Annual Financial Report

 

TIDM65QM 
 
RNS Number : 8738T 
Credit Andorra Preference Ltd 
15 June 2009 
 

 Financial statements 
 
 
CRÈDIT ANDORRÀ GROUP 
 
 
During 2008, the international financial crisis has spread throughout the main 
markets and has had a negative impact on the world economy and, consequently, on 
all sectors and economic players, especially financial institutions. 
 
 
The bursting of the speculative real estate bubble in the United States acted as 
a trigger for the crisis, which worsened with a lack of regulation over subprime 
mortgages and with the high debt incurred by the financial sector. The current 
financial and economic situation has resulted in shrinking demand and therefore 
in a slowdown in the economy and deterioration of the job market, consumption 
and investment. 
 
 
This has led us to an unprecedented level of instability in the financial 
markets, with rocketing volatility and an aversion to risk. In 2008, the main 
stock market indexes fell by around 40%, figures similar to those in 1929 and 
1987. 
 
 
Businesses have failed, banks have been nationalised and central banks have 
intervened in the main economies, adopting policies to counteract the lack of 
liquidity and to reopen interbank financial markets. Governments have improved 
deposit guarantee funds, have injected public capital into banks, have approved 
state guarantees and have created funds for the temporary acquisition of 
financial assets. But in spite of all the measures applied, the financial crisis 
has got worse, spreading to previously unaffected countries and market segments 
and raising doubts as to its intensity and duration. 
 
 
World growth for 2009 has been estimated at below 1%. Growth in GDP in America 
and Europe is expected to be negative. The only places showing positive signs 
are emerging countries, principally China, with an estimated growth rate of 6.5% 
for 2009. 
 
 
The Andorran economy has also been affected by this environment. Symptoms of a 
slowdown continued to appear in 2008 and the main indicators suggest a reduction 
in the pace of activity in all the traditional sectors that have been the 
pillars of the Andorran economy, such as the financial sector, trade, tourism 
and construction. 
 
 
The consolidated balance sheet of the Crèdit Andorrà Group at December 31, 2008 
places total volume of business at 11,715 million euros, with a notable 
migration of third party off-balance-sheet resources managed, these falling by 
38%, towards deposits, less risky products and therefore with less margin, which 
totalled 4,879.5 million euros, 27.7% more than the previous year. This increase 
in our deposit position and monetary market funds, as a defensive and prudent 
measure due to the worsening of the crisis in the financial markets, has placed 
us in a favourable position in terms of liquidity. 
 
 
On the other hand, although the granting of loans has significantly slowed up 
because of the fall in demand and because a more conservative policy has been 
applied in assessing risk, leading to a more restrictive approach in granting 
loans, in 2008 loans to customers actually rose by 5.5%, achieving the figure of 
2,902 million euros. 
 
 
Within this context, the ordinary margin was 183.3 million euros and the 
operating margin, 90 million euros. Great efforts have been made to rein in 
expenditure, which has allowed us to keep a good efficiency ratio of 
31.26%. Consequently, the consolidated net profit for the Crèdit Andorrà SA 
stands at 85 million euros. 
 
 
Our solvency and liquidity ratios, at 20.37% and 70.08%, continue to be far 
above the legal minimums established, which are 10% and 40%, respectively. These 
indicate, on the one hand, a comfortable position in the interbank market and, 
on the other hand, that customers are tending to move towards balance-sheet 
assets. 
 
 
Although this trend has a direct effect on the profitability of the business, 
it's important to note that we have managed to keep our market share in terms of 
volume of business and have improved this share in terms of net profits. 
 
 
Regarding the objectives of the 2007-2010 strategic plan, particularly 
significant is our internationalisation process and, specifically, our expansion 
plan in Latin America and the implementation of the new IT platform. 
Additionally, and in order to tackle the current economic situation, the special 
step has been taken to complement this strategic plan with the start-up of a 
profit improvement plan. 
Financial statements 
 
 
 
 
Regarding the first objective, in 2008 we have continued with our international 
expansion in order to guarantee our Group's growth and competitive edge. The 
Banco Crèdit Andorrà (Panamá) has been set up, starting its operations on 
November 17, 2008 and since then has offered customers financial services and 
overall advice. On December 18, 2008 the licence was secured to open a 
representative branch in Uruguay, which will make our Group available in the 
Mercosur zone. 
 
 
In the area of insurance, we have started our internationalisation towards 
Spain, which has taken the form of a majority investment (76%) in the holding 
ERM, a consultancy firm and insurance broker based in Barcelona. 
 
 
These business projects are already a reality and complement our international 
presence in Switzerland (Geneva) via a private asset management firm called 
Private Investment Management; in Luxembourg via two investment companies, 
Crediinvest SICAV and the recently created Investcrèdit SICAV, and in Spain 
(Madrid) via the Invest Funds Valira Capital Asset Management. 
 
 
With regard to the second objective, the strategic plan aims to strengthen the 
Bank in technological terms, allowing us to tackle, both quickly and reliably, 
the future changes, international projects and constant technological innovation 
of the industry. This new platform is expected to be in operation as from 
January 1, 2010. 
 
 
And, thirdly, a contingency plan has also been started up to minimise the impact 
of the current economic situation on our profits. This plan includes initiatives 
such as bad debt management, optimising banking fees and reducing expenditure. 
 
 
In spite of the complexity of the economic situation, we have also achieved 
significant recognition in 2008. We  have been awarded The Banker prize for the 
"Bank of the Year of Andorra 2008", and Crediinvest, our asset 
management company, has obtained ISO 9001:2000 certification, as well as the 
renewal of its GIPS certificate (Global Investment Performance Standards) and 
the adoption of the principles established in the MIFID. On the other hand, 
Fitch Ratings has maintained its classification for our company and, once again, 
we have therefore renewed our Long-term rating of "A", our Short-term rating of 
"F1", our "B" Individual rating and our Support "3" rating, with a 
stable outlook. This is particularly relevant given the current state of the 
international financial system. According to Fitch, these ratings continue to be 
"a reflection of the leading position of company in the Andorran market, 
of conservative management and solid profitability" and they confirm "the 
healthy quality of the bank's assets, its significant liquidity and strong 
capitalisation". 
 
 
With regard to our institutional commitment to corporate social responsibility 
towards our community and the environment, we are working to improve the 
wellbeing and quality of life of our community, principally through the Crèdit 
Andorrà Foundation. In general terms, the Group's overall investment in 2008 
accounted for 1.67% of its 
profits. 24% was allocated to education, 38% to culture, 20% to social 
programmes, 5% to environmental collaboration and, finally, 13% to collaboration 
for economic development and the international promotion of Andorra. 
 
 
As the leading financial group in Andorra, our challenge is to continue as a 
sustainable, benchmark company within 
the international financial sector, and to ensure that this adds quality and 
growth to the Andorran economy. We want to guarantee the sector's traditional 
values, such as ethics, caution and professional rigour, all deeply rooted in 
our business culture, and to ensure, now more than ever, that our commitment to 
our customers and to our country prevails, with the will to continue being the 
bank they trust. 
 
 
 
 
The Board of Directors 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Establishment and Domicile 
 
 
The Bank is domiciliated in Avda. Meritxell,80, Andorra la Vella, Principality 
of Andorra, telephone number  [phone]. 
 
 
 
 
Legal Form 
 
 
The Bank was registered as a bank in the Principality of Andorra on 29th 
December, 1949. It is a limited liability company under Andorran law registered 
for an indefinite term by the Departament of Comerç of the Andorran Ministry of 
Economy, under number 1673 - Book B-I - page 70. 
 
 
 
 
Shareholders 
 
 
Pintat Mas Family                   22,23% 
Employees of Crèdit Andorrà    21,00% 
Maria Reig i Moles                  20,00% 
Pintat Santolària Family  12,05% 
Casal Vall Family8,56% 
Casal Mor Family                     7,79% 
Other Andorran families (less than 3%)  8,37% 
 
 
 
 
Statutory Auditors 
 
 
The auditors of the bank are KPMG (Barcelona). Auditors have not resigned, been 
removed or re-appointed  during the period covered by the historical financial 
information contained herein. 
 
 
 
 
Risk control and management 
 
 
The management and control of risk has always been a priority objective of 
Crèdit Andorrà Group and, with this in mind, the Bank has developed the 
necessary infrastructure, internal methods and controls. 
 
 
Policy and limits on risks are established and supervised by a committee called 
the Assets, Liabilities and Risks Committee (with functions equivalent to those 
of ALMCO, the Assets and Liabilities Management Committee). Among other 
functions, this committee approves risk policies that affect the management 
of assets and liabilities of the entity and management mandates. The committee 
also sets and revises the limits to balancing entries with banks and 
supranational entities and/or private entities. With the aim of avoiding 
a concentration of risk, it also establishes limits for issuers of financial 
instruments, whether within or outside the Crèdit Andorrà Group balance sheets. 
 
 
All steps taken by this committee bear in mind the rules of ANIF, the Andorran 
national body that regulates, controls and supervises the country's financial 
activity and new regulatory trends, in compliance with the  directives of the 
New Basle Capital Accord, which emphasises increasing awareness of risk and risk 
management. 
 
 
For some years now, and without forgetting conventional methods of risk control, 
Crèdit Andorrà Group has also applied Value-at-Risk (VaR) methodology to all 
areas of risk management. VaR measures risk by means of statistical and 
stochastic techniques. VaR takes the form of a figure that summarises the 
maximum loss to be expected in the value of a portfolio over a fixed timescale 
and for a specific interval of confidence. 
 
 
 
 
 
 
Management of market risk 
 
 
The market VaR is calculated daily for a timescale of one day and with a 
confidence interval of 95% for the entity's 
portfolios as a whole. A detailed report indicating the VaR, with various 
timescales and confidence intervals, is periodically sent to members of the 
Executive Committee and of the Assets, Liabilities and Risks Committee. 
These VaR measurements, along with others, provide a test of integrity and 
consistency. During this period, the average daily VaR for share portfolios, 
calculated with a 95% interval of confidence and a timescale of one day, was 
147.60 thousand euros, with a maximum and minimum of 597.80 thousand euros and 
61.20 thousand euros respectively, compared with the authorised risk limit of 
200 thousand euros. 
 
 
For the securities portfolios as a whole, the average daily VaR, calculated at a 
95% level of confidence, was 1,400.20 thousand euros, with a maximum and minimum 
of 2,160.50 thousand euros and 520 thousand euros respectively, compared with 
the authorised risk limit of 5,000 thousand euros. 
 
 
An analysis of this report is supported by Backtesting methods. In 2008, 
Backtesting showed that both gains and losses were more voluble than expected 
statistically, due to the situations of high stress occurring in the 
financial markets. The daily VaR for the share portfolios as a whole, with a 95% 
level of confidence, was consequently exceeded by 6.1% of all cases throughout 
2008, compared with the expected 5%. For investment portfolios as a whole, the 
daily VaR was exceeded in 8.8% of all cases throughout the year, with a 95% 
level of confidence. 
 
 
Management of credit risk 
 
 
At the end of 2008, of the total exposure to credit risk, interbank deposits 
accounted for 32.5%, the securities portfolio 15.0% while customer loans 
accounted for the remaining 52.5%. 
 
 
With regard to interbank deposits and the securities portfolio, Crèdit Andorrà 
Group also introduced the credit VaR as a management and control tool. This is 
calculated by applying the so-called "CreditManager" programme developed by J.P. 
Morgan. Crèdit Andorrà Group applies the credit VaR with a timescale of one year 
and a confidence level of 99%. 
 
 
At year-end, the credit VaR for the securities portfolio and interbank deposits 
was 25,100.90 thousand euros, out of a total risk exposure of 2,337,109.70 
thousand euros. This credit VaR is slightly above the risk limit of 
22,000 thousand euros set by the Assets, Liabilities and Risks Committee. This 
excess is due to the increase in credit spread observed in the market. In other 
words, this credit VaR level would be equivalent to having a portfolio with 
an average rating of AA. 
 
 
Regarding credit risk, special attention is given to balancing-entry risk and 
country risk. These risks are regularly monitored, always keeping within 
established limits. 
 
 
Management of interest rate and foreign currency risk 
 
 
Crèdit Andorrà Group has traditionally paid particular attention to maintaining 
a very strict relationship between investment and how it is financed. For this 
reason, the Assets, Liabilities and Risks Committee has not set any ordinary 
limit for establishing open positions and, as a consequence, any gap that is not 
in line with the  normal performance of daily operations must have prior 
authorisation. 
 
 
These risks are monitored and controlled via the "ALM II" programme. Exposure to 
interest rate risk as a consequence of gaps between investment and financing is 
very limited. In fact, at the end of 2008, a displacement of 1% parallel to the 
interest rate curve of all currencies would have had an impact amounting to less 
than 5.3% of shareholders' equity. 
 
 
Liquidity risk, understood as risk arising from any difficulty the entity may 
have in meeting its payments or in 
obtaining funds for that purpose, is handled via the management tools mentioned 
above. 
 
 
Foreign currency risk is also subject to daily monitoring, both with regard to 
at-sight transactions and those at term. At year-end, the open position in 
foreign currency risk, consolidated in euros, amounted to 
2,816.30 thousand euros, compared with the established limit of 5 million euros. 
 
 
Management of operational risk 
 
 
The Basle Committee has defined operational risk as the risk of direct and 
indirect loss resulting from inadequate or failed internal processes, persons 
and systems or from external events. 
 
 
Crèdit Andorrà Group continues to develop its organisational structure and to 
establish the capacities required to ensure adaptation to the Basle Capital 
Accord in terms of the measurement and management of operational risk. 
 
 
Compliance with regulations 
 
 
Law regulating the solvency and liquidity criteria of financial entities 
 
 
At its session held on February 29, 1996, the General Council of the 
Principality of Andorra passed the Law regulating the solvency and liquidity 
criteria of financial entities (hereinafter "the Law"). 
 
 
In accordance with this Law, Crèdit Andorrà Group must maintain specific ratios 
with regard to the quantitative measurement of the amounts of assets, 
liabilities and certain off-balance-sheet records of the Bank 
calculated according to accounting criteria, as well as qualitative options on 
the various components, the valuation of risk and other factors. 
 
 
According to this Law, financial entities must maintain a solvency ratio, 
formulated according to the  recommendations of the "Basel Committee on Banking 
Supervision", with a minimum of 10% of the weighted risk of assets. Financial 
entities also have to maintain a minimum liquidity ratio of 40%. 
 
 
The solvency and liquidity ratios as at December 31, 2008 and 2007 are set out 
below, with a comparison of the legal requirements mentioned above: 
 
 
+---------------+-----------+-----------------+-----------+-------------------+ 
|               |           | Bank's current  |           | Legal minimum     | 
|               |           | ratio           |           | ratio             | 
+---------------+-----------+-----------------+-----------+-------------------+ 
|               | 2008      |                 | 2007      |                   | 
+---------------+-----------+-----------------+-----------+-------------------+ 
| Solvency      | 20,37%    |                 | 18,84%    |               10% | 
| ratio         |           |                 |           |                   | 
+---------------+-----------+-----------------+-----------+-------------------+ 
| Liquidity     | 70,08%    |                 | 60,46%    |               40% | 
| ratio         |           |                 |           |                   | 
+---------------+-----------+-----------------+-----------+-------------------+ 
 
 
It should be noted that the solvency ratio is calculated according to ANIF 
Memorandum no. 159/04 on Equity Requirements. This memorandum, which is 
technically binding, complements the Law regulating the solvency and liquidity 
criteria of financial entities of February 29, 1996 and is designed to foster 
greater security and stability in the Andorran financial system by incorporating 
the hedging of market risks. 
 
 
The Law also limits the concentration of risks in favour of any one beneficiary 
to 20% of the Bank's equity, as well as establishing that the concentration of 
any risk that individually exceeds 5% of the equity cannot go beyond the limit 
of 400% of this equity. Similarly, the balances or transactions maintained with 
members of the Board of Directors cannot go above 15% of the equity. 
 
 
In 2008, the Group met the requirements set out in this Law. The highest 
concentration of risk in favour of any single beneficiary was 18.81% of the 
Group's equity. Total loans, discounts and other transactions 
creating individual credit risk in excess of 5% of the Group's equity did not go 
above 70.70%. 
 
 
Law on international cooperation on crime and the fight against money or 
security laundering arising from international crime 
 
 
On July 24, 2001, the current Law on international cooperation on crime and the 
fight against money and security laundering arising from international crime 
came into force, replacing the previous Law, from 1995, protecting bank secrecy 
and preventing money or security laundering resulting from international crime. 
 
 
In compliance with this Law, the Bank has established a number of internal 
control and reporting procedures aimed at protecting bank secrecy and at 
foreseeing and preventing money laundering operations and the financing of 
terrorism. Specific training programmes have also been carried out in this area. 
 
 
At its session on December 11, 2008, the General Council of the Principality of 
Andorra passed a Law amending the Law on international cooperation on crime and 
the fight against money and security laundering arising from international 
crime. This amendment of Andorran legislation against laundering and against 
the financing of terrorism, which will come into force in the next few months, 
updates the current Law, adapting  it to international standards in this area 
and harmonising it with the equivalent laws in Europe. 
 
 
Law to Apply the Agreement between the Principality of Andorra and the European 
Union on taxation of returns on savings in the form of interest payments 
 
 
At its session held on February 21, 2005, the General Council of the 
Principality of Andorra ratified the Agreement between the Principality of 
Andorra and the European Union on the establishment of measures equivalent to 
those provided for in Directive 2003/48/EC of the European Council on taxation 
of savings income in the form of interest payments. Also, at its session on June 
13, 2005, it passed a Law to apply the abovementioned Agreement. 
 
 
During the year, Crèdit Andorrà Group, in its role as payment agent, fulfilled 
all the obligations set out in the Agreement and the Law dealing with its 
application and duly paid the amount withheld as established in the 
abovementioned legislation. 
 
 
Significant events following year-end 
 
 
Based on the proposal by the Finance Ministry, in its session held on July 23, 
2008, the government passed the General Accounting Plan. This General Accounting 
Plan applies to the preparation of financial statements of all companies, in 
accordance with that provided for in Law 30/2007 on company accounting, apart 
from banking entities and other entities operating within the financial system. 
This Decree entered into force on January 1, 2009 and must be applied to 
accounting years starting as from this date. 
 
 
In its session held on June 12, 2008, the General Council passed Law 10/2008 
regulating mutual funds under Andorran law. This Law aims to protect investors 
and ensure transparency, as well as ensuring that the mutual fund market 
operates satisfactorily. A period of one year from this Law coming into force 
has been  stablished  to carry out the necessary adaptations and to apply for 
the corresponding ANIF registration of mutual funds under Andorran law or under 
foreign law when managed or distributed in Andorra within the corresponding 
category. 
 
 
The Group expects to be adapted to the requirements of this new Law within the 
period of time provided. 
 
 
Other matters of interest 
 
 
Crèdit Andorrà Group established the Fundació Crèdit Andorrà SA, registered in 
the Principality of Andorra on December 15, 1987, for an indefinite period of 
time. The Foundation has its own legal identity, is of Andorran nationality and 
of a private nature. 
 
 
This Foundation, which is a non-profit organisation, aims to contribute to 
improving the quality of economic, cultural and social life in Andorra by taking 
on, programming, funding and carrying out specific goals. Among these goals, of 
particular note is the granting of scholarships to deserving students in order 
to help them get the best possible education in any areas that may have an 
influence on the bettering of the economic, scientific, educational, cultural 
and services structure of the country. 
 
 
In 2008, and always with the aim of adapting its work to the needs of the 
country, the activities carried out by 
Fundació Crèdit Andorrà SA focused on three major areas. These included its 
social work programme, particularly actions aimed at the elderly and 
organisations dealing with the disabled; education, particularly the granting 
of scholarships, and also cultural activities, dealing with pedagogical aspects 
and all those areas directly related to the country, its history and its natural 
environment. 
 
 
On the coming into force of the new Law 11/2008, dated June 12, on Foundations, 
the entity expects to be ready to adapt its Articles of Association and to enter 
it in the Foundation Register by June 30, 2009. 
 
 
Management 
 
 
Board of Directors 
 
 
+----------------------+------------------+ 
| Chairman             | Antoni Pintat    | 
|                      | Santolària       | 
+----------------------+------------------+ 
| Vice-chairman        | Jaume Casal Mor  | 
+----------------------+------------------+ 
| Chief Executive      | Josep Peralba    | 
| Officer/Secretary    | Duró             | 
+----------------------+------------------+ 
| Board member         | Rosa Pintat      | 
|                      | Santolària       | 
+----------------------+------------------+ 
| Board member         | Maria Reig Moles | 
+----------------------+------------------+ 
| Board member         | Josep Vidal      | 
|                      | Martí            | 
+----------------------+------------------+ 
 
 
 
 
Executive committee members at dec.31.2008 
 
 
+--------------------------+--------------------------------------------+ 
| Mr. Josep PERALBA DURÓ   | C.E.O.                                     | 
+--------------------------+--------------------------------------------+ 
| Mr. Xavier CORNELLA GRAU | Corporate Assistant General Manager        | 
+--------------------------+--------------------------------------------+ 
| Mr. Josep BRUNET NIU     | Insurance Group Director                   | 
+--------------------------+--------------------------------------------+ 
| Mr. Xavier CORNELLA      | Financial Division Director                | 
| CASTEL                   |                                            | 
+--------------------------+--------------------------------------------+ 
| Mr. Agustí GARCIA PUIG   | General Secretary to the C.E.O.            | 
+--------------------------+--------------------------------------------+ 
| Mr. Frederic GINÉ        | Comercial Credit Control Director          | 
| DIUMENGE                 |                                            | 
+--------------------------+--------------------------------------------+ 
| Mr. Ramon LLADOS BERNAUS | Director of Organizational Resources       | 
+--------------------------+--------------------------------------------+ 
| Mr. Josep Lluis GRASA    | Director of Accounting, Reporting and      | 
| JORDANA                  | Corporate Risk Division                    | 
+--------------------------+--------------------------------------------+ 
| Mr. Xavier RUIZ SENA     | Director, Banking Business Division        | 
+--------------------------+--------------------------------------------+ 
| Mr. Martí TREMOSA FITÉ   | Systems Division Director                  | 
+--------------------------+--------------------------------------------+ 
 
 
Share capital 
 
 
Share capital is represented by 790,000 shares "A" series and 210,000 shares "E" 
series, each of 70 euros, fully subscribed and paid up. Both series have the 
same economic and policy-making rights, the latter series being syndicated. 
 
 
 
 
Legal reserve 
 
 
In compliance with the Law on public limited companies and limited liability 
companies passed by the General Council on October 18, 2007, a legal reserve 
must be established of a minimum of 10% of the profit until 20% of the share 
capital has been reached. As at December 31, 2008 the company had not set up 
this reserve, although the proposed distribution of profits includes compliance 
with this Law. 
 
 
 
 
Guarantee reserve 
 
 
In accordance with Andorran legislation passed in 1995, Crèdit Andorrà Group has 
established a guarantee reserve for deposits and other operational obligations 
of 33,063 thousand euros (2007: 33,063 thousand euros). This reserve cannot be 
distributed. 
 
 
Revaluation reserve 
 
 
This reserve corresponds to two revaluations: 
 
 
The first, totalling 13,934 thousand euros, corresponds to revaluations of 
buildings for own use acquired or built before December 31, 1989. 
 
 
The second, totalling 101,628 thousand euros, corresponds to the revaluation 
authorised by the ANIF on June  12, 2008 of the land, building work and 
installations of working and non-working fixed assets. 
 
 
Consolidation reserves 
 
 
The consolidation reserves correspond to profits accrued in previous years by 
Group companies that form part of the consolidation scope, from the date of 
their acquisition or constitution up to December 31, 2007, that have not been 
distributed as dividends. 
 
 
Subordinated liabilities 
 
 
On October 26, 2005, the ANIF Board of Governors agreed to authorise the issue 
of preferred shares by Crèdit Andorrà SA Preference Ltd., to be accounted for as 
Tier 1 type regulatory capital of the Crèdit Andorrà SA Group. 
 
 
In accordance with this ANIF authorisation, on December 22, 2005 Crèdit Andorrà 
Preference Ltd. carried out an issue of 100 million euros in preferred shares, 
without voting rights and with a specified annual dividend of 5% in the first 
three years following issue, thereafter varying annually with reference to the 
CMS 10-year rate plus 30 basis points, with a maximum of 8%, adjusted for the 
number of days during the year when the CMS 10-year rate is equal to or higher 
than the CMS 2-year rate. 
 
 
On January 25, 2006, the ANIF Board of Governors agreed to authorise an increase 
in the preferred share issue by Crèdit Andorrà Preference Ltd. amounting to an 
additional 50 million euros, given that the other components of the equity of 
Crèdit Andorrà SA continued to account for around 70% of the Group's total 
shareholder equity. These preferred shares are identical in nature to those of 
the first issue. 
 
 
Crèdit Andorrà Preference Ltd. is a wholly-owned subsidiary of Crèdit Andorrà SA 
and the aforementioned issue has the joint, several and irrevocable guarantee of 
Crèdit Andorrà SA, as indicated in the corresponding prospectus for the issue. 
 
 
This issue of a perpetual nature was fully taken up by third parties outside the 
Group and may be fully written off should the issuing company so decide, with 
authorisation from ANIF, six years after it has been paid up. 
 
 
This year Fitch Ratings has maintained the A- rating for this preferred share 
issue. 
 
 
Provision for general banking risks 
 
 
The Group makes provision for general banking risks corresponding to the funds 
allocated by the Bank for reasons of prudence, given the risks inherent in its 
banking activity, as well as the credit and liquidity risk associated with the 
portfolio of unlisted shares or with low market liquidity. Consequently, the 
part related to the risks of unlisted securities (19,344 thousand euros) is not 
taken into account when determining the capital base for calculating 
the solvency ratio. 
 
 
English translation 
 
 
These consolidated financial statements are a free translation of the 
consolidated financial statements originallyissued in Catalan. In the event of a 
discrepancy, the Catalan language version prevails. These consolidated 
financial statements are presented in conformity with the accounting principles 
and valuation criteria established by the Accounting Plan of the Andorran 
Financial System. Certain accounting practices applied by the Group that conform 
with the Accounting Plan of the Andorran Financial System may not conform with 
generally accepted accounting principles in other countries. 
 
 
 
 
Statement 
 
 
Crèdit Andorrà Group 
 
 
 
 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | Euros (thousands)   | 
+-------------+----------+----------+-----------+-----------+---------------------+ 
| ASSETS      |          |          |           |      2008 | |          2007 (*) | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Cash and deposits with OECD       |           |    31,496 | |            19,349 | 
| central banks                     |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Deposits with Andorran National Institute of  |    46,245 | |            46,245 | 
| Finance (ANIF)                                |           | |                   | 
+-----------------------------------------------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Financial              |          |           | 1,677,766 | |         1,210,077 | 
| intermediaries         |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Financial              |          |           |   134,706 | |            73,481 | 
| intermediaries at      |          |           |           | |                   | 
| sight                  |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Due from banks on time |          |           | 1,550,814 | |         1,142,305 | 
| deposit                |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Provision for          |          |           |    -7,754 | |            -5,709 | 
| insolvencies           |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Loan investments       |          |           | 2,882,289 | |         2,732,012 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Customer loans and     |          |           | 2,694,799 | |         2,602,980 | 
| credits                |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Overdrafts on customer accounts   |           |   178,391 | |           112,353 | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
| Bills       |          |          |           |    29,598 | |            35,103 | 
| discounted  |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Provision for          |          |           |   -20,499 | |           -18,424 | 
| insolvencies           |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Securities portfolio   |          |           |   888,364 | |           528,632 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Bonds and other fixed-income      |           |   816,360 | |           418,895 | 
| securities                        |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
| Provision for          |          |           |    -2,654 | |            -2,344 | 
| insolvencies           |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Provision for market   |          |           |         - | |            -5,563 | 
| fluctuations           |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Investments in Group companies    |           |    22,118 | |            18,747 | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
| Other investments      |          |           |    24,827 | |            25,182 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Provision for market   |          |           |         - | |                 - | 
| fluctuations           |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Shares and other equity           |           |    14,844 | |            14,948 | 
| securities                        |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
| Provision for market   |          |           |    -2,143 | |            -2,109 | 
| fluctuations           |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Investment  |          |          |           |    15,012 | |            60,876 | 
| funds       |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Intangible assets and expenses to be          |   133,679 | |           149,678 | 
| amortized                                     |           | |                   | 
+-----------------------------------------------+-----------+-+-------------------+ 
| Goodwill    |          |          |           |   195,668 | |           195,668 | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Intangible assets and expenses to be written  |    52,225 | |            43,889 | 
| off                                           |           | |                   | 
+-----------------------------------------------+-----------+-+-------------------+ 
| Accumulated            |          |           |  -114,214 | |           -89,879 | 
| depreciation           |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Fixed       |          |          |           |   247,229 | |           111,545 | 
| assets      |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Fixed       |          |          |           |   360,154 | |           218,686 | 
| assets      |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Accumulated            |          |           |  -112,925 | |          -105,191 | 
| depreciation           |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Provision for          |          |           |         - | |            -1,950 | 
| depreciation           |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Accrued income and prepaid        |           |    69,389 | |            80,277 | 
| expenses                          |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
| Accrued     |          |          |           |    62,129 | |            79,563 | 
| income      |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Prepaid expenses       |          |           |     7,260 | |               714 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Other       |          |          |           |    41,523 | |            32,313 | 
| assets      |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Operations in course   |          |           |    37,430 | |            27,759 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Stock       |          |          |           |       583 | |               552 | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Options purchased      |          |           |     3,510 | |             4,002 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Total       |          |          |           | 6,017,980 | |         4,910,128 | 
| assets      |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| (*) Shown solely for purposes of  |           |           | |                   | 
| comparison.                       |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | Euros (thousands)   | 
+-------------+----------+----------+-----------+-----------+---------------------+ 
| LIABILITIES |          |          |           |      2008 | |          2007 (*) | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Andorran National Institute of    |           |    61,020 | |            63,217 | 
| Finance (ANIF)                    |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Creditors   |          |          |           | 4,885,100 | |         3,943,713 | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Banks and lending      |          |           |     5,633 | |           122,173 | 
| institutions           |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Customer deposits      |          |           | 4,879,467 | |         3,821,540 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Bonds       |          |          |           |    83,504 | |            16,312 | 
| issued      |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Provision for risks and           |           |     2,742 | |             2,918 | 
| contingencies                     |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
| Provision for pensions and        |           |         - | |                 - | 
| similar obligations               |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
| Provision for contingent          |           |       392 | |               912 | 
| liabilities                       |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
| Other       |          |          |           |     2,350 | |             2,006 | 
| provisions  |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Provision for general banking     |           |    53,281 | |            64,620 | 
| risks                             |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Subordinated           |          |           |   150,000 | |           150,000 | 
| liabilities            |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Accrual accounts       |          |           |    52,268 | |            37,656 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Accrued expenses       |          |           |    51,165 | |            36,431 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Deferred    |          |          |           |     1,103 | |             1,225 | 
| income      |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Other       |          |          |           |    43,869 | |            37,458 | 
| liabilities |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Operations in course   |          |           |    26,549 | |            19,526 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Options     |          |          |           |     2,498 | |             2,885 | 
| issued      |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Suppliers and other    |          |           |    14,822 | |            15,047 | 
| creditors              |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Minority    |          |          |           |       801 | |                 - | 
| interest    |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Share       |          |          |           |    70,000 | |            70,000 | 
| capital     |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Reserves    |          |          |           |   565,390 | |           448,233 | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Legal       |          |          |           |     7,000 | |             7,000 | 
| reserve     |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Guarantee reserve      |          |           |    33,063 | |            33,063 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Voluntary   |          |          |           |   377,850 | |           361,196 | 
| reserve     |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Revaluation reserve    |          |           |   115,562 | |            13,934 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
| Consolidation reserve  |          |           |    31,915 | |            33,040 | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Income      |          |          |           |    50,005 | |            76,001 | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Income for  |          |          |           |    85,005 | |           128,001 | 
| year        |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Income from previous years awaiting           |         - | |                 - | 
| allocation                                    |           | |                   | 
+-----------------------------------------------+-----------+-+-------------------+ 
| Dividends paid out in  |          |           |   -35,000 | |           -52,000 | 
| advance                |          |           |           | |                   | 
+------------------------+----------+-----------+-----------+-+-------------------+ 
|             |          |          |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
| Total liabilities 6,017,980       |           | 6,017,980 | |         4,910,128 | 
| 4,910,128                         |           |           | |                   | 
+-----------------------------------+-----------+-----------+-+-------------------+ 
| (*) Shown solely for purposes of  |           |           | |                   | 
| comparison.                       |           |           | |                   | 
+-------------+----------+----------+-----------+-----------+-+-------------------+ 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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