DUKASCOPY BANK SA

ANNUAL REPORT

2010

CONTENTSCONTENTS

Introducing the Bank

04

Message from the Board of Directors

05

Message from the CEO

06

Review of operations & key figures

07

Organisation of the Bank

08

Financial statements and proposed
appropriation of retained earnings

09

Report of the statutory auditor

29

DUKASCOPY BANK SA ANNUAL REPORT 2010

INTRODUCING THE BANKINTRODUCING THE BANK

Dukascopy’s history started in 1998 as a project of physicists headed by Dr. Andrey Duka aiming at serving the financial
community with innovative solutions based on novel mathematical and econophysical techniques.

Twelve years later, Dukascopy Bank SA was born and the initial vision materialized in a unique internet marketplaceand community offering not only a transparent and fair trading environment but also a platform where investors may
access specialized information, exchange views, share know-how and entertain themselves in a unique home-madehigh tech environment.

Dukascopy Bank SA constantly develops its relations with banks and other market participants to create the world’s
biggest liquidity aggregator. During years of presence in the internet brokerage industry, the popularity of thecompany has been significantly increasing among individuals and financial institutions. We will continue to easeaccess to Dukascopy Bank SA’s unique execution quality for investors.

04

DUKASCOPY BANK SA ANNUAL REPORT 2010

MESSAGE FROM THE BOARD
OF DIRECTORSMESSAGE FROM THE BOARD OF DIRECTORSWith the acquisition of the status of bank in Switzerland, the year 2010 was a milestone in the history of Dukascopy.
Notwithstanding a year rich in events, the effects of the financial crisis, and many legal and regulatory developments,
Dukascopy Bank SA managed to further develop its activities and to strengthen its financial soundness and equity capital.

In the coming years, banks will continue to face a demanding and rapidly changing environment, including newcustomers’ behavior and expectations.

Dukascopy Bank SA keeps on investing in human and technology resources to support and develop its competitive
advantage through its leading-edge technology and its efficient platform and infrastructure.

With its headquarters in Switzerland, Dukascopy Bank SA benefits from a strong regulatory framework, combined with astable political and economic environment. We believe that Dukascopy Bank SA is now ideally positioned to optimise its
unique capacity to innovate and to bring more transparency, better quality solutions and better information; in otherwords, to anticipate clients’ requests for a different banking experience.

DUKASCOPY BANK SA ANNUAL REPORT 2010

05

MESSAGE FROM THE CEOMESSAGE FROM THE CEO

The past year has been productive for Dukascopy. The company acquired a banking status and emerged asa high-tech bank specialized in online Forex brokerage.
The Bank was able to adapt to a changing business climate and successfully passed through the financial crisis and atightening of Swiss Forex brokerage regulations.
Business-wise, 2010 was also effective. It returned a solid growth of the Bank’s income (+29%), further developmentof clientele basis and growth of brokerage activity.
The Bank has been able not only to support the growth of its business but also to massively invest in technology andhuman resources necessary for its development. The rise of operational expenses (+39%), represented mainly by
personnel expenses, reflects those investments in creation of new products and services.
We would like to take this opportunity to thank all of our employees, clients and business partners for their support
and for their contribution to our success in 2010.

Alain Broyon
Chief Executive Officer

06

DUKASCOPY BANK SA ANNUAL REPORT 2010

REVIEW OF OPERATIONSREVIEW OF OPERATIONS

In spite of challenging conditions, Dukascopy Bank SA continued to grow in 2010. We refer to the impact of thefinancial crisis and, during the first semester 2010, to our banking authorization process in Switzerland. The scope ofactivities and the locations of the Bank remained unchanged during the year under review. However, projects for
future development in and outside Switzerland were actively managed.
The gross profit rose by 7.4% to CHF 7.3 million (2009 CHF 6.8 million). The trading income increased by 31% or CHF 6.7
million to reach CHF 28.3 million (2009 CHF 21.6 million) due to higher brokerage volume, particularly during the lastquarter, contrasting with the trend of the industry. The increase in clients deposits (+23.7%) results from the growth of
our clientele basis.
Operating expenses increased by 39% or CHF 5.9 million to reach CHF 21.1 million (2009 CHF 15.2 million) due torecruitments and other investments in resources to support the development of the Bank. Depreciation on fixed andintangible assets amounted to CHF 4.7 million (2009 CHF 7.3 million) in accordance with the depreciation plan.
The net profit for the year rose to CHF 1.1 million (2009 CHF 0.1 million) in spite of a contribution of CHF 0.6 million toprovisions.

KEY FIGURES
Year 2010

Year 2009

Variation

Variation(in CHF million) (in CHF million) (in CHF million)(in %)

Total operating income
Total operating expenses

28.4
21.1

21.9
15.2

6.5
5.9

29.3%
39.0%

Gross profit
Net profit

7.3
1.1

6.8
0.1

0.5
1.0

7.4%
1’098.5%

Total assets
Total clients deposits
Shareholders’ equity

95.7
62.1
24.0

83.8
50.2
22.9

11.9
11.9
1.1

14.3%
23.7%
4.7%

Employees at 31 December ( full time equivalent)

164.4

104.7

59.7

57.0%

BIS ratio (Basel II)

232.6%

216.7%DUKASCOPY BANK SA ANNUAL REPORT 2010

7.3%

07

ORGANISATION OF THE BANKORGANISATION OF THE BANKBoard of Directors

Executive Committee

Chairman

ChairmanBogdan Prensilevich

Alain Broyon, Chief Executive Officer

Vice-Chairman

Vice-Chairman

Pierre J-M. Bongard

Dr. Andrey Duka, Chief Technology officer

Members

Members

Gérard de Cerjat

Laurent Bellières, Chief Operating Officer

Frank Guemara

Philippe Cordonier, Chief Risk Officer

Patrick Zbinden

Veronika Makarova, Chief Administrative Officer

Internal Auditor

External Auditor

PKF Certifica SA

KPMG SA08

DUKASCOPY BANK SA ANNUAL REPORT 2010

FINANCIAL STATEMENTS

BALANCE SHEETat 31 December 2010ASSETS
Liquid assets
Amounts due from banks
Amounts due from customers
Participations
Tangible fixed assets
Intangible assets
Accrued income and prepaid expenses
Other assets
TOTAL ASSETS

31.12.2010
CHF
1,030,928
83,840,641
83,215100,000
1,549,006
5,908,234
230,517
2,969,935
95,712,476

31.12.2009
CHF
28,76765,182,089
562,955
100,000
1,317,534
9,518,153
152,197
6,898,324
83,760,019

CHF
1,149,328
62,057,961
3,245,194
3,830,096
1,453,242
22,000,000
46,000854,525
1,076,130
95,712,476

CHF
50,161,217
2,173,792
7,621,044
903,441
22,000,000
41,000769,737
89,78883,760,019

31.12.2010
CHF
1,312,062,180
2,969,935
3,182,626

31.12.2009
CHF
2,578,230,312
6,898,324
7,435,548

Total amounts due from Group companies and qualified
participants

LIABILITIESAmounts due to banks
Other amounts due to customers
Accrued expenses and deferred income
Other liabilities
Value adjustments and provisions
Share capital
General legal reserve
Profit brought forward
Profit for the year
TOTAL LIABILITIES
Total amounts due to Group companies and qualified
participants

OFF-BALANCE SHEETat 31 December 2010

Off-balance sheet financial instruments
Underlying amounts
Positive replacement values
Negative replacement values

DUKASCOPY BANK SA ANNUAL REPORT 201009

FINANCIAL STATEMENTS

STATEMENT OF INCOME
for the year ended 31 December
2010
CHF

2009
CHF

Interest income
Interest income

70,94379,509Interest expenses
Net interest income(1,354)
69,589(553)
78,956

65,841

279,005-

28,153

Commission expenses(52,882)(37,820)

Net income from commissions and services

12,959269,338

28,280,188

21,596,187

Personnel expenses(12,986,684)(8,785,365)

Other operating expenses(8,093,844)(6,379,629)

Total operating expenses
Gross Profit(21,080,528)
7,282,208(15,164,994)
6,779,487

Depreciation
Value adjustments, provisions and losses
Profit before extraordinary items and taxes(4,667,461)(1,061,823)
1,552,924(7,274,324)(112,289)(607,126)

Extraordinary income
Extraordinary expenses
Taxes
Profit for the Year

5,000
(375)
(481,419)
1,076,130

876,327(179,413)
89,788

Income from commissions and services
Commission income from investment activities
Commission income from other services

Trading income
Operating expenses

10

DUKASCOPY BANK SA ANNUAL REPORT 2010

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

1. ACTIVITY AND NUMBER OF EMPLOYEES OF THE BANK
Dukascopy Bank SA (hereinafter the "Bank") has its head office in Geneva and a representation office in Riga (Latvia).
The Bank is mainly active in the dealing of foreign exchange (hereinafter "FX") through its home built trading platform.
The Bank also accepts management mandates based on FX trading.
Expressed in terms of full-time jobs, the number of employees at 31 December 2010 was 164.4 (104.7 at 31 December2009).

2. RISK MANAGEMENT
The Board of Directors has established an analysis of the main risks the Bank is exposed to. This analysis relies on data
and means implemented by the Bank in matter of Risk Management, as described hereinafter as well as on aprospective estimate of the risks affecting the Bank. In its analysis, the Board of Directors has considered the internal
control system put in place to manage risks. Based on its risk analysis, the Board of Directors has adopted a General Risk
Policy in order to limit and manage the main risks affecting the Bank. Internal control system includes, in particular, asystem of limits, the definition of authorized activities as well as authorities relating to the risk taking in conformity withthe applicable prudential regulation. All significant risks are measured and controlled by an independent body.
Credit risk
FX trading is based on margin accounts which are mainly funded in cash deposited with the Bank or pledged by banks'
guarantees. The trading platform automatically monitors the credit risk relating to clients by way of margin call andmargin cut functionalities that ensure the Bank remains covered with sufficient collateral at any time. The credit risk
relating to banks and other FX counterparties is mitigated by the fixation of limits within the competences decided by
the Board of Directors. The respect of risk limits is controlled on a daily basis and limits are adapted as often as deemednecessary.
Market risk
The Bank measures currency risk on a daily basis and ensures that limits granted by the Board of Directors are compliedwith. Balance sheet and off-balance sheet are converted at closing spot rates. When necessary, the Bank executes FX
trade transactions to reduce FX exposure and to comply with its risk limits. The Bank has no investment in securities andis marginally exposed to interest rate risk. The Bank calculates interest rate risk on a quarterly basis and optimises asset
and liabilities management as often as deemed necessary.

DUKASCOPY BANK SA ANNUAL REPORT 201011

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

Operational risks
Operational risks includes legal risk and concentrates mainly on execution of FX trades on the Bank's trading platform.
The latter presents a high level of automation that reduces errors due to human factor. The Bank has implemented andmonitors, on a regular basis, an internal control system which mitigates the operational risks relating to Information
Technology and any other processes involving operational risks. The internal control system includes segregations ofduties, internal regulation, control activities such as reconciliations and reporting of relevant information to thecorporate bodies in charge of risk supervision: Board of Directors, General Management and specialized committees.
Compliance risks
The policy of Dukascopy is to conduct its activities in respect of the law, banking regulation and interests of its clients.
Compliance Officers follow the legal and regulatory developments and adjust the internal regulation accordingly.
Compliance Officers, Internal and External Auditors enquire about respect of internal and external regulations by the
Bank and its personnel and report compliance issues to the Board of Directors.
3. ACCOUNTING AND VALUATION PRINCIPLES
The accounting and valuation principles applied for the annual accounts at 31 December 2010 are in conformity withthe regulations in force in Switzerland and more particularly with the Swiss Code of Obligations, the Federal Law on
Banks and Saving institutions and with its Implementing Ordinance and the Guidelines governing financial
statements establishment issued by the Swiss Financial Market Supervisory Authority (FINMA-Circ. 08/2).
a) Amounts due from and Amounts due to banks
They are accounted for in the balance sheet at their face value. When deemed necessary, individual value adjustments
are deducted from the doubtful amounts due from banks.
b) Loans and advances to customers
They are carried at their nominal value. Impaired loans are loans for which it is doubtful that debtors will be able tomeet their commitments. Impaired loans and any collateral obtained are valued at their liquidation value, and any
adjustments in value are made in light of the debtors' creditworthiness. If repayment of a loan depends exclusively on
the sale of the collateral, a value adjustment is made for the entire unsecured portion of the loan.

12

DUKASCOPY BANK SA ANNUAL REPORT 2010

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010c) Participations
They are recorded at their acquisition cost. Value adjustments are recorded, if necessary, for permanent impairments invalue.
d) Tangible fixed assets
They are carried on the balance sheet at acquisition cost less any depreciation and accumulated impairment losses
required. Depreciation is accounted for on the basis of the estimated period of use of fixed assets. The appropriatenessof the book-value is reviewed each year (impairment test). If this review brings to light a decrease in value or a change
in the period of use, the Bank records impairment losses by debiting the caption "Depreciation on fixed assets" oradjust the depreciation expense over the adjusted period of use. Fixed assets are depreciated over the following
estimated periods of use:
- Fixtures and fittings

4 years, on a straight-line basis- Furniture

4 years, on a straight-line basis- IT hardware

3 years, on a degressive* basis- Vehicles

5 years, on a degressive* basise) Intangible assets
They consist in softwares acquired either by purchase or by contribution by the shareholders. Contribution values
were based on independent valuations. Softwares are carried at acquisition cost or at contribution value less any
depreciation and accumulated impairment losses required. Depreciation is accounted for on the basis of theestimated period of use of fixed assets. The appropriateness of the book-value is reviewed each year (impairment test).
If this review brings to light a decrease in value or a change in the period of use, the Bank accounts for impairment
losses by debiting the caption "Depreciation on fixed assets" or adjust the depreciation expense over the adjusted
period of use. Intangible assets are depreciated on a degressive* basis over 5 years.

* Annual depreciation amounts to 40% of the accounting value at the beginning of the year. Acquisition cost of fixed assets acquired during the year
are depreciated at the same rate on a prorata basis.

DUKASCOPY BANK SA ANNUAL REPORT 2010

13

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010f) Value adjustments and provisions
The Bank records value adjustments and provisions based on its assessment of the risks of loss and probable liabilities,
based on past events, of which the amount and due date are uncertain but assessable. Value adjustments andprovisions which are no longer necessary are released and entered in the profit and loss account or allocated to coverother risks or maintained in the form of hidden reserves.
g) Employee benefit obligations
The treatment of pension commitments is based on the Swiss GAAP ARR 16 standard. Employee benefit obligations
are taken to mean all commitments resulting from the pension fund to which Bank's employees are ensured for
retirement, death or disablement. There is an economic benefit if, due to contribution reserves, the Bank has the ability
to reduce future employer's contributions. A contrario, there is a liability if, owing to a shortfall in the pension fund the
Bank wants or has to participate in the financing of the pension fund. Each time the annual accounts are closed, theBank determines whether there is economic benefit or commitment on the basis of the annual accounts of thepension fund prepared in accordance with the ARR 26 rules. An economic commitment is recorded as "Valuation
adjustments and provisions" whereas economic benefit is accounted for under "Other assets".
h) Taxes
The Bank records liabilities for income and capital taxes on an accrual basis.
I) Trading operations
Trading operations are made up of spot foreign exchange transactions which are marked-to-market. Realized andunrealized results from trading operations are recorded in the "Trading income".
j) Use of swaps
The Bank uses currency swaps to rollover spot foreign exchange transactions to the next spot settlement date until
positions are closed by its clients or by itself. Replacement values of these instruments are recorded in "Other assets"and "Other liabilities".

14

DUKASCOPY BANK SA ANNUAL REPORT 2010

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010k) Recording of transactions
All transactions are recorded in accordance with the trade date principle with the exception of currency swaps andspot foreign exchange transactions which are carried in the off -balance sheet until value date.
l) Conversion of foreign currencies
Transactions in foreign currencies are converted at the exchange rates of the date of transactions. Current assets andliabilities carried in foreign currencies are converted at the exchange rates of the closing date of the financial
statements. Conversion gains and losses are entered in the statement of income as "Trading income". At 31 December,the exchange rates used to convert the main foreign currencies were as follows:

2010

2009

CHF

CHF

USD

1.00

0.934500

1.032000

EUR

1.00

1.250500

1.483250

GBP

1.00

1.458900

1.674550

CAD

1.00

0.936450

0.979592

JPY

1.00

0.011517

0.011133

AUD

1.00

0.956150

0.926272

NZD

1.00

0.729000

0.745930

LVL

1.00

1.776199

2.118644

NOK

1.00

0.1604850.178072

SEK

1.00

0.1392200.144081

SGD

1.00

0.727776

0.712500

DUKASCOPY BANK SA ANNUAL REPORT 2010

15

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010
4. Information concerning the balance sheet
A. Collateral for loans and off-balance-sheet commitments

Loans
Amounts due from customers
Total at 31 December 2010
Total at 31 December 2009

Secured by
mortgages

Othercollateral

Unsecured

Total

CHF

CHF

CHF

CHF

74,769548,8118,446
14,144

83,215562,955

Net amount
CHF
3,441
3,441

Individualvalueadjustments
CHF
3,441
3,441

2010
CHF
100,000
100,000

2009
CHF
100,000
100,000

Net book
value
CHF
100,000

2010
Ownership andVoting rights
100%

Gross
amounts
CHF
3,441
3,441

Breakdown of impaired loans
Total at 31 December 2010
Total at 31 December 2009

Liquidation
value ofcollateral
CHF-

B. Participations
Participations
Unlisted participations
Total participations

Participations
SWFX-Swiss FX Marketplace SA

Participations
SWFX-Swiss FX Marketplace SA

16

Activity

Head officedormant

GenevaShare capital
CHF
100,000

Activity

Head office

Share capital
CHF

Net book
value
CHF

2009
Ownership andVoting rights

dormant

Geneva100,000

100,000

100%

DUKASCOPY BANK SA ANNUAL REPORT 2010

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

C. Fixed assets

Acquisition cost
CHF
Participations
Majority stake
Subtotal
Other fixed assets
Softwares
Total fixed assets

100,000
100,000
3,517,677
22,375,946
25,893,623

2009
Accumulated Net book value
depreciation at end of year
CHF
CHF

Additions
CHF

Disposals
CHF

Depreciation
CHF

2010
Net book value at
end of year
CHF

-2,200,143-12,857,793-15,057,936

100,000
100,000
1,317,534
9,518,153
10,835,687

1,086,054
202,960
1,289,015--854,582-3,812,879-4,667,461

100,000
100,000
1,549,006
5,908,234
7,557,240

2010
CHF
711,1722009
CHF
540,021

2010
CHF

2009
CHF

2,969,935
2,969,935

6,898,324
6,898,324

3,182,626
647,470
3,830,096

7,435,547
185,497
7,621,044

Fire insurance value of other fixed assets

D. Other assets and liabilities

Other assets
Positive replacement values
Total other assets
Other liabilities
Negative replacement values
Other liabilities
Total other liabilities

DUKASCOPY BANK SA ANNUAL REPORT 201017

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

E. Assets pledged as collateral or assigned to guarantee own commitments, as well as assets underreservation of ownership

Deposits made with banks to cover guarantees

2010
Pledgedassets
CHF

2010
Outstanding
exposures
CHF

2009
PledgedassetsCHF

2019
Outstanding
exposures
CHF

282,977

282,977

250,409250,409

F. Indications relating to pension funds
In Switzerland, Bank's employees are affiliated to one collective pension fund plan (Caisse Inter-EntrePrises - CIEPP) which is considered as defined contributions scheme.
As the Bank has not contributed to any employer's contribution reserve, there is no identifiable economic
benefit to be capitalized in the balance sheet.
Based on the last audited financial statement as at 31 December 2009, the coverage ratio is 102.3%.
The employees working at the representation office in Riga are affiliated to the pension funds of their choice
which are defined as defined contribution schemes. There is no identifiable economic benefits or liabilities
to report in relation with the Latvian pension schemes.
Pension expenses included in "Personnel expenses" at 31 December were as follows:

Contributions paid by the Bank

18

2010
CHF
470,372

2009
CHF
383,690

DUKASCOPY BANK SA ANNUAL REPORT 2010

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

G. Value adjustments, provisions and reserves for general banking risks
Utilization
Recoveries,
New provisions
Balance atBalance atin conformity withdoubtful interest,
charged to income Released 31 December
Change1 January 2010 designated purpose in allocation forex rate differences
statement
2010
to earnings
CHF
CHF
CHF
CHF
CHF
CHF
CHF
Value adjustments andprovisions for default risk
Value adjustments
and provisions for otherbusiness risks
Total value adjustments

3,441

-

-

-

-

-

3,441

900,000
903,441(50,199)(50,199)--

600,000
600,000-

1,449,801
1,453,242

Recoveries,
Utilization
New provisions
Balance at
doubtful interest,
Changein conformity withcharged to income Released 31 December
Balance at
to earnings
statement
2009
1 January 2009 designated purpose in allocation forex rate differences
CHF
CHF
CHF
CHF
CHF
CHF
CHF
Value adjustments andprovisions for default risk
Value adjustments
and provisions for otherbusiness risks
Total value adjustments

5,831(2,390)

-

-

5,061

(5,061)3,441

1,600,000
1,605,831(2,390)

-

-

5,061

(700,000)(705,061)

900,000
903,441

Value adjustments and provisions for other risks include provisions for legal fees and litigations arising out of thenormal conduct of our activities. These provisions are valued according to the best estimate principle.

H. Share capital
2010

Share capital

Total nominal value
CHF
22,000,000

Numberof shares
21,712,000

Capital participating in dividend
CHF
22,000,000

2009

Share capital

Total nominal value
CHF
22,000,000

DUKASCOPY BANK SA ANNUAL REPORT 2010

Numberof shares
22,000Capital participating in dividend
CHF
22,000,000

19FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

I. Justification of equity

Shareholders' equity as at 1 January
Share capital
General legal reserve
Profit brought forward
Total shareholders' equity at 1 January
Share capital increase
Profit for the year
Total shareholders' equity at 31 December
Represented by:
Share capital
General legal reserve
Profit brought forward
Profit for the year

2010
CHF

2009
CHF

22,000,000
41,000859,525
22,900,525
01,076,130
23,976,655

22,000,000
7,000
803,737
22,810,737
089,78822,900,525

22,000,000
46,000854,525
1,076,130

22,000,000
41,000769,737
89,788

J. Large shareholders and groups of shareholders bounds by voting agreements (exceeding 5%)
2010

With voting rights
Andrey Duka
Veronika Makarova

Total nominal value
CHF

Numberof shares

Stakeholdingin %Capital participating in dividend
CHF

10,890,000
10,890,000

10,746,000
10,746,000

49.5%
49.5%

10,890,000
10,890,000

2009

With voting rights
Andrey Duka
Veronika Makarova

20

Total nominal value
CHF

Numberof shares

Stakeholdingin %Capital participating in dividend
CHF

10,890,000
10,890,000

10,89010,890

49.5%
49.5%

10,890,000
10,890,000

DUKASCOPY BANK SA ANNUAL REPORT 2010

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

K. Presentation of the capital adequacy2010
CHF 000
22,901-100
22,801

Tier 1 capital./. Participation in SWFX-Swiss FX Marketplace SA
Total eligible capital

2010
Required capital
CHF 000
1,762
3,729
660

2010
Used approach
Credit risks
Risks without counterparty
Market risksof which on currencies
Operational risks
Total required capital
Surplus of eligible capital

Swiss standardized
Swiss standardized
standardized
standardized
basic indicator

660
3,652
9,803
12,9982009
Required capital
CHF 000
1,500
5,418
846

2009
Used approach
Credit risks
Risks without counterparty
Market risksof which on currencies
Operational risks
Total required capital
Surplus of eligible capital

Swiss standardized
Swiss standardized
standardized
standardized
basic indicator

Ratio between eligible capital and required capital as per Swiss Law

DUKASCOPY BANK SA ANNUAL REPORT 20102009
CHF 000
22,811-100
22,711846
2,715
10,47912,232

2010
232.6%

2009
216.7%

21

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

L. Maturity structure

AssetsLiquid assets
Amounts due from banks
Amounts due from customers
Total current assets
at 31 December 2010
Total current assets
at 31 December 2009
Third-party liabilities
Amounts due to banks
Other amounts due to customers
Total third-party liabilities
at 31 December 2010
Total third-party liabilities
at 31 December 2009

At sight
CHF
1,030,928
80,879,141
83,215Cancellable
CHF
2,961,500-

Within3 Months
CHF-

Within3 to 12 months
CHF-

Within1 to 5 years
CHF
-

Over
5 years
CHF
-

Fixed
CHF
-

Total
CHF
1,030,928
83,840,641
83,21581,993,284

2,961,500

-

-

-

-

-

84,954,784

63,484,185

2,289,625

-

-

-

-

-

65,773,810

1,149,328
62,057,961

-

-

-

-

-

-

1,149,328
62,057,961

63,207,289

-

-

-

-

-

-

63,207,289

50,161,217

-

-

-

-

-

-

50,161,217

M. Amounts due to/from affiliated companies and loans to governing bodies
At 31 December 2010 and 2009, there were no amounts due to/from affiliated companies and no loans granted toBank's governing bodies.
The Bank engages in transactions with related parties in normal course of its business. These transactions include
mainly marketing services and software development support.
Transactions with related parties are conducted at arm's length and are recorded as follows:

Transactions with governing bodies
Operating expenses

22

2010
CHF

2009
CHF

1,062,528-

DUKASCOPY BANK SA ANNUAL REPORT 2010

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

N. Analysis of domestic and foreign assets and liabilities
in CHF ('000)
AssetsLiquid assets
Amounts due from banks
Amounts due from customers
Participations
Tangible fixed assets
Intangible assets
Accrued income and prepaid expenses
Other assets
Total assets
Liabilities
Amounts due to banks
Other amounts due to customers
Accrued expenses and deferred income
Other liabilities
Value adjustments and provisions
Share capital
General legal reserve
Profit brought forward
Profit for the year
Total liabilities

2010
Switzerland

2010
Foreign

2010
Total

2009
Switzerland

2009
Foreign

2009
Total

1,031
59,054
12
100
1,549
5,908
230
1,073
68,957

24,78771
1,897
26,755

1,031
83,841
83
100
1,549
5,908
230
2,970
95,712

29
46,119
513
100
1,318
9,518
152
1,007
58,756

19,06350
5,891
25,00429
65,182
563
100
1,318
9,518
152
6,898
83,760

1
4,961
3,245
1,964
1,453
22,00046
855
1,076
35,601

1,148
57,097
1,866
60,111

1,149
62,058
3,245
3,830
1,453
22,00046
855
1,076
95,712

1,357
2,174
1,278
903
22,00041770
9028,61348,804
6,343
55,14750,161
2,174
7,621
903
22,00041770
90
83,760NOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

O. Analysis of total assets by country / group of countries
2009
Carrying Value
CHF 000

Others

71,761
13,302
10,604
45

2010
Share
%
75
14
11
0

58,757
15,133
9,770
100

2009
Share
%
70
18
12
0

Total

95,712

100

83,760100

Assets
Switzerland
Europe excluding Switzerland
United States and Canada

2010
Carrying Value
CHF 000

DUKASCOPY BANK SA ANNUAL REPORT 201023

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

P. Analysis of the balance sheet per currency
in CHF ('000)
AssetsLiquid assets
Amounts due from banks
Amounts due from customers
Participations
Tangible fixed assets
Intangible assets
Accrued income and prepaid expenses
Other assets
Total assets
Claims arising from spot
and swap transactions
Total at 31 December 2010

CHF

EUR

USD

1,031
7,321
12
100
1,549
5,908
201
2,970
19,092

23,58538
21
23,64447,05133
647,090

GBP

3,402
3,402

JPY

Others

Total

408
408

2,074
2
2,076

1,031
83,841
83
100
1,549
5,908
230
2,970
95,712100,255 327,325 553,516 108,271 103,279 119,417 1,312,063
119,347 350,969 600,606 111,673 103,687 121,493 1,407,775

Liabilities
1,148
1
1,149
Amounts due to banks
1,847
18,3993,710
28,295
7,999
1,808
62,058Other amounts due to customers
1
239
18
281
102
3,245
Accrued expenses and deferred income 2,604
152
120
3,419
136
3
3,830
Other liabilities
1,453
1,453
Value adjustments and provisions
22,00022,000Share capital
46
46
General legal reserve
855
855
Profit brought forward
1,076
1,076
Profit for the year
1,848
3,848
39,453 18,790 29,860
1,913
95,712
Total liabilities
Commitments arising from spot
82,480 330,340 567,551 109,807 101,581 120,516 1,312,275
and swap transactions
121,933 349,130 597,411 113,655 103,429 122,429 1,407,987
Total at 31 December 2010
258
1,839
(1,982)(2,586)
3,195
Net position by currency
(936)
(212)

24

DUKASCOPY BANK SA ANNUAL REPORT 2010

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010
5. Information concerning the off-balance sheet transactions
A. Open financial derivatives
Positive
replacement values
CHF

Negative
replacement values
CHF

Underlying
amounts
CHF- forward contracts*

1,327,566

1,131,157

527,723,850- swaps

1,642,369

2,051,469

784,338,330

2,969,935

3,182,626

1,312,062,180

6,898,324

7,435,548

2,578,230,312

Trading transactions (OTC)
Currencies:

Total before impact of netting agreements
at 31 December 2010
Total before impact of netting agreements
at 31 December 2009

* Represent the spot foreign exchange transactions which are accounted for according to the value date principle.

6. Information concerning the statement of income
A. Trading income
2010

2009

CHF

CHF

Currency trading income

28,280,188

21,596,187

Total

28,280,188

21,596,187

2010

2009

CHF

CHF

Salaries

10,774,201

7,526,952

Benefits

2,147,875

1,149,106

Trading income

B. Personnel expenses

Personnel expenses

Other personnel expenses

64,608109,307

Total personnel expenses

12,986,684

8,785,365

DUKASCOPY BANK SA ANNUAL REPORT 201026

DUKASCOPY BANK SA ANNUAL REPORT 2010
25

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

C. Other operating expenses
2010

2009

CHF

CHF

Marketing and communication

2,833,527

1,873,008

Premises

1,771,646

1,567,422

Legal, audit and consulting

853,011

918,475

Post, telecommunications and data

902,694

724,514

Travels

997,047

709,808

Office supply

161,430

334,234EDP

347,969

245,478

Others226,520

6,690

Total other operating expenses

8,093,844

6,379,629

Other operating expenses

D. Extraordinary income and expenses
2010

2009

Extraordinary income

CHF

CHF

Disposal of amortized fixed assets

5,000

Reimbursement of commissions paid in previous year

171,266

Release of provisions which are no longer necessary

705,061

Total extraordinary income

5,000

876,327

Reimbursement of fees charged in previous year375-

Total extraordinary expenses

375-

Extraordinary expenses

26

DUKASCOPY BANK SA ANNUAL REPORT 2010

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
at 31 December 2010

E. Analysis of domestic and foreign income and expenses

Net interest income
Net income from commissions and services

2010
Domestic
CHF

2010
Foreign
CHF

69,589-12,959-Trading income

28,280,188-

Personnel expenses(9,648,644)(3,338,040)

Other operating expenses(5,949,354)(2,144,490)

Gross profit

12,764,738(5,482,530)

2009
Domestic
CHF

2009
Foreign
CHF

78,956-

Net income from commissions and services

269,338-

Trading income

21,596,187-

Personnel expenses(6,500,324)(2,285,041)

Other operating expenses(5,713,646)(665,983)

Gross profit

9,730,511(2,951,024)

Net interest income

DUKASCOPY BANK SA ANNUAL REPORT 201027

FINANCIAL STATEMENTSPROPOSED APPROPRIATION OF RETAINED EARNINGS
at 31 December 2010

The Board of Directors proposes the following appropriation of available earnings:

Profit for the year

2010

2009

CHF

CHF

1,076,130

89,788

Profit brought forward

854,525

769,737

Amount at the disposal of the Shareholders' meeting

1,930,655

859,525

2010

2009

Proposed utilization

CHF

CHF

Contribution to the general legal reserve

60,0005,000

To be carried forward

1,870,655

854,525

Total

1,930,655

859,52528

DUKASCOPY BANK SA ANNUAL REPORT 2010

REPORT OF THE STATUTORY AUDITOR

Report of the statutory auditor
on the financial statements
to the general meeting
As statutory auditor, we have audited the accompanying financial statements of Dukascopy Bank SA, which comprisethe balance sheet, income statement and notes for the year ended 31 December 2010.

Board of Directors ' Responsibility
The Board of Directors is responsible for the preparation of the financial statements in accordance with therequirements of Swiss law and the company's articles of incorporation. This responsibility includes designing,
implementing and maintaining an internal control system relevant to the preparation of financial statements that are
free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible forselecting and applying appropriate accounting policies and making accounting estimates that are reasonable in thecircumstances.

Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, theauditor considers the inter-nal control system relevant to the entity's preparation of the financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control system. Àn audit also includes evaluating the appropriateness of theaccounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall
presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements for the year ended 31 December 2010 comply with Swiss law and thecompany's articles of incorporation.

DUKASCOPY BANK SA ANNUAL REPORT 201029

REPORT OF THE STATUTORY AUDITOR

Report of the statutory auditor
on the financial statements
to the general meeting
Report on Other Legal Requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) andindependence (article 728 CO and article 1 l AOA) and that there are no circumstances incompatible with our
independence.
In accordance with article 728à paragraph I item 3 CO and Swiss Auditing Standard 890, we confirm that an internal
control system exists, which has been designed for the preparation of financial statements according to the
instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company's
articles of incorporation. We recommend that the financial statements submitted to you be approved.

KPMG SA

Philippe Ruedin

Nicolas Moser

Licensed Audit Expert

Licensed Audit Expert

Auditor in Charge

Geneva, 20 April 201 1

30

DUKASCOPY BANK SA ANNUAL REPORT 2010

Head Office
Geneva
ICC, Route de Pré-Bois 20
CH-1215 Geneva 15
Phone:+41 22 799 48 88
Fax: +41 22 799 48 80

Representation OfficeRiga
Lacplesa iela 20A,
LV-1011, Riga
Phone: +37 16 721 87 25
Fax: +37 16 721 87 30

info@dukascopy.com
www.dukascopy.com