Banca Comerciala Carpatica S.A

Banca Comerciala Carpatica S.A.
CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED
DECEMBER 31, 2003
PREPARED IN ACCORDANCE WITH
INTERNATIONAL FINANCIAL REPORTING STANDARDS
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF CARPATICA BANK S.A.
To the Shareholders of Banca Comerciala Carpatica S.A.:
1. We have audited the accompanying consolidated balance sheet of Banca Comerciala Carpatica S.A. (the
“Bank”) as of December 31, 2003, and the related consolidated statement of operations, cash flows and
changes in shareholders equity for the year then ended, all expressed in millions of ROL. These
financial statements are the responsibility of the Bank's Management. Our responsibility is to express an
opinion on these financial statements based on our audit.
2. This report is made solely to the Bank's shareholders, as a body. Our report has been undertaken so that
we might state to the Bank's shareholders those matters we are required under International Standards on
Auditing to state to them in an auditors' report and for no other purpose. To the fullest extent required by
the law, we do not accept or assume responsibility to anyone other than the Bank and the Bank's
shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
3. We conducted our audit in accordance with International Standards on Auditing. Those Standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by Management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.
4. In our opinion the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Banca Comerciala Carpatica S.A. as of December 31, 2003, and the
results of its operations and its cash flows for the year then ended, in accordance with International
Financial Reporting Standards.
Bucharest, Romania
Ernst & Young Assurance Services SRL

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2003
(Amounts in millions of ROL in terms of purchasing power as of December 31, 2003)
Note
2003 2002
ASSETS
Cash and cash equivalents 4 120,054 70,500
Accounts with the Central Bank 5 390,387 398,843
Due from banks 6 276,594 214,608
Due from customers 7 1,617,733 863,479
Trading securities 8 85,083 138,977
Investment securities 9 6,742 13,254
Property and equipment 10 303,945 214,435
Intangibles 10 2,733 1,758
Deferred tax assets, net 15 5,771 4,805
Other assets 11 16,710 21,933
Total Assets 2,825,752 1,942,592
LIABILITIES AND SHAREHOLDERS' EQUITY

Due to banks 12 354,956 239,001
Due to customers on saving and deposit accounts 13 1,509,548 1,039,795
Long-term borrowings 14 243,158 146,937
Defferred tax liabilities, net 15 0 0
Other liabilities 16 30,607 25,369
Total Liabilities 2,138,269 1,451,102
Minority interest 915 70
Share capital, nominal 18 475,106 315,000

Share capital restatement surplus 248,016 228,462
Accumulated deficit (36,554) (52,042)
Total Shareholders’ Equity 686,568 491,420
Total Liabilities and Shareholders’ Equity 2,825,752 1,942,592
The financial statements were approved by the management on April 4, 2004 and signed on its behalf by:
Nicolaie Hoanta Viorel Grigore

Chief Executive Officer Vice-president
The accompanying notes are an integral

1 part of these financial statements
1
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2003
Note 2003 2002

Interest income
Interest on loans 19 373,691 257,378
Interest on deposits 19 48,677 64,949
Interest on securities 19 23,027 15,882
Total interest income 445,395 338,209
Interest expense
Interest on deposits 20 (167,744) (161,539)
Interest on borrowings 20 (10,619) (6,493)
Total interest expense (178,363) (168,032)
Net interest income 267,032 170,177
Gains/(Lossess) from loans impairment 7 1,930 (39,422)
Net interest income less provision for impairment of

loans 268,962 130,755
Non-interest income
Commission income, net 21 88,962 87,421
Foreign exchange income, net 22 39,846 38,497
Loss from investments (66) -
(Loss)/Income from investments in equities - -
Other income 23 15,873 6,510
Total non-interest income 144,615 132,428
Income before non-interest expense 413,577 263,183
Non-interest expense
Salaries and related expenses 24 (146,252) (91,049)
Depreciation and amortization 25 (32,902) (17,686)
Other operating expenses 26 (99,805) (51,405)
Total non-interest expense (278,959) (160,140)
Net operating profit (loss) 134,618 103,043
Loss on net monetary position (19,151) (39,956)
Profit (loss) before income tax 115,467 63,087
Income tax
Current income tax expense 15 (22,434) (9,906)
Deferred income tax income 15 1,564 2,605
Total income tax (20,870) (7,301)
Net profit (loss) for the year before minority interest 94,597 55,786
Minority interest 165 142
Net profit (loss) for the year 94,762 55,928

2
CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2003
December 31 December 31
2003 2002
Cash flows from operating activities
Operating profit before hyperinflation adjustment and income tax 134,783 103,185
Adjustments for non-cash items:

Depreciation and amortization expense 24,182 17,686
Gain/Loss from disposals of tangible and intangible assets 2,619 (115)
Loss from disposals investments 1,258
Loan impairment expenses 1,930 39,422
Total adjustments for non-cash items 29,989 56,993
Net profit adjusted for non-cash items 164,772 160,178
Changes in operating assets and liabilities
Compulsory reserves at NBR (175,274) (140,120)

Collateral deposits at banks 2,758 (1,335)
Treasury securities 39,087 (121,892)
Loans (929,452) (536,472)
Other assets 1,505 (21,101)
Demand deposits 142,836 182,941
Time deposits 653,572 751,774
Other liabilities 8,570 28,712
Total changes in operating assets and liabilities (256,398) 142,507
Income tax paid (22,216) (9,208)
Net cash from operating activities (113,842) 293,477
Cash flows (used in) investing activities

Net sales of equity investments 154 (11,007)
Acquisition of tangible and intangible assets (123,386) (107,495)
Proceeds from sale of tangible and intangible assets 7,265 694
Net cash (used in) investing activities (115,967) (117,808)
Cash flows from financing activities

Subscription to Share capital 100,385 127,155
Increase in long-term borrowings, net 122,422 94,190
Net cash from financing activities 222,807 221,345
Net increase before monetary loss (7,001) 397,014
Monetary loss on cash transactions (23,858) (79,367)
Net increase in cash and cash equivalents (30,859) 317,647
Cash and cash equivalents at beginning of period 463,644 145,996
Cash and cash equivalents at end of period 432,784 463,644

3
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2003
Share capital
Share capital - restatement Accumulated
nominal reserve deficit Total
Balance as of January 1, 2002 178,000 197,723 (67,386) 308,337

Subscriptions in cash 102,000 25,155 - 127,155
Increase in share capital through appropriation
of retained earnings 35,000 5,584 (40,584) -
Net profit for the year - - 55,928 55,928
Balance as of December 31, 2002 315,000 228,462 (52,042) 491,420

Subscription in cash 90,712 9,673 - 100,385
Increase in share capital through appropriation
of retained earnings 69,393 9,881 (79,274) -
Net profit for the year - - 94,763 94,763
Balance as of December 31, 2003 475,105 248,016 (36,553) 686,568

4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate information
Banca Comerciala Carpatica S.A. (“the Bank”) commenced its activity in 1999 rendering a full range of banking
services to retail and corporate clients. The Bank operates through its head office located in Sibiu and 30
branches, 4 agencies and 3 offices (19 branches, 1 agency and 5 offices as of December 2002) located
throughout the country.
The Bank’s corporate banking activities consist of deposit taking, cash management, lending, and foreign trade
finance. It offers the traditional range of banking services and products associated with foreign trade
transactions, including payment orders, documentary collections and issuance of letters of credit and guarantees.
In 2003 the Bank launched debit cards.
The number of employees as of December 31, 2003 was of 760 (2002-496).
The registered address of the Bank is Mihai Viteazu 42, Sibiu, Romania.
As the Bank’s operations do not have significantly different risks and returns, the regulatory environment, the
nature of its services, the business processes, as well as the types of customers for the products and services and
the methods used to provide the services are homogenous for all Bank’s activities, the Bank operates as a single
business segment unit.
As of December 31, 2003 and 2002, the shareholders’ structure of the Bank is as follows:
December 31, December 31,

2003 2002
Ilie Carabulea 35.75% 34.94%

FIN-PART S.A. Italia 4.17% 11.20%
Lucio Olivo 7.86% 7.59%
Euroconf S.A. 6.77% 7.00%
Gian Antonio Olivo 6.52% 6.29%
Aurel Albu 9.96% 6.12%
Corneliu Tanase 9.82% 6.00%
SC Atlantic Travels Srl 2.10% 4.15%
Others 17.05% 16.71%
Total 100.00% 100.00%
2. Basis of presentation
The consolidated financial statements are presented in millions of Romanian lei (“ROL”), the currency of the
country in which the Bank operates. The books and records of the Bank are maintained in accordance with
Accounting Standards Harmonized with EEC Directive 86 and International Accounting Standards (“IAS
BNR”) and the Romanian Banking Act. The statutory financial statements have been prepared under the
historical cost convention, except for the statutory revaluation of tangible assets. These financial statements (the
IFRS financial statements) are based on the statutory records, adjusted for the differences in the accounting
treatment, including restatement for the changes in the general purchasing power of ROL and other adjustments
for the purpose of fair presentation in accordance with International Financial Reporting Standards (“IFRS”).
5

3. Significant accounting policies
a) Basis of accounting
These consolidated financial statements are prepared in conformity with International Financial Reporting
Standards (IFRS), which comprise standards and interpretations approved by the IASB, and International
Accounting Standards and Standing Interpretation Committee interpretations approved by the IASC that remain
in effect.
b) Basis of consolidation
The consolidated financial statements comprise the financial statements of Banca Comerciala Carpatica S.A. and
its subsidiaries (SVM Carpatica Invest S.A. and SC Carpatica Construct), in which the Bank holds 81.83% and
100% respectively (2002 –81.83% and 0% respectively). A subsidiary is an enterprise where the Bank exercises
control. Control is presumed to exist when direct or indirect ownership exceeds 50% of the voting power of the
enterprise. All intragroup transactions, balances and unrealized surpluses and deficits on transactions between
the Bank and its subsidiaries have been eliminated.
Equity and net income attributable to minority interests are shown separately in the Balance Sheet and Income
Statement, respectively.
c) Impact of inflation
IAS 29 requires that the financial statements of any entity that reports in the currency of a hyperinflationary
economy is adjusted to take into account the effects of inflation. In accordance with this standard, the Bank's
financial statements and the corresponding figures for the previous periods are restated in terms of the measuring
unit current at the balance sheet date, and the net loss on the net monetary position is included in the income
statement and disclosed separately as hyperinflation adjustment (see below).
IAS 29 does not establish a specific inflation rate at which hyperinflation is deemed to arise, although the
standard does suggest that economies are regarded as hyperinflationary if the cumulative inflation rate over a
period of three years exceeds 100%, among other factors. In Romania, the consumer price index for the years
ended December 31, 2003, 2002, and 2001 was 14.2%, 17.9%, and 30.3%, respectively. The cumulative
inflation rate over the period of three years was 75%. The Bank has restated its financial statements in terms of
purchasing power as of 31 December 2003 as follows:
Monetary assets and liabilities

Receivables and payables (including long and short-term interest bearing loans) have not been restated as they
are monetary assets and liabilities and are therefore stated at ROL current as of December 31, 2003.
Non-monetary assets and shareholders’ equity

Non-monetary assets and elements of shareholders’ equity are restated on the historical amount by applying the
consumer price index from the original recording date to the balance sheet date. Some non-monetary items are
carried at amounts current at dates other than date of acquisition or that of the balance sheet, for example
property, plant and equipment that has been revalued. In these cases, the carrying amounts are restated from the
date of the revaluation.
Statements of operations
All items in the statements of operations are restated by applying the consumer price index from the dates when
the items were initially recorded. The restatement was computed on a monthly basis.
6

Hyperinflation adjustment
In a period of inflation, an enterprise holding an imbalance of monetary assets and monetary liabilities either
gains or losses purchasing power, depending on the direction of the imbalance. This gain or loss on the net
monetary position is calculated as the difference resulting from the restatement of non-monetary assets,
shareholder's equity and profit and loss account items. It is expressed in ROL and recorded in the profit and loss
account.
Opening balances
Opening balances as of December 31, 2001 were restated by applying the consumer price index for the period
from January 1st to December 31, 2003 (14.2%) to all balances.
d) Foreign currency translation
Foreign currency transactions are recorded at the rate of exchange on the date of the transaction. At the balance
sheet date, monetary assets and liabilities denominated in foreign currencies are reported using the closing
exchange rate.
December 31, 2003 December 31, 2002

USD/ROL 32,595 33,500
EUR/ROL 41,117 34,919
Exchange differences arising on the settlement of transactions at rates different from those at the date of the
transaction, and unrealized foreign exchange differences on unsettled foreign currency monetary assets and
liabilities, are recognized in the income statement.
e) Comparative figures
2002 amounts have been reclassified in order to correspond with the 2003 presentation.
f) Deposits with banks and other market placements
These are stated at amortized cost, less any amounts written off and provisions for impairment.
g) Loans originated by the Bank
Loans originated by the Bank, including loans where money is provided directly to the borrower, are recognized
when the cash is advanced to borrowers. They are initially recorded at cost, which is the fair value of the cash
given to originate the loan, and are subsequently measured at initial cost less subsequent repayments of principal
and linear amortization of loan origination fees, which approximates the effective interest rate method.
h) Impairment of loans
If there is objective evidence that the Bank will not be able to collect all amounts due (principal and interest)
according to original contractual terms of the loan, such loans are considered impaired. The amount of the
impairment loss is the difference between the loan’s carrying amount and the present value of expected future
cash flows discounted at the loan’s original effective interest rate or is the difference between the carrying value
of the loan and the fair value of collateral, if the loan is collateralised and foreclosure is probable.
Impairment and uncollectibility are measured and recognised individually for loans and receivables that are
individually significant, and on a portfolio basis for a group of similar loans and receivables that are not
individually identified as impaired.
7

The carrying amount of the asset is reduced to its estimated recoverable amount by a charge to income through
the use of a provision for loan impairment account. A write off is made when all or part of a loan is deemed
uncollectible. Write offs are charged against previously established provisions and reduce the principal amount
of a loan. Recoveries of loans written off in earlier period are included in income.
If the amount of the impairment subsequently decreases due to an event occurring after the write-down, the
release of the provision is credited to the provision for loan impairment of expense.
The Bank ceases to accrue interest on the loans when they are written off.
i) Trading securities
Trading securities are securities which were either acquired for generating a profit from short term fluctuations
in price or dealer’s margin, or are securities included in a portfolio in which a pattern of short term profit taking
exists. After initial recognition, trading securities are remeasured at fair value based on valuation models using
data derived from active markets. All related realised and unrealised gains or losses are recognised in trading
income. Interest income on trading treasury securities is included in interest income. All purchases and sales of
treasury securities that require delivery within the time frame established by regulation or market convention are
recognised at settlement date.
j) Available for sale securities
All the securities which are not classified as held for trading, as held to maturity or as originated by the
enterprise are included in available for sale securities. All purchases and sales of securities that require delivery
within the time frame established by regulation or market convention are recognised at settlement date.
Available for sale assets are recognised initially at their cost (including transaction costs). Subsequent to initial
recognition, they are remeasured at their fair value unless fair value cannot be determined in which case they are
carried at cost less any provision for impairment.
k) Property and equipment
Property and equipment are stated at cost less accumulated depreciation and any impairment loss.
Expenses for repairs and maintenance are charged to operating expenses as incurred. Subsequent expenditure on
property and equipment is only recognised as an asset when the expenditures improves the condition of the asset
beyond the originally assessed standard of performance.
Where the carrying amount of an asset is greater than the estimated recoverable amount, it is written down to its
recoverable amount. Gains and losses on disposals of property and equipment are determined by reference to
their carrying amount and are taken to income.
Depreciation is computed on a straight-line basis over the estimated useful life of the asset, as stated below:
Asset type Years

Buildings 50
Computers 1-3
Furniture and equipment 5 - 15
Vehicles 5
8

In accordance with IAS 29 “Reporting in Hyperinflationary Economies”, the opening carrying values and
additions have been restated from the date of acquisition, as appropriate, by applying the change in the
consumer price index from the date of acquisition through the balance sheet date.
l) Intangibles
Intangibles represent costs incurred for acquisition of computer software, amortised using the straight-line
method over their estimated useful lives of 3 years.
In accordance with IAS 29, the cost has been restated from the date of acquisition by applying the change in the
general price index from the date of acquisition through the balance sheet date.
Where the carrying amount of an asset is greater than the estimated recoverable amount, it is written down to its
recoverable amount.
m) Borrowings
Borrowings are initially recognised at cost, being their issue proceeds net of transaction costs incurred.
Subsequently borrowings are stated at amortised cost and any difference between net proceeds and the
redemption value is recognised in the income statement over the period to maturity using the effective yield
method.
n)
n) Derivatives
Derivative financial instruments, including foreign exchange contracts and forward rate agreements, are initially
recognized in the balance sheet at cost, provided the Bank becomes a party to the contractual obligation of the
instrument, and subsequently are re-measured at their fair value.
All derivatives are carried as assets when their fair value is positive and as liabilities when fair value is negative.
Changes in the fair value of derivatives are reported in the income statement.
o) Offsetting financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to set off the recognized amounts and there is an intention to settle or realize on a net basis.
p) Sale and repurchase agreements
Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue to be
recognised in the balance sheet as securities and are measured in accordance with appropriate accounting
policies. The liability for amounts received under these agreements is included in due to banks and other
financial institutions. The difference between sale and repurchase price is treated as interest expense using the
effective yield method. Assets purchased with a corresponding commitment to resell at a specified future date
(reverse repos) are recorded as loans and advances to other banks or customers as appropriate.
9

q) Income and expense recognition
Interest income and expense are recognized in the income statement for all interest bearing instruments,
including loans that are classified as non-performing until they are written off, on an accrual basis using the
effective yield method. Interest income includes coupons earned on fixed income investment and trading
securities and accrued discount and premium on treasury bills and other discounted instruments.
Fees and direct costs relating to loan origination are deferred and amortized to interest income over the life of
the loan using the straight line method which approximates the effective interest rate method.
Commission income and fees for various banking services are recorded as income when collected. Dividends are
recognized when the shareholders’ right to receive the payments is established
r) Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise cash in hand, current accounts
and short-term placements at other banks, treasury bills and other short – term highly liquid investments, with
less than 90 days maturity from the date of acquisition.
s) Contingencies
Contingent liabilities are not recognised in the financial statements but are disclosed, unless the possibility of an
outflow of resources embodying economic benefits is remote.
A contingent asset is not recognized in the financial statements but disclosed when an inflow of economic
benefits is probable.
t) Provisions
The Bank recognizes provisions when it has a present legal or constructive obligation to transfer economic
benefits as a result of past events and a reasonable estimate of the obligation can be made.
u) Employee benefits
Short-term employee benefits:

Short-term employee benefits include wages, salaries and social security contributions. Short-term employee
benefits are recognized as expense when services are rendered.
Post-employment benefits:
Both the Bank and its employees are legally obliged to make defined contributions (included in the social
security contributions) to the National Pension Fund, managed by the Romanian State Social Security (a defined
contribution plan financed on a pay-as-you-go basis). As such, the Bank has no legal or constructive obligation
to pay the post-employment benefits as they fall due. If the Bank ceases to employ members of the Romanian
State Social Security plan, it will have no obligation to pay the benefits earned by its own employees in previous
years. The Bank’s contributions relating to defined contribution plans are charged to income statement in the
year to which they relate.
Termination benefits:
10

As defined by the Romanian Law, the Bank pays termination indemnities in cases of termination of employment
within the framework of reduction in the labor force, connected or not with a reorganization. Expenses related to
termination indemnities are accrued when Management decides to adopt a plan that will result in future
payments of termination benefits and by the balance sheet date either starts to implement the restructuring plan
or communicates the restructuring plan to those affected by it in a sufficiently specific manner to raise a valid
expectation that the Bank will carry out the restructuring. Until the present time, the Bank’s Management has
not initiated any action in this direction.
v) Related parties
Parties are considered to be related if one party has the ability to control the other party or exercise significant
influence over the other party in making financial and operating decisions.
Related party transaction represents a transfer of resources or obligations between related parties, regardless of
whether a price is charged.
w) Taxation
A provision is made for all foreseeable taxation liabilities in accordance with domestic legislation currently in
force.
Differences between financial reporting under IFRS and tax regulations give rise to differences between the
carrying value of certain assets and liabilities and their tax base. Deferred income tax is provided using the
liability method, for all such temporary differences arising between the tax base of assets and liabilities and their
carrying values for financial reporting purposes. Deferred tax assets and liabilities are measured at tax rates that
are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that
have been enacted or substantively enacted at the balance sheet date.
x) Operating leasse-the Bank as a lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as
operating leases. Operating lease payments are recognized as an expense in the income statement on a straight-
line basis over the lease term.
y) Use of estimates
The preparation of consolidated financial statements in accordance with International Financial Reporting
Standards requires management to make estimates and assumptions that affect the amounts and balances
reported in the consolidated financial statements. These estimates are based on information available as of the
date of the consolidated financial statements. Actual results, therefore, could differ from those estimates
z) Events subsequent to the balance sheet date
Post-year-end events that provide additional information about the Bank’s position at the balance sheet date
(adjusting events) or those that indicate that the going concern assumption is not appropriate are reflected in the
consolidated financial statements. Post-year-end events that are not adjusting events are disclosed in the notes
when material.
11

4. Cash and cash equivalents
2003 2002
Cash 120,054 70,500
Total 120,054 70,500
5. Accounts with the Central Bank
2003 2002
Current accounts 350,098 212,615
Deposits 40,289 186,228
Total 390,387 398,843
The National Bank of Romania requires Romanian commercial banks to maintain certain reserves computed in
accordance with specific regulations (“minimum compulsory reserve”) as a stated percentage for all types of
deposits, other borrowed funds and amounts in transit. As of December 31, 2003, the rates of ROL and foreign
currency compulsory reserves were 18% and 25%, respectively (2002-18% and 25%).
Interest paid by the NBR for minimal compulsory reserves during 2003 varied between 6% and 7% for ROL
(2002- 7%-15%) and was 1% for EURO (2002-1%).
6. Due from Banks

2003 2002
Deposits at foreign and domestic banks 272,134 197,103
Current accounts 4,460 17,505
Total 276,594 214,608
As of December 31, 2003 deposits restricted in use amount to EUR 101,000 (EUR 201,000 as of 2002), in
relation with financing agreements concluded by the Bank (see Note 14).
2003 USD EUR ROL
Current accounts 0% - 1% 0% - 3.06% Not applicable

Deposits at foreign and domestic banks 1.02% - 1.55% 1.83% - 3.25% 5 - 37%
2002 USD EUR ROL
Current accounts 0% - 1% 0% - 3.66% Not applicable

Deposits at foreign and domestic banks 1.1% - 2% 2.75% - 4% 5 - 65%
12

7. Due from customers
2003 2002
Loans, gross 1,658,135 900,836
Impairment reserve for loans (40,402) (37,357)
Total 1,617,733 863,479
Interest rates for ROL loans granted by the Bank ranged between 23% - 45% during 2003 (2002- 33%-75%).
Interest rates for foreign currency loans granted ranged between 7% - 19.5% during 2003 (2002- 8%-19.5%).
Total loans granted as of December 31, 2003 and 2002, had the following composition by industry:
2003 2002
Trade 557,830 370,241
Transport 116,339 45,960
Constructions 106,364 35,251
Agriculture 91,718 21,707
Industry 442,338 210,588
Services 170,112 126,744
Other 133,032 52,988
Total 1,617,733 863,479
As of December 31, 2003, loans granted to companies represent 94.81% (94.18% as of December 31, 2002) of
total loans.
13

The movements in reserves during the years 2003 and 2002 are presented below:
Balance as of December 31, 2001 27,702

Monetary gain for 2002 (4,203)
Write-offs, net of recoveries (25,565)
Impairment expense for 2002 39,423
Monetary gain for 2003 (4,657)
Recoveries, net of write-offs 9,632
Impairment expense for 2003 (1,930)
8. Trading securities
2003 2002
Treasury bills 85,083 84,487
Repo transactions - 54,490
Total 85,083 138,977
As of December 31, 2003, the trading securities pledged for multilateral clearing and settlement with the Central
Bank, for cards and BVB amount to ROL 71,317 million. As of December 31, 2002, treasury securities pledged
as collateral for multilateral clearing and settlement with NBR amounted to ROL 34,072 million.
9. Investments securities
Investment Field of activity % 2003 2002
SNCDD Bank payments 0.26% 22 22

Transfond Bank payments 2.53% 4,669 3,632
Fondul pentru dezvoltarea turistica
Sighisoara S.A. Tourism 0.69% - 6,358
SWIFT Bank payments 0.00% 74 74
Other 1,977 3,168
Total 6,742 13,254
14

10. Property and equipment and intangibles

Construction in Buildings Computers Equipment Vehicles Land Intangibles Total
progress and furniture
Cost
As at January 1, 2003 3,765 156,797 18,683 47,332 20,648 2,231 5,606 255,062
Additions 27,224 40,277 7,143 37,915 7,696 183 2,948 123,386
Disposals - (8,500) (49) (744) - - (9) (9,302)
Transfer between categories (3,765) 3,765 - - - - - -
As at December 31, 2003 27,224 192,339 25,777 84,503 28,344 2,414 8,545 369,146
Accumulated depreciation
As at January 1, 2003 - 8,814 8,850 8,698 8,659 - 3,848 38,869
Depreciation for the year - 5,704 5,633 6,350 4,522 - 1,973 24,182
Disposals - (482) (49) (42) - - (9) (582)
As at December 31, 2003 - 14,036 14,434 15,006 13,181 - 5,812 62,469
Carrying value as at December 31, 2003 27,224 178,303 11,343 69,497 15,163 2,414 2,733 306,677
Carrying value as at January 1, 2003 3,765 147,983 9,833 38,634 11,989 2,231 1,758 216,193
As of December 31, 2003 the Bank pledged its property and equipment with a net book value of ROL 65,602 million (December 31, 2002: ROL 51,526 million) as a
collateral for finance lease agreements and borrowings from KFW and German Romanian Fund.
15

11. Other assets
2003 2002
Sundry debtors, net 11,264 15,374
Prepaid expenses 2,880 2,375
Materials and stationery 1,590 1,379
Other assets 976 2,805
Total 16,710 21,933
12. Due to banks
2003 2002
Demand deposits 65,037 42,317
Time deposits 289,919 196,684
Total 354,956 239,001
The annual interest rates offered by the Bank for ROL deposits placed by banks were between 8% p.a. and 27%
p.a. during 2003 (2002- 4% p.a. and 60% p.a.). The annual interest rates offered by the Bank for FCY deposits
were between 1.07% p.a. and 3.45% p.a. during 2003 (2002 – 1.27% p.a. and 4.1% p.a.)
13. Due to customers
2003 2002
Demand deposit 287,874 208,184
Time deposits 1,221,674 831,611
Total 1,509,548 1,039,795
The annual interest rates paid by the Bank for deposits made by individuals and companies are indicated below:
2003 2002
Demand Time deposits Demand Time deposits
deposits deposits
Romanian Lei 1% - 21% 5% - 36% 2% - 6% 5% - 36%
Foreign
currency 0.25% - 4.15% 1.5% - 6.99% 0.5% - 1% 2.75% - 6.90%
16

14. Borrowings
Amount Outstanding as Outstanding as

Loan Interest
Lender Agreement date granted (in of December 31 FCY of December 31
agreement rate
EUR) (FCY) (mil ROL)
EURIBOR
No 1 German Romanian Fund December 12, 2003 5,930,168 5,163,392 EUR 212,306 + 2.75%
No R-2-2 KfW June 19, 2002 500,000 500,000 EUR 20,556 6.35%
TOTAL 6,430,168 232,862
Finance lease 10,296

Total 243,158
The interest for the above-mentioned loan agreements is payable on a quarterly basis.
Agreement 1 was concluded with Ministry of Public Finance and includes eleven agreements concluded during
the period 2000-2004 bearing interest at rates varying between 4.9% and 7.06%. The German Romanian Fund
(“ GRF” ) was established by the Ministry of Public Finance in cooperation with Kreditanstalt fur Wiederaufbau
(” KfW”).
The borrowings are further distributed as loans to small and medium enterprises operating in the production,
services or trade sectors.
15. Taxation
In general the Bank’s tax returns are subject to review and amendments by the fiscal authorities during the
period of five years after the year of their filling. Therefore the Bank’s tax returns for the years 1999-2003 are
subject for such review.
Year ended Year ended

2003 2002
Income tax, current 22,434 9,906

Income tax, deferred (1,564) (2,605)
Total 20,870 7,301
For profit tax purposes, the deductibility of certain expenses, for example entertainment costs is limited to a
percentage of profit, as defined by law.
The statutory tax rate during 2003 was 25% (2002-25%).
17

The deferred tax (asset)/liability as of December 31, 2003 is:
Year ended Year ended

December 31, 2003 December 31, 2002
Temporary Temporary
Tax effect Tax effect
difference difference
Summary of components
Relating to tangibles 27,720 6,930 23,207 5,801
Relating to intangibles (977) (244) (733) (184)
Relating to equity investments 1,774 443 2,489 622
Relating to loans (51,781) (12,945) (43,608) (10,902)
Other 181 45 (569) (142)
Total (23,083) (5,771) (19,214) (4,805)
Inflation impact during 2003 (2,395) (599)
Total temporary differences and

related deferred tax (23,083) (5,771) (16,819) (4,206)
Deferred tax asset, net as of December 31, 2001 2,594

Monetary gain during 2002 (394)
Deferred tax expense during 2002 2,605
Deferred asset, net as of December 31, 2002 4,805

Monetary gain during 2003 (598)
Deferred tax expense during 2003 1,564
16. Other liabilities
2003 2002
Sundry creditors 13,501 12,358

State budget payables 17,106 7,635
Other - 5,376
Total 30,607 25,369
18

17. Share capital – nominal
Share capital as of December 31, 2003 is 47,510,598 common shares authorized, issued and outstanding (2002-
31,500,000 shares). All shares are issued at par value of ROL 10,000 per share for 2003 and all capital has been
paid fully.
A share capital is presented at nominal value, the impact of hyperinflation on this balance is included as a
component of the share capital restatement surplus.
During 2003 the Bank increased its share capital by incorporating reserves and cash contributions.
18. Capital adequacy
The table below presents the computation of capital adequacy starting from IFRS figures, in accordance with the
guidelines of the Bank for International Settlements for capital adequacy computation:
19

Weighting
Value coefficients Weighted value
2003 2002 2003 2002
Balance sheet assets (net of
reserves)
Cash and cash equivalents 120,054 70,500 0% - -
Accounts with the Central Bank 390,387 398,843 0% - -
Trade securities 85,083 138,977 0% - -
Investments in equities 6,742 13,254 0% - -
Current accounts and deposits with
banks 276,594 214,608 20% 55,319 42,922
Loans, net 1,617,733 863,479 100% 1,617,733 863,479
Tangible assets, net 303,945 214,435 100% 303,945 214,435
Intangible assets, net 2,733 1,758 100% 2,733 1,758
Other assets, net 16,710 21,933 100% 16,710 21,933
Total balance sheet items 2,819,981 1,937,787 1,996,440 1,144,527
Off balance sheet items

Letters of guarantee 217,735 38,645 100% 217,735 38,645
Financing engagements and others 116,433 104,410 50% 58,216 52,205
Commitments for FCY operations - - 50% - -
Total off balance sheet items 334,168 143,055 275,951 90,850
Total 3,154,149 2,080,842 2,272,391 1,235,377
Tier I capital 2003 2002
Share capital, nominal 475,106 315,000

Share capital restatement reserve 248,016 228,462
Accumulated deficit (36,554) (52,042)
Total Tier I capital 686,568 491,420
Tier II capital
Total Tier II capital - -
Total capital base 686,568 491,420

Less equity investments in financial
corporations
Total capital 686,568 491,420
Capital adequacy ratios

Tier I ratio 30.21% 39.77%
Tier I + Tier II ratio 30.21% 39.76%
20

19. Interest income
2003 2002
Interest on current loans 370,907 247,429
Interest on past due loans 2,784 9,949
Interest income on loans 373,691 257,378
Interest on deposits accounts 39,458 18,656

Interest on current accounts 9,219 46,293
Interest on interest bearing deposits 48,677 64,949
Interest on treasury bills 23,027 15,882

Interest on trading securities 23,027 15,882
Total 445,395 338,209
20. Interest expense
2003 2002
Interest for time deposits 31,198 158,608
Interest for demand deposits 136,546 2,931
Total interest for deposits 167,744 161,539
Interest for borrowings 10,619 6,493
Total interest expense 178,363 168,032
Interest rates applied by the Bank are presented in Note 13.
21. Commission income, net
2003 2002
Relating to transactions 54,689 32,441
Relating to lending activity 35,530 59,173
From other services 9,405 4,051
Total income from service charges and
commissions 99,624 95,665
Service charges and commissions expense (10,662) (8,244)
Commission income, net 88,962 87,421
21

22. Foreign exchange income, net
2003 2002
Foreign exchange income 78,836 64,895
Foreign exchange expense (38,990) (26,398)
Foreign exchange income, net 39,846 38,497
23. Other income
Other income of the Bank relates to income from non-banking activities, such as income from recoveries of
assets foreclosed.
24. Salaries and related expenses
2003 2002
Salaries 89,842 58,709
Social insurance 38,318 23,128
Others 18,092 9,212
Total 146,252 91,049
The Bank does not have pension arrangements separate from the State pension system of Romania. The
Romanian system requires current contributions by the employer calculated as a percentage of current gross
salary payments; such expense is charged to the profit and loss in the period the related salary is earned by the
employee.
25. Depreciation and amortization expenses
2003 2002
Depreciation and impairment (see Note 10) 30,929 15,439
Amortization of intangibles (see Note 10) 1,973 2,247
Total 32,902 17,686
22

26. Other operating expenses
2003 2002
Administration 75,436 43,416
Advertising and sponsorship 7,684 4,511
Other 16,685 3,478
Total 99,805 51,405
27. Loss on net monetary position
The loss on net monetary position reflected as a hyperinflation adjustment has been calculated as the difference
resulting from the restatement of non-monetary assets, shareholders’ equity, and income statement items (see
Note 3i).
28. Guarantees and other financial commitments
In the normal course of business, the Bank issues guarantees and letters of credit on behalf of its customers. The
credit risk on guarantees is similar to that arising from granting of loans. In the event of a claim on the Bank as a
result of a customer's default on a guarantee these instruments also present a degree of liquidity risk to the Bank.
The aggregate amounts of outstanding guarantees, commitments, and other off balance sheet are:
2003 2002
Letters of guarantee 217,735 38,645
Financing commitments and letters of credit 116,433 104,410
Total 334,168 143,055
The total outstanding financing commitment amount does not necessarily represent future cash requirements.
Most of the commitments are confirmed credits and are likely to be drawn. No provisions were set up for
guarantees issued based on contra-guarantees.
23

29. Other commitments
As of December 31, 2003, the Bank has a commitment for acquisition and construction of property and
equipment of ROL 110 million:
30. Related parties
All related party transactions were made on substantially the same terms, including interest rates and collateral
requirements, as those prevailing for similar transactions with unrelated parties.
Balance Sheet
December 31, 2003
Description Due from Due to
Current accounts and Deposits - 425,321

Loans 79,921 -
Total 79,921 425,321
Income statement
December 31, 2003
Description Revenue Expenses
Interest and commissions expenses - 53,847

Interest and commissions revenue 16,694 -
Total 16,694 53,847
O ff balance sheet
D ecem ber 31, 2003
D escription Issued by Issued in favou r of
Loan com m itm m ents 195,652 -
T otal 195,652 -
24

31. Risk management
Market risk
Market risk is the risk of loss arising from movements in observable market variables such as interest rates,
exchange rates and price movements.
Currency risk
Currency risk is the risk of loss resulting from changes in exchange rates. The high rate of inflation for the year
and the significant currency devaluation induce the risk of losses in value in respect of net monetary assets held
in ROL. During the year the USD depreciated by 2.7% while EUR appreciated by 17.7% against the ROL. The
Bank uses limits on open foreign currencies positions, and focuses on reducing the open currency positions.
Interest rate risk

Interest rate risk is the risk of loss resulting from changes in interest rates. It is controlled primarily through the
limit structure and by setting variable interest rates at the discretion of the Bank on its lending.
Average rates applicable to the major components of the balance sheet have been disclosed within the notes
relating to these components.
Credit risk
Credit risk represents the loss which the Bank would suffer if a client or counterparty failed to meet its
contractual obligations. It is inherent in traditional banking products – loans, commitments to lend and other
contingent liabilities, such as letters of credit –and derivative contracts.
The Bank restricts its credit exposure to both individual counterparties and counterparty groups by using credit
limits. The size of limit depends on the assessment of their financial strength, industry position, and qualitative
factors such as quality of management. Exposure against limits is measured on a continuous basis. The Bank has
a credit risk management function which has authority over counterparty rating, credit risk assessment and credit
approval, and the establishment of provisions for impairment of loans.
Liquidity risk
The liquidity risk is associated either to the difficulty of an enterprise to raise necessary funds in order to meet
commitments or to its inability to sell a financial asset quickly at close to its fair value.
The Bank’s approach to liquidity management is to assess on a continuous basis the liquidity position. The gap
analysis of the Bank’s assets and liabilities based on their remaining maturities is presented below.
25

32. Maturity structure
No fixed
2003 Total 0-1 month 1-3 months 3-12 months 1-5 years Over 5 years maturity
ASSETS
Cash and cash equivalents 120,054 120,054 - - - -
Accounts with the Central
Bank 390,387 390,387 - - - -
Due from banks 276,594 274,538 2,056 - - -
Due from customers 1,617,733 240,967 289,852 688,795 398,119 - -
Trading securities 85,083 42,425 1,125 9,133 32,400 -
Investment securities 6,742 - - - - 6,742
Property and equipment 303,945 - - - - 303,945
Intangibles 2,733 - - - - 2,733
Defferred tax assets, net 5,771 - - - - 5,771
Other assets 16,710 16,710 - - -
Total assets 2,825,752 1,085,081 293,033 697,928 430,519 - 319,191
LIABILITIES
Due to banks 354,956 354,956 - - - -
Due to customers on saving
and deposit accounts 1,509,548 605,942 181,748 585,421 136,437 - -
Long-term borrowings 243,158 320 651 18,628 223,559 - -
Other liabilities 30,607 30,607 - - - -
Total liabilities 2,138,269 991,825 182,399 604,049 359,996 - -
Net liquidity gap 93,256 110,634 93,879 70,523 - 319,191
26

No fixed
2002 Total 0-1 month 1-3 months 3-12 months 1-5 years maturity
ASSETS
Cash and cash equivalents 70,500 70,500 - - - -
Accounts with the Central
Bank 398,843 364,571 34,272 - - -
Due from banks 214,608 214,608 - - - -
Due from customers 863,479 183,908 168,430 328,838 182,303 -
Trading securities 138,977 75,270 10,391 53,316 - -
Investment securities 13,254 - - - - 13,254
Property and equipment 214,435 - - - - 214,435
Intangibles 1,758 - - - - 1,758
Defferred tax assets, net 4,805 - - - 4,805 -
Other assets 21,933 21,933 - - - -
1,942,592 930,790 213,093 382,154 187,108 229,447
-
LIABILITIES -
Due to banks and customers 1,278,796 612,343 188,295 444,981 33,177 -

Long-term borrowings 146,937 675 5,192 25,960 115,110 -
Other liabilities 25,369 18,908 1,934 3,320 1,207 -
1,451,102 631,926 195,421 474,261 149,494 -
Net liquidity gap 491,490 298,864 17,672 (92,107) 37,614 229,447
27

2003
ASSETS Total ROL FCY
Cash and cash equivalents 120,054 75,630 44,424
Accounts with the Central Bank 390,387 136,319 254,068
Due from banks 276,594 160,250 116,344
Due from customers 1,617,733 1,136,754 480,979
Treasury securities 85,083 85,083 -
Investment securities 6,742 6,668 74
Property and equipment 303,945 303,945 -
Intangibles 2,733 2,733
Defferred tax assets, net 5,771 5,771
Other assets 16,710 16,118 592
Total assets 2,825,752 1,929,271 896,481

Due to banks 354,956 301,713 53,243
Due to customers on saving and deposit accounts 1,509,548 1,101,970 407,578
Long-term borrowings 243,158 - 243,158
Deferred tax liabilities, net - - -
Other liabilities 30,607 29,995 612
Minority interest 915 915 -
Shareholders' equity 686,568 686,568
Total liabilities and shareholders' equity 2,825,752 2,121,161 704,591
2002
ASSETS Total ROL FCY
Cash and cash equivalents 70,500 37,727 32,773
Accounts with the Central Bank 398,843 320,416 78,427
Due from banks 214,608 33,918 180,690
Due from customers 863,479 496,261 367,218
Trading securities 138,977 138,977 -
Investment securities 13,254 13,190 64
Property and equipment 214,435 214,435 -
Intangibles 1,758 1,758 -
Deferred tax assets, net 4,805 4,805 -
Other assets 21,933 189,591 (167,658)
Total assets 1,942,592 1,451,078 491,514

Due to banks and customers 1,278,796 944,182 334,614
Long-term borrowings 146,937 - 146,937
Deferred tax liabilities, net - - -
Other liabilities 25,369 12,888 12,481
Minority interests 70 70 -
Shareholders' equity 491,420 491,420 -
Total liabilities and shareholders' equity 1,942,592 1,448,560 494,032
33. Balance sheet structure by currency
28

34. Interest rate risk exposure
The tables below provide information on the extent of the Bank’s interest rate exposure based either on the contractual
maturity date of its financial instruments or, in the case of instruments that re-price to a market interest rate before maturity,
the next re-pricing date.
2003 0-1 1-3 3-12 1-5 Over 5 Total

month months months years years
Assets
Cash and cash equivalents 120,054 120,054
Accounts with the Central Bank 390,387 390,387
Deposits with banks 274,538 2,056 276,594
Treasury securities 42,425 1,125 9,133 32,400 - 85,083
Loans, net 1,617,733 - 1,617,733
Total assets 2,445,137 3,181 9,133 32,400 - 2,489,851
Liabilities
Due to banks and customers 1,203,909 39,561 486,740 134,293 - 1,864,503
Borrowings 319 233,512 3,210 6,117 - 243,158
Total liabilities 1,204,228 273,073 489,950 140,410 - 2,107,661
Net exposure to interest rate risk 1,240,909 (269,892) (480,817) (108,010) - 382,190
2002 0-1 1-3 3-12 1-5 Over 5 years Total

month months months years
Assets
Cash and cash equivalents - - - - - 70,500
Accounts with the Central Bank 364,571 34,272 - - - 398,843
Due from banks 214,608 - - - - 214,608
Treasury securities 75,270 10,391 53,316 - - 138,977
Due from customers 863,479 - - - - 863,479
Total assets 1,517,928 44,663 53,316 - - 1,686,407
Liabilities
Due to banks and customers 612,343 188,295 444,982 33,176 - 1,278,796
Long-term borrowings 663 5,099 141,175 - - 146,937
Total liabilities 613,006 193,394 586,157 33,176 - 1,425,733
Net exposure to interest rate risk 904,922 (148,731) (532,841) (33,176) - 260,674
29

35. Post balance sheet events
Subsequent to the year end, the shareholders decided to increase the share capital to 725,105 shares by cash
contribution.
The subscription period during which the shareholders can exercise the preemption right is from February 13,
2004 to May 12, 2004.
At the end of March, the Bank has filed the documentation relating to the quotation of the Bank’s shares on the
Bucharest Stock Exchange.
30

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Banca Comerciala Carpatica S.A.

CONSOLIDATED FINANCIAL STATEMENTS

To the Shareholders of Banca Comerciala Carpatica S.A.:

Ernst & Young Assurance Services SRL

Total Assets 2,825,752 1,942,592

LIABILITIES AND SHAREHOLDERS' EQUITY

Total Liabilities 2,138,269 1,451,102

Minority interest 915 70

Share capital, nominal 18 475,106 315,000

Total Shareholders’ Equity 686,568 491,420

Total Liabilities and Shareholders’ Equity 2,825,752 1,942,592

Nicolaie Hoanta Viorel Grigore

The accompanying notes are an integral

Note 2003 2002

Net interest income 267,032 170,177

Gains/(Lossess) from loans impairment 7 1,930 (39,422)

Net interest income less provision for impairment of

Income before non-interest expense 413,577 263,183

Net operating profit (loss) 134,618 103,043

Loss on net monetary position (19,151) (39,956)

Profit (loss) before income tax 115,467 63,087

Minority interest 165 142

Net profit (loss) for the year 94,762 55,928

The accompanying notes are an integral

CONSOLIDATED CASH FLOW STATEMENT

Cash flows from operating activities

Adjustments for non-cash items:

Net profit adjusted for non-cash items 164,772 160,178

Changes in operating assets and liabilities

Compulsory reserves at NBR (175,274) (140,120)

Income tax paid (22,216) (9,208)

Net cash from operating activities (113,842) 293,477

Cash flows (used in) investing activities

Cash flows from financing activities

Net increase before monetary loss (7,001) 397,014

Monetary loss on cash transactions (23,858) (79,367)

Net increase in cash and cash equivalents (30,859) 317,647

Cash and cash equivalents at beginning of period 463,644 145,996

Cash and cash equivalents at end of period 432,784 463,644

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY

Balance as of January 1, 2002 178,000 197,723 (67,386) 308,337

Balance as of December 31, 2002 315,000 228,462 (52,042) 491,420

Balance as of December 31, 2003 475,105 248,016 (36,553) 686,568

The accompanying notes are an integral

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In 2003 the Bank launched debit cards.

The number of employees as of December 31, 2003 was of 760 (2002-496).

December 31, December 31,

Ilie Carabulea 35.75% 34.94%

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. Significant accounting policies

Monetary assets and liabilities

Non-monetary assets and shareholders’ equity

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

d) Foreign currency translation

December 31, 2003 December 31, 2002

f) Deposits with banks and other market placements

g) Loans originated by the Bank

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

j) Available for sale securities

k) Property and equipment

Asset type Years