BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual

Report for the year ended 31 December 2023

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

Content

page

Report of the Council and the Board

3 – 5

Council and Board of the Bank

Statement of the Management’s responsibility

The Group’s Consolidated and the Bank’s Separate Financial Statements for the year

ended 31 December 2023

The Group’s Consolidated and the Bank’s Separate Income Statements

The Group’s Consolidated and the Bank’s Separate Statements of Other

Comprehensive Income

The Group’s Consolidated and the Bank’s Separate Statements of Financial

Position

10 – 11

The Group’s Consolidated Statement of Changes in the Shareholders’ Equity

The Bank’s Separate Statement of Changes in the Shareholders’ Equity

The Group’s Consolidated and the Bank’s Separate Statements of Cash Flows

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

15 – 94

Independent Auditor’s Report

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

Report of the Council and the Board

BluOr Bank AS (Bank) is a joint–stock company established on 22 June 2001 and entered into the

bank’s address is Smilšu iela 6, Rīga, LV–1050, Republic of Latvia. On 8 June 2001, the Bank received

a license for conducting the activities of a credit institution, which was re-registered on 28 June 2011,

on 14 September 2017 and on 22 March 2022 – license No. 06.01.05.002/543 at the license register of

the Latvijas Banka. The Bank operates in accordance with the applicable legislation of the Republic of

Latvia and the European Union.

The Group consists of the Bank, which is a Parent company of the Group and a number of subsidiaries.

Those were set up to manage repossessed collaterals and real estate property.

BluOr Bank continues to grow steadily and strengthens its position in the financial

market

BluOr Bank’s activities in 2023 are characterized by stability and targeted development in

accordance with the Bank’s business model and strategic goals.

The Bank completed 2023 with a profit of EUR 12.6 million, which is 20.1% more than in

2022. Net operating income of the Bank during the reporting period amounted to

EUR 37.5 million. The amount of the Bank’s equity capital is EUR 84.7 million. Total assets

of the Bank increased by 35% and amounted to EUR 924 million by the end of 2023.

At the end of 2023, the Bank’s liquidity coverage ratio reached 176.6%, the capital adequacy

ratio was 16.19% (Common Equity Tier 1 adequacy ratio 14.97%). Other key indicators of

the Bank’s financial performance are also successful: return on equity (ROE) – 14.68% and

return on assets (ROA) – 1.67%.

Considering the important role of lending in the growth of the national economy of Latvia,

BluOr Bank, in accordance with its business strategy, continued to provide financing to

domestic enterprises as a priority in 2023, as evidenced by a significant increase in lending.

During the reporting period, the Bank has signed new loan agreements worth

EUR 227 million, which is 51% more than originally planned. Corporate lending has doubled

compared to 2022: it has increased by 118%.

During the reporting period, the Bank provided support for the growth of enterprises in

various sectors and actively supported enterprises in industries such as manufacturing,

agriculture and food production. In 2023, the Bank’s loan portfolio again included projects to

reduce environmental impact and sustainability projects focused on green energy that are

receiving increasing attention in the global context.

The total loan portfolio has increased by 38% over the past year, reaching EUR 503 million at

the end of the reporting period.

Considering the importance of maintaining the growth potential of small and medium-sized

enterprises (SMEs) in the context of the Latvian economy, the Bank continued to ensure the

availability of financial resources for the mentioned segment of enterprises and business

promotion not only in Riga, but also in several regions of Latvia. In 2023, lending to SMEs

and microenterprises accounted for 80% of the total volume of loans issued by the Bank.

Several of these projects were implemented in successful cooperation with the state-owned

development finance institution ALTUM.

In 2023, when multiple increases in the EURIBOR rate had a significant impact on the

companies’ business, the Bank, within its support measures, offered solutions that would help

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

Report of the Council and the Board

clients adapt to the market situation, thereby demonstrating that each client is important to

the Bank and that it is interested in customer business continuity.

As a bank founded by Latvian entrepreneurs, BluOr Bank focuses on long-term relationships

with its clients, therefore it continuously improves and develops existing financial services in

accordance with customer needs. During the reporting period, a number of new products were

introduced for entrepreneurs as well as the remote identification system was improved,

providing even more convenient, secure and efficient cooperation between entrepreneurs and

the Bank.

BluOr Bank successfully continues to implement its business strategy, which is focused on

providing services to Latvian corporate clients. As a result, for several years there has been a

steady increase in the number of the Bank’s clients – Latvian legal entities: during the

reporting period, their number has increased by another 19.5%. In turn, 95% of BluOr Bank’s

total client base consists of clients from Latvia, the Baltic States and Europe.

During the reporting period, the Bank has closely followed economic developments both in

Latvia and internationally. Assessing the current market situation, BluOr Bank raised the term

deposit rates several times during 2023, keeping them in top positions in the overall market

valuation.

For several years, the Bank has been successfully cooperating with a number of European

fintech companies, attracting deposits from countries such as Germany, Austria, the

Netherlands and Spain. These deposits are significant additional investments in the economy

of the state of Latvia – for the Bank this means the availability of additional resources and

diversification of resources, and for enterprises – additional funds for development. As part of

this cooperation during the reporting period, technological integration has been developed,

which has provided an opportunity to offer new short-term deposits on even more favourable

terms for clients.

In 2023, the Bank actively developed its e-commerce area of activity and improved the online

payment function for settlements via the Internet Bank (Bankpay). In the reporting period, the

total turnover of Bankpay services, compared to the previous year, has grown almost tenfold,

exceeding EUR 10 million. Thanks to the increase in turnover, the number of unique

transactions using Bankpay has also increased tenfold. The total e-commerce revenue has

grown eight times compared to the previous year, which confirms the correctness of the

service development strategy. Since last year, BluOr Bank is one of the few banks that

provides support for e-commerce customers in the much-needed 24/7 mode, which has

already been highly appreciated by clients.

Last December, BluOr Bank raised financial resources in the amount of almost EUR 5 million

as a result of the issuance of Additional Tier 1 (AT1) bonds. Attracting additional capital is

one of the prerequisites for the Bank’s further growth, which, in turn, allows it to continue

providing a wider range of financial services to companies whose business development is an

essential driving force for the entire national economy.

As sanctions imposed on Russia, Belarus and other countries intensify, the Bank maintains a

high priority status for all risk management and operational compliance issues. It

continuously improves its internal processes and information systems in the field of

prevention of money laundering, terrorist financing and proliferation, and sanctions risk

management, while improving the client transaction monitoring and due diligence processes.

BluOr Bank has included additional sustainability objectives in its operational strategy, in line

with the environmental, social and governance (ESG) criteria. These include a clear definition

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

Report of the Council and the Board

of the requirements for projects that the bank is ready to support, considering global trends in

achieving climate protection goals. Thus, the bank also sets out clear basic operating

principles for its clients, companies and organisations, which includes environmentally

friendly practices, social responsibility and good governance, promoting sustainable

development and a positive impact on society and the environment.

In 2024, BluOr Bank will continue to provide financing to Latvian enterprises as a priority

area of activity, as well as maintain the development and implementation of products and

services promoting the business development of companies.

As at issuance of the annual report the Board proposes to distribute part of the profit amounting to

EUR 7 million as dividends and the rest to keep as retained earnings to strengthen the capital position

of the Group.

Corporate Governance Statement can be found on the Bank's website in the section "information

disclosure" (https://www.bluorbank.lv/en/compliance).

On behalf of the Bank,

________________ ____________________

Aleksandrs Peškovs Dmitrijs Latiševs

Chairman of the Council Chairman of the Board

This document has been signed in electronic form with a secure electronic signature and contains a

time-stamp

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

Council and Board of the Bank

Council as of 31 December 2023

Name, Surname

Position

Date of Appointment

Aleksandrs Peškovs

Chairman of the Council

22 June 2001

Sergejs Peškovs

Member of the Council

Deputy Chairman of the Council

22 June 2001

25 July 2002

Andrejs Kočetkovs

Member of the Council

22 June 2001

Nataļja Zolova Member of the Council 25 August 2022

Board as of 31 December 2023

Name, Surname

Position

Date of Appointment

Dmitrijs Latiševs

Member of the Board

Deputy Chairman of the Board

Chairman of the Board

1 July 2002

25 April 2003

27 April 2011

Inga Preimane

Member of the Board

11 January 2016

Dmitrijs Feldmans

Member of the Board

13 June 2019

Vadims Morozs

Member of the Board

12 August 2019

On 08 December 2023, Igors Petrovs was released from his duties of a Member of the Board, changes

registered at the Register of Enterprises of the Republic of Latvia, on 12 December 2023.

On 29 February 2024, Dmitrijs Feldmans was released from his duties of a Member of the Board,

changes registered at the Register of Enterprises of the Republic of Latvia, on 29 February 2024.

On behalf of the Bank,

Aleksandrs Peškovs

Chairman of the Council

Dmitrijs Latiševs

Chairman of the Board

This document has been signed in electronic form with a secure electronic signature and contains a

time-stamp

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December

2023

Statement of the Management’s responsibility

The Management of BluOr Bank AS (hereinafter – the “Bank”) is responsible for the preparation of

the consolidated financial statements of the Bank and its subsidiaries (hereinafter – the “Group”) as

well as for the preparation of the financial statements of the Bank.

The Group’s consolidated and the Bank’s separate financial statements are prepared in accordance with

IFRS Accounting standards as adopted by the European Union on a going concern basis. Appropriate

accounting policies have been applied on a consistent basis. Prudent and reasonable judgements and

estimates have been made by the Management in the preparation of the Group’s consolidated and the

Bank’s separate financial statements.

The Group’s consolidated and the Bank’s separate financial statements on pages 8 to 94 are prepared in

accordance with the source documents and present fairly the financial position of the Group as at 31

December 2023 and the consolidated results of its operations and cash flows for the year then ended, as

well as the financial position of the Bank as at 31 December 2023 and the results of its operations and

cash flows for the year ended 31 December 2023.

The management of the Bank is responsible for the maintenance of a proper accounting system,

safeguarding the Group’s and the Bank’s assets, and the detection and prevention of fraud and other

irregularities in the Group and the Bank. Management is also responsible for operating the Group and

the Bank in compliance with the Law on Credit Institutions and other legislation of the Republic of

Latvia applicable to credit institutions.

On behalf of the Bank,

Aleksandrs Peškovs

Chairman of the Council

Dmitrijs Latiševs

Chairman of the Board

This document has been signed in electronic form with a secure electronic signature and contains a

time-stamp

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

The Group’s Consolidated and the Bank’s Separate Income Statements

Note

		2023			2022
		Group	Bank	Group	Bank
		EUR’000	EUR’000	EUR’000	EUR’000
Interest income		37 062	37 062	22 847	22 847
From those income at effective		36 720	36 720	22 629	22 629
interest rate
Interest expenses		(11 523)	(11 838)	(5 258)	(5 589)
Net interest income	6	25 539	25 224	17 589	17 258
Fee and commission income		12 607	12 608	10 372	10 373
Fee and commission expense		(1 743)	(1 743)	(1 930)	(1 930)
Net fee and commission income	7	10 864	10 865	8 442	8 443
Net (loss) / from trading and revaluation	8	(217)	(217)	(1 705)	(1 705)
of financial instruments
Net foreign exchange trading and revaluation income	9	61	61	1 172	1 172
Other operating income	10	1 670	1 595	942	870
Total operating income		37 917	37 528	26 440	26 038
Administrative expenses	11	(16 200)	(15 539)	(13 700)	(12 990)
Other operating expenses	12	(1 879)	(1 882)	(1 683)	(1 684)
Credit loss allowances	17,18,19	(2 081)	(2 081)	(890)	(890)
Impairment of non-financial assets	13	-	(1 400)	97	-
Total operating expenses		(20 160)	(20 902)	(16 176)	(15 564)
Profit before taxation		17 757	16 626	10 264	10 474
Corporate income tax	14	(4 060)	(4 060)	(12)	(12)
Profit for the year		13 697	12 566	10 252	10 462

The accompanying notes on pages 15 to 94 form an integral part of these financial statements.

The Council and the Board of the Bank approved the issue of these financial statements as presented from page 8

to 94 on 11 March 2024. The financial statements are signed on behalf of the Council and the Board of the Bank

by:

Aleksandrs Peškovs

Chairman of the Council

Dmitrijs Latiševs

Chairman of the Board

This document has been signed in electronic form with a secure electronic signature and contains a

time-stamp

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

The Group’s Consolidated and the Bank’s Separate Statements of Other Comprehensive

Income

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Profit for the year	13 697	12 566	10 252	10 462
Other comprehensive income
Items that may be reclassified to profit or loss
Foreign exchange revaluation loss	(9)	-	(6)	-
Revaluation gain/(loss) – financial assets at fair value through other comprehensive income (debt instruments)	773	773	(1 911)	(1 911)
Total items that may be reclassified to profit or loss	764	773	(1 917)	(1 911)
Items that will not be reclassified to profit or loss
Revaluation loss – financial assets at fair value through other comprehensive income (equity instruments)	-	-	(112)	(112)
Total items that will not be reclassified to profit or loss	-	-	(112)	(112)
Other comprehensive (loss)/income	764	773	(2 029)	(2 023)
Total comprehensive income	14 461	13 339	8 223	8 439

The accompanying notes on pages 15 to 94 form an integral part of these financial statements.

The Council and the Board of the Bank approved the issue of these financial statements as presented from page 8

to 94 on 11 March 2024. The financial statements are signed on behalf of the Council and the Board of the Bank

by:

Aleksandrs Peškovs

Chairman of the Council

Dmitrijs Latiševs

Chairman of the Board

This document has been signed in electronic form with a secure electronic signature and contains a

time-stamp

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Financial Statements for the year ended 31

December 2023

The Group’s Consolidated and the Bank’s Separate Statements of Financial Position

Assets

			2023		2022
	Note	Group	Bank	Group	Bank
		EUR’000	EUR’000	EUR’000	EUR’000
Cash and demand deposits with central bank	15	338 024	338 024	120 527	120 527
Loans and receivables from credit institutions	16	24 778	24 770	25 306	25 292
Demand deposits with credit institutions		24 778	24 770	25 306	25 292
Trading financial assets		-	-	3	3
Derivatives		-	-	3	3
Investment securities	17,19	97 835	97 835	162 968	162 968
Fixed income securities		97 422	97 422	162 630	162 630
Non fixed income securities		413	413	338	338
Loans and receivables	18	398 564	398 564	308 310	308 310
Investments in associates	20	827	-	827	-
Investments in subsidiary undertakings	20	-	28 871	-	30 266
Investment property	21	2 934	1 614	2 830	1 614
Property and equipment	22	23 549	3 232	24 610	3 438
Right-of-use assets	22	-	9 261	-	9 924
Intangible assets	23	267	267	256	256
Non-current assets classified as held for sale	44	11 150	11 150	11 150	11 150
Prepayments and accrued income	24	854	844	1 661	1 657
Other assets	25	9 494	9 428	10 089	10 054
Corporate income tax receivable		-	-	3	3
Total assets		908 276	923 860	668 540	685 462

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

The Group’s Consolidated and the Bank’s Separate Statements of Financial Position

Liabilities and Equity

Note

2023

2022

		Group	Bank	Group	Bank
		EUR’000	EUR’000	EUR’000	EUR’000
Due to credit institutions on demand	26	4 407	4 407	6 623	6 623
Financial liabilities carried at amortized cost		814 212	816 637	581 695	583 711
Deposits	27	800 584	803 009	573 707	575 723
Deposits (subordinated)	27	2 623	2 623	1 984	1 984
Additional Tier 1 Debt securities (subordinated)	28	6 123	6 123	1 122	1 122
Debt securities (subordinated)	28	4 882	4 882	4 882	4 882
Lease liabilities	22	-	9 912	-	10 476
Deferred income and accrued expenses		2 263	2 243	1 112	1 107
Provisions		298	298	129	130
Income tax liabilities	14	3 770	3 770	-	-
Other liabilities	29	2 004	1 904	3 120	3 065
Total liabilities		826 954	839 171	592 679	605 112
Shareholders’ equity
Share capital	30	44 493	44 493	44 493	44 493
Statutory reserves	30	24	24	24	24
Revaluation reserve – financial assets at fair value through other comprehensive income		(1 371)	(1 371)	(2 144)	(2 144)
Other reserves	30	(3 412)	(2 400)	(3 413)	(2 400)
Retained earnings		41 588	43 943	36 901	40 377
Total equity attributable to equity holders of the Bank		81 322	84 689	75 861	80 350
Total equity and liabilities		908 276	923 860	668 540	685 462
Contingent liabilities and commitments	32	99 963	99 966	59 124	59 127

The accompanying notes on pages 15 to 94 form an integral part of these financial statements.

The Council and the Board of the Bank approved the issue of these financial statements as presented from page 8

to 94 on 11 March 2024. The financial statements are signed on behalf of the Council and the Board of the Bank

by:

Aleksandrs Peškovs

Chairman of the Council

Dmitrijs Latiševs

Chairman of the Board

This document has been signed in electronic form with a secure electronic signature and contains a

time-stamp

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

The Group’s Consolidated Statement of Changes in the Shareholders’ Equity

Note

					Total equity
					attributable
			Revaluation		to equity
	Share	Statutory	reserve –	Other	Retained holders of the		Total
	capital	reserves	FVOCI	reserves	earnings	parent	equity
Balance as at 31 December	EUR`000	EUR`000	EUR`000	EUR'000	EUR`000	EUR`000	EUR`000
2021	44 493	24	(121)	(3 413)	34 155	75 138	75 138
Dividends paid	-	-	-	-	(7 500)	(7 500)	(7 500)
Other comprehensive income for the year:	-	-	(2 023)	-	(6)	(2 029)	(2 029)
Revaluation of financial
assets	-	-	(2 023)	-	-	(2 023)	(2 023)
Foreign exchange
revaluation	-	-	-	-	(6)	(6)	(6)
Profit for the year	-	-	-	-	10 252	10 252	10 252
Total comprehensive income for the year	-	-	(2 023)	-	10 246	8 223	8 223
Balance as at 31 December
2022	44 493	24	(2 144)	(3 413)	36 901	75 861	75 861
Dividends paid	-	-	-	-	(9 000)	(9 000)	(9 000)
Other comprehensive income for the year:	-	-	773	1	(10)	764	764
Revaluation of financial
assets	-	-	773	-	-	773	773
Foreign exchange
revaluation	-	-	-	1	(10)	(9)	(9)
Profit for the year	-	-	-	-	13 697	13 697	13 697
Total comprehensive income for the year	-	-	773	1	13 687	14 461	14 461
Balance as at 31 December
2023	44 493	24	(1 371)	(3 412)	41 588	81 322	81 322

The accompanying notes on pages 15 to 94 form an integral part of these financial statements.

The Council and the Board of the Bank approved the issue of these financial statements as presented from page 8

to 94 on 11 March 2024. The financial statements are signed on behalf of the Council and the Board of the Bank

by:

Aleksandrs Peškovs

Chairman of the Council

Dmitrijs Latiševs

Chairman of the Board

This document has been signed in electronic form with a secure electronic signature and contains a

time-stamp

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

The Bank’s Separate Statement of Changes in the Shareholders’ Equity

Note

capital

Statutory

reserves

Other

reserves

Revaluation

reserve –

FVOCI

Retained

Earnings

Total

capital and

reserves

EUR'000

EUR’000

Balance as at 31 December

2021

44 493

(2 400)

(121)

37 415

79 411

Dividends paid

(7 500)

Other comprehensive income

for the year:

(2 023)

Revaluation of financial assets

(2 023)

Profit for the year

10 462

Total comprehensive income

for the year

(2 023)

10 462

8 439

Balance at 31 December 2022

44 493

(2 400)

(2 144)

40 377

80 350

Dividends paid

(9 000)

Other comprehensive income

for the year:

773

Revaluation of financial assets

773

Profit for the year

12 566

Total comprehensive income

for the year

773

12 566

13 339

Balance as at 31 December

2023

44 493

(2 400)

(1 371)

43 943

84 689

The accompanying notes on pages 15 to 94 form an integral part of these financial statements.

The Council and the Board of the Bank approved the issue of these financial statements as presented from page 8

to 94 on 11 March 2024. The financial statements are signed on behalf of the Council and the Board of the Bank

by:

Aleksandrs Peškovs

Chairman of the Council

Dmitrijs Latiševs

Chairman of the Board

This document has been signed in electronic form with a secure electronic signature and contains a

time-stamp

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31

December 2023

The Group’s Consolidated and the Bank’s Separate Statements of Cash Flows

			2023		2022
	Note	Group	Bank	Group	Bank
		EUR’000	EUR’000	EUR’000	EUR’000
Cash flow from operating activities
Profit before taxation		17 757	16 626	10 264	10 474
Amortisation of intangible assets		132	132	189	189
Depreciation of property, equipment and right-of-use
assets		1 214	1 005	1 356	1 056
Revaluation of financial assets		(86)	(86)	197	197
Interest income		(37 062)	(37 062)	(22 847)	(22 847)
Interest expense		11 523	11 838	5 258	5 589
Impairment of assets (inc. expected credit loss)		2 081	3 481	890	890
Increase in cash and cash equivalents before changes
in assets and liabilities, as a result of ordinary
operations		(4 441)	(4 066)	(4 693)	(4 452)
(Increase) decrease in loans and receivables		(90 753)	(90 753)	24 573	24 574
(Increase) decrease in term deposits with credit
institutions		4 184	4 184	(8 366)	(8 366)
Decrease in investment securities		65 680	65 680	18 229	18 229
Decrease in trading financial assets		3	3	1 598	1 598
Decrease in prepayments and accrued income		807	813	314	315
(Increase)/ decrease in other assets		589	629	(2 658)	(2 635)
(Decrease) in due to central banks		-	-	(81 681)	(81 681)
Increase/(decrease) in deposits and due to banks		224 086	224 495	(135 485)	(135 775)
Decrease in held-for-trading financial liabilities		-	-	(1)	(1)
Interest received		36 211	36 211	23 893	23 893
Interest paid		(8 093)	(8 408)	(5 511)	(5 842)
Increase/(decrease) in other liabilities and current tax
liabilities		(949)	(995)	2 242	2 240
Increase/(decrease) in deferred income and accrued
expenses		1 151	1 136	(264)	(257)
Net cash from operating activities before tax		228 475	228 929	(167 810)	(168 160)
Corporate income tax paid		(288)	(288)	(12)	(12)
Net cash from operating activities		228 187	228 641	(167 822)	(168 172)
Cash flows from investment activities
Purchase of fixed and intangible assets		(296)	(279)	(116)	(116)
Disposal of investment property		84	-	87	-
Purchase of investment property		(188)	-	-	-
Capital increase in investment in subsidiaries	20	-	(5)	-	(10)
Capital decrease in investment in subsidiaries	20	-	-	-	1 000
Net cash (used in) investing activities		(400)	(284)	(29)	874
Cash flows from financing activities
Lease liabilities repaid on right-of-use asset		-	(564)	-	(549)
Bonds (repaid)		-	-	(264)	(264)
Bonds issued		5 001	5 001	4 855	4 855
Dividends (paid)	30	(9 000)	(9 000)	(7 500)	(7 500)
Net cash (used in) financing activities		(3 999)	(4 563)	(2 909)	(3 458)
Net changes in cash and cash equivalents		223 788	223 794	(170 760)	(170 756)
Cash and cash equivalents at the beginning of the reporting year		130 703	130 689	301 463	301 445
Cash and cash equivalents at the end of the reporting year	31	354 491	354 483	130 703	130 689

The accompanying notes on pages 15 to 94 form an integral part of these financial statements.

The Council and the Board of the Bank approved the issue of these financial statements as presented from page 8 to 94 on 11 March 2024. The

financial statements are signed on behalf of the Council and the Board of the Bank by:

Aleksandrs Peškovs

Chairman of the Council

Dmitrijs Latiševs

Chairman of the Board

This document has been signed in electronic form with a secure electronic signature and contains a time-stamp

BluOr Bank AS

The Group’s Consolidated and the Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

1. GENERAL INFORMATION

BluOr Bank AS (previous name – AS BlueOrange Bank) (“the Bank”) is a Joint Stock Company registered with

the Enterprise Register of the Republic of Latvia on 22 June 2001. The address of the Bank is Smilšu iela 6, Riga,

LV 1050 , Latvia. The Bank holds a banking license issued in Latvia and it acts in accordance with the legislation

of Latvia and the European Union.

The primary lines of business of the Bank are servicing corporate customers and high net worth individuals, and

managing investments and finances.

The sole shareholder of the Bank is a Joint Stock Company BBG that holds 100% of voting shares of the Bank.

JSC BBG is a financial management company registered in Latvia and owned by four Latvian companies and

two private individuals, none of the ultimate beneficial owners controls the Group as at 31 December 2022. The

consolidated financial statements of the parent company AS BBG can be obtained from the Enterprise Register

of Latvia.

The Bank has a number of subsidiaries in Latvia and foreign countries as well as investments in associated

company. Those entities form the Group and are shown in the following table:

			Holding	Holding
			31.12.2023,	31.12.2022,
Name of the company	Country of incorporation, address	Line of business	%	%
SIA BluOr International	M. Pils iela 13, Riga, Latvia,	Real estate development	100	100
SIA CityCap Service	Kr. Valdemara iela 149, Riga, Latvia	Real estate development	100	100
SIA Zapdvina	Kr. Valdemara iela 149, Riga, Latvia	Real estate development	100	100
Development
Kamaly Development	Etiera k-s ½B – 18, Sveti Vlas, Burgas		100	100
EOOD	obl., Nesebier 8256, Bulgaria	Real estate development
UAB Kamaly	Klaipedos m. sav. Klaipedos m., Karklu	Management of collaterals	100	100
Development	g. 12, Lithuania	taken over by the bank
AS Pils Pakalpojumi	Smilšu iela 6, Riga, Latvia	Real estate development	100	100
Foxtran Management Ltd	Suite 102, Blake Building, Corner Eyre	Management of collaterals	100	100
	& Huston Str., Belize	taken over by the bank
SIA Jēkaba 2	Jēkaba iela 2, Riga, Latvia	Real estate development	100	100
Darzciems Entity SIA	Kr. Valdemara 149-405, Riga, Latvia	Real estate development	100	100
Mazirbe Estate SIA	Kr. Valdemara 149-405, Riga, Latvia	Real estate development	100	100
Lielie Zaķi SIA	Kr. Valdemara 149-405, Riga, Latvia	Real estate development	100	100
Pulkarne Entity SIA	Kr. Valdemara 149-405, Riga, Latvia	Real estate development	100	100

BluOr Bank AS, as a parent company, is responsible for establishing the structure and corporate governance

system of the Group with clearly defined duties and responsibilities and adequate supervision of subsidiaries.

There is a Council (composed of two members of the Council) and a Board (composed of one member of the

Board) established in AS Pils Pakalpojumi. The Boards of other subsidiaries of the Bank consist of one Board

member or one elected director. No significant changes have occurred in the corporate governance structure and

operations of the Group and its companies, compared to the previous reporting period.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Investments in associated companies (the Group):

			Holding	Holding
			(%)	(%)
Company	Country of incorporation, address	Line of business	31.12.2023	31.12.2022
AS Termo biznesa
Centrs	Kr. Valdemāra iela 149, Riga, Latvia	Real estate development	26.15	26.15

2. BASIS OF PREPARATION

(1) Statement of Compliance

The financial statements of the Bank and the Group (“financial statements”) have been prepared in accordance

with IFRS Accounting standards as adopted by the European Union (“IFRS Accounting standards” or “IFRS”),

and regulations of the Financial and Capital Market Commission of the Republic of Latvia (‘FCMC’) and Bank

of Latvia regulations in force as at 31 December 2022.

The Group’s consolidated and the Bank’s separate financial statements were authorized for issue by the Board on

11 March 2024. Shareholders have the power to reject the financial statements prepared and issued by the

management and the right to request that new financial statements are issued.

(2) Functional and presentation currency

These consolidated and separate financial statements are presented in thousands of euros (‘000 EUR), unless

stated otherwise. Subsidiaries of the Group and the Bank operate in the functional currency of euro.

(3) Basis of measurement

The Group’s consolidated financial statements and the Bank’s separate financial statements are prepared on the

historical cost basis, except for the following:

- financial instruments at fair value through profit or loss are stated at fair value;

- derivative financial instruments are stated at fair value;

- financial instruments at fair value through other comprehensive income (FVOCI) are valued at fair value;

- repossessed collaterals are recognised at lower of its carrying amount and fair value less cost to sell.

3. SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies have been applied in the preparation of these Group’s Consolidated

and the Bank’s Separate Financial Statements. The accounting principles have been consistently applied, except

for the changes in accounting policies.

(1) Basis for consolidation

(i) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights

to, variable returns from its involvement with the entity and has the ability to affect those returns through its

power over the entity. The financial statements of subsidiaries are included in the consolidated financial

statements from the date on which control commences until the date on which control ceases.

Investments in subsidiaries are carried in the Bank’s separate financial statements at cost less impairment, if any.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(ii) Loss of control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and

any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in

profit or loss. Any interest retained in the former subsidiary is measured by the Group at fair value when control

is lost.

(iii) Interest in equity-accounted investees

The Group’s interests in equity accounted investees comprise interests in associates.

Associates are those entities in which the Group has significant influence, but not control or joint control, over

the financial and operating policies.

Investments in associates are accounted for in the Group’s consolidated financial statements using the equity

method. The Bank ensures the appropriate adjustments are made in the associate’s financial information to align

the accounting policies with those used by the Group before equity method of accounting is applied. They are

initially recognised at cost, including transaction costs. Subsequent to initial recognition, the consolidated

financial statements include the Group’s share of the profit or loss and OCI in equity-accounted investees, until

the date on which significant influence or joint control ceases.

Investments in associates are carried in the Bank’s separate financial statements at cost less impairment, if any.

(iv) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are

eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with

equity-accounted investees are eliminated to the extent of the Group’s interest in the investee. Unrealised losses

are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(v) Group’s unified accounting policy

In the preparation of the consolidated financial statements, the financial statements of those Group entities that

use different accounting policies are adjusted to conform with the Group’s accounting policy.

(2) Foreign currency

Transactions in foreign currencies are translated into the respective functional currencies of the Group companies

at the exchange rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated into the

functional currency at the spot exchange rate at that date. The foreign currency gain or loss on monetary items is

the difference between amortized cost in the functional currency at the beginning of the period, adjusted for

effective interest and payments during the period, and the amortized cost in foreign currency translated at the

exchange rate at the end of the period.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are

retranslated into the functional currency at the spot exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognized in the income statement.

The exchange rates for the most significant currencies as set by the European Central Bank at reporting date are

as follows:

	31 December 2023	31 December 2022
USD	1.1050	1.0666

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on

acquisition, are translated into EUR at exchange rates set by the European Central Bank at the reporting date. The

income and expenses of foreign operations are translated into the functional currency at the exchange rates of

transaction dates.

Foreign currency differences are recognized in other comprehensive income and accumulated in the translation

reserve, except to the extent that the translation difference is allocated to non-controlling interest.

Foreign exchange gains or losses arising from a monetary item receivable from or payable to a foreign operation,

the settlement of which is neither planned nor likely to occur in the foreseeable future and which in substance is

considered to form part of the net investment in the foreign operation, are recognized in other comprehensive

income and accumulated in the translation reserve.

(3) Financial instruments

a) Classification

Financial instruments are classified into the following categories:

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated

as at fair value through profit or loss (FVTPL):

— It is held within a business model whose objective is to hold assets to collect contractual cash flows, and

— Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and

interest (SPPI) on the principal amount outstanding.

A financial asset is measured at fair value through other comprehensive income (FVOCI) only if it meets

both of the following conditions and is not designated as at FVTPL:

— It is held within a business model whose objective is achieved by both collecting contractual cash flows

and selling financial assets, and

— Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and

interest on the principal amount outstanding.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at

fair value through profit or loss (FVTPL). IFRS 9 also allows entities to irrevocably designate a financial asset

that otherwise meets the requirements to be measured at amortised cost or FVOCI as FVTPL, if doing so

eliminates or significantly reduces an accounting mismatch that would otherwise arise.

On initial recognition, an equity instrument other than held for trading, may be irrevocably designated as FVOCI,

with no subsequent reclassification of profit or losses to the income statement.

Financial liabilities carried at amortised cost represent financial liabilities of the Group and the Bank other than

financial instruments designated at fair value through profit or loss. This category includes investment securities,

deposits and balances due to credit institutions, customer deposits, issued debt securities and other financial

liabilities.

Due from other credit institutions

Demand deposits with central banks, and placements with credit institutions are classified as financial assets

measured at amortised cost, provided that the following criteria are met:

• they are held within the business model, which aim is achieved by collecting contractual cash flows

(“Held to collect” business model);

• their contractual cash flows represent solely payments of principal and interest on outstanding principal

• the Group does not designate them on initial recognition to fair value through profit or loss measurement

category.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Business model assessment

The Group and the Bank made an assessment of the objective of the business model in which a financial asset is

held at portfolio level because this best reflects the way the business is managed and information is provided to

management. The information that is considered includes:

- the stated policies and objectives for the portfolio and the operation of those policies in practice, including

whether management’s strategy focuses on earning contractual interest revenue, maintaining a particular interest

rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those

assets or realising cash flows through the sale of assets;

- how the performance of the portfolio is evaluated and reported to the Bank’s and the Group’s management;

- the risks that affect the performance of the business model (and the financial assets held within that business

model) and how those risks are managed;

- the frequency, volume and timing of sales in prior periods, the reasons for such sales and expectations about

future sales activity. However, information about sales activity is not considered in isolation, but as part of an

overall assessment of how the Group’s and the Bank’s stated objective for managing the financial assets is

achieved and how cash flows are realised.

Financial assets that are held for trading and those that are managed and whose performance is evaluated on a fair

value basis are measured at FVTPL because they are neither held to collect contractual cash flows nor held both

to collect contractual cash flows and to sell financial assets.

Solely payments of principal and interest (SPPI) assessment

Classification for debt instruments is driven by the group business model for managing the financial assets and

whether the contractual cash flows represent solely payments of principal and interest (SPPI). If a debt instrument

is held to collect, it may be carried at amortised cost if it also meets the SPPI requirement. Debt instruments that

meet the SPPI requirement that are held in a portfolio where an entity both holds to collect cash flows and sells

assets it may be classified as FVOCI.

Making SPPI assessment, the Group and the Bank considers whether the contractual cash flows are consistent

with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit risk,

other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the

contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement,

the related financial asset is classified and measured at fair value through profit or loss.

b) Recognition

The Group and the Bank initially recognize loans and advances, deposits, debt securities issued and subordinated

liabilities on the date at which they are originated. Regular way purchases and sales of financial assets are

recognized on the settlement date.

c) Measurement

A financial asset or financial liability is initially measured at fair value plus transaction costs that are directly

attributable to acquisition of the financial asset or liability, in the case of a financial asset or liability other than

measured at fair value through profit or loss.

Subsequent to initial recognition, all financial assets and liabilities measured at fair value through profit or loss

and all financial assets measured at FVOCI are measured at fair value.

All financial liabilities other than those measured at fair value through profit or loss and financial assets other

than those measured at FVTPL or FVOCI are measured at amortized cost using the effective interest rate method.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

A gain or loss arising from a change in the fair value of a financial asset or liability is recognised as follows:

- a gain or loss on a financial asset classified as at fair value through profit or loss is recognised in profit or loss;

- a gain or loss on debt securities classified as at fair value through other comprehensive income is recognised in

fair value reserve through other comprehensive income (except for impairment losses and foreign exchange gains

or losses on monetary assets) until the asset is derecognised, at which time the cumulative gain or loss previously

recognised in equity is recognised in profit or loss. Interest in relation to debt securities classified as at fair value

through other comprehensive income is recognised as earned in profit or loss (net interest income) calculated

using the effective interest method.

- equity investments classified at fair value through other comprehensive income are subsequently measured at

fair value. Dividends are recognised as income in profit or loss. Other net gains and losses are recognised in other

comprehensive income and are never reclassified to profit or loss.

For financial assets and liabilities carried at amortised cost, a gain or loss is recognised in profit or loss when the

financial asset or liability is derecognised including the instances where the terms change substantially or

impaired.

d) Amortized cost measurement

The amortized cost of a financial asset or liability is the amount at which the financial asset or liability is measured

at initial recognition, minus principal repayments, plus or minus the cumulative amortization using the effective

interest method, minus any reduction for impairment.

The effective interest rate is a method of calculating the amortized cost of a financial asset or liability, which is

based on the recognition of interest income and expenses over a specific period. The effective interest rate is the

rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial

instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial

liability. When calculating the effective interest rate, the management estimates cash flows considering all

contractual terms of the financial instrument but does not consider future losses. The calculation includes all fees

paid or received between parties to the contract that are an integral part of the effective interest rate, transaction

costs, and all other premiums or discounts.

e) Derecognition

A financial asset (or, where applicable a part of a financial asset or a part of a group of similar financial assets)

is derecognised when:

- the rights to receive cash flows from the asset have expired; or

- the Group and the Bank have transferred the rights to receive cash flows from the asset, or retained the right to

receive cash flows from the asset, but have assumed an obligation to pay them in full without material delay to a

third party under a ‘pass-through’ arrangement; and

- the Group and the Bank either (a) have transferred substantially all the risks and rewards of the asset, or (b) have

neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of

the asset.

When the Group and the Bank has transferred the rights to receive cash flows from an asset or has entered into a

pass-through arrangement and have neither transferred nor retained substantially all the risks and rewards of the

asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s and the Bank’s

continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the

transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount

of consideration that the Group and the Bank could be required to repay.

Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled

option or similar provision) on the transferred asset, the extent of the Group’s and the Bank’s continuing

involvement is the amount of the transferred asset that the Group and the Bank may repurchase, except that in the

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair

value, the extent of the Group’s and the Bank’s continuing involvement is limited to the lower of the fair value

of the transferred asset and the option exercise price.

Financial assets – write-off. Financial assets are written-off, in whole or in part, when the Group and the Bank

exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The

write-off represents a derecognition event. The Group and the Bank may write-off financial assets that are still

subject to enforcement activity when the Group and the Bank seeks to recover amounts that are contractually due,

however, there is no reasonable expectation of recovery.

Financial assets – modification. The Group and the Bank sometimes renegotiates or otherwise modifies the

contractual terms of the financial assets. The Group and the Bank assesses whether the modification of contractual

cash flows is substantial considering, among other, the following factors: any new contractual terms that

substantially (if cash flows differs more than 10%) affect the risk profile of the asset (e.g. profit share or equity-

based return), significant change in interest rate, change in the currency denomination, new collateral or credit

enhancement that significantly affects the credit risk associated with the asset or a significant extension of a loan

when the borrower is not in financial difficulties.

If the modified terms are substantially different, the rights to cash flows from the original asset expire and the

Group and the Bank derecognises the original financial asset and recognises a new asset at its fair value. The date

of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes,

including determining whether a SICR has occurred. The Group and the Bank also assesses whether the new loan

or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset

derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the

substance of the difference is attributed to a capital transaction with owners.

In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make

the originally agreed payments, the Group and the Bank compares the original and revised expected cash flows

to assets whether the risks and rewards of the asset are substantially different as a result of the contractual

modification. If the risks and rewards do not change, the modified asset is not substantially different from the

original asset and the modification does not result in derecognition. The Group and the Bank recalculates the

gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate

(or credit-adjusted effective interest rate for POCI financial assets), and recognises a modification gain or loss in

profit or loss.

When the contractual cash flows of a financial assets are substantially modified, such a modification is treated as

a derecognition of the original assets and the recognition of a new financial asset, and the difference in respective

carrying amounts is recognised in the income statement. In the case of financial asset modification, which does

not lead to derecognition, the Group and the Bank recalculates the gross carrying amount of the financial asset

and recognises a modification gain or loss.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Where an existing financial liability is replaced by another from the same lender on substantially different terms,

or when the terms of an existing liability are substantially modified, such an exchange or modification is treated

as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective

carrying amounts is recognised in the income statement.

f) Offsetting

Financial assets and liabilities are set off and the net amount presented in the statement of financial position when,

and only when, the Group and the Bank have a legal right to set off the amounts and intend either to settle on a

net basis or to realize the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains

and losses arising from a group of similar transactions such as in the trading activity.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(4) Identification and measurement of impairment of financial assets

Identification and measurement of impairment:

The Group and the Bank recognize an allowance for expected losses for all loans and other debt financial assets

not held at FVPL, together with loan commitments and financial guarantee contracts.

IFRS 9 requires a loss allowance to be recognized at an amount equal to either 12-month expected credit losses

(ECLs) or lifetime ECLs. Lifetime ECLs are the ECLs that result from all possible default events over the

expected life of a financial instrument, whereas 12-month ECLs are the portion of ECLs that result from default

events that are possible within 12 months after the reporting date.

The Group and the Bank recognize loss allowances at an amount equal to lifetime ECLs (Stage 2 and Stage 3

instruments), except financial instruments for which credit risk has not increased significantly since initial

recognition, for which the amount recognized will be the 12-month ECLs (Stage 1 instruments).

Accordingly, the Bank and the Group have established a policy to perform an assessment at the end of each

reporting period as to whether a given asset’s credit risk has increased significantly since initial recognition. When

determining whether the credit risk on a financial instrument has increased significantly since initial recognition,

the Bank and the Group consider reasonable and supportable information that is relevant and available without

undue cost or effort, including both quantitative and qualitative information and analysis based on the Bank’s and

the Group’s historical experience and forward-looking information. The Bank and the Group primarily identify

whether a significant increase in credit risk has occurred for an exposure by comparing the remaining lifetime

probability of default (PD) as at the reporting date, with the remaining lifetime PD for this point in time that was

estimated on initial recognition of the exposure.

Significant assets are tested for impairment on an individual basis, while for insignificant assets a collective

assessment is performed. The collective assessment is based on probabilities of default (PD) obtained from the

statistical data for the different type of loans and borrowers, adjusted by several macro factors in order to include

forward-looking information. For the individual assessment the Bank and the Group estimate ECLs based on a

probability-weighted estimate of the present value of all cash shortfalls over the remaining expected life of the

financial asset, i.e. the difference between: the contractual cash flows that are due to the Bank and the Group

under the contract, and the cash flows that they expect to receive, discounted at the effective interest rate of the

loan.

The Bank and the Group have grouped their loans into Stage 1, Stage 2 and Stage 3, based on the applied

impairment methodology, as described below:

— Stage 1 – Performing loans: when loans are first recognized, the Bank and the Group recognize an

allowance based on twelve months expected credit losses.

— Stage 2 – Loans with a significant increase in credit risk: when a loan shows a significant increase in

credit risk since initial recognition, the Bank and the Group recognize an allowance for the lifetime expected

credit loss.

In addition, a significant increase in credit risk is assumed to have taken place, if an event is reported concerning

the loan that indicates a significant increase in credit risk, the Bank and the Group expect to grant the borrower

forbearance or when forbearance measures have already taken place, or the facility is included in the watch list,

or if the borrower falls more than 30 days past due in making its contractual payments.

— Stage 3 – Impaired loans: Financial assets are recognized in Stage 3 when there is objective evidence that

the loan is impaired. This category includes non-performing loans (also defaulted) and loans in the process of

recovery. A loan is considered as defaulted, if it is clear that borrower will not be able to fulfil his obligations to

the Bank without any additional measures like realisation of collateral, or if the borrower falls more than 90 days

past due in making its contractual payments. The lifetime expected credit losses are recognized for these loans

and in addition, the Bank and the Group accrue interest income on the amortised cost of the loan net of allowances.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

The Bank and the Group recognize impairment for FVOCI debt securities as applicable, depending on whether

they are classified as Stage 1, 2 or 3, as explained above. However, the expected credit losses will not reduce the

carrying amount of these financial assets in the statements of financial position, which shall remain to be stated

at fair value. Instead, an amount equal to the allowance that would arise if the assets were measured at amortised

cost will be recognized in OCI as an accumulated impairment amount, with a corresponding charge to profit or

loss.

For financial guarantee contracts, the Bank and the Group estimate their lifetime ECLs based on the present value

of the expected payments to reimburse the holder for a credit loss that is incurred less any amounts that the

guarantor expect to recover from the holder, the debtor or any other party. For other off-balance sheet loan

commitments (credit lines, overdrafts) ECL is estimated similarly to on-balance sheet instruments, applying the

certain conversion factor, which is calculated based on historical data of usage of such facilities.

(5) Fair value measurement

Fair value 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 in the principal, or in its absence, the most advantageous

market to which the Group and the Bank has access at that date. The fair value of a liability reflects its non-

performance risk.

The methods described below have been used for the determination of fair values.

The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e., the

fair value of the consideration given or received, unless the fair value of that instrument is evidenced by

comparison with other observable current market transactions with the same instrument or based on a valuation

technique whose variables include only data from observable markets. When transaction price provides the best

evidence of fair value at initial recognition, the financial instrument is initially measured at the transaction price

and any difference between this price and the value initially obtained from a valuation model is subsequently

recognized in the profit and loss statement depending on the individual facts and circumstances of the transaction

but not later than when the valuation is supported wholly by observable market data or the transaction is closed

out.

When available, the Group and Bank measure the fair value of an instrument using quoted prices in an active

market for that instrument. A market is regarded as ‘active’ if transactions for the asset or liability take place with

sufficient frequency and volume to provide pricing information on an ongoing basis.

If a market for a financial instrument is not active, the Group and the Bank determine fair value using a valuation

technique. Valuation techniques include recent arm’s length transactions between knowledgeable, willing parties

(if available), reference to the current fair value of other instruments that are substantially the same, discounted

cash flow analyses and option pricing models. The chosen valuation technique makes maximum use of market

inputs, relies as little as possible on estimates specific to the Group and the Bank, incorporates all factors that

market participants would consider in setting a price, and is consistent with accepted economic methodologies

for pricing financial instruments.

Where third-party information, such as broker quotes or pricing services, are used to measure fair value, the Group

and the Bank assesses and documents the evidence obtained from the third parties to support the conclusion that

such valuations meet the requirements of IFRS. This includes:

- Verifying that equity broker or pricing service is approved by the Group and Bank for use in pricing the

relevant type of financial instrument;

- Understanding how the fair value has been arrived at and the extent to which it represents actual market

transactions;

- When prices for similar instruments are used to measure fair value, how these prices have been adjusted

to reflect the characteristics of the instrument subject to measurement;

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Fair value is classified into different levels of the fair value hierarchy based on the inputs used in the measurement

techniques:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either

directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the

fair value hierarchy, the fair value measurement is categorized in its entirety in the same level of the fair value

hierarchy as the lowest level input that is significant to the entire measurement.

The Group and the Bank recognizes transfers between levels of the fair value hierarchy as of the end of the

reporting period during which the change has occurred. For further analysis of the basis for fair value refer to

Note 42.

Assets and long positions are measured at a bid price; liabilities and short positions are measured at an asking

price. Where the Group and the Bank has positions with offsetting risks, mid-market prices are used to measure

the offsetting risk positions and a quoted bid or asking price adjustment is applied only to the net open position

as appropriate. Fair values reflect the credit risk of the instrument and include adjustments to take account of the

provisions of the instrument. Fair value estimates obtained from models are adjusted for any other factors, such

as liquidity risk or model uncertainties, to the extent that the Group and the Bank believes a third-party market

participant would take them into account in pricing a transaction.

Loans

The estimated fair value of loans represents the discounted amount of estimated future cash flows expected to be

received. The interest rated used to discount estimated cash flows are based on the prevailing money-market

interest rates curve plus an adequate credit spread.

Shares and other non-fixed income securities

The fair value of shares and other non-fixed income securities is determined by reference to their quoted bid price

at the reporting date, if available. For a number of non-listed shares where disposal was limited, it was assumed

that it was not possible to make a reliable estimate of fair value.

Derivatives

The fair value of currency swaps is estimated by discounting the contractual cash flows to be received and to be

paid in appropriate foreign currencies for the residual maturity, and translating the difference of the discounted

cash flows into euro, applying the exchange rate published by the European Central Bank. EURIBOR interest

rates are used for discounting purposes.

Liabilities to other credit institutions and customers

The estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits, is the

amount repayable on demand, as they are largely due on demand. The estimated fair value of overnight deposits

is their carrying amount. The estimated fair value of fixed interest-bearing deposits not quoted in an active market

is based on discounted cash flows using interest rates for new deposits with similar remaining maturities.

(6) Derivatives

Derivatives include foreign currency swaps and forwards. As at 31 December 2023 and 2022 all derivatives of

the Group and the Bank were classified as financial instruments held for trading.

Derivatives are initially recognized at fair value on the date on which a derivative contract is entered into and are

subsequently remeasured at fair value. All derivatives are carried as assets when their fair value is positive and as

liabilities when their fair value is negative.

Changes in the fair value of derivatives are recognised immediately in the income statement.

Although the Group and the Bank trades in derivative instruments for risk hedging purposes, the Group and the

Bank does not apply hedge accounting.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(7) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not

for sale in the ordinary course of business, use in the production or supply of goods or services or for

administrative purposes.

If the use of the property has been changed, investment properties are reclassified to property and equipment.

Investment property is initially measured at cost. Subsequently investment property is carried at its cost less any

accumulated depreciation and any accumulated impairment losses.

(8) Repossessed assets

In the normal course of business the Group and the Bank occasionally take title to property and other assets that

originally were pledged as security for a loan. When the Group and the Bank acquires (i.e. gains a full title to) an

asset in this way, the asset’s classification follows the nature of its intended use by the Group and the Bank. When

the Group or the Bank is uncertain of its intentions with respect to land and buildings that it has repossessed, those

properties are classified as assets classified as held for sale.

(9) Property and equipment

Items of property and equipment are stated at cost less accumulated depreciation and impairment losses.

Current repair and maintenance costs are charged to the income statement as incurred. Capital repairs of property

and equipment are added to property and equipment at cost, and its useful life is extended. Upon increasing the

carrying amount of an item of property and equipment by expenses incurred to replace a material component, the

replaced component is derecognised according to the derecognition requirements.

Items of property and equipment are derecognised when disposed or when no economic benefits are expected

from the use or disposal of these items in the future. Gains or losses from derecognition of items of property and

equipment are determined as the difference between the proceeds from disposal and the net carrying amount of

the asset at the date of disposal, and are recognised in the income statement.

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of the

individual assets. Depreciation is calculated from the date of acquisition or, in respect of internally constructed

assets, from the time an asset is completed and ready for use. Where an item of property and equipment comprises

major components having different useful lives, they are accounted for as separate items of property and

equipment.

Depreciation methods, useful lives and residual amounts are reviewed at each reporting date.

Land and buildings

The cost of land and buildings disclosed in the financial statements is their assumed fair value measured at the

date of acquisition. Subsequent measurement is carried out on a cost basis similar to other items of property and

equipment. Land is not depreciated.

Construction in progress and capital repairs of real estate properties include costs directly attributable to

construction in progress, including a corresponding proportion of direct overheads incurred during the

establishment of the item of property and equipment. Depreciation of such assets is calculated from the date when

the assets are put into operation.

Real estate properties are depreciated over the useful life which is determined to be 50 years.

Leasehold improvements

Depreciation of leasehold improvements is calculated over the remaining period of lease. Depreciation is

calculated from the date when leasehold improvements are completed and ready for use.

Useful lives of vehicle and other property and equipment

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

The annual depreciation percentages are as follows:

Furniture and	20%
equipment
Computers	25%
Mobile phones	50%
Others	20%
Vehicle (yacht)	10%

(10) Intangible assets

Intangible assets, except goodwill, are identifiable non-monetary assets without physical substance (licenses,

software that is separately identifiable from electronic devices and others) held for rendering of services or other

purposes if it is expected that an economic benefit attributable to these assets will flow to the Group and the Bank.

Intangible assets are recorded at cost less accumulated amortization and amortized to the profit or loss in equal

amounts over the useful life of the intangible asset. The annual amortization rate for software is 20%.

(11) Recognition of income and expenses

All significant categories of income and expenses, including interest income and expenses, are recognized on an

accrual basis.

Interest income and expenses are recognized in the income statement based on the effective interest rate of the

asset/liability. The effective interest rate is the rate that exactly discounts the estimated future cash payments and

receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the

carrying amount of the financial asset or liability. When calculating the effective interest rate, the Group and Bank

estimate future cash flows considering all contractual terms of the financial instruments, but not future credit

losses.

Interest income and expenses include discount or premium amortization or other difference between the carrying

amount of an interest bearing instrument and its value on the maturity date calculated based on the effective

interest rate method.

Fee and commission income and expense are recognised on an accrual basis. Loan origination fees together with

the related direct costs, are deferred and amortised to interest income over the estimated life of the financial

instrument using the effective interest rate method. Fee and commission income is recognised over time on a

straight line basis as the services are rendered, when the customer simultaneously receives and consumes the

benefits provided by the Group’s and the Bank’s performance. Such income includes fees for loan, lease or other

credit enhancement contracts administration.

Net trading income comprises gains less losses related to trading financial assets and liabilities, and includes all

realized and unrealized fair value changes, interest, dividends and foreign exchange differences.

(12) Off-balance sheet items

In the ordinary course of business, the Group and the Bank has off-balance sheet financial instruments consisting

of commitments to extend loans and advances, financial guarantees and commercial letters of credit. Such

financial instruments are recorded in the balance sheet when they are funded or related fees are incurred or

received.

The Group and the Bank measures issued financial guarantees initially at their fair value, which is normally

evidenced by the amount of fees received. This fee amount is then amortised on a straight-line basis over the life

of the guarantee. At each balance sheet date, the guarantees are measured at the higher of (i) the unamortized

balance of the amount at initial recognition and (ii) Expected credit loss.

Documentary and commercial letters of credit represent written undertakings by the Bank and the Group on behalf

of a customer authorising a third party to draw drafts on the Bank and the Group up to a stipulated amount under

specific terms and conditions.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(13) Taxes

Corporate income tax for the reporting period is included in the financial statements based on the management’s

calculations prepared in accordance with Latvian Republic tax legislation. Corporate income tax is included in

the profit and loss statement line item “Corporate income tax for the reporting year” in the year for which it is

assessed and disclosed by the components in the notes to the financial statements.

Corporate income tax for the distributed profit is calculated as 20/80 of the net amount payable to shareholders.

Corporate tax on distributed profit will be recognized when the shareholders of the Company make a decision

about profit distribution.

The applicable tax rate in Latvia for undistributed profits earned till 2023 was 0%. For profits earned in 2023 or

later periods, corporate income tax should be calculated and paid in the amount of 20% from annual profit after

tax. Any amount of corporate income tax paid on undistributed profit will subsequently reduce the amount of tax

payable for distribution of profit of the particular year.

(14) Cash and cash equivalents

Cash and cash equivalents are cash on hand and amounts due from the Bank of Latvia and other credit institutions

with initial maturities of up to 3 months, except liabilities towards the Bank of Latvia and other credit institutions

with initial maturities of up to 3 months.

(15) Leases

the Group and Bank as a lessee

Where the Bank acts as a lessee, the standard requires that right-of-use (RoU) assets and lease liabilities arising

from most leases are recognised on the balance sheet.

Depreciation of the RoU assets and interest expenses related to lease liabilities are recognised in the income

statement. In the cash flow statement payments for the principal portion of the lease liability are presented within

financing activities and payments for the interest portion are presented within operating activities.The lease

liability is initially measured as the present value of lease payments that are not paid at the commencement date.

Over time, the liability will increase with interest expense accruals and decrease with lease payments. The RoU

asset is initially measured at cost i.e. the same amount as the initial measurement of the lease liability plus certain

other costs, for example lease payments made at or before commencement date. The RoU asset is thereafter

depreciated over the lease term. Lease payments are discounted using the incremental borrowing rate. The

Bank applies a single discount rate to a portfolio of leases with reasonably similar characteristics.

the Group as lessor

When acting as a lessor all leases shall be classified as either an operating lease or a finance lease. Operating leases

are those leases where the lessor bears the economic risks and benefits.

(16) Provisions

Provisions are recognized in the statement of financial position when the Group and the Bank have a present legal

or constructive obligation as a result of past events, it is probable that an outflow of resources embodying

economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation

can be made.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current

market assessments of the time value of money and, where appropriate, the risks specific to the liability.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(17) Short-term employee benefits

Short term employee benefits, including salaries and social security contributions, bonuses and vacation benefits

are included in net operation expenses on an accrual bases. The Group and the Bank pay fixed security

contributions to the State Social Fund on behalf of its employees during the employment period in accordance

with local legal requirements and the Group and the Bank will have no obligations to pay further contributions

relating to retired employees.

(18) Loans and advances to customers

Loans and advances to customers are recorded when the Group and the Bank advance money to purchase or

originate a loan due from a customer. Based on the business model and the cash flow characteristics, the Group

and the Bank classify loans and advances to customers into one of the following measurement categories: (i) AC:

loans that are held for collection of contractual cash flows and those cash flows represent SPPI and loans that are

not voluntarily designated at FVTPL, and (ii) FVTPL: loans that do not meet the SPPI test or other criteria for

AC are measured at FVTPL.

(19) Assets under management

Assets managed by the Group and the Bank on behalf of customers are not treated as assets of the Bank and the

Group. The Group and the Bank assume no risk in relation to these assets.

(20) Investments in debt securities and Investments in equity securities

Investment securities includes Investments in debt securities and Investments in equity securities.

Investments in debt securities. Based on the business model and the cash flow characteristics, the Group and

the Bank classifies investments in debt securities as carried at AC, FVOCI or FVTPL. Debt securities are carried

at AC if they are held for collection of contractual cash flows and where those cash flows represent SPPI, and if

they are not voluntarily designated at FVTPL in order to significantly reduce an accounting mismatch.

Debt securities are carried at FVOCI if they are held for collection of contractual cash flows and for selling, where

those cash flows represent SPPI, and if they are not designated at FVTPL. Interest income from these assets is

calculated using the effective interest method and recognised in profit or loss. An impairment allowance estimated

using the expected credit loss model is recognised in profit or loss for the year. All other changes in the carrying

value are recognised in OCI. When the debt security is derecognised, the cumulative gain or loss previously

recognised in OCI is reclassified from OCI to profit or loss.

Investments in debt securities are carried at FVTPL if they do not meet the criteria for AC or FVOCI. The Group

and the Bank may also irrevocably designate investments in debt securities at FVTPL on initial recognition if

applying this option significantly reduces an accounting mismatch between financial assets and liabilities being

recognised or measured on different accounting bases.

Investments in equity securities. Financial assets that meet the definition of equity from the issuer’s perspective,

i.e. instruments that do not contain a contractual obligation to pay cash and that evidence a residual interest in the

issuer’s net assets, are considered as investments in equity securities by the Group. Investments in equity securities

are measured at FVTPL, except where the Group elects at initial recognition to irrevocably designate an equity

investments at FVOCI. The Group’s policy is to designate equity investments as FVOCI when those investments

are held for strategic purposes other than solely to generate investment returns. When the FVOCI election is used,

fair value gains and losses are recognised in OCI and are not subsequently reclassified to profit or loss, including

on disposal. Impairment losses and their reversals, if any, are not measured separately from other changes in fair

value. Dividends continue to be recognised in profit or loss when the Group’s right to receive payments is

established except when they represent a recovery of an investment rather than a return on such investment.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(21) Non-current assets classified as held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a

sale transaction rather than through continuing use and a sale is considered highly probable. They are measured

at the lower of their carrying amount and fair value less costs to sell. An impairment loss is recognised for any

initial or subsequent write-down of the asset to fair value less costs to sell. A gain or loss not previously recognised

by the date of the sale of the noncurrent asset is recognised in the profit or loss statement at the date of

derecognition. Non-current assets are not depreciated while they are classified as held for sale.

(22) New IFRS, amendments and interpretations

Standards or interpretations effective for the first time for the annual periods beginning 1 January 2023,

but did not have material impact on the Bank and the Group:

• IFRS 17 "Insurance Contracts" (effective for annual periods beginning on or after 1 January 2023).

• Amendments to IFRS 17 and an amendment to IFRS 4 (effective for annual periods beginning on or

after 1 January 2023).

• Transition option to insurers applying IFRS 17 – Amendments to IFRS 17 (effective for annual

periods beginning on or after 1 January 2023).

• Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (effective

for annual periods beginning on or after 1 January 2023).

• Amendments to IAS 8: Definition of Accounting Estimates (effective for annual periods beginning on

or after 1 January 2023).

• Deferred tax related to assets and liabilities arising from a single transaction – Amendments to

IAS 12 (effective for annual periods beginning on or after 1 January 2023).

• Amendments to IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (effective

for annual periods beginning on or after 1 January 2023).

Standards or interpretations effective for the first time for the annual periods beginning after 1 January

2024 or not yet endorsed by the EU

• Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective for annual

periods beginning on or after 1 January 2024).

• Classification of liabilities as current or non-current – Amendments to IAS 1 (effective for annual

periods beginning on or after 1 January 2024).

• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures:

Supplier Finance Arrangements (effective for annual periods beginning on or after 1 January 2024, not

yet endorsed by the EU).

• Amendments to IAS 21 Lack of Exchangeability (effective for annual periods beginning on or after 1

January 2024, not yet endorsed by the EU).

The management of the Group is still evaluating new standards and amendments (effective after 2023) impact on

the future financial statements of the Group and the Bank. At present it is not expected that any of these will have

a significant impact on the financial statements of the Group and the Bank.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

4. RISK MANAGEMENT

Within the framework of the internal control system, the Group and the Bank have developed and follow the risk

management strategy and policies, approved by the Council, which in line with the volumes, complexity and

specifics of the Group’s and the Bank's operations, define the following:

1) General guidelines observed by the Group and the Bank in their activities aimed at decreasing risks associated

with their activities which might lead to losses;

2) Description of risk transactions and other risks to which the Group and the Bank are exposed;

3) Identification and management of the significant risks, including measurement, evaluation, control, and

preparation of risk reports;

4) The procedure for setting limits and restrictions for risk transactions together with regular control and

development;

5) Measures for the regular assessment of capital adequacy and maintenance of sufficient capital to cover the

inherent risks and risks to which the Bank might be exposed to;

6) Updating of normative documents regarding the risk management process according to market changes.

The risk management strategy and policies describe and determine the aggregate of measures to ensure that the

possibility of suffering losses is minimized in the event the invested resources are not repaid in due time or the

Bank or the Group suffers other losses.

The Board of the Bank ensures the development of the risk management system as described by the risk

management normative documents; the Board, the Investment Committee, Credit Committee, Non-financial Risk

Management Committee and Customer Activity Compliance Control Committee make the key decisions

according to their regulations. Risk Officer is responsible for the overall control and monitoring of the risk

management system. Independent risk management departments ensure risk management on a daily basis. The

risk management system is monitored by the Internal Audit Service on a regular basis is being continuously

developed pursuant to the development of the Group and the Bank and activities on financial markets. The Board

and the Council regularly receive and review the information on risk management, implementation of the strategy

and policies approved by the Council. Risk management is carried out both on the Group and Bank level.

(1) Credit risk

Credit risk is the risk of potential loss resulting from the inability or refusal to fulfil any contractual obligations

by the Group’s or the Bank’s debtor or counterparty.

Credit risk is managed in accordance with the Risk management Strategy and the Credit Risk Management Policy,

approved by the Council of the Bank. This policy details the basic principles of credit risk management,

identification, assessment, mitigation and control.

The management of risks associated with ordinary loans involves the assessment of the potential borrower’s credit

standing that is performed by the Financial Analysis and Risk Management Department. Decisions on granting

of loans are made by the Credit Committee or the Board, based on the above analysis and evaluation of collateral.

Subsequent to granting a loan, the Financial Analysis and Risk Management Department performs a regular

analysis of the borrower’s financial position, which enables the Bank and the Group to take prompt action in the

case of deterioration of the borrower’s financial position.

Following the Russian military invasion of Ukraine on 24 February 2022, the European Union, the United States

and other countries have imposed a series of financial and other sanctions against Russian and Belorussian state

institutions, companies and individuals, resulting in a sharp collapse of Russian stock, debt and currency markets.

The Bank does not have assets, loans or other financial investments that could be significantly affected by the

above events. Also, the Bank does not have significant financial cooperation with financial institutions in Russia,

Belorus or Ukraine. In the light of foreseeable risks, the Group and the Bank have already taken the necessary

steps to mitigate the potential impact associated with the initiated hostilities on the territory of Ukraine and the

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

sanctions imposed by the international community on Russia. Therefore, the Bank does not see significant credit

risks or other losses in the context of the geopolitical situation.

The real estate market does not react as quickly to changes in energy prices, currently we do not see significant

changes. Although the Bank as a whole, of course, looks cautiously at the coming periods and monitors the

situation on the market and the Bank’s borrowers.

As for commercial facilities, it should be taken into account that borrowers (owners of facilities that rent premises)

most often transfer utility payments to tenants, under the terms of the lease agreements, and there are no negative

trends yet (such as renegotiation of lease terms or outflow of tenants). Of course, the increase in interest rates

(EURIBOR) has or will have a negative impact on the borrowers’ DSCR, however, the Bank most often finances

customers with a sufficient level of DSCR. Accordingly, a reserve has been provided for a potential deterioration

in cash flow.

As of the end of 2023, no significant deterioration has been detected for customers; however, the Bank is cautious

about the near term, especially with regard to customers, whose own costs of production are significantly driven

by energy consumption (food industry, manufacturers of building materials, other manufacturing enterprises with

high energy consumption). The Bank continues to closely monitor the situation and supervise the conditions of

these loans, working proactively with the client to identify in a timely manner any signs of deterioration in the

financial situation. It should be noted that the concentration of any industry in the Bank’s loan portfolio does not

exceed 20%, while each borrower is assessed individually.

Credit risk that is related to inter-bank operations (or operations with financial institutions), including the credit

risk related to inter-bank settlements and the Bank’s investments in debt securities, is controlled by the Bank’s

Investment Committee that sets limits for transactions with each counterparty and issuer.

The Bank and the Group monitor the concentration of significant assets, liabilities, as well as contingent liabilities

and commitments’ credit risk by geographical regions, customer groups and types (i.e. central governments, local

authorities, state enterprises, private enterprises, private individuals, etc.) and industries.

Impairment policies

An important part of the credit risk management is the estimation of provisions under IFRS9, which mostly is

based on the assessment of credit risk of financial instruments. As a result of the assessment, all assets are divided

into stages according to the level of credit risk and changes thereof.

The Bank and the Group recognize an allowance for expected credit losses on all loans and other debt financial

assets, except financial assets which are valued as FVTPL, together with loan commitments and financial

guarantee contracts.

The Bank’s ECL calculations are outputs of complex models with a number of underlying assumptions regarding

the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered in

accounting judgements and estimates include:

- the criteria for assessing the significance of an increase in credit risk and the criteria for granting the Stage 1,

Stage 2 or Stage 3 loans that meet the requirements of IFRS9;

- assessing the accounting interpretations and modelling assumptions used to build the ECL calculation models,

including various formulas and choice of inputs;

- modelling and calculation of key parameters of ECL model, including probability of default (PD), loss given

default (LGD) and exposure at default (EAD);

- determining the macro-economic indicators and incorporating forward-looking information into the ECL model,

as described below;

- estimating the above-mentioned indicators for individually assessed loans for a credible future period and

calculation of ECL based on cash flow.

In order to estimate the expected credit loss (ECL) for debt securities, inter-bank deposits, letters of credit and

financing against securities portfolio, the statistics of historical defaults and recovery rates by Moody’s is used.

Historical PD is applied accordingly to instruments’ or issuers’ external credit ratings. If an instrument has not

any external rating, it is conservatively assumed to apply historical data which is relevant for the rating B-. For

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

the instruments with prime grades, where historical PD is equal to 0%, it is assumed to take PD=0.005%. PD

under these scenario ranges from 0.005% for prime grade instruments to 7.41% for instruments with the lowest

ratings. Significant increase in credit risk for such instruments is recognized, for example, if the instrument is

downgraded and PD corresponding to the new rating increases by at least 100bp or if the issuer of the security

proposed to revise the prospectus of the asset issue.

The approach for ECL calculations for a loan portfolio is based on both a collective and individual assessment.

Loans not classified for Stage 3 assets are assessed individually if they meet at least one of the following criteria:

• The balance of the principal amount of loans granted to one customer or a group of related customers

is not less than 3 million EUR;

• The balance of the principal amount of loans issued to one customer or a group of related customers

exceeds 500 thousand EUR and the total risk rating set in accordance with the “Methodology for

assessing the credit risk of borrowers” is 4 or lower.

• The risk profile of a customer (a group of related customers) is quite different from the groups for

which impairments are calculated collectively.

The calculation of collective impairments is carried out by applying a statistical model based on historical data of

the Bank’s credit portfolio for the calculation of PD rates. The Bank calculates PD rates using the Weibull

approach, which is widely used in credit institutions of various sizes, both in the domestic and foreign markets.

The Weibull approach is particularly well suited for calculating PD rates for portfolios with a low number of

historically observed defaults.

The Weibull approach is a PD calculation method that is often used in the industry when other methods based on

a larger volume of historical data cannot be applied. For example, if the homogeneous Markov chain approach is

not applicable due to insufficient historical data or few default events, the Weibull approach can be applied. With

the Weibull approach, historically observed defaults are adjusted (interpolated) to the function curve, resulting in

PD rates with relatively small amounts of data.

To calculate PD in accordance with this approach, historical transaction data on the number of new and unique

defaults are collected, aggregating the data into homogeneous groups.

Dividing the number of defaults by the total number of transactions in the relevant period, the default rate (DR)

and its cumulative values are calculated.

With the Weibull function, historical default data is replicated for each future period and PD cumulative rates are

calculated based on the interpolated Weibull curve.

PD rates are calculated for each homogeneous group separately, based on the historical data of the Bank’s credit

portfolio at the end of each month for at least 36 months, covering data on the Stage classification of each

transaction and covering data on exposures assessed both individually and in homogeneous groups and on the

number of observed defaults of exposures. If the data does not reflect current market conditions or if historical

data is available for a shorter historical period, data for a shorter period of time is used, which is representative of

exposures as of the date of ECL calculation.

The Bank models the exposure at default (EAD) every time ECL is calculated based on the payment schedule

specified in the agreement and the use of unused credit limits (off-balance sheet obligations).

LGD is calculated at the level of homogeneous portfolio groups or the type of pledged asset, and the calculation

is updated at least once a year. At least once a year, the Bank analyses whether the factors by which LGD groups

are differentiated are relevant and representative for the current portfolio.

LGD is applied to each risk transaction according to its homogeneous group or type of pledged asset. The Bank

applies LGD calculated on the basis of assumptions about the adjustment of the value of recoverable funds

depending on the type of mortgaged property.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

To adjust the ECL with macroeconomic forecasts, the Bank uses the following approaches:

1) Performs statistical calculations that take into account historical correlations between macroeconomic

indicators and the observed probability of default, and, based on forecasts of macroeconomic indicators,

determines the applicable adjustments for future PD rates;

2) Uses an expert assessment based on historical data or publicly available source data, or uses information

provided by third-party assessment experts.

To adjust the PD of the loan portfolio taking into account forward-looking information, the Bank uses a

macroeconomic model, which is developed on the basis of the principles of the one-factor stochastic Vasicek

model. The model predicts the development of PD rates due to a single market factor that has a significant impact

on the probability of default.

To calculate ECL and forecast future PD rates, a baseline scenario is used, supplemented by one or more

alternative scenarios reflecting at least one pessimistic scenario, for example, with a probability of occurrence of

85% and 15%, respectively. Alternative scenarios do not necessarily include less likely extreme or stressful

scenarios. The macroeconomic scenarios used for the end of 2023 include forecasts that take into account the

impact of negative geopolitical and macroeconomic events.

The PD and LGD rates are adjusted taking into account the weighted value of all scenarios, using the probability

distribution of scenarios as weights.

For ECL calculation, the Bank uses the approach PD*EAD*LGD. The approach focuses on each of the variables

PD, EAD and LGD separately, which are applied to each of the exposures, on a monthly cash flow basis, in order

to obtain the projected amount of ECL in the months up to the final maturity of the loan.

By applying the individual calculation approach, the Bank for Stage 1 loans calculates the expected loss for the

next 12 month and for Stage 2 loans calculates the expected loss during the life of the asset as the difference

between the future cash flow due to the Bank under the loan agreement and the future cash flow it expects to

receive from the relevant asset. For Stage 1 and Stage 2 loans, the Bank assumes that the debtor will fulfil the

obligations in accordance with the repayment schedule specified in the loan agreement and applies the

PD*EAD*LGD approach.

The bank predicts the development of EAD according to the loan repayment schedule and applies historically

observed forward-adjusted PD rates to a comparable sub-portfolio valued in homogeneous groups. If the credit

in question has quite a different risk profile from the established homogeneous groups, the PD rates shall be

applied according to the expert method, duly substantiated and documented.

LGD is estimated individually based on the assessment of the future cash flow for the corresponding loan in case

of default. The future cash flow is discounted by applying the effective interest rate (EIR) or its estimate based

on the interest rate applicable to the loan at the time of analysis, as well as on commissions for granting and

servicing the corresponding loan. If the Bank does not have access to information on the EIR applicable to the

loan, the Bank accepts the EIR equal to the interest rate applicable to the loan. The future cash flow from the debt

obligations of the debtor in question is calculated at the level of individual contracts.

For Stage 3 loans, the Bank assumes that the debtor will not fulfil obligations in accordance with the repayment

schedule specified in the loan agreement, and the future cash flow could result from the sale of the collateral,

minus the related expenses, discounted by applying the EIR or its estimate based on the interest rate applicable to

the loan at the time of analysis, as well as on commissions for granting and servicing the corresponding loan.

In 2023 the Bank implemented some changes in the ECL calculation methodology by introducing different

scenarios. Multiple scenarios introduced for the individually assessed Stage 1 and Stage 2 loans. These scenarios

show the possibility of the development of various events. Base case scenario – predicts cash flows from loan

repayment (in accordance with the contract), in case, based on the data of the performed analysis, the cash flow

of the borrower's business activity is sufficient for loan repayment in accordance with the schedule established

by the contract. Negative scenarios assume that the cash flow from business activity is not sufficient to repay the

loan according to the planned loan repayment schedule, and then the coefficient is included for the repayment

schedule. Although other scenarios assume that, the sale of collateral occurs with the larger discounts than applied

in the Base case scenario. Furthermore, another negative scenario is applied, in which it is assumed with a small

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

probability that in case the Bank is unable to take over any of the collateral due to unlikely and unforeseen events,

as a result of which LGD=100% in the calculation.

To calculate the resulting ECL, the probability of occurrence is included in each scenario. The amount of ECL

and the ECL coefficients calculated in each scenario are weighted, by the probability applied to that scenario and

the results for all scenarios are being summed.

Scenarios for Stage 3 loans assume that cash flow is generated only as a result of collateral sale.

Impairments for different financial instruments are recognized based on calculated ECL coefficients and these

coefficients change dynamically depending on the outstanding amount for each instrument.

(2) Currency risk

Foreign exchange risk is the risk of potential loss as a result of the revaluation of assets, liabilities, as well as

contingent liabilities and commitments denominated in foreign currencies due to change in exchange rates.

The Bank and the Group continuously monitor the open positions of foreign currencies and regularly assesses the

structure of assets and liabilities by currency.

An analysis of sensitivity of the Bank’s net profit or loss for the year and comprehensive income to changes in

the foreign currency exchange rates based on positions existing as at 31 December 2023 and 31 December 2022

and a simplified scenario of a 5% change in the USD to EUR exchange rates is as follows:

		2023		2022
EUR’000	Profit or	Shareholders’	Profit or	Shareholders’
	loss	equity	loss	equity
5% appreciation of USD against EUR	(115)	(115)	(74)	(74)
5% depreciation of USD against EUR	115	115	74	74

An analysis of the foreign currency position is presented in Note 38.

(3) Interest rate risk

Interest rate risk is related to potential losses incurred by the Group and the Bank due to movements in interest

rates.

For controlling the interest rate risk, the Investment Committee performs regular analyses of assets and liabilities

by maturity and type of interest. A change of interest rates by 100 basis points would result in the following

changes in profit or loss and capital and reserves:

	2023	2022
	EUR’000	EUR’000
EUR	703	537
USD	(51)	(76)

The interest reprising analysis is disclosed in Note 39.

(4) Debt securities price risk

Debt securities price risk is the potential loss that may arise to the debt securities included in the trading portfolio

due to the decline in market prices as a result of changes in market factors.

The debt securities price risk is managed by the Bank by setting limits on the total amount of the trading portfolio,

as well as purchasing debt securities with relatively short maturities that are less sensitive to price risk.

			Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023
Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements BluOr Bank AS
	2023		2022
EUR’000		OCI	Profit or	OCI
	Profit or loss		loss
10% increase in securities prices	-	2 067	-	2 599
10% decrease in securities prices	-	(2 067)	-	(2 599)
	35

(5) Liquidity risk

Liquidity risk is the risk of potential loss as a result of sales of assets or acquisition of resources at unfavourable

prices in order for the Group and the Bank to fulfil its liabilities to creditors and depositors.

The Bank focuses on a conservative approach to liquidity management. The Bank allocates funds (attracted

mainly from deposits) to assets in order to maintain an asset structure that is appropriate to support the Bank’s

operations (executing of customers’ transactions) and comply with regulatory requirements concerning the

liquidity ratio even in case of a significant outflow of customer deposits or a significant decrease in liquidity on

the securities market.

The procedures for the management of the liquidity risk are described in the Liquidity Management Policy and

consist of several components: liquidity risk indicator system, balance sheet planning, stress testing, and limits

for investments in assets of limited liquidity.

The purpose of liquidity risk indicators is to reflect the actual level of the Bank's liquidity risk and quickly identify

any increase in liquidity risk. The Bank's Liquidity Risk Management Policy determines specific actions to

improve the Bank's liquidity position when liquidity risk indicators reach certain levels.

The aim of liquidity risk stress testing is to measure the deficit or surplus of the Bank's liquid assets that may

occur due to significant outflows of customer deposits or a significant decrease in liquidity on the securities

market. Based on the results of stress testing, the Bank’s Investment Committee sets limits on investments in

assets of limited liquidity.

The reported ratio of net liquid assets versus current liabilities at the reporting date were as follows:

	2023	2022
As at 31 December	77.34%	72.29%

Net liquid assets include cash and cash equivalents, bonds and receivables from credit institutions net of current

liabilities.

Liquidity Coverage Ratio (LCR) at the reporting date was as follows:

	2023	2022
As at 31 December	176.7%	179.8%

In accordance with ‘Normative regulations on establishing a capital and liquidity adequacy assessment process’

No. 209 of the FCMC, the Bank carries out the assessment of the liquidity reserve adequacy necessary for its

operations within the liquidity adequacy assessment process (ILAAP). Liquidity analysis is presented in Note 36.

(6) Country risk

Country risk is the risk of potential losses arising from transactions with residents of foreign countries (or their

securities) due to changes in the economic, political, and legal environment of the respective countries.

Before entering into transactions with residents of foreign countries, the Group and the Bank perform an

assessment of the influence of economic, social, political and legal circumstances on the residents’ ability to fulfil

their obligations.

The Group and the Bank, pursuant to the State risk management policy, set the limits on placement of assets for

the respective country.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(7) Operational risk

Operational risk is the risk of incurring losses from inadequate or improper internal processes, human errors and

errors in the operation of systems, or from external events, including legal risk, but excluding strategic and

reputation risk.

The principles of the operational risk management at the Group and the Bank are established in the internal

regulations of the Bank, by setting:

▪ Organizational structure, division of powers and the principles of delegation, functional duties, procedure

for the exchange of information among the structural units and employees;

▪ Rules, regulations and procedures for operations and other transactions, the accounting procedure and the

organisation of internal processes;

▪ Control over the compliance with the limits set for bank operations and other transactions;

▪ Rules, regulations and procedures for the functioning of information systems (technical, informational,

etc.);

▪ Procedure for granting rights of access to information and material assets;

▪ Procedure for preparing and issuing reports and other information;

▪ Procedure for motivating employees, and other matters.

To ensure efficient conditions for the identification and assessment of the operational risk at the Group and the

Bank, the Bank has established the Operational Risk Management Department, responsible for personnel training

on the matters of operational risk. The Operational Risk Management Department has an operational event

database in place, which ensures receiving information about operational risk events, thus enabling proper

recording, management and addressing of risks.

A systemic approach is applied in the identification and management of risks characteristic to new financial

services and products as part of the approval process of the new services and products. This process involves all

the structural units providing control and support functions together with structural units of the relevant business

lines in order to ensure the assessment of the new financial services or products.

The Bank’s Business Continuity Plan (BCP) includes actions and measures to be taken in various crisis situations

and related operational risks, including possible events related to disruption of IT and support services,

unavailability of critical resources or suppliers. Having assessed the Bank’s BCP and operational risks that may

arise as a result of the development of the geopolitical situation, we have concluded that the BCP includes the

main risks of a possible crisis of the geopolitical situation. The Bank has its own Client Service Centre, which

also provides the Bank’s clients with cash and settlement operations, as well as, if necessary, the Bank can quickly

increase the volumes of on-site customer service. The Bank and the Group has assessed and tested the existing IT

infrastructure capacity and defence capacity, especially taking into account the potential of cyber-attacks and

concluded that the IT infrastructure capabilities are sufficient to repel the most likely cyber-attacks with

acceptable impact. The general testing of the BCP is provided on a regular basis, and within its framework the

Bank ensures the provision of critical operational functions.

The Group and the Bank have also developed Action plans for various crisis situations. The Group and the Bank

have set up an independent structural unit – Internal Audit Service (IAS), the main functions of which also include

evaluation of the activities of the Group and the Bank in accordance with the applicable laws and regulations,

approved plans, policies and other internal documents of the Bank, and compliance with the internal control

procedures of the Group and the Bank’s structural units.

(8) Money laundering and terrorism and proliferation financing and sanctions risk management

The existing business model of the Group and the Bank is aimed at providing high-quality financial services to

clients, while ensuring an effective internal control system, thereby reducing the risk of the Bank being involved

in money laundering and terrorism and proliferation financing, or circumventing international, OFAC or national

sanctions. The Group and the Bank improve the internal control system on a regular basis in compliance with the

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

requirements of the laws and regulations of the Republic of Latvia and international guidelines and

recommendations of good practice.

The Bank has approved the Anti-Money Laundering, Combating the Financing of Terrorism and Countering

Proliferation Financing (hereinafter – AML/CFT/CPF) Policy and the Sanctions Risk Management Policy, which

establish:

- The basic principles of conducting customer due diligence before the establishment of the business relationship

and during the business relationship, client identification, determining the beneficial owner and monitoring

transactions, following a risk-based approach;

- The basic principles of assessing, determining and successfully managing the client’s risk of money

laundering, financing of terrorism and proliferation and risk of sanctions, defining risk mitigation measures;

- The basic principles of identifying suspicious transactions and timely reporting to the competent government

authorities;

- The procedure for terminating business relationship with clients upon identifying disproportionate or

costly/difficult to manage risks of sanctions/money laundering, financing of terrorism and proliferation.

During the business relationship with the client, the Bank ensures updating of the client’s file, following a risk-

based approach. Client files are regularly supplemented and updated with the results of studying client activity

and their transactions, as well as documents supporting transactions. In the opinion of the Bank’s management,

knowing the client’s type of economic activity, operational geography, monitoring their transactions and

refraining from the execution of suspicious financial transactions, the Group and the Bank minimize the risk of

being involved in potential money laundering and terrorism and proliferation financing activities, as well as

reduce the risk of being involved in violation or circumvention of sanctions or such attempts.

The Bank has approved the Strategy for Managing the ML/TF/PF and Sanctions Risk, which sets out the key

principles for managing the ML/TF/PF risk and the risk of sanctions, development of internal control system, risk

identification measures, and risk mitigation and control mechanisms. Taking into account the Bank’s strategy,

the ability of the Bank to manage the ML/TF/PF risk and the risk of sanctions, and the available resources, the

Strategy for Managing the ML/TF/PF and Sanctions Risk sets out the ML/TF/PF risk exposure rates and

maximum permissible limits in order to effectively know and control the ML/TF/PF risk and the risk of sanctions

associated with the activities of clients.

The Strategy for Managing the ML/TF/PF and Sanctions Risk, the AML/CFT/CPF Policy and Sanctions Risk

Management Policy establish requirements for such organisational structure elements, which are based on the

following principles of three-tier protection and control:

— Tier 1 controls — employees of business structural units in charge of acquiring and servicing customers,

ensuring compliance with the ‘Know Your Customer’ (KYC) and ‘Know Your Customer’s Customer’

(KYCC) principles both when entering into a business relationship with the client and during business

relationship. Each employee of the Bank’s structural units is responsible for knowing and complying with

ML/TF/PF and sanctions risk requirements in cooperation with clients, as well as for promoting and

respecting the professional internal culture in accordance with the Corporate Ethics Standards Code.

— Tier 2 controls — structural units in charge of client due diligence prior to establishing business relationship

and during the business relationship, monitoring of client transactions and support function, that provide

independent research and acceptance of clients, supervision of servicing, analysis of client transactions,

issue of opinions on planned client transactions, and reporting to national competent authorities, such as the

Financial Intelligence Unit, the State Revenue Service, the State Security Service, and the Bank of Latvia

[Latvijas Banka]. Tier 2 controls also include employees responsible for supervision such as risk

management officers, operational compliance officers, heads of structural units.

— Tier 3 controls are implemented by the Internal Audit Service through independent and regular management

of the ML/TF/PF and sanctions risk and assessment of controls.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

The Bank has appointed a Board member in charge of the ML/TF/PF and sanctions risk management, as well as

has approved employees responsible for enforcing the requirements of AML/CFT/CPF and sanctions risk

management.

The Bank’s internal control system in the area of ML/TF/PF and sanctions risk management is based on the

principle of distribution of certain duties and responsibilities between structural units and employees, determining

the procedure for making decisions, responsibility for monitoring the client activities and the foundations for the

activity of compliance units. The Client Activity Compliance Control Committee has been set up in the Bank,

whose competence and responsibility is to make decisions regarding high-risk clients before the establishment of

business relationships and during the business relationships, both as part of transaction monitoring and due

diligence. The Client Activity Compliance Control Committee ensures the effective functioning of the internal

control system, making decisions on risk management measures as well.

(9) Management of compliance risk

Compliance risk is a risk that the Group or the Bank may incur losses or may be subject to legal obligations or

sanctions, or its reputation as an institution may be damaged due to non-compliance of its operations or violation

of the requirements of laws, rules and standards in the area of compliance.

The Bank has introduced the compliance control system, which is based on the principle that the function of

compliance control in the Bank is provided by an organisationally separated unit — the Compliance Control

Department. In order to ensure the compliance function, the Bank has appointed compliance experts, —

employees of the Bank’s structural units, experts in the field concerned.

The Bank has appointed a personal data protection officer in charge of organising, controlling and supervising

the compliance of personal data processing at the Bank with the requirements of the regulatory enactments of the

European Union and the Republic of Latvia. The main goal of the compliance control function is to ensure the

identification, assessment and management of the compliance risk. The purpose of the compliance control

function is to ensure the identification, documentation, assessment of the compliance risk, by ensuring that prior

to the initiation of any new activity, the compliance risk associated with the respective activity is identified, and

the Bank’s compliance with compliance laws, rules and standards is assessed.

Operational compliance describes the Bank’s ability to operate in accordance with binding compliance laws,

regulations and standards, which can further be subdivided in 2 levels:

- Compliance with external requirements in general (requirements integrated in the internal regulatory

documents and processes);

- Appropriate internal control system capable of ensuring continued compliance with the relevant

requirements.

The Group and the Bank have introduced an internal whistleblowing system providing for reporting on

deficiencies and other violations of the internal control system and ensuring the protection guarantees for

whistleblowers pursuant to the Whistleblowing Law.

Within the framework of corporate governance, the process of identifying and managing conflict of interest

situations, as well as preventing corruption, is constantly being improved, the approach to obtaining information

about situations that may cause conflicts of interest or corruption cases for the Bank is systematized.

The system for reporting and providing information to internal and external information requests is continuously

reviewed and updated.

The Bank has established unified principles and terms for receiving outsourcing services, including the conditions

for outsourcing providers, control over the execution of the outsourcing agreement and supervision of outsourcing

providers, as well as the procedures by which the Bank manages and minimizes the risks associated with

outsourcing.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(10) Sustainability risk

Sustainability risk is the risk that an event or circumstance in the field of environmental, social or governance

(ESG) will negatively affect the value of investments. Environmental events could be related to regulatory or

legal issues, technology risk or reputation risk. Social events are mostly related to employment issues. Corporate

governance events are related to the company’s code of conduct, diversity of representation and the rights of

minority shareholders. Sustainability risks can take many forms, including risks specific to a particular company,

industry, and country, where political risks and the rule of law are at the core. The occurrence of sustainability

risk may adversely affect the value of investments.

EU legislation sets standards for integrating sustainability risks into the investment process. Sustainability risk

can affect investments both positively and negatively. Therefore, the Bank is committed to introduce the

necessary measures so that sustainability factors are taken into account in the investment decision-making

process.

Our mission is to create positive long-term investment results for our clients and we believe that this can only be

achieved by taking full consideration of sustainability factors. Strong ESG compliance reduces the risk that our

investments returns can be compromised by exogenous risk.

As one way of realizing its duty as a responsible investor, the Bank considers sustainability factors among other

factors when voting at general meetings based on our delegated voting authority on shares owned by our clients

in line with the Bank’s Participation Policy.

The Bank understands that sustainability factors can influence target prices and the basic assessment of aspects

such as a company, a country, an economic sector, and the investment management strategy; therefore, we

undertake to introduce the necessary measures so that sustainability factors are taken into account in the selection

and monitoring of investments. In fact, we have invested in a number of companies and sectors that we believe

will benefit from increasing institutional investor demand for higher ESG compliance in the future. We monitor

the ESG strengths of our chosen investments through reports and management follow-up of the implementation

of ESG targets. We believe that responsible, ESG compliant investing can be a strong catalyst for positive change,

and will ultimately deliver higher, sustainable returns for all stakeholders.

(11) Capital management

The Bank’s Capital Adequacy Management Policy requires maintenance of a strong capital base so as to maintain

investor, creditor and market confidence and to sustain future development of the business as well as to ensure

the Bank’s capital at an adequate level for covering potential risks arising from current and future operations.

As at 3l December 2023, the Bank's capital adequacy ratio was 16.19% (2022: 18.18%) which corresponds to the

requirements set in the Basel Capital Accord and the regulations of the LB. Under the capital requirements

introduced by Regulation (EU) No 575/2013 of the European Parliament and of the Council and the LB banks

need to maintain a ratio of capital to risk weighted assets (“statutory capital ratio”) above the prescribed minimum

level. Although the minimum required level as at 31 December 2023 was 8%, according to a special request by

the LB the Bank was required to ensure a higher capital adequacy of 11.60% during the period from 1 January

2023. In addition to the above capital requirement for the overall risk coverage, the Bank is required to maintain

compliance with the total capital reserve requirement calculated in accordance with Section 35

, 35

of the Credit Institution Law -2.93% (Capital conservation buffer – 2.50%, institution-specific

countercyclical capital buffer – 0.18% (as at 31.12.2023), other reserve -0.25%). The requirements of the total

capital reserve should be met using Tier 1 capital.

During the years 2023 and 2022 as of 31 December of these years the Bank and the Group were in compliance

with the capital adequacy and the minimum capital requirement specified in the Law On Credit Institutions and

the rules of the LB, as well as in compliance with the higher ratio required by the LB. For the calculation of capital

adequacy as at 31 December 2023 refer to Note 44.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

5. USE OF ESTIMATES AND JUDGMENTS

The preparation of financial statements in conformity with IFRS as adopted by EU requires management to make

judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and

liabilities, income and expenses. Although these estimates are based on management’s best knowledge of current

events and actions, the actual results ultimately may differ from those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the accounting

estimates are recognized in the period, in which the estimate is revised if the revision affects only that period, or

in the period of the revision and future periods if the revision affects both current and future periods.

The Group’s and the Bank’s management makes significant estimates and judgements in respect of expected

credit losses on loans and receivables (see note “Risk management – Credit risk”).

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

6. NET INTEREST INCOME

		2023		2022
	Group	Bank	Group	Bank
Interest income	EUR'000	EUR’000	EUR’000	EUR’000
Interest income from financial assets at amortized	35 061	35 061	20 395	20 395
cost (loans):
Deposits with credit institutions	5 874	5 874	506	506
Loans and receivables	29 187	29 187	19 889	19 889
including interest income on impaired loans	627	627	575	575
Interest income from financial assets measured at fair value through other comprehensive income	255	255	64	64
Interest income from financial assets measured at amortised cost (fixed income securities)	1 578	1 578	1 378	1 378
Other interest income	168	168	1 010	1 010
Total interest income	37 062	37 062	22 847	22 847
Interest expense
Interest expense from liabilities measured at amortized cost:	9 311	9 311	2 641	2 641
Deposits	9 311	9 311	2 641	2 641
Interest expense on issued bonds	491	491	313	313
Payments to the Deposit Guarantee Fund and other funds	1 058	1 058	1 046	1 046
Other interest expense	663	978	1 258	1 589
Total interest expense	11 523	11 838	5 258	5 589
Net interest income	25 539	25 224	17 589	17 258

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

7. NET FEE AND COMMISSION INCOME

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Fee and commission income
Money transfers	1 946	1 947	1 096	1 097
Commissions on loans monitoring and service	808	808	551	551
Securities transactions	1 147	1 147	910	910
Assets management	316	316	322	322
Client service	6 546	6 546	6 072	6 072
Payment card service	1 844	1 844	1 421	1 421
Total fee and commission income	12 607	12 608	10 372	10 373
Fee and commission expense
Money transfers	57	57	73	73
Payment card service	1 326	1 326	1 407	1 407
Securities transactions	347	347	390	390
Other	13	13	60	60
Total fee and commission expenses	1 743	1 743	1 930	1 930
Net fee and commission income	10 864	10 865	8 442	8 443

Fee and commission income and expense is accounted according to the point in time principles. The Group and

the Bank did not have any agreements with multiple performance obligations.

8. NET (LOSS) / PROFIT FROM TRADING AND REVALUATION OF FINANCIAL

INSTRUMENTS

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Net (loss) / profit from trading with financial assets at fair value through profit or loss	(100)	(100)	(1 093)	(1 093)
Net profit from trading with financial assets not measured at fair value through profit or loss	(203)	(203)	(415)	(415)
Net profit/(loss) from revaluation of financial assets and liabilities at fair value through profit or loss	86	86	(197)	(197)
Net profit from trading and revaluation of financial	(217)	(217)	(1 705)	(1 705)
instruments

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

9. NET FOREIGN EXCHANGE TRADING AND REVALUATION INCOME

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Net profit from foreign exchange transactions	222	222	1 070	1 070
Net profit / (loss) from revaluation of foreign exchange	(161)	(161)	102	102
Net foreign exchange income	61	61	1 172	1 172

10. OTHER OPERATING INCOME

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Fines received	281	281	201	201
Dividends received	18	18	36	36
Other	1 371	1 296	705	633
Total other operating income	1 670	1 595	942	870

11. ADMINISTRATIVE EXPENSES

			2023		2022
		Group	Bank	Group	Bank
		EUR’000	EUR’000	EUR’000	EUR’000
Salaries to the members of the Board and Council		978	978	869	869
Staff remuneration		7 985	7 864	6 257	6 149
Compulsory state social security contributions (Board		231	231	205	205
and Council)
Compulsory state social security contributions (staff)		1 701	1 673	1 448	1 423
Other staff costs		68	66	45	43
Communications and transport		255	247	250	242
Professional services		595	578	807	792
Public utilities and maintenance		700	644	650	609
Depreciation costs	23	1 214	1 005	1 356	1 055
Amortization costs	24	132	132	189	189
Computer network		380	380	370	370
Advertisement and marketing expenses		355	355	281	280
Other taxes		674	469	577	379
Insurance		99	94	83	80
Audit fee		184	184	135	135
Other		649	639	178	170
Total administrative expenses		16 200	15 539	13 700	12 990

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

The average number of employees in the Group in 2023 was 216 (2022 – 200) and in the Bank was 211 (2022

– 195).

In 2023, the remuneration of the sworn auditor was 183.7 thousand EUR, including 172.7 thousand EUR for

the audit of financial statements (consolidated financial statements), 5.5 thousand EUR for the certification

task related to the conclusion whether the Bank has complied with the requirements of the Financial

Instruments Market Law with respect to its obligations regarding t the separation of financial instruments, the

separate holding of financial instruments and funds of clients, and 5.5 thousand EUR for the certification task

related to the conclusion whether the Bank has complied with the requirements of the Deposit Guarantee Law

in preparing its report on covered deposits and payments to the Deposit Guarantee Fund.

In 2022, the remuneration of the sworn auditor was 135 thousand EUR, including 125 thousand EUR for the

audit of financial statements (consolidated financial report), 5 thousand EUR for the certification task related

to the conclusion whether the Bank has complied with the requirements of the Financial Instruments Market

Law with respect to its obligations regarding t the separation of financial instruments, the separate holding of

financial instruments and funds of clients, and 5 thousand EUR for the certification task related to the

conclusion whether the Bank has complied with the requirements of the Deposit Guarantee Law in preparing

its report on covered deposits and payments to the Deposit Guarantee Fund.

12. OTHER OPERATING EXPENSES

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Membership fees	300	300	306	306
Fees for real estate management	3	-	2	2
Royalties for the use of a trademark	1 163	1 163	1 161	1 161
Other	413	419	214	215
Total other operating expenses	1 879	1 882	1 683	1 684

In 2023, as part of its operating activities the Bank made payments of EUR 1 163 thousand (2022: EUR 1 161

thousand) for the use of the registered trademark BluOr to the owner of this trademark (licensor). The owner

of trademarks is responsible for trademark registration, legal protection and brand development and promotion

activities.

13. IMPAIRMENT OF NON-FINANCIAL ASSETS

Impairment of assets for the Group

	2023	2022
	EUR’000	EUR’000
Total allowances as at the beginning of the reporting period	3 506	3 608
Release of allowances for investment property	-	(97)
Investment property written off during the reporting year	-	-
Other assets written off during the year	(6)	(5)
Total allowance as at the end of the reporting period*	3 500	3 506

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

*including impairment for investment properties 2,740 thousand EUR (see Note 22), and investments in associates 1,021

thousand EUR (see Note 21).

Impairment of assets for the Bank

	2023	2022
	EUR’000	EUR’000
Total allowances as at the beginning of the reporting period	5 474	5 474
Impairment for investments in subsidiaries	1 400	-
Total allowance as at the end of the reporting period*	6 874	5 474

*_ including impairment for investment properties 1,607 thousand EUR (see Note 22) and investments in subsidiaries 5,267

thousand EUR (see Note 21).

14. CORPORATE INCOME TAX

		2023		2022
	Group	Bank	Group	Bank
Corporate income tax for additional payment for credit	EUR’000	EUR’000	EUR’000	EUR’000
institutions	(3 141)	(3 141)	-	-
Corporate income tax for dividends	(906)	(906)	-	-
Corporate income tax for the conditionally distributed profit	(13)	(13)	(12)	(12)
Total corporate income tax	(4 060)	(4 060)	(12)	(12)

Income tax liabilities

2023

2022

Group

Bank

Group

Bank

EUR’000

Corporate income tax for additional payment for credit

institutions

(3 141)

Corporate income tax for dividends

(629)

Total income tax liabilities

(3 770)

(12)

According to the Law on Corporate Income Tax of the Republic of Latvia adopted on 28 July 2017, and effective

as of 1 January 2018, a 20% rate is only applied to distributed profits while a 0% rate is expected to be applied to

undistributed profits. Therefore, deferred tax assets and liabilities are recognisable at nil amount as of 31

December 2023 as the Group and the Bank have full discretion on the distribution decisions.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

15. CASH AND DEMAND DEPOSITS WITH CENTRAL BANK

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Cash	576	576	652	652
Balance with the Bank of Latvia (including the minimum	337 448	337 448	119 875	119 875
reserve deposit)
Total	338 024	338 024	120 527	120 527

According to the regulations of the Bank of Latvia, the total amount of funds on the account with the Central

Bank should not be less than the amount of the obligatory reserves calculated from the average amount of

customer deposits during the month. The obligatory reserve as at 31 December 2023 was EUR 6 888 thousand

(2022: EUR 5 304 thousand).

Cash and balances with the Bank of Latvia are available on demand, thus, taking into account very low

probabilities of default of these balances, expected credit loss is immaterial.

16. LOANS AND RECEIVABLES FROM CREDIT INSTITUTIONS

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Demand deposits with credit institutions
Credit institutions registered in Latvia	-	-	1	1
Credit institutions registered in OECD countries	19 257	19 249	23 967	23 953
Credit institutions of other countries	5 937	5 937	1 338	1 338
Total demand deposits with credit institutions	25 194	25 186	25 306	25 292
Expected credit loss allowance	(416)	(416)	-	-
Total deposits with credit institutions	24 778	24 770	25 306	25 292

The Group and the Bank did not have significant exposures on the credit institutions in Russia or Ukraine.

Deposits with credit institutions 2023

Group, EUR’000

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Stage 1 (12-

months ECL)

Stage 2 (lifetime

ECL)

Stage 3 (lifetime

ECL for credit-

impaired)

Total

Gross

24 523

671

25 194

(Less) expected credit loss allowance

(416)

Net

24 523

255

24 778

Deposits with credit institutions 2023 Bank, EUR’000
	Stage 1 (12-	Stage 2 (lifetime	Stage 3 (lifetime
	months ECL)	ECL)	ECL for credit-	Total
			impaired)
Gross	24 515	-	671	25 186
(Less) expected credit loss allowance	-	-	(416)	(416)
Net	24 515	-	255	24 770

Deposits with credit institutions 2022 Group, EUR’000
	Stage 1 (12-	Stage 2 (lifetime	Stage 3 (lifetime
	months ECL)	ECL)	ECL for credit-	Total
			impaired)
Gross	25 306	-	-	25 306
(Less) expected credit loss allowance	-	-	-	-
Net	25 306	-

25 306

Deposits with credit institutions 2022 Bank, EUR’000
	Stage 1 (12-	Stage 2 (lifetime	Stage 3 (lifetime
	months ECL)	ECL)	ECL for credit-	Total
			impaired)
Gross	25 292	-	-	25 292
(Less) expected credit loss allowance	-	-	-	-
Net	25 292	-	-	25 292

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

The Bank’s demand deposits with credit institutions based on rating agency ratings are as follows:

	2023	2022
	EUR’000	EUR’000
Rated from AAA to A-	8 587	7 381
Rated from BBB+ to BBB-	5 034	6 405
Rated from BB+ to BB-	690	64
Rated below BB-	-	-
Not rated	10 459	11 442
Total deposits with credit institutions	24 770	25 292

The Bank has established its own methodologies for assessment of creditworthiness for credit institutions with

no external rating assigned. The Bank maintains a system of maximum potential exposure limits that are

assigneds the maximum potential exposure for each counterparty based on the external ratings assigned or

agency ratings or individual credit risk internal assessment.

As at 31 December 2023, the Bank had correspondent accounts with 19 banks (2022: 19). The largest account

balances exceeding 10% of total deposits with credit institutions were with EUROCLEAR BANK –2 595

thousand EUR (2022 – 4 427 thousand EUR), MAREX FINANCIAL – 5 034 thousand EUR (2022 – 6 405

thousand EUR), STONEX FINANCIAL LTD –4 275 thousand EUR (2022 – 7 753 thousand EUR.

As at 31 December 2023, EUR 3 904 thousand (2022 – 8 507 thousand EUR) was pledged with other credit

institutions.

17. INVESTMENT SECURITIES

Investment securities

2023

2022

Group

Bank

Group

				Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Non- fixed income securities
SWIFT	18	18	18	18
VISA INC	395

395

320

Non- fixed income securities

413

338

Fixed income securities

At fair value through other comprehensive income

20 648

25 971

At amortised cost (see Note 20)

76 774

136 659

Fixed income securities

97 422

162 630

Investment securities total

97 835

162 968

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Investment securities measured at fair value through other comprehensive income based on rating agency

ratings are as follows (Group and Bank):

	2023	2022
Fixed income securities	EUR’000	EUR’000

Fixed income securities issued by credit institutions of Latvia

Rated from BBB+ to BBB-	1 815	1 810
Total fixed income securities issued by credit institutions of Latvia	1 815	1 810
Fixed income securities issued by corporates of Latvia
Not rated	379	379
Total fixed income securities issued by corporates of Latvia	379	379
Fixed income securities issued by central governments of OECD countries
Rated from AAA to A-	13 538	13 628
Total fixed income securities issued by central governments of OECD	13 538	13 628
countries
Fixed income securities issued by credit institutions of OECD countries
Rated from AAA to A-	-	10 055
Total fixed income securities issued by credit institutions of OECD countries	-	10 055
Fixed income securities issued by corporates of OECD countries
Rated from BB+ to BB-	4 916	99
Total fixed income securities issued by corporates of OECD countries	4 916	99
Total fixed income securities	20 648	25 971
Expected credit loss allowance	(53)	(17)

In order to conservatively calculate ECL for not rated securities, PD which corresponds to B- rating is applied.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Financial assets measured at fair value through profit and loss

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Shares and other non-fixed income securities
Shares in VISA INC	395	395	320	320
Total of shares and other securities with non-fixed	395	395	320	320
income

Financial assets measured at fair value through other comprehensive income (fixed income securities), 2023

Group and Bank, EUR’000	Stage 1 (12-	Stage 2	Stage 3 (lifetime ECL	Total
	months ECL)	(lifetime ECL)	for credit-impaired)
Gross	20 648	-	-	20 648
Expected credit loss allowance	(53)	-	-	(53)
Net	20 595	-	-	20 595

Financial assets measured at fair value through other comprehensive income (fixed income securities), 2022

Group and Bank, EUR’000	Stage 1 (12-	Stage 2	Stage 3 (lifetime ECL	Total
	months ECL)	(lifetime ECL)	for credit-impaired)
Gross	25 971	-	-	25 971
Expected credit loss allowance	(17)	-	-	(17)
Net	25 954	-	-	25 954

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Information about expected credit loss allowances, 2023

	Stage 1 (12-	Stage 2	Stage 3 (lifetime
Group and Bank, EUR’000	months ECL)	(lifetime ECL )	ECL for credit-	Total
			impaired)
Opening balance at 1 January 2022	17	-	-	17
Transfers due to change in credit risk:
-remaining credit risk changes	-	-	-	-
New originated or purchased	36	-	-	36
Derecognised	-	-	-	-
Change for the year	-	-	-	-
FX and other movements	-	-	-	-
Closing balance at 31 December 2022	53	-	-	53

Information about expected credit loss allowances, 2022

	Stage 1 (12-	Stage 2	Stage 3 (lifetime
Group and Bank, EUR’000			ECL for credit-	Total
	months ECL)	(lifetime ECL )	impaired)
Opening balance at 1 January 2021	111	-	-	111

Transfers due to change in credit risk:
-remaining credit risk changes	(1)	-	-	(1)
New originated or purchased	-	-	-	-
Derecognised	(93)	-	-	(93)
Change for the year	(94)	-	-	(94)
FX and other movements	-	-	-	-
Closing balance at 31 December 2021	17	-	-	17

18. LOANS AND RECEIVABLES

(a) Loans

2023

2022

Group

Bank

Group

Bank

EUR’000

Financial institutions

8 096

7 889

Corporates

379 091

289 906

Individuals

14 630

13 910

Total loans and receivables

401 817

311 705

Expected credit loss allowance

Financial institutions

(30)

(84)

Corporates

(3 030)

(3 079)

Individuals

(193)

(232)

Total expected credit loss allowance

(3 253)

(3 395)

Net loans and receivables

398 564

308 310

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(b) Analysis of loans by type

		2023	2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Loan portfolio
Corporate loans	237 566	237 566	150 612	150 612
Industrial loans	5 099	5 099	6 684	6 684
Payment cards loans	787	787	889	889
Loans secured by real estate collateral	147 136	147 136	141 099	141 099
Finance lease	4 267	4 267	4 609	4 609
Trade finance	2 435	2 435	2 006	2 006
Other loans	2 120	2 120	3 540	3 540
Total loan portfolio	399 410	399 410	309 439	309 439
Securities-backed loans
Securities-backed financing	2 407	2 407	2 366	2 366
Total securities-backed loans	2 407	2 407	2 366	2 366
Total loans and receivables	401 817	401 817	311 705	311 705

	Total expected credit loss allowance	(3 253)	(3 253)	(3 395)	(3 395)
Net loans and receivables		398 564	398 564	308 310	308 310

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Loans to residents of Latvia	297 634	297 634	242 245	242 245
Loans to residents of OECD countries	38 876	38 876	41 083	41 083
Loans to residents of non-OECD countries	65 307	65 307	28 377	28 377
Total loans and receivables	401 817	401 817	311 705	311 705
Total expected credit loss allowance	(3 253)	(3 253)	(3 395)	(3 395)
Net loans and receivables	398 564	398 564	308 310	308 310

The Group and the Bank has no direct exposures (loans) on entities or individuals in Russia or in Ukraine.

(d) Ageing structure of the loan portfolio

Bank

EUR’000		Of which not			Of which past due by the following terms		Net
	Total	past due on					carrying
	EUR	the	Less than	31-90	91-180	More than	amount of
As at 31 December 2023	’000	reporting	30 days	days	days	180 days	overdue
		date					loans
Net carrying amount	398 564	392 351	4 249	340	-	1 624	6 213
`Out of which impaired	6 217	2 538	1 929	126	-	1 624	3 679
As at 31 December 2022
Net carrying amount	308 310	303 723	2 711	146	-	1 730	4 587
Out of which impaired	2 381	474	42	135	-	1 730	1 907

The Group’s ageing structure is not materially different from that of the Bank.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Expected credit loss allowance, 2023

	Stage 1 (12-	Stage 2	Stage 3 (lifetime ECL	Total
	months ECL)	(lifetime ECL)	for credit-impaired)
Gross	372 155	21 140	8 522	401 817
(Less) expected credit loss allowance	(779)	(169)	(2 305)	(3 253)
Net	371 376	20 971	6 217	398 564

Expected credit loss allowance, 2022

	Stage 1 (12-	Stage 2	Stage 3 (lifetime ECL	Total
	months ECL)	(lifetime ECL)	for credit-impaired)
Gross	258 686	48 067	4 952	311 705
(Less) expected credit loss allowance	(479)	(345)	(2 571)	(3 395)
Net	258 207	47 722	2 381	308 310

(e) Impaired loans

	2023		2022
	EUR’000		EUR’000
	Group	Bank	Group	Bank
Impaired loans, gross	8 522	8 522	4 952	4 952
Expected credit loss allowance	(2 305)	(2 305)	(2 571)	(2 571)
Net loans and receivables	6 217	6 217	2 381	2 381

The extent to which collateral and other credit enhancements mitigate credit risk for financial assets carried at

amortised cost that are credit impaired, is presented by disclosing collateral values separately for (i) those assets

where collateral and other credit enhancements are equal to or exceed carrying value of the asset (“over-

collateralised assets”) and (ii) those assets where collateral and other credit enhancements are less than the

carrying value of the asset (“under-collateralised assets”).

The effect of collateral on credit impaired assets at 31 December 2023 is as follows.

Over-collateralised assets

Under-collateralised assets

Carrying value

of the assets

Value of

collateral

Carrying value

of the assets

Value of

collateral

Loans to corporate customers

6 176

14 640

Loans to SME

6 176

14 640

Loans to individuals

Consumer loans

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

The effect of collateral on credit impaired assets at 31 December 2022 is as follows.

		Over-collateralised assets	Under-collateralised assets
	Carrying value	Value of	Carrying value	Value of
EUR’000	of the assets	collateral	of the assets	collateral
Loans to corporate customers	2 339	6 922	-	-
Loans to SME	2 339	6 922	-	-
Loans to individuals	42	77	-	-
Consumer loans	42	77	-	-

(f) Movements in the expected credit loss allowance

Movements in the loan impairment allowance for the year ended 31 December 2022 are as follows:

Group and Bank, EUR’000			Credit loss allowance				Gross carrying amount of loans
	Stage 1		Stage 3				Stage 3
Corporates and financial	(12-	Stage 2	(lifetime		Stage 1	Stage 2	(lifetime
		(lifetime	ECL for	Total	(12-months	(lifetime	ECL for	Total
institutions	months	ECL )	credit-		ECL)	ECL )	credit-
	ECL)		impaired)				impaired)
Opening balance at 1	418	321	2 424	3 163	247 762	45 270	4 763	297 795
January 2023
Transfers due to change in credit risk:
-to lifetime (from Stage 1	(46)	46	-	-	(10 730)	10 730	-	-
and Stage 3 to Stage 2)
-to credit-impaired (from Stage 1 and Stage 2 to Stage	(23)	(9)	32	-	(3 160)	(2 874)	6 034	-
3)
to Stage 1 from Stage 2	-	-	-	-	-	-	-	-
-remaining credit risk	(173)	(15)	1 085	897	17 482	(21 261)	(608)	(4 387)
changes
New originated or purchased	576	-	-	576	164 965	-	-	164 965
Derecognised	(6)	(177)	(1 393)	(1 576)	(56 015)	(15 942)	(1 865)	(73 822)
Change for the year	328	(155)	(276)	(103)	112 542	(29 347)	3 561	86 756
FX and other movements	-	-	-	-	-	2 636	-	2 636
Closing balance at 31	746	166	2 148	3 060	360 304	18 559	8 324	387 187
December 2023

The amount of new originated or purchased loans represents loans in the portfolio as at 31 December 2023 while

the amount of derecognised loans represent loans in the portfolio as at 1 January 2023 and derecognised during

2023.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Group and Bank, EUR’000			Credit loss allowance				Gross carrying amount of loans
	Stage 1		Stage 3				Stage 3
Individuals	(12-	Stage 2	(lifetime		Stage 1	Stage 2	(lifetime ECL
	months	(lifetime	ECL for	Total	(12-months	(lifetime	for credit-	Total
		ECL )	credit-		ECL)	ECL )
	ECL)		impaired)				impaired)
Opening balance at 1 January 2023	61	24	147	232	10 925	2 795	190	13 910
Transfers due to change in credit risk:
-to lifetime (from Stage 1 ans Stage 3	(11)	11	-	-	(302)	302	-	-
to Stage 2)
-to credit-impaired (from Stage 1 and Stage 2 to Stage 3)	(2)	(1)	3	-	(22)	(19)	41	-
-remaining credit risk changes	(2)	(13)	25	10	(996)	(253)	(15)	(1 264)
New originated or purchased	11	-	-	11	4	-	-	4 066
					066
Derecognised	(24)	(18)	(18)	(60)	(1 820)	(244)	(18)	(2 082)
Change for the year	(28)	(21)	10	(39)	926	(214)	8	720
FX and other movements	-	-	-	-	-	-	-	-
Closing balance at 31 December	33	3	157	193	11 851	2 581	198	14 630
2023

The amount of new originated or purchased loans represents loans in the portfolio as at 31 December 2023 while

the amount of derecognised loans represent loans in the portfolio as at 1 January 2023 and derecognised during

2023.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Movements in the loan impairment allowance for the year ended 31 December 2022 are as follows:

Group	and	Bank,		Credit loss allowance				Gross carrying amount of loans
EUR’000		Stage 1		Stage 3				Stage 3
Corporates and financial		(12-	Stage 2	(lifetime		Stage 1	Stage 2	(lifetime
			(lifetime	ECL for	Total	(12-months	(lifetime	ECL for	Total
institutions		months	ECL )	credit-		ECL)	ECL )	credit-
Opening balance at 1		ECL)		impaired)				impaired)
January 2022		240	420	3 197	3 857	235 564	68 384	29 559	333 507
Transfers due to change in credit risk:
-to lifetime (from Stage 1		(3)	255	(252)	-	(2 419)	15 651	(13 232)	-
and Stage 3 to Stage 2)
-to credit-impaired (from Stage 1 and Stage 2 to Stage		(34)	-	34	-	(675)	(4)	679	-
3)
to Stage 1 from Stage 2		120	(120)	-	-	14 414	(14 414)	-	-
-remaining credit risk		150	(190)	509	469	(26 308)	(12 333)	(774)	(39 415)
changes
New originated or purchased		79	-	-	79	68 730	-	-	68 730
Derecognised		(134)	(44)	(1 064)	(1 242)	(41 536)	(12 448)	(11 469)	(65 453)
Change for the year		178	(99)	(773)	(694)	12 206	(23 548)	(24 796)	(36 138)
Write-offs
FX and other movements		-	-	-	-	(8)	434	-	426
Closing balance at 31		418	321	2 424	3 163	247 762	45 270	4 763	297 795
December 2022

The amount of new originated or purchased loans represents loans in the portfolio as at 31 December 2022 while

the amount of derecognised loans represent loans in the portfolio as at 1 January 2022 and derecognised during

2022.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Group and Bank, EUR’000			Credit loss allowance				Gross carrying amount of loans
	Stage 1		Stage 3				Stage 3
Individuals	(12-	Stage 2	(lifetime		Stage 1	Stage 2	(lifetime ECL
	months	(lifetime	ECL for	Total	(12-months	(lifetime	for credit-	Total
		ECL )	credit-		ECL)	ECL )
	ECL)		impaired)				impaired)
Opening balance at 1 January 2022	123	48	86	257	12 179	2 466	141	14 786
Transfers due to change in credit risk:
-to lifetime (from Stage 1 ans Stage 3	(20)	20	-	-	(67)	67	-	-
to Stage 2)
-to credit-impaired (from Stage 1 and Stage 2 to Stage 3)	(2)	(20)	22	-	(30)	(50)	80	-
-remaining credit risk changes	(21)	20	50	49	(1 326)	844	(10)	(492)
New originated or purchased	16	-	-	16	1 275	-	-	1 275
Derecognised	(35)	(44)	(11)	(90)	(1 106)	(532)	(21)	(1 659)
Change for the year	(62)	(24)	61	(25)	(1 254)	329	49	(876)
Write-offs
FX and other movements	-	-	-	-	-	-	-	-
Closing balance at 31 December	61	24	147	232	10 925	2 795	190	13 910
2022

The amount of new originated or purchased loans represents loans in the portfolio as at 31 December 2022 while

the amount of derecognised loans represent loans in the portfolio as at 1 January 2022 and derecognised during

2022.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(g) Industry analysis of the loan portfolio (Group and the Bank)

	2023	2022
	EUR’000	EUR’000
Shipping	74 380	41 236
Financial services	5 382	2 242
Wholesale	35 829	43 872
Real Estate	128 180	91 258
Working capital loans	45 462	30 133
Transport and storage	5 827	9 666
Private customers – mortgage loans and consumer loans	9 191	11 228
Manufacture of food products	16 617	15 065
Processing factory	11 669	15 725
Forestry	144	697
Other services	65 883	47 188
Net loans and receivables	398 564	308 310

(h) Analysis of loans by type of collateral (Group and Bank)

	31 December	% of loan	31 December	% of
EUR’000				loan
	2023	portfolio	2022	portfolio
Commercial buildings	152 746	38	108 566	35
Real estate – first mortgage	69 578	17	51 691	17
Commercial assets pledge	71 038	18	77 548	25
Commercial assets: ships/vessels	74 380	19	41 236	13
Trading securities	2 400	1	2 017	1
Deposit	2 475	1	5 777	2
Inventories	24 001	6	15 668	5
Other, no collateral	1 946	-	5 807	2
Net loans and receivables	398 564	100	308 310	100

EUR’000

		2023		2022
	Carrying value	Value of	Carrying value	Value of
	of the assets	collateral	of the assets	collateral
Stage 1	371 376	892 797	258 207	619 652
Stage 2	20 971	59 171	47 722	138 767
Stage 3	6 217	14 731	2 381	6 999
Total	398 564	966 699	308 310	765 418

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

(j) Restructured loans

As at 31 December 2023 and 2022, the loans restructured by the Group and the Bank possessed the following

signs of restructuring:

	2023	2022
	EUR’000	EUR’000
Grace period/payment moratorium	6 896	38 621
Extension of maturity/term	1 131	1 829
Other	8 759	11 256
Total restructured loans	20 419	51 706

(l) Significant credit exposures

As at 31 December 2023 the Bank had no borrowers or groups of related borrowers, respectively, whose total

loan balances exceeded 10% of loans and receivables from customers.

As at 31 December 2022 the Bank had no borrowers or groups of related borrowers, respectively, whose total

loan balances exceeded 10% of loans and receivables from customers.

According to regulatory requirements, the Bank is not allowed to have a credit exposure to one customer or group

of related customers of more than 25% of Bank’s equity. As at 31 December 2023 and 2022, the Bank was in

compliance with this requirement.

19. INVESTMENT SECURITIES AT AMORTISED COST

Financial assets measured at amortised cost (IFRS 9)

		2023		2022
	Group	Bank	Group	Bank
Fixed income securities	EUR’000	EUR’000	EUR’000	EUR’000
Fixed income securities issued by the government of LR	1 031	1 031	1 033	1 033
Fixed income securities issued by companies and credit	3 106	3 106	6 415	6 415
institutions of LR
Fixed income securities issued by the government of OECD	40 245	40 245	81 361	81 361
countries
Fixed income securities issued by companies and credit	29 770	29 770	43 179	43 179
institutions of OECD countries
Fixed income securities issued by companies and credit	4 979	4 979	6 831	6 831
institutions of other countries
Expected credit loss allowance	(2 357)	(2 357)	(2 160)	(2 160)
Total fixed income securities	76 774	76 774	136 659	136 659

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Financial assets measured at amortised cost 2023

Group and Bank, EUR’000	Stage 1 (12-	Stage 2	Stage 3 (lifetime ECL	Total
	months ECL)	(lifetime ECL)	for credit-impaired)
Gross	72 538	4 718	1 875	79 131
(Less) expected credit loss	(204)	(278)	(1 875)	(2 357)
allowance
Net	72 334	4 440	-	76 774

Financial assets measured at amortised cost 2022

	Stage 1 (12-	Stage 2	Stage 3 (lifetime ECL	Total
Group and Bank, EUR’000	months ECL)	(lifetime ECL)	for credit-impaired)
Gross	127 732	9 145	1 942	138 819
(Less) expected credit loss	(295)	(350)	(1 515)	(2 160)
allowance
Net	127 437	8 795	427	136 659

Movements in expected credit loss allowances, 2023

Group and Bank, EUR’000

			Stage 3
	Stage 1 (12-	Stage 2	(lifetime ECL	Total
	months ECL)	(lifetime ECL )	for credit-
			impaired)
Opening ECL balance at 1 January 2023	295	350	1 515	2 160
Transfers due to change in credit risk:
-from Stage 1 to Stage 2	-	-	-	-
-remaining credit risk changes	(2)	(8)	360	350
-from Stage 2 to Stage 3	-	-	-	-
New originated or purchased	67	-	-	67
Derecognised	(156)	(64)	-	(220)
Change for the year	(91)	(72)	360	197
FX and other movements	-	-	-	-
Closing ECL balance at 31 December	204	278	1 875	2 357
2023

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Movements in expected credit loss allowances, 2022

Group and Bank, EUR’000

	Stage 1 (12-	Stage 2	Stage 3 (lifetime
			ECL for credit-	Total
	months ECL)	(lifetime ECL )	impaired)
Opening ECL balance at 1 January 2022	375	140	-	515
Transfers due to change in credit risk:
-from Stage 1 to Stage 2	(139)	139	-	-
-remaining credit risk changes	88	1 624	-	1 712
New originated or purchased	15	-	-	15
Derecognised	(44)	(38)	-	(82)
Change for the year	(80)	210	1 515	1 645
FX and other movements	-	-	-	-
Closing ECL balance at 31 December	295	350	1 515	2 160
2022

Quality analysis of investment securities at amortised cost, based on rating agency ratings, is as follows:

	2023	2022
Debt securities and other fixed income securities	EUR'000	EUR’000
Central governments
Rated from AAA to A-	35 101	76 144
Rated from BBB+ to BBB-	6 174	3 020
Rated from BB+ to BB-	-	3 231
Total central governments	41 275	82 395
Credit institutions
Rated from AAA to A-	1 003	16 374
Rated from BB+ to BB-	3 618	3 326
Total credit institutions	4 621	19 700
Corporates
Rated from AAA to A-	10 635	10 187
Rated from BBB+ to BBB-	1 491	993
Rated from BB+ to BB-	10 063	8 689
Below BB-	4 593	7 017
No rating*	6 453	9 838
Total corporate bonds	33 235	36 724
Expected credit loss allowance	(2 357)	(2 160)
Debt securities and other fixed income securities	76 774	136 659

*Not-rated exposures includes securities with no rating assigned as well as

securities with rating withdrawn.

In order to calculate ECL for not rated securities, PD which corresponds to B-

rating is applied.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

20. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES

(a) Investments in subsidiaries (Bank)

Company	Ownership share	Carrying amount at	Carrying amount at
		31.12.2023	31.12.2022
		EUR’000	EUR’000
SIA BluOr International	100%	5 709	5 709
Impairment allowance		(3 649)	(2 249)
SIA Zapdvina Development	100%	10 474	10 474
Impairment allowance		(806)	(806)
SIA CityCap Service	100%	570	565
Impairment allowance		(158)	(158)
UAB Kamaly Development	100%	3	3
AS Pils Pakalpojumi	100%	15 281	15 281
Impairment allowance		(548)	(548)
Non-reciprocal capital contribution by a parent into subsidiary		(2 400)	(2 400)
SIA Jēkaba 2	100%	4 049	4 049
Impairment allowance		(106)	(106)
SIA Darzciems Entity	100%	73	73
SIA Mazirbe Estate	100%	92	92
SIA Lielie Zaki	100%	88	88
SIA Pulkarne Entity	100%	199	199
		28 871	30 266

Investments in subsidiaries (Bank)

	31.12.2023.	31.12.2022.
	EUR’000	EUR’000
Investments in subsidiaries	36 538	36 533
Non-reciprocal capital contribution by a parent into subsidiary according to IFRS 10 (AS „Pils pakalpojumi”)	(2 400)	(2 400)
Impairment allowance	(5 267)	(3 867)
Investments in subsidiaries net	28 871	30 266

The share capital of SIA Zapdvina Development consisted of 9 948 018 shares with nominal value of EUR 1

amounting to EUR 9 948 018. In 2022, the Bank decreased the share capital of its subsidiary SIA Zapdvina

Development by 1 000 000 shares with nominal value of EUR 1 for a total of EUR 1 000 000. In previous

years the Bank recognised an impairment allowance for its investment in SIA Zapdvina Development in the

amount of EUR 806 thousand triggered by impairment of this subsidiary’s assets. In 2023, based on the appraisal,

no additional impairment allowances were recognised. SIA Zapdvina Development owns a land plot in

Daugavpils.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

The share capital of SIA CityCap Service consisted of 21 495 shares with nominal value of EUR 28 amounting

to EUR 601 860.

In previous years, the Bank recognised an impairment allowance for its investment in SIA CityCap Service in the

amount of EUR 158 thousand triggered by impairment of this subsidiary’s assets. Based on the appraisal, in 2023

impairment allowances were not recognised.

The share capital of SIA BluOr International consisted of 5 686 658 shares with nominal value of EUR 1

amounting to EUR 5 686 658.

In 2023, the Bank recognised an additional impairment allowance for its investment in SIA BluOr International

in the amount of EUR 1 400 thousand EUR triggered by impairment of this investment in subsidiaries.

In previous years, the Bank recognised an impairment allowance for its investment in SIA BluOr International in

the amount of EUR 2 249 thousand EUR triggered by impairment of this investment in subsidiaries.

SIA BluOr International has two subsidiaries (Kamaly Development EOOD un Foxtran Management Ltd.) and

an associate AS „Termo biznesa Centrs”).

In 2023, an additional impairment allowance for the investment in Foxtran Management Ltd. was recognised by

SIA BluOr International in the amount of EUR 1 400 thousand. In the previous years, an impairment allowance

for the investment in Foxtran Management Ltd. was recognised by SIA BluOr International in the amount of EUR

559 thousand. Allowances were recognised since the investment in SIA BluOr International exceeded net assets

of Foxtran Management Ltd.

In the previous years, SIA BluOr International recognised impairment allowances for the investment in

KamalyDevelopment EOOD in the amount of EUR 364 thousand.

In previous years, the Bank recognised an impairment allowance for its investment in SIA Jēkaba 2 in the amount

of EUR 106 thousand.

In previous years, the Bank recognised an impairment allowance for its investment in AS Pils Pakalpojumi in

the amount of EUR 2 948 thousand.

The share capital of SIA Darzciems Entity consisted of 237 730 shares with nominal value of EUR 1 amounting

to EUR 237 730.

The share capital of SIA „Mazirbe Estate” consisted of 199 404 shares with nominal value of EUR 1 amounting

to EUR 199 404.

The share capital of SIA „Lielie Zaķi” consisted of 181 013 shares with nominal value of EUR 1 amounting to

EUR 181 013.

The share capital of SIA „Pulkarne Entity” consisted of 1 207 352 shares with nominal value of EUR 1

amounting to EUR 1 207 352.

Company

	Capital	Carrying amount at	Carrying amount at
	contribution	31.12.2023	31.12.2022
		EUR’000	EUR’000
		Group	Group
AS Termo biznesa Centrs	26.15%	1 848	1 848
Impairment allowance		(1 021)	(1 021)
Total		827	827

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

SIA BluOr International has an associate AS Termo biznesa Centrs. Along with 26,15% of share ownership, the

Group also has the right to collect rental income from part of the premises owned by the associate. Rental income

is recognised in the Group’s profit and loss statement, rental income amounted to EUR 72 thousand in 2023 (EUR

72 thousand in 2022).

Financial information of the associate AS Termo biznesa centrs:

										Net profit	Group’s
											share in net	Group’s
	Current	Long-term	Total	Current	Non-current		Total			(loss)	assets	share in loss
	assets	investments	assets	liabilities	liabilities		liabilities Net assets	Income	Expenses	EUR’000	26.15%	26.15%
	EUR'000	EUR’000	EUR’000	EUR'000	EUR’000		EUR’000 EUR'000	EUR’000	EUR’000		EUR’000	EUR’000
	31 December 2023
AS Termo	75	318	393	-	(27)	(27)	366	289	(264)	25	96	7
biznesa Centrs	31 December 2022
AS Termo	79	322	401	-	(60)	(60)	341	209	(217)	(8)	89	(2)
biznesa Centrs

As losses for 2022 are insignificant they have no impact on the Group results.

21. INVESTMENT PROPERTY

Investment property of the Group and the Bank represents the following:

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Real estate in Latvia	2 346	414	2 242	414
Real estate in Lithuania	2 807	2 807	2 807	2 807
Real estate in Bulgaria	521	-	521	-
Impairment allowance	(2 740)	(1 607)	(2 740)	(1 607)
	2 934	1 614	2 830	1 614

Investment property is recognized at cost. Investment property consists of land and commercial properties.

Direct operating expenses (including repairs and maintenance costs) incurred by the Group in connection with

the investment property which has not earned a rental income during the reporting year amounted to EUR 5

thousand (2022: EUR 4 thousand).

Direct operating expenses (including repairs and maintenance costs) incurred by the Bank in connection with the

investment property which has not earned a rental income during the reporting year amounted to EUR 5 thousand

(2022: EUR 4 thousand).

Rental income on investment property during the reporting year (the Group and the Bank) amounted to EUR 8

thousand (2022: EUR 8 thousand).

The following table shows the valuation technique used in measuring the fair value of property, as well as the

significant unobservable inputs used.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Group’s investment properties

	Carrying	Valuation		Significant unobservable inputs
Type	amount, EUR	method		2023	2022	Fair value, EUR ‘000
	‘000
Buildings and land plot,	93	Comparison	Sales price*			113
Kungu iela, Liepāja,	(2022: 93)	approach	varies from		(2022:	124)
Latvia			EUR to EUR per	20-25,0	20-26,0
			m2
Buildings and a land plot,	95	Comparison	Sales price*			175
Jurģu iela, Jūrmala,	(2022: 95)	approach	varies from	66-112	72-179	(2022: 175)
Latvia			EUR to EUR per
			m2
Land plot, Klaipeda,	1 200	Comparison	Sales price*	0,37-0,57 par	0,37-0,57 par	1 203
Lithuania	(2022: 1 200)	approach	varies from	zemes gabalu	zemes gabalu	(2022: 1 203)
			EUR to EUR per	lielāku nekā	lielāku nekā
			m2 for each land	8,2 ha	8,2 ha
			plot separately
			based on footage	5-5,8 par	5-5,8 par
				zemes gabalu	zemes gabalu
				lielāku nekā 1	lielāku nekā 1
				ha	ha
				2,42–6,41 par 2,42–6,41 par
				zemes gabalu zemes gabalu
Apartments, Bulgaria	328	Comparison	Sales price*	līdz 300 m2	līdz 300 m2	328
	(2022: 328)	approach	varies from	1 130-1 309	925-1 389	(2022: 328)
			EUR to EUR per
			m2
Land plot, Mūku purvs,	387	Comparison	Sales price*			557
Latvia	(2022: 387)	approach	varies from	82-129	37-92	(2022: 483)
			EUR to EUR per
			m2
Land plot, Akācijas iela,	437	Comparison	Sales price*			581
Daugavpils, Latvia	(2022: 250)	approach	varies from	12-23	6,3-14,2	(2022: 250)
			EUR to EUR per
			m2
Land plot in Ķekavas	-	Comparison	Sales price*			-
pagasts, Ķekavas novads,	(2022: 170)	approach	varies from	5,5-8,0	5,4-6,0	(2022: 234)
Latvia			EUR to EUR per
			m2
Zemes gabals, Dzirciema		Comparison	Sales price*
iela, Rīga, Latvija		approach	varies from
	226		EUR to EUR per			226
	(2022: 226)		m2	9,0-18,0	9,0-18,0	(2022: 226)
Land plot in Kolkas		Comparison	Sales price*
pagasts, Dundaga		approach	varies from
novads, Latvia	86		EUR to EUR per			128
	(2022: 86)		m2	4,4-5,0	2,1-5,0	(2022: 117)
Land plot in Lejas		Comparison	Sales price*
akmeņi, Ķekavas novads,		approach	varies from
Latvia	82		EUR to EUR per			82
	(2022: 82)		m2	0,27-1,42	0,50-1,12	(2022: 82)

Total

2 934

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Bank’s investment properties

	Carrying	Valuation			Significant unobservable inputs
Type	amount, EUR	method		2022	2021			Fair value, EUR ‘000
	‘000
Buildings and land	93	Comparison	Sales price*	20-25,0	20-26,0			113
plot, Kungu iela,		approach	varies from
Liepāja, Latvia			EUR to EUR
	(2022: 93)		per m2					(2022: 124)
		Comparison	Sales price*
Zemes gabals,		approach	varies from
Dzirciema iela,	226		EUR to EUR					226
Rīga, Latvija	(2022: 226)		per m2	9,0-18,0	9,0-18,0			(2022: 226)
Buildings and land	95	Comparison	Sales price*					175
plot, Jurģu iela,		approach	varies from
Jūrmala, Latvia			EUR to EUR	66-112	72-179
	(2022: 95)		per m2					(2022: 175)
Land plot, Klaipeda,	1 200	Comparison	Sales price*		0.37-0.57 for		0.37-0.57 for land	1 203
Lithuania		approach	varies from		land plot over		plot over 8.2 ha
	(2022: 1 200)		EUR to EUR			8.2 ha		(2022: 1 203)
			per m2 for each				5 -5.8 for land
			land plot			5 -5.8 for	plot 1 ha
			separately based		land plot 1 ha
			on footage				2.42 – 6.41 for
						2.42 – 6.41	land plots till 300
					m2	for land plots
						till 300 m2
Total	1 614

* sales prices are market prices for similar properties adjusted for certain criteria such as land plot footage adjustment,

location area adjustment, property condition, offer price adjustment, resulting in the significant unobservable inputs.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

22. PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS

Property and equipment

The two buildings that the Bank rents from its subsidiaries at Smilšu street and Jēkaba street are used as the Head

office of the Bank. From the Group’s perspective, these buildings are considered to be corporate assets and are

classified as property and equipment. In 2023 and 2022, the management believes that there are no indications

that these sites may be impaired.

		Land and	Leasehold					Office
		buildings	improvements			Vehicles		equipment		Total
		EUR’000	EUR’000			EUR’000		EUR'000	EUR’000
Cost	Group	Bank	Group	Bank	Group	Bank	Group	Bank	Group	Bank
31 December
2021	29 311	-	-	4 603	1 510	67	2 580	1 905	33 401	6 575
Additions	-	-	-	-	-	-	22	22	22	22
Disposals	-	-	-	-	-	-	(1)	(1)	(1)	(1)
31 December
2022	29 311	-	-	4 603	1 510	67	2 601	1 926	33 422	6 596
Additions	10	-	-	-	-	-	143	136	153	136
Disposals	-	-	-	-	-	-	(138)	(99)	(138)	(99)
31 December
2022	29 321	-	-	4 603	1 510	67	2 606	1 963	33 437	6 633
Depreciation
31 December
2021	4 662	-	-	1 086	635	67	2 160	1 613	7 457	2 766
Depreciation	942	-	-	231	144	-	270	162	1 356	393
Disposals	-	-	-	-	-	-	(1)	(1)	(1)	(1)
31 December
2022	5 604	-	-	1 317	779	67	2 429	1 774	8 812	3 158
Depreciation	943	-	-	230	144	-	127	112	1 214	342
Disposals	-	-	-	-	-	-	(138)	(99)	(138)	(99)
31 December
2023	6 547	-	-	1 547	923	67	2 418	1 787	9 888	3 401
Net carrying
amount
31 December
2022	23 707	-	-	3 286	731	-	172	152	24 610	3 438
31 December
2023	22 774	-	-	3 056	587	-	188	176	23 549	3 232

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Right-of-use assets – lease contracts (IFRS 16)

Bank	Right-of-use assets
Cost	EUR’000
31 December 2021	12 576
31 December 2022	12 576
31 December 2023	12 576
Depreciation
31 December 2021	1 989
Depreciation	663
31 December 2022	2 652
Depreciation	663
31 December 2023	3 315
Net carrying amount
31 December 2022	9 924
31 December 2023	9 261
Lease liability
31 December 2021	11 025
Lease payments	(549)
Interest accrued	331
Interest paid	(331)
31 December 2022	10 476
Lease payments	(564)
Interest accrued	314
Interest paid	(314)
31 December 2023	9 912

The Bank leases a number of premises under operating lease. The leases typically run for 20 years, with an option

to renew the lease after that date. All property leases are intragroup agreements.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

23. INTANGIBLE ASSETS

Group	Software
Acquisition cost	EUR'000
31 December 2021	2 709
Disposed in the reporting period	(4)
Acquired in the reporting period	93
31 December 2022	2 798
Disposed in the reporting period	-
Acquired in the reporting period	143
31 December 2023	2 941
Amortization
31 December 2021	2 357
Amortization for the reporting period	189
Amortization of assets disposed in the reporting period	(4)
31 December 2022	2 542
Amortization for the reporting period	132
Amortization of assets disposed in the reporting period	-
31 December 2023	2 674
Net carrying amount
31 December 2022	256
31 December 2023	267
Bank	Software
Acquisition cost	EUR'000
31 December 2021	2 689
Disposed in the reporting period	(4)
Acquired in the reporting period	94
31 December 2022	2 779
Disposed in the reporting period	-
Acquired in the reporting period	143
31 December 2023	2 922
Amortization
31 December 2021	2 338
Amortization for the reporting period	189
Amortization of assets disposed in the reporting period	(4)
31 December 2022	2 523
Amortization for the reporting period	132
Amortization of assets disposed in the reporting period	-
31 December 2023	2 655
Net carrying amount
31 December 2022	256
31 December 2023	267

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

24. PREPAYMENTS AND ACCRUED INCOME

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Next period expense – Resident	102	92	64	64
Next period expense – Non Resident	729	729	1 303	1 303
Insurance premium	23	23	15	15
Other	-	-	279	275
Prepayments and accrued income total	854	844	1 661	1 657

25. OTHER ASSETS

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Guarantee deposits for credit card operations	5 414	5 414	5 330	5 330
Credit card claims and other payment services	822	822	562	562
Prepayments and receivables	516	450	761	720
Other	2 742	2 742	3 442	3 442
Total other assets	9 494	9 428	10 095	10 054
Allowances for other assets	-	-	(6)	-
Other assets, net	9 494	9 428	10 089	10 054

In 2023, security deposits of EUR 5 414 thousand (2022: EUR 5 330 thousand) were reserved for potential

transactions connected with MasterCard Europe and VISA Card systems.

26. DUE TO CREDIT INSTITUTIONS ON DEMAND

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Credit institutions registered in Latvia	4 147	4 147	6 586	6 586
Credit institutions registered in non- OECD	-	-	10	10
countries
Credit institutions registered in OECD countries	260	260	27	27
Total due to credit institutions on demand	4 407	4 407	6 623	6 623

	BluOr Bank AS Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023 Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements 71 27. FINANCIAL LIABILITIES CARRIED AT AMORTIZED COST: DEPOSITS
	2023			2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Current accounts:
Financial institutions	172 635

172 635

91 059

Corporate entities

227 657

230 082

178 910

180 926

Individuals

50 645

57 229

450 937

453 362

327 198

329 214

Term deposits:

Subordinate liabilities

2 623

1 984

Other financial institutions

72 253

55 397

Corporate entities

14 148

1 661

Individuals

263 246

189 451

352 270

248 493

Total deposits

803 207

805 632

575 691

577 707

Geographical segmentation of the deposits

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Deposits of residents registered in Latvia	232 212	234 637	172 031	174 047
Deposits of residents registered in OECD	526 313	526 313	356 697	356 697
countries
Deposits of residents registered in other countries (non-OECD)	44 682	44 682	46 963	46 963
Total deposits	803 207	805 632	575 691	577 707

As at 31 December 2023, the Bank maintained customer deposit balances of EUR 2 475 thousand which were

reserved by the Bank as collateral for loans and other credit instruments granted by the Bank (as at 31 December

2022: EUR 5 777 thousand).

As at 31 December 2023 the Bank had 1 customer group with deposits exceeding 10% of the total customer

deposits – EUR 156 523 thousand (as at 31 December 2022 the Bank had 1 customer group with deposits

exceeding 10% of the total customer deposits – EUR 104 186 thousand).

28. FINANCIAL LIABILITIES CARRIED AT AMORTIZED COST: SUBORDINATED DEBT

SECURITIES

Subordinated bonds have a fixed term at their origination. Subordinated bonds are repayable before maturity only

on winding up or bankruptcy of the Bank. Subordinated bonds rank before shareholders’ claims.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

By issuing subordinated bonds in 2022 (listed on Nasdaq Riga), Bank raised more than EUR 4.8 million in

financial resources.

Issued subordinated bonds

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Issued subordinated bonds	4 855	4 855	4 855	4 855
Accrued interest payments	27	27	27	27
Total	4 882	4 882	4 882	4 882

						Discount/	Group/	Group/
ISIN	Currency	Issue	Nominal	Date of	Date of	coupon	Bank	Bank
		size	value	issue	maturity			31/12/20
						rate, %	31/12/2023	22
Subordinated bonds
LV0000802569	EUR	4 855	1 000	01.06.2022	01.06.2029	7%	4 855	4 855
Issued debt securities, total (‘000 EUR)							4 855	4 855

Additional Tier 1 perpetual debt securities (not listed)

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Additional Tier 1 debt securities	6 060	6 060	1 100	1 100
Accrued interest payments	63	63	22	22
Total	6 123	6 123	1 122	1 122

ISIN	Currency	Issue	Nomina	Date of	Date of	Discount/	Group/ Bank	Group/ Bank
		size	l value	issue	maturity	coupon rate, %	31/12/2023	31/12/2022
Additional Tier 1 debt securities
LV0000802437				19.10.202
	EUR	100	100 000	0	-	10%	1 100	1 100
LV0000802775	EUR	5 550	5 550 000	08.12.2023	-	13%	4 960	-
Additional Tier 1 debt securities, total (‘000 EUR)							6 060	1 100

29. OTHER LIABILITIES

2023

2022

Group

Bank

Group

Bank

EUR’000

Other financial liabilities

Credit card payments

243

253

Money in transit

1 705

Other liabilities, balances of closed customers’ accounts

1 075

996

Other non-financial liabilities

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Operating and other liabilities

510

				51
Tax settlements	52	52	60	60
Other liabilities	100	-	55	-
Total other liabilities	2 004	1 904	3 120	3 065
30. SHARE CAPITAL AND RESERVES As of 31 December 2023, the authorized share capital comprised 31 781 081 ordinary shares (2022: 31 781 081 ordinary shares. Nominal value of one share is EUR 1.40. The structure of shareholders holding ordinary shares did not change. The holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at the shareholders’ meetings. All shares rank equally with regard to the Bank’s residual assets.

		2023		2022
Share capital	Quantity	EUR’000	Quantity	EUR’000
Ordinary shares with voting
rights	31 781 081	44 493	31 781 081	44 493
	31 781 081	44 493	31 781 081	44 493

The statutory reserve of EUR 24 thousand is not subject to any restrictions and can be distributed to the

shareholders following an appropriate decision.

Dividends

Dividends payable are restricted to the maximum retained earnings of the Bank, which are determined according

to the legislation of Latvia. In accordance with the legislation of the Republic of Latvia, the amount of reserves

available for distribution at the reporting date is EUR 43 943 thousand (2022: EUR 40 377 thousand).

During 2023, 9 million EUR dividends were distributed, 0.28 EUR per share.

During 2022, 7.5 million EUR dividends were distributed, 0.24 EUR per share.

31. CASH AND CASH EQUIVALENTS

2023

2022

Group

Bank

Group

Bank

EUR’000

Cash and balances due from central banks

338 024

120 527

Due from credit institutions on demand and within 3

months

20 874

20 866

16 799

16 785

Due to credit institutions on demand and within 3

months

(4 407)

(6 623)

Total cash and cash equivalents

354 491

354 483

130 703

130 689

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

32. CONTINGENT LIABILITIES AND COMMITMENTS

At any time the Bank has outstanding commitments to extend credit. These commitments take the form of

approved loans and credit card limits and overdraft facilities.

The Bank provides financial guarantees and letters of credit to guarantee the performance of customers to third

parties. These agreements have fixed limits and generally extend for a period of up to five years.

The contractual amounts of commitments are set out in the following table by category. The amounts reflected in

the table for commitments assume that amounts are fully advanced. The amounts reflected in the table for

guarantees and letters of credit represent the maximum accounting loss that would be recognized at the reporting

date if counterparties failed to completely perform as contracted.

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Unused loan facilities	97 299	97 302	55 821	55 824
Unused credit card facilities	760	760	936	936
Guarantees and other	1 904	1 904	2 367	2 367
	99 963	99 966	59 124	59 127
Provisions	(298)	(298)	(129)	(130)

The total contractual amounts of the above loan commitments may differ from the cash flow that may actually be

required in future as these commitments may expire before they are claimed.

Group EUR’000,

2023

Stage 1 (12-

months ECL)

Stage 2

(lifetime ECL)

Stage 3 (lifetime ECL

for credit-impaired)

Total

Contingent liabilities and commitments, Gross

98 940

932

				99 963
Impairment allowance	(106)	(1)	(191)	(298)
Net	98 834	90	741	99 665

Bank EUR’000,	Stage 1 (12-	Stage 2	Stage 3 (lifetime ECL	Total
2023	months ECL)	(lifetime ECL)	for credit-impaired)
Contingent liabilities and commitments, Gross	98 943	91	932	99 966
Impairment allowance	(106)	(1)	(191)	(298)
Net	98 837	90	741	99 668

Group EUR’000,	Stage 1 (12-	Stage 2	Stage 3 (lifetime ECL	Total
2022	months ECL)	(lifetime ECL)	for credit-impaired)
Contingent liabilities and commitments, Gross	58 422	663	39	59 124
Impairment allowance	(103)	(2)	(24)	(129)
Net	58 319	661	15	58 995

	BluOr Bank AS
	Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023
	Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements
Bank EUR’000,	Stage 1 (12-	Stage 2	Stage 3 (lifetime ECL	Total
2022	months ECL)	(lifetime ECL)	for credit-impaired)
Contingent liabilities and commitments, Gross	58 425	663	39	59 127
Impairment allowance	(104)	(2)	(24)	(130)
Net	58 321	661	15	58 997
	75

Movements in the impairment allowance of contingent liabilities and commitments

Movements in the loan impairment allowance for the year ended 31 December 2023 are as follows:

	Stage 1 (12-	Stage 2 (lifetime	Stage 3 (lifetime
Group EUR’000			ECL for credit-	Total
	months ECL)	ECL )	impaired)
Opening balance at 1 January 2023	103	2	24	129
Transfers due to change in credit risk:
-from Stage 1 to Stage 2	-	-	-	-
-from Stage 2 to Stage 1	-	-	-	-
-from Stage 2 to Stage 3	-	-	-	-
-remaining credit risk changes	(167)	-	167	-
New originated or purchased	209	-	-	209
Derecognised	(39)	(1)	-	(40)

Change for the year	3	(1)	167	169
FX and other movements
Closing balance at 31 December 2023	106	1	191	298

Bank EUR’000

Stage 1 (12-

months ECL)

Stage 2 (lifetime

ECL )

Stage 3 (lifetime

ECL for credit-

impaired)

Total

Opening balance at 1 January 2023

104

130

Transfers due to change in credit risk:

-from Stage 1 to Stage 2

-from Stage 2 to Stage 1

-from Stage 2 to Stage 3

-remaining credit risk changes

(167)

167

New originated or purchased

208

Derecognised

(39)

(1)

(40)

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Change for the year

(1)

167

168

FX and other movements

Closing balance at 31 December 2023

106

191

298

Movements in the impairment allowance of contingent liabilities and commitments

Movements in the loan impairment allowance for the year ended 31 December 2022 are as follows:

	Stage 1 (12-	Stage 2 (lifetime	Stage 3 (lifetime
Group EUR’000			ECL for credit-	Total
	months ECL)	ECL )	impaired)
Opening balance at 1 January 2022	69	2	21	92
Transfers due to change in credit risk:
-from Stage 1 to Stage 2	(1)	1	-	-
-from Stage 2 to Stage 1	-	-	-	-
-from Stage 2 to Stage 3	-	-	-	-
-remaining credit risk changes	33	1	11	45
New originated or purchased	32	-	-	32
Derecognised	(29)	(2)	(5)	(36)
Change for the year	35	-	6	41
FX and other movements	(1)	-	(3)	(4)
Closing balance at 31 December 2022	103	2	24	129

	Stage 1 (12-	Stage 2 (lifetime	Stage 3 (lifetime
Bank EUR’000	months ECL)	ECL )	ECL for credit-	Total
			impaired)
Opening balance at 1 January 2022	69	2	21	92
Transfers due to change in credit risk:
-from Stage 1 to Stage 2	(1)	1	-	-
-from Stage 2 to Stage 1	-	-	-	-
-from Stage 2 to Stage 3	-	-	-	-
-remaining credit risk changes	33	1	11	45
New originated or purchased	33	-	-	33
Derecognised	(29)	(2)	(5)	(36)
Change for the year	36	-	6	42
FX and other movements	(1)	-	(3)	(4)
Closing balance at 31 December 2022	104	2	24	130

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

33. LITIGATION

In the Klaipėda District Court, Lithuania, legal proceedings are underway, as a result of which it will be decided

whether UAB Dognus has a right of action at all and whether it will be able to exist at all (the court hearing at

which the substantive examination of the case will begin is scheduled for 12.04.2024). At the same time, the

Court of Appeal of Lithuania, which re-examined the Bank's claim, has decided that the court of first instance

must consider the merits and give a reasoned and justified decision on whether the claim of UAB Dognus is at all

competent for consideration in the Republic of Lithuania. Previously, the court of first instance did not do this,

while the Court of Appeal considered that it doesn’t have competence to resolve the complaints about the

decisions of the first instance regarding the jurisdiction of the cases. Re-examination in the Court of Appeal took

place after the Supreme Court of the Republic of Lithuania, while considering the Bank's claim, indicated that the

Court of Appeal should hear and make a decision on the Bank's complaint. At the moment, the Bank's legal

position in the ongoing legal proceedings in Lithuania can be assessed as positive and its positions have been

strengthened as a result of the decisions made by several courts. What remains unchanged is that even in the worst

case scenario (if the claim of UAB Dognus will be heared by the court), the Bank could not suffer losses in any

case, because the type of claim (actio pauliana) presented by UAB Dognus provides for restitution, i.e. restoration

of the previous status of all persons. In this case, this would mean not only the Bank's obligation to repay the loan

repayment payments received, but also the Bank's return to the status of a secured creditor. Considering that the

original collateral (goods) no longer exists, the Bank's claims would be secured by the court's decision with the

Bank's own refunded funds. In general, the claim of UAB Dognus is still assessed as insufficiently substantiated

from the legal point of view, and the worst case scenario (i.e. a court decision on restitution) is also assessed as

unlikely. On the other hand, if the Lithuanian court decides that the case is not within the jurisdiction of Lithuania,

UAB Dognus will not be able to submit a similar claim in Latvia, because the laws of Latvia do not provide for

such a basis for a claim or any other basis for a claim, as a result of which the Bank, taking into account the actual

circumstances of the case, could be obliged to return the funds.

Management is unaware of any other significant actual, pending or likely claims against the Bank and its

subsidiaries.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

34. ASSETS AND LIABILITIES UNDER MANAGEMENT

		2023		2022
	Group	Bank	Group	Bank
Assets under management	EUR'000	EUR’000	EUR’000	EUR’000
Due from credit institutions registered in Latvia	1 763	1 763	1 191	1 191
Loans to customers	165	165	165	165
Non fixed income securities	35 208	35 208	16 228	16 228
Fixed income securities	9 085	9 085	1 382	1 382
Other assets	-	-	1	1
Total assets under management	46 221	46 221	18 967	18 967
Liabilities under management
Non-resident trust liabilities	25 808	25 808	5 368	5 368
Resident trust liabilities	20 413	20 413	13 599	13 599
Total liabilities under management	46 221	46 221	18 967	18 967

The largest share of assets under management were invested in non-fixed income securities. Assets under

management include loans granted on a trust basis (trust loans) made on behalf of a third party (the beneficiary).

35. RELATED PARTY TRANSACTIONS

Related parties are defined as shareholders who have a significant influence over the Bank (parent company),

members of the Council and the Board and Other related parties, that are companies in which parent company

and members of the Council and the Board have a controlling interest, key management personnel, their close

relatives and companies in which they have a controlling interest, as well as associated and related companies.

All transactions with related parties have been carried out at an arm’s length.

Loans, deposits and other claims and liabilities to related parties include the following:

		2023		2022
	Group	Bank	Group	Bank
	EUR’000	EUR’000	EUR’000	EUR’000
Loans to related parties	3 691	3 691	5 700	5 700
incl. members of the Council and the Board	412	412	903	903
incl. relatives of members of the Council and the Board	2 227	2 227	2 583	2 583
incl. companies related to members of the Council and the Board	1 052	1 052	2 214	2 214
Impairment allowance	(39)	(39)	(111)	(111)
Net loans to related parties	3 652	3 652	5 589	5 589
Other investments – debt securities	1 016	1 016	4 535	4 535
Right-of-use assets – lease contracts	-	9 261	-	9 924
Total loans and other claims	4 668	13 929	10 124	20 048

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Term and demand deposits and loans	162 184	164 609	108 545	110 785
incl. from the parent company	667	667	94	94
incl. from subsidiaries	-	2 425	-	2 240
incl. from the members of the Council and Board	1 554	1 554	1 585	1 585
incl. relatives of members of the Council and the Board	1 439	1 439	843	843
incl. companies related to members of the Council and the Board	158 524	158 524	106 023	106 023
Lease liability	-	9 912	-	10 476
Total deposits and liabilities	158 524	168 436	108 545	121 261
Contingent liabilities and commitments	1 824	1 827	2 080	2 083

		2022		2021
	Group	Bank	Group	Bank
	Interest rate %	Interest rate %	Interest rate %	Interest rate %
Loans to related parties	3.57	3.57	2.70	2.70
Term and demand deposits	2.77	2.77	0.44	0.44

Remuneration to the member of Council and Board during 2023 amounted to EUR 978 thousand (2022: EUR 869 thousand)

(see Note 11).

		2022		2021
	Group	Bank	Group	Bank
Income from related party transactions	EUR'000	EUR’000	EUR’000	EUR’000
Commission income	276	276	213	214
Interest income	398	398	609	609
Expenses from related party transactions
Interest expense	3 292	3 607	722	1 054
Public utilities and maintenance	-	392		401
			-

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

36. MATURITY ANALYSIS OF ASSETS AND LIABILITIES (BANK)

The table below reflects the maturity analysis of financial assets and liabilities based on the contractual term from

the reporting date until the maturity dates of the respective assets and liabilities. The remaining period to maturity

of assets and liabilities as at 31 December 2023 was as follows:

2023

						5 years	Total
			From 3	From 6	From 1	and
	Up to 1 month	From 1 to 3	to	month	to 5	over, or
EUR’000	including	months	6 months	s to 1	years	no	EUR’000
				year		maturit
						y
Financial assets
Cash and demand deposits with central	338 024	-	-	-	-	-	338 024
banks
Deposits with credit institutions	20 866	-	3 904	-	-	-	24 770
Loans and receivables	50 932	8 549	11 687	48 059	277 494	1 843	398 564
Investment securities	81 045	497	2 339	2 775	11 179	-	97 835
Other financial assets	4 014	-	-	-	-	5 414	9 428
Total financial assets	494 881	9 046	17 930	50 834	288 673	7 257	868 621
Financial liabilities
Demand deposits with credit	4 407	-	-	-	-	-	4 407
institutions
Financial liabilities carried at amortized	459 616	201 051	30 453	85 955	33 439	6 123	816 637
cost
Lease liabilities	73	146	146	440	4 323	4 784	9 912
Other financial liabilities	-	-	-	-	-	1 342	1 342
Total financial liabilities	464 096	201 197	30 599	86 395	37 762	12 249	832 298
Maturity gap	30 785	(192 151)	(12 669)	(35 561 )	250 911	(4 992)	36 323
Contingent liabilities and commitments	99 966	-	-	-	-	-	99 966

The maturity analysis of the Group is different from the Bank disclosed above only due to lease liabilities.

The negative gap positions are managed in accordance with the Bank’s Liquidity risk management policy. There

are limits for maturity gap positions, which are set and monitored by the Bank’s Investment committee.

The table below reflects the maturity analysis of financial assets and liabilities based on the contractual term from

the reporting date until the maturity dates of the respective assets and liabilities. The remaining period to maturity

of assets and liabilities as at 31 December 2022 was as follows:

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

2022

						5 years	Total
			From 3	From 6	From 1	and
	Up to 1 month	From 1 to 3	to	month	to 5	over, or
EUR’000	including	months	6 months	s to 1	years	no	EUR’000
				year		maturit
Financial assets						y
Cash and demand deposits with central	120 527	-	-	-	-	-	120 527
banks
Deposits with credit institutions	16 785	-	8 507	-	-	-	25 292
Trading financial assets	3	-	-	-	-	-	3
Loans and receivables	47 348	6 986	10 689	43 119	177 591	22 577	308 310
Investment securities	30 529	7 538	10 954	41 899	70 519	1 529	162 968
Other financial assets	1 282	-	-	-	-	8 772	10 054
Total financial assets	216 474	14 524	30 150	85 018	248 110	32 878	627 154
Financial liabilities
Demand deposits with credit	6 623	-	-	-	-	-	6 623
institutions
Financial liabilities carried at amortized	336 536	51 906	27 760	56 649	86 842	24 018	583 711
cost
Lease liabilities	73	146	146	438	4 307	5 366	10 476
Other financial liabilities	-	-	-	-	-	2 954	2 954
Total financial liabilities	343 232	52 052	27 906	57 087	91 149	32 338	603 764
Maturity gap	(126 758)	(37 528)	2 244	27 931	156 961	540	23 390
Contingent liabilities and commitments	59 127	-	-	-	-	-	59 127

The maturity analysis of the Group is different from the Bank disclosed above only due to lease liabilities.

The negative gap positions are managed in accordance with the Bank’s Liquidity risk management policy. There

are limits for maturity gap positions, which are set and monitored by the Bank’s Investment committee.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

37. FINANCIAL RISK MANAGEMENT

Liquidity risk (Bank)

Residual contractual maturities of financial liabilities of the Bank are presented below. The amounts disclosed in

the tables are the contractual undiscounted cash flows in comparison with the carrying amounts of financial

liabilities The Group’s residual contractual maturities of financial liabilities have not been presented as the

difference to the Bank’s analysis is insignificant.

EUR’000

		Gross nominal		1– 3	3 months	1-5 years
	Carrying	inflow /	Less than	months	to 1 year	and
31 December 2023	amount	(outflow)	1 month			more
Non-derivative liabilities
Demand deposits with credit
institutions	4 407	(4 407)	(4 407)	-	-	-
Lease liabilities	9 912	(12 279)	(73)	(146)	(659)	(11 401)
Financial liabilities carried at amortized cost: deposits	805 632	(811 025)	(459 568)	(201 052)	(116 407)	(33 998)
Financial liabilities carried at amortized cost: subordinated debt	11 005	(29 680)	-	-	(821)	(28 859)
securities
Total non-derivative liabilities	830 956	(857 391)	(464 048)	(201 198)	(117 887)	(74 258)
Unused loan and credit card
commitments	98 062	(98 062)	(98 062)	-	-	-
Guarantees given	1 904	(1 904)	(1 904)	-	-	-
Total Liabilities	930 922	(957 357)	(564 014)	(201 198)	(117 887)	(74 258)

EUR’000

		Gross nominal		1– 3	3 months
	Carrying	inflow /	Less than			1-5 years
31 December 2022	amount	(outflow)	1 month	months	to 1 year	and more
Non-derivative liabilities
Demand deposits with credit
institutions	6 623	(6 623)	(6 623)	-	-	-
Lease liabilities	10 476	(13 157)	(73)	(146)	(659)	(12 279)
Financial liabilities carried at amortized cost: deposits	577 707	(576 622)	(336 836)	(52 357)	(85 049)	(102 380)
Financial liabilities carried at amortized cost: subordinated debt	6 004	(8 480)	-	-	(449)	(8 031)
securities
Total non-derivative liabilities	600 810	(604 882)	(343 532)	(52 503)	(86 157)	(122 690)
Derivative liabilities
Trading: outflow	5 958	(5 958)	(5 958)	-	-	-
Trading: inflow	(5 961)	5 961	5 961	-	-	-
Total derivative liabilities	(3)	3	3	-	-	-
Unused loan and credit card
commitments	56 760	(56 760)	(56 760)	-	-	-
Guarantees given	2 367	(2 367)	(2 367)	-	-	-
Total Liabilities	659 934	(664 006)	(402 656)	(52 503)	(86 157)	(122 690)

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

38. CURRENCY ANALYSIS OF ASSETS AND LIABILITIES (BANK)

The Latvian banking legislation requires that the total foreign currency open position may not exceed 20% of the

equity.

The EUR equivalent of assets and liabilities as at 31 December 2023 by the currencies in which they are

denominated is as follows:

2023

	EUR	USD	Other	Total
EUR'000			currencies
	EUR’000	EUR’000	EUR’000	EUR’000
Financial assets
Cash and demand deposits with central banks	338 018	6	-	338 024
Loans and receivables from banks	9 027	10 149	5 594	24 770
Trading financial assets	-	-	-	-
Loans and receivables	392 404	6 160	-	398 564
Investment securities	91 473	6 362	-	97 835
Other financial assets	9 424	4	-	9 428
Total financial assets	840 346	22 681	5 594	868 621
Financial liabilities
Demand deposits with credit institutions	(4 398)	(7)	(2)	(4 407)
Trading financial liabilities	-	-	-	-
Financial liabilities carried at amortized cost	(800 557)	(11 116)	(4 964)	(816 637)
Other financial liabilities	(881)	(343)	(118)	(1 342)
Total financial liabilities	(805 836)	(11 466)	(5 084)	(822 386)
Assets (liabilities) arising from currency exchange
Spot and forward transaction receivables	27 400	14 014	31	41 445
Spot and forward transaction liabilities	(13 700)	(27 519)	(310)	(41 529)
Net long/short currency position	48 210	(2 290)	231	46 151

The currency analysis of the Group is not significantly different from that of the Bank disclosed above.

The currency gap positions are managed in accordance with the Bank’s Currency risk management policy. There

are limits for currency gap positions.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

38. CURRENCY ANALYSIS OF ASSETS AND LIABILITIES (BANK) (continued)

The Latvian banking legislation requires that the total foreign currency open position may not exceed 20% of the

equity.

The EUR equivalent of assets and liabilities as at 31 December 2022 by the currencies in which they are

denominated is as follows:

2022	EUR	USD	Other	Total
EUR'000			currencies
	EUR’000	EUR’000	EUR’000	EUR’000
Financial assets
Cash and demand deposits with central banks	120 412	115	-	120 527
Loans and receivables from banks	11 937	11 279	2 076	25 292
Trading financial assets	3	-	-	3
Loans and receivables	301 115	7 195	-	308 310
Investment securities	154 768	8 200	-	162 968
Other financial assets	9 763	291	-	10 054
Total financial assets	597 998	27 080	2 076	627 154
Financial liabilities
Due to central banks	-	-	-	-
Demand deposits with credit institutions	(6 528)	(74)	(21)	(6 623)
Trading financial liabilities	-	-	-	-
Financial liabilities carried at amortized cost	(562 493)	(19 943)	(1 275)	(583 711)
Other financial liabilities	(2 429)	(269)	(256)	(2 954)
Total financial liabilities	(571 450)	(20 286)	(1 552)	(593 288)
Assets (liabilities) arising from currency exchange
Spot and forward transaction receivables	15 000	6 274	-	21 274
Spot and forward transaction liabilities	(5 958)	(14 958)	(314)	(21 230)
Net long/short currency position	35 590	(1 890)	210	33 910

The currency analysis of the Group is not significantly different from that of the Bank disclosed above.

The currency gap positions are managed in accordance with the Bank’s Currency risk management policy. There

are limits for currency gap positions.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

39. REPRICING MATURITY ANALYSIS (BANK)

Interest rate risk relates to the changes in the value of the financial instrument as a result of changes in the market

rates. As at 31 December 2023, interest rate re-pricing categories were:

2023	Up to 1		From 3	From 6	From 1		Non-	Total
	month	From 1 to	to	months	to 5	Over 5	interest
EUR'000	including	3 months	6 mont	to 1	years	years	bearing	EUR’00
			hs	year				0
Financial assets
Cash and demand deposits with central banks	337 448	-	-	-	-	-	576	338 024
Loans and receivables from banks	24 770	-	-	-	-	-	-	24 770
Investment securities	2 178	995	25 066	1 962	65 163	2 471	-	97 835
Loans and receivables	172 761	76 416	109 410	29 987	6 992	529	2 469	398 564
Other financial assets	-	-	-	-	-	-	9 428	9 428
Total financial assets	537 157	77 411	134 476	31 949	72 155	3 000	12 473	868 621
FINANCIAL LIABILITIES
Demand deposits with credit institutions	-	-	-	-	-	-	4 407	4 407
Financial liabilities carried at amortized cost	424 679	197 862	29 790	84 480	27 515	11 303	41 008	816 637
Other financial liabilities	-	-	-	-	-	-	1 342	1 342
Total financial Liabilities	424 679	197 862	29 790	84 480	27 515	11 303	46 757	822 386
Interest rate risk net position	112 478	(120 451)	104 686	(52 531)	44 640	(8 303)	(34 284)	46 235
Interest rate risk gross (cumulative) position	112 478	(7 973)	96 713	44 182	88 822	80 519	46 235

The reprising maturity analysis of the Group is not significantly different from that of the Bank disclosed above.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

39. REPRICING MATURITY ANALYSIS (BANK) (continued)

Interest rate risk relates to the changes in the value of the financial instrument as a result of changes in the market

rates. As at 31 December 2022, interest rate re-pricing categories were:

2022	Up to 1		From 3	From 6	From 1		Non-	Total
	month	From 1 to	to	months	to 5	Over 5	interest
EUR'000	including	3 months	6 mont	to 1	years	years	bearing	EUR’00
			hs	year				0
Financial assets
Cash and demand deposits with central banks	119 875	-	-	-	-	-	652	120 527
Loans and receivables from banks	-	-	-	-	-	-	25 292	25 292
Trading financial assets	3	-	-	-	-	-	-	3
Investment securities	4 412	7 299	10 861	52 314	84 346	2 941	795	162 968
Loans and receivables	181 486	10 228	66 109	39 635	7 690	1 456	1 706	308 310
Other financial assets	-	-	-	-	-	-	10 054	10 054
Total financial assets	305 776	17 527	76 970	91 949	92 036	4 397	38 499	627 154
FINANCIAL LIABILITIES
Due to central banks	-	-	-	-	-	-	-	-
Demand deposits with credit institutions	-	-	-	-	-	-	6 623	6 623
Trading financial liabilities	-	-	-	-	-	-	-	-
Financial liabilities carried at amortized cost	298 627	117 893	27 758	56 227	37 714	6 160	39 332	583 711
Other financial liabilities	-	-	-	-	-	-	2 954	2 954
Total financial Liabilities	298 627	117 893	27 758	56 227	37 714	6 160	48 909	593 288
Interest rate risk net position	7 149	(100 366)	49 212	35 722	54 322	(1 763)	(10 410)	33 866
Interest rate risk gross (cumulative) position	7 149	(93 217)	(44 005)	(8 283)	46 039	44 276	33 866

The reprising maturity analysis of the Group is not significantly different from that of the Bank disclosed above.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

40. MAXIMUM CREDIT EXPOSURE ANALYSIS

The Bank’s maximum exposure to credit risk is set out below. The impact of possible netting of assets and

liabilities to reduce potential credit exposure is not significant.

Maximum credit exposure

	Notes		Gross maximum credit exposure
		Bank	Bank
At 31 December		2023	2022
EUR'000
Cash and balances with central banks	15	338 024	120 527
Loans and receivables from banks	16	24 770	25 292
Trading financial assets	17, 32	-	3
Investment securities	19, 21	97 835	162 968
Loans and receivables	20	398 564	308 310
Other financial assets	26	9 428	10 054
Total financial assets		868 621	627 154
Unused loan facilities	35	97 302	55 824
Unused credit card facilities	35	760	936
Guarantees an others	35	1 904	2 367
Total guarantees and commitments		99 966	59 127
Total maximum credit risk exposure		968 587	686 281

The maximum credit risk exposure analysis of the Group is not significantly different from that of the Bank

disclosed above.

The Group’s maximum exposure to credit risk is reflected in the carrying amounts of financial assets in the

consolidated statement of financial position. For financial guarantees issued, commitments to extend credit,

undrawn credit lines and export/import letters of credit, the maximum exposure to credit risk is the amount of the

commitment.

Credit risk management. Credit risk is the single largest risk for the Group's business; management therefore

carefully manages its exposure to credit risk.

The estimation of credit risk for risk management purposes is complex and involves the use of models, as the risk

varies depending on market conditions, expected cash flows and the passage of time. The assessment of credit

risk for a portfolio of assets entails further estimations of the likelihood of defaults occurring, the associated loss

ratios and default correlations between counterparties.

Limits. The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted

in relation to one borrower, or groups of borrowers, and to geographical and industry segments. Limits on the

level of credit risk by product and industry sector are approved regularly by management. Such risks are

monitored on a revolving basis and are subject to an annual, or more frequent, review

Credit risks policies are presented in Note 4.1.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

41.CAPITAL ADEQUACY CALCULATION (BANK)

	2023	2022
	EUR’000	EUR’000
Equity	89 835	82 785
Total Tier 1	83 092	76 424
Tier 1	77 032	75 324
Share capital	44 493	44 493
Statutory reserves	24	24
Retained earnings for the previous periods	31 377	29 915
Profit for the reporting period	12 566	10 462
Dividends proposed	(7 000)	(5 000)
Changes on application of IFRS 9	-	554
Revaluation reserves	(3 771)	(4 545)
Intangible assets	(267)	(256)
Other deductions	(21)	(26)
Insufficient coverage for non-performing exposures	(5)	-
Reduction of Tier 1 capital (Pillar 2 adjustments)	(364)	(297)
Additional Tier 1	6 060	1 100
Tier 2 capital	6 743	6 361
Subordinated debt	6 743	6 361
Risk-weighted value
Banking portfolio	500 840	409 723
Operational risk	56 935	45 554
Total risk exposure amount loan adjustment	-	16
Total risk weighted assets	557 775	455 293
Total capital as a percentage of risk weighted assets (total capital
ratio)	16.11%	18.18%
Total tier 1 capital expressed as a percentage of risk-weighted	14.90%	16.79%
assets (“tier 1 capital ratio”)

The above is based on internal reports of the Bank, provided to key management of the Bank.

As at 3l December 2023, the Bank's capital adequacy ratio was 16.19% (2022: 18.18%) which corresponds to the

requirements set in the Basel Capital Accord and the regulations of the Bank of Latvia. Under the capital

requirements introduced by Regulation (EU) No 575/2013 of the European Parliament and of the Council and the

Bank of Latvia, banks need to maintain a ratio of capital to risk weighted assets (“statutory capital ratio”) above

the prescribed minimum level. Although the minimum required level as at 31 December 2023 was 8%, according

to a special request by the Bank of Latvia the Bank was required to ensure a higher capital adequacy of 11.60%

during the period from 1 January 2023 (additional capital requirement - 2.6% and capital reserve requirement -

1%). In addition to the above capital requirement for the overall risk coverage, the Bank is required to maintain

compliance with the total capital reserve requirement calculated in accordance with Section 35

, 35

of the Credit Institution Law -2.93% (Capital conservation buffer – 2.50%, institution-specific

countercyclical capital buffer – 0.18% (as at 31.12.2023), other reserve -0.25%). The requirements of the total

capital reserve should be met using Tier 1 capital.

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

In addition to the calculation of the capital adequacy ratio in accordance with ‘Normative regulations on

establishing a capital and liquidity adequacy assessment process’ No. 209 of the Bank of Latvia, the Bank

regularly conducts its own internal capital adequacy assessment in order to ensure that it covers all the risks

assumed by the Bank and whether they are covered by the capital.

In accordance with Regulation (EU) of the European Parliament and of the Council 575/2013, the calculation of

capital adequacy is performed at the consolidated level, including the parent company of the bank (AS BBG). All

of the above requirements are also met at the consolidated level. CALCULATION OF CAPITAL ADEQUACY

at the consolidated level can be found on the Bank's website in the section "financial information" in the quarterly

financial report (https://www.bluorbank.com/lv/finansu-informacija).

42. FAIR VALUE OF FINANCIAL INSTRUMENTS

(a) Financial instruments measured at fair value

The table below analyses financial instruments measured at fair value at the end of the reporting period, by the

level in the fair value hierarchy into which the fair value measurement is categorised. There were no transfers

between the fair value hierarchy levels.

The Group and the Bank

	Published price	Valuation techniques based on	Valuation techniques based
	quotations	market observable inputs	on unobservable inputs
31 December 2023	(1)	(2)	(3)	Total
Financial assets
Financial assets at fair value through profit or loss:
Non fixed income securities	-	395	-	395
Derivatives	-	-	-	-
Financial assets at fair value through other comprehensive income
Fixed income securities	20 269	-	379	20 648
Non fixed income securities and shares	-	18	-	18
	20 269	413	379	21 061
	Published price quotations (1)
31 December 2022

Valuation techniques based on

market observable inputs

(2)

Valuation techniques based

on unobservable inputs

(3)

Total

Financial assets

Financial assets at fair value through profit or

loss:

Non fixed income securities

320

Derivatives

Financial assets at fair value through other

comprehensive income

Fixed income securities

25 592

379

25 971

Non fixed income securities and shares

25 592

341

379

26 312

Included in category "Published price quotations" (Level 1) are financial assets and liabilities that are measured

by reference to published quotes in an active market. A financial instrument is regarded as quoted in an active

market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group,

pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions

on an arm’s length basis. The main asset classes included in this category are financial assets for which the fair

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

value is obtained via pricing vendors or binding broker quotes and assets for which the fair value is determined

by reference to indices.

Included in category 2 “Valuation methods based on market observable data” are financial assets and liabilities

that are measured using a valuation technique based on assumptions that are supported by prices from observable

current market transactions in the same instrument or based on available market data.

Not based upon market observable (Level 3) input means that fair values are determined in whole or in part using

a valuation technique (model) based on assumptions that are neither supported by prices from observable current

market transactions in the same instrument nor are they based on available market data.

The following table shows the valuation techniques used in measuring Level 2 fair values:

Type	Valuation technique
Financial assets and	Market comparison technique: The fair values are based on broker quotes. Similar contracts
liabilities designated as at are traded in an active market and the quotes reflect the actual transactions in similar
fair value through profit	instruments.
or loss.
Financial assets	Valuation is based on financial indicators, including discounted cash flows and value of
measured at fair value through other comprehensive income	Bank’s position with the price hedge

The following table shows the valuation techniques used in measuring Level 3 fair values:

						Inter-relation between
Type			Valuation method		Significant unobservable	significant unobservable
					inputs	inputs and fair value
						measurement
Assets at fair value through profit or	Valuation is	based	on	financial	Net assets	The estimated fair value
loss (illiquid bonds)			indicators, including discounted cash			would increase
	flows.					(decrease), if:
						Increase/(decrease) in net
						assets
Financial assets at fair value				Outlook of the court case and estimated	Court case's order	The estimated fair value
through profit or loss	proceeds					would increase (decrease)
						if:
						Positive (negative) court
						case's order
Financial assets measured at fair				Valuation is based discounted dividend	Future net revenues;	The estimated fair value
value through other	model				CAPEX	would increase (decrease)
comprehensive income						if:
						revenue increases/
						(decreases/
						CAPEX decreases/
						(increases)

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

Changes in financial instruments of the Group/Bank classified as Level 3 in Fair Value Hierarchy:

31.12.2023
Financial assets at fair			Fair value
value	31.12.2022	(Sold)	adjustment	31.12.2023
Fixed income securities	379	-	-	379
Non fixed income securities	-	-	-	-
Total financial assets at fair value	379	-	-	379
31.12.2022
Financial assets at fair			Fair value
value	31.12.2021	(Sold)	adjustment	31.12.2022
Fixed income securities	3 514	(3 135)	-	379
Non fixed income
securities	218	(218)	-	-
Total financial assets at fair value	3 732	(3 353)	-	379

The table below analyses the fair values of financial instruments other than measured at fair value by the level in

the fair value hierarchy into which each fair value measurement is categorised. There were no transfers between

the fair value hierarchy levels.

					Total carrying
31 December 2023	Level 1:	Level 2:	Level 3: Total fair value		amount
Financial assets	EUR’000	EUR’000	EUR’000	EUR’000	EUR’000
Cash and demand deposits with central bank	576	337 448	-	338 024	338 024
Loans and receivables from banks	-	-	24 770	24 770	24 770
Loans to customers	-	-	397 937	397 937	398 564
Investment securities at amortised
cost	-	71 288	2 051	73 339	76 774
Other financial assets	-	-	9 428	9 428	9 428
Financial liabilities
Deposits and balances due to financial institutions	-	-	4 407	4 407	4 407
Financial liabilities carried at amortized cost	-	-	816 300	816 300	816 637
Other financial liabilities	-	-	1 342	1 342	1 342

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

					Total carrying
31 December 2022	Level 1:	Level 2:	Level 3: Total fair value		amount
Financial assets	EUR’000	EUR’000	EUR’000	EUR’000	EUR’000
Cash and demand deposits with central bank	652	119 875	-	120 527	120 527
Loans and receivables from banks	-	-	25 292	25 292	25 292
Loans to customers	-	-	307 022	307 022	308 310
Investment securities at amortised
cost	-	122 902	6 330	129 232	136 659
Other financial assets	-	-	10 054	10 054	10 054
Financial liabilities
Balances due to central bank	-	-	-	-	-
Deposits and balances due to financial institutions	-	-	6 623	6 623	6 623
Financial liabilities carried at amortized cost	-	-	582 587	582 587	583 711
Other financial liabilities	-	-	2 954	2 954	2 954

The following table shows the valuation techniques use in measuring Level 2 and Level 3 fair values, as well as

the significant unobservable inputs used:

Type	Valuation method	Significant unobservable inputs
Loans and advances due from financial	Discounted cash flows	Discount rates
institutions
Loans	Discounted cash flows	Discount rates
Due to financial institutions	Discounted cash flows	Discount rates
Deposits	Discounted cash flows	Discount rates

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

43. OPERATING SEGMENTS

The Bank’s Management Board, its chief operating decision maker, monitors separately the operating results of

the Corporate banking operating segment. The Bank’s main business activity is servicing corporate customers

and high net worth individuals, there is no separate retail banking segment and insignificant part of retail banking

products are managed and monitored together with corporate banking products. Treasury function includes

treasury services provided to corporate customers and high net worth individuals and therefore included in the

Corporate segment. The results of all other operations are included in the “Other” segment.

		2023			2022
	Corporate	Other	Total	Corpora	Other	Total
				te
	EUR'000	EUR'000	EUR'000	EUR'000	EUR'000	EUR'000
Net interest and similar income	25 539	-	25 539	17 589	-	17 589
Net fee and commission income	10 864	-	10 864	8 442	-	8 442
Net other finance income	(156)	-	(156)	(533)	-	(533)
Other operating income	1 598	72	1 670	870	72	942
Total operating income	37 845	72	37 917	26 368	72	26 440
Total operating expense	(17 995)	(84)	(18 079)	(15 228)	(58)	(15 286)
Credit loss allowance	(2 081)	-	(2 081)	(890)	-	(890)
Profit before tax	17 769	(12)	17 757	10 250	14	10 264

		2023			2022
	Corporate	Other	Total	Corporat	Other	Total
				e
Fee and commission income	EUR'000	EUR'000	EUR'000	EUR'000	EUR'000	EUR'000
Money transfers	1 949	-	1 949	1 096	-	1 096
Commissions on loans	808	-	808	551	-	551
monitoring and service
Securities transactions	999	-	999	910	-	910
Assets management	316	-	316	322	-	322
Client service	7 169	-	7 169	6 072	-	6 072
Payment card service	1 366	-	1 366	1 421	-	1 421
Total net fee and commission	12 607	-	12 607	10 372	-	10 372
income
Total assets	907 449	827	908 276	667 713	827	668 540
Total liabilities	(826 954)	-	(826 954)	(592 679)	-	(592 679)

BluOr Bank AS

Group’s Consolidated and Bank’s Separate Annual Report for the year ended 31 December 2023

Notes to the Group’s Consolidated and the Bank’s Separate Financial Statements

44. EVENTS AFTER THE REPORTING PERIOD

Corporate income tax for additional payment for credit institutions

In December 2023 a change in corporate income tax (CIT) legislation was introduced in Latvia stipulating an

advance CIT payable at 20% rate on profit after tax. The CIT advance is applicable to banks and leasing entities.

Advance corporate income tax paid is eligible to fully offset dividend distribution tax with no expiry date. As the

changes in the Corporate income tax las were substantively enacted before 31 December 2023, corporate income

tax expense was accordingly recognised in the 2023 financial statements.

Mortgage Borrower Protection Fee

From 1 January 2024, a mortgage borrower protection fee has been introduced in Latvia. The fee is paid by credit

institutions and capital companies registered in Latvia, which have received a special permit (licence) for the

provision of consumer lending services. The fee is paid for loans issued to consumers (individuals – borrowers),

the repayment of which is secured by a mortgage on real estate located in Latvia. The mortgage borrower

protection fee is set at 0.5 percent per quarter of the total amount of the outstanding mortgage credits issued by

the fee payer as at 31 October 2023. As the Bank’s mortgage loan portfolio is small, no material impact is expect

on the Bank in 2024..

Non-current assets classified as held for sale

Non-current assets classified as held for sale as at 31 December 2023 included one building (shopping centre)

that is a collateral recovered from defaulted loan during 2022. The Bank sold the asset in the beginning of 2024,

contract with a buyer was signed in January 2024.

Other than disclosed in these financial statements, no significant subsequent events have occurred in the period

from the reporting date to the date of these financial statements that would require adjustments to be made to

these financial statements and disclosures added to the notes thereto.

Translation from Latvian original*

PricewaterhouseCoopers SIA

Kr. Valdemāra iela 21-21, Rīga, LV-1010, Latvia, LV40003142793

T: +371 6709 4400, F: +371 6783 0055, www.pwc.lv

Translation note: This version of our report is a translation from the original, which was prepared in Latvian. All possible care

has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of

interpretation of information, views or opinions, the original language version of our report takes precedence over this

translation.

Independent Auditor’s Report

To the Shareholder of BluOr Bank AS

Report on the audit of the consolidated and separate financial statements

Our opinion

In our opinion, the consolidated and separate financial statements give a true and fair view of the

consolidated and separate financial position of BluOr Bank AS (the “Bank”) and its subsidiaries

(together “the Group”) as at 31 December 2023, and of the Group’s consolidated and the Bank’s

separate financial performance and the Group’s consolidated and the Bank’s separate cash flows for

the year then ended in accordance with IFRS Accounting Standards as adopted by the European

Union (EU).

Our opinion is consistent with our additional report to the Audit Committee dated 11 March 2024.

What we have audited

The Group’s consolidated and the Bank’s separate financial statements (together “the financial

statements”) comprise:

• the Group’s Consolidated and the Bank’s Separate Income Statements for the year ended 31

December 2023;

• the Group’s Consolidated and the Bank’s Separate Statements of Other Comprehensive

Income for the year ended 31 December 2023;

• the Group’s Consolidated and the Bank’s Separate Statements of Financial Position as at 31

December 2023;

• the Group’s Consolidated Statement of Changes in Shareholders’ Equity for the year ended

31 December 2023;

• the Bank’s Separate Statement of Changes in Shareholders’ Equity for the year ended 31

December 2023;

• the Group’s Consolidated and the Bank’s Separate Statements of Cash Flows for the year

ended 31 December 2023; and

• the notes to the consolidated and Bank’s financial statements, comprising material accounting

policy information and other explanatory information.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing as adopted in the

Republic of Latvia (ISAs). Our responsibilities under those standards are further described in the

Auditor’s responsibilities for the audit of the financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our opinion.

Independence

We are independent of the Group and the Bank in accordance with the International Code of Ethics for

Professional Accountants (including International Independence Standards) issued by the

International Ethics Standards Board for Accountants (IESBA Code) and the ethical requirements of

the Law on Audit Services that are relevant to our audit of the financial statements in the Republic of

Translation note: This version of our report is a translation from the original, which was prepared in Latvian. All possible care

has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of

interpretation of information, views or opinions, the original language version of our report takes precedence over this

translation.

Latvia. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the

ethical requirements of the Law on Audit Services.

To the best of our knowledge and belief, we declare that non-audit services that we have provided to

the Bank, its parent company and subsidiaries are in accordance with the applicable laws and

regulations in the Republic of Latvia and that we have not provided non-audit services that are

prohibited under Article 37.

of the Law on Audit Services of the Republic of Latvia.

The non-audit services that we have provided to the Group and the Bank in the period from 1 January

2023 to 31 December 2023 are disclosed in note 11 to the financial statements.

Our audit approach

Overview

 Overall Group and Bank materiality: EUR 800 thousand which

represents approximately 5% of profit before tax.

 We have audited the separate financial statements of the Bank.

 We have performed selected audit procedures over the significant

balances and transactions of subsidiaries.

 Our audit scope covered substantially all of the Group’s revenues

and substantially all of the Group’s total assets.

 Expected credit losses on loans (Group and Bank).

As part of designing our audit, we determined materiality and assessed the risks of material

misstatement in the financial statements. In particular, we considered where management made

subjective judgements; for example, in respect of significant accounting estimates that involved

making assumptions and considering future events that are inherently uncertain. As in all of our audits,

we also addressed the risk of management override of internal controls, including, among other

matters, consideration of whether there was evidence of bias that represented a risk of material

misstatement due to fraud.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain

reasonable assurance whether the financial statements are free from material misstatement.

Misstatements may arise due to fraud or error. They 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.

Based on our professional judgement, we determined certain quantitative thresholds for materiality,

including the overall Group and Bank materiality for the consolidated and separate financial

statements as a whole as set out in the table below. These, together with qualitative considerations,

helped us to determine the scope of our audit and the nature, timing and extent of our audit

procedures and to evaluate the effect of misstatements, if any, both individually and in aggregate on

the financial statements as a whole.

Materiality

Group

scoping

Key audit

matters

Translation note: This version of our report is a translation from the original, which was prepared in Latvian. All possible care

has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of

interpretation of information, views or opinions, the original language version of our report takes precedence over this

translation.

Overall materiality Overall materiality applied to the Group and the Bank was

EUR 800 thousand.

How we determined it Approximately 5% of the Group’s and the Bank’s profit before

tax for 2023.

Rationale for the materiality

benchmark applied

We chose profit before tax as the base benchmark because,

in our view, it is the benchmark against which the

performance of the Group and the Bank is most commonly

measured by users, and it is a generally accepted

benchmark.

We chose the threshold of 5%, which is within the range of

acceptable quantitative materiality thresholds for this

benchmark for a public-interest entity.

We agreed with the Audit Committee that we would report to them misstatements identified during our

audit above EUR 40 thousand for the Group and the Bank, as well as misstatements below that

amount that, in our view, warranted reporting for qualitative reasons.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in

our audit of the financial statements of the current period. 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.

Key audit matter How our audit addressed the key audit matter

Expected credit losses on loans (Group

and Bank)

Refer to Note 18 “Loans and receivables”

to the financial statements.

We focused on this area because

application of IFRS 9 “Financial

instruments” expected credit loss (ECL)

model for loans impairment losses requires

complex and subjective judgements over

both timing of recognition of expected

credit losses and their extent.

The key features of the expected credit

losses model include classification of loans

to 3 stages, assessment of credit risk

parameters and application of forward-

looking information. The amount of

expected credit losses for the Group’s and

the Bank’s loans is based on calculations

taking into consideration the exposure at

default, probability of default, changes in

customer credit rating and taking into

account estimated future cash flows from

the loan repayments or sale of collateral

(loss given default), and ECL adjustments

by expected impact of future

We assessed whether the Group’s and the Bank’s

accounting policies in relation to the ECL of loans to

customers are in compliance with IFRS 9 by

assessing each significant model component:

exposure at default, probability of default and loss

given default, definitions of default and significant

increase in credit risk, use of macroeconomic

scenarios.

We assessed the design and operating effectiveness

of the controls over relevant loan data and ECL

calculations. These controls included controls over

monitoring of loan quality, the non-retail loans credit

file periodic reviews and related credit rating

assessment, timely transfer into overdue accounts

where relevant and accuracy of overdue days

calculation, appropriate classification into individual or

collective assessment, and staging assessment.

Further, we performed detailed testing over reliability

of loan data, including contract dates, interest rates,

collateral values and types, performing/non-

performing status and other inputs used in ECL

calculation engine as at 31 December 2023.

For a sample of individually significant loans to legal

entities we evaluated reasonableness of assumptions

made by the Bank’s credit expert regarding future

Translation note: This version of our report is a translation from the original, which was prepared in Latvian. All possible care

has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of

interpretation of information, views or opinions, the original language version of our report takes precedence over this

translation.

macroeconomic scenarios.

For individually significant loans ECL are

calculated on individual basis and expert

judgement is applied to determine

probability of default (PD) and loss give

default (LGD). For other loans the expected

credit losses are calculated using the ECL

model.

As at 31 December 2023 expected credit

losses amounted to EUR 3 253 thousand

at the Group and the Bank (refer to Note

18).

cash flow scenarios, PD and LGD, appropriateness of

ECL stage applied, accuracy of ECL calculation as

well as existence and valuation of collateral.

We involved our expert to assess the ECL model and

recalculate the credit loss allowance for loans and

advances assessed on the collective basis. We

tested the accuracy of input information used in the

ECL model.

Finally, we have reviewed the credit risk disclosures.

How we tailored our Group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an

opinion on the consolidated financial statements as a whole, taking into account the structure of the

Group, the accounting processes and controls and the industry in which the Group operates.

The Group engagement team carried out audit work on the Bank’s financial statements and performed

selected audit procedures over the significant balances and transactions of other subsidiaries. Our

audit work addressed substantially all of the Group’s revenues and the Group’s total assets.

Reporting on other information including the Management report

Management is responsible for the other information. The other information comprises:

• Report of the Council and the Board, as set out on pages 3 to 5 of the Annual Report;

• information on the Council and the Board of the Bank, as set out on page 6 of the Annual

Report;

• Statement of Management’s Responsibility, as set out on page 7 of the Annual Report; and,

• Statement of Corporate Governance, set out in a separate statement prepared and signed by

the Bank's Management Board on 20 December 2023 and available on the Bank's website

http://bluorbank.lv as at the date of this audit report,

but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information identified above.

In connection with our audit of the financial statements, our responsibility is to read the other

information identified above and, in doing so, consider whether the other information is materially

inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears

to be materially misstated.

With respect to the Report of the Council and the Board, we also performed the procedures required

by the Law on Audit Services of the Republic of Latvia and the Financial and Capital Market

Commission Regulation No 113 “Regulation on preparation of the annual report and consolidated

annual report of credit institutions, investment brokerage companies and investment management

companies”. Those procedures include considering whether the Report of the Council and the Board

is prepared in accordance with the requirements of the applicable legislation.

In addition, in accordance with the Law on Audit Services of the Republic of Latvia, with respect to the

Statement of Corporate Governance, our responsibility is to consider whether the Statement of

Corporate Governance includes the information required by section (3) of Article 56.2 of the Financial

Instruments Market Law.

Based on the work undertaken in the course of our audit, in our opinion:

Translation note: This version of our report is a translation from the original, which was prepared in Latvian. All possible care

has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of

interpretation of information, views or opinions, the original language version of our report takes precedence over this

translation.

• the information given in the other information identified above for the financial year for which

the financial statements are prepared is consistent with the financial statements;

• the Report of the Council and the Board has been prepared in accordance with requirements

of the Financial and Capital Market Commission Regulation No. 113 “Regulation on

preparation of the annual report and consolidated annual report of credit institutions,

investment brokerage companies and investment management companies”; and

• the Statement of Corporate Governance, available on the Bank's website https://bluorbank.lv

as at the date of this audit report, includes the information required by section (3) of Article

56.2 of the Financial Instruments Market Law.

In addition, in light of the knowledge and understanding of the Group and the Bank and their

environment obtained in the course of the audit, we are required to report if we have identified material

misstatements in the Management report and other information that we obtained prior to the date of

this auditor’s report. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financial

statements

Management is responsible for the preparation of the financial statements that give a true and fair

view in accordance with the IFRS Accounting Standards as adopted by the EU and for such internal

control as management determines is necessary to enable the preparation of financial statements that

are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Group’s and the

Bank’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 management either intends to

liquidate the Group or the Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s and the Bank’s financial

reporting process.

Auditor’s responsibilities for the audit of the financial statements

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 an auditor’s report that

includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that

an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on

the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain

professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher than for one resulting from error, as

fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of

internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Group’s and the Bank’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

Translation note: This version of our report is a translation from the original, which was prepared in Latvian. All possible care

has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of

interpretation of information, views or opinions, the original language version of our report takes precedence over this

translation.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events

or conditions that may cast significant doubt on the Group’s and the Bank’s ability to continue as a

going concern. If we conclude that a material uncertainty exists, we are required to draw attention

in our auditor’s report to the related disclosures in the financial statements or, if such disclosures

are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained

up to the date of our auditor’s report. However, future events or conditions may cause the Group or

the Bank to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events

in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial statements.

We are responsible for the direction, supervision and performance of the Group audit. We remain

solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and to communicate with them all relationships and

other matters that may reasonably be thought to bear on our independence, and where applicable,

actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters

that were of most significance in the audit of the financial statements of the current period and are

therefore the key audit matters. We describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in our report because the adverse

consequences of doing so would reasonably be expected to outweigh the public interest benefits of

such communication.

Report on other legal and regulatory requirements

Report on the compliance of the presentation of consolidated financial statements

with the requirements of the European Single Electronic Format (“ESEF”)

We have been engaged based on our agreement of 20 September 2023 by the Board of the Bank to

conduct a reasonable assurance engagement for the verification of compliance with the applicable

requirements of the presentation of the consolidated financial statements of BluOr Bank AS for the

year ended 31 December 2023 (the “Presentation of the Consolidated Financial Statements”).

Description of a subject matter and applicable criteria

The Presentation of the Consolidated Financial Statements has been applied by the Board of the Bank

to comply with the requirements of art. 3 and 4 of the Commission Delegated Regulation (EU)

2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament

and of the Council with regard to regulatory technical standards on the specification of a single

electronic reporting format (the “ESEF Regulation”). The applicable requirements regarding the

Presentation of the Consolidated Financial Statements are contained in the ESEF Regulation.

The requirements described in the preceding sentence determine the basis for application of the

Presentation of the Consolidated Financial Statements and, in our view, constitute appropriate criteria

to form a reasonable assurance conclusion.

Translation note: This version of our report is a translation from the original, which was prepared in Latvian. All possible care

has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of

interpretation of information, views or opinions, the original language version of our report takes precedence over this

translation.

Responsibility of the Management Board and the Council

The Board of the Bank is responsible for the Presentation of the Consolidated Financial Statements

that complies with the requirements of the ESEF Regulation.

This responsibility includes the selection and application of appropriate markups in iXBRL using ESEF

taxonomy and designing, implementing and maintaining internal controls relevant for the preparation

of the Presentation of the Consolidated Financial Statements which is free from material non-

compliance with the requirements of the ESEF Regulation.

Members of the Council are responsible for overseeing the financial reporting process, which should

also be understood as the preparation of consolidated financial statements in accordance with the

format resulting from the ESEF Regulation.

Our responsibility

Our responsibility is to express a reasonable assurance conclusion whether the Presentation of the

Consolidated Financial Statements complies, in all material respects, with the ESEF Regulation.

We conducted our engagement in accordance with the International Standard on Assurance

Engagements 3000 (R) - ‘Assurance Engagements other than Audits and Reviews of Historical

Financial Information’ (ISAE 3000(R)). This standard requires that we comply with ethical

requirements, plan and perform procedures to obtain reasonable assurance whether the Presentation

of the Consolidated Financial Statements complies, in all material aspects, with the applicable

requirements.

Reasonable assurance is a high level of assurance, but it does not guarantee that the service

performed in accordance with ISAE 3000 (R) will always detect the existing material misstatement

(significant non-compliance with the requirements).

Quality management requirements and professional ethics

We apply International Standard on Quality Management 1, which requires the firm to design,

implement and operate a system of quality management including policies or procedures regarding

compliance with ethical requirements, professional standards and applicable legal and regulatory

requirements.

We comply with the independence and other ethical requirements of the International Code of Ethics

for Professional Accountants (including International Independence Standards) issued by the

International Ethics Standards Board for Accountants, which is founded on fundamental principles of

integrity, objectivity, professional competence and due care, confidentiality and professional

behaviour.

Summary of the work performed

Our planned and performed procedures were aimed at obtaining reasonable assurance that the

Presentation of the Consolidated Financial Statements complies, in all material aspects, with the

applicable requirements and such compliance is free from material errors or omissions. Our

procedures included in particular:

 obtaining an understanding of the internal control system and processes relevant to the

application of the Electronic Reporting Format of the Consolidated Financial Statements,

including the preparation of the XHTML format and marking up the consolidated financial

statements;

 verification whether the XHTML format was applied properly;

Translation note: This version of our report is a translation from the original, which was prepared in Latvian. All possible care

has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of

interpretation of information, views or opinions, the original language version of our report takes precedence over this

translation.

 evaluating the completeness of marking up the consolidated financial statements using the

XBRL markup language according to the requirements of the implementation of electronic

format as described in the ESEF Regulation;

 evaluating the appropriateness of the Group’s' use of XBRL markups selected from the ESEF

taxonomy and the creation of extension markups where no suitable element in the ESEF

taxonomy has been identified; and

 evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our

conclusion.

Conclusion

In our opinion, based on the procedures performed, the Presentation of the Consolidated Financial

Statements complies, in all material respects, with the ESEF Regulation.

Appointment and period of our audit engagement

We were first appointed as auditors by the Bank’s shareholder’s resolution on 28 November 2018. Our

appointment has been renewed annually by shareholder’s resolution representing a total period of

uninterrupted engagement appointment of 6 years.

The engagement partner on the audit resulting in this independent auditor’s report is Ilandra Lejiņa.

PricewaterhouseCoopers SIA

Certified audit company

Licence No. 5

Ilandra Lejiņa

Member of the Board

Certified auditor in charge

Certificate No. 168

Riga, Latvia

11 March 2024

Independent Auditor's Report is signed electronically with a secure electronic signature and contains a

time stamp.