners Club Bulgaria carried out campaigns with retail chains to promote Diners Club card
payments.
APRIL
Fibankwasthefirstinthecountrytoofferinnovativesmartwatch
paymentsusingthe FitbitPayserviceanddigitizedcards issuedby
theBank.
A branch digitalization project was launched, involving electronic
signingofdocumentsinthebranchnetworkoftheBank.
Thenecessary organizationwas set up to implement sustainability
requirements taking into account the environmental, social, and
governance(ESG)factorsintheBank'sactivities,includinginrelation
to strategic planning, risk management framework, internal
governanceanddisclosure.
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MAY
TheratingagencyFitchRatingsconfirmeditscreditratingsassignedtoFirstInvestmentBank.
Theoptionwasprovidedforonlineopeningofacurrentaccountwithdebitcardthroughthe
Bank’snewlydevelopedportalhttps://smetka.fibank.bg/.
FibankintroducedanewBPM(BusinessProcessManagement)systemformanagingprocesses
inretaillending.
MyFinEADfurtherincreaseditsdigitalwalletfunctionalitiesbylaunchingnewservicesrelated
topersonalfinancemanagement(PFM),utilitypaymentsandonlineshopping.
JUNE
A regular annual general meeting of the shareholders of First
InvestmentBankwasheld.Themeetingdecidedtocapitalizethenet
profit for 2020 and elected a new independent member and
chairmanoftheAuditCommitteeoftheBank.
The Sustainable Lady Fund was set up, a joint initiative with
Mastercard as part of Fibank's Smart Lady program to support
innovativegreenprojectsforwomenentrepreneurs.
FibankwasamongthefirstbanksinthecountrytojointheRecovery
ProgramoftheFundManagerofFinancialInstrumentsinBulgariain
supportofmicroandSMEsaffectedbytheCOVID‐19outbreak.
JULY
DebitMastercardPlatinumwaslaunchedforthepremiumsegment,
offeringanumberofbenefitsincludingavirtualassistantapplication
(AskPLEEZ!)andconciergeservices.
NewfeatureswereaddedtoMyFibanke‐banking,includingonline
applicationforEasyLoanoverdrafts.
A new human resources management system was introduced,
enablingmoreefficienthumancapitalmanagementintheBank.
AUGUST
AregularmeetingwithminorityshareholderswasheldaspartoftheBank’sconsistentpolicy
fortransparency,opendialogueandprovidingfeedback.
Morefavorableconditionswereintroducedforthecreditcardcashbackprograminthepremium
segment,featuringreturnofupto1%ofthepaymentsmadeovera6‐monthperiod.
An initiative in support of people with short stature was implemented,aswellasactionsto
facilitatetheuseofATMterminalsoftheBankbyblindpeople.
Informationsecurityprocessesandsystemswereimproved,includingbyintroductionofanew
datacontrolsystem.
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SEPTEMBER
Anewsilvercoindedicatedtothe YearoftheTigerwaslaunched,
developedjointlywiththeNewZealandMint.
TheBankfurtherimproveditspoliciesinthefieldofinternal
governance,includingwithregardtothecompositionofcommittees
andcouncilstotheManagementBoard.
Fibankcontinuedtodevelopitsdebitcardsforchildrenandteensby
offering new competitive terms and including microcards and
paymentwearables.
OCTOBER
Newproductsweredevelopedforretailandbusinesscustomers:theGoldPortfolioandtheEco
Portfolio,linkedrespectfullytothepriceofgoldandtogreenbonds.
Fibankwasawardedby GlobalBrandsMagazineforitscontributiontoinnovationand digital
banking,strengtheneditsimageasaninternationallyrecognizeddigitalbank.
FirstInvestmentBankwasamongthepilotbankstojointheBlinkschemeforinstantpayments
inBGNoperatedbyBORICAAD.
NOVEMBER
First Investment Bank offered the Gold Account: an innovative
productforpurchase,saleandkeepingofdematerializedgold(XAO).
AnagreementwassignedwiththeFundofFundsforgrantingloans
tofarmersundertheFinancinginRuralAreasfinancialinstrument.
MyCardwaslaunched:anewvirtualcreditcardwithpre‐approved
credit limit, issued entirely online through the My Fibank mobile
application.
DECEMBER
Newcreditproductsforbusinesscustomersweredeveloped:Green
Transport,GreenEnergy‐FreeMarketandGreenEnergy‐OwnUse,
inimplementationofsustainabledevelopmentinitiatives.
Two tranches were successfully subscribed of the Bank's one‐year
programforissuanceofhybridinstrumentswithatotalamountofup
toEUR100million,eligibleforadditionalTier1capital.
AdecisionwasmadetomovetheheadquartersoftheBanktoSofia
TechOne,anewandmodernbuildingcertifiedforsustainabilityas
ExcellentundertheBREEAM.
ActivityReport2021
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FINANCIALREVIEW
KEYINDICATORS
2021 2020 2019 2018 2017
Financialindicators(BGNthousand)
Netinterestincome 282,465 249,678 246,714 267,088 260,926
Netfeeandcommissionincome 123,505 99,192 106,774 97,111 102,146
Nettradingincome
15,742 12,531 15,378 10,809 15,326
Totalincomefrombankingoperations
434,970 373,709 443,484 391,329 406,589
Administrativeexpenses
(192,083) (193,807) (220,448) (212,066) (204,698)
Impairment
(125,663) (98,707) (119,730) (83,378) (78,850)
Groupprofitaftertax
Earningpershare(inBGN)
111,408
0.74
45,517
0.36
137,922
1.25
171,546
1.56
92,245
0.84
Balance‐sheetindicators(BGNthousand)
Assets 11,897,221 11,335,420 10,660,175 9,586,681 8,921,198
Loansandadvancestocustomers 6,653,944 6,312,887 6,017,137 5,716,062 5,162,907
Loansandadvancestobanksandfin.inst.
87,456 106,111 79,618 125,483 54,402
Duetoothercustomers
9,973,631 9,542,276 9,104,021 8,342,691 7,583,819
Otherborrowedfunds
120,002 103,649 109,348 121,120 127,493
Hybriddebt
320,733 267,579 267,615 208,786 208,786
TotalGroupequity
1,319,842 1,216,420 978,917 846,272 947,350
Keyratios(in%)
Capitaladequacyratio
20.84 21.28 18.34 16.15 15.89
Tier1capitalratio 20.72 21.15 18.28 16.15 15.87
CET1ratio
17.33 17.72 14.65 13.30 12.87
Leverageratio
12.75 13.45 11.84 11.08 11.28
Liquidassets/depositsfromcustomers
29.46 30.90 28.61 26.50 25.91
Liquiditycoverageratio(LCR)
256.37 257.17 221.64 269.21 334.85
Netstablefinancingratio(NSFR)
139.81 134.47 132.74 135.45 136.43
Netloans/depositsratio
Return‐on‐equity(aftertax)
Return‐on‐assets(aftertax)
66.72
8.85
0.96
66.16
4.22
0.42
66.09
15.12
1.38
68.52
19.24
1.87
68.08
10.24
1.03
Costofrisk
1.75 1.44 1.83 1.55 1.37
Netinterestincome/totalincomefrom
bankingoperations
64.94 66.81 55.63 68.25 64.17
Cost/incomeratio
43.40 56.34 44.58 46.46 53.01
Resources(innumbers)
Branchesandoffices
141 149 158 168 166
Staff 2,867 2,910 2,825 2,868 3,221
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SUSTAINABLEDEVELOPMENT
Thefactorsrelatedtoclimatechangeandsustainabledevelopment(ecologica,socialandgovernance
‐ESG),hasincreasingreflectiononbusinessactivitiesandleadtochangesinbusinessmodels.Their
implementation in all processes is fundamental for the long‐term development of the Bank. It is
extremelyimportantalsoforadequateresponsetomarketexpectations,supportofclientsandthe
community as a whole. In 2021, First Investment Bank undertook important steps (organization,
roadmap) for implementing the requirements, reflecting ESG factors in the activity, its strategic
planning and business strategy, risk manadement framework and internal governance. For more
informationseesection„Sustainabledevelopment“.
CREDITRATING
FirstInvestmentBankhaspublicratingsissuedbytheinternationalratingagencyFitchRatings.InMay
2021,FitchRatingsfullyaffirmedthecreditratingsofFirstInvestmentBankasfollows:long‐termrating
“B”withanegativeoutlook,short‐termrating“B”,viabilityrating“b”,supportrating“5”andsupport
ratingfloor“NF”(NoFloor).
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FINANCIALRESULTS
In 2021, the Group of First Investment Bank reported increased financial results and sustainable
developmentinthecontextoftheongoingCOVID‐19pandemicanditsconsequences.TheGroupprofit
aftertaxincreasedtoBGN111,408thousandcomparedtoBGN45,517thousandayearearlier,asa
resultofhigheroperatingincomeandthedevelopmentofcreditpolicies,aswellasoptimizationof
administrativecosts.Totalincomefrombankingoperationsincreased to BGN 434,970 thousand
(2020:BGN373,709thousand)withanincreaseinallmainsourcesofincome.Thereturnonequity
(aftertax)reached8.85%,andthereturnonassets(aftertax)–0.96%.
In 2021, net interest income increased to BGN 282,465 thousand (2020: BGN 249,678 thousand),
remainingthemainsourceofincomefortheGroupandaccountingfor64.9%oftotaloperatingincome
(2020: 66.8%). Fibank's operations abroad formed 5.4% of the Group's net interest income (2020:
6.5%), reflecting the development of the activity of the subsidiary Bank in Albania.Forfurther
information regarding First Investment Bank – Albania Sh.a., see section “Business review of the
subsidiarycompanies“.
Forthereportingperiod,interestincomeincreasedtoBGN334,310thousand(2020:BGN313,863
thousand),asanincreaseinallmajorbusinesssegments,incl.thehouseholdssegment(2021:BGN
135,633thousand;2020:BGN130,289 thousand)andof enterprises
8
,incl.largeenterprises(2021:
BGN88,623thousand;2020:BGN85,815thousand),smallandmiddleenterprises(2021:BGN60,647
thousand;2020:BGN58,611thousand)andmicroenterprises(2021:BGN23,975thousand;2020:BGN
15,086 thousand). An increase was also reported in the debt instrument investments (2021: BGN
25,088thousand;2020:BGN23,434thousand),usedasanadditionalsourceofinterestincome.
Ininterestexpensesthetrendfromthepreviousyearswaspreserved,withadecreasereportedin
expenses on customer deposits: BGN 14,045 thousand compared to BGN 30,268 thousand a year
earlier.DuringtheyearFirstInvestmentBankmaintainedinterestratesondepositproductsinline
withthemarketconditionsandcompetitiveenvironment,aswellaswiththehighliquiditylevels.An
8
AccordingtoCommissionRecommendation2003/361/ECof6May2003concerningthedefinitionofmicro,
smallandmedium‐sizedenterprisesdeterminedonthebasisofannualturnoverasfollows:microenterprises‐
uptoBGN3.9million;smallenterprises‐uptoBGN19.5million;medium‐sizedenterprises‐uptoBGN97.5
million.
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increasewasreportedininterestexpensesonhybriddebt(2021:BGN27,634thousand;2020:BGN
27,541thousand),aswellasonassets(2021:BGN8,712thousand;2020:BGN5,026thousand),which
includemainlyexpensesrelatedtoexcessreservesandonnostroaccounts,heldinforeignbanks.The
netinterestmarginoftheGroupamountedto3.27%fortheperiod.
Net fee and commission income for 2021 amounted to BGN 123,505 thousand compared to BGN
99,192thousandforthepreviousyear,forming28.4%oftotalincomefrombankingoperationsforthe
Group(2020:26.5%)andprovidingasolidcontributiontooperatingprofit.Fibank'soperationsabroad
formed11.4%ofnetfeeandcommissionincome(2020:8.4%).Anincreasewasreportedinallmajor
sources of income, incl. payment transactions (2021: BGN 24,877 thousand; 2020: BGN 19,787
thousand), customer accounts (2021: BGN 39,772 thousand; 2020: BGN 34,766 thousand), card
services(2021:BGN37,917thousand;2020:BGN32,406thousand),lettersofcreditandguarantees
(2021: BGN 3,466 thousand; 2020: BGN 2,412thousand), as well as for other services (2021: BGN
43,177thousand;2020:BGN31,436thousand),includingsuchrelatedtocreditactivity.Theincrease
wasinfluencedbytheconsistentpolicyandactionsfordevelopmentinthefieldofcross‐sellingand
stimulatingthecommissionincome,aswellastheexpandedcustomerbaseandincreasedcollection
offees.
For2021,nettradingincomeamountedtoBGN15,742thousand(2020:BGN12,531thousand),the
increasemainlyduetohigherincomefromforeigncurrencytransactions,whichamountedtoBGN
15,606thousandBGN,comparedtoBGN12,719thousandayearearlier.Netincomewasalsoreported
indebtandequityinstrumenttransactions,totalingBGN136thousandfortheperiodcomparedtonet
expenses of BGN 188 thousand for the previous year. The relative share of net trading income
remainedinsignificantat3.6%oftotalincomefrombankingoperationsoftheGroup(2020:3.4%).
The other net operating revenues amount to BGN 13,258 thousand, compared to BGN 12,308
thousand the year earlier, as the increase was mainly due to higher income from management of
assignedreceivables(2021:BGN3,075thousand;2020:BGN162thousand)asaresultofthesalesof
portfolios of non‐performing exposures realized during the year,aswellashigherincomefrom
transactionsandrevaluationsofgoldandpreciousmetals.
Over the year, administrative expenses decreased to BGN 192,083 thousand, compared to BGN
193,807thousandayearearlier,influencedmainlybylowercostsforexternalservices(2021:BGN
50,832thousand;2020:BGN54,926thousand),foradvertising(2021:BGN8,944thousand;2020:BGN
10,298thousand)andfordepreciationofproperty,plantandequipment(2021:BGN12,201thousand;
2020:BGN13,165thousand),asaresultofmeasurestakentooptimizetheefficiencyofoperations.
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Atlevelsclosetothepreviousyearremainedthecostsofdepreciationofright‐of‐useassets(2021:
BGN35,089thousand;2020:BGN35,011thousand),aswellasthoserelatedtotelecommunications,
softwareandothercomputersupport(2021:BGN13,146thousand;2020:BGN12,665thousand).An
increasewasreportedinpersonnelcosts(2021:BGN71,871thousand;2020:BGN67,742thousand),
aspartoftheconsecutiveactionstoestablishtheBankasapreferredemployerandtoretainqualified
staffandkeyemployees.Fortheperiod,cost/incomeratiodecreasedto43.40%onaconsolidated
basis(2020:56.34%).
During the year additional write‐downs were made on loans, off‐balance sheet commitments and
other investments, amounting to BGN 160,998 thousand, while BGN 35,335 thousand impairment
losseswerereversed.Asaresult,netimpairmentfor2021amountedtoBGN125,663thousand(2020:
BGN98,707thousand).Formoreinformationseethe“RiskManagement”section.
Fortheperiod,theGroupofFirstInvestmentBankreportedotherincome(net)intheamountofBGN
7,608 thousand, compared to net expenses of BGN 29,696 thousandayearearlier,whichwas
influenced by the reported additional income in connection with the revaluation of investment
propertyintheamountofBGN30,340thousand.Thispositionincludedalsocontributionsmadeto
guaranteeschemes,includingdepositinsurancefunds,forrestructuringandinvestorcompensation
(2021:BGN23,710thousand;2020:BGN35,945thousand).
FormoreinformationseetheConsolidatedFinancialStatementsfortheyearendedDecember31,2021.
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BALANCESHEET
In2021,thetotalassetsoftheGroupofFirstInvestmentBankincreasedby5.0%toBGN11,897,221
thousand, compared to BGN 11,335,420 thousand a year earlier. The dynamics reflected the
developmentof the lending portfolio,the optimization of balancesheetitemsandtheincreaseof
borrowedfundsinlinewiththechangesintheexternalenvironmentandmarketconditions.Fibank
maintaineditsleadingpositionamongbanksinthecountry,rankingfifthintermsofassets(2020:fifth)
bytheendof2021,withamarketshareof8.32%onanindividualbasis(2020:8.70%).
InthestructureoftheGroup'sassets,loansandadvancestocustomersretainedtheirmajorshareat
55.9%oftotal assets (2020:55.7%),followedbycash and receivablesfrom centralbanksat16.6%
(2020:18.8%)andinvestmentsinsecuritiesat14.1%(2020:11.4%).Theshareofrepossessedassets
weredown to3.9%(2020:6.3%)at theexpenseofinvestment property (2021: 6.2%; 2020: 3.7%),
whichareestimatedthatcangenerateadditionalprofitabilityfortheGroup.Theloan/depositratio
amountedto66.7%,inaccordancewiththeconservativeriskmanagementpolicy.
CashandreceivablesfromcentralbanksdecreasedtoBGN1,970,814thousandcomparedtothelevels
ofthepreviousyear(2020:2,133,197thousand)asaresultmainlyofadecreaseinreceivablesfrom
central banks (2021: 1,499,754 thousand BGN; 2020: BGN 1,655,521 thousand), as well as on the
current account balances with foreign banks (2021: BGN 206,145 thousand; 2020: BGN 288,580
thousand).FirstInvestmentBankmanageditscashaccordingtocustomerneedsandwithaviewto
maintainingoptimalreturns.Attheendof2021,cashonhandamountedtoBGN261,999thousand
comparedtoBGN189,096thousandayearearlier.
LoansandadvancestobanksandfinancialinstitutionsamountedtoBGN87,456thousandattheend
oftheperiod(2020: BGN106,111thousand),asadecreasewasreportedinreceivablesfromlocal
banks and financial institutions (2021: BGN 22,208 thousand; 2020: BGN 39,596 thousand) and to
lesserdegreeinthosefromforeignbanksandinstitutions(BGN2021:65,248thousand;2020:BGN
66,515thousand).
ThesecuritiesinvestmentportfoliooftheGroupincreasedtoBGN1,673,781thousandattheendof
theyear(2020:BGN1,292,641thousand),managedaccordingtomarketconditionsandwithaview
to generating additional income, while maintaining proper balance between risk and return. An
increasewasreportedinallmajortypesofinstruments,incl.Bulgariangovernmentsecurities(2021:
BGN582,382thousand;2020:BGN442,529thousand)andforeigngovernments(2021:BGN620,878
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thousand;2020:BGN561,735thousand),aswellasbondsandnotesissuedbyforeignbanks(2021:
BGN 124,057 thousand; 2020: BGN 24,011 thousand) and by the enterprises {2021: BGN 317,559
thousand;2020:BGN236,974thousand).
InaccordancewiththerequirementsregardingbusinessmodelsandtheIFRS9criteriaforclassification
andvaluationoffinancialassetsintheBank'sportfolios,BGN1,088,904thousandofthesecurities
portfolio are measured at fair value through other comprehensive income (2020: BGN 825,882
thousand),BGN268,738thousand–atfairvaluethroughprofitorloss(2020:BGN266,929thousand),
andBGN316,139thousand–atamortizedcost(2020:BGN199,830thousand).
Asof31December2021,Fibank'soperationsabroadformed9.3%oftheassets(2020:4.9%)and11.1%
oftheliabilities(2020:8.4%)oftheGroupincompliancewiththedevelopmentoftheactivityofthe
subsidiary bank in Albania and its priority focused on the retailbankingsegmentandsmalland
medium‐sizedenterprises.ForfurtherinformationregardingFirstInvestmentBank–AlbaniaSh.a.,see
section“Businessreviewofthesubsidiarycompanies“.
Repossessed assets decreased to BGN 459,853 thousand (2020: BGN 713,619 thousand) at the
expenseofinvestmentproperties(2021:BGN732,850thousand;2020:BGN414,021thousand),asa
resultoftransferredduringtheyearrepossessedassetsintheamountofBGN290,975thousand,as
wellasrevaluationmadeduringthetransferintheamountofBGN30,340thousand.Fortheperiod
propertiessoldintheamountofBGN2,683thousandwerewrittenoff.
Other assets of the Group amounted to BGN 129,548 thousand (2020: BGN 110,002 thousand),
including deferred expenses,goldand other receivables. The right‐of‐useassetsamountedtoBGN
92,169thousandattheendoftheyear(2020:BGN154,080thousand).
FormoreinformationseetheConsolidatedFinancialStatementsfortheyearendedDecember31,2021.
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LOANPORTFOLIO
LOANS
In 2021, the net loan portfolio of the Group of First Investment Bank increased by 5.4% to BGN
6,653,944 thousand (2020: BGN 6,312,887 thousand), in line with the objectives for business
developmentplacingapriorityontheretail,microandSMEsegments.
InBGNthousand/%oftotal
2021 % 2020 % 2019 %
Households 2,398,011 33.6 2,167,277 31.7 2,036,721 31.2
Microenterprises 519,600 7.3 350,200 5.1 324,700 5.0
Smallenterprises
549,327 8.3 564,876 8.3 542,875 8.3
Mediumenterprises
1,385,398 19.4 1,144,173 16.7 1,189,054 18.2
Largeenterprises
2,236,375 31.3 2,610,673 38.2 2,434,081 37.3
Grossloanportfolio
7,133,711 100 6,837,199 100 6,527,431 100
Impairment (479,767) (524,312) (510,294)
Netloanportfolio 6,653,944 6,312,887 6,017,137
Growth was reported in loans to households, which increased theirshareto33.6%ofthegross
portfoliooftheGroup(2020:31.7%),aswellasinmicro‐enterprises‐upto7.3%(2020:5.1%),small
enterprises ‐ up to 8.3% (2020: 8.3%) and medium‐sized enterprises ‐ up to 19.4% (2020: 16.7%),
structuredaccordingtotheEUcriteria
9
forcustomersegmentation,whichtogetherform35.0%(2020:
30.1%)oftotalloansattheendoftheyear.Adecreasewasreportedinlargeenterprisessegmentas
theirsharefellto31.3%ofthegrossportfolio(2020:38.2%).AsofDecember31,2021,FirstInvestment
Bankrankedsixthbyloanportfoliosizeamongbanksinthecountry,withamarketshareof9.34%
(2020:9.91%)onanindividualbasis.
InBGNthousand/%oftotal
2021 % 2020 % 2019 %
LoansinBGN 4,053,534 56.8 3,638,012 53.2 3,371,730 51.7
LoansinEUR 2,689,184 37.7 2,868,501 42.0 2,932,912 44.9
Loansinothercurrency
390,993 5.5 330,686 4.8 222,789 3.4
Grossloanportfolio
7,133,711 100 6,837,199 100 6,527,431 100
Impairment (479,767) (524,312) (510,294)
Netloanportfolio 6,653,944 6,312,887 6,017,137
Inthecurrencystructureoftheloanportfolio,loansinBGNincreasedtoBGN4,053,534thousand
(2020: BGN 3,638,012 thousand) or 56.8% of the total portfolio (2020: 53.2%). A decrease was
reportedinloansineurotoBGN2,689,184thousandattheendoftheperiod(2020:BGN2,868,501
9
AccordingtoCommissionRecommendation2003/361/ECof6May2003concerningthedefinitionofmicro,
smallandmedium‐sizedenterprisesdeterminedonthebasisofannualturnoverasfollows:microenterprises‐
uptoBGN3.9million;smallenterprises‐uptoBGN19.5million;medium‐sizedenterprises‐uptoBGN97.5
million.
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thousand),orashareof37.7%(2020:42.0%)oftotalloans.Thecountryhasacurrencyboardsystem
in place which minimizes the BGN/EUR currency risk. Since 2020, Bulgaria is part of the European
ExchangeRateMechanism(ERM)IIandtheSingleSupervisoryMechanism(SSM),whichwasastep
towardsthecountry'saccessiontotheEurozone.LoansinothercurrenciesamountedtoBGN390,993
thousand(2020:BGN330,686thousand),forming5.5%oftotalloans(2020:4.8%).
LoansgrantedbytheFirstInvestmentBankabroadaccountedfor4.9%oftheGroup'sgrossportfolio
(2020:4.2%),reflectingtheincreaseintheloanportfolioofFirstInvestmentBank–AlbaniaSh.a.to
individuals and SME’s. For further information, see section “Business review of the subsidiary
companies“.
Attheendoftheperiod,impairmentchargesforpotentiallossesontheloanportfolioamountedto
BGN 479,767 thousand compared to BGN 524,312 thousand a year earlier. In 2021, additional
impairmentwasrecognizedintheamountofBGN160,033thousand,impairmentlossesintheamount
BGN35,069thousandwerereversed,andBGN171,512thousandwerewrittenoff.
Duringtheyear,FirstInvestmentBankappliedtheapprovedProcedurefordeferralandsettlementof
paymentsduetobanksappliedinthelightoftheCOVID‐19crisis(privatemoratorium)inaccordance
withitstermsandconditions,applyingtheprovisionalprinciplethatthe applicationofthegeneral
paymentmoratoriuminitselfshouldnotleadtoreclassificationoftheexposureasforborne.Formore
informationseetheRiskManagementsection.
ItisthepolicyoftheBanktorequireadequatecollateralupongrantingloans.Alllegallypermissible
typesofcollateralareaccepted,andadiscountrateisapplieddependingontheirexpectedrealizable
value.
Asoftheendof2021,thetypeofcollateralhavingthelargestshareintheGroup'sportfoliowere
suretiesandotherguarantees–37.7%,followedbypledgesofreceivables–28.5%andmortgages–
27.6%.
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Formoreinformationoncreditrisk,seeNote3“RiskManagement” of the Consolidated Financial
StatementsfortheyearendedDecember31,2021.
RELATEDPARTYTRANSACTIONS
Inthecourseofitsordinaryactivities,theBankalsoentersintotransactionswithrelatedparties.These
transactionsarecarriedoutundermarketcriteriaandinaccordancewithapplicablelaw.
Typeofrelatedparty
Partiesthatcontrolor
managetheGroup
Enterprisesunder
commoncontrol
InBGNthousand 2021 2020 2019 2021 2020 2019
Loans 3,515 1,769 2,327 70,364 70,992 7,709
Depositsandloansreceived 13,725 13,275 11,718 13,582 15,194 9,459
Depositsplaced
‐ ‐ ‐ ‐ 2,955 18,748
Otherreceivables
‐ ‐ ‐ 18,037 17,565 16,790
Otherborrowings
‐ ‐ ‐ 320 ‐ ‐
Off‐balancesheetcommitments
1,061 1,031 975 594 703 1,062
Leasingliabilities ‐ ‐ ‐ 1,513 ‐ ‐
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Typeofrelatedparty
Partiesthatcontrolor
managetheGroup
Enterprisesunder
commoncontrol
InBGNthousand 2021 2020 2019 2021 2020 2019
Interestincome 24 25 38 2,085 2,415 556
Interestexpense 8 10 3 1 1 8
Feeandcommissionincome
16 14 19 861 166 187
Feeandcommissionexpense
4 3 2 293 293 562
Formoreinformationregardingrelatedpartytransactions,seeNote35“Relatedpartytransactions”
oftheConsolidatedFinancialStatementsfortheyearendedDecember31,2021.
CONTIGENTLIABILITIES
ContingentliabilitiesofFirstInvestmentBankincludebankguarantees,lettersofcredit,unusedcredit
lines,promissorynotesandothers.Theseareprovidedinaccordancewiththegeneralcreditpolicyon
riskassessmentandcollateralvalue.Withregardtodocumentarytransactionsperformed,theBankis
alsoguidedbytheunifiedinternationalrulesinthearea,protectingtheinterestsofpartiestosuch
transactions.
Attheendofthereportingperiodthetotalamountofoff‐balancesheetcommitmentsoftheGroup
amountedtoBGN847,693thousand,comparedtoBGN795,677thousandayearearlier.Theincrease
wasmainlyduetounusedcreditlines,uptoBGN671,131thousand(2020:BGN588,900thousand)at
theexpenseofbankguarantees,downtoBGN164,055thousand(2020:BGN181,347thousand)and
lettersofcredit–downtoBGN12,507thousand(2020:BGN25,430thousand).
Formoreinformationonoff‐balancesheetcommitments,seeNote32"Contingentliabilities"ofthe
ConsolidatedFinancialStatementsfortheyearendedDecember31,2021.
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ATTRACTEDFUNDS
In 2021, attracted funds from customers increased by 4.5% and reached BGN 9,973,631 thousand
(2020:BGN9,542,276thousand),remainingthemainsourceoffundingfortheGroupandforming
94.3% of total liabilities (2020: 94.3%). First Investment Bank offers savings products and package
programstailoredtomarketconditionsandcustomerneeds.Asat31December2021,theBankranked
fifthbydepositsizeamongbanksinBulgaria(2019:fifth)withamarketshareof8.69%onindividual
basis(2020:9.06%).
Deposits of individuals increased by 2.7% to BGN 7,450,166 thousand at the end of the period
comparedtoBGN7,255,775thousandayearearlier.Theyretainedamajorshareoftotalborrowings
at 74.7% (2020: 76.0%). The currency structure of retail deposits is dominated by BGN funds
accounting for 43.6% of all borrowings (2020: 43.3%), followed by funds in euros at 23.5% (2020:
25.4%)andinothercurrenciesat7.6%(2020:7.4%).
InBGNthousand/%oftotal
2021 % 2020 % 2019 %
Attractedfundsfromindividuals 7,450,166 74.7 7,255,775 76.0 7,073,178 77.7
InBGN 4,352,762 43.6 4,128,051 43.3 4,032,471 44.3
InEUR 2,339,776 23.5 2,424,881 25.4 2,347,852 25.8
Inothercurrency
757,628 7.6 702,843 7.4 692,855 7.6
Attractedfundsfromcorporate,
state‐ownedandpublicinstitutions
2,523,465 25.3 2,286,501 24.0 2,030,843 22.3
InBGN 1,397,919 14.0 1,343,397 14.1 1,293,489 14.2
InEUR 932,705 9.4 713,846 7.5 563,299 6.2
Inothercurrency
192,841 1.9 229,258 2.4 174,055 1.9
Totalattractedfundsfrom
customers
9,973,631 100 9,542,276 100 9,104,021 100
Inaccordancewiththeregulatoryrequirements,FirstInvestmentBankallocatesannualcontributions
totheDepositInsuranceFund.Asprovidedbylaw,theFundguaranteesamountsuptoBGN196,000
keptinacustomer’saccountswiththeBank.
Attracted funds from corporates and institutions increased by 10.4% to BGN 2,523,465 thousand
(2020: BGN 2,286,501 thousand) as a result of the Bank’s consistent policy of cross‐selling,
developmentof transaction business inlinewith modern technologies and the European payment
infrastructure, and building lasting customer relationships. Bytheendof2021theirrelativeshare
increased to 25.3% of total borrowings from customers (2020: 24.0%).Asregardsthecurrency
structure, funds in BGN attracted from corporates and public institutions formed 14.0% of all
borrowings(2020:14.1%),followedbythoseineurosat9.4%(2020:7.5%)andinothercurrenciesat
1.9%(2020:2.4%).
Otherborrowings increasedtoBGN120,002thousandasofDecember31,2021comparedtoBGN
103,649 thousand a year earlier, as a result mainly to the repurchase agreements that the Group
performed in 2021 amounting to BGN 14,358 thousand, as well as received financing (2021: BGN
26,227thousand;2020:BGN23,633thousand)andtheliabilitiesrelatedtostructuredproducts,which
theBankstartedtoofferduringtheperiodincompliancewiththerequirementsforeligibleliabilities
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(MREL)accordingtoRegulation(EU)№575/2013andtheLawonRecoveryandRestructuringofCredit
InstitutionsandInvestmentIntermediaries.Formoreinformation,seesection„Capital“.
ThereceivedfinancingmainlyincludefinancingfromBulgarianDevelopmentBankAD:BGN15,525
thousand(2020:BGN16,137thousand),fromtheFundManagerofFinancialInstrumentsinBulgaria
(Fund of Funds): BGN 7,971 thousand (2020: BGN 3,252 thousand),aswellasfromEuropean
InvestmentFundundertheJEREMIE2initiative:BGN2,731thousand(2020:BGN4,244thousand)For
moreinformation,seethe"Europrograms"section.Attheendoftheyear,theamortizedvalueofdebt
related to total return swap agreements amounted to BGN 73,391 thousand (2020: BGN 73,240
thousand)andconfirmedlettersofcredit–BGN3,388thousand(2020:BGN6,776thousand).
For2021,liabilitiesduetobanksamountedtoBGN8,722thousand,comparedtoBGN2,747thousand
ayearearlier.
Lease liabilities amounted to BGN 92,405 thousand at the end of the year (2020: BGN 154,481
thousand),asaresultofadecreaseinleasingpaymentsandthereportedeffectofchangesinleasing
conditionsandtheleaseterm.
For more information on borrowings see the Consolidated Financial Statements for the year ended
December31,2021.
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CAPITAL
As of December 31, 2021 the share capital of First Investment Bank amounted to BGN 149,085
thousand,dividedinto149,084,800ordinary,registered,dematerializedshareswithvotingrightsin
theTotalGeneralMeetingofShareholdersandanominalvalueofBGN1each.Thesharecapitalhas
beenpaidinfull.ThesharepremiumamountedtoBGN250,017thousand.
ThebalancesheetequityoftheGroupofFirstInvestmentBankincreasedby8.5%toBGN1,319,842
thousand (2020: BGN 1,216,420 thousand), also influenced by theincreaseinotherreservesand
retainedearnings,whichreachedBGN860,339thousandattheendoftheperiod(2020:BGN749,744
thousand).
REGULATORYCAPITAL
FirstInvestmentBankmaintainsownfundsforthepurposeofcapitaladequacyintheformofCommon
EquityTier1andAdditionalTier1capital,followingtherequirementsofRegulation(EU)No575/2013
andtheECimplementingregulations,aswellasOrdinanceNo7oftheBNBontheOrganizationand
ManagementofRisksinBanks.
BytheendofthereportingperiodtheCET1capitalamountedtoBGN1,299,477thousand(2020:BGN
1,313,839thousand).TheTier1capitalamountedtoBGN1,553,735thousand(2020:BGN1,568,097
thousand). The total regulatory capital amounted to BGN 1,562,783 thousand compared to BGN
1,577,681thousandayearearlier.
InDecember2021,FirstInvestmentBankstructuredaone‐yearprogramfortheissuanceofhybrid
instruments (perpetual, non‐cumulative, unsecured, deeply subordinated, freely transferable, non‐
convertiblebonds)meetingtherequirementsforadditionalTier1capitaltoreplaceexistingissuesof
hybridinstrumentsissuedbytheBank.Theprogramenvisagesseparateissues,thecouponinterest
rateforeachbeingdeterminedindividuallyaccordingtomarketconditions.Theminimumnominal
valueper bondis EUR 100,000, with anoptionforadditionalinvestmentabovethatamount at an
incrementofEUR1,000oramultipleofEUR1,000.
Attheendoftheyear,theBanksuccessfullyissuedasprivate placement two tranches under the
program(ISIN:XS2419929422),thefirstintheamountofEUR17.133millionandthesecondinthe
amountofEUR10million.Therewashighinvestorinterest,withtheminimumsubscriptionamount
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fortheissuetobeconsideredsuccessfulbeingexceededmorethanthreetimes(forthefirsttranche)
andtwotimes(forthesecondtranche).Theglobalbondshavebeenacceptedforclearancethrough
ClearstreamBankingS.A,withaviewtosubsequentadmissiontotradingonaregulatedmarketonthe
LuxembourgStockExchange(LuxSE).
Asof31December2020,FirstInvestmentBankalsohasthreeotherhybridinstrumentsissued(bond
issues) with original principal of EUR 40 million (ISIN: BG2100008114) and EUR 60 million (ISIN:
BG2100022123)andEUR30million.(ISIN:BG2100023196),whichareincludedintheadditionalTier1
capitaloftheBank.TheissuesareadmittedtotradingonaregulatedmarketontheLuxembourgStock
Exchange(LuxSE).Attheendofthereportingperiod,theamortizedcostofhybriddebtamountedto
BGN320,733thousand(2020:BGN267,579thousand).
TheGroup(throughthesubsidiaryFirstInvestmentBank‐AlbaniaSh.a.)hastwosubordinatedterm
debtinstrumentsissued(long‐termbonds)amountingtoEUR2.0millionandEUR2.9million,meeting
therequirementsforTier2capital.Asat31December2021,theamortizedvalueofthesubordinated
termdebtamountedtoBGN9,622thousand(2020:BGN9,623thousand).
For more information, see Note 29 “Hybrid and Subordinated Debt” of the Consolidated Financial
Statementsfortheyearended31December2021.
Forthepurposeofreporting qualifyingholdingsoutsidethefinancialsector,FirstInvestmentBank
appliesthedefinitionofeligiblecapital,whichincludestier1capitalandtier2capital,whichcannot
exceed1/3oftier1capital.Asat31December2021,theeligiblecapitalof FirstInvestmentBank,
calculated in accordance with Regulation (EU) No 575/2013 and OrdinanceNo7ofBNBforthe
organizationandmanagementofrisksinbanksamountedtoBGN1,562,783thousand.
PursuanttoRegulation(EC)2017/2395oftheEuropeanParliamentandoftheCouncilof12December
2017foramendingRegulation(EC)575/2013,thebankshavebeenprovidedwiththeoptiontochoose
toapplytransitionalmeasuresformitigatingtheimpactoftheintroductionofIFRS9onregulatory
ownfunds.Withtheseafive‐yeartermisbeingdefinedforgradualintroductionduringwhichbanks
canaddaspecificamounttothecommonequitytier1,calculatedinaccordancewiththeapproach
chosen(theso‐calledstaticapproachorstaticapproachwithdynamicpartincluded)andinaccordance
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withthecoeficientsfortransitionalarrangementsintheamountof0.85for2019,0.70for2020,0.50
for2021and0.25for2022
Inthisregard,itwasdecidedduringthetransitionalperioduntil2022,FirstInvestmentBanktoapply
the measures under Article 473a of Regulation (EU) No 575/2013, including the additional relief
providedforinparagraph4‐theso‐calleddynamicpartofthetransitionaltreatment.
CAPITALREQUIREMENTS
At the end of 2021, the Group of First Investment Bank reported stable capital ratios as follows:
commonequityTier(CET1)ratio17.33%,Tier1capitalratio20.72%andtotalcapitaladequacyratio
20.84%,exceedingtheminimumregulatorycapitalrequirements.
InBGNthousand/%ofrisk
exposures
2021 % 2020 % 2019 %
CET1capital 1,299,477 17.33 1,313,839 17.72 1,025,869 14.65
Tier1capital 1,553,735 20.72 1,568,097 21.15 1,280,127 18.28
Ownfunds
1,562,783 20.84 1,577,681 21.28 1,284,039 18.34
Totalriskexposures
7,498,839 7,413,986 7,003,184
Thereportedcapitalratiosresultedfromthe applicationofcomprehensiveand targeted measures
regardingtheimplementationofcapitalleversinkeyareas,includingsuccessfulsubscriptionofanew
publicissueofshares,retentionofprofit,inclusionoftheissueddebt‐capital(hybrid)instrumentin
theAdditionalTier1capital,aswellasmaintaininghighdisciplineinriskmanagement.
CAPITALBUFFERS
InadditiontothecapitalrequirementssetoutinRegulation(EU)№575/2013,FirstInvestmentBank
maintainsfourcapitalbuffersinaccordancewiththerequirementsofOrdinance№8oftheBNBon
CapitalBuffers,theCombinedBufferRequirement,RestrictionsonDistributionsandtheGuidanceon
AdditionalOwnFunds.
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First Investment Bank maintains a capital conservation buffer, comprised of common equity tier 1
capital,equalto2.5%ofthetotalriskexposureoftheBank,aswellasbufferforsystemicriskcovered
bycommonequitytier1capitalwiththeaimfordecreasingtheeffectofpotentiallong‐termnon‐
cyclicalsystemormacroprudentialrisksinthebankingsysteminthecountry.In2021thelevelofthe
capitalbufferforsystemicriskapplicabletoallbanksinBulgariaremainedunchangedat3%ofthe
totalriskexposuresinthecountry.
Withtheaimforprotectionofthebankingsystemagainstpotentiallossesarisingfromaccumulated
cyclicalsystemicriskinperiodsofexcessivecreditgrowth,thebanksinBulgaria,incl.Fibankmaintains
countercyclicalcapitalbuffer,applicabletocreditriskexposuresintheRepublicofBulgaria.Itslevelis
determinedbytheBulgarianNationalBankeachquarterandin2021adecisionwasmadetoincrease
itfrom0.5%to1.0%inforcefrom01.10.2022,aswellasto1.5%inforcefrom01.01.2023
Inaddition,thedeterminedbyBNBothersystematicallyimportantinstitutions(O‐SII)inthecountry
among which First Investment Bank AD should maintain a buffer forO‐SIIwithaviewontheir
significanceforthenationaleconomyandfinancialsystem.TheapplicableforFibankbufferforO‐SII
onanindividualandconsolidatedbasis,determinedasashareofthetotalvalueoftheriskexposures,
isintheamountof1.0%for2021and2022.
LEVERAGE
Theleverageratioisanadditionalregulatoryandsupervisorytool,whichmeasurestherequiredcapital
maintainedbybanksthatisnotrisk‐sensitiveorrisk‐weighted,therebycomplementingandbuilding
ontherisk‐basedcapitalratiosapplicableundertheexistingregulatoryframework.Intermsofthe
leverageratio,onEUlevel,banksshouldreportanddisclosetheindicatorinordertomaintainthe
minimumrequiredamountof3%underRegulation(EU)№575/2013.
FirstInvestmentBankcalculatestheleverageratiobymatchingitsTier1capitaltothetotalexposure
oftheBank(assets,off‐balancesheetitems,andotherexposures to derivatives and securities
financing transactions), subject to the requirements of Delegated Regulation (EU) 2015/62 of the
Commissionconcerningtheleverageratiosandtheotherapplicableregulations.Asat31December
2021the leverage ratioamounted to 12.75%on a consolidated basis comparedto13.45% for the
previousperiod.
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FirstInvestmentBankhaswrittenrulesinplacetoidentify,manageandmonitortheriskofexcessive
leverageresultingfrompotentialvulnerabilityoftheBankrelatedtothemaintainedlevelsofleverage.
Theriskofexcessiveleverageiscurrentlymonitoredbasedonspecificindicators,whichincludethe
leverage ratio, calculated in accordance with applicable regulatoryrequirements,aswellasthe
mismatchesbetweenassetsandliabilities.TheBankmanagesthistypeofriskusingvariousscenarios,
including such that take into account its possible increase duetoadecreaseintheTier1capital
resultingfrompotentiallosses.Theleverageratioisalsopartofthecapitalindicatorsofthesystem
forongoingmonitoringandearlywarning,andisincorporatedintheframeworkforriskmanagement
attheBank,includinginthemanagementprocessesincaseofpotentialfinancialrisks.
ELIGIBLELIABILITIES
IncompliancewiththerequirementsoftheLawonRecoveryandResolutionofCreditInstitutionsand
InvestmentFirmsandRegulation(EU)No575/2013,banksneedtomeetminimumrequirementsfor
own funds and eligible liabilities (MREL), determined individually for each institution by the
restructuringauthorityandcalculatedasapercentageofthetotalriskexposureamount(TREA)and
theleverageratioexposuremeasure(LRE).
Thedeadlineformeetingtheminimumrequirementsis1January2024.Inordertoensuregradual
accumulationofequityandeligibleliabilities,intermediatetargetlevelshavebeenset(asat1January
2022and1January2023)tobereachedbyinstitutions.
In2021,FirstInvestmentBankdevelopednewstructuredproductsinpreparationforfulfillmentofthe
minimum requirements for own funds and eligible liabilities (MREL). The Gold Portfolio and Eco
Portfolioproducts,designedforbothindividualsandbusinesscustomers,arelinkedrespectfullytothe
priceofgoldandtogreenbondsandarestructuredinlinewith the requirements for maturity,
collateral,subordination,losssharing,acceleration,andothersundertheLawontheRecoveryand
ResolutionofCreditInstitutionsandInvestmentFirmsandRegulation(EU)No575/2013.
FormoreinformationoncapitalseetheConsolidatedFinancialStatementsasat31December2021.
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RISKMANAGEMENT
FirstInvestmentBankhasbuilt,maintained,anddevelopedariskmanagementsystemwhichensures
theidentification,assessmentandmanagementofrisksinherenttoitsactivity.
In2021,theBankoperatedinaccordancewithitsupdatedthree‐yearRiskManagementStrategyand
RiskAppetiteFramework,aimingtomaintainamoderatelylowlevelofriskinaccordancewithits
development targets and to further increase the protection mechanismsagainstrisksinherentin
banking,takingintoaccountthechallengesposedbytheCOVID‐19pandemicanditsconsequences.
The Bank continued to pursue its objectives for reduction and management of non‐performing
exposuresanditslong‐termprioritiesforreductionandeffectiverealizationofnon‐interest‐bearing
assetsinaccordancewiththeStrategyforReductionofNon‐performingExposuresandRepossessed
AssetsandtheOperationalPlanforitsimplementation,takingintoaccountthecontinuingdifficulties
of the environment and investor interest resulting from the uncertain global situation and the
coronaviruspandemic
FirstInvestmentBankappreciatestheimportanceofsustainabledevelopmentissues.Inthisregard,
duringtheyearthenecessaryorganizationwassetupandaroadmappreparedforimplementingthe
requirements, taking into account the environmental, social, and governance (ESG) factors in the
overallactivityoftheBank,includingthoserelatedtostrategicplanningandbusinessstrategy,risk
managementframeworkandinternalgovernance.
RISKMANAGEMENTSTRATEGY
TheriskmanagementstrategyofFirstInvestmentBankisanintegralpartofitsbusinessstrategy.The
mainobjectiveinmanagingtheoverallriskprofileoftheBankistoachieveabalancebetweenrisk,
returnandcapital.TheriskprofileisrelevanttotheproductpolicyoftheBankandisdeterminedin
accordance with the economic factors in the country and the Bank’s internal characteristics and
requirements.
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TheBankdeterminesitsriskpropensityandrisktolerancelevelssothattheycorrespondtoitsstrategic
objectivesandstablefunctioning,aswellastotherequiredlevelofequitycapitalandaneffective
managementprocess.Fibankmaintainsfinancialresourcesthatarecommensuratewiththevolume
andtypeofoperationsperformedandwithitsriskprofile,bydevelopinginternalcontrolsystemsand
mechanismsforriskmanagementinaccordancewithregulatoryrequirementsandbestpractices.The
maingoalsonthebasisofwhichtheriskstrategyisstructured,aredefined,asfollows:
achievingasustainablelevelofcapitaltoensuregoodrisk‐takingcapacity,aswellascapacity
tocoverrisksinthelongterm;
maintaininggoodassetqualitywhileprovidingforanefficientdecision‐makingprocess;
achievingabalancedrisk/returnratioforallbusinessactivitiesoftheBank.
In 2021, as part of the annual review, the risk strategy was updated in accordance with the Risk
appetiteframeworkandtheBank’sbusinessplan.Withrespectto its risk profile, the strategy is
focusedonprioritydevelopmentintheretailandSMEsegments,aswellasconstantlymaintainingan
effectivecontrolenvironmentforexistingbusinessprocesses,accompaniedbyactivemanagementof
operational risk, maintaining an adequate level of unencumbered liquid assets, and limiting the
assumedmarketriskwithinthecurrentlevels.
RISKAPPETITEFRAMEWORK
In2021,asapartofannualreview,FirstInvestmentBankupdatedtheRiskappetiteframework,which
isanintegratedinstrumentfordefiningandlimitingtheoverallrisklevel,whichtheBankiswillingand
abletotaketoachieveitsstrategicandbusinessgoals.For2021,amedium‐lowlevelofriskappetite
issettobemaintained.
DefiningandapplyingariskappetiteframeworkisbasedonassessmentoftheriskprofileoftheBank
onthebasisofthematerialrisksidentifiedintheriskmap,astheoverallriskprofileisexpressedinto
aratingaggregatedfromthescoresassignedtoeachofthespecificrisksthroughouta5‐levelscale
withquantitativevaluesandrisklevels.
Withintherisk appetite framework,the risk capacityoftheBankisdefined,whichrepresentsthe
maximumlevelofrisktheBankcanoperatewithoutbreakingregulatoryrequirementsandotherlimits
withrespecttocapitalandfundingneedsandliabilitiestocounterparties.Therisktoleranceisdefined,
asaprecautionarymeasurewithinmaintainingtheriskappetite,whichassetonastrategiclevelis
definedasapercentagelowerthan100%oftheoverallriskcapacityoftheBank.Forcalculatingthe
riskappetitearethespecificriskindicatorsandlimits(forexamplethetotalcapitalratio,thecommon
equityTier1ratio,loan todepositratio,liuiditycoverageratio,netstablefundingratio,returnon
equity,non‐performingexposureratio,provisioningratio,operatinglosses/regulatorycapital,etc.),as
wellasearlywarningindicatorsinaccordancewiththetypeofrisk.
The risk appetite framework is subject to review by the Managing Board and approval from the
SupervisoryBoardonceayearormoreoften,ifneeded,inaccordancewiththebusinessenvironment
dynamics.ItispartoftheannualprocessfordefiningthestrategyandplanningwithintheBank.
RISKMAP
FirstInvestmentBankdevelopsariskmap,whichclassifiesrisksintodifferent types and identifies
thosetheBankisexposedtoormaybeexposedtoinitsactivity.Itisupdatedonceayearormore
oftenifneeded,aimingatdefiningallmaterialrisks and theiradequate integration within the risk
managementframeworkoftheBank.
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Thetypesofrisksaredifferentiatedintogroups(Pillar1andPillar2)aswellasthemethodsfortheir
measurementinaccordancewiththeapplicableregulatoryframework.
RISKCULTURE
Prudentandconsistentriskcultureisoneofthekeyelementsofeffectiveriskmanagement.In
compliancewiththebeststandards,theFibankseekstodevelopariskculturethatwillfurtherenhance
visibility and prevention in terms of individual risk types, their identification, evaluation and
monitoring, including by applying appropriate forms of training among the employees and senior
managementinvolvedinriskmanagement.
TheBankaimsatapplyingthefollowingprinciplesforensuringhighriskculture:
risktakingwithintheapprovedriskappetite;
approvalofeveryriskinaccordancewiththeeffectiveapprovallevelsandtheinternalrisk
managementframework;
current/ongoing monitoring and risk management, incl. taking into consideration the
ecological,socialandgovernance(ESG)factors;
responsibility of employees at all levels to the management and escalation of risks, while
applyingaconservativeandfuture‐orientedapproachintheirassessment;
effective communication and constructive criticismaimed at makingrationalandinformed
decisions,aswell as creatingconditions foropenandpositiveengagementthroughoutthe
organization;
applying appropriate incentives to contribute to sound and efficient management,
discouragingrisk‐takinginexcessofthelevelacceptabletotheBank.
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RISKMANAGEMENTFRAMEWORK
The risk management framework of First Investment Bank includes automated systems, written
policies,rulesandprocedures,mechanismsfortheidentification,assessment,monitoringandcontrol
ofrisks,andmeasurestoreducethem.Itsmainunderlyingprinciplesare:objectivity,dualcontrolof
anyoperation,centralizedmanagement,separationofduties,independence,clearlydefinedlevelsof
competenciesandauthority,adequacyoftheintrabankrequirementstothenatureandvolumeof
activity, effective mechanisms for internal audit and control.
The Bank meets the requirements of
currentlegislationtocreditinstitutionsforthepreparationandmaintenanceofcurrentrecoveryplans
incaseofpotentialoccurrenceoffinancialdifficultiesandforthecontinuityofprocessesandactivities,
includingwithregardtorecoveryofallcriticalfunctionsandresources.
LINESOFDEFENCE
The risk management framework of First Investment Bank is structured in accordance with the
principleandmodelofthethreelinesofdefensewhichisincompliancewiththeBaselCommitteefor
BankingSupervisionprinciplesforcorporategovernanceinbanks:
Firstlineofdefence:thebusinessunitswhichtaketheriskandareresponsibleformanaging
it,includingthroughidentification,assessment,reportinginaccordancewithcurrentlimits,
proceduresandcontrolsimplementedintheBank;
Second line of defence: the Risk Management and Compliance functions which are
independentofthefirstlineofdefence.TheRiskManagementfunctionmonitors,assesses
and reports risks, while the Compliance function monitors and controls the maintaining of
internalregulationsincompliancewiththeapplicableregulatoryprovisionsandstandards;
Thirdlineofdefence:InternalAuditwhichisindependentofthefirstandthesecondlinesof
defence. It provides an independent review of the quality and effectiveness of risk
management,businessprocessesandbankingactivity,aswellasofthebusinessplanningand
internalpoliciesandprocedures.
TheBank’s policiesoninternalgovernancewithrespecttothe internalcontrolframeworkandthe
independentriskmanagement,complianceandauditfunctionsareinaccordancewiththeapplicable
requirementsinthissphere,includingOrdinanceNo10oftheBNBontheOrganisation,Governance
andInternalControlofBanks,OrdinanceNo7oftheBNBonOrganisationandRiskManagementof
BanksandtheEBAGuidelinesoninternalgovernance.
STRUCTUREANDINTERNALORGANISATION
FirstInvestmentBankhasadevelopedriskmanagementandcontrolfunction,organizedinlinewith
recognizedinternationalpractices and standards, under the managementofaChiefRiskOfficer(a
memberoftheManagingBoard)withappropriateexperienceandqualificationsanddirectlyreporting
totheRiskCommitteeoftheSupervisoryBoard.
TheChief RiskOfficerorganizestheoverall riskmanagementframeworkoftheBank,managesthe
process of its implementation, coordinates the activities of the risk committees of the Bank, and
controls the credit process in its entirety, including the process of collection of problem loans. He
ensurestheeffectivemonitoring,measuring,controllingandreportingofalltypesofrisktowhichthe
Bankisexposed.
FirstInvestmentBankhasalsodevelopedacompliancefunction,whosemainobjectiveistoidentify,
assess,monitorandreporttheriskofnon‐compliance.Thefunction ensures the compliance of
activitieswithregulatoryrequirementsandrecognizedstandards,andsupportstheManagingBoard
and senior staff in the management and control of this risk. The function is organized under the
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subordinationtotheChiefExecutiveOfficer,withdirectreportingtotheRiskCommitteeand/orthe
SupervisoryBoard.TheChiefExecutiveOfficerensurestheorganizationforapplyingthecompliance
functionwithin the Bank, as well asits integration in the established risk management framework
acrosstheBank,byallbusinessunitsandatalllevels.
FirstInvestmentBankmaintainsaninformationsystemallowingforthemeasurementandcontrolof
risksthroughtheuseofinternalratingmodelsforassessmentofthequalityoftheborrower,assigning
ofcreditratingtoexposure,andobtainingquantitativeassessmentofrisk.Theinformationsystem
ensures maintenance of a database and subsequent processing of data for the purposes of risk
management,includingforpreparationoftheregularreportsnecessaryformonitoringtheriskprofile
oftheBank.
COLLECTIVERISKMANAGEMENTBODIES
TheoverallprocessofriskmanagementiscarriedoutundertheguidanceoftheManagingBoardof
FirstInvestmentBank.TheSupervisoryBoardexercisescontrolovertheactivitiesoftheManaging
Boardonriskmanagement,liquidityandcapitaladequacy,directlyand/orthroughtheRiskCommittee
whichfunctionsasanauxiliarybodytotheSupervisoryBoardinaccordancewithexistinginternalbank
rulesandprocedures.
Risk committee advises the Supervisory Board and the Managing Board in relation to the overall
current and future strategy on ensuring compliance of the risk policy and risk limits, risk‐taking
propensityandcontrolonitsexecutionbytheseniormanagement.Asat31December2021,theRisk
CommitteeconsistedofthreemembersoftheSupervisoryBoardofFirstInvestmentBankAD.The
ChairmanoftheRiskCommitteeisMr.JyrkiKoskelo,independentmemberoftheSupervisoryBoard.
ForsupportingtheactivityoftheManagingBoardinmanagingthevarioustypesofrisks,thefollowing
collectivemanagementbodiesoperateattheHeadOfficeofFirstInvestmentBank:aCreditCouncil,
an Asset, liability and Liquidity management Council (ALCO), a Restructuring Committee and an
OperationalRiskCommittee,whichcarryouttheiractivitiesonthebasisofwrittenstructure,scopeof
activitiesandfunctions.
The Credit Council supportsthe managementof the credit riskundertaken bytheBank by issuing
opinionsonloantransactionsinaccordancewiththeauthoritylevelassignedthereto,includingwith
regards to proposals from the operational/business units in theHeadOffice,aswellasfromthe
branchesoftheBankinthecountryandabroad.TheChairmanoftheCreditCouncilistheChiefRisk
Officer (CRO), while the other members include the Chief Corporate Banking Officer (CCBO), the
DirectorandMemberoftheManagingBoardregardingSMEBanking,aswellastheDirectorofthe
CreditRiskManagement,MonitoringandProvisioningdepartment.
TheAsset,liabilityandLiquiditymanagementCouncil(ALCO)isaspecializedcollectivebodywhich
advises the Managing Board on matters relating to implementing the policy for asset and liability
management,andmaintainingadequateliquidityintheBank.Itcarriesoutsystematicanalysisofthe
interest‐ratestructureofassetsandliabilities,ofthematurityladderandofliquidityindicators,witha
viewtopossibleearlywarningandtakingactionsfortheiroptimization.TheChairpersonofALCOis
theChiefExecutiveOfficer(CEO),andothermembersinclude,theChiefFinancialOfficer(CFO),and
thedirectorsoftheTreasury,RiskAnalysisandControl,Retail Banking and Corporate Banking
departments.
The Restructuring Committee is a specialized internal bank body responsible for the monitoring,
evaluation, classification, impairment and provisioning of risk exposures and commitments. It also
givesmotivatedwrittenproposalstotheManagingBoard,anddecidesonrestructuringofexposures
accordingtothecurrentauthoritylevelsintheBank.TheChairmanoftheRestructuringCommitteeis
theChiefExecutiveOfficer(CEO),whiletheothermembersinclude:theChiefRiskOfficer(CRO)and
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thedirectorsoftheImpairedassets,theIntensiveLoanManagement;andarepresentativefromthe
Legaldepartment.
The Operational Risk Committee is an advisory body to the MB, designed to help the adequate
management of operational risk by monitoring and analyzing operating events. The Committee
proposesmeasurestominimizeoperationalrisks,aswellaspreventionmeasures.TheChairmanof
theOperationalRiskCommitteeisthedirectorofRiskAnalysisandControldepartmentandtheother
membersarethedirectorsofthefollowingdepartments:CardPayments;Compliance–Regulations
andStandards;Accounting,InformationTechnologyandBranchNetwork.
Apartfromthecollectivemanagementbodies,theriskfunctioninFirstInvestmentBankisexecuted
bytheRiskAnalysisandControldepartment,theCreditRiskManagement, Monitoring and
ProvisioningdepartmentandthespecializedunitforStrategicRiskManagement(RiskManagement
Directorate), as well as the Compliance function – by departments Compliance – Regulations and
Standards,Compliance–SpecializedMonitoringandControl,specializedunitCompliance–investment
servicesandactivitiesandDataprotectionofficer(ComplianceDirectorate),whichareindependent
(separatefromthebusinessoftheBank)structuralunitsintheorganizationalstructureoftheBank.
TheRiskAnalysisandControldepartmentperformsfunctionsfortheidentification,measurementand
managementofthevarioustypesofrisksinherentintheBank’sactivity.Thedepartmentmonitorsthe
determinedlevelsofriskappetiteandrisktolerance,isresponsiblefortheimplementationofnew
requirements relating to risk assessment and capital adequacy, and assists other departments in
carryingouttheirfunctionsrelatedtoriskmanagementandcontrol.
The Credit Risk Management, Monitoring and Provisioning department performs the functions of
management and monitoring of credit risk, and exercises secondary control over risk exposures
accordingtothecurrentauthoritylevelsonloantransactionsintheBank.Thedepartmentmanages
theprocessofcategorizationofcreditexposures,includingtheassessmentofpotentiallosses.
ThespecializedunitforStrategicRiskManagementaimsatidentifyingandassessingthestrategicrisk,
including the main risks in the Bank’s strategic projects, as well as analyzing the realistics of the
assumptionsembeddedinthestrategiesoftheBankwithrespect to changes in the external
environmentandthemarketsitoperatesin.
The Compliance – Regulations and Standards department carries outtheactivitiesofidentifying,
assessing and managing the risk of non‐compliance, ensures adequate and legitimate internal
regulatoryframeworkinthestructureoftheBank,andmonitorsforcomplianceoftheBank'sproducts
andserviceswithexistingregulations.Italsomanagesandanalysesthecustomersatisfactioninthe
Bankinrelationtocustomercomplaints.
The Compliance – Specialized Monitoring and Control department carriesouttheBank'sactivities
relatedtothepreventionofmoneylaunderingandfinancingofterrorismasaspecializedofficeunder
Art.106oftheLawonMeasuresagainstMoneyLaundering(LMAML),andexercisescontroloverthe
applicationofrequirementsforcombatingandpreventingfraud.
ThespecializedunitCompliance–investmentservicesandactivitiesexecutesongoingcontroloverthe
execution of the regulatory requirements with respect to the Bank’s activity as an investment
intermediaryandonthemarketabusewithfinancialinstruments.Aspartofthecompliancefunction
thereisaDataprotectionofficer–forfurtherinformationseesection„PersonalDataProtection“.
SYSTEMOFLIMITS
FirstInvestmentBankappliesasystemofinternallimitsfordifferenttypesofrisks,inlinewiththe
regulatory requirements and the Bank's risk management strategy, including limits by
client/counterparty, type of instrument and portfolio, sector, market, etc. The limits applied are
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monitored on a regular basis and are subject to periodic review and update in line with the risk
appetite,marketconditionsandcurrentregulatoryframework.
Formoreinformationontheinternallimitsfordifferenttypesofrisk,seethesubsectionsoncreditrisk,
marketrisk,liquidityrisk,operationalrisk,aswellastheConsolidatedFinancialStatementsfortheyear
ended31December2021.
RECOVERYPLAN
InpursuanceoftheLawonRecoveryandResolutionofCreditInstitutionsandInvestmentFirms,banks
inthecountryarerequiredtoprepareandmaintainrecoveryplansincaseofpotentialoccurrenceof
financialdifficulties.
In2021,FirstInvestmentBankupdateditsrecoveryplan,calibratingtherecoveryindicatorsinline
with the regulatory requirements and current macroeconomic environment, so as to provide for
accountabilityandefficiencyinthemanagementofrisksandfinancialresourcesofBank.Inconnection
with the minimum requirements for own funds and eligible liabilities, new measures/options and
indicatorswereadded,structuredasapercentageofthetotalriskexposureamount(TREA)andthe
leverage ratio exposure measure (LRE). Aggregate information concerning the overall recovery
capacitywasfurtherelaborated,includingwithregardtothetimeaspectandtheeffectsofmeasures
oncapitalandliquidity.
TheRecoveryplanincludesthedetailedprocessofescalationanddecision‐making,aswellastheunits
andbodieswithintheBankresponsibleforitsupdatingandimplementation.Itincludesquantitative
and qualitative early warning and recovery indicators, based on a wide range of capital, liquidity,
profitability,assetquality,market‐basedandmacroeconomicindicators,upontheoccurrenceofwhich
aphasedprocessis initiated,involvinganalysis andidentificationofthebestwaytoovercomethe
crisissituation,aswellastakingdecisionstotriggertheappropriate actions according to the
proceduresforreportingandescalation.
Forthepurposesoftheplan,thekeybusinesslinesandthecriticalfunctionsoftheBankhavebeen
identifiedthatarenecessaryforitssmoothoperation.Accordingtotheapplicablerequirementsand
inordertodeterminetherangeofhypotheticalevents,different stress scenarios of idiosyncratic,
systemic and combined shock have been defined, against which effective recovery measures have
beenidentified.
In connection with the implementation of the plan, an effective process of communication and
disclosurehasbeenstructuredinFirstInvestmentBank,includinginternalcommunication(tointernal
bankbodiesandemployees)andexternalcommunication(tosupervisors,shareholdersandinvestors,
customersandcounterparties,andotherstakeholders),aswellasmeasuresforthemanagementof
potentialnegativemarketreactions.
Theprimarymechanismsandtoolsforthemanagementofdifferenttypesofriskaresummarized
below:
CREDITRISK
Creditriskistheriskarisingfromthedebtor’sinabilitytomeettherequirementsofacontractwiththe
bankorinabilitytoactinaccordancewiththeagreedterms.Thedifferenttypesofcreditriskinclude
concentrationrisk,residualrisk,dilutionrisk,counterpartyrisk,andsettlementrisk.Creditriskisthe
majorsourceofrisktothebankingbusinessanditseffectiveassessmentandmanagementarecrucial
forthelong‐termsuccessofcreditinstitutions.
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First Investment Bank manages credit risk by applying internal limits on exposures, on
customers/counterparties, types of instruments, industry sectors, markets, by written rules and
procedures, by internal rating and scoring models, as well as by procedural requirements in the
originatingandmanagingofloanexposures(administration).
The internal bank regulations regarding credit risk are structured in accordance with the business
modelandorganizationoftheactivity,aswellasincompliancewiththeregulatoryrequirementsand
recognizedbankingpracticesandstandards,whichincludeinternalrulesforlendingandmanaging
problemexposures,rulesforimpairmentandtheprovisioningofriskexposures,approvallevelsinthe
originationofloanexposures,aswellasthemethodologyforconductingofcreditanalysisandinternal
credit ratings (scoring models) regarding the creditworthiness ofcustomers.Internalrulesand
proceduresareupdatedregularlywiththeaimofidentifying,analyzingandminimizingpotentialand
existingrisks.Theappliedlimitsoncreditriskexposuresaremonitoredonanongoingbasisandin
compliancewiththemarketconditionsandregulatoryframework.
LOANPROCESS
TheloanprocessinFirstInvestmentBankisautomatedthroughaWorkflowsystemintegratedwith
the main information system of the Bank, which includes controls and authority levels when
consideringtransactions.ApprovedtransactionsareadministeredcentrallybytheLoanAdministration
department,applyingthe"foureyes"principle“.
In 2021, the Bank introduced a new advanced Business Process Management (BPM) system for
processingretailloanapplications(NewWorkflow).Itcoversthestepsofacceptingloanapplications,
givingopinions,approvingandgrantingnewloanstoindividuals,aswellasrenegotiatingthetermsof
existing ones, with integrated applicable limits and levels of authority for granting/renegotiating
differenttypesofloansexposures.
In2021,changesweremadeinthelevelsofauthorityforapprovalofcredittransactions,mainlyin
ordertooptimizetheinternaldecision‐makingprocesseswhenrestructuringexposures,includingwith
regardtothecompetencesoftheRestructuringCommitteeasacollectivemanagementbodyandof
thedepartmentsinvolved.ThecompositionoftheRestructuringCommitteewasoptimized,raisingits
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levelbytheinclusionoftwomembersoftheManagementBoard.Duringtheyearchangeswerealso
madein the guidelines for acceptance and processingof documentsforlendingtoindividualsand
micro‐enterprises,withtheaimoftheirfurtherimprovement.Inconnectionwiththerequirementsof
theprivatemoratoriumapprovedbytheBNB,thetermsforrenegotiationofcredittransactionswere
extendedinthecorrespondingmethodology.
FirstInvestmentBankmaintainssystemsfortheongoingadministeringandmonitoringofdifferent
portfoliosand exposures tocredit risk, including aiming at recognizing and managing exposures in
default and performing adequate value adjustments for credit risk. Considering the impact of the
economiccycle,Fibankmanagesexposuresindefaultwithaviewtotheirtimelydiagnosisandtaking
measuresconsistentwiththerepaymentcapacityoftheclientsandtheBank’spolicyonrisk‐taking.
The monitoring system of the Bankaswellastheinternalprocedures for monitoring of credit
exposuresaresubjecttoregularreviewandupdate,includingwithrespecttotheearlywarningsignals.
Duringtheperiodwereupdatedsignalsforprobabiitiyofdelay/overdueinordertocreditworthiness
assessmentandtoindicatetheprobabilityofnon‐payment.
IntheBankadepartmentfunctionsforIntensiveloanmanagement,whichmanagestheexposuresof
customers transferred from the business units with increased credit risk compared to the initial
disbursement of the loan, as well as from the impaired assets unit, when there are indicators for
recoveryoftheexposureandobjectivepossibilityforfutureregularservicing.Duringtheyearwere
developedtheinternalrilesformanagementofdeterioratingexposures,withtheaimatstimulating
theactivitiesrefferedtotheintensivecreditmanagementaccordingtotheRulesforprecesstransfer
ofcreditexposuesandthedifferentphasesofthelife‐cycleoftheloan.
MODELSFORCREDITRISKMEASUREMENT
FirstInvestmentBankappliesinternalcreditriskmodelstoassesstheprobabilityofdefault(PD),loss
given default (LGD), and exposure at default (EAD) which allowsthecalculationofrisk‐adjusted
returns.Allcreditriskexposuresarecontrolledonanongoingbasis.
The framework, defined in accordance with the Basel standards, sets minimum regulatory capital
requirements to cover financial risks. In addition to regulatory capital, First Investment Bank also
calculateseconomiccapitalwhichisincludedintheinternalmeasurementandmanagementofrisk.
Economiccapitalismaintainedforthepurposeofprotectionandcoveringofunexpectedlossesarising
frommarketconditionsorevents.
For further information regarding economic capital see subsection „Internal Capital Adequacy
Analysis“.
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TheBank uses internal modelsforcreditassessmentof businessandretailcustomers. Assessment
modelsarebasedonquantitativeandqualitativeparameters,weightsofindividualparametersbeing
defined on the basis of historical experience. Business clientsareassignedacreditrating,while
individualsarebasedonscoring.Anadditional assessmentforbusinessclientsis made basedona
behavioral scoring model. The credit risk assessment derived from the rating models is further
examinedbyacreditspecialist/riskmanager.
The Bank has project finance evaluation models (including for real estate, industrial projects and
financingofindividualfixedassets),applyingquantitativeanalysis(basedonestimatedcashflows)and
qualitative evaluation of the project and investor management, market environment and credit
structuring,aswellasaseparateevaluationoftheassetsbeingfunded.
AllriskassessmentmodelsareadoptedbytheManagingBoard,proposedfortheirreviewafterprior
approvalfromtheChiefRiskOfficer.
ThereisastructuredprocesswithintheBankforassessmentandvalidationoftheriskmanagement
modelstoensuretheirreliability,accuracyandeffectiveimplementation.Itenvisagesthepreparation
of regular validation reports in the Bank: brief/monitoring quarterly reports and extended annual
validationreports,coveringbothquantitativeanalysis(statistical,econometricandotherquantitative
approaches) and analysis of the qualitative (non‐statistical) characteristics, in compliance with the
currentregulatoryrequirementsandgoodbankingpracticesinthearea.
CREDITRISKMITIGATIONMETHODS
Creditriskismanagedalsobyacceptanceofguaranteesandcollateral of types and in amounts
accordingtothecurrentregulationsandtheBank’sinternalrulesandrequirements.FirstInvestment
Bankrequirescollateralforcreditriskexposures,includingforcontingentliabilitieswhichbearcredit
risk.ForreductionofthecreditrisktheBankappliesestablishedtechniques,proceduresandrules,
ensuring effective credit protection, including through the monitoring and control of residual risk.
Securedprotectionisensuredbyassetswhichareliquidenoughandhaverelativelyunchangingvalue
intime.TheBankappliesinternalwrittenrulesregulatingeligiblecollateralsbytypeandamount,in
compliancewiththeregulatoryrequirementsfortheirrecognition,aswellasthelegalrequirements
forsupportingdocumentation.Forreductionofcreditrisk,FirstInvestmentBankappliesthefinancial
collateralsimplemethodundertherequirementsofRegulation(EU)No575/2013.
First Investment Bank currently monitors the relative regulations, as well as the acknowledged
standardsandgoodpracticesinthisarea,aimingconstantlyatfurtherdevelopmentandenhancement
of the rules and processes existing in the Bank with respect to the acceptance, evaluation and
managementofcollaterals,includingwithregardstothemethodsforevaluation.In2021theinternal
rules for management of collaterals are enhanced, incl. by implementing the requirements for
appraisersrotationaftersurtainnumberofsuccessivevaluationsofthesameasset,inaccordance
withGuidelinesonloanoriginationandmonitoring(EBA/GL/2020/06).
PROBLEMEXPOSURESANDSTRATEGYFORTHEIRREDUCTION
FirstInvestmentBankhasinternalrulesandwrittenprocedures for managing problem credit
exposures, which include all main actions related to the management of problem loans, including
analysisandassessmentofriskexposures,restructuringandrecovering,enforcedcollection,saleand
writingoffofproblemexposures.Fibankusesalsoaspecializedsystemfortheintegratedmanagement
ofproblemassets,whichincludesallstagesformonitoringandrecoveryofreceivables.Duringthe
yeartheinternalprocessesandruleswereupdated,aimingmoreeffectivemanagementofproblem
andrestructuredexposures.
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Among the strategic priorities of the Bank regarding its risk profile is reducing the portfolio of
nonperformingexposures,asinthisregardaStrategyforreductionofnonperformingexposuresand
repossessedassetsfortheperiod2021‐2023wasdevelopedandadopted,aswellasanoperatingplan
for its implementation, in which measures adequate to the business model and risk profile were
identifiedalignedwiththeEBAGuidelinesonmanagementofnonperformingandforbornexposures
(EBA/GL/2018/06).In2021,theBankcontinuedtotofollowthesetgoalsandprioritiesinit,which
included:
Regularwrite‐offoffullyimpairedanduncollectiblecreditexposuresandsaleofportfoliosof
non‐performingexposures,insuchvolumeandtimehorizonasthemarketdynamicsallow
andthepricesoffered;
Achievingstablerecovery,coveringtheentirelifecycleofcreditexposuresandperfectingthe
practicesandprocessesinordertoachievehigherrecoveryrates;
Improvingthewaysandmethodsforrestructuring,aimedatincreasingcollectionsfromnon‐
performingexposures;
Reduction of the risk profile of the loan portfolio and applying a conservative approach in
collateralvaluation;
Reductionoftherelativeweightofthe portfolioofforeclosedassetsintheBank'sbalance
sheetinordertofreeupcashresourcesandreducerisk.
Duringtheyear,twosalesweremadeofnon‐performingretailportfolios(consumerloans,creditcards
andoverdrafts)amountingtoatotalofBGN43million,andconsistentactionsandmeasureswere
continuedtoreduceproblemexposuresbyimprovedcollectionsandwrite‐offs.Asaresult,netnon‐
performingexposuresoftheGroupdecreasedby11.4%orbyBGN172,583thousandYOY.Asat31
December2021,thenonperformingloan(NPL)ratiocalculatedinaccordancewiththerequirements
oftheEuropeanBankingAuthoritydecreasedby2.1percentagepointsto15.1%ofgrossloansand
advances under the FinREP financial reporting framework, and under the broader definition of
nonperformingexposure(NPE)ratioitdecreasedby2.3percentagepointsto12.7%ofgrossloansand
advancesanddebtinstrumentsotherthanheldfortrading.
In 2021, First Investment Bank continued to apply the Procedurefordeferralandsettlementof
liabilitiespayabletobanksandtheirfinancialinstitutionsubsidiariesinconnectionwiththeCOVID‐19
pandemic,preparedbytheAssociationofbanksinBulgariaandapprovedbytheBNB,inlinewiththe
terms and conditions of its application. The document represents private moratorium under the
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meaningofEBAGuidelinesonlegislativeandnon‐legislative(private)moratoriaonloanrepayments
applied in the light of COVID‐19 crisis (EBA/GL/2020/02), according to which in managing loan
exposures,incl.theirqualificationasnonperformingtheBankappliesthetemporarymeasurestating
thatdeferralonsuchexposuresshallnotleadtotheirre‐classificationundertheformofrestructuring
ordefault.
IMPAIRMENTANDPROVISIONINGOFRISKEXPOSURES
Withrespecttoimpairmentandprovisioningofriskexposures,FirstInvestmentBankapplieswritten
rules, which are structured based on the principles of individual and portfolio evaluation of risk
exposures,dependingontheclassificationandamountofexposure.Forexposuresreportedasnon‐
performing specific impairment is determined, calculated on thebasisofindividualcashflowsfor
individuallysignificantexposures,oronportfoliobasisfortheothers.Regardingexposuresreported
asperforming,theBankappliesimpairmentonaportfoliobasis(takingintoaccountpotentiallosses),
grouping exposures with similar credit risk characteristics. According to IFRS9 an allowance for
impairmentlossiscalculatedequaltotheexpectedcreditlossesoverthelifeoftheinstrument,ifthe
credit risk of the financial instrument has increased significantly since the original recognition.
Otherwise,anallowanceforimpairmentlossesiscalculatedequaltotheexpectedcreditlossesovera
12‐monthhorizon.
TheBankhaswrittenparametersfordefiningtheincreasedcreditrisk,whichincludesdayspastdue,
aswellasotherindicatorsi.e.presenceofforbornemeasures,deteriorationintherating/scoringof
theclientandothers,aswellasdefiningtheparametersformeetingthe cash flow test for solely
paymentsofprincipalandinterest(SPPItest),includingdefiningneworchangedcreditproducts.
In2021,theBankupdateditsinternalrulesforprovisioningandimpairment,aimingtocomplywith
the new requirements on materiality tresholds according the Ordinance No 7 of BNB on the
organizationandmanagementofrisksinbanks,aswellasimplementinginthesystemsoftheBankof
thedefinitionofdefaultinlinewiththeGuidelinesontheapplicationofthedefinitionofdefaultunder
Article178ofRegulation(EU)No575/2013(EBA/GL/2016/07).
Formoreinformationoncreditrisk,seenote3“RiskManagement”fromtheConsolidatedFinancial
Statementsfortheyearended31December2021.
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MARKETRISK
Marketriskistheriskoflossesduetochangesinthepriceoffinancialinstrumentsresultingfrom
generalriskfactorsinherentinthemarketsandnotrelatedtothespecificcharacteristicsofindividual
instruments,suchaschangesininterestrates,exchangeratesand/orspecificriskfactorsrelatingto
theissuer.
Themanagementofmarketriskisbasedonapplyinginternallimitsandwrittenrulesandprocedures
withrespecttotheprocessesandcontrolenvironment.Forthepurposeofassessingandminimizing
marketrisktheBankappliesinternalmodelsforassessment,whicharebasedonthe“ValueatRisk”
(VaR)concept,andinadditionotherdurationanalyses,calculationofstressedVaR,stresstestsand
scenariosareused.ThelimitsappliedbytheBankfordebtandcapitalinstrumentsarestructuredwith
the aim of minimizing the risk and applying a wide and risk‐basedframeworkoflimits,whichare
directlyconnectedwiththeriskprofileoftheinvestments,aswellaswiththedynamicsoftherisk
profileintime.
In2021,theBankenhanceditsapproachesbyapplyingauniformframeworkregardingitslimitson
investments in debt securities to governments and financial institutions in accordance with the
developmentofmarketconditionsandopportunitiestogeneratereturnsandreturns.
POSITIONRISK
Positionriskistheriskofchangesinthepricesofdebtandequity instruments as a result of
circumstancesrelatedtotheissuerand/orchangesinmarketconditions.Positionriskincludesgeneral
andspecificposition/pricerisk.
ItisthepolicyoftheBanktomaintainaninsignificanttradingportfolioinaccordancewiththecriteria
ofRegulation(EU)№575/2013.Therefore,itdoesnotcalculatecapitalrequirementsforinterestrate
andpricingriskinthisportfolio.
Forquantifyingmeasurementoftheinterestrateandpositionriskinthetradingportfolio,theBank
appliesVaR analysiswitha1‐dayhorizonand 99%confidencelevel,whichmeansthat thereis1%
probabilityforthetradingportfoliotodepreciatewithina1‐dayintervalmorethanitscalculatedVaR.
Themodeliscalculatedandmonitoredonadailybasisbyestimatingthemaximumlossthatcould
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occuroveraspecifiedhorizonundernormalmarketconditions,dueto theadversechangesinthe
marketrates,ifthepositionsremainedunchangedforthespecifiedtimeinterval.
IncompliancewiththeEuropeanBankingAuthorityguidelines,theBankmeasuresstressedvalueat
risk (sVaR) of the debt securities portfolio, where model inputsarecalibratedsoastoreflectan
extendedperiodofsignificantstressintheinternationalfinancialmarkets.
INTERESTRATERISKINTHEBANKINGBOOK
Interestrateriskinthebankingbookostheriskfromnegativeeffectontheeconomicvalueofthe
capitalandthenetinterestincomeoftheBankduetochangeinthemarketinterestratelevels.
FirstInvestmentBankmanagesthistypeofriskthoughwrittenrules,limitsandproceduresaimedat
reducingthemismatchbetweentheinterestratesensitivityofassetsandliabilitiesincompliancewith
theEBAGuidelinesonthemanagementofinterestrateriskarisingfromnon‐tradingbookactivities
(EBA/GL/2018/02) and the requirements of Ordinance No 7 of the BNB on Organisation and Risk
ManagementofBanks.Interestrateriskinthebankingbookismeasuredusingmodelsthatassessthe
impactofinterestratescenariosontheeconomicvalueoftheBankandonnetinterestincome.The
interest rate risk assessment framework in the banking book (IRRBB) takes into account various
sourcesoftheIRRBB,incl.theriskofmismatch,underlyingandoptionrisk,andtheriskofchangein
thecreditspreadsoffinancialinstruments(CSRBB).ThesetofstressscenariosappliedbytheBank
includesthoserelatedtonon‐parallelchangesintheinterestratecurve,aswellastakingintoaccount
anumberofbehavioralfeaturesincashflows,inthecontextofdifferentstressscenarios.
Asat31December2021theinterestrateriskontheeconomicvalueoftheGroup(IRRBB)followinga
standardizedshockof+100/‐100bpwasBGN+12.3/+35.4million,whileonthenetinterestincome
oneyearforwardwasBGN‐1.6/+0.6million.
CURRENCYRISK
Currencyriskistheriskoflossresultingfromanadversechangeinexchangerates.Fibank’sexposure
tocurrencyriskarisingfrompositionsinthebankingandtradingbookislimitedbytheapplicationof
regulatory‐requiredandinternallimits.
TheBankactivelymanagestheamountofitsoverallopenforeignexchangeexposure,andseeksto
maintainnegligiblelevelsofcurrencymismatchesinitsentireactivity.Inaddition,FirstInvestment
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Bankcalculatesandapplieslimits,basedonaninternalVaRmodel,regardingthemaximumlossthat
couldbeincurredwithin1dayataconfidencelevelof99.0%.
TheBankisalsoexposedtocurrencyriskasaresultofproprietarytradingtransactions.Thevolumeof
suchtransactionsisverylimitedandcontrolledthroughlimitsonopenforeigncurrencypositions,and
stop‐losslimitsonopenpositions.
COUNTERPARTYRISKANDSETTLEMENTRISK
Counterpartyrisk(counterpartycreditrisk)istheriskthatacounterpartyinaparticulartransaction
will default before the final settlement of the cash flows of the transaction. It arises mainly from
transactions in derivative instruments, repo transactions, securities and commodities
lending/borrowingtransactions,marginlendingtransactionsandextendedsettlementtransactions.
The Bank manages and controls this type of risk by applying limits and minimum credit quality
requirementstocounterparties/issuers.
SettlementriskfortheBankistheriskofoutstandingtransactions in securities, commodities or
currency.Itarisesbothintransactionswithsettlementservicesontheprincipleof"deliveryversus
payment" (delivery versus payment ‐ DvP) and in trade without DvP ("free deliveries"). For DvP
transactions,theBankassessestheriskthatthepricedifferencebetweentheagreedsettlementprice
fortherespectiveinstrumentanditscurrentmarketvaluewillleadtoalossfortheBank.Forthose
related to "free deliveries", the risk is controlled by applying internal credit quality limits to
counterparties/issuers.
For further information regardingmarketriskseenote3“Riskmanagement” of the Consolidated
FinancialStatementsasat31December2021.
LIQUIDITYRISK
Liquidity risk originatesfrom the funding of the banking businessandinpositionsmanagement.It
includestheriskoffailuretomeetapaymentwhendue,orfailuretosellcertainassetsatafairprice
andintheshorttermtomeetanobligation.
First Investment Bank manages liquidity risk through an internal system for monitoring and daily
liquidity management, maintenance of a sufficient amount of cash consistent with the currency
structureof assetsandliabilities andmaturityladder,regular gapanalysisofinflowsandoutflows,
maintainingalowriskportfolioofassetstomeetcurrentliabilities,andoperationsontheinterbank
market.
Inordertomaintainamedium‐lowriskprofile,Fibankhasestablishedanadequate frameworkfor
liquidity risk management. The Bank's policy on liquidity management is designed so as to ensure
meeting all obligations even under stress originating from the external environment or from the
specificsofbankingactivity,aswellastomaintainanadequatelevelandstructureofliquidbuffers
andapplyappropriatemechanismsforthedistributionofcosts,profitsandrisksrelatedtoliquidity.
TheBankappliesacombinationofmethods,financialmodelsandinstrumentsforassessmentand
management of liquidity, including the requirements for reporting and monitoring of the liquidity
coverageratio(LCR)andnetstablefundingratio(NSFR)incompliance with Regulation (EU) No
575/2013andtheapplicabledelegatedregulationsoftheEuropeanCommission.Inordertoreduce
theliquidityrisk,preventivemeasureshavebeentakenaimedtoextendthematurityofborrowings
from customers, to encourage long‐term relationships with clientsandtoincreasecustomer
satisfaction.Inordertoadequatelymanageliquidityrisk,theBankmonitorscashflowsonadailybasis,
andalsomaintainsamaturityladder,whichispartoftheadditionalliquiditymonitoringindicatorsand
atoolfordetailedmonitoringofcashinflowsandoutflowsbymaturityinterval.
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Asregardsasset/liabilityandliquiditymanagementpolicies,FirstInvestmentBankappliesthebusiness
modelrequirementsandthecriteriaforclassificationandvaluationoffinancialassetsintheBank's
portfolios in accordance with IFRS 9. Based on the purpose for managing the financial assets, the
businessmodelsappliedbytheBankinclude:1)abusinessmodelwhosepurposeistheassetstobe
heldtocollectcontractualcashflows(holdtocollect);2)abusinessmodelwhosepurposeisbothto
collectcontractualcashflowsaswellassaleoffinancialassets(holdtocollectandsell);3)another
business model when the purpose is different from the previous two business models, and which
includesassetsheldfortrading.
DuringthereportingyeartheGroupofFibankmaintainedanadequatevolumeofliquidassets,asat
31 December 2021 the ratio of liquid assets covering the attracted funds due to other customers
amountedto29.46%,whichwassignificantlyabovetheBNBrecommendedlevelof20%.Accordingto
the regulatory requirements the Bank should maintain a buffer of liquid assets to ensure liquidity
coverageofnetliquidityoutflowsovera30‐calendardaystressperiodwithaminimumamountof
100%.Attheendofthereportingperiod,theliquiditycoverageratio(LCR)amountedto256.37%on
aconsolidatedbasis(2020:257.17%).
First Investment Bank also calculates a net stable funding ratio (NSFR), which is an instrument
introducedtoensurethatlong‐termliabilitiesareadequatelycoveredbystablefinancingtoolsboth
undernormalcircumstancesandinstressconditions.
At year‐end, the net stable funding ratio amounted to 139.81% on a consolidated basis (2020:
134.47%)andwasabovethereferencevalueof100%inaccordancewithRegulation(EU)2019/876of
theEuropeanParliamentandoftheCouncilof20May2019amendingRegulation(EU)No575/2013
asregardstheleverageratio,thenetstablefundingratio,requirementsforownfundsandeligible
liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to
collective investment undertakings, large exposures, reporting and disclosure requirements, and
Regulation(EU)No648/2012.
INTERNALLIQUIDITYADEQUACYASSESSMENTPROCESS
FirstInvestmentBankpreparesaregularreportontheinternalliquidityadequacyassessmentprocess
(ILAAP),aimedatperformingacomprehensiveinternalassessmentoftheliquiditymanagementand
fundingframeworkoftheBankinthecontextofitsstrategyandriskappetiteintermsofliquidity.
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In2021,aspartofitsannualreviewprocess,theBankupdateditsILAAPreport,includingwithregard
toinformationonliquiditygenerationcapacity,liquiditybufferstrategy,survivalperiods,aswellas
resultsofstressscenariosandstresstestsused.Informationonencumberedassetsandonfinancing
planimplementation was further developed.The internal liquidityindicatorsaresetincompliance
with the requirements for consistency with the Recovery Plan levels, the latter being part of the
monitoringandearlywarningsystemincorporatedintheBank'sriskmanagementframework.With
respect to theinternal processesand organization on ILAAP the CFO has general responsibility for
controllingtheprocessforupdating,formakingproposalsforamendmentsonthedocument,aswell
asensuringcontrolbeforepresentingforapprovalfromthecompetentbodieswithintheBank.
During the period, the internal processes related to ILAAP wereimprovedbystructuringanew
Methodologyforinternalliquidityadequacyassessmentwhichdescribestheapproachestopreparing
andupdatingtheILAAPreport,includingthekeycomponentsinaccordancewiththeEBAGuidelines
onICAAPandILAAPinformationcollectedforSREPpurposes.
The assessment takes into consideration the systems and processes existing in the Bank for
managementofrisksrelatedtoliquidityandfunding,includinginformationonthedailymanagement
ofliquidityriskandontheallocationofcostsandbenefitsrelatedtoliquidity,whicharedetermined
basedonamethodologyforinternaltransferprices(ITP)introducedintheBank.TheILAAPalsotakes
intoaccountthefundingstrategyoftheBank,includingthefundingplanswithinathree‐yearhorizon,
aswell as the strategy on maintaining liquidity buffers and monitoring of encumbered assets. The
quantitativemeasurementsofthereadinessoftheBanktodealwithasuddenandsignificantoutflow
of borrowings (liquidity crisis) are established through stresstestsandscenarioanalyses.Forthe
purposes of ILAAP, First Investment Bank applies a combination of three stress scenarios: of
idiosyncratic,marketandcombinedshock,withahorizonofoneweekandonemonth,whichtakeinto
accountthestabilityofthedepositbaseandthesensitivityofthecustomers.
ToensureadequatecapacityoftheBanktomeetallitsobligationsandcommitments,evenin the
contextofaliquiditycrisis,FirstInvestmentBankhasdevelopedanactionplanincaseofcontingency/
liquiditycrisiswhichisanintegralpartoftheoverallsystemforliquiditymanagement.
For further information regarding liquidity risk see note 3 “Risk management” of the Consolidated
FinancialStatementsasat31December2021.
OPERATIONALRISK
Operationalriskistheriskoflossresultingfrominadequateorfailedprocesses,peopleorsystems,or
fromexternalevents.Inordertomitigatetherisksarisingfromoperationalevents,FirstInvestment
Bankapplieswrittenpolicies,rulesandproceduresthatarebasedontherequirementslaiddownin
Bulgarian and EU legislation and good banking practices. With respect to capital requirements for
operationalrisk,theBankappliesthestandardizedapproachasperrequirementsofRegulation(EU)
575/2013,incl.methodologyforallocationoftheindicatorsaspergroupactivities.
FirstInvestmentBankmaintainsasystemforregistration,trackingandcontrolofoperationalincidents
and near‐misses that complies with the effective regulatory requirements. Operational risk
managementatFibankisbasedontheprinciplesofnotassumingunsoundrisk,strictcompliancewith
theauthoritylevelsandapplicablelaws,andactivemanagementofoperationalrisk.TheBankapplies
reliable methods for avoiding, transferring, and limiting the impact of operational risks, including
throughseparationoffunctionsandresponsibilities,doublecontrol,approvallevels,internalcontrol,
insurancecontracts,andinformationsecurity.
With the aim of developing and enhancing its processes for operational risk management key risk
indicatorsaredefinedwithintheBank,whichareappliedbothatBanklevel,andspecificallyforeach
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businessunitandprocessintheBank.Theyareusedforthepurposeofeffectivesignalingofchanges
thatmayberelevanttotheactivemanagementofoperationalrisk,aswellasforimplementingbetter
monitoringandcontroloftherisktoleranceandofthethresholdsandlimitsonindividualtypesofrisk.
TheRisk Analysis and Control departmentdefinesand categorizesoperationalevents across event
typesandbusinesslinesinherentinbanking,aswellastheobligationsandresponsibilitiesoftheBank's
employees in connection with their registration and reporting. The Operational Risk Committee
regularlyreviewsandanalyzesoperatingeventsandsuggeststotheManagingBoardmeasuresfor
promptcorrectionoftheircauses,aswellasforstrengtheningthecontrolsinthemanagement of
processes,activities,productsandservicesatalllevelsoftheBank'ssystem.
Inordertoassesstheexposureandreduceoperationalrisk,aswellastoenhanceandimprovethe
controlprocedures,FirstInvestmentBankconductsregularRiskControlSelf‐Assessment(RCSA)inthe
form of questionnaires and analyzing of processes. According to good banking practices the self‐
assessmentisanimportanttoolforadditionalevaluationoftheBank’sexposuretooperationalrisk,
aswellasatoolcontributingtotheanalysisoftheeffectivenessofexistingcontrolsforitsmitigation.
In2021FirstInvestmentBankdevelopedthepoliciesforoperationalriskmanagement,incl.updated
therulesofprocedureandthecompositionoftheOperationalRiskCommitteetotheManagingBoard.
INFORMATIONSECURITY
TheBank'sinformationsecuritypolicysetsoutprinciplesandrulesforprotectingtheconfidentiality,
integrityandavailabilityofdataandinformationofFibankanditscustomers,andofrelatedservices.
TheBankappliesinternalrulescoveringtheorganizationalandmanagerialframeworkandemployee
responsibilitiesforensuringthesecurityofdata,systemsandrelevantinfrastructure.Measureshave
beenputinplacetoguaranteeproperlogicalandphysicalsecurity,informationassetmanagement,
accesscontrolandriskmanagement.
An“Informationsecurity”departmentfunctionswithintheBankunderthesupervisionoftheChief
RiskOfficer,whichcoordinatestheactivitiesrelatedtoinformationsecurity,definestherequirements
towardscontrolsandsecurityofdata,aswellasorganizestheexecutionoftheManagementBoard’s
decisionsinthisrespect.
In2021,theBankenhanceditsinternalrulesonmanagementofITchangesandprojects,aswellas
theactivity,compositionandcompetencesoftheITcommitteetotheManagingBoard.
PERSONALDATAPROTECTION
Aspartofitsinternalorganizationasadatacontroller,theBankfurtherstructuredanddevelopedthe
principles and grounds for processing personal data, including with regard to their transparency,
legitimacy,rightsofdatasubjects,aswellastechnicalandorganizationalmeasurestoprotectsuch
data.
IncompliancewiththerequirementsoftheGeneralDataProtectionRegulation(GDPR),theBankhas
aDataProtectionOfficer(DPO)–e‐mail:dpo@fibank.bg.TheDPOhasaleadingroleinensuringthe
lawfulprocessingofpersonaldata intheBank's structure,conducts awareness‐raisingtrainingand
contributestobuildingadataprotectionculture.TheDPOisacontactpersonwiththeCommissionfor
theProtectionofPersonalDataandonissuesrelatedtotheexerciseoftherightsofthedatasubjects.
BUSINESSCONTINUITYMANAGEMENT
Inordertoensuretheeffectivemanagementofbusinesscontinuity,FirstInvestmentBankmaintains
contingencyandbusinesscontinuityplans,aswellasplansfortherecoveryofallitscriticalfunctions
andresources,whichareregularlytested.Businesscontinuitymanagementensuressustainabilityat
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allorganizationallevelswithintheBank,aswellastheopportunityforeffectiveactionsandreactions
in crisis situations. The organization of processes ensured within the Bank aims at protecting the
interestsofallstakeholders,itsreputation,brandandthevalue‐addingactivities.
Building an appropriate corporate culture with regard to business continuity management is an
importantpartoftheoverallriskcultureoftheBank.Tofurtherintegrateinformationandapplya
centralizedapproach,theinternalrulesonbusinesscontinuitywerestructuredintoasingledocument
with main content and separate action plans for specific incidents and crisis situations. The
organizationthusestablishedaimstoensurerapidandeffectiveactionforaddressingpotentialcrisis
situations,aswellasthetimelyeliminationofanynegativeconsequences.
In2021,aspartoftheannualreviewoftheBusinesscontinuityplan,thelatterwasupdated,incl.with
respecttothetimeneededforrecoveryofinformationsystems,additionsonthealternativesuppliers
ofcritiralfunctionsandfinancialmarketsinfrastructures,aswellasplanincludedforassessmentof
the pandemic situation and planning of necessary anti‐epidemic measures within First Investment
Bank.
RISKEXPOSURES
Asat31December2021FirstInvestmentBankappliedthestandardizedapproachforthecalculation
ofriskexposuresforcreditrisk,inaccordancewithRegulation(EU)No575/2013.Duetothelimited
volumeoffinancialinstrumentsinthetradingbook(bondsandothersecurities)capitalrequirements
arecalculatedinaccordancewiththerequirementsofRegulation(EU)No575/2013asappliedtothe
banking portfolio. With respect to capital requirements for operationalrisk,theBankappliesthe
standardized approach as per requirements of Regulation (EU) 575/2013, incl. methodology for
allocationoftheindicatorsaspergroupactivities.
InBGNthousand/%oftotal
2021 % 2020 % 2019 %
Forcreditrisk
6,941,701 92.6 6,834,786 92.2 6,385,596 91.2
Formarketrisk
4,713 0.1 5,525 0.1 4,750 0.1
Foroperationalrisk
552,425 7.4 573,675 7.7 612,838 8.8
Totalriskexposures
7,498,839 100 7,413,986 100 7,003,184 100
In2021thestructureofrisk‐weightedassetscomprisedpredominantlyofthosetocreditriskat92.6%
oftotalexposures(2020:92.2%),followingbythoseforoperationalriskat7.4%(2020:7.7%)andto
marketriskat0.1%(2020:0.1%)TheBankcontinuedtomaintainaconservativeapproachintherisk
assessmentandriskmanagement.
Apart from Supervisory purposes, Fibank also calculates the economic capital that will ensure its
solvencyandbusinesscontinuityinadversemarketconditions.Forthatpurpose,aninternalcapital
adequacyanalysis(ICAAP)iscarriedout.
INTERNALCAPITALADEQUACYANALYSIS
FirstInvestmentBankADperformsregularinternalcapitaladequacyanalysis(ICAAP)inthecontextof
itsbusinessstrategy,riskprofileandriskappetite.Theassessmentoftherequiredeconomiccapitalof
theBankreflectstheriskprofileofitsactivity,aswellasitsriskappetite,asthemainindicatorsofthe
quantitativeevaluationmethodsusedtakeintoaccountunfavorableexternalenvironmentscenarios.
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In 2021, the ICAAP report was updated in accordance with Fibank’s Risk Strategy and business
developmentgoals,aswellaswiththeoperationalenvironmentandexternalconditions.Anintegrated
stress test in accordance with the EBA guidelines was added to the set of used analysis methods,
assessingtheBank'sresilienceunderthebaselinemacroeconomicscenarioandtheadversescenario
(negative shock). The framework for interest rate risk in the bankingbook(IRRBB)wasfurther
developed and improved, and a credit spread risk assessment in the banking book (CSRBB) was
integrated. The methodologyfor determining the capital to coverequity tradingportfolio risk was
changed,usingstresstestassumptionsbasedontheEBAadversescenario.Themodelfordetermining
thecapitalforlegalriskwasfurtherdevelopedusingMonteCarlosimulationsfortheprobabilityof
litigationlossesthattheBankmayincuroveraone‐yearhorizon.
WhenpreparingtheICAAPreport,abusinessmodelassessmentismade,aswellasinternalcontrol
framework, incl. independent risk, compliance and internal audit functions are taken into
consideration. The internal system for assessing the required internal capital is based on VaR
forecastingmodelsforcreditandmarketrisk,stresstestsforcredit,market,liquidity,reputational,
andinterestrateriskinthebankingbook,usingthestandardisedapproachandstresstestsregarding
operationalrisk,theEarnings‐at‐Riskapproachforstrategicrisk,andonanalyticaltoolsandtechniques
thatallowmoredetailedassessmentofcapitaladequacyinaccordancewiththeriskprofileoftheBank
andthecurrentoperatingenvironment.ForaggregatingthevarioustypesofriskstheBankusesa
correlation matrix, which takes into account the connection between the separate risk categories,
aimingatamorerealisticandmoreenhancedapproachformeasuringtherisktheBankisexposedto,
atthesametimeassufficientlyconservativeestimates.
Forcalculationofcapitaladequacyregardingtheexposuretocreditrisk,FirstInvestmentBank
uses internal valuation models, except in particular cases, e.g. in exposure classes with
negligibleimpactontheriskprofile.Forexposureclassesofsubstantialimportance,whichconstitute
themaincreditactivityofFibank,economiccapitalisdeterminedbasedonasingle‐factorportfolio
credit‐VaRmodelwhichdeterminestheprobabledistributionoflossesthatmaybeincurredwithina
one‐yearhorizon,atconfidenceintervalcorrespondingtotheriskappetiteoftheBank.Toquantify
theriskofoccurrenceofextraordinary,unlikelybutpossibleevents,stressscenariosareapplied.The
stressscenarioresultsarecomparedwiththecapitalrequirementsforcreditrisk,calculatedaccording
totheportfolioVaRmodel.
Aspartoftheoverallassessmentoftheexposuretocreditrisk,forthepurposesofICAAP,First
Investment Bank assesses the concentration risk which is due to the uneven distribution of credit
exposuresbyclient,orbyagroupofrelatedpersons,aswellasbyeconomicsectors,fromthe
perspective of its financial stability and ability to carry outitscorebusiness.Forthequantitative
evaluationoftheneededeconomiccapitalforthisrisk,theBankmatchestheresultsoftheportfolio
VaRmodelbetweentherealandahypotheticalportfolio,inwhichtheamountofexposuresisoneand
thesameatallcustomersatequallyallotherconditions.Forcalculatingtheconcentrationriskasper
economicsectors,aHerfindahl‐HirschmanIndex(HHI)isused.
TheBank’sexposuretomarketriskislimitedandinvolvestheassessmentofcapitaladequacy
inrelationtopositionrisk,foreignexchangerisk,andcommodityrisk.Forcalculationofthe
economic capital for market risk, internal value‐at‐risk (VaR) modelsareused,withatime
horizonof1yearandaconfidencelevelcorrespondingtotheriskappetiteoftheBank,aswellasstress
testsforpositionriskoftheequityportfolio.
Forthepurposesoftheinternalanalysisofcapitaladequacy,Fibankmanagestheinterestrateriskin
itsbankingbookbymanagingthestructureofinvestments,controllingthecostsandtermsoffinancial
liabilities,aswellascontrollingtheinterestratestructure
oftheloanportfolioandtheotherinterest‐
bearingassets.Twoaspectsarebeingmeasuredfortheinterestrateinthebankingbook–theeffect
ofinterestratesonthenetinterestincomeataone‐yearhorizon,andtheeffectontheeconomic
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valueoftheBank.Forcalculatingthesufficiencyoftheeconomiccapitalwithrespecttointerestrate
riskinthebankingbookthelargestdecreaseintheeconomicvalueoftheBankorthenetinterest
incomeisdefinedresultinginashiftoftheyieldcurvesinthefollowingscenarios:Parallelshock–
parallelincrease/decreaseofinterestratelevels;Shortratesshock–increase/decreaseintheinterest
ratelevelsintheshortpartofthecurve;Steepener–theshortpartoftheyieldcurveregisters
decrease,whilethelongpart–increase;Flattener–theshortpartoftheyieldcurveregistersincrease,
whilethelongpart–decrease.Inadditiontothenon‐riskinterestratecomponent,reportedarealso
thestressscenariosforchangeinthecreditspread(CSRBB).
ForthepurposesofICAAP,FirstInvestmentBankcalculatestherequiredeconomiccapitalfor
operationalriskonthebasisoftheresultsfromtheappliedstresstestsandtheannualself‐
assessment exercise on risk and controls, which units in the Bank go through, and on
identifyingpotentialscenariosforrarebutplausibleoperationalevents.TheusedbytheBankstress
testsareforextraordinarybutprobableevents,includingdifferentscenariosbasedontheirfinancial
impact and probability of occurrence. The economic capital for operational risk, incl. legal risk, is
calculatedastheoverallfinancialeffectinaone‐yearhorizonbasedonallanalyzedstressscenarios.
Toassessliquidityrisk,theBankdifferentiatestheanalysisintwodirectionsregardingtherisk
ofinsolvencyandtheriskofprovidingliquidity.Theriskofinsolvencyismanagedandcovered
bymaintaininganappropriatebufferofunencumbered,highlyliquidassets,whiletheriskofproviding
liquidity is covered and mitigated by economic capital. The Bank calculates economic capital for
liquidityriskbyassessingtheamountoflossthatwouldbeincurredasaresultofaliquiditycrisis,
(idiosyncratic, market and combined shock), taking into account the cost of repo transactions or
liquidatingassetstomeetthecashoutflow,aswellastheexpectedincreaseininterestexpenseon
borrowings.
ForthepurposeofICAAP,theBankassessesandotherrisks,includingstrategicriskandreputational
risk. For the quantification of strategic risk, the Earnings‐at‐Risk approach is used, measuring the
historicaldeviationsbetweenthebudgetedandgeneratednetprofitoftheBank.Thecapitalallocated
forstrategicriskisdeterminedbyapplyingapercentageofdeviationcorrespondingtotheaccepted
confidenceleveltothebudgetednetprofitforthenextyear.
ThereputationalriskreflectstheriskthattheBank'sreputation may differ negatively from the
expectedstandardintermsofitsexpertise,integrityandreliability.Reputationalriskmaymaterialize
mainlyinlossofbusiness,increasedcostoffunding,orliquiditycrisistheeffectsofwhicharemeasured
intheassessmentofstrategicriskandliquidityrisk.
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DISTRIBUTIONCHANNELS
FirstInvestmentBankmaintainsdiversificationofthechannelsfordistributionoftheproductsand
servicesoffered,includingawell‐developedbranchnetwork,widenetworkofATMandPOSterminals,
e‐banking,mobilebanking,directsales,contactcenter,corporatewebsiteandacorporateblog.All
channelsareconstantlyimprovedinlinewiththecurrenttrends in banking, market conditions,
technologicaldevelopmentandcustomerneeds.
BRANCHNETWORK
FirstInvestmentBankstrivestomaintainanadequatebalancebetweenawell‐developednetworkof
physicallocationsandtheprovisionofmodernremotebankingtechniques,includinginthecontextof
thedigitaltransformationinthebankingsector.
In 2021, the Bank continued to optimize its branch network, taking into account the external
environmentandmarketconditions,theworkloadofindividuallocationsandthevolumesofactivity.
Eightofficeswereclosedduringtheyear,threeoftheminSofiaandfiveintherestofthecountry.As
at31December2021,thebranchnetworkofFirstInvestmentBankcomprisedatotalof141branches
andofficesonaconsolidatedbasis(2020:149),locatedin60citiesinBulgaria:44locationsinthecity
ofSofia(2020:47),82branchesandofficesintherestofthecountry(2020:87),oneforeignbranchin
Nicosia,Cyprus,aswellasasubsidiarybankinAlbaniawithHeadOfficeand14branchesinAlbania.
Forfurther information regardingthebranchnetworkof FirstInvestment Bank–AlbaniaSh.a., see
section“Businessreviewofsubsidiarycompanies”.
ThebranchnetworkbothinSofiaandinotherplacesinthecountryisstructuredaccordingtoaunified
organizationalmodelwithaviewtoefficientallocationofbudgetarytargets,focusingonattracting
newcustomersandcross‐selling.Thereare27branchesinthecountry,whileinthecapital5functional
brancheshavebeenestablished:Central,East,West,NorthandSouth,toeachofwhichofficesare
allocatedbasedonterritoriallocationandbusinessindicators.
IntheconnectionwiththedevelopmentofthepandemicCOVID‐19,Fibankcontinuedtotakeactions
andmeasuresregardingtheinternalorganizationofthebranchnetwork,incl.safetyrequirements,
protectivepanels,socialdistance,providedsafetyequipmentfortheBank'semployeesandcustomers.
Aspartoftheongoingimprovementandoptimizationofprocesses,thebranchdigitizationprojectwas
developed,aimedatintroducingelectronicdocumentandelectronicsignaturesinoffices,aswellas
reducingthe use of paper documents in a sustainable way, in ordertointroduceanewmodelof
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customer servicing, developing digitalization in everyday operations. Since 2019, the Bank has
centralizedbackoffice,whichcontributestobettercustomerservice.
Fibankbranchesandofficesinthe
country offer the full range of
banking products and services to
both individuals and business
customers. In an effort to better
satisfycustomerdemand,partof
thebranchnetworkoperateswith
extended working hours, while
some offices are also open on
weekends.
The branch of First Investment
Bank in Nicosia, the Republic of
Cyprus,hasbeenoperatingsince
1997,initiallymainlyintheareaof
corporatelending.Overtheyears,
ithassystematicallyand
consistently expanded the range
of products and services. At
present, the branch offers
standard credit and savings
products,paymentservicesande‐
banking, with a focus on SME
customersandretailbanking.
CONTACTCENTER–*bank(*2265),080011011
In2021,Fibank’sContactCenterfunctionedasaneffectivechannelforcommunicationandtargeted
sellingofproductsandservices.Italsocontributedtotheattractionofnewandretentionofcurrent
customersthroughtheprovisionofservicesinaccordancewiththeBank'sestablishedstandardsand
businessobjectives.
Throughout the year, 38 outgoing campaigns of different
nature and topics were conducted through the Contact
Center,includinginformationcampaigns,directmarketingof
productsandservices,consumeropinionsurveys,aswellas
campaignsinsupportofloancollection(softcollection).Over
69,000outgoingcallsweremade,withahighresponserate
achieved.
For the reporting period, the Contact Center received over
75,000 incoming calls, emails and chat conversations in
relation to various inquiries and requests by existing or potential customers, including on general
bankinginformation,cardservices,contactandreferenceinformation,productrequests,etc.
ThroughtheContactCenter,customersmayalsoapplyfordebitcardoverdraftsorapplyforconsumer
loans.Theymayreceiveup‐to‐dateandtimelyinformationonproductsandservices,theTariffand
interestratesoftheBank,thelocationofbranchesandtheirworkinghours,aswellasadequateand
professionalassistancebyemployeesincaseofquestionsorproblems.Customersmaycommunicate
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remotelywiththeBankbyphone,emailoronlinechatinrealtimethroughthecorporatewebsiteof
theBank.
CORPORATEWEBSITE–www.fibank.bg
In2021,FirstInvestmentBankcontinuestodevelopitscorporatewebsiteinordertotransformitinto
anactivechannelforproductcommunicationandcross‐selling.Duringtheyearstartedtheofferingof
anewservice‐"Videoconsultation"forindividualsregardingcreditproductsoftheBank,available
through www.fibank.bg. Through the site could be submitted online applications for credit cards,
overdraftsandconsumerloans,aswellastocommunicatedirectlywithanexpertfromtheBank.
Thecorporatewebsitehasanumberoffeatures,includingvisualizationelementsinlinewithcurrent
digitaltrendsandfeaturesforintuitivedesignandpersonalizedcontent.Theyprovideaneasywayto
compareproductsandservicesofferedbytheBank,allowingcustomerstoquicklyselecttheonesthat
bestmeettheirneeds.
Duringtheyear,areviewofthecorporatewebsitewasconductedinordertoassessitscompliance
withstandardsforprovidingaccessiblecontent(includingHarmonizedEuropeanStandardEN301549
V2.1.2,2018‐08onaccessibilityrequirementsforICTproductsandservices).TheBankiscommittedto
maintainingaconsistentlyhighlevelofaccessibilityofpublishedinformationandtoensuringusability
ofcontentbypeoplewithdisabilities(impairedhearingoreyesight).
CORPORATEBLOG
In2021,incontinuingpandemicofCOVID‐19,thecorporateblogofFirstInvestmentBank,together
withotheronlinecommunicationchannels,incl.socialnetworkshadakeyroleincommunicatingwith
customers,asanimportantpartofthekeymessages,news,initiativesweredisseminatedthrough
theseonlinechannels.
Overtheyears,theBankhasstrivedtocontinuouslydevelopitscorporatebloginlinewithcurrent
trendsincommunicationintheInternetenvironment,whilemaintaininganintuitiveanduser‐oriented
approach, design and functionality of the platform. It engages in open dialogue and customer
feedback,thusenablingtheBanktoexploretheusabilityofproductsandservices,aswellascustomer
satisfaction.InadditiontothenewtopicsrelatedtoproductsandservicesoftheBank,incl.insupport
ofindividualsandlegalentitiesaffectedbythesituationwithCOVID‐19,thecorporateblogpresents
thediverserangeofsocialandcorporateinitiativesoftheBank,financialanalyzesandstudiesrelated
tothemarketofbankingproductsandservicesinthecountry,currentnewsonvarioustopics,aswell
asusefulinformationforcustomers.Itprovidesanopendialogueandfeedbackwithcustomers,thus
providing an opportunity to study the usability of the Bank’s products and services and customer
satisfaction.
Apartfromitscorporateblog,FirstInvestmentBankalsomaintainsactiveonlinecommunicationin
real time with customers and stakeholders through leading social networks such as Facebook,
Instagram,LinkedIn,TwitterandYouTube.
SALES
FirstInvestmentBankusesdirectsalesasanadditionalopportunityfordistributionofproductsand
services, including for comprehensive bank servicing of institutional and corporate clients This
approach helps to build long‐term relationships with key customers, as well as to obtain direct
feedbackontheBank'sproductsandservices.
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TheCorporateSalesandPublicProcurementDepartmentinthesystemofFirstInvestmentBankhas
considerable experience in preparing the Bank's participation in public procurement, as well as in
servicingcorporateandinstitutionalclients,budgetspendingunits,stateandmunicipalenterprises.
In2021Fibankparticipatedinover90publicprocurementproceduresandcompetitions,asinaround
50%ofwhichtheBankwaschosenasaservicingbank,thereforeattractingnewbusinessclientsand
maintainingrelationswithexistingones.
DIGITALBANKING
MYFIBANKELECTRONICBANKING
TheMyFibankelectronicbankingplatformofFirstInvestmentBankhasbeen designed as a single
customerservicechannelandisconstantlydevelopedbyupgradingandaddingnewfunctionalities.
The platform is integrated with the core banking IT environment, providing a high level of system
security,optimizationandgreaterworkflowefficiency,aswellasincreasedproductivity.
ThroughtheMyFibankelectronicbanking,customersusebothactiveandpassivebankingaccording
to their needs and depending on their access rights to the system. As part of the active banking,
customerscanopenandclosecurrentanddepositandotheraccounts,carryoutpaymentsinnational
and foreign currency (including mass payments), make utility payments, apply for and enter into
agreementsforcreditproducts(includingcreditcards),requesttheissuanceofdebitcards,aswellas
buyorsellforeigncurrency.Passivebankingallowscustomerstochecktransactionsandbalanceson
bankaccountsand/orpaymentcards.ItalsoprovidesinformationonlocationsofbranchesandATMs,
aswellasexchangerates,newsandcurrentpromotions.
Expandingthescopeofservicesoffered,asof2021customersmaypurchaseonlineproducts,including
electronicvignettes,byusingtheiraccountsorpaymentcardsinMyFibankelectronicbankingorthe
mobileapplication.TheymayalsoopenaGoldAccount:aninnovativeproductforpurchase,saleand
keepingofdematerializedgold(XAO).
A number of technical innovations and improvements were made to My Fibank during the year,
including an updated design, a new alternative method of account management, new application
formsformortgageloans,overdrafts,creditanddebitcards,aswellasaremoteactivationoption(for
cardsdeliveredbycourier).Remoteopeningofaccountsandenteringintoagreementswithcustomers
werefurtherdevelopedatwww.smetka.fibank.bg.
In compliance with the regulatory requirements arising from Regulation (EU) 1230/2021, First
InvestmentBankaddedanewfunctionalitytoe‐banking,allowingpreliminaryvisualizationofthefees
duewhenorderingatransfer.
Withregardtostrongcustomerauthentication(SCA)requirements,FirstInvestmentBankprovides
thesoftwareFibankTokenasameansofsignatureandidentificationintheelectronicbankingsystem,
whichincludestwo‐factorauthenticationandtheuseofQRcodescanningtechnology.
In accordance with the EU regulations and the trends in the development of digital banking, First
Investment Bank has provided Third Party Providers (TPPs) with access to customer accounts
maintained at the Bank and available online for provision of account information and payment
initiationservices:theso‐calledOpenBanking.Inaddition,usingthearrangementsofDirective(EU)
2015/2366(PSD2)toexpandandintegrateitsservices,FirstInvestmentBankalsoofferscustomers
accountinformationandpaymentinitiationservicesviatheMyFibankmobilebankingplatform.For
moreinformationonopenbanking,seethePaymentServicessection.
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In2021,theintegratedMyFibankelectronicbankingplatformcontinuedtoestablishitselfasachannel
generating a predominant share (nearly 80%) of the total outgoing transfers of the Bank, with a
reportedgrowthof15%intransactionsand11%innumberofcustomersusingtheplatform.
Asproofofitsachievementsinthefield
of digital banking during the period,
FibankwasawardedasDigitalBankofthe
Year–BulgariabytheinternationalGlobal
Brands Magazine for its contribution to
the development of innovations and
ensuring a secure and reliable digital
bankingsystem.
During the year, the team of the Digital
Banking Department won the internal
Most Valuable Team competition which
distinguishes the team meeting the
highestcorporatestandardsforeffective
andefficientinteractionwithotherunitsintheBankasaprerequisiteforqualitycustomerservice.
MYFIBANKMOBILEAPPLICATION
TheBank'smobileapplicationispartofMyFibankelectronicbanking,providingremoteaccesstothe
integratedplatformbyusingamobiledevice.Theapplicationisavailableforinstallationbycustomers
fromtheappmarketplacesfortherespectiveoperatingsystems(e.g.AppStore,GooglePlay,Huawei
AppGallery).
Withthemobileapplication,customersmayuseactiveorpassivebankingsubjecttolimitssetbythe
Bankorbythecustomer.Inaddition,theinnovativeDigitalPaymentsservicedeveloped byFibank
allows customers to use digital bank cards through the mobile application and thus make digital
paymentswiththeirNFCenabledmobiledevicesatPOSterminalssupportingcontactlesspayments.
In2021,FibankcontinuedtodevelopitsmobileapplicationbylaunchingMyCard:anewtypeofvirtual
creditcardwithoutplastic,designedformakingpaymentsovertheInternetorotherremotemeansof
communication, including through mobile smart devices. The option was also provided to digitize
cards,includinginthirdpartyapps(GooglePay,ApplePay,Garmin,Fitbit).Formoreinformationon
digitizingcardsinthirdpartyapps,seetheCardPaymentssection.
During the year, push notifications were further developed to provideavarietyofinformationto
customersregardingtheirtransfers,accounttransactions,cardauthorizations,creditcardobligations,
utilitypayments,orchangestotheTariffoftheGeneralTermsoftheBank.
The Bank's efforts are aimed at providing first class service with a focus on digital methods and
channelsinordertoincreasetheshareofself‐servicesolutionsandpromotesustainablebanking.
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CORPORATEGOVERNANCESTATEMENT
pursuant to Art. 100m of the Public Offering of Securities
Act and Art. 40 of the Accountancy Act
Asapubliccompanyandpublicinterestentity,FirstInvestmentBankdisclosesinformation
aboutitscorporategovernancepractices,asthissectionoftheAnnualReportrepresentsa
CorporateGovernanceStatementpursuanttoArt.100mofthePublicOfferingofSecurities
ActandArt.40oftheAccountancyAct.
CORPORATEGOVERNANCEFRAMEWORK....................................................................................72
CORPORATEGOVERNANCECODE.................................................................................................73
MANAGEMENTSTRUCTURE..........................................................................................................74
SUPERVISORYBOARD....................................................................................................................75
MANAGINGBOARD.......................................................................................................................79
GENERALMEETINGOFSHAREHOLDERS.......................................................................................81
CONTROLENVIRONMENTANDPROCESSES..................................................................................82
PROTECTIONOFSHAREHOLDERS’RIGHTS....................................................................................83
INFORMATIONDISCLOSURE..........................................................................................................84
STAKEHOLDERS..............................................................................................................................86
SHAREHOLDERS’STRUCTURE........................................................................................................87
SHAREPRICEANDMARKETCAPITALISATION...............................................................................87
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CORPORATEGOVERNANCEFRAMEWORK
ForFirstInvestmentBankADgoodcorporategovernanceisakeyelementforensuringlong‐termand
sustainabledevelopment,andsuccessfulbusinessmodel.ThecorporatepolicyoftheBankisbasedon
professionalandtransparentgovernanceinaccordancewithinternationallyrecognizedstandardsand
principlesofgoodcorporategovernance,takingintoaccountchangesintheregulatoryandeconomic
environmentaswellasthefinancialmarketsinthecountryandabroad.
The corporate governance of First Investment Bank is a system of policies, rules, procedures and
practices by which the Bank is managed and controlled, with clearly defined functions, rights and
responsibilitiesatalllevels:GeneralMeetingofShareholders,SupervisoryBoardandcommitteesto
it, Managing Board and committees and councils to it, Internal Audit, and structures at the
headquarters,branchesandoffices.FirstInvestmentBankhasatwo‐tiergovernancesystemconsisting
ofaSupervisoryBoardandManagingBoard.
FirstInvestmentBankapplieswrittenpoliciesforcorporategovernanceongrouplevel,whichdefines
themainprinciplesoninternalgovernanceandcontroloverthesubsidiaries,aswellastheprocedures
andmechanismsfacilitatingtheconsistentandintegrateddevelopmentofthecompaniesinlinewith
groupstrategyandincompliancewithregulatoryandsupervisorybodies‘requirements.
In2021, the Bank further improveditscorporategovernancepolicies,includingatgrouplevel,the
functions for monitoring the activity of subsidiaries, the assessment of suitability of members of
managementandsupervisorybodiesandkeyfunctionholders,thestructuringofactivitiesandthe
compositionofcommitteesandcouncilstotheManagementBoard,thebudgetandstrategypolicies,
aswellasthedisclosurepractices,includingnewdisclosureandaccountabilityrequirementsrelated
tosustainabledevelopmentandtoenvironmental,social,andgovernance(ESG)factors.
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CORPORATEGOVERNANCECODE
FirstInvestmentBankADfunctionsinaccordancewiththeCorporateGovernanceCodeadoptedby
the Managing Board and approved by the Supervisory Board. It outlines and structures the main
components,functionsandresponsibilitiesconstitutingthesystemofcorporategovernanceofFirst
InvestmentBank.InadditiontotherequirementsofapplicablelawintheRepublicofBulgaria,the
Code is structured by applying the principles of the Basel Committee on Banking supervision, the
guidelines of the European Banking Authority (EBA), as well as the applicable standards of the
Organization for Economic Cooperation and Development (OECD) inthisfield,andthe
recommendationsoftheNationalCorporateGovernanceCode(lastamended,July2021),approved
bytheFinancialSupervisionCommission.
The Code sets out the basic principles and requirements for maintaining and improving the
organizationandmethodsofgovernanceattheBank,aimedat:
honestandresponsiblegovernancebasedonaddingvalue;
effectivepracticesofmanagementoversightandcontrol;
executivemanagementandseniorstaffactinginthebestinterestoftheBankandtowards
increasingthevalueofshareholders'equity;
timelyinformationdisclosureandtransparency;
effective system of risk management and control based on the principle of three lines of
defense.
In compliance with the requirements of the applicable legislation, First Investment Bank annually
disclosesinformationonthecorporategovernancepracticesandmeetingtherequirementssetinthe
CorporateGovernanceCodeofFirstInvestmentBankapplyingthe“complyorexplain”principle.Along
withitsannualreportandfinancialstatements,theBankdiscloses to the public also a corporate
governanceassessmentscorecardincompliancewiththeNationalCorporateGovernanceCode.
InadditiontotheCorporateGovernanceCode,FirstInvestmentBankappliesaDisclosurePolicy.Both
documentsarepubliclyavailableatthecorporatewebsiteoftheBank(https://www.fibank.bg/bg/za‐
nas/korporativno‐upravlenie/kodeks‐na‐korporativnoupravlenie).
In2021,therequirementsspecifiedintheseweremet,includingtherequirementsfordisclosureof
regulatedinformationandinformationunderthefinancialcalendaroftheBankfor2021.
CODEOFCONDUCTANDWHISTLEBLOWINGPOLICY
Forthepurposeofestablishingtheprofessionalandethicalstandardsrequiredandapplicabletothe
Bankasabusinesscompany,workenvironmentandacreditinstitution,FibankhasaCodeofConduct
thatdeterminesthebasicprinciples,ethicalnormsandcorporatevalueswhichunderliethepolicies
andbusinessplans,rules,proceduresanddailyoperationalactivitiesoftheBank.
TheBank,ledbytheunderstandingthatfollowingalawfulandethicalconductinrelationsbetween
managerialstaff,employees,customersandpartnersoftheBankisanimportantaspectunderlyingits
overallactivity,hasinplaceawhistleblowingpolicy.ThePolicyaimstosystematizethemeansand
procedures for internal sharing of information where there are suspicions of unlawful actions, or
problemsrelatedtotheworkprocess,therebyensuringtheirtransparentandfairconsiderationand
resolution.Thecreationofconditionsforreportinginanenvironmentoftrustandrespect,aswellas
forcarrying out consistentandimpartialactionstoverifythe receivedreports, isakeyelementin
preservingtheBank'shighcorporatespiritandreputation.
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MANAGEMENTSTRUCTURE
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SUPERVISORYBOARD
STRUCTUREANDCOMPETENCES
Asat31.12.2021theSupervisoryBoardconsistedoffivemembers,asfollows:
Name Position Termofoffice
EvgeniKrastevLukanov ChairmanoftheSupervisoryBoard 24.01.2027
MayaLubenovaGeorgieva DeputyChairoftheSupervisoryBoard 24.01.2027
RadkaVesselinovaMineva MemberoftheSupervisoryBoard 24.01.2027
JordanVelichkovSkortchev MemberoftheSupervisoryBoard 24.01.2027
JyrkiIlmariKoskelo MemberoftheSupervisoryBoard 27.07.2025
ThebusinessaddressofallSupervisoryBoardmembersis37,DraganTsankovBlvd.,1797Sofia.
EachmemberoftheSupervisoryBoardhasprofessionalexperience, knowledge, qualifications and
abilities,incompliancewiththefitandproperrequirements,contributingforthecollectivesuitability
inaccordancewiththeactivitiescarriedoutbytheBank,themainrisksandlong‐termgoals.
During the year the general meeting of shareholders re‐elected the current members: Mr. Evgeni
Lukanov,Ms.MayaGeorgieva,Ms.RadkaMinevaandMr.JordanSkortchevforanew5‐yeartermas
membersoftheSupervisoryBoardofFirstInvestmentBank.
Asat31December2021themembersoftheSupervisoryBoardheldatotalof367,652sharesofFirst
Investment Bank, as follows: Mr. Evgeni Lukanov (337,139 shares), Ms. Maya Georgieva (11,388
shares),Mr.JordanSkortchev(19,125shares),asnoneofthemownedmorethan1%oftheissued
sharecapital.
In July 2021, we had our last farewell to Mr. Georgi Dimitrov Mutafchiev (1957 – 2021) – former
MemberoftheSupervisoryBoardandofthePresidingCommitteetotheSupervisoryBoardofthe
Bank.Mr.Mutafchievdedicatedmorethan21yearsofhisprofessionallifetothedevelopmentand
affirmingofFirstInvestmentBankamongtheleadersinthefinancialmarketinthecountry.
DIVERSITYPOLICYANDINDEPENDENCE
FirstInvestmentBankcompliesitsactivityandmaintainspoliciesandpracticesforensuringdiversity
in the composition of its governing bodies, including various aspects such as work experience,
educationalqualifications,gender.
TheBankseekstomaintainatargetlevelof30%ofthemembersoftheSupervisoryBoardtobefrom
theunderrepresentedgender(roundingdowntoanintegerifnecessary).Asof31December2021,
theBank fulfilled thesettargetlevelastwoof the Supervisory Board memberswerewomen.The
reportedlevelsexceeded the average levels in EU relatedtomanagement board in its supervisory
function(24%)accordingtolatestreporteddatainresearchfordiversitypracticesoftheEuropean
BankingAuthority(EBAReportonthebenchmarkingof diversity practicesatEuropeanUnionlevel
under Article 91(11) of Directive 2013/36/EU (2018 data), EBA/REP/2020/05, published at
https://eba.europa.eu/regulation‐and‐policy/internal‐governance).
For further information regarding the professional experience and competences of the Supervisory
Boardmembersseesection„Otherinformation“.
ThecompositionoftheSupervisoryBoardisstructuredsoastoensureconscientious,professionaland
independentfulfillmentoftheobligationsofitsmembers.Firstinvestmentbankcomplieswiththe
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requirementsapplicableforsignificantbanksandpubliccompanies,for1/3ofthemembersofthe
SupervisoryBoardtobeindependent.
FUNCTIONSANDRESPONSIBILITIES
The Supervisory Board of First Investment Bank supervises and, where necessary, advises the
Managing Board and monitors the overall activities of the Bank.Itadoptsandoverseesthe
implementationofthestrategicobjectives,thecorporategovernanceframework,andthecorporate
cultureoftheBank. When exercisingsupervision over the Managing Board, the SupervisoryBoard
takesintoaccounttheachievementofobjectives,thestrategyandrisksintheactivityoftheBank,as
wellasthestructureandoperationoftheinternalsystemsforriskmanagementandcontrol.
TheSupervisoryBoardensuressupervisionoftheriskmanagementframework,includingriskappetite,
internalgovernanceandthecontrolsystemofalltypesofrisksbyrequiringhighriskcultureamong
employees.Itcarriesoutitsactivityeffectivelyexchanginginformation with the Managing Board
subject to specifics, and by implementation of high ethical standards and the corporate values of
businessconductsetsthetoneforhighcorporatecultureandbusinessethics:"ToneoftheTop".
ThemeetingsoftheSupervisoryBoardaredeterminedinadvance,inaccordancewithanannualwork
plan.In2021,theSupervisoryBoardheld14meetingstoconsiderissueswithinitscompetence.Among
thehighlightsinitsactivitywereexercisingongoingsupervisionovertheimplementationoftheRisk
StrategyandtheStrategyforReductionofNon‐performingExposuresandAcquiredAssets,aswellas
approvalofanupdatedRiskManagementStrategyandRiskAppetiteFrameworkwithathree‐year
horizonwiththeactivesupportoftheRiskCommittee.Subjecttoregularreviewduringtheperiod
weretheprogressofdevelopmentofproducts/instrumentsmeetingtheminimumrequirementsfor
ownfundsandeligibleliabilities(MREL),aswellastheconditionofthebranchnetworkandtheactivity
ofbranches.AlsodiscussedwereissuesrelatedtotheBank'sactivitiesinthecontextoftheCOVID‐19
pandemic and the implementation of its strategic development objectives. During the year, the
Supervisory Board exercised control over the reliability of financial information reporting and the
internalauditframework,inwhichactivityitwasassistedbytheAuditCommittee.Regularreviews
wereperformedofthefinancialresults,marketsharesandcompetitivepositionoftheBank,aswell
asofthepotentialareasfordevelopment.TheSupervisoryBoardmemberswereregularlyupdatedon
mattersofcomplianceandbringingtheactivityinlinewithnewregulatoryrequirements.
The activity of the Supervisory Board is supported organizationallybyaSecretary.Inadditionto
organizingthemeetingsoftheSupervisoryBoardandtheminutes,thesecretaryhastheresponsibility
tofollowtheapplicationoftheprocedures,aswellastoensuretheinformationtobeprovidedand
exchanged between the members of the Supervisory Board, members of the committees and the
ManagingBoard.
ASSESSMENTOFTHEACTIVITY
Onceayear,theSupervisoryBoardperformsanassessmentoftheeffectivenessofitsownactivities
asacollectivebodyandindividually,assessmentofthegovernancepracticesandprocedures,
suitability,aswellasofthefunctioningoftheManagingBoardandthecommitteestotheSupervisory
Board.Suchassessmentfor2021wasaccomplishedattheendofthefourthquarteroftheyear.
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COMMITTEES
The Supervisory Board is supported in its activity by a Presiding Committee, a Risk Committee, a
Remuneration Committee, and a Nomination Committee which function according to written
competencies,rightsandresponsibilitiesincompliancewiththeapplicableregulatoryrequirements.
ThePresidingCommittee is responsible for overseeing the activities of the Managing Board on
important strategic decisions, including the issue of new shares, bonds, hybrid instruments, the
adoptionofprogramsandbudgetsrelatingtotheactivityoftheBank,aswellasthelineresponsibilities
ofthemembersoftheManagingBoard.DuringtheyeartheactivityoftheCommitteewasexpanded
bydelegatingfromtheSupervisoryBoardthefunctionforoverviewandcontrolovertheactivityof
thesubsidiarycompaniesoftheBank.ChairofthePresidingCommitteeisMs.MayaGeorgieva.
In2021,thePresidingCommitteeheld7meetingstoconsiderissueswithinitscompetence,including
allocationofresponsibilitiesamongmembersoftheManagementBoard,makingrecommendations
andcoordinationofthestrategicdevelopmentgoalsandbusinessstrategyoftheBankfortheperiod
2021‐2023,aswellasupdatingthestrategyandbudgetpolicies,includingwithregardtoallocationof
budgettargetsandinternalmanagementatgrouplevel.
TheRiskCommitteeadvisestheSupervisoryBoardandtheManagingBoardinrelationtotheoverall
current and future strategy on ensuring compliance of the risk policy and risk limits, risk‐taking
propensityandcontrolofitsexecutionbyseniormanagement.ChairmanoftheCommitteeisMr.Jyrki
Koskelo.
TheRiskCommitteeheld8meetingsduringthereportingperiod,discussingissuesofitscompetence.
Itreviewedupdatedplansandcurrentriskreports,includingtheRecoveryPlan,forthepurposeof
coordination and subsequent application. During the year, the Committee reviewed and made
recommendationsontheupdatedRiskManagementStrategyandRiskAppetite Framework with a
three‐yearhorizon.ItwasregularlyinformedandmonitoredtheimplementationoftheRiskStrategy,
theRiskAppetiteFramework,theStrategyforReductionofNon‐performingExposuresandAcquired
Assets,aswellastheeffectivenessoftheinternalriskmanagement and control systems and the
compliancefunctionintheBank.Duringtheyear,theRiskCommitteehelddiscussionsonthequality
oftheloanportfolio,includinginviewoftheeffectsandconsequencesoftheCOVID‐19pandemic.
The Remuneration Committee assists the Supervisory Board in the implementation of the
RemunerationpolicyoftheBankanditssubsequentamendments, aswellasin anyothermatters
concerningremuneration,inaccordancewiththeregulatoryrequirementsandbestpracticesinthe
area.ChairoftheRemunerationCommitteeisMr.EvgeniLukanov.
In2021,theRemunerationCommitteeheld3meetingsdiscussingissuesofitscompetencerelatedto
theRemunerationPolicy.Italsoreviewedproposalsinconnectionwiththeannualassessmentprocess
andupdatingthecategoriesofidentifiedstaff.
TheNominationCommitteeassiststheSupervisoryBoardinassessingtheindividualandcollective
suitability of members of the Supervisory Board and Managing Board, as well as assessing the
suitabilityofthekeyfunctionholdersincompliancewithapplicableregulationsandthePolicyofFirst
InvestmentBankfornominationandassessmentofthesuitabilityofmembersofthemanagingand
supervisorybodiesandpersonsholdingotherpositions.ChairoftheNominationCommitteeisMr.
JordanSkortchev.
DuringtheyeartheNominationCommitteeheld7meetingsconsideringissueswithinitscompetence,
includingontheselectionandsuitabilityofpersonsholdingseniormanagementpositionsintheBank's
subsidiaries,changesinthecompositionofcouncilsandcommitteestotheManagementBoard,as
wellas annual follow‐up assessmentsoftheindividualandcollective suitabilityofmembersofthe
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SupervisoryBoard,theManagementBoardandkeypositionholders.TheNominationCommitteealso
discussedtopicsrelatedtoplanningoftrainingswithintheinstitution.
AsacompanyofpublicinterestandaccordingwiththeLawontheIndependentFinancialAudit(LIFA),
theBankhasafunctioningAuditCommitteewhichisresponsibleforsupervisingthefinancialreporting
andtheindependentfinancialaudit,aswellasfortheeffectivenessofthesystemsforinternalcontrol
andriskmanagementintheBank.TheCommitteealsomakesarecommendationintheselectionand
remunerationoftheregisteredauditorstoperformtheindependentfinancialauditoftheBankand
monitorstheirindependenceinaccordancewiththeapplicableEuropeanandnationalregulations,as
wellaswiththeCodeofEthicsforProfessionalAccountants.TheactivityoftheAuditCommitteeis
structuredbasedonwrittendefinedcompetencies,rightsandresponsibilities,includedinitsrulesof
procedure(statureunderthemeaningofArt.107ofLIFA)incompliancewiththerequirementsofthe
LawontheIndependentFinancialAuditandRegulation537/2014oftheEuropeanParliamentandof
theCouncilonspecificrequirementsregardingstatutoryauditofpublic‐interestentities.
FirstinvestmentBankfulfillstherequirementthemajorityofthemembers,incl.thechairmanofthe
AuditCommitteetobeexternalandindependentfromtheBank.InJune2021,attheGeneralMeeting
ofShareholdersasanewindependentmemberandchairmanoftheAuditCommitteewaselectedMr.
DimitarDimitrov,witha3‐yearterm,whopossessesfinancialcompetenciesaswellastheknowledge,
professionalexperienceandqualificationsinthefieldofaccountingandfinancialauditnecessaryfor
theeffectiveperformanceofhisduties.Mr.JordanSkortchevwasalsore‐electedforanew3‐year
termasmemberoftheAuditCommitteeoftheBank.
Duringtheyear,theAuditCommitteeheld15meetings,addressingvariousmattersofitscompetence,
includingrecommendationsontheselectionofstatutoryauditors,aswellasongoingmonitoringof
financialreportingandindependentfinancialaudit,monitoringtheeffectivenessoftheinternalaudit
functionandcontrolsystems,includingthroughregularmeetingsheldwiththeChiefFinancialOfficer,
theDirectorofInternalAudit,aswellaswithrepresentativesofthestatutoryauditorsoftheBank.
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MANAGINGBOARD
In2021nochangesweremadetothecompositionoftheManagingBoardofFirstInvestmentBank.
DuringtheyearthecurrentmembersMr.ChavdarZlatevandMs.NadiaKoshinskawerere‐electedfor
anew5‐yearand4‐yearterm,respectivelyasmembersoftheManagingBoardoftheBank.
STRUCTUREANDCOMPETENCES
Attheendof2021theManagingBoardofFirstInvestmentBankADconsistedofsixmemberselected
bytheSupervisoryBoardontherecommendationoftheNominationCommittee,inaccordancewith
therequirementsofapplicablelaw,theStatuteoftheBank,andthePolicyofFirstInvestmentBank
fornominationandassessmentofthesuitabilityofmembersofthemanagingandsupervisorybodies
andpersonsholdingotherpositions.
Name Position TermofOffice
NikolaHristovBakalov
ChiefExecutiveOfficer(CEO),Chairmanofthe
ManagingBoard
16.01.2025
SvetozarAlexandrovPopov
ChiefRiskOfficer(CRO),Memberofthe
ManagingBoardandExecutiveDirector
21.04.2024
RalitsaIvanovaBogoeva
ChiefRetailBankingOfficer(CRBO),Memberof
theManagingBoardandExecutiveDirector
28.04.2023
ChavdarGeorgievZlatev
ChiefCorporateBankingOfficer(CCBO),
MemberoftheManagingBoardandExecutive
Director
25.01.2027
IankoAngelovKarakolev
ChiefFinancialOfficer(CFO)andMemberofthe
ManagingBoard
21.05.2023
NadiaVasilevaKoshinska
MemberoftheManagingBoardandDirectorof
SMEBankingDepartment
30.06.2025
ThebusinessaddressofallManagingBoardmembersis37,DraganTsankovBlvd.,1797Sofia.
TheManagementBoardmembersareelectedforperiodofupto5yearsandcanbere‐electedfor
furthermandateswithoutlimitation.
ThemembersoftheManagingBoardareestablishedprofessionalswithhighreputationandproven
leadership qualities and capacity to translate their knowledge, skills and experience into well‐
argumentedsolutionsthatcanbeappliedtothepracticesintheBank,aimingtoachievetheobjectives
andthedevelopmentstrategyandstablemanagementoftheinstitution.
Asat31December2021themembersoftheManagingBoardheldatotalof33,649sharesofFirst
InvestmentBank,asfollows:Mr.NikolaBakalov(374shares),Mr.SvetozarPopov(5856shares),Mr.
ChavdarZlatev(27,173shares),Mr.IankoKarakolev(12shares),Ms.NadiaKoshinska(234shares),as
noneofthemownedmorethan1%oftheissuedsharecapital.
DIVERSITYPOLICY
Inaccordancewiththepoliciesandpracticesformaintainingandensuringdiversityinthecomposition
ofthemanagementbodies,theBankseekstomaintainatargetlevelof30%ofthemembersofthe
ManagingBoardtobefromtheunderrepresentedgender,ifnecessaryroundingdowntoaninteger.
Asof31December2021,theBankfulfilledthesettargetlevelastwooftheManagingBoardmembers
werewomen.ThereportedlevelsexceededtheaveragelevelsinEUrelatedtomanagementboardin
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itsmanagementfunction(15%)accordingtoreporteddatainresearchfordiversitypracticesofthe
European Banking Authority (EBA Report on the benchmarking of diversity practices at European
UnionlevelunderArticle91(11)ofDirective2013/36/EU(2018data),EBA/REP/2020/05,publishedat
https://eba.europa.eu/regulation‐and‐policy/internal‐governance).Forfurtherinformationregarding
theprofessionalexperienceandcompetencesoftheSupervisoryBoardmembersseesection„Other
information“.
The composition of the Managing Board is structured so as to ensure effective management of
operations,subjecttothegenerallyacceptedprinciplesofmanagerialandprofessionalcompetence
andclearseparationofdutiesandresponsibilities.TheBankisrepresentedtogetherwitheachtwoof
theexecutivemembersoftheBoard(executivedirectors).
FUNCTIONSANDRESPONSIBILITIES
TheManagingBoardofFirstInvestmentBankisthebodywhichmanagestheBankindependentlyand
responsibly, in accordance with the established mission, objectives and strategies. The Managing
BoardoperatesunderrulesofprocedureapprovedbytheSupervisoryBoard.Itsmainfunctionsareto
manageandrepresenttheBankbyresolvingallmattersaffectingtheBankwithinitsscopeofactivities,
exceptthoseoftheexclusivecompetenceoftheGeneralMeetingofShareholdersortheSupervisory
Board according to the law and the Statute of the Bank. The Managing Board organizes the
implementationofdecisionsoftheGeneralMeetingofShareholdersandtheSupervisoryBoard,and
performsanyotherfunctionsassignedtoitbythosebodiesorthelaw.Accordingtothestatutesand
internal regulations, certain decisions of the Managing Board are subject to approval by the
SupervisoryBoard,whileothersrequirecoordinationwithacommitteetotheSB.
Inaccordancewiththeprinciplesofgoodcorporategovernance, an open dialogue is maintained
betweentheSupervisoryBoardandtheManagingBoardofFirstInvestmentBank.Besidestheregular
reports on implementation of objectives and activities, joint meetings are also conducted. The
ManagingBoardimmediatelynotifiestheChairmanoftheSupervisory Board or his deputy of any
circumstancesthatareofmaterialimportancetotheBankandprovidestimelyinformationregarding
implementationofthebusinessstrategy,riskappetite,achievementofobjectives,risklimitsorrules
relating to regulatory compliance, the system of internal control, or the compliance of the Bank's
activitywiththeregulatoryrequirementsandtheexternalenvironment.
The Managing Board of First Investment Bank holds meetings every week. The meeting agenda is
preparedinadvance.ForthemeetingsoftheManagingBoardminutesarepreparedwhicharesigned
byallmembersthatwerepresentatthemeeting.
TheactivityoftheManagingBoardissupportedorganizationallybyaSecretary,whoisemployedon
afull‐time basis andpossesses the necessary qualifications andskills to ensure that the governing
bodiesfollowinternalrulesandexternalregulations,aswellasfacilitatingcommunicationbetween
them.
COMMITTEESANDCOUNCILSTOTHEMANAGINGBOARD
The activity of the Managing Boardis supportedby collectivebodies, including theCredit Council,
Assets, Liabilities and Liquidity management Council (ALCO), Restructuring Committee, and the
Operational Risk Committee, which function accordingto writtenstructure, scopeofactivitiesand
functions–formoreinformationseesection„RiskManagement“.
OtherinternalcollectivebodiesalsooperateintheBank,e.g.anITCommittee,whichasanauxiliary
bodytotheMB,isresponsibleformonitoringtheimplementationoftheBank'sITstrategicprogram,
andtomanageandcontroltheITprojectportfolio,thetargeteduseofresourcesandtheapproved
budgetinthisarea–formoreinformationseesection„Informationtechnology“.
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Inlinewiththelong‐termprioritiesaimedatreducingnon‐interest‐bearingassetsandensuringtheir
effectiverealization,aCommissionforthemanagementandsaleofassetsfunctionswithintheBank.
ItsroleistoassisttheManagementBoardinrelationtothemanagement,administrationandsaleof
acquiredassets,inaccordancewiththeLevelsofauthorityestablishedintheBank.TheCommissionis
chairedbyamemberoftheManagementBoard,whiletheothermembersincludethedirectorsofthe
ImpairedAssets,AssetManagementandAdministrativedepartments,aswellastheHeadoftheAsset
ValuationdivisiontotheFinancedepartment.
AsanauxiliarybodyintheBankfunctionsalsoCommissiononcashoperations,chairedbytheChief
RetailBankingOfficer,whiletherestofthemembersincludedirectorsofthefollowingdepartments:
Vault, Accounting, Branch Network and Analysis and Control of Risk, and the deputy director of
Securitydepartment.
GENERALMEETINGOFSHAREHOLDERS
TheGeneralMeetingofShareholdersofFirstInvestmentBankisthemostseniormanagementbody,
allowingshareholderstodecideonfundamentalissuesconcerningtheexistenceandactivitiesofthe
Bank.Inparticular,theGeneralMeetingofShareholdersdecidesonamendmentsandsupplementsto
the Statute of the Bank, on increasing or reducing the capital,aswellasontransformationor
dissolution of the Bank. The General Meeting of Shareholders has powers to appoint or dismiss
membersoftheSupervisoryBoard,theAuditCommitteeandtheHeadoftheInternalAuditofthe
Bank,decideonthedistributionofprofit,ontheissuanceofbonds,aswellasonanyothermatters
undertheStatuteoftheBankandtheapplicablelaw.
InJune2021,anAnnualGeneralMeetingofShareholderswasheld,whichrepresented89.24%ofthe
sharecapitalandvotingrights,atwhichadecisionwastakenthattheentirenetprofitoftheBankfor
2020shallbecapitalizedandsetinotherreserveswithgeneralpurpose.Amendmentsweremadeto
theBy‐lawsofFirstInvestmentBankforauthorizingtheManagementBoardwithinaperiodof5years
as from 11.08.2021, with the prior approval of the Supervisory Board, to adopt resolution for the
issuanceofdebtinstruments,includingsubordinatedtermdebtanddebt/equity(hybrid)instruments,
uptotheaggregateamountofBGN2billionoritsequivalenceinanothercurrency.
TheGeneralMeetingofShareholderselectedregisteredauditorsforperformingindependentfinancial
auditoftheBankfor2021–BDOBulgariaOODandEcovisAuditBGOOD.Thecompanieswereelected
afterpriorapprovaloftheBulgarianNationalBankandrecommendationfromtheAuditCommittee
oftheBankbasedoncriteriaforcoordinationoftheselection,approvedbytheBNBtogetherwiththe
CommissionforPublicOversightofStatutoryAuditors.DecisionweretakenontheGMSforre‐election
ofmembersoftheSupervisoryBoard,aswellasforelectionofanewindependentmemberofthe
AuditCommitteeoftheBank–forfurtherinformationseesection„SupervisoryBoard“.
Withaviewtogreaterefficiencyandfacilitatingtheimplementationofcertaindecisions,theGeneral
Meeting of Shareholders with its previous decisions of 19.06.2019, 29.05.2017 and 16.05.2016
authorized the Management Board, with the prior approval of the Supervisory Board, to adopt
resolutionsfor:issuanceofmortgagebondsundertheLawonmortgagebondswithageneralnominal
amountofBGN400,000,000withmaturityupto10yearsfromdateofissuanceandotherconditions,
definedbytheManagingBoard(withinaperiodof5yearsasfrom23.07.2019);forincrease,through
issuanceofnewshares,oftheBank’scapitaluntilitreachesanaggregatenominalamountofBGN
210,000,000.00(withinaperiodof5yearsasfrom23.06.2017).
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CONTROLENVIRONMENTANDPROCESSES
The Bank has established and constantly improves a reliable and comprehensive internal control
frameworkwhichincludescontrolfunctionswiththenecessarypowersandrightsofaccess,enabling
independent performanceof duties by the structural and auxiliary units exercising monitoring and
control.
Theriskmanagementprocesses,proceduresandrequirementsarestructuredaccordingtothe"three
lines of defense" principle, which include the business units, risk management and compliance
functions,aswellasinternalaudit.Thecontrolfunctionsareindependentoftheoperationalbusiness
unitswhichtheymonitorandcontrol,andarealsoorganizationallyindependentofoneanotheras
theyperformdifferentfunctions.Formoreinformationonriskmanagementandcompliancefunctions
seesection„RiskManagement“.
Theinternalcontrolframeworkisincompliancewiththeapplicable requirements in this sphere,
includingOrdinanceNo10oftheBNBontheOrganisation,GovernanceandInternalControlofBanks
and EBA Guidelines on internal governance. During the period, the procedures for reviewing
complaints were updated, as well as the rules for performing compliance checks with regards to
investmentservicesandactivities,partoftheCompliancefunctionwithintheBank.
FirstInvestmentBankapplieswrittenpoliciesandrulesregardingthedisclosureofconflictsofinterest,
inaccordance with theadopted Policy formanaging of conflict of interest, whichconsolidates the
requirements in the applicable internal banking documents and further develops the necessary
organizationfortimelyidentification,management,avoidanceandminimizingpresentandpotential
conflictsofinterest.
INTERNALAUDIT
The internal audit function established in First Investment Bank has broad powers, independence,
resourceavailabilityandaccesstothecompetentmanagementandsupervisorybodies.Itcontributes
totheeffectivemanagementoftheBank,givingreasonableassurancethatlegalregulations,rulesand
proceduresareadheredto,andappropriateandtimelycorrectiveactionsaretaken,therebyhelping
toreducetheriskoflossesandtoachievethebusinessobjectivesoftheBank.
Theinternalauditcarriesoutperiodicinspectionstoensuretheachievementofgoalsandobjectives,
theeconomicalandefficientuseofresources,adequatecontrolofvariousrisks,protectionofassets,
reliability and integrity of financial and management information, and compliance of activity with
currentlegislationandtheexistingpolicies,plans,internalrulesandprocedures.
In 2021 the General Meeting of Shareholders of First Investment Bank approved the 2020 annual
reportoftheInternalAuditwhichinformsshareholdersofthemainresultsofthecontrolactivitiesof
internalauditors,themeasurestaken,andtheirimplementation.
REGISTEREDAUDITORS
TheannualfinancialstatementsofFirstInvestmentBankaresubjecttoindependentfinancialaudit
jointlybytwoauditcompanies,whichareregisteredauditorspursuanttotheLawonIndependent
FinancialAuditandincompliancewiththeapplicablelegislation.Inordertoensuretransparencyand
todisclosetheresultsoftheBanktoallstakeholders,theauditedfinancialstatementsarepublished
inBulgarianandEnglishonitscorporatewebsiteatwww.fibank.bg.
The registered auditors are elected by the General Meeting of Shareholders on a proposal by the
Supervisory Board and following a recommendation by the Audit CommitteeoftheBank.The
registeredauditorsareauditcompaniesindependentfromtheBank,andtheirselectionisalsoagreed
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in advance with the Bulgarian National Bank based on criteria for coordination of the selection,
approvedbytheBNBtogetherwiththeCommissionforPublicOversightofStatutoryAuditors.
The registered auditors selected to perform independent financial audit of the annual financial
statementsoftheBankfor2021are:
BDOBulgariaOOD,UIC:831255576,enteredintheregisterofregisteredauditors,maintained
bytheCommissionforPublicOversightofStatutoryAuditorsunderregistration№016;and
Ecovis Audit BG OOD, UIC: 204901453, entered in the register of registered auditors,
maintainedbytheCommissionforPublicOversightofStatutoryAuditorsunderregistration
№176.
InitscapacityofacompanyofpublicinterestinaccordancewiththeLawontheIndependentFinancial
Audit, an Audit Committee functions within the Bank. For further information on its functions and
responsibilitiesseesection„SupervisoryBoard“.
PROTECTIONOFSHAREHOLDERS’RIGHTS
ThecorporategovernanceofFirstInvestmentBankprotectstherightsofshareholders,depositorsand
other customers of the Bank, treating all shareholders of the Bankequally, includingminorityand
foreign shareholders. The governing bodies of First Investment Bank provide shareholders and
investorswithregularandtimelydisclosureofinformationaboutmajorcorporateeventsrelatedto
theoperationandcondition oftheBank, ensuring informed exercisingofshareholders’rights,and
informedinvestmentdecision‐makingbyinvestors.
CONVENINGOFGMSANDINFORMATION
TheconveningoftheGeneralMeetingofShareholdersismadebywrittennoticetoshareholdersin
accordance with the Statute of the Bank in order to encourage their participation in the General
Meeting,andinsuchawayasnottoimpedethevotingormakeitunnecessarilyexpensive.TheBank
providesshareholderswithtimelyandadequateinformationfordecision‐making,takingintoaccount
thescopeofcompetenceoftheGeneralMeeting.Theinvitation,togetherwiththewrittenmaterials
related to the agenda of the General Meeting, are announced in the Commercial Register to the
RegistryAgency,submittedtotheFinancialSupervisionCommission,andmadeavailabletothepublic
throughwww.x3news.comatleast30 days before holding the General Meeting. They are also
publishedonthewebsiteoftheBankinBulgarianandEnglishfromthetimeoftheannouncement
until the conclusion of the General Meeting. Upon request, the materials are provided to each
shareholderfreeofcharge.Aspartoftheinvitationwrittenrulesforvotingwithproxyareincluded,
alsorequirementsrelated todocuments prepared in a foreign language,aswellasinformationon
receivingandacceptingnotifications,warrantsofattorneyandotherdocumentsthroughelectronic
meansofcommunicationwerealsolaiddown.
IncaseswheretheBankemployeesarealsoitsshareholders,thesamerequirementsregardingvoting
rightsthatarecurrentlyapplicabletotheothershareholdersareapplied.
MAINTRANSFERRIGHTSANDRESTRICTIONS
AllsharesissuedbyFirstInvestmentBankADareordinary,dematerialized,registered,andeachshare
entitlesitsholdertoonevoteattheGeneralMeetingofshareholders,andtoadividendandliquidation
shareinproportionwithitsnominalvalue.TheBankmaynotissueshares with different nominal
values.
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TheBank'ssharesarefreelytransferable,subjecttotherequirementsofapplicablelaw.Underthe
regulatoryframework,naturalorlegalpersons,orpersonsactinginconcert,maynot,withoutprior
approvaloftheBNB,acquiredirectlyorindirectlysharesorvotingrightsintheBankif,asaresultof
suchacquisition,theirholdingbecomesqualifying,orifsuchholdingreachesorexceedsthethresholds
of20,33or50percentofthesharesorvotingrights,orwhentheBankbecomesasubsidiary.
Norestrictionontherightsofindividualshareholdersholdingsharesofthesameclassisallowed,and
therearenoshareholdersofFirstInvestmentBankwithspecialvotingrights.Also,theBankhasno
knowledge of agreements between shareholders that could lead torestrictionsonthetransferof
shares,orvotingrights.
FirstInvestmentBankmaintainsaspecialsectionontherightsofshareholdersonitscorporatewebsite
at(https://www.fibank.bg/bg/investitori/korporativno‐upravlenie/prava‐na‐akcionerite).
MINORITYSHAREHOLDERSANDINSTITUTIONALINVESTORS
In accordance with good corporate governance practices, the Bank develops initiatives to engage
minorityshareholdersandinstitutionalinvestors.
Inanefforttomaintainanopen line of communication with shareholders and investors, First
InvestmentBankmaintainsanInvestorsClub,byregisteringinwhichallstakeholderscanreceivee‐
mailnotificationsofanyinvestorinformationdisclosedbytheBanktothepublic.
TheBankaimstoorganizeandholdmeetingswithminorityshareholders,withaviewtofurthering
transparency and creating an opportunity for open dialogue and feedback between them and the
seniormanagementoftheBank,aswellastheiropportunitytocontributeandworkactivelyforthe
successfuldevelopmentofFirstInvestmentBankAD.In2021twomeetingswithminorityshareholders
wereheld–inAugustandNovember2021,atwhichthefinancialresultsoftheBankforfirsthalfand
third quarter of the year were presented, as well as the new services offered by the Bank and a
discussiononthestrategyofrdevelopmentinthedigitalbankingandSMEbanking.
Inaccordancewithgoodcorporategovernancepractices,aimingatequaltreatmentofrespondents,
thenoticefortheregularmeetingswithminorityshareholders, as well as the results from their
holding,werepubliclydisclosedthroughwww.x3news.com,aswellasontheBank’swebsite.
INFORMATIONDISCLOSURE
Transparencyand timely disclosureofinformation is a key principle incorporategovernance. First
InvestmentBank maintains asystemofdisclosureinaccordancewithcurrent regulations, which is
aimedatprovidingtimely,accurateandunderstandableinformationaboutsignificantevents,allows
for objective and informed decisions, ensures equal access to information and prevents abuse of
insiderinformation.
First Investment Bank has Disclosure policy adopted by the Managing Board and approved by the
SupervisoryBoardthatoutlinestheframeworkforprovisionofinformation to stakeholders,
shareholdersandinvestorsinaccordancewithmodernpracticesofgoodcorporategovernanceand
providesanopportunityformakingobjectiveandinformeddecisionsandassessments.Indisclosing
information, the Bank is guided by the principles of accuracy, accessibility, equality, timeliness,
integrityandregularity.Attheendof2021theBankupdateditsdisclosurepolicyincompliancewith
the applicable regulatory requirements in this sphere, incl. the new Ordinance No 2 of FSC from
09.11.2021fortheinitialandsubsequentdisclosureofinformationinpublicofferingofsecuritiesand
admissionfortradingofsecuritiesonaregulatedmarket(OrdinanceNo2ofFSC),aswellaswiththe
requirements on sustainable development pursuant to Regulation (EU) 2020/852 of the European
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Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate
sustainableinvestment,andamendingRegulation(EU)2019/2088(Regulation(EU)2020/852)andthe
delegatedactsforitsimplementation,aswellastoRegulation (EU) 2019/2088 of the European
Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the
financialservicessector(Regulation(EU)2019/2088).
In its capacity as a public company and issuer, Fibank discloses to the public (through
www.x3news.com) periodic information, including annual financial reports audited jointly by two
registeredauditors,aswellasinterimfinancialandactivityreports.Thescopeofperiodicinformation
disclosedbyFirstInvestmentBankexceedstherequirementsofnationallegislation,astheBankhas
decidedtopubliclydisclosequarterlyfinancialactivityreportsincompliancewithArt.100n
1
,par.7of
LPOSandArt.15,par.2ofOrdinance№2oftheFSC,whichhavemoredetailedcontentthanthatofits
half‐yearreports,insteadofthemoreconcisepublicnotificationsforfinancialconditionforthefirst,
thirdandfourthquarter.
First Investment Bank prepares its Annual Report in Bulgarian and English. It contains detailed
information on the development and competitive position of the Bankanditsfinancialresults,
implementationofobjectivesandreviewofbusinessbytypeofactivity,aswellasinformationonthe
management structure, the corporate governance framework (Corporate Governance Statement
pursuanttothePublic OfferingofSecuritiesActandtheAccountancyAct),riskmanagement,non‐
financial information, incl. related to sustainable development (Non‐financial statement within the
meaningoftheAccountancyAct)andremunerationpolicyandits implementation (Report on the
implementationoftheremunerationpolicyunderthemeaningofthePublicOfferingofSecuritiesAct).
Withrespecttothereporttheregisteredauditorsshallgavetheiropinionwhetheritcorrespondsto
thefinancialstatementsandispreparedincompliancewiththeapplicableregulatoryrequirements.
TheBankalsoimmediatelydisclosesadhocinformationonimportanteventsrelatedtoitsactivity.
InformationisalsopublishedonthewebsiteofFibank:www.fibank.bg,Investorssection.
Since2016,FirstInvestmentBankhasparticipatedintheEU‐widetransparencyexerciseconductedby
theEuropeanBankingAuthority(EBA),whichincludesaggregatedanddetailedbank‐levelinformation
oncapitalposition,riskexposures,leverageandassetquality.TheexerciseispartofEBA'sactions
aimedatpromotingtransparencyandmarketdisciplineintheEUfinancialmarket.In2021,120banks
andbankinggroupsfrom25countriesfromtheEUandEEA,tookpartintheexercise.Informationon
the results of First Investment Bank are publicly available on thewebsiteofEBAat
https://eba.europa.eu/risk‐analysis‐and‐data/eu‐wide‐transparency‐exercise.
First Investment Bank maintains a corporate website, including an English‐language version, with
establishedcontentandscopeoftheinformationdisclosedtherein.Itprovidesinformationaboutthe
productsandservicesoftheBank,aswellasessentialtradingandcorporateinformationaboutthe
Bank,includingonshareholderstructure,managementandsupervisorybodiesandtheircommittees,
financialreportingandactivityreports,aswellastheotherinformationrequiredundertheregulatory
requirements and the National Corporate Governance Code. A special, easily accessible Investors
section is maintained on the website, featuring detailed and updated corporate governance
information, stock information, financial information, news for investors, general meetings of
shareholders,etc.
Inaddition,FibankpublishesinformationontheBankintheformofpresentationsandinterviewswith
seniormanagement,pressreleases,journals(e.g.FibankNews),disclosesdetailedinformationonthe
products and services of the Bank, the applicable terms and conditions and the Tariff and any
amendmentsthereto,aswellasnon‐financialinformationoneventsandinitiativesconductedaspart
ofitscorporatesocialresponsibilitypolicy.
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In2021,theBankprepareditsactivityincompliancewiththerequirementswithrespecttodisclosure
of information in the single electronic reporting format pursuant to Delegated Regulation (EU
2019/815.Accordingtowhichtheannualfinancialreportsandactivityreportsshallbedisclosedin
XHTMLformat,whilespecificpartsoftheconsolidatedfinancialstatementsshallbemarkedbyusing
thein‐lineXBRLformat,whichismachinereadableformat.
INVESTORRELATIONSDIRECTOR
With a view to establishing an effective relationship between FirstInvestmentBankandits
shareholdersandpersonsthathaveinterestininvestinginfinancialinstrumentsissuedbytheBank,
anInvestorRelationDirectorisappointedwithinFirstInvestmentBank–Mrs.VassilkaMomchilova
Stamatova.
TheInvestorRelationsDirectorofFirstInvestmentBankhasthe necessary qualifications and
professionalexperienceforperformingherobligationsandresponsibilities.Thedirectorisresponsible
forthetimelydisclosureofallneededreports,notificationsandinformationtheBankisrequiredto
disclosetotheFinancialSupervisionCommission,theBulgarianStockExchange,theCentralDepositary
andthepublic,aswellastokeeparegisterofallsentmaterials.
Inexecutionoftheapplicableregulatoryrequirements,inJune2021theInvestorRelationsdirectorof
theBankreportedheractivityduring2020attheAnnualGeneralShareholders’Meetingandherreport
wasadoptedbytheshareholdersunanimously.
ThebusinessaddressoftheInvestorRelationsDirectoris37,DraganTsankovBlvd.,1797Sofia,tel.
+3592/8171430,email:vasilka.stamatova@fibank.bg/ir@fibank.bg.
FirstInvestmentBankhasamobileinvestorrelationsapplicationprovidingquickaccesstofinancial
information,thefinancialcalendaroftheBank,aswellasotherdataandnewsofinteresttoinvestors.
STAKEHOLDERS
FirstInvestmentBankappliesapolicyofprovidinginformationtostakeholdersaboutitsactivity.Those
include persons who are not shareholders but are interested in the economic development of the
company,suchascreditors,bondholders,customers,employees,thegeneralpublic,andothers.
Periodically,inaccordancewithlegalrequirementsandbestpractices,FirstInvestmentBankdiscloses
informationofanon‐financialnature,includingonsustainabledevelopmenttakingintoconsideration
ecological,socialandgovernment(ESG)factors. The Banksupportsecologicalinitiatives,aimedfor
reducing the carbon footprint, as well as socially significant projects, provides sponsorship and
develops donation programs directed primarily towards disadvantaged people, talented children,
supporting Bulgarian sport, culture and education.Formoreinformation,seesection„Sustainable
development“.
Fortwelveyearsnow,FirstInvestmentBankhasmaintainedanddevelopedacorporateblogwhich
functions as a channel of communication aimed at open dialogue in accessible language with
customers,partnersandotherstakeholders.
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SHAREHOLDERS’STRUCTURE
Asat31December2021theshareholderstructureofFirstInvestmentBankincludedthefollowing
shareholders:Mr.TzekoMinev(31.36%),Mr.IvailoMutafchiev(31.36%),BulgarianDevelopmentBank
AD(18.35%)andValeaFoundation(7.87%).
Theremaining11.06%oftheBank’sissuedsharecapital(BGN16.5 million) was owned by other
shareholders,holdingsharessubjecttofreetradeontheBulgarianStockExchange(free‐float).Atthe
endoftheyearthetotalnumberofshareholderswasover2,000whichincludebothindividualsand
legalentities,includinginstitutionalinvestors.
DuringthereportingperiodFirstInvestmentBankdidnotacquireortransferownshares,andatthe
endofthereportingperiodtheBankdidnothaveownshares.
SHAREPRICEANDMARKETCAPITALISATION
In2021,thesharepriceoftheBankfluctuatedintherangebetweenBGN1.51toBGN1.91.Thelast
priceofthesharesofFirstInvestmentBankforthereportingperiodwasBGN1,60(2020:BGN1,84)
and the market capitalization of the Bank, calculated on this basis, amounted to BGN 238,536
thousand.(2020:BGN274,316thousand).Atotalof2,368transactionswereconcludedwiththeshares
oftheBankontheregulatedmarketBSE,amountingtoaturnoverofBGN3,597thousand,compared
to4,219transactionsandBGN8,322thousandturnoverayearearlier.
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As at 31 December 2021, the shares of the Bank were traded on the Main Market BSE, Premium
EquitiesSegmentoftheBulgarianStockExchangeandwereincludedinthreestockexchangeindices
–SOFIX,BGBX40andBGTR30,whichbringtogetherthelargest,most traded and most liquid
companiesonthestockexchangeinBulgaria.
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REPORTONTHEIMPLEMENTATIONOFTHE
REMUNERATIONPOLICY
within the meaning of Art. 100n of the Public Offering of
Securities Act
Initscapacityasacreditinstitutionandapubliccompany,FirstInvestmentBankdiscloses
informationregardingtheremunerationpolicyanditsimplementation.
MAINPRINCIPLESANDOBJECTIVES..............................................................................................90
ENFORCEMENTANDCONTROLAUTHORITIES..............................................................................90
IDENTIFIEDSTAFF..........................................................................................................................90
FIXEDREMUNERATION.................................................................................................................91
RATIOBETWEENFIXEDANDVARIABLEREMUNERATION.............................................................91
CRITERIAFOREVALUATIONANDIMPLEMENTATIONOFTHEACTIVITY.......................................91
SPECIFICREQUIREMENTSFORDEFERRATION,PAYMENTININSTRUMENTSANDRETENTION
OFVARIABLEREMUNERATION......................................................................................................91
LEAVEBENEFITS.............................................................................................................................92
SUMMARYOFQUANTITATIVEINFORMATION..............................................................................92
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REMUNERATIONPOLICY
Initscapacityasacreditinstitutionandapubliccompany,FirstInvestmentBankdisclosesinformation
regarding the remuneration policy and its implementation, and this section of this activity report
representReportontheimplementationoftheRemunerationPolicywithinthemeaningofArt.100n
ofthePublicOfferingofSecuritiesAct.
MAINPRINCIPLESANDOBJECTIVES
TheremunerationprinciplesofFirstInvestmentBankarestructuredinsuchawayastocontributeto
soundcorporategovernanceandriskmanagement.TheBankimplementsaRemunerationPolicyin
accordancewiththeregulatoryrequirements,whichisconsistentwiththebusinessandriskstrategy,
goals,valuesandlong‐terminterestsoftheBank,promotingreliableandeffectiveriskmanagement
anddoesnotstimulaterisk‐takingbeyondthelevelacceptabletotheBank.
ThemaingoalofthePolicyistoattractandretainhighlyqualifiedstaff,motivatethemtoachievehigh
resultsatamoderatelevelofriskandinaccordancewiththelong‐terminterestsoftheBankandits
shareholders.Itisbasedontheprinciplesofavoidingconflictsofinterestandequaltreatmentofall
employees,genderneutrality,documentation,objectivity,reliableriskmanagement.
ENFORCEMENTANDCONTROLAUTHORITIES
The Managing Board of the Bank is responsible for the organization of the implementation and
applicationoftheRemunerationPolicyinFirstInvestmentBankAD.
TheSupervisoryBoardshallapprovetheRemunerationPolicyontheproposaloftheManagingBoard
andaftercoordinationwiththe RemunerationCommittee,whichasabodyfunctioningwithinthe
Supervisory Board, supports its activities in this area. For more information on the Remuneration
Committee,seethesection"SupervisoryBoard".
TheRemunerationPolicyisasubjecttoreviewatleastonceayearandupdatedasnecessary.
IDENTIFIEDSTAFF
TheRemunerationPolicydeterminesthecategoriesofstaff,incl. the identified staff, whose
professionalactivitieshaveasignificantimpactontheriskprofileoftheBank,incl.membersofthe
SupervisoryBoardandseniormanagementstaff,includingmembersoftheManagingandexecutive
directors; employees with managerial responsibility for independent control functions and those
whoseactivitiesinvolverisk‐taking.
For2021thenumberofidentifiedstaffofFirstInvestmentBankonaconsolidatedbasisamountsto
61employees,whichincludemembersoftheSupervisoryBoardandtheManagingBoard,aswellas
otherpersons,whoseactivities are relatedtorisk‐taking,incl.inthefieldof lendingandthemain
businesslines,aswellasthoserelatedtoindependentcontrolandothercorporatefunctions.They
are defined in accordance with the internal methodology for evaluation and determination of the
categoriesofemployeesbytheidentifiedstaff,developedaccordingtothequalitativeandquantitative
criteriaofCommissionDelegatedRegulation(EU)2021/923of25March2021supplementingDirective
2013/36/EU of the European Parliament and of the Council with regard to regulatory technical
standards setting out the criteria to define managerial responsibility, control functions, material
businessunitsandasignificantimpactonamaterialbusinessunit’sriskprofile,andsettingoutcriteria
foridentifyingstaffmembersorcategoriesofstaffwhoseprofessionalactivitieshaveanimpactonthe
institution’sriskprofile.
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FIXEDREMUNERATION
Individual permanent remuneration of identified staff is determined and developed by defining
remunerationlevelsforthespecificposition.Astartinglevelisdeterminedatwhichemployeesare
generally appointed, taking into account their expertise and relevant and proven managerial
experience,aswellasaremunerationlevelaftersuccessfullypassingtheprobationaryperiod,defined
asapercentageincreaseoverthestartinglevel.
Permanent remuneration of employees within the category of identified staff is subject to annual
review,whichiscarriedoutaspartoftheprocessofplanningandbudgetingstaffnumbersandstaff
expensesforthenextyear.Thereviewofpermanentremunerationandchangedecisionsarebased
onassessmentofemployees’performanceusinganumberofelements.Theyincludeperformance
againstspecificpre‐definedkeyindicators/targetsreflectingthespecificcontributionoftheposition
and consistent with the targets and key priorities of the unit; indicators measuring the personal
productivityandefficiency of employees;currentprioritiesofthe Bank byindividual business line;
generaltrendsinthedevelopmentofthelabormarketand/ordataoncurrentremunerationlevelsfor
similarpositions;approvedlevelsforthespecificpositionandlevelsandindividualremunerationof
employeesatsimilarlygraduatedpositions;staffcostsbudgetedfortheperiod.
RATIOBETWEENFIXEDANDVARIABLEREMUNERATION
TheRemunerationPolicyestablishesthebasicprinciplesindeterminingofremuneration‐fixedand
variable,andtheaimistoprovideanopportunityforanoptimalratiobetweenfixedandvariable
remunerationinaccordancewiththeapplicableprovisions.
Theamountofthevariableremunerationmaynotexceedtheamount of the permanent
remuneration,exceptinthecaseswhenbyadecisionoftheGeneralMeetingofShareholdersofthe
Bank a higher amount is determined, but not more than twice the amount of the permanent
remuneration.
CRITERIAFOREVALUATIONANDIMPLEMENTATIONOFTHEACTIVITY
Thevariableremunerationshallbebasedontheresultsoftheactivityandtheachievedgoals,taking
intoaccountthelevelandtimehorizonoftheassumedrisks,thepriceofthecapitalandthenecessary
liquidity.Theassessmentshallbebasedonanappropriatecombinationoffinancial(quantitative)and
non‐financial (qualitative) criteria, including a combination of the assessments of the employee's
performance,thestructuralunitinwhichtheemployeeworksandtheBankasawhole.
Thequantitativecriteriashallincludeindicatorssuchasbudgetexecution,achievementoftargetlevels
ofearning,capitaladequacyandeffectiveness,aswellasotherrisk‐adjustedindicators(e.g.economic/
internalcapital),throughwhichexanteriskadjustment.
Thequalitycriteriashallincludeachievingstrategicgoals,adherencetotheBank'spoliciesandstrategy
for risk management, customer satisfaction, compliance with internalrules,ethicalnormsand
corporatevalues,initiative,motivation,leadership,teamwork,cooperationwiththeotherstructural
units,etc.
SPECIFIC REQUIREMENTS FOR DEFERRATION, PAYMENT IN INSTRUMENTS AND
RETENTIONOFVARIABLEREMUNERATION
InaccordancewiththecurrentlegislationandtheRemunerationpolicyatleast50%ofthevariable
remunerationoftheemployeesfromidentifiedstaff,shallcompriseofsharesandotherinstruments
relatedtosharesorequivalentnon‐cashinstruments,aswellasinstrumentswithinthemeaningof
Art.52orArt.63ofRegulation(EU)№575/2013orotherinstrumentswhichcanbefullyconverted
intoCommonEquityTier1instrumentsorwrittendown,asfarassuchinstrumentsadequatelyreflect
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thecreditqualityoftheBankasagoingconcernandareappropriatetobeusedforthepurposeofthe
variableremunerationinlinewithDelegatedRegulation(EU)№527/2014.
The requirements regarding the instruments to determine an appropriate retention period are
includedinordertocomplywiththeincentiveswiththelong‐terminterestsoftheBank.
Theremunerationpolicyshallprovideamechanism foradeferredpaymentofatleast 40% of the
variableremunerationoftheidentifiedstaffforaperiodofatleastfourtofiveyears,dependingon
theeconomiccycle,thenatureoftheactivityandtheassociatedrisks,aswellasbythepositionofthe
respectiveemployee.Thedeferralmechanismshallinvolveproportionateallocationofthedeferred
variableremunerationoritsgradualincreaseovertheperiodofdeferral.
LEAVEBENEFITS
Accordingtotheconcludedcontractsformanagementandcontrolincaseofunilateralterminationby
theBank,withoutnotice,themembersoftheManagingBoardareentitledtocompensationinthe
amountofupto6monthlyremunerationsunderthecontract,andthebranchmanagers‐2months.
AccordingtotheconcludedagreementsbetweentheBankandthemembersoftheSupervisoryBoard,
uponterminationofthecontractthemembersoftheSupervisoryBoardareduecompensationupto
12monthlyremunerations,andinspecialcasesthecompensationisupto24monthlyremunerations.
TheemploymentcontractsoftheBank'semployeescomplywiththeapplicableprovisionsoftheLabor
Codeanddonotcontainclausesthatdifferfromtheprovisionsofthelawandtheusualpractice.
In2021,noseverancepaywaspaidtotheidentifiedstaff.
SUMMARYOFQUANTITATIVEINFORMATION
In2021,theremunerationpaidtoseniormanagementamountedtoBGN10,863thousand(2020:BGN
10,087 thousand). During the year, no variable remuneration was paid under the meaning of
OrdinanceNo4oftheBNBfortherequirementstowardsremunerationsinbanks.
ThecreditexposureofthepersonscontrollingormanagingtheBankattheendoftheperiodamounts
toBGN3513thousand(2020:BGN1769thousand)onaconsolidatedbasis.
FormoreinformationonRelatedpartytransactionsandremunerationpaid,seeNote35“RelatedParty
Transactions”oftheConsolidatedFinancialStatementsfortheyearended31December2021.
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NON‐FINANCIALDECLARATION
within the meaning of Art. 51 of the Accountancy Act
Inaccordancewithlegalregulationsandgoodpractices,FirstInvestmentBankdisclosesin
its Annual Reports non‐financial information that represents a Non‐financial statement
withinthemeaningofArt.51oftheAccountancyAct.
BUSINESSMODEL..........................................................................................................................94
SUSTAINABLEDEVELOPMENT.......................................................................................................95
ENVIRONMENTALISSUES..........................................................................................................96
SOCIALISSUES............................................................................................................................99
GOVERNANCEISSUES..............................................................................................................100
ETHICALISSUES...........................................................................................................................100
CODEOFETHICS......................................................................................................................100
RESPONSIBILITYANDCOMPLIANCE........................................................................................101
WHISTLEBLOWING..................................................................................................................101
HUMANCAPITAL.........................................................................................................................103
POLICYFORNOMINATIONANDSUITABILITYASSESSMENT.......................................................105
INFORMATIONTECHNOLOGY.....................................................................................................106
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BUSINESSMODEL
FirstInvestmentBankoffersauniversalbusinessmixofproductsandservicesto
individuals,aswellastobusinessclients,incl.strategicfocusfordevelopmentin
thespheresofretail,smallandmedium‐sizedenterprises.
BUSINESSPRINCIPLES
Webelievethattrustisthebasisoflong‐term
relations.
Westrivenotonlyforthebestpracticesandresults,
butwehavethegoodwillanddisciplinetoachieve
them.
Weappreciateandrespectourbusinesspartners.
Westrivefordevelopmentandproactivesolutions.
Weareengagedinsocialissuesandwemakeour
contributiontotheirsolution.
Webearresponsibilityforourdecisionsandactions.
COMPETITIVEADVANTAGES
First‐classcustomerservice.
Well‐recognisedbrand.
Deepknowledgeofthemarket.
Widebranchnetwork.
Innovativedigitalservices.
Solidmarketpositions.
Flexibilityindecision‐taking.
Highprofessionalstandards.
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Fibanksuccessfullyadaptsitsbusinessmodelandbusinessdevelopmenttothecurrentchallengesof
theexternalenvironment,includingtheprocessesofdigitalizationandthesustainabledevelopment
trends.Contributingtothisareitscustomer‐orientedstrategy,conservativeriskpolicy,experienced
management,aswellashighcorporategovernancestandardsappliedinpractice.
ForfurtherinformationregardingthestructureoftheGroup,seesectionsection„Fibankprofile“.
SUSTAINABLEDEVELOPMENT
Thefactorsrelatedtoclimatechangeandsustainabledevelopment(ecological,socialandgovernance
‐ESG),hasincreasingreflectiononbusinessactivitiesandleadtochangesinbusinessmodels.Their
implementation in all processes is fundamental for the long‐term development of the Bank. It is
extremelyimportantalsoforadequateresponsetomarketexpectations,supportofclientsandthe
communityasawhole.
In2021,FirstInvestmentBankundertookimportantsteps(organization,roadmap)forimplementing
therequirements,reflectingESGfactorsintheactivity,itsstrategicplanningandbusinessstrategy,risk
manadementframeworkandinternalgovernance.
The Bank takes a holistic approach to the implementation of sustainability requirements through
integration in its business processes, risk management and corporate governance framework,
includingthelendingprocessanddecision‐making,creditassessmentofborrowersandinvestment
activity,aswellasinsettingthetonebythemanagementintermsofcommitmentanddevelopinga
sustainabilitycultureamongemployees.
Duringtheyear,FibankjoinedtheSustainableFinanceworkinggroupoftheAssociationofBanksin
Bulgariawhichaimstomonitorchangesinsustainabledevelopmentandassistbanksinaddressing
them,includingwithrespecttoreshapingbusinessstrategiesandobjectives,takingintoaccountthe
impactofESGfactors,incorporatingESGrisksinriskmanagementstrategies,organizingtrainingsto
develop sustainable development commitment within the sector, as well as coordination and
providingguidanceondisclosureandreportingintheareaofESGrisksandsustainability.
In2021, First Investment Banktooka number ofactions and implemented initiatives and projects
relatedtosustainabledevelopment,includingonenvironmental,socialandgovernanceissues.
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ENVIRONMENTALISSUES
FirstInvestmentBankrecognizesthegrowingimportanceofenvironmentalissuesandclimaterisk,
whicharereflectedinthebusinessdevelopmentstrategiesofbanksandhaveasignificantimpacton
riskmanagementininstitutions.
Duringtheyear,Fibankrevieweditsbusinessstrategyandsettargetexposurevolumesbybusiness
segmentfortheperiod2022‐2024meetingtherequirementsfor"green"lendingunderRegulation
(EU)2020/852oftheEuropeanParliamentandoftheCouncilof18June2020ontheestablishmentof
a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088
(TaxonomyRegulation),withaviewtoachievingtheobjectivesoftheParisAgreementonclimate
changemitigationandadaptation.Emphasiswasplacedoncreditprogramsassistingthetransitionto
decarbonisationinsectorssubjecttotransitionalrisk,aswellasonthedevelopmentofprogramsto
reducecarbonemissionsfromownactivities.
Attheendoftheyear,theBankperformedananalysisofitscustomersandloanportfolioinorderto
identifyexposurestotaxonomy‐eligibleeconomicactivitiesundertherequirementsoftheTaxonomy
Regulationanditsdelegatedacts.Asof31.12.2021theexposurestowardstaxonomyeligibleandnon‐
eligible economic activities, calculated in line with the requirements of Delegated Regulation (EU)
2021/2178onthedisclosureswithrespecttoecologicallysustainableeconomicactivities(Delegated
Regulation(EU)2021/2178)were,asfollows:
Exposuresasof31.12.2021
%oftotal
assets
%ofcovered
assets
10
Taxonomyeligibleeconomicactivities 9% 12%
Taxonomynon‐eligibleeconomicactivities 56% 72%
Totalfinancialandnon‐financialcorporations 65% 84%
Attheendoftheyear,theBank'ssecuritiesinvestmentportfolioincludedbondsbackedby“green”
projectsor by loans for mitigation of greenhouse gas emissionstotaling over EUR25 million(BGN
49,207thousand).
Inaddition,incompliancewithapplicableregulations,FirstInvestmentBankdisclosesinformationfor
itsexposurestofinancialandnon‐financialcorporations,whichare/arenotobligedtopublishnon‐
financialdeclaration,aswellastheexposurestocentralgovernments,centralbanksandsupranational
issuers,derivativesandotherasashareofthetotalassetsoftheBank,asfollows:
10
Coveredassets–totalassetsexcludingexposurestocentralgovernments,centralbanksandsupranational
issuers,andderivatives.
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Exposuresasof31.12.2021 %oftotal
Financialandnon‐financialcorporations,whichareobligedtopublish
non‐financialdeclaration/information
4%
Financialandnon‐financialcorporations,whicharenotobligedtopublish
non‐financialdeclaration/information
61%
Totalfinancialandnon‐financialcorporations 65%
Centralgovernments,centralbanksandsupranationalissuers 22%
Derivatives 0%
Other 13%
Totalassests 100%
Startingfrom1January2024,banksandfinancialcorporationswillhavetodisclosethegreenasset
ratio: a key sustainable development indicator showing exposures related to taxonomy‐aligned
activities as a percentage of total assets in compliance with the technical verification criteria
establishedforeacheconomicactivityunderCommissionDelegatedRegulation(EU)2021/2139of4
June2021supplementingRegulation(EU)2020/852oftheEuropeanParliamentandoftheCouncilby
establishingthetechnicalscreeningcriteriafordeterminingtheconditionsunderwhichaneconomic
activity qualifies as contributing substantially to climate change mitigation or climate change
adaptationandfordeterminingwhetherthateconomicactivitycausesnosignificantharmtoanyof
theotherenvironmentalobjectives.
In line with the adopted policies for reducing the carbon footprint and investing in sustainable
development,newcreditproductsinthefieldofsustainablefinancingweredevelopedandlaunched
attheendoftheyear:GreenTransport,intendedforpurchaseofnewelectricvehiclesbybusiness
customers; Green Energy ‐ Free Market for companies wishing to invest in the construction of
photovoltaicsystemsforproductionofelectricityforfreemarketsale;andGreenEnergy‐OwnUse
forconstructionofphotovoltaicsystemsgeneratingelectricityforownconsumptionorforsale.
Aspartoftheinitiativestoprotecttheenvironmentandreduceharmfulemissions,anewEcoPortfolio
productwasdeveloped.Itisintendedforbothindividualandbusinesscustomersandislinkedtoa
portfolioofbondsbackedby“green”projectsorbyloansformitigationofgreenhousegasemissions.
Asat31.12.2021attractedfundsunderthisstructuredproductamountedtoBGN2,638thousand.
Duringtheperiod,aspartofFibank'sSmartLadyprogram,theSustainableLadyFundwasestablished
insupportofinnovative"green"projectsofwomenentrepreneurs.TheFundisajointinitiativewith
Mastercardaimedatequalstart,innovationandcirculareconomy,partofthenetworkofglobaland
localprojectsoftheinstitutioninsupportofecology.
Attheendoftheyear,thefirstprojectsreceivedfinancialsupportinacompetitionwithBGN10,000
prizefund.Itwasheldinthecategoriesofstart‐upsandalreadyoperatingbusinesses,focusingon
projectsrelatedtofoodwasteandcreatingenvironmentallyfriendlyestablishments.
Duringtheyear,FirstInvestmentBankjoinedtheinitiativeoftheBulgarianStockExchangeandthe
IndependentBulgarianEnergyExchangefortheestablishmentofaGreenFinance&EnergyCenter
functioningasathink‐tankonsustainablefinanceandfocusingtheeffortsofbusinesses,government
andstakeholderstowardseconomictransformationforsustainabledevelopment.Theprojectaimsto
promoteandparticipateinthedevelopmentofpoliciesinthefieldofsustainablefinanceandenergy,
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aswellastogenerateideasforthedevelopmentofmethodologiesforstockindicesandfinancial
instrumentsbasedonsustainabilityfactors.
InNovember2021,fortheninthconsecutiveyear,
Fibankstoodbehindacharitablecausethroughits
2022calendardedicatedtotheBulgarianRhythmic
Gymnastics Federation (BRGF) and the idea for
sustainable development through research and
preservation of Bulgarian varieties of fruits and
vegetables.Thelattertaskisinlinewiththe2030
AgendaforSustainableDevelopmentoftheUnited
Nations, aimed at geographical biodiversity and
reduction of the carbon footprint and damage to
naturefromtheuseofpesticides.Thecalendarwas
printedon100%recycledpaperwithoutelemental
chlorineorheavymetalsandwithaneutralpH,in
line with the bank's long‐term commitment to
socialresponsibility and sustainable development.
All proceeds from the sale of the calendar were
donated to the Bulgarian Rhythmic Gymnastics
Federation and the Agricultural Academy, in
supportoftheiractivities.
Thefundsraisedundertheinitiativeamounted
toBGN13,727whichFibankdoubled,thusbringingthetotalamounttooverBGN27,000.
Attheendof2021,FirstInvestmentBanktookadecisiontomoveitsheadquarterstoSofiaTechOne,
anewandmodernbuildingcertifiedforsustainabilityasExcellentundertheBREEAM.Thepremises
are equipped with a new generation climate management system providing individual settings for
roomsandofficeswhichhelpsreducecarbon(CO2)emissionsintheatmosphere.
Inaddition,aspartofinitiativestoreducecarbonemissionsfromownactivities,fluorescentlighting
inthebranchnetworkisgraduallyreplacedwithdiodelighting.Airconditioningisalsomodernized
withefficientandenvironmentallyfriendlysystemsusingR32refrigerantwhichhas4timeslesscarbon
footprint.
The Bank's paper consumption has decreased by 8% during the year and by 15% annually on
averagefortheperiod2019‐21,aprocessdrivenbyinitiativesfordigitizationoftheactivity.
ForfurtherinformationontheecologicalinitiativesofthesubsidiarycompanieswithintheGroupof
FirstInvestmentBank,seesection„Businessreviewofsubsidiarycompanies“.
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SOCIALISSUES
In 2021, First Investment Bank strengthened its image as a socially responsible institution by
implementingvariousprojectsinthefieldsofcorporatedonation,education,cultureandsportsas
partofitscorporatesocialresponsibilityprogram.
During the period, First Investment Bank further
expandeditsSmartLadyprogrammainlytargetedat
microenterprisesrunorownedbywomen,aswellas
at businesses whose products and/or services are
designedforwomen.Sofartheprogramhasfunded
projectsworthoverBGN85million,helpingmorethan
700womenentrepreneurscreatenewbusinessesor
developexistingones.
Additionally, more than 250 ladies have undergone
training on specially tailored topics such as digital
marketing,presentationskills,overcomingobjections,
negotiationskills,etc.throughtheprogram'sweb‐basedplatform.
Duringtheyear,thepartnershipbetweenFirstInvestment
BankandthenationalorganizationLittlePeopleofBulgaria
becamepartoftheGoodnessisNeverEnoughcampaignof
theBulgarianDonationForum.Itsmaingoalistopromote
good corporate donation practices and show the
importanceof joint cooperation betweenbusinesses and
NGOs.Thecampaignisimplementedwithintheframework
oftheDonationforChangeproject.Fibankwasthefirst
BulgarianbanktobuildATMterminalsspeciallyadaptedfor
peopleofshortstaturefiveyearsago.Itcontinuesto
increasethenumberofsuchATMsandsupporttheannual
activitiesofthenationalorganizationLittleBulgarianPeople.Aprojectaimedatfacilitatingtheuseof
theBank'sATMterminalsbyblindpeoplewasalsolaunchedduringtheyear.
As a bank dedicated to supporting the country's culture, during the reporting period Fibank
contributedtoinitiativesinthefieldsofmusic,theaterandfinearts,includingtheInternationalJazz
Festivalin Bansko,theSofiaSummerFestand theexhibitionofChristoandJeanne‐ClaudeinSofia
which presented to the Bulgarian public a selection of original lithographs, along with their iconic
monumentalprojects.FibankcontinueditssupporttothesocialprogramoftheUnionofBulgarian
ArtistsandthefundspeciallycreatedbyUBAthroughannualdonationsandsocialinitiativesaimedat
raising funds, as well as granting scholarships to talented disadvantaged students in the field of
theater.
FibankcontinueditsjointinitiativewiththeHigherSchoolofInsuranceandFinance(HSIF)underthe
BankingManagementandInvestmentActivitymaster'sprogramwhichaimstomeettheeconomy’s
demand for education based on a combination of established business practices and academic
expertise.Duringtheyear,FibankandHSIFgrantedthreescholarshipsandprovidedopportunitiesfor
professionalrealizationforthemostmotivatedcandidatesparticipatingintheprogram.
Development of Bulgarian sports and support for young talents areamongtheimportantcauses
underlying the social responsibility program of First Investment Bank. During the year, the Bank
continued to champion initiatives in its capacity as general sponsor of the Bulgarian Olympic
Committee (BOC) and sponsor of the Bulgarian Athletics Federation (BAF),theBulgarian Rhythmic
Gymnastics Federation (BRGF) and others. In September 2021, at anofficialceremony,theBank
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awardedthemedalistsoftheTokyoOlympicGames,aswellastheircoaches,withgoldandsilvercoins.
InFebruaryandMarch2021,FibankalsoprovidedsupportforthestartsoftheMen'sGiantSlalom
WorldCupinBansko,aswellastheWorldJuniorAlpineSkiingChampionship.
For the ninth consecutive year, First Investment Bank awarded the most successful Bulgarian
companiesintheBestBulgarianCompanyoftheYearcompetition.Theinitiativeiscarriedoutthanks
to Fibank, its aim being to raise public awareness of good business examples in the country and
promotesuccessfulbusinessmodels,thusmotivatingBulgariancompaniestowardscompetitiveness
andinnovation.
In2021,thetotalvalueoffundsdonatedbyFibankforvarioussocialinitiativesandsponsorships
exceededBGN720,000.
AtestimonytoFibank’sachievementsduringtheyearwastheGoldenHeartAwardoftheBusiness
LadyMagazine.Itservesasrecognitionoftheeffortsofcompanieswithhighestcontributiontosocial
causes, and was awarded to Fibank for its consistent policy in the field of corporate social
responsibility.
ForfurtherinformationonthesocialinitiativesofthesubsidiarycompanieswithintheGroupofFirst
InvestmentBank,seesection„Businessreviewofsubsidiarycompanies“.
GOVERNANCEISSUES
ForFirstInvestmentBankADgoodcorporategovernanceisakeyelementforensuringlong‐termand
sustainabledevelopment,andsuccessfulbusinessmodel.ThecorporatepolicyoftheBankisbasedon
professionalandtransparentgovernanceinaccordancewithinternationallyrecognizedstandardsand
principlesofgoodcorporategovernance,takingintoaccountchangesintheregulatoryandeconomic
environmentaswellasthefinancialmarketsinthecountryandabroad.
FirstInvestmentBankimplementswrittencorporategovernancepoliciesatgrouplevel,whichsetout
thebasicprinciplesforinternalmanagementandcontrolofsubsidiaries,aswellastheproceduresand
mechanismstopromoteconsistentandintegrateddevelopmentofsubsidiariesinlinewiththegroup's
strategyandinaccordancewiththerequirementsoftheregulatoryandsupervisoryauthorities.
For more information see sections „Corporate Governance Declaration“ and „Business review of
subsidiarycompanies“.
ETHICALISSUES
CODEOFETHICS
InordertoestablishtheprofessionalandethicalstandardsrequiredandapplicabletotheBankasa
businessentity,placeofworkandcreditinstitution,FirstInvestmentBankhasaCodeofEthicswhich
definesthebasicprinciples,ethicalnormsandcorporatevaluesonwhichthepoliciesandbusiness
plans,rules,proceduresanddailyoperationsarebuilt.
TheactivityoftheBankisbasedonthefollowingprinciples:
Knowledgeandobservanceofcurrentlegislation,moralnormsandcustoms,respectforhuman
rights;
LoyaltyandcommitmenttothemissionandvaluesoftheBank;
Responsibleattitudetowardsworkobligations,goodfaith,transparencyandimpartiality;
Correctness,highethics,careandrespectincustomerrelations;
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Observance of office hierarchy, proper execution of management orders, mutual respect and
toleranceinrelationswithpeersandsubordinates,teamwork;
Avoidanceofpersonalorpoliticalbiasesintheperformanceofofficialduties.
RESPONSIBILITYANDCOMPLIANCE
FirstInvestmentBankoperatesinaccordancewiththecurrentnationalandEuropeanregulationsand
otherregulatoryrequirements,accordingtotheestablishedstandardsofpracticeandinaccordance
withtheinternalregulations.TheBanktakesallnecessarymeasurestoensurethatintheperformance
oftheirdutiesthemembersofthemanagementandsupervisorybodiesoftheBankandallemployees
act in accordance with the applicable regulatory requirements and the adopted moral and ethical
standardsofbehaviorsoastominimizerisksassociatedwiththeactivitiesoftheinstitution.
InaccordancewiththeeffectivelegislationthebanksintheRepublicofBulgariaimplementmeasures
topreventtheuseofthefinancialsystemforthepurposesofmoneylaunderingandterroristfinancing.
ThemeasuresappliedbyFirstInvestmentBankaimedatensuringreliablepreventioninaccordance
withtheregulatoryrequirementsincooperationwithotherorganizationsandgovernmentbodies.In
addition,theprinciple"Knowyourclient"isaconditionforofferingappropriateservicetailoredtothe
individualneedsofeachclient,aswellascontributestomanagingrisksfromillegalityoperations.
First Investment Bank applies written rules and policies to identify, assess, manage and mitigate
currentandpotentialconflictsofinterest.TheorganizationofworkingprocessintheBankismeantto
minimizethepossibilityofsituationsrelatingtoconflictsofinterest,asinlinewiththeCodeofConduct
ofFibanktheemployeesareobligedtoputtheinterestsoftheBankanditsclientsabovetheirown
interests,whilekeepingconfidentialityofinformationandprotectionofpersonaldata.Measuresand
actionsarealsostructuredforpreventingfraudsandcorruptionpractices.
WHISTLEBLOWING
TheBank,ledbytheunderstandingthatfollowingalawfulandethicalconductinrelationsbetween
managerialstaff,employees,customersandpartnersoftheBankisanimportantaspectunderlyingits
overallactivity,hasinplaceawhistleblowingpolicy.
ThePolicyaimstosystematizethemeansandproceduresforinternalsharingofinformationwhere
therearesuspicionsofunlawfulactions,orproblemsrelatedtotheworkprocess,therebyensuring
theirtransparentandfairconsiderationandresolution,whilesecuringneededcareandprotectionof
therightsofthepersonssubmittingthesignals.
Thecreationofconditionsforreportinginanenvironmentoftrustandrespect,aswellasforcarrying
outconsistentandimpartialactionstoverifythereceivedreports,isakeyelementinpreservingthe
Bank'shighcorporatespiritandreputation.
APPLICATIONATGROUPLEVEL
Accordingtoitsgroup‐levelCorporateGovernancePolicy,FirstInvestmentBank,asaparentcompany,
setsoutthebasicprinciples,ethicalnormsandcorporatevalues, as well as the guidelines for
compliancewithapplicableregulatoryrequirementsandrecognizedstandardsforcompanieswithin
theGroup,withaviewtoestablishingacommonframeworkforbusinessethicsandconductthathelps
maintainthehighreputationofsubsidiariesandoftheGroupasawhole.
Subsidiaries should comply with the Code of Ethics of Fibank and adhere to the guidelines and
principlessetforthinitsCorporateGovernanceCode,aswellasintheConflictofInterestPolicy,the
Whistleblowing Policy and the Compliance Policy, always taking into account the applicable local
regulationsandactivityspecifics.
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Inaccordancewithlegalregulationsandgoodpractices,FirstInvestmentBankdisclosesinitsAnnual
Reportsnon‐financialinformation thatrepresentsa Non‐financial statementwithinthe meaningof
Art.51oftheAccountancyAct,includingwithregardtosustainable development and the related
ecological, social and government issues, the human capital and the diversity policies in place,
descriptionofbusinessdevelopmentandproducts,corporategovernancepracticesandethicalissues,
aswellasinformationonbusinessmodel,productsanddevelopmentpriorities–formoreinformation
see also sections „Mission and development priorities“, „Fibank profile“, „Highlights 2021“,
„Distribituion channels“, „Information technology“, „Human capital“, „Corporate governance
statement“,„Businessreview“,„Businessreviewofsubsidiarycompanies“,„Developmentpriorities“.
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HUMANCAPITAL
First Investment Bank aims to ensure empoyees with favorable work environment, under tone of
understanding.
In 2021, the Bank's human resources management activities continued to be focused on ensuring
adequateresponseandovercomingthechallengesposedbytheCOVID‐19pandemic.Asearlyas2021,
Fibankprovideditsemployeeswitha"greencorridor"forvaccinationagainstCOVID‐19,becomingone
ofthefirstemployersinthecountrytodosoinordertoprotecttheirhealthandcreateasafeand
secureworkingenvironment.
Animportantelementofthehumancapitalmanagementactivityduringtheyearwascoordinatingthe
implementationoftheBank'sprotocolforactioninaCOVID‐19pandemicanditsupdatinginlinewith
the changing situation. A Plan for assessment of the epidemic situation and taking anti‐epidemic
measureswasdevelopedandputintopractice,withappropriatestepsandactionsdependingonthe
numberofcases.Insupportofemployees,activitieswerecarriedoutfortimelycommunicationof
guidelinesandrulesforimplementingtheanti‐epidemicmeasureswhileatthesametimemaintaining
theefficiencyofwork.Initiativestoprotectemployees'healthalsoincludedconstantcommunication
withstateandlocalhealthauthorities.Whereneeded,employees wereassisted in theiraccess to
medicalservicesandtesting.
In2021,projectsandinitiativesinotherimportantareasofhumancapitalmanagementatFibankwere
alsocarriedout.AprojectforintroductionofanewHRsystemwassuccessfullycompleted.Theaimof
theprojectwastoachievehigherefficiencyinperformingkeyprocessesandactivitiesofhumancapital
management.Thenewsystemcanbeupgradedwithmodulesformanagementofremunerationand
benefits,selection,workperformanceandtraining.
During the period, significant training initiatives and projects were carried out having long‐term
impactonthemotivationandperformanceofemployeesandteamsintheBank,including:
Training in Development of customer interaction skills: advice, sales and customer service–
practicallyorientedtrainingforfrontofficeemployeesandloanofficers,withanemphasisonthe
development of skills for successful and proactive customer‐oriented communication when
offeringandsellingproducts.Theprogramreliedonaninteractiveapproachwhenpresentingthe
informationsuchasrole‐playinggames,useofvideoaids,involvementofemployeesindiscussions
andsharingsuccessfulexperiences.
TraininginFibankinvestmentproducts–developingsalesskillsforproductsandsolutionstailored
tocustomerneedsinthebranchnetworkofFibank,inlinewithcurrenttrendsandchallengesin
thebankingsector.
Shiftingthetrainingprocessfocustoe‐learninginconnectionwiththeanti‐epidemicmeasures
appliedforpreservationofthehealthofemployees.Duringtheyear,morethan1,600employees
participated in e‐learning in various fields including retail loan products, insurance products,
remotebanking,newsystemforretailloanapproval,introductorytrainingfornewemployees,and
informationsecurity.
Introductorytrainingsfornewemployeesareheldonaregularbasis,coveringallthemaintopics
necessary for acquaintance with the work environment and the Bank's activities including
corporategovernance,ethicalrequirementsandcodeofconduct,internalcontrolfunctions(risk
management,complianceandinternalaudit),anti‐moneylaundering/combatingthefinancingof
terrorism(AML/CFT)measures,systemsandbusinessactivities.
In2021,over65%ofFibankemployeesenrolledforvariousformsoftraininginoneormoreareas.The
Bankcontinuedtoinvestintheprofessionaldevelopmentofitsstaffbyfinancingtheparticipationof
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11employeesinthe Banking ManagementandInvestment Activity master's programcarriedout
jointlywiththeHigherSchoolofInsuranceandFinance(HSIF).
During the year, the consistent efforts continued for
encouraging positive examples of productive and
achievement‐oriented work behavior. For the sixth
consecutive year, the Together We Can Do More program
washeld,servingasaninspiringandmotivatingboosttoemployeesoftheBank.Attheendofthe
year,thenumberofemployeesawardedfortheentireexistenceoftheprogramreached135.
Asof31.12.2021thenumberofstaffofFirstInvestmentBankonaconsolidatedbasisamountedto
2867employeescomparedto2910ayearearlier.Attheendoftheyear,28%oftheBank'sstaffwere
employeesattheageofupto35years,andtheshareofthoseupto45yearswas63%ofthetotal
staff.
ThemajorityoftheBank'semployeesarewomen(74%),astheshare for those with managerial
functions(directorsofdepartments,branchmanagers,managersofspecializedunits)was46%.
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POLICYFORNOMINATIONANDSUITABILITYASSESSMENT
In2021,FirstInvestmentBankcontinuedtofurtherdevelopitsPolicyfornominationandassessment
of the suitability of members of the managing and supervisory bodies and persons holding other
positions, mainly in terms of its practical implementation, incl. developed internal tools,
questionnairesandmatricesforindividualandcollectivesuitabilityassessment,aswellasintheinitial
suitability assessment (in case of appointment of new members / persons)andin the subsequent
suitabilityassessment,whichiscarriedoutregularly,notlessthanonceayear.Theinternalframework
inthissphereisinlinewiththerequirementsandgoodpractices,incl.theLawonCreditInstitutions,
OrdinanceNo20oftheBNBonIssuanceofApprovalstoMembersoftheManagementBoard(Board
ofDirectors)andSupervisoryBoardofaCreditInstitutionandPerformanceRequirementsforTheir
DutiesandthejointEBAandESMAGuidelinesontheassessmentofthesuitabilityofmembersofthe
managementbodyandkeyfunctionholders.
The Policy sets out the basic requirements, principles, guidelinesandcriteriaforselectionand
assessingtheindividualandcollectivesuitabilityofmembersofthebodiesofFirstInvestmentBank
whohavemanagementandsupervisoryfunctions,aswellaswithregardstothekeyfunctionholders
withintheBank.ThePolicystructuresandidentifiestheessential fitand properrequirements and
criteria (incl. with respect to needed knowledge, skills and experience; reputation, honesty and
integrity;independenceandallocationofenoughtimeforperformingofduties;aswellasthepractices
forencouragingdiversity,successionplanningandtraining),sothattheytoamaximumextentmeet
the high standards applied by the Bank with a view to making an adequate contribution to the
realizationofitsobjectivesandstrategy.
TheBankappliesapolicyforencouragingdiversitywithrespecttoSupervisoryBoardandManaging
Boardinordertomaintainadiversegroupofboardmembersand to provide diverse views and
experiencetofacilitateindependentopinions/decisionsandsoundgovernance,whichincludesvarious
aspectssuchasworkexperience,educationalqualifications,gender,age,geographicaldiversity.With
respect to thecomposition of the bodies, the Bank seeks to maintainatargetlevelof30%ofthe
membersoftheSupervisoryBoardandoftheManagingBoardtobe from the underrepresented
gender,asifnecessaryroundingoff(down)toaninteger.Asof31December2021,theBankfulfilled
thesettargetinthepolicy.Forfurtherinformationregardingdiversity,seesectionsSupervisoryBoard
andManagingBoard.
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INFORMATIONTECHNOLOGY
Developing information technology and maintaining a modern infrastructure, information and
technologyenvironmentisamongFirstInvestmentBank'sstrategicpriorities.Overtheyears,theBank
hassystematicallyandconsistentlyinvestedintechnologiesinlinewiththelatesttrendsinbanking,
enablingittoofferinnovativeproductsandmultifunctionalsolutionstocustomers.
In 2021, Fibank continued to develop in this direction, strengthening its position among the most
technologicalandinnovativeinstitutionsintheBulgarianbankingmarket.Duringtheyear,numerous
projectsrelatedtotheimprovementanddevelopmentoftheBank'sITassetsandinfrastructurewere
successfullycompleted.AnewDellEMCVxRailhyper‐convergedappliancewasinstalledandrelated
servicesmigratedtoit.Anewall‐flasharray(AFA)storageinfrastructurewasputintooperationto
ensuregreaterefficiencyandsecurity.ThesystemsmanagingtheIPcommunicationandthecontact
center of the Bank were updated, as well as the data control system.Intermsofnetworking,the
configurationoftheOracleExaDataDatabasemachineX7‐8wasexpandedduringtheperiod.
TheBankusesOracleFlexcubeversion12foritscorebankinginformationsystem.Itfeaturesuniversal
modulesforretailbanking,corporateandinvestmentbanking,andanintegratedworkflowdocument
informationsystemusedforprocessingandapprovalofloanapplications,acceptanceandregistration
of currency transfers and authorization of other payment transactions. The system is built in
compliance with all risk control principles, including the four eyes principle applied in day‐to‐day
operations.ThroughitscentralizedandintegratedITinfrastructure,theBankaimstoprovidefirst‐class
service and high level of security in the execution of banking transactions, as well as to maintain
reliabledatabases,networksandsystemsensuringcontinuityofservicesandkeyprocesses.
InDecember2021,thefirstphaseoftheimplementationofanewcreditprocessmanagementsystem
(BusinessProcessManagement/NewWorkflow)wassuccessfullycompleted.Itcoverstheactivitiesof
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acceptance of applications, approval, granting and renegotiation of loans to individuals, with the
correspondinglimitsandlevelsofauthority.
Inimplementationoftheprojectsforbranchdigitalizationandmodernizationofservicesofferedto
customers,thepilotphaseofaprojectforelectronicsigningofdocumentsattheofficesoftheBank
startedduringtheperiod.
Withregardtopaymentservices,Fibankwasamongthefirstbanksinthecountrytomeetthecriteria
andreceivecertificationfromBORICAADtojointheBlinkschemeforinstantpaymentsinBGN,aswell
as for bulk payments. The work continued for joining the Continuous Gross Settlement (CGS)
mechanismoftheSTEP2‐TsystemoperatedbyEBAClearing.Ahighersecuritystandard(EMVv.2)was
introducedforelectronicpaymentsovertheInternet.
Duringtheyear,technicalsupportwasprovidedforupgradingexistingservicesandfunctionalitiesand
launching new ones: payments with smart devices using digital wallets of third party providers;
paymentswithsmartwatchesusingtheFitbitPayservice;offeringthenewMyCardvirtualcreditcard;
launchingtheGoldAccount,aninnovativeproductforpurchase,saleandkeepingofdematerialized
gold(XAO);providingtheoptiontoremotelyapplyformortgageloansthroughtheMyFibankmobile
application.
TakingintoconsiderationtheimportanceattachedbytheBanktoinformationtechnology,theactivity
is managed by Chief Information Technology and Operations Officer. In addition, there is an IT
committeefunctioningasanauxiliary body to the ManagementBoard.ItmonitorstheITstrategic
programimplementation,theITprojectportfolio,thetargeteduseofresourcesandthespendingof
theapprovedbudget.ThecommitteeischairedbytheChiefExecutiveOfficer,theremainingmembers
includingtheChiefRetailBankingOfficer,theChiefInformationTechnologyandOperationsOfficer,as
well as the directors of the Information Technology, Information Security, Digital Banking, SME
Banking,andFinancedepartments.
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BUSINESSREVIEW
RETAILBANKING
DEPOSITS
In2021,attractedfundsfromindividualsincreasedandreachedBGN7,450,167thousandcompared
toBGN7,255,775thousandayearearlier,mainlydrivenbythe26.0%increaseincurrentaccounts
which reached BGN 2,478,823 thousand (2020: BGN 1,967,574 thousand). Such results were
determined bytheconsistentpolicyoftheBankforestablishinglong‐termcustomerrelationships,
whiledevelopingcross‐sellingandtransactionbusiness.
Fibankoffersawiderangeofcurrentaccounts,includingtheIQcurrentaccount,aswellasaccounts
tailoredtothespecificneedsofcertaincustomergroupssuchascondominiums,notaries,insurance
brokers and agents, private enforcement agents, etc. The Bank offers also banking packets and
programs,inlc.MyChoice,MyChoiceOnline,DigitalMe,DigitalMe+.Inordertoexpandopportunities
forcustomersin2021,theBankdevelopedtheGoldAccount,aninnovativeproductforpurchase,sale
andkeepingofdematerializedgold(XAO).
TheBank'spolicyisaimedatbuildingastabledepositbasebyofferingavarietyofflexibledeposit
products, while maintaining high standards of customer service. In 2021, Fibank maintained the
interest rates on its savings products in line with the market conditions and the competitive
environment,aswellasthehighliquiditylevels.
In2021г.Fibanklaunchedanewdepositproduct–theForMedepositfeaturingdifferentterms(3,6,
12months)andcurrencies.Itisautomaticallycloseduponexpiryofthetermandinterestispaidto
thecustomer'scurrentaccount.
Bytheendoftheyear,termdeposits andsavingsaccountswereintheamountofBGN4,971,344
thousand(2020:BGN5,288,201thousand),withborrowingsfromindividualsretainingamajorshare
at66.7%(2020:72.9%).Withaviewtodiversifyingitssourcesoffunds,theBankparticipatesinthe
internationalplatformWeltSparenbyRaisinaimedatattractingdepositsfromforeignpersons.
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IntermsofattractedfundsfromindividualsFirstInvestmentBankwasplacedfifthamongbanksinthe
countryasattheendofDecember2021(2020:third).Asatthesamedatethemarketshareofthe
Bankamountedto10.27%onanindividualbasis(2020:10.98%).
Asanalternativetodepositproductsinalowinterestrateenvironment,newproductsweredeveloped
during the year for retail and business customers: the Gold Portfolio and the Eco Portfolio, linked
respectfullytothepriceofgoldandtogreenbonds.
LOANS
Thegrossloanportfolioofhouseholdsincreasedwith10.6%toBGN2,398,011thousandcomparedto
BGN2,167,277thousandforthepreviousyear,asaresultofanincreaseinconsumerandmortgage
productlines.
BGNth/%oftotal
2021 % 2020 % 2019 %
Consumerloans 1,074,443 44.8 972,496 44.9 901,057 44.2
Mortgageloans 1,153,425 48.1 1,009,903 46.6 936,102 46.0
Creditcards
167,126 7.0 179,780 8.3 194,464 9.5
Otherprogramsandsecured
financings
3,017 0.1 5,098 0.3 5,098 0.3
Totalloanstoindividuals
2,398,011 100 2,167,277 100 2,036,721 100
In 2021, the Bank introduced a new advanced Business Process Management (BPM) system for
processingretailloanapplications(NewWorkflow).Itcoversthestepsofacceptingloanapplications,
givingopinions,approvingandgrantingnewloanstoindividuals,aswellasrenegotiatingthetermsof
existingones,withintegratedlimitsandlevelsofauthorityforgranting/renegotiatingdifferenttypes
ofloansexposures.
CONSUMERLOANS
Consumer loans increased by 10.5% to BGN 1 074,443 thousand (2020: BGN 972,496 thousand),
contributorsbeingthecompetitivetermsofferedbytheBank,theeasyloanapplicationprocedureand
thedevelopmentofnewproductsandprograms,includingseasonalofferings,inlinewithcustomer
needsandmarketnecessities.
During the year, First Investment Bank continued to be among the most active banks under the
Programforguaranteeinginterest‐freeloanstoprotectpeopledeprivedoftheopportunitytowork
due to the COVID‐19 pandemic organized by the Bulgarian Development Bank, having signed
additionalagreementstoincreasethelimitsandtheportfolioofloansundertheprogram.
AspartoftheBank’sstrategyfordevelopmentanddigitalization of services,developed to further
facilitate customers and promote sustainable environmental development, consumer loans were
offered fully online, with remote signing of documents using a specialized encoding device
(software/hardware token) or a qualified electronic signature viathemobileappofathird‐party
certificationserviceprovider.
Takingintoaccountthedevelopingneedsofcustomersandtheincreaseddemandforonlineservices,
during the period a video consultation service on credit products for individuals was launched,
availableatthecorporatewebsitewww.fibank.bg,aswellasviaMyFibankdigitalbankingorMyFibank
mobileapp.
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FirstInvestmentBank’smarketshareinthissegmentamountedto8.56%(2020:8.63%)attheendof
December2021, andFibankwasfifth(2020:fifth)intermsofconsumerloansamongbanks inthe
countryonanindividualbasis.
CREDITCARDS
Theutilized limits on credit cardswereintheamount of BGN167,126thousandat the end ofthe
period (2020: BGN 179,780 thousand). Fibank develops various and innovative card products and
services,includingthematiccampaignstopromoteandattractnewcustomers,whichwereorganized
inimplementationoftheBank’sconsistentandlong‐termpolicyforstimulatingthesenon‐cash
payments. The relative share of loans utilized through credit cards in the total loan portfolio to
individualsoftheGroupamountedto7.0%(2020:8.3%).
Therewerenewcardproductsandpromotionaloffersduringtheyear,includingthenewMyCard
virtualcreditwithapre‐approvedcreditlimit,issuedentirelyonlinethroughtheMyFibankmobile
app.
Inpursuanceofitsstrategicplans,theBankcontinuedtodevelopitsoperationswithaviewtomore
effectivemanagementofthecustomerportfolioandtargetingindividualcustomergroups,aswellas
identifyingadditionalcross‐sellingopportunities.Forfurtherinformationseesection„Cardpayments“.
MORTGAGELOANS
As at the end of December 2021, mortgage loans increased by 14.2% to BGN 1,153,425 thousand
comparedtoBGN1,009,903thousandayearearlier,forminga48.1%shareintheportfolioofloansto
householdsoftheGroup(2020:46.6%).Asat31December2021,themarketshareoftheBankinthis
segment was 6.37% (2020: 6.68%), as Fibank was placed sixth among banks in the country on an
individualbasis(2020:sixth).
Inpursuanceofitsstrategyfordevelopmentoftheretailbankingsegment,Fibankcontinuedtooffer
mortgagesoncompetitiveterms,aswellastoorganizepromotionalcampaignsaimedatstimulating
sales. To further facilitate customers and digitalize services,theoptionforremotesubmissionof
mortgageloanapplicationswasprovidedthroughtheMyFibankmobileapp.
Fibankwillputeffortsforadditionaldevelopmentofitsdistributionalchannelsforitscreditproducts
andwillcontinuetodevelopandofferflexiblecreditproductsforindividualswiththeaimatattracting
newclientsandofferingsupplementaryproductsandservices.
For more information on the mortgage loan portfolio of First Investment Bank – Albania Sh.a. see
section“Businessreviewofthesubsidiarycompanies“.
ActivityReport2021
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CORPORATEBANKING
DEPOSITS
Attracted funds from corporates and institutions in 2021 increased with 10.4% to BGN 2,523,464
thousand(2020: BGN 2,286,501 thousand). The increase in volumereflectedmainlyinthecurrent
accountsreachingBGN2,074,799thousandattheendof2021(2020:BGN1,757,737thousand)and
forming82.2%oftheattractedfundsfrombusinesscustomersandinstitutionsoftheGroup(2020:
76.9%).
TermaccountsreachedBGN448,665thousand(2020:528,764thousand)attheendoftheperiod,
forming17.8%oftheattractedfundsfromcorporatesandinstitutionsoftheGroup(2020:23.1%).
First Investment Bank offers a variety of deposit and savings accounts, and package programs for
businesscustomerswhichconstantlyadapttomarketconditionsandspecificcompanyrequirements.
In2021,newdepositproductsweredevelopedinordertoexpandopportunitiesforbusinessandretail
customers,includinginnovativeaccountsandproductstiedtothepriceofgoldortoaportfolioof
greenbonds.
Asat31December2021,fundsattractedbythethirtybiggestnon‐bankingclientsrepresented7.40%
ofthetotalamountduetoothercustomers(2020:5.88%).
LOANS
CORPORATELENDING
TheportfolioofloanstocorporatesoftheGroupincreasedwith1.4%toBGN4,735,700thousandat
theendof2021,comparedtoBGN4,669,922thousandayearearlierasresultofincreasingtheshare
of micro, small and medium‐sized portfolios
11
, based on the constant bank’s policy for priority
developmentinthesesegments.Themicroenterprisesincreasedtheirshareupto11.0%(2020:7.5%)
11
AccordingtoCommissionRecommendation2003/361/ECof6May2003concerningthedefinitionofmicro,
smallandmedium‐sizedenterprisesdeterminedonthebasisofannualturnoverasfollows:microenterprises‐
uptoBGN3.9million;smallenterprises‐uptoBGN19.5million;medium‐sizedenterprises‐uptoBGN97.5
million.
ActivityReport2021
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ofallbusinessloans,smallenterprises–upto12.5%(2020:12.1%),medium‐sizedenterprises–to
29.3%(2020:24.5%)attheexpenseoflargeenterprises,whichdecreasedto47.2%(2020:55.9%)of
allbusinessloans.
BGNth/%oftotal
2021 % 2020 % 2019 %
Microenterprises 519,600 11.0 350,200 7.5 324,700 7.2
Smallenterprises 594,327 12.5 564,876 12.1 542,875 12.1
Medium‐sizedenterprises
1,385,398 29.3 1,144,173 24.5 1,189,054 26.5
Largeenterprises 2,236,375 47.2 2,610,673 55.9 2,434,081 54.2
Totalloanstoenterprises
4,735,700 100 4,669,922 100 4,490,710 100
First Investment Bank provides various financing for business clients, including under the form of
workingcapitalloans,investmentloans,guarantees,financingundertheprogramsandfundsofthe
EU,undertheNationalGuaranteedFund,factoringservicesandothers.
In2021theBankappliedtheProcedureforDeferralandSettlementofLiabilitiesPayabletoBanksand
theirSubsidiaries‐FinancialInstitutionsinconnectionwithCOVID‐19(privatemoratorium),developed
bytheAssociationofBanksinBulgaria(ABB)andapprovedbytheBNB,inaccordancewiththeterms
andconditionsofitsoperation.
DuringtheperiodadditionalagreementsweresignedundertheRecoveryProgramoftheBulgarian
DevelopmentBankforportfolioguaranteesinsupportoftheliquidityofenterprisesaffectedbythe
COVID‐19 pandemic, expanding the scope of the program and prolonging its term. For more
informationseesection„Europrograms“.
TheBankcontinuedtoofferfactoringservicestoexistingandpotentialbusinesscustomers,including
companiesdeliveringofgoodsorprovidingserviceswithdeferredpaymentinthecountryorabroad.
FirstInvestmentBankisamemberofFactorsChainInternational(FCI),aglobalnetworkofleading
commercialfinancecompaniesandcanprovideexportfactoringwithoutrecourse,aswellasimport
factoring.
The Bank also maintains co‐operation with leading factoring insurance companies in the area of
commercialfinanceFirstInvestmentBankhassignedtotheframeworkagreementwiththeTaiwan
exportinsuranceagencyEximbankTaiwanforfinancingdeliveriesofgoodsfromTaiwanesesuppliers
tocustomersofFirstInvestmentBankinBulgariaorabroad.
ThemarketshareofFibankattheendofDecember2021amountedto10.84%ofloanstocorporates
inthebankingsystem(2020:11.52%),Fibankretaineditsfourthplace(2020:fourth)amongbanksin
thecountryonanindividualbasis.
Asat31.12.2021,loanstothemanufacturingsectorhadaleadingshareintheportfoliostructureof
theGroup(2021:BGN1,325,019thousand,2020:BGN1,308,787thousand),followedbythetrade
sector(2021:BGN784,314thousand,2020:BGN847,347thousand,)andtheservicessector(2021:
BGN668,753thousand;2020:BGN847,347thousand),formingrespectively18.6%,11.0%and9.4%of
totalloans(2020:19.1%,12.4%and10.9%).Suchdynamicsreflectedthepositivetrendsofeconomic
activityinthecountryandtheconsequencesoftheCOVID‐19crisesindifferentareas,mainlyintrend,
inlinewiththeBank'sdevelopmentgoalsanddiversificationoftheactivity.
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LoansinagricultureincreaseduptoBGN243,141thousandintheendoftheyear(2020:BGN185,157
thousand) In accordance with the its consistent policy for agricultural producers support, incl.
partisipationinspecificprogramsforruraldevelompent,EU‐funded.Anincreasewasalsoreportedin
thesectorsofconstruction–uptoBGN421,176thousand(2020:BGN387,563thousand),tourism,
which reached 2021: BGN 307,981 thousand; 2020: BGN 285411 thousand), transport (2021: BGN
257,355thousand;2020:BGN236,908thousand),infrastructure(2021:BGN444,456thousand;2020:
BGN425,845thousand)andthefinance(2021:179,548;2020:122,506).
During the period, the Bank affirmed its cooperation with the Bulgarian Export Insurance Agency
(BAEZ),bycontinuingitsactivityontheagreementforportfolioinsurancewiththeagency,usedas
partofthetechniquesformitigatingcreditrisk.
SMEBANKING
In 2021, loans to small and medium enterprises
12
increasedwith15.8%andamountedtoBGN
1,979,725thousand(2020:BGN1,709,049 thousand)or41.8% ofthebusinessloansoftheGroup,
fromwhichtosmallenterpriseswereBGN594,327thousand(2020:BGN564,876thousand),andloans
to medium‐sized enterprises – BGN 1,385,398 thousand (2020: BGN 1,144,173 thousand). For the
bank’spolicyonthissegmentcontributedthedevelopedloanproductsandcompetitivetermsoffered
intheproductsforSMEclients,aswellasthevarioussolutionsrelatedtotheprogramsandfundsof
theEUandtheotherguaranteeschemesandfinancing.
In2021,FibankprovidedloansundertheRecoveryProgramoftheBulgarianDevelopmentBankfor
portfolioguaranteesinsupportoftheliquidityofmicro,smallandmedium‐sizedenterprisesaffected
by the emergency situation and the COVID‐19 epidemic. The instrument mainly included working
capitalloansforpaymentofsalaries,leases,administrativecostsandcoveringofotherliquidityneeds
directlyrelatedtobusinessactivity,withamaximumloanamountofBGN3millionandmaximumterm
of6years.
12
EnterpriseswithannualincomeofsalesregardingtheEUcriteriaasfollows:smallenterprises(betweenBGN
3.9‐19.5million)andmedium‐sizedenterprises(betweenBGN19.5‐97.5million).
ActivityReport2021
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TheactivitycontinuedunderthesignedagreementwiththeFundManagerofFinancialInstrumentsin
BulgariaEADforthefinancialinstrumentLoss‐cappedportfolioguaranteetoovercometheeffectsof
the COVID‐19, which was transformed during the year into the Recovery Program. The financial
instrumentprovidesreliefintermsofcollateralrequirementsand/orpricingofloansformicro,small
ormedium‐sizedenterprises,includinginterestratesubsidyundercertainconditions.Enterprisesmay
applyforinvestmentorworkingcapitalloanswithagraceperiodofupto1year,maximumtermof7
years,andamountupto70%oftheapplicant'sannualincomebutnotexceedingBGN3million
.
For
moreinformationseesection„Europrograms“.
InNovember2021,FibanksignedanewagreementwiththeFundManagerofFinancialInstruments
inBulgariaforfinancingofsmallandmediumenterprisesundertheRuralDevelopmentProgram2014‐
2020.Thefinancialinstrumentaimstoprovideloansonmorefavorabletermsforbeneficiariesinorder
toincreasethecompetitivenessoftheagriculturalsectorandstimulateinvestmentinruralareas.It
includesinvestmentandworkingcapitalloans,withmaximumamountofinvestmentloansuptoBGN
2millionwithanoptionforadditionalworkingcapitalfinancingupto30%ofthetotalinvestmentbut
notexceedingBGN391,166(EUR200thousand)andarepaymentperiodofupto10years.
ForSMEfinancing,FirstInvestmentBankmaintainscooperationwithotherinstitutions,includingthe
NationalAgriculturalFundandtheBulgarianExportInsuranceAgency.Throughouttheyear,theBank
increaseditseffortsinofferingfactoringservicestoBulgariancompaniesasanalternativetoworking
capitalloans.
During the year Fibank developed and launched new credit products in the field of sustainable
financing:GreenTransport,intendedforthepurchaseofnewelectricvehiclesbybusinesscustomers;
Green Energy ‐ Free Market for companies wishing to invest in the construction of photovoltaic
systemsforelectricityproductionforfreemarketsale;andGreenEnergy‐OwnUseforconstruction
of photovoltaic systems generating electricity for own consumptionorforsale.Thenewcredit
productsareinimplementationoftheBank'spolicyforreducingthecarbonfootprintandinvestingin
sustainabledevelopment.Formoreinformationseesection„Sustainabledevelopment“.
FormoreinformationontheSMEloanportfolioofFirstInvestmentBank–AlbaniaSh.a.seesection
“Businessreviewofthesubsidiarycompanies“.
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MICROLENDING
In2021,themicrolendingportfoliooftheGroupgrewuptoBGN519,600thousandcomparedtoBGN
350,200thousandayearearlier.TheBankcontinueditstargetedeffortsfordevelopmentwithpriority
inthissegment.
TheMicrolendingProgram
13
ofFirstInvestmentBankcoversawiderangeofretailers,manufacturers,
farmers,freelancers,includingstart‐upsandcompanieswithlessmarketexperience.TheBankoffers
specializedproductsformicroenterprisesincludinginvestmentloans,workingcapitalloans,business
creditcardsandoverdraftfacilitiesatcompetitiveterms
In2021,amongthehighlightsofmicrolendingactivitieswastheprovisionofinvestmentandworking
capitalloansatmorefavorabletermsundertheMicrocreditwithSharedRiskprogramfundedbythe
HumanResourceDevelopmentOperationalProgram(HRDOP)andco‐financedbytheEuropeanSocial
FundandtheYouthEmploymentInitiative.Theinstrumentisinsupportofstart‐upsandbusinesses
thatdevelopsocialactivitiesorofferservicesgeneratingpositivesocialimpact.
Duringtheyear,offeringofloanstomicro‐enterprisescontinuedundertherecoveryprogramsofthe
BulgarianDevelopmentBankandtheFundManagerofFinancialInstrumentsinBulgariainsupportof
enterprisesaffectedbytheCOVID‐19pandemic.
First Investment Bank has an active Smart Lady program which isconstantlyevolving.Itismainly
targetedatmicroenterprisesrunorownedbywomen,aswellasatbusinesseswhoseproductsand/or
servicesaredesignedforwomen.SofartheprogramhasfundedprojectsworthoverBGN85million.
Duringtheperiod,asajointinitiativewithMastercard,aSustainableLadyFundwasestablishedin
supportofinnovativegreenprojectsofwomenentrepreneurs.Inthefieldofsustainabledevelopment,
newcreditproductsforbusinesseswerealsoofferedtofinanceinvestmentinelectricvehiclesand
photovoltaicsystems.Formoreinformationseesection„Sustainabledevelopment“.
TheBankcontinuedtosupportagriculturalproducers,offeredtailoredfinancingsolutionstoindividual
sectorsor businessareaswithhighdevelopmentpotential,incl.,ITcompanies,medicalanddental
practices.
13
Enterpriseswithannualturnover/incomeofsalesuptoBGN3.9millionregardingtheEUcriteriafor
segmentationofcustomers.
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EUROPROGRAMS
Fibankoffersawiderangeofservicesrelatedtotheutilization of funds under EU operational
programs,includinginvestmentloansforoverallprojectimplementation,bridgefinancinguptothe
amountoftheapprovedfinancialassistance,issuanceofbankguaranteestosecureadvancepayments
of approved financial assistance, and other banking products specifically tailored to the needs of
customers.
Withregardtoexternalprograms,in2021FirstInvestmentBankfocuseditseffortsonparticipationin
variousguaranteeschemesandprogramsorganizedinsupportofbusinessesandindividualsaffected
bytheCOVID‐19pandemicanditsconsequences,aswellas on otherspecializedinstrumentswith
socialimpact,e.g.forfinancinginruralareas.
During the year, First Investment Bank successfully participated in the Program for guaranteeing
interest‐free loans to protect people deprived of the opportunitytoworkduetotheCOVID‐19
pandemic organized by the Bulgarian Development Bank. Fibank has been among the most active
banksunderthisprogram,havingprovidedthefullamountofloansandthreetimesincreasedthelimit
byannexingitsagreementwiththeBDB.
AlsofullyutilizedbytheBankwastheloss‐cappedportfolioguaranteetoovercometheeffectsfrom
theCOVID‐19undertheRecoveryProgramoftheFundManagerofFinancialInstrumentsinBulgaria,
financedundertheOperationalProgramInnovationsandCompetitiveness2014‐2020oftheEuropean
RegionalDevelopmentFund.LoansprovidedunderitwerepartoftheBank'sconsistentstrategyto
support businesses in overcoming the effects of the pandemic, including by repositioning and
expandingtheactivitiesofbeneficiaries,eachloanbeingupto80%securedbythefund.
IncreasedlendingwasalsoreportedundertheotherRecoveryProgramoftheBulgarianDevelopment
Bankforportfolioguaranteesinsupportoftheliquidityofenterprises affected by the COVID‐19
pandemic.Additionalagreementsweresignedduringtheyearexpandingthescopeoftheprogram,
includingwithregardtoeligibleenterprises,maximumtermandamountofloans.
InNovember2021,Fibankwonthree
competitive procedures and signed
agreements for three separate
positions in implementation of the
Financing in Rural Areas instrument
under the Rural Development
Program2014‐2020.FirstInvestment
Bankisthesolecontractorunderthe
instrumentwithatotalloanamount
of over BGN 70 million, aiming to
increase investment in rural areas.
Loans are provided for agricultural
andnon‐agriculturalactivitiesinrural
areastoincreasethecompetitiveness
oftheagriculturalsector,aswellastopromotesocialinclusion and support for sustainable
developmentofagriculturalholdings.
Duringtheyear,Fibankalsoimplementedaprograminsupportofstart‐ups,socialenterprisesand
entrepreneurshipamongvulnerablegroupsundertheMicrocreditwithSharedRiskinstrumentofthe
Fund Manager of Financial Instruments in Bulgaria, funded by the Human Resource Development
OperationalProgram.
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PAYMENTSERVICES
In2021FirstInvestmentBankwasamemberandparticipantinpaymentsystemsandagentofother
paymentserviceproviders,asfollows:
BankIntegratedSystemforElectronicTransactions(BISERA);
Real‐TimeGrossSettlementSystem(RINGS);
SystemforServicingofClientsTransfersinEuro(BISERA7‐EUR);
Trans‐EuropeanAutomatedReal‐TimeGrossSettlementExpressTransfersystem(TARGET2);
Pan‐EuropeansystemforpaymentsinEuro(STEP2SEPACreditTransfer),asadirectparticipant
throughEBAClearing;
BankOrganisationforPaymentsInitiatedbyCards(BORICA);
AgentofWesternUnion;
AgentofEasypay.
ThepandemicofCOVID‐19acceleratedthemigrationtowardse‐payments,asthesharesoftransfers
viathedigitalchannels(e‐bankingandmobilebanking)increasedtoapproximately80%ofalloutgoing
transfersoftheBank(2020:75%;2019:67%).
DuringtheyearFirstInvestmentBankwasamongthepilotbankstojointheBlinkschemeforinstant
payments(upto10seconds)inBGNoperatedbyBORICAAD.ThenewservicewhichtheBanklaunched
afterthereportingperiod,inJanuary2022,isavailablethroughMyFibankdigitalbankingandcanbe
usedformakingBGNtransfersintheamountofuptoBGN30,000.Formoreinformationseesection
„Subsequentevents“.
OPENBANKING
Since2019FirstInvestmentBankhasbeendevelopingits“OpenBanking”relatedservicesderiving
fromtheLawonPaymentServicesandPaymentSystems(LPSPS)and Ordinance No 3 of BNB,
implementing the requirements of Directive (EU) 2015/2366 for thepaymentserviceswithinthe
internalmarket(PSD2).
TheBankmaintainstestandproductionenvironment,providingopportunityfortestingtheaccessto
thespecialinterface(API),aswellasprovidingbytheThirdPartyProviders(TPPs)ofthePayment
Initiation and Account Access Information services. Aiming on providing wider awareness for the
customers an actual Terms for Access and Use of First Investment Bank’s API Portal are being
maintained,aswellasGeneralTermsandConditionsforsecuringaccessforThirdPartyProvidersto
accountsofcustomersheldinFibank.
Aiming to expand and integratethe services offeredto clients, First Investment Bank providesthe
usageofthePSD2servicesaccountinformationandpaymentinitiationthroughtheMobileApplication
MyFibank.Thisoptionsecuresquicknessandconvenienceforclientswhentheywanttohaveaccess
toconsolidatedinformationfortheiraccountservicedatanotherpaymentserviceproviderorwhen
theywanttoinitiatepaymentfromsuchaccounts.
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CARDPAYMENTS
In 2021, First Investment Bank developed its card business in line with customer needs, modern
technologiesanddigitizationprocesses,aswellasincompliancewiththeregulatoryrequirements,
aimingtoincreasethesecurityofcardtransactions.
Duringtheyear,theBankintroducedthelatestversionoftheEMV3DS2protocolforensuringsecure
card payments over the Internet, thus continuing its focus on strengthening the security of online
payments, including as regards the requirements for strong customer authentication (SCA). Fibank
applies different payment confirmation methods depending on the individual preferences of
customers,providedtheymeetregulatoryrequirementsandmandatoryelements.Thoseincludethe
FibankTokenapplication,acombinationofastaticpasswordandadynamicpasswordsentviaSMS,
orbiometricverification(fingerprint/facialrecognition)byaregisteredmobiledevice.
FirstInvestmentBankcontinuedtodevelopitsservicesrelatedtodigitizationofbankcards,expanding
therangeofthird‐partyappsforwhichcardsissuedbytheBank can be digitized. In 2021, Fibank
becamethefirstbankinthecountrytoofferinnovativepaymentswithsmartwatchesthroughthe
Fitbitpayservice.ItscardscanalsobeusedwiththeGooglePaydigitalwalletformakingcontactless
POS payments in retail outlets, purchases in Android applications, or online transactions with
merchantsacceptingsuchtypeofpayments.
Duringtheperiod,theDebitMastercardPlatinumwaslaunchedforthepremiumsegment,offeringa
numberofbenefitsincludingavirtualassistantapplication(AskPLEEZ!)andconciergeservices.Anew
virtualcreditcardwasalsoofferednamedMyCard,withapre‐approvedcreditlimit,issuedentirely
onlinethrough theMyFibank mobileapp.ItisdesignedformakingpaymentsovertheInternetor
otherremotemeansofcommunication,includingthroughmobilesmartdevices.
TheBankcontinuedtodevelopthefunctionalitiesandqualityofitsATMnetwork,includingbyadding
acontactlessfunctiontomoreATMdevices.FibankwasthefirstBulgarianbanktobuildATMterminals
speciallyadaptedforpeopleofshortstaturefiveyearsago.Itcontinuestoincreasethenumberof
suchATMsandsupporttheannualactivitiesofthenationalorganizationLittleBulgarianPeople.
TheBank’sATMnetworkconsistedof621devicestheattheendoftheyear(2020:649),andthePOS
networkof9,375devices(2020:8,694).Separately,thesubsidiarybankinAlbaniamaintainsitown
ATMnetwork.FormoreinformationonthecardbusinessofFirstInvestmentBank–AlbaniaSh.a.see
section“Businessreviewofthesubsidiarycompanies“.
ActivityReport2021
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INTERNATIONALPAYMENTS
FirstInvestmentBankisamongtheleadingbanksinBulgariainthesphereofinternationalpayments
and trade financing. Fibank is a popular, reliable and fair business partner which has built a good
reputationovertheyearsamonginternationalfinancialinstitutions and has gained valuable
experienceandknow‐howfromitsnumerousinternationalbusinesspartners,investors,customers,
andcounterparties.
In 2021, the Bank reported an increase of 11% in incoming and 25% in outgoing foreign currency
transfersduetotheconditionsoftheenvironmentandthecompetitiveconditionsofferedbytheBank,
aswellasthehighqualityofcustomerservice.
First Investment Bank has a wide network of correspondent banks, through which it carries out
international payments and trade financing operations in almostallpartsoftheworld.TheBank
executescross‐bordercurrencytransfersthroughSWIFT,andsinceSeptember2019alsothroughthe
platformSWIFTgpi(Globalpaymentinitiative)whichimprovesthespeedandthetraceabilityofthe
cross‐border transfers. Fibank executes transfers through the following payment systems as well:
TARGET2 and BISERA7‐EUR and since April 2017 the Bank executes credit transfers as a direct
participantinthesystemSTEP2operatedbyEBAClearing.Fibankoperatesinreceivingandissuingof
checksandperformingvariousdocumentarytransactions.
FirstInvestmentBankcontinuedworkingontheprojectforinclusion into the new payments
organization – real time settlement Continuous Gross Settlement (CGS) in the STEP‐2‐T system,
operatedbyEBAClearing.AnewworkingprojectforthenewconsolidatedplatformTARGET2.
TheBankhasframeworkagreementwiththeTaiwanexportinsuranceagencyEximbankTaiwanfor
financingdeliveriesofgoodstoclientsofFirstInvestmentBankinBulgariaorothercountrieswhere
the Bank has branches or subsidiaries. Under the agreement, Fibank can provide financing under
amountofeveryindividualcredit‐upto100%ofthevalueofthecontractbutnotexceedingUSD2
million,withaperiodofutilizationupto6monthsafterthefirstshipmentandarepaymenttermof6
monthsto5yearsirrespectiveofthetypeofthegoods(consumerornon‐consumer).
InsupportofitsclientswithinternationalbusinessFirstInvestmentBankcontinuedtocooperatein
issuinginternationallyacknowledgedguaranteesandlettersofcredit,incl.throughawidenetworkof
partnerbanksandinstitutions.Duringthereportingperiod,thelettersofcreditandbankguarantees
inforeigncurrencyissuedbytheBanktoguaranteetheperformanceofitscustomerstothirdparties
amountedtoBGN74,449thousand(2020:BGN73,590thousand),forming8,8%oftheoff‐balance
sheetcommitmentsoftheGroup(2020:9.2%).
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GOLDANDCOMMEMORATIVECOINS
In2021,FirstInvestmentBankcelebrated20yearssincethe
beginningofitsbusinesswithpreciousmetalproductsand
articles.Overtheyearsithasestablishedaleadingposition
in the country in terms of transactions and investment
adviceintheareaofpreciousmetals.
For2021,therevenuesfromsalesofgoldandpreciousmetal
productsamountedtoBGN1356thousand,asanincrease
wasreportedinthenumberofrealizedtransactions,dueto
growinginvestment interest and the dynamics in the gold
price in the international markets in a pandemic situation
anduncertaintyinexternalenvironment.
FirstInvestmentBankoffersitscustomersproductsof
investmentgoldandotherpreciousmetalssince2001.Over
theyears,ithasbuiltsuccessfulcooperationwithanumber
ofleadingfinancialinstitutionsfromaroundtheworld:the
renownedSwissrefineryPAMP(ProduitsArtistiquesdeMétauxPrécieux),thebanksUBSandCredit
Suisse,theNewZealandMint,theNationalBankofMexico,theAustrianMint,theBritishRoyalMint,
andothers.
Continuingthetradition, anewsilver coindedicated totheYearoftheWater Tigerwaslaunched,
developedjointlywiththeNewZealandMint.ItisavailableexclusivelyintheofficesofFibankandin
itsonlineGold&Silverstore.AlsoofferedwerenewgoldandsilverbarsproducedbytheSwissrefinery
PAMPanddedicatedtotheLunarNewYear.
Inlinewithitslong‐termpolicyforsupportingBulgarianbrand,FibankbyagreementwiththeBulgarian
NationalBank,successfully distributed Bulgariancommemorativecoinsandcoinsetsissuedbythe
centralbank.ThewiderangeofgoldandsilveritemsispresentedbothinFibankbranchnetwork,as
well as in Fibank Gold & Silver online store. In 2021, the interesttothemincreased,asnew
collectionersandinvestorswereattractedasclients.
Incarryingouttransactionsingoldandpreciousmetals,FirstInvestmentBankinvariablycomplieswith
allqualitycriteriaoftheLondonMetalExchangeandinternationalethicaltradingstandards.
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PRIVATEBANKING
FirstInvestmentBankoffersprivatebankingtoindividualssince
2003, and to corporate clients since 2005. Private banking
features servicing by a designated personal officer, who is
responsible for the overall banking solutions provided to a
customer.
In 2021 the Bank developed its private banking activity with a view to increasing the number of
customers served in this segment, as well as to stimulating the growth of customer investment
portfolioandtheaccompanyingfeeandcommissionincome.
AmongthehighlightsinprivatebankingduringtheyearcontinuedtobethePersonalBankingservice,
aimedatasubsegmentofcustomersthatmeetcertainminimumfinancialcriteria.Itisimplemented
throughthebranchnetworkofFirstInvestmentBank,enablingcustomerstobenefitfromanumber
ofproductsandpersonalizedservices.ThoseincludethePremiumandPremiumPluspackageoffers,
featuringpreferentialtermsfortraditionalbankingproductsand services. In addition, at certain
locationscustomers may usededicated Personal Banking officersthat provide fast and competent
assistanceinallbankingtransactions.Fortheyear,Fibankreporteda156%growthofprivatebanking
customers
served.
Intheconditionsoflowinterestratesandinordertoprovide greater choice to customers in
diversifyingtheirinvestments,thesuccessfulcooperationwithFFBHAssetManagement,E.I.Sturdza
StrategicManagementLimitedandwithErsteAssetManagement,partofErsteBank,Austriaregarding
thedistributionoftheirmutualfunds,asanalternativetostandardformsofsavings.In2021,thetotal
salesvolumeofthemutualfundsofferedbyFibankADincreasedbynearly34%.
Privatebankingcustomersalsohavetheopportunitytotakeadvantageofthetrustedfinancialassets
managementservice‐apersonalizedfinancialstrategymanagedbyprofessionalportfoliomanagers
withexperienceininternationalfinancialmarketsandaprovenapproachthatcanbeadaptedtothe
customer'sfinancialconditionandhispersonalpreferences.
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CAPITALMARKETS
In 2021 net trading income of the Group amounted to BGN 15,742 thousand (2020: BGN 12,531
thousand),mainlyasaresultofthehigherincomefromtradeoperationsrelatedtoexchangerates.
Other net operating incomes, arising from debt and capital instruments, amounted to BGN 2,968
thousandcomparedtoBGN5,705thousandayearearlier.
ThesecuritiesportfolioattheendoftheyearamountedtoBGN1,673,781thousand,comparedto
BGN 1,292,641 thousand a year earlier, of which BGN 1,088,904 thousand measured at fair value
throughothercomprehensiveincome(2020:BGN825,882),BGN268,738thousandmeasuredatfair
valuethroughprofitorloss(2020:BGN266,929thousand)andBGN316,139thousandmeasuredat
amortizedcost(2020:BGN199,830thousand).
FirstInvestment Bankappliesthebusinessmodelrequirementsandcriteriaforclassifyingfinancial
assets in the Bank's portfolios according to IFRS 9. Depending onthepurposeoffinancialasset
management,thoseinclude:1)abusinessmodelwhoseobjectiveistoholdassetsinordertocollect
thecontractualcash flows(hold to collect);2)abusinessmodelwhoseobjectiveistobothcollect
contractualcashflowsandselloffinancialassets(holdtocollectandsell);3)anotherbusinessmodel,
wherethepurposeisdifferentfromthetwoabovebusinessmodels(otherbusinessmodel),where
assetsheldfortradingarealsoincluded.
The Bank’s activity is organized in compliance with the regulatory requirements arising from the
European legal framework in the field of financial markets – Regulation (EU) No 600/2014 of the
EuropeanParliamentandoftheCouncilonmarketsinfinancialinstruments,aswellasinlinewiththe
MarketsinFinancialInstrumentsAct,theregulationswithinthescopeofmarketabusesinfinancial
instrumentsandtheotherapplicablelaw.
In pursuance of the requirements arising from Regulation (ЕС) № 648/2012 of the European
Parliament and of the Counsel on OTC derivatives, central counterparties and trade repositories
(EMIR),theBankhasaLegalEntityIdentifier(LEI)code549300UY81ESCZJ0GR95,issuedbytheGlobal
MarketsEntityIdentifier(GMEI)Utility.
Inanefforttoprovidecustomersinterestedintradingfinancialinstrumentswithquickandeasyreal‐
timeaccesstotradingplatformsonregulatedmarkets,FirstInvestmentBanklaunchedanewproject
forenteringintoagreementsandplacingordersfortradingstocksandmutualfundsfullyonline.
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In its capacity as an investment intermediary and a primary dealer of government securities, First
Investment Bank carries out transactions with financial instruments in the country and abroad
includingtransactionsingovernmentsecurities,shares,corporateandmunicipalbonds,compensatory
instrumentsaswellasmoneymarketinstruments.TheBankalsoofferstrustportfoliomanagement,
investment consultation, as well as depositary and custodian services to private individuals and
corporates, including maintaining registers of investment intermediaries, of accounts of securities,
incomepaymentsandservicingpaymentsundertransactionsinfinancialinstruments.Aspartofthe
Compliancefunction,theBankhasaspecializedunit“Compliance–InvestmentServicesandActivities”
which controls and ensures observance of the requirements relatedtoFibank’sactivityasan
investmentintermediary.
Ordersforthesubscription/redemptionofunitsinfourmutualfunds(FIBGarantMutualFund,FIB
Classic Mutual Fund, FIB Avangard Mutual Fund and FFBH Vostok Mutual Fund, managed by the
ManagementcompanyFFBHAssetManagementAD)canbeaccepted inFibank’sofficeswhichare
registeredwiththeFinancialSupervisionCommission.Attheselocations,distributionisalsocarried
out of four mutual funds managed by Erste Asset Management (ERSTE‐SPARINVEST
Kapitalanlagegesellschaftm.b.H).
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BUSINESSREVIEWOFTHESUBSIDIARYCOMPANIES
FIRSTINVESTMENTBANK–ALBANIASH.A.
FirstInvestmentBank–AlbaniaSh.a.(FibankAlbania)wasgrantedafullbankinglicensebytheBank
ofAlbaniainJune2007,andinSeptember2007effectivelytookovertheactivitiesoftheformerTirana
branchofFibankwhichhadoperatedintheAlbanianmarketsince1999,byassumingallitsrightsand
obligations, assets and liabilities. Fibank Albania has also been licensed by the Albanian Financial
Supervisory Authority for carrying out investment services and activities, including depository and
custodianservices.In2021,itslicensewasrenewedinaccordancewiththenewcapitalmarket
requirementsinthecountry(Law62/2020OnCapitalMarkets).
Inlinewithitsmission,FirstInvestmentBank–AlbaniaSh.a.aimstobeamongthefastestgrowing
banks in Albania, recognized as an innovative credit institution which offers first class service and
exceptional products and services, provides excellent career opportunities to employees, and is
sociallyresponsible.
In 2021, First Investment Bank ‐ Albania Sh.a. reported good financial results and sustainable
development, notwithstanding the difficult business environmentrelatedtothespreadand
consequencesoftheCOVID‐19pandemic.TheBankmaintainedsoundliquidityandcapitalpositions,
reportinga16.20%capitaladequacyratioatyear‐end(2020:18.92%),the minimumrequiredlevel
being12%accordingtotheapplicableregulatoryrequirementsinthecountry.
For 2021, First Investment Bank ‐ Albania Sh.a. reported a net profit of ALL
14
615 307 thousand
comparedto375204thousandALLayearearlier,theincreasebeingmainlyduetohigheroperating
incomeandlowerimpairmentcharges,thelatteramountingtoALL 191,924 thousand (2020: ALL
285,006thousand).Operatingincomeincreasedby14.2%,reachingALL1,644,830thousand(2020:
ALL1,439,728thousand).Increasewasreportedinallmajorsourcesofincome,includingnetinterest
incomeuptoALL1,160,395thousand(70.5%oftotalincome),netfeeandcommissionincomeupto
14
TheofficialexchangerateoftheAlbanianlekagainsttheeuroattheendof2021wasALL120.76pereuro,and
theaveragefortheyearwasALL122.37pereuro.
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ALL346,233thousand(21.0%)andnettradingincomeuptoALL19,947thousand(1.2%).Othernet
operatingincomeamountedtoALL118,255thousandfortheyear.
Duringtheyear,staffcostsamountedtoALL375,099thousandcomparedtoALL347,525thousandfor
thepreviousyear,reflectingtheincreasednumberofemployeesofthebankwhichbytheendof2021
reached 367 people (2020: 351). General administrative costs amounted to ALL 162,299 thousand
(2020:ALL162,103thousand)anddepreciationcoststoALL120,155thousand(2020:ALL 116,845
thousand).
DuringtheyeartheassetsofFibankAlbaniaincreasedby22.3%andreachedALL41,883,294thousand
(2020:ALL34,243,838thousand)mainlyasaresultofthegrowthinloansandadvancestocustomers
andinvestmentsinsecurities.Thegrossloanportfolioincreasedby20.6%toALL21,591,197thousand
(2020:ALL17,908,218thousand),mainlyduetogrowthinSMEloans,aswellasinretailloans,andin
particular mortgages. In 2021, the bank continued to offer competitive lending terms both to
individualsandbusinesscustomers.Insupportoffarmers,FirstInvestmentBank‐AlbaniaSh.a.hasa
partnershipagreementwiththeAlbanianRuralCreditGuaranteeFoundationtofacilitatethefinancing
ofmicro,smallandmedium‐sizedenterprisesinAlbania,basedonKfWpoliciesandsupport.
Investments in securities reported at fair value through other comprehensive income (FVOCI)
increasedtoALL11,592,311thousand(2020:ALL9,961,169thousand),includingmainlytreasurybills
andgovernmentbondsofthegovernmentsofAlbaniaandEUcountries.Loansandadvancestobanks
andfinancialinstitutions,includingcurrentaccountsandplacementswithlocalandforeignbanksand
financial institutions increased to ALL 4,234,180 thousand as at 31 December 2021 (2020: ALL
2,422,790thousand).
Borrowingsfromcustomersincreasedby20.5%toALL34,332,798thousandattheendoftheperiod
(2020:28,503,007thousandALL),withgrowthreportedinbothretailandbusinessdepositsasaresult
oftheflexibleandcompetitivesavingsproducts,promotionalcampaignsandbundledservicesoffered
bythebank.Duringtheyearanewsavingsaccountwaslaunched:theFibankSuperSavingsAccount,
featuringcompetitivetermsandtheoptiontodepositorwithdrawfundsatanytime.
Witha view to supporting customers in a pandemic situation, the arrangementwas continued for
elderlycustomersofthebanktoreceivetheirpensionsviatheAlbanianpostalservices,withoutvisiting
a bank office. Special current accounts were also offered for individuals receiving state aid in
connectionwiththecoronaviruscrisis.
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As at 31 December 2021, First Investment Bank ‐ Albania Sh.a. hadtwosubordinatedtermdebt
instrumentsissued(long‐termbonds)amountingtoEUR2.0millionandEUR2.9million,meetingthe
requirementsforTier2capitalunderRegulation(EU)575/2013.Attheendoftheyear,theamortized
valueofthedebtyearamountedtoALL594,092thousand(2020:ALL608,631thousand).Theequity
ofFirstInvestmentBank‐AlbaniaincreasedtoALL4,235,850thousandcomparedtoALL3,646,590
thousandattheendof2020,mainlyasaresultoftheincreaseinretainedearnings.
FibankAlbaniaoffersanelectronicandmobilebankingplatformfeaturingauserfriendlyandintuitive
design,whichitconstantlyupgradesinlinewithtechnologicalinnovationsandcustomerneeds.Atthe
endof 2020 the bank, jointlywiththesecondlargestmobileoperatorinthecountry,launchedan
innovative product combining a mobile device and a telecommunications service paid in monthly
installments.
Inthefieldofcardbusiness,thebankhasdevelopedanetworkofATMterminalswithcash‐infunction
andhasinvestedinthesecurityofcardpayments.Promotionalcampaignsareregularlyorganized,
includingforcontactlessdebitandcreditcards,inordertopromotecardpaymentsandstimulatethe
volume of transactions. During the period, a 17.6% increase was reported in credit card use, with
outstanding balances reaching ALL 349,459 thousand at the end of the year (2020: ALL 297,241
thousand). The bank is Visa certified and offers debit and credit cards to individual and corporate
customers.Italsohasitsowncenterforchipcardpersonalization.
FirstInvestmentBank‐AlbaniaSh.a.continuouslymodernizesitsbranchnetwork,whichattheendof
theyearincluded14branches.IthasaHeadOfficeand4branchesinTirana,aswellasbranchesinthe
otherlargercitiesofDurres,Vlora,Elbasan,Fier,Shkoder,Korca,Berat,Lezhë,SarandaandLushnjë.
Throughitsbranchnetwork,thebankoffersinvestmentgoldandotherpreciousmetalstotheAlbanian
market.InconnectionwiththeCOVID‐19pandemic,thenecessarysafetymeasureswereimplemented
during the year according to the recommendations of the country’s authorities, covering both
employeesandcustomersofthebank.
First Investment Bank ‐ Albania Sh.a. continued to
develop its corporate social responsibility and
commitment to society by supporting a number of
initiatives in Albania, focusing on several key areas:
philanthropy, ethical work practices, environmental
protectionandvolunteering.
Thebankcontinueditslong‐termcooperationwiththe
Down Syndrome ‐ Albania foundation, aimed at
assistingfamiliesinneedinthecountry.Duringtheyear
itwasawardedacertificateofrecognitionforitsoverall
contribution,supportandparticipationinthevarious
initiativesofthefoundationovertheyears.
Atthebeginning of the year, Fibank Albaniadonated
fundsforthepurchaseofsecuritycamerasforseveralkindergartensinthetownofFier,inorderto
ensureadditionalcomfortandsecurityforparentsandemployees.
Withaviewtoincreasingfinancial literacy and innovation among adolescents and young people,
during the period Fibank Albania took part in the Global Money Week organized by the Albanian
BankingAssociation,aswellasintheUNWorldCreativityandInnovationDayinitiativewhichtook
placeinAlbaniainApril2021.Supportwasalsoprovidedforwomenseekingcareersinthefieldof
informationandcommunicationtechnologies.
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In 2021, a number of initiatives in the field of culture were also carried out. The bank supported
talentedAlbanianwritersandparticipatedinculturalandsocialeventsorganizedbytheDriteroAgolli
Foundation.
InOctober2021thebanktookpartintheannualinitiativetosupportthefightagainstbreastcancer,
aimedatraisingfundsandincreasingpublicengagementandawarenessonthetopic.
AttheendoftheyearFirstInvestmentBank–Albania,jointly
withtheAlbanianRedCross,participatedinacampaignforfree
and voluntary blood donation entitled "Donate blood ‐ save
lives!".Employeesofthebankandothervolunteerstookpartin
thecampaign,whosemaingoalwastopromotevoluntaryblood
donation in Albania as an act of vital importance for saving
thousandsoflives.
First Investment Bank –Albania Sh.a. has a corporate
governance structure consisting of Executive Management
(Directorate), Management Board, and an Audit Committee.
ChiefExecutiveOfficerofFirstInvestmentBank–AlbaniaSh.a.
is Mr. Bozhidar Todorov who has extensive experience in
banking,havingheldseniorpositionsatFirstInvestmentBankADrelatedtomanagementofcorporate
assets.
ThefinancialstatementsofthebankarepreparedinaccordancewithInternationalFinancialReporting
Standards,andauditedbyaregisteredauditor.For2021,theregisteredauditorofthebankwasGrant
ThortntonSh.p.k.
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DINERSCLUBBULGARIAAD
DinersClubBulgariaADisajointstockcompanyincorporatedinNovember1996,itsmainbusiness
activitybeingtheissuanceofDinersClubcreditcardsandprocessingofpaymentswiththem.In2005,
FirstInvestmentBankacquired80%ofthecompany’scapital.DinersClubBulgariaislicensedbythe
Bulgarian National Bank as a payment institution to perform payment transactions using payment
cards, to issue and accept payments with payment instruments and to execute credit transfers,
includingstandingorders.
Overtheyears,DinersClubBulgariaADhasconsistentlyworkedtowardsincreasingthepenetration
oftheDinersClubbrandinthelocalmarketbyofferingnewservicestocardholdersandexpandingthe
networkofPOSterminalsacceptingpaymentswithDinersClubcards.Thecompanyhasenteredinto
partnershipswithanumberoffinancialinstitutionsinBulgaria,thusfacilitatingtheconstantincrease
oflocationsforcarryingoutpaymentswith Diners Club cards. Inordertostimulate payments and
issuanceofnewDinersClubcards,promotionalcampaignsareregularlycarriedout,includingwith
variousretailchainsandoutlets.Suchcampaignsweresuccessfullycarriedoutin2021.
Duringtheyear,DinersClubBulgariacontinuedtodevelopitsintegratedProtectBuysystemforsecure
onlinepaymentsusingthe3DSecureprotocolforcardholdersandmerchants,inaccordancewiththe
regulatory requirements and security standards for online transactions.Allcardsissuedbythe
companyusetwo‐factorauthenticationforonlinepayments.Withaviewtoincreasedconvenience
for customers and providing them with additional services, the company offers the MyDinersClub
service (https://my.diners.bg/). The service features electroniccardstatements,reportsfor
authorizationsand transactions made, and alsoallows payment of utility bills,municipaltaxesand
fees,aswellasamountsdueonDinersClubcards.
For2021DinersClubBulgariareportedanetlossofBGN662thousandcomparedtoBGN583thousand
ayearearlier.Thiswasmainlyduetodecreasedfeeandcommissionincome,aswellastoincreased
costsandinvestmentsmadebythecompanytomeetthehighsecuritystandardsincardpayments.
NetoperatingincomeamountedtoBGN2,223thousand,comparedtoBGN2,586thousandforthe
previousyearduetodecreasedincomefrominterest,commissionsandotherservices,aswellasto
lower funding from Discover Financial Services (DFS) to promotethebrandinthecountry.The
operatingexpensesofthecompanyamountedtoBGN1,819thousand(2020:BGN2,067thousand).
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ThecompanyreportedBGN14,435thousandinassets(2020:BGN15,382thousand),mainlyasaresult
ofthedecreaseinloansandadvancestocustomerswhichreachedBGN11,251thousandcompared
to BGN 12,150 thousand the year before. Loans and advances to individuals formed 98.6% of all
receivablesfromcustomers(2019:98.3%).
Borrowingsdecreased,drawnbankoverdraftamountsreachingBGN13,303thousandcomparedto
BGN13,588thousandayearearlier.TheequityofthecompanyamountedtoBGN942thousandat
theendoftheperiod(2020:BGN1,604 thousand). For 2020, the average numberofstaff was 15
employees(2020:13employees).
Inpursuanceofitscorporatesocialresponsibilitypolicy,in2021DinersClubBulgariasupportedvarious
socialinitiativesinthefieldofmusicandculture,includingtheSofiaSummerFest.
DinersClubBulgariaADhasaone‐tiermanagementsystem,comprisingtheBoardofDirectorsandthe
Executivemanagement(ExecutiveDirector).TheExecutiveDirectorrepresentingDinersClubBulgaria
ADasat31.12.2021,Mr.SimeonIliev,hasextensiveprofessionalexperienceinthecardbusiness.
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FIHEALTHINSURANCEAD
FiHealthInsuranceADisaninsurancecompanylicensedbytheFinancialSupervisionCommissionin
June2013,whenitbecamethefirstvoluntaryhealthinsurancefundinthecountrytoobtainalicense
forinsuranceoftherisksofaccidentandillness,coveringfinancialcostsrelatedtooutpatientmedical
care,hospitaltreatment,expensesformedicalgoodsanddentalservices,aswellasindemnityincase
ofinsuranceeventsarisingasaresultofaccidentorillness.In2018thecompany’sinsurancelicense
wasexpandedtocoveranothertypeofrisk:miscellaneousfinanciallosses.
FirstInvestmentBankacquiredamajoritystakeinthecompany (formerlynamedHealthInsurance
Fund FI Health AD/Health Insurance Fund Prime Health AD) in 2010,andovertheyearshas
systematicallyandconsistentlyworkedtowardsdevelopingthecompany’sbusinessandexpansionof
theproductsandservicesprovided.
FiHealthInsuranceADhasaone‐tiermanagementsystem,comprising a Board of Directors and
Executivemanagement(ExecutiveDirector).ExecutiveDirectorofFiHealthInsuranceADisMs.Milena
Kasapova,whohasextensiveprofessionalexperienceininsurance.Since2016,thecompanyhasbeen
representedjointlybyitsExecutiveDirectorandaProcurator,withMs.TsvetomiraKarapchanska,a
longtimeSalesManagerofthecompany,beingappointedasProcurator.Thecompanyhasestablished
compliance, internal control, and risk management
functions.
In2021,FiHealthInsurancefurtherdevelopeditsbusiness
and launched successful campaigns to promote new
insurance products, including additional coverage to the
"PeaceofMindwithFiHealth"policyincaseof
unemployment.Thisproductprovidesinsuredpersonswith
protectionagainstrisksrelatedtotheirlife,health,physical
conditionandemployment.
The product range of the company offers insurance
coverageforbothretailandbusinesscustomers,primarily
fromthemicroandSMEsegments.Itincludesthe“Peaceof
Mind with Fi Health” and “Occupational Accident”
insurance products, the “FiHealth Protect” insurance
offeredwithcreditcards,the“FiHealthPartner”insurance
designedforindividuals,aswellasgroupinsurancepolicies
suitableforemployeesofcorporateclients.In2021,thecompanydirecteditseffortsatdevelopingan
insuranceproduct for retail customers of First Investment Bank using overdraftfacilities from the
bank.Salesoftheproductareexpectedtobeginin2022.
Throughout the year, the company continued to focus on offering group sickness insurance to
corporate clients and signed new agreements to that effect. Such insurance, taken out by the
employer, guarantees comprehensive and high‐quality medical care, as well as easier access to
reputablemedicalestablishmentsandqualifiedhealthspecialistsontheterritoryofthecountry.This
easy and well‐organized access to quality medical service promotes additional health insurance,
expandsthemarketnicheandcreatessophisticatedhealthserviceusers.FiHealthalsocreatedaVIP
packageforindividualclientswithahighlevelofcoverage.
For2021,thepremiumincomeofFiHealthInsuranceamountedtoBGN9,122thousand,comparedto
BGN7,303thousandfor2020,andthereportednetprofitfortheperiodwasBGN2,074thousand
(2020: BGN 1,401 thousand). The company manages insurance risk through established limits,
proceduresforapprovalofsubmittedclaims,andvariousmethodsforassessmentandcontrol.
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Thecompany'sassetsincreasedby22.4%toBGN16,475thousandatyear‐end(2020: BGN13,459
thousand), driven by cash and cash equivalents (2021: BGN 4,666 thousand; 2020: BGN 1,507
thousand).Therewasadecreaseinfinancialassetsheldbythecompany(2021:BGN6,096thousand;
2020:BGN6,140thousand),whichmainlyincludebankdepositsandBulgariangovernmentsecurities.
Therewasanincreaseinreceivablesandotherassets(2021:BGN5,203thousand;2020:BGN4,240
thousand),includingreceivablesunderinsurancecontracts.Asat31December2021,theequityofFi
HealthInsuranceamountedtoBGN10,465thousand,comparedtoBGN8,391thousandayearearlier.
Thecompanysetsasidetherequiredtechnicalreservesinaccordancewithlegalrequirementsand
standards.
In order to continue safeguarding its financial stability while progressively increasing the product
portfolio,in2021FiHealthInsurancereneweditsagreementwithanA+ratedreinsurancecompany
(S&P).
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MYFINEAD
In2020 First Investment Bank established anewsubsidiary:MyFinEAD.MyFinwasenteredinthe
Commercial Register of the Registry Agency in March 2020, its main business being issuance of
electronicmoneyandprovisionofpaymentserviceswithinthemeaning of the Law on Payment
ServicesandPaymentSystems,forwhichitwaslicensedbytheBulgarianNationalBank.
The company started its activity in November 2020, offering customersadigitalplatformforfast
money transfers and online payments, issuance of digital and virtual cards, as well as innovative
paymentservicessuchaspeer‐to‐peertransfersbetweenMyFincustomers,PaybyLinkandothers.
MyFin customers can receive real‐time information about their account balances and transactions
performed,aswellasuse24/7consultationwithqualifiedliveoperators.
Thevisionofthecompanyisfocusedonfacilitatingtheuserexperienceinfinancialmanagement,as
wellasondevelopingandupgradingitsdigitalservicesplatformwithnewfunctionalitiesandoptions
forcustomers.
In2021,thecompanyfurtherincreaseditsdigitalwalletfunctionalitiesbydevelopingandlaunching
newservicesrelatedtopersonalfinancemanagement(PFM),utilitypaymentsandonlineshopping.
ProofoftheachievementsofMyFinEADduringtheperiodwasthebrandrecognitionawardreceived
fromBusinessLadymagazine.
In2021,thecapitalofMyFinEADwasincreasedfromBGN1milliontoBGN2millionwithaviewto
expandingitsactivityandimplementingnewprojectsandservices.Afterthereportingperiod,viaFirst
Investment Bank, the company provided its customers with access to the innovative Blink service
allowinginstantpayments(upto10seconds)foramountsuptoBGN30,000,thusbecomingoneof
thefirstfintechcompaniesinBulgariatoofferthisservice.
Rightfrom the start of itsactivity, the companybecame involved in initiativesforcorporatesocial
responsibility and commitment to society, supporting projects to reduce harmful emissions and
protecttheenvironment.Inadditiontothecompany’smainfocusbeingtheissuanceofdigitaland
virtualpaymentcards,itsplasticcardsofferedtocustomersare also made of innovative 100%
biodegradablematerial,developedinpartnershipwiththecompanyAustriacard.
In 2021, in fulfillment of the commitments made,
MyFin planted 20 linden trees in the town of
Kyustendil.Theinitiative waspartoftheCleanAir
for Kyustendil project which aims to build
sustainable mechanisms of civic participation,
protecttheenvironmentandimproveairquality.It
wasimplementedbytheASORIAssociationwiththe
supportofEEAand Norway Grants andtheActive
CitizensFund.
For its activities in support of sustainable
development during the year, MyFin EAD was a
finalistintheGreenPlanet categoryoftheannual
awards for charity and corporate social
responsibilityheldbyBusinessLadymagazine.Thecompanywasalsomainsponsorofthe359HipHop
AwardsmusicfestivalwhichtookplaceinSofia.
MyFin EAD has a one‐tier management system, comprising a Board of Directors and Executive
management (Executive Director). The Executive Director representing the company, Mr. Lachezar
Venkov,hasextensiveprofessionalexperienceinfinancialanddigitalservices.
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Asat31December2021FirstInvestmentBankADalsohadothersubsidiarycompanies,asfollows:
FirstInvestmentFinanceB.V.,DebitaOOD,RealtorOOD–inliquidation,BalkanFinancialServicesEAD,
CreativeInvestmentEOOD,TurnaroundManagementEOOD–inliquidation,LegaSolutionsEOODand
АМСImotiEAD.
In2021,decisionsweremadetoterminatetheactivityofthesubsidiariesRealtorOODandBalkan
FinancialServicesEADandliquidationproceedingswereopenedforthesecompanies.InJanuary2022,
pursuanttothedecisiontoclosethesubsidiaryTurnaroundManagementEOOD,thecompanywas
deletedfromtheCommercialRegister.
For further information on subsidiary companies, including on those subject to consolidation, see
section “Fibank profile“, as well as note 36 „Subsidiary undertakings” of the Consolidated financial
statementsfortheyearended31December2021.
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MEETINGTHE2021GOALS
N Goals Fulfilment
1 Tobeamongtheleadingbanksinthe
country, with a priority focus for
development on the segments of
retail banking and services for small
andmediumbusinesses
In 2021, the portfolios of retail, micro, small and medium‐sized
enterpriseloansregisteredincreasetoBGN2,398million,BGN520
million, BGN 594 million and BGN 1,385 million respectively,
accounting for 33.6%, 7.3%, 8.3% and 19.4% of the Group loan
portfolio,oratotalof68.7%(2020:61.8%).
The Bank preserved its leading position among institutions in the
country:fifthindeposits,fourthincorporateloans,fifthinconsumer
loansandsixthinmortgageloans.
New products were developed in the SME segment aimed at
sustainable development (Green Transport, Green Energy ‐ Free
MarketandGreenEnergy‐OwnUse),aswellasnewsavingsproducts
and investment solutions for business customers and individuals
(GoldAccount,EcoPortfolio,GoldPortfolio).
Duringtheyear,FirstInvestmentBankactivelyprovidedloansunder
the BDB Program for guaranteeing interest‐free loans to protect
people deprived of the opportunity to work due to the COVID‐19
pandemic.
Digitalservicesweredeveloped,takingintoaccountthenewneeds
ofcustomersandthedemandforonlineservices(fullyonlineaccount
opening, applying for mortgage loans through digital channels,
digitizingcardsinthird‐partyapps).
GrantingofloansstartedundertheRecoveryProgramoftheBDBand
theFundManagerofFinancialInstrumentsinBulgariaforportfolio
guarantees in support of the micro, small and medium‐sized
enterprisesaffectedbytheCOVID‐19epidemic.
A new agreement was signed with the Fund Manager of Financial
Instruments in Bulgaria for granting loans to farmers under the
FinancinginRuralAreasfinancialinstrument.
Formoreinformationseesections„Financial review“ and „Business
review“.
2 Tocontinueitsdevelopmentasa
customer‐oriented bank, with high
quality service, preferred by the
populationandbusinesscustomers
ThedepositbaseoftheGroupincreasedtoBGN9,973,631thousand
attheendoftheperiod(2020:BGN9,542,276thousand).Thetotal
loan portfolio also increased, reaching BGN 6,653,944 thousand
(2020:BGN6,312,887thousand).
Anincrease was reported in balances on current accounts ofboth
individuals(26.0%)andbusinesses(18,0%),inlinewiththepolicyfor
maintaining long‐term relationships with customers. There was
furtherdevelopmentincross‐sellingandtransactionbusiness,which
contributedtotheincreaseincommissionincome(by24.5%during
theyear).
TheBankfocusedondevelopmentofitsdigitalsalesduringtheyear,
introducing new functionalities and services in the electronic and
mobile banking in response to changing customer attitudes to
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remote banking and aiming at higher satisfaction and quality of
service.
Proofofthehighqualityofservicewastheawardreceivedduringthe
year–FavoriteBrandawardandfirstplaceintheFinancial
InstitutionscategorybytheMyLoveMarksconsumerrating.
Formoreinformationseesections„Businessreview“,„Highlights2021“
and„Awards2021“
3 Toinvestinthecreationofnew,
creativeproductsandinthe
development of digital services,
providing its customers with
competitiveadvantages
Avideo consultation service on credit products for individualswas
launched,availableatthecorporatewebsitewww.fibank.bg,aswell
asviaMyFibankdigitalbankingorMyFibankmobileapp.
Fibank became the first bank in the country to offer innovative
payments with smart watches through the Fitbit pay service. The
option was also provided to digitizecardsissuedbytheBank,
includinginthirdpartyapps.
A new Debit Mastercard Platinum was launched for the premium
segment,offeringanumberofbenefitsincludingavirtualassistant
application(AskPLEEZ!)andconciergeservices.
First Investment Bank offered the Gold Account, an innovative
productforpurchase,saleandkeepingofdematerializedgold(XAO).
New structured investment products were launched, designed for
retail and business customers: the Gold Portfolio and the Eco
Portfolio,linkedrespectfullytothepriceofgoldandtogreenbonds.
Fullyonlineaccountopeningandconsumerlendingwereoffered,as
wellasapplyingformortgageloansthroughdigitalchannelsofthe
Bank.
TheBranchdigitalizationprojectwaslaunched,involvingelectronic
signingofdocumentsinthebranchnetworkoftheBank.
The new MyCard virtual credit was offered with a pre‐approved
creditlimit,issuedentirelyonline.
MyfinEADdevelopedthefunctionalitiesofitsdigitalwalletthrough
new services, related to personal finance management, utiliity
paymentsandonlinepurchases.
ProofoftheaccomplishedbytheGroupduringtheyearinthesphere
ofdigitalbankingwastheawardreceivedforDigitalBankoftheYear
–BulgariabytheinternationalGlobalBrandsMagazine,aswellasfor
establishingthetrademarkofthesubsidiaryMyfinEADby“Business
lady”magazine.
Formoreinformationseesections„Businessreview“,„Businessreviewof
subsidiarycompanies“and„Distributionchannels“.
4 Todevelopasustainablebusiness
model
The Group of First Investment Bank reported a steady growth of
assetswhichreachedBGN11,897,221thousandattheendof2021
(2020:BGN11,335,420thousand),notwithstandingthechallengesof
theexternalenvironmentandtheCOVID‐19pandemic.
At the end of 2021, the Group reported stable capital ratios as
follows:commonequityTier(CET1)ratio17.33%,Tier1capitalratio
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20.72% and total capital adequacy ratio 20.84%, exceeding the
minimumregulatorycapitalrequirements.
Fibankmaintainedhighliquidity,withliquiditycoverageratio(LCR)
and net stable funding ratio (NSFR) of 256.37% and 139.81%
respectivelyattheendoftheperiod.
In 2021, the Bank operated in accordance with its strategy for
maintainingamoderatelylowlevelofrisk.
Non‐performingexposuresoftheGroupdecreasedby11.4%YOY,in
implementationofthestrategyfortheirreductionandasaresultof
implemented measures for improved collections, write‐offs and
portfoliosales.
Newcreditproducts(GreenTransport,GreenEnergy‐FreeMarket
andGreenEnergy‐OwnUse)weredevelopedinimplementationof
theBank'spolicyforreducingthecarbonfootprintandinvestingin
sustainabledevelopment.
In2021,theBankcontinuedtodevelopitsbranchnetworkinsearch
ofabalancebetweendigitalchannelsandphysicallocations.Asat31
December 2021 the branch network on a consolidated basis
consistedof141branchesandoffices(2020:149).
For more information see sections „Financial review“, „Risk
management“and„Sustainabledevelopment“.
5 Achieving good financial results, incl.
intermsofreturnoncapitalandcost/
incomeratio
In 2021, the Group of First Investment Bank reported increased
financial results and sustainable development in an environment
affectedbytheCOVID‐19pandemicanditsaftermath.
GroupprofitaftertaxincreasedtoBGN111,408thousandcompared
to BGN 45,517 thousand a year earlier, mainly driven by higher
operatingincomeanddecreasedadministrativecosts.
TotaloperatingincomeoftheGroupgrewtoBGN434,970thousand
(2020: BGN 373,709 thousand) with increase reported in all key
incomesources,includingnetinterestincome(by13.1%)andnetfee
andcommissionincome(by24.5%).
Returnonequity(aftertaxes)reached8.85%(2020:4.22%),inline
withthesetROEtargetofover8%.Returnonassets(aftertaxes)was
0.96%(2020:0.42%).
Thecost/incomeratiodecreasedto43.40%bytheendoftheperiod
(2020:56.34%),inlinewiththeobjectivetoconsistentlymaintainthis
ratiobelow50%.
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SUBSEQUENTEVENTS
InJanuary2022FirstInvestmentBanklaunchedtheinnovativeinstantpayment(upto10seconds)
serviceinBGNundertheBlinkschemeoperatedbyBORICAAD.Theserviceisavailablethrough
MyFibankdigitalbankingfortransfersuptoBGN30,000.
InJanuary2022,pursuanttothedecisionofFibanktocloseitssubsidiaryTurnaroundManagement
EOOD,thecompanywasdeletedfromtheCommercialRegister.
Forfurtherinformation,seetheConsolidatedFinancialStatementsfortheyearendedDecember31,
2021.
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DEVELOPMENTPRIORITIES
UNIVERSALBULGARIANBANK,LEADINGINKEYSEGMENTS
SettingapriorityonthedevelopmentofretailandSMEsegments.
Offeringnewandcreativeproducts,providingcustomerswithconvenienceandsecurity.
Upgradingthecross‐sellingandtransactionalbusinessmodels.
HIGHQUALITYCUSTOMERSERVICE
Maintaininghighestqualityofcustomerservicebydevelopingmotivationalprogramsandtraining
foremployees.
SpeedincustomerservicebyimprovingITsystemsandapplyingcustomer‐orientedapproaches.
Developmentofpersonalizedservices.
FOCUSONDIGITIZATIONANDINNOVATION
Implementationoftechnologicalinnovations.
Developmentofdigitalservices,mobileapplicationsande‐banking.
OptimizationofITandbusinessprocessesinlinewithinnovationinbanking.
STABLEANDSUSTAINABLEBUSINESSMODEL
Ensuresoundcapitalpositionandeffectiveliquiditymanagement.
Maintainoptimalassetstructureandreduceloanportfoliorisk.
Offerproductsandfinanceprojectsaimedatsustainabilityandsupportingthegreenidea,aswell
asimplementenvironmentallyfriendlyinternalprocesses.
RETURNFORSHAREHOLDERSANDCOSTOPTIMISATION
Achievereturnonequityofover8%byend‐2023.
Achieveasustainablecost‐to‐incomeratiobelow50%.
Investinprofitablesecuritiesandrevenuediversification.
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OTHERINFORMATION
MEMBERSOFTHESUPERVISORYBOARD
EvgeniLukanov‐ChairmanoftheSupervisoryBoard
Mr.LukanovjoinedFirstInvestmentBankADin1998asDeputyDirector,andlaterasDirectorand
General Manager of the Tirana Branch, Albania. From2001 to 2003hewasDirectoroftheBank’s
VitoshaBranch(Sofia).
Mr.LukanovhasoccupiedanumberofseniorpositionswithFirstInvestmentBankAD.From2003to
2007hewasDirectoroftheRiskManagementDepartmentandMemberoftheManagingBoard.From
2004to2012‐ExecutiveDirectorandMemberoftheManagingBoardofFirstInvestmentBankAD.
DuringhisyearsofworkinFirstInvestmentBankAD,Mr.LukanovhasbeenChairmanoftheCredit
CouncilandtheLiquidityCounciloftheBank.Hehasbeeninchargeofthefollowingdepartments:Risk
Management, Impaired Assets and Provisioning, Loan Administration, Specialized Monitoring and
Control,RetailBanking,Methodology,andLiquidity.
Mr.LukanovhasalsobeenmemberoftheManagingBoardofFirstInvestmentBank–AlbaniaSh.a.
AtthebeginningofFebruary2012,Mr.LukanovwaselectedasChairmanoftheSupervisoryBoardof
FirstInvestmentBankAD.Fortheperiod2012‐2019hewasChairmanoftheRiskCommitteetothe
SupervisoryBoardoftheBank and sinceMay2019 was elected asChairman of the Remuneration
CommitteetotheSupervisoryBoardoftheBank.
Mr. Lukanov holds a Master’s Degree in Economics from the University of National and World
Economy,Sofia.Priorto joining First InvestmentBankAD,Mr.EvgeniLukanovworkedascurrency
brokerwithFirstFinancialBrokerageHouseOOD.
BesideshispositionontheSupervisoryBoardoftheBank,Mr.LukanovisalsoChairmanoftheBoard
ofDirectorsofFiHealthInsuranceAD.HeisownerofETImeksa‐EvgeniLukanovandholdsmorethan
10%ofthecapitalofAveaOOD.
MayaGeorgieva‐DeputyChairoftheSupervisoryBoard
PriortojoiningFirstInvestmentBank,Ms.MayaGeorgievaworkedwiththeBulgarianNationalBank
for 19 years where she gained considerable experience in international banking relationships and
payments,bankingstatisticsandfirmcrediting.HerlastappointmentwithBNBwasasHeadofthe
BalanceofPaymentsDivision.
Ms. Maya Georgieva joined First Investment Bank AD in 1995 as DirectoroftheInternational
Department. From 1998 to 2012 she served as Executive Director of First Investment Bank and
MemberoftheManagingBoard.DuringheryearsofworkintheBankshehasbeenresponsibleofthe
following departments: International Payments, Letters of Credit and Guarantees, SME Lending,
Human Capital Management, Administrative Department, Sales Department, Retail Banking,
Marketing,AdvertisingandPR,BranchNetwork,PrivateBankingandtheVault.
AlongsideherresponsibilitiesattheBank,Ms.Georgievahasalsooccupiedanumberofothersenior
executivepositions.From2003to2011shechairedtheSupervisoryBoardofCaSysInternational‐a
NorthernMacedonia‐basedcardprocessingcompanyservicingcardpaymentsinBulgaria,Northern
MacedoniaandAlbania.
From2009to2011shewasChairoftheBoardofDirectorsofDinersClubBulgariaAD‐afranchise
companyofDinersClubInternational,ownedbyFirstInvestmentBank.Inthiscapacity,sheinspired
thelaunchofanumberofproducts,includingthefirstfemale‐orientedcreditcard.From2006to2011
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shewasalsomemberoftheManagingBoardofFirstInvestmentBank‐AlbaniaSh.a.,asubsidiaryof
FirstInvestmentBank.
InthebeginningofFebruary2012,Ms.GeorgievawaselectedasDeputyChairoftheSupervisoryBoard
ofFirstInvestmentBankADandChairofthePresidingCommitteetotheSupervisoryBoardofFirst
InvestmentBankAD.
Ms.GeorgievaholdsaMastersDegreeinMacroeconomicsfromtheUniversityofNationalandWorld
Economy in Sofia and has post‐graduate specializations in International Payments and Balance of
PaymentswiththeInternationalMonetaryFundandBankingfromSpecializedpostgraduatecourseof
BNBjointwiththeBulgarianUnionofScienceandTechnology.
Shewasgrantedseveraltimeswiththe"BankeroftheYear"awardoftheBulgarianfinancialweekly
"Banker"‐in2001and2011,aswellasin2018foroverallcontributiontothedevelopmentofthe
bankingsystem.
RadkaMineva‐MemberoftheSupervisoryBoard
Prior to joining First Investment Bank AD, Ms. Mineva worked as a capital markets dealer at the
BulgarianNationalBankwhereshegainedconsiderableexperienceinbanking.Duringthetimespent
withtheCentralBank,shespecializedattheFrankfurtStockExchangeandtheLondonStockExchange
asacapitalmarketsdealer.
Ms.MinevastartedhercareerwiththeforeigntradeenterpriseMainEngineeringOffice,whereshe
workedfor9years;shealsospentthreeyearsasanexpertatRVMTradingCompany.
Since2000,Ms.MinevahasbeenaMemberoftheSupervisoryBoardofFirstInvestmentBankAD.
SinceMay2019,shewaselectedasMemberofthePresidingCommitteetotheSupervisoryBoardof
FirstInvestmentBank.
SheisagraduateoftheUniversityofNationalandWorldEconomyinSofia,withadegreeinTradeand
Tourism.
BesidesherpositionontheSupervisoryBoardoftheBank,Ms.MinevaisManagerofBalkanHolidays
ServicesEOOD‐acompanywithactivitiesinthesphereoftourism,transportation,hotelbusiness,
touroperation,andtouragencyservices.Ms.MinevaisalsoManagerofBalkanHolidaysPartnersOOD
‐acompanyengagedininternationalanddomestictourismservices,foreigneconomictransactions,
andfinancialmanagement.Ms.Minevaownsmorethan25%ofthecapitalofBalkanHolidaysPartners
OOD.SheisalsoMemberoftheManagingBoardofthenon‐profitorganization“NationalBoardof
Turism”andofthenon‐profitorganization“Unionofinvestorsintourism”.
JordanSkortchev‐MemberoftheSupervisoryBoard
BeforejoiningFirstInvestmentBankAD,Mr.JordanSkortchevworkedfortwoyearswiththeCentral
andLatinAmericaDepartmentoftheforeigntradeorganizationIntercommerce,followedbyfiveyears
withFirstPrivateBank,SofiaasanFXDealerandHeadoftheDealingDivision.
Mr.SkortchevjoinedFirstInvestmentBankin1996asChiefDealer,FXMarkets.From2001to2012
Mr.SkortchevwasMemberoftheManaging Boardand Executive DirectoroftheBank.Duringhis
yearsofworkintheBank,Mr.Skortchevhasbeenresponsibleforthefollowingdepartments:Card
Payments,Operations,GoldandNumismatics,InternetBanking,Dealing,SecurityandOfficeNetwork‐
Sofia.
Alongside his responsibilities at the Bank, Mr. Skortchev has also occupied other senior executive
positions. Mr. Skortchev has been Chairman of the Supervisory Board of UNIBank AD, Republic of
NorthernMacedonia,memberoftheSupervisoryBoardofCaSysInternational,RepublicofMacedonia,
memberoftheBoardofDirectorsofDinersClubBulgariaAD,memberoftheBoardofDirectorsof
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BankserviceAD,memberoftheBoardofDirectorsofMedical centerFiHealthAD,and Managerof
FiHealthOOD.
InthebeginningofFebruary2012,Mr.SkortchevwaselectedasaMemberoftheSupervisoryBoard
of the Bank. For the period 2012‐2019, he was Chairman of the Remuneration Committee to the
SupervisoryBoardofFirstInvestmentBankAD.SinceMay2019,Mr. Skortchev was elected as
ChairmanoftheNominationCommitteetotheSupervisoryBoardofFirstInvestmentBankAD.
Mr.SkortchevholdsaMastersDegreeinInternationalEconomicRelationsfromtheHigherInstituteof
Economics(nowtheUniversityofNationalandWorldEconomy)inSofia.Hehasspecializedinbanking
inLuxembourg,inswapdealsatEuromoney,andinfuturesandoptionsattheChicagoStockExchange.
Mr.Skortchevholdsmorethan10%ofthecapitalofInvestmentintermediaryDeltaStockAD.
JyrkiKoskelo–MemberoftheSupervisoryBoard
Mr.JyrkiKoskelowaselectedasmemberoftheSupervisoryBoardofFirstInvestmentBankADinJune
2015.InhiscapacityasanindependentmemberMr.KoskelosupportstheSupervisoryBoardinsetting
upthebusinessobjectivesandthestrategyoftheBank,thecorporatecultureandvalues,aswellasin
overseeing good corporate governance practices and effective riskmanagement.Sincetheendof
2019,hehasbeenChairmanoftheRiskCommitteetotheSupervisoryBoardofFirstInvestmentBank
AD.Mr.Koskelohaslong‐termexperience inbankingandglobal financial markets,aswellaswide
professionalpracticeindifferentgeographicalregions.
Mr.KoskeloworkedintheInternationalFinanceCorporation(IFC‐amemberoftheWorldBankGroup)
for24years,from1987tolate2011.Thefirst13yearsheworkedasanInvestmentOfficercovering
theCentralandEasternEuropeandAfricaregions.In2000,hewasappointedasDirectorWork‐out
Loansandin2004hebecameDirectorGlobalFinancialMarkets.In2007,hewasappointedasVice
President(reportingtotheCEO)andamemberoftheIFC’sManagementCommittee.Mr.Koskeloled
theformulationandimplementationoftheIFC’sinvestmentstrategy,policies,andpracticesacross
industriesandregions,includinginCentralandEasternEurope,LatinAmericaandAfrica.Hismajor
legaciesincludeIFC’sentrytoGlobalTradeFinancePrograms,decentralizationoftheorganizationwith
significantstaffingacrossemergingmarkets,IFC’sleadingroleinprivatesectorsideofViennaInitiative
tosupportCentralEuropebanksafterLehmanCrisisandestablishmentofIFC’sAssetManagement
subsidiary’sfirst$3billionfundforcapitalizationofweakbanksinpoorcountries.
PriortojoiningtheIFC,hespentcloseto10yearsinseniormanagementpositionsintheprivatesector
intheMiddleEastandinUSA.
Mr.Koskelocurrentlyholdsanumberofseniorandadvisorypositions in European and African
organizationsandfinancialinstitutionsincluding:
AATIF(aKfW&EUsponsoredAfricaAgricultureandTradeInvestmentFund),Luxemburg–
MemberoftheBoardofDirectors,ChairmanoftheInvestmentCommittee;
EXPOBank,CzechRepublic–MemberoftheSupervisoryBoard;
GulfMarineServicesPLC(GMSInternational),UK–MemberoftheBoardofDirectors.
Duringtheperiod2012–upto2019Mr.KoskeloactedinmultipleSupervisoryBoardandadvisory
positions including in the Africa Development Corporation, Germany; African Banking Corporation,
Botswana;RSwitch,Rwanda;EXPOBank,Latvia,AtlasMaraCo‐NvestLLC,UK,andinAlJaberGroup,
UAE.
Mr.KoskeloholdsaMasterofScience(M.Sc.)degreeinCivilEngineeringfromtheTechnicalUniversity
ofHelsinki,FinlandandaMasterofBusinessAdministration(MBA)inInternationalFinancefromthe
MassachusettsInstituteofTechnology(MIT),SloanSchoolofManagementinBoston,USA.
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MEMBERSOFTHEMANAGINGBOARD
NikolaBakalov–ChiefExecutiveOfficer(CEO)and
ChairmanoftheManagingBoard
Mr.NikolaBakalovhasextensiveexperienceinthebankingandinsurancesectorinBulgaria,combined
withprovenprofessionalandmanagerialskills.FromDecember2000toSeptember2011,heworked
atFirstInvestmentBankAD,takingincreasingresponsibilitiesfromCardServicesSpecialisttoDirector
oftheCardPaymentsDepartment,whichpositionheheldforalmost6years.Duringthisperiodhe
wasalsoelectedasmemberoftheexecutivecommitteesofMastercardBulgariaandVISABulgaria.
IntheperiodDecember2011‐August2012,Mr.BakalovwasmemberoftheManagingBoardofAllianz
BankBulgariaAD,whereheservedasExecutiveDirector,andsubsequentlyasChiefExecutiveOfficer.
From2013toAugust2020,Mr.BakalovwasExecutiveDirectorofFiHealthInsuranceAD,wherehe
expandedsignificantly theactivityofthecompany and transformeditina leadingcompanyinthe
sphereofhealthinsurance.
At the beginning of 2020, he was elected as Chief Retail Banking Officer (CRBO), Member of the
ManagingBoardandExecutiveDirectorofFirstInvestmentBankAD,responsiblefortheretailbanking
businesslineswithintheBank.
SinceApril2020Mr.BakalovhasbeenelectedasChiefExecutiveOfficer(CEO)andChairmanofthe
ManagingBoardofFirstInvestmentBankAD.
Responsibilities in the Bank – Compliance function, Legal Department, Corporate Communications
Department, Marketing and Advertising Department, Human Capital Management Department,
AdministrativeDepartment,AssetManagementDepartment,InformationTechnologiesDepartment
andProtocolandSecretariatDepartment.
Mr. Bakalov holds a Master’s degree in International Economic Relations from the University of
Nationaland WorldEconomyinSofia, and has additionalspecializationsincardpayments,finance
retailservicesandcorporategovernance.
ApartfromhispositionattheBank,Mr.BakalovisDeputychairmanoftheBoardofDirectorsof
FiHealthInsuranceAD.
SvetozarPopov–ChiefRiskOfficer(CRO),MemberoftheManagingBoard
andExecutiveDirector
Mr. Svetozar Popov joined First Investment Bank AD in 2004 as partoftheRiskManagement
Department,andwasshortlythereafterpromotedtoHeadoftheCreditRiskDivision.From2006to
2008hewasDeputyDirectorofRiskManagement,duringwhichperiodhealsochairedtheBank's
CreditCouncil.From2016to2017,Mr.PopovheldtheofficeofChiefComplianceOfficer(CCO),and
inMay2017hewasappointedasChiefRiskOfficer(CRO),MemberoftheManagementBoardand
ExecutiveDirectorofFirstInvestmentBankAD.
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From2008to2015,Mr.PopovwasmemberoftheManagingBoardandExecutiveDirectorofUNIBank
AD,NorthernMacedonia,wherehegainedsignificantmanagementexperienceandwasresponsible
fortheareasofriskmanagement,creditadministration,andfinance.PriortojoiningFirstInvestment
BankAD,Mr.PopovworkedatRaiffeisenbank(Bulgaria)EADasanSMEloanofficer.
Mr.PopovholdsaMastersdegreeinFinancefromtheUniversityofNationalandWorldEconomyin
Sofia,andhasobtainedadditionalqualificationsinthefieldoffinancialanalysisfromtheEuropean
BankforReconstructionandDevelopment(EBRD)andotherinternationallyrecognizedinstitutions,as
wellaspracticalexperienceinforeignbanks.
In the Bank he is responsible for the Risk Analysis and ControlDepartment,theCreditRisk
Management,MonitoringandProvisioningDepartment,theImpairedAssetsDepartment,theLoan
Administration Department, Security Department, Information Security Department and the
specializedunitStrategicRiskManagement.
Besides his position in the Bank, Mr. Popov is a Chairman of the Supervisory Board of UNIBank,
RepublicofNorthernMacedonia,ChairmanoftheBoardofDirectorsofMyFinEADandaManagerof
DebitaOOD.
ChavdarZlatev‐ChiefCorporateBankingOfficer(CCBO),Memberofthe
ManagingBoardandExecutiveDirector
Mr.ChavdarZlatevjoinedtheteamofFirstInvestmentBankADin2004asChiefspecialistintheSME
LendingDepartment.SoonafterwardshewaspromotedtoDeputyDirectoroftheDepartment.From
2006to2009hewasmanageroftheVitoshabranchofFirstInvestmentBankAD.Hewassubsequently
appointedDeputyDirectoroftheBranchNetworkDepartment,andin2010promotedtoDirectorof
theDepartment.Inearly2011,hewasappointedDirectoroftheCorporateBankingDepartment,and
has participated in the development and implementation of a number of banking products. In
November2014Mr.ZlatevwaselectedmemberoftheManagingBoardofFirstInvestmentBankAD,
andfromFebruary2018wasappointedasChiefCorporateBankingOfficer(CCBO),Memberofthe
ManagingBoardandExecutiveDirector.
AlongsidehisresponsibilitiesintheBankfortheperiodduring2011‐August2020hewasmemberof
theBoardofDirectorsofFiHealthInsuranceAD.
PriortojoiningFirstInvestmentBankAD,Mr.ZlatevworkedinCBUnionbankAD asaseniorbank
officer,Corporateclients.HeholdsaMaster‘sdegreeinMacroeconomics from the University of
NationalandWorldEconomyinSofia.HehasspecializedloanproductsandpracticesinBankofIreland,
aswellascontemporarybankingpracticesinBancoPopolarediVerona.
Responsibilities in the Bank – Corporate Banking Department, Corporate Sales and Public
ProcurementsDepartment.
Besides his position with the Bank, Mr. Zlatev is a member of the Management Board of First
InvestmentBank–AlbaniaSh.a.
RalitsaBogoeva–ChiefRetailBankingOfficer(CRBO),
MemberoftheManagingBoardandExecutiveDirector
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Ms. Ralitsa Bogoeva has been Chief Retail Banking Officer, Member of the Managing Board and
ExecutiveDirectorofFirstInvestmentBankADsinceMay2020.She has extensive professional
experienceinvariousfieldsofbanking.
Ms.RalitsaBogoevajoinedtheteamofFirstInvestmentBankADin2002asaRetailLoanOfficerand
ayearlaterwaspromotedtoDeputyDirectoroftheRetailBankingDepartment,apositionsheheld
foreightyears.From2011to2018shewasDirector,InternalAuditofFibank.FromJune2018to2020,
Ms.BogoevaheldthepositionofChiefITandOperationsOfficerattheBank.Duringherprofessional
career, Ms. Bogoeva has managed various projects in the fields of finance, the development and
administrationofproductsforindividualsandbusinesses,aswellasinnovativeprojectsinthefieldof
informationtechnologyanddigitalizationofbanking.
Ms.Bogoevahasa Master's degreeinAccountingandControlfromthe Universityof National and
World Economy in Sofia, as well as a number of additional qualifications in the areas of banking,
internationalauditingstandards,planningandprojectmanagement.
ResponsibilitiesintheBank–RetailBankingDepartment,PrivateBankingDepartment,DigitalBanking
Department,CardPaymentsDepartment,BranchNetworkDepartment,OrganisationandControlof
CustomerServiceDepartment,GoldandCommemorativeCoinsDepartment,theVault.
InadditiontoherpositionintheBank,Ms.BogoevaisamemberoftheBoardofDirectorsofDiners
ClubBulgariaAD,amemberoftheBoardofDirectorsofMyFinEADandamemberoftheSupervisory
BoardofUNIBankaAD,NorthernMacedonia.Sheowns25%ofthecapitalofRayaHomesOOD.
IankoKarakolev–ChiefFinancialOfficer(CFO)and
MemberoftheManagingBoard
Mr.IankoKarakolevwaselectedChiefFinancialOfficer(CFO)andMemberoftheManagingBoardof
FirstInvestmentBankADinJune2020.HeisalongtimefinancialanalystandstaffmemberofFirst
InvestmentBankAD.
Mr. Karakolev joined the Bank's team in 1999 as an accountant‐controller in the Financial and
AccountingDepartmentandsoonbecameDirectoroftheInternetBranch.Intheperiod2002‐2007he
waspromotedfromHeadoftheFinancialStatements,AnalyzesandBudgetingunittoDeputyChief
Accountant. After that, until 2011, he held the position of Deputy Director of the Finance and
AccountingDepartment.From2011to2014hewasChiefFinancialOfficerandDirectoroftheFinance
andAccountingDepartment,andintheperiod2014‐2020wasDirectoroftheFinanceDepartment.
Duringhisprofessionalcareer,Mr.Karakolevhasparticipatedinthemanagementofmanyinnovative
projects contributing to the implementation of international standards and the development of
banking,aswellasincorporateactionssuchastheacquisitionofMKBUnionbankanditssubsequent
mergerwithFirstInvestmentBankAD.
PriortojoiningtheteamofFirstInvestmentBankAD,Mr.KarakolevworkedatBulgarianCommercial
andIndustrialBankADasanaccountant.HeholdsaMaster'sdegreeinFinancefromtheUniversityof
NationalandWorldEconomyinSofiaandhasprofessionalcertificatesandqualificationsinthefields
ofinternationalfinancialandaccountingstandards,theEuropeanregulatoryframeworkonbanking
andreporting,managementandbusinessplanning.
Responsibilities in the Bank – Finance Department, Accounting Department, Treasury Department,
Investor Relations Department, Financial Institutions and Corresponding Banking Department and
IntensiveLoanManagementDepartment.
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InadditiontohispositionintheBank,Mr.KarakolevisamemberoftheSteeringCouncilandofthe
AuditCommitteeofFirstInvestmentBank‐AlbaniaSh.a.,memberoftheBoardofDirectorsofBalkan
FinancialServicesEADandmemberoftheSupervisoryBoardofUNIBankaAD,NorthernMacedonia.
NadiaKoshinska–MemberoftheManagingBoardandDirectorofSME
BankingDepartment
Ms.NadiaKoshinskajoinedFibankin1997asacorporateloanexpert.In2002,shewasappointed
DeputyDirectorLoanAdministrationandheldthispositionuntil2004.In2004NadiaKoshinskawas
appointedDirectorSMELendingDepartmentresponsibleforincreasingthemarketshareoftheBank
throughimplementingspecialprogramsanddedicatedproductsfor SMEs. Also in 2004, she was
appointedasamemberoftheCreditCouncil.Attheendof2015,Ms.KoshinskawaselectedasChief
RetailBankingOfficer(CRBO)andMemberoftheManagingBoard,whilesinceSeptember2017isa
MemberoftheManagingBoardandDirectorofSMEBankingDepartment.
PriortojoiningFirstInvestmentBank ADsheworkedin thebalance ofpaymentsandforeigndebt
divisioninBulgarianNationalBank.
Ms.NadiaKoshinskaholdsaMastersdegreeinAccountingandControlfromtheUniversityofNational
andWorldEconomyinSofia.
IntheBanksheisresponsiblefortheSMEBankingDepartment.
Ms.Koshinskadoesnotholdoutsideprofessionalpositions.
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The present Consolidated Activity report for 2021 was approved by the Managing Board of First
Investment Bank AD in accordance with the Bank’s internal regulations at a meeting dated
28April2022.
SignedSigned
SvetozarPopov
ExecutiveDirector,
ChiefRiskOfficer,
MemberoftheManagingBoard
Signed
ChavdarZlatev
ExecutiveDirector,
ChiefCorporateBankingOfficer,
MemberoftheManagingBoard
IankoKarakolev
ChiefFinancialOfficer,
MemberoftheManagingBoard
DECLARATION
under Art. 100о, para. 4(4) of the Public Offering of Securities Act (POSA)
The undersigned Svetozar Alexandrov Popov, Executive Director and Member of the Managing
Board of First Investment Bank AD, Chavdar Georgiev Zlatev, Executive Director and Member
of the Managing Board of First Investment Bank_AD and Ianko Angelov Karakolev, Chief
Financial Officer and Member of the Managing Board at First Investment Bank AD, hereby
declare that to the best of our knowledge:
• The consolidated financial statements of First Investment Bank AD as at 31 December
2021, prepared in accordance with the applicable accounting standards, give a true and
fair view of the assets and liabilities, financial position and profit of First Investment
Bank AD, as well as of the companies included in the consolidation.
• The consolidated annual report of First Investment Bank AD as at 31 December 2021
contains a fair review of the development and results from the activities of First
Investment Bank AD, as well as of the companies included in the consolidation.
Signed Signed
_____________________ _____________________
Svetozar Popov Chavdar Zlatev
Executive Director Executive Director
Member of MB Member of MB
Signed
_____________________
Ianko Karakolev
Chief Financial Officer
Member of MB
28 April 2022
Sofia
1
INDEPENDENT AUDITORS REPORT
To the shareholders of
First Investment Bank AD
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of First Investment Bank AD and its
subsidiaries ("the Group") containing the consolidated statement of financial position as at 31
December 2021 and the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year ended
on that date, as well as the notes to the consolidated financial statements that also contain a
summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the financial position of First Investment Bank AD and its subsidiaries as at 31
December 2021 and its financial performance and its cash flows for the year then ended in
accordance with the International Financial Reporting Standards (IFRS) adopted by the
European Union (EU).
Basis for opinion
We conducted our audit in accordance with the International Standards on Auditing (ISA). Our
responsibilities under these standards are further described in our section "Auditor's
Responsibilities for the Auditing of the Financial Statements". We are independent of the Group
in accordance with the International Code of Ethics for Professional Accountants (IESBA Code),
along with the ethical requirements of the Independent Financial Audit Act (IFAA) applicable to
our audit of the consolidated financial statements in Bulgaria, and we have fulfilled our other
ethical responsibilities in line with the requirements of the IFAA and the IESBA Code. We believe
that the audit evidence we received is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, according to our professional judgment, were of the
highest importance in the audit of the current period's consolidated financial statements. These
issues are considered as part of our audit of the consolidated financial statements as a whole
and the formation of our opinion thereon, and we do not provide a separate opinion on these
issues.
2
Impairment of customer receivables
Key audit matter - Findings of
substance
Matters discussed with audit
committee
Impairment is a material judgment of
management in respect of losses incurred
within the First Investment Bank AD's loan
portfolio.
First Investment Bank AD assesses the
need for impairment of loans on an
individual and portfolio basis.
Loans represent 55.93% of the assets of
First Investment Bank AD. First Investment
Bank AD categorizes its receivables from
customers in 4 business segments: retail
banking, small and medium enterprises,
microcredit and corporate clients. The
share of receivables from corporate
customers is the largest - 48.21% of the
total receivables from customers.
Because of their materiality and
uncertainty related to the process of
identifying deteriorating loans, the
assessment of objective evidence of
impairment and the determination of
recoverable value is defined as a key audit
issue.
The process includes various assumptions
and factors, including the counterparty's
financial condition, expected future cash
flows, collateral value.
As a result, the use of different modeling
techniques and assumptions may lead to
differences in the valuation of loan loss
provisions.
Exposures that give the greatest
uncertainty to valuations are those where
there is a risk of cash flow shortages or
collateral insufficiency.
The issues discussed cover the positive
results and good practices set out in the
provisioning model. First Investment Bank
AD has complied with IFRS requirements
when developing policy and provisioning
rules.
Improvements have been discussed in the
procedures that First Investment Bank AD
should introduce in order to:
a clearer documenting of
judgments about the future cash
flows of borrowers and the
expected development of future
credit exposures, with particular
attention being paid to lending for
working capital by First Investment
Bank AD.
systematically confirming the
commitment of the borrowers'
owners to provide ongoing support
to the companies.
A recommendation was also discussed
with The Audit Committee that the risk
management bodies of First Investment
Bank AD monitor the changes in risk
factors, the macroeconomic framework
and other data used in the provisioning
models, and the material changes to be
timely reflected in the provisioning
3
Key audit matter - Findings of
substance
Matters discussed with audit
committee
How this key audit matter was addressed during our audit
Procedures carried out in support of our conclusions and discussions:
- The internal rules of First Investment Bank AD have been reviewed, we have
gained understanding of key controls in key business processes, and tests of
effectiveness of controls are performed according to the audit strategy.
- A sample of borrowers has been reviewed on a risk-based basis for which
substantive procedures have been performed in relation to the assessment of
the adequacy of the recognized impairment provision.
- For individually accrued provisions, we tested assumptions about the
identification and quantification of impairments, including future cash flow
projections and credit collateral estimates. We examined a sample of credit
exposures that continue to be, have become, or have been, at risk of impairment.
- For collective impairment provisions, we reviewed the methodology used by First
Investment Bank AD to determine them, the reasonableness of the underlying
assumptions and the sufficiency of the data used by the management.
- For selected non-performing loans, we have evaluated the management
forecasts for cash flow generation, collateral estimates and other repayment
sources. In addition, we have tested a sample of performing loans for which we
have assessed the financial performance indicators for weaknesses and other
risks that could jeopardize the ability to repay exposures.
References in the Annual Financial Statements
Notes 18 and 18a
Note 2 (j)
Note 3 C (iii)
Note 4
Assets acquired as collateral
Key audit matter- Assets acquired as
collateral
Matters discussed with audit
committee
The position in the consolidated financial
statements amounting to BGN 459,853
thousand is disclosed in the respective
subgroups.
The Buildings group contains assets of
varying degrees of completeness and are
in line with their condition at the acquisition
date.
First Investment Bank AD has recognized
in the group Other income/expenses, net
(Note 12) loss of BGN 6,034 thousand.
The actions and procedures that First
Investment Bank AD should implement in
order to enable First Investment Bank AD
to track the changes in the portion of
revenues and expenses by groups and
subgroups by the time of realization of the
respective assets were discussed. In
addition, we have set out our
recommendation to improve asset
inventory processes that have been
acquired as collateral in order to better and
4
Key audit matter- Assets acquired as
collateral
Matters discussed with audit
committee
First Investment Bank AD, like any other
banking institution, is exposed to a
significant risk on the realization of assets
acquired as collateral.
fully implement the national financial
reporting framework.
How this key audit matter was addressed during our audit
Procedures carried out in support of our conclusions and discussions:
- The internal rules of First Investment Bank AD have been reviewed, we have
gained understanding of key controls in key business processes, and tests of
effectiveness of controls are performed according to the audit strategy.
- For a sample of newly acquired collateral assets amounting to BGN 37,009
thousand, the acquisition documents were reviewed and the fair value reports
were reviewed for a sample of BGN 309,684 thousand.
Supporting documents for our sample have been reviewed in connection with
the largest object - a brokerage agreement, a rental agreement, a commission
contract and the annexes to them. Substantive procedures have been carried
out to confirm the completeness and accuracy of reclassification between the
different groups.
References in the Annual Consolidated Financial Statements
Note 12
Note 22
Litigation and provisions
Key audit matter – Litigation and
provisions
Matters discussed with audit
committee
First Investment Bank AD, like any other
banking institution, is exposed to
significant risk of litigation and regulatory
inspections. The degree of impact cannot
always be predicted, but it can lead to
provisions for contingent and other
obligations depending on the relevant
facts and circumstances. The level of
provisions is subject to management and
assessment based on legal advice.
First Investment Bank AD has recognized
provisions in the amount of BGN 523
thousand in litigation.
In connection with issued bank
guarantees, First Investment Bank AD has
blocked funds in the amount of BGN
44,137 thousand, which are disclosed in
Recognition and valuation of provisions
have been discussed with the Audit
Committee to ensure that First Investment
Bank AD has correctly implemented its
provisioning policies.
Disputes on which First Investment Bank
AD has not recognized provisions were
discussed in order to be sufficiently
convinced that there is no need for
additional provisions and in particular:
the legal department of First Investment
Bank AD reports to the Audit Committee
the current status of litigation. The
significant changes that have taken place
have been discussed, taking into account
the potential changes in the provisions.
5
Key audit matter – Litigation and
provisions
Matters discussed with audit
committee
Note 25 to the consolidated financial
statements (included in the subgroup
Other assets).
Due to the ambiguities from the
occurrence and filing of claims related to
lawsuits against First Investment Bank AD,
there is a risk of incomplete or untimely
reflection in the financial statements of
legal claims related to the relevant
reporting period.
The discussion is also held in order to
identify all significant litigation.
How this key audit matter was addressed during our audit
Procedures performed in support of our conclusions and discussions
- The internal rules of First Investment Bank AD have been reviewed, we have
received an understanding of the key controls in the essential business
processes and tests have been made for the effectiveness of the controls,
according to the audit strategy.
- A letter was received from the legal department of First Investment Bank AD, as
well as from external legal advisers regarding information on cases filed in
foreign jurisdiction and subsequent proceedings in Bulgaria. The pending court
cases in Bulgarian and Romanian courts, on which no final decisions have
entered into force, are listed.
References in the annual consolidated financial statements
Note 25
Note 30
Other matters
Pursuant to Decision 81/15 March 2019 of the Bulgarian National Bank (BNB), First Investment
Bank AD should have reclassified certain Receivables from customers as “Exposures in
default”. The Bank has not reclassified as “Defaulted exposures” Receivables from customers
amounting to BGN 400,021 thousand gross (BGN 362, 467 thousand net), for which the
management has provided the BNB with explanations and reasons for its decision.
Information other than the consolidated financial statements and the auditor's report
thereon
Management is responsible for other information. The other information consists of a
consolidated activity report, incl. corporate governance statement, consolidated non-financial
statement and remuneration policy implementation report prepared by management in
accordance with Chapter Seven of the Accounting Act, but does not include the consolidated
6
financial statements and our audit report on it, which we received before the date of our audit
report .
Our opinion on the consolidated financial statements does not cover other information and we
do not express any form of assurance regarding it, unless explicitly stated in our report and to
the extent that it is stated.
In connection with our audit of the consolidated financial statements, our responsibility is to read
the other information and thereby determine whether that other information is materially
inconsistent with the consolidated financial statements or with our knowledge of the audit, or
otherwise it appears to contain material misstatement.
In the event that, based on the work we have done, we conclude that there is a material
misstatement in this other information, we are required to report this fact.
We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated
financial statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with IFRS applicable in the EU and for such internal control
system as it deems necessary to ensure the preparation of consolidated financial statements
that do not contain material misstatements, regardless of whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing
the Group's ability to continue as a going concern, disclosing, where applicable, issues related
to the going concern assumption and using the accounting basis based on the going concern
assumption. if management does not intend to liquidate the Group or discontinue the Group, or
if management has virtually no alternative but to do so.
The persons in charge of general management are responsible for supervising the Group's
financial reporting process.
Responsibilities of auditor for the consolidated financial statements
Our objectives are to obtain reasonable assurance as to whether the consolidated financial
statements as a whole do not contain material misstatements, whether due to fraud or error,
and to issue an audit report that includes our audit opinion. A reasonable level of assurance is
a high level of assurance, but there is no guarantee that an audit performed in accordance with
ISA will always reveal material misstatement, where such exists. Incorrect readings may arise
as a result of fraud or error and are considered material if it could reasonably be expected that
they, alone or as a whole, could influence the economic decisions of consumers made on the
basis of this consolidated financial report.
7
—
As part of the ISA-compliant audit, we use professional judgment and maintain professional
skepticism throughout the audit. We also:
—
identify and assess the risks of material misstatement in the consolidated financial
statements, whether due to fraud or error, develop and perform audit procedures in response
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not disclosing material misstatement resulting from fraud is higher
than the risk of material misstatement resulting from error, as fraud may include collusion,
falsification, intentional omissions, introductory statements of the auditor in error, as well as
neglect or circumvention of internal control.
—
We gain an understanding of internal control relevant to the audit in order to develop audit
procedures that are appropriate in the particular circumstances, but not in order to express
an opinion on the effectiveness of the Group's internal control.
—
We evaluate the appropriateness of the accounting policies used and the reasonableness
of the accounting estimates and related disclosures made by management.
—
we conclude on the appropriateness of management's use of the accounting base based on
the going concern assumption and, based on the audit evidence obtained, whether there is
material uncertainty about events or conditions that could raise significant doubts about the
Group's ability to continue as a going concern. If we conclude that there is material
uncertainty, we are required to draw attention in our audit report to the disclosures related
to this uncertainty in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our audit report. However, future events or conditions may cause the Group
to cease to operate as a going concern.
—
We evaluate the overall presentation, structure and content of the consolidated financial
statements, including disclosures, and whether the consolidated financial statements
present the underlying transactions and events in a manner that achieves reliable
presentation.
—
We obtain sufficient appropriate audit evidence about the financial information of the entities
or entities within the Group to express an opinion on the consolidated financial statements.
We are responsible for instructing, overseeing and performing the Group's audit. We are
solely responsible for our audit opinion.
We communicate with those charged with governance, among other matters, the planned scope
and timing of the audit and significant audit findings, including significant deficiencies in internal
control, which we identify during our audit.
We also provide those charged with governance with a statement that we have met the
applicable ethical requirements for independence and that we will communicate with them all
relationships and other matters that could reasonably be considered relevant to our
independence, and, where applicable, the precautionary measures involved.
Among the matters communicated to those charged with governance, we identify those matters
that were of the greatest importance in the audit of the consolidated financial statements for the
8
current period and which are therefore key audit matters. We describe these matters in our audit
report, except where law or regulation impedes the public disclosure of the matter or when, in
extremely rare cases, we decide that an issue should not be communicated in our report, as it
could reasonably be expected that the adverse consequences of this action would outweigh the
public interest benefits of this communication.
We are jointly and severally liable for the performance of our audit and for the audit opinion
expressed by us, in accordance with the requirements of the IFAA applicable in Bulgaria. In
undertaking and fulfilling the commitment for joint audit, in connection with which we report, we
have been guided by the Guidelines for Joint Audit, issued on 13.06.2017 by the Institute of
Certified Public Accountants in Bulgaria and the Commission for Public supervision of registered
auditors in Bulgaria.
Report on other legal and regulatory requirements
Additional issues raised by the Accounting Act and the Public Offering of Securities Act
In addition to our responsibilities and reporting under ISA, described above in the section "Other
information other than the consolidated financial statements and the auditor's report" regarding
the consolidated statement of operations, the Group's corporate governance statement, the
consolidated non-financial statement and Remuneration Policy Implementation Report, we also
complied with the procedures added to those required by ISAs under the Guidelines on New
and Extended Auditor Reports and Auditor Communication of the Professional Organization of
Registered Auditors in Bulgaria, Institute of Certified Public Accountants (ICPA). ”These
procedures concern checks on the availability as well as checks on the form and content of this
other information in order to assist us in forming an opinion on whether other information
includes disclosures and reports provided for in Chapter Seven of the Accounting Act. and in
the Public Offering of securities Act, (Art. 100n, para. 10 of POSA in connection with Art. 100n,
para. 8, items 3 and 4 of POSA), applicable in Bulgaria.
Opinion in connection with Art. 37, para. 6 of the Accounting Act
Based on the procedures performed, our opinion is that:
—
(a) The information included in the consolidated statement of operations for the financial
year for which the consolidated financial statements have been prepared is consistent with
the consolidated financial statements.
—
b) The consolidated activity report has been prepared in accordance with the requirements
of Chapter Seven of the Accounting Act and of Art. 100 (n), para. 7 of the Public Offering of
Securities Act.
—
c) The corporate governance statement of the Group for the financial year for which the
consolidated financial statements have been prepared presents the requirements required
under Chapter Seven of the Accounting Act and Art. 100 (n), para. 8 of the Public Offering
of Securities Act Information.
—
d) The consolidated non-financial statement for the financial year for which the consolidated
financial statements have been prepared has been submitted and prepared in accordance
with the requirements of Chapter Seven of the Accounting Act.
9
—
e) The report on the implementation of the remuneration policy for the financial year for which
the financial statement has been prepared has been submitted and meets the requirements
set out in the ordinance under Art. 116c, para. 1 of the Public Offering of Securities Act.
Opinion in connection with Art. 100 (n), para. 10 in connection with Art. 100 n, para. 8, items 3
and 4 of the Public Offering of Securities Act
Based on the performed procedures and the acquired knowledge and understanding of the
Group's activities and the environment in which it operates, in our opinion, the description of the
main characteristics of the Group's internal control and risk management systems in connection
with the financial reporting process, which is part of the consolidated activity report (as an
element of the content of the corporate governance declaration) and the information under Art.
Article 10 (1) (c), (d), (e), (h) and (i) of Directive 2004/25 / EC of the European Parliament and
of the Council of 21 April 2004 on takeover bids do not contain cases of material misstatement.
Additional reporting on the audit of the consolidated financial statements in connection
with Art. 100 (n), para. 4, item 3 of the Public Offering of Securities Act
Statement in connection with Art. 100 (n), para. 4, item 3, p. "B" of the Public Offering of
Securities Act
Information on related party transactions is disclosed in Note 35 to the consolidated financial
statements. Based on our audit procedures on related party transactions as part of our audit of
the consolidated financial statements as a whole, we are not aware of any facts, circumstances
or other information on the basis of which we can conclude that related party transactions are
not disclosed in the accompanying financial statements for the year ended 31 December 2021,
in all material respects, in accordance with the requirements of IAS 24 Related Party
Disclosures. The results of our audit procedures on related party transactions are reviewed by
us in the context of forming our opinion on the consolidated financial statements as a whole,
and not for the purpose of expressing a separate opinion on related party transactions.
Statement in connection with Art. 100 (n), para. 4, item 3, p. "C" of the Public Offering of
Securities Act
Our responsibilities for the audit of the consolidated financial statements as a whole, described
in the section of our report "Auditor's Responsibilities for the Audit of the Financial Statements",
include assessing whether the consolidated financial statements present material transactions
and events in a manner that provides reliable presentation. Based on our audit procedures on
the material transactions underlying the consolidated financial statements for the year ended 31
December 2021, we are not aware of any facts, circumstances or other information on the basis
of which we can conclude that they are there are cases of material misstatement in accordance
with the applicable requirements of IFRS adopted by the European Union. The results of our
audit procedures on the significant transactions and events of the Bank for the consolidated
financial statements are reviewed by us in the context of forming our opinion on the financial
10
statements as a whole, and not for the purpose of expressing a separate opinion on these
significant transactions.
Report on other legal and regulatory requirements
Reporting on compliance with the electronic format of the consolidated financial statements
included in the annual consolidated financial statements for the activity under Art. 100n, para 5
of POSA with the requirements of the ESEF Regulation
We are committed to providing reasonable assurance as to the compliance of the electronic
format of the Group's consolidated financial statements for the year ended 31 December 2021,
attached to the electronic file 549300UY81ESCZJ0GR95-20211231-EN-CON.xhtml, with the
requirements of Commission Delegated Regulation (EU) 2019/815 of 17 December 2018
supplementing Directive 2004/109 / EC of the European Parliament and of the Council by means
of regulatory technical standards to define the uniform electronic format for reporting ("ESEF
Regulation") . Our opinion is only regarding the electronic format of the consolidated financial
statements and does not cover the other information included in the annual consolidated
financial statements for the activity under Art. 100n, para. 5 of the POSA.
Description of the subject and applicable criteria
The management has prepared an electronic format of the consolidated financial statements of
the Group for the year ended 31 December 2021 under the ESEF Regulation in order to comply
with the requirements of the POSA. The rules for the preparation of consolidated financial
statements in this electronic format are set out in the ESEF Regulation and, in our view, have
the characteristics of appropriate criteria for issuing a reasonable assurance opinion.
Responsibilities of management and those charged with governance
The management of the Group is responsible for the application of the requirements of the ESEF
Regulation when preparing the electronic format of the consolidated financial statements in
XHTML. These responsibilities include the selection and application of appropriate iXBRL
markings using the taxonomy of the ESEF Regulation, as well as the introduction and
implementation of such internal control system as management deems necessary to prepare
the electronic format of the Group's annual consolidated financial statements. does not contain
significant inconsistencies with the requirements of the ESEF Regulation.
The persons in charge of general management are responsible for overseeing the process of
preparing the Group's annual consolidated financial statements, including the implementation
of the ESEF Regulation.
11
Auditor's responsibilities
Our responsibility is to express an opinion of reasonable assurance as to whether the electronic
format of the consolidated financial statements is in accordance with the requirements of the
ESEF Regulation. To this end, we have complied with the Guidelines on the Audit Opinion on
the Application of the Single European Electronic Format (ESEF) for the Financial Statements
of Companies "whose securities are admitted to trading on a regulated market in the European
Union (EU)" of the professional organization. of Registered Auditors in Bulgaria, Institute of
Certified Public Accountants (ICPA) "and we have committed to expressing a reasonable level
of assurance in accordance with IAАЕS 3000 (revised) Assurance Exercises Other than Audits
and Reviews of Historical Financial Information" ( IAАЕS 3000 (revised)) This standard requires
us to comply with ethical requirements, plan and perform appropriate procedures to obtain
reasonable assurance whether the electronic format of the Group's consolidated financial
statements has been prepared in all material respects in accordance with applicable regulations.
criteria mentioned above The nature, timing and scope of the selected procedures depend on
our professional judgment, including the assessment of the risk of material non-compliance with
the requirements of the ESEF Regulation, whether due to fraud or error.
A reasonable level of assurance is a high level of assurance, but there is no guarantee that a
commitment made in accordance with IAАЕS 3000 (revised) will always reveal a material non-
compliance where applicable.
Quality control requirements
We apply the requirements of the International Standard on Quality Control (ISQC) 1 and,
accordingly, maintain a comprehensive quality control system, including documented policies
and procedures regarding compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements for registered auditors in Bulgaria.
We meet the ethical and independence requirements of the International Code of Ethics for
Professional Accountants (including International Standards of Independence) of the
International Ethics Standards Board for Accountants (IESBA Code), adopted by ICPA through
the IFAA.
Summary of the work performed
The purpose of the procedures planned and performed by us was to obtain a reasonable degree
of assurance that the electronic format of the consolidated financial statements has been
prepared, in all material respects in accordance with the requirements of the ESEF Regulation.
As part of the assessment of compliance with the requirements of the ESEF Regulation
regarding the electronic (XHTML) format for reporting on the Group's consolidated accounts, we
maintained professional skepticism and used professional judgment. We also:
—
received an understanding of the internal control and processes related to the application of
the ESEF Regulation to the consolidated financial statements of the Group and including the
12
preparation of the consolidated financial statements of the Group in XHTML format and its
marking in machine readable language (iXBRL);
—
we checked if the applied XHTML format is valid;
—
we checked whether the human readable part of the electronic format of the consolidated
financial statements corresponds to the audited consolidated financial statements;
—
we assessed the completeness of the markings in the consolidated financial statements of
the Group in the use of machine-readable language (iXBRL) in accordance with the
requirements of the ESEF Regulation;
—
assessed the appropriateness of the iXBRL markings selected from the main taxonomy
used, as well as the creation of an extended taxonomy element in accordance with the ESEF
Regulation where an appropriate element in the basic taxonomy is missing;
—
we assess the appropriateness of correlating (fixing) the elements of the extended taxonomy
in accordance with the ESEF Regulation.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Opinion on the compliance of the electronic format of the consolidated financial
statements with the requirements of the ESEF Regulation
In our opinion, based on the procedures performed by us, the electronic format of the
consolidated financial statements of the Group for the year ended 31 December 2021, contained
in the attached electronic file 549300UY81ESCZJ0GR95-20211231-EN-CON.xhtml, has been
prepared in all essential aspects in accordance with the requirements of the ESEF Regulation.
Reporting according to art. 10 of Regulation (EU) № 537/2014 in connection with the
requirements of Art. 59 of the Independent Financial Audit Act
According to the requirements of the Independent Financial Audit Act in connection with Art. 10
of Regulation (EU) № 537/2014, we also report the following information.
—
ECOVIS AUDIT BG OOD and BDO Bulgaria OOD have been appointed statutory auditors
of the financial statements for the year ended 31 December 2021 of First Investment Bank
AD (the “Bank”) by the General Meeting of Shareholders held on 23 June 2021, for a period
of one year.
—
The audit of the financial statements for the year ended 31 December 2021 of the Bank
represents the first full continuous commitment for mandatory audit of this company
performed by ECOVIS AUDIT BG OOD and the seventh full continuous commitment for
mandatory audit of this company performed by BDO Bulgaria Ltd.
—
We confirm that the audit opinion expressed by us is in accordance with the additional report
submitted to the audit committee of the Bank, in accordance with the requirements of Art. 60
of the Independent Financial Audit Act.
13
—
We confirm that we have not provided those specified in Art. 64 of the Independent Financial
Audit Act prohibited services outside the audit.
—
We confirm that in performing the audit we have maintained our independence from the
Bank.
—
For the period covered by our statutory audit, ECOVIS AUDIT BG OOD and BDO Bulgaria
OOD have jointly provided the following services to the Bank, which are not specified in the
activity report or financial statements of the Company:
Agreed upon procedure for application of Ordinance 14 of the BNB for the period December
1, 2021 - December 30, 2021 - Review of the current state of the internal control systems
prepared by the Bank in accordance with the requirements of the International Standard for
Related Services 4400 "Engagements to carry out agreed upon procedures regarding
financial information“;
—
For the period covered by our statutory audit, in addition to the audit, BDO Bulgaria OOD
has provided the following services to the Bank and its controlled companies, which are not
specified in the activity report or financial statements of the Bank.:
Audit as of December 31, 2021 of the annual financial statements of Fi Health Insurance AD
(subsidiary), prepared in accordance with IFRS, in accordance with ISA;
—
Audit as of December 31, 2021 of the annual financial statements of Diners Club Bulgaria
AD (subsidiary), prepared in accordance with IFRS, in accordance with ISA;
—
Audit as of December 31, 2021 of the annual financial statements of Myfin EAD (subsidiary),
prepared in accordance with IFRS, in accordance with ISA.
Sofia, 28 April 2022
For BDO Bulgaria OOD:
Nedyalko Apostolov
Manager
Tsvetana Stefanina
Registered auditor, responsible for the
audit
Sofia, 51B Bulgaria Blvd, floor 4
For ECOVIS AUDIT BG OOD:
Atina Nikolaos Mavridis
Manager
Rayna Stefanova
Registered auditor, responsible for the
audit
Sofia, r.d. Strelbishte, 23 Tvardishki
prohod street, fl. 3