Marfin Popular: Synopsis of group results 2006
6/3/2007 10:15
Note: The Consolidated Income Statement for the year ended 31 December 2006 includes only the profit of Laiki Group, since the merger of the three Groups (Laiki, Marfin and Egnatia) took place on 22 December 2006. On the other hand, the Consolidated Balance Sheet at 31 December 2006 shows the three Groups on a consolidated basis. Therefore, the comments below relate to the results of Laiki Group only, and it is not advisable to relate them to the information in the Group Consolidated Balance Sheet which are on a consolidated basis.
In 2006 Laiki Group more than doubled its profits compared to 2005. The profit attributable to shareholders increased by 101,3% and amounted to C£86,1 million, compared with C£42,8 million in 2005.
Operating income increased by 22.4% compared to 2005 and amounted to C£315,2 million. All the operating income components show particularly satisfactory increases. Net interest income, which constitutes the biggest part of operating income, increased by 21,3%. The net interest margin remained at high levels due to the improved performance of foreign currency liquid funds, the positive results of the efforts to improve the quality of the advances portfolio and the increase in collections from loans in arrears, despite the introduction from 1 January 2006 by the Central Bank of Cyprus of stricter regulations regarding suspension of recognition of income from advances in arrears from six months to three months.
Group operating expenses demonstrated a contained increase of 8,1% compared to 2005, despite the addition of the expenses of the new Bank in Serbia, which was acquired at the start of 2006. The contained increase in expenses reflects the success of the Group’s efforts to control operating costs and increase productivity. The small increase in operating expenses, combined with the particularly satisfactory increase in operating income resulted in an improvement in the cost to income ratio from 58,8% in 2005 to 51,9% in 2006.
Group provisions for impairment of advances remained relatively stable compared with 2005, despite the dynamic growth in the advances portfolio and the introduction of the new stricter rules by the Central Bank of Cyprus.
The significantly increased profitability achieved by the Group in 2006 is the result of improved operating performance, combined with the maintenance of provisions at stable levels.
BALANCE SHEET GROWTH
The consolidation of the three Groups on 22 December 2006 created a powerful regional financial Group with 312 branches and a presence in 12 countries, an expanded size and customer base with total assets of approximately C£13,1 billion (€22,6 billion) and considerably improved capital adequacy with total equity of C£1,8 billion (€3,1 billion) and significant improvement in non-performing loan (NPL) ratios. The NPL ratio has improved from 10,1% at 31 December 2005 to 6,6% at 31 December, 2006 and the Coverage Ratio has improved from 64,2% to 67,1% respectively.
GOALS AND PROSPECTS
The merger of the three Groups has progressed considerably and it is expected that it will be completed by 30 June 2007 at the latest, according to plan. The activities of the new Group will lead to considerable synergies, limiting costs and increasing revenues. The Group dynamics are developing along three axes: growth of assets and revenues, cost control and improvement in the quality of advances. These trends are apparent in all the geographical areas in which the new Group operates, significantly increasing the likelihood of improving profitability in the future.
In 2006 Laiki Group more than doubled its profits compared to 2005. The profit attributable to shareholders increased by 101,3% and amounted to C£86,1 million, compared with C£42,8 million in 2005.
Operating income increased by 22.4% compared to 2005 and amounted to C£315,2 million. All the operating income components show particularly satisfactory increases. Net interest income, which constitutes the biggest part of operating income, increased by 21,3%. The net interest margin remained at high levels due to the improved performance of foreign currency liquid funds, the positive results of the efforts to improve the quality of the advances portfolio and the increase in collections from loans in arrears, despite the introduction from 1 January 2006 by the Central Bank of Cyprus of stricter regulations regarding suspension of recognition of income from advances in arrears from six months to three months.
Group operating expenses demonstrated a contained increase of 8,1% compared to 2005, despite the addition of the expenses of the new Bank in Serbia, which was acquired at the start of 2006. The contained increase in expenses reflects the success of the Group’s efforts to control operating costs and increase productivity. The small increase in operating expenses, combined with the particularly satisfactory increase in operating income resulted in an improvement in the cost to income ratio from 58,8% in 2005 to 51,9% in 2006.
Group provisions for impairment of advances remained relatively stable compared with 2005, despite the dynamic growth in the advances portfolio and the introduction of the new stricter rules by the Central Bank of Cyprus.
The significantly increased profitability achieved by the Group in 2006 is the result of improved operating performance, combined with the maintenance of provisions at stable levels.
BALANCE SHEET GROWTH
The consolidation of the three Groups on 22 December 2006 created a powerful regional financial Group with 312 branches and a presence in 12 countries, an expanded size and customer base with total assets of approximately C£13,1 billion (€22,6 billion) and considerably improved capital adequacy with total equity of C£1,8 billion (€3,1 billion) and significant improvement in non-performing loan (NPL) ratios. The NPL ratio has improved from 10,1% at 31 December 2005 to 6,6% at 31 December, 2006 and the Coverage Ratio has improved from 64,2% to 67,1% respectively.
GOALS AND PROSPECTS
The merger of the three Groups has progressed considerably and it is expected that it will be completed by 30 June 2007 at the latest, according to plan. The activities of the new Group will lead to considerable synergies, limiting costs and increasing revenues. The Group dynamics are developing along three axes: growth of assets and revenues, cost control and improvement in the quality of advances. These trends are apparent in all the geographical areas in which the new Group operates, significantly increasing the likelihood of improving profitability in the future.
