REG - Alpha Bank A.E. - Annual Financial Report <Origin Href="QuoteRef">ACBr.AT</Origin> - Part 4
31/03/2017 07:07
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financial statements
Consolidated Statement of Cash Flows
(Amounts in thousands of Euro)
From 1 January to
Note 31.12.2016 31.12.2015*
Cash flows from continuing operating activities
Profit / (loss) before income tax (9,678) (2,043,466)
Adjustments for gain/(losses) before income tax for:
Depreciation/impairment/write-offs of fixed assets 101,855 92,139
Amortization/impairment/write-offs of intangible assets 51,578 45,714
Impairment losses from loans, provisions and staff leaving indemnity 1,237,992 3,117,055
(Gains)/losses from investing activities (109,792) 75,696
(Gains)/losses from financing activities 50,015 31,714
Share of (profit)/loss of associates and joint ventures 3,342 9,821
Other adjustments 9,529
1,325,312 1,338,202
Net (increase)/decrease in assets relating to continuing operating activities:
Due from banks (135,041) 1,059,452
Trading securities and derivative financial assets 156,769 356,871
Loans and advances to customers 480,508 (223,026)
Other assets 82,573 (54,510)
Net increase/(decrease) in liabilities relating to continuing operating activities:
Due to banks (6,004,782) 7,842,354
Derivative financial liabilities (269,485) (345,729)
Due to customers 1,901,458 (11,008,914)
Other liabilities (28,180) (230,316)
Net cash flows from continuing operating activities before taxes (2,490,868) (1,265,616)
Income taxes and other taxes paid (17,391) (40,794)
Net cash flows from continuing operating activities (2,508,259) (1,306,410)
Net cash flows from discontinued operating activities 2,697 (869)
Cash flows from continuing investing activities
Investments in associates and joint ventures (18,655) (12,310)
Acquisitions during the year 9,151
Amounts received from disposal of subsidiaries 76,016 15,392
Dividends received 3,178 3,308
Acquisitions of fixed and intangible assets 20, 21, 22 (186,048) (105,553)
Disposals of fixed and intangible assets 36,537 14,270
Net (increase)/decrease in investement securities 2,093,587 7,469
Net cash flows from continuing investing activities 2,004,615 (68,273)
Net cash flows from discontinued investing activities (24,477) 33,252
Cash flows from continuing financing activities
Receipts of debt securities in issue and other borrowed funds 204,640
Repayments of debt securities in issue and other borrowed funds (9,640)
(Purchases)/sales of hybrid securities (15) (1,730)
Share capital increase 32 1,552,169
Share capital increase expenses (970) (61,276)
Net cash flows from continuing financing activities 203,655 1,479,523
Effect of exchange rate differences on cash and cash equivalents (31,476) (3,334)
Net increase/(decrease) in cash flows from continuing activities (331,465) 101,506
Net increase/(decrease) in cash flows from discontinued activities (21,780) 32,383
Cash and cash equivalents at the beginning of the year 13 1,328,133 1,194,244
Cash and cash equivalents at the end of the year 13 974,888 1,328,133
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* The figures for the comparative year for the Consolidated Statement of Cash Flows have been restated due to the
presentation of Álpha Bank Srbija A.D. as discontinued operations (note 49).
The attached notes (pages 47-190) form an integral part of these consolidated financial statements
Notes to the Financial Statements
GENERAL INFORMATION
The Alpha Bank Group, which includes companies in Greece and abroad, offers the following services: corporate and retail
banking, financial services, investment banking and brokerage services, real estate management, hotel services.
The Bank operates under the brand name of Alpha Bank A.E. using the sign of Alpha Bank. The Bank's registered office is 40
Stadiou Street, Athens and is listed in the General Commercial Register with registration number 223701000 (ex societe
anonyme registration number 6066/06/B/86/05).The Bank's duration is until 2100 but may be extended by the General Meeting
of Shareholders.
In accordance with article 4 of the Articles of Incorporation, the Bank's objective is to engage, on its own account or on
behalf of third parties, in Greece and abroad, independently or collectively, including joint ventures with third parties,
in any and all (main and secondary) operations, activities, transactions and services allowed to credit institutions, in
conformity with whatever rules and regulations (domestic, community, foreign) may be in force each time. In order to serve
this objective, the Bank may perform any kind of action, operation or transaction which, directly or indirectly, is
pertinent, complementary or auxiliary to the purposes mentioned above.
The tenure of the Board of Directors which was elected by the Ordinary General Meeting of Shareholders on 27.6.2014 expires
in 2018.
The Board of Directors as at December 31, 2016, consists of:
CHAIRMAN (Non Executive Member)
Vasileios Th.Rapanos
VICE CHAIRMAN
(Non Executive Independent Member)
Evangelos J.Kaloussis */***
EXECUTIVE MEMBERS
MANAGING DIRECTOR
Demetrios P.Mantzounis
EXECUTIVE DIRECTORS AND GENERAL MANAGERS
Spyros N.Filaretos (COO)
Artemiïs Ch.Theodoridis
George C.Aronis
NON-EXECUTIVE MEMBERS
Efthimios O.Vidalis **/****
NON-EXECUTIVE INDEPENDENT MEMBERS
Ibrahim S.Dabdoub **/****
Richard R.Gildea **/***
Shahzad A.Shahbaz ***/****
Jan Oscar A.Vanhevel */***
NON-EXECUTIVE MEMBER
(in accordance with the requirements of Law 3723/2008)
Marica S.Ioannou - Frangakis
NON-EXECUTIVE MEMBER
(in accordance with the requirements of Law 3864/2010)
Panagiota S.Iplixian */**/***/****
SECRETARY
Georgios P. Triantafyllidis
At the meeting held on 26.1.2017, the Board of Directors of Alpha Bank elected Mrs. Carolyn Adele G.Dittmeier, as
non-Executive Independent Member in replacement of Mr. Pavlos A.Apostolidis who resigned on 15.12.2016. On 23.2.2017 the
Board of Directors of Alpha Bank elected, according to Law 3864/2010, as suggested by the Financial Stability Fund (HFSF),
Mr. Spyridon - Stavros A.Mavrogalos - Fotis, as Non-Executive Member in replacement of Mrs. Panagiota S.Iplixian who
resigned.
-------------------------------
* Member of the Audit Committee
** Member of the Remuneration Committee
*** Member of the Risk Management Committee
**** Member of Corporate Governance and Nominations Committee
The Ordinary General Meeting of Shareholders of 30.6.2016 appointed for the fiscal year of 2016, KPMG Certified Auditors AE
as certified auditors of the Bank by the following persons:
a. Principal Auditors: Nikolaos E. Vouniseas
John Á. Áchilas
b. Substitute Auditors: Michael A. Kokkinos
Anastasios E. Panayides
The Bank's shares are listed in the Athens Stock Exchange since 1925 and are ranked among the companies with the higher
market capitalization. Additionally, the Bank's share is included in a series of international indices, such as MSCI
Emerging Markets Index, the FTSE All World, FTSE Med100 and the FTSE4Good Emerging Index (from December 2016).
Apart from Greek Stock Exchange, the shares of the Bank are listed on the London Stock Exchange in the form of
international certificates (GDRs) and they are traded over the counter in New York (ADRs).
The total number of ordinary shares amounted to 1,536,881,200 as at 31 December 2016. 1,367,706,054 ordinary shares of the
Bank are traded in the Athens Stock Exchange while the Hellenic Financial Stability Fund ("HFSF") possesses the remaining
169,175,146 ordinary, registered, voting, paperless shares or percentage equal to 11.01% on the total of ordinary shares
issued by the Bank. The exercise of the voting rights for the shares of HFSF is subject to restrictions according to the
article 7a of Law 3864/2010.
In addition, on the Athens Stock Exchange there are 1,141,734,167 warrants that are traded each one incorporating the right
of the holder to purchase 0.148173663047785 new shares owned by the HFSF.
During the year 2016, the average daily volume per session for shares was E 14,802,962 and for warrants E 4,325.
The credit rating of the Bank assessment by three international credit rating agencies is as follows:
• Moody's: Caa3
• Fitch Ratings: RD
• Standard & Poor's: CCC+
According to Law 4374/1.4.2016, the obligation to publish quarterly financial statements for the first and third quarter of
the financial year, pursuant to the provision of Article 6 of Law 3556/30.4.2007 before its amendment, was abolished.
However, article 25 of Law 4416/6.9.2016 incorporated article 5b in the Law 3556/30.4.2007, based on which the obligation
to prepare and publish consolidated Financial Statements for the first and third quarter of the financial year remains.
This obligation relates to credit institutions whose securities are traded on a regulated market and are required to
publish Consolidated Financial Statements.
Furthermore, according to No.8/754/14.4.2016 decision of the Hellenic Capital Market Commission relating to "Special Topics
Periodic Reporting according to Law 3556/30.4.2007", the obligation to publish financial Information arising from the
quarterly and half-yearly financial statements, as previously stated by the No.4/507/28.4.2009 decision of the Hellenic
Capital Market Commission Board of Directors, was abolished.
In addition, according to Law 4403/7.7.2016, which amended article 135 of Codified Law 2190/1920 the obligation to publish
the financial information arising from the annual financial statements, was abolished.
The financial statements have been approved by the Board of Directors on 30 March 2017.
ACCOUNTING POLICIES APPLIED
1.1 Basis of presentation
These consolidated financial statements relate to the fiscal year 1.1-31.12.2016 and they have been prepared:
a) in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, in accordance
with Regulation 1606/2002 of the European Parliament and the Council of the European Union on 19 July 2002 and
b) on the historical cost basis. As an exception, some assets and liabilities are measured at fair value. Those assets are
mainly the following:
• Trading securities
• Derivative financial instruments
• Available-for-sale securities
• The convertible bond issued by the Bank which is included in "Debt securities in issue held by institutional investors
and other borrowed funds".
The financial statements are presented in Euro, rounded to the nearest thousand, unless otherwise indicated.
The accounting policies for the preparation of the financial statements have been consistently applied by the Group to the
years 2015 and 2016, after taking into account the following amendments to standards which were issued by the International
Accounting Standards Board (IASB), adopted by the European Union and applied on 1.1.2016:
• Amendment to International Financial Reporting Standard 10 "Consolidated Financial Statements", toInternational
Financial Reporting Standard 12 "Disclosure of Interests in Other Entities" and toInternationalÁccounting Standard 28
"Investments in Associates and Joint Ventures": Investment Entities: Applying the Consolidation Exception (Regulation
2016/1703/22.9.2016)
On 18.12.2014, the International Accounting Standards Board issued an amendment to the above standards with which it
clarified that the exception provided in IFRS 10 and IAS 28, for the preparation of consolidated financial statements and
the application of the equity method respectively, applies also to a parent entity that it is a subsidiary of an investment
entity which measures all of its subsidiaries at fair value according to IFRS 10. In addition, with the aforementioned
amendment it was clarified that the disclosure requirements of IFRS 12 apply to the investment entities which measure all
of their subsidiaries at fair value through profit or loss.
The adoption of the above amendment by the Group had no impact on its financial statements.
• Amendment to International Financial Reporting Standard 11 "Joint Arrangements": Accounting for acquisition of
interests in joint operations (Regulation 2015/2173/24.11.2015)
On 6.5.2014 the International Accounting Standards Board issued an amendment to IFRS 11 with which it is clarified that
when an entity acquires an interest in a joint operation in which the activity of the joint operation constitutes a
business (as defined in IFRS 3), it shall apply all of the principles on business combinations accounting in IFRS 3, and
other IFRSs, that do not conflict with the guidance in IFRS 11. In addition, it shall disclose the information required by
IFRS 3 and other related standards. This applies both when acquiring the initial interest in the joint operation that
constitutes a business and when acquiring an additional interest.
The adoption of the above amendment by the Group had no impact on its financial statements.
• Amendment to International Accounting Standard 1 "Presentation of Financial Statements": Disclosure Initiative
(Regulation 2015/2406/18.12.2015)
On 18.12.2014 the International Accounting Standards Board issued an amendment to IAS 1 in the context of the project it
has undertaken to analyze the possibilities for improving the disclosures in IFRS financial reporting. The main amendments
are summarized below:
• the restriction to disclose only a summary of significant accounting policies is removed;
• it is clarified that even when other standards require specific disclosures as minimum requirements, an entity may not
provide them if this is considered immaterial. In addition, in case the disclosures required by the IFRS are insufficient
to enable users to understand the impact of particular transactions, the entity shall consider whether to provide
additional disclosures;
• it is clarified that the line items that IFRS require to be presented in the balance sheet and the statements of profit
or loss and other comprehensive income are not restrictive and that the entity may present additional line items, headings
and subtotals;
• it is clarified that in the Statement of Comprehensive Income the share of other comprehensive income of associates and
joint ventures accounted for using the equity method shall be separated into:
- amounts that will not be reclassified subsequently to profit or loss and
- amounts that will be reclassified subsequently to profit or loss;
• it is clarified that the standard does not specify the presentation order of the notes and that each entity shall
determine a systematic manner of presentation taking into account the understandability and comparability of its financial
statements.
The adoption of the above amendment by the Group had no impact on its financial statements.
• Amendment to International Accounting Standard 16 "Property, Plant and Equipment" and toInternational Accounting
Standard 38 "Intangible Assets": Clarification of Acceptable Methods of Depreciation and Amortization (Regulation
2015/2231/2.12.2015)
On 12.5.2014 the International Accounting Standards Board issued an amendment to IAS 16 and IAS 38 with which it expressly
prohibits the use of revenue as a basis for the depreciation and amortization method of property, plant and equipment and
intangible assets respectively. An exception is provided only for intangible assets and only when the following conditions
are met:
• when the intangible asset is expressed as a measure of revenue, i.e. when the right over the use of the intangible
asset is expressed as a function of revenue to be generated in such a way that the generation of a specific amount of
revenue determines the end of the right of use, or
• when it can be demonstrated that the revenue and the consumption of the economic benefits are highly correlated.
The adoption of the above amendment by the Group had no impact on its financial statements.
• Amendment to International Accounting Standard 16 "Property, Plant and Equipment" and toInternational Accounting
Standard 41 "Agriculture": Bearer Plants (Regulation 2015/2113/23.11.2015)
On 30.6.2014 the International Accounting Standards Board issued an amendment to IAS 16 and IAS 41 with which it clarified
that bearer plants, which are living plants that:
a) are used in the production or supply of agricultural produce;
b) are expected to bear produce for more than one period; and
c) have remote likelihood of being sold as agricultural produce, except for incidental scrap sales,
shall be accounted for based on IAS 16 instead of IAS 41.
The above amendment does not apply to the activities of the Group.
• Amendment to International Accounting Standard 27 "Separate Financial Statements": Equity Method in Separate Financial
Statements (Regulation 2015/2441/18.12.2015)
On 12.8.2014 the International Accounting Standards Board issued an amendment to IAS 27 with which it provides the option
to use the equity method to account for investments in subsidiaries, joint ventures and associates in an entity's separate
financial statements. In addition, with the above amendment it is clarified that the financial statements of an investor
that does not have investments in subsidiaries but has investments in associates or joint ventures, which under IAS 28 are
accounted for with the equity method, do not constitute separate financial statements.
The above amendment does not apply to the financial statements of the Group.
• Improvements to International Accounting Standards - cycle 2012-2014 (Regulation 2015/2343/15.12.2015)
As part of the annual improvements project, the International Accounting Standards Board issued, on 25.9.2014, non- urgent
but necessary amendments to various standards.
The adoption of the above amendments had no impact on the financial statements of the Group.
Except for the standards mentioned above, the European Union has adopted the following new standards which are effective
for annual periods beginning after 1.1.2016 and have not been early adopted by the Group.
• International Financial Reporting Standard 9 "Financial Instruments" (Regulation 2016/2067/22.11.2016)
Effective for annual periods beginning on or after 1.1.2018
On 24.7.2014, the International Accounting Standards Board completed the issuance of the final text of IFRS 9: Financial
Instruments, which replaces the existing IAS 39. The new standard provides for significant differentiations in the
classification and measurement of financial instruments as well as in hedge accounting. An indication of the new
requirements is presented below:
Classification and measurement
Financial instruments shall be classified, at initial recognition, at either amortized cost or at fair value. The criteria
that should be considered for the initial classification of the financial assets are the following:
i. The entity's business model for managing the financial assets and
ii. The contractual cash flow characteristics of the financial assets.
A financial asset shall be measured at amortized cost if both of the following conditions are met:
• the instrument is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows and
• the contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and
interest (SPPI) on the principal amount outstanding.
If an instrument meets the above criteria but is held with the objective of both selling and collecting contractual cash
flows it shall be classified as measured at fair value through other comprehensive income.
Financial assets that are not included in any of the above two categories are mandatorily measured at fair value though
profit or loss.
In addition, IFRS 9 permits, at initial recognition, equity instruments to be classified at fair value through other
comprehensive income. The option precludes equity instruments held for trading. Moreover, with regards to embedded
derivatives, if the hybrid contact contains a host that is within the scope of IFRS 9, the embedded derivative shall not be
separated and the accounting treatment of the hybrid contact should be based on the above requirements for the
classification of the financial instruments.
With regards to the financial liabilities, the main difference is that the change in the fair value of a financial
liability initially designated at fair value through profit or loss shall be recognised in profit or loss with the
exception of the effect of change in the liability's credit risk which shall be recognised directly in other comprehensive
income.
Impairment
Contrary to the existing IAS 39, under which an entity recognizes only incurred credit losses, the new standard requires
the recognition of expected credit losses. In particular, on initial recognition of an asset, 12-month expected credit
losses are recognized. However, in case the credit risk of the issuers has increased significantly since initial
recognition as well as in cases of purchased or originated credit impaired assets lifetime expected credit losses are
recognized.
Hedging
The new requirements for hedge accounting are more aligned with the entity's risk management. The main changes in relation
to the current requirements of IAS 39 are summarized below:
• more items become eligible for participating in a hedging relationship either as hedging instruments or as hedged
items,
• the requirement for hedge effectiveness tests to be within the range of 80%-125% is removed. Hedge effectiveness test
is performed progressively only and under certain circumstances a qualitative assessment is considered adequate,
• in case that a hedging relationship ceases to be effective but the objective of risk management regarding the hedging
relationship remains the same, the entity shall rebalance the hedging relationship in order to satisfy the hedge
effectiveness criteria.
It is noted that the new requirements for hedge accounting do not include those that relate to macro hedging, since they
have not been finalized yet.
Except for the aforementioned modifications, the issuance of IFRS 9 has resulted in the amendment to other standards and
mainly to IFRS 7 where new disclosures were added.
IFRS 9 Implementation Program
The Bank, in order to ensure proper application of the new standard, has embarked on the IFRS 9 Implementation Program. For
the management of the Program two Committees have been established:
a. An Implementation Steering Committee consisting of member of the General Management
b. An Operational Steering Committee consisting of senior management from Finance, Credit Risk and IT.
The Implementation Steering Committee meets on a regular basis to confirm key assumptions, approve decisions and policies
as well as to monitor the progress of the implementation work across the Group. The program is organized around two main
work streams, the impairment workstream and the classification and measurement work stream. Delivery of implementation of
the required changes has been undertaken by the approximately 42 projects that the Bank has identified to ensure compliance
with IFRS 9.
In addition, the Board of Directors, the Audit Committee and the Risk Management Committee have assumed an active role,
which includes the involvement in the decision making process for key assumptions and decisions of the IFRS 9 Program.
The project organization is relevant for significant Group subsidiaries which have also set up committees for the
management of the application at the local level, within the framework of principles and policies set by the Group.
To date, the Program has been directed towards determining the classification of its financial instruments based on the new
criteria, developing key methodologies regarding IFRS 9 concepts, designing the operating model and the systems operating
model will be maintained and developing risk modeling methodologies for the calculation of impairment.
Classification and measurement work stream
The Group is in the process of assessing the existing and define the new business models, where necessary, that will be
compatible with the Group's business strategy. The result of the assessment will be the mapping of Group's financial assets
to the new business models.
Additionally, the Group is in the process of assessing its financial assets in order to determine whether the SPPI
criterion (i.e. cash flows represent Solely Payments of Principal and Interest) is met. For standardised retail loans, the
assessment is based on product characteristics while for non standardised (mainly corporate) loans and debt securities the
assessment is based on the characteristics of the individual asset.
Finally, the Group is in the process of updating policies and designing new classification processes that shall be applied
for the classification of financial assets from 1.1.2018.
Impairment work stream
The Group will be required to record an allowance for expected losses for all loans and other debt financial assets not
held at fair value through profit or loss, together with loan commitments and financial guarantee contracts.
The allowance is based on the expected credit losses associated with the probability of default in the next twelve months
unless there has been a significant increase in credit risk since origination, in which case, the allowance is based on the
probability of default over the life of the asset.
When determining whether the risk of default has significantly increased since initial recognition, the Group intends to
consider reasonable and supportable information, both quantitative and qualitative, that could vary between portfolios.
The Group is currently developing its detailed methodologies for assessing when there is an increase in credit risk.
The key inputs to the measurement of the expected credit loss are the following variables:
- Probability of default
- Loss Given default
- Exposure at default
The Group expects to derive these parameters from internally developed statistical models and other historical data that
will be adjusted to reflect forward looking information. The Group intends to develop at least two scenarios to estimate
future economic environment.
Finally, the Group is designing the processes and the governance framework for impairment calculations, including the new
elements introduced by IFRS 9, with the aim to establish detailed process flow to be implemented in the system for
impairment calculations and to update accordingly policy and process manuals.
Hedge accounting
The Group is still examining whether it will exercise the accounting policy choice to continue applying IAS 39 hedge
accounting. The current intention is to continue to apply IAS 39.
Transition approach
The classification and measurement and impairment requirements are applied retrospectively by adjusting the opening balance
sheet at the date of initial application, with no requirement to restate comparative periods. The current intention of the
Group is not to restate comparatives.
Quantitative Impact
It is estimated that until IFRS 9 Implementation Program has progressed to such a degree that important decisions affecting
implementation have been taken and incorporated in the models for the calculation of impairment losses there would be no
reliable estimate of the impact of IFRS 9, especially with regards to the interaction with regulatory capital requirements.
Therefore, no reliable information can be disclosed regarding expected impact on the Group's financial position and
regulatory capital.
The Group, however, intends to quantify the potential impact of IFRS 9 once allowed by the degree of Program Implementation
and no later than the audited annual financial statements of 31.12.2017.
• International Financial Reporting Standard 15 "Revenue from Contracts with Customers" (Regulation 2016/1905/22.9.2016)
Effective for annual periods beginning on or after 1.1.2018
IFRS 15 "Revenue from Contracts with Customers" was issued on 28.5.2014 by the International Accounting Standards Board.
The new standard is the outcome of a joint project by the IASB and the Financial Accounting Standards Board (FASB) to
develop common requirements as far as the revenue recognition principles are concerned.
The new standard shall be applied to all contracts with customers, except those that are in scope of other standards, such
as financial leases, insurance contracts and financial instruments.
According to the new standard, an entity recognizes revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. A new revenue recognition model is introduced, by applying the following five steps:
- Step 1: Identify the contract(s) with a customer
- Step 2: Identify the performance obligations in the contract
- Step 3: Determine the transaction price
- Step 4: Allocate the transaction price to the performance obligations in the contract
- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
The performance obligation notion is new and in effect represents a promise in a contract with a customer to transfer to
the customer either: (a) a good or service (or a bundle of goods or services) that is distinct; or (b) a series of distinct
goods or services that are substantially the same and that have the same pattern of transfer to the customer.
The new IFRS 15 supersedes:
(a) IAS 11 "Construction Contracts";
(b) IAS 18 "Revenue";
(c) IFRIC 13 "Customer Loyalty Programmes";
(d) IFRIC 15 "Agreements for the Construction of Real Estate";
(e) IFRIC 18 "Transfers of Assets from Customers";and
(f) SIC-31 "Revenue-Barter Transactions Involving Advertising Services".
The Group is examining the impact from the adoption of IFRS 15 on its financial statements.
In addition, the International Accounting Standards Board has issued the following standards and amendments to standards as
well as IFRIC 22 which have not yet been adopted by the European Union and they have not been early applied by the Group.
• Amendment to International Financial Reporting Standard 2 "Share-based Payment": Classification and Measurement of
Share-based Payment Transactions
Effective for annual periods beginning on or after 1.1.2018
On 20.6.2016 the International Accounting Standards Board issued an amendment to IFRS 2 with which the following were
clarified:
- in estimating the fair value of a cash-settled share-based payment, the accounting for the effects of vesting and
non-vesting conditions shall follow the same approach as for equity-settled share-based payments,
- where tax law requires an entity to withhold a specified amount of tax (that constitutes a tax obligation of the
employee) that relates to share-based payments and shall be remitted to the tax authority, such an arrangement shall be
classified as equity-settled in its entirety, provided that the share-based payment would have been classified as
equity-settled had it not included the net settlement feature,
- if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it
becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the
modification.
The Group is examining the impact from the adoption of the above amendment on its financial statements.
• Amendment to International Financial Reporting Standard 4 "Insurance Contracts": applying IFRS 9 Financial Instruments
with IFRS 4 Insurance Contracts
Effective for annual periods beginning on or after 1.1.2018
On 12.9.2016 the International Accounting Standards Board issued an amendment to IFRS 4 with which:
- It provides insurers, whose activities are predominantly connected with insurance, with a temporary exemption from
application of IFRS 9 and
- following full adoption of IFRS 9, it gives all entities with insurance contracts the option to present changes in fair
value on qualifying designated financial assets in other comprehensive income instead of profit or loss.
The Group is examining the impact from the adoption of the above amendment on its financial statements.
• Amendment to International Financial Reporting Standard 10 "Consolidated Financial Statements" and toInternational
Accounting Standard 28 "Investments in Associates and Joint Ventures": Sale or contribution of assets between an investor
and its associate or joint venture
Effective date: To be determined
On 11.9.2014 the International Accounting Standards Board issued an amendment to IFRS 10 and IAS 28 in order to clarify the
accounting treatment of a transaction of sale or contribution of assets between an investor and its associate or joint
venture. In particular, IFRS 10 was amended in order to be clarified that in case that as a result of a transaction with an
associate or joint venture, a parent loses control of a subsidiary, which does not contain a business, as defined in IFRS
3, it shall recognise to profit or loss only the part of the gain or loss which is related to the unrelated investor's
interests in that associate or joint venture. The remaining part of the gain from the transaction shall be eliminated
against the carrying amount of the investment in that associate or joint venture. In addition, in case the investor retains
an investment in the former subsidiary and the former subsidiary is now an associate or joint venture, it recognises the
part of the gain or loss resulting from the remeasurement at fair value of the investment retained in that former
subsidiary in its profit or loss only to the extent of the unrelated investor's interests in the new associate or joint
venture. The remaining part of the gain is eliminated against the carrying amount of the investment retained in the former
subsidiary.
In IAS 28, respectively, it was clarified that the partial recognition of the gains or losses shall be applied only when
the involved assets do not constitute a business. Otherwise, the total of the gain or loss shall be recognised.
On 17.12.2015, the International Accounting Standards Board deferred the effective date for the application of the
amendment that had been initially determined. The new effective date will be determined by the International Accounting
Standards Board at a future date after taking into account the results of its project relating to the equity method.
The Group is examining the impact from the adoption of the above amendment on its financial statements.
• International Financial Reporting Standard 14 "Regulatory deferral accounts"
Effective for annual periods beginning on or after 1.1.2016
On 30.1.2014 the International Accounting Standards Board issued IFRS 14. The new standard addresses the accounting
treatment and the disclosures required for regulatory deferral accounts that are maintained in accordance with local
legislation when an entity provides rate-regulated goods or services. The scope of this standard is limited to first-time
adopters that recognized regulatory deferral accounts in their financial statements in accordance with their previous GAAP.
IFRS 14 permits these entities to capitalize expenditure that non-rate-regulated entities would recognize as expense.
The above standard does not apply to the financial statements of the Group.
• Amendment to International Financial Reporting Standard 15 "Revenue from Contracts with Customers": Clarifications to
IFRS 15 Revenue from Contracts with Customers
Effective for annual periods beginning on or after 1.1.2018
On 12.4.2016 the International Accounting Standards Board issued an amendment to IFRS 15 with which it clarified mainly the
following:
- when a promised good or service is separately identifiable from other promises in a contract, which is part of an
entity's assessment of whether a promised good or service is a performance obligation,
- how to apply the principal versus agent application guidance to determine whether the nature of an entity's promise is
to provide a promised good or service itself (i.e., the entity is a principal) or to arrange for goods or services to be
provided by another party (i.e., the entity is an agent),
- for a licence of intellectual property, which is a factor in determining whether the entity recognises revenue over
time or at a point in time.
Finally, two practical expedients to the transition requirements of IFRS 15 were added for completed contracts under full
retrospective transition approach as well as for contract modifications at transition.
The Group is examining the impact from the adoption of the above amendment on its financial statements.
• International Financial Reporting Standard 16 "Leases"
Effective for annual periods beginning on or after 1.1.2019
On 13.1.2016 the International Accounting Standards Board issued IFRS 16 "Leases" which supersedes:
• IAS 17 " Leases"
• IFRIC 4 "Determining whether an arrangement contains a lease"
• SIC 15 "Operating Leases - Incentives" and
• SIC 27 "Evaluating the substance of transactions involving the legal form of a lease".
The new standard significantly differentiates the accounting of leases for lessees while essentially maintaining the
existing requirements of IAS 17 for the lessors. In particular, under the new requirements, the classification of leases as
either operating or finance is eliminated. A lessee is required to recognize, for all leases with term of more than 12
months, the right-of-use asset as well as the corresponding obligation to pay the lease payments. The above treatment is
not required when the asset is of low value.
The Group is examining the impact from the adoption of IFRS 16 on its financial statements.
• Amendment to International Accounting Standard 7 "Statement of Cash Flows": Disclosure Initiative
Effective for annual periods beginning on or after 1.1.2017
On 29.1.2016 the International Accounting Standards Board issued an amendment to IAS 7 according to which an entity shall
provide disclosures that enable users of financial statements to evaluate changes in liabilities for which cash flows are
classified in the statement of cash flows as cash flows from financing activities. The changes that shall be disclosed,
which may arise both from cash flows and non-cash changes, include:
- changes from financing cash flows,
- changes arising from obtaining or losing control of subsidiaries or other businesses,
- the effect of changes in foreign exchange rates,
- changes in fair values and
- other changes.
The Group is examining the impact from the adoption of the above amendment on its financial statements.
• Amendment to International Accounting Standard 12 "Income Taxes": Recognition of Deferred Tax Assets for Unrealised
Losses
Effective for annual periods beginning on or after 1.1.2017
On 19.1.2016 the International Accounting Standards Board issued an amendment to IAS 12 with which the following were
clarified:
• Unrealised losses on debt instruments measured at fair value for accounting purposes and at cost for tax purposes may
give rise to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the
carrying amount of the asset by sale or by use.
• The recoverability of a deferred tax asset is assessed in combination with other deferred tax assets. However, if tax
law offsets specific types of losses only against a particular type of income, the relative deferred tax asset shall be
assessed in combination with other deferred tax assets of the same type.
• During the deferred tax asset recoverability assessment, an entity compares the deductible temporary differences with
future taxable profit that excludes tax deductions resulting from the reversal of those deductible temporary differences.
• The estimate of probable future taxable profit may include the recovery of some of an entity's assets for more than
their carrying amount if there is sufficient evidence that it is probable that the entity will achieve this.
The Group is examining the impact from the adoption of the above amendment on its financial statements.
• Amendment to International Accounting Standard 40 "Investment Property": Transfers of Investment Property
Effective for annual periods beginning on or after 1.1.2018
On 8.12.2016 the International Accounting Standards Board issued an amendment to IAS 40 with which it clarified that an
entity shall transfer a property to, or from, investment property when, and only when, there is a change in use. A change
in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of
the change in use. In isolation, a change in management's intentions for the use of a property does not provide evidence of
a change in use. In addition, the examples of evidence of a change in use were expanded to include assets under
construction and not only transfers of completed properties.
The Group is examining the impact from the adoption of the above amendment on its financial statements.
• Improvements to International Accounting Standards - cycle 2014-2016
Effective for annual periods beginning on or after 1.1.2017 and 1.1.2018
As part of the annual improvements project, the International Accounting Standards Board issued, on 8.12.2016, non- urgent
but necessary amendments to various standards.
The Group is examining the impact from the adoption of the above amendments on its financial statements.
IFRIC Interpretation 22 "Foreign Currency Transactions and Advance Consideration"
Effective for annual periods beginning on or after 1.1.2018
On 8.12.2016 the International Accounting Standards Board issued IFRIC 22. The Interpretation covers foreign currency
transactions when an entity recognizes a non monetary asset or liability arising from the payment or receipt of advance
consideration before the entity recognizes the related asset, expense or income. The Interpretation clarified that the date
of the transaction, for the purpose of determination of exchange rate to use on initial recognition of the asset, the
income or expense, is the date of initial recognition of the non monetary asset or liability (i.e. advance consideration).
Additionally, if there are multiple payments or receipts in advance, the entity shall determine a date of the transaction
for each payment or receipt of advance consideration.
The Group is examining the impact from the adoption of the above Interpretation on its financial statements.
1.2 Basis of consolidation
The consolidated financial statements include the parent company Alpha Bank, its subsidiaries, associates and joint
ventures. The financial statements used to prepare the consolidated financial statements have been prepared as at
31.12.2016 and the accounting policies applied in their preparation, when necessary, were adjusted to ensure consistency
with the Group accounting policies.
a. Subsidiaries
Subsidiaries are entities controlled by the Group.
The Group takes into account the following factors, in assessing control:
- power over the investee,
- exposure, or rights, to variable returns from its involvement with the investee, and
- the ability to use its power over the investee to affect the amount of the investor's return.
Power arises from currently exercisable rights that provide the Group with the current ability to direct the relevant
activities of the investee. In a straightforward case, rights that provide power are derived from voting rights granted by
equity instruments such as shares. In other cases, power results from contractual arrangements.
The Group's returns are considered variable, when these returns have the potential to vary as a result of the investee's
performance. Variability of returns is judged based on the substance of the arrangement, regardless of their legal form.
The Group, in order to evaluate the link between power and returns, assesses whether it exercises its power for its own
benefit or on behalf of other parties, thus acting as either a principal or an agent, respectively. If the Group determines
that it acts as a principal, then it controls the investee and consolidation is required. Otherwise, control does not exist
and there is no requirement to consolidate.
In cases where the power over an investee arises from voting rights, the Group primarily assesses whether it controls the
investee through holding more than 50% of the voting rights. However, the Group can have power even if it holds less than
50% of the voting rights of the investee, through:
- a contractual arrangement between the investors and other vote holders,
- rights arising from other contractual arrangements,
- the size of the investor's holding of voting rights relative to the size and dispersion of holdings of the other vote
holders,
- potential voting rights.
In cases of structured entities where the voting rights relate to administrative tasks only and the relevant activities are
directed by means of contractual arrangements (i.e. securitization vehicles or mutual funds), the Group assesses the
existence of control based on the following:
• the purpose of the entity and the contractual rights of the parties involved,
• the risks to which the investee was designed to be exposed, the risks it was designed to pass on to the parties
involved with the investee and the degree of exposure of the Group to those risks,
• indications of a special relationship with the entity, which suggests that the Group has more than a passive interest
in the investee.
Furthermore, regarding the structured entities that are managed by the Group, the Group assesses if it acts as principal or
an agent based on the extent of its decision - making authority over the entity's activities, the rights of third parties
and the degree of its exposure to variability of returns due to its involvement with the entity.
The Group, based on the above criteria, controls structured entities established for the securitization of loan
portfolios.
The Group reassess whether it controls an investee if facts and circumstances indicate that there are changes to one or
more of the elements of control.
The financial statements of subsidiaries are fully consolidated from the date that control commences until the date that
control ceases.
The acquisition method is applied when the Group obtains control of other companies or units that meet the definition of a
business. Application of the acquisition method requires identifying the acquirer, determining the acquisition date and
measuring the consideration transferred, the identifiable assets acquired, the liabilities assumed and any non controlling
interest in the acquiree, in order to determine the amount of goodwill or gain arising from the business combination.
The consideration transferred is measured at fair value on acquisition date. Consideration includes also the fair value of
any contingent consideration. The obligation to pay contingent consideration is recognized as a liability or as an equity
component, in accordance with IAS 32 or other applicable IFRSs. The right to the return of a previously transferred
consideration is classified as an asset, if specified conditions are met. Subsequently, and to the extent that changes in
the value of the contingent consideration do not constitute measurement period adjustments, contingent consideration is
measured as follows:
- In case it has been classified in equity, it is not re-measured.
- In all other cases it is measured at fair value through profit or loss.
The identifiable assets acquired and liabilities assumed are initially recognised on acquisition date at their fair value,
except from specific assets or liabilities for which a different measurement basis is required. Any non controlling
interests are recognised at either fair value or at their proportionate share in the acquiree's identifiable net assets, as
long as they are present ownership interests and entitle their holders to a proportionate share of the entity's net assets
in the event of liquidation. Otherwise, they are measured at their acquisition date fair values.
Any difference between:
a. the sum of the consideration transferred, the fair value of any previously held equity interest of the Group in the
acquiree and the amount of any non - controlling interests, and
b. the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed,
is recognised as goodwill if the above difference is positive or as a gain in profit or loss if the difference is
negative.
During the measurement period, the provisional amounts recognized at the acquisition date are adjusted in order to reflect
new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have
affected the measurement of the amounts recognized as of that date. These adjustments affect accordingly the amount of
goodwill. The measurement period ends as soon as the information about facts and circumstances existed as of the
acquisition date has been obtained. However, the measurement period shall not exceed one year from the acquisition date.
When the Group's interest in a subsidiary increases as a result of an acquisition, the difference between the consideration
paid and the share of net assets acquired is recognized directly in retained earnings.
Sales of ownership interests in subsidiaries that do not result in a loss of control for the Group are accounted for as
equity transactions and the gain or loss arising from the sale is recognized directly in retained earnings.
Intercompany transactions are eliminated, unless the transaction provides evidence of impairment of the asset transferred,
in which case, it is recognized in the consolidated balance sheet.
b. Associates
Associates are entities over which the Group has significant influence but not control. Significant influence is generally
presumed to exist when the Group holds, directly or indirectly, more than 20% of the share capital of the company concerned
without having control or joint control, unless the ownership of more than 20% does not ensure significant influence, e.g.
due to lack of representation of the Group in the company's Board of Directors or due to the Group's non-participation in
the policy making process.
Investments in associates are accounted for using the equity method of accounting. The investment is initially recognised
at cost and adjusted thereafter for the post acquisition change in the Group's share of net assets of the associate. In
case the losses according to the equity method exceed the investment in ordinary shares, they are recognized as a reduction
of other elements that are essentially an extension of the investment in the associate.
The Group's share of the associate's profit or loss and other comprehensive income is separately recognized in the income
statement and in the statement of comprehensive income, accordingly.
c. Joint ventures
The Group applies IFRS 11 which deals with the accounting treatment of interests in joint arrangements. All joint
arrangements in which the Group participates and has joint control are joint ventures, which are accounted for by using the
equity method.
A detailed list of all Group subsidiaries, associates and joint ventures, as well as the Group's ownership interest in
them, is provided in note 38.
1.3 Operating Segments
Operating segments are determined and measured based on the information provided to the Executive Committee of the Bank,
which is the body responsible for the allocation of resourses between the Group's operating segments and the assessment of
their performance.
Based on the above, as well as the Group's administrative structure and activities, the following operating segments have
been determined:
• Retail Banking
• Corporate Banking
• Asset Management and Insurance
• Investment Banking and Treasury
• South Eastern Europe
• Other
Since the Group operates in various geographical areas, apart from the operating segments identified above, the financial
statements contain information based on the below distinction:
• Greece
• Other Countries
It is noted that the methods used to measure operating segments for the purpose of reporting to the Executive Committee are
not different from those required by the International Financial Reporting Standards.
Detailed information relating to operating segments is provided in note 40.
1.4 Transactions in foreign currency and translation of foreign operations
a. Transactions in foreign currency
The consolidated financial statements are presented in Euro, which is the functional currency and the currency of the
country of incorporation of the parent company Alpha Bank.
Items included in the financial statements of the subsidiaries are measured in the functional currency of each subsidiary
which is the currency of the company's country of incorporation or the currency used in the majority of the transactions
held.
Transactions in foreign currencies are translated into the functional currency of each subsidiary at the closing exchange
rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the
functional currency at the closing exchange rate at that date. Foreign exchange differences arising on translation are
recognized in the income statement.
Non-monetary assets and liabilities are recognized at the exchange rate ruling at initial recognition, except for
non-monetary items denominated in foreign currencies that are measured at fair value. The exchange differences relating to
these items are part of the change in fair value and they are recognized in the income statement or recorded directly in
equity depending on the classification of the non-monetary item.
b. Translation of foreign operations
The financial statements of all group entities that have a functional currency that is different from the presentation
currency of the Group financial statements are translated as follows:
i. Assets and liabilities are translated to Euro at the closing rate applicable on the balance sheet date. The comparative
figures presented are translated to Euro at the closing rates at the respective date of the comparative balance sheet.
ii. Income and expense items are translated to Euro at average exchange rates applicable for each period presented.
The resulting exchange difference from the retranslation and those arising from other monetary items designated as a part
of the net investment in the entity are recorded in equity. When a foreign entity is sold, the exchange differences are
reclassified to the income statement as part of the gain or loss on sale.
1.5 Cash and cash equivalents
For the purposes of the consolidated cash flow statement, cash and cash equivalents consists of:
a. Cash on hand
b. Non-restricted placements with Central Banks and
c. Short-term balances due from banks and Reverse Repo agreements
Short-term balances due from banks are amounts that mature within three months of the balance sheet date.
1.6
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