2005 year


Statement of the Chairperson of the Board

Supervisory Board

Management Board

Republic of Belarus. Key macroeconomic indicators

Republic of Belarus. Banking system key progress

Belarusbank activities highlights

Belarusbank's Ratings

Corporate banking

Affluent corporate clients

Retail banking

Retail business development

Documentary business



International cooperation

Banking cards

Information technologies

Personnel, organizational structure and regional network

Mission and strategy of Belarusbank


Independent auditors' report

Income statement as of December 31, 2005

Balance sheet as of December 31, 2005

Statement of shareholder's equity for 2005

Statement of cash flows as of December 31, 2005

Dear Ladies and Gentlemen!

Belarusbank is the largest and oldest universal financial institution in the Republic of Belarus, continues strengthening its positions on the market, offering its clients comprehensive financing solutions. We preserve the leading role on the market in international activities and service a significant part of Belarus foreign trade turnover. Our bank continues to maintain positive trends of dynamic development. In the year 2005 our assets have approached USD 4 bn., thus positioning Belarusbank among the top fifty banks of Central and Eastern Europe.

The successful performance of Belarusbank is proved by Fitch Ratings, reports of our auditor Deloitte & Touche as well as opinions of numerous well-known financial and consulting institutions. Our achievements are confirmed by increasing short term and long term ratings. In 2005 Fitch Ratings has raised the long-term and short-term ratings of Belarusbank to B- and B respectively, which affirms the bank's transition towards stable development.

Belarusbank places great emphasis on strengthening of international cooperation. One of our main objectives is expansion of Belarusbank’s presence on international markets and strengthening of cooperation with our foreign partners. We plan to open the fourth Representative office abroad – in Beijing, China.

Hence, if you are looking for new business opportunities or have plans to realize your most challenging financial endeavors in the Republic of Belarus our bank is your reliable and perspective partner to serve your needs.

Chairperson of the Board N. Ermakova

Supervisory Board


Nickolay Korbut
Chairperson of the Supervisory Board,
Minister of Finance of the Republic of Belarus

Vladimir Belokhvostov
Deputy Chairperson of the Supervisory
Board, Minister of Housing and Communal Services of the Republic of Belarus

Members of the Supervisory Board:

Valentina Shurak
Chief Accountant, RUE Beltelekom

Vera Tarasova
Chief Accounting and Finance Officer, Belarusian railways

Alexander Kernozhitsky
Head of Financial Deptartment, Minsk Executive Committee

Andrey Poznyak
Deputy Chairperson, Minsk Regional Executive Committee

Ivan Vabishchevich
Head of Financial Department, Brest Regional Executive Committee

Vladimir Novatsky
Deputy Chairperson, Vitebsk Regional Executive Committee

Vladimir Majorov
Deputy Chairperson, Gomel Regional Executive Committee

Alexander Radevich
Deputy Chairperson, Grodno Regional Executive Committee

Vladimir Kravtsov
Deputy Chairperson, Mogilev Regional executive Committee


Management Board of the Bank

Nadezhda Ermakova
Chairperson of the Board

Valentina Lukianenko
First Deputy Chairperson of the Board

Ivan Kozel
Deputy Chairperson of the Board

Valentina Nazarenko
Deputy Chairperson of the Board

Vladimir Novik
Deputy Chairperson of the Board

Vladislav Gorozhankin
Deputy Chairperson of the Board

Gennadi Gospodarik
Deputy Chairperson of the Board, Head of Operational Department

Vladimir Zanko
Deputy Chairperson of the Board, Head of Personnel Dept

Grigory Grudnitsky
Head of Security Dept

Vladimir Drushchits
Head of Audit Dept


Ownership structure

Republic of Belarus
Key macroeconomic indicators

In 2005 the national currency was stable. Moreover Belarusian Ruble strengthened against the leading world currencies. This fact considerably influenced inflation rate, which in 2005 amounted to 8 percents which is lower than in other CIS countries.

Monetary policy goals put forward by the National Bank for 2005 have been reached.

The external public debt of the Republic of Belarus reduced to USD 750 mln. This is the lowest indicator among the countries of the Eastern Europe and CIS.




Total banking assets/GDP, USD bn equivalent


GDP growth in CIS selected countries, %, 2005


Source: EBRD, Transition Report 2005

The gross domestic product of the Republic of Belarus increased by 9.2 % in 2005 compared to 2004. Belarus remains one of the leading countries in terms of this indicator among its nearest neighboring CIS countries. High quantitative economic growth rates are supported by the government's policy oriented at enhancing the country's competitiveness, modernizing production processes, and implementing ecology-friendly resource and energy-saving technologies. The strategic goal is to increase foreign investments and enhance their role in the know-how transfer mechanism.

The industry of Belarus is traditionally driving the country's economic growth. The industrial sector is the main export-oriented economical branch, making up over a quarter of the GDP. Its output is forecasted to increase by 6.5-8% in 2006 and by 43-51% over the period of 2006-2010, with the physical index being accounted. In this case, the development of the following industries is prioritized: machine-building and metal-working, petrochemical, forestry and wood processing, and construction materials manufacturing.

In 2005, inflation in Belarus was at the record-low level over the entire period of market reforms 8%. At the current stage of the country's socioeconomic development, inflation processes are predominantly of a structural character. This positive tendency is likely to be enhanced in the forecast period accompanied by gradual reduction of prices growth.

Republic of Belarus
Banking System Key Progress

In 2005 the banking system of the Republic of Belarus celebrated its 15-th anniversary.

Under the Banking System Development Concept, elaborated by the National Bank in 2001, banks continued growth of assets and capital.

The well-known consulting company Roland Berger estimates that specific segments of the banking sector of the Republic of Belarus show significant growth potential*. It primarily refers to considerable increase of total banks assets, comprising retail and corporate loans, compared to the GDP.

Thus the share of total assets of local banks grew from 28% of GDP in 1995 up to 29% of GDP in 2000 and to 35% in 2005. But we understand that this ratio is far from being required by the national economy and thus there is a good potential for growth.

     *Special research for Belarusbank done
     by Roland Berger Strategy Consultants, Minsk, October 2004.

Activities highlights

In 2005 Belarusbank continued to strengthen its positions in the local and international markets.

The major forecasted indicators as set out by the Bank Strategy have been reached:

— Capital gains increased to 65%;

— Assets growth up 44%.

The Bank holds leading positions in most banking business segments of the domestic market. Belarusbank is No. 1 in the following parameters and banking activities:

— Assets volume

— Branch network

— Retail banking

— Corporate banking

— International project and trade financing

— Card processing

Below are presented some of Belarusbank's key figures:




Belarusbank's Ratings

In 2005 Fitch Ratings has risen Belarusbank's long-term rating- from “CCC+” up to “B-“ (B minus) and short-term rating from “C” up to “B”. Support Bank ratings are confirmed at the level of “5”. The Individual rating of Belarusbank is considered to be “D/E”. The outlook for the Bank's ratings is “Stable”.

The Individual rating of Belarusbank takes into account the sizable retail customer base, relatively diversified balance structure and limited trade risks. The substantial increase of capitalization and profitability may become an important positive factor for the Bank's solvency. The Long-term and Short-term ratings increase reflects Fitch's higher level of confidence in the willingness of the government of the Republic of Belarus to provide support to the banks, in case it is necessary. Such change of view took place after consultations with Belarusian authorities and receiving from them respective assurance.

Belarusbank ratings' rise enhances its image not only in the face of its customers but also among its partner foreign financial institutions, reflecting growing reliability of Belarusbank as a business partner. Notwithstanding the fact that the ratings are still below the investment grade level, they are the highest among the largest Belarusian banks. Presently, the Republic of Belarus has no sovereign rating assigned. This fact, however, did not limit the ability of Belarusbank to constantly improve its ratings.

Fitch Ratings


Corporate banking

Corporate Banking is one of the main activities of Belarusbank. Corporate Banking serves large corporates, small and medium-sized companies, individual entrepreneurs, as well as the public sector and international joint venture companies.

The number of corporate clients and entrepreneurs served by the Bank increased by 7,272 last year, reaching 66,350. The Bank serves enterprises of all forms of ownership in all branches of the national economy. More than 50% of corporate clients of the bank are small and medium-sized enterprises. Belarusbank offers corporate clients a broad range of financial products and services.

Corporate loans development trend, BYR bn

Corporate clients loans portfolio is diversified by the branches of industry and regions.

Corporate loans structure


Affluent corporate clients

A number of major enterprises of Belarus are among the clients of the bank. Those are Minsk tractor works, Belshyna, Belarusian metallurgic works, Belaruskaliy etc.

Major corporate clients

Corporate client base development trend







Retail banking

Retail Banking is Belarusbank's most developing business segment. In 2005, development of retail business was extended, becoming one of the main directions of the Bank's activities. Implementation of the Private Clients Comprehensive Servicing Program has been carried out through 2003-2005 and aimed at improvement of savings activities, extension of the range of services rendered to individuals and improvement of service quality.

Belarusbank has traditionally been the market leader in retail lending. As of the 31st of December, 2005, out of the total volume of loans in the banking system of the Republic of Belarus, Belarusbank provided 54% of loans nominated in foreign currency and 90% of loans in Belarusian Rubles.

Increase of share of loans to individuals in the Bank's overall loan portfolio proves the priority of the retail lending development. From the beginning of running the special retail Program (starting on January 1, 2003) the share of loans to individuals amounted to 15%, then as of December 31, 2005, it reached 41% of the Bank's total loan portfolio. The rise in lending volume related mainly to well-secured housing loans provided by Belarusbank.



• Loans

— building loans

— mortgage loans

— consumer loans

— car loans

• Deposits

• Currency exchange

• Banking cards

• Travel cheques

• Bonds

• Precious metals business

• Depositary service

• Equity market dealership

• International money orders



Retail business development

In order to maintain its leading position in the retail market, special attention is paid to the matters of maximum availability of services to the customers, widening their range and upgrading their quality, including setting time of service convenient for the customers, all-round introduction of «one desk» principal, development and improvement of informational and consulting servicing, optimisation and simplification of loans administration and other retail services.

One of the major directions of retail business development in 2006 will be the crediting of retail customers:

— in the framework of the government housing program by granting preferential loans, as well as introduction as an experiment of local housing savings system in one of the regions;

— for house building (reconstruction) and purchase of apartments and for consumer needs in accordance with the usual procedure.

Development of loan products for consumer needs will include the Bank's work toward further objectives:

— maximum involvement of trade and public catering industries for participating in the program;

— dominant role of plastic cards as the basic instrument of crediting day-to-day expenditures.

The creation of attractive pricing conditions for customers and the implementation of innovative forms of customer service will contribute to the increase of the individual's funds accumulated in the accounts of the bank. Particular attention will be paid to the development of Belarusbank bonds as a savings instrument.

The bank shall continue to build up a range of clearing transactions using plastic cards throughout the regions of the Republic of Belarus duly equipped for that. These transactions will include payments for utilities, electricity, phones, goods and services in POS, internet provider services and other payments. The system will also include express money transfer, real-time payments through ATMs and remote account management (SMS-banking).

The bank has set the aim to maintain its leading positions in the plastic cards emission market as well as in the increase of the clearing settlements with the growth rates of the banking plastic cards emission and the technical infrastructure development being comparable.

The bank plans to increase the sale of commemorative coins and precious metals bullion, in particular gold. Silver and platinum bullion will be added to the list of precious metals bullion for sale.

Retail loans development trend, BYR bn

Documentary business

In 2005 Belarusbank continued to develop correspondent relations with local and foreign financial institutions. As of December 31, 2005 the Bank maintained correspondent relations with more than 900 banks in 84 countries.

The gross volume of foreign trade operations settlements effected by the Bank's clients in 2005 grew by 29% compared with the year 2004 and made up USD 5.7 billion.

Documentary settlements are being intensively used during foreign trade contracts implementation. The volumes of documentary operations performed by the Bank increased substantially in quantity and in money terms and amounted to USD 545.6 million, which is 1.2 times more than in the previous year.

The total volume of documentary operations with uncovered credit lines increased more than two times from the beginning of the year 2005 and amounted to USD 165 million. In 2005 the volume of foreign banks funds attracted in the form of trade financing surpassed 2004's figure 2.5 times and reached USD 108 million.

Documentary operations development tvend, USD mln


In 2005 Belarusbank has reconfirmed its status of one of the major operators of local payment and settlement system. The Bank continues to be key player in securities and local monetary markets. In 2005 the Treasury increased the number of own and clients' operations in foreign exchange (FX) and securities markets.

Key indicators of Treasury operations in 2005:

The Bank constantly ranks the first in Belarusian Foreign and Stock Exchange ratings in terms of transactions volume in government notes market segment.

The amount of banks-counterparties in foreign markets has increased twofold in 2005; nonresident banks have extended the borrowing limits fixed for Belarusbank to conduct interbank transactions which enables the bank to use borrowings in foreign markets more extensively.

Government stocks average gain/ Average refinancing rate dynamics, % p.a.




Belarusbank is the only bank of Belarus having introduced a new kind of savings for the population banking bonds. The bank placed some bond issues nominated in Belarusian Rubles, USD and Euro. During the year 2005 the bank sold bonds to private clients for the amount exceeding BYR 60 billion, comprising BYR 43.7 billion, USD 6.3 million and EUR 1.7 million.

In 2005 Belarusbank continued operations in the market of promissory notes. Promissory notes for the total amount of BYR 61 billion were issued; among them, promissory notes with deferred payment for clients for BYR 39 million.

In 2005 the depository of Belarusbank completed transition to the centralized data warehouse and processing system. This new IT solution allowed to reduce operational risks, to consolidate information security and reliability.

The depository of Belarusbank keeps leading position in the country in respect of the number of the joint-stock companies served. Their number increased up to 571 in 2005, and the number of the clients' depo accounts exceeded 200,000.

The total amount of assets in the Bank's depositary reached BYR 2 trillion. The Bank continued performing trust management transactions. In 2005 more 3.2 thousand trust deeds have been concluded and the total value of the instruments accepted for trust management exceeded BYR 1.9 billion.

2005 Bond issue

2005 Refinancing Rate Dynamics


International cooperation

In 2005 Belarusbank works closely with foreign banks on financing of investment projects in the Republic of Belarus — more than 32 individual loan agreements for the amount of USD 77.1 mln have been signed with foreign financial institutions.

In 2005 the Bank was authorized to act as a credit lines' agent of the Republic of Belarus for the loans provided by the government of the People's Republic of China and ChinaEximBank in the amount of USD 234 mln for financing of investment project of the third mobile communication operator of GSM standard “BeST”.

The investment portfolio of the Bank formed with foreign credit lines in 2005 amounted to more than USD 340 mln. in equivalent, allowing Belarusbank to become leader in the sphere of attraction of foreign loan resources to the Republic of Belarus.

In December, 2005 Belarusbank initiated its debut Syndicated loan.

Dynamics of attraction of the foreign banks' long-term loans

2005 Selected transactions financed through foreign credit lines

Banking cards

New services introduced in 2005:

—public utilities payment with plastic cards;

—real time money transfer from one card-account to another in Belarusian rubles;

—loan repayment in Belarusian rubles.

—real-time placing USD to card-accounts with plastic cards;

—transfer of interest income in belarusian rubles from deposit accounts to card-accounts;

—cash withdrawal in Euro at cash withdrawal points by International plastic cards holders.

—SMS banking;

—payment of satellite TV provider “Cosmos TV” with plastic cards.

In 2005 the first EMV-standard smart card VISA has been issued. The project of issuing VISA Electron cards for pensioners has started. The loyalty project for cardholders has been realized at department stores network “Korzinka”.

Banking cards issuing structure

Information technologies

In 2005 selection process of the modern core banking system (CBS) has been finalized. The Bank has selected such world known companies as SAP and IBM. New CBS represents an integrated and multipurpose solution securing centralized processing and storage of data, monitoring of bank's activities in real-time mode. Introducing of a centralized core banking system will allow:

•to increase the efficiency of bank's activities;

•to extend the range of banking products and services;

•to decrease customer's servicing time;

•to standardize processes of performing banking operations;

•to introduce IAS/IFRS, BASEL II;

•to replace old decentralized IT-system with modern SAP for banking IT solution.

The introduction of the centralized core banking system will allow to decrease the operating costs for support of the bank activity, in particular, to reduce the personnel expenses and expenditures connected with IT-technologies support.

The centralized model of bank's functioning and centralized core banking system created on its basis will serve as a basis for introduction of modern systems to manage liquidity, transaction and credit risk as well as other bank risks that are included into BASEL II recommendations.

Prospect CBS architecture


Personnel, organizational structure and regional network

Personnel policy of the bank for 2004-2005 has been successfully implemented in the fields of improvement of human resources management system, increasing the bank's personnel qualification, streamlining the remuneration system, recruitment, formation of the managing staff reserve, creation of professional group for solving the bank's strategic development challenges.

In the framework of the Complex Program of the Bank's Staff Social Development special attention was paid to material aid to the bank's employees in the form of welfare payments for solving housing problems, health promotion, development of employees and their family members' artistic creativity.

Practical accomplishment of network optimisation of bank's offices is executed according to the Program of Network Optimisation for 2005, making provisions for activities in the following main directions:

•Rearrangement of branches, taking into consideration their financial position, economic and geographical location and creation of subbranches instead of closing branches, including in Minsk and regional centres;

•Creation of outlets in economically developed regions to attract customers, including rural settlements, which are the centers of large-scale farms and village administrations.

Improvement of bank's network shall be directed to creation of universal products and services sale centres on the basis of subbranches.

Belarusbank’s Presence

<PSTYLE="CLEAR: left; FONT-WEIGHT: bold? align="center"> 

Mission and strategy of Belarusbank

The Mission of Belarusbank is:

—to support economic growth of the Republic of Belarus

—to support domestic producers and business communities

—to support clients' foreign trade

—to implement new banking products and services for retail and corporate clients.

The Main Strategic Goal of Belarusbank are:

—to strengthen current leading position in the local market

—to increase profitability

—to expand international cooperation

—to introduce IAS/IFRS, BASEL II

—to develop and implement modern centralized core banking IT-system

—to optimize organizational structure and regional network.


Strategy For 2006 and Beyond

Belarusbank has the largest customer base and is a leader in most Belarusian market segments. This market position provides a sound basis for generating further growth by developing and strengthening customer relations.

In the corporate and retail customer segments, the process of further developing service concepts and a product range closely adopted to individual customer needs is well under way.

Belarusbank's activities on foreign market are aimed at obtaining long-term financing for corporate and retail lending, attracting short-term financing for serving foreign trade operations of our clients, as well as obtaining untied financing, such as direct loans from foreign banks, syndicated loans, credit linked notes, securitization of its assets.

The overall Belarusbank objective on the foreign market is serving as a link between foreign and Belarusian business partners.


Strategic goals for 2010

- Capital build-up USD 1.5 bn

- Assets Growth USD 10.0 bn


Independent auditors' report

















If you have noticed any discrepancy, please, highlight it and press Ctrl+Enter