Banco de Costa Rica and subsidiaries Consolidated ...€¦ · Republic of Costa Rica. Its main...

Banco de Costa Rica and subsidiaries

Consolidated Financial Statements Unaudited

March 31, 2015 and 2014

Table of contents

Consolidated Financial Statements Consolidated statement of financial position Consolidated income statement Consolidated statement of changes in equity Consolidated statement of cash flows Notes to consolidated financial statement

(1) Summary of operations and significant accounting policies ........................................ - 6 - (a) Operations ................................................................................................................. - 6 -

(b) Accounting policies for consolidated financial statement preparation ..................... - 9 -

(c) Investment in other companies ................................................................................. - 9 -

(d) Foreign currency ..................................................................................................... - 10 -

(e) Basis of consolidated financial statements preparations ........................................ - 12 -

(f) Financial instruments .............................................................................................. - 12 -

(g) Cash and cash equivalents ...................................................................................... - 14 -

(h) Investments in financial instruments ...................................................................... - 14 -

(i) Loan portfolio ......................................................................................................... - 15 -

(j) Allowance for loan losses ....................................................................................... - 16 -

(k) Securities sold under repurchase agreements ......................................................... - 20 -

(l) Accounting for accrued interest receivable ............................................................ - 20 -

(m) Other receivable ...................................................................................................... - 21 -

(n) Foreclosed assets .................................................................................................... - 21 -

(o) Offsetting ................................................................................................................ - 22 -

(p) Property and equipment .......................................................................................... - 22 -

(q) Deferred charges ..................................................................................................... - 24 -

(r) Intangible assets ...................................................................................................... - 24 -

(s) Impairment of assets ............................................................................................... - 25 -

(t) Accounts payable and other payables ..................................................................... - 25 -

(u) Provisions ............................................................................................................... - 26 -

(v) Legal reserve ........................................................................................................... - 27 -

(w) Revaluation surplus ................................................................................................ - 27 -

(x) Use of estimates ...................................................................................................... - 27 -

(y) Recognition of main types of revenue and expenses .............................................. - 28 -

(z) Income tax .............................................................................................................. - 28 -

(aa) BICSA financial leases ........................................................................................... - 29 -

(bb) Pension, retirement and outgoing personnel ........................................................... - 29 -

(cc) Statutory allocations ............................................................................................... - 30 -

(dd) Development Financing Fund................................................................................. - 31 -

(ee) Development Credit Fund ....................................................................................... - 31 -

(ff) BICSA trust ............................................................................................................ - 32 -

(gg) Economic period ..................................................................................................... - 32 -

(2) Collateralized or restricted assets ............................................................................... - 32 - (3) Balances and transactions with related parties ........................................................... - 33 - (4) Cash and cash equivalents .......................................................................................... - 33 - (5) Investments in financial instruments .......................................................................... - 34 - (6) Loan portfolio ............................................................................................................. - 37 - a) Loan portfolio by sector .......................................................................................... - 37 -

b) Current loans ........................................................................................................... - 38 -

c) Loan portfolio by arrears ........................................................................................ - 39 -

d) Past due loans ......................................................................................................... - 40 -

e) Accrued interest receivable on loan portfolio ......................................................... - 41 -

f) Allowance for loan impairment .............................................................................. - 41 -

g) Syndicated loans ..................................................................................................... - 43 -

(7) Foreclosed assets, net ................................................................................................. - 54 - (8) Investments in other companies ................................................................................. - 55 - (9) Property and equipment.............................................................................................. - 57 - (10) Intangible assets ......................................................................................................... - 60 - (11) Demand obligations with public................................................................................. - 62 - (12) Demand and term obligations with entities ................................................................ - 62 - (13) Other obligations with the public ............................................................................... - 63 - (14) Obligations with entities and obligations with Central Bank of Costa Rica .............. - 66 - (a) Maturities of loan payable ...................................................................................... - 67 -

(15) Income tax .................................................................................................................. - 68 - (16) Provisions ................................................................................................................... - 72 - (17) Other sundry accounts payable................................................................................... - 76 - (18) Equity ......................................................................................................................... - 77 - (19) Commitments and contingencies................................................................................ - 84 - (20) Trusts .......................................................................................................................... - 89 - (21) Other debit memoranda accounts ............................................................................... - 90 - (22) Current and term brokerage operations and portfolio management operations ......... - 91 - (23) Investments fund managment agreements ................................................................. - 95 - (24) Pension fund managment agreements ........................................................................ - 96 - (25) Financial income on investments in financial instruments ........................................ - 98 - (26) Financial income on loan portfolio ............................................................................ - 98 - (27) Expenses for obligations with the public ................................................................... - 99 - (28) Expenses for allowances for impairment of assets ..................................................... - 99 - (29) Income from recovery of assets and decreased in allowances and provisions ......... - 100 - (30) Service fees and commissions income ..................................................................... - 100 - (31) Administrative expenses........................................................................................... - 101 - (32) Statutory allocations of earnings .............................................................................. - 102 - (33) Components of other comprehensive income .......................................................... - 103 - (34) Operating leases ....................................................................................................... - 103 - (35) Fair value of financial instruments ........................................................................... - 104 -

(a) Cash and cash equivalents, accrued interest receivable, other receivables, demand deposits and customer savings deposits, interest payable, and other liabilities. ...................................... - 104 -

(b) Investments in financial instruments ........................................................................ - 104 - (36) Operation Segments ................................................................................................. - 105 - (37) Risk Management ..................................................................................................... - 111 - (38) Financial information of the Development Financing Fund .................................... - 152 - (39) Financial information of the Development Financing Fund .................................... - 165 - (40) Transition to International Financing Reporting Standards (IFRSs)........................ - 168 - (41) Figures 2014 ............................................................................................................. - 188 - (42) Relevant and subsequent events ............................................................................... - 188 - (43) Date of authorization for issuance of the financial statements ................................. - 189 -

- 6 - Banco de Costa Rica and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2015 and 2014

(Continued)

(1) Summary of operations and significant accounting policies

(a) Operations Banco de Costa Rica (the Bank) is an autonomous, independently managed, public law institution organized in 1877. As a State-owned public bank, it is regulated by the Internal Regulations of the National Banking System (IRNBS), the Internal Regulations of the Central Bank of Costa Rica, and by the Political Constitution of the Republic of Costa Rica. It is also subject to oversight by the General Superintendence of Financial Entities (SUGEF) and the Comptroller General of the Republic (CGR). The Bank’s registered office is located at Avenida Central and Avenida Segunda, Calle 4 and Calle 6, in San José, Costa Rica. The Bank´s website and its subsidiaries located in Costa Rica is www.bancobcr.com. The Bank is mainly dedicated to extending loans and granting bid and performance bonds; issuing certificates of deposit; opening checking accounts in colones, U.S. dollars, and euros; issuing letters of credit; providing collection services; buying and selling foreign currency; managing trusts; providing custodial services for assets; and other banking operations. As of March 31, 2015, the Bank has 245 branches (246 and 247 as of December 31, 2014 and March 31, 2014, respectively) distributed among the national territory and has in operation 581 automated teller machines (573 and 531 as of December 31, 2014 and March 31, 2014, respectively), and has 3,873 employees (3,853 and 3,779 as of December 31, 2014 and March 31, 2014, respectively). The consolidated financial statements and notes thereto are expressed in colones (¢), the monetary unit of the Republic of Costa Rica. The Bank is shareholder owner of a 100% of the following subsidiaries: BCR Valores, S.A. (brokerage firm) was organized as a corporation in February 1999 under the laws of the Republic of Costa Rica. Its main activity is securities trading. As of March 31, 2015, the Brokerage Firm has 62 employees (61 as of December 31, 2014 and March 31, 2014), and is regulated by the Costa Rican National Securities Commission (SUGEVAL). BCR Sociedad Administradora de Fondos de Inversion, S.A. (investment fund manager company) was organized as a corporation in July 1999 under the laws of the Republic of Costa Rica. Its main activity is investment fund management. As of March 31, 2015, the Investment Fund Manager has 91 employees (92 and 90 as of December 31, 2014 and March 31, 2014, respectively) and is regulated by SUGEVAL.

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Banco de Costa Rica and Subsidiaries


(Continued)

BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A. (pension fund operator) was organized as a corporation in September 1999 under the laws of the Republic of Costa Rica. Its main activity is managing supplemental pension plans and offering additional services related to disability and death plans to members. As of March 31, 2015, the Pension Fund Manager has 109 employees (111 and 116 as of December 31, 2014 and March 31, 2014, respectively), and is regulated by the Pensions Superintendency (SUPEN). BCR Sociedad Corredora de Seguros, S.A. (insurance broker) was organized as a corporation in February 2009 under the laws of the Republic of Costa Rica. Its main activity is insurance underwriting. As of March 31, 2015 the Insurance Broker has 80 employees (76 and 80 as of December 31, 2014 and March 31, 2014, respectively) and is regulated by the General Insurance Superintendency (SUGESE). BAN Procesa - TI. S.A. was organized as a corporation in August 2009 under the laws of the Republic of Costa Rica. Its main activity will be to provide IT processing services and technical support, purchase, lease, and maintain hardware and software, including software development, and address the Bank’s IT needs. This entity is not engaged in operations. The Bank holds a 51% ownership interest in the following subsidiary: Banco Internacional de Costa Rica, S.A. and subsidiary (BICSA) was organized as a bank under the laws of the Republic of Panama in 1976. It operates under a general license granted by the Superintendence of Banks of Panama to engage in banking transactions in Panama or abroad; its office is located in the city of Panama, Republic of Panama, BICSA Financial Center, 50 floor, Avenida Balboa and Calle Aquilino de la Guardia, and its subsidiary in Miami, Florida, United States of America. The remaining 49% of BICSA’s stocks are owned by Banco Nacional de Costa Rica. As of March 31, 2015 BICSA has 243 employees (250 and 238 as of December 31, 2014 and March 31, 2014, respectively).

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(Continued)

In the Republic of Panama, banks are regulated by the Superintendency of Banks of Panama through Executive Order No. 9 of February 26, 1998, and by the resolutions and directives issued by that entity. Among other aspects, that law regulates authorization of banking licenses, minimum capital and liquidity requirements, general oversight, and procedures for credit risk and market risk management, money laundering prevention, and bank takeover and liquidation. Banks are also subject to an audit at least every two (2) years by auditors from the Superintendency of Banks to verify compliance with Executive Order No. 9 and Law No. 42 on Money Laundering Prevention. BICSA wholly owned subsidiaries Arrendadora Internacional, S.A. and Bicsa Capital S.A, are engaged in providing funding through financial leases and purchase of invoices and brokerage services respectively. The Branch has been operating since September 1, 1983 under an international banking license granted by the office of the State Comptroller and Banking Commissioner of the State of Florida, United States of America. Regulatory aspects of BICSA and Subsidiary Miami Branch The Branch is subject to regulations and periodic oversight by certain federal and state agencies. For such purposes, the Branch has an agreement with federal and state regulatory authorities, which requires the Branch to continually maintain and report certain minimum capital ratios and maturity parameters, e.g. the Branch must maintain a minimum ratio of eligible assets to third party liabilities of 110%, on a daily basis.

Panama Branch

Executive Order No. 9 of February 26, 1998 requires that banks operating under a general license maintain capital funds for an amount greater than or equal to 8% of risk-weighted assets, including off-balance sheet operations. This law also limits the amount that can be loaned to a single economic group to a maximum of 25% of capital funds. It also limits the amount that can be loaned to related parties to a maximum of 5% and 10% of capital funds, depending on the guarantee provided by the borrower, up to a cumulative maximum of 25% of BICSA’s capital funds.

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(Continued)

(b) Accounting policies for consolidated financial statement preparation

The financial statements have been prepared in accordance with the legal provisions, rules, and accounting regulations issued by the Central Bank of Costa Rica (BCCR), the General Superintendence of Financial Entities (SUGEF), and the National Financial System Oversight Board (CONASSIF).

(c) Investment in other companies

Valuation of investments by the equity method

i. Subsidiaries

Subsidiaries are entities controlled by the Bank. Control exists when the Bank has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its actives. As prescribed by regulations, the financial statements must present investments in subsidiaries by the equity method rather than on a consolidated basis. Transactions that affect the equity of those companies, such as conversion adjustments and unrealized gain or loss on valuation of investments, are recognized in the same manner in the Bank's equity, the effects are recorded in the “Adjustment for valuation of investments in other companies" account. The consolidated financial statements include the financial figures of the Bank and of the following subsidiaries:

Subsidiary

Ownership percentage

BCR Valores, S.A. (the Brokerage Firm) 100% BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A. (the Pension Funds Manager)

100%

BCR Sociedad Administradora de Fondos de Inversión, S.A. (the Investment Funds Manager)

100%

Banco Internacional de Costa Rica, S.A. and subsidiary (Arrendadora Internacional, S.A. which are wholly-owned subisidiary)

51%

BCR Sociedad Corredora de Seguros, S.A. (the Insurance Broker)

100%

All significant intercompany balances and transactions have been eliminated on consolidation.

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(Continued)

(d) Foreign currency

i. Foreign currency transactions

Assets and liabilities held in foreign currency are converted to colones at the exchange rate ruling at the consolidated balance sheet date. Transactions in foreign currency during the year are converted at the foreign exchange rate ruling at the date of the transaction. Conversion gains or losses are presented in the consolidated income statement.

ii. Monetary unit and foreign exchange regulations

As of January 30, 2015 the Board of Directors of the Central Bank of Costa Rica, on article 5 of minute to session 5677-2015, established a managed floating Exchange rate regime starting February 2, 2015, whose main aspects are detailed below:

In this regime, the Central Bank of Costa Rica will allow the exchange rate to be freely determined by the foreign exchange market, but may participate in the market in a discretionary manner, to meet its own requirements of currency and those of the non-banking Public Sector, in order to avoid sharp exchange fluctuations.

The Central Bank of Costa Rica, may carry out direct Operations or use forex trading instruments it considers appropriate in accordance with the current regulations.

In its stabilization transactions, the Central Bank of Costa Rica will continue to use in the Foreign Currency Market (MONEX), the rules of engagement with the amendments provided for in this agreement. The Financial Stability Committee shall determine the intervention procedures consistent with the strategy approved by the Board.

As of March 31, 2015 and December 31, 2014, the effective foreign Exchange rate system was adjustable the band regime. As established in the Chart of Accounts, assets and liabilities held in foreign currency should be expressed in colones at the exchange rate disclosed by the Central Bank of Costa Rica. Thus, as of March 31, 2015, monetary assets and liabilities denominated in U.S. dollars were valued at the exchange rate of ¢527.36 to US$1.00 (¢533.31. and ¢538.34 to US$1.00 as of December 31, 2014 and March 31, 2014, respectively).

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(Continued)

Valuation in colones of monetary assets and liabilities in foreign currency during the year ended March 31, 2015 gave rise to foreign exchange losses of ¢27,739,661,184 (¢227,837,079,565 as of March 31, 2014) and gains of ¢28,441,343,644 (¢227,041,284,412 as of March 31, 2014), which are presented in the consolidated income statement.

Additionally, valuation of other assets and other liabilities gave rise to gains and losses, respectively, which are booked in “Other operating income” and “Other operating expenses”, respectively. For the year ended March 31, 2015 valuation of other assets gave rise to gains of de ¢140,253,385 (¢617,280,597 as of March 31, 2014) and valuation of other liabilities gave rise to losses of ¢289,891,191 (¢495,377,490 as of March 31, 2014).

iii. Financial statements of foreign subsidiaries (BICSA)

The financial statements of BICSA are presented in U.S. dollars, which is its current tender. The conversion of the financial statements to colones was carried out as follows: Assets and liabilities have been converted at the closing exchange rate.

Income and expenses have been converted at the average exchange rates in effect

during each year.

The equity is measured in terms of historical cost and has been converted using the Exchange rate at the transactions date.

As result of BCR’s participation in BICSA, net profits in the amount of ¢1,215,816,114, increased for the period ended March 31, 2015, which are disclosed in the consolidated income statement (¢1,170,429,406 in March 31, 2014). As results of the conversions for the year ended March 31, 2015 net loss arise for exchange rate differences in the amount of ¢584,380,056 (net income for ¢3,818,024,378 in 2014), shown in the equity account with the caption “adjustment for conversion” in the financial statements.

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(Continued)

(e) Basis of consolidated financial statements preparations

The consolidated financial statements have been prepared on the fair value basis for available-for-sale assets and trading financial instruments. Other financial and non-financial assets and liabilities are recorded at amortized or historical cost. The accounting policies have been consistently applied.

(f) Financial instruments A financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity. The Bank’s financial instruments include primary instruments: cash and due from banks, investments in financial instruments, loan portfolio, other receivable, obligations with the public, obligations with entities, and payables.

(i) Classification Trading financial instruments are instruments held by the Bank for short-term profit taking. Originated instruments are loans and other accounts receivable created by the Bank providing money to a debtor rather than with the intention of short-term profit taking. Available-for-sale assets are financial assets that are not held for trading purposes, originated by the Bank, or held to maturity. Available-for-sale assets include certain debt securities. In accordance with accounting standards issued by CONASSIF, as of January 1, 2008, investments in financial instruments made by regulated entities are to be classified as available for sale. Own investments in open investment funds are to be classified as trading financial assets. Own investments in closed investment funds are to be classified as available for sale. Until December 31, 2007, SUGEF allowed investments in financial instruments to be classified as held-to-maturity. Entities regulated by SUGEVAL, SUGEF, SUPEN, and SUGESE may classify other investments as trading financial instruments, provided there is an express statement of intent to trade them within 90 days from the acquisition date.

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(Continued)

(ii) Recognition The Bank recognizes available-for-sale assets on the date at which the Bank becomes a party to the contractual provisions of the instrument. From this date, any gains or losses arising from changes in the fair value of the assets are recognized in equity. Held-to-maturity assets and originated loans and other accounts receivable are recognized using settlement date accounting, i.e. on the date they are transferred to the Bank. In 2015 and 2014, the Bank did not classify financial instruments as held to maturity, except for the securities received to capitalize the Bank. (See notes 5 and 18).

(iii) Measurement Financial instruments are measured initially at fair value, including transaction costs. Subsequent to initial recognition, available-for-sale assets are measured at fair value, except for any instrument that does not have a quoted market price in an active market and whose fair value cannot be reliably measured is stated at cost, including transaction costs less impairment losses. All non-trading financial assets and liabilities, originated loans and other accounts receivable, and held-to-maturity investments are measured at amortized cost less impairment losses. Any premium or discount is included in the carrying amount of the underlying instrument and amortized to finance income or expense using the effective interest method. Article 17 of the Accounting Regulations Applicable to Entities Regulated by SUGEF, SUGEVAL, SUPEN and SUGESE and to Non-financial Issuers prescribes available-for-sale classification for investments in financial instruments by regulated entities.

(iv) Fair value measurement principles The fair value of financial instruments is based on their quoted market price at the consolidated balance sheet date without any deduction for transaction costs.

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(Continued)

(v) Gains and losses on subsequent measurement

Gains and losses arising from a change in the fair value of available-for-sale assets are recognized directly in equity until the investment is considered to be impaired, at which time the loss is recognized in the consolidated income statement. When the financial assets are sold, collected, or otherwise disposed of, the cumulative gain or loss recognized in equity is transferred to the consolidated income statement.

(vi) Derecognition A financial asset is derecognized when the Bank loses control over the contractual rights that comprise the asset. This occurs when the rights are realized, expire, or are surrendered. A financial liability is derecognized when it is extinguished.

(g) Cash and cash equivalents The Bank considers cash and due from banks, demand and term deposits, and investment securities that the Bank has the intent to convert into cash within two months or less to be cash and cash equivalents, with the exception of BICSA whose period is ninety days or less.

(h) Investments in financial instruments

Investments in financial instruments that are classified as available-for-sale investments are valued at market prices using the price vector furnished by Proveedor Integral de Precios de Centroamérica, S.A. (PIPCA). In accordance with accounting standards issued by CONASSIF, starting January 1, 2008, the Bank no longer classifies investments in financial instruments as held-to-maturity. However, pursuant to Law No. 8703 “Amendment to Law No. 8627 on the Ordinary and Extraordinary Budget of the Republic for Fiscal Year 2008”, securities received to capitalize by State-owned banks are to be classified as held-to-maturity and are not subject to market price valuation. The effect of market price valuation of available-for-sale investments and restricted financial instruments are included in the equity account with the caption “Adjustment for valuation of available-for-sale investments” until those investments are realized or sold. Regular purchases or sales of financial assets are recognized by the settlement date method, date of delivery in exchange for an asset. Investments in repurchase agreements (term seller positions) and investment in securities with original maturities of less than 180 days are not valued at market prices.

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(Continued)

Trading investments are measured at fair value through profit or loss and are acquired with the intention of selling the financial instrument in the immediate future. Held-to-maturity investments are measured at amortized cost by the effective interest method. In accordance with Law No. 8703, the Bank no longer classifies investments as held to maturity, except investments in financial instruments received to capitalize the Bank. Trading investments are measured at fair value through profit or loss and are acquired with the intention of selling the financial instrument in the short term. When a financial asset is acquired with accrued interest, interest is booked in a separate account as accrued interest receivable. BICSA´s investments The fair values of BICSA’s investment securities that are quoted in active markets are based on recent purchase prices. If a security is not quoted in an active market, its fair value is determined by using a valuation technique, such as the use of recent transactions, the analysis of discounted cash flows, and other valuation techniques commonly used by market participants. Shares for which fair values cannot be reliably determined are measured at cost less impairment losses.

(i) Loan portfolio The Bank loan portfolio SUGEF defines credits as any operation formalized by a financial intermediary irrespective of the type of underlying instrument or document, whereby the intermediary assumes the risks of either directly providing funds or credit facilities or guaranteeing that their customer will honor its obligations with third parties. Credits include loans, factoring, purchases of securities, guarantees in general, advances, checking account overdrafts, bank acceptances, interest, open letters of credit, and preapproved lines of credit. The loan portfolio is presented at the value of outstanding principal. Interest on loans is calculated based on the outstanding principal and contractual interest rates and is accounted for as income on the accrual basis of accounting. The Bank follows the policy of suspending interest accruals on loans with principal or interest that is more than 180 days past due.

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(Continued)

BICSA loan portfolio

Loans receivable are non-derivate financial assets with fixed or determinable payments that are not quoted in an active market and usually originate in providing resources for a loan. Loans are presented at their main value pending collection, less not generated interest and commissions and reserve for loan losses. Not earned commissions and interest are recognized as income over the life of the loan using the effective interest method.

(j) Allowance for loan losses

The Bank loan portfolio The loan portfolio is valued in accordance with provisions established in SUGEF Directive 1-05 “Regulations for Borrower Classification”, which was approved by CONASSIF on November 24, 2005, published in Official Journal “La Gaceta” No. 238 on Friday, March 9, 2005, and became effective on October 9, 2006.

Loan operations approved for individuals or legal entities with a total outstanding balance exceeding ¢65,000,000 (Group 1 under SUGEF Directive 1-05) are classified by credit risk. This classification takes into account the following considerations: Creditworthiness, which includes an analysis of projected cash flows, an analysis of

financial position, consideration for experience in the line of business, quality of management, stress testing for critical variables, and an analysis of the creditworthiness of individuals, regulated financial intermediaries, and public institutions.

Historical payment behavior, which is determined by the borrower’s payment history

over the previous 48 months, considering servicing of direct loans, both current and settled, in the National Financial System as a whole. SUGEF calculates the level of historical payment behavior for borrowers reported by entities during the previous month.

Arrears

Pursuant to the aforementioned Directive, collateral may be used to mitigate risk for purposes of calculating the allowance for loan impairment. The market value of collateral should be considered and adjusted at least once annually. The percentage of acceptance of collateral is also a mitigating factor. Collateral must be depreciated six months after the most recent appraisal.

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(Continued)

Risk categories are summarized below:

Risk category

Arrears

Historical payment behavior

Creditworthiness

A1 30 days or less Level 1 Level 1 A2 30 days or less Level 2 Level 1 B1 60 days or less Level 1 Level 1 or Level 2 B2 60 days or less Level 2 Level 1 or Level 2 C1 90 days or less Level 1 Level 1, Level 2 or C2 90 days or less Level 2 Level 3

D 120 days or less Level 1 or Level 2 Level 1, Level 2, Level 3 or Level 4

Remaining loan operations, for which the borrower’s total outstanding balance is less, than ¢65,000,000 (Group 2 under SUGEF Directive 1-05), are classified in the following categories based on historical payment behavior and arrears:

Risk

category Arrears

Historical payment behavior

Creditworthiness

A1 30 days or less Level 1 Level 1 A2 30 days or less Level 2 Level 1 B1 60 days or less Level 1 Level 1 or Level 2 B2 60 days or less Level 2 Level 1 or Level 2

C1 90 days or less Level 1 Level 1, Level 2 or Level 3

C2 90 days or less Level 2 Level 1, Level 2 or Level 3

D 120 days or less Level 1 or Level

2 Level 1, Level 2, Level 3 or Level 4

Borrowers are to be classified in risk category E if they fail to meet the conditions for classification in risk categories A through D mentioned above, are in bankruptcy, a meeting of creditors, court protected reorganization procedure, or takeover, or if the Bank considers classification in such category to be appropriate. Pursuant to SUGEF Directive 1-05: "Regulation for qualifying Debtors", as of January 1, 2014, the Bank must maintain a minimum amount of allowance resulting from the sum of generic and specific allowances, calculated in accordance with the Transitory XII.

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(Continued)

The generic allowance will be equal to 0.5% of the total due balance, corresponding to the loan portfolio classified in A1 and A2 risk categories, without reducing the effect of mitigators of loan operations which apply to contingent claims. The specific allowance is calculated on the covered and uncovered portion of each loan. The allowance on the exposed portion is equal to the total outstanding balance of each loan transaction minus the weighted adjusted value of the relevant security. The resulting amount is multiplied by the percentage that corresponds to the risk category. The allowance on the covered part of each credit operation is equal to the amount corresponding to the covered part of the operation, multiplied by the appropriate percentage. Specific allowance percentages for each borrower risk category are as follows:

Risk category

Specific allowance percentage on the uncovered portion of the loan

Specific allowance percentage on the covered portion of the loan

A1 0% 0% A2 0% 0% B1 5% 0.5% B2 10% 0.5% C1 25% 0.5% C2 50% 0.5% D 75% 0.5% E 100% 0.5%

As of January 1, 2014, as an exception in the case of risk category E, the minimum allowance for loans to a borrower whose historical payment behavior is rated as level 3 is to be calculated as follows:

Arrears

Specific allowance

percentage on the uncovered portion of the

loan

Specific allowance

percentage on the covered

portion of the loan

Creditworthiness (Borrowers Group

1)

Creditworthiness (Borrowers Group

2)

30 days or less 20% 0.5% Level 1 Level 1 60 days or less 50% 0.5% Level 2 Level 2

More than 61 days

100% 0.5% Level 1 or Level 2 or Level 3 or Level

4 Level 1 or Level 2

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(Continued)

Pursuant to SUGEF Directive 1-05, as of March 31, 2015, the minimum allowance is ¢38,025,082,637 of which ¢37,962,713,170 correspond to direct loans and stand-by credits and ¢62,369,467 correspond to stand-by credits. As of December 31, 2014 and March 31, 2014, the minimum allowance is ¢35,470,014,032 (of which ¢35,426,418,269 correspond to direct loans and stand-by credits and ¢43,595,763 correspond to stand-by credits) and ¢33,987,423,747 (of which ¢33,867,205,970 correspond to direct loans and stand-by credits and ¢120,217,777correspond to stand-by credits)

As of March 31, 2015, an allowance was booked for ¢38,078,595,303 (¢35,520,106,333 and ¢34,037,423,949 as of December 31, 2014 and March 31, 2014, respectively).

As of March 31, 2015, December 31, 2014 and March 31, 2014, increases in the allowance for loan impairment resulting from the minimum allowance are included in the accounting records in conformity with article 17 of SUGEF Directive 1-05, under prior authorization from SUGEF in conformity with article 10 of IRNBS.

As of March 31, 2015, December 31, 2014 and March 31, 2014, management considers the allowance to be sufficient to absorb any potential losses that could be incurred on recovery of the portfolio.

Accounts and accrued interest receivable

In order to assess the risk of accounts and accrued interest receivable unrelated to loan operations, the Bank considers the arrears of the accounts based on ranges established for other assets in SUGEF Directive 1-05 adopted by CONASSIF.

Arrears Allowance percentage 30 days or less 2% 60 days or less 10% 90 days or less 50% 120 days or less 75% More than 120 days 100%

BICSA allowance for loan impairment

BICSA first assesses whether there is any objective evidence of impairment for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If BICSA determines that there is no objective evidence of impairment for a financial as set assets individually, irrespective of whether the financial asset is individually significant, the asset is collectively tested for impairment by grouping it together with financial assets with similar credit risk characteristics. Assets that are individually tested for impairment and for which an impairment loss has been previously recognized are not collectively tested for impairment.

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(Continued)

When a loan is considered to be uncollectible, it is charged against the allowance for loan impairment. Such loans are derecognized after all the necessary procedures have been completed and the amount of the loss has been determined. Subsequent recovery of any amounts previously derecognized results in a credit to the allowance. If in a subsequent period the amount of the impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognized, the impairment loss is reversed through the consolidated income statement through an adjustment to the allowance. Management considers the allowance for loan impairment to be sufficient. The regulatory authority periodically reviews the allowance for loan impairment as an integral part of its audits. The regulatory authority may require that additional allowances are recognized based on its evaluation of information available as of the date of the audits. As of March 31, 2015, a consolidated allowance has been booked for ¢46,967,913,104 (¢43,522,599,142 and ¢47,517,515,641 as of December 31, 2014 and March 31, 2014).

BICSA Accounts and accrued interest receivable

In order to assess the allowance for accounts and accrued interest receivable, BICSA applies the criteria mentioned in the section on the allowance for loan impairment.

(k) Securities sold under repurchase agreements

The Bank enters into sales of securities under repurchase agreements for a certain date in the future at a fixed price. The obligation to repurchase securities sold is reflected as a liability in the consolidated balance sheet and stated at the value of the original agreement. The underlying securities are held in asset accounts. Finance expense recognized is calculated by the effective interest method. Interest is presented as finance expense in the consolidated income statement, and accrued interest payable in the consolidated balance sheet.

(l) Accounting for accrued interest receivable

Interest receivable is accounted for on the accrual basis. Under current regulations, interest accrual is suspended on loan operations that are more than 180 days past due. Accrued interest receivable on those loans is recorded when collected. BICSA does not suspend interest accrual.

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(Continued)

(m) Other receivable

The recoverability of these accounts is assessed by applying criteria similar to those established by SUGEF for the loan portfolio. If an account is not recovered within 120 days from the due date or the date booked, an allowance is created for 100% of the outstanding balance. Accounts with no specified due date are considered payable immediately. BICSA applies the criteria mentioned in the section on the allowance for loan impairment.

(n) Foreclosed assets Foreclosed assets are assets owned by the Bank for realization or sale. Included in this account are assets acquired in lieu of payment, assets adjudicated in judicial auctions, assets purchased to be leased under finance and operating leases, goods produced for sale, idle property and equipment, and other foreclosed assets. Foreclosed assets are valued at the lower of cost and fair value. If fair value is less than the cost booked in the accounting records, an impairment allowance must be booked for the amount of the difference between both values. Cost is the historical acquisition or production value in local currency, these assets should not be revalued or depreciated for accounting purposes, and they are to be booked in local currency. The cost booked in the accounting records for a foreclosed asset may only be increased by the amount of improvements or additions, up to the amount by which they increase the asset’s realizable value. Other expenditures related to foreclosed assets are to be expensed in the period incurred. The net realizable value of an asset should be used as its fair realizable value is determined by applying strictly conservative criteria and is calculated by subtracting expenses to be incurred on the sale of the asset from its estimated selling price. The estimated selling price of the asset is determined by an appraiser based on current market conditions. Future expectations for market improvements are not considered and it is assumed that the assets must be sold in the shortest period of time possible to enable the Bank to recover the money invested and use it for its business activities. For all foreclosed assets, the Bank should have reports from the appraisers who made the appraisals and those reports are to be updated at least annually. If an asset booked in this group is used by the Bank, it should be reclassified to the appropriate account in the corresponding group.

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(Continued)

Pursuant to article 20-b of SUGEF Directive 1-05, the Bank is required to book an allowance for retired assets and for foreclosed assets that were not sold or leased under operating or finance leases within two years from the acquisition or production date for an amount equivalent to the carrying amount of the assets. The allowance must be established gradually by booking one-twenty-fourth of the value of such assets each month until the allowance is equivalent to 100% of the carrying amount of the assets, without exception. The booking of the allowance shall begin at month-end of the month in which the asset was i) acquired, ii) produced for sale or lease, or iii) retired from use.

(o) Offsetting

Financial assets and liabilities are offset and the net amount presented in the consolidated financial statements when the Bank has a legal right to set off the recognized amounts and intends to settle on a net basis.

(p) Property and equipment

(i) Own assets

Property and equipment is depreciated on the straight-line method over the estimated useful lives of the assets for both tax and financial purposes. Leasehold improvements are amortized straight line over a period of sixty months, starting the month after the deferred charge is booked. Leasehold improvements are amortized solely at the end of the term of the lease agreement. When the lessor or the Bank notifies the other party that it does not intend to renew the lease at the end of the original lease term or extension, the remaining balance is amortized over the remainder of the lease term.

Pursuant to requirements established by regulatory authorities, the Bank must have its real property appraised by an independent appraiser at least once every five years, in order to determine its net realizable value. If the realizable value is less than the carrying amount, the carrying amount must be adjusted to the appraisal value.

(ii) Leased assets

Leases in terms of which the Bank assumes substantially all the risks and rewards of ownership are classified as finance leases.

At the beginning of the lease term, this is recognized in the statement of financial position, as an asset and a liability by the same amount, the fair value of the leased assets, or the present value of minimum lease payments, if this were the lowest between the present value of the stipulated payments in the contract discounted at the interest rate implicit in the operation, determined at the beginning of the lease.

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(Continued)

To calculate the present value of the minimum payments by the lease, is taken as a discount factor the interest rate implicit in the lease, wherever practicable to determine; otherwise the incremental interest rate of the tenant loans is used. Any initial direct cost of the tenant will be added to the amount recognized as an asset.

(iii) Subsecuent cost Costs incurred to replace a component of an item of property and equipment are capitalized and accounted for separately. Subsequent costs are only capitalized when they increase the future economic benefits. All other costs are recognized in the consolidated income statement when incurred.

(iv) Depreciation Depreciation and amortization are charged to the consolidated income statement on the straight-line method using the annual depreciation rates established for tax purposes. When appraisals made by independent appraisers determine that the technical useful life is less than the remaining useful life calculated using applicable rates for tax purposes, the technical useful life is to be used. Estimated useful lives are as follows: Useful lives of assets owned by the Bank and subsidiaries, except BICSA

Useful lives

Building 50 years Vehicles 10 years Furniture and equipment 10 years Computer hardware 5 years Improvements 5 years

Useful lives of assets owned by BICSA: Buildings 40 years Improvements 5 years Furniture and equipment 5 years Computer hardware 3 years Vehicles 3 years

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(Continued)

(v) Revaluation

At least every five years financial entities should evaluate the real estate by appraisals, stating the net realizable value of the property. If the realizable value of the assets is different than the one included in the accounting registers, the Bank must adjust the book value to the resulting value of the appraisal. These assets are depreciated by the straight line method for financial and tax purposes, based on the expected life of the respective assets. The last appraisal of Banco de Costa Rica was done on January 2011 and the accounting registered on April 29, 2011.

(q) Deferred charges

Deferred charges are valued at cost and stated in local currency. These charges are not subject to revaluations or adjustments.

(r) Intangible assets

Intangible assets acquired by the Bank are stated at cost less accumulated amortization and impairment losses. As of March 31, 2015, December 31, 2014 and March 31, 2014, the Bank recognizes amortization expense on goodwill acquired on shares, which will be amortized over 5 years in accordance with the Accounting Regulations Applicable to Entities Regulated by SUGEF, SUGEVAL, SUPEN, and SUGESE and to Nonfinancial Issuers. Amortization of IT systems is charged to profit or loss on a straight-line basis over the estimated useful lives of the related assets. The estimated useful life is five years. Subsequent expenditures or disbursements are capitalized only when they increases the future economic benefits; otherwise are recognized on results as incurred.

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(Continued)

(s) Impairment of assets

The carrying amount of an asset is reviewed at each consolidated balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in the consolidated income statement for assets carried at cost, and treated as a decrease in revaluation surplus for assets recorded at revalued amounts, until the amount of the surplus of the specific asset is sufficient to absorb the impairment loss. The recoverable amount of an asset is the greater of its net selling price and value in use. The net selling price is equivalent to the value obtained in an arm’s length transaction. Value in use is the present value of future cash flows and disbursements derived from continuing use of an asset and from its disposal at the end of its useful life. If in a subsequent period the amount of the impairment loss decreases and the decrease can be linked objectively to an event occurring after impairment loss was determined, the loss is reversed through the consolidated income statement or consolidated statement of changes in equity, as appropriate. For Banco de Costa Rica, SUGEF establishes: regardless of the previously expressed, at least once every five years, financial institutions must have its property appraised by an independent appraiser, in order to determine the net realizable value of property and buildings, whose net book value exceeds 5% of the entity’s equity. If the net realizable value of the assets appraised, taken as a whole, is less than the corresponding net carrying amount, the carrying amount is to be reduced to the appraisal value by adjusting assets that are significantly overstated. The decrease in the value of real property for use is taken against account “331 – Adjustments for revaluation of assets”. In cases where an entity is aware of a significant overstatement in the carrying amount of one or more assets, regardless of the cause of the reduction in their value and/or the useful life originally assigned, the entity must hire an appraiser to perform a technical appraisal, immediately notify SUGEF of the results, and book the applicable adjustments in the accounting records.

(t) Accounts payable and other payables

Accounts payable and other payables are recognized at cost.

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(Continued)

(u) Provisions

A provision is recognized in the consolidated statement of financial position if, as a result of a past event, the Bank has a present legal or constructive obligation and it is probable that an outflow of economic benefits will be required to settle the obligation. The provision made approximates settlement value; however, final amounts may vary. The estimated value of provisions is adjusted at the consolidated statement of financial position date, directly affecting the consolidated income statement.

Severance benefits

Costa Rican legislation requires to the Bank and its subsidiaries domiciled in Costa Rica payment of severance benefits to employees dismissed without just cause, equivalent to seven days’ salary for employees with three to six months of service, 14 days salary for employees with between six months to one year of service, and compensation in accordance with the Workers Protection Law for those with more than one year of service. In the specific case of the Bank, this limit is increased to twenty months for personnel who have worked for more than twenty years and for those who have fewer years, it corresponds to seniority in the Solidarity Association up to twenty months.

In February 2000, the Workers Protection Law was enacted and published. This law modifies the existing severance benefit system and establishes a mandatory supplemental pension plan, thereby amending several provisions of the Labor Code. Pursuant to the Workers Protection Law, all public and private employers must contribute 3% of monthly employee salaries during the entire term of employment. Contributions are collected through the Costa Rican Social Security Administration (CCSS) and are then transferred to pension fund operators selected by employee.

The Bank follows the practice of transferring to the Employees Association the severance benefits corresponding to each employee based on the employee’s current salary.

The amounts of severance benefits not transferred to the Association are provisioned as indicated in the Collective Agreement, according to the article 29 subsection 3 and the laws of the country, where only 50% is provisioned for the employee belonging to the Association. By agreement of the Board of Directors, session 30-12 of July 30, 2012, it was agreed that 100% provision should be accrued from November 2012 thereafter.

BICSA retirements savings plan for employees

BICSA offers its employees defined contribution pension plans in accordance with the conditions and practices in the jurisdictions where it operates. Under those plans, BICSA contributes specified amounts to a fund managed by a third party, and is under no legal obligations to make additional contributions in the event the fund has insufficient assets to pay employees their benefits.

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(Continued)

BICSA has adopted a voluntary retirement savings plan in which BICSA contributes twice the amount contributed by employees, up to a maximum of 10% of monthly salaries. As of March 31, 2015, the contributions made by BICSA and subsidiary under this plan amounted to ¢90,373,156, which is equivalent to US$171,369 (¢389,654,419, which is equivalent to US$730,634 and ¢74,754,969, which is equivalent to US$138,862 as of December 31, 2014 and March 31, 2014, respectively).

BICSA years-of-service premium and indemnity for employees

Under Panamanian labor law, companies are required to establish a severance fund to guaranty payment of a years-of-service premium and indemnity to eligible employees on resignation or dismissal without just cause. To create the fund, quarterly contributions equivalent to 1,92% of salaries paid in the Republic of Panama are made to cover the years-of-service premium, while monthly contributions equivalent to 5% are made to cover the indemnity. Quarterly contributions are to be placed in a trust. As of March 31, 2015 the severance fund has a balance of ¢365,630,817, equivalent to US$693,323 (¢356,335,876 equivalent to US$668,159 and ¢323,468,049 equivalent to US$600,862 as of December 31, 2014 and March 31, 2014, respectively) and is presented in the consolidated financial statements as prepaid expenses.

(v) Legal reserve According to Article 12 of the Organic Law of the National Banking System the Bank sets aside 50% of net earnings after income tax to increase its Legal Reserve. The Bank’s subsidiaries, except BICSA, appropriate 5% of their earnings after taxes to a legal reserve.

(w) Revaluation surplus Revaluation surplus included in equity may be transferred directly to earnings of prior periods when the surplus is realized. The whole surplus is realized on the retirement, disposal, or use of the asset. The transfer of revaluation surplus to prior period retained earnings should not be made through the consolidated income statement. The Bank was authorized by SUGEF to capitalize revaluation surplus by increasing share capital.

(x) Use of estimates Management has made a number of estimates and assumptions relating to the reporting of assets, liabilities, profit or loss, and the disclosure of contingent liabilities in preparing these consolidated financial statements. Actual results may differ from those estimates. Material estimates that are particularly susceptible to significant changes are related to the determination of the allowance for loan impairment.

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(Continued)

(y) Recognition of main types of revenue and expenses

(i) Financial income Financial income and expense is recognized in the consolidated income statement as it accrues considering the effective yield or interest rate. Financial income and expense includes amortization of any premium or discount during the term of the instrument and until its maturity, and is calculated on an effective interest basis.

(ii) Fees and commissions income

When loan origination fees are generated, they are taken against effective yield, and they are deferred over the loan term. Service fees and commissions are recognized when the services are rendered. In the case of other commissions related to the provision of services, these are recognized when the service is provided.

(iii) Net income on trading securities Net income on trading securities includes gains and losses arising from sales and from changes in the fair value of trading assets and liabilities.

(iv) Operating lease expenses Payments for operating lease agreements are recognized in the consolidated income statement over the term of the lease.

(z) Income tax Pursuant to the Income Tax Law, the Bank and its subsidiaries are required to file their income tax returns for the twelve months ending December 31 of each year. (i) Current

Current tax is the expected tax payable on taxable income for the year, using tax rates enacted at the consolidated balance sheet date, and any adjustment to tax payable in respect of previous years.

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(Continued)

(ii) Deferred

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial purposes and the amounts used for taxation purposes. In accordance with this method, temporary differences are identified as either taxable temporary differences (which result in future taxable amounts) or deductible temporary differences (which result in future deductible amounts). A deferred tax liability represents a taxable temporary difference, while a deferred tax asset represents a deductible temporary difference. A deferred tax asset is recognized only to the extent there is a reasonable probability that it will be realized.

BICSA’s Miami branch is subject to state and federal income taxes in the United States of America. Income tax expense is determined by using the separate currency pools method, as described in Section 1.882-5 of the U.S. Treasury Department Regulations.

(aa) BICSA financial leases

BICSA’s financial lease operations mainly consist of leases for transportation, machinery, and equipment. Average lease terms are between 36 and 60 months. Lease receivables represent the present value of future lease payments. The difference between the gross receivable and the present value of the receivable is presented as unearned income, which is recognized in profit or loss over the life of the lease.

(bb) Pension, retirement and outgoing personnel

A fund was created by Law No. 16 of November 5, 1936, which has been amended on a number of occasions. The most recent amendment was included in Law No. 7107 of October 26, 1988. Pursuant to Law No. 16, the fund was established as a special wage protection and retirement system for the Bank’s employees. The fund is comprised of allotments established by the laws and regulations related to the fund, and monthly contributions made by the Bank and employees equivalent to 10% and 0.5% of total wages and salaries, respectively. As of October 1, 2007, this fund is managed by BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A. (subsidiary) under a comprehensive management agreement. The Bank’s contributions to the fund are considered to be defined contribution plans. Consequently, the Bank has no additional obligations.

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(Continued)

(cc) Statutory allocations

Under article 12 of IRNBS, the net earnings of commercial State-owned banks are allocated as follows: 50% to a legal reserve; 10% to increase the capital of the National Institute for Cooperative Develabond (INFOCOOP); and the remainder to increase the Bank’s capital, pursuant to article 20 of Law No. 6074. Transition provision III of Law No. 8634 “Development Banking System” establishes that for a five-year period starting in 2007, the contributions made by State-owned banks equivalent to 5% of their annual net earnings (prescribed by article 20 of the Law for the creation of the National Commission for Educational Loans (CONAPE) will be allocated as follows: two percent to CONAPE and three percent to the capital of the Development Financing Fund (FINADE). On January 2013 transitory III is removed and will continue calculating a 5% for CONAPE, in accordance with Law 9092, Return of Income of the National Commissions for Educational Loans. In accordance with article 46 of the “National Emergency and Risk Prevention Act”, all institutions of the central administration and decentralized public administration, as well as State-owned companies, must contribute three percent (3%) of their reported earnings before taxes and statutory allocations and of their accumulated budget surplus to CNE. Such funds are deposited in the National Emergency Fund to finance the National Risk Management System. The expenditure for CNE is calculated as 3% of income before taxes and profit appropriations. Pursuant to article 78 of the Employee Protection Law, State-owned public entities must contribute up to 15% of their earnings with the purpose of strengthening the funding base for the Disability, Old Age, and Death Benefit System of CCSS and to provide universal CCSS coverage for impoverished non-salaried workers. According to Executive Decree number 37127-MTSS, beginning in 2013 a progressive yearly contribution from net earnings must be set aside beginning with 5% in 2013, up to 7% beginning in 2015 and 15% in 2017.

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(Continued)

(dd) Development Financing Fund

In accordance with article 32 of Law No. 8634 “Development Banking System”, all State-owned banks, except Banco Hipotecario para la Vivienda (BANHVI), shall appropriate each year at least five percent (5%) of their net earnings after income taxes to the creation and strengthening of its own development funds. The objective of that appropriation is to provide financing to individuals and legal entities that present viable and feasible projects in conformity with the provisions of the aforementioned law (See note 38).

(ee) Development Credit Fund

The Development Credit Fund (DCF), comprised of the resources provided in Article 59 of the Organic Law of the National Banking System, No.1644, commonly called "Banking Toll ". This fund will be administered by the State Banks, in compliance with Law No. 9094 "Derogatory of Transitory VII-Law No. 8634", and in accordance with Article 35 of Law No. 8634 "Development Banking System", in meeting 119 of January 16, 2013, by agreement number AG 1015-119-2013, agreed to appoint Banco de Costa Rica and Banco Nacional de Costa Rica as administrators for a five years period from the signature of the respective management agreements. Each bank is responsible for managing fifty percent (50%) of the fund. The Technical Secretariat of the Governing Board through written communication CR/SBD-014-2013 informed all private banks to open up checking accounts with each of the administrators’ banks (Banco Nacional and Banco de Costa Rica), both in colones and foreign currency with the obligation to distribute fifty percent of the resources to each bank. The powers granted by the Governing Board to the administrators are:

a) Administrators’ Banks can perform services with the beneficiaries of the Development Banking System as recognized by Article 6 of Law 8634.

b) In accordance with Article 35 of the Law 8634 with funds from the Development Credit Fund the Banks can perform services for other financial entities, except for private banks, provided they meet the objectives and obligations under Law 8634 and that are duly accredited by the Board.

c) The Banks may proceed or carry on in accordance with Article 35 Law 8634 the resources

of the Development Credit Fund through: associations, cooperatives, foundations, NGO, producers organizations or other entities if they have credit operations in programs that meet the objectives established in the Law 8634 and are duly accredited by the Board.

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(Continued)

The contract signed for a five years term will be renewable for equal and successive periods unless otherwise decided by the Governing Board, notified in writing at least three months in advance. It may be terminated as provided for in Article 12 paragraph j) of the Law 8634 and its executive regulations, if the Banks administrators demonstrate proven lack of capacity and expertise. (See note 39).

(ff) BICSA trust BICSA has a license to manage trusts in or from the Republic of Panama. Fee and commission income derived from trust management is recognized on the accrual basis. BICSA is required to manage trust funds in accordance with the contractual terms and independently of its own equity.

(gg) Economic period

The economic fiscal period corresponds to the period ended on December 31 of every year.

(2) Collateralized or restricted assets

The collateralized or restricted assets are as follows:

March December March

2015 2014 2014

Cash and due from banks - BCCR

(see note 4) ¢ 396,884,198,172 428,790,049,206 394,284,038,948

Cash and due from banks - restricted (see note 4) 611,637,980 323,956,946 552,302,236

Total cash and due from banks 397,495,836,152 429,114,006,152 394,836,341,184

Investments in financial instruments

(see note 5) 76,596,018,987 35,451,176,263 163,015,713,553

Other assets 389,233,341 380,204,699 353,496,654

¢ 474,481,088,480 464,945,387,114 558,205,551,391

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(Continued)

(3) Balances and transactions with related parties

The consolidated financial statements include balances and transactions with related parties, as follows:

(4) Cash and cash equivalents

Cash and cash equivalents are as follows for purposes of reconciliation with the consolidated cash flow statement:

As of March 31, 2015, demand deposits in BCCR are restricted as a minimum legal reserve in the amount of ¢396,878,756,501 (¢428,783,138,510 and ¢394,282,128,459 as of December 31, 2014 and March 31, 2014, respectively).

As of March 31, 2015, the Pension Fund Manager’s deposits in BCCR are restricted as a minimum legal reserve in the amount of ¢2,819,183 (¢1,193,354 and ¢1,286,015 as of December 31, 2014 and March 31, 2014, respectively).

As of March 31, 2015, the Brokerage Firm holds restricted demand deposits in BCCR in the amount of ¢2,622,489 (¢5,717,342 and ¢624,474 as of December 31, 2014 and March 31, 2014, respectively), for a total of ¢396,884,198,173 (¢428,790,049,206 and ¢394,284,038,948 as of December 31, 2014 and March 31, 2014, respectively).


2015 2014 2014

Assets:

Loan portfolio ¢ 810,909,684 835,323,322 740,382,495

Other accounts receivable 60,022,056 159,566,331 81,416,397

Investment in other companies 10,000,000 10,000,000 10,000,000

Total ¢ 880,931,740 1,004,889,653 831,798,892


2015 2014 2014

Cash ¢ 60,585,745,272 80,080,281,287 51,971,115,122

Demand deposits in BCCR 412,646,059,979 429,419,898,193 414,984,824,425

Checking accounts and demand deposits

in local financial entities 3,405,760,998 2,854,905,812 4,089,150,438

Checking accounts and demand deposits

in foreign financial entities 181,304,119,964 108,122,444,449 158,478,767,838

Notes payable on demand 21,781,358,642 3,166,206,715 10,361,216,523

Cash and due from banks - restricted 611,637,980 323,956,946 552,302,236

Total cash and due from banks 680,334,682,835 623,967,693,402 640,437,376,582

Investments in short-term financial instruments 63,701,907,019 334,458,288,652 136,565,316,779

Total cash and cash equivalent ¢ 744,036,589,854 958,425,982,054 777,002,693,361

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(Continued)

As of March 31, 2015, the Brokerage Firm holds restricted assets as part of the guarantee fund in the amount of ¢611,637,980 (¢316,168,813 and ¢552,302,236 as of December 31, 2014 and March 31, 2014, respectively). (See note 2).

As of March 31, 2015 the Bank has a liability for outstanding checks in the amount of ¢4,278,052,029 (¢3,496,795,642 and ¢7,902,928,164 as of December 31, 2014 and March 31, 2014), which is offset by notes payable on demand cashed the next day once cleared by the clearing house.

(5) Investments in financial instruments

Investments in financial instruments are as follows:


2015 2014 2014

Trading ¢ 7,874,390,888 3,996,247,239 7,787,896,695

Available-for-sale 611,518,999,357 784,753,669,628 688,701,718,006

Held to maturity (note 18) 27,280,583,228 27,328,999,258 26,281,113,178

Accrued interest receivable on available-for

sale investments 6,118,916,326 4,862,783,551 6,349,662,279

¢ 652,792,889,799 820,941,699,676 729,120,390,158


2015 2014 2014

Trading: Fair value Fair value Fair value

Local issuers:

Govermment 150,398,236 - -

State-owned banks 50,716,412 - -

Other (Open investments funds) ¢ 7,673,276,240 3,996,247,239 7,787,896,695

¢ 7,874,390,888 3,996,247,239 7,787,896,695

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(Continued)

As of March 31, 2015, the loan portfolio amounts to ¢153,708,026,777 (¢154,004,866,763 and ¢137,273,233,221 as of December 31, 2014 and March 31, 2014) corresponding to the Development Credit Fund (See note 39).


2015 2014 2014

Available for sale: Fair value Fair value Fair value

Local issuers:

Govermment ¢ 421,671,051,026 411,372,858,165 504,950,331,962

State-owned banks 66,470,962,805 55,899,228,016 66,930,310,324

Private banks 2,537,306,478 1,502,706,706 23,044,241,724

Private issuers 1,468,992,575 1,578,143,045 1,667,560,141

Others 5,390,493,989 4,718,695,283 7,266,102,555

497,538,806,873 475,071,631,215 603,858,546,706

Foreign issuers

Govermment 19,150,292,998 3,348,395,048 5,897,588,183

State-owned banks 40,599,103,698 57,936,994,175 46,694,300,172

Private banks 36,935,380,829 237,906,951,659 22,209,680,371

Private issuers 17,295,414,959 10,489,697,531 10,041,602,574

¢ 611,518,999,357 784,753,669,628 688,701,718,006


2015 2014 2014

Held to maturity Fair value Fair value Fair value

Local issuers

Govermment (see note 18) ¢ 27,280,583,228 27,328,999,258 26,281,113,178

¢ 27,280,583,228 27,328,999,258 26,281,113,178

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(Continued)

Investments have been pledged as follows:

In accordance with Article 37 of the Workers Pretention Law, the Pension Fund Manager must hold a minimum operating capital equivalent to a percentage of the net assets of administrative resources. As of March 31, 2015, this capital amounts to ¢1,734,097,294 (¢1,678,480,021 and ¢2,408,820,124 as of December 31, 2014 and March 31, 2014, respectively). As of March 31, 2015, the Brokerage Firm holds restricted Investments in securities in the amount of ¢30,053,125,022 (¢21,346,584,291 and ¢21,681,652,810, respectively).


2015 2014 2014

Clearing house guaranty deposited in

BCCR (SINPE) ¢ 42,322,444,570 10,531,615,640 135,641,629,330

Bid bonds 51,191,750 50,975,235 44,061,782

Guarantee for deposits received 2,486,352,101 1,894,496,311 3,283,611,289

Minimum restricted capital of Pension Fund

Manager 1,734,097,294 1,678,480,021 2,408,820,124

Guarantee for repurchase agreements of Brokerage

Firm 30,001,933,272 21,295,609,056 21,637,591,028

¢ 76,596,018,987 35,451,176,263 163,015,713,553

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(Continued)

(6) Loan portfolio

The total loans receivable originated by the Bank by sector are as follows:

a) Loan portfolio by sector


Sector 2015 2014 2014

Agriculture, livestock, hunting, and

related services ¢ 204,050,058,035 200,733,339,538 189,365,827,310

Fishing and aquaculture 11,471,879,139 10,266,574,241 12,464,096,120

Manufacturing 448,430,739,382 462,710,204,369 366,935,191,357

Telecomunication and public utilities 45,006,937,133 44,691,854,958 44,739,076,454

Mining and quarrying 1,600,972,457 1,620,420,902 1,642,583,735

Retail 137,265,074,557 126,918,511,473 155,418,867,783

Services 1,076,922,088,058 1,090,258,760,587 998,485,625,219

Transportations 91,779,456,428 92,066,535,919 90,305,622,806

Real estate, business and leasing activities 999,214,456 1,088,338,152 1,220,027,287

Construction, purchase and repair of real estate 765,592,765,911 757,906,158,972 695,013,087,414

Consumer 364,345,049,335 364,474,562,495 347,899,391,862

Hospitality 90,754,800,087 92,021,221,544 91,098,386,938

Education 1,086,147,601 1,053,141,958 982,272,275

3,239,305,182,579 3,245,809,625,108 2,995,570,056,560

Plus accrued interest receivable 26,241,063,961 25,092,087,231 24,187,547,238

Less allowance for loan impairment (46,898,425,364) (43,472,149,547) (47,149,968,108)

¢ 3,218,647,821,176 3,227,429,562,792 2,972,607,635,690

- 38 -



(Continued)

b) Current loans

The detail of the loan portfolio by arrears is as follows:

BICSA finance lease receivable The balance of finance lease receivables is as follows:

Finance leases mature as follows:


2015 2014 2014

Cheking account overdrafts ¢ 12,946,242,766 10,223,474,007 8,671,178,855

Loans with other funds 2,868,641,542,409 2,903,058,930,093 2,643,327,340,445

Credit cards 40,645,956,054 42,636,083,807 40,652,701,635

Factoring 44,777,116,151 44,336,644,189 27,787,313,651

Finance leases 6,458,652,779 7,892,568,525 6,679,999,901

Issued and used letters of credit 30,066,244 33,067,108 96,580,877

Confirmed and used letters of credit 4,244,344,621 5,447,949,407 3,925,204,998

¢ 2,977,743,921,024 3,013,628,717,136 2,731,140,320,362


2015 2014 2014

Total minimum payments ¢ 7,100,993,111 9,013,530,179 10,082,456,642

Unearned interest collected - (471,374,043) -

¢ 7,100,993,111 8,542,156,136 10,082,456,642


2015 2014 2014

Less than one year ¢ 281,097,831 631,650,764 1,614,058,471

Between one and five years 6,819,895,280 7,590,098,057 8,468,398,171

More than five years - 320,407,315 -

¢ 7,100,993,111 8,542,156,136 10,082,456,642

- 39 -



(Continued)

c) Loan portfolio by arrears

The loan portfolio by arrears is as follows:

As of March 31, 2015, the Bank has granted loans to financial entities in the amount of ¢5,181,815,230 (¢3,272,930,963 and ¢1,550,419,200 as of December 31, 2014 and March 31, 2014, respectively). As of March 31, 2015, BICSA has granted loans to financial entities in the amount of ¢41,640,020,746 (¢48,270,341,717 and ¢25,808,534,985 as of December 31, 2014 and March 31, 2014, respectively). The Bank classifies loans as past due when no principal or interest payments have been made by one day after the due date. The distribution of the loan portfolio by deadlines is a follows:


2015 2014 2014

Current ¢ 2,977,743,921,024 3,013,628,717,136 2,731,140,320,362

1 to 30 days 170,610,049,177 124,969,144,796 123,813,450,327

31 to 60 days 18,107,634,213 30,985,085,041 55,765,606,156

61 to 90 days 12,352,890,717 17,812,642,759 24,508,616,933

91 to 120 days 7,395,607,587 6,718,807,651 5,005,455,159

121 to 180 days 4,249,714,974 9,423,616,860 9,290,532,227

More than 180 days 15,422,458,214 11,452,185,181 14,243,149,367

Legal colecctions 33,422,906,673 30,819,425,684 31,802,926,029

¢ 3,239,305,182,579 3,245,809,625,108 2,995,570,056,560


2015 2014 2014

Current ¢ 2,985,964,047,735 3,014,081,642,095 2,731,240,118,224

1 to 30 days 170,996,549,761 124,983,180,694 123,899,014,949

31 to 60 days 18,755,901,427 31,164,522,958 55,821,063,642

61 to 90 days 13,001,201,101 17,983,402,446 24,561,933,852

91 to 120 days 7,969,574,803 6,832,135,675 5,443,655,209

121 to 180 days 5,546,473,101 10,291,237,270 11,258,050,085

More than 180 days 37,071,434,651 40,473,503,970 43,346,220,599

¢ 3,239,305,182,579 3,245,809,625,108 2,995,570,056,560

- 40 -



(Continued)

d) Past due loans Past due loans, including loans in accrual status (for which interest is recognized on a cash basis) and unearned interest on past due loans, are as follows:

Loans in legal collections as of March 31, 2015:

Loans in legal collections as of December 31, 2014:

Loans in legal collections as of March 31, 2014:

As of the period ended on March 31, 2015, total restructured loans amount to ¢64,449,044 (¢1,317,751,766 and ¢100,586,460 as of December 31, 2014 and March 31, 2014, respectively). As of that date, BICSA’s restructured loans amount to ¢24,991,216,502 (¢21,792,942,058 and ¢25,010,937,246 as of December 31, 2014 and March 31, 2014, respectively). As of March 31, 2015, the average annual interest rate earned on loans is 11.08% in colones (11.10% and 10.89% as of December 31, 2014 and March 31, 2014, respectively) and 6.40% in U.S. dollars (6.36% and 6.32% as of December 31, 2014 and March 31, 2014, respectively). As of March 31, 2015, BICSA’s average annual interest rate earned on loans in U.S dollar is 6.28% (6.61% and 6.26% as of December 31, 2014 and March 31, 2014, respectively).


2015 2014 2014

Past due loans

in nonaccrual status (2015: 4,398)

(December 31, 2014: 4,358)

(March 31, 2014: 4,383) ¢ 15,422,458,214 11,452,185,181 14,243,149,367

Past due loans

in accrual status ¢ 212,715,896,668 189,909,297,107 218,383,660,802

Total unearned interest ¢ 7,330,877,744 6,761,448,731 6,356,834,775

Percentage Balance

1,730 1.03% ¢ 33,422,906,673

No. of loans

Percentage Balance

1,623 0.95% ¢ 30,819,425,684

No. of loans

Percentage Balance

2,391 1.06% ¢ 31,802,926,029

No. of loans

- 41 -



(Continued)

e) Accrued interest receivable on loan portfolio Accrued interest receivable is as follows:

f) Allowance for loan impairment Movement in the allowance for loan impairment is as follows:


2015 2014 2014

Current loans ¢ 16,275,361,973 15,847,261,822 14,252,128,432

Past due loans 7,654,995,871 7,103,262,148 6,982,112,984

Loan in legal collections 2,310,706,117 2,141,563,261 2,953,305,822

¢ 26,241,063,961 25,092,087,231 24,187,547,238

2015 opening balance ¢ 43,472,149,547

Conversion effect (93,107,924)

Plus:

Allowance charged to profit or loss (see note 28) 3,693,535,177

Recoveries 11,458,537

Movement of balances 66,670,433

Less:

Adjustment for foreign exchange differeces (77,230,449)

Reversal of allowance against income (see note 29) (175,049,957)

Balance at March 31, 2015 ¢ 46,898,425,364

2014 opening balance ¢ 43,992,576,678

Conversion effect 970,785,521

Plus:




Adjustment for foreign exchange differeces 272,469,907

Less:

Transfer to unpaid balances (11,115,625,896)

Reversal of allowance against income (see note 29) (6,288,972,690)

Balance at December 31, 2014 ¢ 43,472,149,547

- 42 -



(Continued)

2014 opening balance ¢ 43,992,576,678

Conversion effect 1,110,324,938

Plus:




Adjustment for foreign exchange differeces 337,712,588

Less:

Transfer to unpaid balances (610,015,068)

Reversal of allowance against income (see note 29) (2,834,252,867)

Balance at March 31, 2014 ¢ 47,149,968,108

- 43 -



(Continued)

g) Syndicated loans

Banco de Costa Rica syndicated loan portfolio As of March 31, 2015, the Bank does not maintain syndicated loan portfolio with other banks. BICSA syndicated loans:

No. Operations BICSA NACIONALUS Dollars 1 ¢ 15,504,106,609 13,016,985,088Total 1 ¢ 15,504,106,609 13,016,985,088

Syndicated loans with Banco Citigroup (Citigroup) :

No. Operations BICSA CITIGROUP

US Dollars 8 ¢ 4,113,408,000 41,634,218,204Total 8 ¢ 4,113,408,000 41,634,218,204

Syndicated loans with Credicorp Bank (Credicorp) :

No. Operations BICSA CREDICORP

US Dollars 7 ¢ 586,311,465 4,292,263,726Total 7 ¢ 586,311,465 4,292,263,726

Syndicated loans with Banco Latinoamericano de Comercio Exterior (BLADEX) :

No. Operations BICSA BLADEX

US Dollars 4 ¢ 4,224,153,600 25,576,960,000Total 4 ¢ 4,224,153,600 25,576,960,000

Syndicated loans with Bancolombia :

No. Operations BICSA BANCOLOMBIA

US Dollars 1 ¢ 3,480,576,000 122,537,369,600Total 1 ¢ 3,480,576,000 122,537,369,600

- 44 -



(Continued)

Syndicated loans with Banco Hipotecario Dominicano (BHD) :

No. Operations BICSA BHD

US Dollars 1 ¢ 2,795,677,331 27,968,418,417Total 1 ¢ 2,795,677,331 27,968,418,417

Syndicated loans with Citibank :

No. Operations BICSA CITIBANK

US Dollars 2 ¢ 9,653,125,985 9,753,493,562Total 2 ¢ 9,653,125,985 9,753,493,562

Syndicated loans with Banco Aliado :

No. Operations BICSA ALIADO

US Dollars 1 ¢ 3,955,199,916 3,955,200,000Total 1 ¢ 3,955,199,916 3,955,200,000

Syndicated loans with Corporación Interamericana de Inversión (CIE) :

No. Operations BICSA CIE

US Dollars 2 ¢ 4,983,552,000 5,800,960,000Total 2 ¢ 4,983,552,000 5,800,960,000

Syndicated loans with Global Bank (Global):

No. Operations BICSA GLOBAL

US Dollars 3 ¢ 8,689,335,221 12,540,620,800Total 3 ¢ 8,689,335,221 12,540,620,800

Syndicated loans with Multibank:

No. Operations BICSA MULTIBANK

US Dollars 4 ¢ 6,247,377,623 6,855,680,000Total 4 ¢ 6,247,377,623 6,855,680,000

- 45 -



(Continued)

Syndicated loans with BAC Nicaragua (BAC):

No. Operations BICSA BAC

US Dollars 3 ¢ 6,641,406,776 4,862,688,998Total 3 ¢ 6,641,406,776 4,862,688,998

Syndicated loans with Espiritú Santo Bank (Espiritú Santo) :

No. Operations BICSA ESPIRITU SANTO

US Dollars 1 ¢ 1,146,975,003 1,908,219,464Total 1 ¢ 1,146,975,003 1,908,219,464

Syndicated loans with Citibank New York:


US Dollars 4 ¢ 7,232,215 138,453,094Total 4 ¢ 7,232,215 138,453,094

Syndicated loans with Banco Itau BBA (BBA)

No. Operations BICSA BBA

US Dollars 3 ¢ 5,273,600,000 126,566,400,000Total 3 ¢ 5,273,600,000 126,566,400,000

Syndicated loans with Rabobank Curacao (Rabobank)

No. Operations BICSA RABOBANK

US Dollars 3 ¢ 5,273,600,000 110,745,600,000Total 3 ¢ 5,273,600,000 110,745,600,000

Syndicated loans with Banco Lafise (Lafise)

No. Operations BICSA LAFISE

US Dollars 2 ¢ 11,589,406,517 11,847,469,363Total 2 ¢ 11,589,406,517 11,847,469,363

- 46 -



(Continued)

Banco de Costa Rica syndicated loan portfolio As of December 31, 2014, the Bank does not maintain syndicated loan portfolio with other banks. BICSA syndicated loans:

Syndicated loans with Copbanca NY (Copbancal)

No. Operations BICSA COPBANCA

US Dollars 1 ¢ 5,273,600,000 26,368,000,000Total 1 ¢ 5,273,600,000 26,368,000,000

Syndicated loans with Banco Financiera Comercial Hondureña (Financiera)

No. Operations BICSA FINANCIERA

US Dollars 1 ¢ 2,384,420,565 1,582,080,000Total 1 ¢ 2,384,420,565 1,582,080,000

Syndicated loans with Banco Nacional (Nacional) :

No. Operations BICSA NACIONAL

US Dollars 1 ¢ 13,163,850,723 13,163,850,723Total 1 ¢ 13,163,850,723 13,163,850,723


No. Operations BICSA CITIGROUP

US Dollars 8 ¢ 4,719,795,100 42,103,961,071

Total 8 ¢ 4,719,795,100 42,103,961,071


No. Operations BICSA CREDICORP

US Dollars 7 ¢ 705,453,194 4,340,691,686

Total 7 ¢ 705,453,194 4,340,691,686

- 47 -



(Continued)



US Dollars 4 ¢ 4,271,813,100 25,865,535,000

Total 4 ¢ 4,271,813,100 25,865,535,000


No. Operations BICSA BANCOLOMBIA

US Dollars 1 ¢ 3,519,846,000 123,919,911,600

Total 1 ¢ 3,519,846,000 123,919,911,600


No. Operations BICSA BHD

US Dollars 1 ¢ 2,870,939,991 28,283,975,322

Total 1 ¢ 2,870,939,991 28,283,975,322



US Dollars 2 ¢ 10,445,478,265 9,863,538,585

Total 2 ¢ 10,445,478,265 9,863,538,585


No. Operations BICSA ALIADO

US Dollars 1 ¢ 3,740,273,172 3,999,825,000

Total 1 ¢ 3,740,273,172 3,999,825,000

- 48 -



(Continued)



US Dollars 2 ¢ 5,599,755,000 5,866,410,000

Total 2 ¢ 5,599,755,000 5,866,410,000

Syndicated loans withGlobal Bank (Global):


US Dollars 3 ¢ 9,144,169,248 12,682,111,800

Total 3 ¢ 9,144,169,248 12,682,111,800



US Dollars 4 ¢ 6,539,162,432 6,933,030,000

Total 4 ¢ 6,539,162,432 6,933,030,000



US Dollars 3 ¢ 7,465,388,511 4,917,552,848

Total 3 ¢ 7,465,388,511 4,917,552,848



US Dollars 1 ¢ 1,159,915,881 1,929,749,170

Total 1 ¢ 1,159,915,881 1,929,749,170



US Dollars 4 ¢ 7,313,915 140,015,207

Total 4 ¢ 7,313,915 140,015,207

Syndicated loans with Rabobank Curacao (Rabobank):


US Dollars 6 ¢ 10,666,200,000 239,989,500,000

Total 6 ¢ 10,666,200,000 239,989,500,000

- 49 -



(Continued)

Banco de Costa Rica syndicated loan portfolio As of March 31, 2014, the Bank does not maintain syndicated loan portfolio with other banks. BICSA syndicated loans:

Syndicated loans with Banco Lafise (Lafise):

No. Operations BICSA LAFISE

US Dollars 2 ¢ 11,981,139,701 11,981,139,802

Total 2 ¢ 11,981,139,701 11,981,139,802

Syndicated loans with Copbanca NY (Copbancal):

No. Operations BICSA COPBANCA

US Dollars 1 ¢ 5,333,100,000 26,665,500,000

Total 1 ¢ 5,333,100,000 26,665,500,000

Syndicated loans with Banco Financiera Comercial Hondureña (Financiera):

No. Operations BICSA FINANCIERAUS Dollars 1 ¢ 2,511,794,862 1,599,930,000

Total 1 ¢ 2,511,794,862 1,599,930,000

Syndicated loans with Banco General, S. A. (General):

No. Operations BICSA GENERALUS Dollars 4 ¢ 461,499,276 26,810,391,453Total 4 ¢ 461,499,276 26,810,391,453


No. Operations BICSA CITIGROUPUS Dollars 8 ¢ 6,460,080,000 42,501,071,428Total 8 ¢ 6,460,080,000 42,501,071,428

- 50 -



(Continued)


No. Operations BICSA CREDICORPUS Dollars 7 ¢ 1,276,772,365 4,381,631,626Total 7 ¢ 1,276,772,365 4,381,631,626

Syndicated loans with Amerra Capital Management LLC (Amerra):

No. Operations BICSA AMERRAUS Dollars 1 ¢ 4,665,613,335 6,998,420,000Total 1 ¢ 4,665,613,335 6,998,420,000



US Dollars 1 ¢ 845,193,800 2,691,700,000Total 1 ¢ 845,193,800 2,691,700,000


No. Operations BICSA BANCOLOMBIAUS Dollars 1 ¢ 3,359,241,600 125,088,682,400Total 1 ¢ 3,359,241,600 125,088,682,400


No. Operations BICSA BHDUS Dollars 1 ¢ 2,942,149,765 28,550,740,235

Total 1 ¢ 2,942,149,765 28,550,740,235

- 51 -



(Continued)


No. Operations BICSA CITIBANKUS Dollars 4 ¢ 18,166,855,302 19,342,914,734

Total 4 ¢ 18,166,855,302 19,342,914,734


No. Operations BICSA ALIADOUS Dollars 1 ¢ 3,775,550,167 4,037,550,000Total 1 ¢ 3,775,550,167 4,037,550,000



US Dollars 3 ¢ 6,964,811,434 7,435,837,400

Total 3 ¢ 6,964,811,434 7,435,837,400

Syndicated loans with Global Bank (Global):


US Dollars 3 ¢ 10,037,973,532 12,801,725,200

Total 3 ¢ 10,037,973,532 12,801,725,200



US Dollars 4 ¢ 6,866,363,583 6,998,420,000

Total 4 ¢ 6,866,363,583 6,998,420,000

Syndicated loans with Banco Industrial Guatemala (Industrial):

No. Operations BICSA INDUSTRIAL

US Dollars 1 ¢ 4,158,907,695 5,383,400,000

Total 1 ¢ 4,158,907,695 5,383,400,000

- 52 -



(Continued)



US Dollars 3 ¢ 6,090,117,678 4,963,933,547

Total 3 ¢ 6,090,117,678 4,963,933,547



US Dollars 1 ¢ 1,756,152,921 1,947,949,913

Total 1 ¢ 1,756,152,921 1,947,949,913



US Dollars 7 ¢ 5,450,278,517 6,123,160,449

Total 7 ¢ 5,450,278,517 6,123,160,449

Syndicated loans with Union Bank (Union):

No. Operations BICSA UNION

US Dollars 3 ¢ 2,691,700,000 5,383,400,000

Total 3 ¢ 2,691,700,000 5,383,400,000

Syndicated loans with Banco Itau BBA (BBA)

No. Operations BICSA BBA

US Dollars 3 ¢ 4,845,060,000 6,998,420,000

Total 3 ¢ 4,845,060,000 6,998,420,000

Syndicated loans with MMG Bank (MMG)

No. Operations BICSA MMG

US Dollars 3 ¢ 375,511,783 1,076,680,000

Total 3 ¢ 375,511,783 1,076,680,000

- 53 -



(Continued)

Syndicated loans with HSBC:

No. Operations BICSA HSBC

US Dollars 3 ¢ 1,016,116,750 1,076,680,000

Total 3 ¢ 1,016,116,750 1,076,680,000

Syndicated loans with Centro Corporativo El Cafetal (Cafetal)

No. Operations BICSA CAFETAL

US Dollars 3 ¢ 3,197,472,583 1,477,318,011

Total 3 ¢ 3,197,472,583 1,477,318,011

Syndicated loans with Standard Bank NY (Standard)

No. Operations BICSA STANDARD

US Dollars 3 ¢ 7,948,659,331 7,948,659,546

Total 3 ¢ 7,948,659,331 7,948,659,546

Syndicated loans with Rabobank Curacao (Rabobank)


US Dollars 3 ¢ 2,153,360,000 7,948,659,546

Total 3 ¢ 2,153,360,000 7,948,659,546

Syndicated loans with Caja de Ahorros (Caja)

No. Operations BICSA CAJA

US Dollars 2 ¢ 7,348,012,074 9,097,946,000

Total 2 ¢ 7,348,012,074 9,097,946,000

- 54 -



(Continued)

(7) Foreclosed assets, net

The foreclosed assets are presented net of the allowance for impairment and per legal requirement, as follows:

Movement in the allowance for impairment and per legal requirement is as follows:

Syndicated loans with Banco Agromercantil (Agromercantil)

No. Operations BICSA AGROMERCANTIL

US Dollars 2 ¢ 2,153,360,000 2,153,360,000

Total 2 ¢ 2,153,360,000 2,153,360,000

Syndicated loans with Banco Financiera Comercial Hondureña (Financiera)

No. Operations BICSA FINANCIERA

US Dollars 2 ¢ 2,839,743,500 2,839,743,500

Total 2 ¢ 2,839,743,500 2,839,743,500


2015 2014 2014

Real property ¢ 51,194,385,569 51,036,981,832 39,937,001,127

Other acquired assets 344,245,182 312,823,026 209,114,300

Purchased for sale 498,778,938 440,762,057 372,672,348

Idle property and equipment 24,749,652 638,009 59,391,443

52,062,159,341 51,791,204,924 40,578,179,218

Allowance for impairment and per legal requirement (38,630,443,919) (36,410,170,802) (27,895,269,925)

¢ 13,431,715,422 15,381,034,122 12,682,909,293


2015 2014 2014

Opening balance ¢ 36,410,170,802 25,153,101,003 25,153,101,003

Conversion effect (62,558) 402,686 455,572

Increases 3,398,679,349 14,728,576,800 3,678,630,213

Reversals (1,178,343,674) (3,471,909,687) (936,916,863)

Closing balance ¢ 38,630,443,919 36,410,170,802 27,895,269,925

- 55 -



(Continued)

(8) Investments in other companies

Investments in other companies are as follows:

In accordance with the General Board’s Agreement in Article VII, of meeting 12-13, of April 1, 2013, and in addition to the 50 ordinary registered shares already held, Banco Nacional de Costa Rica transfers to Banco de Costa Rica 50 ordinary registered shares of ¢100,000 par value each, from the Ban Procesa - IT, S.A. share capital. As of March 31, 2015, December 31, 2014 and March 31, 2014, Banco de Costa Rica holds a 100% interest in the company, represented by 100 ordinary registered shares of ¢100,000 par value each, subscribed and paid in full.

As of March 31, 2015, December 31, 2014 and March 31, 2014, participation in Bolsa Nacional de Valores, S.A. is of 1,514,974 ordinary shares with a par value of ¢19.18 each booked at cost since these shares are not subject to public offer. Ownership interest in BICSA As of March 31, 2015, the accumulated minority interest of Banco Nacional de Costa Rica presented in the equity section of the consolidated statement of financial position amounts to de ¢50,456,887,088 (¢49,814,337,258 and ¢46,251,875,321 as of December 31, 2014 and March 31, 2014, respectively), and the results for the period represents the minority interest in the consolidated income statement in the amount of ¢1,168,137,123 and ¢1,124,530,475, respectively. The Bank’s consolidated income statement as of March 31, 2015 and 2014 includes ¢1,215,816,114 and ¢1,170,429,406, respectively for BICSA’s results of operations. The Bank’s consolidated statement of changes in equity for the years ended March 31, 2015 and 2014 includes an increase in equity for ¢584,380,056 and decrease in equity for ¢3,818,024,378 respectively, corresponding to changes arising from translation of BICSA’s financial statements.


2015 2014 2014

Costa Rican National Stock ¢ 29,057,201 29,057,201 29,057,201

BAN Procesa - TI, S.A. 10,000,000 10,000,000 10,000,000

¢ 39,057,201 39,057,201 39,057,201

- 56 -



(Continued)

Ordinary shares are as follows:

The Bank owns a 51% ownership interest in BICSA (domiciled in Panama). As of March 31, 2015, that ownership interest is represented by 6,772,137 ordinary shares of US$10 par value each (6,772,137 and 6,410,649 ordinary shares of US$10 par value as of December 31, 2014 and March 31, 2014, respectively). The remaining 49% of shares is owned by Banco Nacional de Costa Rica On April 2014, BICSA increased its capital stock in the amount of US$7.09 million from retained earnings for a total of capital stock of US$132.79 million, distributed over a total of 13,278,700 shares with a nominal value of US$10 each duly recognized in the Financial Statements in 2014. The Bank follows the policy of adjusting the value of its investment in BICSA by the equity method. In applying this policy, the Bank considers the entity's results of operations, as well as the variation in equity (in colones) arising from adjustments to equity by applying the year-end exchange rate with respect to the U.S. dollar, in addition to changes resulting from revaluations. Such variation results from the fact that BICSA’s accounting records are kept in U.S. dollars.

Quantity Amount in US Dollars Quantity Amount in US Dollars Quantity Amount in US Dollars

Balance at beginning of year 13,278,700 132,787,000 12,569,900 125,699,000 12,569,900 125,699,000

Shares issued - - 708,800 7,088,000 - -

Balance at end of year 13,278,700 132,787,000 13,278,700 132,787,000 12,569,900 125,699,000

2015 20142014


- 57 -



(Continued)

(9) Property and equipment

As of March 31, 2015, property and equipment is as follows:

Cost: Lands Building

Furniture and

equipment Computer hardware Vehicles Finance leases Total

Balance at December 31, 2014 ¢ 19,074,402,016 57,233,321,216 27,695,540,097 28,719,687,001 5,600,782,261 2,992,604,700 141,316,337,291

Conversion effect (4,658,253) (74,146,017) (9,608,976) (24,968,880) (571,200) - (113,953,326)

Additions 204,663,625 297,041,171 1,040,243,380 55,876,841 - 19,562,052 1,617,387,069

Retirements - - (9,896,245) (101,477,876) - - (111,374,121)

Transfers - - (48,345,548) (6,930,167) - - (55,275,715)Balance at March 31, 2015 19,274,407,388 57,456,216,370 28,667,932,708 28,642,186,919 5,600,211,061 3,012,166,752 142,653,121,198

Accumulated depreciation and impairment:

Balance at December 31, 2014 - 14,397,436,005 14,783,305,370 18,619,684,016 3,374,503,399 - 51,174,928,790

Conversion effect - (3,373,312) (2,924,695) (16,521,450) (312,641) - (23,132,098)

Depreciation expense - 258,049,524 560,097,772 831,371,524 141,481,509 134,732,087 1,925,732,416

Retirement - - (8,873,556) (100,564,963) - - (109,438,519)

Transfers - - (31,278,548) (5,560,328) - - (36,838,876)

Balance at March 31, 2015 ¢ - 14,652,112,217 15,300,326,343 19,328,408,799 3,515,672,267 134,732,087 52,931,251,713

Balance, net:

March 31, 2015 ¢ 19,274,407,388 42,804,104,153 13,367,606,365 9,313,778,120 2,084,538,794 2,877,434,665 89,721,869,485

- 58 -



(Continued)

As of December 31, 2014, property and equipment is as follows:

.


Furniture and


Balance at December 31,2013 ¢ 19,359,347,252 55,361,553,742 25,356,986,652 25,616,097,135 5,712,917,857 - 131,406,902,638

Conversion effect 29,985,059 477,276,043 29,376,581 119,600,078 3,676,800 - 659,914,561

Additions - 1,394,491,431 2,615,860,650 5,014,851,005 - 2,992,604,700 12,017,807,786

Retirements - - (376,933,574) (214,324,287) (115,812,396) - (707,070,257)

Transfers (314,930,295) - 70,249,788 (1,816,536,930) - - (2,061,217,437)Balance at December 31,2014 19,074,402,016 57,233,321,216 27,695,540,097 28,719,687,001 5,600,782,261 2,992,604,700 141,316,337,291


Balance at December 31,2013 - 13,368,324,763 13,314,451,693 17,891,799,348 2,891,095,570 - 47,465,671,374

Conversion effect - 11,612,254 15,604,112 85,213,982 1,496,714 - 113,927,062

Depreciation expense - 1,017,498,988 2,034,565,515 2,776,973,742 566,988,167 - 6,396,026,412

Retirement - - (339,130,167) (210,092,004) (85,077,054) - (634,299,225)

Transfers - - (242,185,783) (1,924,211,052) - - (2,166,396,835)

Accumulated depreciation and impairment: ¢ - 14,397,436,005 14,783,305,370 18,619,684,016 3,374,503,397 - 51,174,928,788

Balances net:

December 31, 2014 ¢ 19,074,402,016 42,835,885,211 12,912,234,727 10,100,002,985 2,226,278,864 2,992,604,700 90,141,408,503

- 59 -



(Continued)

As of March 31, 2014, property and equipment is as follows:


Furniture and


Balance at December 31,2013 ¢ 19,359,347,252 55,361,553,742 25,356,986,652 25,616,097,135 5,712,917,857 - 131,406,902,638

Conversion effect 33,923,044 539,957,465 33,234,654 135,307,348 4,159,680 - 746,582,191

Additions - 7,306,967 508,913,984 163,709,342 - - 679,930,293

Retirements (314,930,295) - (22,214,681) (87,613,081) (115,812,397) - (540,570,454)

Transfers - - (110,991,348) (12,746,187) - - (123,737,535)Balance at March 31, 2015 19,078,340,001 55,908,818,174 25,765,929,261 25,814,754,557 5,601,265,140 - 132,169,107,133


Balance at December 31,2013 - 13,368,324,763 13,314,451,693 17,891,799,349 2,891,095,570 - 47,465,671,375

Conversion effect - 14,219,566 18,022,959 98,332,584 1,748,535 - 132,323,644

Depreciation expense - 249,006,710 493,351,535 649,803,910 142,274,082 - 1,534,436,237

Retirement - - (20,623,046) (87,562,509) (85,077,055) - (193,262,610)

Transfers - - (60,578,605) (12,123,926) - - (72,702,531)

Balance at March 31, 2015 ¢ - 13,631,551,039 13,744,624,536 18,540,249,408 2,950,041,132 - 48,866,466,115

Balance, net:

March 31, 2014 ¢ 19,078,340,001 42,277,267,135 12,021,304,725 7,274,505,149 2,651,224,008 - 83,302,641,018

- 60 -



(Continued)

(10) Intangible assets

Intangible assets, correspond to software and goodwill acquired from the purchase of BICSA shares. These assets are detailed as follows:

Cost:



Additions 1,058,682,449

Balance at March 31, 2015 33,611,455,154

Accumulated amortization and impairment

Balance at December 31, 2014 19,544,095,765


Amortization and impairment expense 1,204,199,040

Amortization expense for goodwill acquired 38,670,590

Balance at March 31, 2015 20,769,854,530

Net balance

March 31, 2015 ¢ 12,841,600,624

- 61 -



(Continued)

Cost:



Additions 8,202,332,449

Movement of balances (18,497,462)

Retirements (1,235,080,131)





Amortization and impairment expense 3,807,178,734


Movement of balances (18,497,461)

Retirements (590,071,969)


Net balance

December 31, 2014 ¢ 13,049,284,659

Cost:



Additions 475,000,663

Retirements (449,583)

Balance at March 31, 2014 26,146,319,663




Amortization and impairment expense 922,327,591


Balance at March 31, 2014 17,164,100,605

Net balance

Balance at March 31, 2014 ¢ 8,982,219,058

- 62 -



(Continued)

(11) Demand obligations with public

Demand and term obligations with the public as follows:

(12) Demand and term obligations with entities

Demand and term obligations per number of customers and accumulated amount are detailed as follows:


2015 2014 2014

Checking accounts ¢ 844,674,852,106 943,577,337,919 893,311,679,417

Certified checks 652,257,617 876,458,812 810,964,453

Demand savings deposits 484,287,153,699 491,782,209,130 466,773,915,596

Mature term deposits 5,333,507,338 7,965,501,437 5,152,466,171

Overnigth matured deposits 9,068,526,347 8,267,631,150 15,471,654,612

Other demand deposits 55,604,198,976 50,170,869,835 39,564,520,878

Other demand obligations with the public 10,987,919,431 7,560,232,495 16,188,171,118

¢ 1,410,608,415,514 1,510,200,240,778 1,437,273,372,245


2015 2014 2014

Public Demand Demand Demand

Deposits ¢ 1,399,620,496,082 1,502,640,008,283 1,421,085,201,127

Other obligations with the public 10,987,919,432 7,560,232,495 16,188,171,118

(note 11) 1,410,608,415,514 1,510,200,240,778 1,437,273,372,245

Entities

Deposits from State-owned entities 8,839,457,609 5,121,163,647 4,344,904,977

Deposits from other banks 158,908,222,470 159,706,321,116 144,384,455,448

Other obligations with entities 59,918,744,270 31,977,001,226 20,226,695,642

227,666,424,349 196,804,485,989 168,956,056,067

¢ 1,638,274,839,863 1,707,004,726,767 1,606,229,428,312

- 63 -



(Continued)

As of March 31, 2015, demand deposits from customers include court-ordered deposits for ¢179,567,737,935 (¢170,996,647,973 and ¢172,899,057,386 as of December 31, 2014 and March 31, 2014, respectively), which are restricted because of their nature. As of March 31, 2015, the Bank has a total of 1,157,357 customers with demand deposits (1,143,554 and 1,154,320 as of December 31, 2014 and March 31, 2014, respectively) and has a total of 33,894 customers with term deposits (32,635 and 32,017 as of December 31, 2014 and March 31, 2014, respectively). BICSA has a total of 1,089 customers with demand deposits (1,120 and 1,092 as of December 31, 2014 and March 31, 2014, respectively) and 1,122 (1,101 and 1,085 as December 31, 2014 and March 31, 2014, respectively).

(13) Other obligations with the public Other obligations with the public are as follows:


2015 2014 2014

Public Term Term Term

Deposits ¢ 1,484,311,440,002 1,528,211,769,189 1,419,488,660,014

(note 11) 1,484,311,440,002 1,528,211,769,189 1,419,488,660,014

Entities

Deposits from State-owned entities 39,213,731,933 35,178,489,436 33,780,019,836

Deposits from other banks 743,374,800 639,969,550 3,108,814,700

Other obligations with entities 894,483,553,493 940,725,970,981 824,427,873,681

934,440,660,226 976,544,429,967 861,316,708,217

¢ 2,418,752,100,228 2,504,756,199,156 2,280,805,368,231


2015 2014 2014

Confirmed letters of credit ¢ 5,567,898,516 6,439,863,012 5,115,191,438

Term buyer position-tri-party

repurchase Agreement 24,559,491,779 19,183,845,604 14,855,080,967

¢ 30,127,390,295 25,623,708,616 19,970,272,405

- 64 -



(Continued)

Repurchase agreements: The Bank raises funds through the sale of financial instruments under agreements in which the Bank commits to repurchase them at future dates and at a predetermined price and return. As of March 31, 2015 the Bank’s repurchase agreements are as follows:

As of December 31, 2014 the Bank’s repurchase agreements are as follows:

As of March 31, 2014 the Bank’s repurchase agreements are as follows:

Reverse repurchase agreements: The Bank purchases financial instruments under agreements whereby the Bank commits to sell the financial instruments at future dates at a predetermined price and return. As of March 31, 2015 no financial instruments acquired under repurchase agreements are kept.

Fair value ofunderlying

assetsCarrying amount o

corresponding liability Repurchase date Repurchase price

Investments ¢ 30,001,933,272 24,559,491,779 04/02/2015 to 05/28/2015 100%




Investments ¢ 21,295,609,056 19,183,845,604 01/02/2015 to 02/16/2015 100%




Investments ¢ 21,637,591,027 14,855,080,967 04/01/2014 to 05/20/2014 100%

- 65 -



(Continued)

As of December 31, 2014, the Bank’s reverse repurchase agreements are as follows:

The Bank has no reverse repurchase agreements at March 31, 2014.

Asset balance

Fair value of

collateral Repurchase dateRepurchase price

BCCR ¢ 236,162,176 237,525,918 01-01-15 to 01-19-15 100%

Local goverment 1,621,360,353 1,621,360,353 01-01-15 to 02-20-15 100%

¢ 1,857,522,529 1,858,886,271

Issuer

- 66 -



(Continued)

(14) Obligations with entities and obligations with Central Bank of Costa Rica

Obligations with entities and obligations with Central Bank of Costa Rica are as follows:

As of March 31, 2015 term obligations with foreign financial entities include the international issuance for US$500,000,000 (equivalent to ¢263,680,000,000), with an interest rate of 5.25% and 5 years term. (US$500,000,000 equivalent to ¢266,655,000,000 and ¢269,170,000,000 as of December 31, 2014 and March 31, 2014, respectively).

As of December 31, 2014, subordinated obligations include a new ten year term credit in the amount of ¢5,333,100,000 (equivalent to US$10,000,000) with Corporación Interamericana de Inversiones.


2015 2014 2014

Obligations with BCCR ¢ - 1,663,017,970 -

Term obligations BCCR 12,000,000,000 - 61,000,000,000

Charges payable for obligations BCCR 1,833,333 - 8,354,167

12,001,833,333 1,663,017,970 61,008,354,167

Checking accounts of local financial entities 15,842,697,989 12,845,487,488 12,954,399,655

Checking accounts of foreign financial entities 455,561,845 409,801,809 357,750,558

Overdrafts on demand checking accounts in

foreign financial entities 5,920,355,601 3,545,048,199 2,538,552,256

At sight liablities statutory legal mandate 156,271,826,740 156,295,148,240 139,381,543,412

Outstanding checks 4,278,052,030 3,496,795,642 7,902,928,164

Overnight deposits 44,897,930,145 20,212,204,611 5,820,882,023

Term deposits from local financial entities 45,529,563,643 41,653,141,096 75,928,763,127

Term deposits from foreign financial entities 323,045,871,699 333,195,199,475 319,503,810,318

Loan from foreing financial entities

(see note 14-a) 419,921,195,070 459,205,180,953 335,073,785,017

Obligations from financial leases (see note 14-a) 2,602,097,012 2,769,576,207 -

Obligations from resources obtained from the

liquidity market (see note 14-a) 2,144,984,322 362,629,446 4,649,961,675

Charges payable for obligations with financial

and non financial entities 4,994,423,967 8,879,770,572 5,319,796,9661,025,904,560,063 1,042,869,983,738 909,432,173,171

Loans from local finanl entities

(see note 14-a) 141,196,948,480 136,692,152,790 101,860,388,080

Liquity market obligations

(see note 14-a) - 2,666,550,000 24,300,000,000

1,167,101,508,543 1,182,228,686,528 1,035,592,561,251

Subordinated obligations or debentures 21,094,400,000 21,332,400,000 16,150,200,000

Charges payable for subordinated obligations 52,814,777 50,204,699 33,646,277

21,147,214,777 21,382,604,699 16,183,846,277

¢ 1,200,250,556,653 1,205,274,309,197 1,112,784,761,695

- 67 -



(Continued)

(a) Maturities of loan payable

As of March 31, 2015, loans payable mature as follows:

As of December 31, 2014, loans payable mature as follows:

As of March 31, 2014, loans payable mature as follows:

As of March 31, 2015, the Bank has following obligations from financial leases:

As of December 31, 2014, loans payable mature as follows:

The Bank has no obligations from financial leases at March 31, 2014.

BCCR

Local financial

entities Foreign financial entities

International

organizations Total

Less than one year ¢ 12,000,000,000 78,234,594,562 258,930,948,116 - 349,165,542,678

Between one and two years - 34,278,400,000 90,252,727,383 - 124,531,127,383

Between three and five years - 1,848,396,800 4,817,519,571 - 6,665,916,371

More than five years - 28,980,541,440 65,920,000,000 21,094,400,000 115,994,941,440

Total ¢ 12,000,000,000 143,341,932,802 419,921,195,070 21,094,400,000 596,357,527,872

BCCR

Local financial


International

organizations Total

Less than one year ¢ - 55,426,353,636 280,461,335,680 23,557,030,135 359,444,719,451

Between one and two years - 59,818,716,150 83,276,432,288 - 143,095,148,438

Between three and five years - 1,250,611,950 - - 1,250,611,950

More than five years - 23,225,650,500 71,910,382,850 21,332,400,000 116,468,433,350

Total ¢ - 139,721,332,236 435,648,150,818 44,889,430,135 620,258,913,189

BCCR

Local financial


International

organizations Total

Less than one year ¢ 61,000,000,000 76,976,349,755 227,045,687,340 - 365,022,037,095

Between one and two years - 46,028,070,000 72,447,339,613 29,906,346,571 148,381,756,184

Between three and five years - 7,805,930,000 5,674,411,493 - 13,480,341,493

More than five years - - - 16,150,200,000 16,150,200,000

Total ¢ 61,000,000,000 130,810,349,755 305,167,438,446 46,056,546,571 543,034,334,772

Quote Interest Maintenance Amortization

Less than one year ¢ 958,741,936 187,595,799 95,567,125 675,579,012

Between one and five years 2,360,812,363 200,725,115 233,569,248 1,926,518,000

¢ 3,319,554,299 388,320,914 329,136,373 2,602,097,012

Quote Interest Maintenance Amortization

Less than one year ¢ 969,559,052 203,718,174 96,645,372 669,195,506

Between one and five years 2,611,738,386 250,865,584 260,492,101 2,100,380,701

¢ 3,581,297,438 454,583,758 357,137,473 2,769,576,207

- 68 -



(Continued)

(15) Income tax

Pursuant to the Costa Rican Income Tax Law, the Bank is required to file income tax returns for the twelve months ending December 31 of each year. As of March 31, 2015, the Bank’s separate balances of income tax payable and expected income tax amount to ¢3,116,224,256 (¢9,740,298,430 and ¢3,353,002,357 as of December 31, 2014 and March 31, 2014, respectively) (see note 17) and ¢76,096,877 (¢7,803,108,259 and ¢131,650,885 as of December 31, 2014 and March 31, 2014, respectively), and are booked under “Other assets”. Income tax is detailed as follows:


2015 2014 2014

Current tax ¢ 2,638,794,023 11,443,347,781 3,166,313,559

Prior year income tax 477,430,233 (1,177,660,429) 186,688,798

Advances of settled income taxes - (525,388,922) -

3,116,224,256 9,740,298,430 3,353,002,357

Deferred income tax 116,510,508 1,752,242,941 9,000,000

Deferred tax adjutment of

previous period 12,646,247 - -

Decrease in deferred income tax (65,917,626) (289,958,819) (94,448,544)

Income tax ¢ 3,179,463,385 11,202,582,552 3,267,553,813

Realization of deferred

income tax ¢ (63,239,128) (1,462,284,122) 85,448,544

- 69 -



(Continued)

BICSA is subject to tax legislation in the following jurisdictions.

Panama According to tax legislation in effect in Panama, BICSA is exempt from payment of income tax on foreign source income. BICSA is further exempt from payment of income tax on interest income earned on term deposits placed in local banks and on securities issued by the Panamanian and foreign governments and on investments in securities traded in the Panamanian Stock Exchange.

Miami Income tax is not levied on any income that is unrelated to transactions or business dealings in the United States of America. Finance expense is calculated based on the cost of liabilities denominated in U.S. dollars.

A deferred tax liability represents a taxable temporary difference and a deferred tax asset represents a deductible temporary difference. Deferred tax assets and liabilities are attributed to the following: As of March 31, 2015:

As of December 31, 2014:

Assets Liabilities Net

Valuation of investments ¢ 1,139,079,257 (567,764,213) 571,315,044

Revaluation of Assets - (4,773,052,627) (4,773,052,627)

Provisions 151,909,863 - 151,909,863

Unused tax credits and losses 3,320,086,377 - 3,320,086,377

Allowance for uncollectible 100,388,052 - 100,388,052

¢ 4,711,463,549 (5,340,816,840) (629,353,291)


Valuation of investments ¢ 1,297,921,743 (331,691,914) 966,229,829


Provisions 123,726,853 - 123,726,853



¢ 4,935,526,073 (5,122,326,872) (186,800,799)

- 70 -



(Continued)

As of March 31, 2014:

Movement in temporary differences is as follows: As of March 31, 2015:



Valuation of investments ¢ 1,558,840,955 (271,544,989) 1,287,295,966


Provisions 116,637,800 - 116,637,800

Financial leases 362,372,891 - 362,372,891



¢ 6,703,155,803 (5,163,500,224) 1,539,655,579

December 31, 2014

Included in the

income statement Included in equity March 31, 2015

On the liability account

Valuation of investments ¢ (331,691,915) - (236,072,298) (567,764,213)

Revaluation of Assets (4,790,634,958) 17,582,331 - (4,773,052,627)

In the asset account

Valuation of investments 1,297,921,743 - (158,842,486) 1,139,079,257

Unused tax credits and losses 3,419,420,794 (114,935,838) 15,601,421 3,320,086,377

Provisions 123,726,853 28,183,010 - 151,909,863

Allowance for uncollectible 94,456,683 5,931,369 - 100,388,052

¢ (186,800,800) (63,239,128) (379,313,363) (629,353,291)

December 31, 2013

Included in the

income statement Included in equity December 31, 2014

In the liability account

Valuation of investments ¢ (789,056,791) - 457,364,877 (331,691,914)

Revalaution of Assets (4,922,278,262) 131,643,304 - (4,790,634,958)


Valuation of investments 1,260,465,543 - 37,456,200 1,297,921,743

Financial leases 333,206,160 - (333,206,160) -

Unused tax credits and losses 4,176,085,579 (1,627,137,488) 870,472,703 3,419,420,794

Provisions 76,963,568 46,763,285 - 123,726,853

Allowance for uncollectables 108,009,906 (13,553,223) - 94,456,683

¢ 243,395,703 (1,462,284,122) 1,032,087,620 (186,800,799)

- 71 -



(Continued)


As of March 31, 2015, the Subsidiary BCR Valores, S.A. (Brokerage firm) maintains a tax receivable balance of ¢194,080,214 originated by excess advanced free payments for the period 2014. As of March 31, 2015, BICSA subsidiary recognized a deferred tax asset on unused tax credits and losses for the amount of ¢3,320,086,377equivalent to US$6,295,674 (¢3,419,420,794 equivalent to US$6,411,694 and ¢4,541,633,322 equivalent to US$8,436,366 as of December 31, 2014 and March 31, 2014, respectively) related to evidence that future taxable profit will be available. In conducting the analysis of the deferred tax BICSA management considers whether it is probable that some or all portion of the deferred tax asset is not realizable. Performing or not the deferred tax assets depends on the generation of future taxable income during the periods in which those temporay differences become deductible. BICSA administration considers the detail of reversals of deferred tax assets and liabilities, project future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income for the periods in which the deferred tax assets will be deductible, BICSA administration believes that it may be able to realize the benefits of this deductible temporary difference.

December 31, 2013

Included in the

income statement Included in equity March 31, 2014

On the liability account

Valuation of investments ¢ (789,056,790) - 517,511,801 (271,544,989)

Revaluation of Assets (4,922,278,262) 30,323,027 - (4,891,955,235)


Valuation of investments 1,260,465,543 - 298,585,056 1,559,050,599

Financial leases 333,206,160 - 29,166,731 362,372,891

Unused tax credits and losses 4,176,085,579 - 365,547,743 4,541,633,322

Provisions 76,963,568 39,464,588 - 116,428,156

Allowance for uncollectible 108,009,906 15,660,929 - 123,670,835

¢ 243,395,704 85,448,544 1,210,811,331 1,539,655,579

- 72 -



(Continued)

(16) Provisions

Movement in provisions is as follows:

Legal Indemnities Litigations Other Total

Balance December 31, 2014 33,752,312,536 3,716,097,637 3,664,136,817 41,132,546,990

Conversion effect (6,038,105) (5,568,435) - (11,606,540)

Provision made 659,121,195 145,726,422 216,897,077 1,021,744,694

Provision used (265,260,094) (122,113,916) (460,521) (387,834,531)

Adjustment for foreign exchange - (12,975,551) - (12,975,551)

Reversal - (37,510,967) - (37,510,967)

Balance March 31, 2015 ¢ 34,140,135,532 3,683,655,190 3,880,573,373 41,704,364,095


Balance December 31, 2013 ¢ 24,421,984,625 1,588,321,753 4,995,908,926 31,006,215,304

Conversion effect 35,273,079 1,889,002 - 37,162,081

Provision made 10,044,080,548 2,673,596,508 2,349,646,733 15,067,323,789

Provision used (749,025,716) (354,934,574) (3,670,313,190) (4,774,273,480)

Adjustment for foreign exchange - 18,322,843 - 18,322,843

Reversal - (211,097,895) (11,105,652) (222,203,547)

Balance December 31, 2014 33,752,312,536 3,716,097,637 3,664,136,817 41,132,546,990

- 73 -



(Continued)


Balance December 31, 2013 ¢ 24,421,984,625 1,588,321,753 4,995,908,926 31,006,215,304

Conversion effect 39,905,549 2,137,088 - 42,042,637

Provision made 25,153,920 76,593,163 757,619,368 859,366,451

Provision used (52,156,227) (150,030,258) (877,000) (203,063,485)

Adjustment for foreign exchange - 19,115,234 - 19,115,234

Reversal - (30,000,000) - (30,000,000)

Balance March 31, 2014 24,434,887,867 1,506,136,980 5,752,651,294 31,693,676,141

- 74 -



(Continued)

As of March 31, 2015, the Bank is a defendant in litigation, for which the following provisions have been established:

Ordinary suits filed against the Bank estimated at ¢6,894,130,540 and US$33,908,205, for

which the Bank has provisioned ¢820,229,067 and US$2,091,399, respectively.

Labor suits by nature are difficult to estimate. However, they have been estimated at ¢2,155,119,669, for which the Bank has provisioned ¢543,195,038, corresponding to cases where a provisional judgment has been handed down.

The arbitration proceedings against the Bank are estimated in the amount of US$2,091,217, of which the amount of US$40,000 has been provisioned.

For tax proceedings, and due to the possible future confirmations of payments of taxes, plus

corresponding interest and penalties, the Bank has provisioned the amount of ¢373,089,698.

As of March 31, 2015, other provisions correspond to employee incentives, self-insurance booked for a fidelity policy, a policy covering detached auxiliary teller offices, and a policy covering the transportation of securities. Given the future enforceable right, the provision for legal benefits that should be recorded for accounting purposes corresponds to the required amount. Therefore, the provisioned amount as of March 31, 2015 is of ¢9,961,224,413. As of December 31, 2014 the Bank is a defendant in litigation, for which the following provisions have been established:

Ordinary suits filed against the Bank estimated at ¢6,343,764,567 and US$33,892,341, for

which the Bank has provisioned ¢587,330,252 and US$2,075,535, respectively.

Proceedings in which the Bank is the defendant estimated at ¢437,361,969 and US$203,998 for which the Bank has provisioned ¢120,000,000

Labor suits by nature are difficult to estimate. However, they have been estimated at

¢2,259,920,748, for which the Bank has provisioned ¢597,195,038, corresponding to cases where a provisional judgment has been handed down.

For tax proceedings, and due to the possible future confirmations of payments of taxes, plus

corresponding interest and penalties, the Bank has provisioned the amount of ¢373,089,698.

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(Continued)

As of December 31, 2014, other provisions correspond to employee incentives, self-insurance booked for a fidelity policy, a policy covering detached auxiliary teller offices, and a policy covering the transportation of securities. As of March 31, 2014, the Bank is a defendant in litigation, for which the following provisions have been established: Ordinary suits filed against the Bank estimated at ¢4,319,964,188 and US$37,393,182, for

which the Bank has provisioned ¢395,870,042 and US$481,065, respectively.

Proceedings in which the Bank is the defendant estimated at ¢460,489,305 and US$203,998 for which the Bank has provisioned ¢120,000,000

Labor suits by nature are difficult to estimate. However, they have been estimated at

¢2.336.931.705 and US$186.200 for which the Bank has provisioned ¢271,000,000, corresponding to cases where a provisional judgment has been handed down.

As of March 31, 2015, other provisions correspond to employee incentives, self-insurance booked for a fidelity policy, a policy covering detached auxiliary teller offices, and a policy covering the transportation of securities. As of March 31, 2015, December 31, 2014 and March 31, 2014, BCR Sociedad Administradora de Fondos de Inversión, S.A., has no legal provisions for lawsuits. As of March 31, 2015, BICSA’s subsidiary maintains a provision for litigation for ¢400,403,535, equivalent to US$759,261 (¢499,097,945, equivalent to US$935,850 and ¢26,551,580 equivalent to US$49,322 as of December 31, 2014 and March 31, 2014, respectively), As of March 31, 2014, December 31, 2014 and March 31, 2014, BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A. has pending litigation estimating probable outflow of economic benefits by ¢261,153,751 for infringements to article 11 subsection a) of the Ley de Promoción de la Competencia y Defensa Efectiva al Consumidor (Act on promotion of competition and effective consumer). As of March 31, 2015, BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A., has ¢141,115,200 as other provisions (¢141,115,200 and ¢135,704,367 as of December 31, 2014 and March 31, 2014, respectively), which correspond to a precautionary measure of affiliates equity with a voluntary agreement.

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(Continued)

As of March 31, 2015, December 31, 2014 and March 31, 2014, there is an ongoing investigation at the SUGEVAL Related to an investor claim. The Brokerage Firm has provisioned the amount of ¢38,000,000. As of March 31, 2015, a client present a process against BCR Valores, S.A. under the record 08-001181-1027-CA, which was declared in place by the Supreme Court of Justice, sentencing the Brokerage Firm to legal damages and aggravation payments, whose existence and quantification should be proven at the enforcement of judgement. The amount claimed by the client is of US$250,000. The Brokerage Firm has provisioned the amount of ¢131,840,000 (¢133,327,500 and ¢134,585,000 as of December 31, 2014 and March 31, 2014, respectively).

(17) Other sundry accounts payable Other sundry accounts payable are as follows:


2015 2014 2014

Due for goods and services ¢ 222,067,721 105,736,600 81,111,747

Tax liability 3,116,224,256 9,740,298,430 3,353,002,357

Tax on gain on DU 657,424,491 660,917,965 585,300,636

Employer payroll taxes 2,498,667,622 2,299,432,266 2,096,528,040

Court-ordered withholdings 911,926,418 888,384,204 859,835,407

Tax withholdings 1,543,655,448 1,105,307,256 1,295,228,243

Employee withholdings 1,173,120,611 826,422,395 869,730,893

Other third-party withholdings 6,995,798,674 6,732,955,159 6,126,867,817

Compensation and salaries 1,792,243,500 7,773,398,499 2,061,496,496

Statutory allocations 2,908,745,821 6,945,785,934 2,437,612,990

Accrued vacations 7,468,927,088 6,782,729,462 6,083,679,907

Accrued statutory christmas bonus 3,123,554,034 1,453,048,273 1,869,050,908

Contributions to Superintendency 39,358,412 9,146,302 49,775,308

Various creditors 16,113,575,392 14,790,839,855 21,350,099,544

¢ 48,565,289,488 60,114,402,600 49,119,320,293

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(Continued)

(18) Equity

a) Capital The Bank’s capital is as follows:

On December 23, 2008, the Executive Branch of the Costa Rican Government authorized a capital contribution funded under Law No. 8703 “Amendment to the Law on the Ordinary and Extraordinary Budget of the Republic for Tax Year 2008 (Law No. 8627)”. Such law grants funds to capitalize three State-owned banks, including Banco de Costa Rica, in order to stimulate productive sectors and particularly small and medium-sized enterprises. For such purposes, the Bank received four securities for a total of US$50,000,000 equivalents to ¢27,619,000,002 and denominated in DU maturing in 2013, 2017, 2018, and 2019 (No. 4191, No. 4180, No. 4181, and No. 4182 for DU10,541,265.09 each, at a reference exchange rate of ¢655,021 to DU1.00). As of March 31, 2015 and based on the exchange rate, the balance of those investments is of ¢27,280,583,228 (¢27,328,999,258 and ¢26,281,113,178 as of December 31, 2014 and March 31, 2014, respectively). (See note 5).

On February 12, 2014 the National Financial System Oversight Board (CONASSIF) authorized the increase of the capital stock of the Bank for ¢9,656,096,274 from accumulated earnings and from assets revaluation surplus’s for ¢53,295,862 a total of ¢9,709,392,136. As of March 31, 2015, the amount for the constitution of the Development Financing Fund is ¢14,406,348,662 (¢12,027,329,325 as of December 31, 2014 and March 31, 2014).


2015 2014 2014

Capital under Law No.1644 ¢ 30,000,000 30,000,000 30,000,000

Bank capitalization bonds 1,288,059,486 1,288,059,486 1,288,059,486

Capital increase under Law No. 7107 79,107,385,015 79,107,385,015 79,107,385,015

Capital increase under Law No. 8703 27,619,000,002 27,619,000,002 27,619,000,002

Increase from revaluation surplus 13,020,197,845 13,020,197,845 13,020,197,845

Other 697,630,970 697,630,970 697,630,970

¢ 121,762,273,318 121,762,273,318 121,762,273,318

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(Continued)

b) Surplus from revaluation of property and equipment

Corresponding to the increase in fair value of real property owned by the Bank. As of March 31, 2015, December 31, 2014 and March 31, 2014, revaluation surplus amounts to ¢27,183,449,854.

c) Adjustments for revaluation of available-for-sale investments Corresponding to variations in the fair value of available-for-sale investments. As of March 31, 2015, the balance of the adjustment for valuation of available-for-sale investments corresponds to unrealized net losses in the amount of ¢6,500,615,812 (¢6,659,354,810 and ¢7,403,043,584 as of December 31, 2014 and March 31, 2014, respectively).

d) Adjustments for valuations of investments in other companies This item mainly corresponds to foreign exchange differences arising from conversion of BICSA’s financial statements and the unrealized gain or loss on valuation of investments and other changes in subsidiaries. As of March 31, 2015 changes in equity include foreign exchange differences corresponding to investments in other companies in the amount of ¢9,458,482,113 (¢10,042,862,169 and ¢10,469,627,079 as of December 31, 2014 and March 31, 2014, respectively).

Technical reserves of BICSA´s accumulated profits As of March 31, 2015, from Banco de Costa Rica´s accumulated earnings obtained as a result of the Investment in other Companies, it should be considered for any purpose, that there are amounts related to special reserves applied to equity accounts of BICSA for US$16,465,794 (51% de US$32,285,871) due to changes made to policies concerning the subsidiary (US$15,129,582 and US$153,151 as of December 31, 2014 and march 31, 2014, respectively). For the year ended December 31, 2014, laws and regulations applicable in the Republic of Panama for purposes of compliance with standards issued by the Superintendency of Banks of Panama, establish that from the year 2014 on, an estimated of credits reserves should be prepared based on regulatory guidelines. These estimates originate reserves in BICSA´s equity for US$9,852,127, called Excess and Regulatory Credit Reserves, as well as Regulatory Dynamic Provision for US$19,813,721.

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(Continued)

The Board of Directors general resolutions SBP-GJD-003-2013 dated July 9, 2013 establishes the accounting for the differences that may arise between the regulations issued by the Superintendency of Banks and the IFRS, so that: 1) the accounting records and the financial statements are prepared in accordance with IFRS as required by agreement No.006-2012 dated December 18, 2012; 2) according to standards applicable to banks and presenting specific aspects and additional accounting required by IFRS, in the event that an estimate of provision or reserve is greater than the correspondent calculation under IFRS, the excess of provision or reserve will be recognized in the equity. The general resolution came into effect for the accounting periods ending on or after December 31, 2014. Subject to prior authorization of the Superintendency of Banks, banks can book the established provision, partially or totally, based on justification duly evidenced and presented to the Superintendency of Banks. Agreement No.004-2013 indicates that specific provisions originate from concrete and objective evidence of impairment. These provisions should be constituted for credit facilities classified in the category of risk known as special, subnormal, doubtful or irrecoverable, both for individual credit facilities or a group of them. From December 31, 2014, banks must calculate and maintain at all times the amount of specific provision determined by the methodology specified in this agreement, which considers the balance due from each credit facility in any of the categories subject to provision, the present value of each available warranty as mitigation of risk, as established by type of warranty in this agreement, and a table of weightings applied to the net amount exposed to loss of such credit facilities. In case of an excess of a specific provision calculated in accordance with this agreement over the estimate calculated in accordance with IFRS, this excess will booked as a regulatory reserve in the equity, that increases or decreases towards undistributed earnings. The balance of the regulatory reserves will not be considered in the agreements. The Bank determines its country risk reserve with provisions established in general regulations No.7-2000 and No.1-2001 issued by the Superintendency of Banks of Panama. Agreement No.004-2013 indicates that the dynamic provision is a reserve constituted to meet possible future needs of specific provisions ruled by banking regulations criteria. It is constituted with quarterly periodicity on credit facilities that don’t have a specific regulation provision assigned, i.e., the credit facilities classified in normal category. This agreement regulates the methodology to calculate the amount of the dynamic provision, considering a minimum or maximum restriction applicable to the provision determined on credit facilities. The dynamic provision is an equity issue that increases or decreases with assignments to undistributed earnings. Its credit balance forms part of the regulatory capital but does not replace or compensates the capital adequacy requirements set forth by the Superintendency.

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(Continued)

Fort the year ended December 31, 2014, BICSA and subsidiaries adopted the International Financial Reporting Standards issued by the Board of International Accounting Standards upon request of the Superintendency of Banks of Panama, thus not causing significant changes in the important figures. As of December 31, 2014, the changes established by these standards in BICSA do not arise changes in the capital adequacy of Banco de Costa Rica, as the equity of the subsidiaries is excluded in accordance with the regulations of SUGEF agreement 3-06.

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(Continued)

Regulatory Capital As of March 31, 2015, the capital adequacy for the BCR Financial Conglomerate is detailed as follows:

Companies of the Financial Conglomerate Base capital

Individual capital

requirement Individual surplus or deficit Non-tranferable items

Tranferable surplus

and individual deficit

Holding company

Banco de Costa Rica ¢ 325,462,500,727 271,620,058,604 53,842,442,123 - 53,842,442,123

325,462,500,727 271,620,058,604 53,842,442,123 - 53,842,442,123

Regulated Companies

Banco Internacional de Costa Rica, S. A

and subsidiaries 103,035,674,027 85,876,230,496 17,159,443,531 8,408,127,330 8,751,316,201

BCR Valores, S. A.- Puesto de Bolsa 10,658,393,750 1,773,933,420 8,884,460,330 - 8,884,460,330

BCR Sociedada Administradora de

Fondos de inversión, S.A. 6,552,857,210 1,869,757,990 4,683,099,220 - 4,683,099,220

BCR Pensión Operadora de Planes de

Pensiones Complementarias, S.A. 5,710,381,487 2,081,489,029 3,628,892,458 - 3,628,892,458

¢ 125,957,306,474 91,601,410,935 34,355,895,539 8,408,127,330 25,947,768,209

Not regulated Companies

BCR Corredora de Seguros, S.A. 1,800,000,000 963,611,149 836,388,851 836,388,851

¢ 1,800,000,000 963,611,149 836,388,851 - 836,388,851

Global surplus or deficit of the financial

conglomerate ¢ 80,626,599,183

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(Continued)

As of December 31, 2014, the capital adequacy for the BCR Financial Conglomerate is detailed as follows:


Individual capital


Tranferable surplus


Holding company


320,049,044,541 269,575,714,711 50,473,329,830 - 50,473,329,830

Regulated Companies








¢ 121,797,782,720 93,754,729,601 28,043,053,119 7,076,493,945 20,966,559,174


BCR Corredora de Seguros, S.A. 1,800,000,000 1,025,979,019 774,020,981 - 774,020,981

¢ 1,800,000,000 1,025,979,019 774,020,981 - 774,020,981



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(Continued)

As of March 31, 2014, the capital adequacy for the BCR Financial Conglomerate is detailed as follows:


Individual capital


Tranferable surplus


Holding company


307,946,911,085 270,234,678,333 37,712,232,752 - 37,712,232,752

Regulated Companies








¢ 118,962,147,673 70,179,477,551 48,782,670,122 15,540,523,267 33,242,146,855


BCR Corredora de Seguros, S.A. 1,677,349,419 659,988,168 1,017,361,251 - 1,017,361,251

¢ 1,677,349,419 659,988,168 1,017,361,251 - 1,017,361,251



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(Continued)

(19) Commitments and contingencies

The Bank has off-balance sheet commitments and contingencies that arise in the normal course of business and involve elements of credit and liquidity risk.

Off-balance financial instruments with risk are as follows:

Off-balance financial instruments involving risk by type of deposit are as follows:

These commitments and contingent liabilities expose the Bank to credit risk since commissions and losses are recognized in the consolidated statement of financial position until the obligations are fulfilled or expire. As of March 31, 2015, December 31, 2014 and March 31, 2014, letters of credit are backed 100% or by guarantee deposits or credit facilities. As of March 31, 2015, floating guarantees in custody are for ¢134,447,670,298 (¢141,037,825,816 and ¢136,029,055,722 as of December 31, 2014 and March 31, 2014, respectively).


2015 2014 2014

Guarantees granted:

Performance bonds ¢ 110,012,845,265 115,077,994,185 104,999,864,048

Bid bonds 1,591,783,867 1,853,318,163 2,844,676,572

Other guarantees 58,044,874,752 65,532,653,152 61,368,005,287

Issued non-negociated letters of credits 12,675,092,975 7,774,323,112 16,250,428,357

Confirmed non-negociated but letters of credits 9,864,822,829 13,775,803,000 15,555,388,435

Preapproved lines of Credit 105,134,567,315 104,308,947,436 121,777,753,395

Other contingencies 31,097,108,332 29,942,344,434 26,411,843,348

Credits pending disbursement 8,066,807,374 7,967,575,054 9,897,144,938

¢ 336,487,902,709 346,232,958,536 359,105,104,380


2015 2014 2014

With prior deposit ¢ 4,851,328,087 3,898,268,755 4,065,792,339

Without prior deposit 300,539,466,289 312,392,345,346 328,627,468,692

Pending litigation and

claims 31,097,108,333 29,942,344,435 26,411,843,349

¢ 336,487,902,709 346,232,958,536 359,105,104,380

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(Continued)

The Bank has off-balance financial instruments with risk that arise in the normal course of business to meet the financial needs of its customers. Those financial instruments include letters of credit and guarantees that involve varying levels of credit risk. Other contingencies

As of March 31, 2015, the Bank’s Legal Division reported the following contingencies and commitments:

Administrative suits against the Bank estimated at ¢6,073,901,472 and US$31,816,807. In

addition other contentious processes are filed for preliminary injunction with no estimate. In labor matters there are active ordinary processes estimated in the amount of

¢1,611,924,631. Criminal proceedings in which the Bank is a third-party defendant estimated at

¢316,361,969 and US$200.000. Arbitration processes against the Bank are estimated in the amount of US$2,051,217. In tax matters, for taxes plus interest and proportional penalties, the amount of

¢5,128,807,128 was estimated.

As of December 31, 2014, the Bank’s Legal Division reported the following contingencies and commitments:


addition other contentious processes are filed for preliminary injunction with no estimate.

In labor matters there are active ordinary processes estimated in the amount of ¢1,662,725,710.

Criminal proceedings in which the Bank is a third-party defendant estimated at ¢317,361,969 and US$203,998.

In tax matters, for taxes plus interest and proportional penalties, the amount of ¢5,128,807,128 was estimated.

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(Continued)

As of March 31, 2014, the Bank’s Legal Division reported the following contingencies and commitments:


addition other contentious processes are filed for preliminary injunction with no estimate. In labor matters there are active ordinary processes estimated in the amount of

¢2,065,931,705 and US$186,200. Criminal proceedings in which the Bank is a third-party defendant estimated at

¢340,489,305 and US$203,998. Other matters:

On May 28, 2014 the collection management of the counter guarantee in the amount of US$2,008,000, to Banco de la Construcción de China was settled under a court process filed against Oriental Palace, S.A.

Suit filed against BICR

Until 2004, Banco Internacional de Costa Rica, S.A. – Costa Rica (BICR) was a subsidiary of BICSA Corporación Financiera, S.A. The latter entity (holding) merged with Banco Internacional de Costa Rica, S.A. (Panama) in September 2005, which was involved in a legal process filed by TELESIS, S.A. related to a software contract subscribed by the parties. In 1989, the court action was estimated by the plaintiff at US$192,000. In September 2002, the plaintiff claimed US$12,595,684, plus interest accrued until the payment date, plus legal expenses. The Second Civil Court of San José, first Section, issued ruling No. 408 on November 16, 2004, which upheld the defense motion filed by BICR. With this ruling, BICR is released from further payment obligations. TELESIS, S.A. filed a formal appeal to overturn the ruling by the Second Civil Court. On December 21, 2006, the First Chamber of the Supreme Court of Justice dismissed the formal appeal filed by TELESIS, S.A., thereby confirming the statute of limitations had lapsed on all claims filed by TELESIS, S.A. and releasing BICR from payment obligations. In 2007 the Bank recovered the amount of US$2,096,804 from Banco Nacional de Costa Rica. The latter absorbed the operations of BICR and other institutions in 2004, at which time BICR transferred its provision for the above contingency to Banco Nacional de Costa Rica.

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(Continued)

To handle its defense in the above case, BICR hired three Costa Rican attorneys through an agreement that clearly stipulated the fees to be paid by BICR in exchange for litigation services. BICR promptly paid the full amount due under the agreement; however, the attorneys filed a claim for payment of fees in the amount of ¢501,134,949 (approximately US$967,704), plus 2% monthly interest of ¢70,845,379 (approximately US$136,804) that had been paid as of July 23, 2007). This file was processed by the First Board of Appeal of the Supreme Chamber under an action of this nature by claimants, because its action was overruled in first and second instance recognizing the validity and effectiveness of the professional services contract signed by BICR and aforementioned lawyers. The Court resolution of April 12, 2013 summoned the parties to appear before the First Civil Court, which was carried on April 18, 2013. Likewise, in resolution of June 13, 2013, the said Chamber admitted the appeal for processing. Therefore, it is expect the Board to rule on the merits.

Income tax - BICSA Costa Rica

On November 9, 2006, the Bank received Conclusion of Tax Audit Notice No. 2752000016446 from the Large Taxpayer Division of the Costa Rican Tax Administration indicating an outstanding tax liability, were not property presented corresponding to the tax years running from 1999 through 2004 for BICR. Until 2004 that entity operated as a subsidiary of BICSA Corporación Financiera, S.A., which merged with BICSA in September 2005. The scope of the claim amounts to ¢707,639,319 (approximately US$1,366,468 since interest, penalties and surcharges were eliminated from the transfer of the original charges. The transfer of charges originated in treatment by the current tax administration of certain items of expenditure and income differently from the previously authorized and notified in writing by the Tax Administration to BICR and other banks of the Costa Rican banking system. BICR challenged charges transfer arguing among other things that the settlement of tax in those years was conducted in accordance with guidelines issued directly from that Directorate. By order liquidating SFGCN-AL-075-12 29-06-2012, the Tax Autorities determine a tax debt amounting to the sum of ¢621,992,593 for interest and the sum of ¢809,228,709, for a total of ¢1,431,221,302 approximately US$2,891,298. On July 23, 2012 the Bank interposed a new claim against that decision No. 035-2012 TFA Administrative Tax Court of Costa Rica. Besides, based on resolution DGH-153-08 as of December 8, 2008 it was requested nullity of condoned interests. Thru resolution OT10R-041-13 of April 24, 2013, notified on May 14, 2013, Tax Authority partially sustains the revocatory claim interposed by the company against the resolution. Total debt amounts to ¢621.992.593 plus ¢174,614,907 of interests for a total of ¢796,607,500 (equivalent to US$1.609.276). On September 5, 2013 the company presented an appeal against resolution SFGN-AL-075 and resolution TFA-497-2013 of November 4, 2013. Tax Authority overrules nullity condemned BICSA and confirming income tax payment for fiscal periods from 1999 to 2004.

- 88 -



(Continued)

BICSA paid penalty amounts on November 29, 2013 for US$1,243,985. On November 22, 2013 BICSA presented a claim to Tax Authority requesting amendment of the judge’s decision related to Interests Condemn Resolution No.153-08 of Finance Ministry and also recommended discharge of interests determined on resolution OT10R-041-13 of April 24, 2013 confirmed by Tax Authority sentence 497-2013 for ¢174,614,907 and discharge of interests from fiscal period 2005. Independently from liquidation (income tax calculation exactness and interests origin) against Tax Authority judgement, on February 1, 2013 it was interposed an contentious administrative process related to income tax of periods from 1999-2004. On April 19, 2013 the claim presented in February 1, 2013 was extended, the State answered the claim. On July 17, 2013 the State answered the extended claim negatively and in September 25, 2013 it was presented the claim’s answer by the State. It was presented a second claim extension on November 13, 2013 and in November 20, 2013 the General Law Office answered the claim. On November 7, 2013 it was the preliminary hearing; claim extension presented on April 19, 2013 was rejected. Tax Authority integrate judgement No.497 as a new fact and reprogrammed second preliminary hearing. Labor processes against Miami agency have been solved in favor of BICSA. It is pending resolution by Caja Costarricense del Seguro Social amounts determination by contributions if proceeded. In management opinion, final resolutions of such matters would not affect financial position, operational or liquidity result of BICSA and its agency. On sentence No.045-PJCD-2-2014, dated November 25, 2014, the Conciliation and Decision Board declared the dismissal of an employee of the Bank as unjustified and condemned BICSA to pay to the former employee the amount of US$160,760 as compensation. There was a corresponding appeal presented to this verdict, which was solved in favor of the Bank revoking the first instance judgment. As of March 31, 2015, December 31, 2014 and March 31, 2014, and due to the fusion between INS Pensiones Operadora de Pensiones Complementarias, S.A. and BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A., a series of contingencies arise that have been reasonably covered with pledged securities from the seller. SUPEN has required disclosure of the contingency related to TUDES and its performance calculation. The Pension Operator received a warranty to cover this contingency as described in note 22 of its financial statements. As of March 31, 2015, December 31, 2014 and March 31, 2014, the Brokerage Firm has a process presented by Avícola La Aurora, S.A. against it, transacted under record No. 08-001181-1027 in the first chamber of the Supreme Court of Justice.

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(Continued)

As of March 31, 2015, December 31, 2014 and March 31, 2014, the is an administrative procedure presented by Mr. Ricardo Quirós Díaz against the Brokerage Firm before SUGEVAL. The case is being studied and the brokerage firm has answered some queries and provided information and documentation requested by SUGEVAL. As of March 31, 2015, December 31, 2014 and March 31, 2014, there were no contingencies for BCR Sociedad Administradora de Fondos de Inversión, S.A. that should be disclosed on this report.

(20) Trusts

The Bank provides trust services, whereby it manages assets at the direction of the customer. The Bank receives a fee for providing those services. The underlying assets and liabilities are not recognized in the Bank’s separate financial statements. The Bank is not exposed to any credit risk and it does not guarantee these assets or liabilities. The types of trusts managed by the Bank are as follows:

Management and investment trusts Management trusts with a testamentary clause Guarantee trusts Housing trusts Management and investment public trusts. The assets in which capital trust is invested are detailed as follows:


2015 2014 2014

Cash and due from banks ¢ 27,977,268,043 30,734,175,397 13,001,866,164

Investments 149,770,383,938 151,995,415,198 146,943,015,898

Loan portfolio 165,313,100,347 171,748,373,122 153,555,863,823

Allowance for loan losses (20,659,823,170) (20,814,301,375) (19,832,607,596)

Foreclosed assets 2,800,923,121 2,812,150,260 5,237,631,380

Investments in other companies 41,962,864,983 47,777,148,281 38,595,799,452

Other receivables 108,682,921,690 43,396,993,148 45,999,399,870

Property and equipment 404,363,791,370 410,341,563,510 427,511,204,006

Other assets 12,568,377,752 30,043,631,458 21,618,402,203

¢ 892,779,808,074 868,035,148,999 832,630,575,200

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(Continued)

Trust capital held by subsidiaries and invested in assets by entity is as follows:

(21) Other debit memoranda accounts

Other debit memoranda accounts are as follows:


2015 2014 2014

Banco de Costa Rica ¢ 796,998,490,388 763,980,738,748 723,615,795,137

Banco Internacional de Costa Rica, S.A. 94,172,431,020 102,084,252,222 107,020,734,960

BCR Valores, S.A.- Puesto de Bolsa (see note 22) 1,608,886,666 1,970,158,029 1,994,045,103

¢ 892,779,808,074 868,035,148,999 832,630,575,200


2015 2014 2014

Assets and securities held in custody ¢ 6,284,691,201 6,674,824,439 6,377,728,787

Guarantees received and held in custody 1,360,474,701,697 717,220,912,040 730,207,560,271

Guarantees received and held by third Parties 879,208,327 761,634,198 807,547,197

Unused authorized facilities of credit 479,784,827,438 509,197,215,195 612,898,885,325

Write-offs 35,759,769,997 36,022,053,580 29,670,448,023

Interest income on non-accruall loans 15,190,614,648 14,286,110,396 12,617,992,815

Other memoranda accounts 1,629,775,269,278 1,468,799,571,150 1,205,113,576,137

Assets and securities held in

for third parties 109,865,725,309 77,618,497,954 126,785,380,698

Assets of funds managed by the Bank 1,108,163,455,758 1,055,532,220,950 1,026,443,171,517

Management of individual portfolio´s

by Brokerage Firm 292,300,387,512 306,830,780,379 336,340,520,868

Trading securities held in custody - - 611,958,334

Trading securities received as guarantee

(Guarantee Trust) - - 2,065,500,000

Unsettled confirmed spot contracts - - 1,721,877,738

Repurchase pending settlement 26,875,458,302 19,700,155,420 21,283,054,297

Cash and receivable from custodial activities 21,848,037,782 28,625,502,802 74,188,165,416

Trading securities held in custody 5,268,102,082,134 4,331,690,492,195 3,786,168,946,345

Third-party trading securities receivable as

guarantees (Guarantee Trust) 40,307,292,301 31,479,388,002 28,638,274,005

Confirmed outstanding cash contracts 54,250,823,905 38,372,415,948 35,623,251,144

Unsettled confirmed spot contracts 1,562,529,605 - 10,144,837,690

Repurchase agreements pending settlement 53,349,984,049 40,914,306,259 39,984,955,260

¢ 10,504,774,859,243 8,683,726,080,907 8,087,693,631,867

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(Continued)

Other memoranda accounts by entity are as follows:

(22) Current and term brokerage operations and portfolio management operations

Memoranda accounts of the Brokerage Firm are as follows:


2015 2014 2014

Banco de Costa Rica ¢ 6,765,315,897,562 5,744,934,728,879 5,299,425,899,008

Banco Internacional de Costa Rica, S.A. 2,250,672,483,172 1,508,888,286,791 1,345,695,156,991

BCR Valores, S.A.- Puesto de Bolsa (note 22) 374,088,429,423 367,445,312,802 409,502,325,579

BCR Sociedad Administradora de

Fondos de Inversión, S.A. (note 23) 414,524,538,210 384,140,212,537 424,238,140,564


Pensiones Complementarias, S.A. ( note 24) 700,173,510,876 678,317,539,898 608,832,109,725

¢ 10,504,774,859,243 8,683,726,080,907 8,087,693,631,867


2015 2014 2014

Other memoranda accounts

Other registered accounts 69,954 70,744 71,411

Total other memoranda accounts 69,954 70,744 71,411

Own memoranda accounts

Unsettled confirmed spot contracts ¢ - - 1,721,877,738

Repurchase agreements pending setlement -

term buyer (note 22-a) 26,875,458,302 19,700,155,420 21,283,054,297

Total own memoranda accounts ¢ 26,875,458,302 19,700,155,420 23,004,932,035

Third-party memoranda accounts

Portfolio management ¢ 292,300,387,512 306,830,780,379 336,340,520,868

Cash and receivables from custodial activities - - 27,008,316

Unsettled confirmed spot contracts 1,562,529,605 - 10,144,837,690

Repurchase agreements pending setlement -

term buyer (note 22-a) 17,134,531,993 12,698,686,636 11,338,428,985

Reverse repurchase agreements pending setlement -

term seller (note 22-a) 36,215,452,057 28,215,619,624 28,646,526,274

Total third-party memoranda accounts 347,212,901,167 347,745,086,639 386,497,322,133

Total memoranda accounts (note 21) 374,088,429,423 367,445,312,803 409,502,325,579

Managed trust (note 20) 1,608,886,666 1,970,158,029 1,994,045,103

Total memoranda accounts and trusts ¢ 375,697,316,089 369,415,470,832 411,496,370,682

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(Continued)

In repurchases, reverses repurchases and term operations, the Brokerage Firm is contingently liable for the short balance that arises when a security is bought for an amount that is less than the amount payable to the respective buyer. In conformity with the Regulations for Repurchase Operations and the Regulations for Term Operations, all such transactions have guarantees to cover those contingencies.

Securities backing repurchases and reverse repurchase agreements are held in the custody of the Central Securities Depository Institution of the Costa Rican National Stock Exchange (CEVAL) or foreign depositories with which CEVAL has custody agreements. a) Repurchase The Brokerage Firm enters into agreements to buy or sell securities at certain future dates (repurchase and reverse repurchase agreements). Those agreements are comprised of securities that the parties commit to sell or buy on an agreed upon date and at a stated price. The difference between the contractual value and the value of the security represents an additional guarantee for the operation, and corresponds to a portion of the security held in custody. As of March 31, 2015, term buyer and seller positions in repurchase and reverse repurchase agreements in which the Brokerage Firm participates are as follows:

Third Colones US Dollars Total Colones US Dollars Total

1 – 30 days ¢ 5,061,456,808 6,379,775,169 11,441,231,977 20,106,023,011 9,065,632,016 29,171,655,027

31 – 60 days 1,684,466,560 1,434,498,104 3,118,964,664 2,652,312,656 2,884,999,890 5,537,312,546

61 – 90 days - 2,444,992,850 2,444,992,850 - 1,377,141,982 1,377,141,982

Greater than 91 days - 129,342,502 129,342,502 - 129,342,502 129,342,502

Total third ¢ 6,745,923,368 10,388,608,625 17,134,531,993 22,758,335,667 13,457,116,390 36,215,452,057

Self employed

1 – 30 days ¢ 20,880,549,812 1,588,904,555 22,469,454,367 - - -

31 – 60 days 4,048,516,505 357,487,430 4,406,003,935 - - -

Total own 24,929,066,317 1,946,391,985 26,875,458,302 - - -

Total ¢ 31,674,989,685 12,335,000,610 44,009,990,295 22,758,335,667 13,457,116,390 36,215,452,057

Buyer Term Seller Term

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(Continued)

As of December 31, 2014, term buyer and seller positions in repurchase and reverse repurchase agreements in which the Brokerage Firm participates are as follows:

As of March 31, 2014, term buyer and seller positions in repurchase and reverse repurchase agreements in which the Brokerage Firm participates are as follows:


1 – 30 days ¢ 3,933,325,934 7,477,322,991 11,410,648,925 11,055,281,485 14,059,337,528 25,114,619,013

31 – 60 days 529,000,051 486,768,724 1,015,768,775 2,352,102,433 476,629,242 2,828,731,675

61 – 90 days - 112,913,465 112,913,465 - 112,913,465 112,913,465

Greater than 91 days - 159,355,471 159,355,471 - 159,355,471 159,355,471

Total third ¢ 4,462,325,985 8,236,360,651 12,698,686,636 13,407,383,918 14,808,235,706 28,215,619,624

Self employed

1 – 30 days ¢ 11,671,804,367 3,943,415,452 15,615,219,819 - - -

31 – 60 days 4,012,140,359 72,795,242 4,084,935,601 - - -

Total own 15,683,944,726 4,016,210,694 19,700,155,420 - - -

Total ¢ 20,146,270,711 12,252,571,345 32,398,842,056 13,407,383,918 14,808,235,706 28,215,619,624



1 – 30 days ¢ 3,811,758,416 4,272,121,378 8,083,879,794 20,148,826,073 3,154,271,542 23,303,097,615

31 – 60 days 917,477,766 1,212,148,728 2,129,626,494 3,546,059,467 948,931,003 4,494,990,470

61 – 90 days 188,894,271 936,028,426 1,124,922,697 188,894,271 659,543,918 848,438,189

Total third ¢ 4,918,130,453 6,420,298,532 11,338,428,985 23,883,779,811 4,762,746,463 28,646,526,274

Self employed

1 – 30 days ¢ 15,963,724,156 4,405,713,318 20,369,437,474 - - -

31 – 60 days 98,189,795 815,427,028 913,616,823 - - -

Total own 16,061,913,951 5,221,140,346 21,283,054,297 - - -

Total ¢ 20,980,044,404 11,641,438,878 32,621,483,282 23,883,779,811 4,762,746,463 28,646,526,274


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(Continued)

b) Guarentees granted

In order to comply with the Costa Rican National Stock Exchange requirement for a system of guarantees to secure operations executed by the Brokerage Firm on behalf of third parties, the Brokerage Firm may either hold a performance bond in colones issued by a private Costa Rican bank or make a contribution to the Guarantee Fund, described below. In order to establish a risk management system, SUGEVAL set up a guarantee fund comprised of contributions from brokerage firms. Contributions are made proportionally based on the net buy positions during the last six months. As of March 31, 2015, the Brokerage Firm made contributions for a total of ¢206,863,323 (¢306,168,813 and ¢301,609,819 as of December 31, 2014 and March 31, 2014, respectively). These contributions are booked in the subaccount “Guarantee fund – National Stock Exchange” under “Cash and due from banks”.

c) Agreements subscribed with customers of BCR Valores, S.A. (the Brokerage Firm)

Starting 2012, a multiple agreement was implemented, which includes all the products offered by the Brokerage Firm, except for individual portfolio management services. Accordingly, as of December 31, 2014, the Brokerage Firm has two types of agreements available: Commission agreement to perform brokerage operations, foreign exchange operations,

and operations with foreign exchange and financial derivatives Individual portfolio management agreement.

d) Customers securities in custody

As of March 31, 2015, December 31, 2014 and March 31, 2014, BCR Valores does not have investment securities in custody.

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(Continued)

(23) Investments fund managment agreements

The value of net assets in each investment fund managed by the BCR Sociedad Administradora de Fondos de Inversión, S.A. (Investment Fund Manager) is as follows:


2015 2014 2014

Type of fundIn Colones

BCR Short Term Colones

Undiversified Financial open ¢ 72,432,930,065 61,777,583,556 94,198,751,960

BCR Joint Colones Undiversified Open, medium term 37,107,665,432 29,675,830,843 39,296,210,761

BCR Purpose Fund 360 Open, medium term - 515,927,015 603,729

BCR Portfolio Fund Colones Open, medium term 15,413,525,903 5,216,801,450 -

BCR Real-Estate colones Closed, No financial

Undiversified and mixed portfolio 8,302,955,755 8,095,774,995 7,887,676,549

¢ 133,257,077,155 105,281,917,859 141,383,242,999

In US Dollars

Investment funds in US dollars equivalent in colones 281,267,461,055 278,858,294,678 282,854,897,565

(see notae21) ¢ 414,524,538,210 384,140,212,537 424,238,140,564

Investment funds in US dollars

BCR Liquidity Dollars Undiversified

Open

US$

121,035,820 121,894,470 169,038,884

BCR Real-Estate Dollars

Undiversified Real-Estate, Closed, Long Haul 187,126,292 176,010,439 169,756,698

BCR Real Estate Trade and

Industry Undiversified Real-Estate, Closed, Long Haul 127,797,482 125,589,276 122,666,110

BCR Fund Liquidity Dollars

International Undiversified

Open, Money Market

58,228,891 62,349,487 40,281,740

BCR Fund Portfolio Dollars Open, medium term 9,050,061 7,759,049 -

BCR Fund Real progress

Undiversified Real Estate, closed 30,111,463 29,279,458 23,677,116

US$ 533,350,009 522,882,179 525,420,548

Investment funds

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(Continued)

(24) Pension fund managment agreements The value of net assets in each investment fund managed by the BCR Sociedad Administradora de Fondos de Inversión, S.A. (Investment Fund Manager) is as follows:

The detail of assets for each pension fund in the reports issued separately is detailed as follows: Funds received by the Pension Fund Manager are invested in the following securities and other investments:


2015 2014 2014

Assets and securities held in custody ¢ 6,284,691,201 6,674,824,439 6,377,728,787

Guarantees held by entity 200,000,000 200,000,000 200,000,000

Administration of funds and securitiesby

third parties 49,902,126 50,707,045 49,349,985

Mandatory pension fund 514,343,050,562 485,983,074,430 442,994,051,043

Voluntary Pension Fund 18,160,288,389 18,128,602,693 18,284,125,289

Labor capitalization fund 58,633,034,966 67,957,398,031 50,564,341,402

Supplementary Pension Fund

created by special laws 102,502,543,632 99,322,933,260 90,362,513,219

(see note 21) ¢ 700,173,510,876 678,317,539,898 608,832,109,725


2015 2014 2014

Voluntary Pension Fund (colones) ¢ 13,809,720,740 13,669,886,675 13,291,715,179

Securities Issued by the Banco Central de Costa Rica 2,094,693,971 1,775,759,664 2,168,114,592

Securities Issued by the Government 5,034,958,682 4,814,246,311 5,269,419,226

Securities Issued by the Private Banks 2,547,618,525 2,832,768,993 2,788,648,320

Securities Issued by the Private Non-Financial Institutions 864,786,500 909,445,030 757,096,470

Securities Issued by the Private Financial Institutions 1,274,784,150 1,220,372,250 1,016,462,634

Nonfinancial public entities 286,644,050 186,348,900 291,292,800

Public Banks Created By law 792,966,600 720,203,701 70,168,050

Securities Issued by the State Commercial Banks 665,642,020 902,301,490 524,915,680

Participation in Securities Investment Funds Open 208,065,256 267,860,778 363,746,080

Titles Participation Investment Funds Closed 39,560,986 40,579,558 41,851,327

Voluntary Pension Fund (US$) US $ 7,785,327 7,771,496 8,681,693

Securities Issued by the Government 1,850,420 1,589,699 1,732,498

Securities Issued by the Private Banks 2,838,345 3,194,731 3,338,583

Securities Issued by the Private Non-Financial Institutions 581,991 482,869 472,155

Securities Issued by the Private Financial Institutions 936,881 1,037,742 1,391,633

Nonfinancial public entities 264,001 186,363 184,477

Public Banks Created By law 481,765 651,988 733,943

Securities Issued by the State Commercial Banks 313,952 259,101 354,705

Participation in Securities Investment Funds Open 233,088 80,105 182,599

Titles Participation Investment Funds Closed 284,884 288,898 291,100

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(Continued)

The agreements subscribed by the Pension Fund Manager are found in chapter II of the Employee Protection Law, articles 14, 15, and thereafter. The applicable agreement is known as “Voluntary Supplemental Pension Plan Affiliation Agreement”.

Following is a general description of the nature of the agreements subscribed:

The Employee Protection Law puts mechanisms in place to expand coverage and strengthen the funding base for the Disability, Old Age, and Death System of CCSS through supplemental pension funds. The aforementioned Law establishes a voluntary personal savings system, whereby contributions are recorded and controlled by the Centralized Collection System of CCSS, or directly by pension fund operators. A close relationship exists between the funds, plans, and agreements, the latter being a formal requirement for eligibility to access pension funds. The agreements define and stipulate the rights and obligations of both parties. The funds are separate equity funds administered by pension fund operators for a stated purpose, i.e. long-term savings to be used by the member as a supplemental pension fund. The funds are comprised of voluntary contributions from members and third-party contributors. The plans are a set of complementary conditions and benefits offered to plan beneficiaries.


2015 2014 2014

Supplementary Pension Fund (colones) ¢ 608,649,814,495 573,539,071,517 525,605,403,620




Securities Issued by the Private Non-Financial Institutions 22,693,644,165 23,663,306,787 18,867,082,388


Nonfinancial public entities 35,135,532,420 27,586,354,878 24,601,506,050

Public Banks Created By law 48,057,101,217 44,618,417,344 19,076,756,795

Securities Issued by the State Commercial Banks 23,974,350,778 27,548,492,683 38,185,581,205

Participation in Securities Investment Funds Open 4,880,507,441 4,758,097,678 8,247,567,548

Titles Participation Investment Funds Closed 6,209,415,339 6,326,255,268 6,500,447,161


In equity securities issued by financial institutions 136,995,471 140,230,665 141,553,273

Labor capitalization fund (colones) ¢ 57,735,693,213 66,658,502,628 49,752,319,566




Securities Issued by the Private Non-Financial Institutions 2,229,798,723 2,504,671,568 2,583,360,738


Nonfinancial public entities 1,691,668,200 839,842,700 253,064,500

Public Banks Created By law 5,455,985,455 5,458,052,378 -

Securities Issued by the State Commercial Banks 5,494,455,117 5,064,302,480 5,548,759,100

Operations repurchase and reports 1,590,604,305 674,689,622 2,003,267,923


- 98 -



(Continued)

(25) Financial income on investments in financial instruments Financial income on investments in financial instruments is as follows:

(26) Financial income on loan portfolio Financial income on loan portfolio is as follows:

2015 2014

Trading ¢ - 374,584

Available-for-sale 6,161,096,895 7,330,643,884

At maturity and restricted 552,872,104 449,836,147

¢ 6,713,968,999 7,780,854,615

March

2015 2014

Checking accounts overdrafts ¢ 241,748,857 336,916,740

Loans with other funds 64,739,585,350 56,483,092,118

Credit cards 2,990,609,306 2,959,492,966

Factoring 32,571,622 42,989,750

Issued and used letters of credits 1,977,295 3,690,440

Confirmed and used letters of credits - 26,210

Past due loans in legal collections 20,638,604 3,913,687

68,027,131,034 59,830,121,911

Financial leases 1,179,032,796 761,311,607

¢ 69,206,163,830 60,591,433,518

March

- 99 -



(Continued)

(27) Expenses for obligations with the public Financial income on loan portfolio is as follows:

(28) Expenses for allowances for impairment of assets

Expenses for allowances for impairment of assets are as follows:

2015 2014

Demand deposits ¢ 5,554,097,999 5,197,087,646

Term deposits 19,346,473,029 16,674,758,457

Repurchase agreements - securities 291,865,166 251,729,248

¢ 25,192,436,194 22,123,575,351

March

2015 2014

Allowance for loan impairment (see note 6-f) ¢ 3,053,183,856 4,578,216,977

Allowance for other doubtful receivables 375,461,411 319,774,016

Allowance for stand-by credits 4,121,438 4,818,635,268

Expenses generic estimation and against cyclic

for loan 640,351,321 -

Expenses generic estimation and against cyclic

for contigent credit portfolio 15,956,532 -

¢ 4,089,074,558 9,716,626,261

March

- 100 -



(Continued)

(29) Income from recovery of assets and decreased in allowances and provisions

Income from recovery of assets and decreases in allowances and provisions is as follows:

(30) Service fees and commissions income

Service fees and commissions income is as follows:

2015 2014

Recovery of loans write-offs ¢ 277,374,486 261,313,265

Decrease in allowance for loan losses

(see note 6-f) 173,890,046 2,541,979,175

Decrease in allowance for other doubtful

receivables 767,105,899 109,855,452

Decrease in allowance for stand-by credit losses 150,428 3,885,242,448

Decrease in generic estimation and against cyclic

for loan 1,159,911 292,273,692

Decrease in generic estimation and against cyclic

for contingent loans 810,552 230,728,252

¢ 1,220,491,322 7,321,392,284

March

2015 2014

Drafts and transfers ¢ 567,394,924 521,943,207

Foreign trade 68,745,920 85,363,165

Certified checks 2,811,010 3,258,676

Trust management 930,151,311 760,792,321

Custodial services 52,564,274 53,050,309

Ranking mandates 556,824 304,093

Collections 114,965,494 100,553,075

Credit cards 8,485,874,797 7,372,684,123

Investment fund management 1,554,052,075 1,479,619,245

Pension fund management 1,341,082,199 1,173,318,794

Insurance underwriting 917,194,462 666,119,285

Brokerage operation (third-parties in local market) 454,952,806 344,766,664

Brokerage operation (third-parties in other markets) 40,971,851 54,371,905

Auttorized custodial services or securities 62,277,054 14,320,087

Others 6,070,351,942 4,597,772,517

¢ 20,663,946,943 17,228,237,466

March

- 101 -



(Continued)

(31) Administrative expenses Administrative expenses are as follows:

2015 2014

Salaries and bonuses, permanent staff ¢ 15,103,019,108 13,413,069,246

Salaries and bonuses, contractors 677,387,922 646,609,625

Compensation for directors and statutory 58,985,454 58,193,484

Overtime 402,115,292 353,846,601

Per diem 153,405,941 187,989,412

Statutory Christmas bonus 1,392,002,445 1,253,282,206

Vacation 1,487,730,700 1,407,068,820

Performance incentives 102,006,178 757,521,763

Fixed representation expenses 132,884,309 83,285,858

Other compensation 926,538,924 506,820,675

Contibution to severance payment 670,133,852 563,933,955

Employer social security taxes 5,242,597,775 4,628,028,922

Refleshments 45,808,918 71,038,492

Uniforms 2,074,164 2,592,189

Training 88,556,163 191,539,917

Employee insurance 182,081,928 138,396,045

Assets for personal use 83,270 475,744

"Back-to-school" bonus 1,922,970,143 1,808,527,586

Compulsory retirement saving accounts 464,004,345 411,624,275

Other personnel expenses 183,804,647 187,439,089

Outsourcing 3,102,631,921 2,579,440,987

Transportation and communications 1,496,065,793 1,445,144,893

Property insurance 26,445,799 37,754,808

Property maintenance and repairs 1,170,521,679 871,050,123

Public utilities 783,320,092 767,940,039

Leasing of property 1,739,408,139 1,263,701,288

Leasing of furniture and equipment 243,871,555 300,716,061

Depreciation of property and equipment 1,784,250,905 1,392,162,156

Amortization of leasehold property 168,109,384 179,376,817

Other infraestructure expenses 245,311,311 123,236,275

Overhead 3,776,181,519 3,731,738,308

¢ 43,774,309,575 39,363,545,659

March

- 102 -



(Continued)

(32) Statutory allocations of earnings The statutory allocations of earnings are as follows:

As of March 31, 2015, there are no decreases on the statutory allocations of earnings corresponding to RIVM Caja Costarricense del Seguro Social (¢170,034,940 as of March 31, 2014).

2015 2014

Statutory allocations of CONAPE ¢ 539,771,331 567,792,174

Statutory allocations of Instituto

de Fomento Cooperativo 913,914,833 816,092,383

Statutory allocations of Comisión

Nacional de Emergencias 386,218,559 414,803,546

Participation of Public Pension

Fund Operators 181,032,278 -

Other statutory allocations 639,740,383 408,046,192

¢ 2,660,677,384 2,206,734,295

March

- 103 -



(Continued)

(33) Components of other comprehensive income The components of other comprehensive income are as follows:

(34) Operating leases

The Bank as tenant Non-cancellable operating lease rentals are payable as follows:

These leases correspond to leases of furniture and equipment.

Amount before

income tax

Profit/tax

(expense)Net taxes

Amount before

income tax

Profit/tax

(expense)Net taxes

Adjustment for valuation of available-for

sale investments ¢ 573,928,081 (379,313,363) 194,614,718 (3,979,463,319) 1,210,811,331 (2,768,651,988)

Exchange differences for conversion of

financial statements, foreign entities (1,145,843,069) - (1,145,843,069) 7,487,134,866 - 7,487,134,866

¢ (571,914,988) (379,313,363) (951,228,351) 3,507,671,547 1,210,811,331 4,718,482,878

March March

2015 2014


2015 2014 2014

Less than one year ¢ 913,417,691 1,105,406,038 852,026,216

Between one and five years 1,025,223,671 1,034,074,023 1,523,026,952

More than five years 1,161,166,561 1,174,267,557 1,246,007,310

¢ 3,099,807,923 3,313,747,618 3,621,060,478

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(Continued)

(35) Fair value of financial instruments The fair values of the Bank’s main financial assets and liabilities are as follows:

As of March 31, 2015, the financial obligations include ¢21,147,214,777 for subordinated obligations (¢21,382,604,699 and ¢16,183,846,277 as of December 31, 2014 and March 31, 2014, respectively). Where practicable, the following assumptions were used by management to estimate the fair value of each class of financial instrument both on and off the consolidated statement of financial position:

(a) Cash and cash equivalents, accrued interest receivable, other receivables, demand deposits and customer savings deposits, interest payable, and other liabilities.

The carrying amounts approximate fair value because of the short maturity of these instruments.

(b) Investments in financial instruments The fair value of available-for-sale financial instruments is based on quoted market prices or prices quoted by brokers.

(c) Securities sold under repurchase agreements

The carrying amount of funds owed under repurchase agreements maturing in one year or less approximates their fair value because of the short maturity of these instruments.

(d) Loan portfolio

Management determined the fair value of the loan portfolio by the discounted cash flow method.

(e) Term deposits and loans payable

Management determined the fair value of term deposits and loans payable by the discounted cash flow method.

Carrying amount Fair value Carrying amount Fair value Carrying amount Fair value

Cash and due from banks ¢ 680,334,682,835 680,334,682,835 623,967,693,402 623,967,693,402 640,437,376,582 640,437,376,582

Investments 652,792,889,799 646,673,973,473 820,941,699,676 816,078,916,125 729,120,390,158 722,770,727,879

Loan portfolio 3,265,546,246,540 3,030,495,613,927 3,270,901,712,338 3,080,229,489,924 3,019,757,603,798 2,785,592,545,751

4,598,673,819,174 4,357,504,270,235 4,715,811,105,416 4,520,276,099,451 4,389,315,370,538 4,148,800,650,212

Demand deposits 1,454,153,059,228 1,454,153,059,228 1,547,813,604,024 1,547,813,604,024 1,467,365,624,695 1,467,365,624,695

Term deposits 1,484,311,440,002 1,478,334,603,480 1,528,211,769,189 1,522,915,064,432 1,419,488,660,014 1,415,539,917,814

Financial obligations 1,200,260,139,203 1,218,998,331,078 1,205,285,943,030 1,228,909,161,394 1,112,793,438,849 1,129,889,759,732

¢ 4,138,724,638,433 4,151,485,993,786 4,281,311,316,243 4,299,637,829,850 3,999,647,723,558 4,012,795,302,241

20142014

December

2015

MarchMarch

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(Continued)

Fair value estimates are made at a specific date, based on relevant market information and information concerning the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale a particular financial instrument at a given date. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Estimates could vary significantly if changes are made to those assumptions.

(36) Operation Segments

The Bank has defined its business segments based on the administrative and reporting structure, and on the structure of banking, stock brokerage, investment and pension fund management, and insurance brokerage services it provides.

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(Continued)

As of March 31, 2015 assets, liabilities, of each segment are as follows:

ASSETS

Cash and due from banks ¢ 573,223,814,179 25,179,724 552,791,793 922,075,638 115,296,639,521 167,515,132 690,188,015,987 (9,853,333,151) 680,334,682,836

Investments in financial instruments 503,120,926,025 6,342,828,505 6,694,913,212 37,726,878,614 95,099,334,918 4,267,900,093 653,252,781,367 (459,891,568) 652,792,889,799

Loan portfolio 2,479,128,823,663 - - - 739,518,997,514 - 3,218,647,821,177 - 3,218,647,821,177

Accounts and fees and commissions receivable 2,594,709,322 593,938,856 659,594,721 612,293,814 5,002,551,230 351,959,788 9,815,047,731 (367,725,810) 9,447,321,921

Foreclosed assets 13,037,034,452 - - - 394,680,970 - 13,431,715,422 - 13,431,715,422

Invertments in other companies, net 82,085,824,002 - - 29,057,201 - - 82,114,881,203 (82,075,824,002) 39,057,201

Property and equipment, net 81,756,988,821 - 7,496,685 - 7,946,478,464 10,905,514 89,721,869,484 - 89,721,869,484

Other assets 37,471,925,078 92,503,653 39,320,207 445,781,202 13,069,858,312 19,775,217 51,139,163,669 - 51,139,163,669

TOTAL ASSETS ¢ 3,772,420,045,542 7,054,450,738 7,954,116,618 39,736,086,469 976,328,540,929 4,818,055,744 4,808,311,296,040 (92,756,774,531) 4,715,554,521,509

LIABILITIES AND EQUITY

LIABILITIES

Obligations with the public ¢ 2,544,944,533,810 - - 24,559,491,778 370,470,032,346 - 2,939,974,057,934 (1,509,558,705) 2,938,464,499,229

Obligations the Central Bank of Costa Rica 12,001,833,333 - - - - - 12,001,833,333 - 12,001,833,333

Oblifations with entities 678,743,913,412 - - 2,242,141,272 494,919,119,873 - 1,175,905,174,557 (8,803,666,015) 1,167,101,508,542

Accounts payable and provisions 87,436,496,793 1,188,601,400 715,975,259 608,180,074 5,516,626,779 533,629,362 95,999,509,667 (367,725,810) 95,631,783,857

Other liabilities 34,775,924,630 - - - 2,449,523,447 155,217,818 37,380,665,895 - 37,380,665,895

Subordinated obligations 21,147,214,777 - - - - - 21,147,214,777 1 21,147,214,778

TOTAL LIABILITIES ¢ 3,379,049,916,755 1,188,601,400 715,975,259 27,409,813,124 873,355,302,445 688,847,180 4,282,408,456,163 (10,680,950,529) 4,271,727,505,634

EQUITY

Capital 121,762,273,318 3,013,547,294 4,089,200,000 7,626,000,000 38,609,421,071 750,000,000 175,850,441,683 (54,088,168,365) 121,762,273,318

Unfunded capital contributions - 1,652,740,792 - - - - 1,652,740,792 (1,652,740,792) -

Equity adjustments 30,141,316,155 (15,681,463) (109,680,161) (384,728,680) 34,851,949,979 10,245,204 64,493,421,034 (34,352,104,879) 30,141,316,155

Capital reserves 189,527,978,318 255,890,000 500,430,501 629,243,557 14,090,766,425 150,000,000 205,154,308,801 (15,626,330,483) 189,527,978,318

Prior periods retained earnings 29,916,490,639 778,320,437 2,410,619,877 3,928,627,568 13,037,147,772 2,862,934,229 52,934,140,522 (23,017,649,884) 29,916,490,638

Profit for tha year 7,615,721,695 181,032,278 347,571,142 527,130,900 2,383,953,237 356,029,131 11,411,438,383 (3,795,716,687) 7,615,721,696

Developemt Financing Fund equity 14,406,348,662 - - - - - 14,406,348,662 - 14,406,348,662

Minority interest - - - - - - - 50,456,887,088 50,456,887,088

TOTAL EQUITY 393,370,128,787 5,865,849,338 7,238,141,359 12,326,273,345 102,973,238,484 4,129,208,564 525,902,839,877 (82,075,824,002) 443,827,015,875

TOTAL LIABILITIES AND EQUITY ¢ 3,772,420,045,542 7,054,450,738 7,954,116,618 39,736,086,469 976,328,540,929 4,818,055,744 4,808,311,296,040 (92,756,774,531) 4,715,554,521,509

DEBIT CONTINGENT ACCOUNTS ¢ 263,714,358,037 - - - 72,773,544,672 - 336,487,902,709 - 336,487,902,709

TRUST ASSETS ¢ 796,998,490,388 - - 1,608,886,666 94,172,431,020 - 892,779,808,074 - 892,779,808,074

TRUST LIABILITIES ¢ 373,969,181,789 - - 19,306,564 - - 373,988,488,353 - 373,988,488,353

TRUST EQUITY ¢ 423,029,308,599 - - 1,589,580,102 94,172,431,019 - 518,791,319,720 - 518,791,319,720

OTHER DEBIT MEMORANDA ACCOUNTS ¢ 6,765,315,897,562 700,173,510,876 414,524,538,210 374,088,429,423 2,250,672,483,174 - 10,504,774,859,245 - 10,504,774,859,245

BICSABank Pension Fund

Investment Fund

Manager Brokerage Firm EliminationsTotal ConsolidatedInsurance Broker

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(Continued)

As of December 31, 2014 assets, liabilities, of each segment are as follows:

ASSETS

Cash and due from banks ¢ 533,001,195,161 35,027,437 423,504,224 1,367,830,900 95,104,940,785 324,807,152 630,257,305,659 (6,289,612,257) 623,967,693,402

Investments in financial instruments 679,797,197,812 6,766,004,747 6,737,424,109 29,357,999,701 99,998,350,646 4,133,622,167 826,790,599,182 (5,848,899,506) 820,941,699,676

Loan portfolio 2,467,853,622,360 - - - 759,575,940,432 - 3,227,429,562,792 - 3,227,429,562,792




Property and equipment, net 81,926,662,678 - - - 8,202,947,910 11,797,915 90,141,408,503 - 90,141,408,503

Other assets 49,272,876,455 119,504,616 362,856,451 667,272,964 12,171,000,301 294,452,748 62,887,963,535 - 62,887,963,535

TOTAL ASSETS ¢ 3,909,684,902,691 7,500,210,446 8,081,038,730 31,975,063,402 980,693,176,663 5,129,895,094 4,943,064,287,026 (93,164,018,648) 4,849,900,268,378


LIABILITIES



Oblifations with entities 697,182,234,950 - - 449,167,162 494,466,163,700 - 1,192,097,565,812 (9,868,879,284) 1,182,228,686,528

Accounts payable and provisions 97,276,473,500 1,048,192,951 1,202,698,834 692,981,251 5,325,301,979 1,268,582,744 106,814,231,259 (432,416,723) 106,381,814,536


Subordinated obligations 21,382,604,699 - - - - - 21,382,604,699 1 21,382,604,700

TOTAL LIABILITIES ¢ 3,523,504,854,541 1,048,192,951 1,202,698,834 20,325,994,017 879,031,264,102 1,363,807,011 4,426,476,811,456 (12,570,928,486) 4,413,905,882,970

EQUITY

Capital 121,762,273,318 2,957,930,021 4,089,200,000 7,626,000,000 38,609,421,071 750,000,000 175,794,824,410 (54,032,551,092) 121,762,273,318


Equity adjustments 30,566,957,213 (26,801,464) (121,910,482) (534,801,740) 35,924,576,828 3,153,854 65,811,174,209 (35,244,216,996) 30,566,957,213

Capital reserves 178,560,730,574 255,890,000 424,888,163 550,415,437 13,007,425,650 88,674,710 192,888,024,534 (14,327,293,960) 178,560,730,574

Prior periods retained earnings 22,632,060,769 33,000,000 975,315,470 2,430,893,281 3,411,602,471 1,255,731,318 30,738,603,309 (8,106,542,540) 22,632,060,769

Profit for tha year 20,630,696,951 1,523,640,873 1,510,846,745 1,576,562,407 10,708,886,541 1,668,528,201 37,619,161,718 (16,988,464,767) 20,630,696,951



TOTAL EQUITY 386,180,048,150 6,452,017,495 6,878,339,896 11,649,069,385 101,661,912,561 3,766,088,083 516,587,475,570 (80,593,090,162) 435,994,385,408



TRUST ASSETS ¢ 763,980,738,748 - - 1,970,158,029 102,084,252,222 - 868,035,148,999 - 868,035,148,999


TRUST EQUITY ¢ 418,747,904,845 - - 1,924,400,709 102,084,252,221 - 522,756,557,775 - 522,756,557,775


Bank Pension Fund

Investment Fund

Manager Brokerage Firm BICSA Insurance Broker Total Eliminations Consolidated

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(Continued)

As of March 31, 2014 assets, liabilities, of each segment are as follows:

ASSETS

Cash and due from banks ¢ 508,718,615,444 28,277,807 128,374,615 872,454,441 135,197,455,965 145,621,445 645,090,799,717 (4,653,423,134) 640,437,376,583

Investments in financial instruments 617,388,075,762 6,434,311,009 8,911,832,697 30,038,373,136 75,980,548,148 2,799,668,246 741,552,808,998 (12,432,418,840) 729,120,390,158

Loan portfolio 2,328,267,805,723 - - - 644,339,829,965 - 2,972,607,635,688 - 2,972,607,635,688




Property and equipment, net 75,693,528,881 - - - 7,598,383,995 10,728,142 83,302,641,018 - 83,302,641,018

Other assets 58,910,960,845 58,917,844 24,836,688 318,060,290 14,217,170,202 85,329,298 73,615,275,167 - 73,615,275,167

TOTAL ASSETS ¢ 3,682,319,226,449 7,029,492,574 9,667,035,515 31,794,836,759 884,187,826,497 3,299,940,840 4,618,298,358,634 (94,825,041,619) 4,523,473,317,015


LIABILITIES



Oblifations with entities 617,306,568,472 - - 4,674,115,526 428,420,184,031 - 1,050,400,868,029 (14,808,306,777) 1,035,592,561,252

Accounts payable and provisions 79,173,779,548 980,211,988 754,847,384 752,374,108 4,227,856,538 348,769,816 86,237,839,382 (247,301,243) 85,990,538,139


Subordinated obligations 16,183,846,277 - - - - - 16,183,846,277 - 16,183,846,277

TOTAL LIABILITIES ¢ 3,309,949,655,890 980,211,988 754,847,384 20,281,570,601 789,796,244,141 422,484,346 4,122,185,014,350 (17,333,143,216) 4,104,851,871,134

EQUITY

Capital 121,762,273,318 3,853,270,124 4,089,200,000 7,626,000,000 35,550,559,940 750,000,000 173,631,303,382 (51,869,030,064) 121,762,273,318


Equity adjustments 30,250,033,349 (20,788,193) (129,059,437) (614,035,563) 36,801,311,967 (3,439,369) 66,284,022,754 (36,033,989,405) 30,250,033,349

Capital reserves 178,560,730,574 288,890,000 424,888,163 550,415,436 129,314,611 88,674,710 180,042,913,494 (1,482,182,921) 178,560,730,573

Prior periods retained earnings 22,632,060,768 - 3,975,315,470 3,290,893,281 19,615,435,957 1,805,731,318 51,319,436,794 (28,687,376,025) 22,632,060,769

Profit for tha year 7,137,143,225 414,890,693 551,843,935 659,993,004 2,294,959,881 236,489,835 11,295,320,573 (4,158,177,347) 7,137,143,226



TOTAL EQUITY 372,369,570,559 6,049,280,586 8,912,188,131 11,513,266,158 94,391,582,356 2,877,456,494 496,113,344,284 (77,491,898,403) 418,621,445,881



TRUST ASSETS ¢ 723,615,795,137 - - 1,994,045,103 107,020,734,960 - 832,630,575,200 - 832,630,575,200


TRUST EQUITY ¢ 377,729,337,527 - - 1,970,083,643 107,020,734,960 - 486,720,156,130 - 486,720,156,130


Bank Pension Fund

Investment Fund

Manager Brokerage Firm BICSA Insurance Broker Total Eliminations Consolidated

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(Continued)

As of March 31, 2015, profit of each segment are as follows:

Financial income ¢ 91,697,211,843 130,399,869 118,038,472 820,031,444 13,071,195,239 63,776,682 105,900,653,549 (13,477,214) 105,887,176,335

Financial expenses 55,127,186,248 10,940,632 19,633,931 361,381,753 5,590,808,599 13,123,661 61,123,074,824 (13,477,214) 61,109,597,610

Allowance for impairment of assets 3,176,508,585 341,333 - - 901,922,660 10,301,980 4,089,074,558 - 4,089,074,558

Recovery of assets and decrease in allowances 1,122,543,157 - - - 97,948,164 - 1,220,491,321 - 1,220,491,321

FINANCIAL INCOME 34,516,060,167 119,117,904 98,404,541 458,649,691 6,676,412,144 40,351,041 41,908,995,488 - 41,908,995,488

Other operating income 26,584,708,182 1,462,824,699 1,565,277,722 792,847,167 526,125,569 1,014,450,800 31,946,234,139 (3,790,580,966) 28,155,653,173

Other operating expenses 12,263,921,863 423,873,845 536,894,464 181,556,007 835,536,779 115,992,655 14,357,775,613 (1,163,001,400) 13,194,774,213

GROSS OPERATING INCOME 48,836,846,486 1,158,068,758 1,126,787,799 1,069,940,851 6,367,000,934 938,809,186 59,497,454,014 (2,627,579,566) 56,869,874,448

Personnel expenses 25,023,171,149 522,814,924 606,229,905 433,244,125 2,262,316,345 390,415,028 29,238,191,476 - 29,238,191,476

Other administrative expenses 13,018,248,708 147,012,522 30,139,100 49,313,330 1,248,840,409 42,564,028 14,536,118,097 - 14,536,118,097

Administrative expenses 38,041,419,857 669,827,446 636,369,005 482,557,455 3,511,156,754 432,979,056 43,774,309,573 - 43,774,309,573

NET OPERATING INCOME BEFORE TAXES AND

STATUTORY ALLOCATIONS 10,795,426,629 488,241,312 490,418,794 587,383,396 2,855,844,180 505,830,130 15,723,144,441 (2,627,579,566) 13,095,564,875

Income tax 1,831,002,397 117,981,660 140,928,621 48,562,362 356,955,105 143,363,877 2,638,794,022 - 2,638,794,022

Deferred income tax - - - 1,574,670 114,935,838 - 116,510,508 - 116,510,508

Decrease in income tax 1,068,586,810 6,651,694 12,793,533 7,506,038 - 8,737,782 1,104,275,857 - 1,104,275,857

Statutory allocations 2,417,289,347 195,879,067 14,712,564 17,621,502 - 15,174,904 2,660,677,384 - 2,660,677,384

NET PROFIT FOR THE YEAR 7,615,721,695 181,032,279 347,571,142 527,130,900 2,383,953,237 356,029,131 11,411,438,384 (2,627,579,566) 8,783,858,818

Results for the period attributable to minority interests - - - - - - - (1,168,137,123) 1,168,137,123

Results for the period attributable to the parent 7,615,721,695 181,032,279 347,571,142 527,130,900 2,383,953,237 356,029,131 11,411,438,384 (3,795,716,689) 7,615,721,695

NET INCOME FOR THE PERIOD ¢ 7,615,721,695 181,032,279 347,571,142 527,130,900 2,383,953,237 356,029,131 11,411,438,384 (3,795,716,689) 7,615,721,695

BICSABank Pension Fund

Investment Fund

Manager Brokerage Firm Consolidated

Insurance

Broker EliminationsTotal

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(Continued)

As of March 31, 2014, profit of each segment are as follows:

Financial income ¢ 284,433,012,431 224,637,189 352,084,943 1,420,002,881 10,767,987,235 86,642,973 297,284,367,652 (155,410,847) 297,128,956,805

Financial expenses 251,566,548,446 37,938,792 1,993,397 669,569,827 4,998,202,318 7,148,129 257,281,400,909 (155,410,847) 257,125,990,062

Allowance for impairment of assets 9,306,972,782 656,552 - - 408,996,928 - 9,716,626,262 - 9,716,626,262

Recovery of assets and decrease in allowances 7,309,385,850 - - - - 12,006,434 7,321,392,284 - 7,321,392,284

FINANCIAL INCOME 30,868,877,053 186,041,845 350,091,546 750,433,054 5,360,787,989 91,501,278 37,607,732,765 - 37,607,732,765

Other operating income 26,313,015,783 1,255,175,027 1,514,853,462 725,024,513 602,469,991 743,005,208 31,153,543,984 (3,881,102,291) 27,272,441,693

Other operating expenses 11,345,077,265 268,599,829 443,331,301 172,876,402 684,383,416 70,577,933 12,984,846,146 (847,455,418) 12,137,390,728

GROSS OPERATING INCOME 45,836,815,571 1,172,617,043 1,421,613,707 1,302,581,165 5,278,874,564 763,928,553 55,776,430,603 (3,033,646,873) 52,742,783,730

Personnel expenses 22,997,584,908 509,123,401 589,060,421 454,044,611 1,709,969,538 411,501,021 26,671,283,900 - 26,671,283,900

Other administrative expenses 11,483,387,191 103,440,162 32,562,606 41,836,243 1,003,979,406 27,056,151 12,692,261,759 - 12,692,261,759

Administrative expenses 34,480,972,099 612,563,563 621,623,027 495,880,854 2,713,948,944 438,557,172 39,363,545,659 - 39,363,545,659

NET OPERATING INCOME BEFORE TAXES AND

STATUTORY ALLOCATIONS 11,355,843,472 560,053,480 799,990,680 806,700,311 2,564,925,620 325,371,381 16,412,884,944 (3,033,646,873) 13,379,238,071

Income tax 2,286,452,161 134,950,991 229,600,822 138,167,227 269,965,739 107,176,620 3,166,313,560 - 3,166,313,560

Deferred income tax - - 9,000,000 - - 1 9,000,001 - 9,000,001

Decrease in income tax 30,323,027 6,793,616 14,453,797 15,660,929 - 27,217,175 94,448,544 - 94,448,544

Statutory allocations 2,132,606,053 17,005,412 23,999,720 24,201,009 - 8,922,100 2,206,734,294 - 2,206,734,294

Decrease in statutory allocations 170,034,940 - - - - - 170,034,940 - 170,034,940

NET PROFIT FOR THE YEAR 7,137,143,225 414,890,693 551,843,935 659,993,004 2,294,959,881 236,489,835 11,295,320,573 (3,033,646,873) 8,261,673,700

Results for the period attributable to minority interests - - - - - - - (1,124,530,475) 1,124,530,475

Results for the period attributable to the parent 7,137,143,225 414,890,693 551,843,935 659,993,004 2,294,959,881 236,489,835 11,295,320,573 (4,158,177,348) 7,137,143,225

NET INCOME FOR THE PERIOD ¢ 7,137,143,225 414,890,693 551,843,935 659,993,004 2,294,959,881 236,489,835 11,295,320,573 (4,158,177,348) 7,137,143,225

Bank Pension Fund

Investment Fund

Manager Brokerage Firm BICSA

Insurance

Broker Total Eliminations Consolidated

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(Continued)

(37) Risk Management

Comprehensive Risk Management

Sophistication and uncertainty of financial markets involve managing risks that may impair the value of entities and of third party resources it manages. Given this reality, the Bank implemented a System of Comprehensive Risk management, enabling it to achieve a proper balance between the expected benefits of the business strategy and the acceptance of a certain level of risk, through an effective risk-based management.

Corporate Governance of the risk function

Boards of Directors, committees and senior managers of member institutions of the Conglomerate, strengthen and ensure the above mentioned system, aware that it contributes to the improvement of institutional processes, and hence to the achievement of objectives and goals.

Organizational structure of the risk function

Corporate risk management is headed by a Deputy General Management, which has various administrative units responsible for the specific and management of relevant risk to which the entity is exposed. In the subsidiaries there are risk managing areas responsible for this work, which are functionally and operationally independent from the risk taking areas, with delineation of roles and responsibilities.

Objective of the Comprehensive Risk Management System

The System aims to generate information that will support decision making, oriented to locate the entity at a risk level consistent with its profile and risk appetite as well as it business flows, complexity, operations volume and economic environment, and thus lead to the achievement of institutional objective and goals.

Guiding framework of the System

The Conglomerate has policies, strategies and other corporate regulations for an effective comprehensive risk management, providing administrative, legal and technical certainty to the System, supporting decision making.

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(Continued)

Risk culture

The Boards of Directors and Senior Management of the Conglomerate members promote a risk culture management integrated in all level of the Organization, promoting alttitudes, values, skills and risk-based guidelines for the strategic and operational decision making. Classification of significant risk

The relevant risks to the Bank are classified as follows:

Comprehensive Risk Management Strategic Financial Credit

Loan portfolio Investment portfolio

Market Liquidity Inflation Exchange rates Interest rates Prices of assets and liabilities Financial derivates

Operational Operating Legal Technological

Others Reputation Environmental and social Trust management Securitization management Conglomerate (intragroup) Money laundering and terrorism financing

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(Continued)

Risk profile and limit structure

The risk profile adopted by the Bank is “moderate”. However, for some particular risk, such as operational risk, the “conservative” is adopted. According to this profile, parameters of acceptability, appetites, tolerance limits and risk indicators defining the exposure levels to assume, are established, generating alerts to derivations in normal behavior, enabling timely decision making.

Process of comprehensive risk management The process in risk assessments includes identification, analysis, evaluation, management review, and documentation and risk communication. Standardized tools and methodologies for risk assessments are developed and updated in accordance with the sophistication of the comprehensive risk management at corporate level.

Types of risk assessments The process in risk assessments includes qualitative and quantitative assessments. The first correspond to specific analysis of the objectives of activities and substantial processes of the Conglomerate. The second refer to global analysis with quantitative risk measurements using mathematical and statistical methods and models. In addition, during the period under study, the comprehensive risk management generated reports about risk on new services and products or modification to existing ones, which are issued prior to its release to the market or the contacting of services. For each of the members of the Conglomerate, on a consolidated basis, there is a model of Comprehensive Risk Rating reflecting the exposure degree to the most relevant risks, by monitoring the established tolerance limits. As a result of this model it was determined that the overall risk rating improved by 11% in annual terms, between March 31, 2015 and March 31, 2014, representing a substantial improvement in risk exposure. Risk control framework Risk Control arises as result of the operation of the International Control System established in each of the Conglomerates member, incorporating flow of processes and internal control activities to minimize risk exposure.

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(Continued)

The established risk assessments generate various alerts, recommendations and risk management plans, contributing to its overall and specific mitigation. In addition, there are contingency plans for unexpected events that may affect compliance with the risk tolerance limits.

As result of the above, it is achieved that the risks are located at a level of acceptable exposure, consistent with the established risk profile, thus contributing to sustainability, solvency and value of the Conglomerate members. In accordance with the regulations, estimates and provisions are maintained. Implemented risk assessment models seek to establish additional capital requirements to cover non-expected losses. Likewise, BCR capital adequacy indicator is evaluated to analyze its ability to respond to different types of risk, which, during the period under study was higher than the 10% limit established by the Superintendency of Financial Institutions.

Evaluation of the effectiveness and maturity of the System Managing risk areas apply critical judgment on the effectiveness and maturity of the System using self-assessment tools for continuous improvement. Annually, a Model of Corporate Maturity is applied to evaluate the progress in management by type of risk. The results of this assessment are used to define strategies and work plans. In addition, risk measurement models periodically undergo retrospective and stress tests, which allow adjustments and to determine more sensitively the variables and factors affecting the impact derived by risk exposure. Accountability During the analysis, the system generated timely and periodic reports for the Boards of Directors, Committees and other risk-taking areas of the Conglomerate as a result of the Comprehensive Risk Management, or by the occurrence of significant events that should be known of for suitable decision making based on risk exposure and risk based business management.

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(Continued)

(a) Credit risk management Definition Credit risk is the possibility of economic losses due to non-compliance with the conditions agreed upon by the debtor.

Management of this risk contributes with the solidity of BCR´s equity in the long term by providing both tools and information to improve decision-making, minimize losses and maintain risk exposure of credit portfolio within established parameters. The General Board of the BCR has define management strategies to control credit risk from portfolios to individual debtors, using tools and methodologies framed within the existing regulation developed internally. Credit Management methodology In general models and systems measuring credit risk that accurately reflect the value of the positions and their sensitivity to various risk factors are applied in corporative information from reliable sources. The statistical support is complemented with expert criteria to analyze the borrower’s capacity of payment, as well a stress analysis on exposures to macroeconomic, microeconomic and Bank´s internal variables. Thus manages to infer the type pf phenomena that could face the entity and, in turn, lead to losses in the loan portfolio and, therefore, on the financial position, due to changes in macro prices (interest rates, exchange rates, inflations) and specific conditions of the portfolio. Moreover, mechanisms to identify monitor and control the effects of variations in exchange rates and interest rates on credit risk are implemented, including stress analysis or debtors exposed to theses variations. Specifically, for the quantitative analysis of the loan portfolio consolidated by activity and currency, there is a model to quantify the average probability of payment, expected loss and Value at Risk (VaR), from which the margin of expected loss are derived. Moreover, the risk inherent to the activities and products the Bank ventures is identified, as well as its feedback throughout the organization through the Executive Committee.

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(Continued)

Tolerance limits and risk indicators The credit risk analysis is performed by measuring trend and deviation of the tolerance limits and indicators established for this purpose. The following indicators have been established for this purpose: Up to date portfolio: the tolerance for this indicator is 90% of the portfolio. Arrears indicator between 60 and 90 days: for this indicator is it was established not to

overcome 1.25% of the portfolio. Arrears indicator for more than 90 days: the tolerance for this indicator is 2.25% of the total

portfolio. Concentration indicator: a tolerance of 13% was established for this indicator.

There is an institutional credit contingency plan which is activated at the time the indicators deviate from desirable levels in accordance with the approved risk profile. Exposure and risk management The allowance for the loan portfolio is ¢38,009.10 million (¢35,470 million and ¢33,670 million as of December 31, 2014 and March 31, 2014, respectively). In order to monitor the segmented loan portfolio, credit risk indicators as expected loss, average probability of payment and value at risk (VaR) are followed up. In addition, depending on the limits set by General Board of Directors for indicators like up to date portfolio and arrears ranges, the portfolio is monitored globally and by activity location, currency and harvest. As of March 31, 2015, the behavior of the most important indicators is as follows: • Percentage of up to date portfolio is 91.4% (92.57 and 90.83% as of December 31, 2014

and March 31, 2014, respectively). • Percentage of arrears between 60 and 90 days is 0.82% (0.66% and 1.04% as of

December 31, 2014 and March 31, 2014, respectively). • Percentage of arrears more than 90 days is 2.25% (2.04% and 2.26% as of December 31,

2014 and March 31, 2014, respectively).

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(Continued)

This last indicator is 0.75% percentage points below the regulatory limit to be in degree of normality, showing retail banking activities higher delinquency. The dollar portfolio accounts for 38.09% of the total portfolio (38.12% and 42.40% as of December 31, 2014 and March 31, 2014, respectively). It is important to mention that the loan portfolio has been managed strategically in order to attract customers with an acceptable risk profile. In addition, regular monitoring to lending in foreign currency is given, and in particular, the portfolio of clients not generating income in foreign currency. Although SUGEF regulation establishes a maximum limit of 20% of the equity for a Group of economic interest for granting a credit, the Bank has set a lower limit in order to monitor the concentration by customer and group of economic interest. While there is relative concentration in activities such as trade, housing, services and consumption, as shown in the following chart, limits on the annual growth by sector are defined, to achieve a loan structure in the medium and long term that is consistent with the risk appetive established by the Senior Management.

In addition, appropriate and timely communication mechanisms on exposure of the Bank to credit risk are implemented at all levels of the organizational structure, thus allowing a prospective view of the impact on the credit estimates and equity. The reports consider both the exposure resulting from position taking and deviations arising regarding the limits and defined tolerance levels. Also, the commercial area is kept informed on the inherent risks of the economic activities associated with credit, through specific studies and analysis of the credit placement goals previously approved by the General Board of Directors, as well as new credit instruments the Bank is planning to offer.


2015 2014 2014

Activity

Trade 15.90% 15.60% 15.60%

Housing 23.90% 24.70% 25.10%

Services 23.90% 24.70% 18.90%

Consumption 12.50% 12.40% 12.40%

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(Continued)

The maximum exposure to credit risk is represented by the carrying amount of each financial asset (See note 6):

Set out below is an analysis of the Bank’s gross and net (allowance for loan impairment) amounts of individually assessed loans with allowance by risk category according to applicable regulations:


2015 2014 2014

Bank of Costa Rica

Gross Loan Portfolio ¢ 2,494,667,123,362 2,482,783,630,282 2,342,132,648,290

More products receivable 22,470,807,864 20,539,648,814 19,805,033,849

Less allowance for impairment (38,009,107,563) (35,469,656,738) (33,669,876,416)

Credit portfolio net ¢ 2,479,128,823,663 2,467,853,622,358 2,328,267,805,723

International Bank for Costa Rica, S.A.

and Subsidiary

Gross Loan Portfolio ¢ 744,638,059,217 763,025,994,826 653,437,408,269

More products receivable 3,770,256,098 4,552,438,417 4,382,513,389

Less allowance for impairment (8,889,317,801) (8,002,492,809) (13,480,091,692)

Credit portfolio net ¢ 739,518,997,514 759,575,940,434 644,339,829,966

Total Consolidated Net Loan Portfolio ¢ 3,218,647,821,177 3,227,429,562,792 2,972,607,635,689

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(Continued)

March December March March December March

Note 2015 2014 2014 2015 2014 2014

Principal 6a 2,494,667,123,362 2,482,783,630,282 2,342,132,648,290 227,765,921,617 228,486,090,224 243,711,002,196

Interest 22,470,807,864 20,539,648,814 19,805,033,849 - - -

2,517,137,931,226 2,503,323,279,096 2,361,937,682,139 227,765,921,617 228,486,090,224 243,711,002,196

Allowance for loan losses (38,009,107,563) (35,469,656,738) (33,669,876,416) (69,487,740) (50,449,595) (367,547,533)

Carrying amount ¢ 2,479,128,823,663 2,467,853,622,358 2,328,267,805,723 227,696,433,877 228,435,640,629 243,343,454,663

Loan portfolios

Total balances

A1 ¢ 2,068,499,239,245 2,070,238,541,752 1,859,095,261,127 213,661,390,515 214,760,916,411 225,242,819,358

A2 17,891,925,381 17,452,654,775 15,730,709,288 630,278,381 618,755,304 697,673,225

B1 148,951,730,160 153,586,500,733 249,757,025,424 3,777,601,696 3,378,657,254 5,655,719,807

B2 21,539,924,211 20,609,724,897 8,035,471,851 111,837,216 100,561,743 223,190,725

C1 75,801,166,853 78,846,042,531 55,700,494,732 1,503,037,008 1,982,001,193 2,685,861,886

C2 12,498,297,412 12,962,589,689 17,163,095,253 106,494,224 92,447,854 83,920,948

D 66,108,411,154 48,348,282,372 59,053,007,775 895,157,893 670,405,419 716,460,360

E 105,847,236,810 101,278,942,347 97,402,616,689 7,080,124,684 6,882,345,046 8,405,355,887

2,517,137,931,226 2,503,323,279,096 2,361,937,682,139 227,765,921,617 228,486,090,224 243,711,002,196

Structural allowance (37,962,713,170) (35,426,418,269) (33,867,205,970) (62,369,467) (43,595,762) (120,217,777)

Carrying amount, net 2,479,175,218,056 2,467,896,860,827 2,328,070,476,169 227,703,552,150 228,442,494,462 243,590,784,419

Carrying amount 2,517,137,931,226 2,503,323,279,096 2,361,937,682,139 227,765,921,617 228,486,090,224 243,711,002,196

Allowance for loan losses (37,962,713,170) (35,426,418,269) (33,867,205,970) (62,369,467) (43,595,762) (120,217,777)

(Excess) inunsuficiency of allowance

over structural allowance (46,394,393) (43,238,469) 197,329,554 (7,118,273) (6,853,833) (247,329,756)

Carriyng amount, net 2,479,128,823,663 2,467,853,622,358 2,328,267,805,723 227,696,433,877 228,435,640,629 243,343,454,663

Direct Loans Stand-by credits

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(Continued)

The assessed portfolio with allowance is detailed as follows:


Principal Covered balance Overdraft Allowance Principal Allowance

Loan portfolio

Direct generic allowance

A1 ¢ 2,068,499,239,245 1,534,811,990,121 533,687,249,124 2,275,349,165 213,661,390,515 54,550,435

A2 17,891,925,381 16,239,758,391 1,652,166,990 19,681,118 630,278,381 346,653

2,086,391,164,626 1,551,051,748,512 535,339,416,114 2,295,030,283 214,291,668,896 54,897,088

Direct specific allowance

B1 148,951,730,160 139,543,083,874 9,408,646,286 623,929,707 3,777,601,696 578,678

B2 21,539,924,211 20,466,167,535 1,073,756,676 129,888,452 111,837,216 455,698

C1 75,801,166,853 73,879,444,198 1,921,722,655 561,698,053 1,503,037,008 1,100

C2 12,498,297,412 12,187,441,374 310,856,037 168,834,205 106,494,224 4,146,224

D 66,108,411,154 56,776,302,880 9,332,108,274 7,061,535,141 895,157,893 46,086

E 105,847,236,809 75,493,053,174 30,354,183,639 27,121,797,329 7,080,124,684 2,244,593

430,746,766,600 378,345,493,035 52,401,273,568 35,667,682,887 13,474,252,721 7,472,379

2,517,137,931,226 1,929,397,241,547 587,740,689,682 37,962,713,170 227,765,921,617 62,369,467

Loan portfolio

Seniority of loan portfolio

Direct generic allowance Principal Covered balance Overdraft Allowance Principal Allowance

Up to date 2,068,499,239,245 1,534,811,990,121 533,687,249,124 2,247,468,854 213,661,390,515 54,897,038

1 - 30 days 17,891,925,381 16,239,758,391 1,652,166,990 47,561,428 630,278,381 51

2,086,391,164,626 1,551,051,748,512 535,339,416,114 2,295,030,282 214,291,668,896 54,897,089


Up to date 306,873,623,872 286,055,403,913 20,818,219,960 12,414,659,621 13,467,784,785 5,400,816

1 - 30 days 43,477,389,784 36,570,491,602 6,906,898,182 1,084,330,718 6,467,936 2,071,562

31 - 60 days 18,961,415,894 16,131,152,776 2,830,263,118 870,063,386 - -

61 - 90 days 12,557,803,591 10,894,724,482 1,663,079,109 1,144,623,365 - -

91 - 180 days 12,850,385,118 10,941,723,718 1,908,661,400 1,823,135,048 - -

Over 180 days 36,026,148,341 17,751,996,544 18,274,151,799 18,330,870,750 - -

430,746,766,600 378,345,493,035 52,401,273,568 35,667,682,888 13,474,252,721 7,472,378

¢ 2,517,137,931,226 1,929,397,241,547 587,740,689,682 37,962,713,170 227,765,921,617 62,369,467

Direct loans Stand-by credits


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(Continued)



Loan portfolio


A1 ¢ 2,070,238,541,752 1,526,907,444,091 543,331,097,661 1,656,190,835 214,760,916,411 32,674,812

A2 17,452,654,775 15,845,802,003 1,606,852,772 13,962,124 618,755,304 247,502

2,087,691,196,527 1,542,753,246,094 544,937,950,433 1,670,152,959 215,379,671,715 32,922,314


B1 153,586,500,733 143,789,243,472 9,797,257,261 604,894,258 3,378,657,254 5,815,865

B2 20,609,724,897 19,661,884,377 947,840,521 110,513,560 100,561,743 423,602

C1 78,846,042,531 76,093,617,695 2,752,424,836 748,981,104 1,982,001,193 3,752,508

C2 12,962,589,689 12,469,125,779 493,463,910 256,707,256 92,447,854 -

D 48,348,282,378 40,119,336,964 8,228,945,414 6,203,804,532 670,405,421 3,969

E 101,278,942,341 72,317,585,765 28,961,356,580 25,831,364,600 6,882,345,044 677,504

415,632,082,569 364,450,794,052 51,181,288,522 33,756,265,310 13,106,418,509 10,673,448

2,503,323,279,096 1,907,204,040,146 596,119,238,955 35,426,418,269 228,486,090,224 43,595,762

Loan portfolio



Up to date 2,070,238,541,752 1,526,907,444,091 543,331,097,661 1,619,503,742 214,760,916,411 32,922,279

1 - 30 days 17,452,654,775 15,845,802,003 5,855,106,462 50,649,217 - -

2,087,691,196,527 1,542,753,246,094 549,186,204,123 1,670,152,959 214,760,916,411 32,922,279


Up to date 239,364,506,094 226,780,431,566 12,584,074,527 8,083,590,082 13,718,705,686 10,127,102

1 - 30 days 68,607,167,168 58,281,672,694 6,077,240,785 1,574,217,906 6,090,127 357,381

31 - 60 days 34,050,310,486 29,802,056,796 4,248,253,690 1,098,213,140 - -

61 - 90 days 14,642,846,484 12,561,649,465 2,081,197,019 1,251,223,530 - -

91 - 180 days 14,828,335,017 11,843,022,827 2,985,312,190 2,734,514,242 - -

Over 180 days 44,138,917,320 25,181,960,704 18,956,956,621 19,014,506,410 378,000 189,000

415,632,082,569 364,450,794,052 46,933,034,832 33,756,265,310 13,725,173,813 10,673,483

¢ 2,503,323,279,096 1,907,204,040,146 596,119,238,955 35,426,418,269 228,486,090,224 43,595,762



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(Continued)



Loan portfolio


A1 ¢ 1,859,095,261,127 1,401,434,136,916 457,661,124,211 371,819,052 225,242,819,358 2,554,398

A2 15,730,709,288 14,134,476,587 1,596,232,701 3,146,142 697,673,225 9,103

1,874,825,970,415 1,415,568,613,503 459,257,356,912 374,965,194 225,940,492,583 2,563,501


B1 249,757,025,424 239,492,203,579 10,264,821,845 561,139,534 5,655,719,806 46,829,457

B2 8,035,471,851 7,424,366,679 611,105,171 62,595,391 223,190,728 5,159,014

C1 55,700,494,732 52,062,132,849 3,638,361,883 920,002,898 2,685,861,886 3,588,152

C2 17,163,095,253 16,845,287,927 317,807,326 162,272,720 83,920,948 -

D 59,053,007,775 52,673,705,797 6,379,301,977 4,795,011,225 716,460,360 -

E 97,402,616,689 67,771,518,964 29,631,097,732 26,991,219,008 8,405,355,885 62,077,653

487,111,711,724 436,269,215,795 50,842,495,934 33,492,240,776 17,770,509,613 117,654,276

2,361,937,682,139 1,851,837,829,298 510,099,852,846 33,867,205,970 243,711,002,196 120,217,777

Loan portfolio



Up to date 1,859,095,261,127 1,401,434,136,916 457,661,124,211 363,211,996 225,242,819,358 2,563,501

1 - 30 days 15,730,709,288 14,134,476,587 1,596,232,701 11,753,198 697,673,225 -

1,874,825,970,415 1,415,568,613,503 459,257,356,912 374,965,194 225,940,492,583 2,563,501


Up to date 278,238,431,006 265,461,278,359 12,777,152,646 6,826,397,066 1,770,041,484 117,465,267

1 - 30 days 63,984,975,679 55,902,573,264 8,082,402,414 881,568,264 193 -

31 - 60 days 58,868,327,565 55,166,986,256 3,701,341,309 902,299,315 - -

61 - 90 days 26,501,509,439 23,882,489,525 2,619,019,914 1,237,745,371 89,936 9

91 - 180 days 15,048,916,184 12,155,764,302 2,893,151,882 2,734,665,530 - -

Over 180 days 44,469,551,851 23,700,124,089 20,769,427,769 20,909,565,230 378,000 189,000

487,111,711,724 436,269,215,795 50,842,495,934 33,492,240,776 1,770,509,613 117,654,276

¢ 2,361,937,682,139 1,851,837,829,298 510,099,852,846 33,867,205,970 227,711,002,196 120,217,777



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(Continued)

Set out below is an analysis of the Bank’s gross and net (allowance for loan impairment) amounts of individually assessed loans with allowance by risk category according to applicable regulations:

Loans customer

As of March 31, 2015 Gross Net

Risk category:

A1 ¢ 2,068,499,239,245 2,066,182,127,227

A2 17,891,925,381 17,871,873,945

B1 148,951,730,160 148,315,666,360

B2 21,539,924,211 21,408,839,331

C1 75,801,166,853 75,233,338,526

C2 12,498,297,412 12,329,463,207

D 66,108,411,154 59,045,523,981

E 105,847,236,810 78,373,258,756

¢ 2,517,137,931,226 2,478,760,091,333

Loans customer

As of December 31, 2014 Gross Net

Risk category:

A1 ¢ 2,070,238,541,752 2,068,558,008,639

A2 17,452,654,775 17,438,692,647

B1 153,586,500,733 152,975,544,674

B2 20,609,724,897 20,499,211,338

C1 78,846,042,531 78,090,062,488

C2 12,962,589,689 12,705,882,433

D 48,348,282,378 42,144,476,647

E 101,278,942,341 75,484,981,961

¢ 2,503,323,279,096 2,467,896,860,827

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(Continued)

In compliance with SUGEF Directive 1-05, as of March 31, 2015, the Bank must maintain a structural allowance in the amount of ¢38,025,082,637 (corresponding to direct loans for ¢37,962,713,170 and stand-by credits for ¢62,369,467). As of December 31, 2014 and March 31, 2014, the Bank must maintain a structural allowance in the amount of ¢35,470,014,031 and ¢33,867,205,970, respectively (corresponding to direct loans for ¢35,426,418,269 and 33,867,205,970, as of December 31, 2014 and March 2014, respectively; and stand-by credits for ¢43,595,762). SUGEF External Circular Letter 02 1-2008 dated May 30, 2008 indicates that the expense for the allowance for loan losses corresponds to the amount necessary to achieve the minimum structural allowance. Furthermore, there must be a duly documented technical justification for any excess above the minimum structural allowance, which is to be sent to SUGEF with the authorization request. The excess may not surpass 15% of the minimum required allowance for the loan portfolio. This notwithstanding, if any additional allowances are required above the 15%, they must be taken from net earnings for the period pursuant to article 10 of IRNBS. Following, an analysis of the balance of the credit portfolio corresponding to the subsidiary BICSA, assessed individually with allowance, according to gross and net amounts, after deducting the allowance for loan losses, by risk classification in accordance with the applicable regulations:

Loans customer


Risk category:

A1 ¢ 1,859,095,261,127 1,858,701,087,701

A2 15,730,709,288 15,727,563,145

B1 249,757,025,424 249,137,836,352

B2 8,035,471,851 7,972,876,460

C1 55,700,494,732 54,725,498,309

C2 17,163,095,253 17,000,822,532

D 59,053,007,775 54,257,996,550

E 97,402,616,689 70,546,795,120

¢ 2,361,937,682,139 2,328,070,476,169

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(Continued)


2015 2014 2014

BICSA

Principal ¢ 744,638,059,266 763,025,994,826 653,437,408,269

Interests 3,770,255,903 4,552,438,417 4,382,513,389

748,408,315,169 767,578,433,243 657,819,921,658

Allowance for loan losses (8,889,317,534) (8,002,492,809) (13,480,091,692)

Carrying amount ¢ 739,518,997,635 759,575,940,434 644,339,829,966

Loan portfolio , net estimated ¢ 730,700,171,850 748,773,269,653 635,590,356,331

At amortized cost

Level 1: Normal or low risk 683,463,081,585 699,067,802,179 585,486,780,101

Level 2: Special mention 35,203,044,019 37,287,119,550 35,956,819,423

Level 3: Subnormal 10,067,509,652 10,780,050,485 15,856,948,437

Level 4: Doubtful 8,892,213,535 7,654,748,290 8,695,297,289

Level 5: Unrecoverable 1,963,640,781 1,986,041,640 4,483,770,874

739,589,489,572 756,775,762,144 650,479,616,124

Impairment reserve (8,889,317,801) (8,002,492,809) (13,480,091,692)

Carrying amount 730,700,171,771 748,773,269,335 636,999,524,432

Impaired renegotiaded loans

Gross amount 7,475,748,306 7,677,291,304 -

Impaired amount 7,475,748,306 7,677,291,304 -

Impairement provision 2,087,810,857 1,912,708,849

Total, net 5,387,937,449 5,764,582,455 -

Not in defalult or impaired

Level 1: Normal or low risk 683,463,081,585 699,067,802,179 585,486,780,101

Level 2: Special mention 35,203,044,337 37,287,119,550 35,956,819,423

Subtotal 718,666,125,922 736,354,921,729 585,486,780,101

Individual impaired

Level 3: Subnormal 10,067,509,652 10,780,050,485 15,856,948,437

Level 4: Doubtful 8,892,213,535 7,654,748,290 8,695,297,289

Level 5: Unrecoverable 1,963,640,421 1,986,041,640 4,483,770,874

Subtotal 20,923,363,608 20,420,840,415 29,036,016,600

Impairment reserve

Specific 5,419,324,334 4,543,111,630 2,563,060,427

Collective 3,469,993,467 3,459,381,179 10,917,031,265

Total impairment reserve 8,889,317,801 8,002,492,809 13,480,091,692

Obligations of customers by acceptance

Carrying amount ¢ 5,048,569,687 6,250,232,364 4,366,960,246

Interest receivable ¢ 3,770,256,098 4,552,438,417 4,382,513,389

Loan porftolio, net ¢ 739,518,997,635 759,575,940,434 644,339,829,966

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(Continued)

As of March 31, 2015, the allowance for impairment of BICSA´s credit portfolio is of ¢8,889,317,801 (¢8,002,492,809 and ¢13,480,091,692 as of December 31, 2014 and March 31, 2014, respectively).

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(Continued)

The concentration of the portfolio of direct loans and stand-by credits by sector (economic activity) is as follows:

Direct Stand-by Direct Stand-by Direct Stand-by

Loans Credits Loans Credits Loans Credits

Retail ¢ 137,265,074,557 33,519,819,623 126,918,511,473 37,109,333,405 155,418,867,783 40,039,073,363

Manufacturing 448,430,739,382 8,501,417,173 462,710,204,369 7,411,940,787 366,935,191,357 8,270,980,503

Consturction, purchase and repair of

real estate 765,592,765,911 16,758,720,741 757,906,158,972 23,913,797,783 695,013,087,414 23,825,161,830

Agriculture, livestock, hunting and

related services 204,050,058,035 104,449,577 200,733,339,538 36,265,080 189,365,827,310 -

Fishing and aquaculture 11,471,879,139 74,363,524 10,266,574,241 - 12,464,096,120 -

Consumer 364,345,049,335 105,890,989,130 364,474,562,495 104,882,503,143 347,899,391,862 124,332,315,868

Educations 1,086,147,601 42,748,541 1,053,141,958 97,215,281 982,272,275 100,000,000

Transportation 91,779,456,428 203,900,000 92,066,535,919 203,900,000 90,305,622,806 621,227,714

Public utilities 45,006,937,133 - 44,691,854,958 - 44,739,076,454 -

Services 1,076,922,088,058 135,600,881,529 1,090,258,760,587 139,117,194,811 998,485,625,219 131,587,071,385

Hospitality 90,754,800,087 - 92,021,221,544 - 91,098,386,938 -

Mining and quarying 1,600,972,457 - 1,620,420,902 - 1,642,583,735 -

Real estate, business and leasing

activities 999,214,456 - 1,088,338,152 - 1,220,027,287 -

Goverment - 4,675,380,256 - 3,256,040,717 - 3,917,430,369

Financial and stock market - 18,124,282 - 262,423,094 - -

note 6 and 19 ¢ 3,239,305,182,579 305,390,794,376 3,245,809,625,108 316,290,614,101 2,995,570,056,560 332,693,261,032

Other contingencies - 31,097,108,333 - 29,942,344,435 - 26,411,843,348

3,239,305,182,579 336,487,902,709 3,245,809,625,108 346,232,958,536 2,995,570,056,560 359,105,104,380

20142014

March MarchDecember

2015

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(Continued)

Concentration of BICSA’s loan portfolio by geographic area is as follows:


2015 2014 2014

Germany ¢ 1,895,059,195 2,893,173,151 -

Australia - 1,485,956,853 -

Brazil 18,711,504,328 18,500,523,900 16,600,340,528

Chile 1,420,704,148 3,548,272,490 -

China 2,015,312,568 1,269,212,203 -

Colombia 3,976,040,212 4,083,829,858 -

Costa Rica 327,854,593,971 350,090,168,752 279,959,861,947

Denmark 411,145,149 682,438,942 -

Ecuador 13,908,685,983 14,975,058,413 10,985,603,986

El Salvador 33,845,348,316 29,902,377,047 29,516,951,252

Spain - 405,315,600 -

United States of America 38,041,066,665 29,882,129,400 17,180,389,496

Guatemala 34,531,107,220 31,694,011,726 25,091,840,596

Netherlands 5,830,825,979 3,072,597,835 4,665,613,513

Honduras 3,856,101,673 4,037,823,871 4,509,047,552

England 2,175,545,631 4,195,414,843 -

Caribean Islands 5,522,239,693 5,692,599,471 -

Brithish Virgin Islands - 610,640 88,969,837

México 7,992,046,930 4,282,111,849 -

Nicaragua 33,049,488,773 37,855,256,827 37,785,551,643

Panama 182,757,001,938 174,853,501,825 173,843,527,943

Paraguay 3,427,840,000 3,466,515,000 -

Perú 3,480,360,837 5,663,752,200 11,443,265,124

Poland 1,054,720,000 2,133,240,000 -

Dominican Republic 4,679,106,017 4,966,086,191 5,633,849,765

Russia - 213,324,000 -

Singapore 5,273,600,000 5,333,100,000 -

South Africa 1,054,720,000 1,411,138,260 -

Switherland 281,645,573 2,666,550,000 -

Uruguay 7,383,040,000 7,466,340,000 7,536,760,000

Others 209,208,418 6,303,563,679 28,595,835,087

¢ 744,638,059,217 763,025,994,826 653,437,408,269

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(Continued)

Concentration of the Bank’s loan portfolio by geographic area is as follows:

As of March 31, 2015, the Bank keeps trust commissions in the amount of ¢1,202,500 (¢2,778,612 and ¢1,638,000 as of December 31, 2014 and March 31, 2014, respectively). Total assets foreclosed by the Bank are as follows (see note 7):

The portfolio of direct loans by type of guarantee is as follows (see notes 6 and 19):

As of March 31, 2015, the 53% of the loan portfolio is secured by mortgage or chattel mortgage (53% and 54% as of December 31, 2014 and March 31, 2014, respectively).


2015 2014 2014

Costa Rica ¢ 2,494,667,123,362 2,482,783,630,282 ¢ 2,342,132,648,290

¢ 2,494,667,123,362 2,482,783,630,282 ¢ 2,342,132,648,290


2015 2014 2014

Property ¢ 51,194,385,569 51,036,981,832 39,937,001,127

Others 344,245,182 312,823,026 209,114,300

¢ 51,538,630,751 51,349,804,858 40,146,115,427


2015 2014 2014

Guarantee

Pledged Assets ¢ 12,468,127,785 13,272,714,227 13,143,170,575

Bonds - 3,295,148,098 371,844,358

Collections 29,264,803,773 36,346,858,822 5,211,572,100

Fiduciary 418,050,772,174 445,898,678,919 372,019,162,801

Mortage 1,104,749,927,227 1,095,247,714,717 1,064,957,286,642

Chattel 627,078,816,756 610,555,895,009 564,481,773,906

Other 1,047,692,734,864 1,041,192,615,316 975,385,246,178

¢ 3,239,305,182,579 3,245,809,625,108 2,995,570,056,560

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(Continued)

Pursuant to SUGEF Directive 5-04: "Regulations on Credit Limits to Individual Persons and Economic Interest Groups", the Bank debugs information on reported data of economic interest groups as part of their responsibility to identify significant administrative and stockholder’s equity relationships among debtors with total active operations. As of March 31, 2015, groups of borrowers (members) having operations that add 2% or more of adjusted capital and in groups report 5% or more of adjusted capital, are reported.

The concentration of the loan portfolio by economic interest group is as follows:




No. Percentage Band Total amount No. of customers

1 0-4,99% 15,564,512,582 ¢ 20,210,502,451 372

2 5-9,99% 31,129,025,164 141,217,384,962 67

3 10-14,99% 46,693,537,745 - 0

4 15-20% 62,258,050,327 840,291,401,798 263

Total ¢ 1,001,719,289,211 702


1 0-4,99% 15,016,150,195 ¢ 45,678,915,060 463

2 5-9,99% 30,032,300,389 102,837,456,797 4

3 10-14,99% 45,048,450,584 75,147,539,309 2

4 15-20% 60,064,600,778 840,918,632,154 227

Total ¢ 1,064,582,543,320 696


1 0-4,99% 15,016,150,195 ¢ 416,432,673,403 289

2 5-9,99% 30,032,300,389 235,553,658,684 145

3 10-14,99% 45,048,450,584 63,266,213,917 2

4 15-20% 60,064,600,778 752,254,323,380 599

Total ¢ 1,467,506,869,384 1,035

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(Continued)

(b) Market risk management

Definitions Market risk refers to potential losses that may occur in the value of assets and liabilities on the statement of financial position due to adverse movements in the factors that determine the price, also known as risk factors, such as liquidity, interest rates and inflation, including the portfolios assigned in administration. The liquidity risk is generated when the financial entity cannot meet the requirements or obligations with third parties due to insufficient cash flow, resulting from the outcome between term recoveries (active operations) and term obligations (passive operations). Price of assets and inflations risk measures the potential losses that may occur in financial assets forming part of Investment portfolios, and a decline in the purchasing power of the money flows received by the Bank. The risk of interest rates measures the possibility that the entity incurs in losses as a result of changes in the present value of assets and liabilities. The exchange rate risk is the possibility of economic loss due to variations in the exchange rate. This risk also arises when the net result of the exchange rate adjustments does not compensate proportionally the adjustment in the value of assets in foreign currency, causing a reduction in the equity indicator or in any model affected negatively in the determination of the exchange rate risk by variations in this macro price, as in Camel’s indicators or own statisticians.

Risk Management methodology

The management of the liquidity risk is periodically assessed by daily updating of the BCR projected cash flows to six months through an automated applications, for the preparation of the gap report to one and three months both in colones and in US dollars, as well as the implementation of the Coverage of Liquidity Index (ICL), established by SUGEF 17-13 from January 1, 2015 on, which seeks to strengthen the banks with a backup of high quality liquid assets, for the fulfillment of their commitments in a stress scenario of 30 days. In order to decrease the liquidity risk, following variables are taken into considerations: deposits volatility, debt levels, structure of liabilities, liquidity degree of assets, availability of funding and the overall effectiveness of the gap of time lines. Regarding the management of market risk for the BCR’s investments portfolio, daily monitoring of risk factors (interests rates and exchange rate) impact is given through the Value at Risk methodology (VaR).

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(Continued)

In addition, the risk derived from the Price quotations of financial instruments in the market is monitored through the methodology of historical simulation of VaR calculations established in SUGEF´s agreement 3-06; this allows the entity to manage the impact of this risk on the equity adequacy. Thus the institution also applies models (stop-loss) that help to limit, to a certain degree, losses by negative changes in securities prices. In terms of interest rates, the Bank is sensitive to this type of risk due to the mix of rates and deadlines, both in assets and liabilities. This sensibility is mitigated through the management of variable rates and the combination of deadlines monitored by internal models. Counterparty risk management is carried out through the fulfillment of the investments profile established by the Bank in its internal policies, and the reporting of issuers, which analyzes the financial statements and the default risk by issuers, according to internal studies and risk rating. Tolerance limits and risk indicators The main indicators for controlling the market risk limits are the following: Liquidity risk: VaR by currency both in colones and US dollars, term matching to one and

three month in both colones and in US dollars and coverage of Liquidity Index (ICL). Price risk: VaR of the Investment portfolio through internal models. Inflation risk: Variation of real financial income (ViR) Exchange risk: VaR of the equity position through internal models and the daily

management of the equity positions.

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(Continued)

Exposure and risk management: (c) Liquidity risk As of March 31, 2015, as result of the ICL indicator, the Bank obtained, at a ratio of liquid assets versus its commitments of 0.83 times in local currency and 0.86 times in US dollars, thus fulfilling the regulatory limit of 0.60, effective from January 1, 2015. As of the same cutt-off date, the liquidity index of term matching was favorable given it exceeded the minimum approved levels, a shown in the following table:


If these results are compared with those obtained in the previous quarter, there is a general deterioration observed which mainly responds to seasonal fluctuations in demand deposits and to a significant decrease in availabilities. Despite the above, this quarter levels are main tend at normal. The following table lists the changes of regulatory liquidity matches by currency and term for the fourth quarter of 2014 to the first quarter of 2015:

Regulatory liquidity matches by currency and term

Index Interpretation Observation Approved levels

1 month term matching US dollars 1.44 Limit: 1.10

1 month term matching Colones 1.23 Limit: 1.00

3 month term matching US dollars 1.03 Limit: 0.94

3 month term matching Colones 0.94 Limit: 0,85

Ratio between assets

and liabilities associated

with accounts volability


2015 2014 2014

Indicador Observation Observation Observation

1 month term matching US dollars 1.44 1.79 1.04

1 month term matching Colones 1.23 1.35 1.11

3 month term matching US dollars 1.03 1.11 0.93

3 month term matching Colones 0.94 1.03 0.89

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(Continued)

In the first quarter of the year passive accounts presented a behavior that responds to the market conditions and the seasonality of these months. As of March 31, 2015 saving accounts have a decrease of -1% (11.20% and 15.70% as of December 31, 2014 and March 31, 2014, respectively), but the balances of current accounts and term deposits presented a growth in local currency of 8% (5.10% and 14.10% for December 31, 2014 and March 31, 2014, respectively) and 12% (-4% and 12.7% for December 31, 2014 and March 31, 2014, respectively). In US dollars, the balance of the saving accounts and term certificates presented a growth of 2% (9.10% and 3.10% as of December 31, 2014 and March 31, 2014, respectively), however, in the current account balances a decrease of -6% can be seen (4.5% and 23% as of December 31, 2014 and March 31, 2014, respectively). The entity is implementing a strategy of liquidity that seeks to increase deposits from the public and reduce its volatility as well as diversify sources of wholesale funding in order to obtain the compliance with regulatory index (ICL, term matching) and to strengthen the Bank in compliance with commercial goals established in its budget.

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(Continued)

The Bank’s assets and liabilities mature as follows:


Demand 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days 181 to 365 days Over 365 días

More than 30 days

past due TOTAL

Cash and due from banks ¢ 267,076,984,876 240,266,496 154,508,161 - - - 216,863,323 - 267,688,622,856

Cash reserve-BCCR 213,601,373,509 45,429,554,029 23,246,464,071 19,312,093,175 61,647,255,844 39,428,230,544 9,981,088,807 - 412,646,059,979

Investments 41,087,962 66,727,477,478 34,233,843,571 9,484,677,266 66,225,356,863 178,399,834,105 291,561,696,228 - 646,673,973,473

Interest on investments - 1,011,794,186 1,820,828,897 1,749,325,618 994,825,923 68,978,471 473,163,231 - 6,118,916,326

Loan portfolio 12,940,845,895 146,661,358,715 56,551,812,466 77,520,090,278 181,287,510,055 178,320,212,056 2,540,469,554,011 45,553,799,103 3,239,305,182,579

Interest on loans - 13,004,190,749 731,363,112 666,291,877 799,092,032 645,502,647 7,436,422,561 2,958,200,983 26,241,063,961

¢ 493,660,292,242 273,074,641,653 116,738,820,278 108,732,478,214 310,954,040,717 396,862,757,823 2,850,138,788,161 48,512,000,086 4,598,673,819,174

Obligations with public ¢ 1,410,608,415,514 316,173,455,420 160,027,717,991 142,009,285,975 430,971,616,280 295,705,400,067 169,551,354,564 - 2,925,047,245,811

Obligations with BCCR - 12,000,000,000 - - - - - - 12,000,000,000

Obligations with financial

entities 227,666,424,350 97,954,603,677 50,743,574,335 35,834,801,716 102,908,429,762 165,013,813,666 481,985,437,070 - 1,162,107,084,576

Charges payable 10,009,927 3,952,094,230 1,600,167,550 1,812,802,172 5,887,939,215 3,224,270,663 1,935,809,511 - 18,423,093,268

1,638,284,849,791 430,080,153,327 212,371,459,876 179,656,889,863 539,767,985,257 463,943,484,396 653,472,601,145 - 4,117,577,423,655

¢ (1,144,624,557,549) (157,005,511,674) (95,632,639,598) (70,924,411,649) (228,813,944,540) (67,080,726,573) 2,196,666,187,016 48,512,000,086 481,096,395,519

ASSETS

LIABILITIES

Assets and liabilities spread

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(Continued)




More than 30 days

past due TOTAL

Cash and due from banks ¢ 194,223,838,263 7,788,134 - - - - 316,168,812 - 194,547,795,209


Investments 600,082,097 318,695,530,364 19,495,322,196 26,987,911,343 59,133,363,574 186,894,745,992 204,271,960,558 - 816,078,916,124

Interest on investments - 1,402,920,583 610,536,032 1,365,662,288 1,030,818,386 285,967,144 166,879,118 - 4,862,783,551

Loan portfolio 10,177,347,874 119,792,559,863 84,211,550,640 103,673,256,822 189,948,084,978 160,574,330,595 2,538,507,349,889 38,925,144,447 3,245,809,625,108

Interest on loans - 13,088,125,429 754,950,441 841,402,120 753,377,443 778,926,356 4,659,558,796 4,215,746,646 25,092,087,231

¢ 433,773,359,247 501,872,481,930 142,203,503,798 160,235,699,439 304,737,716,739 375,959,757,293 2,753,887,695,877 43,140,891,093 4,715,811,105,416


Obligations with BCCR 1,663,017,970 - - - - - - - 1,663,017,970


entities 196,548,971,835 77,441,318,317 35,621,320,979 38,393,524,823 151,971,670,200 158,007,162,290 515,364,947,512 - 1,173,348,915,956

Charges payable 14,174,405 3,726,771,145 7,468,551,046 2,056,359,298 3,251,813,953 2,304,102,869 2,059,286,318 - 20,881,059,034

1,708,681,919,142 434,830,787,118 298,632,252,965 227,997,274,794 534,700,404,622 386,866,742,495 668,219,330,408 - 4,259,928,711,544

¢ (1,274,908,559,895) 67,041,694,812 (156,428,749,167) (67,761,575,355) (229,962,687,883) (10,906,985,202) 2,085,668,365,469 43,140,891,093 455,882,393,872

ASSETS

LIABILITIES


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(Continued)




More than 30 days

past due TOTAL

Cash and due from banks ¢ 224,900,249,919 240,692,419 - - - - 311,609,819 - 225,452,552,157


Investments 198,080,355 77,665,934,034 61,211,852,782 50,075,666,837 98,471,663,980 210,108,993,902 225,038,535,989 - 722,770,727,879

Interest on investments - 2,406,825,933 1,359,748,149 970,782,307 909,358,662 465,452,771 237,494,457 - 6,349,662,279

Loan portfolio 8,671,178,855 115,543,758,179 58,502,728,247 62,376,211,768 184,563,615,755 226,038,528,890 2,293,878,190,203 45,995,844,663 2,995,570,056,560

Interest on loans - 10,954,167,801 182,217,743 199,017,736 367,344,390 5,348,426,256 4,473,922,767 2,662,450,545 24,187,547,238

¢ 456,011,355,915 255,543,969,437 140,766,378,121 133,419,292,083 355,076,371,213 466,328,810,005 2,533,510,898,556 48,658,295,208 4,389,315,370,538


Obligations with BCCR - 61,000,000,000 - - - - - - 61,000,000,000


entities 168,956,056,067 119,737,790,003 31,812,671,245 24,948,608,840 90,593,463,914 144,862,405,815 449,361,768,400 - 1,030,272,764,284

Charges payable 10,111,303 2,709,042,527 1,397,405,927 1,664,942,117 5,303,010,807 2,492,168,392 1,882,127,260 - 15,458,808,333

1,606,239,539,615 516,722,842,636 195,635,051,006 160,450,132,139 560,743,708,669 356,840,302,909 586,832,300,306 - 3,983,463,877,280

¢ (1,150,228,183,700) (261,178,873,199) (54,868,672,885) (27,030,840,056) (205,667,337,456) 109,488,507,096 1,946,678,598,250 48,658,295,208 405,851,493,258

ASSETS

LIABILITIES


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(Continued)

(d) Price risk of the portfolio

The Investment portfolio of Banco de Costa Rica is composed of BCR Investment portfolio of own funds and the Investment portfolio of the Development Credit Fund. The result of the VaR to 21 days for the investment portfolio of own funds amounts to 0.63% with respect to the market value (1.13% and 1.02% as of December 31, 2014 and March 31, 2014, respectively), 40 points less than the observed in March 31, 2014, percentage that is below the tolerable limit of 2%. Regarding the market risk management of this portfolio, losses from Investment valuation adjustments are monitored in order to mitigate the impact of these adjustments on the Bank´s profits. In addition to this monitoring, the Bank has maintained the duration of the portfolio in 1.4 years in order to contain the impact of variations in the interest rates on valuation adjustments, accompanied by decrease in the Investment portion in US dollars by 4.5% (1.71% and 1.45% as of December 31, 2014 and March 31, 2014, respectively) compared to march 31, 2014, thus containing the exchange risk. With respect to the DCF investment portfolio, the VaR amounts to 1.12% (2.20% and 2.05% as of December 31, 2014 and March 31, 2014, respectively), 15 points less than the observed in March 31, 2014, percentage that is below the tolerable limit of 2%. Regarding the market risk management of this portfolio, as well as the Investment portfolio of own funds, losses arising from valuation of Investments are monitored. In addition, the Bank has maintained the duration of the portfolio in 0.5 years from March 31, 2014 and March 31, 2015, in order to contain the impact of interest rate variations on valuation adjustments. About the Investment profile of the DCF portfolio, the total portfolio increased by 9.32%, in annual terms, between March 31, 2014 and March 31, 2015. This increase is distributed in the diversification of this portfolio in order to benefit from securities that are typical for the risk appetite of this Fund, which was established by law, without neglecting to take advantage of the best interest rates.

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(Continued)

Compared with March 31, 2014, the VaR increased by 3.14% and the nominal value of the Investment portfolio is 16% lower.

As of March 31, 2015 the DCF Investment portfolio represents 11% of the total Investment portfolio (14.34% and 10% as of December 31, 2014 and March 31, 2014, respectively). The effect of this portfolio on capital adequacy is 0.0002% (0.002% and 0.005% as of December 31, 2014 and March 31, 2014, respectively), while the investment portfolio of own funds has an incidence of 0.0017% (0.14% and 0.16% as of December 31, 2014 and March 31, 2014, respectively). Following, the results of the VaR SUGEF 03-06 methodology are detailed:

As of March 31, 2015 Market value VaR SUGEF 03-06

Own funds ¢ 285,072,590,257 ¢ 630,704,765

Development Credit Fund (DCF) ¢ 32,706,051,241 ¢ 72,360,034

As of December 31, 2014 Market value VaR SUGEF 03-06

Own funds ¢ 248,192,201,169 ¢ 559,082,979


As of March 31, 2014 Market value VaR SUGEF 03-06

Own funds ¢ 334,873,645,507 ¢ 661,592,385


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(Continued)

As part of the mitigation actions to contain the price risk, BCR has a policy of having investment concentrations subject to price assessment not greater than 6%, so that a sharp variation in the securities prices does not increase the capital requirement for price risk. In addition, the entity keeps a short-term portfolio both in own funds as in Development Credit Funds (DCF). In general terms, given the Bank´s conservative investment profile in their investment policies, exposure to risk is conservative, since the entity complies with its tolerance limits, having a moderate risk appetite.

(e) Counterparty risk

In terms of the investment profile established by the Bank for maximum internal investments, BCR´s total investment portfolio decreases 16.90% in annual terms between March 31, 2014 and March 31, 2015. However, the Bank maintains its investment profile without altering the composition of its limits. In addition, studies of local counterpart issuers are made every six months and international issuers at least annually; analyzing the financial statements and the risk of default. (f) Interest rate risk

In order to meet the objectives outlined in the 2015-2016 Macroeconomic Program, the Central Bank of Costa Rica (BCCR) applied a decrease of 50 points in the Monetary Policy Rate (TPM) from February 2, 2015, since the tendency of inflation to the target range (+-4%), was recorded faster than expected. However, the twelve month inflation expectations remain out of the target inflation range, but given its decreasing trend, the BCCR established to set the TPM at 4.5% as of March 19, 2015 (a decrease of 25 points). This decrease should be interpreted as a signal to the national financial system to decrease the cost of money and, therefore, a decrease in the passive basic rate (TBP) could result, meaning that the net financial income (IFN) of the BCR could be affected. Under the assumption that the TBP decreases 0,02% and the passive rates 0.01%, the IFN of BCR may be decreased by approximately ¢63 million per month, and if the performance curves decreases by 0.05%, investment portfolio of own funds could be revalued by 0.82% in terms of net present value, this with data as of March 31, 2015.

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(Continued)

Knowing the inverse relationship between performance and price, while considering an increase in the securities prices, the VaR methodology as per SUGEF suffers an increase of 0.56% as of March, 2015 (0.47% and 0.29% as of December 31, 2014 and March 31, 2014, respectively). With regard to international interest rates, these have remained unusually low for many years, a trend that the Federal Reserve of the United States of America has adopted to stimulate consumption and investment in that country. However, for the third quarter of 2015 it is expected that this entity will increase the FED Funds Rate (FED Rate); this happening, the Prime Rate will also suffer increases (PR = FED Fund + 3%), possibly causing variations in BCR´s net financial income (IFN) in US dollar. Under the assumption that an increase of 25 points in the FED rate is given, this would cause the Prime Rate to be placed at 3.5%, and the deposit rates up by 10 points, so that the BCR´s net financial income (IFN) in US dollar could increase up to approximately US$397,000 per month; covering an eventual decrease in the net financial income (IFN) in colones facing the decrease of the TBP. Given the above, it should be noted that the decrease in interest rates in colones would be faster than the increase in interest rates in US dollars, so the compensatory effect, would probably be perceived at the end of the second half of 2015; this would require increasing the funding sources (demand accounts and term deposits at the counter), and thus compensate the loss of the net financial income (IFN) in colones, with a broader credit offer, especially in service improvement (less time in processes and agility in addressing requirements) given the level and amount of competition within the system. Therefore, the decrease in the TPM could have negative effects on the Bank´s equity adequacy and net financial income, although marginally.

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(Continued)

As of March 31, 2015, interest rate terms for assets and liabilities are matched as follows:

Effective

rate 1 to 30 days 31 to 90 days 91 to 180 days 181 to 360 days 361 to 720 days

More than 720

days Total

Colones:

Assets

Investments 7.50% ¢ 4,527,309,902 8,829,540,304 16,825,495,677 97,244,460,077 52,504,835,372 128,688,994,187 308,620,635,519

Loan portfolio 11.08% 947,076,619,946 20,235,727,445 12,966,832,073 30,171,858,311 55,273,305,860 296,919,505,371 1,362,643,849,006

Total recovered assets (*) 951,603,929,848 29,065,267,749 29,792,327,750 127,416,318,388 107,778,141,232 425,608,499,558 1,671,264,484,525

Liabilities

Obligations with the public 23,847,075,594 6,659,234,135 4,674,925,623 1,102,229,112 85,310,349 18,005,254 36,386,780,067

Demand 2.50%

Term 7.00%

12,000,000,000 - - - - - 12,000,000,000


entities 5.22% 189,920,773,179 140,707,963,046 261,686,040,402 186,421,748,978 4,559,457,444 10,374,527,714 793,670,510,763

Total matured liabilities (*) 225,767,848,773 147,367,197,181 266,360,966,025 187,523,978,090 4,644,767,793 10,392,532,968 842,057,290,830

Assets and liabilities spread ¢ 725,836,081,075 (118,301,929,432) (236,568,638,275) (60,107,659,702) 103,133,373,439 415,215,966,590 829,207,193,695

US Dollars

Assets

Investments 2.09% ¢ 42,389,821,579 34,757,612,111 18,923,350,973 2,835,300,145 53,202,957,842 72,660,563,356 224,769,606,006

Loan portfolio 6.35% 908,018,606,538 146,907,598,730 240,875,810,376 58,926,682,796 99,821,784,164 170,773,197,307 1,625,323,679,911


Liabilities

Obligations with the public 236,902,861,569 91,832,497,864 89,599,443,474 40,506,046,780 69,291,391,735 26,959,747,239 555,091,988,661

Demand 0.47%

Term 1.33%


entities 0.08% 41,220,554,227 67,673,968,140 210,100,424,305 217,685,844,459 71,404,707,000 402,252,398,027 1,010,337,896,158

Total matured liabilities (*) 278,123,415,796 159,506,466,004 299,699,867,779 258,191,891,239 140,696,098,735 429,212,145,266 1,565,429,884,819

Assets and liabilities spread ¢ 672,285,012,321 22,158,744,837 (39,900,706,430) (196,429,908,298) 12,328,643,271 (185,778,384,603) 284,663,401,098

(*) Rate-sensitive

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(Continued)

As of December 31, 2014, interest rate terms for assets and liabilities are matched as follows:

Effective


More than 720

days Total

Colones:

Assets

Investments 6.38% ¢ 29,964,315,856 9,665,219,257 11,982,925,907 85,268,947,176 48,873,712,500 115,765,007,618 301,520,128,314

Loan portfolio 11.10% 927,969,665,494 56,240,075,451 16,784,730,651 29,018,950,518 53,544,616,996 270,137,875,448 1,353,695,914,558


Liabilities

Obligations with the public 16,483,330,676 6,780,612,949 2,952,321,742 792,296,749 100,814,272 14,597,610 27,123,973,998

Demand 2.81%

Term 6.81%


entities 5.21% 221,016,105,232 207,163,894,261 181,691,866,902 104,212,879,155 5,634,712,446 11,079,253,990 730,798,711,986


Assets and liabilities spread ¢ 720,434,545,442 (148,039,212,502) (155,876,532,086) 9,282,721,790 96,682,802,778 374,809,031,466 897,293,356,888

US Dollars

Assets

Investments 1.45% ¢ 466,429,891,396 16,549,408,230 39,180,833,795 21,180,298,287 5,716,167,822 50,994,858,458 600,051,457,988

Loan portfolio 6.47% 883,218,508,428 189,478,283,011 235,505,718,426 63,525,372,242 95,681,767,143 179,387,608,920 1,646,797,258,170

Total recovered assets (*) 1,349,648,399,824 206,027,691,241 274,686,552,221 84,705,670,529 101,397,934,965 230,382,467,378 2,246,848,716,158

Liabilities


Demand 3.02%

Term 1.31%


entities 1.35% 27,250,989,135 61,333,342,194 272,928,693,067 219,918,534,731 106,309,198,023 400,492,128,197 1,088,232,885,347


Assets and liabilities spread ¢ 1,146,974,026,098 36,036,548,162 (86,909,622,993) (189,154,930,543) (84,623,434,335) (196,123,742,062) 626,198,844,327

(*) Rate-sensitive

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(Continued)

As of March 31, 2014, interest rate terms for assets and liabilities are matched as follows:

Effective


More than 720

days Total

Colones:

Assets

Investments 8.59% ¢ 52,298,198,420 35,201,745,464 36,157,556,238 106,716,771,059 47,803,458,048 122,925,904,213 401,103,633,442

Loan portfolio 10.89% 931,991,988,595 8,663,157,116 15,600,811,225 20,032,280,637 35,715,922,899 157,308,992,428 1,169,313,152,900


Liabilities

Obligations with the public 14,595,587,376 3,081,500,865 2,050,566,645 564,742,143 23,345,794 35,184,849 20,350,927,672

Demand 1.91%

Term 6.05%

61,000,000,000 - - - - - 61,000,000,000


entities 4.81% 219,910,585,541 162,638,167,112 239,050,860,837 108,305,676,330 7,194,494,737 7,003,610,773 744,103,395,330


Assets and liabilities spread ¢ 688,784,014,098 (121,854,765,397) (189,343,060,019) 17,878,633,223 76,301,540,416 273,196,101,019 744,962,463,340

US Dollars

Assets

Investments 2.23% ¢ 4,519,831,686 71,339,171,656 26,614,971,428 32,814,533,457 37,916,742,304 55,253,351,036 228,458,601,567

Loan portfolio 7.78% 857,710,058,517 176,684,399,472 41,125,594,738 184,128,134,717 73,411,560,801 163,823,945,830 1,496,883,694,075


Liabilities


Demand 1.50%

Term 1.46%


entities 0.03% 28,024,360,428 46,338,950,010 249,763,291,513 196,586,224,047 63,057,971,270 365,854,553,182 949,625,350,450


Assets and liabilities spread ¢ 662,826,411,774 134,677,427,405 (288,484,510,001) (31,308,007,825) (23,097,753,492) (173,179,029,269) 281,434,538,592

(*) Rate-sensitive

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(Continued)

Within the gap report (assets and liabilities subject to interest rates) in local currency, a total difference of asset recovery less maturity of liabilities as of March 31, 2015, of ¢829,207,193,695 arises (¢897,293,356,888 and ¢744,962,463,340 as of December 31, 2014 and March 31, 2014, respectively), while in foreign currency the same difference is of ¢284,663,401,098 (¢626,198,844,327 and ¢281,434,538,592 as of December 31, 2014 and March 31, 2014, respectively), being an improved inference in the statement of financial position due to positive changes in interest rates, since the entity presents more assets than liabilities in both currencies. Regarding to term matching (sum of liquidity of assets and liabilities) as of March 31, 2015 the total amount in local currency was ¢374,359,460,331 (¢368,141,351,644 and ¢289,560,177,949 as of December 31, 2014 and March 31, 2014, respectively), while in foreign currency, the collected data was ¢106,736,935,188 (¢87,741,042,228 and ¢116,291,315,309 as of December 31, 2014 and March 31, 2014, respectively), which shows the necessary solvency to meet the liquid liabilities of the Organization. (g) Foreign exchange risk

Banco de Costa Rica uses two indicators to manage the foreign exchange risk: the balance of assets and liabilities denominated in foreign currency and value at risk (VaR). The limit to exposure to unexpected exchange rate variations is established at US$ 68.4 million as of March 31, 2015 (US$68.40 million and US$69 million as of December 31, 2014 and March 31, 2014, respectively.) In the past year the BCR has respected the ceiling established for its equity position in foreign currency. The Bank has established a risk appetite of 1.5% for the VaR to the open position in foreign currency. During the period from April 30, 2014 to March 31, 2015, the volatility of the exchange rate decreased, causing the daily VaR to decrease from 0.74% as of March 31, 2014 to 0.65% as of March 31, 2015. Being the open position of U$20 million (including provisions and other accounting reserves), the capital requirement for exchange risk is ¢10,604 million, adding 0.05% to the equity adequacy of the entity.

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(Continued)

Assets and liabilities in US dollars are detailed as follows:

The valuation of monetary assets and liabilities in foreign currency is carried out with reference to the purchase exchange rate set by the BCCR the last business day of each month. As of March 31, 2015 this was ¢527.36 per US $1.00 (¢533.31 and ¢538.34 per US$ 1.00 as of December 31, 2014 and March 31, 2014, respectively). Although the net position is not covered with any instrument; however, the Bank considers it remains at an acceptable level for buying and selling US dollars in the market at the time it is considered as necessary.


2015 2014 2014

Assets:

Cash and due from banks US$ 648,321,963 503,609,734 579,663,563

Investments in financial instruments 605,016,539 924,910,430 570,260,829

Loan portfolio 3,197,503,268 3,192,150,916 3,038,835,051

Accounts and accrued interest payable 4,279,697 4,299,241 4,056,925

Other 17,588,252 19,605,706 26,545,282

Total assets 4,472,709,719 4,644,576,027 4,219,361,650

Liabilities:

Obligations with the public 2,291,235,233 2,471,003,258 2,326,166,397

Other financial obligations 1,998,748,774 2,024,292,516 1,682,854,521

Other accounts payable and provisions 27,033,635 26,734,813 33,954,189

Other 40,644,159 12,567,370 10,997,940

Subordinated obligations 40,100,150 40,094,139 30,062,500

Total liabilities 4,397,761,951 4,574,692,096 4,084,035,547

Net position US$ 74,947,768 69,883,931 135,326,103

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(Continued)

As of March 31, 2015, complying with SUGEF´s regulations, the term matching of the most important US dollar accounts is as follows:


More than 30 days

past due TOTAL

Cash and due from banks US$ 395,575,796 15,522 - - - - 392,262 - 395,983,580

Cash reserve-BCCR 130,844,165 30,094,564 19,408,181 15,247,582 37,232,138 19,318,505 193,248 - 252,338,383

Investments 77,913 94,879,576 63,471,596 7,438,863 72,507,239 141,427,605 231,871,687 - 611,674,479

Interest on investments - 881,054 2,187,265 115,066 245,444 87,059 858,943 - 4,374,831

Loan portfolio 24,538,922 199,752,270 71,270,300 89,403,341 233,658,429 221,078,994 2,349,581,119 24,646,470 3,213,929,845

Interest on loans - 5,833,484 586,669 557,324 892,138 674,134 4,100,621 1,480,713 14,125,083

US$ 551,036,796 331,456,470 156,924,011 112,762,176 344,535,388 382,586,297 2,586,997,880 26,127,183 4,492,426,201

Obligations with public US$ 1,009,290,625 223,525,205 146,180,164 139,831,368 332,954,870 223,679,283 207,634,402 - 2,283,095,917

Obligations with BCCR - - - - - - - - -


entities 298,351,556 165,027,459 88,892,651 61,602,339 171,473,425 296,434,460 908,394,145 - 1,990,176,035

Charges payable 810 2,144,953 1,524,210 1,394,014 6,370,863 2,777,344 2,543,437 - 16,755,631

1,307,642,991 390,697,617 236,597,025 202,827,721 510,799,158 522,891,087 1,118,571,984 - 4,290,027,583

US$ (756,606,195) (59,241,147) (79,673,014) (90,065,545) (166,263,770) (140,304,790) 1,468,425,896 26,127,183 202,398,618

ASSETS

LIABILITIES


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(Continued)

As of December 31, 2014 complying with SUGEF´s regulations, the term matching of the most important US dollar accounts is as follows:


More than 30 days

past due TOTAL


Cash reserve-BCCR 128,315,309 27,801,782 39,134,258 19,506,295 43,268,117 21,797,189 154,008 - 279,976,958

Investments 935,184 520,496,967 33,625,591 40,844,306 75,234,477 166,305,921 95,288,692 - 932,731,138


Loan portfolio 19,083,362 166,512,734 94,941,877 124,969,789 245,033,471 174,656,927 2,357,563,606 22,393,526 3,205,155,292

Interest on loans - 6,177,207 670,133 918,425 829,595 944,912 4,792,830 676,083 15,009,185

US$ 371,377,936 721,526,387 169,446,400 186,729,899 365,166,411 363,845,394 2,458,655,392 23,069,609 4,659,817,428

Obligations with public US$ 970,707,492 245,365,765 282,628,847 154,675,662 353,858,674 241,053,043 214,330,136 - 2,462,619,619

Obligations with BCCR 3,118,295 - - - - - - - 3,118,295


entities 241,842,185 126,047,977 57,645,013 62,447,000 267,633,560 287,386,915 963,041,505 - 2,006,044,155

Charges payable 4,795 1,369,270 12,099,229 1,843,346 2,503,900 2,507,043 3,186,123 - 23,513,706

1,215,672,767 372,783,012 352,373,089 218,966,008 623,996,134 530,947,001 1,180,557,764 - 4,495,295,775

US$ (844,294,831) 348,743,375 (182,926,689) (32,236,109) (258,829,723) (167,101,607) 1,278,097,628 23,069,609 164,521,653

LIABILITIES


ASSETS

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(Continued)

As of March 31, 2014 complying with SUGEF´s regulations, the term matching of the most important US dollar accounts is as follows:


More than 30 days

past due TOTAL


Cash reserve-BCCR 136,075,575 32,943,067 11,022,582 9,701,929 52,314,247 12,772,684 5,626,160 - 260,456,244

Investments 367,947 24,498,856 113,240,184 31,579,053 97,231,560 151,803,832 148,904,060 - 567,625,492


Loan portfolio 16,107,254 176,017,965 78,999,451 83,890,074 243,594,811 211,532,566 2,218,121,514 30,433,166 3,058,696,801

Interest on loans - 6,971,197 338,481 369,688 682,365 436,077 5,289,588 2,041,359 16,128,755

US$ 471,123,068 240,600,215 205,141,238 125,670,034 394,319,384 376,948,477 2,378,762,320 32,474,525 4,225,039,261

Obligations with public US$ 1,038,823,383 260,438,854 152,836,472 88,973,187 399,940,243 197,549,708 180,205,371 - 2,318,767,218


entities 196,415,659 151,715,566 51,680,000 38,384,150 145,017,675 259,538,635 831,144,530 - 1,673,896,215

Charges payable 2,664 1,456,690 1,456,078 1,137,831 6,223,012 3,141,537 2,939,673 - 16,357,485

1,235,241,706 413,611,110 205,972,550 128,495,168 551,180,930 460,229,880 1,014,289,574 - 4,009,020,918

US$ (764,118,638) (173,010,895) (831,312) (2,825,134) (156,861,546) (83,281,403) 1,364,472,746 32,474,525 216,018,343Assets and liabilities spread

ASSETS

LIABILITIES

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(Continued)

The Bank incurs currency risk when the value of its dollar-denominated assets and liabilities is affected by exchange rate variations, which is recognized in the separate income statement.

For the years ended March 31, 2015 and March 31, 2014, the consolidated accumulated financial statements show a net foreign exchange gain of ¢701,682,460 and a net foreign exchange loss of ¢795,795,153, respectively.

(h) Operational risk management

Operating or operational risk is defined as the risk of loss resulting from inadequate use or failure of processes, personnel and internal and automated systems or due to external events. This definition includes technological and legal risks, according to the generalized definition and the Basel Committee, but excludes the strategic and reputation risk. The aim of the Bank of operational risk management is to minimize the financial losses and damages to the reputation of the Conglomerate, as well as achieving efficiency and effectiveness in the execution of processes and optimize the internal Control Systems. Essentially, the model of management and control of operational risk in the Conglomerate comprises a set of qualitative and quantitative techniques and tools that allow to determine the risk level in the substantive processes; this from the estimate of the probability of occurrence of identified relevant events and their impact. It also includes the assessment of effectiveness of existing management measures, as well as the implementation of risk management plans. Thus the Bank has also defined:

Aspects about the proper segregation of duties, including independence in the

authorization of transactions. Requirements on adequate monitoring and reconciliation of transactions. Compliance with regulatory and legal requirements. Documentation of controls and processes. Monthly report on operation losses and proposals for the solutions of the same. Use of ethical standards in the business. Development of activities to mitigate the risk, including security policies. Communication and implementation of corporate conduct guidelines. Reduced risk impact through insurance as appropriate. Comprehensive planning for the recovery of activities, including plans to restore key

operations and internal and external support to ensure the provision of services. Staff training.

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(Continued)

The qualitative and quantitative operational risk assessment complements an internal database or historical record of loss events, such as those arising in consequence of: natural disasters, vandalism, fraud, fines, convictions, robbery or assaults as well as replacement costs of damaged assets. At the same time, quantitative evaluation is carried out by the “Exponential Smoothing” methodology, with which loss projections for operational risk are performed, based on the historical record and thus establishing a maximum limit for losses in accordance with institutional risk appetite. Regarding the calculation of regulatory capital, the BCR uses the basic method authorized by SUGEF. However, it has been proposed to soon start the project to evolve to the standard method proposed by the Basel Committee, which has relevant inputs for the determination of capital considering the component of operational risk by business activities. Moreover, BCR has a system of business continuity management (based on Standard 22301:2012), which includes contingency plans and an expert group for IT continuity, consisting of a logistics plan designed by the Organization, which allows to detect undesired incidents in relevant services, as well as, ensure the recovery and restoration of interrupted services within a given time, under the coordination of the Corporate Crisis Committee. During the period under study, as in 2014, there is continued progress in the execution and improvement of the business continuity management system and IT, with special emphasis on disclosure; in addition to planning and execution of tests or simulations to determine the effectiveness of these contingency plans. The Bank also has support groups for recovery and emergency response in areas like infrastructure, technology, security, occupational health and institutional communication.

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(Continued)

(38) Financial information of the Development Financing Fund

The Bank presents the following financial information as manager of its Financial Information of Development Financing Fund (FINADE):


2015 2014 2014

ASSETS

Availability ¢ 4,071,928,785 1,901,357,999 385,287,423

Cash 4,071,928,785 1,901,357,999 385,287,423

Loan portfolio 10,607,753,380 11,260,060,994 11,840,325,250

Current 8,722,862,496 9,435,610,156 10,434,316,355

Past due 2,065,506,640 2,005,064,162 1,419,649,895

Legal collections 129,116,199 53,957,048 156,558,131

Accrued interest receivable 105,394,774 108,898,602 102,147,743

(Allowance for loan impairment) (415,126,729) (343,468,974) (272,346,874)

TOTAL ASSETS ¢ 14,679,682,165 13,161,418,993 12,225,612,673

LIABILITIES

Accounts payable and provisions ¢ 5,638,847 5,646,300 38,805,912

Other sundry accounts payable 5,638,847 5,646,300 38,805,912

Other liabilities 38,781,974 40,592,642 24,539,090

Deferred income 38,781,974 40,592,642 24,539,090

TOTAL LIABILITIES ¢ 44,420,821 46,238,942 63,345,002

EQUITY

Contributions from Banco de Costa Rica ¢ 11,189,308,279 9,898,139,668 9,898,139,669

Profit from prior year 3,217,040,383 2,129,189,657 2,129,189,656

Profit for current year 228,912,682 1,087,850,726 134,938,346

TOTAL EQUITY ¢ 14,635,261,344 13,115,180,051 12,162,267,671

TOTAL LIABILITIES AND EQUITY ¢ 14,679,682,165 13,161,418,993 12,225,612,673

OTHER DEBIT MEMORANDA ACCOUNTS

Own debit memoranda accounts ¢ 326,897,766 295,327,865 951,495,679

DEVELOPMENT FINANCING FUND

BALANCE SHEET

As of March 31, 2015, December 31, 2014 and March 31, 2014

(In colones)

Financial information

- 153 -



(Continued)

March March

2015 2014

FINANCE INCOME

Loan portfolio ¢ 294,999,884 301,613,945

Gain on foreign exchange differences - 22,907,091

TOTAL FINANCE INCOME 294,999,884 324,521,036

Financial expenses

Foreign exchange loss 3,752,154 -

Total financial expenses 3,752,154 -

Allowance for loan losses 72,168,916 155,112,982

Recovery of assets and decrease in allowances 502,770 -

FINANCE INCOME 219,581,584 169,408,054

OTHER OPERATING INCOME

Other operating income 177,930 3,293,683

Other services 9,205,953 -

TOTAL OTHER OPERATING INCOME 9,383,883 3,293,683

Other operating expenses

Other operating expenses 52,785 37,763,391

Total other operating expenses 52,785 37,763,391

PROFIT FOR THE YEAR ¢ 228,912,682 134,938,346

BACKGROUND OF FINANCING FOR DEVELOPMENT

INCOME STATEMENT

As of March 31, 2015 and March 31, 2014

Financial information

(In colones)

- 154 -



(Continued)

Loan portfolio corresponding to FINADE The information contained in notes a) through f) below corresponds to financial information.

a) Loan portfolio by sector

The loan portfolio by sector is as follows:


2015 2014 2014

Sector

Agriculture, livestock, hunting and

related services ¢ 2,360,738,877 2,509,433,128 3,125,697,743

Fisheries and aquaculture 18,588,662 18,761,269 19,239,198

Manufacturing 2,430,598,443 2,495,480,081 2,593,675,360

Exploitation of mines and quarries 85,133,743 87,294,030 93,416,496

Trade 5,474,547 5,798,942 6,716,938

Services 5,012,353,003 5,344,673,574 5,107,029,354

Transport 628,599,679 651,314,806 689,415,486

Real estate, and business activities

and rental 50,029,022 51,798,784 55,333,901

Construction, purchase and repair

of properties 147,830,869 149,067,282 152,337,813

Consumption 20,250,156 20,820,325 22,411,860

Hotels and Restaurants 49,853,311 50,658,385 67,143,038

Education 108,035,023 109,530,760 78,107,193

10,917,485,335 11,494,631,366 12,010,524,381

Plus accrued interest receivable 105,394,774 108,898,602 102,147,743

Less allowance for loan losse (415,126,729) (343,468,974) (272,346,874)

¢ 10,607,753,380 11,260,060,994 11,840,325,250

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(Continued)

b) Loan portfolio by arrears

The loan portfolio by arrears is as follows:

c) Past due loans

Past due loans, including loans in accrual status (for which interest is recognized on a cash basis) and unearned interest on past due loans, are as follows:


2015 2014 2014

Current ¢ 8,722,862,496 9,435,610,156 10,434,316,355

1 to 30 days 1,291,071,453 744,886,566 545,547,352

31 to 60 days 372,024,809 652,775,536 524,560,290

61 to 90 days 145,739,658 83,201,774 154,344,643

91 to 120 days 1,636,068 196,188,005 142,604,936

121 to 180 días 85,719,268 121,167,911 45,670,651

More than 181 days 169,315,384 206,844,370 6,922,023

Legal collections 129,116,199 53,957,048 156,558,131

¢ 10,917,485,335 11,494,631,366 12,010,524,381


2015 2014 2014

Past due loans in

nonaccrual status, 48 loans on 2015

(50 and 5 loans as of 2014) ¢ 169,315,384 206,844,370 6,922,023

Past due loans in

accrual status ¢ 1,896,191,256 1,798,219,792 1,412,727,872

Total interest not collected ¢ 26,191,391 18,294,379 23,034,075

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(Continued)

As of March 31, 2015, loans on legal collection, are as follows:

As of December 31, 2014, loans on legal collection, are as follows:

As of March 31, 2014, loans on legal collection, are as follows:

d) Accrued interest receivable on loan portfolio Accrued interest receivable is as follows:

percentage Balance

11 1.18% ¢ 129,116,199

# operations

percentage Balance

7 0.47% ¢ 53,957,048

# operations

percentage Balance

8 1.30% ¢ 156,558,131

# operations


2015 2014 2014

Current loans ¢ 58,245,053 54,451,883 58,549,517

Past due loans 40,040,647 51,231,335 33,928,825

Loans in legal collections 7,109,074 3,215,384 9,669,401

¢ 105,394,774 108,898,602 102,147,743

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(Continued)

e) Allowance for loan impairment Movement in the allowance for loan impairment is as follows:

Opening balance, 2015 ¢ 343,468,974

Plus:

Estimación cargada a resultadosAllowance charged to profit or loss 72,168,916

Less:

Adjustment for exchange rate differential (8,391)

Reversión de estimación contra ingresosReverting to revenue estimate (502,770)

Closing balance March, 2015 ¢ 415,126,729


Plus:

Estimación cargada a resultados Allowance charged to profit or loss 365,377,363

Balance transfer 80,186

Adjustment for exchange rate differential 3,249,985

Less:

Reversión de estimación contra ingresos Reversal of allowance against income (139,221,245)

Closing balance December, 2014 ¢ 343,468,974


Plus:

ESTIMATING CHARGED TO RESULTSAllowance charged to profit or loss 155,112,982

Adjustment for exchange rate differential 3,251,207

Closing balance march, 2014 ¢ 272,346,874

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(Continued)

f) Loan portfolio by type of guarantee The loan portfolio by type of guarantee is as follows:


2015 2014 2014

Guarantee

Mortgage ¢ 1,568,126,527 1,730,315,501 1,653,253,249

Chattel mortgage 4,533,750,713 4,739,934,521 4,540,705,471

Others 4,815,608,095 5,024,381,344 5,816,565,661

¢ 10,917,485,335 11,494,631,366 12,010,524,381

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(Continued)

g) Financial instruments of FINADE with credit risk exposure:


2015 2015 2015

Principal ¢ 10,917,485,335 11,494,631,366 12,010,524,381

Products receivable 105,394,774 108,898,602 102,147,743

11,022,880,109 11,603,529,968 12,112,672,124

Allowance for loans losses (415,126,729) (343,468,974) (272,346,874)

Carrying amount ¢ 10,607,753,380 11,260,060,994 11,840,325,250

Loan portfolio

Total balance:

A1 ¢ 8,773,660,369 9,212,187,400 10,045,623,610

A2 336,652,544 236,522,095 335,981,873

B1 725,953,235 840,664,095 578,235,888

B2 175,761,394 118,308,544 195,069,913

C1 179,908,408 162,090,341 417,491,388

C2 - - 17,609,959

D 63,891,373 299,413,417 217,099,856

E 767,052,786 734,343,866 305,559,637

11,022,880,109 11,603,529,758 12,112,672,124

Minimum allowance (415,126,722) (343,468,976) (274,423,194)

Book value, net ¢ 10,607,753,387 11,260,060,782 11,838,248,930

Book value 11,022,880,109 11,603,529,968 12,112,672,124

(Surplus) inadequacy of allowance (415,126,722) (343,468,976) (274,423,194)

over minimum allowance (7) 2 2,076,320

Book value, net ¢ 10,607,753,380 11,260,060,994 11,840,325,250

Direct loans

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(Continued)

The assessed loan portfolio included allowance is detailed as follows As of March 31, 2015:

Principal Covered balance Overdraft Allowance

Loan portfolio


A1 ¢ 8,773,660,369 8,054,582,558 719,077,811 9,651,026

A2 336,652,544 312,237,625 24,414,919 19,681,118

9,110,312,913 8,366,820,183 743,492,730 29,332,144


B1 725,953,235 594,637,455 131,315,779 7,219,890

B2 175,761,394 165,618,917 10,142,477 1,196,428

C1 179,908,408 157,497,783 22,410,625 5,775,904

D 63,891,373 62,180,813 1,710,560 1,351,319

E 767,052,786 375,791,205 391,261,582 389,561,837

1,912,567,196 1,355,726,173 556,841,023 405,105,378

11,022,880,109 9,722,546,356 1,300,333,753 434,437,522

Loan portfolio


Direct generic allowance Principal Covered balance Overdraft Allowance

Up to date 8,773,660,369 8,054,582,558 719,077,811 9,559,086

1 - 30 days 336,652,544 312,237,625 24,414,919 462,258

9,110,312,913 8,366,820,183 743,492,730 10,021,344


Up to date 702,680,021 547,432,956 155,247,065 76,195,245

1 - 30 days 393,078,705 299,512,508 93,566,197 83,594,189

31 - 60 days 381,299,222 331,095,840 50,203,382 2,874,375

61 - 90 days 150,297,925 130,097,096 20,200,829 5,193,314

91 - 180 days 93,448,728 27,442,195 66,006,533 65,609,079

Over 180 days 191,762,595 20,145,578 171,617,017 171,639,176

1,912,567,196 1,355,726,173 556,841,023 405,105,378

¢ 11,022,880,109 9,722,546,356 1,300,333,753 415,126,722

Direct loans

Direct loans

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(Continued)



Loan portfolio


A1 ¢ 9,212,187,400 8,512,630,322 699,557,079 7,369,750

A2 236,522,095 212,361,865 24,160,230 189,218

9,448,709,495 8,724,992,187 723,717,309 7,558,968


B1 840,664,305 710,753,374 129,910,931 7,064,149

B2 118,308,544 107,354,685 10,953,859 1,181,270

C1 162,090,341 147,105,536 14,984,805 3,863,886

D 299,413,416 281,533,744 17,879,672 13,634,981

E 734,343,867 374,995,683 359,348,183 310,165,722

2,154,820,473 1,621,743,022 533,077,450 335,910,008

11,603,529,968 10,346,735,209 1,256,794,759 343,468,976

Loan portfolio



Up to date 9,212,187,400 8,512,630,322 699,557,079 7,020,911

1 - 30 days 236,522,095 212,361,865 24,160,230 538,057

9,448,709,495 8,724,992,187 723,717,309 7,558,968


Up to date 277,874,638 179,301,044 98,573,593 60,525,506

1 - 30 days 508,875,419 474,384,213 34,491,206 58,261

31 - 60 days 681,165,961 531,918,725 149,247,236 35,302,057

61 - 90 days 85,796,997 76,561,054 9,235,943 2,676,970

91 - 180 days 326,948,581 305,978,809 20,969,772 16,744,637

Over 180 days 274,158,877 53,599,177 220,559,700 220,602,577

2,154,820,473 1,621,743,022 533,077,450 335,910,008

¢ 11,603,529,968 10,346,735,209 1,256,794,759 343,468,976

Direct loans

Direct loans

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(Continued)



Loan portfolio


A1 ¢ 10,045,623,610 9,025,117,309 1,020,506,301 2,009,125

A2 335,981,873 295,581,873 40,400,000 67,196

10,381,605,483 9,320,699,182 1,060,906,301 2,076,321


B1 578,235,888 511,175,272 67,060,616 3,455,266

B2 195,069,913 88,565,615 106,504,298 10,668,143

C1 417,491,388 307,408,850 110,082,538 27,582,116

D 17,609,959 4,197,055 13,412,903 6,707,291

E 217,099,856 85,959,721 131,140,134 98,372,293

305,559,637 178,483,078 127,076,561 125,561,764

1,731,066,641 1,175,789,591 555,277,050 272,346,873

12,112,672,124 10,496,488,773 1,616,183,351 274,423,194

Loan portfolio



Up to date 10,045,623,610 9,025,117,309 1,020,506,301 1,986,932

1 - 30 days 335,981,873 295,581,873 40,400,000 89,389

10,381,605,483 9,320,699,182 1,060,906,301 2,076,321


Up to date 447,242,262 295,119,015 111,723,247 24,345,673

1 - 30 days 201,190,927 218,088,519 23,502,407 18,046

31 - 60 days 550,885,643 422,588,321 128,297,322 14,527,667

61 - 90 days 159,692,199 106,938,685 52,753,514 23,663,231

91 - 180 days 260,875,549 73,582,898 187,292,652 158,072,454

Over 180 days 111,180,061 59,472,153 51,707,908 51,719,802

1,731,066,641 1,175,789,591 555,277,050 272,346,873

¢ 12,112,672,124 10,496,488,773 1,616,183,351 274,423,194

Direct loans

Direct loans

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(Continued)

Loans customer


Risk category:

A1 ¢ 8,773,660,369 8,764,009,342

A2 336,652,544 336,282,226

B1 725,953,235 718,733,344

B2 175,761,394 174,564,966

C1 179,908,408 174,132,504

D 63,891,373 62,540,054

E 767,052,786 377,490,951

¢ 11,022,880,109 10,607,753,387

Loans customer

As of December 31, 2014 Gross Net

Risk category:

A1 ¢ 9,212,187,400 9,204,817,651

A2 236,522,095 236,332,877

B1 840,664,305 833,600,156

B2 118,308,544 117,127,275

C1 162,090,341 158,226,455

D 299,413,417 285,778,435

E 734,343,866 424,178,143

¢ 11,603,529,968 11,260,060,992

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(Continued)

Loans customer


Risk category:

A1 ¢ 10,045,623,610 10,043,614,487

A2 335,981,873 335,914,676

B1 578,235,888 574,780,622

B2 195,069,913 184,401,770

C1 417,491,388 389,909,271

C2 17,609,959 10,902,668

D 217,099,856 118,727,563

E 305,559,637 179,997,873

¢ 12,112,672,124 11,838,248,930

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(Continued)

(39) Financial information of the Development Financing Fund

The Bank presents the following financial information as manager of its Development Financing Fund (DCF):


2015 2014 2014

ASSETS

Availabilities ¢ 1,682,735,235 ¢ 1,673,525,844 ¢ 1,219,843,448

Central Bank of Costa Rica 1,682,735,235 1,673,525,844 1,219,843,448

Investments in financial instruments 155,087,629,475 155,392,335,621 138,545,693,591

Available-for-sale 153,708,026,777 154,004,866,763 137,273,233,219

Accrued interest receivable 1,379,602,698 1,387,468,858 1,272,460,372

Accounts, fees and commissions receivable - - 2,161,105

Deferred tax and income tax receivable - - 2,161,105

TOTAL ASSETS ¢ 156,770,364,710 ¢ 157,065,861,465 ¢ 139,767,698,144

LIABILITIES

Obligations with the public ¢ 156,271,826,740 ¢ 156,361,638,401 ¢ 139,381,543,412

Demand obligation 156,271,826,740 156,295,148,240 139,381,543,412

Fees payable to financial institutions - 66,490,161 -

Accounts payable and provisions 248,068,437 242,098,761 236,036,719

Deferred income tax - - 6,482,522

Other sundry accounts payable 248,068,437 242,098,761 229,554,197

TOTAL LIABILITIES ¢ 156,519,895,177 156,603,737,162 139,617,580,131

EQUITY

Equity adjustments ¢ 160,675,839 19,897,343 42,594,194

Adjustment for valuation of

available-for-sale investments 160,675,839 19,897,343 42,594,194

Profit for current year 89,793,694 442,226,960 107,523,819

TOTAL EQUITY ¢ 250,469,533 462,124,303 150,118,013

TOTAL LIABILITIES AND EQUITY ¢ 156,770,364,710 ¢ 157,065,861,465 ¢ 139,767,698,144


BALANCE SHEET

Financial Information

(In colones without cents)

As of March 31, 2015, December 31, 2014 and March 31, 2014

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(Continued)

Staring as of November 27, 2014, after Law No. 9274 was reformed (Comprehensive Reform of the Development Banking System) the managing bank will receive a commission of maximum 10% of the earnings, set by the Governing Council, to cover operation costs, services and any other costs arising from managing the investments (15 % in 2014).

March March

2015 2014

Financial income

Investments in financial instruments ¢ 1,420,059,748 1,191,843,507

Gain on available for-sale financial instruments 18,881,341 11,692,354

Total financial income 1,438,941,089 1,203,535,861

Financial expenses

Obligations with the Public 527,880,171 434,442,682

Losses in exchange differences 26,904,144 83,566,413

Total financial expenses 554,784,315 518,009,095

FINANCIAL INCOME 884,156,774 685,526,766

Other operating income

Exchange and arbitrage, foreign currency 16,859,187 10,611,240

Other operating income 22,052 20,860,537

Total other operating income 16,881,239 31,471,777

Other operating expenses

Exchange and arbitrage, foreign currency 327,731 164,455

Other operating expenses 2,773,338 8,627

Total other operating expenses 3,101,069 173,082

GROSS OPERATING INCOME 897,936,944 716,825,461

Statutory allocations of earnings (DFF) 808,143,250 609,301,642

RESULT FOR THE PERIOD ¢ 89,793,694 107,523,819

STATUTORY ALLOCATIONS

Statutory allocations of earnings (DFF) ¢ 808,143,250 609,301,642

Service fees and commissions (DCF) 89,793,694 107,523,819

¢ 897,936,944 716,825,461


INCOME STATEMENT

As of March 31, 2015 and March 31, 2014

Financial Information

(In colones without cents)

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(Continued)

The investments in financial instruments corresponding to the Development Financing Fund (DCF) are as follow:


2015 2014 2014

Available for sale investments ¢ 153,708,026,777 154,004,866,763 137,273,233,219

Accrued interest on available for

sale investments 1,379,602,698 1,387,468,858 1,272,460,372

¢ 155,087,629,475 155,392,335,621 138,545,693,591


2015 2014 2014

Available for sale Fair value Fair value Fair value

Issuers of the country:

Government ¢ 79,930,209,198 86,531,159,491 87,665,023,331

State Bank 57,308,737,621 48,291,339,294 41,206,629,236

137,238,946,819 134,822,498,785 128,871,652,567

Foreign Issuers :

Government - - 5,897,588,183

Private Banks 16,469,079,958 19,182,367,978 2,503,992,469

¢ 153,708,026,777 154,004,866,763 137,273,233,219

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(Continued)

(40) Transition to International Financing Reporting Standards (IFRSs) Through various resolutions, CONASSIF (the Board) agreed to partial adoption, starting January 1, 2004, of IFRSs promulgated by the International Accounting Standards Board (IASB). In order to regulate application of those Standards, the Board issued the Terms of the Accounting Regulations Applicable to Entities Regulated by SUGEF, SUGEVAL, SUPEN, and SUGESE and to Nonfinancial Issuers and approved a comprehensive revision of those regulations. On March 17, 2007 the Council adopted a comprehensive reform of the “Accounting regulations/standards applicable to supervised entities by SUGEF, SUGEVAL, SUPEN and SUGESE and non-financial issuers”.

On May 11, 2010, the Board issued private letter ruling CNS 413-10 to revise the Accounting Regulations Applicable to Entities Regulated by SUGEF, SUGEVAL, SUPEN, and SUGESE and to Non-financial Issuers (the Regulations), which mandate application by regulated entities of IFRSs and the corresponding interpretations issued by the IASB in effect as of January 1, 2008, except for the special treatment indicated in Chapter II of the aforementioned Regulations.

Pursuant to the Regulations and in applying IFRSs in effect as of January 1, 2008, any new IFRSs or interpretations issued by the IASB, as well as any other revisions of IFRSs adopted that will be applied by regulated entities, will require the prior authorization of the Board.

On April 4, 2013 C.N.S. 1034/08 was issued, stating that, for the period starting January 1, 2014, IFRS 2011 shall be applied with exception of special treatments referred to in Chapter II of the rules for regulated financial entities.

Following are some of the main differences between the accounting standards issued by the Board and IFRSs, as well as the IFRSs or interpretations of the International Financial Reporting Interpretations Committee (IFRICs) yet to be adopted:

a) IAS 1: Presentation of Financial Statements

New IAS I is effective as from the periods on or after January 1, 2009.

The presentation of financial statements required by the Board differs in some respects from presentation under IAS 1. Following are some of the most significant differences:

SUGEF Standards do not allow certain transactions, such as clearing house balances, gains or losses on the sale of financial instruments, income taxes, etc. to be presented on a net basis. Given their nature, IFRSs require those balances to be presented net to prevent assets and liabilities or profit or loss from being overstated.

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(Continued)

b) Revised IAS 1: Financial Statements Presentation IAS 1 requires an entity to disclose reclassification adjustments and income tax relating to each component of other comprehensive income. Reclassification adjustments are amounts reclassified to profit or loss in the current period that were previously recognized in other comprehensive income. Revised IAS I changes the name of some financial statements, using “statement of financial position” instead of balance sheet. IAS I require an entity to present a statement of financial position as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes retrospective restatement. The financial statements presentation format is determined by the Board and can be different from the options permit on certain IFRS and IAS.

c) IAS 7: Statements of Cash Flows The Board has only authorized preparation of the cash flow statement using the indirect method. The direct method is also acceptable under IAS 7.

d) IAS 8: Accounting Policies, Changes in Accounting Estimates, and Errors

In some cases, SUGEF has authorized the booking of notices of deficiencies received from Tax Authorities against prior period retained earnings.

e) IAS 16: Premises and equipment

The Standard issued by the Board requires the revaluation of property through appraisals made by independent appraisers at least once every five years, eliminating the option to carry these assets at cost or to revalue other types of assets.

Furthermore, SUGEF permits the conversion (capitalize) of the surplus revaluation directly in equity shares (only for state banks), without having to relocate previously to retained earnings, as required by IAS 16.

Moreover, under IAS 16, depreciation continues on property, plant and equipment, even if the asset is idle. The Standard issued by the Board allows entities to suspend the depreciation of idle assets and reclassify them as foreclosed assets.

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(Continued)

f) IAS 18: Revenue The Board has allowed regulated financial entities to recognize loan fees and commissions collected prior to January 1, 2003 as revenue. Additionally, the Board has permitted the deferral of 25%, 50%, and 100% of loan fees and commissions for transactions completed in 2003, 2004, and 2005, respectively. IAS 18 prescribes deferral of 100% of those fees and commissions over the loan term. The Board has also allowed deferral of the net excess of loan fee income minus expenses incurred for activities such as assessment of the borrower’s financial position, evaluation and recognition of guarantees, sureties, or other collateral instruments, negotiation of the terms of the instrument, preparation and processing of documents, and settlement of the operation. IAS 18 does not allow deferral on a net basis of loan fee income. Instead, it prescribes deferral of 100% of loan fee income, and permits the deferral of only certain incremental transaction costs, rather than all direct costs. Accordingly, when costs exceed income, loan fee income is not deferred, since the Board only allows the net excess of income over expenses to be deferred. This treatment does not conform to IAS 18 and IAS 39, which prescribe separate treatment for income and expenses (see comments on IAS 39). Starting as of January 1, 2014 the treatment of loan commissions was implemented as directed in IAS 18.

g) Revised IAS 19: Benefits for employees

This standard is for application in the periods that begin in or after January, 1, 2013. It includes changes referring to the benefit plans defined for which it previously required that the measurements of the actuarial appraisals were recognized in the statement of results or in the other integral results. The new IAS 19 will require the changes in measurements to be included in other integral results and the cost of services and net interest to be included in the statement of results.

h) IAS 21: The Effects of Changes in Foreign Exchange Rates The Board requires that the financial statements of regulated entities be presented in colones as the functional currency.

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(Continued)

i) IAS 24: Related parties disclosures The Council of the International Accounting Standards Board revised IAS 24 in 2009 in order to: (a) simplify the definition of “related parties”, clarify the meaning to be given to this term and eliminate the incoherencies of the definition; (b) Provide a partial exemption from the requirement of information disclosed by entities related with the government. This standard will be applied retroactively for the annual periods starting as from January 1, 2011.

j) IAS 27: Consolidated and Separate Financial Statements

The Board requires that the financial statements of a parent be presented separately, measuring its investments by the equity method. Under IAS 27, a parent is required to present consolidated financial statements. A parent need not present consolidated financial statements when the ultimate or any intermediate parent of the parent produces consolidated financial statements available for public use, provided certain other requirements are also met. However, in this case, IAS 27 requires that investments be accounted for at cost.

In the case of financial groups, the holding company must consolidate the financial statements of all of the companies of the group in which it holds an ownership interest of twenty-five percent (25%) or more, irrespective of control. For such purposes, proportionate consolidation should not be used, except in the consolidation of investments in joint arrangements. Amended IAS 27 (2008) requires accounting for changes in ownership interests by the Bank in a subsidiary, while maintaining control, to be recognized as an equity transaction. When the Bank loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognized in profit or loss. The amendments to IAS 27 became mandatory for the Bank’s 2010 consolidated financial statements. These amendments have not been adopted by the Board. The objective of this standard is to describe accounting treatment and disclosures required by subsidiaries, joint ventures and associates when the entity presents separate financial statements.

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(Continued)

k) IAS 28: Investments in partners and joint ventures The Board requires consolidation of investments in companies in which an entity holds twenty-five percent (25%) or more equity interest, irrespective of any considerations of control. Such treatment does not conform to IAS 27 and IAS 28. The objective of this standard is to describe the accounting treatment for Investments in partners and it determines the requirements for the application of the method of equity participation when recording investments in partners and joint ventures.

l) Revised IAS 32: Financial Instruments: Presentation Revised IAS 32 provides new guidelines clarifying the classification of financial instruments as liabilities or equity (e.g. preferred shares). SUGEVAL determines whether those shares fulfill the requirements of share capital.

m) Amendments to IAS 32: Financial Instruments – Presentation and IAS 1: Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation The amendments to the standards require puttable instruments and instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation to be classified as equity if certain conditions are met. These changes have not been adopted by the Board.

n) IAS 37: Provisions, Contingent Liabilities and Contingent Assets SUGEF requires that a provision for possible losses must be booked for contingent assets. IAS 37 does not allow this type of provision.

o) IAS 38: Intangible Assets The commercial banks listed in article 1 of Internal Regulations National Banking System (Law No. 1644) may present organization and installation expenses as an asset in the balance sheet, however, those expenses must be fully amortized on the straight-line method over a maximum of five years. Similar procedure and term must be used for the amortization of goodwill acquired. Automatic applications should be amortized systematically by the straight line method during the term which produces economic benefits; such term could not exceed five years. Similar proceeding applies to purchase good will.

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(Continued)

IAS 38 allows different methods to distribute an asset amortizable amount during useful life. Useful life of automatic applications could be longer than five years as stated by CONASIF standards. On the order hand, IFRS do not require annual goodwill amortization, only evaluating impairment.

p) IAS 39: Financial Instruments: Recognition and Measurement The Board requires that the loan portfolio be classified pursuant to SUGEF Directive 1-05 and that the allowance for loan impairment be determined based on that classification. It also allows excess allowances to be booked. IAS 39 requires that the allowance for loan impairment be determined based on a financial analysis of actual losses. IAS 39 also prohibits the booking of provisions for contingent accounts. Any excess allowances must be reversed in the income statement.

Revised IAS 39 introduced changes with respect to classification of financial instruments, which have not been adopted by the Board. The revised version includes the following changes:

The option of classifying loans and receivables as available for sale was established.

Securities quoted in an active market may be classified as available for sale, trading, or

held to maturity.

The “fair value option” was established to designate any financial instrument to be measured at fair value through profit or loss, provided a series of requirements are met (e.g. the instrument has been measured at fair value since the original acquisition date).

The category of loans and receivables was expanded to include purchased loans and

receivables that are not quoted in an active market. The Board has also allowed capitalization of direct costs incurred for assessment of the borrower’s financial position, evaluation and recognition of guarantees, sureties, or other collateral instruments, negotiation of the terms of the instrument, and preparation and processing of documents, net of income from loan fees. However, IAS 39 only permits capitalization of incremental transaction costs, which are to be presented as part of the financial instrument and may not be netted against loan fee income (see comments on IAS 18).

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(Continued)

Regular purchases and sales of securities are to be recognized using the settlement date accounting only.

Depending on the type of entity, financial assets are to be classified as follows:

a) Pooled portfolios

Investments in pooled investment funds, pension and retirement savings accounts, and similar trusts are to be classified as available for sale.

b) Own investments of regulated entities

Investments in financial instruments of regulated entities are to be classified as available for sale.

Own investments in open investment funds are to be classified as trading financial assets. Own investments in closed investment funds are to be classified as available for sale. Entities regulated by SUGEVAL and SUGEF may classify other investments in financial instruments as trading investments, provided there is an express statement of intent to trade them within 90 days from the acquisition date. Banks regulated by SUGEF may not classify investments in financial instruments as held to maturity. The above classifications do not necessarily adhere to the provisions of IAS 39. The amendment to IAS 39 clarifies the existing principles that determine whether specific risks or portions of cash flows are eligible for designation in a hedging relationship. The amendments to IAS 39 became mandatory for 2010 financial statements, with retrospective application. This amendment has not been adopted by the Board.

q) IAS 40: Investment Property IAS 40 allows entities to choose between the fair value model and the cost model to measure their investment property. The Standard issued by the Board only allows entities to use the fair value model to measure this type of assets, unless clear evidence for determining the fair value of the assets is unavailable.

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(Continued)

r) Revised IFRS 3: Business Combinations

The revised standard (2008) incorporates the following changes:

The definition of a business has been broadened, which is likely to result in more

acquisitions being treated as business combinations.

Contingent consideration will be measured at fair value, with subsequent changes therein recognized in profit or loss.

Transaction costs, other than share and debt issue costs, will be expensed as incurred.

Any pre-existing interest in the acquirer will be measured at fair value, with the related

gain or loss recognized in profit or loss.

Any non-controlling (minority) interest will be measured at either fair value, or at its proportionate interest in the identifiable assets and liabilities of the acquirer, on a transaction-by-transaction basis.

Revised IFRS 3, which became mandatory for 2010 financial statements, will be applied prospectively. This Standard has not been adopted by the Board.

s) IFRS 5: Non-current Assets Held for Sale and Discontinued Operations The Board requires that an allowance be booked for 100% of the carrying amount of assets that have not been sold within two years. IFRS 5 requires that such assets be recorded and measured at the lower of cost or fair value, discounting the future cash flows of assets to be sold in more than one year. Accordingly, assets could be understated, with excess allowances.

t) Amendments to IFRS 7: Financial Instruments – Disclosures

In March 2009, the IASB issued certain amendments to IFRS 7, Financial Instruments: Disclosure, which requires enhanced disclosures about fair value measurements and liquidity risk in respect of financial instruments.

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(Continued)

The amendments require that fair value measurement disclosures use a three-level fair value hierarchy that reflects the significance of the inputs used in measuring fair values of financial instruments. Specific disclosures are required when fair value measurements are categorized as Level 3 (significant unobservable inputs) in the fair value hierarchy. The amendments require that any significant transfers between Level 1 and Level 2 of the fair value hierarchy be disclosed separately, distinguishing between transfers into and out of each level. Furthermore, changes in valuation techniques from one period to another, including the reasons therefor, are required to be disclosed for each class of financial instruments.

Further, the definition of liquidity risk has been amended and it is now defined as the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The amendments require disclosure of a maturity analysis for non-derivative and derivative financial liabilities, but contractual maturities are required to be disclosed for derivative financial liabilities only when contractual maturities are essential for an understanding of the timing of cash flows. For issued financial guarantee contracts, the amendments require the maximum amount of the guarantee to be disclosed in the earliest period in which the guarantee could be called. These amendments have not been adopted by the Board.

u) IFRS 9: Financial Instruments

IFRS 9 deals with classification and measurement of financial assets. The requirements of this Standard represent a significant change from the existing requirements in IAS 39 in respect of financial assets. The Standard contains two primary measurement categories for financial assets: amortized cost and fair value. The Standard eliminates the existing IAS 39 categories of held to maturity, available for sale, and loans and receivables. For an investment in an equity instrument which is not held for trading, the Standard permits an irrevocable election, at initial recognition, on an individual share-by-share basis, to present all fair value changes in other comprehensive income. No amount recognized in other comprehensive income would ever be reclassified to profit or loss at a later date. The standard requires that derivatives embedded in contracts with a host contract that is a financial asset within the scope of the standard not be separated; instead the hybrid financial instrument is assessed in its entirety as to whether it should be measured at amortized cost or fair value.

This standard requires entities to determine whether presenting the effects of changes in the credit risk of a liability designated at fair value through profit or loss would create an accounting mismatch based on facts and circumstances at the date on which the financial liability is initially recognized.

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(Continued)

The objective of this IFRS is to establish the principles for the financial information about financial assets so that it will present useful and relevant information for the users of the financial statements facing the evaluation of the amounts, schedule and uncertainty of the future cash flows of the entity. The standard includes three chapters on recognition, impairment of financial assets and heading instruments. This standard supersedes IFRS 9 (2009), IFRS 9 (2010) and IFRS 9 (2013). However, for annual periods beginning in or before January 1, 2018, and entity may elect to apply previous versions of IFRS 9 if, and only if the corresponding date of the entity initial application is prior to February 1, 2015.

v) IFRS 10: Consolidated Financial Statements

This Standard provides a revised control definition and an application guidance. Therefor, this IFRS supersedes IAS 27 (2008) and SIC 12, Consolidation - Special Purpose Entities, and is applicable to all investees.

Early application is permitted. Entities that apply this IFRS earlier must disclose that fact and apply IFRS 11, IFRS 12, IAS 27 (as amended in 2011), and IAS 28 (as amended in 2011) simultaneously.

An entity is not required to make adjustments to the accounting for its involvement with an investee when entities that were previously consolidated or unconsolidated in accordance with IAS 27 (2008), SIC 12, and this IFRS, continue to be consolidated or continue not to be consolidated.

When application of this IFRS results in an investor consolidating an investee that is a business not previously consolidated, the investor must:

1) determine the date when the investor obtained control of that investee on the basis of the

requirements of this IFRS; and

2) measure the assets, liabilities, and no-controlling interests as if acquisition accounting had been applied from that date.

If (2) is impracticable, then the deemed acquisition date must be the beginning of the earliest period for which retroactive application is practicable, which may be the current period.

The standard is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. This standard has not been adopted by the Board.

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(Continued)

w) IFRS 11: Joint Arrangements

This standard was issued in May 2011 with an effective date of January 1, 2013. The Standard addresses the inconsistencies in the accounting for joint arrangements and requires a single accounting treatment for interests in jointly controlled entities. This standard has not been adopted by the Board.

The objective of this IFRS is to establish principles for joint arrangements disclosures.

It supersedes IAS 31, Interest in Joint Ventures and SIC 13, Jointly Controlled Entities, non-monetary contributions by ventures.

x) IFRS 12: Disclosure of investments in other entities

This Standard was issued in May 2011 with an effective date of January 1, 2013. This Standard requires an entity to disclose information that enables users of financial statements to evaluate the nature and financial effects of its investments in other entities, including joint arrangements, associates, structured entities, and “off balance” activities. This Standard has not been adopted by the Board.

y) IFRS 13: Fair Value Measurement

This Standard was issued in May 2011 and clarifies the definition of fair value, establishes a single procedure for measuring fair value, and defines the measurements and applications required or permitted by IFRSs. This Standard is to be applied for annual periods beginning on or after January 1, 2013. Earlier application is permitted. This Standard has not been adopted by the Board.

z) IFRS 15: Revenue derived from contracts and clients International Financial Reporting standard IFRS 15, Revenue derived from contracts and clients established principles for presentation of useful information to users of the financial statements about the nature, amount, schedule and uncertainty of revenue and cash flows arising from an entity´s contracts with their clients. IFRS 15 applies to annual periods that begin in or after January 1, 2017. Earlier application is permitted.

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(Continued)

IFRS 15 supersedes: a. IAS 11: Construction Contracts; b. IAS 18: Revenue; c. IFRIC 13: Clients loyalty programs; d. IFRIC 15: Agreements for construction of Properties; e. IFRIC 18: Transfer of assets from customers; f. SIC 31: Revenue swap – advertising services Revenue is important information for users of financial statements, assessing the situation and financial performance of an entity. However, the above requirements for the recognition of revenue on International Financial Reporting Standards (IFRS) differ from accounting principles generally accepted in the United States of America (US GAAP) and both requirements sets needed improvement. The requirements for recognition of revenue from previous IFRS provided limited guidance and, therefore, the two main standards for the recognition of revenue, IAS 18 and IAS 11, could be difficult to apply to complex transactions. Furthermore, IAS 18 provided limited guidance on many important issues of revenue, such as accounting of agreements with multiple elements. Instead, US GAAP comprised broader aspects in the recognition of revenue, along with numerous requirements for industries or specific transactions, which resulted in a different accounting of similar transactions. Therefore, the Council of International Financial Reporting Standards (IASB) and the issuer of national standards in the United States, the Council of Financial Accounting Standards Board (IASB), initiated a joint project to clarify the principles for recognition of revenue and to develop a common standard for revenue to IFRS and US GAAP that: a. Eliminate inconsistencies and weakness of the above requirements on revenue: b. Provides a solid framework to address the problems of revenue; c. Improves comparability of recognition practices of revenue between entities, industries,

jurisdictions and capital market; d. Provides more useful information to users of the financial statements through disclosure

requirements improved; and e. Simplify the preparation of the financial statements, reducing the number of

requirements that and entity must refer. The basic principle of IFRS 15 is that an entity recognizes revenue to represent transfer of goods or services committed to customers in exchange for an amount that reflects the consideration to which the entity expects to be entitled to exchange of such goods or services. An entity recognizes revenue in accordance with the basic principle by applying the following steps:

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(Continued)

a. Step 1: Identify the contract (contracts) with the client – a contract is an agreement between two or more parties that creates enforceable rights and obligations. The requirements of IFRS 15 apply to each contract which has been agreed with a client and meets the specified criteria. In some cases, IFRS 15, requires an entity to combine contracts and accounted for as one. IFRS 15 also provides requirements for the posting contracts changes.

b. Step 2: Identify performance obligations in the contract – a contract includes commitments to transfer goods or services to a customer. If goods or services are different, commitments and performance obligation are accounted for separately. A good or service different if the client can take advantage of the good or service itself or with other resource that are available to the customer and commitment of the institution to transfer the good or service to the customer is separately recognizable from other contract commitments.

c. Step 3: To determine the transaction Price – the Price of transaction is the amount of

consideration in a contract to which an entity expects to be entitled in exchange for the transfer of goods or services involved with the client. The transaction price can be a fixed amount of the consideration for the client, but may sometimes include a variable compensation in cash or other form. The transaction price is also adjusted by the value of money over time if the contract includes a significant financing component, as well as any consideration payable to the customer. If the consideration is variable, an entity shall estimate the amount of the consideration to which it shall be entitled to the exchange for goods or services involved. The estimated variable compensation amount is included in the price of transaction only to the extended that is highly likely that a significant reversal of the amount of income recognized accumulated to not occur when the uncertainty associated with the variable compensation was subsequently resolved.

d. Step 4: Allocate the transaction price between performance obligations of the contract – an entity usually allocate the transaction price to each performance obligation based on the relative independent selling prices of each good or service involved in the contract. If a selling price is not observable independently, an entity shall estimate. Sometimes, the transaction price includes a discount or a variable amount of the consideration that relates entirely to a part of the contact. The requirements specify when an entity assigns the discount or variable consideration to one or more, but not all the performance obligations (different goods or services) of the contract.

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(Continued)

e. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation –

an entity recognizes the revenue when (or as) it satisfies a performance obligation by transferring goods or services committed to the client (which is when the customer obtains control of that good or service). The amount of income recognized is the amount allocated to the performance obligation satisfied. A performance obligation can be met at any given time (usually for commitments to serve the customer). For performance obligations that are satisfied overtime, an entity recognizes revenue over time by selecting an appropriate method to measure the progress of the entity toward complete satisfaction of that performance obligation.

aa) IFRIC 10, Interim financial statements and deterioration

This statement prohibits the reversal of an impairment loss recognized in a previous interim period, regarding to surplus value, investment in an equity instrument or a financial asset booked at cost. IFRIC 10 applies to surplus value, investment in equity instruments and financial assets booked at cost starting from the date the first time the criteria of measurement of NIC 36 and NIC 39 was applied (i.e. January 1, 2004). The Counsel allows revisions of estimates.

bb) IFRIC 12, Services concession agreements

This interpretation provides guidelines for the posting of public service concession agreements to a private operator. This interpretation applies both to:

The infrastructures that the operator builds purchases from a third party, to be used for the provision of services agreements; and

Existing infrastructures to which the operator has access in order to provide the services established in the agreement.

IFRIC 12 is mandatory for financial statements as of July 1, 2009. This IFRIC has not been adopted by the Council.

cc) IFRIC 13, Customer Loyalty programs

This interpretation provides guidance to the entity that grants credits –awards to its customers for loyalty as part of sales transaction which, subject to compliance with any additional condition established as a requirement, the customer can redeem in the future in form of goods, free services or discounts. IFRIC 13 is mandatory for financial statements starting from January 1, 2011. This IFRIC has not been adopted by the Council.

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(Continued)

dd) IFRIC 14, IAS 19, Limit of Assets for determined benefits, obligation to maintain a minimum level of funding and their interaction

This interpretation applies to benefits defined for former employees and other long term benefits for employees. It also considers requirements to maintain a minimum level of funding to any requirement to fund a benefits plan for former employees or other long term benefits plans. It also covers the situation where a minimum level of funding may result in a liability. The IFRIC 14 is mandatory for financial statements starting from January 1, 2011, which retrospective application. This IFRIC has not been adopted by the Council.

ee) IFRIC 16, Hedges of net investment in abroad business

This interpretation allows an entity using step considerations to choose an accounting policy that covers the risk of exchange rate, in order to determine the accumulative adjustment of currency conversion that is reclassified in results for the disposal of net investments in abroad business, as if the direct method has been used. The IFRIC 16 is mandatory for financial statements as of July, 1, 2009. The Council has not adopted his standard.

ff) IFRIC 17, Distribution of non- cash assets to owners This interpretation provides guidance for accounting dividends payable distributed using non- cash assets, at the beginning and the end of the period. If an entity declares dividends to be distributed through non- cash assets, after the closing of a reported period but before the financial statements are authorized to be issued, it will reveal: a) The nature of the asset to be distributed;

b) The carrying amount of the asset at the closing date; and

c) If the fair values are determined, wholly or partially, by reference to price quotes published in an active market or are estimated using a valuation method, as well as the method used to determine the fair value and the assumptions applied when using a valuation method.

IFRIC 17 is mandatory for financial statements starting from July 1, 2009. This standard has not been adopted by the Council. Its application is prospective; a retrospective application is not permitted.

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(Continued)

gg) IFRIC 18, Transfer of assets from customers

This interpretation offers guidance for accounting of transfers of property, plant and equipment for entities receiving such transfer from customers, as well as those agreements in which an entity receives cash from customers and must use the cash amount only for construction or purchasing property, plant and equipment. This IFRIC is mandatory for financial statements from July 1, 2009. This IFRIC has not been adopted by the Council.

hh) IFRIC 19, Amortizing financial liabilities with equity instruments

This interpretation provides guidance for accounting renegociated terms of financial liability and give rise to the entity that issues the equity instruments to cancel the financial liability totally or in part. IFRIC 19 is mandatory for financial statements starting from July 1, 2010. This IFRIC has not been adopted by the Council.

ii) IFRIC 17: Distributions of non- cash assets to owners

This IFRIC is mandatory for financial statements from July 1, 2009. Its application is prospective; a retrospective application is not permitted.

jj) IFRIC 18: Transfer of assets from customers

This interpretation is mandatory for financial statements form July 1, 2009. This interpretation is applicable to entities that transfer assets to other entities for goods or services of different nature, for which an income has to be recognized due to the difference in value.

kk) IFRIC 19: Amortizing financial liabilities with equity instruments

IFRIC 19 is mandatory for financial statements starting from July 1, 2010.

ll) IFRIC 21: Levies

This interpretation addresses the accounting of a liability to pay a levy if that liability is within IAS 37. It also addresses the accounting of a liability to pay a levy where the amount and maturity are true.

This interpretation does not address the accounting of cost arising from the recognition of a liability to pay a levy. Entities should apply other standards to decide whether the recognition of a liability to pay a tax results in an asset or an expense.

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(Continued)

The event that triggers the obligation and results in a liability to pay a levy is the activity that produces the levy payment, as established by law. For example, if the activity that results in the levy payment is to generate an income from ordinary activities in this period, and the calculation of this tax is based on income from ordinary activities that took place in an earlier period, the event that results in the obligation of the levy is the income generation in the current period. Generating revenue in the previous periods is necessary, but not sufficient to create a present obligation. An entity does not have an implied obligation to pay a levy to be generated by future period operation; as a result, the entity is economically compelled to continue operating in that future period. The preparation of financial statements under the going concern assumption does not imply that an entity has a present obligation to pay a levy to be generated by operations in future periods. The liability to pay a levy is recognized progressively if the event results in the obligation over a period (for example, if the activity that generates the payment of the tax occurs as established by law, over a period). For example, if the event that results in the obligation is the generation of a regular income for activities over a period, the corresponding liability is recognized as the entity produces that income. An entity shall apply this interpretation for annual periods beginning on or after January 1, 2014.

mm) Amendments to existing standards

Benefits for employees (Amendment to IAS 19)

This rule is modified to recognized the discount rate to be used corresponding with local currency bonds.

The transition date is for annual periods that begin in or after January 1, 2015; it may be applied in advance and disclose that fact. Any application adjustment must be made against retained earnings at the beginning of the period.

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(Continued)

This standard is for application in the periods that begin in or after January 1, 2013. It includes changes referring to the benefit plans defined for which it previously required that the remeasurement of the actuarial appraisals were recognized in the statement of results or in other integral results. The new IAS 19 will require changes in the measurements to be included in other integral results and the cost of services and net interest to be included in the statement of results. Sales or contribution of assets between an investor and partner or joint venture (Amendments to IFRS 10 and IAS 28) Loss of Control When a controller loses control of a subsidiary, the controller: a. Will derecognize assets and liabilities of former subsidiary of the consolidated

statement of financial position. b. Recognizes an investment retained in the former subsidiary at fair value and

subsequently accounted for this investment and the amount owed by or to the former subsidiary thereof, in accordance with relevant IFRS´s. This retained interest at fair value is measured again, as describe in paragraph B98 (b) (iii) and B99(a). The value measured again, if applicable, at the date when control is lost, is regarded as the fair value on initial recognition of financial assets, in accordance with IFRS 9 or cost on initial recognition of an investment in an associate or joint venture.

c. Will recognize gain or loss associated with the loss of control of previous controller as specified in paragraphs B98 to B99.

Sale or contribution of assets between an investor and partner or joint venture (Amendments to IFRS 11), This IFRS requires the acquirer of a share in a joint venture to apply all the principles on accounting for business combinations of IFRS 4 and other IFRS, except those in conflict with the guidelines of this IFRS. In addition, the acquirer shall disclose the information required by IFRS 3 and other IFRS for business combinations.

Accounting for acquisitions of shares in joint ventures (Amendments to IFRS 11) This IFRS requires the acquirer of a share in a joint venture to apply all the principles on accounting for business combinations of IFRS 4 and other IFRS, except those in conflict with the guidelines of this IFRS. In addition, the acquirer shall disclose the information required by IFRS 3 and other IFRS for business combinations.

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(Continued)

Accounting for acquisitions of shares in joint ventures (Amendments to IFRS 11), issued in May, 2014, amended the heading after paragraph B33 and added paragraphs. If an entity applies these amendments but doesn’t apply IFRS 9, the reference in these amendments to IFRS 9 shall be read as a reference to IAS 39, Financial Instruments: Recognition and Measurement. Amendments to IFRS 11, May, 2014. An entity shall apply those amendments prospectively for annual periods that begin in or after January 1, 2016. Earlier application is permitted. If an entity applies these amendments for a period beginning before, it will disclose that fact. Share method in separate financial statements (Amendments to IAS 27) Separate financial statements are those presented by a controller (inverter with control on a subsidiary) or an investor with joint control in an investee or significant influence over it. Subject to the requirements of this standard, an entity may choose to account for its investment in subsidiaries, joint ventures and associates at cost, in accordance with IFRS 9, Financial Instruments, or using the share equity method as described in IAS 28, Investments in associates and joint ventures. When an entity prepares separate financial statements, it shall account for investments in subsidiaries, joint ventures and associates: a. at cost, or; b. in accordance with IFRS 9; or c. Using the equity method as described in IAS 28

An entity shall apply the same accounting for each category of investment. The accounted investments are registered at cost or using the share equity method in accordance with IFRS 5, non- current assets held for sale and discontinued operations, in cases where they are classified as held for sale or for distribution (or included in a group of assets for disposal that are classified as held for sale or for distribution). In these circumstance, the measurement of investments accounted is not amended in accordance with IFRS 9. The share method in separate financial statements (Amendments to IAS 27), issued in August, 2014, amended paragraphs 4 to 7, 10, 11 B and 12. An entity shall apply those amendments for annual periods beginning on or after January 1, 2016, retrospectively, in accordance with IAS 8, Accounting Policies, changes in Accounting Estimates and Errors. Earlier application is permitted. If an entity applies these amendments for a period beginning before, it will disclose that fact.

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(Continued)

Novation or renewal of derivates and continued hedges accounting (Amendments to IAS 39)

This document established amendments to IAS 39, Financial Instruments: Recognition and Measurement. These amendments result from proposals of the standard project 2013/2: Novation derivates and continued hedge accounting, and the corresponding responses received (Proposed Amendments to IAS 39 and IFRS 9) was published in February 2013. IASB has amended IAS 39 to discontinue exempt the hedge accounting when the novation of a derivate designed as a hedging instrument meets certain conditions. A similar exception will be included in IFRS 9, Financial Instruments. It is effective from annual periods beginning on or after January 1, 2014.

Disclosure of recoverable amount of nonfinancial assets

This document establishes the amendments to IAS 36, Impairment of Assets. The amendments result from proposal of the standard project 2013/1, Disclosure of the recoverable amount of nonfinancial assets and corresponding response received (Proposed Amendments to IAS 36) that was published in January 2013. In May 2013, paragraphs 130 and 134 were amended as well as the heading of paragraph 138. An entity shall apply these amendments retrospectively for annual periods beginning on or after January 1, 2014. Earlier application is permitted. An entity shall not apply those amendments in periods (including comparative periods) in which IFRS 13 is applied. The changes made in this document along the disclose requirements to IAS 36 with the original intention of the IASB. For the same reason, the IASB also amended IAS 36 to require amount of assets that present impairment is based on fair value less cost of disposal, consistent with the disclosure requirements for impairment assets presented in U.S. GAAP

nn) Amendments to standards established by CONASSIF The following amendments to the accounting standards applicable to entities supervised by SUGEF, SUGEVAL, SUGESE, SUPEN and nonfinancial issuers established by CONASSIF shall apply from January 1, 2014: 1. Delete the last paragraph of article 8. Therefore, not allowed to commercial state banks

to capitalize total revaluation surplus.

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(Continued)

2. Delete paragraph two of article 19, IAS 40, Investment Property for rent or goodwill. Therefore, the adjustments to fair value of investment properties are recognized in the income statement.

3. Modify paragraph four of the concept of Group 130, Loan portfolio, so the commissions

representing an adjustment to the effective yield should be recorded as a deferred credit.

4. Add the account of deferred direct cost associated with credit, recognizing the direct cost incurred by the entity in the formalization of credit and must be repaid by means of effective intersect method.

5. Another important change is that the formats and the scope of the information to be

disclosed in the financial statements, will be made mostly based on IAS 1, including the concept of other comprehensive income, adjusting the statement of changes in equity, and requiring the presentation criteria, for the intermediate financial information in accordance with IAS 34.

(41) Figures 2014

As of March 31, 2015, financial statement figures have been reclassified for comparison with those at 2014, per modifications to the Chart of Accounts and SUGEF Directive 31-04: "Regulation on the financial information of entities, groups and financial conglomerates" approved by CONASSIF and effective from January 1, 2014. In the statement of financial position, Other foreclosed assets includes the amount of ¢372,672,348 that were presented as Other assets as valued stamps, tax form, phone cards and stamps of the National Registry in the financial statements as of March 31, 2015

(42) Relevant and subsequent events As of March 31, 2015 there are relevant and subsequent events to disclose as follows: On May 27, 2014 the return of Capital to Banco de Costa Rica was approved in Extraordinary General Assembly of Shareholders, minute No.02-14. Therefore, there was a return of the surplus capital to Banco de Costa Rica as the only partner of BCR Pensiones, in the amount of ¢700,000,000. The capital of the Pension Operator decreases in the indicated amount, going from 1,979,450,000 shares with a nominal value of one colon each to 1,279,450,000 shares with the same nominal value.

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otes to Consolidated Financial Statements

On September 19, 2014, BCR Corredora de Seguros, S.A. carries out the distribution of accumulated earning from previous periods in the amount of ¢550,000,000 in accordance with the agreement of the Assembly of Shareholders approving the proposal. On September 26, 2014, BCR Valores Puesto de Bolsa, S.A. carries out the distribution of accumulated earning from previous periods in the amount of ¢860,000,000 in accordance with the agreement of the Assembly of Shareholders approving the proposal. On September 30, 2014 BCR Sociedad Administradora de Fondos de Inversión, S.A. carries out the distribution of accumulated earnings from previous periods in the amount of ¢3,000,000,000 in accordance with the agreement of the Assembly of Shareholders approving the proposal. On January 14, 2015, according to the latest regulation proposal notified to the Bank by the Dirección General de Tributación, regarding the present issuers eventually representing a tax contingency and in order to make the corresponding provision considering the legal risk involved, it is indicated that the total amount for tax adjustments, interests and penalties as of January 8, 2015 is of ¢5.116.774.222.

The Bank expressed partial disagreement with the proposed regulation and is expecting the administrative liquidation to be notified, containing concrete facts and legal principles motivating the differences in the tax bases and fax fees.

(43) Date of authorization for issuance of the financial statements

The General Management of the Bank authorized the issuance of the consolidated Financial Statements on April 30, 2015. SUGEF has the possibility to require modifications to the Financial Statements after the date of authorization for issuance.

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