2006 proved to be the most successful year in the history of AS “Akciju komercbanka “Baltikums”’ (thereafter the Bank or Komercbanka Baltikums) since its inception back in 2001. The year was marked by 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 consistent 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, namely trade and shipping financing as well as wealth management. 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 SEB Unibanka continued through the credit line extended 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 7.5 million LVL. In the early 2007 an additional share issue was carried out, thus raising the Bank’s capital to 10.4 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 million EUR and began preparations for placing the third issue (which was successfully placed in the early 2007 for the total amount of 10 million EUR). In turn, the first issue for the amount of 3.9 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 client base concentrating on both servicing 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. Notwithstanding significant growth of customer base, the Bank continouosly implements close monitoring of the customers activities by implementing “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) and Sberbank (Russia, Moscow). We are confident that this is yet another evidence of the Bank’s overall positive development. During 2006 a restructuring process was initiated within the Baltikums Holding. In August, the Bank’s subsidiary IPAS “Baltikums Asset Management” acquired 93.5% of AS “Baltikums Dzīvība”’s shares for the the total amount of 2.4 million LVL. In turn, in September 2006 the Bank itself acquired 100% of SIA “Nord Real Estate”’s shares for the amount of 0.2 million LVL. As a result, the consolidated financial statements as of 31 December 2006 contains the Bank’s and its four subsidiaries’ financial results as well as the subsidiary of the Bank’s subsidiary’ financial results. In January 2007 the Bank’s subsidiary IPAS “Baltikums Asset Management” acquired 49% of AS „Baltikums Apdrošināšanas Grupa”’s shares. This transaction is a logical step on the part of AS „Baltikums Apdrošināšanas 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 the holding’s business activities. In 2006 the Bank’s subsidiary “Baltikums Asset Management“ was continuing to develop its range of asset management, consulting as well as fund management services. For 2007 Komercbanka Baltikums decided to concentrate its major efforts on further strengthening of its position in the chosen field of trade and shipping financing and expanding a range of investment and wealth management services and products as well as development of private banking. Achieving considerable success was largely based on the high level of professionalism of the Bank’s team of employees. 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. The 2006 consolidated and the bank’s financial statements of AS “Akciju komercbanka “Baltikums”” are enclosed herewith. | 
