ANNUALREPORT2022
www.dukascopy.com

CONTENTS
INTRODUCING DUKASCOPY GROUP

03

MESSAGE FROM THE BOARD OF DIRECTORS

04

MESSAGE FROM THE co-CEOs

05

REVIEW OF OPERATIONS & KEY FIGURES07

CORPORATE GOVERNANCE

09

FINANCIAL STATEMENTS

12REPORT OF THE STATUTORY AUDITOR40

KEY METRICS DISCLOSURES

42

CONSOLIDATED FINANCIAL STATEMENTS

49

REPORT OF THE STATUTORY AUDITOR79

KEY METRICS DISCLOSURES

81

CONTACTSDUKASCOPY BANK SA ANNUAL REPORT 2022

8802

INTRODUCINGDUKASCOPY GROUP
Dukascopy’s history started in 1998 in Geneva as

cards, its own crypto currency, etc. to individuals

a physicist project headed by Dr. Andrey Duka. Hisand institutions. The SWFX trading platforms

aim was to serve the financial community throughoperated by Dukascopy Bank SA are consideredinnovative solutions derived from novel scientificbilaterally organised trading facilities offering more

techniques based on advanced mathematics andthan a thousand products by the end of year 2022.

econophysics.
Since 2016, an account with Dukascopy can be
The founders’ vision materialised in the form

opened, using the latest online identificationof an international FinTech group headed bytechnologies, in less than one day and has

Dukascopy Bank. The group is a fully digitalallowed the Bank to open more than 300 000

Internet-based Swiss bank and securities houseaccounts as of the date of this report.

counting 72.1 employees on 31.12.2022 (counted
in full time equivalent, 83.0 on 31.12.2021).

As a regulated institution, the Bank was able toOn the same date, Dukascopy Group counted

launch crypto and blockchain related activities in

108.0 for the consolidated companies (123.7

2018. The "Dukascoin" is the Ethereum-based

employees on 31.12.2021).

token created by the Bank. Dukascoins aredesigned as a means of payment and speculation

The Bank and securities houses of Dukascopy

and were a great success for the Bank consideringGroup are regulated in Switzerland, Latvia andits wide acceptance as a reward for clients opening

Japan. The Latvian entity, Dukascopy Europe has

an MCA. The Dukascopy brand is internationallya license to operate in the European Union.

known as a reference for innovation and recognised for its integrity in providing digital financial

The Group offers multi-products (FX, bullion,

services.

CFD, binary options) online and mobile trading
platforms together with an increasing range of

The motto of Dukascopy Group is to offer

other financial services including current accounts,

everyone from around the world easy-to-use

guarantees, classic banking payments, innovative

financial services at affordable conditions in a

instant payments via smartphones, payment

friendly digital environment.

DUKASCOPY BANK SA ANNUAL REPORT 2022

03

MESSAGE FROM THE BOARD
OF DIRECTORSThe year 2022 brought new challenges to the

Although numerous challenges exist, Dukascopy

World. The conflict in Europe is shaping a newGroup continued its planned development

international relations world map. Added totowards better full digitalisation and auto-

increased environmental requests, the energy

matisation of all its procedures. Dukascopy

industry is transforming, and from there allcontinued to diversify its products, partners

industries are reorganising. Not forgetting thatand geographical presence to provide the best

the COVID effects are not yet fully overcome.

services for its varied client base - who are thereal wealth of Dukascopy Group and a gage for

The financial markets are reflecting these quickly

stable and longterm future development.

moving realities and are bringing new andimportant issues to financial markets’ players. In

We would like to express also our gratitude andthis complex actuality, Dukascopy Group showed

congratulations to the Dukascopy group share-

once again to be a fast moving, flexible and highly

holders, executive management, employees andreactive Institution. Dukascopy is able to plan, study

partners for their excellent work, support andand provide for alternative roads in continuing

loyalty in 2022.

complex realities, while also keeping stable roots in
its rules and procedures of risk control.

DUKASCOPY BANK SA ANNUAL REPORT 2022

The Board of Directors

04

MESSAGE
FROM THE co-CEOs
The year 2022 has brought tremendous changes

the military conflict in Ukraine significantlyin the economic and political situation in

impacted the Swiss banking industry by tightening

Switzerland and all around the World. The sharp

compliance regulations and adding limitations onrise of inflation in most developed economies

financial services. Disruptions in the delivery

has led to extraordinarily fast increase of key

chains of the global economy destabilized allinterest rates by central banks. The market

industries and agriculture. This unstable environ-interest rates have moved away from zero andment has led to extremely high volatility in finan-

negative levels into a positive zone and havecial instrument prices throughout the year 2022.

grown rapidly during 2022. On stock markets, theshares of Big Tech companies - the leaders in

Dukascopy Bank continued its strategy ofprevious years - have dropped dramatically.

development in these conditions and focused on
two main business areas: FX and CFD electronic

The crypto winter together with tightening

trading platforms and retail digital banking.

regulations has brought a sharp decline in theprices of all major crypto currencies and has led

The range of financial instruments traded on theto bankruptcy of large actors in the crypto

Bank’s platforms has increased with more thanindustry. Galloping energy prices have led to crisis

1000 CFDs on various stocks. Further improve-in industries with high energy consumption. The

ments in all existing trading platforms together

military conflicts and growth of tension in allwith the implementation of the new platform

regions of the World have led to an unprece-

Meta Trader 5 (Will be delivered to clientsdented number of sanctions implemented byin 2023), have directed to support the trend

developed countries. The sanctions implemented

towards an increase of the shares of CFDs in theby Switzerland, USA and EU in 2022 in relation to

trading volume of the Bank’s clients.

DUKASCOPY BANK SA ANNUAL REPORT 2022

05

Offering of new types of payment cards, extensions u b s i d i a r i e s w e re a l s o p ro f i t a b l e . T h eof the range of payment methods, establishment ofconservative asset allocation and liquidity

new correspondent banking relationships and an

management policies allowed the Bank toincreased degree of automatisation in transactions

successfully traverse a year of extremely highprocessing have stimulated an increase in themarket turbulence and instability, and to

number and volume of retail banking clients’await with confidence and optimism further

deposits as well as in the revenue of the Bank.

development of the Bank's business in 2023.

Operations with cryptocurrencies as well gradually

We express appreciation and gratitude to all

developed with the extension of the range ofour colleagues, clients and business partners

services provided to the Bank’s clients and thefor the new accomplishments made during

number of counterparts. Issuing of Dukascoins

this particular year.

continued and the number of tokens in circulation
reached 6.1 million by the end of the year 2022.

Despite all complexities and challenges of thefinancial year 2022, the Bank's profit is 200%

Veronika and Andrey Duka

higher than the profit for 2021. All of the Bank's

co-Chief Executive Officers

DUKASCOPY BANK SA ANNUAL REPORT 2022

06

REVIEW OF OPERATIONS& KEY FIGURESDUKASCOPY BANK SA

clients opening trading accounts. 40’018 new

Despite a very difficult market environment

MCA accounts were opened in 2022. From thecharacterised by a conflict in Europe, high inflation

beginning of the year total clients’ total deposits

and rising interest rates, the profit for 2022 wason MCA accounts rose by 42.4% from CHF 36.1 tosecond-highest after 2020 in the group history as

51.5 million. In 2022, brut revenues from MCA

illustrated by the following key figures:accounts were CHF 2.02 million.

(in CHF million or in %)Net result
Cost/income ratio

2022

2021

2020

6.4

2.1

10.4

the main source of operational revenue in 2022.

71.3% 86.8%

52.5%

The bank has an ongoing commitment to improve

Brokerage services for trading accounts remained

Total operating income

27.4

22.7

40.1

its client interfaces and combine them with the

Total operating expenses

19.6

19.7

21.0

best possible trading services. More than 450 new

Total assets

196.3

184.5

162.7

tradeable instruments were added during the

Total client deposits

131.3

125.9

105.3

year, including indices and stocks from US andRegulatory capital

57.1

51.1

50.4

Mexico. A total of 1160 instruments, including FX,
Bullion, CFDs on commodities, bonds, Indices,

The Bank’s net profit for 2022 was CHF 6.4 million.

cryptos, stocks, ETFs are presently available on2022 operating expenses were CHF 19.6 million,

the bank’s proprietary trading platform JForex.

0.4% below operating expenses in 2021. Client

In January the newly designed JForex 4 had adeposits have increased 4.3% from 125.9 to CHF

smooth launch. It proposes a wide range of

131.3 million during 2022.

improvements for the user, many of them as aresult of client feedback. The older version Jforex

The number of Dukascopy’s mobile multi-currency

3 as well as all other interfaces remain fully

accounts (MCA) continued to grow last year. The

supported and integrated within our systems. The

Bank is expecting scale synergies where it would

MT4 platform also continued to find its clients andbenefit from the transfer of some of the MCA

the number of tradeable instruments has reached

DUKASCOPY BANK SA ANNUAL REPORT 202207109 at the end of 2022. All top traded instru-

DUKASCOPY GROUP

ments are made available. In the near future,

As can be seen in the consolidated financial state-

Dukascopy is planning to announce the launch ofments, the Group figures do not significantly deviate

the MT5 trading platform to further widen thefrom those of the Dukascopy Bank because thebreadth of its reach.

Bank remains the prominent element of Dukascopy
Group. In 2022, all consolidated subsidiaries of

The involvement and development of the

Dukascopy Group were profitable.

Bank in crypto related activities remains animportant focus area. In 2022 several new

Dukascopy Japan’s net profit for 2022 was CHF

services such as peer to peer (P2P or block-216.2 thousand. The Company has a stable positive

chain operations involving stable coins) were

result. Operating expenses were in line with 2021.

launched. Dukascopy Bank has developed rich

The Company is stably profitable due to the imple-

crypto-fiat functionality over the last several

mentation of the new marketing policy and MT4

years together with its retail banking activities.

platform.

More than 6.1 million Dukascoins were issued
by the end of the year 2022.

SWFX has been consolidated for the first time in
2019. Its net profit in 2022 amounts to CHF 150.2

Net interest income increased by 200 percent inthousand.

2022. This is due to rising interest rates acrossall major currencies. Specifically, the reference

Dukascopy Europe’s net profit for 2022 was CHF

of the Swiss Franc was increased from a nega-

6.2 thousand. The Company is stably profitable.

tive 0.75 percent to a positive 1.0 percent andOperating expenses were decreased by 3.2%

the reference rate for EUR has moved from acompared to 2021. The outsourcing agreements

negative 0.5 percent to a positive 1.3 percent atensure high efficiency and allow to reduce the costs

the end of 2022.

of the bank.

DUKASCOPY BANK SA ANNUAL REPORT 2022

08

CORPORATE
GOVERNANCE
The corporate governance framework is defined byŸ Bogdan Prensilevich is the chairman of thethe Bank's Articles of Incorporation and governance

Board of Directors since 2009 and is a Board

policies, bodies of the Bank are:member since the inception of the company.

Ÿ the General Meeting of shareholders;

He has also been advising the company in legal

Ÿ the Board of Directors;

matters since its foundation, in 2004. AfterŸ the Executive Committee;

completing his law studies at the University ofŸ the External Auditor.

Geneva, he was admitted to the Geneva Bar
Association in 2002. Since then he advises clients

GENERAL MEETING OF SHAREHOLDERS

as an independent attorney. In 2007, he co-

The General Meeting of Shareholders is the Bank's

founded the Law firm "Etude de Cerjat &supreme body. Its rights and liabilities are governed

Prensilevich".

by the Swiss Civil Code. The shareholders elect themembers of the Board and the External Auditor.

Ÿ Frank Guemara is the vice-chairman of theBoard of Directors which he joined in 2009 & the

BOARD OF DIRECTORS

chairman of the Audit Committee since 2018. He

The Board of Directors is responsible for the overallobtained a master's degree in economic sciences

strategic direction, supervision and control of thefrom the University of Geneva and is also a Swiss

Bank and appoints the members of the Executive

Certified Public Accountant. In 1993, after having

Committee. In 2017, the Board of Directors createdstarted his career at Coopers & Lybrand, hean Audit Committee comprising two members.

joined the bank Lombard Odier where he deve-

At the end of 2022, the Board of Directors wasloped a consulting activity for family companies.

composed of six members, all independent as per

In 2002, he founded Triportail SA, a company

the FINMA circular 2017/1.

engaged in the transfer of family companies.

DUKASCOPY BANK SA ANNUAL REPORT 202209Ÿ Per Prod’hom joined the Board and became ad’études supérieurs» from the Geneva IUHEI in

member of the Audit Committee in 2018. After

International law, Economy and History. From 1995

obtaining degrees in law, business administration

till 2021 she worked at International banks inand EU law at the University of Geneva, he passed

Geneva, also being a Member of the Committee of

the Bar exam and obtained the Swiss Tax Expert

Directors.

diploma. He has been working as tax lawyer for
more than 25 years (Deloitte, Baker & McKenzie,Ÿ Enrico Giacoletto

Python). He is currently a partner at the law firm

the Board of Directors in 2021. He holds a Master

Streng SA. He has also been a lecturer to theof Science from the Swiss Federal Institute of

future tax experts at the Universities of Geneva

Technology (EPFL). He is a CFA charterholder andand Lausanne (“LLM tax” in Geneva and “Master in

has the FRM (Financial Risk Manager) certification.

International Taxation” in Lausanne).

He teaches risk management and risk regulation

was elected member ofin Geneva and Lugano. He started his career inŸ Gérard, Charles William de Cerjat is a member

the financial industry in 2003. Before foundingof the Board of Directors of the Bank since 2009.

easyReg in 2018, he worked for 9 years in the

He obtained a law degree at the University of

Financial Service Risk Management unit of EY.

Geneva and was admitted to the Geneva Bar
association in 1966. Since 1972, he advises clients

EXECUTIVE COMMITTEE

as an independent lawyer. In 2007, he co-founded

The Executive Committee is responsible for day-the Law firm "Etude de Cerjat & Prensilevich".

to-day operational management of the Bank's
business and for the development and imple-

Ÿ Tatiana Pannatier was elected member of thementation of the strategy. At the end of 2022,

Board of Directors in 2020. She has a Master's

the Executive Committee was composed of theDegree in Law (Sofia, Bulgaria) and a «Diplômefollowing five members:

DUKASCOPY BANK SA ANNUAL REPORT 2022

10

Ÿ Veronika Duka, co-Chief Executive Officer andŸ Irina Kupriyanova Vedeneeva, Chief Financial

Chief Administrative Officer, founding shareholder.

Officer, obtained a certificate of business admi-

Graduated as an engineer from the Moscow Statenistration from HEC Lausanne, a Master's degree

Aviation Technological University, she had been thein Public Administration from IDHEAP. Before

administrative manager of scientific companies forjoining the company in 2006, she worked for 15

7 years before leading the Geneva Research Colla-

years in the accounting and tax fields.

boration Foundation. The latter was a Not For Profit
organization, active in the scientific field, suppor-

Ÿ Andrejs Bagautdinovs, Chief Integration Officer,ting interdisciplinary research in natural and social

obtained a master's degree from the Riga Civil

sciences, developing novel economic applications in

Aviation University & an MBA in Global Banking

Geneva. Ms Duka has been playing her key

and Finance from the European University of

executive role in the company since its inception.

Geneva. After working for 4 years as an engineer
and a programmer and before joining the company

Ÿ Andrey Duka, co-Chief Executive Officer and Chiefin 2006, he had been working for 14 years in theTechnology Officer and founding shareholder. He

banking field (Payment, Investment & Treasury

graduated with honours as an engineer from theoperations) at various positions including 3 years at

Moscow State Aviation Technological University

the executive level.

and obtained a PhD from the Federal Institute of
Aviation Materials of Moscow. After conducting

Ÿ Wajih Raïs, Chief Risk Officer, has joined the Bank

scientific research during his PhD, he worked

as a deputy CRO in 2020. He obtained a Master’sfor 7 years as a general manager in scientificdegree in Business Law from University Paris V,

companies, then joined the CERN as a Researchpassed the bar exam and holds a Master in Finance

Associate and founded the Geneva Researchand Strategy from Sciences Po Paris, in France. He

Collaboration Foundation which is presented

specialised in financial services first as a banking

above in connection with Veronika Duka. Mr Dukafinancial auditor for more than 7 years for KPMG la

has been playing his key executive role in the

Defense and for PwC Geneva. He also worked ascompany since inception.

Head of pricing & research for a financial company.

DUKASCOPY BANK SA ANNUAL REPORT 2022

11

FINANCIAL
STATEMENTS

DUKASCOPY BANK SA ANNUAL REPORT 2022

12

BALANCE SHEET
as at 31 December 2022

ASSETS (CHF)

31.12.2022

31.12.2021

Liquid assets

50 188 954

37 719 957

Amounts due from banks

88 793 552

89 446 253

Amounts due from customers

2 398 634

1 736 572

Trading assets

3 120 740

5 255 953

Positive replacement values of derivative financial instruments

2 349 761

837 487

Financial investments

44 949 869

45 341 390

Accrued income and prepaid expenses

1 536 028

1 198 190

Investment in subsidiaries

1 608 197

1 608 197

Tangible fixed assets

618 786

837 020

Other assets

703 390488 511

Total assets

196 267 911

184 469 530

7 292 665

11 975 263

124 008 025

113 896 999

274 867

1 272 663

Accrued expenses and deferred income

3 465 400

2 725 071

Other liabilities

1 941 289

1 676 360

Reserves for general banking risks

3 850 000

3 850 000

Bank's capital

22 000 000

22 000 000

Statutory retained earnings reserve

1 421 000

1 317 000

Profit carried forward

25 652 174

23 686 294

Profit of the year

6 362 491

2 069 880

Total liabilities

196 267 911

184 469 530

31.12.2022

31.12.2021

150 215

139 755

1 134 000

988 000

LIABILITIES (CHF)
Amounts due to banks
Amounts due in respect of customer deposits
Negative replacement values of derivative financial instruments

OFF–BALANCE SHEET
as at 31 December 2022
OFF–BALANCE SHEET COMMITMENTS (CHF)
Contingent liabilities
Irrevocable commitments

DUKASCOPY BANK SA ANNUAL REPORT 2022

13

STATEMENT OF INCOME
for the year ended 31 December 2022

RESULT FROM INTEREST OPERATIONS (CHF)

31.12.2022

31.12.2021

Interest and discount income(14 597)(316 443)

Interest and dividend income from financial investments

734 428

723 495

Interest expense(564 629)(563 885)

Gross result from interest operations

155 202(156 833)

949–

156 151(156 833)

Commission income from other services

2 417 122

3 042 969

Commission expense(985 930)(1 347 912)

Subtotal result from commission business and services

1 431 192

1 695 057

Result from trading activities

25 871 888

21 126 836

Personnel expenses(6 108 489)

(6 487 064)

General and administrative expenses(13 480 176)

(13 182 354)

Subtotal operating expenses(19 588 665)

(19 669 418)

(333 634)(414 111)

1 356(46 422)7 538 288

2 535 109

Changes in value adjustments for default risks and losses from interest operations
Subtotal net result from interest operations

RESULT FROM COMMISSION BUSINESS AND SERVICES (CHF)

OPERATING EXPENSES (CHF)

Value adjustments on participations and depreciation and amortisationof tangible fixed assets and intangible assets
Changes to provisions and other value adjustments, and losses
Operating result

11

Extraordinary income
Extraordinary expenses––

Changes in RRBG–

150 000

Taxes(1 175 797)

(615 240)

Profit of the year

6 362 491

2 069 880

DUKASCOPY BANK SA ANNUAL REPORT 2022

14

PRESENTATION OF THE STATEMENT OF CHANGES IN EQUITY
as at 31 December 2022

Bank'scapitalStatutoryretained earnings reserve

Reserves
for generalbanking risks

ProfitcarriedforwardResult of
the year

TOTAL

Equity at start of current period

22 000 000

1 317 000

3 850 000

23 686 294

2 069 880

52 923 174

Allocation of previous year result

–

–

–

–

–

–

Allocation to statutory retained earnings reserve–

104 000––(104 000)–

Allocation to profit carried forward

–

–

–

1 965 880

(1 965 880)–

Result of the year

–

–

–

–

6 362 491

6 362 491

22 000 000

1 421 000

3 850 000

25 652 174

6 362 491

59 285 665(CHF)

Equity at end of current period

THE BOARD OF DIRECTORS PROPOSES THE FOLLOWINGAPPROPRIATION OF AVAILABLE EARNINGS:
(CHF)

2022

Result of the year

6 362 491

Profit carried forward

25 652 174

Amount at the disposal of the Shareholders' general meeting

32 014 665

PROPOSED UTILISATION (CHF)
Contribution to the statutory retained earnings reserve2022
319 000

To be carried forward

31 695 665

Total

32 014 665

DUKASCOPY BANK SA ANNUAL REPORT 2022

15

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022
1. Name, legal status and domicile of the bankDukascopy Bank SA (hereinafter the "Bank") is a limited company under Swiss law, authorized and regulated by FINMA as abank and a securities house, which renders online brokerage and online banking services from its head office in Geneva(Switzerland). The Bank has representative offices in Riga, Kiev, Moscow and Hong Kong. Bank owns participations (seesection Financial Statements).
2. Accounting and valuation principles
2.1. General principles
The financial statements are established in accordance with the Swiss Code of Obligations, the Act on Banks and Saving
institutions, its related Ordinance, the FINMA Accounting Ordinance and FINMA circular 2020/1. The financial statements areprepared in accordance with the reliable assessment principle as defined by the FINMA circular 2020/1 and are allowed toinclude silent reserves. In the notes, certain figures are rounded for publication but the calculations are based on the nonrounded figures, thus small rounding differences can arise.
General valuation principles
The financial statements are prepared on the assumption of a going-concern. The accounting is therefore based on goingconcern values.
Items are entered in the balance sheet as liabilities if they have arisen due to past events, if a cash outflow is probable andtheir value can be reliably estimated. If a reliable estimate is not possible, then it is a contingent liability, which iscommented on in the notes. The disclosed balance sheet items are valued individually. In principle, neither assets andliabilities nor expenses and income are offset. Accounts receivable and account payable are offset in the following cases:Ÿ deduction of value adjustments from the corresponding asset item;Ÿ offsetting of positive and negative replacement values of derivative financial instruments with the same
counterparty, if there are recognized and legally enforceable netting agreements in place;Ÿ offsetting of price gains and losses from trading activities.
2.2. Changes to accounting principles and valuation method
No changes in 2022.
Financial instruments
a.Liquid assets
Liquid assets are recognized at their nominal value.
b.Amounts due from banks and amounts due from customers
They are recognized at their nominal value less any necessary value adjustments. Amounts due in respect of precious metal
account deposits are valued at fair value. Doubtful receivables, i.e. obligations entered with clients for which the debtor isunlikely to meet its future obligations, are valued individually and depreciated by means of individual value adjustments.
Impaired receivables and any collateral obtained are valued at their liquidation value, and any adjustments in value are made inlight of the debtors' creditworthiness. If the repayment of a loan depends exclusively on the proceeds of the collateral, a value
adjustment is made for the entire unsecured portion of the receivable. If a receivable is classed as entirely or partially
irrecoverable or a receivable is waived, the receivable is derecognized by booking it against the corresponding value adjustment.
If recovered amounts from receivables written off in earlier periods cannot be used immediately for other value adjustments ofthe same type, they are recognized in “Change in value adjustments for default risk and losses from interest operations” in thestatement of income.
DUKASCOPY BANK SA ANNUAL REPORT 2022

16

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022
c. Amounts due to banks and amounts due in respect of customer deposits
These items are recognized at their nominal value. Amounts due in respect of precious metal account deposits are valued atfair value.
d. Trading assets
Trading assets comprise positions in cryptocurrencies and CFD on actions held with a trading intent. Trading positions aremeasured at market value. Trading results are recognized through “Result from trading activities and the fair value option”.
e. Positive and negative replacement values of derivative financial instruments
Trading operations comprise execution of client orders and transactions of the Bank for its own account including hedging
transactions. The trading assets and liabilities related to trading operations of the Bank are exclusively recognized in the offbalance sheet due to the nature of such transactions (spot forex, spot precious metals and derivatives). Spot tradingtransactions executed by the Bank are accounted for according to the value date principle. This implies that between the
trade date and the value date, spot transactions are disclosed as derivative instruments. Explanations below concerningderivative financial instruments traded by the Bank also apply to such spot trading operations.
Trading assets and liabilities are valued and recognized at fair value. Fair value is the price based on a price-efficient andliquid market or the price calculated using a valuation model.
The price gain or loss resulting from the valuation is recorded via the item “Result from trading activities”.
Derivative financial instruments are used for trading and for hedging purposes.
Trading purposes
The valuation of derivative financial instruments for trading purposes is done according to the fair value and the positive or
negative replacement value is recorded in the corresponding item. The fair value is based on market prices.
The realized result from trading operations and the unrealized result from valuations relating to trading operations arerecorded via the item “Result from trading activities”.
Hedging purposes
The Bank also uses derivative financial instruments as part of its assets and liabilities management (ALM) to hedge against
market risks. Hedging operations are valued and disclosed as trading operations. Derivatives are used for economic
hedging purpose and the Bank does not apply hedge accounting.
Use of swaps
The Bank uses currency swaps to rollover spot foreign exchange and precious metal transactions to the next spot
settlement date until positions are closed.
Netting
The Bank offsets positive and negative replacement values with the same counterparty within the terms of the recognized
and legally enforceable netting agreements.
f. Financial investments
Financial investments include the bonds and the cryptocurrencies.
Financial investments count Swiss and US government bonds acquired with the intention to hold them until maturity. The

DUKASCOPY BANK SA ANNUAL REPORT 2022

17

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022
valuation is based on the acquisition cost principle with the agio/disagio (premium/discount) accrued/deferred over the
residual term to maturity (accrual method).
If held-to-maturity financial investments are sold or reimbursed early, the realized gains and losses, which correspond to
the interest component, are accrued/deferred over the residual term to maturity of the transaction via the item “Other
assets” or “Other liabilities”.
Value adjustments for default risk are recorded immediately under “Changes in value adjustments for default risk andlosses from interest operations”.
g. Crypto assets in Financial investments
Dukascoins
Dukascopy Bank books Dukascoins belonging to the Bank in the caption "Financial investments" valued at lower than costor market. For such tokens issued by the Bank, the latter considers that acquisition cost is zero. As a consequence,
Dukascoins belonging to the Bank will remain valued at zero as long as they stay in "Financial investments".
The Bank books Dukascoins belonging to clients in the caption "Financial investments" at fair value on the asset side and in"Amounts due in respect of customer deposits" at fair value on the liabilities side.
According to the Art. 10 Finma Accounting Ordinance, the fair value derives either from a price efficient and liquid market orfrom a valuation model. According to our analysis, there is currently no efficient price and no liquid market for Dukascoins.
To our knowledge, there is no generally accepted valuation methodology for payment tokens. Due to the lack of future cash
flows, intrinsic value, highly correlated base assets, which could be used as a benchmark in model, the value of such tokens
depends mainly on market demand.
Considering the foregoing, the Bank considered that there is no fair value estimates for Dukascoins and therefore thosecoins should be valued at cost. Currently, the sole active marketplace is the Dukascoin bulletin board established by the
Bank, where prices are set daily for very small volumes.
Value adjustments are recorded under “Other ordinary expenses” or “Other ordinary income”.
Other crypto assets
Dukascopy Bank books other crypto assets belonging to the Bank in the caption "Financial investments". The valuation isbased on the acquisition cost principle. The subsequent valuation is based on the lower of cost or market principle.
Trading assets comprises positions in Crypto currencies held with a trading intent are booked in “Trading assets”. Trading
positions are measured at market value. Trading results are recognized through “Result from trading activities and the fairvalue option”.
h. Participations
Participations owned by the Bank include equity securities of companies that are held for long-term purposes, irrespectiveof any voting rights. They are valued at historical costs minus any value adjustments, if any. Each participation is tested for
impairment as of the balance sheet date. This test is based on indicators reflecting a possible impairment of individual
assets. If any such indicators exist, the recoverable amount is calculated. The recoverable amount is calculated for eachindividual asset. The recoverable amount is the higher amount of the net selling price and the value in use.
An asset is impaired if its carrying amount exceeds its recoverable amount. If the asset is impaired, the book value isreduced to match the recoverable amount and the impairment is charged via the item “Value adjustments on participations
and amortization of tangible fixed assets and intangible assets”. Realized gains from the sale of participations are recorded
via the item “Extraordinary income” and realized losses are recorded via the item “Extraordinary expenses”.

DUKASCOPY BANK SA ANNUAL REPORT 2022

18

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022
i. Tangible fixed assets
Investments in tangible fixed assets are capitalized as an asset if they exceed the minimal value for recognition of CHF 1’000.
Tangible fixed assets are recognized at acquisition cost minus the scheduled accumulated depreciation over the estimatedoperating life.
Tangible fixed assets are depreciated at a consistent rate over an estimated operating life via the item “Value adjustments
on participations and depreciation of tangible fixed assets and intangible assets”. The estimated operating lives of thedifferent categories of tangible fixed assets and the depreciation methods are as follows:- Fixtures and fittings

4 years, on a linear basis- Furniture

4 years, on a linear basis- IT hardware

3 years, on a linear basis- Vehicles

5 years, on a linear basis- Software

5 years, on a linear basis

Acquisition cost of tangible fixed assets acquired during the year are depreciated at the same rate on a prorata basis.
Objects used by the Bank as the lessee as part of a finance lease are recorded via the item “Tangible fixed assets” at cash
purchase value. The leasing liabilities are disclosed, depending on the counterparty, in the items “Amounts due to banks” or“Other liabilities”.
In case an indication arise that the value of a tangible fixed asset is impaired, an additional amortization is recorded in theitem “Value adjustments on participations and depreciation of tangible fixed assets and intangible assets”.
The recoverable amount is the higher amount of the net selling price and the value in use. An asset is impaired if its carrying
amount exceeds its recoverable amount. If the asset is impaired, the book value is reduced to match the recoverable
amount and the impairment is charged via the item “Value adjustments on participations and depreciation of tangible fixed
assets and intangible assets”.
Realized gains from the sale of tangible fixed assets are recorded via the item “Extraordinary income” and realized losses arerecorded via the item “Extraordinary expenses”.
j. Provisions
The Bank records provisions based on its assessment of the risks of loss and probable liabilities, based on past events, ofwhich the amount and due date are uncertain but assessable. Legal and factual obligations are valued regularly. If an
outflow of resources is likely and can be reliably estimated, a corresponding provision is created.
Existing provisions are reassessed at each balance sheet date. Based on this reassessment, the provisions are increased, left
unchanged or released. Currently, provisions exclusively relate to legal risks. The variation of provisions is recorded in thestatement of income via “Changes in provisions and other value adjustments, and losses”.
Provisions are released via the statement of income if they are no longer needed on business grounds and cannot be used
for other similar purposes except if the Bank decides to maintain them as silent reserves.
k. Reserves for general banking risks
Reserves for general banking risks are prudently created reserves to hedge against the risks in the course of business of theBank. The creation and release of Reserves for general banking risks are recognized via the item “Changes in reserves forgeneral banking risks” in the statement of income. The Reserves for general banking risks are subject to tax when theyexceed certain criteria.

DUKASCOPY BANK SA ANNUAL REPORT 2022

19

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022
l. Taxes
Current taxes are recurring, usually annual, taxes on profits, capital and total income (Geneva professional tax). Transactionrelated taxes are not included in current taxes.
Liabilities from current tax are disclosed via the item “Accrued liabilities and deferred income”.
Expense due to current tax is disclosed in the statement of income via the item “Taxes”.
m. Off-balance sheet transactions
Off-balance sheet disclosures are at nominal value. Provisions are created in the liabilities in the balance sheet forforeseeable risks.
n. Pension benefit obligations
The Bank’s employees based in Switzerland are insured for retirement, death or disablement through a defined
contribution pension scheme. The Bank bears the costs of the occupational benefit plan for employees and survivors as per
the legal requirements. The employer contributions arising from the pension scheme are included in “Personnel expenses”
on an accrual basis.
Employee benefit obligations mean all commitments resulting from the pension fund to which Bank’s employees are insured.
There is an economic benefit if the Bank has the ability to reduce its future employer's contributions. On the contrary, there isa liability if, owing to a shortfall in the pension fund, the Bank wants or has to participate in the financing of the pension fund.
The Bank assesses whether there is an economic benefit or economic obligation arising from pension schemes as of thebalance sheet date. The assessment is based on the contracts and financial statements of the pension funds (establishedunder Swiss GAAP FER 26 in Switzerland).
The identified economic benefit (including the employer contribution reserves without a waiver of use) are recorded in“Other assets”. If an economic obligation is identified for an individual pension fund, it is recorded in “Provisions”. The
difference with the corresponding value of the prior period are recorded in the statement of income in “Personnel
expenses”.
2.3. Recording of business transactions
All business transactions, except trading operations, concluded up to the balance sheet date are recorded as of their tradedate (trade date principle) and valued according to the above-mentioned principles. Any trading operations including spot
foreign exchange transactions, foreign exchange forwards, swaps or any other derivative financial instrument entered into
but not yet fulfilled are recorded in accordance with the settlement date accounting method. Between the trade date andthe settlement date, these transactions are disclosed at replacement value via the item “Positive replacement value ofderivative financial instruments” or “Negative replacement value of derivative financial instruments”.
2.4. Treatment of foreign currencies
Transactions in foreign currencies are converted at the exchange rates of the transaction date. Assets and liabilities carriedin foreign currencies are converted at the exchange rates of the balance sheet date. Resulting conversion gains and losses
are recorded via the item “Result from trading activities”.

DUKASCOPY BANK SA ANNUAL REPORT 2022

20

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022
At the balance sheet date, the main exchange rates used to convert assets and liabilities in foreign currencies were as
follows:

(CHF)

2022

2021

USD

1.00

0.924850.91217EUR

1.00

0.99005

1.03719

GBP

1.00

1.11908

1.23308

CAD

1.00

0.68287

0.72179

JPY

1.00

0.00705

0.00792

AUD

1.00

0.630700.66316NZD

1.00

0.58755

0.62396NOK

1.00

0.09443

0.10346

SEK

1.00

0.08869

0.10075

SGD

1.00

0.69009

0.67642

3. Risk Management
As an online bank mainly offering fully automated (Straight-Through-Processing) brokerage services via innovative in-housedeveloped IT solutions, Dukascopy Bank is mostly subject to operational, market and legal risks. Since the Bank is not active
in credit activities and only executes client orders based on collateral (client margin deposits and bank guarantees), its credit
risk exposure is normally limited to possible default of institutional trading counterparties.
The identification, measurement, monitoring, management of risks and maintenance of the Bank’s stability, is a priority for
the Bank. The key elements of risk management are the following:Ÿ a comprehensive risk policy and internal regulation defining among others the risk appetite and risk limits
which are commensurate with the Bank’s risk capacity;Ÿ the permanent monitoring of risk limits and compliance with regulatory capital, risk diversification andliquidity requirements applicable to Swiss banks;
Ÿ a risk control function in charge of monitoring the Bank’s risk profile and risk management capabilities;
Ÿ proper segregation of duties;
Ÿ wide application of the four-eyes principle and IT-based controls in business operations;Ÿ three lines of defense: risk management by business units, risk control and compliance functions andinternal audit;Ÿ a comprehensive internal reporting on relevant risks.
The Board of Directors is the supreme governing body of the risk management organization. It has established an analysis of themain risks the Bank is exposed to. Based on its risk analysis, the Board of Directors has adopted a Risk Management Concept
aiming at limiting and managing the main risks affecting the Bank. The Risk Management Concept defines the risk appetite, themain risk limits and features of the risk measurement and risk management. The Board of Directors monitors compliance withthe limits as well as the implementation of the risk policy based on a comprehensive quarterly reporting on risks.
The executive management is responsible for the execution of the Board of Directors’ policies. It ensures a suitable risk
management organization is in place as well as the use of an adequate risk monitoring system. It monitors the use of limits
and ensures that an adequate internal reporting is in place. The risk control function and the compliance function are
independent of business operations. They monitor all risks as the second line of defense and establish most of thequarterly reporting about risks to the executive management and the Board of Directors.

DUKASCOPY BANK SA ANNUAL REPORT 2022

21

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022
Operational risks
Operational risks are defined as the risk of losses due to inadequacy or failure of internal procedures, people and systems
or due to external events. This definition includes risks related to client data confidentiality and legal risks, including fines bysupervisory authorities and settlements. As a bank offering highly automated services accessible through the Internet,
Dukascopy Bank much relies on IT systems and Internet connections to operate. Automation brings high efficiency,
eliminates human errors but at the same time means dependency on the availability and integrity of IT systems andInternet connections that the Bank protects through advanced security solutions and permanent monitoring of the systemcomponents. Cyber and IT risks are among the main risks for the Bank.
The operational risks are measured by calculating the probability and extent of possible financial damages due to negative
events such as an error in client order execution or the breach of a regulation (compliance risk). The Bank has documented
operational risks and key controls aiming at mitigating such risks (e.g. four eyes principle, reconciliations, automatedcontrols, internal regulation, etc.) in a systematic manner via an internal regulation which is approved annually by the Boardof Directors and based on the FINMA circular 2008/21. The operational risk management framework also includes aBusiness Continuity Management documentation, which rules the maintenance or the resumption of business operations
in case of occurrence of critical situations such as a natural disaster affecting the Bank. The effectiveness of the BusinessContinuity Management is tested annually.
The Bank establishes risk indicators, mainly based on operational incidents and losses which allow the risk control function
to report on operational risks in a systematic and objective way to the executive management and the Board of Directors.
The management of operational risks is one of the priorities of the Bank since it has a direct effect on its stability andattractiveness as a trusty service provider.
Market risks – trading operations
Due to the Bank’s specialization in forex trading, market risks are concentrated on currency risk. Market risks related toother financial instruments offered by the Bank (precious metals, stocks, commodities, equities, etc.) are minor incomparison to currency risks.
The management of market risks deriving from trading operations is a priority risk management activity and a cornerstoneof the Bank’s financial stability. In particular, the volatility on the forex market may trigger significant impact on the Bank’s
statement of income due to the Bank’s currency risk exposure via the item “Result from trading activities”. For various
reasons including for benefitting from bid and ask spreads, the Bank permanently keeps a certain portion of market
exposure deriving from client order execution.
The Bank applies prudent market risk limits and sophisticated monitoring of market risk exposure via automated hedging
logics and 24h human and automated surveillance.
The Bank automatically measures its market risk exposure on a permanent and real time basis. The IT system automatically
caps such market risk exposure under the limits decided by the executive management and the Board of Directors. Thoselimits have been set sufficiently carefully to ensure that Swiss banking capital adequacy requirements are complied with at
all times. If deemed necessary, the Bank’s advanced technology allows it to fully exclude exposure deriving from trading on
all or specific instruments, for instance in anticipation of exceptional market events such as the abandon of a currency peg
by a Central Bank.
Market risks – other currency risks
The Bank has a limit applicable to currency risk exposure deriving from currency discrepancies between assets andliabilities. This limit is monitored on a daily basis by the Treasurer who maintains sufficient currency congruence between
assets and liabilities through the assets and liabilities management (ALM).

DUKASCOPY BANK SA ANNUAL REPORT 2022

22

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022
Market risks – interest rate risks
The Bank is not active in credit or other interest generating activities. The Bank’s exposure to interest rate risks mostly
derives from government bonds it has bought and deposited with trading counterparties as trading collateral. Since the
Bank intends to hold those bonds until maturity, the identified interest rate risks should not materialize in losses. The Bank
calculates and reports on interest rate risks on a quarterly basis.
Credit risk
The Bank is not active in credit activities. However, in the frame of its core trading activities, a credit risk exists if clients are
not able to honor payment obligations collected during their trading at the Bank (settlement of trading losses and paymentof fees). For that reason, the Bank only accepts to trade on a covered basis. The trading platforms automatically monitor thecredit risk related to clients by way of margin call and margin cut functionalities which shall ensure that the Bank remains
covered by sufficient collateral at any time. In some circumstances, the margin call and margin cut functionalities of the
Bank may not suffice to fully prevent certain client accounts to become negative. In such cases, the Bank collects unsecured
receivables. Also, the Bank may grant short term unsecured loans and advances to the Bank’s employees.
Counterparty risk in interbank business
The Bank deposits its liquidity and trades (mainly to hedge client transactions) with more than 40 different banks and otherinstitutional trading counterparties external to its ECN marketplace such as brokers and other marketplaces. Counterparty
and default risks relating to banks and other trading counterparties are mitigated by the fixation of exposure limits within
the competences set by the Board of Directors. The respect of the risk limits is controlled on a daily basis and limits are
adapted as often as deemed necessary.
In principle, the Bank works only with first-class counterparties. Before entering into a business relationship with acounterparty in interbank business, the Bank performs an assessment of the counterparty risk and sets a risk exposure
limit accordingly. The limit depends significantly on the rating, if any, and on the capital adequacy of the counterparty which
are reassessed on an annual basis or more frequently if deemed necessary. The Bank is attentive to financial news andpublic information circulating about its counterparties. In case of negative information concerning the stability of acounterparty, its creditworthiness is verified by the Bank. If deemed necessary, risk limits and credit risk exposures areadjusted or suppressed by the executive management and the risk control function. The Treasurer monitors compliancewith the limits on a daily basis.
Liquidity
Due to the nature of its business activities, the Bank has abundant liquidities and no long term monetary commitment. The
Bank is exclusively financed by its own capital, client deposits and therefore does not need to raise funds on the money
market. As a result, the liquidity risk of the Bank is low and requires limited monitoring. The liquidity risk management
strategy of the Bank and an emergency liquidity plan have been approved by the Board of Directors. They identify reservesof liquidity, liquidity risk indicators and steps necessary to maintain sufficient liquidity, including in case of liquidity stresssituation. The Treasurer ensures that the limits are complied with. The liquidity situation and concentration risks aremonitored by the risk control function and reported quarterly to the executive management and to the Board of Directors.
4. Methods used for identifying default risks and determining the need for value adjustments
4.1. Amounts due from customers
With regard to receivables covered by bank guarantees, the credit risk mostly relates to banks having issued suchguarantees and the default risk is determined as explained in section 4.2. below. If a bank guarantee issuer defaults, thereceivable becomes unsecured and default risks are assessed like for unsecured loans or advances to Bank’s employees.
DUKASCOPY BANK SA ANNUAL REPORT 2022

23

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022
The Bank considers that a risk of default exists on unsecured receivables if a payment of interests or a reimbursement of theprincipal is not honored in due date or if the debtor disputes such payment obligations or indicates that he/she will not beable to honor them. In such cases, the Bank enquires about the debtor’s intentions and financial situation and evaluates the
chances of recovering the receivable. A value adjustment is recorded for the portion of receivable whose recovery is
considered uncertain.
4.2. Amounts due from banks
In principle, the Bank only takes credit risk exposure towards counterparties having sound creditworthiness. The Bank
considers that a counterparty is defaulting in case the latter refuses to honor a payment order in due time, or is declaredbankrupted or placed under special administration due to insolvency/going-concern issues. In such cases, thecounterparty’s situation is evaluated by the Bank. A value adjustment is recorded for the portion of receivable whose
recovery is considered uncertain.
4.3. Process for determining value adjustments and provisions
Value adjustments and provisions are reassessed at each balance sheet date. Changes in value adjustments and provisions
are approved by the executive management unless they simply result from a use of provision in conformity with its purposeor the recovery of an impaired receivable. Value adjustments on non-impairment credit exposures are determined
individually or on a portfolio basis according to Art. 25 para 1 let. c FINMA Accounting Ordinance.
5. Valuation of collateralCollateral provided by clients is normally made of cash deposited with Dukascopy Bank, in any currency accepted in depositby the Bank. Collateral also may comprise up to 80% of bank guarantees issued by Swiss or European banks having a Baa or
superior Long-Term senior debt Moody’s rating. With the joint approval of the risk control function and executive
management, the Bank may accept bank guarantees derogating the above criteria. Bank guarantees must be denominatedin the same currency as the client account reference currency. Collateral is valued at nominal value of the cash or bankguarantees. The Bank applies no haircut to collateral and grants a leverage for the trading of certain instruments.
6. Business policy regarding the use of derivative financial instruments and hedge accounting
Trading of OTC financial instruments with clients, including trading of certain financial derivatives (CFD and binary options),is the core business of the Bank. As per Swiss legislation, the main instrument offered by the Bank, namely leveraged margin
trading on currencies and precious metals without delivery, while it is often regarded as a CFD instrument in otherjurisdictions. Therefore, depending on the qualification of leveraged margin trading, the Bank may be seen as a pureprovider of financial derivative instruments. The Bank does not trade credit derivatives.
The Bank executes all trading operations in full STP (Straight-through-Processing) mode and always acts as a principal intrades, including on its ECN (Electronic Communication Network) trading environment.
The Bank also uses derivative financial instruments for risk management purposes, mainly to hedge against market risks(including currency risk) mostly deriving from clients trading operations. Hedging operations are executed by the Bank eitherwith external institutional counterparties or with clients. The Bank does not use hedge accounting.
7. Significant subsequent event after the balance sheet dateNo material event occurred after the balance sheet date that could have a material impact on the financial position of the
Bank as of 31 December 2022. The merger of UBS and Crédit Suisse did not affect the Bank's financial condition.

DUKASCOPY BANK SA ANNUAL REPORT 2022

24

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of collateral for loans/receivables and off-balance-sheet transactions,as well as impaired loans/receivables

LOANS (CHF)(before netting with value adjustments)

Secured by mortgages

Other collateral Unsecured

Total

Amounts due from customers–

38 732

2 359 901

2 398 633

Total at 31 December 2022–

38 732

2 359 901

2 398 633–

40 172

1 696 400

1 736 572–

38 732

2 359 901

2 398 633–

40 172

1 696 400

1 736 572

Other collateral Unsecured

Total(before netting with value adjustments)
Total at 31 December 2021
(before netting with value adjustments)
Total at 31 December 2022
(after netting with value adjustments)
Total (after netting with value adjustments)
at 31 December 2021

OFF-BALANCE SHEET COMMITMENTS (CHF)

Secured by mortgages

Contingent liabilities*–

150 215–150 215

Irrevocable commitments––

1 134 000

1 134 000

Total at 31 December 2022–

150 215

1 134 000

1 284 215

Total at 31 December 2021–

139 755

988 000

1 127 755

*Contingent liabilities are bank guarantees issued by the Bank on behalf of clients, fully secured by client cash deposits.

BREAKDOWN OF IMPAIRED
LOANS/RECEIVABLES (CHF)

Gross debt
amountEstimated liquidation
proceeds of collateral

Net debt
amountIndividual value
adjustments

Total at 31 December 2022

–

–

–

–

Total at 31 December 2021

–

–

–

–

DUKASCOPY BANK SA ANNUAL REPORT 2022

25

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown of trading portfolio and other financial instruments at fair value (assets and liabilities)
2022

2021

Equity securities

1 161 044–

Other trading portfolio assets (cryptocurrencies)

1 959 696

5 255 953

Total trading assets

3 120 740

5 255 953

Total assets

3 120 740

5 255 953

– of which determined using a valuation model––– of which, securities eligible for repo transactions in accordance with liquidity requirements––

ASSETS (CHF)

Presentation of derivative financial instruments (assets and liabilities)
Trading instruments
OTC TRANSACTIONS (CHF)

Positive
replacement values

Negative
replacement values

Contract
volumesInterest instruments:
– CFD

3 535

17

1 173 487

Total interest instruments

3 535

17

1 173 487

804 095

719 948

173 808 389

Currencies:– forward contracts*

197 123

206 914317 358 270

1 001 218

926 862491 166 659– forward contracts*

2 603

3 319

817 378– swaps

31 5827 815

20 435 444

Total precious metals

34 185

11 13421 252 822– CFD

491 379

90 26723 689 700

Total equity securities and indices491 379

90 26723 689 700

1 616 366

43 12111 125 573– swaps
Total currencies
Precious metals:

Equity securities and indices:

Others:
– CFD

–

388

49 832

Total others

1 616 366

43 50911 175 405

Total at 31 December 2022 before impact of netting contracts

3 146 683

1 071 789

548 458 073

–

–

–

896 816

1 040 609

617 715 419–- Futuresof which determined using a valuation model
Total at 31 December 2021 before impact of netting contractsof which determined using a valuation model
Total at 31 December 2022 after impact of netting contracts
Total at 31 December 2021 after impact of netting contracts––

2 349 761

274 867

837 487

1 272 663

* Represent the spot trading transactions which are accounted for according to the value date principle.
DUKASCOPY BANK SA ANNUAL REPORT 2022

26

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown by counterparty
POSITIVE REPLACEMENT VALUES AFTERIMPACT OF NETTING CONTACTS (CHF)

Central clearing
housesBanks & securities
dealers

Otherscustomers

Total

Total at 31 December 2022–

283 097

2 066 664

2 349 761

Total at 31 December 2021–

322 717514 770

837 487

Breakdown of financial investments
Fair value

Book value
2022

2021

2022

2021

44 949 868

45 339 716

44 560 235

45 508 932(CHF)
Debt securities held to maturity
Cryptocurrencies

1

1 674

1

1 674

Total

44 949 869

45 341 390

44 560 236

45 510 606

including securities eligible for repo transactionsin accordance with liquidity regulations

33 851 728

34 418 633

33 463 612

34 379 460

2022

2021

44 949 868

45 339 716

A+ to A-––

BBB+ to BBB-––

BB+ to B-––

Lower than B-––

Without rating––

Breakdown of contreparties
DEBT SECURITIES: BOOK VALUE OF BONDS HELD TO MATURITY (CHF)
AAA to AA-

We use rating DBRS Morningstar.

Presentation of participations
2021

2022

Cost
value

Value
adjustment

Book value
at end of year

Without listed value

3 751 344

(2 143 147)

1 608 197–––

1 608 197

Total participations

3 751 344

(2 143 147)

1 608 197–––

1 608 197

PARTICIPATIONS (CHF)

DUKASCOPY BANK SA ANNUAL REPORT 2022

Disposals
ValueBook value
Additions Reimbursement adjustment at end of year

27

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Disclosure of companies in which the Bank holds a permanent direct or indirect
significant participation
2022
PARTICIPATIONS

Activity

Share capital
(CHF)

Head
officeSharecapital in %Sharevote in %Helddirectly in %SWFX SAIP service

100 000

Geneva

100

100

100

Dukascopy Europe IBS AS

brokerage

1 933 921

Riga

100

100

100

Dukascopy Community SAsocial media

100 000

Geneva

100

100

100

brokerage

792 347

Tokyo

100

100

100

Dukascopy Japan K.K.

In the end of 2022, the share capital of Dukacopy Japan K.K. was reduced.
2021
SWFX SAIP service

100 000

Geneva

100

100

100

Dukascopy Europe IBS AS

brokerage

1 933 921

Riga

100

100

100

Dukascopy Community SAsocial media

100 000

Geneva

100

100

100

brokerage

6 021 839

Tokyo

100

100

100

Dukascopy Japan K.K.

Presentation of tangible fixed assets
2021

2022

AccumulatedBook value
depreciation at end of year

Additions

Disposals

Book value
Depreciation at end of year

(CHF)

Cost value

Softwares

23 279 663(23 131 414)

148 249

19 184–(75 390)

92 043

Other tangible fixed assets

10 356 896(9 668 125)688 771

96 216–(258 244)

526 743

Total fixed assets

33 636 559(32 799 539)

837 020

115 400–(333 634)

618 786

Leasing(CHF)
Future leasing installments arising from operating leasesof which, may be terminated within one year

2023

2024

2025

2026

2027

1 270 957

1 008 054

885 220233 02032 35847 040––––

They are rental costs.

DUKASCOPY BANK SA ANNUAL REPORT 2022

28

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown of other assets and liabilities
OTHER ASSETS (CHF)

2022

2021

Wire transfers

180 097

83 136

Accrual interests on bonds*

360 543242 625

Indirect taxes to be reimbursed*

162 750

162 750

Total other assets

703 390488 511

1 697 595

1 443 113

243 612233 15482

93

1 941 289

1 676 360

OTHER LIABILITIES (CHF)
Wire transfers
Indirect taxes to be paid
OthersTotal other liabilities* Reclassification "Accrual interests on bonds" and "Indirect taxes to be reimbursed" from "Accrued income and prepaid expenses"
to "Other assets". Comparative figures for 2021 have been adapted.

Disclosure of assets pledged or assigned to secure own commitments
and of assets under reservation of ownership
2022

(CHF)

2021

Book value of pledged
assets & assets
Effective
assigned as collateral commitments

Book value of pledged
assets & assets
assigned as collateral

Effective
commitments

Swiss bonds

14 076 301

565 868

18 839 353

1 194 602

Margin accounts assigned as collateral

22 281 310

124 115

23 666 255

382 910219 530

219 530

219 530

219 530

36 577 141

909 51342 725 138

1 797 042

Deposits made with banks to secure guarantees
Total

Indications relating to pension funds
A collective pension fund plan exists for the employees based in Switzerland (Caisse Inter-Entreprises-CIEPP). This
fund is a defined contribution scheme. There is no employer contribution reserve and there is no identifiableeconomic benefit to be capitalised in the balance sheet (2021: nil). The pension fund unaudited accounts as of 31
December 2022 present a coverage ratio of 109%. Based on the last audited financial statements of the Caisse InterEntreprises-CIEPP as at 31 December 2021, the coverage ratio was 126.3%.
There is no pension fund for the other foreign representation offices of the Bank.

DUKASCOPY BANK SA ANNUAL REPORT 2022

29

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of economic benefit / obligation and the pension expenses

Over orunderfunding
31.12.2022(CHF)

Economic interestof the Bank
2022
2021

−

Pension plans with overfunding−

Change ineconomic interest
versus prior year

Contributions
paid for 2022−

255 561−

Pension expenses inpersonnel expenses
2022

2021

255 561

255 008

Presentation of value adjustments and provisions, reserves for general banking
risks, and changes therein during the current year

Currency Recoveries, past
New creations Releases Balance atBalance at Use in conformity with Reclassifidue interest charged to income to income 31.12.2022
31.12.2021
designated purpose
cations differences(CHF)
Provisions for other business risks

–

–

–

–

–

–

Total provisions

–

–

–

–

–

–

–

–

3 850 000

–

–

–

–

–

–

3 850 000

–

–

–

–

–

–

–

–

Reserves for general banking risks––

Value adjustments for default
risks and country risks – of which,value adjustments for default risks inrespect of impaired loans/receivables

Provisions are valued according to the best estimate principle. Reserves for general banking risks have not been taxed.

Presentation of the Bank's capital
2022
(CHF)

Total parvalue

Numberof shares

Share capital

22 000 000

Registered shares

22 000 000

2021
Capital eligiblefor dividend

Total parvalue

Numberof shares

Capital eligiblefor dividend

21 712 000

22 000 000

22 000 000

21 712 000

22 000 000

21 712 000

22 000 000

22 000 000

21 712 000

22 000 000

of which, paid up

22 000 000

21 712 000

22 000 000

22 000 000

21 712 000

22 000 000

Total Bank's capital

22 000 000

21 712 000

22 000 000

22 000 000

21 712 000

22 000 000

The share capital consists of 21 680 000 shares with a nominal value of CHF 1 and of 32 000 shares with a nominal value of CHF 10.

DUKASCOPY BANK SA ANNUAL REPORT 2022

30

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Disclosure of amounts due from/to related parties

2022

2021

(CHF)

Amountsdue from

Amounts
due toAmountsdue from

Amounts
due toHolders of qualified participations

1 605 165

42 063

1 204 166

28 123

Group companies

1 959 035

3 739 105

1 563 413

3 911 383

Linked companies

–

–

–

–

Transactions with members of governing bodies–

19 108–12 9614 998

26 134–14 888Other related parties

Dukascopy Bank SA engaged into transactions with related parties in the normal course of its business. Thesetransactions mainly include outsourcing, marketing services and copyright agreements. Besides, all subsidiaries of the
Bank hedge their trading operations with Dukascopy Bank.
Transactions with related parties are conducted at arm's length.

Disclosure of holders of significant participations

2022
With voting rights

Nominal(CHF)

Numberof shares% of equity
in %Capital eligiblefor dividend (CHF)

Dr. Andrey Duka

10 890 000

10 746 000

49.5

10 890 000

Veronika Duka

10 890 000

10 746 000

49.5

10 890 000

2021
With voting rights

Nominal(CHF)

Numberof shares% of equity
in %Capital eligiblefor dividend (CHF)

Dr. Andrey Duka

10 890 000

10 746 000

49.5

10 890 000

Veronika Duka

10 890 000

10 746 000

49.5

10 890 000

DUKASCOPY BANK SA ANNUAL REPORT 2022

31

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of the maturity structure of financial instrumentsDue
At sight Cancellable

ASSETS (CHF)

Within Within 3 to
3 months 12 months

Within 1
to 5 yearsOver
5 yearsNo
maturity

Total

Liquid assets

50 188 954

–

–

–

–

–

–

50 188 954

Amounts due from banks

88 574 022

219 530

–

–

–

–

–

88 793 552

Amounts due from customers

2 375 382

23 252

–

–

–

–

–

2 398 634

Trading assets

3 120 740

–

–

–

–

–

–

3 120 740

Positive replacement values

2 349 761

–

–

–

–

–

–

2 349 761

Financial investments

1–

11 098 140– 14 076 301 19 775 427–

44 949 869

Total current assets

146 608 860

242 782

11 098 140– 14 076 301 19 775 427–

191 801 510

134 743 732

254 164–

10 921 083– 34 418 633–

180 337 612

Amounts due to banks

7 292 665

–

–

–

–

–

–

7 292 665

Amounts due in respect

124 008 025

–

–

–

–

–

–

124 008 025

274 867

–

–

–

–

–

–

274 867

131 575 557

–

–

–

–

–

–

131 575 557

127 144 925

–

–

–

–

–

–

127 144 925

of derivative financial instruments

at 31 December 2022
Total current assets
at 31 December 2021

THIRD-PARTY LIABILITIES (CHF)

of customer deposits
Negative replacement valuesof derivative financial instruments
Total third-party liabilities
at 31 December 2022
Total third-party liabilities
at 31 December 2021

DUKASCOPY BANK SA ANNUAL REPORT 2022

32

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of assets and liabilities by domestic and foreign origin in accordancewith the domicile principle

2022

2021

Domestic

Foreign

Total

Domestic

Foreign

Total

Liquid assets

50 189–50 18937 720–37 720

Amounts due from banks

40 46748 326

88 79337 65551 79189 446

Amounts due from customers

1 662

737

2 399

1 265

472

1 737

Trading assets

1 810

1 310

3 120

4 306

950

5 256

179

2 171

2 350

52

785

837

33 852

11 09844 95034 41910 92345 342

Accrued income and prepaid expenses

976

561

1 537

682

517

1 199

Investment in subsidiaries

200

1 408

1 608

200

1 408

1 608

Tangible fixed assets

505

114

619

684

153

837

Other assets

703

–

703

488

–

488

Total assets

130 543

65 725196 268

117 471

66 999184 470

–

7 293

7 293

–

11 975

11 975

6 975

117 033

124 008

6 999

106 898

113 897

49

226

275

114

1 159

1 273

Accrued expenses and deferred income

2 993

473

3 466

2 283

442

2 725

Other liabilities

1 940

1

1 941

1 673

4

1 677

Reserves for general banking risks

3 850

–

3 850

3 850

–

3 850

Bank's capital

22 000–22 00022 000–22 000Statutory retained earnings reserve

1 421

–

1 421

1 317

–

1 317

Profit carried forward

25 652–25 65223 686–

23 686

Result of the year

6 362

–

6 362

2 070

–

2 070

Total liabilities

71 242125 026

196 268

63 992120 478

184 470ASSETS (CHF 000)

Positive replacement values of derivative
financial instruments
Financial investments

LIABILITIES (CHF 000)
Amounts due to banks
Amounts due in respect of customer deposits
Negative replacement valuesof derivative financial instruments

DUKASCOPY BANK SA ANNUAL REPORT 2022

33

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown of total assets by country or group of countries (domicile principle)

2022

2021

Absolute (CHF 000)

Share %

Absolute (CHF 000)

Share %

Switzerland

130 543

66.5

117 471

63.7

Europe excluding Switzerland

45 921

23.4

48 79326.4

USA and Canada

15 432

7.9

15 334

8.3

Others

4 372

2.2

2 872

1.6

Total

196 268

100.0

184 470

100.0

ASSETS

Breakdown of total assets by credit rating of country groups (risk domicile view)

2022

2021

Absolute (CHF 000)

Share %

Absolute (CHF 000)

Share %

1

62 60595.2

64 246

95.9

2

2

0.0

6

0.0

3

709

1.1

301

0.4

4

114

0.2

31

0.0

5

1 293

2.0

2 057

3.2

6

295

0.4

167

0.2

7

638

1.0

145

0.2

without rating

69

0.1

46

0.1

65 725100.0

66 999100.0

SERV Rating

Total

The Bank does not use an internal rating system for country risk management. SERV is the rating issued by OECD.
Exposure excluding Switzerland.

DUKASCOPY BANK SA ANNUAL REPORT 2022

34

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of assets and liabilities broken down by the most significant currenciesof the Bank
CHF

EUR

USD

JPY

Others

Total

Liquid assets

50 189––––50 189Amounts due from banks

4 552

32 16439 0401 854

11 18388 793

Amounts due from customers

1 647

316

369

–

67

2 399

–

–

–

–

3 121

3 121

2 350

–

–

–

–

2 350

33 852–

11 098––44 950

926

177

328

–

105

1 536

1 608

–

–

–

–

1 608

Tangible fixed assets

619

–

–

–

–

619

Other assets

462

9

174

1

57

703

Total assets

96 20532 66651 0091 855

14 533

196 268

62 24392 158183 144

71 915102 959

512 419

158 448

124 824

234 153

73 770117 492

708 687

140

3 862

2 984

73

234

7 293

14 87539 30655 727449

13 651124 008

275

–

–

–

–

275

2 266

1 064

95

22

19

3 466

385

1 409

130

–

17

1 941

Reserves for general banking risks

3 850

–

–

–

–

3 850

Bank's capital

22 000––––22 000Statutory retained earnings reserve

1 421

–

–

–

–

1 421

Profit carried forward

25 652––––25 652

Result of the year

6 362

–

–

–

–

6 362

Total liabilities

77 22645 64158 936544

13 921

196 268

Delivery obligations arising from spot

73 31751 312207 400

79 481100 812512 322

Total at 31 December 2022

150 543

96 953266 336

80 025

114 733

708 590

Net position by currency

7 905

27 871(32 183)(6 255)

2 759

97

ASSETS (CHF 000)

Trading assets
Positive replacement valuesof derivative financial instruments
Financial investments
Accrued income and prepaid expenses
Investment in subsidiaries

Claims arising from spot exchange
and swap transactions
Total at 31 December 2022
LIABILITIES (CHF 000)
Amounts due to banks
Amounts due in respect of customer deposits
Negative replacement valuesof derivative financial instruments
Accrued expenses and deferred income
Other liabilities

exchange and swap transactions

DUKASCOPY BANK SA ANNUAL REPORT 2022

35

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown of contingent assets and contingent liabilities

CONTINGENT ASSETS (CHF)

2022

2021

Other contingent assets––

Total contingent assets––

Other contingent liabilities

150 215

139 755

Total contingent liabilities

150 215

139 755TRADING INCOME (CHF)

2022

2021

Leveraged margin trading

25 516 059

20 564 956

355 829561 880

25 871 888

21 126 836

CONTINGENT LIABILITIES (CHF)

Breakdown of the result from trading activities

Binary options
Total

Breakdown by underlying risk
RESULT (CHF) FROM TRADING ACTIVITIES FROM:

2022

2021

Equity securities

3 448 746

2 720 035

Foreign currency

17 648 400

12 655 336

Commodities / precious metals

3 659 613

4 799 515

Cryptocurrencies

1 115 129951 950Total

25 871 888

21 126 836

DUKASCOPY BANK SA ANNUAL REPORT 2022

36

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Disclosure of material refinancing income in the item Interest and discountincome as well as material negative interest
NEGATIVE INTEREST (CHF)
Negative interest on credit operations
Negative interest on deposits

2022

2021

248 094

348 137

3 331

3 186

Negative interest on credit operations are disclosed as a reduction in Interest and discount income.
Negative interest on deposits are disclosed as a reduction in Interest expense.

Breakdown of personnel expenses
PERSONNEL EXPENSES (CHF)

2022

2021

5 047 548

5 310 740––

Benefits

966 614

1 101 388

Other personnel expenses

94 32774 936

Total personnel expenses

6 108 489

6 487 064

Salariesof which, expenses relating to share-based compensation
and alternative forms of variable compensation

DUKASCOPY BANK SA ANNUAL REPORT 2022

37

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown of general and administrative expenses

GENERAL AND ADMINISTRATIVE EXPENSES (CHF)

2022

2021

Premises

1 735 919

1 934 323

IT related expenses

2 011 818

2 044 675

Copyright agreement

3 385 302

2 939 247

Legal and consulting

1 888 419

1 786 754

Post, telecommunications and data

599 791

596 122

Expenses for vehicles

65 61675 530

Office supply

173 061

183 150

Audit fees

304 893253 095

of which for financial and regulatory audits

304 893253 095––

2 165 855

2 342 058

Travels

891 221779 475

Others258 281247 925

13 480 176

13 182 354

2022

2021

Disposal of fully depreciated fixed assets–

11

Total extraordinary income–

11of which for other services
Marketing and communication

Total general and administrative expenses

Explanations regarding extraordinary income and expenses

EXTRAORDINARY INCOME (CHF)

There was no extraordinary expense in 2022 and 2021.

DUKASCOPY BANK SA ANNUAL REPORT 2022

38

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of current taxes, deferred taxes and disclosure of tax rate

(CHF)

2022

2021

Current tax expenses(1 175 797)

(615 240)

Total taxes(1 175 797)

(615 240)

2022

2021

15.6%

24.3%

(CHF)
Average tax rate

Taxes consist of tax on profit and capital, as well as professional tax. The fluctuation observed in the tax rate is dueto the Geneva professional tax because the latter is not proportionate to the profit but to the total gross income.

Presentation of operating result broken down according to domestic and foreign
origin, according to the principle of permanent establishment
2022
(CHF)

2021

Domestic

Foreign

Domestic

Foreign

156 151–(156 833)–

Subtotal result from commission business and services

1 431 192–

1 695 057–

Result from trading activities

25 871 888–

21 126 836–

Personnel expenses(5 266 131)

(842 358)(5 280 019)

(1 207 045)

General and administrative expenses(4 266 483)

(9 213 693)

(4 077 744)

(9 104 610)

Subtotal operating expenses(9 532 614)

(10 056 051)

(9 357 763)

(10 311 655)

(262 890)(70 744)(289 741)(124 370)(7 419)8 775(8 102)(38 320)

17 656 308(10 118 020)

13 009 454(10 474 345)

Subtotal net result for interest operations

Value adjustments on participations and depreciation andamortisation of tangible fixed assets and intangible assets
Changes to provisions and other value adjustments and losses
Operating result

DUKASCOPY BANK SA ANNUAL REPORT 2022

39

REPORT OF THE STATUTORY AUDITOR
TO THE GENERAL MEETING
of Dukascopy Bank SA, Meyrin
Report on the Audit of the Financial Statements
OpinionWe have audited the financial statements of Dukascopy Bank SA (the Company), which comprise the balance sheet as
at 31 December 2022, the income statement and the statement of changes in equity for the year then ended, andnotes to the financial statements, including a summary of significant accounting policies.
In our opinion, the financial statements (pages 12 to 39) comply with Swiss law and the Company’s articles ofincorporation.
Basis for Opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities
under those provisions and standards are further described in the “Auditor's Responsibilities for the Audit of the
Financial Statements” section of our report. We are independent of the Company in accordance with the provisions of
Swiss law, together with the requirements of the Swiss audit profession, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other Information
The Board of Directors is responsible for the other information. The other information comprises the information
included in the annual report, but does not include the stand-alone financial statements, the consolidated financial
statements of the company, and our auditor’s reports thereon.
Our opinion on the financial statements does not cover the other information and we do not and will not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
Board of Directors’ Responsibilities for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions
governing the preparation of financial statements for Banks, the provisions of Swiss law and the Company's articles ofincorporation, and for such internal control as the Board of Directors determines is necessary to enable thepreparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern, and using the going concern
basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or
has no realistic alternative but to do so.

DUKASCOPY BANK SA ANNUAL REPORT 2022

40

Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Swiss law and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgment and maintainprofessional scepticism throughout the audit. We also:− Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
− Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control.
− Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made.
− Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosuresin the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Company to cease to continue as a going concern.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and PS-CH 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 (page 15) complies with Swiss law and theCompany’s articles of incorporation. We recommend that the financial statements submitted to you be approved.

KPMG SA
Philippe Ruedin
Licensed Audit Expert
Auditor in Charge

Philippine Bouvard
Licensed Audit Expert

Geneva, 21 April 2023

Enclosure:– Financial statements (balance sheet, income statement, statement of changes in equity and notes);– Proposed appropriation of available earnings.
DUKASCOPY BANK SA ANNUAL REPORT 2022

41

KEY METRICS FOR DISCLOSURE TO THE FINANCIAL STATEMENTS
as at 31 December 2022

KM1: Key regulatory figures
AVAILABLE CAPITAL AMOUNTS (CHF 000) (2022 Audited)2022 2022Q3 2022Q2 2022Q1 2021

1 Common Equity Tier 1 (CET1)
1a Fully loaded ECL accounting model CET1
2 Tier 1
2a Fully loaded ECL accounting model Tier 1
3 Total capital
3a Fully loaded ECL accounting model Total capital

50 70249 03350 70249 03350 70249 033161 582
12 927

194 163
15 53331.38%

25.25%

31.38%

25.25%

31.38%

25.25%

2.50%
0.00%
0.00%
2.50%
23.38%

2.50%
0.00%
0.00%
2.50%
17.25%

RISK-WEIGHTED ASSETS AMOUNTS (2022 Audited)
4 Total risk-weighted assets (RWA)
4a Minimum capital requirements (000 CHF)
RISK-BASED CAPITAL RATIOS (as a percentage % of RWA) (2022 Audited)
5 CET1 ratio (%)
5a Fully loaded ECL accounting model Common Equity Tier 1 (%)
6 T1 ratio (%)
6a Fully loaded ECL accounting model Tier 1 ratio (%)
7 Total capital ratio (%)
7a Fully loaded ECL accounting model total capital ratio (%)
ADDITIONAL CET1 REQUIREMENTS (buffers as a percentage of RWA) (2022 Audited)
8 Capital conservation buffer requirement according to Basel minimum requirements (%)
9 Countercyclical buffer requirement according to Basel minimum requirements (%)
10 Bank G-SIB and/or D-SIB additional requirements
11 Total of bank CET1 specific buffer requirements according to Basel minimum requirements (%)
12 CET1 available after meeting the bank’s minimum capital requirements (%)

TARGET CAPITAL RATIOS ACCORDING TO ANNEX 8 OF THE CAPITAL ADEQUACY ORDINANCE (CAO) (% of RWA) (2022 Audited)
2.50%
12a Capital conservation buffer according to CAO, Annex 8 (%)
0.00%
12b Countercyclical capital buffer according to CAO, Art. 44 and Art. 44a (%)
12c CET1 capital target (%) accord. to CAO, Annex 8+countercyclical buffer accord. to CAO, Art. 44 & 44a 7.00%
8.50%
12d T1 capital target according to CAO, Annex 8+countercyclical buffer accord. to CAO, Art. 44 and 44a
12e Total capital target according to CAO, Annex 8+contercyclical buffer accord. to CAO, Art. 44 and 44a 10.50%

2.50%
0.00%
7.00%
8.50%
10.50%

BASEL III LEVERAGE RATIO (2022 Audited)
13 Total Basel III leverage ratio exposure measure (000 CHF)
14 Basel IIII Leverage Ratio
14a Fully loaded ECL accounting model Basel III leverage ratio (%)

202 877
24.99%
0%

195 420
25.09%
0%

MEDIUM SHORT-TERM LIQUIDITY COVERAGE RATIO LCR
15 LCR Numerator: total stock of high quality liquid assets (000 CHF)
16 LCR Denumerator: total cash outflow (000 CHF)
17 Liquidity coverage ratio (%)

79 8555 245
1 523%NET STABLE FUNDING RATIO NSFR
18 Available stable refinancings (000 CHF)
19 Required stable refinancings (000 CHF)
20 Net stable funding ratio NSFR (%)

163 62225 435643%

DUKASCOPY BANK SA ANNUAL REPORT 2022

72 877
5 148
1 416%

65 786
5 213
1 262%

155 80224 128646%

63 7655 691
1 120%

61 3426 257
980%

151 506
24 379621%

42

KEY METRICS DISCLOSURES FOR THE FINANCIAL STATEMENTS
as at 31 December 2022

OV1: Overwiew of risk-weighted assets
RWA
2022 (Audited)

RWA
2021

Min. capital requirements
2022 (Audited)

1 Credit risk

31 31532 7002 505.2

20 Market risk*

65 82996 3885 266.3

24 Operational risk

56 38856 7384 511.1

24a Risks without counterparty

6 751

6 974

540.1

–

–

–

1 299

1 363

103.9

161 582

194 163

12 926.6(CHF 000)

25 Amounts below the thereshold 3 (subject to 250% risk weight)
26 Others
27 Total (1 + 20 + 24 + 25 + 26)
To determine minimum capital requirement we use:
– credit risk: standard approach;– market risk: standard approach;– operational risk: basic indicator approach;– others: cryptocurrencies.
*Market risk decreased due to a reduction in open positions in currencies

LIQA: Liquidity risk management
In general, Dukascopy Bank has a very low liquidity risk appetite. Therefore, Dukascopy Bank and its Group haveabundant liquidity, which resulted from the vast majority of its assets being allocated into high quality liquid assets andbank deposits at sight. High quality liquid assets are constituted of high-grade government bonds and deposits with the
Swiss National Bank. The bank deposits are mostly held with top rank Swiss, German, UK and US banks. Liquidity risk
management is oriented to limit the liquidity risk and to ensure that the Bank has sufficient liquid assets in order to beable to meet its payment obligations in stress situations and at all times. The Treasurer of the Bank is responsible formanaging the liquidity of the Bank as well as for its compliance with the regulatory requirements.
The Finance department of the Bank is in charge of the independent measurement and monitoring of the liquidity
requirements and limits and is responsible for the regular risk reporting to the attention of the Executive Committee
and to the Board of Directors of the Bank.
The Executive Committee of the Bank is responsible for ensuring the risk tolerance and liquidity limits of the Bank aswell as of the Group. It is in charge of implementing and observing the risk policy principles and requirements for
identification, measurement, evaluation, management, monitoring and reporting of the liquidity risk. Furthermore, it
reports to the Board of Directors and its committees. The Board of Directors of the Bank determines the risk tolerance
and liquidity limits of the Group. Moreover, it defines the requirements for identification, measurement, evaluation,
management, monitoring and reporting of the liquidity risk. On a quarterly basis, the Chief Risk Officer issues a Risk
Report to the Audit Committee and the Board of Directors that includes the liquidity risk situation.
To measure the liquidity risk, the Finance department regularly conducts liquidity stress tests to verify the compliancewith the regulatory requirements through internal liquidity stress scenarios. The stress scenarios include a marketwide shock, temporary unavailability of the largest correspondent banks and a massive outflow of clients’ deposits. The
results of stress testing are periodically communicated as a part of the risk reporting to the attention of the Executive
Committee and to the Board of Directors of the Bank.
DUKASCOPY BANK SA ANNUAL REPORT 2022

43

KEY METRICS DISCLOSURES FOR THE FINANCIAL STATEMENTS
as at 31 December 2022

CR1: Credit risk – credit quality of assets
Gross carrying values of(CHF 000)Defaulted exposures Non-Defaulted exposures

Value adjustments/
impairments

Netvalues

1 Loans (excluding debt securities)–

145 970–

145 970

2 Debt securities–

44 950–44 9503 Off-balance sheet exposures

–

1 284

–

1 284

24 Total–

192 204–

192 204

A situation of "default" is recognised when the debtor has failed to pay interests or to reimburse the loan
at the contractually agreed maturity date.

CR 3: Credit risk – overview of credit risk mitigation techniques(CHF 000)

Unsecured
exposures/carrying
valuesExposures secured
by collateral/
carrying values

Exposures secured by financial
guarantees or credit derivatives/
the amounts effectively covered

190 881

–

39

1 134

150

–

192 015

150

39

–

–

–

Loans (Debt securities included)
Off-balance sheet exposures
Totalof which defaulted

ORA: Operational risks
Operational risks include IT, cyber, confidentiality, fraud, compliance and legal risks. The Bank is particularly exposed to
IT and cyber risks due to its reliance on technological solutions connected to the Internet. The identification,measurement, management, monitoring and reporting of the Bank's risks are organised in a comprehensive Risk
Management Concept complemented by specific concepts on cyber-security, data confidentiality and operational risk
management and by other internal regulation. Compliance risks are specifically subject to a Compliance Risk Analysis
and Action Plan. All this documentation is reviewed annually by the relevant specialised committees of the Bank: theRisk Committee, the Compliance Committee and the IT Steering Committee. The Bank makes sure that each identified
operational risk remains within the limits of its appetite and keeps under scrutiny the internal controls which allow tokeep those risks at acceptable level. Quarterly, the Board of Directors and the Executive Committee are informed of theevolutions in the Bank and Group's risk profile, receive operational risk indicators allowing them to monitor the situationof risks and their compliance with the Bank's objectives. For determining capital requirements applicable to operationalrisks the Bank uses the basic indicator method.

DUKASCOPY BANK SA ANNUAL REPORT 2022

44

KEY METRICS DISCLOSURES FOR THE FINANCIAL STATEMENTS
as at 31 December 2022

IRRBBA: Interest-rate risk: Measuring, managing, monitoring and controllinginterest rate risks
Definition of interest rate risk in the banking book. Interest rate risk in the banking book is defined as the potential
loss in the net interest income (NII) or in the economic value of equity (EVE) arising from the effect of adverse interest
rate changes. The Bank could be exposed to the interest rate risk by offering CFD trading on debt instruments. In suchcase, the Bank's exposure to the interest rate risk would much fluctuate depending on the clients trading positions.
Therefore, the Bank fully hedges this trading flow. The Bank's business activities hardly expose it to the interest raterisk because it basically has no interest based business: the Bank neither charges or pay interests to its clients.
The main source of interest rate risk of the Bank in the bonds it hold as collateral for trading counterparties.
However, since these bonds are aimed to be held until maturity, the risk is not expected to materialize into losses.

The Board of Directors defines the interest rate risk appetite of the Bank. The principles for managing risk areapproved by the Board of Directors and are incorporated in the Bank risk management policies. The Bank risk
management policies define the organisational structure, responsibilities, limits and maximum acceptable risk withthe objective to optimise the net interest income on a long term horizon. The Executive Management is responsible
for supervising and implementing the risk profile and recommending risk limits to the Board of Directors.

On a quarterly basis, the Chief Risk Officer issues a Risk Report to the Audit Committee and the Board of Directorsthat includes the interest rate risk situation. This Risk Report presents inter alia the results of the stress tests withsignificant shifts in interest rate curves, the level of use of the risk limits and the distribution of relevant positions per
currency and per maturity.

The Bank do not pay interest on customers’ accounts. Nevertheless, it can review that policy at any time if consider it
necessary. Therefore, repricing maturities for all due to customers match with repricing maturities of interest rates
sensitive assets. Since the Bank does not place deposits on term with banks and do not issue loans to customers, alldue from banks have 1 month and due from customers have 9 month repricing maturities.

Risk measurement mechanisms regarding the interest rate risk modelling are aligned with the business model of theBank. Finance Department performs quarter-end stress tests to monitor the net interest income (NII) and theeconomic value of equity (EVE). These stress tests are measured for each currency using the own base scenario (100basis point change in interests) and the six standardised interest rate shock scenarios prescribed by the FINMA(Circular 2019/2 “Interest rate risk – banks). For each standardised scenario, FINMA defines the amount in basis
points of interest rate shock per currency (CHF, USD, EUR) and per maturity bucket (from overnight up to more than
20 years).

DUKASCOPY BANK SA ANNUAL REPORT 2022

45

KEY METRICS DISCLOSURES FOR THE FINANCIAL STATEMENTS
as at 31 December 2022

FINMA prescribed scenarios
The six standard scenarios prescribed by FINMA can be summarised and illustrated as follows:Standard scenario

Amount of interest rate shock for CHF currency

Parallel shift up+150 basis points

Parallel shift down

– 150 basis points

Steepener shock (short term rates down and long term rates up)

From -97 basis point up to +90 basis points*

Flattener shock (short term rates up and long term rates down)

From +120 basis points down to -60 basis points*

Rise in short term interest rates

From +150 basis points down to 0 basis points*

Fall in short term interest rates

From -150 basis points down to 0 basis points**depending on maturity bucket

To measure its ability to withstand extreme changes in interest rates, the Bank also may conduct ad hoc stress tests
response to market conditions. The details of the various standardised scenarios are provided in the circular.

Change in economic value of equity (EVE)
Change in economic value of equity has been computed with the assumptions of a run off balance sheet, where
existing banking book positions amortise and are not replaced by any new business. Floating rate instruments are
only impacted for the period until the next interest rate reset date whereas for the fixed rate instruments the entire
maturity is impacted. The impact on each position is calculated stressing the effective interest rate.

Change in net interest income (NII)
Change in net interest income is computed assuming a constant balance sheet, where maturing and repricing cash
flows are replaced by new cash flows with identical features. The stress test is based on all cash flows from fixed andfloating rate instruments as well as assets and liabilities at sight. The impact is measured for one-year period.
Floating rate instruments are impacted after interest rate reset date while fixed interest rate instruments are
impacted for the remaining time after the expiration up to one year. At sight assets and liabilities are impacted forthe duration of one year. The assumptions reflect the expected behavior of counterparties to modify or to cap theinterest rate conditions (asset side) as well as the Bank’s optionalities to update its commercial policy with respect tonegative interests charged to customers (liability side) without affecting substantially other revenue categories.
Parallel shift up scenario may as well differ according to commercial policy and competition.

DUKASCOPY BANK SA ANNUAL REPORT 2022

46

KEY METRICS DISCLOSURES FOR THE FINANCIAL STATEMENTS
as at 31 December 2022

IRRBBA1: Interest-rate risk - quantitative information on the structure of positions
and maturity repricing as of 31 December 2022
Average interest rate
reset period (in years)

Volume(in CHF millions)
Positions with an defined interest rate reset date

Totalof which of which other signiCHF
ficant currencies*

Totalof which
CHF

43

31

12

4.47

6.22

Amounts due from banks

89

5

72

0.04

0.04

Amounts due from customers

2

1

1

0.62

0.62

(124)

(15)

(104)

0.04

0.04

Other liabilities

(7)

0

(7)

0.04

0.04

Total

3

22

(26)

–

–

Financial investments
Positions with an undefined interest rate reset date

Sight liabilities in personal and current accounts*Significant currencies are those that make up more than 10% of assets or liabilities of total assets (ie USD and EUR).

DUKASCOPY BANK SA ANNUAL REPORT 2022

47

KEY METRICS DISCLOSURES FOR THE FINANCIAL STATEMENTS
as at 31 December 2022

IRRBB1: Information on the economic value of equity and net interest income

Period (CHF millions)

Δ EVE

Δ NII

(change in the net present value)(change in the discounted earning value)

31.12.2022

31.12.2021

31.12.2022

31.12.2021

Parallel upward shift

(2.0)

(3.3)

0

0

Parallel downward shift

2.0

3.7

0

0

Steepener shock

(0.8)

(1.1)

–

–

Flattener shock

0.4

0.5

–

–

Upward short-term interest rate shock

(0.5)

(0.8)

–

–

Downward short-term interest rate shock

0.5

0.8

–

–

Maximum

2.0

3.7

0

0

Total eligible capital

50.7

49.0

–

–

The Bank is required to disclose the measured change in economic value of equity (EVE) and changes in net interest
income (NII) under the standard interest rate scenarios prescribed by FINMA. The change in net interest income (pre-tax)
is disclosed as the difference in future interest income over a rolling 12-month period.
The Bank's business activities hardly expose it to the interest rate risk because it basically has no interest based business:
the Bank neither charges or pay interests to its clients. Nevertheless, it can review that policy at any time if consider it
necessary. Therefore, repricing maturities for all due to customers match with repricing maturities of interest rates
sensitive assets. Since the Bank does not place deposits on term with banks and do not issue loans to customers, all due
from banks have 1 month and due from customers have 9 month repricing maturities.
The Bank could be exposed to the interest rate risk by offrering CFD trading on debt instruments. In such case, the Bank's
exposure to the interest rate risk would much fluctuate depending on the clients trading positions. Therefore, the Bank
fully hedges this trading flow. The main source of interest rate risk of the Bank in the bonds it hold as collateral for trading
counterparties. However, since these bonds are aimed to be held until maturity, the risk is not expected to materialize
into losses.

DUKASCOPY BANK SA ANNUAL REPORT 2022

48

CONSOLIDATEDFINANCIALSTATEMENTS

DUKASCOPY BANK SA ANNUAL REPORT 2022

49

CONSOLIDATED BALANCE SHEET
as at 31 December 2022

ASSETS (CHF)

31.12.2022

31.12.2021

Liquid assets

50 188 954

37 719 957

Amounts due from banks

96 816 043

96 088 110

Amounts due from customers

2 443 336

1 790 542

Trading assets

3 120 740

5 255 953

Positive replacement values of derivative financial instruments

2 356 475

850 980

Financial investments

44 949 869

45 341 390

Accrued income and prepaid expenses

1 575 770

1 224 410

Investment in subsidiaries

100 000

100 000

Tangible fixed assets

620 366

841 131

Other assets

758 108

601 697

Total assets

202 929 661

189 814 170

4 779 810

9 079 237

132 103 550

121 157 749

283 453

1 282 249

Accrued expenses and deferred income

3 503 799

2 892 086

Other liabilities

2 044 300

1 766 891

616 000

616 000

Reserves for general banking risks

3 234 000

3 234 000

Bank's capital

22 000 000

22 000 000

Retained earnings reserve

27 655 569

25 332 463

Currency translation reserve(26 364)

130 389

Consolidated profit of the year

6 735 544

2 323 106

202 929 661

189 814 170

31.12.2022

31.12.2021

150 215

139 755

1 134 000

988 000

LIABILITIES (CHF)
Amounts due to banks
Amounts due in respect of customer deposits
Negative replacement values of derivative financial instruments

Provisions

Total liabilities

OFF–BALANCE SHEET
as at 31 December 2022
OFF–BALANCE SHEET COMMITMENTS (CHF)
Contingent liabilities
Irrevocable commitments

DUKASCOPY BANK SA ANNUAL REPORT 2022

50

CONSOLIDATED STATEMENT OF INCOME
as at 31 December 2022

RESULT FROM INTEREST OPERATIONS (CHF)

31.12.2022

31.12.2021

Interest and discount income(14 597)(316 443)

Interest and dividend income from financial investments

734 428

723 495

Interest expense(564 629)(563 885)

Gross result from interest operations

155 202(156 833)

949–

156 151(156 833)

Commission income from other services

2 455 427

3 119 550

Commission expense(1 075 160)

(1 445 074)

Subtotal result from commission business and services

1 380 267

1 674 476

Result from trading activities

26 789 140

21 958 905

Personnel expenses(7 002 154)

(7 408 302)

General and administrative expenses(12 979 005)

(12 726 622)

Subtotal operating expenses(19 981 159)

(20 134 924)

(335 785)(416 565)

1 346(46 532)

8 009 960

2 878 527

Extraordinary income

–

1 541

Changes in reserves for general banking risks–

126 000

Taxes(1 274 416)

(682 962)

Profit of the year

6 735 544

2 323 106

Changes in value adjustments for default risks and losses from interest operations
Subtotal net result from interest operations

RESULT FROM COMMISSION BUSINESS AND SERVICES (CHF)

OPERATING EXPENSES (CHF)

Value adjustments on participations and depreciation and amortisationof tangible fixed assets and intangible assets
Changes to provisions and other value adjustments, and losses
Operating result

DUKASCOPY BANK SA ANNUAL REPORT 2022

51

PRESENTATION OF THE CONSOLIDATED STATEMENTOF CHANGES IN EQUITY
as at 31 December 2022

Bank'scapitalReserves
for generalbanking risks

Currencytranslation
reserve

Retainedearning
reserve

Consolidated
profitfor the year

TOTAL

Equity at start of current period

22 000 000

3 234 000

130 389

25 332 463

2 323 106

53 019 958

Allocation of previous year result

–

–

–

–

–

–

Other allocations to Retained earnings reserve

–

–

–

–

–

–

Allocation to Retained earnings reserve

–

–

–

2 323 106

(2 323 106)–

Currency translation differences––(156 753)––(156 753)

Profit of the year

–

–

–

–

6 735 544

6 735 544

22 000 000

3 234 000

(26 364)

27 655 569

6 735 544

59 598 749(CHF)

Equity at end of current period

DUKASCOPY BANK SA ANNUAL REPORT 2022

52

CONSOLIDATED CASH FLOW STATEMENT
as at 31 December 2022

CASH FLOW FROM OPERATING ACTIVITIES(internal financing) in CHF 000

2022

2021

Cash in-flow

Cash out-flow

Cash in-flow

6 736

–

2 323

–

–

–

–

126

336

–

417

–

24

Result of the year
Changes in reserves for general banking risks
Value adjustement on participations, depreciation andCash out-flow

amortisation of tangible fixed assets and intangible assets
Provisions and other value adjustments

–

–

–

Accrued income and prepaid expenses

–

351

1 028

–

Accrued expenses and differred income

612

–

–

654

Other items

121

–

–

1 125

Subtotal

7 805

351

3 768

1 929

Recognised in reserves

–

157

–

118

Change of scope of consolidation

–

–

–

–

Subtotal

–

157

–

118

CASH FLOW FROM SHAREHOLDER'S EQUITY TRANSACTIONSCASH FLOW FROM TRANSACTIONS IN RESPECT OF PARTICIPATIONS, TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS
Participations

–

–

–

–

Other tangible fixed assets

–

115

–

246

Subtotal

–

115

–

246

–

10 921

CASH FLOW FROM BANKING OPERATIONS MEDIUM AND LONG-TERM BUSINESS (> 1 YEAR)
Financial instruments

569–

SHORT-TERM BUSINESS
Amounts due to banks

–

4 300

2 770

–

10 946–17 108–

Negative replacement values of derivative financial instuments

–

999

659

–

Amounts due from banks

–

728

–

1 130

Amounts due from customers

–

653

–

1 104

Amounts due in respect of customer deposits

Trading assets

2 135

–

–

5 256

Positive replacement values of derivative financial instuments

–

1 506

–

366

Financial instruments–

177

11 225––

12 469–14 460Subtotal

13 65020 83231 76233 237TOTAL

21 45521 45535 53035 530LIQUIDITY
Liquid assets

DUKASCOPY BANK SA ANNUAL REPORT 2022

53

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022
1. Name and legal status of the GroupDukascopy Group (hereinafter the "Group") is headed by Dukascopy Bank SA (hereinafter the "Bank"), a limited company
under Swiss law which renders online brokerage and online banking services from its head office in Geneva (Switzerland).
The Bank fully owns two subsidiaries offering similar online brokerage services as the Bank, namely, Dukascopy Europe IBS
AS, a European regulated broker based in Riga and Dukascopy Japan K.K., a Type-1 licensed brokerage company located inTokyo. These two subsidiaries are included in the consolidated financial statements of the Group. SWFX SA offers intellectual
property services and is consolidated as at 31 December 2022 as well.
The Group’s scope of consolidation comprises all companies owned and controlled, either directly or indirectly, over 50% of
the capital or voting rights by the Bank, at the exception of Group companies which are insignificant with regard to the sizeof the Group. Dukascopy Community SA and its subsidiaries, if any, are not consolidated in the Group’s consolidated
financial statements because they are of very small size.
2. Accounting and valuation principles
2.1. General principles
The Group’s financial statements are established in accordance with the Swiss Code of Obligations, the Act on Banks andSaving institutions, its related Ordinance, the FINMA Accounting Ordinance and FINMA circular 2020/1. In the notes, certain
figures are rounded for publication but the calculations are based on the non-rounded figures, thus small rounding
differences can arise. The consolidated financial statements have been complied to present a true and fair view of theGroup’s assets, financial position and results.
Consolidation method
Entities either directly or indirectly controlled by the Bank or over which the Bank exercises a dominant influence areconsolidated according to the full consolidation method. This means assets, liabilities, off-balance sheet transactions,income and expenses of fully consolidated companies are included in the Group’s consolidated financial statements. All
material business relations between consolidated companies are eliminated from assets, liabilities, income and expenses.
Net assets of Group companies are consolidated according to the purchase method. In the case of combined entities, thecombination is an amalgamation of the accounts, performed in compliance with the same rules as described above. If asignificant influence is exercised over a company, the equity method is used for consolidation purposes. If the year-end
closing date for consolidated companies’ accounts is not 31 December, interim financial statements are compiled.
Entities are consolidated as from the date effective control over them passed to the Group; they are removed from thescope of consolidation as from the date such control ceases.
General valuation principles
The consolidated financial statements are prepared on the assumption of a going-concern. The accounting is therefore
based on going-concern values.
Items are entered in the consolidated balance sheet as liabilities if they have arisen due to past events, if a cash outflow is
probable and their value can be reliably estimated. If a reliable estimate is not possible, then it is a contingent liability, whichis commented on in the notes.
The disclosed consolidated balance sheet items are valued individually.
In principle, neither assets and liabilities nor expenses and income are offset. Accounts receivable and accounts payable areoffset in the following cases:Ÿ deduction of value adjustments from the corresponding asset item;Ÿ offsetting of positive and negative replacement values of derivative financial instruments with the same
counterparty, if there are recognized and legally enforceable netting agreements in place;Ÿ offsetting of price gains and losses from trading activities.

DUKASCOPY BANK SA ANNUAL REPORT 2022

54

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022
2.2. Changes to accounting principles and valuation method
No changes in 2022.
Financial instrumentsa. Liquid assets
Liquid assets are recognized at their nominal value.
b. Amounts due from banks and amounts due from customers
They are recognized at their nominal value less any necessary value adjustments. Amounts due in respect of precious metal
account deposits are valued at fair value.
Doubtful receivables, i.e. obligations entered with clients for which the debtor is unlikely to meet its future obligations, arevalued individually and depreciated by means of individual value adjustments. Impaired receivables and any collateralobtained are valued at their liquidation value, and any adjustments in value are made in light of the debtors'
creditworthiness. If the repayment of a loan depends exclusively on the proceeds of the collateral, a value adjustment ismade for the entire unsecured portion of the receivable.
If a receivable is classed as entirely or partially irrecoverable or a receivable is waived, the receivable is derecognized bybooking it against the corresponding value adjustment.
Recovered amounts from receivables written off in earlier periods are recognized in “Change in value adjustments fordefault risk and losses from interest operations” in the consolidated statement of income.
c. Amounts due to banks and amounts due in respect of customer deposits
These items are recognized at their nominal value. Amounts due in respect of precious metal account deposits are valued atfair value.
d.Trading assets
Trading assets comprise positions in cryptocurrencies and CFD on actions held with a trading intent. Trading positions aremeasured at market value. Trading results are recognized through “Result from trading activities and the fair value option”.
e. Positive and negative replacement values of derivative financial instruments
Trading operations comprise execution of client orders and transactions of the Bank for its own account including hedging
transactions. The trading portfolio and liabilities related to trading operations of the Group are exclusively recognized in the
consolidated off-balance sheet due to the nature of such transactions (spot forex, spot precious metals and derivatives).
Spot trading transactions executed by the Group are accounted for according to the value date principle. This implies thatbetween the trade date and the value date, spot transactions are disclosed as derivative instruments. Explanations below
concerning derivative financial instruments traded by the Group also apply to such spot trading operations.
Trading assets and liabilities are valued and recognized at fair value. Fair value is the price based on a price-efficient andliquid market or the price calculated using a valuation model.
The price gain or loss resulting from the valuation is recorded via the item “Result from trading operations”.
Derivative financial instruments are used for trading and for hedging purposes.

DUKASCOPY BANK SA ANNUAL REPORT 2022

55

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022
Trading purposes
The valuation of derivative financial instruments for trading purposes is done according to the fair value and thepositive or negative replacement value is recorded in the corresponding item. The fair value is based on market prices
or option pricing models. The realized result from trading operations and the unrealized result from valuations relating
to trading operations are recorded via the item “Result from trading operations”.
Hedging purposes
The Group also uses derivative financial instruments as part of its assets and liabilities management (ALM) to hedge
against market risks. The Bank’s subsidiaries active in brokerage activities have the obligation to hedge all their trading
operations with the Bank. Hedging operations are valued and disclosed as trading operations.
Use of swaps
The Group uses currency swaps to rollover spot foreign exchange and precious metal transactions to the next spot
settlement date until positions are closed.
Netting
The Group offsets positive and negative replacement values with the same counterparty within the terms of therecognized and legally enforceable netting agreements.
f. Financial investments
Financial investments include the bonds and the cryptocurrencies.
Financial investments count Swiss and US government bonds acquired with the intention to hold them until maturity.
The valuation is based on the acquisition cost principle with the agio/disagio (premium/discount) accrued/deferredover the residual term to maturity (accrual method).
If held-to-maturity financial investments are sold or reimbursed early, the realized gains and losses, which correspondto the interest component, are accrued/deferred over the residual term to maturity of the transaction via the item
“Other assets” or “Other liabilities”.
Value adjustments for default risk are recorded immediately under “Changes in value adjustments for default risk andlosses from interest operations”.
g. Crypto assets in Financial investments
Dukascoins
Dukascopy Bank books Dukascoins belonging to the Bank in the caption "Financial investments" valued at lower thancost or market. For such tokens issued by the Bank, the latter considers that acquisition cost is zero. As a consequence,
Dukascoins belonging to the Bank will remain valued at zero as long as they stay in "Financial investments".
The Bank books Dukascoins belonging to clients in the caption "Financial investments" at fair value on the asset sideand in "Amounts due in respect of customer deposits" at fair value on the liabilities side.
According to the Art. 10 Finma Accounting Ordinance, the fair value derives either from a price efficient and liquidmarket or from a valuation model. According to our analysis, there is currently no efficient price and no liquid market for
Dukascoins. To our knowledge, there is no generally accepted valuation methodology for payment tokens. Due to thelack of future cash flows, intrinsic value, highly correlated base assets, which could be used as a benchmark in model,
the value of such tokens depends mainly on market demand. Considering the foregoing, the Bank considered that there

DUKASCOPY BANK SA ANNUAL REPORT 2022

56

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022
is no fair value estimates for Dukascoins and therefore those coins should be valued at cost. Currently, the sole active
marketplace is the Dukascoin bulletin board established by the Bank, where prices are set daily for very small volumes.
Value adjustments are recorded under “Other ordinary expenses” or “Other ordinary income”.
Other crypto assets
Dukascopy Bank books other crypto assets belonging to the Bank in the caption "Financial investments". The valuation isbased on the acquisition cost principle. The subsequent valuation is based on the lower of cost or market principle.
Trading assets comprises positions in Crypto currencies held with a trading intent are booked in “Trading assets”. Trading
positions are measured at market value. Trading results are recognized through “Result from trading activities and the fairvalue option”.
h. Non-consolidated Participations
Participations owned by the Bank which are not consolidated include equity securities of companies that are held for longterm purposes, irrespective of any voting rights. They are valued at historical costs minus any value adjustments, if any.
Each non-consolidated participation is tested for impairment as of the consolidated balance sheet date. This test is based on
indicators reflecting a possible impairment of individual assets. If any such indictors exist, the recoverable amount iscalculated. The recoverable amount is calculated for each individual asset. The recoverable amount is the higher amount of
the net selling price and the value in use. An asset is impaired if it carrying amount exceeds its recoverable amount. If theasset is impaired, the book value is reduced to match the recoverable amount and the impairment is charged via the item
“Value adjustments on participations and depreciation of tangible fixed assets and intangible assets”.
Realized gains from the sale of non-consolidated participations are recorded via the item “Extraordinary income” andrealized losses are recorded via the item “Extraordinary expenses”.
I. Tangible fixed assets
Investments in tangible fixed assets are capitalized as an asset if they exceed the minimal value for recognition of CHF 1’000.
Tangible fixed assets are recognized at acquisition cost minus the scheduled accumulated depreciation over the estimatedoperating life.
Tangible fixed assets are depreciated at a consistent rate over an estimated operating life via the item “Value adjustments onparticipations and depreciation of tangible fixed assets and intangible assets”. The estimated operating lives of the different
categories of tangible fixed assets and the depreciation methods are as follows:- Fixtures and fittings

4 years, on a linear basis- Furniture

4 years, on a linear basis- IT hardware

3 years, on a linear basis- Vehicles

5 years, on a linear basis- Software

5 years, on a linear basis

Acquisition costs of tangible fixed assets acquired during the year are depreciated at the same rate on a prorata basis.
Objects used by the Group as the lessees as part of a finance lease are recorded via the item “Tangible fixed assets” at cash
purchase value. The leasing liabilities are disclosed, depending on the counterparty, in the items “Amounts due to banks” or“Other liabilities”. Each tangible fixed asset is tested for impairment as of the consolidated balance sheet date. This test isbased on indicators reflecting a possible impairment of the individual assets impaired. If any such indicators exist, therecoverable amount is calculated. The recoverable amount is calculated for each individual asset.

DUKASCOPY BANK SA ANNUAL REPORT 2022

57

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022
The recoverable amount is the higher amount of the net selling price and the value in use. An asset is impaired if it carrying
amount exceeds its recoverable amount. If the asset is impaired, the book value is reduced to match the recoverable
amount and the impairment is charged via the item “Value adjustments on participations and depreciation of tangible fixed
assets and intangible assets”. Realized gains from the sale of tangible fixed assets are recorded via the item “Extraordinary
income” and realized losses are recorded via the item “Extraordinary expenses”.
j. Provisions
The Group records provisions based on its assessment of the risks of loss and probable liabilities, based on past events, ofwhich the amount and due date are uncertain but assessable. Legal and factual obligations are valued regularly. If an
outflow of resources is likely and can be reliably estimated, a corresponding provision is created.
Existing provisions are reassessed at each consolidated balance sheet date. Based on this reassessment, the provisions are
increased, left unchanged or released. Currently, provisions exclusively relate to legal risks and deferred tax. The variation ofprovisions is recorded in the consolidated statement of income via “Changes in provisions and other value adjustments, andlosses”. Provisions are released via the consolidated statement of income if they are no longer needed on business grounds.
k. Reserves for general banking risks
Reserves for general banking risks are prudently created reserves to hedge against the risks in the course of business of theGroup. The creation and release of Reserves for general banking risks are recognized via the item “Changes in reserves forgeneral banking risks” in the consolidated statement of income. The Reserves for general banking risks are subject to tax
when they exceed certain criteria. The portion of Reserves for general banking risks which is not subject to current tax
triggers the recording of deferred tax in the item “Provisions” in the consolidated balance sheet via the item “Taxes” in the
consolidated statement of income.
l. Taxes
Current taxes are recurring, usually annual, taxes on profits, capital and total income (Geneva professional tax). Transactionrelated taxes are not included in current taxes.
Liabilities from current tax are disclosed via the item “Accrued liabilities and deferred income”.
Deferred taxes, stemming from temporary timing differences between the taxable and accounting values of assets andliabilities, are booked as deferred taxes in the item “Provisions” on the liabilities side of the consolidated balance sheet.
Deferred taxes are calculated based on the tax rate applied to the Bank. Expenses due to current and deferred taxes aredisclosed in the consolidated statement of income via the item “Taxes”.
m. Off-balance sheet transactions
Off-balance sheet disclosures are at nominal value. Provisions are created in the liabilities in the consolidated balance sheet
for foreseeable risks.
n. Pension benefit obligations
The Group’s employees based in Switzerland are insured for retirement, death or disablement through a defined
contribution pension scheme. The Group bears the costs of the occupational benefit plan for employees and survivors as
per the legal requirements. The employer contributions arising from the pension scheme are included in “Personnel
expenses” on an accrual basis. The treatment of pension commitments is based on the Swiss GAAP FER 16 rules. Employee
benefit obligations mean all commitments resulting from the pension fund to which Group’s employees are insured.

DUKASCOPY BANK SA ANNUAL REPORT 2022

58

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022
There is an economic benefit if, due to contribution reserves, the Group has the ability to reduce its future employer's
contributions. On the contrary, there is a liability if, owing to a shortfall in the pension fund, the Group wants or has toparticipate in the financing of the pension fund.
The Group assesses whether there is an economic benefit or economic obligation arising from pension schemes as of theconsolidated balance sheet date. The assessment is based on the contracts and financial statements of the pension funds(established under Swiss GAAP FER 26 in Switzerland).
The identified economic benefits (including the employer contribution reserves without a waiver of use) are recorded in“Other assets”. If an economic obligation is identified for an individual pension fund, it is recorded in “Provisions”. The
differences with the corresponding value of the prior period are recorded in the consolidated statement of income in“Personnel expenses”.
2.3. Recording of business transactions
All business transactions concluded up to the consolidated balance sheet date are recorded as of their trade date (tradedate principle) and valued according to the above-mentioned principles. Any foreign exchange spot transactions, foreignexchange forwards, swaps or any other derivative financial instrument entered into but not yet fulfilled are recorded inaccordance with the settlement date accounting method. Between the trade date and the settlement date, thesetransactions are disclosed at replacement value via the item “Positive replacement value of derivative financial instruments”
or “Negative replacement value of derivative financial instruments”.
2.4. Treatment of foreign currencies
For each Group company, income and expenses denominated in foreign currencies are converted, in the individualcompany accounts, at the exchange rate prevailing on the transaction date. Assets and liabilities in foreign currencies areconverted at the exchange rate applicable on the period-closing date. Currency gains and losses resulting from currencytranslation are included in the respective statement of income of individual companies.
On consolidation, assets and liabilities of Group companies are converted into Swiss francs at the exchange rate of theconsolidated balance sheet date at the exception of the shareholders’ equity which is converted at historical rate. Income
and expenses of Group companies are converted at the exchange rate averaged over the reporting period. Exchange
differences resulting from conversion into Swiss francs of individual financial statements are recognized in the consolidatedbalance sheet in the item “Currency translation reserve”.
At the consolidated balance sheet date, the main exchange rates used to convert assets and liabilities in foreign currencies
were as follows:

(CHF)
USD
EUR
GBP
CAD
JPY
AUD
NZD
NOK
SEK
SGD

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

2022
0.924850.99005
1.11908
0.68287
0.00705
0.630700.58755
0.094430.088690.69009

DUKASCOPY BANK SA ANNUAL REPORT 2022

2021
0.912171.037191.23308
0.72179
0.00792
0.663160.623960.103460.10075
0.6764259

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022
The average exchange rates over the reporting period for the conversion of income and expenses of Group companies wereas follows:

(CHF)

2022

2021

EUR

1.00

1.00495

1.08114JPY

1.00

0.00730

0.00833

3. Risk Management
Due to its core business consisting in offering fully automated (Straight-Through-Processing) brokerage services via
innovative in-house developed IT solutions, the Group is mostly subject to operational, market and legal risks. The Bank
provides IT and trading technology to all Group companies under white labeling agreements. Besides, the Bank is the soleGroup company which is allowed to take market risks. As a consequence, operational and market risks of the Group areconcentrated at the Bank.
Since the Group is not active in credit activities and only executes client orders based on collateral (client margin deposits
and bank guarantees), its credit risk exposure is normally limited to possible default of institutional trading counterparties.
The identification, measurement, monitoring, management of risks and maintenance of the Group’s stability, is a priority for
the Bank. The key elements of risk management and Group consolidated supervision are the following:Ÿ a comprehensive risk policy and internal regulation defining among others the risk appetite and risk limits
which are commensurate with the Bank’s risk capacity;Ÿ the permanent monitoring of risk limits and compliance with applicable regulatory capital, risk
diversification and liquidity requirements at local and Group levels;
Ÿ a risk control function and a risk officer in charge of monitoring the Bank’s and Group’s risk profile and risk
management capabilities;
Ÿ proper segregation of duties;
Ÿ wide application of the four-eyes principle and IT-based controls in business operations;Ÿ three lines of defense: risk management by business units, risk control and compliance functions andinternal audit at local and Group levels;
Ÿ a comprehensive internal reporting on relevant risks.
The Bank’s Board of Directors is the supreme governing body of the risk management organization of the Group. It hasestablished an analysis of the main risks the Bank and the Group are exposed to. Based on its risk analysis, the Board of
Directors has adopted a Risk Management Concept aiming at limiting and managing the main risks affecting the Bank wheremost of the Group’s risks are concentrated. In addition, the Board of Directors has adopted Group risk limits and an internal
regulation governing the consolidated supervision of the Group by the Bank. The Risk Management Concept defines the risk
appetite, the main risk limits and features of the risk measurement and risk management of the Bank. The Board of
Directors monitors compliance with the limits as well as the implementation of the risk policy based on a comprehensive
quarterly reporting on risks and Group consolidated supervision.
The executive management of each Group company is responsible for the execution of the Group and local policies. It
ensures a suitable risk management organization is in place as well as the use of an adequate risk monitoring system. It
monitors the use of limits and ensures that an adequate internal reporting is in place, including to the attention of the Bank’s
officers in charge of the Group consolidated supervision. The Group and local risk control and compliance functions are
independent of business operations. They monitor all risks as the second line of defense and establish most of the quarterly
reporting about risks to the local and Bank’s executive management and the Board of Directors.
DUKASCOPY BANK SA ANNUAL REPORT 2022

60

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022
Operational risks
Operational risks are defined as the risk of losses due to inadequacy or failure of internal procedures, people and systems or due
to external events. This definition includes risks related to client data confidentiality and legal risks, including fines by supervisory
authorities and settlements. As a Group offering highly automated services accessible through the Internet, the Group muchrelies on IT systems and Internet connections to operate. Automation brings high efficiency, eliminates human errors but at thesame time means dependency on the availability and integrity of IT systems and Internet connections that the Group protects
through advanced security solutions and permanent monitoring of the system components. Cyber and IT risks are among themain risks for the Bank.
The operational risks are measured by calculating the probability and extent of possible financial damages due to negative
events such as an error in client order execution or the breach of a regulation (compliance risk). The Bank has documented
operational risks and key controls aiming at mitigating such risks (e.g. four eyes principle, reconciliations, automated controls,internal regulation, etc.) in a systematic manner via an internal regulation which is approved annually by the Board of Directors
and based on the FINMA circular 2008/21. The operational risk management framework also includes a Business Continuity
Management (BCM) documentation, which rules the maintenance or the resumption of business operations in case ofoccurrence of critical situations such as a natural disaster affecting the Bank or Group companies. The effectiveness of theBusiness Continuity Management of the Bank is tested annually. In other Group entities, the BCM documentation is adapted to
local operations and applicable regulation.
The Bank establishes risk indicators, mainly based on operational incidents and losses which allow the Bank’s risk control
function to report on operational risks in a systematic and objective way to the Bank’s executive management and the Boardof Directors. The management of operational risks is one of the priorities of the Group since it has a direct effect on its
stability and attractiveness as a trusty service provider.
Market risks – trading operations
Due to the Group’s specialization in forex trading, market risks are concentrated on currency risk. Market risks related toother financial instruments offered by the Group (precious metals, stocks, commodities, equities, etc.) are minor incomparison to currency risks. As mentioned above, the Bank is the sole Group company which accepts and manages market
risks on trading activities.
The management of market risks deriving from trading operations is a priority risk management activity and a cornerstoneof the Group’s financial stability. In particular, the volatility on the forex market may trigger significant impact on the Group’s
financial situation due to the Bank’s currency risk exposure via the item “Result from trading activities”. For various reasons
including for benefiting from bid and ask spreads, the Bank permanently keeps a certain portion of market exposure
deriving from client order execution.
The Bank applies prudent market risk limits and sophisticated monitoring of market risk exposure via automated hedging
logics and 24h human and automated surveillance.
The Bank automatically measures its market risk exposure on a permanent and real time basis. The IT system automatically
caps such market risk exposure under the limits decided by the executive management and the Board of Directors. Those limits
have been set sufficiently carefully to ensure that Swiss banking capital adequacy requirements are complied with at all times. If
deemed necessary, the Bank’s advanced technology allows it to fully exclude exposure deriving from trading on all or specificinstruments, for instance in anticipation of exceptional market events such as the abandon of a currency peg by a Central Bank.
Market risks – other currency risks
The Group entities have limits applicable to currency risk exposure deriving from currency discrepancies between assets
and liabilities. These limits are monitored on a regular basis and sufficient currency congruence is maintained between
assets and liabilities through the assets and liabilities management (ALM).
DUKASCOPY BANK SA ANNUAL REPORT 2022

61

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022
Market risks – interest rate risks
The Group is not active in credit or other interest generating activities. The Group’s exposure to interest rate risks mostly
derives from government bonds bought and deposited by the Bank with trading counterparties as trading collateral. Only
the Bank is exposed to interest rate risks. Since the Bank intends to hold those bonds until maturity, the identified interest
rate risks should not materialize in losses. The Bank calculates and reports on interest rate risks on a quarterly basis.
Credit risk
The trading platforms automatically monitor the credit risk related to clients by way of margin call and margin cut
functionalities which shall ensure that the Group remains covered by sufficient collateral at any time. Unsecured loans areshort term exceptions such as rent deposits, amounts due from tax authorities and loans granted to the Bank’s employees.
Counterparty risk in interbank business
The Group deposits its liquidity and trades (mainly to hedge client transactions) with more than 40 different banks and otherinstitutional trading counterparties external to the Bank’s ECN marketplace such as brokers and other marketplaces.
Counterparty and default risks relating to banks and other trading counterparties are mitigated by the fixation of exposure
limits approved by the competent officers including the Bank’s Board of Directors. The respect of the risk limits is controlled
on a daily basis and limits are adapted as often as deemed necessary.
In principle, the Group works only with first-class counterparties. Before entering into a business relationship withcounterparty in interbank business, the Group performs an assessment of the counterparty risk and sets a risk exposure
limit accordingly. The limit depends significantly on the rating, if any and on the capital adequacy of the counterparty which
are reassessed on an annual basis or more frequently if deemed necessary. In case of extreme market events or negative
events affecting certain counterparties, the Bank’s executive management and risk control function urgently examine Group
exposures and reconsider risk limits.
Liquidity
Due to the nature of its business activities, the Group has abundant liquidities and no long term monetary commitment. The
Group is exclusively financed by its own capital, client deposits and therefore does not need to raise funds on the money
market. Bank’s subsidiaries deposit most of their liquidity with Dukascopy Bank. As a result, the liquidity risk of the Group is
low and requires limited monitoring. The liquidity risk management strategy of the Bank and an emergency liquidity plan
has been approved by the Board of Directors. The latter identify reserves of liquidity, liquidity risk indicators and steps
necessary to maintain sufficient liquidity for the Bank and the Group, including in case of liquidity stress situation.
The Bank’s Treasurer monitors the liquidity situation of the Group. He/she ensures that the Group limits are complied with.
The Group liquidity situation and concentration risks are monitored by the Bank’s risk control function and reported
quarterly to the executive management and to the Board of Directors.
4. Methods used for identifying default risks and determining the need for value adjustments
4.1. Amounts due from customers
The Bank is the sole Group company that accepts bank guarantees as collateral. With regard to receivables covered by bankguarantees, the credit risk mostly relates to banks having issued such guarantees and the default risk is determined as
explained in section 4.2. below. If the bank having issued the bank guarantee defaults, the receivable becomes unsecured
and default risks are assessed as described below, like for all other unsecured receivables.
The Group considers that a risk of default exists on unsecured receivables if a payment of interests or a reimbursement of
the principal is not honored in due date or if the debtor disputes such payment obligations or indicates that he/she will not

DUKASCOPY BANK SA ANNUAL REPORT 2022

62

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022
be able to honor them. In such cases, the Group enquires about the debtor’s intentions and financial situation and evaluates
the chances of recovering the receivable. A value adjustment is recorded for the portion of receivable whose recovery is
considered uncertain.
4.2. Amounts due from banks
In principle, the Group only takes credit risk exposure towards counterparties having sound creditworthiness. The Groupconsiders that a counterparty is defaulting in case the latter refuses to honor a payment order in due time, or is declaredbankrupted or placed under special administration due to insolvency/going-concern issues. In such cases, thecounterparty’s situation is evaluated. A value adjustment is recorded for the portion of receivable whose recovery is
considered uncertain.
4.3. Process for determining value adjustments and provisions
Value adjustments and provisions are reassessed at each balance sheet date. Changes in value adjustments and provisions
are approved by the executive management unless they simply result from a use of provision in conformity with its purposeor the recovery of an impaired receivable. Value adjustments on non-impairment credit exposures are determined
individually or on a portfolio basis according to Art. 25 para 1 let. c FINMA Accounting Ordinance.
5. Valuation of collateralCollateral provided by clients is normally made of cash, in any currency accepted in deposit by the Group. As far as the Bankis concerned, collateral also may comprise up to 80% of bank guarantees issued by Swiss or European banks having a Baa or
superior Long-Term senior debt Moody’s rating. With the joint approval of the Bank’s risk control function and executive
management, the Bank may accept bank guarantees derogating the above criteria. Bank guarantees must be denominatedin the same currency as the client account reference currency. Collateral is valued at nominal value of the cash or bankguarantees. The Bank applies no haircut to collateral and grants a leverage for the trading of certain instruments.
6. Business policy regarding the use of derivative financial instruments and hedge accounting
Trading of OTC financial instruments with clients, including trading of certain financial derivatives (CFD and binary options),is the core business of the Group. As per Swiss legislation, the main instrument offered by the Group, namely leveraged
margin trading on currencies and precious metals without delivery, while it is often regarded as a CFD instrument in otherjurisdictions. Therefore, depending on the qualification of leveraged margin trading, the Group may be seen as a pureprovider of financial derivative instruments. The Group does not trade credit derivatives.
Dukascopy Group executes all trading operations in full STP (Straight-through-Processing).
The Group also uses derivative financial instruments for risk management purposes, mainly to hedge against market risks(including currency risk) mostly deriving from clients trading operations. By policy, the brokerage subsidiaries of the Bank musthedge all their trading operations with Dukascopy Bank, which is their unique trading venue. In its trading activity, including
when dealing with its subsidiaries, the Bank always acts as a principal. The Bank hedges its own market risks by entering into
hedging trades with external institutional counterparties or with clients. The Bank does not use hedge accounting.
7. Significant subsequent event after the balance sheet dateNo material event occurred after the balance sheet date that could have a material impact on the financial position of the
Bank as of 31 December 2022. The merger of UBS and Crédit Suisse did not affect the Bank's financial condition.

DUKASCOPY BANK SA ANNUAL REPORT 2022

63

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of collateral for loans/receivables and off-balance-sheet transactions,as well as impaired loans/receivables

LOANS (CHF)(before netting with value adjustments)

Secured by mortgages

Other collateral Unsecured

Total

Amounts due from customers–

38 732

2 404 604

2 443 336

Total at 31 December 2022–

38 732

2 404 604

2 443 336–

40 172

1 750 370

1 790 542–

38 732

2 404 604

2 443 336–

40 172

1 750 370

1 790 542

Other collateral Unsecured

Total(before netting with value adjustments)
Total at 31 December 2021
(before netting with value adjustments)
Total at 31 December 2022
(after netting with value adjustments)
Total (after netting with value adjustments)
at 31 December 2021

OFF-BALANCE SHEET COMMITMENTS (CHF)

Secured by mortgages

Contingent liabilities*–

150 215–150 215

Irrevocable commitments––

1 134 000

1 134 000

Total at 31 December 2022–

150 215

1 134 000

1 284 215

Total at 31 December 2021–

139 755

988 000

1 127 755

*Contingent liabilities are bank guarantees issued by the Bank on behalf of clients, fully secured by client cash deposits.

BREAKDOWN OF IMPAIRED
LOANS/RECEIVABLES (CHF)

Gross debt
amountEstimated liquidation
proceeds of collateral

Net debt
amountIndividual value
adjustments

Total at 31 December 2022

–

–

–

–

Total at 31 December 2021

–

–

–

–

DUKASCOPY BANK SA ANNUAL REPORT 2022

64

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown of trading portfolio and other financial instruments at fair value (assets and liabilities)
2022

2021

Equity securities

1 161 044–

Other trading portfolio assets (cryptocurrencies)

1 959 696

5 255 953

Total trading assets

3 120 740

5 255 953

Total assets

3 120 740

5 255 953

–

–

–

–

ASSETS (CHF)– of which determined using a valuation model– of which, securities eligible for repo transactions in accordance with liquidity requirements

Presentation of derivative financial instruments (assets and liabilities)
Trading instruments
OTC TRANSACTIONS (CHF)

Positive
replacement values

Negative
replacement values

Contract
volumesInterest instruments:
– CFD

3 535

17

1 173 487

Total interest instruments

3 535

17

1 173 487

– forward contracts*

804 095

719 948

173 808 389– swaps

201 906

213 706

317 363 135

1 006 001

933 654491 171 524– forward contracts*

2 603

3 319

817 378– swaps

32 7798 286

20 436 660

Total precious metals

35 38211 60521 254 038– CFD

491 839

91 09023 690 151

Total equity securities and indices491 839

91 09023 690 151

1 616 641

43 62111 125 858

Currencies:

Total currencies
Precious metals:

Equity securities and indices:

Others:
– CFD

–

388

49 832

Total others

1 616 641

44 00911 175 690

Total at 31 December 2022 before impact of netting contracts

3 153 398

1 080 375

548 464 890

–

–

–

1 370 899

1 802 167

1 028 188 332–- futuresof which determined using a valuation model
Total at 31 December 2021 before impact of netting contractsof which determined using a valuation model
Total at 31 December 2022 after impact of netting contracts
Total at 31 December 2021 after impact of netting contracts––

2 356 475

283 453

850 980

1 282 249

* Represent the spot trading transactions which are accounted for according to the value date principle.
DUKASCOPY BANK SA ANNUAL REPORT 2022

65

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown by counterparty
POSITIVE REPLACEMENT VALUES AFTERIMPACT OF NETTING CONTACTS (CHF)

Central clearing
housesBanks & securities
dealers

Otherscustomers

Total

Total at 31 December 2022–

281 7022 074 773

2 356 475

Total at 31 December 2021–

321 480529 500

850 980

Breakdown of financial investments
Fair value

Book value
2022

2021

2022

2021

44 949 868

45 339 716

44 560 235

45 508 932

1

1 674

1

1 674

Total

44 949 869

45 341 390

44 560 236

45 510 606

including securities eligible for repo transactionsin accordance with liquidity regulations

33 851 728

34 418 633

33 463 612

34 379 460

2022

2021

44 949 868

45 339 716

A+ to A-––

BBB+ to BBB-––

BB+ to B-––

Lower than B-––

Without rating

–

–

(CHF)
Debt securities held to maturity
Cryptocurrencies

Breakdown of contreparties
DEBT SECURITIES: BOOK VALUE OF BONDS HELD TO MATURITY (CHF)
AAA to AA-

We use rating DBRS Morningstar.

Presentation of non-consolidated participations
2021
NON-CONSOLIDATEDPARTICIPATIONS (CHF)

2022

Cost
value

Value
adjustment

Book value
at end of year

Without listed value

100 000–

100 000–––

100 000

Total participations

100 000–

100 000–––

100 000

DUKASCOPY BANK SA ANNUAL REPORT 2022

Disposals
ValueBook value
Additions Reimbursement adjustment at end of year

66

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Disclosure of companies in which the bank holds a permanent direct or indirect
significant participation
2022
CONSOLIDATED PARTICIPATIONS

Activity

Share capital
(CHF)

Head
officeSharecapital in %Sharevote in %Helddirectly in %Dukascopy Europe IBS AS

brokerage

1 933 921

Riga

100

100

100

Dukascopy Japan K.K.

brokerage

792 347

Tokyo

100

100

100

SWFX SAIP service

100 000

Geneva

100

100

100

100 000

Geneva

100

100

100

NON-CONSOLIDATED PARTICIPATIONS
Dukascopy Community SAsocial media

In the end of 2022, the share capital of Dukacopy Japan K.K. was reduced.
2021

CONSOLIDATED PARTICIPATIONS
Dukascopy Europe IBS AS

brokerage

1 933 921

Riga

100

100

100

Dukascopy Japan K.K.

brokerage

6 021 839

Tokyo

100

100

100

SWFX SAIP service

100 000

Geneva

100

100

100

100 000

Geneva

100

100

100

NON-CONSOLIDATED PARTICIPATIONS
Dukascopy Community SAsocial media

The Group’s scope of consolidation comprises all companies owned, either directly or indirectly, over 50% of the capitalor voting rights by the Bank or which are under dominant influence of the Bank by another manner, at the exception ofGroup company whose integration would not have any significantly influence on the consolidated financial statements
as Dukascopy Community SA (total balance sheet CHF 260 226, net profit CHF 1 951). Dukascopy Europe IBS AS,
Dukascopy Japan K.K. and SWFX SA are fully integrated in consolidated financial statements of the Group.

Presentation of tangible fixed assets
2021
(CHF)

Cost value

Softwares

23 323 414

2022
Additions

Disposals(23 175 166)

148 248

19 184–(75 390)

92 042

96 216(380)(260 395)

528 324

115 400(380)(335 785)

620 366

Other tangible fixed assets

10 406 950(9 714 067)

692 883

Total fixed assets

33 730 364(32 889 233)

841 131

DUKASCOPY BANK SA ANNUAL REPORT 2022

Book value
Depreciation at end of year

AccumulatedBook value
depreciation at end of year

67

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Leasing(CHF)
Future leasing installments arising from operating leasesof which, may be terminated within one year

2023

2024

2025

2026

2027

1 428 025

1 124 996

953 477

233 11932 36947 040––––

They are rental costs.

Breakdown of other assets and liabilities
OTHER ASSETS (CHF)

2022

2021

Wire transfers

234 815

196 315

Accrual interests on bonds*

360 543242 625

Indirect taxes to be reimbursed*

162 750

162 750–7

758 108

601 697

1 697 699

1 444 826

Indirect taxes to be paid

308 645287 325

Others37 95634 7402 044 300

1 766 891

OthersTotal other assets

OTHER LIABILITIES (CHF)
Wire transfers

Total other liabilities* Reclassification "Accrual interests on bonds" and "Indirect taxes to be reimbursed" from "Accrued income and prepaid expenses"
to "Other assets". Comparative figures for 2021 have been adapted.

Disclosure of assets pledged or assigned to secure own commitments
and of assets under reservation of ownership
2022

(CHF)

2021

Book value of pledged
assets & assets
Effective
assigned as collateral commitments

Book value of pledged
assets & assets
assigned as collateral

Effective
commitments

Swiss bonds

14 076 301

565 868

18 839 353

1 194 602

Margin accounts assigned as collateral

22 281 310

124 115

23 666 255

382 910219 530

219 530

219 530

219 530

36 577 141

909 51342 725 138

1 797 042

Deposits made with banks to secure guarantees
Total

DUKASCOPY BANK SA ANNUAL REPORT 2022

68

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Indications relating to pension funds
A collective pension fund plan exists for the employees based in Switzerland (Caisse Inter-Entreprises-CIEPP). This
fund is a defined contribution scheme. There is no employer contribution reserve and there is no identifiableeconomic benefit to be capitalised in the balance sheet (2021: nil). The pension fund unaudited accounts as of 31
December 2022 present a coverage ratio of 109%. Based on the last audited financial statements of the Caisse InterEntreprises-CIEPP as at 31 December 2021, the coverage ratio was 126.3%.
The employees based in Japan are affilated to a defined contributions scheme pension fund of the Japan state.
This fund does not allow any employer's contribution reserve.
There is no pension funds for the other consolidated entities of the Group.

Presentation of economic benefit / obligation and the pension expenses(CHF)

Over orunderfunding
31.12.2022−

Pension plans with overfunding

Economic interestof the Bank
2022
2021
−

Change ineconomic interest
versus prior year

Contributions
paid for 2022−

276 554−

Pension expenses inpersonnel expenses
2022

2021

276 554

275 063

Presentation of value adjustments and provisions, reserves for general banking
risks, and changes therein during the current year

(CHF)
Provisions for deferred taxes

Currency Recoveries, past
New creations Releases Balance atBalance at Use in conformity with Reclassifidue interest charged to income to income 31.12.2022
31.12.2021
designated purpose
cations differences
616 000

–

–

–

–

–

–

Provisions for other business risks
Total provisions
Reserves for general banking risks

616 000

–

–

–

–

–

–

–

–

616 000

–

–

–

–

–

–

616 000

3 234 000

–

–

–

–

–

–

3 234 000

–

–

–

–

–

–

–

–

Value adjustments for default
risks and country risks – of which,value adjustments for default risks inrespect of impaired loans/receivables

Provisions are valued according to the best estimate principle. Reserves for general banking risks have not been taxed.

DUKASCOPY BANK SA ANNUAL REPORT 2022

69

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of the Bank's capital
2022

2021

(CHF)

Total parvalue

Numberof shares

Capital eligiblefor dividend

Total parvalue

Numberof shares

Capital eligiblefor dividend

Share capital

22 000 000

21 712 000

22 000 000

22 000 000

21 712 000

22 000 000

Registered shares

22 000 000

21 712 000

22 000 000

22 000 000

21 712 000

22 000 000

of which, paid up

22 000 000

21 712 000

22 000 000

22 000 000

21 712 000

22 000 000

Total Bank's capital

22 000 000

21 712 000

22 000 000

22 000 000

21 712 000

22 000 000

The share capital consists of 21'680'000 shares with a nominal value of CHF 1 and of 32'000 shares with a nominal value of CHF 10.

Disclosure of amounts due from/to related parties
2022

2021

(CHF)

Amountsdue from

Amounts
due toAmountsdue from

Amounts
due toHolders of qualified participations

1 605 165

42 063

1 204 166

28 123

Group companies–

260 190–

256 111

Linked companies

–

–

–

–

Transactions with members of governing bodies–

19 108–12 9614 998

26 134–14 888Other related parties

Dukascopy Bank engaged into transactions with related parties in the normal course of its business. These transactions
mainly include marketing services. Transactions with related parties are conducted at arm's length.

Disclosure of holders of significant participations
2022
With voting rights

Nominal(CHF)

Numberof shares% of equity
in %Capital eligiblefor dividend (CHF)

Dr. Andrey Duka

10 890 000

10 746 000

49.5

10 890 000

Veronika Duka

10 890 000

10 746 000

49.5

10 890 000

2021
With voting rights

Nominal(CHF)

Numberof shares% of equity
in %Capital eligiblefor dividend (CHF)

Dr. Andrey Duka

10 890 000

10 746 000

49.5

10 890 000

Veronika Duka

10 890 000

10 746 000

49.5

10 890 000

DUKASCOPY BANK SA ANNUAL REPORT 2022

70

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of the maturity structure of financial instrumentsDue
At sight Cancellable

ASSETS (CHF)

Within3 months

Within 3 to
12 months

Within 1
to 5 yearsOver
5 yearsNo
maturity

Total

Liquid assets

50 188 954

–

–

–

–

–

–

50 188 954

Amounts due from banks

96 596 513

219 530

–

–

–

–

–

96 816 043

Amounts due from customers

2 375 948

67 388

–

–

–

–

–

2 443 336–––

3 120 740

Trading assets

3 120 740–––

Positive replacement values

2 356 475

–

–

–

–

–

–

2 356 475

1–

11 098 140–

14 076 301

19 775 427–

44 949 869

14 076 301

19 775 427–

199 875 417

of derivative financial instruments
Financial investments
Total current assets

154 638 631

286 918

11 098 140–

141 399 684

307 532–

10 921 083–

34 418 633–

187 046 932

at 31 December 2022
Total current assets
at 31 December 2021

THIRD-PARTY LIABILITIES (CHF)
Amounts due to banks

4 779 810

–

–

–

–

–

–

4 779 810

Amounts due in respect

132 103 550

–

–

–

–

–

–

132 103 550

283 453

–

–

–

–

–

–

283 453

137 166 813

–

–

–

–

–

–

137 166 813

131 519 235

–

–

–

–

–

–

131 519 235

of customer deposits
Negative replacement valuesof derivative financial instruments
Total third-party liabilities
at 31 December 2022
Total third-party liabilities
at 31 December 2021

DUKASCOPY BANK SA ANNUAL REPORT 2022

71

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of assets and liabilities by domestic and foreign origin in accordancewith the domicile principle

2022

2021

Domestic

Foreign

Total

Domestic

Foreign

Total

Liquid assets

50 189–50 18937 720–37 720

Amounts due from banks

40 46756 34996 81637 65558 43396 088Amounts due from customers

1 663

781

2 444

1 265

526

1 791

Trading assets

1 810

1 310

3 120

4 306

950

5 256

179

2 178

2 357
52

799

851

ASSETS (CHF 000)

Positive replacement values of derivative
financial instruments
Financial investments

33 852

11 09844 95034 41910 92345 342

Accrued income and prepaid expenses

1 015

561

1 576

708

516

1 224

Investment in subsidiaries

100

–

100

100

–

100

Tangible fixed assets

505

115

620

684

157

841

Other assets

758

–

758

601

–

601

Total assets

130 538

72 392202 930

117 51072 304

189 814

–

4 780

4 780

–

9 079

9 079

6 472

125 632

132 104

6 569

114 589

121 158

49

234

283

113

1 169

1 282

Accrued expenses and deferred income

3 055

448

3 503

2 450

443

2 893

Other liabilities

2 043

1

2 044

1 763

4

1 767

616

–

616

616

–

616

Reserves for general banking risks

3 234

–

3 234

3 234

–

3 234

Bank's capital

22 000–22 00022 000–22 000Retained earnings reserve

27 656–27 65625 332–25 332Currency translation reserve

(26)

–

(26)

130

–

130

Consolidated profit of the year

6 513

223

6 736

2 176

147

2 323

Total liabilities

71 612

131 318

202 930

64 383125 431

189 814LIABILITIES (CHF 000)
Amounts due to banks
Amounts due in respect of customer deposits
Negative replacement valuesof derivative financial instruments

Provisions

DUKASCOPY BANK SA ANNUAL REPORT 2022

72

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown of total assets by country or group of countries (domicile principle)

2022

2021

Absolute (CHF 000)

Share %

Absolute (CHF 000)

Share %

Switzerland

130 538

64.3

117 51161.9

Europe excluding Switzerland

45 67422.5

48 56825.6

USA and Canada

15 432

7.6

15 334

8.1

Others

11 286

5.6

8 401

4.4

Total

202 930100

189 814100

ASSETS

Breakdown of total assets by credit rating of country groups (risk domicile view)

2022

2021

Absolute (CHF 000)

Share %

Absolute (CHF 000)

Share %

1

70 48497.3

70 046

96.8

2

2

0.0

6

0.0

3

697

1.0

301

0.4

4

95

0.1

31

0.0

5

55

0.1

1 561

2.2

6

271

0.4

167

0.2

7

718

1.0

145

0.2

without rating

70

0.1

47

0.1

72 392100

72 304100

SERV Rating

Total

The Bank does not use an internal rating system for country risk management. SERV is the rating issued by OECD.
Exposure excluding Switzerland.

DUKASCOPY BANK SA ANNUAL REPORT 2022

73

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of assets and liabilities broken down by the most significant currenciesof the Bank
CHF

EUR

USD

JPY

Others

Total

Liquid assets

50 189––––50 189Amounts due from banks

4 562

32 22939 0449 690

11 291

96 816

Amounts due from customers

1 647

334

369

27

67

2 444

–

–

–

–

3 121

3 121

2 356

–

–

–

–

2 356

33 852–

11 098––44 950Accrued income and prepaid expenses

926

186

328

30

106

1 576

Non-consolidated investment in subsidiaries

100

–

–

–

–

100

Tangible fixed assets

619

–

–

1

–

620

Other assets

472

10

206

1

69

758

Total assets

94 72332 75951 0459 749

14 654202 930

62 24592 157183 149

71 915102 960

512,426

156 968

124 916234 194

81 664

117 614715 356

4

2 165

2 426

51

134

4 780

15 01739 71756 301

7 192

13 877132 104

283

–

–

–

–

283

2 288

959

118

117

21

3 503

Other liabilities

446

173

1 409

–

16

2 044

Provisions

616

–

–

–

–

616

Reserves for general banking risks

3 234

–

–

–

–

3 234

Bank's capital

22 000––––22 000Retained earnings reserve

27 656––––27 656

Currency translation reserve

(26)

–

–

–

–

(26)

Consolidated profit of the year

6 736

–

–

–

–

6 736

Total liabilities

78 25443 01460 2547 360

14 048202 930

Delivery obligations arising from spot

73 31751 312207 408

79 481100 811512 329

Total at 31 December 2022

151 571

94 326267 662

86 841

114 859715 259

Net position by currency

5 397

30 590(33 468)(5 177)

2 755

97

ASSETS (CHF 000)

Trading assets
Positive replacement values of derivative
financial instruments
Financial investments

Claims arising from spot exchange
and swap transactions
Total at 31 December 2022
LIABILITIES (CHF 000)
Amounts due to banks
Amounts due in respect of customer deposits
Negative replacement valuesof derivative financial instruments
Accrued expenses and deferred income

exchange and swap transactions

DUKASCOPY BANK SA ANNUAL REPORT 2022

74

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown of contingent assets and contingent liabilities

CONTINGENT ASSETS (CHF)

2022

2021

Other contingent assets––

Total contingent assets––

Other contingent liabilities

150 215

139 755

Total contingent liabilities

150 215

139 755TRADING INCOME (CHF)

2022

2021

Leveraged margin trading

26 433 311

21 397 025

355 829561 880

26 789 140

21 958 905

CONTINGENT LIABILITIES (CHF)

Breakdown of the result from trading activities

Binary options
Total

DUKASCOPY BANK SA ANNUAL REPORT 2022

75

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown by underlying risk
RESULT (CHF) FROM TRADING ACTIVITIES FROM:

2022

2021

Equity securities

3 510 019

2 765 761

Foreign currency

18 494 757

13 429 253

Commodities / precious metals

3 669 065

4 810 740

Cryptocurrencies

1 115 299

953 151

Total

26 789 140

21 958 905

Disclosure of material refinancing income in the item Interest and discountincome as well as material negative interest
NEGATIVE INTEREST (CHF)
Negative interest on credit operations
Negative interest on deposits

2022

2021

248 094

348 137

3 331

3 186

Negative interest on credit operations are disclosed as a reduction in Interest and discount income.
Negative interest on deposits are disclosed as a reduction in Interest expense.

Breakdown of personnel expenses
PERSONNEL EXPENSES (CHF)

2022

2021

5 684 624

5 973 658––

1 181 741

1 331 745

Other personnel expenses

135 789

102 899

Total personnel expenses

7 002 154

7 408 302

Salariesof which, expenses relating to share-based compensation
and alternative forms of variable compensation
Benefits

DUKASCOPY BANK SA ANNUAL REPORT 2022

76

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Breakdown of general and administrative expenses

GENERAL AND ADMINISTRATIVE EXPENSES (CHF)

2022

2021

Premises

1 959 385

2 178 732

IT related expenses

2 022 828

2 056 036

Copyright agreement

3 094 942

2 729 736

Legal and consulting

1 259 276

1 116 046

Post, telecommunications and data

622 423621 562

Expenses for vehicles

65 61675 530

Office supply

178 299

186 898

Audit fees

315 761

266 065of which for financial and regulatory audits

315 761

266 065––

2 253 726

2 413 132

Travels

891 258

779 478

Others

315 491

303 407

12 979 005

12 726 622

2022

2021

Disposal of fully depreciated fixed assets–

11

Donation from Japanese State

–

1 530

Total extraordinary income

–

1 541

of which for other services
Marketing and communication

Total general and administrative expenses

Explanations regarding extraordinary income and expenses

EXTRAORDINARY INCOME (CHF)

There was no extraordinary expense in 2022 and 2021.

DUKASCOPY BANK SA ANNUAL REPORT 2022

77

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2022

Presentation of operating result broken down according to domestic and foreign
origin, according to the principle of permanent establishment
2022
(CHF)

2021

Domestic

Foreign

Domestic

Foreign

156 151–(156 833)–

Subtotal result from commission business and services

1 431 192

(50 925)

1 695 057

(20 581)

Result from trading activities

25 871 888

917 252

21 126 836

832 069

Personnel expenses(5 305 571)

(1 696 583)

(5 319 493)

(2 088 809)

General and administrative expenses(4 268 768)

(8 710 237)

(4 078 629)

(8 647 993)

Subtotal operating expenses(9 574 339)

(10 406 820)

(9 398 122)

(10 736 802)(262 890)(72 895)(289 741)(126 824)(7 419)8 765(8 102)(38 430)

17 614 583(9 604 623)

12 969 095(10 090 568)

Subtotal net result for interest operations

Value adjustments on participations and depreciation andamortisation of tangible fixed assets and intangible assets
Changes to provisions and other value adjustments and losses
Operating result

Presentation of current taxes, deferred taxes and disclosure of tax rate

(CHF)

2022

2021

Current tax expenses(1 274 416)

(682 962)

Total taxes(1 274 416)

(682 962)(CHF)
Average tax rate

2022

2021

15.9%

23.7%

Taxes consist of tax on profit and capital, as well as professional tax. The fluctuation observed in the tax rate is dueto the Geneva professional tax because the latter is not proportionate to the profit but to the total gross income.

DUKASCOPY BANK SA ANNUAL REPORT 2022

78

REPORT OF THE STATUTORY AUDITOR
TO THE GENERAL MEETING
of Dukascopy Bank SA, Meyrin
Report on the Audit of the Consolidated Financial Statements
OpinionWe have audited the consolidated financial statements of Dukascopy Bank SA and its subsidiaries (the Group), which
comprise the consolidated balance sheet as at 31 December 2022 and the consolidated statement of income, theconsolidated statement of changes in equity and the consolidated statement of cashflows for the year then ended,and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements (page 49 to 78) give a true and fair view of the financial positionof the Group as at 31 December 2022, and its consolidated results of operations and its consolidated cash flows forthe year then ended in accordance with the accounting rules for banks, securities firms, financial groups andconglomerates and comply with Swiss law.
Basis for Opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities
under those provisions and standards are further described in the “Auditor's Responsibilities for the Audit of theConsolidated Financial Statements” section of our report. We are independent of the Group in accordance with theprovisions of Swiss law, together with the requirements of the Swiss audit profession, and we have fulfilled our otherethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other Information
The Board of Directors is responsible for the other information. The other information comprises the information
included in the annual report, but does not include the consolidated financial statements, the stand-alone financial
statements of the company and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not and will
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation identified above and, in doing so, consider whether the other information is materially inconsistent withthe consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
Board of Directors’ Responsibilities for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance withthe provisions governing the preparation of financial statements for Banks and the provisions of Swiss law, and forsuch internal control as the Board of Directors determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern, and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.

DUKASCOPY BANK SA ANNUAL REPORT 2022

79

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with Swiss law and SA-CH will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:− Identify and assess the risks of material misstatement of the consolidated financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
− Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theGroup’s internal control.
− Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made.
− Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosuresin the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
− Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We are responsible forthe direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.

Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists,
which has been designed for the preparation of consolidated financial statements according to the instructions of theBoard of Directors.
We recommend that the consolidated financial statements submitted to you be approved.

KPMG SA
Philippe Ruedin
Licensed Audit Expert
Auditor in Charge

Philippine Bouvard
Licensed Audit Expert

Geneva, 21 April 2023

Enclosure:– Consolidated Financial statements (balance sheet, income statement, statement of changes in equity and notes);

DUKASCOPY BANK SA ANNUAL REPORT 2022

80

KEY METRICS DISCLOSURES FOR THE CONSOLIDATEDFINANCIAL STATEMENTS
as at 31 December 2022

KM1: Key regulatory figures
AVAILABLE CAPITAL AMOUNTS (CHF 000) (2022 Audited)2022 2022Q3 2022Q2 2022Q1 2021

1 Common Equity Tier 1 (CET1)
1a Fully loaded ECL accounting model CET1
2 Tier 1
2a Fully loaded ECL accounting model Tier 1
3 Total capital
3a Fully loaded ECL accounting model Total capital

51 25849 49351 25849 49351 25849 493

158 330
12 666

189 450
15 15632.37%

26.12%

32.37%

26.12%

32.37%

26.12%

2.50%
0.00%
0.00%
2.50%
24.37%

2.50%
0.00%
0.00%
2.50%
18.12%

RISK-WEIGHTED ASSETS AMOUNTS (2022 Audited)
4 Total risk-weighted assets (RWA)
4a Minimum capital requirements (000 CHF)
RISK-BASED CAPITAL RATIOS (as a percentage % of RWA) (2022 Audited)
5 CET1 ratio (%)
5a Fully loaded ECL accounting model Common Equity Tier 1 (%)
6 T1 ratio (%)
6a Fully loaded ECL accounting model Tier 1 ratio (%)
7 Total capital ratio (%)
7a Fully loaded ECL accounting model total capital ratio (%)
ADDITIONAL CET1 REQUIREMENTS (buffers as a percentage of RWA) (2022 Audited)
8 Capital conservation buffer requirement according to Basel minimum requirements (%)
9 Countercyclical buffer requirement according to Basel minimum requirements (%)
10 Bank G-SIB and/or D-SIB additional requirements
11 Total of bank CET1 specific buffer requirements according to Basel minimum requirements (%)
12 CET1 available after meeting the bank’s minimum capital requirements (%)

TARGET CAPITAL RATIOS ACCORDING TO ANNEX 8 OF THE CAPITAL ADEQUACY ORDINANCE (CAO) (% of RWA) (2022 Audited)
2.50%
12a Capital conservation buffer according to CAO, Annex 8 (%)
0.00%
12b Countercyclical capital buffer according to CAO, Art. 44 and Art. 44a (%)
12c CET1 capital target (%) accord. to CAO, Annex 8+countercyclical buffer accord. to CAO, Art. 44 & 44a 7.00%
8.50%
12d T1 capital target according to CAO, Annex 8+countercyclical buffer accord. to CAO, Art. 44 and 44a
12e Total capital target according to CAO, Annex 8+contercyclical buffer accord. to CAO, Art. 44 and 44a 10.50%

2.50%
0.00%
7.00%
8.50%
10.50%

BASEL III LEVERAGE RATIO (2022 Audited)
13 Total Basel III leverage ratio exposure measure (000 CHF)
14 Basel IIII Leverage Ratio
14a Fully loaded ECL accounting model Basel III leverage ratio (%)

209 538
24.46%
0%200 765
24.65%
0%

MEDIUM SHORT-TERM LIQUIDITY COVERAGE RATIO LCR
15 LCR Numerator: total stock of high quality liquid assets (000 CHF)
16 LCR Denumerator: total cash outflow (000 CHF)
17 Liquidity coverage ratio (%)

79 8554 809
1 661%

72 8774 677
1 558%

65 786
4 739
1 388%

63 765 61 342
5 183
5 627
1 230% 1 090%

162 574
22 429725%

158 500
22 701698%

NET STABLE FUNDING RATIO NSFR
18 Available stable refinancings (000 CHF)
19 Required stable refinancings (000 CHF)
20 Net stable funding ratio NSFR (%)

DUKASCOPY BANK SA ANNUAL REPORT 2022

171 396
23 584727%

81

KEY METRICS DISCLOSURES FOR THE CONSOLIDATEDFINANCIAL STATEMENTS
as at 31 December 2022

OV1: Overwiew of risk-weighted assets
RWA
2022 (Audited)

RWA
2021

Min. capital requirements
2022 (Audited)

1 Credit risk

33 22134 3382 657.7

20 Market risk*

64 96594 2385 197.2

24 Operational risk

57 97558 425

4 638

870

1 087

69.6

–

–

–

1 299

1 362

103.9

158 330

189 450

12 666.4(CHF 000)

24a Risks without counterparty
25 Amounts below the thereshold 3 (subject to 250% risk weight)
26 Others
27 Total (1 + 20 + 24 + 25 + 26)
To determine minimum capital requirement we use:
– credit risk: standard approach;– market risk: standard approach;– operational risk: basic indicator approach;– others: cryptocurrencies.
*Market risk decreased due to a reduction in open positions in currencies

LIQA: Liquidity risk management
In general, Dukascopy Bank has a very low liquidity risk appetite. Therefore, Dukascopy Bank and its Group haveabundant liquidity, which resulted from the vast majority of its assets being allocated into high quality liquid assets andbank deposits at sight. High quality liquid assets are constituted of high-grade government bonds and deposits with the
Swiss National Bank. The bank deposits are mostly held with top rank Swiss, German, UK and US banks. Liquidity risk
management is oriented to limit the liquidity risk and to ensure that the Bank has sufficient liquid assets in order to beable to meet its payment obligations in stress situations and at all times. The Treasurer of the Bank is responsible formanaging the liquidity of the Bank as well as for its compliance with the regulatory requirements.
The Finance department of the Bank is in charge of the independent measurement and monitoring of the liquidity
requirements and limits and is responsible for the regular risk reporting to the attention of the Executive Committee
and to the Board of Directors of the Bank.
The Executive Committee of the Bank is responsible for ensuring the risk tolerance and liquidity limits of the Bank aswell as of the Group. It is in charge of implementing and observing the risk policy principles and requirements for
identification, measurement, evaluation, management, monitoring and reporting of the liquidity risk. Furthermore, it
reports to the Board of Directors and its committees. The Board of Directors of the Bank determines the risk tolerance
and liquidity limits of the Group. Moreover, it defines the requirements for identification, measurement, evaluation,
management, monitoring and reporting of the liquidity risk. On a quarterly basis, the Chief Risk Officer issues a Risk
Report to the Audit Committee and the Board of Directors that includes the liquidity risk situation.
To measure the liquidity risk, the Finance department regularly conducts liquidity stress tests to verify the compliancewith the regulatory requirements through internal liquidity stress scenarios. The stress scenarios include a market-wide
shock, temporary unavailability of the largest correspondent banks and a massive outflow of clients’ deposits. The
results of stress testing are periodically communicated as a part of the risk reporting to the attention of the Executive
Committee and to the Board of Directors of the Bank.

DUKASCOPY BANK SA ANNUAL REPORT 2022

82

KEY METRICS DISCLOSURES FOR THE CONSOLIDATEDFINANCIAL STATEMENTS
as at 31 December 2022

CR1: Credit risk – credit quality of assets
Gross carrying values of(CHF 000)Defaulted exposures Non-Defaulted exposures

Value adjustments/
impairments

Netvalues

1 Loans (excluding debt securities)–

154 139–

154 139

2 Debt securities–

44 950–44 9503 Off-balance sheet exposures

–

1 284

–

1 284

24 Total–

200 373–

200 373

A situation of "default" is recognised when the debtor has failed to pay interests or to reimburse the loan
at the contractually agreed maturity date.

CR 3: Credit risk – overview of credit risk mitigation techniques(CHF 000)
Loans (Debt securities included)
Off-balance sheet exposures
Totalof which defaulted

Unsecured
exposures/carrying
valuesExposures secured
by collateral/
carrying values

Exposures secured by financial
guarantees or credit derivatives/
the amounts effectively covered

199 050

–

39

1 134

150

–

200 184

150

39

–

–

–

ORA: Operational risks
Operational risks include IT, cyber, confidentiality, fraud, compliance and legal risks. The Bank is particularly exposed to
IT and cyber risks due to its reliance on technological solutions

connected to the Internet. The identification,measurement, management, monitoring and reporting of the Bank's risks are organised in a comprehensive Risk
Management Concept complemented by specific concepts on cyber-security, data confidentiality and operational risk
management and by other internal regulation. Compliance risks are specifically subject to a Compliance Risk Analysis
and Action Plan. All this documentation is reviewed annually by the relevant specialised committees of the Bank: theRisk Committee, the Compliance Committee and the IT Steering Committee. The Bank makes sure that each identified
operational risk remains within the limits of its appetite and keeps under scrutiny the internal controls which allow tokeep those risks at acceptable level. Quarterly, the Board of Directors and the Executive Committee are informed of theevolutions in the Bank and Group's risk profile, receive

operational risk indicators allowing them to monitor thesituation of risks and their compliance with the Bank's objectives. For determining capital requirements applicable tooperational risks the Bank uses the basic indicator method.

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83

KEY METRICS DISCLOSURES FOR THE CONSOLIDATEDFINANCIAL STATEMENTS
as at 31 December 2022

IRRBBA: Interest-rate risk: Measuring, managing, monitoring and controllinginterest rate risks
Definition of interest rate risk in the banking book. Interest rate risk in the banking book is defined as the potential
loss in the net interest income (NII) or in the economic value of equity (EVE) arising from the effect of adverse interest
rate changes. The Bank could be exposed to the interest rate risk by offering CFD trading on debt instruments. I suchcase, the Bank's exposure to the interest rate risk would much fluctuate depending on the clients trading positions.
Therefore, the Bank fully hedges this trading flow. The Bank's business activities hardly expose it to the interest raterisk because it basically has no interest based business: the Bank neither charges or pay interests to its clients. The
main source of interest rate risk of the Bank in the bonds it hold as collateral for trading counterparties. However,since these bonds are aimed to be held until maturity, the risk is not expected to materialize into losses.

The Board of Directors defines the interest rate risk appetite of the Group. The principles for managing risk areapproved by the Board of Directors and are incorporated in the Group risk management policies. The Group risk
management policies define the organisational structure, responsibilities, limits and maximum acceptable risk withthe objective to optimise the net interest income on a long term horizon. The Executive Management is responsible
for supervising and implementing the risk profile and recommending risk limits to the Board of Directors.

On a quarterly basis, the Chief Risk Officer issues a Risk Report to the Audit Committee and the Board of Directors that
includes the interest rate risk situation. This Risk Report presents inter alia the results of the stress tests with significant
shifts in interest rate curves, the level of use of the risk limits and the distribution of relevant positions per currency andper maturity. The Bank do not pay interest on customers’ accounts. Nevertheless, it can review that policy at any time if
consider it necessary. Therefore, repricing maturities for all due to customers match with repricing maturities ofinterest rates sensitive assets. Since the Bank does not place deposits on term with banks and do not issue loans tocustomers, all due from banks have 1 month and due from customers have 9 month repricing maturities.

Risk measurement mechanisms regarding the interest rate risk modelling are aligned with the business model of theGroup. Finance Department performs quarter-end stress tests to monitor the net interest income (NII) and theeconomic value of equity (EVE). These stress tests are measured for each currency using the own base scenario (100basis point change in interests) and the six standardised interest rate shock scenarios prescribed by the FINMA (Circular
2019/2 “Interest rate risk – banks). For each standardised scenario, FINMA defines the amount in basis points ofinterest rate shock per currency (CHF, USD, EUR) and per maturity bucket (from overnight up to more than 20 years).

The interest rate risks of subsidiaries are insignificant compared to the interest rate risks taken by the bank itself. In
application of Note 3 of circular FINMA 2019/2 "Interest rate risks – banks", the Bank withdraws from including themin the analysis at the consolidated level.

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84

KEY METRICS DISCLOSURES FOR THE CONSOLIDATEDFINANCIAL STATEMENTS
as at 31 December 2022

FINMA prescribed scenarios
The six standard scenarios prescribed by FINMA can be summarised and illustrated as follows:Standard scenario

Amount of interest rate shock for CHF currency

Parallel shift up+150 basis points

Parallel shift down

– 150 basis points

Steepener shock (short term rates down and long term rates up)

From -97 basis point up to +90 basis points*

Flattener shock (short term rates up and long term rates down)

From +120 basis points down to -60 basis points*

Rise in short term interest rates

From +150 basis points down to 0 basis points*

Fall in short term interest rates

From -150 basis points down to 0 basis points**depending on maturity bucket

To measure its ability to withstand extreme changes in interest rates, the Bank also may conduct ad hoc stress tests
response to market conditions. The details of the various standardised scenarios are provided in the circular.

Change in economic value of equity (EVE)
Change in economic value of equity has been computed with the assumptions of a run off balance sheet, where
existing banking book positions amortise and are not replaced by any new business. Floating rate instruments are
only impacted for the period until the next interest rate reset date whereas for the fixed rate instruments the entire
maturity is impacted. The impact on each position is calculated stressing the effective interest rate.

Change in net interest income (NII)
Change in net interest income is computed assuming a constant balance sheet, where maturing and repricing cash
flows are replaced by new cash flows with identical features. The stress test is based on all cash flows from fixed andfloating rate instruments as well as assets and liabilities at sight. The impact is measured for one-year period.
Floating rate instruments are impacted after interest rate reset date while fixed interest rate instruments are
impacted for the remaining time after the expiration up to one year. At sight assets and liabilities are impacted forthe duration of one year. The assumptions reflect the expected behavior of counterparties to modify or to cap theinterest rate conditions (asset side) as well as the Bank’s optionalities to update its commercial policy with respect tonegative interests charged to customers (liability side) without affecting substantially other revenue categories.
Parallel shift up scenario may as well differ according to commercial policy and competition.

DUKASCOPY BANK SA ANNUAL REPORT 2022

85

KEY METRICS DISCLOSURES FOR THE CONSOLIDATEDFINANCIAL STATEMENTS
as at 31 December 2022

IRRBBA1: Interest-rate risk - quantitative information on the structure of positions
and maturity repricing as of 31 December 2022
Average interest rate
reset period (in years)

Volume(in CHF millions)
Positions with an defined interest rate reset date

Totalof which of which other signiCHF
ficant currencies*

Totalof which
CHF

43

31

12

4.47

6.22

Amounts due from banks

89

5

72

0.04

0.04

Amounts due from customers

2

1

1

0.62

0.62

(124)

(15)

(104)

0.04

0.04

Other liabilities

(7)

0

(7)

0.04

0.04

Total

3

22

(26)

–

–

Financial investments
Positions with an undefined interest rate reset date

Sight liabilities in personal and current accounts*Significant currencies are those that make up more than 10% of assets or liabilities of total assets (ie USD and EUR).

DUKASCOPY BANK SA ANNUAL REPORT 2022

86

KEY METRICS DISCLOSURES FOR THE CONSOLIDATEDFINANCIAL STATEMENTS
as at 31 December 2022

IRRBB1: Information on the economic value of equity and net interest income

Period (CHF millions)

Δ EVE

Δ NII

(change in the net present value)(change in the discounted earning value)

31.12.2022

31.12.2021

31.12.2022

31.12.2021

Parallel upward shift

(2.0)

(3.3)

0

0

Parallel downward shift

2.0

3.7

0

0

Steepener shock

(0.8)

(1.1)

–

–

Flattener shock

0.4

0.5

–

–

Upward short-term interest rate shock

(0.5)

(0.8)

–

–

Downward short-term interest rate shock

0.5

0.8

–

–

Maximum

2.0

3.7

0

0

Total eligible capital

51.3

49.5

–

–

The Group is required to disclose the measured change in economic value of equity (EVE) and changes in net interest
income (NII) under the standard interest rate scenarios prescribed by FINMA. The change in net interest income (pre-tax)
is disclosed as the difference in future interest income over a rolling 12-month period.
The Group's business activities hardly expose it to the interest rate risk because it basically has no interest based
business: the Group neither charges or pay interests to its clients. Nevertheless, it can review that policy at any time if
consider it necessary. Therefore, repricing maturities for all due to customers match with repricing maturities of interest
rates sensitive assets. Since the Bank does not place deposits on term with banks and do not issue loans to customers, alldue from banks have 1 month and due from customers have 9 month repricing maturities.
The Group could be exposed to the interest rate risk by offrering CFD trading on debt instruments. In such case, theGroup's exposure to the interest rate risk would much fluctuate depending on the clients trading positions. Therefore,
the Group fully hedges this trading flow. The main source of interest rate risk of the Group in the bonds it hold as collateral
for trading counterparties. However, since these bonds are aimed to be held until maturity, the risk is not expected tomaterialize into losses.

DUKASCOPY BANK SA ANNUAL REPORT 2022

87

CONTACTS
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