BARCLAYS BANK IRELAND PLC ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 --- BARCLAYS BANK IRELAND PLC TABLE OF CONTENTS DIRECTORS AND OTHER INFORMATION | 1 --- | --- DIRECTORS' REPORT | 2 INDEPENDENT AUDITOR'S REPORT | 7 INCOME STATEMENT | 12 STATEMENT OF COMPREHENSIVE INCOME | 13 BALANCE SHEET | 14 STATEMENT OF CHANGES IN EQUITY | 15 STATEMENT OF CASH FLOWS | 16 NOTES TO THE FINANCIAL STATEMENTS | 17 --- BARCLAYS BANK IRELAND PLC # DIRECTORS AND OTHER INFORMATION ## BOARD OF DIRECTORS David Farrow | British | Group Non-Executive Director --- | --- | --- Helen Keelan | Irish | Independent Non-Executive Director James Kelly | Irish | Chief Risk Officer Sinead Mahon | Irish | Chief Operating Officer David Martin | Irish | Independent Non-Executive Director Eoin O'Driscoll | Irish | Independent Non-Executive Director Kevin Wall | British | Chief Executive Officer (appointed 26 June 2017) ## SECRETARY Pauline Gallagher (resigned 28 December 2017) Paul McCullagh (appointed 28 December 2017) ## AUDIT COMMITTEE MEMBERS David Farrow | | David Martin | Chairman | Eoin O'Driscoll | | ## COMPANY NUMBER 396330 ## REGISTERED OFFICE AND BUSINESS ADDRESS Two Park Place, Hatch Street, Dublin 2 ## SOLICITORS Matheson | 70 Sir John Rogerson's Quay, Dublin 2 Arthur Cox | Earlsfort Court, Earlsfort Terrace, Dublin 2 ## INDEPENDENT AUDITORS KPMG | 1 Harbourmaster Place, International Financial Services Centre, Dublin 1 --- BARCLAYS BANK IRELAND PLC # DIRECTORS' REPORT The Directors present the annual report and audited financial statements for the financial year ended 31 December 2017. ## PRINCIPAL ACTIVITY The principal activity of the Bank is the provision of wholesale banking services to corporate entities and private bank management advisory services. The Bank advises, leads, underwrites and participates in debt transactions and also provides operational banking, trade and treasury services. The Bank also introduces Irish companies to the debt and equity capital-raising and risk management structuring capability of Barclays Investment Bank, a leader in the global investment banking market. With effect from 1 July 2017, the Bank terminated its cross-border merchant acquiring services provided to the card acquiring division of Barclays Bank PLC. This business is now conducted by Barclayscard International Payments Limited (BIPL). The Bank continues to pursue opportunities to grow the business and to provide a wide range of banking services to corporate entities and advisory services to private banking management clients. The Bank is licensed by the Central Bank of Ireland and received its banking licence on 7th March 2005. ## BUSINESS REVIEW The Bank's profit after tax for the year ended 31 December 2017 was €22.5 million (2016: €24.4 million). Excluding a one-off pension provision charge taken in 2016, the Bank's profit after tax for the year ended 31 December 2017 decreased by 18% year on year, the 2016 total including a one-off provision charge of €3.0 million (net of tax) resulting from the restructuring of the Barclays Ireland defined benefit pension scheme which was utilised in Q1 2017. The Bank's common equity tier one ratio remains strong at 16.7% as at 31 December 2017 (2016: 15.4%). The increase in the year is due primarily to a decrease in the level of credit risk weighted assets attributed to the Bank's loans and advances provided to customers and to banks and the exiting of the merchant acquiring business. The Bank's total capital ratio was 19.4% as at 31 December 2017 (2016: 17.7%), giving sufficient capacity to conservatively expand the balance sheet. Profit before tax for the financial year ended 31 December 2017 was 17% down on prior year, after excluding the impact of the provision taken in 2016, primarily driven by a fall in operating income, but also impacted by the inclusion of an impairment credit of €1.1m for the year ended 31 December 2016 as well as an increase in administrative expenses in 2017, driven by higher staff numbers. Total operating income was down 7% year on year with key drivers being a 48% (€2.5m) fall in trading and foreign exchange income and the negative interest rate environment. Before the impact of the pension provision taken for the year to end 31 December 2016, the cost income ratio increased from 37% in 2016 to 42% in 2017. Customer deposits rose by 16% in 2017 to €2.8 billion and drawn customer loans decreased by 14% to €1.3 billion resulting in the loan to deposit ratio decreasing from 63% in 2016 to 47% as at the end of 2017. A ratio of 47% reflects a position where the Bank was fully able to fund loans from deposits without the need to access its parent bank or the wholesale interbank market for its day to day liquidity requirements. The Bank is the principal employer in a defined benefit pension plan that was closed to future accrual in May 2013. At the end of 2017, the Bank's retirement benefit obligations on the plan was a net liability of €7.5 million being the fair value of the plan assets less the present value of the plan liabilities, versus a prior year net liability of €12.1 million. The Bank has a proactive approach to customers showing early signs of financial distress and utilises the advice of Barclays' group experts to help manage such situations. The Bank posted an impairment release of €0.046 million in the financial year ended 31 December 2017 (financial year ended 31 December 2016: credit of €1.1 million), due to the release of impairment model driven provisions and recoveries on previously written off debt. The total balance sheet impairment provision of €1.4 million at the end of 2017 is made up of specific provisions of €1.0 million and incurred but not reported (IBNR) impairment provisions of €0.4 million. --- BARCLAYS BANK IRELAND PLC The Bank forecasts its liquidity position on a daily basis as the balance sheet asset and liability maturity profile changes with each new asset or liability booked. The Bank has sufficient buffers over the required minimum levels of daily liquidity necessary to meet its regulatory liquidity requirements. In addition, the Bank has the ability to borrow from Barclays Group Treasury up to €450m should the need arise and has a detailed liquidity funding plan in place and, if required, access to the Barclays Group liquidity contingency plan and expert personnel. The Bank holds high quality liquid assets in the form of €528 million placed with the Central Bank as at 31 December 2017 (2016: €524 million). ## FUTURE DEVELOPMENTS In July 2017, Barclays announced its intention to utilise the Bank after the UK's departure from the EU, to continue Barclays delivery of a broad range of products and services to clients across most of the major economies in Europe and we are engaging with our regulators to extend the Bank's activities. The priority is to minimise disruption and preserve clients' ability to continue to transact with Barclays. While we remain confident of continued deep inter-linkages between EU and UK financial services markets, in the absence of certainly around the timing and composition of an agreement, we intend to take necessary steps to preserve on-going market access for Barclays customers. ## RESULTS AND DIVIDENDS The Bank's profit after tax for the financial year ended 31 December 2017 was €22.5 million (financial year ended 31 December 2016: €24.4 million). An interim dividend of €46.3m was paid in 2017 (2016: € nil). The Directors do not propose to make a final dividend payment for the financial year ended 31 December 2017 (financial year ended 31 December 2016: € nil). ## DIRECTORS The names of persons who were Directors at any time during the financial year ended 31st December 2017, or who have been appointed since that date, are set out below. David Farrow Helen Keelan James Kelly John Mahon (appointed 22 May 2017, resigned 29 September 2017) Sinead Mahon David Martin Eoin O'Driscoll Kevin Wall (appointed 26 June 2017) Sasha Wiggins (resigned 26 June 2017) ## DIRECTORS' AND SECRETARY'S INTERESTS The Directors and Secretary had no interests in the shares of the company or any other group company that are required by the Companies Act 2014 to be recorded in the register of interests or disclosed in the Directors' Report. ## FINANCIAL RISK MANAGEMENT In the ordinary course of business, the Directors and management of the Bank manage a variety of risks with credit, operational, conduct, liquidity, interest and foreign currency risks being the most significant. These risks are identified, measured and monitored through various control mechanisms across the Bank in order to price facilities and products on a risk adjusted basis and to highlight risk concentrations which require management attention. Independent checks on risk issues and key processes are undertaken by the Bank's internal audit function. ## Credit risk Credit risk arises because the Bank's customers, clients or counterparties may not be able or willing to fulfil their contractual obligations under loan agreements or other credit facilities. The objective of credit risk management is to create value by ensuring that the income generated by each exposure individually and in aggregate is commensurate with the credit risk taken. The Bank closely monitors the credit risk of the portfolio on a number of bases including sector, geography, credit grade and security and has a range of control mechanisms in place to manage the risk. --- BARCLAYS BANK IRELAND PLC Credit approvals are rigorously reviewed by expert credit staff and approved by senior credit officers who have sanctioning to approved limits. ## Operational risk Operational risk, which is inherent in all business activities, is the potential for financial and reputational loss arising from failures in internal controls, operational processes or the systems that support them. The Bank manages this risk through appropriate risk controls and loss mitigation actions. These actions include a balance of policies, procedures, internal controls and business continuity arrangements, including taking into account cyber security considerations. ## Conduct risk Conduct risk is the risk that detriment is caused to our customers, clients, counterparties or Barclays because of inappropriate judgement in the execution of our business activities. The Bank continues to improve conduct risk management across governance structures, management information, culture change initiatives, risk management processes and enterprise-wide risk management. ## Funding and liquidity risk The objective of liquidity management is to ensure the availability, at all times, of sufficient funds to meet the demand of customers for additional committed borrowings or to repay existing deposits as they mature or are withdrawn. The Bank holds clients deposits and cash reserves in excess of client advances and maintains a balance of high quality liquid assets with the Central Bank of Ireland in order to ensure availability of funds and to support the liquidity position. All residual excess funds held are placed on overnight deposit with Barclays Bank plc. ## Interest rate risk Interest rate risk is the risk of loss arising on the cost of funding the balance sheet from adverse movements in market interest rates. The interest rate re-pricing mismatch in the balance sheet of the Bank is short-term with the majority of loans and deposits re-pricing within three months. The risk of loss is considered low and within accepted risk appetite. ## Foreign exchange risk Foreign exchange risk is the risk of loss arising on currency exposures in the balance sheet from adverse movements in market foreign exchange rates. The Bank provides foreign exchange capability to customers, with most FX deals undertaken at spot value. Forward foreign exchange deals undertaken on behalf of clients are matched by corresponding trades to close out the Bank's position with Barclays Bank PLC. FX positions on spot and forward activity are closely monitored with positions being closed out within accepted risk tolerance levels. Incomes in currencies other than Euro are converted to Euro each month. ## CODE OF CORPORATE GOVERNANCE The Bank is subject to the Central Bank of Ireland's Corporate Governance Code for Credit Institutions and Insurance Undertakings. The Bank does not have to comply with the additional requirements in Appendices 1 and 2 of the Code for Major Institutions. ## POST BALANCE SHEET EVENT In February 2018, in line with the Bank's plans to serve Barclays European customers, the Bank signed a twenty-year lease for additional office space at One Molesworth Street, Dublin 2. Other Assets (Note 19) as at 31 December 2017, includes €2.7m in costs relating to the new lease that will be released to the Income Statement over the lease term. --- BARCLAYS BANK IRELAND PLC # STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS The Directors are responsible for preparing the Directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the company's assets, liabilities and financial position as at the end of the financial year and of the profit or loss of the company for the financial year. In preparing these financial statements, the Directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; - state whether the financial statements have been prepared in accordance with IFRS as adapted by the EU; and - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities, financial position and profit or loss of the company and which enable them to ensure that the financial statements of the Company comply with the provision of the Companies Act 2014. The Directors are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are also responsible for preparing a directors' report that complies with the requirements of the Companies Act 2014. ## DISCLOSURE OF RELEVANT INFORMATION TO AUDITORS The Directors in office at the date of this report have confirmed that, as far as they are aware: - there is no relevant audit information of which the Bank's auditor is unaware; and - they have taken all the steps that ought to be taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Bank's auditor is aware of that information. ## AUDIT COMMITTEE The Bank's Audit Committee, which comprises a majority of independent non-executive Directors, assists the Board of Directors (the "Board") in fulfilling its responsibilities relating to: - the integrity of the financial statements; - the relationship between the Bank and its external auditors; - the Bank's internal controls, internal audit and IT systems; and - compliance functions. --- BARCLAYS BANK IRELAND PLC # DIRECTORS' COMPLIANCE STATEMENT The directors acknowledge that they are responsible for securing the company's compliance with its relevant obligations. The directors confirm that; - A compliance policy statement setting out the company's policies, that in our opinion are appropriate to the company, respecting compliance by the company with its relevant obligations has been drawn up. - Appropriate arrangements or structures that are designed to secure material compliance with the company's relevant obligations have been put in place. - A review of the arrangements and structures referred to at two above has been conducted during the financial year ended 31 December 2017. ## PRINCIPAL RISKS AND UNCERTAINTIES The principal risks faced by the Bank are credit risk, market risk, liquidity risk and operational risk. The financial risk management objectives and policies of the Bank and the exposure of the Bank to these key risks are set out in the financial risk management section and in note 30. The final outcome of the negotiations between the UK and the EU and any settlement reached in respect of financial services remains uncertain, and as a result the Bank stands to refine our plans in light of external developments and will continue to work closely with regulators, clients, colleagues and other stakeholders to ensure that the Bank is able to respond appropriately to any outcome. The Bank will continue to monitor developments and assess their impact on our risk profile. ## ACCOUNTING RECORDS The measures taken by the Directors to secure compliance with the Company's obligation to keep adequate accounting records are the appointment of professionally qualified accounting personnel with appropriate expertise and the provision of adequate resources to the finance function and the use of appropriate systems. The accounting records are kept at the Bank's registered office at Two Park Place, Hatch Street, Dublin 2. ## GOING CONCERN The Directors are satisfied that the Bank has adequate resources to continue in business for the foreseeable future. For this reason, they continue to adopt the going concern basis for preparation of the financial statements. ## AUDITORS As part of a Group wide process KPMG became auditors to the bank with effect from the 24 April 2017 and have expressed their willingness to continue in office in accordance with section 383(2) of the Companies Act 2014. On behalf of the Board Sinead Mahon Director Helen Keelan Director David Martin Director 23 March 2018 --- # INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BARCLAYS BANK IRELAND PLC ## 1 Opinion: our opinion is unmodified We have audited the financial statements of Barclays Bank Ireland PLC ("the Company") for the year ended 31 December 2017 which comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, statement of cash flows, and the related notes, including the accounting policies in note 2. The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards (IFRS) as adopted by the European Union and, Irish Law, as applied in accordance with the provisions of the Companies Act 2014. In our opinion: - the financial statements give a true and fair view of the assets, liabilities and financial position of the Company as at 31 December 2017 and of its profit for the year then ended; - the financial statements have been properly prepared in accordance with IFRS as adopted by the European Union as applied in accordance with the provisions of the Companies Act 2014; - the financial statements have been properly prepared in accordance with the requirements of the Companies Act 2014. ## Basis for opinion We conducted our audit in accordance with International Standards on Auditing (Ireland) ("ISAs (Ireland)") and applicable law. Our responsibilities under those standards are further described in the Auditor's Responsibilities section of our report. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee. We were appointed as auditor by the directors on 24 April 2017. The financial year ended 31 December 2017 is our first year as auditor. We have fulfilled our ethical responsibilities under, and we remained independent of the Company in accordance with, ethical requirements applicable in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA) as applied to public interest entities. No non-audit services prohibited by that standard were provided. ## 2 Key audit matters: our assessment of risks of material misstatement Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. --- INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BARCLAYS BANK IRELAND PLC In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows: ### Loan allowance for impairment charges (€1,435k) and loan impairment release (€46k) Refer to Note 2 (accounting policy) and Note 14 (financial statement disclosures) #### The key audit matter The carrying value of loans and advances to customers and banks held at amortised cost may be materially misstated if the provision for impairment is not appropriately identified and estimated. The identification of impaired loans and the determination of the amount of the loss allowance is inherently judgemental. Provisions may not reflect recent developments in credit quality, arrears experience or emerging macro-economic risks. Provisioning involves a significant degree of management judgement particularly in relation to the estimation of future cash flows and the calculation of the collective provision. #### How the matter was addressed in our audit Our audit procedures included, among others: - Testing the design, implementation and operating effectiveness of key controls relating to the credit process (credit appraisal, sanctioning, recording, grading, monitoring and provisioning) including General IT controls and IT automated controls. - Obtaining management's annual credit review documentation and for a selection of loans: - Challenging the reasonableness of management's judgement by forming our own judgement based on the individual facts and circumstances; and - Challenging the forecast of recoverable cash flows, probability of realisation and valuation of collateral, where held by tracing back to source data and forming our own judgement based on the individual facts and circumstances. - Testing the appropriateness of the collective provision model in conjunction with our modelling specialist by: - Testing the inputs of underlying data; - Evaluating model methodology, and key assumptions; and - Comparing the model output to the Company's observed loss history. - Obtaining independent confirmation for a selection of loans. - Critically assessing whether financial statement disclosures appropriately reflect the Company's exposure to credit risk and are in compliance with IFRS. Based on evidence obtained, we found that the allowance for impairment is acceptable. # INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BARCLAYS BANK IRELAND PLC Revenue Recognition (Interest and similar income €56,297k; Loan related fee income €5,092k) *Refer to Note 2 (accounting policy) and Notes 4 and 6 (financial statement disclosures)* ## The key audit matter The Company has several revenue streams with high volumes of low margin transactions. These revenue streams include: - Interest and similar income - Fee and commission Interest income earned on loans is recognised using the effective interest rate method. The key assumption in this calculation is the expected life of the loans and the profile of the cash flows. There is a risk that this judgement may not appropriately reflect all the facts available, which would misstate interest income. There is a risk that the timing of revenue could be manipulated to meet specific targets or expectations as the determination of the timing of recognition of certain fee and commission income streams can require management judgement. ## How the matter was addressed in our audit Our audit procedures included, among others: - Testing the design, implementation and operating effectiveness of key controls relating to the revenue process from initiation to recording in the financial statements. - Reviewing the revenue recognition policies and recalculating a sample of income entries; ascertaining whether these entries were appropriately calculated based on relevant agreements and appropriately recognised. - Performing specific items testing for revenue entries made near the financial year end to determine if all revenue has been recognised in the correct period. Based on evidence obtained, we found that the application of the Company's revenue recognition accounting policy is acceptable. ## Valuation of retirement benefit obligation (€7,521k) *Refer to Note 2 (accounting policy) and Note 22 (financial statement disclosures)* ## The key audit matter The Company operates a defined benefit pension scheme (Barclays Bank Irish Retirement and Life Assurance scheme) and has a net IAS 19 defined benefit pension deficit. The scheme has been closed to new entrants and to future accrual since May 2013. Actuarial assumptions are made in valuing the Company's defined benefit scheme and small changes in these actuarial assumptions could lead the pension deficit amount to be materially misstated. ## How the matter was addressed in our audit Our audit procedures included, among others: - Testing the design, implementation and operating effectiveness of key controls relating to the defined benefit pension scheme within the entity and its service organisations. - Engaging our actuarial specialist and engaging in discussions with management and the Company's actuary to understand the judgements made in determining key economic assumptions used in the calculation of the liability and challenging the reasonableness of those assumptions by comparing them to our own independently determined benchmarks. - Independently confirming and inspecting the fair value of scheme assets held. - Considering the Company's IFRS compliance with IAS 19 disclosures in note 22 to the financial statements. Based on the evidence obtained, we concluded that the data and assumptions used by management in the actuarial valuations, the fair value of the scheme assets and the Company's compliance with IFRS to be reasonable. 9 # INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BARCLAYS BANK IRELAND PLC ## 3 Our application of materiality and an overview of the scope of our audit Materiality for the financial statements as a whole was set at €1.25m determined with reference to a benchmark of profit before tax (of which it represents 5%). We reported to the Audit Committee all corrected and uncorrected misstatements we identified our audit with a value in excess of €62.5k in addition to other audit misstatements below that amount, that, in our view, warranted reporting on qualitative grounds. Our audit of the Company was undertaken to the materiality level specified above and was all performed at the Company's office in Dublin. ## 4 We have nothing to report on going concern We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months from the date of approval of the financial statements. We have nothing to report in these respects. ## 5 We have nothing to report on the other information in the annual report The directors are responsible for the other information presented in the annual report together with the financial statements. The other information comprises the information included in the directors' report. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information. Based solely on that work, we report that: - we have not identified material misstatements in the directors' report; - in our opinion, the information given in the directors' report is consistent with the financial statements; - in our opinion, the directors' report has been prepared in accordance with the Companies Act 2014. ## 6 Our opinions on other matters prescribed by the Companies Act 2014 are unmodified We have obtained all the information and explanations which we consider necessary for the purpose of our audit. In our opinion, the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited and the Company's statement of financial position and the profit and loss account is in agreement with the accounting records. ## 7 We have nothing to report on other matters on which we are required to report by exception The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors' remuneration and transactions required by sections 305 to 312 of the Act are not made. 10 # INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BARCLAYS BANK IRELAND PLC ## 8 Respective responsibilities ### Directors' responsibilities As explained more fully in their statement set out on page 5, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. ### Auditor's responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. The risk of not detecting a material misstatement resulting from fraud or other irregularities is higher than for one resulting from error, as they may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control and may involve any area of law and regulation not just those directly affecting the financial statements. A fuller description of our responsibilities is provided on IAASA's website at [https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a9820dc9c3a/Description_of_auditors_responsibilities_for_audit.pdf](https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a9820dc9c3a/Description_of_auditors_responsibilities_for_audit.pdf) ## 9 The purpose of our audit work and to whom we owe our responsibilities Our report is made solely to the Company's members, as a body, in accordance with section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for our report, or for the opinions we have formed. Jonathan Lew for and on behalf of KPMG Chartered Accountants, Statutory Audit Firm 1 Harbourmaster Place IFSC Dublin 1 23 March 2018 11 # BARCLAYS BANK IRELAND PLC # INCOME STATEMENT for the financial year ended 31 December 2017 | | Note | 2017 €'000 | 2016* €'000 | | --- | --- | --- | --- | | Interest and similar income | 4 | 56,297 | 51,653 | | Interest and similar expenses | 5 | (24,390) | (19,297) | | **Net interest income** | | **31,907** | **32,356** | | Fee and commission income | 6 | 14,476 | 14,541 | | Trading and foreign exchange income | 7 | 2,682 | 5,205 | | Fee and other expenses | 8 | (4,809) | (4,740) | | **Total operating income** | | **44,256** | **47,362** | | General and administrative expenses | 9 | (18,525) | (17,036) | | Provisions | 23 | - | (3,387) | | Depreciation and amortisation expense | 10 | (282) | (706) | | **Operating profit before impairment** | | **25,449** | **26,233** | | Loan impairment release | 11 | 46 | 1,093 | | **Operating profit** | | **25,495** | **27,326** | | **Profit before income tax** | | **25,495** | **27,326** | | Income tax expense | 12 | (3,014) | (2,965) | | **Profit for the financial year** | | **22,481** | **24,361** | The notes on pages 17 to 55 are an integral part of these financial statements. *The presentation of certain items has been amended - see Note 2. 12 # BARCLAYS BANK IRELAND PLC # STATEMENT OF COMPREHENSIVE INCOME for the financial year ended 31 December 2017 | | Note | 2017 €'000 | 2016 €'000 | | --- | --- | --- | --- | | **Profit for the financial year** | | **22,481** | **24,361** | | **Items that will not be reclassified to profit or loss** | | | | | Re-measurements of post-employment benefit obligations | 22 | 2,909 | (1,474) | | | | **2,909** | **(1,474)** | | **Other comprehensive income / (loss) for the financial year, net of tax** | | **2,909** | **(1,474)** | | **Total comprehensive income for the financial year** | | **25,390** | **22,887** | Items in the statement above are disclosed net of tax. The deferred tax relating to each component of other comprehensive income is disclosed in note 12. The notes on pages 17 to 55 are an integral part of these financial statements. 13 # BARCLAYS BANK IRELAND PLC # BALANCE SHEET as at 31 December 2017 | | Note | 2017 €'000 | 2016 €'000 | | --- | --- | --- | --- | | **Assets** | | | | | Cash and balances at central bank | | 528,265 | 523,792 | | Loans and advances to banks | 13 | 1,392,480 | 835,684 | | Loans and advances to customers | 14 | 1,287,346 | 1,499,445 | | Derivative financial instruments | 15 | 2,570 | 9,907 | | Current income tax assets | | - | 390 | | Property, plant and equipment | 16 | 15 | 19 | | Intangible assets | 17 | 118 | 396 | | Deferred income tax assets | 18 | 940 | 1,932 | | Other assets | 19 | 5,945 | 633,799 | | **Total assets** | | **3,217,679** | **3,505,364** | | **Liabilities** | | | | | Deposits from banks | 20 | 67,298 | 56,390 | | Deposits from customers | 21 | 2,752,691 | 2,383,087 | | Derivative financial instruments | 15 | 2,519 | 9,826 | | Retirement benefit obligations | 22 | 7,521 | 12,071 | | Provisions | 23 | - | 3,387 | | Current income tax liabilities | | 16 | - | | Other liabilities | 24 | 5,451 | 637,503 | | Subordinated debt | 25 | 50,049 | 50,056 | | **Total liabilities** | | **2,885,545** | **3,152,320** | | **Equity** | | | | | Share capital | 26 | 138,446 | 138,446 | | Capital contribution | 27 | 121,000 | 121,000 | | Retained earnings | | 72,688 | 93,598 | | **Total equity** | | **332,134** | **353,044** | | **Total equity and liabilities** | | **3,217,679** | **3,505,364** | The notes on pages 17 to 55 are an integral part of these financial statements. On behalf of the Board Sinead Mahon, Director Helen Keelan, Director David Martin, Director Paul McCullagh, Company Secretary 23 March 2018 14 # BARCLAYS BANK IRELAND PLC # STATEMENT OF CHANGES IN EQUITY for the financial year ended 31 December 2017 | | Share capital €'000 | Capital contribution €'000 | Retained earnings €'000 | Total equity €'000 | | --- | --- | --- | --- | --- | | **Balance as at 1 January 2016** | **138,446** | **121,000** | **70,711** | **330,157** | | Profit for the financial year | - | - | 24,361 | 24,361 | | Other comprehensive loss for the financial year | - | - | (1,474) | (1,474) | | **Total comprehensive income for the financial year** | **-** | **-** | **22,887** | **22,887** | | **Balance as at 31 December 2016** | **138,446** | **121,000** | **93,598** | **353,044** | | **Balance as at 1 January 2017** | **138,446** | **121,000** | **93,598** | **353,044** | | Profit for the financial year | - | - | 22,481 | 22,481 | | Other comprehensive income for the financial year | - | - | 2,909 | 2,909 | | **Total comprehensive income for the financial year** | **-** | **-** | **25,390** | **25,390** | | Dividend Paid | - | - | (46,300) | (46,300) | | **Transactions with Shareholders** | **-** | **-** | **(46,300)** | **(46,300)** | | **Balance as at 31 December 2017** | **138,446** | **121,000** | **72,688** | **332,134** | The notes on pages 17 to 55 are an integral part of these financial statements. 15 # BARCLAYS BANK IRELAND PLC # STATEMENT OF CASH FLOWS for the financial year ended 31 December 2017 | | 2017 €'000 | 2016 €'000 | | --- | --- | --- | | **Reconciliation of profit before tax to net cash flows from operating activities:** | | | | Profit before tax | 25,495 | 27,326 | | *Adjustment for non-cash items:* | | | | Impairment credit | (46) | (1,093) | | Depreciation and amortisation | 282 | 706 | | Other provisions and retirement benefit obligations | (458) | (824) | | *Changes in operating assets and liabilities* | | | | Net decrease / (increase) in loans and advances | 209,086 | (474,761) | | Net increase in deposits | 380,512 | 316,460 | | Net decrease in derivative financial instruments | 30 | 57 | | Net decrease / (increase) in other assets | 627,854 | (602,797) | | Net (decrease) / increase in other liabilities and provisions | (635,446) | 608,358 | | Corporate income tax paid | (2,800) | (4,457) | | **Net cash from / (utilised in) operating activities** | **604,509** | **(131,025)** | | **Net cash from investing activities** | **-** | **-** | | Dividends paid | (46,300) | - | | **Net cash used in financing activities** | **(46,300)** | **-** | | **Net increase / (decrease) in cash and cash equivalents** | **558,209** | **(131,025)** | | Cash and cash equivalents at beginning of the financial year | 1,268,091 | 1,399,116 | | **Cash and cash equivalents at end of financial year** | **1,826,300** | **1,268,091** | | **Cash and cash equivalents comprise:** | | | | Cash and balances at central banks | 528,265 | 523,792 | | Loans and advances to banks with original maturity less than three months | 1,298,035 | 744,299 | | | **1,826,300** | **1,268,091** | For the purposes of the cash flow statement, cash comprises cash on hand and demand deposits and cash equivalents comprise highly liquid investments that are convertible into cash with an insignificant risk of changes in value with original maturities of three months or less. The notes on pages 17 to 55 are an integral part of these financial statements. 16 # BARCLAYS BANK IRELAND PLC # NOTES TO THE FINANCIAL STATEMENTS ## 1. General Information Barclays Bank Ireland PLC ('the Bank') provides wholesale banking services to corporate entities and private bank management advisory services. The Bank is a public limited company and is incorporated and tax resident in Ireland. The address of its registered office is Two Park Place, Hatch Street, Dublin 2, Ireland. The Bank is a wholly owned subsidiary of Barclays Bank PLC, a company incorporated and domiciled in England and Wales. The Financial Statements for the financial year ended 31 December 2017 were authorised for issue by order of the Board of Directors on 23 March 2018. ## 2. Summary of significant accounting policies ### Statement of compliance The Financial Statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'), and interpretations (IFRICs) issued by the Interpretations Committee; as issued by the International Accounting Standards Board ('IASB') and adopted by the European Union ('EU'); and, in accordance with Irish law. IFRS adopted by the EU differ in certain respects from IFRS issued by the IASB. References to IFRS hereafter refer to IFRS adopted by the EU. ### Basis of preparation From 1 January 2015 the financial statements have been prepared in accordance with IFRS and IFRICs adopted by the EU and with those parts of the Companies Act 2014 applicable to companies reporting under IFRS. Prior to this the Bank prepared its financial statements in accordance with accounting standards generally accepted in Ireland (Irish GAAP). The Financial Statements are presented in Euro rounded to the nearest thousand. They have been prepared under the historical cost convention except for the following which are recognised at fair value: derivative financial instruments; share-based payments; and pension plan assets. Pension obligations are measured at the present value of the future estimated cash flows of benefits earned. The preparation of financial statements in accordance with IFRS and Irish law requires the use of accounting judgements, estimates and assumptions that affect the reported amounts of assets, income and expenses. The areas involving a higher degree of judgement and areas where assumptions and estimates are significant are discussed in Note 3, 'Significant accounting judgements, estimates and assumptions'. Foreign exchange rates used during the year are as follows: | | 31 December 2017 | | 31 December 2016 | | | --- | --- | --- | --- | --- | | | Average | Closing | Average | Closing | | € / STG £ | 0.8761 | 0.8882 | 0.8163 | 0.8570 | ### New standards/Amendments The Amendments to IAS 7: 'Statement of Cash Flows', require entities to provide disclosures that enable users to evaluate changes in liabilities arising from financing activities. An entity uses its judgement when determining the exact form and content of the disclosures needed to satisfy this requirement. The Amendments also suggest a number of specific disclosures that may be necessary in order to satisfy the above requirement. This amendment did not have a significant impact on the financial position of the Group. ### Prior Year re-classification Following a review of the financial statements, the Directors determined that costs incurred by the bank as a result of its Large Exposure Guarantee issued by Barclays Bank PLC should be amended and classified as an expense rather than offset against Interest and similar income. As a result of the above, the 2016 comparative income statement has been amended as per the below: 17 # BARCLAYS BANK IRELAND PLC # NOTES TO THE FINANCIAL STATEMENTS | | Year ended 31 December 2016 €'000 | | --- | --- | | Interest and similar income (Prior to re-classification) | 47,174 | | Large Exposure Guarantee Costs | 4,479 | | **Interest and similar income (After re-classification)** | **51,653** | | | Year ended 31 December 2016 €'000 | | --- | --- | | Fee and other expenses (Prior to re-classification) | (261) | | Large Exposure Guarantee Costs | (4,479) | | **Fee and other expenses (After re-classification)** | **(4,740)** | ### Going concern On the basis of the Directors assessment, having considered the Bank's business, profitability projections, funding and capital plans, the directors considered it appropriate to adopt the going concern basis of accounting in preparing its financial statements. ### Future accounting developments There are a number of significant changes to the Bank's financial reporting after 2017 as a result of amended or new accounting standards. The most significant of these are as follows: #### IFRS 9 Financial Instruments IFRS 9 is a new accounting standard with an effective date of 1 January 2018 and it replaces IAS 39 Financial Instruments: Recognition and Measurement. It leads to significant changes in the accounting for financial instruments. The key changes relate to: - **Financial assets:** Financial assets are held at either fair value or amortised cost, except for equity investments not held for trading and certain debt instruments, which may be held at fair value through other comprehensive income; - **Financial liabilities:** Gains and losses arising from changes in own credit on non-derivative financial liabilities designated at fair value through profit or loss are excluded from the income statement and taken instead to other comprehensive income; - **Impairment:** Credit losses expected at the balance sheet date, (rather than only losses incurred in the year) on loans, debt securities and loan commitments not held at fair value through profit or loss are reflected in impairment allowances; and - **Hedge accounting:** Hedge accounting is more closely aligned with financial risk management. Based on the Bank's assessment the largest impact is in the area of impairment. IFRS 9 introduces the requirement to calculate Expected Credit Loss (ECL). Under IAS 39, a financial asset or group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment ("a loss event"). The IFRS 9 impairment model looks to the movement in the credit risk of an asset since its origination and requires recognition of lifetime expected loss loan when there is a significant increase in credit risk, even where a loss event has not yet occurred. IFRS 9 requires an entity to monitor and assess changes in credit risk on financial instruments since origination and determine whether the credit risk on those financial instruments has increased significantly since initial recognition. Under IFRS 9 an entity is required to track and assess changes in credit risk on financial instruments since origination and determine whether the credit risk on those financial instruments has increased significantly since initial recognition. Under the IFRS 9 ECL model, the change in credit risk should be based on the risk of default and not changes in the amount of ECL which may be expected on a financial instrument. The standard introduces a 3-stage model for impairment, based on changes in credit quality since initial recognition: **Stage 1** - includes financial instruments that have not had a significant increase in credit risk since initial recognition. For these assets, 12-month ECL is recognised. 12-month ECL is the expected credit losses that result from default events that are possible within 12 months after the reporting date. It is not the expected cash shortfalls over the 12-month period but the entire credit loss on an asset weighted by the probability that the loss will occur in the next 12 months. Therefore all financial assets in scope will have an impairment provision equal to at least 12-month ECL. 18 ## Page 21 missing RECITATION and PyMuPDF returned no text BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## IFRS 16 Leases In January 2016, the IASB issued IFRS 16 Leases, which will replace IAS 17 Leases. Under the new requirements, lessees would be required to recognise assets and liabilities arising from both operating and finance leases on the balance sheet. The effective date is 1 January 2019 and will result in the operating leases held by the Bank being reported on the Balance Sheet. ## Foreign currency translation The Bank applies IAS 21 The Effects of Changes in Foreign Exchange Rates. Transactions and balances in foreign currencies are translated into euro at the rate ruling on the date of the transaction. Foreign currency balances are translated into euro at the period end exchange rates. Exchange gains and losses on such balances are taken to the income statement. ## Financial assets and liabilities The Bank applies IAS 39 Financial Instruments: Recognition and Measurement for the recognition, classification and measurement and de-recognition of financial assets and financial liabilities, for the impairment of financial assets. ## Recognition The Bank recognises financial assets and liabilities when it becomes a party to the terms of the contract, which is the trade date or the settlement date. ## Classification and measurement Financial assets and liabilities are initially recognised at fair value and may be held at fair value or amortised cost depending on the Bank's intention towards the assets and the nature of the assets and liabilities, as determined by their contractual terms. The Bank's policies for determining the fair values of the assets and liabilities are set out in note 30. ## De-recognition The Bank derecognises a financial asset, or a portion of a financial asset, from its balance sheet where the contractual rights to cash flows from the asset have expired, or have been transferred, usually by sale, and with them either substantially all the risks and rewards of the asset or significant risks and rewards, along with the unconditional ability to sell or pledge the asset. Financial liabilities are derecognised when the liability has been settled, has expired or has been extinguished. ## Impairment In accordance with IAS 39, the Bank assesses at each balance sheet date whether there is objective evidence that loan assets will not be recovered in full and, wherever necessary, recognises an impairment loss in the income statement. An impairment loss is recognised if there is objective evidence of impairment as a result of events that have occurred and these have adversely impacted the estimated future cash flows from the assets. These events include: - becoming aware of significant financial difficulty of the issuer or obligor; - a breach of contract, such as a default or delinquency in interest or principal payments; - the Bank, for economic or legal reasons relating to the borrowers' financial difficulty, grants a concession that it would not otherwise consider; - it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; - the disappearance of an active market for that financial asset because of financial difficulties; and - observable data at a portfolio level indicating that there is a measurable decrease in the estimated future cash flows, although the decrease cannot yet be ascribed to individual financial assets - such as adverse changes in the payment status of borrowers in the portfolio or national or local economic conditions that correlate with defaults on the assets in the portfolio. Impairment assessments are conducted individually for significant assets. For the purposes of the assessment, loans with similar credit risk characteristics are grouped together generally on the basis of their product type, industry, geographical location, collateral type, past due status and other factors relevant to the evaluation of future cash flows. The impairment assessment includes estimating the expected future cash flows from the asset or the group of assets, which are then, discounted using the original effective interest rate calculated for the asset. If this is lower than the carrying value of the asset or the portfolio, an impairment allowance is raised. 20 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the income statement. Following impairment, interest income continues to be recognised at the original effective interest rate on the unimpaired amount. Uncollectable loans are written off against the related allowance for loan impairment on completion of the Bank's internal processes and all recoverable amounts have been collected. Subsequent recoveries of amounts previously written off are credited to the income statement. ### Interest income and expense The Bank applies IAS 39 Financial Instruments: Recognition and Measurement. Interest income on loans and advances at amortised cost, and interest expense on financial liabilities held at amortised cost, are calculated using the effective interest method which allocates interest, and direct and incremental fees and costs, over the expected lives of the assets and liabilities. The effective interest method requires the Bank to estimate future cash flows, in some cases based on its experience of customers' behaviour, considering all contractual terms of the financial instrument, as well as the expected lives of the assets and liabilities. ### Fee and commission income and expense The Bank applies IAS 18 Revenue. Fees and commissions charged for services provided to or received by the Bank are recognised as the services are provided, for example on completion of the underlying transaction. ### Trading income In accordance with IAS 39, trading positions are held at fair value and the resulting gains and losses are included in the income statement. Income arises from both the sale and purchase of trading positions, margins which are achieved through market-making and customer business and from changes in fair value caused by movements in interest and exchange rates. ### Income tax The Bank applies IAS 12 Income Taxes in accounting for taxes on income. Income tax payable on taxable profits ('current tax') is recognised as an expense in the period in which the profits arise. Current tax is measured using tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred tax is provided in full, using the liability method, on temporary differences arising from the differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates and legislation enacted or substantively enacted at the balance sheet date expected to apply when the deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets and liabilities are only offset when there is a legal right to set-off and an intention to settle on a net basis. ### Derivative financial instruments The Bank applies IAS 39 for derivative financial instruments. All financial instruments are initially recognised at fair value on the date of recognition. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. On initial recognition, it is presumed that the transaction price is the fair value unless there is observable information available in an active market to the contrary. The best evidence of an instrument's fair value on initial recognition is typically the transaction price. However, if fair value can be evidenced by comparison with other observable current market transactions in the same instrument, or is based on a valuation technique whose inputs include only data from observable markets then the instrument should be recognised at the fair value derived from such observable market data. The Bank's derivative financial instruments are primarily forward foreign exchange contracts. Forward foreign exchange contracts are agreements to buy or sell a specified quantity of foreign currency, usually on a specified future date at an agreed rate. All derivative instruments are held at fair value through profit or loss. 21 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## Property, plant and equipment The Bank applies IAS 16 Property Plant and Equipment. Property, plant and equipment is stated at cost, which includes direct and incremental acquisition costs less accumulated depreciation and provisions for impairment, if required. Subsequent costs are capitalised if these result in an enhancement to the asset. Depreciation is provided on the depreciable amount of items of property, plant and equipment on a straight-line basis over their estimated useful economic lives. Depreciation rates, methods and the residual values underlying the calculation of depreciation of items of property, plant and equipment are kept under review to take account of any change in circumstances. The Bank uses the following annual rates in calculating depreciation: | Annual rates in calculating depreciation | Depreciation rate | | --- | --- | | Fixtures, plant & equipment | 10-20% | Where a leasehold property has a remaining useful life of less than 15 years, costs of adaptation and installed equipment are depreciated over the remaining life of the lease. ## Intangible assets The accounting standard that the Bank applies in accounting for intangible assets is IAS 38. Intangible assets comprise internally generated software, other software and licences. They are initially recognised when they are separable or arise from contractual or other legal rights, the cost can be measured reliably and where it is probable that future economic benefits attributable to the assets will flow from their use. Intangible assets are stated at cost less amortisation and provisions for impairment, if any, and are amortised over their useful lives in a manner that reflects the pattern to which they contribute to future cash flows, generally over 4-5 years. Intangible assets are reviewed for impairment when there are indications that impairment may have occurred. ## Operating leases The Bank applies IAS 17 Leases, for operating leases. An operating lease is a lease where substantially all of the risks and rewards of the leased assets remain with the lessor. Rentals payable are recognised as an expense in the income statement on a straight-line basis over the lease term. ## Provisions The Bank applies IAS 37 Provisions, Contingent Liabilities and Contingent Assets in accounting for non-financial liabilities. Provisions are recognised for present obligations arising as consequences of past events where it is more likely than not that a transfer of economic benefit will be necessary to settle the obligation, which can be reliably estimated. Provision is made for undrawn loan commitments if it is probable that the facility will be drawn and results in the recognition of an asset at an amount less than the amount advanced. ## Subordinated debt Subordinated debt is measured at amortised cost using the effective interest method under IAS 39. ## Share based payments The Bank applies IFRS 2 Share Based Payments in accounting for employee remuneration in the form of shares of its listed parent. Employee incentives include awards in the form of shares and share options, as well as offering employees the opportunity to purchase shares on favourable terms. The cost of the employee services received in respect of the shares or share options granted is recognised in the income statement over the period that employees provide services, generally the period in which the award is granted or notified and the vesting date of the shares or options. The overall cost of the award is calculated using the number of shares and options expected to vest and the fair value of the shares or options at the date of grant. The number of shares and options expected to vest takes into account the likelihood that performance and service conditions included in the terms of the awards will be met. Failure to meet the non-vesting condition is treated as a cancellation, resulting in an acceleration of recognition of the cost of the employee services. The fair value of shares is the market price ruling on the grant date, in some cases adjusted to reflect restrictions on transferability. The fair value of options granted is determined using option pricing models to estimate the numbers of shares likely to vest. These take into account the exercise price of the option, the current share price, 22 **BARCLAYS BANK IRELAND PLC** **NOTES TO THE FINANCIAL STATEMENTS** the risk-free interest rate, the expected volatility of the share price over the life of the option and other relevant factors. Market conditions that must be met in order for the award to vest are also reflected in the fair value of the award, as are any other non-vesting conditions - such as continuing to make payments into a share based savings scheme. ### Retirement benefit obligations The Bank operates a defined contribution scheme and a defined benefit scheme. Defined contribution schemes - the Bank recognises contributions due in respect of the accounting period in the income statement. Any contributions unpaid at the balance sheet date are included as a liability. Defined benefit schemes - the Bank recognises its obligation to members of the scheme at the period end, less the fair value of the scheme assets. Actuarial gains and losses are recognised in other comprehensive income in the reporting period in which they occur. Each scheme's obligations are calculated using the projected unit credit method on the assumptions set out. Scheme assets are stated at fair value as at the year end. Changes in pension scheme liabilities or assets ('re-measurements') that do not arise from regular pension cost, interest on net defined benefit liabilities or assets, past service costs, plan amendment, settlements or contributions to the plan, are recognised in other comprehensive income. A plan amendment occurs when the Bank introduces, or withdraws, a defined benefit plan, or changes the benefits payable under an existing plan. Re-measurements comprise experience adjustments (differences between previous actuarial assumptions and what has actually occurred) and the effects of changes in actuarial assumptions. ### Contingent liabilities Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events, and present obligations where the transfer of economic resources is uncertain or cannot be reliably measured. Contingent liabilities are not recognised on the balance sheet but are disclosed unless the outflow of economic resources is remote. 23 ## Page 26 missing RECITATION and PyMuPDF returned no text # BARCLAYS BANK IRELAND PLC ## NOTES TO THE FINANCIAL STATEMENTS ### 6. Fee and commission income | | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | --- | --- | --- | | Loan related fee income | 5,092 | 5,097 | | Transactional banking fee income | 1,273 | 795 | | Private Bank fee income | 5,068 | 4,969 | | Trade finance & guarantee fee income | 2,398 | 2,156 | | Merchant acquiring fee income | 631 | 1,317 | | Other fee income | 14 | 207 | | **Fee and commission income** | **14,476** | **14,541** | ### 7. Trading and foreign exchange income | | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | --- | --- | --- | | Trading income | 2,711 | 5,253 | | Foreign exchange on balance sheet re-translation | (29) | (48) | | **Net foreign exchange income** | **2,682** | **5,205** | Trading income represents the net margin earned on spot and forward foreign exchange transactions. ### 8. Fee and other expenses | | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | --- | --- | --- | | Pension Finance Cost (see note 22) | 305 | 261 | | Large Exposure Guarantee Costs (see note 31) | 4,504 | 4,479 | | **Fee and other Expenses** | **4,809** | **4,740** | ### 9. General and administrative expenses | | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | --- | --- | --- | | Staff costs | 13,568 | 13,050 | | Other administrative expenses | 4,957 | 3,986 | | **Administrative expenses** | **18,525** | **17,036** | Total staff costs are analysed as follows: | | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | --- | --- | --- | | Wages and salaries | 11,556 | 10,894 | | Social insurance costs | 1,028 | 1,214 | | Retirement benefit costs (defined benefit plan) | 85 | 80 | | Retirement benefit costs (defined contribution plan) | 899 | 862 | | **Total staff costs including retirement benefit** | **13,568** | **13,050** | At 31 December 2017, the number of staff was 119 (31 December 2016: 99). The average number of staff during the financial year was 106 (financial year ended 31 December 2016: 102). Other administrative expenses includes an amount of €518 thousand (financial year ended 31 December 2016: €480 thousand) relating to operating lease payments at Two Park Place Hatch Street. 25 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS Auditors' remuneration (including expenses and excluding VAT): | | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | --- | --- | --- | | Statutory audit | 110 | 100 | | Other assurance services | - | - | | Taxation services | - | - | | Other non-audit services | - | - | | Auditors' remuneration | 110 | 100 | The figures in the above table relate to fees paid to KPMG in 2017 and PricewaterhouseCoopers (PwC) in 2016. ## 10. Depreciation and amortisation expense | | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | --- | --- | --- | | Depreciation of property, plant & equipment (note 16) | 4 | 207 | | Amortisation of intangible assets (note 17) | 278 | 499 | | Depreciation and amortisation expense | 282 | 706 | ## 11. Loan impairment release | | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | --- | --- | --- | | Loans and advances to customers release | (46) | (404) | | Loans and advances to customers recoveries | - | (689) | | Loan impairment release | (46) | (1,093) | An analysis of impairment charges for the financial year is included in note 14. 26 BARCLAYS BANK PLC NOTES TO THE FINANCIAL STATEMENTS ## 12. Income tax expense | | Year ended 31 December 2017 (€'000) | Year ended 31 December 2016 (€'000) | | --- | ---: | ---: | | **Current tax - Irish corporation tax:** | | | | Current year | 2,762 | 3,880 | | Adjustment in respect of prior years | (171) | (492) | | Adjustment for Deferred tax credit | 423 | (423) | | **Income tax expense** | **3,014** | **2,965** | The reconciliation of tax on the profit before taxation at the standard Irish corporation tax rate to the Bank's actual tax charge for the financial years ended 31 December 2017 and 31 December 2016 is as follows: | | Year ended 31 December 2017 (€'000) | Year ended 31 December 2016 (€'000) | | --- | ---: | ---: | | Profit before tax multiplied by the standard rate of corporation tax in Ireland of 12.5% (2016: 12.5%) | 3,187 | 3,416 | | **Effects of:** | | | | Adjustments in respect of prior years | (171) | (492) | | Adjustment for Deferred tax credit | 423 | (423) | | Other adjustments for tax purposes | (425) | 464 | | **Income tax expense** | **3,014** | **2,965** | The effective taxation rate on a statutory profit basis for the financial year ended 31 December 2017 is 11.8% (financial year ended 31 December 2016: 10.9%). The tax effects relating to each component of other comprehensive income are as follows: | | Year ended 31 December 2017 | | | Year ended 31 December 2016 | | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | | Pre-tax (€'000) | Tax Net of tax (€'000) (€'000) | Pre-tax (€'000) | Tax (€'000) | Net of tax (€'000) | | Re-measurement of retirement benefit obligation | 3,478 | (569) | 2,909 | (1,563) | 89 | (1,474) | | **Other comprehensive income / (loss) for the financial year** | **3,478** | **(569)** | **2,909** | **(1,563)** | **89** | **(1,474)** | ## 13. Loans and advances to banks | | 31 December 2017 (€'000) | 31 December 2016 (€'000) | | --- | ---: | ---: | | Placements with other banks | 1,392,480 | 835,663 | | Mandatory deposits with Central Bank of Ireland | - | 21 | | **Loans and advances to banks** | **1,392,480** | **835,684** | | Maturity less than a year | 1,389,980 | 833,163 | | --- | ---: | ---: | Mandatory deposits with Central Bank of Ireland are currently nil in 2017. This relates to the Bank's deposit protection requirement (31 December 2016: €21 thousand). 27 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## 14. Loans and advances to customers | | 31 December 2017 €'000 | 31 December 2016 €'000 | | --- | --- | --- | | Loans and advances to customers | 1,288,781 | 1,500,926 | | Less allowance for impairment charges on loans and advances to customers | (1,435) | (1,481) | | **Loans and advances to customers** | **1,287,346** | **1,499,445** | | Maturity less than a year | 261,431 | 205,471 | | --- | --- | --- | The following tables show the movement in the impairment provisions on total loans and advances to customers during the financial year ended 31 December 2017 and 31 December 2016. | 31 December 2017 | Financial services €'000 | Construction & property €'000 | Wholesale & retail trade €'000 | Transport, postal & other €'000 | Energy & water €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | --- | | Provision at 1 January 2017 | 52 | 1,108 | 169 | 73 | 79 | 1,481 | | (Release) / charge in income statement | (31) | (16) | 7 | 21 | (27) | (46) | | Amounts written off | - | - | - | - | - | - | | **Provision at 31 December 2017** | **21** | **1,092** | **176** | **94** | **52** | **1,435** | | 31 December 2016 | Financial services €'000 | Construction & property €'000 | Wholesale & retail trade €'000 | Transport, postal & other €'000 | Energy & water €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | --- | | Provision at 1 January 2016 | 57 | 604 | 265 | 146 | 1,044 | 2,116 | | Charge in income statement | (5) | 504 | (96) | (73) | (734) | (404) | | Amounts written off | - | - | - | - | (231) | (231) | | **Provision at 31 December 2016** | **52** | **1,108** | **169** | **73** | **79** | **1,481** | Provisions include specific and 'incurred but not reported' (IBNR) provisions. IBNR provisions are recognised on all categories of loans for incurred losses not specifically identified but which, experience and observable data indicate, are present in the portfolio at the date of assessment. Provisions utilised reflect impairment provisions which have been utilised against the related loan balance; the utilisation of a provision does not, of itself, alter a customer's obligations nor does it impact on the Bank's rights to take relevant enforcement action. 28 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## 15. Derivative financial instruments The Bank's use of objectives and policies on managing the risks that arise in connection with derivatives are included in the financial risk management section of note 30. The notional amounts of certain types of derivatives do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate the Bank's exposure to credit risk. The derivative instruments give rise to assets or liabilities as a result of fluctuations in market rates or prices relative to their terms. The notional amounts and fair values of derivative instruments held by the Bank are set out in the following tables: | 31 December 2017 | Contract / Notional amount €'000 | Fair values Assets €'000 | Fair values Liabilities €'000 | | :--- | :--- | :--- | :--- | | **Derivatives held for trading** | | | | | Foreign exchange forward contracts | 160,128 | 2,570 | (2,519) | | **Total derivative assets / liabilities held for trading** | **160,128** | **2,570** | **(2,519)** | | **Maturity less than a year** | | **2,421** | **(2,376)** | | 31 December 2016 | Contract / Notional amount €'000 | Fair values Assets €'000 | Fair values Liabilities €'000 | | :--- | :--- | :--- | :--- | | **Derivatives held for trading** | | | | | Foreign exchange forward contracts | 360,082 | 9,907 | (9,826) | | **Total derivative assets / liabilities held for trading** | **360,082** | **9,907** | **(9,826)** | | **Maturity less than a year** | | **9,437** | **(9,355)** | Derivatives held for trading above comprise derivatives entered into with an economic hedging intent to which the Bank does not apply hedge accounting. ## 16. Property, plant and equipment | | Fixtures, plant & equipment €'000 | Total €'000 | | :--- | :--- | :--- | | **Cost** | | | | At 1 January 2017 | 595 | 595 | | Additions | - | - | | Disposals / write-offs | - | - | | **At 31 December 2017** | **595** | **595** | | **Accumulated depreciation** | | | | At 1 January 2017 | 576 | 576 | | Charge in the year | 4 | 4 | | **At 31 December 2017** | **580** | **580** | | **Net book value at 31 December 2017** | **15** | **15** | BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS | | Fixtures, plant & equipment €'000 | Total €'000 | | :--- | :--- | :--- | | **Cost** | | | | At 1 January 2016 | 595 | 595 | | Additions | - | - | | Disposals / write-offs | - | - | | **At 31 December 2016** | **595** | **595** | | **Accumulated depreciation** | | | | At 1 January 2016 | 369 | 369 | | Charge in the year | 207 | 207 | | **At 31 December 2016** | **576** | **576** | | **Net book value at 31 December 2016** | **19** | **19** | ### Operating leases The Bank leases an office premises at Hatch Street to carry out its business. Minimum future rentals are the rentals payable under operating leases up to the next available break option where this exists or to expiry date of the lease. Both the required break option notice period and the amount of any penalty rent have been included in the amounts payable below. Minimum future rentals under non-cancellable operating leases are as follows: | | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | Not later than 1 year | 593 | 480 | | Later than 1 year and not later than 5 years | 2,373 | 1,919 | ## 17. Intangible assets | | Internally generated software €'000 | Total €'000 | | :--- | :--- | :--- | | **Cost** | | | | At 1 January 2017 | 1,739 | 1,739 | | Additions | - | - | | **At 31 December 2017** | **1,739** | **1,739** | | **Accumulated depreciation** | | | | At 1 January 2017 | 1,343 | 1,343 | | Charge in the year | 278 | 278 | | **At 31 December 2017** | **1,621** | **1,621** | | **Net book value at 31 December 2017** | **118** | **118** | BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS | | Internally generated software €'000 | Total €'000 | | :--- | :--- | :--- | | **Cost** | | | | At 1 January 2016 | 1,739 | 1,739 | | Additions | - | - | | **At 31 December 2016** | **1,739** | **1,739** | | **Accumulated depreciation** | | | | At 1 January 2016 | 844 | 844 | | Charge in the year | 499 | 499 | | **At 31 December 2016** | **1,343** | **1,343** | | **Net book value at 31 December 2016** | **396** | **396** | Intangible assets predominantly comprise computer software that is developed internally by the Bank and purchased computer software. ### Impairment review - intangible assets Intangible assets have been reviewed for any indication that impairment may have occurred. Where any such indication exists impairment has been measured by comparing the carrying value of the intangible asset to its recoverable amount. There was no impairment identified in the financial year ended 31 December 2017 and 31 December 2016. ## 18. Deferred tax assets | | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | **The movement on the deferred tax account is as follows:** | | | | At beginning of financial year | 1,932 | 1,420 | | Income statement credit / (charge) for financial year | - | - | | Pension and other retirement benefits | (569) | 89 | | Provisions | (423) | 423 | | **At end of financial year** | **940** | **1,932** | Deferred tax assets are attributable to the following items: | | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | **Deferred tax assets** | | | | Pension and other post-retirement benefits | 940 | 1,509 | | Provisions | - | 423 | | **Deferred tax assets** | **940** | **1,932** | BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## 19. Other assets | | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | Credit related fees receivable | 791 | 620 | | Amounts receivable from group companies | 1,483 | 100,078 | | Amounts receivable from VISA | - | 532,557 | | Other debtors and prepaid expenses | 3,671 | 544 | | **Other assets** | **5,945** | **633,799** | | **Maturity less than a year** | **2,788** | **632,887** | Amounts receivable from VISA in 2017 are nil (31 December 2016: €532,557 thousand). This relates to the pending settlement of non-domestic merchant acquiring transactions. With effect from 1 July 2017, the Bank terminated its cross-border merchant acquiring services provided to the card acquiring division of Barclays Bank PLC. In relation to the merchant acquiring services the amounts receivable from group companies in 2017 is nil (31 December 2016: €98,452 thousand). This relates to the pending settlement of domestic acquiring transactions. With effect from 1 July 2017, the Bank terminated its cross-border merchant acquiring services provided to the card acquiring division of Barclays Bank PLC. Included in Other debtors and prepaid expenses are costs of €2,700 thousand relating to the new lease for the premises at One Molesworth Street, Dublin 2. ## 20. Deposits from banks | | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | Deposits from banks | 67,298 | 56,390 | | **Deposits from banks** | **67,298** | **56,390** | | **Maturity less than a year** | **67,298** | **56,390** | An analysis of the contractual maturity profile of deposits by banks is set out in note 30. ## 21. Deposits from customers | | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | Term deposits | 870,262 | 1,002,321 | | Demand deposits | 80,918 | 50,366 | | Notice Deposits | 327,410 | - | | Current accounts | 1,474,101 | 1,330,400 | | **Deposits from customers** | **2,752,691** | **2,383,087** | | **Maturity less than a year** | **2,752,691** | **2,383,087** | An analysis of the contractual maturity profile of deposits by customer is set out in note 30. BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## 22. Retirement benefit obligations The Bank operated a defined benefit scheme under which pension entitlements of certain employees arise. Contributions are made annually by the Bank to a separately administered pension fund. The cost to the Bank for the financial year ended 31 December 2017 was €85 thousand (financial year ended 31 December 2016: €80 thousand). ### Barclays Bank Irish Retirement and Life Assurance Plan The Bank operates a defined benefit ("DB") scheme that was closed to new entrants and future accrual on 31 May 2013. The scheme is funded and provides retirement benefits on the basis of the members' salary as at the time of closure and are determined by an independent actuary, Willis Towers Watson ("WTW"), on the basis of triennial valuations. The latest full actuarial valuation of the DB scheme was carried out as at 31 December 2014, with the next full valuation to be carried out as at 31 December 2017. At 31 December 2017, the Bank has recorded 100% of the scheme's assets and future obligations (31 December 2016: 78%), following on from the take-on of the assets and liabilities relating to the insurance entities that were disposed by Barclays group in 2017. ### Amounts recognised The following tables include amounts recognised in the income statement and an analysis of benefit obligations and scheme assets for the DB scheme. The net position is recognised on the balance sheet. | Income statement charge | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | :--- | :--- | :--- | | Current service cost | 85 | 80 | | Net finance cost | 305 | 261 | | Past service cost - plan amendments | 3,323 | - | | **Total charge** | **3,713** | **341** | | Statement of other comprehensive income | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | :--- | :--- | :--- | | Impact of re-measurement, gross of tax (see note 12) | (3,478) | 1,563 | | **Total** | **(3,478)** | **1,563** | | Balance sheet reconciliation | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | Benefit obligation at beginning of the financial year | (44,836) | (42,549) | | Current service cost | (85) | (80) | | Interest costs on scheme liabilities | (1,170) | (993) | | Re-measurement - experience gain / (loss) | 1,817 | (425) | | Transfer of Liabilities | (12,225) | - | | Changes in assumptions | (1,320) | (1,548) | | Benefits paid | 959 | 759 | | **Benefit obligation at end of the financial year** | **(56,860)** | **(44,836)** | | Fair value of scheme assets at beginning of the financial year | 32,765 | 31,187 | | Interest income on scheme assets | 865 | 732 | | Employer contribution | 4,785 | 1,195 | | Transfer of Assets | 8,902 | - | | Re-measurement - return on plan assets greater than discount rate | 2,981 | 410 | | Benefits paid | (959) | (759) | | **Fair value of scheme assets at the end of the financial year** | **49,339** | **32,765** | | **Net deficit** | **(7,521)** | **(12,071)** | All figures above are shown before deferred tax. BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS Assets A long-term investment strategy has been set for the DB scheme, with its asset allocation comprising a mixture of equities, bonds, property and other appropriate assets. This recognises that different asset classes are likely to produce different long-term returns and some asset classes may be more volatile than others. The long-term investment strategy seeks to ensure, amongst other aims, that investments are adequately diversified. The value of the assets of the schemes and their percentage in relation to total scheme assets were as follows: | | 31 December 2017 €'000 | % of assets | 31 December 2016 €'000 | % of assets | | :--- | :--- | :--- | :--- | :--- | | Equity | 22,987 | 46.6% | 14,810 | 45.2% | | Fixed interest | 22,057 | 44.7% | 14,318 | 43.7% | | Property | 1,717 | 3.5% | 1,245 | 3.8% | | Other (including cash) | 2,578 | 5.2% | 2,392 | 7.3% | | **Total** | **49,339** | **100%** | **32,765** | **100%** | Included within the fair value of scheme assets were: €25 thousand (31 December 2016: €22 thousand) relating to shares in Barclays PLC. Scheme assets do not include any of Bank's own financial instruments, or any property occupied by the Bank. ### Assumptions Actuarial valuation of the schemes' obligation is dependent upon a series of assumptions, below is a summary of the main financial and demographic assumptions adopted for the DB scheme. | | 2017 % p.a. | 2016 % p.a. | | :--- | :--- | :--- | | Discount rate | 2.00% | 2.00% | | Inflation rate | 1.75% | 1.75% | | Rate of increase for pensions | 1.75% | 1.75% | The discount rate assumption for 2017 and 2016 are taken based on the single equivalent discount rate implied by the Willis Towers Watson RATE Link model. Assumptions regarding future mortality are set based on advice from published statistics and represent the Bank's best estimate of future experience. The table below shows the assumed life expectancy at 60, for members of the DB scheme: | Assumed life expectancy | 2017 years | 2016 years | | :--- | :--- | :--- | | **Life expectancy at 60 for current pensioners** | | | | - Males | 25.9 | 25.8 | | - Females | 28.6 | 28.5 | | **Life expectancy at 60 for future pensioners currently aged 40** | | | | - Males | 28.9 | 28.4 | | - Females | 30.8 | 30.7 | ### Sensitivity analysis on actuarial assumptions The sensitivity analysis has been calculated by valuing the liabilities using the amended assumptions shown in the table below and keeping the remaining assumptions the same as disclosed in the assumptions table above: | | 2017 €'000 | 2016 €'000 | | :--- | :--- | :--- | | 0.5% increase in discount rate (reduces defined benefit obligations) | (6,206) | (4,793) | | 0.5% increase in inflation rate (increases defined benefit obligations) | 7,094 | 5,490 | ### Funding The latest triennial funding valuation of the DB scheme was carried out with an effective date of 31 December 2014. This was completed in 2015 and showed a deficit of €5,400 thousand and a funding level of 88%. The Bank and trustee agreed a scheme-specific plan to fund the deficit. BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS Defined benefit contributions paid with respect to the DB scheme were as follows: | | €'000 | | :--- | :--- | | 2017 | 4,785 | | 2016 | 1,195 | The Bank's total employer contributions of €4,785 thousand in 2017 include regular contributions of €1,085 thousand and a special contribution of €3,700 thousand related to the take-on of the assets and liabilities of the insurance entities that were disposed by Barclays group in 2017. The Bank's expected regular contribution in respect of the DB scheme in 2018 is €1,085 thousand (2017: €1,085 thousand). An escrow account was set up in 2013 which may be used to provide further resources to meet obligations in certain circumstances. The expected value of contributions by the Bank to the escrow account in 2018 is €500 thousand (2017: €500 thousand) and the value of this escrow account is €2,500 thousand and is included within Loans and advances to banks. ## 23. Provisions | | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | Disposal of a business | - | 3,387 | As at 31 December 2016, the Bank had a constructive obligation to make a payment to the Barclays Bank Irish Retirement & Life Assurance Scheme arising from the disposal of Barclays Assurance and Insurance Dublin businesses to a third party. This obligation was fully utilised in 2017. ## 24. Other liabilities | | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | Amounts payable to group companies | 803 | 632,780 | | Staff costs payable | 3,410 | 3,427 | | Other creditors and accrued expenses | 1,238 | 1,296 | | **Other liabilities** | **5,451** | **637,503** | | **Maturity less than a year** | **5,451** | **637,503** | Included in the amount payable to group companies is nil in 2017 (31 December 2016: €632,245 thousand) for the VISA acquiring payable to Barclays Bank PLC. ## 25. Subordinated debt | | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | **Dated loan capital** | | | | €50 million Floating Rate Notes 2023 | 50,049 | 50,056 | On 16 December 2013 the Bank availed of €50m Tier 2 Subordinated debt from its parent Barclays Bank PLC, as part of optimising its Tier 1 and Tier 2 capital mix and to provide the Bank with sufficient capital to support business growth. This debt re-prices on a three monthly basis, based on the 3 month Euribor rate plus 2.84%. The Bank may, with the prior approval of the Central Bank of Ireland, elect to prepay the debt in whole or in part after 16 December 2018, or with the prior approval of the Central Bank of Ireland at any period before this date if there has been a change in the regulatory classification or applicable tax treatment which was not reasonably foreseeable at the time of issuance. BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## 26. Share capital | Authorised | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | 5 billion units of ordinary stock of €1 each | 5,000,000 | 5,000,000 | | Allotted, called up and fully paid | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | 138,446,218 units (2016: 138,446,218) of ordinary stock at €1 each | 138,446 | 138,446 | ## 27. Capital contribution | | 31 December 2017 €'000 | 31 December 2016 €'000 | | :--- | :--- | :--- | | Capital contribution | 121,000 | 121,000 | On 24 June 2005, the Bank received a capital contribution of €121 million from its parent, Barclays Bank PLC, for on-going use in its operations. The Bank has no repayment obligation in respect of this contribution. ## 28. Share based payments The Bank, as part of Barclays PLC, engages in equity settled share-based payment transactions in respect of services received from certain of its employees. The cost of all share based payments to the Bank for the financial year ended 31 December 2017 was €19 thousand (financial year ended 31 December 2016: €63 thousand) and is included in general and administrative expenses. The terms of the main current plans are as follows: ### Sharesave Under this scheme, eligible employees may enter into contracts to save up to €300 per month and, at the expiry of a fixed term of three, five or seven years, have the option to use these savings to acquire shares in Barclays PLC at a discount, calculated in accordance with the rules of the scheme. The discount is currently 20% of the market price at the date the options are granted. Participants in the scheme have six months from the date of vest in which the option can be exercised. ### Share Value Plan (SVP) The SVP was introduced in March 2010 and approved by shareholders (for Executive Director participation and use of new issue shares) at the AGM in April 2011. SVP awards are granted to participants in the form of a conditional right to receive Barclays PLC shares or provisional allocations of Barclays PLC shares which vest or are considered for release over a period of three years in equal annual tranches. Participants do not pay to receive an award or to receive a release of shares. The grantor may also make a dividend equivalent payment to participants on release of a SVP award. SVP awards are also made to eligible employees for recruitment purposes. All awards are subject to potential forfeiture in certain leaver scenarios. ### Other schemes In addition to the Sharesave scheme and SVP, the Group operates a number of other schemes, none of which are individually or in aggregate material in relation to the charge for the financial year. Included within other schemes are the Barclays Long Term Incentive Plan and the Executive Share Award Scheme. BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS Share option and award plans The weighted average fair value per award granted and weighted average share price at the date of exercise / release of shares during the financial year was: | | Weighted average fair value per award granted in year | Weighted average share price at exercise / release during year | | :--- | :--- | :--- | | | 2017 £ | 2016 £ | 2017 £ | 2016 £ | | SVP | 2.30 | 1.66 | 2.29 | 1.66 | | Other | 0.41-2.30 | 0.61-1.67 | 1.99-2.30 | 1.65-1.88 | SVP are nil cost awards on which the performance conditions are substantially completed at the date of grant. Consequently the fair value of these awards is based on the market value at that date. Movements in options and awards The movement in the number of options and awards for the major schemes and the weighted average exercise price of options was: | | SVP$^{1}$ Number | Sharesave Number Weighted avg. ex. price | | :--- | :--- | :--- | | | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | | Outstanding at start of year | 51,071 | 36,320 | 232,604 | 231,089 | 1.53 | 1.86 | | Granted in the year | 35,520 | 33,311 | 67,809 | 141,327 | 1.53 | 1.40 | | Exercised in the year | (23,647) | (18,560) | (36,196) | (8,043) | 1.49 | 1.76 | | Transferred in the year | - | - | 31,769 | (26,395) | - | - | | Less: forfeited in the year | - | - | (45,821) | (90,562) | 1.53 | 1.95 | | Less: expired in the year | (16,512) | - | (12,275) | (14,812) | - | - | | **Outstanding at end of year** | **46,432** | **51,071** | **237,890** | **232,604** | **1.50** | **1.54** | $^{1}$ Nil cost award and therefore the weighted average exercise price was nil. BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## 29. Contingent liabilities and commitments The table below gives the contract amounts of contingent liabilities and commitments. The maximum exposure to credit loss under contingent liabilities and commitments is the contractual amount of the instrument in the event of non-performance by the other party where all counter claims, collateral or security prove worthless. | | 31 December 2017 Contract amount €'000 | 31 December 2016 Contract amount €'000 | | :--- | :--- | :--- | | **Contingent liabilities** | | | | Guarantees and irrevocable letters of credit | 302,847 | 247,656 | | Other contingent liabilities | 89,399 | 98,527 | | | **392,246** | **346,183** | | **Commitments** | | | | Undrawn formal standby facilities, credit lines and other commitments to lend | 1,045,127 | 973,893 | Guarantees and letters of credit are given as security to support the performance of a customer to third parties. As the Bank will only be required to meet these obligations in the event of the customer's default, the cash requirements of these instruments are expected to be considerably below their nominal amounts. Other contingent liabilities primarily include performance bonds and are generally short term commitments to third parties which are not directly dependent on the customers' credit worthiness. Commitments to lend are agreements to lend to a customer in the future, subject to certain conditions. BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS 30. Financial risk management Responsibility for risk management policies and limits on the level of risk assumed by the Bank lies with the Board of Directors. The Bank's approach to risk management is derived from that of its holding company, which has a separate function dedicated to risk management. The risk management framework is designed to provide a reasonable degree of assurance that no single event, or combination of events, will materially affect the financial well-being of the Bank. The Bank has a formal structure for managing risk, including established risk limits, reporting lines, mandates and other control procedures. The principal risks faced by the bank are credit risk, market risk, liquidity risk and operational risk. (a) Credit risk management Credit risk is the risk of suffering financial loss, should any of the Bank's customers, clients or market counterparties fail to fulfil their contractual obligations to the Bank. Credit risk exists as a result of the Bank providing commercial loans, advances and loan commitments arising from such lending activities and from credit enhancements provided by the Bank such as financial guarantees, letters of credit, endorsements and acceptances. The granting of credit is one of the Bank's major sources of income and the Bank dedicates considerable resources to its control. The sanctioning of individual exposures is performed either by the Bank's Chief Credit Officer, Associate Credit Director or the Bank's Credit Committee (in accordance with sanctioning discretions). The subsequent control of exposures is performed by the Bank's Lending Middle Office which report to the Bank's Operations Team who in turn report to the Bank's Chief Operating Officer. The Associate Credit Director reports to the Bank's Chief Credit Officer who reports to the Chief Risk Officer, a member of the Board. The Bank's Sanctioning Committee is the Ireland Credit Committee which is the highest level credit sanctioning forum in the Bank. Responsibility for oversight of this Committee lies with the Credit Risk Management Committee which is chaired by the Chief Executive Officer. The Bank's Credit Risk Management Committee exercises oversight through regular review of the Bank's credit portfolio examining, inter alia, the constitution of the portfolio in terms of sectorial and individual exposures against the Bank's overall Risk appetite. The Chief Credit Officer, who is a member of Bank's Credit Risk Management Committee, reports the views of this Committee to the Board Risk Committee as a standard agenda item. Corporate loans which are identified as showing signs of credit stress / deterioration are recorded on graded problem exposure lists known as watch lists. These lists are updated monthly and circulated to the relevant Management Committees. Once listing has taken place, exposures are closely monitored and, where appropriate, reduced and/or cancelled. Watch list exposures are categorised in line with the perceived degree of the risk attached to the lending, and its probability of default. In line with Barclays Group policy, the Bank works to four watch list categories based on the degree of concern. By the time an account becomes impaired it will normally have passed through all four categories, each of which reflect the need for ever-increasing caution and control. Where a customer's financial health gives grounds for concern, it is placed into the appropriate category. All customers, regardless of financial health, are subject to a full review of all facilities on, at least, an annual basis. More frequent interim reviews may be undertaken should circumstances dictate. Asset credit quality All loans and advances are categorised as either 'neither past due nor impaired', 'past due but not impaired', or 'past due and impaired', which includes restructured loans. For the purposes of the credit risk disclosures: * A loan is considered past due when the borrower has failed to make a payment when due under the terms of the loan contract. * The impairment allowance includes allowances against financial assets that have been individually impaired. Loans neither past due nor impaired consist of corporate loans that are performing. These loans, although unimpaired, may carry an unidentified impairment provision. * Impaired loans that are individually assessed consist of corporate loans that are past due and for which an individual allowance has been raised. 39 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS The Bank uses the following internal measures to determine credit quality for loans that are performing: | Default Grade | Credit Quality Description | Probability of Default | | --- | --- | --- | | 1-3 | Strong | 0.0% - 0.05% | | 4-5 | | 0.05% - 0.15% | | 6-8 | | 0.15% - 0.30% | | 9-11 | | 0.30% - 0.60% | | 12-14 | Satisfactory | 0.60% - 2.15% | | 15-19 | | 2.15% - 11.35% | | 20-21 | Higher risk | 11.35%+ | For loans that are performing, these descriptions can be summarised as follows: **Strong:** there is a very high likelihood of the asset being recovered in full. **Satisfactory:** while there is a high likelihood that the asset will be recovered and therefore, of no cause for concern to the Bank, the asset may not be collateralised, regardless of the fact that the output of internal grading models may have indicated a higher classification. At the lower end of this grade there are customers that are being more carefully monitored, for example, corporate customers which are indicating some evidence of deterioration. **Higher risk:** there is concern over the obligor's ability to make payments when due. However, these have not yet converted to actual delinquency. There may also be concerns over the value of collateral or security provided. However, the borrower or counterparty is continuing to make payments when due and is expected to settle all outstanding amounts of principal and interest. Loans that are past due are monitored closely, with impairment allowances raised as appropriate and in line with the Bank's impairment policies. These loans are all considered higher risk for the purpose of this analysis of credit quality. 40 # BARCLAYS BANK IRELAND PLC ## NOTES TO THE FINANCIAL STATEMENTS ### Balance sheet credit quality The following tables present the credit quality of the Bank's financial assets exposed to credit risk. | As at 31 December 2017 | Neither Past due nor individually Impaired €'000 | Past due but not individually impaired €'000 | Individually Impaired €'000 | Total €'000 | Impairment allowance €'000 | Total carrying value €'000 | | --- | --- | --- | --- | --- | --- | --- | | Cash and balances at central bank | 528,265 | - | - | 528,265 | - | 528,265 | | Loans and advances to banks | 1,392,480 | - | - | 1,392,480 | - | 1,392,480 | | Loans and advances to customers | 1,287,781 | - | 1,000 | 1,288,781 | (1,435) | 1,287,346 | | Derivative financial instruments | 2,570 | - | - | 2,570 | - | 2,570 | | Other assets | 3,199 | - | - | 3,199 | - | 3,199 | | **Total** | **3,214,295** | **-** | **1,000** | **3,215,295** | **(1,435)** | **3,213,860** | | As at 31 December 2016 | Neither Past due nor individually Impaired €'000 | Past due but not individually impaired €'000 | Individually Impaired €'000 | Total €'000 | Impairment allowance €'000 | Total carrying value €'000 | | --- | --- | --- | --- | --- | --- | --- | | Cash and balances at central bank | 523,792 | - | - | 523,792 | - | 523,792 | | Loans and advances to banks | 835,684 | - | - | 835,684 | - | 835,684 | | Loans and advances to customers | 1,499,926 | - | 1,000 | 1,500,926 | (1,481) | 1,499,445 | | Derivative financial instruments | 9,907 | - | - | 9,907 | - | 9,907 | | Other assets | 633,799 | - | - | 633,799 | - | 633,799 | | **Total** | **3,503,108** | **-** | **1,000** | **3,504,108** | **(1,481)** | **3,502,627** | The above tables do not include non-financial assets. The impairment allowance above includes allowances against financial assets that have been individually impaired and those that are subject to collective impairment. Assets subject to a collective impairment allowance are included in financial assets neither past due nor individually impaired or financial assets past due but not individually impaired, as appropriate. 41 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS Credit quality of financial assets neither past due nor individually impaired | As at 31 December 2017 | Strong €'000 | Satisfactory €'000 | Higher risk €'000 | Total €'000 | | :--- | ---: | ---: | ---: | ---: | | Cash and balances at central bank | 528,265 | - | - | 528,265 | | Loans and advances to banks | 1,392,480 | - | - | 1,392,480 | | Loans and advances to customers | 1,125,294 | 162,486 | - | 1,287,780 | | Derivative financial instruments | 2,570 | - | - | 2,570 | | Other assets | 3,199 | - | - | 3,199 | | Total | 3,051,808 | 162,486 | - | 3,214,294 | | As at 31 December 2016 | Strong €'000 | Satisfactory €'000 | Higher risk €'000 | Total €'000 | | :--- | ---: | ---: | ---: | ---: | | Cash and balances at central bank | 523,792 | - | - | 523,792 | | Loans and advances to banks | 835,684 | - | - | 835,684 | | Loans and advances to customers | 1,365,985 | 133,940 | 1 | 1,499,926 | | Derivative financial instruments | 9,907 | - | - | 9,907 | | Other assets | 633,799 | - | - | 633,799 | | Total | 3,369,167 | 133,940 | 1 | 3,503,108 | The above tables do not include non-financial assets. The Bank's maximum exposure to credit risk is the carrying value of the assets with the exception of Loans and advances to customers. The maximum exposure to credit risk for Loans and advances to customers utilised balances of €1,287,780 thousand (2016: €1,499,926 thousand) and unutilised balances of €1,045,127 thousand (2016: €973,893 thousand) as per Note 29. The likely total credit exposure is less due to collateral, credit enhancements and other actions taken to mitigate the Bank's exposure. ## Credit risk mitigation, collateral and security The Bank uses a wide variety of techniques to reduce credit risk on its lending. The most important of these is performing an assessment of the ability of a borrower to service the proposed level of borrowing. The Bank's policy is to establish that loans are within the customer's capacity to repay, rather than to rely excessively on security. The Bank actively manages its credit exposures. When weakness in exposures is detected - either in individual exposures or in groups of exposures - the Bank takes action to mitigate the risks. Such actions may, for example, include; reducing the amounts outstanding (in discussion with the customers, clients or counterparties, if appropriate) and / or, on occasion, selling the financial asset which constitutes the exposure. The Bank looks to maintain the diversification of its portfolio to avoid unwanted credit risk concentrations. Maximum exposure guidelines are in place relating to the exposures to any individual counterparty. These permit higher exposures to higher-rated borrowers than to lower-rated borrowers. They also distinguish between types of counterparty, for example, between sovereign governments, banks and corporations. Excesses are considered individually through the credit function as they arise and are reviewed regularly. Collateral, security and parental guarantees provided by Barclays Bank PLC are an important mitigation of credit risk. The Bank routinely obtains non tangible collateral and security typically by way of intergroup and / or third party guarantees, where possible supported by negative pledges which prohibit the granting of tangible security to other lenders / creditors. The Bank ensures that any collateral held is sufficiently liquid, legally effective, enforceable and regularly reassessed. All exposures afforded to the property sector are fully secured by property collateral. As at 31 December 2017 approximately 37% (2016: 35%) of the maximum exposures to Loans and advances to customers is mitigated by cash, land and property, debentures, other collateral and guarantees held by the Bank. Valuation of the collateral and security taken is within set Bank parameters which are reviewed for appropriateness on a regular basis. Before reliance is placed on third party protection, a credit assessment is undertaken of the proposed protection. Security structures and legal covenants are subject to regular review, at least annually, to ensure that they remain fit for purpose and remain consistent with accepted local market practice. 42 # BARCLAYS BANK IRELAND PLC ## NOTES TO THE FINANCIAL STATEMENTS ## Industrial concentration of credit risk A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The Bank implements limits on concentrations in order to mitigate the risk. An analysis of the Bank's credit risk concentration by industrial sector is set out below. | As at 31 December 2017 | Government & central banks €'000 | Financial services €'000 | Construction & property €'000 | Agriculture, manufacturing & wholesale & retail trade €'000 | Transport, postal & communications and business & other services €'000 | Energy & water €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | --- | --- | | **On balance sheet:** | | | | | | | | | Cash and balances at central bank | 528,265 | - | - | - | - | - | 528,265 | | Loans and advances to banks | - | 1,392,480 | - | - | - | - | 1,392,480 | | Loans and advances to customers | - | 7,514 | 450,142 | 440,625 | 208,205 | 180,860 | 1,287,346 | | Derivative financial instruments | - | 1,940 | - | 630 | - | - | 2,570 | | Other Assets | - | 5,040 | 242 | 514 | 149 | - | 5,945 | | **Off balance sheet:** | | | | | | | | | Guarantees and letters of credit | - | 142,849 | 12,668 | 17,606 | 88,832 | 40,892 | 302,847 | | Other contingent liabilities | - | 6,941 | 1,070 | 62,227 | 7,209 | 11,952 | 89,399 | | Undrawn commitments | 25,000 | 9,480 | 148,666 | 541,465 | 292,159 | 28,357 | 1,045,127 | | **Total** | **553,265** | **1,566,244** | **612,788** | **1,063,067** | **598,554** | **262,061** | **4,653,979** | | As at 31 December 2016 | Government & central banks €'000 | Financial services €'000 | Construction & property €'000 | Agriculture, manufacturing & wholesale & retail trade €'000 | Transport, postal & communications and business & other services €'000 | Energy & water €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | --- | --- | | **On balance sheet:** | | | | | | | | | Cash and balances at central bank | 523,792 | - | - | - | - | - | 523,792 | | Loans and advances to banks | - | 835,684 | - | - | - | - | 835,684 | | Loans and advances to customers | - | 17,709 | 399,694 | 565,731 | 264,781 | 251,530 | 1,499,445 | | Derivative financial instruments | - | 8,979 | - | 928 | - | - | 9,907 | | Other Assets | - | 633,179 | 33 | 454 | 16 | 117 | 633,799 | | **Off balance sheet:** | | | | | | | | | Guarantees and letters of credit | - | 129,823 | 11,425 | 17,131 | 66,974 | 22,303 | 247,656 | | Other contingent liabilities | - | 3,662 | 465 | 78,263 | 4,134 | 12,003 | 98,527 | | Undrawn commitments | - | 69,855 | 131,440 | 530,187 | 217,278 | 25,133 | 973,893 | | **Total** | **523,792** | **1,698,891** | **543,057** | **1,192,694** | **553,183** | **311,086** | **4,822,703** | ## Analysis of problem loans ### Loans and advances past due but not impaired The following tables present an age analysis of loans and advances that are past due but not impaired and loans that are assessed as impaired. These loans are reflected in the balance sheet credit quality tables as being Higher Risk. As at 31 December 2017 and 31 December 2016 there were no financial assets past due and not individually impaired. 43 ## Page 46 missing RECITATION and PyMuPDF returned no text # BARCLAYS BANK IRELAND PLC ## NOTES TO THE FINANCIAL STATEMENTS The VaR model in some instances may not appropriately measure some market risk exposures, especially for market moves that are not directly observable via prices. When reviewing VaR estimates, the following considerations are taken into account: - the historical simulation uses the most recent two years of past data to generate possible future market moves, but the past may not be a good indicator of the future. - the one-day time horizon may not fully capture the market risk of positions that cannot be closed out or hedged within one day. - VaR is based on positions as at close of business and consequently, it is not an appropriate measure for intra-day risk arising from a position bought and sold on the same day. - VaR does not indicate the potential loss beyond the VaR confidence level. | 31 December 2017 | Less than 3 months €'000 | 3-6 Months €'000 | 6 months to 1 year €'000 | 1-5 years €'000 | Greater than 5 years €'000 | Non-interest bearing €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | --- | --- | | **Assets** | | | | | | | | | Cash and balances at central bank | 528,265 | - | - | - | - | - | 528,265 | | Loans and advances to banks | 1,300,535 | 91,945 | - | - | - | - | 1,392,480 | | Loans and advances to customers | 1,231,487 | 55,859 | - | - | - | - | 1,287,346 | | Derivative financial instruments | - | - | - | - | - | 2,570 | 2,570 | | Property, plant and equipment | - | - | - | - | - | 15 | 15 | | Intangible assets | - | - | - | - | - | 118 | 118 | | Deferred income tax assets | - | - | - | - | - | 940 | 940 | | Other assets | - | - | - | - | - | 5,945 | 5,945 | | **Total assets** | **3,060,287** | **147,804** | **-** | **-** | **-** | **9,588** | **3,217,679** | | **Liabilities** | | | | | | | | | Deposits from banks | (67,298) | - | - | - | - | - | (67,298) | | Deposits from customers | (1,058,664) | (275,469) | (91,698) | - | - | (1,326,860) | (2,752,691) | | Derivative financial instruments | - | - | - | - | - | (2,519) | (2,519) | | Retirement benefit obligations | - | - | - | - | - | (7,521) | (7,521) | | Current income tax liabilities | - | - | - | - | - | (16) | (16) | | Other liabilities | - | - | - | - | - | (5,451) | (5,451) | | Subordinated debt | (50,049) | - | - | - | - | - | (50,049) | | **Total liabilities** | **(1,176,011)** | **(275,469)** | **(91,698)** | **-** | **-** | **(1,342,367)** | **(2,885,545)** | | **Equity** | **-** | **-** | **-** | **-** | **-** | **(332,134)** | **(332,134)** | | **Total equity and liabilities** | **(1,176,011)** | **(275,469)** | **(91,698)** | **-** | **-** | **(1,674,501)** | **(3,217,679)** | | **Interest rate repricing gap** | **1,884,276** | **(127,665)** | **(91,698)** | **-** | **-** | **(1,664,913)** | **-** | | **Cumulative gap** | **1,884,276** | **1,756,611** | **1,664,913** | **1,664,913** | **1,664,913** | | | 45 # BARCLAYS BANK IRELAND PLC ## NOTES TO THE FINANCIAL STATEMENTS | 31 December 2016 | Less than 3 months €'000 | 3-6 Months €'000 | 6 months to 1 year €'000 | 1-5 years €'000 | Greater than 5 years €'000 | Non-Interest bearing €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | --- | --- | | **Assets** | | | | | | | | | Cash and balances at central bank | 523,792 | - | - | - | - | - | 523,792 | | Loans and advances to banks | 835,684 | - | - | - | - | - | 835,684 | | Loans and advances to customers | 1,442,095 | 57,350 | - | - | - | - | 1,499,445 | | Derivative financial instruments | - | - | - | - | - | 9,907 | 9,907 | | Current income tax assets | - | - | - | - | - | 390 | 390 | | Property, plant and equipment | - | - | - | - | - | 19 | 19 | | Intangible assets | - | - | - | - | - | 396 | 396 | | Deferred income tax assets | - | - | - | - | - | 1,932 | 1,932 | | Other assets | - | - | - | - | - | 633,799 | 633,799 | | **Total assets** | **2,801,571** | **57,350** | **-** | **-** | **-** | **646,443** | **3,505,364** | | **Liabilities** | | | | | | | | | Deposits from banks | (56,390) | - | - | - | - | - | (56,390) | | Deposits from customers | (711,563) | (276,217) | (204,334) | - | - | (1,190,973) | (2,383,087) | | Derivative financial instruments | - | - | - | - | - | (9,826) | (9,826) | | Retirement benefit obligations | - | - | - | - | - | (12,071) | (12,071) | | Provisions | - | - | - | - | - | (3,387) | (3,387) | | Other liabilities | - | - | - | - | - | (637,503) | (637,503) | | Subordinated debt | (50,056) | - | - | - | - | - | (50,056) | | **Total liabilities** | **(818,009)** | **(276,217)** | **(204,334)** | **-** | **-** | **(1,853,760)** | **(3,152,320)** | | **Equity** | - | - | - | - | - | **(353,044)** | **(353,044)** | | **Total equity and liabilities** | **(818,009)** | **(276,217)** | **(204,334)** | **-** | **-** | **(2,206,804)** | **(3,505,364)** | | **Interest rate repricing gap** | **1,983,562** | **(218,867)** | **(204,334)** | **-** | **-** | **(1,560,361)** | **-** | | **Cumulative gap** | **1,983,562** | **1,764,695** | **1,560,361** | **1,560,361** | **1,560,361** | **-** | **-** | 46 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## Foreign currency risk The Bank is exposed to foreign exchange risk represented by exposures on assets and liabilities, denominated in currencies other than the functional currency of the Bank. The Bank's risk management policies prevent the holding of significant open positions in foreign currencies. The below tables summarise the Bank's exposure to foreign currencies at 31 December 2017 and 31 December 2016: | 31 December 2017 | Euro €'000 | British pounds £'000 | US dollars €'000 | Other €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | | **Assets** | | | | | | | Cash and balances at central banks | 528,265 | - | - | - | 528,265 | | Loans and advances to banks | 845,494 | 97,762 | 434,724 | 14,500 | 1,392,480 | | Loans and advances to customers | 1,134,718 | 121,627 | 28,518 | 2,483 | 1,287,346 | | Derivative financial instruments | 2,567 | 3 | - | - | 2,570 | | Other assets | 6,966 | 52 | - | - | 7,018 | | **Total assets** | **2,518,010** | **219,444** | **463,242** | **16,983** | **3,217,679** | | **Liabilities** | | | | | | | Deposits from banks | 65,325 | 20 | 340 | 1,613 | 67,298 | | Deposits from customers | 2,055,804 | 219,067 | 442,663 | 15,157 | 2,752,691 | | Derivative financial instruments | 2,516 | 3 | - | - | 2,519 | | Retirement benefit obligations | 7,521 | - | - | - | 7,521 | | Current income tax liabilities | 16 | - | - | - | 16 | | Other liabilities | 5,321 | 108 | 22 | - | 5,451 | | Subordinated debt | 50,049 | - | - | - | 50,049 | | **Total liabilities** | **2,186,552** | **219,198** | **463,025** | **16,770** | **2,885,545** | | **Equity** | **332,134** | **-** | **-** | **-** | **332,134** | | **Total equity and liabilities** | **2,518,686** | **219,198** | **463,025** | **16,770** | **3,217,679** | | 31 December 2016 | Euro €'000 | British pounds £'000 | US dollars €'000 | Other €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | | **Assets** | | | | | | | Cash and balances at central banks | 523,792 | - | - | - | 523,792 | | Loans and advances to banks | 471,438 | 144,407 | 190,318 | 29,521 | 835,684 | | Loans and advances to customers | 1,232,556 | 109,973 | 128,038 | 28,878 | 1,499,445 | | Derivative financial instruments | 9,903 | 4 | - | - | 9,907 | | Current income tax assets | 390 | - | - | - | 390 | | Other assets | 4,938 | 631,208 | - | - | 636,146 | | **Total assets** | **2,243,017** | **885,592** | **318,356** | **58,399** | **3,505,364** | | **Liabilities** | | | | | | | Deposits from banks | 31,850 | 25 | 138 | 24,377 | 56,390 | | Deposits from customers | 1,778,437 | 253,045 | 317,859 | 33,746 | 2,383,087 | | Derivative financial instruments | 9,824 | 2 | - | - | 9,826 | | Retirement benefit obligations | 12,071 | - | - | - | 12,071 | | Provisions | 3,387 | - | - | - | 3,387 | | Other liabilities | 5,205 | 632,237 | 29 | 32 | 637,503 | | Subordinated debt | 50,056 | - | - | - | 50,056 | | **Total liabilities** | **1,890,830** | **885,309** | **318,026** | **58,155** | **3,152,320** | | **Equity** | **353,044** | **-** | **-** | **-** | **353,044** | | **Total equity and liabilities** | **2,243,874** | **885,309** | **318,026** | **58,155** | **3,505,364** | 47 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS (c) Liquidity risk Liquidity risk is the risk that the Bank, although solvent, either does not have sufficient financial resources available to meet its obligations as they fall due, or can secure such resources only at excessive cost. This also results in the Bank's inability to meet regulatory liquidity requirements. This risk is inherent in all banking operations and can be affected by a range of Bank-specific and market-wide events. The liquidity risk management process ensures that the Bank is able to honour all of its financial commitments as they fall due. The need to monitor, manage and control intraday liquidity is recognised by the Bank as a mission critical process: any failure to meet specific intraday commitments would have significant consequences. The Bank holds high quality liquid assets that can be utilised against any unforeseen interruption to cash flow. An important source of structural liquidity is provided by our core corporate deposits, mainly current accounts and savings accounts. Although current accounts are repayable on demand and savings accounts at short notice, the Bank's broad base of customer accounts helps to protect against unexpected fluctuations. Such accounts help to form a stable funding base for the Bank's operations and liquidity needs. Stress testing is undertaken to assess and plan for the impact of various scenarios which may put the Bank's liquidity at risk. The Bank performs a range of stress tests on the net funding position and projected cash flows. These stress scenarios include Bank-specific scenarios such as an unexpected rating downgrade, and external scenarios such as an economic recession. The output informs both the liquidity mismatch limits and the Bank's contingency planning plan. The ability to raise funds is impacted by Barclays Group. The funding impact of a credit downgrade is regularly estimated. Whilst the impact of a single downgrade may affect the price at which funding is available, the effect on liquidity is not considered significant in overall terms. The table below presents the cash flows payable by the Bank under financial liabilities by remaining contractual maturities at the balance sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows of all financial liabilities (i.e. nominal values). The balances in the below table do not agree directly to the balances in the balance sheet as the table incorporates all cash flows, on an undiscounted basis, related to both principal as well as those associated with all future coupon payments. The Bank is subject to negative interest rates on the Deposits from customers and these future cash flows have been offset against this balance. | As at 31 December 2017 | On demand €'000 | Within 3 Months €'000 | 3 months to 1 year €'000 | 1-5 years €'000 | Over 5 years €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | --- | | *Financial liabilities:* | | | | | | | | Deposits from banks | (65,182) | (502) | (1,619) | - | - | (67,303) | | Deposits from customers | (1,550,021) | (835,742) | (367,826) | - | - | (2,753,589) | | Derivative financial instruments - pay leg | - | (76,608) | (66,135) | (16,539) | - | (159,282) | | Derivative financial instruments - receive leg | - | 76,624 | 66,164 | 16,545 | - | 159,333 | | Other liabilities | - | (5,451) | - | - | - | (5,451) | | Subordinated debt | - | (313) | (957) | (5,083) | (51,218) | (57,571) | | Total cash outflows | (1,615,203) | (841,992) | (370,373) | (5,077) | (51,218) | (2,883,863) | | As at 31 December 2016 | On demand €'000 | Within 3 Months €'000 | 3 months to 1 year €'000 | 1-5 years €'000 | Over 5 years €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | --- | | *Financial liabilities:* | | | | | | | | Deposits from banks | (31,510) | (24,848) | - | - | - | (56,358) | | Deposits from customers | (1,380,765) | (522,035) | (481,087) | - | - | (2,383,887) | | Derivative financial instruments - pay leg | - | (126,944) | (219,883) | (9,995) | - | (356,822) | | Derivative financial instruments - receive leg | - | 126,972 | 219,938 | 9,993 | - | 356,903 | | Other liabilities | - | (637,503) | - | - | - | (637,503) | | Subordinated debt | - | (315) | (963) | (5,114) | (52,503) | (58,895) | | Total cash outflows | (1,412,275) | (1,184,673) | (481,995) | (5,116) | (52,503) | (3,136,562) | 48 BARCLAYS BANK PLC NOTES TO THE FINANCIAL STATEMENTS ## Maturity analysis of off-balance sheet commitments given The table below presents the maturity split of the Bank's off balance sheet commitments given at the balance sheet date. The amounts disclosed in the table are the undiscounted cash flows (i.e. nominal values) on the basis of earliest opportunity at which they are available. | As at 31 December 2017 | On demand €'000 | Within 3 Months €'000 | 3 months to 1 year €'000 | 1-5 years €'000 | Over 5 years €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | --- | | **Off balance sheet:** | | | | | | | | Guarantees and letters of credit | 302,847 | - | - | - | - | 302,847 | | Other contingent liabilities | 89,399 | - | - | - | - | 89,399 | | Commitments | 985,027 | - | 5,000 | 55,100 | - | 1,045,127 | | **Total cash outflows** | **1,377,273** | **-** | **5,000** | **55,100** | **-** | **1,437,373** | | As at 31 December 2016 | On demand €'000 | Within 3 Months €'000 | 3 months to 1 year €'000 | 1-5 years €'000 | Over 5 years €'000 | Total €'000 | | --- | --- | --- | --- | --- | --- | --- | | **Off balance sheet:** | | | | | | | | Guarantees and letters of credit | 247,656 | - | - | - | - | 247,656 | | Other contingent liabilities | 98,527 | - | - | - | - | 98,527 | | Commitments | 973,893 | - | - | - | - | 973,893 | | **Total cash outflows** | **1,320,076** | **-** | **-** | **-** | **-** | **1,320,076** | ## (d) Operational risk Operational risk, which is inherent in all business activities, is the potential for financial and reputational loss arising from failures in internal controls, operational processes or the systems that support them. The Bank manages this risk through appropriate risk controls and loss mitigation actions. These actions include a balance of policies, procedures, internal controls and business continuity arrangements, including taking into account cyber security considerations. ## (e) Fair value Fair value refers to the price that would be received to sell an asset or the price that would be paid to transfer a liability in an arm's length transaction with a willing counterparty, which may be an observable market price or, where there is no quoted price for the instrument, may be an estimated based on available market data. IFRS 13 Fair Value Measurement requires an entity to classify its assets and liabilities according to a hierarchy that reflects the observability of significant market inputs. The three levels of the value hierarchy are defined below: ## Quoted market prices - Level 1 Assets and liabilities are classified as Level 1 if their value is observable in an active market. Such instruments are valued by reference to unadjusted quoted prices for identical assets or liabilities in active markets where the quoted price is readily available, and the price represents actual and regularly occurring market transactions. An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis. ## Valuation technique using observable inputs - Level 2 Assets and liabilities classified as Level 2 have been valued using models whose inputs are observable in an active market. Valuations based on observable inputs include assets and liabilities such as swaps and forwards which are valued using market standard pricing techniques, and options that are commonly traded in markets where all the inputs to the market standard pricing models are observable. ## Valuation technique using significant unobservable inputs - Level 3 Assets and liabilities are classified as Level 3 if their valuation incorporates significant inputs that are not based on observable market data (unobservable inputs). A valuation input is considered observable if it can be directly observed from transactions in an active market, or if there is compelling external evidence demonstrating an executable exit price. Unobservable input levels are generally determined via reference to observable inputs, historical observations or using other analytical techniques. 49 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS The following tables show the Bank's assets and liabilities that are held at fair value disaggregated by valuation technique (fair value hierarchy) and balance sheet classification. | As at 31 December 2017 | Quoted Market prices (Level 1) €'000 | Observable inputs (Level 2) €'000 | Significant unobservable inputs (Level 3) €'000 | Total €'000 | | --- | --- | --- | --- | --- | | **Assets** | | | | | | Derivative financial instruments | - | 2,570 | - | 2,570 | | **Total assets** | **-** | **2,570** | **-** | **2,570** | | | | | | | | **Liabilities** | | | | | | Derivative financial instruments | - | 2,519 | - | 2,519 | | **Total liabilities** | **-** | **2,519** | **-** | **2,519** | | As at 31 December 2016 | Quoted Market prices (Level 1) €'000 | Observable inputs (Level 2) €'000 | Significant unobservable inputs (Level 3) €'000 | Total €'000 | | --- | --- | --- | --- | --- | | **Assets** | | | | | | Derivative financial instruments | - | 9,907 | - | 9,907 | | **Total assets** | **-** | **9,907** | **-** | **9,907** | | | | | | | | **Liabilities** | | | | | | Derivative financial instruments | - | 9,826 | - | 9,826 | | **Total liabilities** | **-** | **9,826** | **-** | **9,826** | ## Derivative financial instruments These are FX forward contracts linked to the foreign exchange (FX) market. All are traded as OTC derivatives and observable inputs to valuation are FX forward rates. The following tables summarises the fair value of financial assets and liabilities measured at amortised cost on the Bank's balance sheet: | As at 31 December 2017 | Carrying value €'000 | Fair Value €'000 | Quoted Market prices (Level 1) €'000 | Observable inputs (Level 2) €'000 | Significant unobservable inputs (Level 3) €'000 | | --- | --- | --- | --- | --- | --- | | **Assets** | | | | | | | **Loans and receivables** | | | | | | | Cash and balances at central bank | 528,265 | 528,265 | - | 528,265 | - | | Loans and advances to banks | 1,392,480 | 1,392,480 | - | 1,392,480 | - | | Loans and advances to customers | 1,287,346 | 1,271,125 | - | - | 1,271,125 | | Other assets | 5,945 | 5,945 | - | 5,945 | - | | **Total assets** | **3,214,036** | **3,197,815** | **-** | **1,926,690** | **1,271,125** | | | | | | | | | **Liabilities** | | | | | | | **Other financial liabilities** | | | | | | | Deposits from banks | 67,298 | 67,298 | - | 67,298 | - | | Deposits from customers | 2,752,691 | 2,752,691 | - | 2,752,691 | - | | Other liabilities | 5,451 | 5,451 | - | 5,451 | - | | Subordinated debt | 50,049 | 50,049 | - | - | 50,049 | | **Total liabilities** | **2,875,489** | **2,875,489** | **-** | **2,825,440** | **50,049** | 50 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS | As at 31 December 2016 | Carrying value €'000 | Fair Value €'000 | Quoted Market prices (Level 1) €'000 | Observable inputs (Level 2) €'000 | Significant unobservable inputs (Level 3) €'000 | | --- | --- | --- | --- | --- | --- | | **Assets** | | | | | | | **Loans and receivables** | | | | | | | Cash and balances at central bank | 523,792 | 523,792 | - | 523,792 | - | | Loans and advances to banks | 835,684 | 835,684 | - | 835,684 | - | | Loans and advances to customers | 1,499,445 | 1,481,452 | - | - | 1,481,452 | | Other assets | 633,799 | 633,799 | - | 633,799 | - | | **Total assets** | **3,492,720** | **3,474,727** | **-** | **1,993,275** | **1,481,452** | | | | | | | | | **Liabilities** | | | | | | | **Other financial liabilities** | | | | | | | Deposits from banks | 56,390 | 56,390 | - | 56,390 | - | | Deposits from customers | 2,383,087 | 2,383,087 | - | 2,383,087 | - | | Other liabilities | 637,503 | 637,503 | - | 637,503 | - | | Subordinated debt | 50,056 | 50,056 | - | - | 50,056 | | **Total liabilities** | **3,127,036** | **3,127,036** | **-** | **3,076,980** | **50,056** | The fair value is an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As a wide range of valuation techniques are available, it may not be appropriate to directly compare this fair value information to independent market or other financial institutions. Different valuation methodologies and assumptions can have a significant impact on fair values which are based on unobservable inputs. ## Loans and advances to banks The fair value of loans and advances, for the purpose of this disclosure, is derived from discounting expected cash flows in a way that reflects the current market price for lending to issuers of similar credit quality. Where market data or credit information on the underlying borrowers is unavailable, a number of proxy/extrapolation techniques are employed to determine the appropriate discount rates. There is minimal difference between the fair value and carrying amount due to the short term nature of the lending (i.e. predominantly overnight deposits) and the high credit quality of counterparties. ## Loans and advances to customers The fair value of loans and advances to customers, for the purpose of this disclosure, is derived from discounting expected cash flows in a way that reflects the current market price for lending to issuers of similar credit quality. The fair value of corporate loans is calculated by the use of discounted cash flow techniques where the gross loan values are discounted at a rate of difference between contractual margins and hurdle rates or spreads where Barclays charges a margin over LIBOR depending on credit quality and loss given default and years to maturity. ## Deposits from banks and customers In many cases, the fair value disclosed approximates carrying value because the instruments are short term in nature or have interest rates that reprice frequently such as customer accounts and other deposits and short term debt securities. The fair value for deposits with longer term maturities such as time deposits, are estimated using discounted cash flows applying either market rates or current rates for deposits of similar remaining maturities. Consequently the fair value discount is minimal. ## Subordinated liabilities Fair value for dated non-convertible loan capital are based on significant inputs that are not based on observable market data (unobservable inputs), being determined via reference to quoted market rates for instruments issued with similar terms, being determined on an agreed but not observable spread over the three month Euribor rate. 51 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## (f) Capital Management (unaudited) The Bank's capital consists of the sum of the following elements: - Tier 1 capital (all qualifies as Common Equity Tier 1 (CET1)), which includes ordinary share capital, retained earnings and a capital contribution. - Tier 2 capital in the form of sub-ordinated debt. | Tier 1 | 2017 €'000 | 2016 €'000 | | --- | --- | --- | | Ordinary Share Capital | 138,446 | 138,446 | | Capital Contribution | 121,000 | 121,000 | | Retained Earnings | 72,688 | 93,598 | | **Total Tier 1 Capital** | **332,134** | **353,044** | | | | | | **Tier 2** | | | | Subordinated Debt | 50,049 | 50,056 | | **Total Tier 2 Capital** | **50,049** | **50,056** | The above balance sheet capital positions are not equal to the regulatory capital positions for the same end periods due to regulatory capital adjustments, such as the exclusion of current year profits until audited. ## 31. Related party disclosures The holding company of the Bank is Barclays Bank PLC, which holds 100% of the issued ordinary shares of the Bank. The ultimate controlling party of the Bank is Barclays PLC. ## Related party transactions ## Barclays Group 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 or operation decisions, or one party controls both. The definition includes the holding and ultimate holding company and fellow subsidiaries, associates, joint ventures and pension schemes of the Barclays Group. The Bank has a small number of large exposures which are in excess of 25% of its capital base relevant for limits to large exposures as detailed in Regulation (EU) No. 575/2013 ('The Capital Requirements Regulation'). On 31st July 2012 Barclays Bank PLC provided an irrevocable and unconditional pari-passu guarantee amount of €75 million to cover any excesses above the 25% limit. The guarantee remains in place and Barclays Bank PLC has provided a number of amended and restated guarantees to provide further credit risk mitigation for new and increased loan facilities. As at 31 December 2017 the guarantee limit was €400 million. This was reduced to €300 million on 4 January 2018. Barclays Bank PLC provided an additional parental guarantee for GBP£1.6 billion on 1 January 2015 specifically to cover the receivable arising from its VISA business to ensure compliance with large exposures rules at all times. This is no longer in place as the underlying activity is now conducted by Barclaycard International Payments Ltd. 52 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS Amounts included in the financial statements, in aggregate, by category of related party transactions carried out at "arm's length basis" are as follows: | For the financial year ended and as at 31 December 2017 | Parent company €'000 | Other group companies €'000 | Defined benefit scheme €'000 | Total €'000 | | --- | --- | --- | --- | --- | | Net interest income | 5,500 | - | - | 5,500 | | Fee, commission & other income | 6,564 | - | - | 6,564 | | General and administrative expenses | (2,543) | - | (21) | (2,564) | | Provisions | - | - | - | - | | Fee and other expenses | (4,504) | - | (305) | (4,809) | | | **5,017** | **-** | **(326)** | **4,691** | | | | | | | | Loans and advances to banks | 1,389,450 | - | 2,500 | 1,391,950 | | Derivative financial instruments | 1,939 | - | - | 1,939 | | Other assets | 1,483 | - | - | 1,483 | | Deposits by banks | (1,613) | - | - | (1,613) | | Deposits by customers | - | - | (608) | (608) | | Derivative financial instruments | (618) | - | - | (618) | | Retirement benefit obligations | - | - | (7,521) | (7,521) | | Other liabilities | (803) | - | - | (803) | | Subordinated debt | (50,049) | - | - | (50,049) | | | **1,339,789** | **-** | **(5,629)** | **1,334,160** | | For the financial year ended and as at 31 December 2016 | Parent company €'000 | Other group companies €'000 | Defined benefit scheme €'000 | Total €'000 | | --- | --- | --- | --- | --- | | Net interest income | 2,373 | (76) | - | 2,297 | | Fee, commission & other income | 7,203 | 180 | - | 7,383 | | General and administrative expenses | (2,480) | - | (80) | (2,560) | | Provisions | - | - | (3,387) | (3,387) | | Fee and other expenses | (4,479) | - | (261) | (4,740) | | | **2,617** | **104** | **(3,728)** | **(1,007)** | | | | | | | | Loans and advances to banks | 742,362 | - | 2,000 | 744,362 | | Derivative financial instruments | 8,414 | - | - | 8,414 | | Other assets | 99,993 | 85 | - | 100,078 | | Deposits by banks | (24,366) | - | - | (24,366) | | Deposits by customers | - | (36,870) | (1,314) | (38,184) | | Derivative financial instruments | (1,609) | - | - | (1,609) | | Retirement benefit obligations | - | - | (12,071) | (12,071) | | Provisions | - | - | (3,387) | (3,387) | | Other Liabilities | (632,780) | - | - | (632,780) | | Subordinated debt | (50,056) | - | - | (50,056) | | | **141,958** | **(36,785)** | **(14,772)** | **90,401** | 53 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## Key Management Personnel The Bank's Key Management Personnel, and persons connected with them, are also considered to be related parties for disclosure purposes. Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Bank (directly or indirectly) and comprise the Directors of the Bank and certain pre-approved control functions. | | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | --- | --- | --- | | Short-term employee benefits | 1,958 | 1,791 | | Post-employment benefits | 117 | 116 | | Other long-term benefits | - | - | | Termination benefits | - | - | | Share-based payment | - | - | | | **2,075** | **1,907** | There were no loans, deposits or commitments with Key Management Personnel during the financial year ended or as at 31 December 2017 (financial year ended or as at 31 December 2016: none). ## Directors' remuneration | | Year ended 31 December 2017 €'000 | Year ended 31 December 2016 €'000 | | --- | --- | --- | | **Directors remuneration** | | | | - For services as directors | - | - | | - For other services | 1,267 | 1,171 | | Gain on exercise of share options during the financial year | - | - | | Benefits under long-term incentive schemes | - | - | | Contributions to retirement benefits schemes: | | | | - Defined contribution | 63 | 69 | | - Defined benefit | - | - | | Compensation for loss of office paid by the Bank and other termination payments | - | - | | Fees paid to non-executive directors | 309 | 170 | | | **1,639** | **1,410** | As at 31 December 2017, there were no Directors accruing benefits under a defined benefit scheme (2016: €nil). 54 BARCLAYS BANK IRELAND PLC NOTES TO THE FINANCIAL STATEMENTS ## 32. Post balance sheet events In February 2018, in line with the Bank's plans to serve Barclays European customers, the Bank signed a twenty-year lease for additional office space at One Molesworth Street, Dublin 2. Other Assets (Note 19) as at 31 December 2017, includes €2.7m in costs relating to the new lease that will be released to the Income Statement over the lease term. The large exposures guarantee limit (Note 31) was reduced from €400 million to €300 million on 4 January 2018. ## 33. Approval of financial statements The Board of Directors approved the financial statements on 23 March 2018. 55