- Impressive Net Profits Growth by 56.3% (32.3% on a recurrent basis)
- Net Customer Loans growth by 20.4% - Household Lending continues to expand at remarkable rates (+30.4% - well ahead of the market)
- Customer Deposits increase by 10.9%, with deposit cost at only 1.64%
- Net Interest Margin remains at very satisfactory levels (3.37%)
- Cost to Income below 60% for the first time since IFRS (at 55.6%)
- NPLs continue to decrease (at 10.3% in Q1 07 vs 15.0% in Q1 06)
- Significant improvement of ROE and ROA (at 22.0% and 1.35%)
ATEbank has continued its significant growth in profitability in the first 3-months of 2007 compared to the respective period of 2006, as consolidated profits after tax and minority interest increased by 56.3% reaching the level of euro 74.6 million versus euro 47.7 million in the corresponding period of the previous year. On a recurrent basis, if adjusted for the euro 11.4 million capital gains from the sale of shares in the available for sale portfolio, profits after tax and minority interest increased by 32.3%.
Net interest income reached euro 157.9 million, a 12.7% increase compared to the corresponding period in 2006, with an impressive growth in loans interest income of 21.2%. The Net Interest Margin (net interest income over average interest earning assets) stood at the very satisfying level of 3.37%, showing a significant improvement compared to 31 March 2006 when it stood at 3.09%. This development is the result of: a) the loan mix shift towards products with higher spreads, b) the greater - in absolute terms - increase of the loans compared to the deposits and c) the favorable deposit versus loan spread of ATEbank.
Net fee and commission income increased by 10.4% compared to the corresponding period in 2006 reaching the level of euro 20.0 million. Other non-interest and non fee income, showed an increase of 63.3% at euro 62.5 million, positively affected by the capital gains from the sale of available for sale shares (euro 11.4 million) and the impressive performance of net trading income (+170.7% at euro 20.5 million).
Operating expenses reached euro 133.6 million, an increase of 9.6% compared to 31 March 2006. This increase is mainly due to the high Q1 07 personnel expenses of the Bank that include two consecutive salary increases, as the 2006 collective salary agreement was finalized with significant delay in December 2006 and as a result the Q1 06 personnel expenses did not include any salary increases. Α large part of this seasonal percentage increase will be absorbed by the end of 2007 and total cost is not expected to exceed the target set in the business plan (c. 4-5% growth). Furthermore, it must be noted that Q1 07 operating expenses include the consolidation of Mindbank Romania which was not included in the Q1 06 results. Despite the above, the Group Cost to Income ratio was reduced significantly to the level of 55.6%. This is the first time since the implementation of the IFRS that ATEbank achieves a cost/income ratio below 60%.
Impairment losses on loans were euro 15.0 million in the first three months of 2007, compared to euro 15.1 million in the corresponding period in 2006, signifying the continuous improvement in loan quality.
Total loans before provisions at the end of the first quarter of 2007 reached euro 15.4 billion, an increase of 15.1% compared to the end of the first quarter of 2006. It should also be noted that if adjusted for the euro 419 million loan write-offs during the period April 2006 to March 2007, the underlying expansion of the loan book would be 18.2%. Net customer loans at the end of March 2007 reached euro 14.1 billion, an increase of 20.4% compared to end of March 2006.
Household loan portfolio has continued its impressive growth reaching as of 31 March 2007 euro 5.1 billion compared to euro 3.9 billion as of 31 March 2006, an increase of 30.4%, significantly higher than the market growth. Average mortgage lending disbursements continued to grow at high rates, euro 120m per month, above the estimated FY 07 target of around euro 105m per month.
Similarly, in consumer credit, the new products which have been introduced have led the average consumer lending new disbursements in the first three months of 2007 to increase by 62% compared to the corresponding period last year. As a result, the mortgage portfolio has reached the level of euro 4.2 billion, up by 32,4% compared to 31 March 2006, while consumer loans have increased by 36,9% reaching the level of euro 559 million.
The continuous increase of the household segment as a percentage of the total loan portfolio (33% in Q107 compared to 29% in Q106) proves the determination and ability of ATEbank to expand its activities in the retail market. The aim is to keep on at the same pace in order to gain further market share in sectors which can produce relatively higher returns both through interest as well as fees and commissions income. The efforts to penetrate the SMEs sector, although are not still impressive in outstanding volumes, as they are affected by significant write-offs of part of the legacy portfolio, are showing positive signs and the management will continue its efforts to grow further this segment.
Total NPL ratio dropped from 15.0% in 31 March 2006 to 10.3% in 31 March 2006, while the provisioning coverage ratio, despite the euro 419 million of write-offs, stands at the satisfactory level of 85.9%.
Customer deposits increased by 10.9% at euro 19.4 billion, resulting in a loans to deposits ratio of 79.6%. Such a ratio together with the comparatively low cost of funding (1.64%) constitute significant advantages, which the bank will continue to utilize in order to foster growth and gain market share.
Based on the reported net profit for the first quarter of 2007, the Return on average Assets stood at 1.35% compared to 0.92% in Q1 2006, while the Return on average Equity increased substantially to 22.0% from 15.5%. If capital gains from the available for sale portfolio are excluded, ROA stood at 1.14% while ROE at 18.7%.
ATEbank sustains a robust capital adequacy. At the end of March 2007, the estimated Tier I Ratio stood at 11.1%.
The turnaround of almost all of the companies in the ATEbank Group into profitability and the sustainability of the Bank''s profits are the result of an intensive effort that is being made throughout the Group at an operational and organizational level.
The positive results of the first quarter of 2007 are proving that ATEbank is in the right track to deliver the targets set in its 2007-9 Business Plan.
ATEbank''s management is constantly examining ways to increase lending, improve customer service, raise employees'' incentives and enhance shareholders'' returns.