In 2005 the Bank continued to develop successfully by putting an emphasis on its chosen strategic areas. It became evident to the Bank that it has chosen its strategy rightly by emphasising trade and shipping finance areas as well as active involvement in financial market operations and asset management area. Its fourth complete operating year the Bank and its daughter companies finished with a net profit of LVL 524 thousand (EUR 745 thousand) and its assets reached LVL 41 million (EUR 58 million). Over the past years the Bank has operated with increasing profit and managed to increase the most important financial indicators every year. Thus, in comparison with the previous year, in 2005 the Bank achieved higher return on equity, increased its loan portfolio and deposits attracted from customers as well as expanded its customer base. Management of the Bank proposes to retain the profit for the year 2005. At the end of 2004 the Bank attracted funds in the public issue of notes that were successfully invested in 2005. The issue allowed the Bank to increase its loan portfolio by developing further trade and shipping finance areas. Furthermore, according to its program of attracting of long-term funding, in the past year the Bank continued in 2003 successfully started co-operation with JSC SEB Latvijas Unibanka by using the granted long-term credit line. As in the previous years, in the past year the Bank paid great attention to ensuring the stability of its operations by developing further risk management process and maintaining conservative approach to business as one of the cornerstones of its operations. Stability and continuous work at risk minimization did not disallow the Bank from being dynamic and did not impede it to react timely to changing market conditions and offer new and competitive services to its customers. In 2005 the Bank continued to develop reputation risk management as an important priority of its operations. Good reputation of the Bank is closely related to its long-term goals and we can be pleased with what has been done in the reputation management area, especially, taking into account how important the issue is currently in Latvia and in the World. We are also pleased with performance of the daughter companies in 2005. Baltikums Lizings finished the year with a net profit of LVL 10 thousand (EUR 14 thousand). Baltikums Asset Management continued to develop asset management, investment counselling, and fund management services. At the end of 2005 Baltikums Asset management had LVL 7.57 million (EUR 11 million) under management. One of the most important achievements of Baltikums Asset Management in 2005 was a substantial increase in assets under management for all investment funds and plans. It confirms right choice of the strategy and professional management of funds. Up to date experience of the Bank and operating results show explicitly that the chosen specialisation in certain operating areas, defined priorities, and bias towards stability and risk minimization are a successfully chosen strategic path that is to be followed in the coming years. As an important task for 2006 we can mention further strengthening of our position in the chosen trade and shipping finance areas. We believe that we are knowledgeable and professional in these areas. Nevertheless, we recognise that we have to strengthen and develop further our competitive advantages as the competition from other market participants intensifies. Also, we will continue our program of attracting of long-term funding. We plan a public issue of notes in the first half of 2006 in co-operation with JSC Parex bank and the funds are to be used for increasing of the loan portfolio. In 2006 the Bank will expand its offering of investment and customer funds management services as well as will pay great attention to the development of private customers servicing. The management of the Bank is very proud of its professional team of employees thanks to which it is possible to set forth and achieve new goals. The Bank will continue to pay great attention to professionalism, qualification and motivation of its employees as it believes that the team of professional and motivated employees is an important resource to operate in the chosen areas in the environment of competition. Finally, we would like to thank our customers for their loyalty and successful co-operation and express a hope that we will continue to be successful partners in business in the future. The 2005 consolidated and the Bank’s financial statements of JSC Akciju komercbanka Baltikums are enclosed herewith. | 
