Note 1.Accounting policy

Note 1.1.Main Activity

JSC “Credit OptimaBank” - is an open joint-stock company, banking is its function.

The Bank during the performance of its functions is guided by:

  • Constitution of Ukraine adopted by the Verkhovna Rada of 28.06.1996;
  • Civil Code of Ukraine, approved by the President of Ukraine of 16.01.2003, № 435-IV (with amendments);
  • Economic Code of Ukraine, approved by the President of Ukraine from 16.01.2003, № 436-IV (with amendments);
  • Presidential Decree "On measures to prevent the legalization (laundering) of proceeds of crime" from 10.12.2001 № 1199/2001 (with modifications);
  • Law of Ukraine «About the Companies» dated 19.09.1991 № 1576-XII (with modifications);
  • Law "On Banks and Banking Activity" dated 07 December 2000 № 2121-III (with modifications);
  • Law of Ukraine "About accounting and financial reporting in Ukraine" dated 16.07.1999roku № 996-XIV (with modifications);
  • Law of Ukraine «On securities and stock exchange» from 23.02.2006, № 3480 - IV (with amendments);
  • Law of Ukraine «On National Depository System and Peculiarities of electronic circulation of securities in Ukraine» from 10.12.1997, № 710/97-VR;
  • Law "On prevention and counteraction to legalization (laundering) of proceeds of crime" from 28.11.2002, № 249 (with modifications);
  • Law of Ukraine «On Taxation of business profits» in the wording of 22.05.97, № 283/97-VR;
  • current legislation of Ukraine on taxation;
  • other legislative acts of Ukraine, the Plan accounts of banks and instructions on the application of the Plan accounts of banks of Ukraine, approved by the Board of Bank of 17.06.2004, № 280 (with changes), other regulations of the National Bank of Ukraine, international and national standards accounting and internal regulations, the main of which are:
  • Bank’sCharter;
  • Regulation of the Bank on credit resource, structural and financial policies;
  • normative documents (Orders, orders, regulations, Orders, Regulations, Technology cards) that determine the order of operations with various financial instruments to reflect changes and additions.

The Bank conducts banking operations, according to the Bank’sCharter, under license number 239 dated 25 December 2007, the National Bank of Ukraine № 239-1 and permission to perform operations defined by paragraphs 1-4 of the second and fourth part of Article 47 of the Act «On banks and banking activity»of 25.12.2007 and application to permit № 239-1 dated 25.12.2007

Available volumes active-passive operations, expanding its customer base, balanced approach in spending allowed in 2008 to achieve positive financial results.

Note 1.2."Principles of accounting policies and reporting"

Accounting policy - a set of defined rules, methods and practical procedures taken by the Bank and used for compiling and providing financial reporting. Accounting policy is an instrument which affects as forms and methods of accounting, and financial results of the Bank and paid him taxes.

The principles on which the accounting and reporting of JSC «Credit Optima Bank», as set out in the Regulations on the organization of accounting and reporting in banking institutions of Ukraine approved by the Board of the National Bank of Ukraine № 566 of 30.12.98 (with modifications). The main ones are: complete coverage of accounting, prevalence of essence over form, autonomy, circumspection, calculation and matching of revenues and expenses, continuity, consistency, historical (actual) cost.

Differences between the Bank's accounting policies and International Financial Reporting Standards determined by the differences that exist between national regulations (standards) and the International Financial Reporting Standards.

Methods for evaluation of balance sheet that were used during the reporting period and at the time of the annual financial report:

Accounting involves the process of recognition of specific balance sheet item - a report on the financial position of the Bank, the main elements which are assets, liabilities and equity.

Cost of financial instruments recorded in foreign currency converted into national currency at current exchange rate of National Bank of Ukraine at the time of the transaction, or the rate at the time of balance.

Assets and liabilities of the Bank are accounted, priority, according to the cost of purchase or occurrence; assets and liabilities - in foreign currency, except for non-monetary articles that are to be revalued with each change of the official exchange rate, property, securities and property rights being taken as collateral, valued at fair value.

For accounting and financial reporting Bank’sassets and liabilities are taxed and accounted for:

  • cost of acquisition or emergence - for historical or original value: assets –for the amount of money paid for them, their equivalents, or other forms of compensation; commitment - for the amount of funds serviceman in exchange for such obligation or amount of funds or their equivalents, that are due for repayment obligations in the normal economic activity;
  • fair (market) value: assets - for the same amount of money that must be paid for acquisition (exchange) of such assets in the current time, commitments - for that amount of money that can be repaid in the current time such commitments result of transactions between aware, interested and independent parties. The expression «knowledgeable, interested and independent parties» is well-informed buyer, wishing to buy, and well-informed seller who has a desire to sell, which are independent and act in their own interests, bringing the value of assets in line with the fair is through revaluation , classification to reduce the utility and available credit risks.

Besides abovementioned, the accounting policy of the Bank, depending on the nature and content of tasks for different parts of the accounting system, another valuation methods are used for other groups of assets and liabilities, namely:

  • Book value - a price at which assets, liabilities and equity are reflected in the balance. Book value for financial assets and financial liabilities consist of the principal amount, accrued interest and bonus and discount, the amount of revaluation, the amount recognized reduction benefits;
  • Shockproof cost - a cost that is estimated financial assets, financial obligations and that consists of the acquisition cost, reduced amount to repay the principal amount of debt, increased (reduced) in the amount of accumulated amortization of any difference between original cost and cost of redemption, calculated using the effective interest rates, reduced by the amount of partial write-off by reducing benefits;
  • Contract value - the value of assets, an agreements signed by the Bank with its contractors;
  • Residual value - the difference between the initial (overstated) the value of the sum and the accrued depreciation reserve or created;
  • Value of the pledge - the cost defined by the coherence between the Bank and the borrower and fixed in the agreement;
  • Liquidation value - the amount of funds to be obtained from the case of certain asset liquidation;
  • Nominal value - the value specified in the securities, banknotes, coins, etc.;
  • Overstated the cost - the cost of the asset after its revaluation;
  • Renewable cost - the amount of funds, their equivalents, or other forms of compensation, which must be spent for the acquisition of (a) the same or similar assets at the current time (date balance);
  • Current value - the current (discounted) sum of future net cash inflows that are expected from the asset, the current (discounted) value of future payments, which are expected to need to repay obligations in the ordinary activities of the Bank;
  • Net cost - price of the asset in terms of normal economic activity less the cost of sales.

If the book value of assets (of loans and deposits placed) over the rated amount of expected reimbursement, it recognizes reduce their usefulness. Reducing the usefulness of accounting shows by building a special reserve account for costs Bank.

Rating (revaluation) of assets and liabilities of the bank will be reflected in the different ways, according to the regulations of National Bank of Ukraine (hereinafter - the Bank) on accounting, as follows:

  • adjustments related article balance sheet;
  • revaluation of balance sheet foreign currency, except for non-by the official exchange rate;
  • формуваннямспеціальнихрезервівунаціональнійвалюті (заактивамивнаціональнійвалюті); formation of special reserves in national currency (by assets in local currency);
  • formation of special reserves in foreign currency (by assets in foreign currency), by which the revaluation at the official exchange rate is provided by independent valuation of assets in foreign currency from currency fluctuations.

Principles of assessment of certain assets and liabilities, revenues and expenditures:

Basis of assessment that were used during the preparation of financial statements is historical (original) cost and fair value.

All assets are priced and accounted for the initial (historical) value, which is recognized by the amount actually paid by cash or their equivalents.

All the Bank liabilities are estimated and accounted for the initial (historical) cost - the amount of funds serviceman in exchange for a commitment or a sum of money or their equivalents, which are due for repayment obligations in the normal economic activities.

Other methods of evaluation of assets and liabilities of the Bank are used if required by applicable law, internal regulations and guidelines, national standards, and applied on a regular basis to all similar types of assets.

Assets and liabilities Bank account, priority, cost of purchase or occurrence; assets and liabilities in foreign currency, except for non-monrtary articles are to be revaluated with each change of the official exchange rate, property, securities and property rights being taken as collateral, and are valued at fair value.

Bank Assets and liabilities should be assessed so that created them in the reserves and the measures taken exclude the possibility of transferring existing financial risks in future reporting periods.

Revenues / expenses and charges to be reflected in financial reporting bank if the following conditions:

- as for assets and liabilities – they are a real debt (interest income / expenses);

- as for granted (received) services - financial results can be accurately rated, and this is a treaty provision (a) services.

If income (expense) are received (paid) at the balance date, the Bank does not display them on the accounts of assessed revenues and expenses.

Settlement period for the application of the principle of conformity is a calendar month. Criteria for the recognition of income and expenses apply separately to each bank. Each type of income and expenditure is shown in the accounting separately. Revenues and expenses are recognized in the reporting period to which they belong, and are calculated based on the base of calculation and of the use of the relevant assets / commitments.

Financial statements is compiled on the basis of accounting. Accounting and financial reporting in the currency of Ukraine(Ukrainian hryvnia, thousands UAH). Transactions in foreign currencies are displayed in the accounting and financial reporting in the currency of Ukraine since its listing at the official exchange rate set by the National Bank of Ukraine on the date of transaction or reporting.

. The annual financial statements the Bank made pursuant to the Law «On Accounting and financial reporting of banks of Ukraine», instructions on assembling and disclosure of banks' financial statements, approved by the Board of the National Bank of Ukraine 27.12.2007number 480 and is based on the fundamental requirements for disclosure in the financial statements in accordance with national regulations (standards), accounting, international accounting standards, regulations of the National Bank of Ukraine and of the accounting policy of JSC « Credit Optima Bank».

Note 1.3 "Consolidated Financial Statements"

The Bank has not parties of the consolidated group, so consolidated financial statements is not done.

Note 1.4"The initial recognition of financial instruments"

Assessment of financial instruments by category, the Bank applies during their initial recognition.

Accounting for financial instruments and their evaluation is in accordance with the provisions of (standard) 13 Accounting and Financial instruments.

Financial instruments are divided into financial assets, financial liabilities and equity instruments and derivative financial instruments.

Financial assets include:

- money not limited to use, and their equivalents;

- receivables from trade operations;

- receivables purchased for factoring agreement, deposit money in the bank;

- bills received; bonds purchased the amount receivable under the contract of financial lease;

- financial investments in shares of other companies. Financial commitments include: accounts payable for the trade transactions, notes issued;

- received a loan, bonds issued, the commitment of financial leasing and other financial obligations.

The tools of equity are: shares owned, shares and other equity.

All financial instruments must initially recorded at their actual cost, which consists of:

- fair value of assets, liabilities or equity instruments granted or received in exchange for the financial instrument;

- costs that are directly related to the acquisition or disposal of financial instruments (fees, mandatory fees and payments in the transfer of securities, etc.).

After initial recognition all financial assets must pereotsinyuvatysya at their fair value, but below their categories, which are valued at cost shockproof:

- accounts receivable, not intended for resale (shockproof reduced costs in the amount of reserve of doubtful debts);

- financial investments held by banks to their maturity;

- financial assets, fair value can not be reliably determined.

At each balance sheet date, after the recognition of financial liabilities are valued at cost shockproof than financial obligations for resale, and financial obligations under derivative financial instruments.

Application of effective interest rates are in accordance with international financial reporting standards, national regulations (standards) of accounting, "Manual on accounting of credit, deposit (deposit) operations and the formation and use of reserves for credit risks in banks, approved by the Board of the National Bank of Ukraine from 15.09.2004 № 435 "Regulations on accounting transactions in securities in the banks, approved by the Board of the National Bank of Ukraine from 03.10.2005 № 358.

The Bank is not using effective interest rates:

- financial instruments with the use of the term to one year;

- if the deviation of effective interest rates of the nominal rate for a particular financial instrument and irrelevant, according to the requirements of the accounting policy of the Bank.

Note 1.5 "Trading securities

Operation of trading securities during 2008 were not conducted.

Note 1.6 "Credit and debt Clients”

Method of credit and indebtedness of clients.

At the end of the day on December 31, 2008, credit outstanding of the Customers minus reserves for credit risks was 57,199 thousands UAH. In its credit policy, the Bank needs to provide a combination of interests of the bank, its shareholders and investors and business entities with regard to national interests.

Provision, design, maintenance and control of returning the loans granted to bank customers - corporate and individuals, and for the use of the loan is regulated by current legislation of Ukraine and National Bank of Ukraine. The general procedure of credit transactions in the Bank's definition of "Regulation on lending of JSC «Credit Optima Bank», and other internal documents that regulate the implementation of lending operations.

The basic requirements for keeping credit operations:

a) to ensure timely and accurate accounting of debts and obligations;

b)to ensure proper accounting received collateral warranties and guarantees;

c) taking off-balance and keeping the original contracts and additional agreements to the credit operations.

Principal debt on the credit transaction is counted on the relevant balance sheet accounts according to these criteria of classification of credits:

  • purpose of the loan, the type of agent (banks, business entities, individuals, budgetary organizations);
  • term credit facilities: (short-term (less than a year - 365 days or 366 if intercalary year) and long (more than one year - 365 days or 366 if intercalary year);
  • state of credit debt: time, overdue and doubtful.

Accounting for credit transactions with customers by the Bank pursuant to the Plan accounts of banks and instructions on use of Plan accounts. Interbank loans recorded in the accounts of class, 1 credit business entities and individuals listed in the accounts of class 2.

Registration of credit is done in balance the accounts in accordance with the target direction credit. Loans granted to individuals - entrepreneurs, recorded in the accounts, accounting for credit debt entities. Accounting operations of the mortgaged property is appropriate accounting policy bank. Accounting provision of the loan (collateral, guarantees, surety, insurance policies, property rights, etc.) carried out on off-balance-sheet accounts. Providing counted for its value, which is in agreement provision. The application of the Bank of various forms and types of credit is separate internal documents.

Each of the loans is provided by examining the following criteria:

  • estimation of the financial status of the borrower;
  • state service credit debt by borrower principal debt and interest (commissions and other payments of debt service) for him in terms of each debt;
  • level of provision of credit transaction.

To do this, the Bank elaborated "Methods of assessing the financial status and determine the class of borrower," as for corporate and individuals.

According to the results of analysis conducted classification of credit operations by charging it to one of the categories of risk. Transfer the amounts of loans in case of change of category towards improvement or deterioration, is not less than once per month, with the results of classification are used, held in the reporting month.

Accrued interest on loans

Interest income on credit transactions are charged at least once a month.

When calculating interest included the first day and included the last day of the contract. Thus in calculating interest on credit is accepted month with 1 of 30 (31) number. he last day of the month is included in the calculation of interest, except when reporting date is the end date of transaction.

Charges and payment of interest on the credit operations of the entities is under the terms of the agreement, in some cases, terms can vary.

Interest on bank credit is calculated from the date of transfer credit to the account of the borrower to complete its debt and paid by the Borrower, according to calculations Bank monthly period under the loan agreement and simultaneously returning the loan.

In the case of Debtor’s outstanding debt on credit operations with the accrued income in the period stipulated agreement, the next day unpaid amount transferred to the appropriate accounts with overdue accounts accrued income classes 1, 2, 3.