- Increase in Net Profit by 28.1% - ROE at 17.4%
- Loan growth of 19.1%, despite write offs of ?461m
- Household lending expands above market rate (+27.4%)
- Customer Deposits growth of 14.1%, while deposit cost remains low at 2.04%
- Loans to Deposits ratio is at comfortable levels (86.1%) ? adequate liquidity
- Total Operating Expenses grow at relatively low levels (+6.6%)
- NPLs continuously decline (7.1% vs 10.8% in 2006)
- Dividend of 0.05 euro per share (in addition to the interim dividend of 0.05 euro per share given in Dec 2006)
During 2007 ATEbank increased its consolidated profits, after tax and minority interest, by 28.1% reaching the level of 241.4 million euro versus 188.4 million euro in 2006.
Net interest income reached 614.9 million euro, a 2.3% increase. The performance of NII was mainly affected by the following factors:
- the significant increase of interest expenses as a result of the shift of depositors to higher interest time deposits,
- the pressure in loan spreads due to competition,
- the negative but temporary effect of initial teaser rates in large part of the new loans
- the lower, compared to 2006, average balances of funds placed in the interbank market, and
- the lower, compared to 2006, interest income from recoveries of loans in arrears.
As a result of the above, the Net Interest Margin (net interest income over average interest earning assets) decreased from 3.37% in 31 December 2006 to 3.24% in 31 December 2007. ATEbank is following closely the development of NII and expects that the shift in the loan mix towards higher interest segments (such as consumer credit and SMEs) will foster growth in interest income and will more than absorb the negative effect of deposit mix shift.
Net fee and commission income increased by 4.9% compared to 2006 reaching the level of 84.5 million euro, negatively affected by the lower commissions from mutual funds and higher contributions to the deposits guarantee fund, linked to the growth of deposits. Other non-interest income, showed a significant increase of 27.2% at 251.3 million euro, mainly due to the capital gains from the sale of available for sale shares (83,6 million euro, +78%) and the impressive performance of net trading income (at 45.5 million euro, +180%).
Total Operating expenses reached 568.0 million euro, an increase of 6.6% compared to 2006. It must be noted that operating expenses were affected by a one-off amount of 3 m euro which represents ATEbank's donation to the victims of the wildfires in Greece. The Group cost income ratio was reduced, to 59.8% compared to 60.7% in December 2006.
Total Impairment losses amounted to 79.9 million euro in 2007, of which 78.1 million euro were for impairment losses on loans and 1.8 million euro for impairment losses on assets, compared to total impairment loses of 62.7 million euro in 2006.
Total loans before provisions at the end of 2007 reached 17.8 billion euro, an increase of 19.1% compared to end of 2006. It should also be noted that if adjusted for the 461 million euro loan write-offs during 2007, the underlying expansion of the loan book would be 22.2%. Total Loans after provisions were up 23.9% year on year.
Household loan portfolio has continued its impressive growth reaching as of 31 December 2007 6.2 billion euro compared to 4.8 billion euro as of 31 December 2006, an increase of 27.4%, higher than the corresponding market growth. The mortgage loan portfolio reached 5.1 billion euro, a growth of 26.0%, the increase of the consumer loan portfolio accelerated further, to 46.0%, reaching 764.0 million euro, while credit card lending increased well above market rates by 13.1%, reaching 308 m euro, despite write-offs of 25 m. euro.
The continuous increase of the household segment's market share indicates the ability of ATEbank to become a major player in areas which until a few years ago it had very small presence. In this respect, the efforts to penetrate the SMEs are showing positive signs (growth adjusted for write-offs is 12.1%) and the following years this segment along with household credit will be the main focus of growth.
The 461 million euro of total write-offs during 2007 have helped significantly the improvement of the quality of the Group's loan book, with the total NPL ratio dropping from 10.8% on 31 December 2006 to 7.1% on 31 December 2007. At the same time, despite these write-offs, the provisioning coverage ratio stands at the satisfactory level of 81.1%.
Customer deposits increased by 14.1% y-o-y at 20.6 billion euro, resulting in a loans to deposits ratio of 86.1%. Such a ratio together with the comparatively low cost of deposits (2.04%) is in the current difficult market environment a significant advantage that enables the bank to foster lending growth at low cost.
Based on the net profit for 2007, the Return on average Assets stood at 1.07%, while the Return on average Equity was 17.4%.
ATEbank sustains a robust capital adequacy. At the end of December 2007, having applied the new directives by the Bank of Greece the estimated Tier I Ratio stood at 9.3%.
For 2008-10 ATEbank will focus on:
- the increase of its market share in higher margin segments
- the steady improvement of asset quality
- the gradual but continuous disengagement from non-financial/non-core participations
- the increased contribution of the overseas participations (42% of the non-bank profits)
- the growth in asset management and fee income
- the improved productivity through better IT systems (including the new state-of-the art IT center)
As a result of the 2007 results, the Board of Directors has decided to propose to the Annual Shareholders Meeting the distribution of a dividend of 0.05 euro per share, which in addition to the interim dividend of 0.05 euro per share given in December 2007 is 11% higher than the dividend distributed in 2006.