Friday, 30 July 2010 - 18:31
Emporiki Bank Posts H1 Net Loss of EUR535.3 Mil.
Emporiki Bank Friday said that in the first half of 2010, Group Net Losses amounted to EUR535.3 million burdened by additional high provisions and increased one-off costs related to the Bank’s accelerated transformation. In the second quarter, Group losses amounted to EUR325.9 million.
Group Net Banking Income increased by 7.4% y-o-y to EUR368.4 million while Gross Operating Income jumped up by 71% y-o-y to EUR40 million.
The increase in Group Net Banking Income came largely from a significant 30.4% y-o-y rise in Net Interest Income reaching EUR315.2 million, mainly due to increased margins, with Group Net Interest Margin at 2.26%. Quarter on quarter Group Net Banking Income came 4.8% lower, despite a 3.4% increase in Core operating income (NII and Fees & Commissions), burdened by EUR13.3 million negative variation of mark-to-market valuation of the trading portfolios, mainly constituted by Greek State Securities, following the downgrade of Greek economy ratings.
In the first half of 2010, Group operating expenses growth rate was restrained to 2.7% in relation to the previous year to EUR328.4 million as a result of cost control measures, within the framework of the Restructuring & Development Plan, and a significant 12.0% decrease in staff expenses. Excluding transformation costs, the reduction in operating expenses amounts to 9.1% y-o-y. The respective cost-to-income ratio for the first half is 76.0%, further down from 89.7% in the same period last year. The cost control measures taken include the complete procurement reengineering and the implementation of new policies on travels, energy, printing and telecoms, as well as lease reductions through renegotiation of leases.
Ôhe Cost of Risk in the first half of 2010 increased by 57.5% y-o-y to EUR567 million, up by EUR68 million q-o-q. In Q2 2010, Emporiki, closely monitoring the economic environment, booked EUR317.6 million of provisions, further increasing the provisions related to its old loan portfolio. However, thanks to enhanced cost control measures and sustained restructuring initiatives, Emporiki continued to demonstrate a healthy new loans’ portfolio, with cost of risk demands remaining close to zero, in the second quarter of 2010 following the trend that started in the first quarter of 2010.
On the liabilities side, the increasing trend towards core deposits (saving & sight) continued and represented approximately 59.5% of deposit portfolio from 58% in the first quarter of 2010, as the Bank remained firm on its decision to refrain from intense competition over time deposits. Within the framework of this decision, Emporiki can balance its balance sheet without excessive cost, as it is not constrained to overpay deposits. Overall bank deposit volumes declined by 13.7% year-to-date or by 5% q-o-q to EUR12.9 billion, in a market with strongly downward trend for the whole banking system.
Group Fees & Commissions showed a 5.0 % y-o-y contraction to EUR59 million due to lower activity and compliance of the Bank with the new regulations regarding reduction of the range of this type of income, mitigated though by the positive impact of new commission generating products launched in Q1 10.
Other Income in the second quarter of 2010 stood at EUR3 million significantly increased versus the previous quarter. However, it is unfavourably compared to the same period last year due to one-off capital gains of EUR27.1 million last year due to the recent State regulation and the Bank’s financial debt restructuring actions.
Due to the persistent adverse economic conditions in Greece, Emporiki Bank states that the estimates and forecasts included in its Restructuring and Development Plan, as was announced to the investment public on 7/10/2009 and have been incorporated in the Prospectus of the Share Capital Increase of Emporiki Bank (dated on 17/02/2010), have been aligned with and are now based on the stress scenario presented on 22 June 2010, which reconfirms return to profitability in 2012.
Mr. Alain Strub, Vice-Chairman of the Board and CEO of Emporiki Bank, made the following statement:
“In the second quarter of 2010 Emporiki further improved its operating performance, as a result of an effective commercial policy and the successful cost control measures that have been implemented. The well-defined credit approval processes we now have in place, allowed us to ensure the lowest possible cost of risk on our new loans’ production, which was kept at close to zero levels for yet another quarter.
Emporiki remains committed to supporting the Greek households, professionals and businesses through financing within an adverse economic environment. Moreover we continue to invest to the bank’s recovery and long-term growth, including employee training and new recruitments. As a member of Credit Agricole, the largest banking group in France, Emporiki continues to provide liquidity, security, value added products, upgraded services and responsible banking, in the difficult economic environment where it operates”.