Τ BANK Α.Τ.Ε.
EARNINGS FOR 9M 2008
PRESS RELEASE 27/11/2008
Aspis Bank Group, despite the adverse market conditions, has began implementing its new strategy, emphasizing the strengthening of the Bank in the current environment and achieving growth through the expansion of Retail Banking (SMEs and Individuals) with a concurrent reduction in operating costs. This strategy is expected to lead to a significant turnaround and a return to steadily increasing profitability from 2009.
The restructuring plan, upon which the new strategy is based, is founded on the following main pillars:
1.New business model and organizational structure emphasizing the significant expansion into Retail Banking (Individuals and SMEs).
2.Strengthening the Bank's liquidity with parallel reduction of the cost of funds by use of alternative sources of funding (apart from customer deposits) such as asset securitizations and full use of the refinancing programme of the Ministry of Economy and Finance available for Banks.
3.Significant upgrade of the Bank's infrastructure and centralization of credit procedures; measures that will ensure the already sufficient quality of the Bank?s loan portfolio.
4.Rationalization and reduction of operating expenses through intervention in critical sectors of the Aspis Bank Group.
Furthermore, the scheduled capital increase of euro 210 million within H1 2009 will support the Bank's growth and capital adequacy.
The results of the restructuring plan that the new management has begun implementing have become evident on Aspis Bank Group financial figures despite the short period since its launch. Despite the adverse economic climate, assets and liabilities increased on a year-over-year basis as well as on a year-to-date basis. The total capital adequacy ratio was maintained at high levels (estimated to 12.5% on a consolidated basis). More specific, total assets increased by 13% to euro3 billion driven mainly by core banking business growth, particularly loan growth. Loans and advances to customers net of impairment increased by 6% yoy to euro2.2 billion. The emphasis that has been laid on Retail Banking and is evident in the growth of consumer credit and loans to SMEs by 30% and 6% yoy respectively. Customer deposits increased by 19% yoy to euro2.4 billion, with the loan-to-deposit ratio reaching 97%, a satisfactory percentage considering the current market conditions.
In 9M 2008, Aspis Bank Group reported a loss after tax and minority interests of euro27.2 million. The negative result was mainly affected by the suppression of the net interest margin, the increase in operating expenses, which increased significantly in Q2 2008 and continue to negatively affect results, by the cost of restructuring and by the readjustment of the provisioning policies in line with the new market conditions. Provisions for 9M 2008 reached euro13.1 million against euro2.4 million in 9M 2007.
The suppression of net interest margin is driven by the significant increase in time deposit interest rates and by the fact that Aspis Bank has not fully transferred the increased interest cost to loan interest rates. However, Aspis Bank recently readjusted its pricing policy in response to the market trends, the results of which have not become evident yet. At present, the increase in interest income is below the increase in interest expense (16% yoy versus 42% respectively), causing the net interest income to narrow to euro33 million versus ?41 million in 9M 2007.
Negative returns in capital markets and depressed stock markets have negatively affected results from financial transactions, as well as commission income. Consequently, net commission income decreased to ?18 million versus euro21 million in 9M 2007 while the loss from financial transactions amounted to euro1.4 million.
Total operating expenses increased to euro80 million versus euro55 million in 9M 2007. Specifically, personnel expenses increased to euro44 million versus euro26 million in 9M 2007 due to compensations paid to staff that left of euro9.5 million. Administrative expenses increased to euro27 million versus euro22 million in 9M 2007 due to the increase of promotion and advertising cost, of the cost of upgrade of the Bank's information systems and the cost of the expansion of Aspis Bank in Bulgaria- a plan that has now been cancelled-. Depreciation increased to euro9 million versus euro7 million in 9M 2007 due to the increased cost of the Bank's new core banking IT system - Finacle.
Aspis Bank Group, despite the adverse market conditions, has began implementing its new strategy, emphasizing the strengthening of the Bank in the current environment and achieving growth through the expansion of Retail Banking (SMEs and Individuals) with a concurrent reduction in operating costs. This strategy is expected to lead to a significant turnaround and a return to steadily increasing profitability from 2009.
The restructuring plan, upon which the new strategy is based, is founded on the following main pillars:
1.New business model and organizational structure emphasizing the significant expansion into Retail Banking (Individuals and SMEs).
2.Strengthening the Bank's liquidity with parallel reduction of the cost of funds by use of alternative sources of funding (apart from customer deposits) such as asset securitizations and full use of the refinancing programme of the Ministry of Economy and Finance available for Banks.
3.Significant upgrade of the Bank's infrastructure and centralization of credit procedures; measures that will ensure the already sufficient quality of the Bank?s loan portfolio.
4.Rationalization and reduction of operating expenses through intervention in critical sectors of the Aspis Bank Group.
Furthermore, the scheduled capital increase of euro 210 million within H1 2009 will support the Bank's growth and capital adequacy.
The results of the restructuring plan that the new management has begun implementing have become evident on Aspis Bank Group financial figures despite the short period since its launch. Despite the adverse economic climate, assets and liabilities increased on a year-over-year basis as well as on a year-to-date basis. The total capital adequacy ratio was maintained at high levels (estimated to 12.5% on a consolidated basis). More specific, total assets increased by 13% to euro3 billion driven mainly by core banking business growth, particularly loan growth. Loans and advances to customers net of impairment increased by 6% yoy to euro2.2 billion. The emphasis that has been laid on Retail Banking and is evident in the growth of consumer credit and loans to SMEs by 30% and 6% yoy respectively. Customer deposits increased by 19% yoy to euro2.4 billion, with the loan-to-deposit ratio reaching 97%, a satisfactory percentage considering the current market conditions.
In 9M 2008, Aspis Bank Group reported a loss after tax and minority interests of euro27.2 million. The negative result was mainly affected by the suppression of the net interest margin, the increase in operating expenses, which increased significantly in Q2 2008 and continue to negatively affect results, by the cost of restructuring and by the readjustment of the provisioning policies in line with the new market conditions. Provisions for 9M 2008 reached euro13.1 million against euro2.4 million in 9M 2007.
The suppression of net interest margin is driven by the significant increase in time deposit interest rates and by the fact that Aspis Bank has not fully transferred the increased interest cost to loan interest rates. However, Aspis Bank recently readjusted its pricing policy in response to the market trends, the results of which have not become evident yet. At present, the increase in interest income is below the increase in interest expense (16% yoy versus 42% respectively), causing the net interest income to narrow to euro33 million versus ?41 million in 9M 2007.
Negative returns in capital markets and depressed stock markets have negatively affected results from financial transactions, as well as commission income. Consequently, net commission income decreased to ?18 million versus euro21 million in 9M 2007 while the loss from financial transactions amounted to euro1.4 million.
Total operating expenses increased to euro80 million versus euro55 million in 9M 2007. Specifically, personnel expenses increased to euro44 million versus euro26 million in 9M 2007 due to compensations paid to staff that left of euro9.5 million. Administrative expenses increased to euro27 million versus euro22 million in 9M 2007 due to the increase of promotion and advertising cost, of the cost of upgrade of the Bank's information systems and the cost of the expansion of Aspis Bank in Bulgaria- a plan that has now been cancelled-. Depreciation increased to euro9 million versus euro7 million in 9M 2007 due to the increased cost of the Bank's new core banking IT system - Finacle.