2006 proved to be the most successful year in the history of JSC Akciju komercbanka Baltikums (thereafter the Bank, Komercbanka Baltikums) since its inception back in 2001. The year was marked by a rapid growth in the Bank's major financial indicators. The Bank not only reached the planned financial figures, but substantially exceeded them. Komercbanka Baltikums remained consequent in keeping to improve its annual financial indicators. As a result, the Bank's 2006 net profit exceeded 1 million LVL. The Bank's assets amounted to 60 million LVL (a rise of 47% on an annual basis). The clients' deposits reached a record 38 million LVL, accounting for 2/3 of the Bank's assets. The results achieved by the Bank have once again confirmed the appropriateness of a chosen strategy based on a specialisation, trade and ship financing, wealth and asset management services. Komercbanka Baltikums's loan portfolio as of the end of the reporting period amounted to 17 million LVL. A balanced and well-thought-out policy in the area of of corporate financing, one of the Bank's major priorities, became a prerequisite for the portfolio’s high credit quality with the share of bad loans remaining symbolic. In the field of clients' financing a successful cooperation with JSC SEB Latvijas Unibanka continued manifesting itself in the use of an extended credit line provided by this bank. In addition Komercbanka Baltikums was actively cooperating with other Latvian banks in the area of syndicated financing. In accordance with the previously developed strategy, Komercbanka Baltikums substantially raised its equity in 2006. Over the course of 2006 the Bank carried out two new share issues. This allowed to raise a share capital up to 7.45 million LVL. In the early 2007 an additional share issue was carried out, thus raising the Bank's capital to 10.415 million LVL. The Bank was continuing to develop a successfully launched long-term funding program by issuing notes. In 2006 the Bank placed the second issue of its notes for the amount of 5.0 million EUR and began preparations for placing the third issue (which was successfully placed with investors in the early 2007 for the total amount of 10 million EUR). In turn, the first issue for the amount of 3.85 million EUR was redeemed in 2006. Raising funds through the issuance of notes allows the Bank to increase its loan portfolio and strengthen its position in the chosen niche. In 2006 the Bank substantially optimized the structure of its clients concentrating on both serving the existing clients and attracting the new ones. Considerable success was achieved thanks to cooperation with other holding's companies based in Russia, Ukraine and Kazakhstan. Despite a significant growth in the size of the client base, the Bank was consistent in keeping to rigorously assess clients' activities based on Know-Your-Client and Know-the-Business-of-Your-Client principles. The Bank continued to expand its network of correspondent banks. In 2006 it opened correspondent accounts with American Express Bank (New York, USA), American Express Bank GMBH (Frankfurt/Main, Germany), Bank of China (Beijing, China), Sberbank (Russia, Moscow). We are confident that this is yet another evidence in support of the Bank’s overall positive development. We hope this successful cooperation will continue in the future. During 2006 a restructuring process was initiated within the Baltikums Holding. In August the Bank's subsidiary IPAS Baltikums Asset Management acquired 93.46% of AS Baltikums Dziviba's shares for the the total amount of 2.353 million LVL. In turn, in September 2006 the Bank itself acquired 100% of SIA Nord Real Estate's shares for the amount of 206 thousand LVL. As a result, the consolidated financial report as of 31 December 2006 contains the Bank's and its four subsidiaries' financial reports. In January 2007 the Bank's subsidiary IPAS Baltikums Asset Management acquired 49% of AS Baltikums Apdrosinasanas Grupa's shares. This transaction is a logical step on the part of AS Baltikums Apdrosinasanas Grupa's un AS Baltikums Bankas Grupa's shareholders in their efforts to restructure the Baltikums Holding through the consolidation of its financial and insurance companies under the umbrella of AS Baltikums Bankas Grupa. The mentioned consolidation allows to optimize and further successfully develop the holding's activities. In 2006 the Bank's subsidiary Baltikums Asset Management was continuing to develop its range of money management, consulting as well as fund management services. For 2007 Komercbanka Baltikums decided to concentrate its major efforts on further stregnthening of its position in the chosen field of trade and ship financing and expanding a range of investment and wealth management services and products as well as a deepened development of private banking. Achieving considerable success was largely based on the high level of professionalism on the part of the Bank's team of employees. The Bank will be consistent in keeping to pay a considerable attention to the professionalism of its employees, raising their skills and motivation since it reckons that such a team is one of its main resources enabling to achieve significant goals and results. We are grateful to all our clients for cooperation and trust and express our hope that we will continue to be successful partners in the years to come and gain together! | 
